UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM 8-K/A
AMENDMENT NO. 1
TO
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
January 29, 1999
Date of Report (Date of earliest event reported)
CONSOLIDATED DELIVERY & LOGISTICS, INC.
(Exact name of Registrant as specified in its charter)
Delaware 0-26954 22-3350958
(State or other jurisdiction of (Commission File (IRS Employer
incorporation or organization) Number) Identification No.)
380 Allwood Road, Clifton, New Jersey 07012
(Address of principal (Zip Code)
executive offices)
(Registrant's telephone number, including area code) (973) 471-1005
NOT APPLICABLE
(Former name or former address, if changed since last report.)
<PAGE>
ITEM 5. Other Events
1. On January 29, 1999, Consolidated Delivery & Logistics, Inc. (the
"Company") completed a $15 million private placement of senior subordinated
notes and warrants with three financial institutions. The notes bear
interest at 12% per annum and are subordinate to all senior debt including
the Company's credit facility with First Union Commercial Corporation.
Under the terms of the notes, the Company is required to maintain certain
financial ratios and comply with other financial conditions. The notes
mature on January 29, 2006 and may be prepaid by the company under certain
circumstances. The warrants expire January 29, 2009 and are exercisable at
any time prior to expiration at a price of $.001 per equivalent share of
common stock for an aggregate of 506,250 shares of the Company's stock,
subject to additional adjustments. The Company plans to use the proceeds to
finance acquisitions as they arise and for general working capital
purposes.
2. On February 19, 1999, Consolidated Delivery & Logistics, Inc. announced
that as of February 23, 1999 shares of the Company's common stock will
begin trading on the American Stock Exchange under the symbol CDV. The
company's stock formerly traded on the Nasdaq National Market under the
symbol CDLI.
The Form 8-K is being amended to provide the additional exhibits noted
below.
ITEM 7. Financial Statements and Exhibits
c. Exhibits
99.1 Press Release issued February 2, 1999.
99.2 Press Release issued February 19, 1999.
99.3 Senior Subordinated Loan Agreement
99.4 Warrant Agreement
99.5 Registration Rights Agreement
EXHIBIT 99.1
FOR IMMEDIATE RELEASE
Drew Kronick, Vice President
Consolidated Delivery & Logistics, Inc.
(973) 471-1005
Richard Shonfeld
The Dilenschneider Group
(212) 922-0900
CONSOLIDATED DELIVERY & LOGISTICS, INC. COMPLETES
$15 MILLION PRIVATE PLACEMENT
Funds Will be Used to Finance Ongoing Acquisition Program
Clifton, NJ February 2, 1999 - Consolidated Delivery & Logistics, Inc.
(NASDAQ: CDLI) today announced that it has completed its previously announced
$15 million private placement of senior subordinated notes and warrants. The
issue was placed with two financial institutions. Proceeds will be used
primarily to finance acquisitions.
Commenting on the transaction, Albert W. Van Ness, Jr., chairman and
chief executive officer of CD&L, said, "The $15 million generated by this
private placement coupled with the recently announced increased availability
under the Company's senior credit facility creates a significant financing
resource to fuel our ongoing acquisition program."
"CD&L, which has completed seven consecutive quarters of improved
earnings, increased annual revenues by $25 million through the acquisition of
four companies during the (more) past 6 months. We are currently reviewing
several new opportunities in our acquisition pipeline that can add to both
revenues and earnings in 1999."
<PAGE>
The notes offered have not been, and will not be registered under the
Securities Act of 1933, or any state securities laws, and may not be offered or
sold in the United States absent registration or an applicable exemption from
registration requirements.
Consolidated Delivery & Logistics, Inc. headquartered in Clifton, New
Jersey is a full service, same day ground and air delivery and logistics company
with 70 offices in 24 states and the District of Columbia. The Company has
nearly 4,000 employees and utilizes over 1,000 independent contractors to
provide time sensitive delivery services to thousands of businesses.
This press release contains certain forward-looking statements
regarding future events or the future financial performance of the Company.
These forward-looking statements include comments on the Company's future
business development. These forward-looking statements involve certain risks and
uncertainties that may cause the actual events or results to differ materially
from those indicated by such forward-looking statements. Potential risks and
uncertainties include without limitation the risk that the Company will lack
satisfactory merger or acquisition candidates and/or have an inability to
conclude acquisitions or mergers on satisfactory terms or achieve cost savings
or additional profits contemplated by the Company's business management strategy
or other risks specified in the Company's SEC filings.
FOR IMMEDIATE RELEASE
Contacts:
Drew Kronick, Vice President Lee Laino
Consolidated Delivery & Logistics, Inc. The Dilenschneider Group
(973) 471-1005 (212) 922-0900
CONSOLIDATED DELIVERY & LOGISTICS, INC.
TO BEGIN TRADING ON AMEX
CLIFTON, NJ, February 19, 1999 - Consolidated Delivery & Logistics,
Inc. announced today that as of February 23, 1999 shares in the company's common
stock will begin trading on the American Stock Exchange under the symbol CDV.
The company's stock formerly traded on the Nasdaq National Market under the
symbol CDLI.
According to Albert W. Van Ness, Jr., Chairman and Chief Executive
Officer of CD&L, "We are extremely pleased to see our stock listed on the Amex.
We believe that this proactive decision to list our shares on the American Stock
Exchange will better optimize market liquidity and should provide more orderly
trading of our shares. We expect this move to reinforce investor confidence and
assure that CD&L's share price is fully and appropriately valued."
Mr. Van Ness added "The Exchange's Allocation Committee presented
several excellent specialist firms for the Company's review. We are pleased that
from this fine group CD&L's management team selected AGS Specialist Partners as
the Company's market representative."
<PAGE>
(more)
CD&L expects to announce 4th Quarter and full year 1998 financial
results next Wednesday, 24 February. The Company recently completed seven
consecutive quarters of improved earnings and increased annualized revenues by
$40 million through the acquisition of five companies over the past six months.
"We are currently reviewing several new opportunities in our acquisition
pipeline that can add to both revenue and earnings in 1999," Mr. Van Ness
commented.
Headquartered in Clifton, New Jersey, CD&L is a national ground and
air provider of customized time-critical delivery solutions with 70 offices in
24 states and the District of Columbia. The company has nearly 4,000 employees
and 1,000 independent contractors to provide time-critical delivery services to
thousands of businesses across the county.
This press release contains certain forward-looking statements
regarding future events or the future financial performance of the Company.
These forward-looking statements include comments on the Company's future
business development, operating efficiencies, operating cost reductions and its
future trading patterns on the American Stock Exchange. These forward-looking
statements involve certain risks and uncertainties that may cause the actual
events or results to differ materially from those indicated by such
forward-looking statements.
Potential risks and uncertainties include without limitation the risk
that revenues and profits of acquired companies will decrease or fail to improve
over historical results, or that trading activity on the American Stock Exchange
will not prove to optimize liquidity or prove to be more orderly or that the
Company's management group will be unable to effectively and profitably
integrate acquired businesses or that the Company will lack satisfactory merger
or acquisition candidates to achieve its growth plans or that the Company will
be unable to achieve the cost savings or additional profits contemplated by the
Company's business management strategy or other risks specified in the Company's
SEC filings.
EXHIBIT 99.3
================================================================================
$15,000,000
SENIOR SUBORDINATED LOAN AGREEMENT
among
CONSOLIDATED DELIVERY &
LOGISTICS, INC.
and
VARIOUS LENDERS
_________________________________
Dated as of January 29, 1999
_________________________________
================================================================================
TABLE OF CONTENTS
SECTION 1. Amount and Terms of Loans..........................................5
1.01 The Loans.......................................................5
1.02 Notice of Borrowing.............................................5
1.03 Disbursement of Funds...........................................5
1.04 Notes...........................................................5
1.05 Interest........................................................6
1.06 Capital Adequacy Regulations....................................6
SECTION 2. Commitments; Repayment; Prepayments; Payments; Taxes...............7
2.01 Termination of Commitments; Payment of Loans....................7
2.02 Mandatory and Voluntary Prepayments.............................7
2.03 Methodand Place of Payment......................................9
2.04 Net Payments....................................................9
SECTION 3. Conditions Precedent to Loans on the Funding Date.................10
3.01 Notes..........................................................11
3.02 Officers' Certificate..........................................11
3.03 Opinions of Counsel............................................11
3.04 CorporateDocuments; Proceedings................................11
3.05 Subordinated Guaranties........................................11
3.06 Capitalization.................................................12
3.07 Credit Documents...............................................12
3.08 Litigation.....................................................12
3.09 Fees,Etc.......................................................12
3.10 Approvals......................................................12
3.11 Financial Statements; Projections; Management Letter Reports...12
3.12 Existing Indebtedness..........................................13
3.13 Material Adverse Change, Etc...................................13
3.14 Plans; Shareholders' Agreements; Management Agreements; Employment
Agreements; Collective Bargaining Agreements; Debt Agreements;
Affiliate Contracts; Tax Sharing Agreements and Material
Contracts......................................................13
3.15 Solvency Certificate; Insurance Analyses; Etc..................15
3.16 No Default; Representations and Warranties.....................15
3.17 Warrants.......................................................15
SECTION 4. Representations, Warranties and Agreements........................15
4.01 Status.........................................................15
4.02 Power and Authority............................................16
4.03 No Violation...................................................16
4.04 Governmental Approvals.........................................16
4.05 Financial Statements; Financial Condition; Undisclosed
Liabilities; Projections; Etc..................................16
4.06 Litigation.....................................................18
4.07 Trueand Complete Disclosure....................................18
4.08 Use of Proceeds; Margin Regulations............................18
4.09 Tax Returns and Payments.......................................18
4.10 Compliance with ERISA..........................................19
4.11 Representations and Warranties in Documents....................19
4.12 Properties.....................................................20
4.13 Capitalization.................................................20
4.14 Subsidiaries...................................................20
4.15 Compliance with Statutes, Etc..................................20
4.16 Investment Company Act.........................................20
4.17 Public Utility Holding Company Act.............................21
4.18 Environmental Matters..........................................21
4.19 Labor Relations................................................21
4.20 Patents, Licenses, Franchises and Formulas.....................22
4.21 Existing Indebtedness..........................................22
4.22 Restrictions on or Relating to Subsidiaries....................22
4.23 The Transaction................................................22
4.24 Material Contracts.............................................23
4.25 Year 2000 Reprogramming........................................23
4.26 Valid Issuance of Borrower Common Stock........................23
SECTION 5. Affirmative Covenants.............................................23
5.01 Information Covenants..........................................23
(a) MonthlyReports...................................23
(b) QuarterlyFinancial Statements....................24
(c) AnnualFinancial Statements.......................24
(d) ManagementLetters................................24
(e) Budgets..........................................24
(f) Officers' Certificates...........................25
(g) Noticeof Default or Litigation...................25
(h) OtherReports and Filings.........................25
(i) EnvironmentalMatters.............................25
(j) Credit Agreement Notices.........................26
(k) Other Information................................26
5.02 Books, Records and Inspections................................26
5.03 Maintenance of Property, Insurance............................26
5.04 Corporate Franchises..........................................27
5.05 Compliance with Statutes, Etc.................................27
5.06 Compliance with Environmental Laws............................27
5.07 ERISA.........................................................27
5.08 End of Fiscal Years; Fiscal Quarters..........................29
5.09 Payment of Taxes..............................................29
5.10 Use of Proceeds, Margin Regulations...........................29
5.11 Year 2000 Compliance..........................................29
5.12 Observation of Board of Directors.............................29
5.13 Permitted Acquisitions........................................30
5.14 Intellectual Property Rights..................................35
5.15 Post-Closing Obligations......................................35
SECTION 6. Negative Covenants...............................................35
6.01 Liens.........................................................35
6.02 Consolidation, Merger, Purchase or Sale of Assets, Etc........37
6.03 Dividends.....................................................38
6.04 Indebtedness..................................................39
6.05 Transactions with Affiliates..................................40
6.06 No Further Negative Pledges...................................41
6.07 Consolidated Indebtedness to Consolidated EBITDA..............41
6.08 Fixed Charge Coverage Ratio...................................42
6.09 Consolidated Net Worth........................................42
6.10 Capital Expenditures..........................................42
6.11 Restrictions on Additional Subordinated Indebtedness..........43
6.12 Limitation on Voluntary Payments and Modifications;
Limitation on Modifications of Certificate of
Incorporation, By-Laws and Certain Other Agreements; Etc......43
6.13 Limitation on Certain Restrictions on Subsidiaries............43
6.14 Limitation on Issuance of Capital Stock.......................44
6.15 Business......................................................44
6.16 Limitation on Creation of Subsidiaries........................44
6.17 Amendments with Respect to Senior Debt........................45
SECTION 7. Events of Default................................................45
7.01 Payments......................................................45
7.02 Representations, Etc..........................................45
7.03 Covenants.....................................................45
7.04 Default Under Other Agreements................................45
7.05 Bankruptcy, Etc...............................................45
7.06 ERISA.........................................................46
7.07 Judgments.....................................................47
7.08 Subordinated Guaranty.........................................47
7.09 Change in Management..........................................47
SECTION 8. Definitions and Accounting Terms.................................47
8.01 Defined Terms.................................................47
SECTION 9. Subordination....................................................64
9.01 Obligations Subordinate to Senior Indebtedness................64
9.02 Payment Over of Proceeds Upon Dissolution.....................64
9.03 No Payment in Certain Circumstances...........................66
9.04 Acceleration Rights; Remedies.................................66
9.05 PaymentOtherwise Permitted....................................67
9.06 Subrogation to Rights of Holders of Senior Indebtedness.......67
9.07 Provisions Solely to Define Relative Rights...................67
9.08 NoWaiver of Subordination Provisions; Amendment...............68
9.09 Reliance on Judicial Order or Certificate of
Liquidating Agent.............................................68
9.10 Turnover; Miscellaneous Subordination Provisions..............68
<PAGE>
SENIOR SUBORDINATED LOAN AGREEMENT, dated as of January 29, 1999,
among CONSOLIDATED DELIVERY & LOGISTICS, INC., a corporation organized and
existing under the laws of the State of Delaware (the "Borrower") and the
financial institutions party hereto from time to time (each, a "Lender" and,
collectively, the "Lenders"). Unless otherwise defined herein, all capitalized
terms used herein and defined in Section 8 are used herein as therein defined.
W I T N E S S E T H :
WHEREAS, the Borrower has requested that the Lenders lend to the
Borrower $15,000,000 for the purposes specified herein; and
WHEREAS, subject to and upon the terms and conditions herein set
forth, the Lenders are willing to make loans to the Borrower in an aggregate
amount of $15,000,000;
NOW, THEREFORE, IT IS AGREED:
SECTION 1. Amount and Terms of Loans.
1.01 The Loans. Subject to and upon the terms and conditions set forth
herein, each Lender severally agrees to make, on the Funding Date, a loan in
Dollars (each, a "Loan" and, collectively, the "Loans") to the Borrower in a
principal amount equal to such Lender's Commitment. Any amount of any Loan
prepaid or repaid may not be reborrowed.
1.02 Notice of Borrowings. The Borrower shall give each Lender at the
address specified opposite its signature below, prior to 12:00 Noon (New York
time) on the Business Day preceding the Funding Date, written notice (or
telephonic notice promptly confirmed in writing) of the proposed Borrowing of
Loans.
1.03 Disbursement of Funds. No later than 12:00 Noon (New York time)
on the Funding Date, each Lender will make available to the Borrower an amount
equal to such Lender's Commitment, by wire transfer to an account designated in
writing by the Borrower to the Lenders in Dollars and immediately available
funds.
1.04 Notes. (a) The Borrower's obligation to pay the principal of, and
interest on, the Loan made to it by each Lender, shall be evidenced by a
promissory note substantially in the form of Exhibit A, with blanks
appropriately completed in conformity herewith (each, a "Note" and,
collectively, the "Notes").
(b) The Note issued to each Lender shall (i) be executed by the
Borrower, (ii) be payable to the order of such Lender or its registered assigns
and be dated the Funding Date, (iii) be in the stated principal amount equal to
the Loan made by such Lender on the Funding Date and be payable in the principal
amount of the Loan evidenced thereby, (iv) mature on the Maturity Date, (v) bear
interest as provided in Section 1.05, (vi) be subject to voluntary repayment and
mandatory repayment as provided in Section 2.02 and (vii) be entitled to the
benefits of this Agreement and the Subordinated Guaranty.
<PAGE>
(c) Each Lender will note on its internal records the amount of each
Loan made or acquired by it and each payment in respect thereof and will, prior
to any transfer of any Note, endorse on the reverse side thereof the outstanding
principal amount of the Loan evidenced thereby. Failure to make any such
notation shall not affect the Borrower's obligations in respect of the Loans.
1.05 Interest. (a) The Borrower agrees to pay interest in respect of
the unpaid principal amount of each Loan from the date such Loan is made until
the maturity thereof (whether by acceleration or otherwise), at a rate which
shall at all times be equal to 12% per annum.
(b) Overdue principal and, to the extent permitted by law, overdue
interest in respect of each Loan and any other overdue amount payable hereunder
shall, in each case, bear interest at a rate per annum equal to 14% (or, in the
event the non-payment of any such overdue amounts results from the application
of the payment blockage restrictions on Subordinated Obligations set forth in
Section 9.03, 17%) and shall be payable on demand.
(c) Accrued and unpaid interest shall be payable quarterly in arrears
on each Quarterly Payment Date, on any repayment (on the amount repaid), at
maturity (whether by acceleration or otherwise) and, after such maturity, on
demand.
(d) All computations of interest hereunder shall be made in accordance
with Section 10.07(b).
1.06 Capital Adequacy Regulations. If any Lender shall have determined
that after the date hereof, the adoption or effectiveness of any applicable law,
rule or regulation regarding capital adequacy, or any change therein, or any
change in the interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by such Lender or any corporation
controlling such Lender with any request or directive regarding capital adequacy
(whether or not having the force of law) of any such authority, central bank or
comparable agency, has or would have the effect of reducing the rate of return
on such Lender's or such other corporation's capital or assets as a consequence
of such Lender's Commitment or Commitments hereunder or its obligations
hereunder to a level below that which such Lender or such other corporation
could have achieved but for such adoption, effectiveness, change or compliance
(taking into consideration such Lender's or such other corporation's policies
with respect to capital adequacy), then from time to time, upon written demand
by such Lender, accompanied by the notice referred to in the last sentence of
this Section 1.06, the Borrower shall pay to such Lender such additional amount
or amounts as will compensate such Lender or such other corporation for such
reduction. In determining such additional amounts, each Lender will act
reasonably and in good faith and will use reasonable averaging and attribution
methods. Each Lender, upon determining that any additional amounts will be
payable pursuant to this Section 1.06, will give prompt written notice thereof
to the Borrower, which notice shall set forth in reasonable detail the basis of
the calculation of such additional amounts, although the failure to give any
such notice shall not release or diminish the Borrower's obligations to pay
additional amounts pursuant to this Section 1.06 upon the subsequent receipt of
such notice.
<PAGE>
SECTION 2. Commitments; Repayment; Prepayments; Payments; Taxes.
2.01 Termination of Commitments; Payment of Loans. (a) The Total
Commitment (and the Commitment of each Lender hereunder) shall terminate on the
Expiration Date unless the Funding Date has occurred on or before such date.
(b) The unpaid principal amount of the Loans plus all accrued and
unpaid interest thereon and all other amounts owed hereunder with respect
thereto shall be paid in full in cash on the Maturity Date.
2.02 Mandatory and Voluntary Prepayments. (a) The Borrower may, upon
not less than three Business Days' and not more than five Business Days' prior
written notice to the Lenders (which notice shall be irrevocable), at any time
and from time to time, prepay the Loans in whole or in part, provided, however,
that (i) each partial prepayment pursuant to this Section 2.02(a) shall be in an
aggregate principal amount of at least $500,000 and, if greater, in integral
multiples of $500,000, and (ii) no such prepayment shall be made unless (x)
there is no Senior Indebtedness outstanding under the Credit Agreement and all
commitments under the Credit Agreement have been terminated or (y) the Credit
Agreement expressly permits such payments or the Bank has, in writing, consented
to such payment. In connection with any voluntary prepayment, the Borrower shall
prepay the Loan at the prepayment price set forth below (plus all accrued
interest):
% of Principal
Prepayment Date During the Period Being Paid
From the Funding Date to 105%
but not including the first
anniversary of the Funding Date
From the first anniversary of the Funding 104%
Date to but not including the second
anniversary of the Funding Date
From the second anniversary of the Funding 103%
Date to but not including the third
anniversary of the Funding Date
From the third anniversary of the Funding 102%
Date to but not including the fourth
anniversary of the Funding Date
From the fourth anniversary of the Funding 101%
Date and at any time thereafter
; provided that on or prior to January 29, 2002, the Borrower may, at its
option, prepay up to 33% of the initial aggregate principal amount of the Loans
at a prepayment price equal to 101% of the principal amount thereof, plus
accrued and unpaid interest thereon, if any, to the date of prepayment solely
with the net proceeds of a Qualified Public Equity Offering, with any additional
<PAGE>
prepayments of Loans with the net proceeds of such Qualified Public Equity
Offering to be made at the relevant prepayment price as otherwise set forth in
the table above.
(b) Notwithstanding the foregoing or the provisions of Section 2.02(d)
below, the Lenders and the Borrower agree and acknowledge that the Credit
Agreement prohibits any payments that would otherwise be made to the Lenders
under Section 2.02(a) or (d) and, as a result thereof, no payment shall be made
to the Lenders under Section 2.02(a) or (d) unless and only to the extent the
Credit Agreement is amended or modified to provide that such amounts may be paid
to the Lenders.
(c) All prepayments (whether voluntary or mandatory) shall include
payment of accrued interest on the principal amount of the Loans so prepaid and
shall be applied to payment of accrued interest before application to principal.
Any payment of the Loans as a result of an Event of Default (or the acceleration
of the Loans resulting therefrom) and all mandatory prepayments (including,
without limitation, payments pursuant to Section 2.02(d)) shall be deemed a
voluntary prepayment for the purposes of this Section 2 and shall be paid at the
payment price specified in Section 2.02(a) as if such payment had been
voluntary; provided that (x) any payment of Loans made as a result of an Event
of Default arising under Section 7.03(a)(i) as a consequence of a default in the
performance of any covenant contained in Section 6.07, 6.08 or 6.09 or the
acceleration of the Loans resulting therefrom shall be paid at a prepayment
price equal to 101% of the principal amount thereof, plus accrued and unpaid
interest thereon, if any, to the date of such prepayment and (y) any payment of
Loans made pursuant to Section 2.02(e) shall be paid at the prepayment price
specified in said Section. Except in the event a given Lender waives any right
to payment of the Loans resulting from an Event of Default or declines to demand
payment pursuant to Section 2.02(d) (or waives, in part, repayment of a portion
of its outstanding Loans to which it is otherwise entitled as a result of an
Event of Default or demands repayment of its outstanding Loans in a lesser
principal amount than it is otherwise entitled to pursuant to Section 2.02(d)),
all prepayments which are applied to principal will be applied on a pro rata
basis to all Loans.
(d) Upon the occurrence of a Change in Control or an Asset Sale, the
Borrower shall, upon demand of any Lender, repay in full in cash, on the
Business Day following any such demand, the unpaid outstanding principal amount
of the Loan made by such Lender at the prepayment price specified in Section
2.02(a) and all other amounts (including accrued and unpaid interest) owing
hereunder and the other Loan Documents to such Lender.
(e) In addition to any other mandatory repayments required pursuant to
this Section 2.02, on each date after the Effective Date upon which the Borrower
or any of its Subsidiaries receives any proceeds from any key-man life
insurance, the Borrower shall prepay an aggregate principal amount of the Loans
at a prepayment price equal to 101% in an amount equal to 50% of the amount of
proceeds received from such key-man life insurance; provided that in the event
that 50% of the proceeds of such key-man life insurance are paid directly to one
or more Lenders (or any other financial institution that ceases to be a Lender
hereunder upon assignment of all of its outstanding Loans pursuant to Section
10.04) as beneficiaries thereunder, such payment shall be deemed to be a
prepayment by the Borrower of the Loans as provided above in this Section
<PAGE>
2.02(e) and each Lender (and any other financial institution that ceases to be a
Lender hereunder) in receipt of such proceeds shall make such transfers of such
proceeds to the other Lenders as may be required to ensure that the prepayments
deemed to be made pursuant to this proviso are applied on a pro rata basis to
all outstanding Loans of the Lenders.
2.03 Method and Place of Payment. Except as otherwise specifically
provided herein, all payments under this Agreement or any Note shall be made to
each Lender not later than 12:00 Noon (New York time) on the date when due and
shall be made in Dollars and in immediately available funds at the address
specified opposite such Lender's signature below. Whenever any payment to be
made hereunder or under any Note shall be stated to be due on a day which is not
a Business Day, the due date thereof shall be extended to the next succeeding
Business Day and, with respect to payments of principal, interest shall be
payable at the applicable rate during such extension.
2.04 Net Payments. (a) All payments made by the Borrower hereunder or
under any Note will be made without setoff, counterclaim or other defense.
Except as provided in Section 2.04(b), all such payments will be made free and
clear of, and without deduction or withholding for, any present or future taxes,
levies, imposts, duties, fees, assessments or other charges of whatever nature
now or hereafter imposed by any jurisdiction or by any political subdivision or
taxing authority thereof or therein with respect to such payments (but
excluding, except as provided in the second succeeding sentence, any tax imposed
on or measured by the net income of a Lender pursuant to the laws of the
jurisdiction or any political subdivision or taxing authority thereof or therein
in which the principal office or applicable lending office of such Lender is
located) and all interest, penalties or similar liabilities with respect thereto
(collectively, "Taxes"). If any Taxes are so levied or imposed, the Borrower
agrees to pay the full amount of such Taxes, and such additional amounts as may
be necessary so that every payment of all amounts due hereunder or under any
Note, after withholding or deduction for or on account of any Taxes, will not be
less than the amount provided for herein or in such Note. If any amounts are
payable in respect of Taxes pursuant to the preceding sentence, then the
Borrower shall be obligated to reimburse each Lender, upon the written request
of such Lender, for taxes imposed on or measured by the net income of such
Lender pursuant to the laws of the jurisdiction or any political subdivision or
taxing authority thereof or therein in which the principal office or applicable
lending office of such Lender is located as such Lender shall determine are
payable by such Lender in respect of such amounts so paid to or on behalf of
such Lender pursuant to the preceding sentence and in respect of any amounts
paid to or on behalf of such Lender pursuant to this sentence. The Borrower will
furnish to each Lender within 45 days after the date of the payment of any Taxes
due pursuant to applicable law certified copies of tax receipts evidencing such
payment by the Borrower. The Borrower agrees to indemnify and hold harmless each
Lender, and reimburse such Lender upon its written request, for the amount of
any Taxes so levied or imposed and paid by such Lender.
(b) Each Lender that is not a United States person (as such term is
defined in Section 7701(a)(30) of the Code) agrees to deliver to the Borrower on
or prior to the Effective Date, or in the case of a Lender that is an assignee
or transferee of an interest under this Agreement pursuant to Section 10.04
(unless the respective Lender was already a Lender hereunder immediately prior
to such assignment or transfer), on the date of such assignment or transfer to
<PAGE>
such Lender, (i) two accurate and complete original signed copies of Internal
Revenue Service Form 4224 or 1001 (or successor forms) certifying to such
Lender's entitlement to a complete exemption from United States withholding tax
with respect to payments to be made under this Agreement and under any Note, or
(ii) if the Lender is not a "bank" within the meaning of Section 881(c)(3)(A) of
the Code and cannot deliver either Internal Revenue Service Form 4224 or 1001
pursuant to clause (i) above, (x) a certificate substantially in the form of
Exhibit B (any such certificate, a "Section 2.04(b)(ii) Certificate") and
(y) two accurate and complete original signed copies of Internal Revenue Service
Form W-8 (or successor form) certifying to such Lender's entitlement to a
complete exemption from United States withholding tax with respect to payments
of interest to be made under this Agreement and under any Note. In addition,
each Lender agrees that from time to time after the Effective Date, when a lapse
in time or change in circumstances renders the previous certification obsolete
or inaccurate in any material respect, it will deliver to the Borrower two new
accurate and complete original signed copies of Internal Revenue Service Form
4224 or 1001, or Form W-8 and a Section 2.04(b)(ii) Certificate, as the case may
be, and such other forms as may be required in order to confirm or establish the
entitlement of such Lender to a continued exemption from or reduction in United
States withholding tax with respect to payments under this Agreement and any
Note, or it shall immediately notify the Borrower of its inability to deliver
any such Form or Certificate, in which case such Lender shall not be required to
deliver any such Form or Certificate pursuant to this Section 2.04(b).
Notwithstanding anything to the contrary contained in Section 2.04(a), but
subject to the immediately succeeding sentence, (x) the Borrower shall be
entitled, to the extent it is required to do so by law, to deduct or withhold
income or similar taxes imposed by the United States (or any political
subdivision or taxing authority thereof or therein) from interest, fees or other
amounts payable hereunder for the account of any Lender that is not a United
States person (as such term is defined in Section 7701(a)(30) of the Code) for
U.S. Federal income tax purposes to the extent that such Lender has not provided
to the Borrower U.S. Internal Revenue Service Forms that establish a complete
exemption from such deduction or withholding and (y) the Borrower shall not be
obligated pursuant to Section 2.04(a) hereof to gross-up payments to be made to
a Lender in respect of income or similar taxes imposed by the United States if
(I) such Lender has not provided to the Borrower the Internal Revenue Service
Forms required to be provided to the Borrower pursuant to this Section 2.04(b)
or (II) in the case of a payment, other than interest, to a Lender described in
clause (ii) above, to the extent that such forms do not establish a complete
exemption from withholding of such taxes. Notwithstanding anything to the
contrary contained in the preceding sentence or elsewhere in this Section 2.04,
the Borrower agrees to pay additional amounts and to indemnify each Lender in
the manner set forth in Section 2.04(a) (without regard to the identity of the
jurisdiction requiring the deduction or withholding) in respect of any amounts
deducted or withheld by it as described in the immediately preceding sentence as
a result of any changes after the Effective Date in any applicable law, treaty,
governmental rule, regulation, guideline or order, or in the interpretation
thereof, relating to the deducting or withholding of income or similar Taxes.
<PAGE>
SECTION 3. Conditions Precedent to Loans on the Funding Date. The
obligation of each Lender to make its Loan on the Funding Date is subject to (a)
the condition precedent that the Effective Date shall have occurred and (b) the
satisfaction of the following additional conditions precedent:
3.01 Notes. On the Funding Date, there shall have been delivered to
each Lender the appropriate Note, in each case executed by the Borrower and in
the amount, maturity and as otherwise provided herein.
3.02 Officers' Certificate. On the Funding Date, each Lender shall
have received a non-recourse certificate, dated the Funding Date, signed by the
Chief Executive Officer, Chief Financial Officer, President or any Vice
President of the Borrower stating that all of the conditions specified in
Sections 3.08, 3.10, 3.12, 3.13 and 3.16 and 3.18 have been satisfied on such
date; provided that such certificate shall not be required to include a
certification as to acceptability of any matters to the Lenders described in
said Sections.
3.03 Opinions of Counsel. On the Funding Date, each Lender shall have
received (i) from Winston & Strawn, special counsel to the Borrower and its
Subsidiaries, an opinion addressed to each of the Lenders and dated the Funding
Date covering the matters set forth in Exhibit C-1, (ii) from Mark Carlesimo,
Esq., general counsel of the Borrower, an opinion addressed to each of the
Lenders and dated of the Funding Date covering the matters set forth in Exhibit
C-2 and (iii) from counsel rendering such opinions, reliance letters addressed
to each of the Lenders and dated the Funding Date with respect to all legal
opinions delivered in connection with the Transaction, with such legal opinions
to be in form and substance satisfactory to each Lender.
3.04 Corporate Documents; Proceedings. (i) On the Funding Date, each
Lender shall have received a certificate, dated the Funding Date, signed by the
Chief Executive Officer, Chief Financial Officer, President or any Vice
President of each Loan Party, and attested to by the Secretary or any Assistant
Secretary of such Loan Party, in the form of Exhibit E with appropriate
insertions, together with copies of the Certificate of Incorporation and By-Laws
(or equivalent organizational documents) of such Loan Party and the resolutions
of such Loan Party referred to in such certificate, and the foregoing shall be
acceptable to the Lenders in their sole discretion.
(ii) All corporate and legal proceedings and all instruments and
agreements relating to the transactions contemplated by this Agreement, the
other Loan Documents and the other Documents shall be satisfactory in form and
substance to the Lenders, and each Lender shall have received all information
and copies of all documents and papers, including records of corporate
proceedings, governmental approvals, good standing certificates and bring-down
telegrams, if any, which such Lender may have requested in connection therewith,
such documents and papers where appropriate to be certified by proper corporate
or governmental authorities.
3.05 Subordinated Guaranties. On the Funding Date, each Subsidiary of
the Borrower shall have duly authorized, executed and delivered a Subordinated
Guaranty in the form of Exhibit D (as amended, modified or supplemented from
time to time in accordance with the terms hereof and thereof, the "Subordinated
Guaranty"), and the Subordinated Guaranty shall be in full force and effect.
<PAGE>
3.06 Capitalization. On the Funding Date, after giving effect to the
Transaction, the ownership and capital structure (including, without limitation,
the terms of the capital stock, options, warrants or other securities issued or
to be issued by the Borrower and its Subsidiaries) shall be in form and
substance satisfactory to the Lenders.
3.07 Credit Documents. On or prior to the Funding Date, there shall
have been delivered to the Lenders true and complete copies of the Credit
Agreement, the Modification Agreement and all schedules, annexes and exhibits
thereto (certified as such by an appropriate officer of the Borrower), and all
of the foregoing shall be in form and substance satisfactory to the Lenders. All
conditions precedent to the effectiveness of the Modification Agreement shall
have been satisfied or waived by the parties thereto, and all representations
and warranties set forth in the Credit Agreement and the Modification Agreement
shall be true and complete in all material respects as if made on and as of the
Funding Date.
3.08 Litigation. On the Funding Date, no litigation by any entity
(private or governmental) shall be pending or threatened with respect to this
Agreement, any other Document or any documentation executed in connection
herewith or with respect to the Transaction, or which any Lender shall determine
could reasonably be expected to have a materially adverse effect on the
Transaction or on the performance, business, assets, nature of assets,
liabilities, operations, properties, condition (financial or otherwise) or
prospects of the Borrower and its Subsidiaries taken as a whole (after giving
effect to the Transaction).
3.09 Fees, Etc (a) On the Funding Date, the Borrower shall have paid
to each Lender a financing fee equal to 1.50% of the Commitment of such Lender
as in effect on the Funding Date (immediately prior to the incurrence of Loans
on such date).
(b) On the Funding Date, the Borrower shall have paid in full to each
Lender all costs, fees and expenses (including, without limitation, all legal
fees and expenses) payable to such Lender to the extent then due pursuant hereto
or as otherwise agreed between the Borrower and such Lender.
3.10 Approvals. All necessary governmental and third party approvals
in connection with the Transaction and the transactions contemplated by the
Documents and otherwise referred to herein or therein shall have been obtained
and remain in effect. There shall not exist any judgment, order, injunction or
other restraint issued or filed or a hearing seeking injunctive relief or other
restraint pending or notified prohibiting or imposing materially adverse
conditions upon the consummation of the Transaction, the transactions
contemplated by the Documents, or the making of the Loans.
3.11 Financial Statements; Projections; Management Letter Reports. (a)
On or prior to the Funding Date, the Lenders shall have received the
consolidated balance sheets of the Borrower at December 31, 1995, December 31,
1996, December 31, 1997 and September 30, 1998 and the related statements of
income and cash flows and changes in shareholders' equity of the Borrower for
the fiscal years or nine-month period, as the case may be, ended as of said
dates, all of which financial statements shall be prepared in accordance with
generally accepted accounting principles consistently applied, subject, in the
<PAGE>
case of the nine-month statements, to normal year-end audit adjustments and the
absence of footnotes, and shall (x) be in form and substance satisfactory to the
Required Lenders and (y) not disclose any material adverse differences in the
business, properties, assets, liabilities, results of operations, condition
(financial or otherwise) or prospects of the Borrower and its Subsidiaries taken
as a whole from that previously disclosed to the Lenders.
(b) On or prior to the Funding Date, the Lenders shall have received
detailed consolidated financial projections for the Borrower and its
Subsidiaries, which include the projected results of the Borrower, after giving
effect to the Transaction and the other transactions contemplated herein, for
the period commencing on January 1, 1999 and ending on December 31, 2001 (the
"Projections"), which Projections, and the supporting assumptions and
explanations thereto, and the accounting practices and procedures to be utilized
by the Borrower following the Funding Date, shall be satisfactory in form and
substance to the Lenders.
(c) On or prior to the Funding Date, the Lenders shall have received a
copy of any "management letter" received by the Borrower or any of its
Subsidiaries from its certified public accountants during the three-year period
prior to the Funding Date.
3.12 Existing Indebtedness. On the Funding Date and after giving
effect to the Loans incurred on the Funding Date and the other transactions
contemplated hereby, neither the Borrower nor any of its Subsidiaries shall have
any Indebtedness or preferred stock outstanding except for the Loans, the Senior
Debt and the Existing Indebtedness, which Existing Indebtedness shall not exceed
$10,500,000 in aggregate principal amount. All of the Existing Indebtedness
shall remain outstanding immediately after the transactions contemplated hereby
without any defaults or events of default existing thereunder or arising as a
result of the transactions contemplated hereby. None of the Existing
Indebtedness shall have been incurred in anticipation of the transactions
contemplated hereby.
3.13 Material Adverse Change, Etc Since December 31, 1997, nothing
shall have occurred (and none of the Lenders shall have become aware of any
facts or conditions not previously known) which the Required Lenders shall
determine (i) could reasonably be expected to have a material adverse effect on
the rights or remedies of the Lenders or on the ability of any Loan Party to
perform its obligations to the Lenders under this Agreement or any other Loan
Document, (ii) could reasonably be expected to have a material adverse effect on
the performance, business, assets, nature of assets, liabilities, operations,
properties, condition (financial or otherwise) or prospects of any Loan Party
and its Subsidiaries taken as a whole (after giving effect to the Transaction)
or (iii) reasonably indicates the inaccuracy in any material respect of the
information previously provided to any Lender in connection with its analysis of
the transactions contemplated hereby or reasonably indicates that the
information previously provided omitted to disclose any material information
necessary to make the statements contained therein not misleading.
3.14 Plans; Shareholders' Agreements; Management Agreements;
Employment Agreements; Collective Bargaining Agreements; Debt Agreements;
Affiliate Contracts; Tax Sharing Agreements and Material Contracts. On or prior
to the Funding Date, there shall have been delivered to any Lender who requests
<PAGE>
same in writing true and correct copies, certified as true and complete by an
appropriate officer of the Borrower of:
(i) all Plans (and for each Plan that is required to file an
annual report on Internal Revenue Service Form 5500-series, a copy of the
most recent such report (including, to the extent required, the related
financial and actuarial statements and opinions and other supporting
statements, certifications, schedules and information), and for each such
Plan that is a "single-employer plan," as defined in Section 4001(a)(15) of
ERISA, the most recently prepared actuarial valuation therefor) and any
other "employee benefit plans," as defined in Section 3(3) of ERISA, and
any other material agreements, plans or arrangements (other than health
insurance plans) involving the payment of $500,000 in any fiscal year of
the Borrower, with or for the benefit of current or former employees of the
Borrower or any of its Subsidiaries or any ERISA Affiliate (provided that
the foregoing shall apply in the case of any multiemployer plan, as defined
in 4001(a)(3) of ERISA, only to the extent that any document described
therein is in the possession of the Borrower or any Subsidiary of the
Borrower or any ERISA Affiliate or reasonably available thereto from the
sponsor or trustee of any such plan) (collectively, the "Employee Benefit
Plans");
(ii) all agreements entered into by the Borrower or any
Subsidiary of the Borrower governing the terms and relative rights of its
capital stock and any agreements entered into by shareholders relating to
any such entity with respect to their capital stock (collectively, the
"Shareholders' Agreements");
(iii) all collective bargaining agreements applying or relating
to any employee of the Borrower or any Subsidiary of the Borrower
(collectively, the "Collective Bargaining Agreements");
(iv) all agreements evidencing or relating to Indebtedness for
borrowed money of the Borrower or any Subsidiary of the Borrower whether or
not such agreement is to remain outstanding after giving effect to the
incurrence of Loans on the Funding Date (collectively, the "Debt
Agreements"), it being understood and agreed that equipment lease
agreements do not constitute agreements evidencing Indebtedness for
borrowed money for purposes of this clause (iv);
(v) all tax sharing, tax allocation and other similar agreements
entered into by the Borrower or any Subsidiary of the Borrower (other than
any such agreements entered into between or among the Borrower and any
Wholly-Owned Subsidiary) (collectively, the "Tax Sharing Agreements"); and
(vi) all contracts, agreements or understandings entered into
between the Borrower or any of its Subsidiaries on the one hand, and any of
its Affiliates, on the other hand (excluding employment agreements entered
into by the Borrower or any of its Subsidiaries in the ordinary course of
business) (collectively, the "Affiliate Contracts").
all of which Employee Benefit Plans, Shareholders' Agreements, Collective
Bargaining Agreements, Debt Agreements, Tax Sharing Agreements and Affiliate
Contracts shall be in form and substance satisfactory to the Required Lenders
and shall be in full force and effect on the Funding Date.
<PAGE>
3.15 Solvency Certificate; Insurance Analyses; Etc. On the Funding
Date, the Borrower shall cause to be delivered to each of the Lenders (i) a
solvency certificate from the acting chief financial officer of the Borrower
addressed to each of the Lenders and dated the Funding Date and in form and
substance satisfactory to the Required Lenders, setting forth the conclusion
that, after giving effect to the Transaction and the incurrence of all
financings contemplated hereby, the Borrower and its Subsidiaries (on a
consolidated basis), are not insolvent and will not be rendered insolvent by the
Indebtedness incurred in connection with the Transaction, will not be left with
unreasonably small capital with which to engage in their respective businesses
and will not have incurred debts beyond their ability to pay such debts as they
mature and become due, (ii) evidence of key-man life insurance for Albert W. Van
Ness, Jr. and William T. Brannan, complying with the requirements of Section
5.03, in scope, form and substance satisfactory to the Lenders and stating that
such insurance shall not be canceled or reissued without 30 days' prior written
notice by the insurer to the Lenders and (iii) the fully executed employment
agreement of Albert W. Van Ness Jr.
3.16 No Default; Representations and Warranties. At the time of the
incurrence of the Loans and also after giving effect thereto (i) there shall
exist no Default or Event of Default and (ii) all representations and warranties
contained herein or in the other Loan Documents shall be true and complete in
all material respects with the same effect as though such representations and
warranties had been made on the Funding Date, except to the extent that such
representations and warranties expressly relate to an earlier date.
3.17 Warrants. On the Funding Date, each Lender shall have received
the Warrants to be received by such Lender and the other Warrant Documents, in
each case duly executed by the Borrower pursuant to the Warrant Documents.
SECTION 4. Representations, Warranties and Agreements. In order to
induce the Lenders to enter into this Agreement and to make the Loans, the
Borrower makes the following representations, warranties and agreements as to
itself and its Subsidiaries on and as of the Funding Date, all of which
representations, warranties and agreements shall survive the execution and
delivery of this Agreement and the other Loan Documents:
4.01 Status. Each Loan Party and its Subsidiaries (i) is a duly
organized and validly existing corporation (or a limited liability company or
partnership, as applicable) in good standing under the laws of the jurisdiction
of its organization, (ii) has the power and authority to own its property and
assets and to transact the business in which it is engaged and presently
proposes to engage and (iii) is duly qualified and is authorized to do business
and is in good standing in each jurisdiction where the ownership, leasing or
operation of property or the conduct of its business requires such
qualifications except for failures to be so qualified which, in the aggregate,
could not reasonably be expected to have a material adverse effect on the
<PAGE>
performance, business, assets, nature of assets, liabilities, operations,
properties, condition (financial or otherwise) or prospects of such Loan Party
and its Subsidiaries taken as a whole.
4.02 Power and Authority. Each Loan Party and its Subsidiaries has the
power to execute, deliver and perform the terms and provisions of each of the
Documents to which it is party and has taken all necessary corporate action (or
limited liability company or partnership action if applicable) to authorize the
execution, delivery and performance by it of each of such Documents. Each Loan
Party and its Subsidiaries has duly executed and delivered each of the Documents
to which it is party, and each of such Documents constitutes its legal, valid
and binding obligation enforceable in accordance with its terms, except as the
enforceability thereof may be limited by bankruptcy, reorganization, moratorium
or similar laws relating to or limiting creditors' rights generally or by
general equitable principles (regardless of whether the issue of enforceability
is considered in a proceeding in equity or at law).
4.03 No Violation. Neither the execution, delivery or performance by
any Loan Party of the Documents to which it is a party, nor compliance by it
with the terms and provisions thereof, (i) will contravene any provision of any
applicable law, statute, rule or regulation or any order, writ, injunction or
decree of any court or governmental instrumentality applicable to it, (ii) will
conflict with or result in any breach of any of the terms, covenants, conditions
or provisions of, or constitute a default under, or result in the creation or
imposition of (or the obligation to create or impose) any Lien (except pursuant
to the Credit Documents) upon any of the property or assets of any Loan Party or
its Subsidiaries pursuant to the terms of any indenture, mortgage, deed of
trust, credit agreement or loan agreement, or any other material agreement,
contract or instrument to which any of them are a party or by which any of their
property or assets is bound or to which any of them may be subject or (iii) will
violate any provision of the Certificate of Incorporation or By-Laws (or similar
organizational documents) of any Loan Party or its Subsidiaries.
4.04 Governmental Approvals. No order, consent, approval, license,
authorization or validation of, or filing, recording or registration with
(except as have been obtained or made on or prior to the Funding Date and are in
full force and effect), or exemption by, any governmental or public body or
authority, or any subdivision thereof, is required to authorize, or is required
in connection with, (i) the execution, delivery and performance of any Document,
(ii) the legality, validity, binding effect or enforceability of any such
Document or (iii) the Transaction.
4.05 Financial Statements; Financial Condition; Undisclosed
Liabilities; Projections; Etc (a)(i) The financial statements of the Borrower
and its Subsidiaries delivered pursuant to Section 3.11, have been examined or
reviewed by the accountants referred to therein, who delivered unqualified
opinions in respect thereto and (ii) the pro forma (after giving effect to the
Transaction and the related financing thereof) consolidated balance sheet of the
Borrower as at the Funding Date, copies of all of which financial statements
referred to in the preceding clauses (i) and (ii) have heretofore been furnished
to each Lender, present fairly in all material respects the financial position
of the respective entities at the dates of said statements and the results of
operations for the period covered thereby (or, in the case of the pro forma
balance sheet, present a good faith estimate of the pro forma financial
condition of the Borrower and its Subsidiaries (after giving effect to the
Transaction) on a consolidated basis at the date thereof), subject, in the case
of the unaudited financial statements, to normal year-end audit adjustments and
the absence of footnotes. All such financial statements have been prepared in
accordance with generally accepted accounting principles and practices
consistently applied except to the extent provided in the notes to said
<PAGE>
financial statements and, in the case of the unaudited interim financial
statements, subject to normal year-end adjustments (all of which are of a
recurring nature and none of which, individually or in the aggregate, would be
material) and the absence of footnotes. Since December 31, 1997, there has been
no material adverse change in the performance, business, assets, nature of
assets, liabilities, operations, properties, condition (financial or otherwise)
or prospects of the Borrower and its Subsidiaries taken as a whole.
(b) On and as of the Funding Date, on a pro forma basis after giving
effect to the Transaction and all other transactions contemplated by the
Documents and to all Indebtedness (including, without limitation, the Loans)
being incurred in connection with the Transaction, and Liens created, and to be
created, by each Loan Party in connection therewith: (a) the sum of the assets
(including all contribution and subrogation rights and other intangible assets),
at a fair valuation, of each Loan Party will exceed its debts; (b) no Loan Party
has incurred or intends to, or believes that it will, incur debts beyond its
ability to pay such debts as such debts mature; and (c) each Loan Party will
have sufficient capital with which to conduct its business. For purposes of this
Section 4.05(b) "debt" means any liability on a claim, and "claim" means (i)
right to payment, whether or not such a right is reduced to judgment,
liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed,
undisputed, legal, equitable, secured, or unsecured or (ii) right to an
equitable remedy for breach of performance if such breach gives rise to a
payment, whether or not such right to an equitable remedy is reduced to
judgment, fixed, contingent, matured, unmatured, subordinated, disputed,
undisputed, secured or unsecured.
(c) Except as fully reflected in the financial statements and the
notes related thereto described in Section 4.05(a), there were as of the Funding
Date (and after giving effect to the Transaction and the other transactions
contemplated hereby and by the Documents) no liabilities or obligations with
respect to the Borrower or any of its Subsidiaries of any nature whatsoever
(whether absolute, accrued, contingent or otherwise and whether or not due)
which, either individually or in the aggregate, could reasonably be expected to
be material to the Borrower and its Subsidiaries taken as a whole. As of the
Funding Date, neither the Borrower nor any of its Subsidiaries knows of any
basis for the assertion against the Borrower or any of its Subsidiaries of any
liability or obligation of any nature whatsoever that is not fully reflected in
the financial statements and the notes related thereto described in Section
4.05(a) which, either individually or in the aggregate, could reasonably be
expected to be material to the Borrower and its Subsidiaries taken as a whole.
As of the Funding Date (and after giving effect to the Transaction), neither the
Borrower nor any of its Subsidiaries will have any outstanding Indebtedness or
preferred stock other than (i) the Loans, (ii) the Senior Debt and (iii) the
Existing Indebtedness.
(d) On and as of the Funding Date, the Projections have been prepared
in good faith by the Borrower and there are no statements or conclusions in any
of the Projections which are based upon or include information known to the
Borrower to be misleading or which fail to take into account material
information known to the Borrower regarding the matters reported therein. On the
<PAGE>
Funding Date, the Borrower believes that the Projections were reasonable and
attainable (although actual results may differ from the Projections and no
representation is made that the Projections will in fact be attained).
4.06 Litigation. There are no actions, suits or proceedings pending
or, to the best knowledge of the Borrower and its Subsidiaries, threatened (i)
with respect to any Document or the transactions contemplated thereby, or (ii)
that are likely to materially and adversely affect the performance, business,
assets, nature of assets, liabilities, operations, properties, condition
(financial or otherwise) or prospects of the Borrower and its Subsidiaries taken
as a whole.
4.07 True and Complete Disclosure. All factual information (taken as
a whole) heretofore or contemporaneously furnished by or on behalf of any of the
Loan Parties or their Subsidiaries in writing to any Lender for purposes of or
in connection with this Agreement, the other Loan Documents or any transaction
contemplated herein or therein is, and all other such factual information (taken
as a whole) hereafter furnished by or on behalf of any of the Loan Parties and
their Subsidiaries in writing to any Lender will be, true and accurate in all
material respects on the date as of which such information is dated or
certified. There is no fact known to the Borrower which is reasonably likely to
have a material adverse effect on the performance, business, assets, nature of
assets, liabilities, operations, properties, condition (financial or otherwise)
or prospects of the Borrower and its Subsidiaries taken as a whole, which has
not been disclosed herein or in the other Loan Documents or such other
documents, certificates and statements furnished to the Lenders for use in
connection with the transactions contemplated hereby.
4.08 Use of Proceeds; Margin Regulations. (a) All proceeds of the
Loans shall be used by the Borrower (i) to repay outstanding loans under the
Credit Agreement, (ii) to pay Transaction Fees and Expenses and (iii) for other
working capital and general corporate purposes (including the financing of
Permitted Acquisitions).
(b) No part of the proceeds of any Loan will be used to purchase or
carry any Margin Stock or to extend credit for the purpose of purchasing or
carrying any Margin Stock. Neither the making of any Loan nor the use of the
proceeds thereof will violate or be inconsistent with the provisions of
Regulation T, U or X of the Board of Governors of the Federal Reserve System.
4.09 Tax Returns and Payments. Each of the Loan Parties and each of
their Subsidiaries has filed or caused to be filed with the appropriate taxing
authority, all material returns, statements, forms and reports for taxes (the
"Returns") required to be filed by or with respect to the income, properties or
operations of such Loan Party or such Subsidiary. The Returns accurately reflect
in all material respects all liability for taxes of such Loan Party or such
Subsidiary as a whole for the periods covered thereby. Each of the Loan Parties
and each of their Subsidiaries has paid all material taxes payable by it which
have become due other than those contested in good faith and for which adequate
reserves have been established in accordance with generally accepted accounting
principles. There is no material action, suit, proceeding, investigation, audit,
or claim now pending or, to the best knowledge of any of the Loan Parties and
each of their Subsidiaries, threatened by any authority regarding any taxes
relating to any Loan Party or any of its Subsidiaries that is likely to
materially and adversely affect the performance, business, assets, nature of
assets, liabilities, operations, properties, conditions (financial or otherwise)
and prospects of the Borrower and its Subsidiaries taken as a whole. As of the
Funding Date, none of the Loan Parties or their Subsidiaries has entered into an
agreement or waiver or has been requested to enter into an agreement or waiver
extending any statute of limitations relating to the payment or collection of
taxes of any of the Loan Parties or their Subsidiaries, or is aware of any
circumstances that would cause the taxable years or other taxable periods of any
of the Loan Parties or their Subsidiaries not to be subject to the normally
applicable statute of limitations. None of the Loan Parties or their
<PAGE>
Subsidiaries has provided, with respect to themselves or property held by them,
any consent under Section 341 of the Code. None of the Loan Parties or their
Subsidiaries has incurred, or will incur, any material tax liability in
connection with the Transaction or any other transactions contemplated hereby
(it being understood that the representation contained in this sentence does not
cover any future tax liabilities of the Borrower or any of its Subsidiaries
arising as a result of the operation of their businesses in the ordinary course
of business).
4.10 Compliance with ERISA. Each Plan (and each related trust,
insurance contract or fund) is in substantial compliance with its terms and with
all applicable laws, including, without limitation, ERISA and the Code; each
Plan (and each related trust, if any) which is intended to be qualified under
Section 401(a) of the Code has received a determination letter from the Internal
Revenue Service to the effect that it meets the requirements of Sections 401(a)
and 501(a) of the Code; all contributions required to be made with respect to a
Plan have been timely made; neither the Borrower nor any Subsidiary of the
Borrower nor any ERISA Affiliate has incurred any material liability (including
any indirect, contingent or secondary liability) to or on account of a Plan
pursuant to Section 409, 502(i), 502(l) or 515, or Section 4975 of the Code or
expects to incur any such liability under any of the foregoing sections with
respect to any Plan; no condition exists which presents a material risk to the
Borrower or any Subsidiary of the Borrower or any ERISA Affiliate of incurring a
liability to or on account of a Plan pursuant to the foregoing provisions of
ERISA and the Code; no action, suit, proceeding, hearing, audit or investigation
with respect to the administration, operation or the investment of assets of any
Plan (other than routine claims for benefits) is pending, expected or
threatened; each group health plan (as defined in Section 607(1) of ERISA or
Section 4980B(g)(2) of the Code) which covers or has covered employees or former
employees of the Borrower, any Subsidiary of the Borrower or any ERISA Affiliate
has at all times been operated in compliance with the provisions of Part 6 of
subtitle B of Title I of ERISA and Section 4980B of the Code; no lien imposed
under the Code or ERISA on the assets of the Borrower or any Subsidiary of the
Borrower or any ERISA Affiliate exists or is likely to arise on account of any
Plan; and the Borrower and its Subsidiaries may cease contributions to or
terminate any employee benefit plan maintained by any of them without incurring
any material liability. Neither the Borrower nor any ERISA Affiliate has ever
contributed to a multiemployer plan (within the meaning of Section 3(37) or
4001(a)(iii) of ERISA), a Plan described in Title IV of ERISA or a Plan subject
to Section 302 of ERISA or Section 412 of the Code.
4.11 Representations and Warranties in Documents. All representations
and warranties set forth in the Loan Documents and their corresponding annexes,
<PAGE>
exhibits and schedules are true in all material respects at the time as of which
such representations and warranties were made and on the Funding Date.
4.12 Properties. All Real Property owned by the Borrower or any of its
Subsidiaries and all material Leasehold Properties leased by the Borrower or its
Subsidiaries, in each case as of the Funding Date, and the nature of the
interest therein, is correctly set forth in all material respects in Schedule
VI. Each of the Loan Parties and each of their Subsidiaries has good and
merchantable title to all properties owned by it (including all Real Property
reflected in Schedule VI and in the financial statements (including the
consolidated pro forma balance sheet) referred to in Section 4.05(a) except as
sold or otherwise disposed of since the dates of such financial statements in
the ordinary course of business or as permitted by Section 6.02), free and clear
of all Liens, other than (i) as referred to in such financial statements
(including said consolidated pro forma balance sheet) or in the notes thereto or
(ii) as otherwise permitted by Section 6.01.
4.13 Capitalization. On the Funding Date, after giving effect to the
Transaction, the authorized capital stock of the Borrower consists of (i)
30,000,000 shares of common stock, $0.001 par value per share (the "Borrower
Common Stock"), of which 6,637,517 shares are issued and outstanding, and (ii)
2,000,000 shares of preferred stock, $0.001 par value per share (the "Borrower
Preferred Stock"), none of which shares are issued and outstanding. All of such
outstanding shares have been duly and validly issued, are fully paid and
nonassessable and except as set forth on Schedule VIII and as provided for in
the Warrant Documents, there are no outstanding subscriptions, options,
warrants, rights, puts, calls, commitments, conversion rights, rights of
exchange, preemptive rights, rights of first refusal, rights of first offer,
plans or other agreements of any character providing for the purchase, issuance
or sale of any shares of Borrower Common Stock. None of the shares of Borrower
Common Stock has been issued in violation of the Securities Act or any other
federal, state, foreign or local law.
4.14 Subsidiaries. On the Funding Date, the corporations, limited
liability companies and partnerships listed on Schedule III are the only
Subsidiaries of the Borrower. Schedule III correctly sets forth, as of the
Funding Date, the percentage ownership (direct and indirect) of the Borrower in
each class of capital stock (or other equity interests) of such Subsidiaries and
also identifies the direct owner thereof.
4.15 Compliance with Statutes, Etc. Each of the Borrower and each of
its Subsidiaries is in compliance with all applicable statutes, regulations and
orders of, and all applicable restrictions imposed by, all governmental bodies,
domestic or foreign, in respect of the conduct of its business and the ownership
of its property, except with respect to each of the foregoing such noncompliance
as could not, individually or in the aggregate, reasonably be expected to have a
material adverse effect on the performance, business, assets, nature of assets,
liabilities, operations, properties, condition (financial or otherwise) or
prospects of the Borrower and its Subsidiaries taken as a whole.
4.16 Investment Company Act. Neither the Borrower nor any its
Subsidiaries is an "investment company" or a company "controlled" by an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.
<PAGE>
4.17 Public Utility Holding Company Act. Neither the Borrower nor
any of its Subsidiaries is a "holding company," or a "subsidiary company" of a
"holding company," or an "affiliate" of a "holding company" or of a "subsidiary
company" of a "holding company" within the meaning of the Public Utility Holding
Company Act of 1935, as amended.
4.18 Environmental Matters. (a) Each of the Borrower and each of its
Subsidiaries is in compliance with, in all respects, all applicable
Environmental Laws and the requirements of any permits issued under such
Environmental Laws except for such noncompliances which, in the aggregate, could
not reasonably be expected to have a material adverse effect on the performance,
business, assets, nature of assets, liabilities, operations, properties,
condition (financial or otherwise) or prospects of the Borrower and its
Subsidiaries taken as a whole. There are no past, pending or, to the best
knowledge of the Borrower, threatened material Environmental Claims against the
Borrower or any of its Subsidiaries or any Real Property currently owned or
operated by the Borrower or any of its Subsidiaries. There are no facts,
circumstances, conditions or occurrences concerning the business or operations
of the Borrower or any of its Subsidiaries or any Real Property owned or
operated at any time by the Borrower or any of its Subsidiaries or, to the
knowledge of the Borrower any property adjoining any such Real Property that
could reasonably be expected (i) to form the basis of an Environmental Claim
against the Borrower or any of its Subsidiaries or any Real Property owned or
operated by the Borrower or any of its Subsidiaries or (ii) to cause such Real
Property to be subject to any restrictions on the ownership, occupancy, use or
transferability of such Real Property under any Environmental Law except such
Environmental Claims and restrictions which individually or in the aggregate
could not reasonably be expected to have a material adverse effect on the
performance, business, assets, nature of assets, liabilities, operations,
properties, condition (financial or otherwise) or prospects of the Borrower and
its Subsidiaries taken as a whole.
(b) Neither the Borrower nor any of its Subsidiaries has, at any time,
generated, used, treated, stored, transported or released Hazardous Materials
on, to or from any Real Property at any time owned, leased or operated by the
Borrower or any of its Subsidiaries, except for such Hazardous Material of a
type and in a quantity used in the normal course of business of the Borrower or
its Subsidiaries, which Hazardous Material is being held, used, stored and
disposed of in compliance with applicable Environmental Laws.
4.19 Labor Relations. Neither the Borrower nor any of its Subsidiaries
is engaged in any unfair labor practice that could reasonably be expected to
have a material adverse effect on the Borrower and its Subsidiaries taken as a
whole. There is (i) no significant unfair labor practice complaint pending
against the Borrower or any of its Subsidiaries or, to the best knowledge of the
Borrower, threatened against any of them, before the National Labor Relations
Board, and no significant grievance or significant arbitration proceeding
arising out of or under any collective bargaining agreement is so pending
against the Borrower or any of its Subsidiaries or, to the best knowledge of the
Borrower, threatened against any of them and (ii) no significant strike, labor
dispute, slowdown or stoppage pending against the Borrower or any of its
Subsidiaries or, to the best knowledge of the Borrower, threatened against the
Borrower or any of its Subsidiaries.
<PAGE>
4.20 Patents, Licenses, Franchises and Formulas. (a) The Borrower,
together with its Subsidiaries, has a license to use or otherwise has the right
to use, free and clear of pending or threatened Liens, all the material patents,
patent applications, trademarks, service marks, trade names, trade secrets,
copyrights, proprietary information, computer programs, data bases, licenses,
franchises and formulas, or rights with respect to the foregoing (collectively,
"Intellectual Property"), and has obtained all licenses and other rights of
whatever nature, necessary for the present conduct of its business, without any
known conflict with the rights of others which, or the failure to obtain which,
as the case may be, could reasonably be expected to have a material adverse
effect on the performance, business, assets, nature of assets, liabilities,
operations, properties, condition (financial or otherwise) or prospects of the
Borrower and its Subsidiaries taken as a whole.
(b) Neither the Borrower nor any of its Subsidiaries has knowledge of
any claim by any third party contesting the validity, enforceability, use or
ownership of the Intellectual Property, or of any existing state of facts that
would support a claim that use by the Borrower or any of its Subsidiaries of any
such Intellectual Property has infringed or otherwise violated any Intellectual
Property right of any other Person and that to the best knowledge of the
Borrower and its Subsidiaries no claim is threatened except for such claims that
could not individually or in the aggregate reasonably be expected to have a
material adverse affect on the performance, business, assets, nature of assets,
liabilities, operations, properties, condition (financial or otherwise) or
prospects of the Borrower and its Subsidiaries taken as a whole.
4.21 Existing Indebtedness. Schedule V sets forth a true and complete
list of all Indebtedness (other than the Loans and the Senior Debt under the
Credit Agreement) of the Loan Parties and each of their Subsidiaries as of the
Funding Date after giving effect to the Transaction and the other transactions
contemplated hereby (the "Existing Indebtedness"), in each case showing the
aggregate principal amount there of and the name of the respective obligor and
any other entity which directly or indirectly guaranteed such debt. None of the
Existing Indebtedness was incurred in connection with, or in contemplation of,
the Transaction.
4.22 Restrictions on or Relating to Subsidiaries. There does not exist
any encumbrance or restriction on the ability of (i) any Loan Party or any
Subsidiary thereof to pay dividends or make any other distributions on its
capital stock or any other interest or participation in its profits, or to pay
any Indebtedness, (ii) any Loan Party or any Subsidiary thereof to make loans or
advances to another Loan Party or any Subsidiary thereof or (iii) any Loan Party
or any Subsidiary thereof to transfer any of its properties or assets to another
Loan Party or any Subsidiary thereof, except for such encumbrances or
restrictions existing under or by reason of (w) applicable law, (x) this
Agreement and the other Loan Documents, (y) customary provisions restricting
subletting or assignment of any lease governing a leasehold interest of any Loan
Party or any Subsidiary thereof, and (z) the Credit Documents.
4.23 The Transaction. All aspects of the Transaction have been
effected in accordance with the Documents and all applicable law. At the time of
consummation thereof, all consents and approvals of, and filings and
registrations with, and all other actions in respect of, all governmental
agencies, authorities or instrumentalities required in order to consummate the
Transaction shall have been obtained, given, filed or taken and are in full
force and effect (or effective judicial relief with respect thereto has been
<PAGE>
obtained). Additionally, at the time of consummation thereof, there does not
exist any judgment, order or injunction prohibiting or imposing material adverse
conditions upon the consummation of the Transaction, and there does not exist
any judgment, order or injunction prohibiting or imposing any material adverse
condition upon the Loans or the performance by any of the Loan Parties or their
Subsidiaries of their obligations under the Documents.
4.24 Material Contracts. All material written contracts and licenses
of the Borrower and its Subsidiaries in effect on the Funding Date, each of
which involve a sum in excess of $500,000 per annum, are listed on Schedule VII
hereto.
4.25 Year 2000 Reprogramming. All Information Systems and Equipment
are either Year 2000 Compliant, or any reprogramming, remediation, or any other
corrective action, including the internal testing of all such Information
Systems and Equipment, will be completed by December 31, 1999. Further, to the
extent that such reprogramming/remediation and testing action is required, the
cost thereof, as well as the cost of the reasonably foreseeable consequences of
failure to become Year 2000 Compliant, to the Borrower and its Subsidiaries
(including, without limitation, reprogramming errors and the failure of other
systems or equipment) could not reasonably be expected to (x) result in a
Default or an Event of Default or (y) have a material adverse effect on the
performance, business, assets, nature of assets, liabilities, operations,
properties, condition (financial or otherwise) or prospects of the Borrower and
its Subsidiaries taken as a whole.
4.26 Valid Issuance of Borrower Common Stock. The Borrower has duly
authorized and reserved a sufficient number of shares of Borrower Common Stock
for issuance upon the exercise of the Warrants without giving effect to any
additional shares of Borrower Common Stock which may be issued after giving
effect to antidilution adjustments to the Warrants after the Funding Date
pursuant to the Warrant Agreement. The Borrower Common Stock, when issued and
delivered by the Borrower pursuant to the Warrants, will be duly and validly
issued, fully paid and non-assessable securities of the Borrower free and clear
of all Liens, and no Person has any preemptive rights to subscribe for any
capital stock of the Borrower.
SECTION 5. Affirmative Covenants. The Borrower covenants and agrees
that on and after the Effective Date and until the Loans and Notes, together
with interest, and all other Obligations, are paid in full and for so long as
the Commitment is outstanding:
5.01 Information Covenants. The Borrower shall furnish to each
Lender:
(a) Monthly Reports. Within 30 days after the end of each fiscal month
the consolidated and consolidating balance sheets of the Borrower and its
Subsidiaries as at the end of such month and the related consolidated and
consolidating statements of earnings for such month and for the elapsed portion
of the fiscal year ended with the last day of such month, setting forth
comparative figures for the corresponding month and elapsed portion of such
<PAGE>
fiscal year for the prior fiscal year and comparable budgeted figures for such
period, all of which shall be certified by the chief financial officer or
controller of the Borrower, subject to normal year-end audit adjustments.
(b) Quarterly Financial Statements. On the earlier to occur of (x) the
date of the filing of the Borrower's Form 10-Q Report with the SEC for or (y)
the date occurring 50 days after the close of, each of the first three quarterly
accounting periods in each fiscal year of the Borrower, the consolidated and
consolidating balance sheets of the Borrower and its Subsidiaries as at the end
of such quarterly period and the related consolidated and consolidating
statements of earnings and stockholders' equity and statement of cash flows for
such quarter, in each case for such quarterly period and for the elapsed portion
of the fiscal year ended with the last day of such quarterly period, in each
case setting forth comparative figures for the related periods in the prior
fiscal year and comparable budgeted figures for such period, all of which shall
be certified by the chief financial officer or controller of the Borrower,
subject to normal year-end audit adjustments and shall be accompanied by a
management discussion and analysis of the results of operations and financial
condition with respect to such period.
(c) Annual Financial Statements. On the earlier to occur of (x) the
date of the filing of the Borrower's Form 10-K Report with the SEC for or (y)
the date occurring 105 days after the close of, each fiscal year of the
Borrower, the consolidated and consolidating balance sheets of the Borrower and
its Subsidiaries as at the end of such fiscal year and the related consolidated
and consolidating statements of earnings and stockholders' equity and statement
of cash flows for such fiscal year and setting forth comparative figures for the
preceding fiscal year and comparable budgeted figures for such period and
certified, (x) in the case of the consolidating statements by the chief
financial officer or controller of the Borrower and (y) in the case of the
consolidated financial statements of the Borrower and its Subsidiaries, by any
of the "big five" or other independent certified public accountants of
recognized national standing reasonably acceptable to the Required Lenders,
together with a signed opinion of such accounting firm (which opinion shall not
be qualified in any respect) stating that in the course of its regular audit of
the financial statements of the Borrower, which audit was conducted in
accordance with generally accepted auditing standards, such accounting firm
obtained no knowledge of any Default or Event of Default which has occurred and
is continuing or, if in the opinion of such accounting firm such a Default or
Event of Default has occurred and is continuing, a statement as to the nature
thereof and shall be accompanied by a management discussion and analysis of the
results of operations and financial condition with respect to such period.
(d) Management Letters. Promptly after the receipt thereof by the
Borrower or any Subsidiary of the Borrower, a copy of any "management letter"
received by the Borrower or such Subsidiary from its certified public
accountants.
(e) Budgets. As soon as available but in no event later than 90 days
after the first day of each fiscal year of the Borrower, a budget for the Loan
Parties in form customarily prepared by the Borrower (including budgeted
statements of earnings and sources and uses of cash, cash flow statements and
balance sheets) prepared by the Borrower for each calendar month of such fiscal
year and on an annual basis for the next succeeding fiscal year prepared in
reasonable detail with appropriate presentation and discussion of the principal
assumptions upon which such budgets are based, accompanied by the statement of
<PAGE>
the chief financial officer or controller of the Borrower to the effect that, to
the best of his or her knowledge, the budget is a reasonable estimate for the
periods covered thereby.
(f) Officers' Certificates. At the time of the delivery of the
financial statements provided for in Section 5.01(a), (b) and (c), a certificate
of the chief financial officer or controller, of the Borrower to the effect that
no Default or Event of Default has occurred and is continuing or, if any Default
or Event of Default has occurred and is continuing, specifying the nature and
extent thereof, which certificate, in the case of certificates delivered
pursuant to Section 5.01(b) or (c), shall set forth the calculations required to
establish whether the Borrower was in compliance with the provisions of Sections
6.02, 6.04 and 6.07 through 6.10, inclusive, at the end of such fiscal quarter
or year, as the case may be.
(g) Notice of Default or Litigation. Promptly, and in any event within
two Business Days after an officer of any of the Loan Parties or their
Subsidiaries obtains knowledge thereof, notice of (i) the occurrence of any
event which constitutes a Default or Event of Default, (ii) any litigation or
governmental investigation or proceeding pending (x) against any of the Loan
Parties or their Subsidiaries which could reasonably be expected to materially
and adversely affect the performance, business, assets, nature of assets,
liabilities, operations, properties, condition (financial or otherwise) or
prospects of the Borrower and its Subsidiaries taken as a whole or (y) with
respect to any Document, and (iii) any other event which could reasonably be
expected to materially and adversely affect the performance, business, assets,
nature of assets, liabilities, operations, properties, condition (financial or
otherwise) or prospects of the Borrower and its Subsidiaries taken as a whole.
(h) Other Reports and Filings. Promptly upon transmission thereof,
copies of any financial information, proxy materials and other information and
reports, if any, which any of the Loan Parties or their Subsidiaries (x) has
filed with the Securities and Exchange Commission or any successor thereto (the
"SEC") or (y) has delivered to holders of, or any agent or trustee with respect
to, Indebtedness (including the holders of any Senior Indebtedness) of such Loan
Party or such Subsidiary in its capacity as such a holder, agent, or trustee.
(i) Environmental Matters. Promptly upon, and in any event within five
Business Days after an officer of any of the Loan Parties or any of their
Subsidiaries obtains knowledge thereof, notice of any of the following
environmental matters: (i) any pending or threatened material Environmental
Claim against any of the Loan Parties, any of their Subsidiaries, any Real
Property owned or operated by any of the Loan Parties or any of their
Subsidiaries; (ii) any condition or occurrence on or arising from any Real
Property owned or operated at any time by any of the Loan Parties or any of
their Subsidiaries that (A) could reasonably be anticipated to result in a
material noncompliance by such Loan Party or Subsidiary with any applicable
Environmental Law, or (B) could reasonably be anticipated to form the basis of a
material Environmental Claim against such Loan Party or Subsidiary or any Real
Property owned or operated by such Loan Party or Subsidiary; (iii) any condition
or occurrence on any Real Property owned or operated by any of the Loan Parties,
any of their Subsidiaries or any property adjoining such Real Property that
could reasonably be anticipated to cause any of such Real Property owned or
leased by the Borrower or any of its Subsidiaries to be subject to any material
<PAGE>
restrictions on the ownership, occupancy, use or transferability of such Real
Property under any Environmental Law; and (iv) the taking of any removal or
remedial action in response to a material Release or material threatened Release
or the actual or alleged presence of any Hazardous Material on or from any Real
Property owned or operated at any time by any of the Loan Parties or any of
their Subsidiaries in each case as required by any Environmental Law or any
governmental or other administrative agency. All such notices shall describe in
reasonable detail the nature of the claim, investigation, condition, occurrence
or removal or remedial action and such Loan Party's, such Subsidiary's response
thereto. In addition, Borrower will provide the Lenders with copies of all
material non-privileged communications with any government or governmental
agency relating to Environmental Claims, all material non-privileged
communications with any person relating to material Environmental Claims, and
such detailed reports of any material Environmental Claim as may reasonably be
requested by the Required Lenders.
(j) Credit Agreement Notices. Promptly upon transmission thereof, a
copy of any notice of default furnished by the Borrower under Article VI of the
Credit Agreement simultaneously with the delivery thereof to the Bank.
(k) Other Information. From time to time, such other information or
documents (financial or otherwise) with respect to any Loan Party or its
Subsidiaries, as any Lender may reasonably request.
5.02 Books, Records and Inspections. The Borrower will, and will cause
each of its Subsidiaries to, keep proper books of record and account in which
full, true and correct entries, in conformity with United States generally
accepted accounting principles and all requirements of law, shall be made of all
dealings and transactions in relation to its business and activities. The
Borrower shall, and shall cause each of its Subsidiaries to, permit, upon
reasonable notice, officers and designated representatives of any Lender to
visit and inspect, under guidance of officers of the Borrower or such
Subsidiaries, any of the properties of the Borrower or its Subsidiaries, and to
examine the books of account of the Borrower or its Subsidiaries and discuss the
affairs, finances and accounts of the Borrower or its Subsidiaries with, and be
advised as to the same by, its and their officers, all at such reasonable times
and intervals and to such reasonable extent as such Lender may request.
5.03 Maintenance of Property, Insurance. Schedule II sets forth a true
and complete listing of all insurance maintained by the Borrower and each of its
Subsidiaries as of the Effective Date. The Borrower will, and will cause each of
its Subsidiaries to, (i) keep all material property useful and necessary in its
business in good working order and condition (ordinary wear and tear excepted),
(ii) maintain with financially sound and reputable insurance companies insurance
on all its property in at least such amounts and against at least such risks and
liabilities and with such deductibles or self-insured retentions as are
customary in the industry of the Borrower, (iii) maintain key-man life insurance
with a financially sound and reputable insurance company for each of Albert W.
Van Ness Jr. and William T. Brannan in an amount equal to at least $5,000,000
for each such individual for a period of at least five years from the Funding
Date and name the Bank and the Lenders hereunder on the Funding Date (or, if all
of such Lenders cease to be Lenders hereunder at any time after the Funding
<PAGE>
Date, at least one Lender hereunder) as the beneficiaries thereof and (iv)
furnish to each Lender, upon written request, full information as to the
insurance carried.
5.04 Corporate Franchises. The Borrower shall, and shall cause each of
its Subsidiaries to, do or cause to be done all things necessary to preserve and
keep in full force and effect its existence and its material rights, franchises
licenses and patents; provided, however, that nothing in this Section 5.04 shall
prevent the withdrawal of any such Person of its qualification as a foreign
corporation in any jurisdiction where such withdrawal could not reasonably be
expected to have a material adverse effect on the performance, business, assets,
nature of assets, liabilities, properties, operations, condition (financial or
otherwise) or prospects of the Borrower and its Subsidiaries taken as a whole.
5.05 Compliance with Statutes, Etc. The Borrower shall, and shall
cause each of its Subsidiaries to, comply with all applicable statutes,
regulations and orders of, and all applicable restrictions imposed by, all
governmental bodies, domestic or foreign, in respect of the conduct of its
business and the ownership of its property except such noncompliance as could
not, individually or in the aggregate, reasonably be expected to have a material
adverse effect on the performance, business, assets, nature of assets,
liabilities, operations, properties, condition (financial or otherwise) or
prospects of the Borrower and its Subsidiaries taken as a whole.
5.06 Compliance with Environmental Laws. The Borrower shall, and shall
cause each of its Subsidiaries to, comply, in all material respects, with all
Environmental Laws applicable to the ownership or use of all the Real Property,
and shall promptly pay, or cause its Subsidiaries to promptly pay all costs and
expenses incurred in such compliance, and will keep or cause to be kept the
Borrower's or its Subsidiaries' interest in all owned Real Properties free and
clear of any Liens imposed pursuant to such Environmental Laws imposed in
connection with their ownership or use. Neither the Borrower nor any of its
Subsidiaries will generate, use, treat, store, release or dispose of, or permit
the generation, use, treatment, storage, Release or disposal of Hazardous
Materials on any Real Property, or transport or permit the transportation of
Hazardous Materials to or from any Real Property, other than in the normal
course of business in compliance with applicable law. If required to do so under
any applicable directive or order of any governmental agency, the Borrower
agrees to undertake, and cause each of its Subsidiaries to undertake, any clean
up, removal, remedial or other action necessary to remove and clean up any
Hazardous Materials from any Real Property owned, leased or operated by the
Borrower or any of its Subsidiaries in accordance with, in all material
respects, such orders and directives of all governmental authorities, except to
the extent that the Borrower or such Subsidiary is contesting such order or
directive in good faith and by appropriate proceedings and for which adequate
reserves have been established to the extent required by GAAP; provided that it
will not constitute a breach of this Section 5.06 if a Person other than the
Borrower and its Subsidiaries takes such action on behalf of the Borrower and
its Subsidiaries.
5.07 ERISA. As soon as possible and, in any event, within ten (10)
days after the Borrower, any Subsidiary of the Borrower or any ERISA Affiliate
knows or has reason to know of the occurrence of any of the following, the
Borrower will deliver to each of the Lenders a certificate of the chief
financial officer of the Borrower setting forth the full details as to such
occurrence and the action, if any, that the Borrower, such Subsidiary or such
<PAGE>
ERISA Affiliate is required or proposes to take, together with any notices
required or proposed to be given to or filed by the Borrower, such Subsidiary,
the Plan Administrator or such ERISA Affiliate to or with the PBGC or any other
governmental agency, or a Plan participant and any notice received by the
Borrower, such Subsidiary or ERISA Affiliate from the PBGC or any other
government agency, or a Plan participant, the Plan administrator with respect
thereto: that a Reportable Event has occurred (except to the extent that the
Borrower has previously delivered to the Lenders a certificate and notices (if
any) concerning such event pursuant to the next clause hereof); that a
contributing sponsor (as defined in Section 4001(a)(13) of ERISA) of a Plan
subject to Title IV of ERISA is subject to the advance reporting requirement of
PBGC Regulation Section 4043.61 (without regard to subparagraph (b)(1) thereof),
and an event described in subsection .62, .63, .64, .65, .66, .67 or .68 of PBGC
Regulation Section 4043 is reasonably expected to occur with respect to such
Plan within the following 30 days; that an accumulated funding deficiency,
within the meaning of Section 412 of the Code or Section 302 of ERISA, has been
incurred or an application may be or has been made for a waiver or modification
of the minimum funding standard (including any required installment payments) or
an extension of any amortization period under Section 412 of the Code or Section
303 or 304 of ERISA with respect to a Plan; that any contribution required to be
made with respect to a Plan has not been timely made; that a Plan has been or
may be terminated, reorganized, partitioned or declared insolvent under Title IV
of ERISA; that a Plan has an Unfunded Current Liability; that proceedings may be
or have been instituted to terminate or appoint a trustee to administer a Plan
which is subject to Title IV of ERISA; that a proceeding has been instituted
pursuant to Section 515 of ERISA to collect a delinquent contribution to a Plan;
that the Borrower, any Subsidiary of the Borrower or any ERISA Affiliate will or
may incur any liability (including any indirect, contingent, or secondary
liability) to or on account of the termination of or withdrawal from a Plan
under Section 4062, 4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or with
respect to a Plan under Section 401(a)(29), 4971, 4975 or 4980 of the Code or
Section 409 or 502(i) or 502(l) of ERISA or with respect to a group health plan
(as defined in Section 607(l) of ERISA or Section 4980B(g)(2) of the Code) under
Section 4980B of the Code; or that the Borrower or any Subsidiary of the
Borrower may incur any material liability pursuant to any employee welfare
benefit plan (as defined in Section 3(l) of ERISA) that provides benefits to
retired employees or other former employees (other than as required by Section
601 of ERISA) or any Plan. The Borrower will deliver to each of the Lenders
copies of any records, documents or other information that must be furnished to
the PBGC with respect to any Plan pursuant to Section 4010 of ERISA. The
Borrower will also deliver to each of the Lenders a complete copy of the annual
report (on Internal Revenue Service Form 5500-series) of each Plan (including,
to the extent required, the related financial and actuarial statements and
opinions and other supporting statements, certifications, schedules and
information) required to be filed with the Internal Revenue Service. In addition
to any certificates or notices delivered to the Lenders pursuant to the first
sentence hereof, copies of annual reports and any records, documents or other
information required to be furnished to the PBGC or any other government agency,
and any material notices received by the Borrower, any Subsidiary of the
Borrower or any ERISA Affiliate with respect to any Plan shall be delivered to
the Lenders no later than ten (10) days after the date such annual report has
been filed with the Internal Revenue Service or such records, documents and/or
information has been furnished to the PBGC or any other government agency or
such notice has been received by the Borrower, the Subsidiary or the ERISA
Affiliate, as applicable.
<PAGE>
5.08 End of Fiscal Years; Fiscal Quarters. The Borrower will cause
its, and each of its Subsidiaries', fiscal years (unless any Foreign Subsidiary
is required to adopt a different fiscal year under applicable law) to end on
December 31 of each year and each of its, and each of its Subsidiaries', four
fiscal quarters to end on March 31, June 30, September 30 and December 31 of
each year.
5.09 Payment of Taxes. The Borrower shall, and shall cause each of its
Subsidiaries to, pay and discharge all taxes, assessments and governmental
charges or levies imposed upon it or upon its income or profits, or upon any
properties belonging to it, prior to the date on which penalties would otherwise
attach thereto, and all lawful claims which, if unpaid, might become a lien or
charge upon any properties of any of its Subsidiaries not otherwise permitted
under Section 6.01; provided, however, that neither the Borrower nor any of its
Subsidiaries shall be required to pay any such tax, assessment, charge, levy or
claim which is being contested in good faith and by proper proceedings if it has
maintained adequate reserves with respect thereto in accordance with generally
accepted accounting principles.
5.10 Use of Proceeds, Margin Regulations. (a) The Borrower shall use
all proceeds of the Loans as provided in Section 4.08(a).
(b) No part of the proceeds of any Loan will be used to purchase or
carry any Margin Stock or to extend credit for the purpose of purchasing or
carrying any Margin Stock. Neither the making of any Loan nor the use of the
proceeds thereof will violate or be inconsistent with the provisions of the
Regulation T, U or X of the Board of Governors of the Federal Reserve System.
5.11 Year 2000 Compliance. The Borrower will ensure that its
Information Systems and Equipment are at all times after December 31, 1999 Year
2000 Compliant, except insofar as the failure to do so could not reasonably be
expected to have a material adverse effect on the performance, business, assets,
nature of assets, liabilities, operations, properties, condition (financial or
otherwise) or prospects of the Borrower and its Subsidiaries taken as a whole,
and shall notify each Lender promptly upon detecting any material failure of the
Information Systems and Equipment to be Year 2000 Compliant. In addition, the
Borrower shall provide each Lender (x) to the extent that on June 30, 1999
senior management of the Borrower does not in its good faith reasonable judgment
believe that the Borrower and its Subsidiaries will be Year 2000 Compliant on
September 30, 1999, an "action plan" on June 30, 1999, setting forth the nature
of such non-compliance and the actions the Borrower and/or such Subsidiary
proposes to take to remedy such non-compliance, (y) to the extent that the
Borrower and its Subsidiaries are not Year 2000 Compliant on September 30, 1999
and the "action plan" referred to in preceding clause (x) was not required to be
delivered pursuant to said clause (x), an "action plan" as described in
preceding clause (x) on such date and (z) with such additional information about
its year 2000 computer readiness (including, without limitation, information as
to contingency plans, budgets and testing results) as such Lender shall
reasonably request.
5.12 Observation of Board of Directors. PCF may designate one
individual (the "Observer") to attend all meetings of the Board of Directors of
the Borrower (and any committees thereof) at the reasonable expense of the
Borrower. The Observer shall be entitled to receive all reports, presentations
<PAGE>
and materials, as if the Observer were a member of the Board of Directors, all
at the reasonable expense of the Borrower. The Borrower agrees to give the
Observer prior written notice of all meetings of the Board of Directors of the
Borrower promptly after the scheduling thereof and in any event no later than
five Business Days prior to such meeting, or if such meeting is scheduled less
than five Business Days in advance, on the date preceding the date for which
such meeting has been scheduled.
5.13 Permitted Acquisitions. (a) Subject to the provisions of this
Section 5.13 applicable thereto and the requirements contained in the definition
of Permitted Acquisition, the Borrower and its Subsidiaries may from time to
time after the Funding Date effect Permitted Acquisitions, so long as with
respect to each Permitted Acquisition:
(i) no Default or Event of Default or default or event of default
under the Credit Agreement (after giving effect to any waiver thereof
by the Bank) is in existence at the time of the consummation of such
Permitted Acquisition or would exist after giving effect thereto, and
all representations and warranties contained herein and in the other
Loan Documents shall be true and correct in all material respects with
the same effect as though such representations and warranties were
made on and as of the date of such Permitted Acquisition (both before
and after giving effect thereto);
(ii) the Borrower shall have given the Lenders at least 7 days
prior written notice of any such Permitted Acquisition (each such
notice, a "Permitted Acquisition Notice"), which notice shall (r)
contain the estimated date such Permitted Acquisition is scheduled to
be consummated, (s) to the extent then available, attach a true and
correct copy of the letter of intent, description of material terms or
similar agreement entered into or contemplated to be entered into by
the Borrower or one of its Subsidiaries and the seller in connection
with such Permitted Acquisition, (t) contain the estimated aggregate
purchase price of such Permitted Acquisition and the amount of related
costs and expenses and the intended method of financing thereof, (u)
contain the estimated amount of cash (including proceeds of loans
under the Credit Agreement) required to effect such Permitted
Acquisition, (v) contain a description of any Permitted Earn-Out Debt
or Permitted Seller Notes to be incurred by the Borrower in connection
with such Permitted Acquisition and the maximum potential liability of
the Borrower with respect thereto, (w) contain a description of the
Permitted Equity Issuances to be effected by the Borrower in
connection with such Permitted Acquisition and (x) state the aggregate
amount of the Capitalized Lease Obligations and other Indebtedness to
be assumed by the Borrower and its Subsidiaries in connection with
such Permitted Acquisition;
(iii) the Borrower shall have given the Lenders such other
information related to the Person or business, division or product
line being acquired and the Permitted Acquisition as any Lender shall
reasonably request, including, without limitation, due diligence
materials, organizational documents, good standing certificates,
governmental approvals, consents and expert reports prepared by such
accounting, environmental and/or other experts as the Required Lenders
shall reasonably request;
<PAGE>
(iv) the Lenders shall have received (I) within thirty days after
the consummation of such Permitted Acquisition, a copy of the executed
purchase agreement and all related agreements, schedules and exhibits
with respect to such Permitted Acquisition and (II) on the date of the
consummation of such Permitted Acquisition, a certification from the
Borrower as to the purchase price for the respective Permitted
Acquisition and the estimated amount of all related costs, fees and
expenses and that, except as described in the Permitted Acquisition
Notice therefor, there are no other amounts or types of consideration
(including amounts payable under non-competition and/or consulting
agreements) which will be payable in connection with the respective
Permitted Acquisition;
(v) the Borrower in good faith believes, based on calculations
made by the Borrower, on a Pro Forma Basis (as if the Calculation
Period were the one-year period following the date of the consummation
of the respective Permitted Acquisition) that the financial covenants
contained in Sections 6.07 through 6.09, inclusive, and the financial
covenants contained in the Credit Agreement (unless waived by the
Bank), will continue to be met for the one-year period following the
date of the consummation of the respective Permitted Acquisition;
(vi) calculations are made by the Borrower of the Consolidated
EBITDA of the Person or business, division or product line being
acquired pursuant to the respective Permitted Acquisition (determined
in accordance with the definition of Consolidated EBITDA contained
herein, but treating references therein and in any other defined terms
used in determining Consolidated EBITDA to "the Borrower" to instead
be references to the Person or business, division or product line
being acquired pursuant to the respective Permitted Acquisition and
taking into account increases to Consolidated EBITDA which may arise
from elimination of excess owners compensation or elimination of any
other costs and expenses of the entity being acquired not expected to
be incurred following the date of such Permitted Acquisition to the
extent such increases are acceptable to the Required Lenders in their
reasonable discretion) (the "Acquired EBITDA"), and the amount thereof
shall exceed zero (x) for each of the last three fiscal years of such
Person (or the Person owning such business, division or product line)
ended prior to the date of the respective Permitted Acquisition (or
such lesser period of time as such Person has operated its business)
and (y) for the Calculation Period; provided, however, in the case of
calculations based on financial statements not audited by a "big-five"
accounting firm or other nationally recognized accounting firm
reasonably acceptable to the Required Lenders (any such firm, a
"Qualified Accounting Firm"), the Required Lenders shall be satisfied
in their sole discretion that the Acquired EBITDA of such Person or
business, division or product line being acquired pursuant to the
respective Permitted Acquisition exceeds zero for the Calculation
Period;
(vii) the proposed Permitted Acquisition will not be reasonably
likely to result in materially increased litigation, tort, collective
bargaining, tax, ERISA and environmental liabilities of the Borrower
or any its Subsidiaries;
<PAGE>
(viii) if the Person or business, division or product line being
acquired pursuant to the respective Permitted Acquisition is involved
in a proceeding under the Bankruptcy Code, the bankruptcy court with
jurisdiction thereover shall have approved such Permitted Acquisition
pursuant to a final order satisfactory in form and substance to the
Lenders in their sole discretion;
(ix) recalculations are made by the Borrower of compliance with
the covenants contained in Sections 6.07 through 6.09, inclusive, for
the Calculation Period, on a Pro Forma Basis, and such recalculations
shall show that all such covenants would have been complied with
throughout the Calculation Period on a Pro Forma Basis;
(x) with respect to each Permitted Acquisition, the sum (without
duplication) of (such sum, with respect to any Permitted Acquisition,
the "Permitted Acquisition Purchase Price") (I) the amount of cash
paid as consideration in connection with any such Permitted
Acquisition, (II) the fair market value of the Borrower Common Stock
(based on (x) the closing trading price of the Borrower Common Stock
on the date of such Permitted Acquisition on the primary stock
exchange or other market on which such stock is listed or traded or
(y) if the Borrower Common Stock is not listed on an exchange or other
market, the good faith determination of the Required Lenders and the
Borrower) issued as consideration in such Permitted Acquisition, (III)
the aggregate amount (determined by using the face amount of the debt
or the amount payable at maturity, whichever is greater) of Permitted
Seller Notes issued by the Borrower in connection with such Permitted
Acquisition, (IV) the maximum potential liability of the Borrower with
respect to all Permitted Earn-Out Debt issued in connection with such
Permitted Acquisition (but only to the extent such Permitted Earn-Out
Debt would appear on the balance sheet of the Borrower or its
Subsidiaries under generally accepted accounting principles), (V) the
amount of Capitalized Lease Obligations and other Indebtedness assumed
in connection with such Permitted Acquisition, (VI) the fair market
value of the Permitted Borrower Warrants (determined (x) in the case
of Permitted Borrower Warrants with an exercise price greater than the
closing trading price of the Borrower Common Stock on the stock
exchange or other market on which such Borrower Common Stock is listed
or traded on the date of such Permitted Acquisition (or if the
Borrower Common Stock is not listed or traded on a stock exchange or
other market, the fair market value of the Borrower Common Stock on
such date as determined in good faith by the Required Lenders and the
Borrower), in good faith by the Required Lenders and the Borrower
using the Black-Scholes valuation methodology and (y) in the case of
Permitted Borrower Warrants with an exercise price less than or equal
to the closing trading price of the Borrower Common Stock on the stock
exchange or other market on which such Borrower Common Stock is listed
or traded on the date of such Permitted Acquisition (or if the
Borrower Common Stock is not listed or traded on a stock exchange or
other market, the fair market value of such Borrower Common Stock on
such date as determined in good faith by the Required Lenders and the
Borrower), using the closing trading price (or fair market value as so
determined, as the case may be) of the Borrower Common Stock into
which such Permitted Borrower Warrants are convertible on the date of
such Permitted Acquisition less the applicable exercise price of such
Permitted Borrower Warrants) issued as consideration in connection
with such Permitted Acquisition and (VII) the fair market value of the
<PAGE>
Permitted Borrower Options (determined (x) in the case of Permitted
Borrower Options with an exercise price greater than the closing
trading price of the Borrower Common Stock on the stock exchange or
other market on which such Borrower Common Stock is listed or traded
on the date of such Permitted Acquisition (or if the Borrower Common
Stock is not listed or traded on a stock exchange or other market, the
fair market value of the Borrower Common Stock on such date as
determined in good faith by the Required Lenders and the Borrower), in
good faith by the Required Lenders and the Borrower using the
Black-Scholes valuation methodology and (y) in the case of Permitted
Borrower Options with an exercise price less than or equal to the
closing trading price of the Borrower Common Stock on the stock
exchange or other market on which such Borrower Common Stock is listed
or traded on the date of such Permitted Acquisition (or if the
Borrower Common Stock is not listed or traded on a stock exchange or
other market, the fair market value of such Borrower Common Stock on
such date as determined in good faith by the Required Lenders and the
Borrower), using the closing trading price (or fair market value as so
determined, as the case may be) of the Borrower Common Stock into
which such Permitted Borrower Options are exercisable on the date of
such Permitted Acquisition less the applicable exercise price of such
Permitted Borrower Options) issued as consideration in connection with
such Permitted Acquisition, shall not exceed the lesser of (x)
$7,000,000 and (y) the product of (I) the Acquired EBITDA of the
Person or business, division or product line being acquired pursuant
to the respective Permitted Acquisition for the Calculation Period
multiplied by (II) 7; provided that the cash consideration referred to
in clause (I) above shall not exceed 70% of the Permitted Acquisition
Purchase Price payable pursuant to such Permitted Acquisition;
(xi) with respect to each Permitted Acquisition, the
consideration paid therefor and Indebtedness incurred, issued and/or
assumed in connection therewith shall consist solely of those items
described in subclauses (u) through (x), inclusive, of preceding
clause (ii) as set forth in the Permitted Acquisition Notice delivered
therefor;
(xii) prior to the consummation of the respective Permitted
Acquisition, the Lenders shall have received (w) detailed consolidated
projections, certified by the chief financial officer or controller of
the Borrower, for the Borrower and its Subsidiaries, which include the
projected results of the Borrower, after giving effect to the
respective Permitted Acquisition, for the period commencing on the
first day of the fiscal quarter of the Borrower then most recently
ended and ending on the third anniversary of such first, (x) a pro
forma (after giving effect to the Permitted Acquisition and the
related financing thereof) consolidated balance sheet of the Borrower
as at the first day of the fiscal quarter of the Borrower then last
ended, which pro forma consolidated balance sheet shall present a good
faith estimate of the pro forma financial condition of the Borrower
and its Subsidiaries (after giving effect to the Permitted Acquisition
and the financing thereof) on a consolidated basis at the first day of
the fiscal quarter of the Borrower then most recently ended and
otherwise be in form and substance satisfactory to the Lenders, (y)
the "action plan" proposed to be undertaken upon the consummation of
the respective Permitted Acquisition and (z) copies of the financial
<PAGE>
statements of the Person being acquired pursuant to the respective
Permitted Acquisition for the last three fiscal years of such Person,
which shall, in the case of the financial statements for the most
recent fiscal year of such Person, be audited; and
(xiii) prior to the consummation of the respective Permitted
Acquisition, the Borrower shall furnish to each Lender an officers'
certificate executed by the chief financial officer or controller of
the Borrower, certifying as to compliance with the requirements of the
applicable preceding clauses (i) through (xii), containing the
calculations required by preceding clauses (v), (vi), (ix) and (x) and
attaching the projections and pro forma consolidated balance sheet
required by preceding clause (xii);
provided that in the event that a proposed Permitted Acquisition is not
permitted to be consummated by virtue of the application of the foregoing
clauses (vi), (ix) and (x) and the Bank shall have waived in writing the
requirements of a "Permitted Acquisition" under, and as defined, the Credit
Agreement with respect to such Permitted Acquisition, deemed such proposed
Permitted Acquisition to be a "Permitted Acquisition" or otherwise consented to
such acquisition for all purposes of the Credit Agreement, then, notwithstanding
the foregoing provisions of this Section 5.13(a), such proposed Permitted
Acquisition shall be permitted pursuant to this Section 5.13(a), so long as (w)
the requirements of all clauses above other than clauses (vi), (ix), (x) and
(xiii) shall have been satisfied, (x) the Permitted Acquisition Purchase Price
of such Permitted Acquisition, when combined with the aggregate Permitted
Acquisition Purchase Price for all other Permitted Acquisitions effected during
the then current fiscal year of the Borrower in reliance upon this proviso,
shall not exceed $5,000,000, (y) the Permitted Acquisition Purchase Price of
such Permitted Acquisition, when combined with the aggregate Permitted
Acquisition Purchase Price of all other Permitted Acquisitions effected after
the Funding Date in reliance on this proviso, shall not exceed $15,000,000 and
(z) prior to the consummation of such Permitted Acquisition, the Borrower shall
furnish to each Lender an officer's certificate executed by the chief financial
officer or controller of the Borrower certifying as to compliance with the
requirements of preceding clauses (w), (x) and (y), containing the calculations
required by preceding clauses (x) and (y) and clause (v) above and attaching the
projections and pro forma consolidated balance sheet required by clause (xii)
above. The consummation of each Permitted Acquisition shall be deemed to be a
representation and warranty by the Borrower that all conditions thereto have
been satisfied and that same is permitted in accordance with the terms of this
Agreement, which representation and warranty shall be deemed to be a
representation and warranty for all purposes hereunder, including, without
limitation, Section 7.
(b) At the time of each Permitted Acquisition involving the creation
or acquisition of a Subsidiary, not less than 100% of the capital stock or other
equity interests of such Subsidiary shall be directly owned by the Borrower or a
Subordinated Guarantor.
(c) The Borrower shall cause each Subsidiary which is formed to
effect, or is acquired pursuant to, a Permitted Acquisition after the Effective
Date to execute and deliver, prior to the date of or concurrently with the
consummation of the respective Permitted Acquisition, a counterpart of the
Subordinated Guaranty or a substantially similar guaranty in form and substance
satisfactory to the Required Lenders.
<PAGE>
5.14 Intellectual Property Rights. The Borrower will, and will cause
each of its Subsidiaries to, maintain in full force and effect all Intellectual
Property rights necessary or material to the business of the Borrower or any
Subsidiary of the Borrower and take no action (including, without limitation,
the licensing of Intellectual Property), or fail to take an action, as the case
may be, in connection with such Intellectual Property rights which could
reasonably be expected to result in a material adverse effect on the
performance, business, assets, nature of assets, liabilities, properties,
operations, condition (financial or otherwise) or prospects of the Borrower and
its Subsidiaries taken as a whole. The Borrower shall, and shall cause each of
its Subsidiaries to, diligently prosecute all pending applications filed in
connection with seeking the Intellectual Property rights and take all other
reasonable actions necessary for the protection and maintenance of the
Intellectual Property rights necessary or appropriate to the business of the
Borrower or any Subsidiary of the Borrower at all times from and after the
Funding Date other than any such actions the failure of which, in the aggregate,
could not reasonably be expected to have a material adverse effect on the
performance, business, assets, nature of assets, liabilities, operations,
properties, condition (financial or otherwise) or prospects of the Borrower and
its Subsidiaries taken as a whole.
5.15 Post-Closing Obligations. Within 90 days following the Funding
Date, the Borrower shall either cause each of Clayton/National Courier Systems,
Inc. and National Express Company, Inc. to be reinstated as validly existing
corporations under Missouri law or transfer all of the assets of such
corporations to an existing or newly-formed Subsidiary which is or becomes a
Subordinated Guarantor.
SECTION 6. Negative Covenants. The Borrower hereby covenants that on
and after the Effective Date and until the Loans and Notes, together with
interest and all other Obligations incurred hereunder and thereunder, have been
paid in full and the Commitment is no longer outstanding:
6.01 Liens. The Borrower shall not, and shall not permit any of its
Subsidiaries to, create, incur, assume or suffer to exist any Lien upon or with
respect to any of their respective property or assets (real or personal,
tangible or intangible), whether now owned or hereafter acquired, or sell any
such property or assets subject to an understanding or agreement, contingent or
otherwise, to repurchase such property or assets (including sales of accounts
receivable with recourse to the Borrower or any of its Subsidiaries), or assign
any right to receive income or permit the filing of any financing statement
under the UCC or any other similar notice of Lien under any similar recording or
notice statute with respect to property or assets of the Borrower or any of its
Subsidiaries; provided, however, that the provisions of this Section 6.01 shall
not prevent the Borrower or any of its Subsidiaries from creating, incurring,
assuming or permitting the existence of the following (Liens described below are
herein referred to as "Permitted Liens"):
(i) inchoate Liens with respect to the Borrower or any Subsidiary
of the Borrower for taxes not yet due or Liens for taxes being
contested in good faith and by appropriate proceedings for which
adequate reserves have been established in accordance with generally
accepted accounting principles;
<PAGE>
(ii) Liens in respect of property or assets of the Borrower or
any Subsidiary of the Borrower imposed by law, which were incurred in
the ordinary course of business and do not secure Indebtedness for
borrowed money, such as carriers', warehousemen's, materialmen's,
mechanics' and landlords' liens and other similar Liens arising in the
ordinary course of business, and (x) which do not in the aggregate
materially detract from the value of the Borrower's or any of its
Subsidiaries' property or assets or materially impair the use thereof
in the operation of the business of the Borrower or the Subsidiaries
of the Borrower or (y) which are being contested in good faith by
appropriate proceedings, which proceedings have the effect of
preventing the forfeiture or sale of the property or assets subject to
any such Lien;
(iii) Liens of the Borrower or the Subsidiaries in existence on
the Effective Date which are listed, and the property subject thereto
described, on Schedule IV, together with any refinancing, renewal or
extension thereof, provided that the outstanding principal balance of
such Indebtedness secured thereby is not increased above the amount
outstanding immediately prior to such refinancing, renewal or
extension and the Liens do not extend to any additional assets;
(iv) Liens securing Senior Indebtedness and Liens permitted by
the Credit Agreement (as in effect on the date hereof);
(v) easements, rights-of-way, restrictions, encroachments and
other similar charges or encumbrances on the property of the Borrower
or any Subsidiary of the Borrower arising in the ordinary course of
business and not materially interfering with the conduct of the
business of the Borrower or any of its Subsidiaries;
(vi) Liens on property of the Borrower and its Subsidiaries
subject to, and securing only, Capitalized Lease Obligations to the
extent such Capitalized Lease Obligations are permitted by Section
6.04(v), provided that such Liens only serve to secure the payment of
Indebtedness arising under such Capitalized Lease Obligation and the
Lien encumbering the asset giving rise to the Capitalized Lease
Obligation does not encumber any other asset of the Borrower or any of
its Subsidiaries;
(vii) Liens (other than any Lien imposed by ERISA) on property of
the Borrower or any Subsidiary of the Borrower incurred or deposits
made in the ordinary course of business in connection with (x)
workers' compensation, unemployment insurance and other types of
social security or (y) to secure the performance of tenders, statutory
obligations, surety and appeal bonds, bids, leases, government
contracts, trade contracts, performance and return-of-money bonds and
other similar obligations (exclusive of obligations for the payment of
borrowed money);
(viii) Liens placed upon equipment or machinery used in the
ordinary course of business of the Borrower or any Subsidiary of the
Borrower within 60 days following the time of purchase thereof by the
Borrower or any of its Subsidiaries and improvements and accretions
thereto to secure Indebtedness incurred to pay all or a portion of the
purchase price thereof or any Indebtedness incurred to refinance such
Indebtedness, provided that (x) the aggregate principal amount of all
<PAGE>
Indebtedness secured by Liens permitted by this clause (viii) incurred
in any fiscal year of the Borrower does not exceed the aggregate
amount of Indebtedness permitted under Section 6.04(v) with respect to
all machinery and equipment and (y) in all events, the Lien
encumbering the equipment or machinery so acquired and improvements
and accretions thereto does not encumber any other asset of the
Borrower or any of its Subsidiaries;
(ix) Liens arising from precautionary UCC-1 financing statement
filings regarding operating leases entered into by the Borrower or any
Subsidiary of the Borrower in the ordinary course of business;
(x) inchoate Liens (where there has been no execution or levy and
no pledge or delivery of collateral) arising from and out of judgments
or decrees in existence at such time not constituting an Event of
Default;
(xi) assignments of immaterial amounts of overdue accounts
receivable for collection in the ordinary course of business; and
(xii) Liens on property or assets acquired pursuant to a
Permitted Acquisition, or on property or assets of a Subsidiary of the
Borrower in existence at the time such Subsidiary is acquired pursuant
to a Permitted Acquisition, provided that (i) such Liens are not
incurred in connection with, or in contemplation or anticipation of,
such Permitted Acquisition and do not attach to any other asset of the
Borrower or any of its Subsidiaries and (ii) any Indebtedness that is
secured by such Liens is permitted to exist under Section 6.04(iii).
6.02 Consolidation, Merger, Purchase or Sale of Assets, Etc. The
Borrower shall not, and shall not permit any of its Subsidiaries to, (i) wind
up, liquidate or dissolve its affairs, (ii) enter into any transaction of merger
or consolidation, (iii) convey, sell, lease or otherwise dispose of (or agree to
do any of the foregoing at any future time) all or any part of its property or
assets, including without limitation assets consisting of capital stock of a
Subsidiary thereof or stock equivalents, (iv) enter into any partnerships, joint
ventures or sale-leaseback transactions, or (v) purchase, lease or otherwise
acquire (in one or a series of related transactions) any part of the property or
assets of any Person, or make or maintain any loan, extension of credit or
advance to any Person, or own or purchase or otherwise acquire any capital stock
or equity interests or obligations of or other securities of any Person, or
otherwise make any other investment or capital contribution in any Person,
except that the following shall be permitted:
(A) purchases or other acquisitions by the Borrower and its
Subsidiaries of inventory, materials and equipment in the ordinary course
of business;
(B) Capital Expenditures permitted pursuant to Section 6.10;
(C) so long as there shall exist no Default or Event of Default,
the Borrower and its Subsidiaries may sell assets so long as the amount of
Net Sale Proceeds from such sales in any one fiscal year does not exceed
<PAGE>
$500,000 in the aggregate and such proceeds are used, or irrevocably
committed to be used, to purchase, within 180 days from the date of sale,
assets to be used in the business of the Borrower or its Subsidiaries;
(D) the Borrower and its Subsidiaries may lease (as lessee) real
or personal property in the ordinary course of business so long as such
leases are not Capitalized Lease Obligations;
(E) the Borrower and its Subsidiaries may make and maintain
investments (1) consisting of receivables owing to any of them (including,
without limitation, through the indirect acquisition thereof through a
security interest), if created or acquired in the ordinary course of
business and payable or dischargeable in accordance with customary terms,
(2) in cash and Cash Equivalents, (3) in Interest Rate Contracts entered
into pursuant to the requirements of the Credit Agreement (as in effect on
the date hereof), (4) consisting of loans and advances in the ordinary
course of business and consistent with past practices to their respective
employees for moving, travel and emergency expenses and other similar
expenses, so long as the aggregate principal amount thereof at any one time
outstanding (determined without regard to any write-downs or write-offs of
such loans and advances) shall not exceed $100,000, (5) consisting of
purchases or acquisitions of securities of trade creditors or customers
received in any plan of reorganization or similar arrangement on the
bankruptcy or insolvency of such trade creditors or customers or received
in settlement of delinquent obligations of, and other disputes with,
suppliers arising in the ordinary course of business, (6) permitted
pursuant to the Credit Agreement (as in effect on the date hereof) and (7)
in addition to those permitted pursuant to clauses (1) through (6) above,
so long as the aggregate amount of such investments (determined without
regard to any write-downs or write-offs thereof) does not exceed $250,000;
(F) the Borrower and its Subsidiaries may sell inventory in the
ordinary course of business;
(G) the Loan Parties may consummate the Transaction in accordance
with the Documents;
(H) Dividends may be paid to the extent permitted by Section
6.03;
(I) each of the Borrower and its Subsidiaries may enter into
licensing arrangements with respect to Intellectual Property, in accordance
with customary past practice of the Borrower or such Subsidiary (as the
case may be);
(J) any Permitted Acquisition expressly permitted by Section 5.13
hereof; and
(K) Subsidiaries of the Borrower that are Subordinated Guarantors
may effect asset swaps between and among each other in the ordinary course
of business.
6.03 Dividends. The Borrower will not, nor will the Borrower permit
any of its Subsidiaries to, declare or pay any Dividends with respect to the
Borrower or any of its Subsidiaries, except that (i) any Subsidiary of the
Borrower may pay Dividends to the Borrower or any Wholly-Owned Domestic
<PAGE>
Subsidiary of the Borrower and (ii) so long as no Default or Event of Default is
then in existence or would result from the payment of the respective Dividend,
the Borrower may pay cash Dividends not to exceed (x) $500,000 per annum in the
form of one or more purchases of Warrants from Paribas or any of its Affiliates
pursuant to its right of first offer under Section 14(d) of the Warrant
Agreement and (y) $250,000 per annum in the form of one or more purchases of
Warrants from any Exeter Entity or any of its Affiliates pursuant to its right
of first offer under Section 14(d) of the Warrant Agreement.
6.04 Indebtedness. The Borrower shall not, nor shall it permit any of
its Subsidiaries to, contract, create, incur, assume or suffer to exist any
Indebtedness, except:
(i) Indebtedness incurred pursuant to this Agreement and the other
Loan Documents;
(ii) Senior Debt;
(iii) Indebtedness of a Subsidiary acquired pursuant to a Permitted
Acquisition (or Indebtedness assumed by the Borrower or any Wholly-Owned
Subsidiary of the Borrower pursuant to a Permitted Acquisition as a result
of a merger or consolidation or the acquisition of an asset securing such
Indebtedness), so long as such Indebtedness was not incurred in connection
with, or in anticipation or contemplation of, such Permitted Acquisition
and guaranties of any such Indebtedness;
(iv) Indebtedness of the Borrower and its Subsidiaries as set forth on
Schedule V, including any refinancing, renewal or extension (other than
Indebtedness) thereof so long as the amount of Indebtedness is not
increased;
(v) Indebtedness of the Borrower and its Subsidiaries evidenced by
Capitalized Lease Obligations and Indebtedness secured by Liens permitted
by Section 6.01(viii); provided that the aggregate amount of Indebtedness
evidenced by Capitalized Lease Obligations under all Capital Leases entered
into in any fiscal year of the Borrower after the Funding Date, when
aggregated with the amount of Indebtedness secured by Liens permitted by
Section 6.01(viii) incurred in such fiscal year of the Borrower, shall not
exceed $3,500,000;
(vi) the Borrower and its Wholly-Owned Subsidiaries may make
intercompany loans to any Wholly-Owned Domestic Subsidiary of the Borrower
and any Wholly-Owned Subsidiary may make intercompany loans to the
Borrower;
(vii) Indebtedness of the Borrower evidenced by Permitted Seller Notes
and Permitted Earn-Out Debt issued in connection with Permitted
Acquisitions in accordance with the requirements of Section 5.13;
(viii) additional Indebtedness (which may be, but shall not be
required to be, incurred under the Credit Agreement) in an aggregate
principal amount incurred at any time after the Funding Date not to exceed
the Available Debt Basket Amount then in effect, so long as (x) no Default
or Event of Default exists at the time of the incurrence thereof (and
<PAGE>
immediately after giving effect thereto) and (y) at the time of the
incurrence thereof, the Borrower shall have furnished to each Lender an
officer's certificate, executed by the chief financial officer of the
Borrower (each, a "Debt Incurrence Eligibility Certificate"), (I) setting
forth the Reported Consolidated EBITDA of the Borrower for the four fiscal
quarters (taken as one accounting period) then most recently ended and the
Available Basket Amount to which the Borrower is then entitled under the
definition thereof and the amount of the Available Basket Amount that had
previously been utilized and (II) certifying as to compliance with
preceding clause (x); and
(ix) additional Indebtedness (which shall be required to be incurred
pursuant to the Credit Agreement) in an aggregate principal amount incurred
at any time after the Funding Date not to exceed $5,000,000, so long as the
Borrower certifies that no part of the proceeds of such Indebtedness are
utilized by the Borrower or any of its Subsidiaries to purchase or
otherwise acquire all or substantially all of the assets of, or any capital
stock or other equity interests of, any Person or to make Capital
Expenditures.
6.05 Transactions with Affiliates. The Borrower will not, and will not
permit any of its Subsidiaries to, enter into any transaction or series of
related transactions, whether or not in the ordinary course of business, with
any Affiliate of the Borrower or any of its Subsidiaries unless (a) such
transaction or series of related transactions is in writing and on terms that
are no less favorable to the Borrower or such Subsidiary, as the case may be,
than those that would be available in a comparable transaction in arm's-length
dealings with an unrelated third party, (b) with respect to any transaction or
series of related transactions involving aggregate value in excess of $100,000,
the Borrower delivers an officers' certificate to each of the Lenders certifying
that such transaction or series of related transactions complies with clause (a)
above and such transaction or series of related transactions has been approved
by a majority of the board of directors of the Borrower, (c) with respect to any
transaction or series of related transactions involving aggregate payments in
excess of $1,000,000, such transaction or series of related transactions has
been approved by the disinterested directors of the Borrower (or in the event
there is only one disinterested director, by such disinterested director) and
(d) with respect to any transaction or series of related transactions involving
aggregate payments in excess of $5,000,000, such transaction or series of
related transactions has been approved by the disinterested directors of the
Borrower (or in the event there is only one disinterested director, by such
disinterested director) and the Borrower delivers to each of the Lenders a
written opinion of any investment banking firm of national standing or other
recognized independent expert with experience appraising the terms and
conditions of the type of transaction or series of related transactions for
which an opinion is required stating that the transaction or series of related
transactions is fair to the Borrower or such Subsidiary from a financial point
of view, except that (i) the Borrower and its Subsidiaries may effect the
Transaction, (ii) the transactions entered into between Borrower and the
Subsidiary Guarantors, and between such Subsidiary Guarantors, shall be
permitted, (iii) the Borrower may pay customary fees to directors of the
Borrower, (iv) the Borrower and its Subsidiaries may enter into the employment
agreements in the ordinary course of business and (v) Dividends may be paid in
accordance with Section 6.03. In no event may any management, closing or similar
fees be paid or payable by the Borrower or any of its Subsidiaries to any
Affiliates of the Borrower or any of its Subsidiaries.
<PAGE>
6.06 No Further Negative Pledges. Except (a) as otherwise permitted by
or under the terms of Existing Indebtedness, this Agreement or the Credit
Documents and (b) with respect to specific property encumbered to secure payment
of particular Indebtedness permitted to be incurred by the terms hereof, the
Borrower shall not, and shall not permit any of its Subsidiaries to, enter into
any agreement prohibiting the creation or assumption of any Lien upon its
properties or assets, whether now owned or hereafter acquired.
6.07 Consolidated Indebtedness to Consolidated EBITDA. The Borrower
will not permit the ratio of Consolidated Indebtedness as at the end of any
fiscal quarter ended on a date set forth below to Consolidated EBITDA for any
period of four consecutive fiscal quarters, in each case taken as one accounting
period, ending on a date set forth below to be greater than the ratio set forth
opposite such date below:
Fiscal Quarter
Ended Ratio
December 31, 1998 4.25:1.0
March 31, 1999 4.00:1.0
June 30, 1999 4.00:1.0
September 30, 1999 4.00:1.0
December 31, 1999 4.00:1.0
March 31, 2000 4.00:1.0
June 30, 2000 4.00:1.0
September 30, 2000 4.00:1.0
December 31, 2000 3.75:1.0
March 31, 2001 3.75:1.0
June 30, 2001 3.75:1.0
September 30, 2001 3.75:1.0
December 31, 2001 3.75:1.0
March 31, 2002 3.50:1.0
June 30, 2002 3.50:1.0
September 30, 2002 3.50:1.0
December 31, 2002 3.50:1.0
March 31, 2003 3.25:1.0
June 30, 2003 3.25:1.0
September 30, 2003 3.25:1.0
December 31, 2003 3.25:1.0
March 31, 2004 3.00:1.0
June 30, 2004 3.00:1.0
September 30, 2004 3.00:1.0
December 31, 2004 3.00:1.0
March 31, 2005 3.00:1.0
June 30, 2005 3.00:1.0
September 30, 2005 3.00:1.0
December 31, 2005 3.00:1.0
<PAGE>
6.08 Fixed Charge Coverage Ratio. The Borrower will not permit the
Fixed Charge Coverage Ratio for any period of four consecutive fiscal quarters,
in each case taken as one accounting period, ending on a date set forth below to
be less than the ratio set forth opposite such date:
Fiscal Quarter
Ended Ratio
December 31, 1998 1.00:1.0
March 31, 1999 1.00:1.0
June 30, 1999 1.00:1.0
September 30, 1999 1.00:1.0
December 31, 1999 1.00:1.0
March 31, 2000 1.00:1.0
June 30, 2000 1.00:1.0
September 30, 2000 1.00:1.0
December 31, 2000 1.15:1.0
March 31, 2001 1.15:1.0
June 30, 2001 1.15:1.0
September 30, 2001 1.15:1.0
December 31, 2001 1.15:1.0
March 31, 2002 1.25:1.0
June 30, 2002 1.25:1.0
September 30, 2002 1.25:1.0
December 31, 2002 1.25:1.0
March 31, 2003 1.25:1.0
June 30, 2003 1.25:1.0
September 30, 2003 1.25:1.0
December 31, 2003 1.25:1.0
March 31, 2004 1.25:1.0
June 30, 2004 1.25:1.0
September 30, 2004 1.25:1.0
December 31, 2004 1.25:1.0
March 31, 2005 1.25:1.0
June 30, 2005 1.25:1.0
September 30, 2005 1.25:1.0
December 31, 2005 1.25:1.0
6.09 Consolidated Net Worth. The Borrower will not permit
Shareholders' Equity at any time to be less than the Minimum Consolidated Net
Worth at such time.
6.10 Capital Expenditures. (a) The Borrower shall not, and shall not
permit any of its Subsidiaries to, make any expenditure for fixed or capital
assets (including, without limitation, expenditures for maintenance and repairs
which should be capitalized in accordance with generally accepted accounting
principles and Capitalized Lease Obligations) (collectively, "Capital
Expenditures"), except that during any fiscal year of the Borrower, the Borrower
and its Subsidiaries may make Capital Expenditures in any such fiscal year so
long as the aggregate amount thereof does not exceed $3,500,000.
<PAGE>
(b) In addition to the Capital Expenditures permitted above, the
Borrower and its Subsidiaries may make Permitted Acquisitions in accordance with
Section 5.13 in amounts not to exceed the amounts permitted thereby.
6.11 Restrictions on Additional Subordinated Indebtedness. The
Borrower will not, nor will it permit any of its Subsidiaries to, create or
suffer to exist any Indebtedness for borrowed money which (i) provides that it
is subordinate in right of payment to any Senior Indebtedness and (ii) is senior
in right of payment to the Loans or other Obligations.
6.12 Limitation on Voluntary Payments and Modifications; Limitation on
Modifications of Certificate of Incorporation, By-Laws and Certain Other
Agreements; Etc. The Borrower shall not, and shall not permit its Subsidiaries
to:
(i) make (or give any notice in respect of) any voluntary or optional
payment or prepayment on or voluntary or optional redemption (including
pursuant to any change of control provision) or voluntary or optional
acquisition for value of (including, without limitation, by way of
depositing with the trustee with respect thereto money or securities before
due for the purpose of paying when due), of any Indebtedness that is not
Senior Indebtedness;
(ii) amend or modify, or permit the amendment or modification of any
provision of the Existing Indebtedness, Permitted Earn-Out Debt or
Permitted Seller Notes or any agreement relating to any of the foregoing in
any manner adverse to the Lenders;
(iii) amend, modify or change its Certificate of Incorporation
(including, without limitation, by the filing or modification of any
certificate of designation), By-Laws (or similar organizational documents)
or any agreement entered into by it with respect to its capital stock or
other equity interests in any manner adverse to the Lenders;
(iv) amend, modify or change, terminate, or enter into any new
Shareholders' Agreement, except for such amendments, modifications or
changes which are not in a manner adverse to the Lenders;
(v) amend, modify or change, terminate or enter into any new Tax
Sharing Agreement; or
(vi) amend, modify or change, or enter into any new Management
Agreement or Employee Benefit Plan except if the aggregate cost to the
Borrower and its Subsidiaries as a result of such amendments,
modifications, changes to such plans and agreements and new plans and
agreements is not reasonably likely to have a material adverse effect on
the performance, business, property, assets, nature of assets, liabilities,
condition (financial or otherwise) or prospects of the Borrower and its
Subsidiaries taken as a whole.
6.13 Limitation on Certain Restrictions on Subsidiaries. The Borrower
will not, and will not permit any of its Subsidiaries to, directly or
indirectly, create or otherwise cause or suffer to exist or become effective any
encumbrance or restriction on the ability of any such Person to (i) pay
dividends or make any other distributions on its capital stock or any other
<PAGE>
interest or participation in its profits owned by the Borrower or any Subsidiary
of the Borrower, or pay any Indebtedness owed to the Borrower or a Subsidiary of
the Borrower, (ii) make loans or advances to the Borrower or any Subsidiary of
the Borrower or (iii) transfer any of its properties or assets to the Borrower,
except for such encumbrances or restrictions existing under or by reason of (v)
applicable law, (w) this Agreement and the other Loan Documents, (x) the Credit
Agreement and the other Credit Documents, (y) customary provisions restricting
subletting or assignments of any lease governing a leasehold interest of the
Borrower or any other Subsidiary of the Borrower and (z) the asset transfer
restrictions imposed by purchase money financing permitted pursuant to Section
6.04(v).
6.14 Limitation on Issuance of Capital Stock. (a) The Borrower shall
not permit any of its Subsidiaries to issue any capital stock (including by way
of sales of treasury stock) or other ownership interests or any options or
warrants to purchase, or securities convertible into, capital stock, except (i)
for transfers and replacements of then outstanding shares, (ii) for stock
splits, stock dividends and similar issuances which do not decrease the
percentage ownership of any Person in any class of the capital stock of the
Borrower or such Subsidiary or (iii) upon the formation of any new Subsidiary as
permitted by this Agreement in connection with Permitted Acquisitions.
(b) The Borrower will not issue any capital stock, except for (x)
issuances of the Borrower Common Stock for cash (except that Permitted Equity
Issuances in connection with Permitted Acquisitions shall be permitted in
accordance with Section 5.13) so long as, after giving effect to such issuance,
the Borrower complies with the requirements of Section 2.02(d), if applicable,
and (y) issuances of Borrower Common Stock in connection with the conversion of
any Permitted Seller Note into Borrower Common Stock pursuant to, and in
accordance with the terms of, such Permitted Seller Note, so long as no Default
or Event of Default then exists or would result therefrom and the Borrower
complies with the requirements of Section 2.02(d), if applicable.
6.15 Business. The Borrower will not, and will not permit any of its
Subsidiaries to, engage (directly or indirectly) in any business other than a
Permitted Business.
6.16 Limitation on Creation of Subsidiaries. The Borrower will not,
and will not permit any Subsidiary to, establish, create or acquire any new
Subsidiary; provided that (I) the Borrower and its Wholly-Owned Subsidiaries
shall be permitted to establish or create Wholly-Owned Subsidiaries so long as,
in each case (i) at least 5 days prior written notice thereof is given to the
Lenders and (ii) such new Subsidiary promptly executes a counterpart of the
Subordinated Guaranty and (II) Wholly-Owned Subsidiaries of the Borrower may be
acquired or formed in connection with Permitted Acquisitions so long as, in each
such case such new Subsidiary executes a counterpart of the Subordinated
Guaranty. In addition, each new Subsidiary that is required to execute any Loan
Documents pursuant to this Section 6.16 shall execute and deliver, or cause to
be executed and delivered, all other relevant documentation of the type
described in Section 3 as such new Subsidiary would have had to deliver if such
new Subsidiary were a Subordinated Guarantor on the Funding Date.
<PAGE>
6.17 Amendments with Respect to Senior Debt. The Borrower shall not
amend, modify or restate the terms of Senior Debt if such amendment,
modification or restatement would (i) result in the final maturity date of the
Senior Debt occurring prior to November 15, 2001 or (ii) prior to November 15,
2001, increase the margin of the Senior Debt in excess of the maximum margin
calculated from time to time permitted under Paragraph 2.1(C) of the Credit
Agreement, as such Paragraph 2.1(C) is in effect on the date hereof, plus 2%.
SECTION 7. Events of Default. Upon the occurrence of any of the
following specified events (each, an "Event of Default"):
7.01 Payments. Any Loan Party shall (i) default in the payment when
due of any principal of any Loan or any Note or (ii) default, and such default
shall continue unremedied for five or more Business Days, in the payment when
due of any interest on any Loan or Note, or any Fees or any other amounts owing
by it hereunder or thereunder or under any other Loan Document; or
7.02 Representations, Etc. Any representation, warranty or statement
made by any Loan Party herein or in any other Loan Document, or in any
certificate delivered pursuant hereto or thereto, shall prove to be untrue in
any material respect on the date as of which made or deemed made; or
7.03 Covenants. (a) The Borrower or any of its Subsidiaries shall (i)
default in the due performance or observance by it of any term, covenant or
agreement contained in Section 5.01(g)(i), 5.08, 5.12 or 6 and (ii) default in
the due performance or observance by it of any other term, covenant or agreement
contained in this Agreement and such default shall continue unremedied for a
period of 30 days after written notice to the Borrower by any Lender; or (b) any
Loan Party shall default in the due performance or observance by it of any term,
covenant or agreement contained in any other Loan Document after any applicable
notice provided for therein has been given or any lapse of time provided for
therein has occurred; or
7.04 Default Under Other Agreements. (i) The Borrower or any of its
Subsidiaries shall default in any payment of any Indebtedness (other than the
Obligations) on the stated maturity thereof; or (ii) any Indebtedness of the
Borrower or any of its Subsidiaries (other than the Obligations) shall be
declared to be due and payable prior to the stated maturity thereof, provided
that it shall not constitute an Event of Default pursuant to this Section 7.04
unless the aggregate amount of all Indebtedness referred to in clauses (i) and
(ii) above exceeds $2,000,000 at any one time; or
7.05 Bankruptcy, Etc. The Borrower or any of its Subsidiaries shall
commence a voluntary case concerning itself under Title 11 of the United States
Code entitled "Bankruptcy," as now or hereafter in effect, or any successor
thereto (the "Bankruptcy Code"); or an involuntary case is commenced against the
Borrower or any of its Subsidiaries and the petition is not controverted within
10 days, or is not dismissed or discharged, within 60 days, after commencement
of the case; or a custodian (as defined in the Bankruptcy Code) is appointed
for, or takes charge of, all or substantially all of the property of the
Borrower or any of its Subsidiaries, or the Borrower or any of its Subsidiaries
commences any other proceeding under any reorganization, arrangement, adjustment
<PAGE>
of debt, relief of debtors, dissolution, insolvency or liquidation or similar
law of any jurisdiction whether now or hereafter in effect relating to the
Borrower or any of its Subsidiaries, or there is commenced against the Borrower
or any of its Subsidiaries any such proceeding which remains undismissed or
undischarged for a period of 60 days, or the Borrower or any of its Subsidiaries
is adjudicated insolvent or bankrupt; or any order of relief or other order
approving any such case or proceeding is entered; or the Borrower or any of its
Subsidiaries suffers any appointment of any custodian or the like for it or any
substantial part of its property to continue undischarged or unstayed for a
period of 60 days; the Borrower or any of its Subsidiaries makes a general
assignment for the benefit of creditors; or any corporate action is taken by the
Borrower or any of its Subsidiaries for the purpose of effecting any of the
foregoing; or
7.06 ERISA. (a) Any Plan shall fail to satisfy the minimum funding
standard required for any plan year or part thereof under Section 412 of the
Code or Section 302 of ERISA or a waiver of such standard or extension of any
amortization period is sought or granted under Section 412 of the Code or
Section 303 or 304 of ERISA, a Reportable Event shall have occurred, a
contributing sponsor (as defined in Section 4001(a)(13) of ERISA) of a Plan
subject to Title IV of ERISA shall be subject to the advance reporting
requirement of PBGC Regulation Section 4043.61 (without regard to subparagraph
(b)(1) thereof), and an event described in subsection .62, .63, .64, .65, .66,
.67 or .68 of PBGC Regulation Section 4043 shall be reasonably expected to occur
with respect to such Plan within the following 30 days; any Plan which is
subject to Title IV of ERISA shall have had or is likely to have a trustee
appointed to administer such Plan, any Plan which is subject to Title IV of
ERISA is, shall have been or is likely to be terminated or to be the subject of
termination proceedings under ERISA, any Plan shall have an Unfunded Current
Liability, a contribution required to be made with respect to a Plan has not
been timely made, the Borrower or any Subsidiary of the Borrower or any ERISA
Affiliate has incurred or is likely to incur any liability to or on account of a
Plan under Section 409, 502(i), 502(l), 515, 4062, 4063, 4064, 4069, 4201, 4204
or 4212 of ERISA or Section 401(a)(29), 4971 or 4975 of the Code or on account
of a group health plan (as defined in Section 607(1) of ERISA or Section
4980B(g)(2) of the Code) under Section 4980B of the Code, or the Borrower or any
Subsidiary of the Borrower has incurred or is likely to incur liabilities
pursuant to one or more employee welfare benefit plans (as defined in Section
3(1) of ERISA) that provide benefits to retired employees or other former
employees (other than as required by Section 601 of ERISA) or Plans a "default,"
within the meaning of Section 4219(c)(5) of ERISA, shall occur with respect to
any Plan; any applicable law, rule or regulation is adopted, changed or
interpreted, or the interpretation or administration thereof is changed, in each
case after the date hereof, by any governmental authority or agency or by any
court (a "Change in Law"), or, as a result of a Change in Law, an event occurs
following a Change in Law, with respect to or otherwise affecting any Plan; (b)
there shall result from any such event or events the imposition of a lien, the
granting of a security interest, or a liability or a material risk of incurring
a liability; and (c) such lien, security interest or liability, individually,
and/or in the aggregate, in the opinion of the Required Lenders, has had, or
could reasonably be expected to have, a material adverse effect upon the
business, operations, condition (financial or otherwise) or prospects of the
Borrower or any Subsidiary of the Borrower; or
<PAGE>
7.07 Judgments. One or more judgments or decrees shall be entered
against the Borrower or any of its Subsidiaries involving in the aggregate for
the Borrower and its Subsidiaries a liability (not paid or fully covered by a
reputable insurance company) in excess of $2,000,000 and all such judgments or
decrees shall not be satisfied, vacated, discharged or stayed or bonded pending
appeal for any period of 60 consecutive days; or
7.08 Subordinated Guaranty. The Subordinated Guaranty or any provision
thereof shall cease to be in full force or effect as to any Subordinated
Guarantor, or any Subordinated Guarantor or any Person acting by or on behalf of
any Subordinated Guarantor shall deny or disaffirm such Subordinated Guarantor's
obligations under the Subordinated Guaranty, or any Subordinated Guarantor shall
default in the due performance or observance of any term, covenant or agreement
on its part to be performed or observed pursuant to the Subordinated Guaranty
and such default shall continue beyond any grace period specifically applicable
thereto; or
7.09 Change in Management. Albert W. Van Ness, Jr. shall cease to
serve as both Chairman and Chief Executive Officer of the Borrower (i.e., shall
cease to serve in at least one of the foregoing capacities) or William T.
Brannan shall cease to serve as both President and Chief Operating Officer of
the Borrower (i.e., shall cease to serve in at least one of the foregoing
capacities) and, in the case of the death or termination of the employment of
either such individual, a successor officer acceptable to the Required Lenders
in their sole discretion shall not have replaced such individual in his
respective capacity within 120 days after such individual's death or termination
of employment;
then, and in any such event, and at any time thereafter, if any Event of Default
shall then be continuing, the Required Lenders (or, in the case of an Event of
Default under Section 7.01, any Lender (or group of Lenders that are affiliates
of one another) with outstanding Loans in an aggregate principal equal to at
least $5,000,000) may, by written notice to the Borrower, take any or all of the
following actions, without prejudice to the rights of any other Lender or the
holder of any Note to enforce its claims against any Loan Party (provided that,
if an Event of Default specified in Section 7.05 shall occur with respect to the
Borrower, the result which would occur upon the giving of written notice by the
Required Lenders to the Borrower as specified in clause (i) below shall occur
automatically without the giving of any such notice): (i) declare the principal
of and any accrued interest in respect of all Loans and the Notes and all
Obligations to be, whereupon the same shall, subject to Section 9.04 hereof,
become, forthwith due and payable without presentment, demand, protest or other
notice of any kind, all of which are hereby waived by the Borrower; and (ii)
exercise any rights or remedies under the Subordinated Guaranty.
SECTION 8. Definitions and Accounting Terms.
8.01 Defined Terms. As used in this Agreement, the following terms
shall have the following meanings (such meanings to be equally applicable to
both the singular and plural forms of the terms defined):
"Acquired EBITDA" has the meaning provided in Section 5.13(a)(vi).
<PAGE>
"Affiliate" shall mean, with respect to any Person, any other Person
directly or indirectly controlling (including, but not limited, to all
directors, officers and trustees of such Person), controlled by, or under direct
or indirect common control with, such Person; provided, however, that for
purposes of Section 6.05, an Affiliate of the Borrower shall include (w) any
Person that directly or indirectly (including through limited partners, general
partner or limited liability company interests) owns more than 5% of any class
of the capital stock of the Borrower (x) any officer, director, trustee or
beneficiary of the Borrower or any such shareholder, (y) any spouse, parent,
sibling or descendant of any such person in clause (w) or (x) above, and (z) any
trust for the benefit of any such Person or for any spouse, issue or lineal
descendant of such Person described in clauses (w) through (y) above. For all
purposes of this Agreement, none of the Bank, any Lender or any of their
respective Affiliates, shall be considered an Affiliate of the Borrower or any
Subsidiary of the Borrower. A Person shall be deemed to control another Person
if such Person possesses, directly or indirectly, the power to direct or cause
the direction of the management and policies of such other Person, whether
through the ownership of voting securities, by contract or otherwise.
"Affiliate Contracts" shall have the meaning set forth in Section
3.14(vii).
"Agreement" shall mean this loan agreement, as modified, supplemented
or amended from time to time.
"Asset Sale" shall mean the sale of all or substantially all of the
assets of the Borrower and its Subsidiaries.
"Available Debt Basket Amount" shall mean, at any time, (i)
$10,000,000, if the Reported Consolidated EBITDA of the Borrower for the last
four fiscal quarters (taken as one accounting period) most recently ended prior
to the delivery of (and as set forth in) the Debt Incurrence Eligibility
Certificate most recently delivered pursuant to Section 6.04(viii) is greater
than or equal to $13,000,000 but less than $16,500,000, (ii) $15,000,000, if the
Reported Consolidated EBITDA of the Borrower for the last four fiscal quarters
(taken as one accounting period) most recently ended prior to the delivery of
(and as set forth in) the Debt Incurrence Eligibility Certificate most recently
delivered pursuant to Section 6.04(viii) is greater than or equal to $16,500,000
but less than $20,000,000, (iii) $20,000,000, if the Reported Consolidated
EBITDA of the Borrower for the last four fiscal quarters (taken as one
accounting period) most recently ended prior to the delivery of (and as set
forth in) the Debt Incurrence Eligibility Certificate most recently delivered
pursuant to Section 6.04(viii) is greater than or equal to $20,000,000 but less
than $27,000,000, (iv) $30,000,000, if the Reported Consolidated EBITDA of the
Borrower for the last four fiscal quarters (taken as one accounting period) most
recently ended prior to the delivery of (and as set forth in) the Debt
Incurrence Eligibility Certificate most recently delivered pursuant to Section
6.04(viii) is greater than or equal to $27,000,000 but less than $34,000,000 and
(v) $40,000,000, if the Reported Consolidated EBITDA of the Borrower for the
last four fiscal quarters (taken as one accounting period) most recently ended
prior to the delivery of (and as set forth in) the Debt Incurrence Eligibility
Certificate most recently delivered pursuant to Section 6.04(viii) is greater
than or equal to $34,000,000.
<PAGE>
"Bank" shall mean, collectively, First Union and any other institution
which becomes a "Lender" under the Credit Agreement pursuant to the terms
thereof after the Funding Date.
"Bankruptcy Code" shall have the meaning provided in Section 7.05.
"Bankruptcy Event" shall have the meaning provided in Section 9.02.
"Borrower" shall have the meaning provided in the first paragraph of
this Agreement.
"Borrower Common Stock" shall have the meaning provided in Section
4.13.
"Borrower Preferred Stock" shall have the meaning provided in Section
4.13
"Borrowing" shall mean the borrowing of Loans from all the Lenders
having Commitments on a pro rata basis on the Funding Date.
"Business Day" shall mean any day except Saturday, Sunday and any day
which shall be in New York City a legal holiday or a day on which banking
institutions are authorized or required by law or other government action to
close.
"Calculation Date" shall mean the date of the respective Permitted
Acquisition, incurrence, assumption or issuance of Indebtedness or other event,
as the case may be, which gives rise to the requirement to calculate compliance
with the financial covenants under this Agreement on a Pro Forma Basis.
"Calculation Period" shall mean the period of four consecutive fiscal
quarters (taken as one accounting period) most recently ended prior to a given
Calculation Date.
"Capital Expenditures" shall have the meaning set forth in Section
6.10(a).
"Capitalized Lease," as applied to any Person, shall mean any lease of
any property (whether real, personal or mixed) by that Person as lessee which,
in conformity with generally accepted accounting principles, is accounted for as
a capital lease on the balance sheet of that Person.
"Capitalized Lease Obligations" of any Person shall mean all rental
obligations under Capitalized Leases, in each case taken at the amount thereof
accounted for as Indebtedness in accordance with generally accepted accounting
principles.
"Cash Equivalents" shall mean, as to any Person, (i) securities issued
or directly and fully guaranteed or insured by the United States or any agency
or instrumentality thereof (provided that the full faith and credit of the
United States is pledged in support thereof) having maturities of not more than
twelve months from the date of acquisition, (ii) time deposits and certificates
of deposit of any commercial bank organized under the laws of the United States,
any State thereof or the District of Columbia having, or which is the principal
<PAGE>
banking subsidiary of a bank holding company organized under the laws of the
United States, any State thereof, or the District of Columbia having, capital,
surplus and undivided profits aggregating in excess of $200,000,000 and having a
long-term unsecured debt rating of at least "A" or the equivalent thereof from
Standard & Poor's Corporation ("S&P") or "A2" or the equivalent thereof from
Moody's Investors Service, Inc. ("Moody's"), with maturities of not more than
twelve months from the date of acquisition by such Person, (iii) repurchase
obligations with a term of not more than 7 days for underlying securities of the
types described in clause (i) above entered into with any bank meeting the
qualifications specified in clause (ii) above, (iv) commercial paper issued by
any Person incorporated in the United States and/or tax exempt securities issued
by any agency or instrumentality of any state of the United States or
subdivision thereof, in each case rated at least A-2 or the equivalent thereof
by S&P or at least P-1 or the equivalent thereof by Moody's and in each case
maturing not more than 12 months after the date of acquisition by such Person,
(v) investments in money market funds substantially all of whose assets are
comprised of securities of the types described in clauses (i) through (iv) above
and (vi) as to any Foreign Subsidiary, securities available in the applicable
foreign country where such Foreign Subsidiary operates and which are reasonably
equivalent as to credit quality and principal risk as the securities of the
types described in clauses (i) through (v) above.
"CERCLA" shall mean the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as the same may be amended from time to
time, 42 U.S.C. Section 9601 et seq.
"Change in Control" shall mean, at any time and for any reason
whatsoever (a) any Person or "group" (within the meaning of Rules 13d-3 and
13d-5 under the Exchange Act, other than Management Investors) shall become the
"beneficial owner" (as defined in Rules 13d and 13d-5 under the Exchange Act,
except that a Person shall be deemed to have "beneficial ownership" of all
securities that such Person has a right to acquire, whether such right is
exercisable immediately or only after the passage of time) of 30% or more of any
outstanding class of capital stock of the Borrower having ordinary voting power
in the election of directors of the Borrower, or (b) the Board of Directors of
the Borrower shall cease to consist of a majority of Continuing Directors.
"Change in Law" shall have the meaning provided in Section 7.06.
"Claims" shall have the meaning provided in the definition of
"Environmental Claims."
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time, and the regulations promulgated and the rulings issued thereunder.
Section references to the Code are to the Code, as in effect at the date of this
Agreement, and to any subsequent provisions of the Code, amendatory thereof,
supplemental thereto or substituted therefor.
"Collective Bargaining Agreements" shall have the meaning set forth in
Section 3.14(iii).
<PAGE>
"Commitment' shall mean, for each Lender, the loan commitment set
forth opposite such Lender's name in Schedule I hereto.
"Consolidated EBIT" shall mean, for any period, the Consolidated Net
Income before any deduction for interest income, Consolidated Interest Expense
and provision for taxes and without giving effect to any net extraordinary gains
or losses or gains or losses from sales of assets (other than inventory sold in
the ordinary course of business).
"Consolidated EBITDA" for any period shall mean Consolidated EBIT,
adjusted by adding thereto the amount of all amortization of intangibles and
depreciation that were deducted in arriving at Consolidated Net Income for such
period; provided that for purposes of any determination of compliance with
Sections 6.07 and 6.08, all calculations of Consolidated EBITDA shall be made on
a Pro Forma Basis.
"Consolidated Indebtedness" shall mean, at any time, the aggregate
principal amount of all Indebtedness of the Borrower and its Subsidiaries
determined on a consolidated basis (excluding all Indebtedness of the type
described in clause (vii) of the definition thereof, except to the extent
amounts are owing with respect thereto upon the termination of the respective
agreement constituting such Indebtedness); provided that Indebtedness evidenced
by Permitted Earn-out Debt shall not be included in any determination of
Consolidated Indebtedness except to the extent that such Permitted Earn-out Debt
would appear on the balance sheet of the Borrower or its Subsidiaries under
generally accepted accounting principles.
"Consolidated Interest Expense" shall mean, for any period, the total
consolidated interest expense of the Borrower and its Subsidiaries for such
period (calculated without regard to any limitations on the payment thereof)
payable during such period in respect of all Indebtedness of the Borrower and
its Subsidiaries, on a consolidated basis, for such period (including, without
duplication, that portion of Capitalized Lease Obligations of the Borrower and
its Subsidiaries representing the interest factor for such period but excluding
Indebtedness constituting Permitted Earn-Out Debt that would not appear on the
balance sheet of the Borrower or its Subsidiaries under generally accepted
accounting principles).
"Consolidated Net Income" shall mean, for any period, net income of
the Borrower and its Subsidiaries for such period determined on a consolidated
basis (after provision for taxes); provided, however, the net income of any
Subsidiary of the Borrower, which is not a Wholly-Owned Subsidiary and for which
the investment of the Borrower therein is accounted for by the equity method of
accounting, shall have its net income included in the Consolidated Net Income of
the Borrower and its Subsidiaries only to the extent of the amount of cash
dividends or distributions paid by such Subsidiary to the Borrower.
"Contingent Obligation" shall mean, as to any Person, any obligation
of such Person guaranteeing or intended to guarantee any Indebtedness, leases,
dividends or other obligations (the "primary obligations") of any other Person
(the "primary obligor") in any manner, whether directly or indirectly,
including, without limitation, any obligation of such Person, whether or not
contingent, (i) to purchase any such primary obligation or any property
constituting direct or indirect security therefor, (ii) to advance or supply
funds (x) for the purchase or payment of any such primary obligation or (y) to
<PAGE>
maintain working capital or equity capital of the primary obligor or otherwise
to maintain the net worth or solvency of the primary obligor, (iii) to purchase
property, securities or services primarily for the purpose of assuring the owner
of any such primary obligation of the ability of the primary obligor to make
payment of such primary obligation or (iv) otherwise to assure or hold harmless
the holder of such primary obligation against loss in respect thereof; provided,
however, that the term Contingent Obligation shall not include endorsements of
instruments for deposit or collection in the ordinary course of business. The
amount of any Contingent Obligation shall be deemed to be an amount equal to the
stated or determinable amount of the primary obligation in respect of which such
Contingent Obligation is made or, if not stated or determinable, the maximum
reasonably anticipated liability in respect thereof (assuming such Person is
required to perform thereunder) as determined by such Person in good faith.
"Continuing Directors" shall mean the directors of the Borrower on the
Funding Date and each other director of the Borrower, if such director's
nomination for the election to the Board of Directors of the Borrower is
recommended by a majority of the then Continuing Directors.
"Credit Agreement" shall mean the Loan and Security Agreement, dated
as of July 14, 1997, among the Borrower, certain of its Subsidiaries and the
Bank, as amended prior to the Funding Date (including by the Modification
Agreement) and as such agreement may, subject to Section 6.17, be further
amended, restated, extended, replaced, supplemented, restructured or otherwise
modified or refinanced pursuant to a Permitted Refinancing from time to time (in
whole or in part without limitation (except as provided in this Agreement) as to
terms, extensions of maturities, increasing the amount of borrowings or other
conditions or covenants), including all related notes, collateral documents,
guarantees, Interest Rate Contracts, instruments and agreements entered into in
connection therewith, as the same may be amended, modified, supplemented,
restated, restructured, replaced or refinanced pursuant to a Permitted
Refinancing from time to time.
"Credit Documents" shall mean the "Loan Documents", as defined in the
Credit Agreement (as in effect on the date hereof).
"Credit Party" shall mean the Borrower and each of its Subsidiaries
party to any Credit Document.
"Cumulative Consolidated Net Income" shall mean, at any time of
determination thereof, Consolidated Net Income for the period (taken as one
accounting period) commencing October 1, 1998 and ending on the last day of the
last fiscal quarter of the Borrower then ended.
"Debt Agreements" shall have the meaning set forth in Section
3.14(iv).
"Debt Incurrence Eligibility Certificate" shall have the meaning
provided in Section 6.04(vii).
<PAGE>
"Default" shall mean any event, act or condition which with notice or
lapse of time, or both, would constitute an Event of Default.
"Dividend", with respect to any Person, shall mean that such Person
has declared or paid a dividend or returned any equity capital to its
stockholders or authorized or made any other distribution, payment or delivery
of property (other than capital stock of such Person) or cash to its
stockholders in their capacity as stockholders, or redeemed, retired, purchased
or otherwise acquired, directly or indirectly, for a consideration any shares of
any class of its capital stock outstanding on or after the Effective Date (or
any options or warrants issued by such Person with respect to its capital
stock), or set aside any funds for any of the foregoing purposes, or shall have
permitted any Subsidiary of such Person to purchase or otherwise acquire for a
consideration any shares of any class of the capital stock of such Person
outstanding on or after the Funding Date (or any options or warrants issued by
such Person with respect to its capital stock). Without limiting the foregoing,
"Dividends" with respect to any Person shall also include all cash payments made
or required to be made by such Person with respect to any stock appreciation
rights, equity incentive plans or any similar plans or setting aside of any
funds for the foregoing purposes.
"Documents" shall mean the Loan Documents and the Credit Documents.
"Dollars" and the sign "$" shall each mean freely transferable lawful
money of the United States.
"Domestic Subsidiaries" shall mean each Subsidiary of the Borrower
incorporated or organized in the United States or any State or territory
thereof.
"Effective Date" shall have the meaning provided in Section 10.10.
"Eligible Transferee" shall mean and include a commercial bank,
financial institution, other "accredited investor" (as defined in Regulation D
of the Securities Act), other than an individual, that is not a competitor of
the Borrower or any of its Subsidiaries, or a "qualified institutional buyer" as
defined in Rule 144A of the Securities Act.
"Employee Benefit Plans" shall have the meaning set forth in Section
3.14(i).
"Environmental Claims" shall mean any and all administrative,
regulatory or judicial actions, suits, demands, demand letters, directives,
claims, liens, notices of noncompliance or violation, investigations or
proceedings relating in any way to any violation of, or liability under, any
Environmental Law or any permit issued, or any approval given, under any such
Environmental Law (hereafter, "Claims"), including, without limitation, (a) any
and all Claims by governmental or regulatory authorities for enforcement,
cleanup, removal, response, remedial or other actions or damages pursuant to any
applicable Environmental Law, and (b) any and all Claims by any third party
seeking damages, contribution, indemnification, cost recovery, compensation or
injunctive relief resulting from Hazardous Materials arising from alleged injury
or threat of injury to health, safety or the environment.
<PAGE>
"Environmental Law" shall mean any Federal, state, foreign or local
statute, law, rule, regulation, ordinance, code, policy and rule of common law
now or hereafter in effect and in each case as amended, and any judicial or
administrative interpretation thereof, including any judicial or administrative
order, consent decree or judgment, relating to the environment, health, safety
or Hazardous Materials, including, without limitation, CERCLA; RCRA; the Federal
Water Pollution Control Act, as amended, 33 U.S.C. Section 251 et seq.; the
Toxic Substances Control Act, 15 U.S.C. Section 7401 et seq.; the Clean Air Act,
42 U.S.C. Section 7401 et seq.; the Safe Drinking Water Act, 42 U.S.C. Section
3803 et seq.; the Oil Pollution Act of 1990, 33 U.S.C. Section 2701 et seq.; the
Occupational Safety and Health Act, 29 U.S.C. Section 651 et seq.; and any
applicable state and local or foreign counterparts or equivalents.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations promulgated and rulings
issued thereunder. Section references to ERISA are to ERISA, as in effect at the
date of this Agreement, and to any subsequent provisions of ERISA, amendatory
thereof, supplemental thereto or substituted therefor.
"ERISA Affiliate" shall mean each person (as defined in Section 3(9)
of ERISA) which, together with the Borrower or any Subsidiary of the Borrower,
would be deemed to be a "single employer" (i) within the meaning of Section
414(b), (c), (m) or (o) of the Code or (ii) as a result of the Borrower or a
Subsidiary of the Borrower being or having been a general partner of such
person.
"Event of Default" shall have the meaning provided in Section 7.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as in
effect on the Effective Date.
"Exeter Entity" shall mean each of Exeter Venture Lenders L.P. and
Exeter Capital Partners IV, L.P. and any Affiliate that is a successor thereto.
"Existing Indebtedness" shall have the meaning provided in Section
4.21.
"Expiration Date" shall mean January 31, 1999.
"First Union" shall mean First Union Commercial Corporation or any
successor thereto by merger or consolidation.
"Fixed Charge Coverage Ratio" for any period shall mean the ratio of
(x) the remainder of (i) Consolidated EBITDA less (ii) the amount of all cash
Capital Expenditures made by the Borrower or any of its Subsidiaries for such
period less (iii) taxes paid by the Borrower and its Subsidiaries for such
period less (iv) Dividends paid by the Borrower during such period to (y) Fixed
Charges for such period.
"Fixed Charges" for any period shall mean the sum of (i) Consolidated
Interest Expense for such period and (ii) the aggregate principal amount of all
scheduled payments of Indebtedness (including the principal portion of rentals
under Capitalized Lease Obligations but excluding (x) repayment of revolving
loans not accompanied by a permanent reduction to the commitment relating
<PAGE>
thereto and (y) Indebtedness constituting Permitted Earn-Out Debt that would not
appear on the balance sheet of the Borrower or its Subsidiaries under generally
accepted accounting principles) required to be made during such period.
"Foreign Subsidiaries" shall mean each Subsidiary of the Borrower
other than a Domestic Subsidiary.
"Funding Date" shall mean the one and only day on which Loans are
made.
"Hazardous Materials" means (a) petroleum or petroleum products,
radioactive materials, asbestos in any form that is friable, urea formaldehyde
foam insulation, transformers or other equipment that contain, dielectric fluid
containing levels of polychlorinated biphenyls, and radon gas; (b) any
chemicals, materials or substances defined as or included in the definition of
"hazardous substances," "hazardous waste," "hazardous materials," "extremely
hazardous waste," "restricted hazardous waste," "toxic substances," "toxic
pollutants," "contaminants," or "pollutants," or words of similar meaning and
regulatory effect, under any applicable Environmental Law; and (c) any other
chemical, material or substance, exposure to which is prohibited, limited or
regulated under applicable Environmental Laws.
"Indebtedness" shall mean, as to any Person, without duplication, (i)
all indebtedness (including principal and interest) of such Person for borrowed
money or for the deferred purchase price of property or services (including,
without limitation, any contingent consideration (including Permitted-Earnout
Debt) or seller paper which may be payable or issuable in connection with
acquisitions by the Borrower or any of its Subsidiaries) other than trade
payables and accrued expenses arising in the ordinary course of business in
accordance with customary trade terms, (ii) the maximum amount available to be
drawn under all letters of credit issued for the account of such Person and all
unpaid drawings in respect of such letters of credit, (iii) all Indebtedness of
the types described in clauses (i), (ii), (iv), (v), (vi) or (vii) of this
definition secured by any Lien on any property owned by such Person, whether or
not such Indebtedness has been assumed by such Person, (iv) all Capitalized
Lease Obligations of such Person, (v) all Contingent Obligations of such Person,
(vi) mandatory obligations of such Person to redeem or purchase Stock or
purchase or repay Indebtedness and (vii) any Financial Undertaking (as such term
is defined in the Credit Agreement (as in effect on the date hereof)) of such
Person.
"Indemnified Matters" shall have the meaning provided in Section
10.01.
"Indemnitees" shall have the meaning provided in Section 10.01.
"Information Systems and Equipment" shall mean all computer hardware,
firmware and software, as well as other information processing systems, or any
equipment continuing embedded microchips, whether directly owned, licensed,
leased, operated or otherwise controlled by the Borrower or any of its
Subsidiaries, including through third-party service providers, and which, in
whole or in part, are used, operated, relied upon, or integral to, the
Borrower's or any of its Subsidiaries' conduct of their business.
<PAGE>
"Intellectual Property" shall have the meaning provided in Section
4.20.
"Interest Rate Contract" shall mean interest rate swap agreements,
interest rate cap agreements, interest rate collar agreements, interest rate
insurance, and other agreements or arrangements designed to provide protection
against fluctuations in interest rates, each as in effect on the date hereof.
"Leasehold Properties" of any Person means all right, title and
interest of such Person as lessee or licensee in, to and under leases or
licenses of land, improvements and/or fixtures.
"Lender" shall have the meaning provided in the first paragraph of
this Agreement.
"Lien" shall mean any mortgage, pledge, hypothecation, assignment,
deposit arrangement, encumbrance, lien (statutory or other), preference,
priority or other security agreement of any kind or nature whatsoever
(including, without limitation, any conditional sale or other title retention
agreement, any financing or similar statement or notice filed under the UCC or
any other similar recording or notice statute, and any lease having
substantially the same effect as any of the foregoing).
"Loan" has the meaning specified in Section 1.01.
"Loan Documents" shall mean, collectively, this Agreement, each Note,
each Subordinated Guaranty and the Warrant Documents.
"Loan Party" means each of the Borrower and each Subordinated
Guarantor.
"Management Investors" shall mean senior management of the Borrower on
the Effective Date.
"Margin Stock" shall have the meaning provided in Regulation U.
"Maturity Date" shall mean January 29, 2006.
"Minimum Consolidated Net Worth" shall mean, as at any date of
determination, an amount equal to the sum of (i) 70% of the Shareholders' Equity
as at September 30, 1998 plus (ii) 50% of Cumulative Consolidated Net Income at
such date plus (iii) the aggregate cash proceeds (net of underwriting discounts
and commissions) received by the Borrower after the Effective Date from
issuances of equity of the Borrower less (iv) any dividends on the capital stock
of the Borrower theretofore declared but not yet paid, but only to the extent
not already deducted when determining the amount specified in clause (i) above.
"Modification Agreement" shall mean the Modification Agreement, dated
as of January 29, 1999, among the Borrower, certain of its Subsidiaries and the
Bank, as in effect on the Funding Date.
<PAGE>
"Moody's" shall have the meaning provided in the definition of "Cash
Equivalents."
"Net Sale Proceeds" shall mean for any sale or other disposition of
assets including capital stock and securities, the gross cash proceeds
(including any cash received by way of deferred payment pursuant to a promissory
note, receivable or otherwise, but only as and when received) received from such
sale, net of (x) reasonable transaction costs (including, without limitation,
attorneys' fees), (y) the amount of such gross cash proceeds required to be used
to permanently repay any Indebtedness which is secured by the respective assets
which were sold, and (z) the estimated marginal increase in income taxes and any
stamp tax which will be payable by the Borrower's consolidated group as a result
of such sale.
"Non-Payment Blockage Notice" shall have the meaning provided in
Section 9.03.
"Non-Payment Blockage Period" shall have the meaning provided in
Section 9.03.
"Non-Payment Default" shall have the meaning provided in Section 9.03.
"Note" shall have the meaning provided in Section 1.04(a).
"Notice of Borrowing" shall have the meaning provided in Section 1.02.
"Obligations" shall mean all amounts, direct or indirect, contingent or
absolute, of every type or description, and at any time existing, owing to any
Lender pursuant to the terms of this Agreement or any other Loan Document,
including without limitation, all principal, interest, premium, penalties, fees,
expenses, indemnification, reimbursements, damages and any other liabilities,
together with and including any amounts received upon the exercise of rights of
recision or other rights of action (including claims for damages) or otherwise.
"Observer" shall have the meaning provided in Section 5.12.
"Payment Default" shall have the meaning provided in Section 9.03.
"PBGC" shall mean the Pension Benefit Guaranty Corporation established
pursuant to Section 4002 of ERISA, or any successor thereto.
"PCF" shall mean Paribas Capital Funding LLC, a Delaware limited
liability company.
"Permitted Acquisition" shall mean the acquisition by the Borrower or
any of its Wholly-Owned Subsidiaries of assets constituting all or substantially
all of a business, business unit, division or product line of any Person not
already a Subsidiary of the Borrower or 100% of the capital stock of any such
Person, although any such acquisition shall only be a Permitted Acquisition so
long as (A) the consideration therefor consists solely of the proceeds of cash,
Permitted Equity Issuances, Permitted Seller Notes, Permitted Earn-Out Debt and
<PAGE>
the assumption of Capitalized Lease Obligations and other Indebtedness to the
extent permitted under Section 6.04; (B) the assets acquired, or the business of
the Person whose stock is acquired, shall be in a Permitted Business; (C) those
acquisitions that are structured as asset acquisitions shall be consummated by
the Borrower or through a new Wholly-Owned Subsidiary formed by the Borrower to
effect such acquisition; and (D) those acquisitions that are structured as stock
acquisitions shall be effected through a purchase of 100% of the capital stock
of such Person by the Borrower or through a merger between such Person and a
newly-formed direct Wholly-Owned Subsidiary of the Borrower or through a merger
of such Person and the Borrower, as the case may be, so that after giving effect
to such merger 100% of the capital stock of the surviving corporation of such
merger is owned by the Borrower or such Person has merged with and into the
Borrower, with the Borrower as the surviving corporation of such merger, as the
case may be. Notwithstanding anything to the contrary contained in the
immediately preceding sentence, an acquisition shall be a Permitted Acquisition
only if all requirements of Section 5.13 with respect to Permitted Acquisitions
are met with respect thereto.
"Permitted Acquisition Notice" shall have the meaning provided in
Section 5.13(a)(ii).
"Permitted Acquisition Purchase Price" shall have the meaning provided
in Section 5.13(a)(x).
"Permitted Borrower Options" shall mean options to purchase Borrower
Common Stock issued by the Borrower to a seller as consideration in connection
with a Permitted Acquisition.
"Permitted Borrower Warrants" shall mean warrants to purchase Borrower
Common Stock issued by the Borrower as consideration to a seller in connection
with a Permitted Acquisition.
"Permitted Business" shall mean a line of business in which the
Borrower and each of the Subsidiaries of the Borrower are engaged on the Funding
Date after giving effect to the Transaction, and reasonably related extensions
thereof.
"Permitted Earn-Out Debt" shall mean Indebtedness of the Borrower
incurred in connection with a Permitted Acquisition and in accordance with
Section 5.13, which Indebtedness is not secured by any assets of the Borrower or
any of its Subsidiaries (including, without limitation, the assets so acquired)
and is only payable by the Borrower upon the passage of time (e.g., non-compete
payments) or in the event certain future performance goals are achieved with
respect to the assets acquired; provided that such Indebtedness shall only
constitute Permitted Earn-Out Debt to the extent the terms of such Indebtedness
expressly limit the maximum potential liability of the Borrower with respect to
and all such other terms shall be in form and substance reasonably satisfactory
to the Required Lenders.
"Permitted Equity Issuances" shall mean issuances of Borrower Common
Stock, Permitted Borrower Warrants and Permitted Borrower Options by the
Borrower as consideration in Permitted Acquisitions to the extent permitted
pursuant to Section 5.13.
"Permitted Liens" shall have the meaning provided in Section 6.01.
<PAGE>
"Permitted Refinancing" means any refinancing of Senior Debt which
refinancing does not result in the final maturity date of the Senior Debt
occurring prior to November 15, 2001.
"Permitted Seller Notes" shall mean notes issued by the Borrower to
sellers of stock or assets in a Permitted Acquisition and issued in accordance
with Section 5.13, which notes shall be subordinated, unsecured and
unguaranteed, and shall be substantially in the form of Exhibit G hereto or
otherwise be in form and substance reasonably satisfactory to the Required
Lenders.
"Person" shall mean any individual, partnership, joint venture, firm,
corporation, limited liability company, association, trust or other enterprise
or any government or political subdivision or any agency, department or
instrumentality thereof.
"Plan" shall mean any pension plan, as defined in Section 3(2) of
ERISA, which is maintained or contributed to by (or to which there is an
obligation to contribute of) the Borrower, a Subsidiary of the Borrower or an
ERISA Affiliate, and each such plan for the five year period immediately
following the latest date on which the Borrower, a Subsidiary of the Borrower or
an ERISA Affiliate maintained, contributed to or had an obligation to contribute
to such plan.
"Pro Forma Basis" shall mean, with respect to any Permitted
Acquisition, the calculation of the consolidated results of the Borrower and its
Subsidiaries otherwise determined in accordance with this Agreement as if the
respective Permitted Acquisition (and all other Permitted Acquisitions
consummated during the respective Calculation Period or thereafter and prior to
the Calculation Date) had been effected on the first day of the respective
Calculation Period, with the following rules to apply in connection therewith:
(i) with respect to calculations of Consolidated Indebtedness, if any
Indebtedness (other than Permitted Earn-Out Debt that would not appear on
the balance sheet of the Borrower or its Subsidiaries under generally
accepted accounting principles) is assumed, incurred or issued pursuant to
the respective Permitted Acquisition (or was assumed, incurred or issued in
connection with any other Permitted Acquisition which occurred during the
relevant Calculation Period or thereafter and on or prior to the
Calculation Date), then all such Indebtedness shall be deemed to have been
outstanding from the first day of the respective Calculation Period and all
Indebtedness (other than Permitted Earn-Out Debt that would not appear on
the balance sheet of the Borrower or its Subsidiaries under generally
accepted accounting principles) that was outstanding during the Calculation
Period or thereafter and prior to the Calculation Date but not outstanding
on the Calculation Date shall be deemed to have been retired or repaid in
full on the first day of the Calculation Period; and
(ii) with respect to all calculations of Consolidated EBITDA (and the
other components of the definition of Consolidated EBITDA included
therein), such calculations shall (I) include only the Consolidated EBITDA
of the Borrower and its Subsidiaries (and the other components of the
definition of Consolidated EBITDA included therein) during the relevant
Calculation Period and shall not include any Consolidated EBITDA (or other
components) of the Person or business, division or product line being
acquired pursuant to the Permitted Acquisition unless (x) such Consolidated
EBITDA of the Person or business, division or product line being acquired
has been audited for the entire Calculation Period by any Qualified
Accounting Firm, (y) in the case of calculations based on unaudited
<PAGE>
financial statements or audited financial statements audited by an
accounting firm other than a Qualified Accounting Firm, the Required
Lenders shall be reasonably satisfied with the calculations of Consolidated
EBITDA of such Person or business, division or product line being acquired
pursuant to the respective Permitted Acquisition or (z) the calculations
are being used in connection with a Permitted Acquisition being effected in
accordance with the proviso at the end of Section 5.13(a) and (II) to the
extent Consolidated EBITDA of the Person or business, division or product
line being acquired is permitted to be included in any calculation of
Consolidated EBITDA pursuant to clause (I) above, take into account
increases to Consolidated EBITDA which may arise from elimination of excess
owners compensation or elimination of any other costs and expenses of the
entity being acquired not expected to be incurred following the date of
such Permitted Acquisition to the extent such increases are acceptable to
the Required Lenders in their reasonable discretion but no other
adjustments for possible future savings that may result from such Permitted
Acquisition; provided, however, such increases shall not be required to be
acceptable to the Required Lenders in the case of calculations being used
in connection with a Permitted Acquisition being effected in accordance
with the proviso at the end of Section 5.13(a).
"Projections" shall have the meaning provided in Section 3.11(b).
"Qualified Accounting Firm" shall have the meaning provided in Section
5.13(a)(vi).
"Qualified Public Equity Offering" shall mean any sale or issuance by
the Borrower of Borrower Common Stock generating gross proceeds of at least
$25,000,000 pursuant to a registered public offering under the Securities Act.
"Quarterly Payment Date" shall mean the first Business Day of each
March, June, September and December of each calendar year.
"RCRA" shall mean the Resource Conservation and Recovery Act, as the
same may be amended from time to time, 42 U.S.C. Section 6901 et seq.
"Real Property" of any Person shall mean all the right, title and
interest of such Person in and to land, improvements and fixtures, including
Leasehold Properties.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of the date hereof, among the Borrower and the investors
named therein, in substantially the form of Exhibit J hereto, as the same may be
amended, modified and/or supplemented from time to time in accordance with the
terms thereof.
"Regulation T" shall mean Regulation T of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor to
all or a portion thereof.
"Regulation U" shall mean Regulation U of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor to
all or a portion thereof.
<PAGE>
"Regulation X" shall mean Regulation X of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor to
all or a portion thereof.
"Related Fund" shall mean, with respect to any Lender that is a fund
that invests in loans, any other fund that invests in loans and is managed by
the same investment advisor as such Lender or by an Affiliate of such investment
advisor.
"Release" means disposing, discharging, injecting, spilling, pumping,
leaking, leaching, dumping, emitting, escaping, emptying, seeping, placing,
pouring and the like, into or upon any land or water or air, or otherwise
entering into the environment.
"Reportable Event" shall mean an event described in Section 4043(c) of
ERISA with respect to a Plan that is subject to Title IV of ERISA other than
those events as to which the 30-day notice period is waived under subsection
.22, .23, .25, .27 or .28 of PBGC Regulation Section 4043.
"Reported Consolidated EBITDA" shall mean Consolidated EBITDA but
without giving effect to the proviso contained in the definition thereof.
"Required Lenders" shall mean, at any time, Lenders the sum of whose
then outstanding Loans represents at least a majority of all then outstanding
Loans.
"Returns" shall have the meaning provided in Section 4.09.
"S&P" shall have the meaning provided in the definition of "Cash
Equivalents."
"SEC" shall have the meaning provided in Section 5.01(h).
"Section 2.04(b)(ii) Certificate" shall have the meaning provided in
Section 2.04(b)(ii).
"Securities Act" shall mean the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder.
"Senior Debt" shall mean all payment and performance obligations now
or hereafter incurred pursuant to and in accordance with the terms of the Credit
Agreement and the other Credit Documents (including without limitation all
principal, interest (including, without limitation, any post-petition interest
on such obligations at the rate set forth in the Credit Agreement, accruing
whether or not granted or permitted in connection with an event of the type
referred to in Section 7.05 hereof), premium, penalties, fees, expenses,
indemnification, reimbursements, damages and other liabilities payable under the
Credit Agreement and the other Credit Documents) and any Interest Rate Contract;
provided, that in no event shall the principal amount of Senior Debt (exclusive
of interest rate protection obligations) exceed $25,000,000 plus any additional
amounts permitted to be incurred pursuant to Section 6.04(viii) and (ix) less
(x) the amount of any permanent reduction of commitments thereunder, (y) any
repayment of loans thereunder (other than loans which can be reborrowed) and (z)
any other repayment accompanied by a permanent reduction of commitments
<PAGE>
thereunder (other than any repayments and/or permanent reductions of commitments
under Senior Debt in connection with a refinancing of such Senior Debt which
does not result in an increase in the aggregate outstanding principal amount of
loans and the aggregate available commitments thereunder from those amounts
outstanding and/or available immediately prior to such refinancing, except to
the extent any such increase is attributable to an incurrence of additional
Indebtedness permitted pursuant to Sections 6.04(viii) and/or (ix)). Senior Debt
outstanding under the Credit Agreement shall continue to constitute Senior Debt
for all purposes hereof, notwithstanding that such Senior Debt or any claim in
respect thereof may be disallowed, avoided or subordinated pursuant to any
insolvency law, the Bankruptcy Code or any similar federal or state law for the
relief of debtors or other applicable insolvency law or equitable principles as
a claim for unmatured interest.
"Senior Indebtedness" shall mean collectively, with respect to the
Borrower and its Subsidiaries, (a) the Senior Debt and (b) any additional
Indebtedness of the Borrower and its Subsidiaries for borrowed money which is
either secured or not subordinated to the payment of the Obligations, to the
extent such additional Indebtedness is permitted to be incurred pursuant to
Section 6.04(viii) or (ix), which additional Indebtedness may be (and in the
case of any incurrence pursuant to Section 6.04(ix), shall be) incurred pursuant
to the Credit Agreement. Senior Indebtedness outstanding under the Credit
Agreement shall continue to constitute Senior Indebtedness for all purposes
hereof, notwithstanding that such Senior Indebtedness or any claim in respect
thereof may be disallowed, avoided or subordinated pursuant to any insolvency
law, the Bankruptcy Code or any similar federal or state law for relief of
debtors or other applicable insolvency law or equitable principles as a claim
for unmatured interest.
"Shareholders' Agreements" shall have the meaning set forth in Section
3.14(ii).
"Shareholders' Equity" shall mean, as at any date of determination, an
amount equal to the "stockholders' equity" of the Borrower, determined in
accordance with generally accepted accounting principles, as reflected on the
consolidated balance sheet of the Borrower.
"Subordinated Guarantor" shall mean each Domestic Subsidiary and each
other Subsidiary which has entered into the Subordinated Guaranty in accordance
with this Agreement.
"Subordinated Guaranty" shall have the meaning provided in Section
3.05 and, in any event, shall mean and include any similar guaranty entered into
pursuant to Section 5.13, as the same may be amended, modified or supplemented
from time to time.
"Subordinated Obligations" shall have the meaning set forth in Section
9.01.
"Subsidiary" shall mean, as to any Person, (i) any corporation more
than 50% of whose stock of any class or classes having by the terms thereof
ordinary voting power to elect a majority of the directors of such corporation
(irrespective of whether or not at the time stock of any class or classes of
such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time owned by such Person directly or
indirectly through one or more Subsidiaries of such Person and (ii) any
partnership, association, joint venture or other entity in which such Person
directly or indirectly through one or more Subsidiaries of such Person has more
than a 50% equity interest at the time.
"Tax Sharing Agreements" shall have the meaning set forth in Section
3.14(v).
<PAGE>
"Taxes" shall have the meaning provided in Section 2.04(a).
"Total Commitment" means the aggregate Commitments of the Lenders.
"Transaction" shall mean collectively, (i) the execution and delivery
of the Loan Documents and the incurrence of Loans hereunder on the Funding Date,
(ii) the execution and delivery of the Modification Agreement on the Funding
Date and (iii) the payment of the Transaction Fees and Expenses in connection
therewith.
"Transaction Fees and Expenses" shall mean all fees and expenses
incurred in connection with and arising out of the Transaction and the
transactions contemplated thereby and hereby; provided, however, that the
aggregate amount of such fees and expenses shall be approximately $1,000,000.
"UCC" shall mean the Uniform Commercial Code as from time to time in
effect in the relevant jurisdiction.
"Unfunded Current Liability" of any Plan shall mean the amount, if
any, by which the value of the accumulated plan benefits under the Plan
determined on a plan termination basis in accordance with actuarial assumptions
at such time consistent with those prescribed by the PBGC for purposes of
Section 4044 of ERISA, exceeds the fair market value of all plan assets
allocable to such liabilities under Title IV of ERISA (excluding any accrued but
unpaid contributions).
"United States" and "U.S." shall each mean the United States of
America.
"Warrant" shall mean, collectively, one or more warrants issued to a
Lender or its assignees in connection with this Agreement, substantially in the
form of Exhibit H hereto.
"Warrant Agreement" shall mean the Warrant Agreement, dated as of the
date hereof, between the Borrower and the Lenders, in substantially the form of
Exhibit I hereto, as the same may be amended, modified or supplemented from time
to time in accordance with the terms thereof.
"Warrant Documents" mean the Warrant, the Warrant Agreement and the
Registration Rights Agreement.
"Wholly-Owned Domestic Subsidiary" shall mean, as to any Person, any
Wholly-Owned Subsidiary of such Person that is a Domestic Subsidiary.
"Wholly-Owned Subsidiary" shall mean, as to any Person, (i) any
corporation 100% of whose capital stock is at the time owned by such Person
and/or one or more Wholly-Owned Subsidiaries of such Person and (ii) any
partnership, association, joint venture or other entity in which such Person
and/or one or more Wholly-Owned Subsidiaries of such Person has a 100% equity
interest at such time.
<PAGE>
"Year 2000 Compliant" shall mean that all material Information Systems
and Equipment accurately process date data (including, but not limited to,
calculating, comparing and sequencing), before, during and after the year 2000,
as well as same and multi-century dates, or between the years 1999 and 2000,
taking into account all leap years, including the fact that the year 2000 is a
leap year, and further, that when used in combination with, or interfacing with,
other Information Systems and Equipment, shall accurately accept, release and
exchange date data, and shall in all material respects continue to function in
the same manner as it performs today and shall not otherwise impair in any
material respect the accuracy or functionality of Information Systems and
Equipment.
SECTION 9. Subordination.
9.01 Obligations Subordinate to Senior Indebtedness. The Borrower
covenants and agrees, and each Lender and each other holder of any Note, if any,
likewise covenants and agrees, that, (a) to the extent and in the manner
hereinafter set forth in this Section 9, the payment of the Obligations,
including pursuant to any amendment, modification, restatement or renewal
thereof (the "Subordinated Obligations"), is hereby expressly made subordinated
and subject in right of payment to the prior payment in full of all Senior
Indebtedness and (b) the terms and conditions of such subordination is for the
benefit of the holders of the Senior Indebtedness and each such holder may
enforce such subordination.
9.02 Payment Over of Proceeds Upon Dissolution. In the event of (i)
any insolvency or bankruptcy case or proceeding, or any receivership,
liquidation, reorganization or other similar case or proceeding in connection
therewith, relative to the Borrower or to its assets, or (ii) any liquidation,
dissolution or other winding up of the Borrower, whether voluntary or
involuntary and whether or not involving insolvency or bankruptcy, or (iii) any
assignment for the benefit of creditors or any other marshalling of assets and
liabilities of the Borrower (collectively, "Bankruptcy Events"), then and in any
such event:
(a) the holders of Senior Indebtedness shall be entitled to receive
payment in full in cash of all amounts due or to become due on or in
respect of all Senior Indebtedness (including interest after the
commencement of a Bankruptcy Event at the rate specified in the Senior
Indebtedness, whether or not allowed), before any Lender is entitled to
receive any direct or indirect payment or distribution on account of
Subordinated Obligations including, without limitation, by exercise of
set-off and any payment which may be payable or deliverable by reason of
any other Indebtedness being subordinated in right of payment to the
Subordinated Obligations;
(b) any payment or distribution of assets of the Borrower of any kind
or character, whether in cash, property or securities (including, without
limitation, securities of the Borrower or any successor), by set-off or
otherwise, to which any Lender would be entitled on account of the
Subordinated Obligations but for the provisions of this Section 9 or 2.02,
including any such payment or distribution which may be payable or
deliverable by reason of the payment of any other Indebtedness of the
Borrower being subordinated to the payment of Subordinated Obligations
(except for any such payment or distribution (1) authorized by an unstayed,
<PAGE>
final, nonappealable order or decree stating that effect is being given to
the subordination of such Subordinated Obligations to the Senior
Indebtedness, and made by a court of competent jurisdiction in a
reorganization proceeding under any applicable bankruptcy law or (2) of
securities which, if debt securities, are subordinated to at least the same
extent as the Subordinated Obligations are to (A) such Senior Indebtedness
or (B) any securities issued in exchange for Senior Indebtedness; provided,
however, that (x) the final maturity of such securities shall not be
earlier than one year following the maturity date of the last to mature of
the Senior Indebtedness (including any securities issued in exchange
therefor) at the time outstanding and the scheduled amortization thereof
shall not be more favorable (as to amount or time of payment) than the
scheduled amortization of the principal amount of the Subordinated
Obligations, (y) such securities shall contain covenants which are no more
restrictive than the covenants contained herein and shall not contain
greater defaults than as are contained herein, and (z) such securities
shall bear interest at a rate per annum less than or equal to 14% per annum
computed on the same basis as described herein) 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 otherwise, directly to the holders of all Senior Indebtedness 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, ratably according to the aggregate
amounts remaining unpaid on account of such Senior Indebtedness held or
represented by each, to the extent necessary to make payment in full of all
such 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 9, any Lender shall have received any such payment or
distribution of assets of the Borrower of any kind or character on account
of the Subordinated Obligations, whether, property or securities
(including, without limitation, securities of the Borrower or any successor
thereto), including any such payment or distribution which may be payable
or deliverable by reason of the payment of any other Indebtedness of the
Borrower being subordinated to the payment of the Subordinated Obligations
(but excluding any payment of the character described in the parenthetical
clause in the foregoing paragraph (b)) before all Senior Indebtedness is
paid in full, then and in such event such payment or distribution shall be
paid over or delivered, in accordance with Section 9.10 hereof, forthwith
to the trustee in bankruptcy, receiver, liquidating trustee, custodian,
assignee, agent or other Person making payment or distribution of assets of
the Borrower for application to the payment of all such Senior Indebtedness
remaining unpaid, to the extent necessary to pay such Senior Indebtedness
in full, after giving effect to any concurrent payment or distribution to
or for the holders of such Senior Indebtedness.
If, notwithstanding the provisions of this Agreement, there shall
occur any consolidation of the Borrower with, or any merger of the Borrower
into, another corporation or the liquidation or dissolution of the Borrower
following any conveyance, transfer or lease of its properties and assets
substantially as an entirety to another corporation, such consolidation, merger
<PAGE>
or liquidation shall not be deemed a Bankruptcy Event; provided, that no other
Bankruptcy Event shall have occurred and be continuing at the time of such
consolidation, merger or liquidation. The Bank is hereby authorized to file an
appropriate claim on behalf of the Lenders if the Lenders do not file such claim
or there is not filed on behalf of the Lenders a proper proof of claim in the
form required in any Bankruptcy Event prior to thirty (30) days before the
expiration of the time to file such claim or claims.
9.03 No Payment in Certain Circumstances. In the event that (i) the
Borrower shall fail to pay when due (after giving effect to any applicable grace
periods), upon acceleration or otherwise, any amount or obligation with respect
to Senior Indebtedness under the Credit Agreement (a "Payment Default") which
Payment Default shall not have been cured or waived in writing, or (ii) an event
of default (other than a Payment Default) under the Credit Agreement shall occur
and be continuing, which shall not have been cured or waived in writing (a
"Non-Payment Default"), and the Borrower and each Lender receive written notice
of such Non-Payment Default from either the Bank or the holders of at least a
majority in aggregate principal amount of the Senior Indebtedness under the
Credit Agreement at the time outstanding (a "Non-Payment Blockage Notice"), then
no payment on account of the Subordinated Obligations shall be made by the
Borrower or otherwise on account of the Subordinated Obligations (x) in the case
of any Payment Default, unless and until such Senior Indebtedness shall have
been paid in full or until such Payment Default shall have been cured or waived
in writing, or (y) in the case of any Non-Payment Default, from the date on
which the Borrower and each Lender receive such Non-Payment Blockage Notice
until the earlier of (1) 179 days after such date and (2) the date, if any, on
which the Senior Indebtedness under the Credit Agreement is paid in full or such
Non-Payment Default is waived by the holders of such Senior Indebtedness under
the Credit Agreement or otherwise cured (a "Non-Payment Blockage Period");
provided, that (x) only one Non-Payment Blockage Notice may be given in any
360-day period, (y) no Non-Payment Default or event which, with the giving of
notice and/or lapse of time, would become a Non-Payment Default which, in either
case, existed or was continuing on the date of the commencement of any
Non-Payment Blockage Period shall be, or be made, the basis for the commencement
of a subsequent Non-Payment Blockage Period unless such Non-Payment Default or
event, as the case may be, shall in the interim have been cured or waived in
writing for period of not less than 90 consecutive days and (z) there must be a
181 consecutive day period in any 360 consecutive day period during which no
Non-Payment Blockage Period is in effect.
In the event that, notwithstanding the foregoing, any Lender shall
have received any payment or distribution on account of the Subordinated
Obligations contrary to the foregoing provisions of this Section 9.03, then and
in such event such payment shall be paid over and delivered forthwith to the
holders (or their agent or trustee) of the relevant Senior Indebtedness in
accordance with Section 9.10 hereof. The provisions of this Section 9.03 shall
not apply to any payment with respect to which Section 9.02 would be applicable.
9.04 Acceleration Rights; Remedies. If an Event of Default, other
than an Event of Default under Section 7.05, shall exist at any time that any
Senior Indebtedness under the Credit Agreement shall be outstanding or there
shall exist any obligation of the Bank to make any loan or advance thereunder,
no Lender nor any other holder of the Notes shall take any action, judicial or
otherwise, to accelerate or collect payment on the Subordinated Obligations or
to pursue any other remedy with respect to the Subordinated Obligations
(including, without limitation, commencing or joining with any other creditor of
the Borrower in commencing any proceeding in bankruptcy) prior to the earlier of
<PAGE>
(i) the expiration of 30 calendar days immediately following the receipt by the
Bank of notice of the occurrence of such Event of Default from the Required
Lenders or from the holder or holders entitled to accelerate payments on the
Subordinated Obligations or (ii) acceleration of the Senior Indebtedness under
the Credit Agreement, but such action may only be taken if at the end of such
period such Event of Default has not been cured or waived; provided, that any
amount received by any of the Lenders as a result of any acceleration permitted
above prior to payment in full in cash of the Senior Indebtedness under the
Credit Agreement shall be paid to the Bank in accordance with the provisions of
this Section 9.
9.05 Payment Otherwise Permitted. Nothing contained in this Section 9
or elsewhere in this Agreement or in the Notes shall prevent the Borrower, at
any time except as set forth in Section 2.02 or 9.02 or under the conditions
described in Section 9.03, from making payments at any time of principal of and
interest on the Loans or any other amount payable by the Borrower under the
Notes or this Agreement. Notwithstanding the provisions of this Section 9, no
Lender shall be charged with knowledge of the existence of any facts, including
of the occurrence of a Payment Default, which would prohibit the making of any
payment or distribution by the Borrower or of any other payment on account of
the Subordinated Obligations or the receipt or retention thereof by any Lender,
or the taking of any action by any Lender of the type referred to in Section
9.04, unless such Lender shall have received at least two Business Day's prior
written notice of such facts.
9.06 Subrogation to Rights of Holders of Senior Indebtedness. Subject
to, and solely effective following, the final payment in full of all Senior
Indebtedness, the Lenders shall be subrogated to the rights of the holders of
Senior Indebtedness to receive payments and distributions of cash, property and
securities applicable to such Senior Indebtedness to the extent of the payments
or distributions made to the Bank, or otherwise applied to payment of, the
Senior Indebtedness pursuant to the provisions of this Section 9 until the
principal of and interest on the Loans and the Notes shall be paid in full in
cash. For purposes of such subrogation, no payments or distributions to the
holders of Senior Indebtedness of any cash, property or securities to which the
Lenders would be entitled except for the provisions of this Section 9, and no
payments over pursuant to the provisions of this Section 9 to the holders of
Senior Indebtedness by the Lenders shall, as among the Borrower, its creditors
(other than holders of Senior Indebtedness) and the Lenders, be deemed to be a
payment or distribution by the Borrower to or on account of the Senior
Indebtedness.
9.07 Provisions Solely to Define Relative Rights. The provisions of
this Section 9 and Section 2.02 are and are intended solely for the purpose of
defining the relative rights of the holders of the Notes on the one hand and the
holders of Senior Indebtedness on the other hand. Nothing contained in this
Section 9 or elsewhere in this Agreement or in the Notes is intended to or shall
(i) impair, as among the Borrower, its creditors (other than holders of Senior
Indebtedness) and the Lenders, the obligation of the Borrower, which is absolute
and unconditional, to pay to the Lenders the principal of, and premium and
interest on, and any other amount payable by the Borrower under, the Loans, the
Notes or this Agreement as and when the same shall become due and payable in
accordance with its terms; or (ii) affect the relative rights against the
Borrower of the Lenders and its creditors (other than the holders of Senior
Indebtedness); or (iii) prevent the Lenders from accelerating the Loans and
exercising all other remedies otherwise permitted by applicable law upon default
<PAGE>
under this Agreement, subject to the rights, if any, under this Section 9 of the
holders of Senior Indebtedness (x) upon the occurrence of a Bankruptcy Event, to
receive, pursuant to and in accordance with Section 9.02, cash, property and
securities otherwise payable or deliverable to the Lenders, (y) under the
conditions specified in Section 9.03, to prevent any payment prohibited by such
Section or (z) under Section 9.04.
9.08 No Waiver of Subordination Provisions; Amendment. No right of any
present or future holder of any Senior Indebtedness to enforce subordination as
provided herein shall at any time in any way be prejudiced or impaired by any
act or failure to act on the part of the Borrower or by any act or failure to
act, in good faith, by any such holder, or by any non-compliance by the Borrower
with the terms, provisions, and covenants of this Agreement, regardless of any
knowledge thereof any such holder may have or be otherwise charged with. Without
in any way limiting the generality of the foregoing, the holders of Senior
Indebtedness may at any time and from time to time, without the consent of or
notice to the Lenders or any other holder of the Notes, without incurring
responsibility to the Lenders or such holders and without impairing or releasing
the subordination provided in this Section 9 or the obligations hereunder of the
Lenders and such holders to the holders of Senior Indebtedness, do any one or
more of the following: (i) change the manner, place or terms of payment or
extend the time of payment of, or renew or alter, Senior Indebtedness or any
instrument evidencing the same or any agreement under which Senior Indebtedness
is outstanding; (ii) sell, exchange, release or otherwise deal with any property
pledged, mortgaged or otherwise securing Senior Indebtedness; (iii) release any
Person liable in any manner for the collection of Senior Indebtedness; (iv)
exercise or refrain from exercising any rights against the Borrower and any
other Person or any security therefor; and (v) take or refrain from taking any
other action whether similar or dissimilar to the foregoing.
9.09 Reliance on Judicial Order or Certificate of Liquidating
Agent. Upon any payment or distribution of assets of the Borrower or any other
payment on account of the Subordinated Obligations referred to in this Section
9, the Lenders shall be entitled to rely upon any unstayed, final, nonappealable
order or decree entered by any court of competent jurisdiction in which a
Bankruptcy Event is pending, for the purpose of ascertaining the Persons
entitled to participate in such payment or distribution, the holders of Senior
Indebtedness of the Borrower, the amount thereof or payable thereon, the amount
or amounts paid or distributed thereon and all other facts pertinent thereto or
to this Section 9.
9.10 Turnover; Miscellaneous Subordination Provisions. (a) If a
payment or distribution is made to any holder of Subordinated Obligations that
because of this Section 9 or Section 2.02 should not have been made to it, such
holder shall segregate such payment or distribution from its other funds and
property and hold it in trust for the benefit of, and, upon written request, pay
it over (in the same form as received, with any necessary endorsement) to, the
holders of Senior Indebtedness as their interests may appear, or the Bank or
other agent or representative or the trustee under the Credit Agreement,
indenture or other agreement (if any) pursuant to which Senior Indebtedness may
have been incurred or issued, as their respective interests may appear, for
application (in the case of cash) to, or as collateral (in the case of non-cash
property or securities) for the payment or prepayment of, all obligations with
<PAGE>
respect to Senior Indebtedness remaining unpaid to the extent necessary to pay
such obligations in full in accordance with their terms, after giving effect to
an concurrent payment or distribution to or for the holders of Senior
Indebtedness.
(b) A distribution may consist of cash, securities or other property,
by set-off or otherwise, and a payment or distribution on account of any
obligations with respect to the holders of Subordinated Obligations shall
include any redemption, purchase or other acquisition of the Subordinated
Obligations.
(c) For the purpose of this Section 9 and Section 2.02, all Senior
Indebtedness now or hereafter existing shall not be deemed to have been paid in
full unless the holders or owners thereof shall have received payment in full in
cash.
(d) The agreements contained in this Section 9 and Section 2.02 shall
continue to be effective or be reinstated, as the case may be, if at any time
any payment of any of the Senior Indebtedness is rescinded or must otherwise be
returned by any holder of Senior Indebtedness upon any Bankruptcy Event of the
Borrower, all as though such payment had not been made.
(e) All rights and interests under this Agreement of the holders of
Senior Indebtedness, and all agreements and obligations of the holders of
Subordinated Obligations and the Borrower under this Section 9 and Section 2.02,
shall remain in full force and effect irrespective of (i) any lack of validity
or enforceability of the Credit Agreement, any promissory notes evidencing the
Indebtedness thereunder, or any other agreement or instrument relating thereto
or to any other Senior Indebtedness, including, without limitation, any
agreement referred to in the definition of Credit Agreement, or (ii) any other
circumstance that might otherwise constitute a defense available to, or a
discharge of, any holders of Subordinated Obligations or the Borrower.
(f) The provisions set forth in this Section 9 and Section 2.02
constitute a continuing agreement and shall (i) be and remain in full force and
effect until payment in full of all Senior Indebtedness at such time when the
Bank shall have no obligation to make advances under the Credit Agreement, (ii)
be binding upon the holders of Subordinated Obligations, the Borrower and their
respective successors, transferees and assigns, and (iii) inure to the benefit
of, and be enforceable directly by, each of the holders of Senior Indebtedness
and their respective successors, transferees and assigns.
(g) No waiver of the rights of the holders of the Senior Indebtedness
hereunder shall be deemed made unless the same shall be in writing, duly signed
by an authorized officer of such holder, and each waiver, if any, shall apply
only to the specific instance involved and shall in no way impair the rights of
such holder, or the obligations of the Lenders, in any other respect at any
other time.
<PAGE>
SECTION 10. Miscellaneous.
10.01 Payment of Expenses, Etc. The Borrower agrees to: (i) whether or
not the transactions herein contemplated are consummated, pay all reasonable
out-of-pocket costs and expenses of each Lender (including, without limitation,
the reasonable fees and disbursements of White & Case LLP and up to $2,500 of
the reasonable fees and disbursements of O'Sullivan Graev & Karabell, LLP) in
connection with the preparation, execution and delivery of this Agreement and
the other Loan Documents and the documents and instruments referred to herein
and therein and any amendment, waiver or consent relating hereto or thereto, and
of each of the Lenders in connection with the enforcement of this Agreement and
the other Loan Documents and the documents and instruments referred to herein
and therein (including, without limitation, the reasonable fees and
disbursements of counsel for each of the Lenders); (ii) pay and hold each of the
Lenders harmless from and against any and all present and future stamp, excise
and other similar taxes with respect to the foregoing matters and save each of
the Lenders harmless from and against any and all liabilities with respect to or
resulting from any delay or omission (other than to the extent attributable to
such Lender) to pay such taxes; and (iii) defend, protect, indemnify and hold
harmless each Lender and each of its officers, directors, employees,
representatives, attorneys, agents, Affiliates, any other Person in control of
any Lender or its affiliates (collectively called the "Indemnitees") from and
against any and all liabilities, obligations (including removal or remedial
actions), losses, damages (including foreseeable and unforeseeable consequential
damages and punitive damages), penalties, claims, actions, judgments, suits,
proceedings, costs, expenses and disbursements (including reasonable attorneys'
and consultants fees and disbursements) of any kind or nature whatsoever that
may at any time be incurred by, imposed on or assessed against the Indemnitees
directly or indirectly based on, or arising or resulting from, or in any way
related to, or by reason of (a) any investigation, litigation or other
proceeding (whether or not any Lender is a party thereto and whether or not any
such investigation, litigation or other proceeding is between or among any
Lender, the Borrower or any of its Subsidiaries, or any third Person or
otherwise) related to the entering into and/or performance of this Agreement or
any other Document or the proceeds of any Loans hereunder or the consummation of
any transactions contemplated herein (including, without limitation, the
Transaction) or in any other Document or the exercise of any of their rights or
remedies provided herein or in the other Loan Documents; or (b) the actual or
alleged generation, presence or Release of Hazardous Materials on or from, or
the transportation of Hazardous Materials to or from, any Real Property owned or
at any time operated by the Borrower or any of its Subsidiaries; or (c) any
Environmental Claim relating to the Borrower, any of its Subsidiaries or any
Real Property owned or at any time operated by the Borrower or any of its
Subsidiaries; or (d) the exercise of the rights of any Lender under any of the
provisions of this Agreement, any other Loan Document or any Loans hereunder; or
(e) the consummation of any transaction contemplated herein (including, without
limitation, the Transaction) or in any other Loan Document (the "Indemnified
Matters") regardless of when such Indemnified Matter arises, but excluding any
such Indemnified Matter based solely on the gross negligence or willful
misconduct of any Indemnitee.
10.02 Right of Setoff. In addition to any rights now or hereafter
granted under applicable law or otherwise, and not by way of limitation of any
such rights, upon the occurrence and during the continuance of an Event of
Default, each Lender is hereby authorized at any time or from time to time,
<PAGE>
without presentment, demand, protest or other notice of any kind to the Borrower
or any of its Subsidiaries or to any other Person, any such notice being hereby
expressly waived, but in any event subject to Section 9, to set off and to
appropriate and apply any and all deposits (general or special) and any other
Indebtedness at any time held or owing by such Lender (including, without
limitation, by branches and agencies of such Lender wherever located) to or for
the credit or the account of the Borrower or any of its Subsidiaries against and
on account of the Subordinated Obligations and liabilities of the Borrower or
any of its Subsidiaries to such Lender under this Agreement or under any of the
other Loan Documents, including, without limitation, all interests in
Subordinated Obligations purchased by such Lender pursuant to Section 10.06(b),
and all other claims of any nature or description arising out of or connected
with this Agreement or any other Loan Document, irrespective of whether or not
such Lender shall have made any demand hereunder and although said Subordinated
Obligations, liabilities or claims, or any of them, shall be contingent or
unmatured. The Lenders hereby agree to provide notice to the Borrower and the
Bank of any action taken pursuant to this Section 10.02; provided, that the
failure to give such notice shall not affect any action taken by such Lender
pursuant to this Section 10.02.
10.03 Notices. Except as otherwise expressly provided herein, all
notices and other communications provided for hereunder shall be in writing
(including telegraphic, telex, facsimile or cable communication) and mailed,
telegraphed, telexed, telecopied, cabled or delivered: if to the Borrower, at
its address specified opposite its signature below; if to any Lender, at its
address specified opposite its name below; if to the Bank, to the address
specified in the Credit Agreement; or, as to the Borrower or any Lender, at such
other address as shall be designated by such party in a written notice to the
other parties hereto and the Bank; and, as to the Bank, at such other address as
shall be designated by the Bank in a written notice to the Borrower and each
Lender. All such notices and communications shall, when mailed, telegraphed,
telexed, facsimile, or cabled or sent by overnight courier, be effective three
Business Days after deposited in the mails, certified, return receipt requested,
when delivered to the telegraph company or cable company or one Business Day
following delivery to an overnight courier, as the case may be, or when sent by
telex or facsimile device, except that notices and communications to a Lender or
the Bank shall not be effective until received by such Lender or the Bank.
10.04 Benefit of Agreement. (a) This Agreement shall be binding upon
and inure to the benefit of and be enforceable by the respective successors and
assigns of the parties hereto; provided, however, that no Loan Party may assign
or transfer any of its rights, obligations or interest hereunder or under any
other Loan Document without the prior written consent of all Lenders; and
provided, further, that although any Lender may transfer, assign or grant
participations in its rights hereunder, such Lender shall remain a "Lender" for
all purposes hereunder (and may not transfer or assign all or any portion of its
Loans hereunder except as provided in Section 10.04(b)) and the transferee,
assignee or participant, as the case may be, shall not constitute a "Lender"
hereunder; and provided, further, that no Lender shall transfer or grant any
participation (x) to any competitor of the Borrower or any of its Subsidiaries
or (y) under which the participant shall have rights to approve any amendment to
or waiver of this Agreement or any other Loan Document except to the extent such
amendment or waiver would: (i) extend the final scheduled maturity of any Loan
or Note in which such participant is participating, or reduce the rate or extend
<PAGE>
the time of payment of interest (except in connection with a waiver of
applicability of any post-default increase in interest rates) or reduce the
principal amount thereof over the amount thereof then in effect (it being
understood that waivers of any Defaults or Events of Default or of a mandatory
repayment shall not constitute a change in the terms of such participation), or
(ii) consent to the assignment or transfer by or a release of the Borrower or
any Subordinated Guarantor of any of its rights and obligations under this
Agreement or any other Loan Document other than, in the case of any Subordinated
Guaranty, as otherwise provided therein. In the case of any such permitted
participation, the participant shall not have any rights under this Agreement or
any of the other Loan Documents (the participant's rights against such Lender in
respect of such participation to be those set forth in the agreement executed by
such Lender in favor of the participant relating thereto) and all amounts
payable by any Loan Party hereunder and thereunder shall be determined as if
such Lender had not sold such participation.
(b) Notwithstanding the foregoing, any Lender (or any Lender together
with one or more other Lenders) may assign all or a portion of its outstanding
principal amount of Loans to one or more Eligible Transferees or to a Related
Fund each of which assignees shall become a party to this Agreement as a Lender
by execution of an assignment and assumption agreement substantially in the form
of Exhibit F (appropriately completed); provided that: (i) at such time Schedule
I shall be deemed modified to reflect the outstanding Loans of such new Lender
and of the existing Lenders; (ii) new Notes will be issued, at the Borrower's
expense, to such new Lender and to the assigning Lender upon the request of such
new Lender or assigning Lender, such new Notes to be in conformity with the
requirements of Section 1.04 (with appropriate modifications) to the extent
needed to reflect the revised outstanding Loans; and (iii) notice that such new
Lender has become a Lender hereunder is provided to the Bank and the Borrower in
accordance with Section 10.03. At the time of each assignment pursuant to this
Section 10.04(b) to a Person which is not already a Lender hereunder and which
is not a United States person (as such term is defined in Section 7701(a)(30) of
the Code) for Federal income tax purposes, the respective assignee Lender shall
provide to the Borrower the appropriate Internal Revenue Service Forms (and, if
applicable, a Section 2.04(b)(ii) Certificate) required by Section 2.04(b).
10.05 No Waiver; Remedies Cumulative. No failure or delay on the part
of any Lender or any holder of any Note in exercising any right, power or
privilege hereunder or under any other Loan Document and no course of dealing
between the Borrower or any of its Subsidiaries and any Lender or the holder of
any Note shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, power or privilege hereunder or under any other Loan
Document preclude any other or further exercise thereof or the exercise of any
other right, power or privilege hereunder or thereunder. The rights, powers and
remedies herein or in any other Loan Document expressly provided are cumulative
and not exclusive of any rights, powers or remedies which any Lender or the
holder of any Note would otherwise have. No notice to or demand on the Borrower
or any of its Subsidiaries in any case shall entitle any such Person to any
other or further notice or demand in similar or other circumstances or
constitute a waiver of the rights of any Lender or the holder of any Note to any
other or further action in any circumstances without notice or demand.
10.06 Payments Pro Rata. Each of the Lenders agrees that, if it should
receive any amount hereunder (whether by voluntary payment, by realization upon
<PAGE>
security, by the exercise of the right of setoff or banker's lien, by
counterclaim or cross action, by the enforcement of any right under the Loan
Documents, or otherwise), which is applicable to the payment of the principal
of, or interest on, the Loans, of a sum which with respect to the related sum or
sums received by other Lenders is in a greater proportion than the total of such
Subordinated Obligations then owed and due to such Lender bears to the total of
such Subordinated Obligations then owed and due to all of the Lenders
immediately prior to such receipt, then such Lender receiving such excess
payment shall purchase for cash without recourse or warranty from the other
Lenders an interest in the Subordinated Obligations to such other Lenders in
such amount as shall result in a proportional participation by all the Lenders
in such amount; provided, that if all or any portion of such excess amount is
thereafter recovered from such purchasing Lender, such purchase shall be
rescinded and the purchase price restored to the extent of such recovery, but
without interest.
10.07 Calculations; Computations. (a) The financial statements to be
furnished to the Lenders pursuant hereto shall be made and prepared in
accordance with generally accepted accounting principles in the United States
consistently applied throughout the periods involved (except as set forth in the
notes thereto or as otherwise disclosed in writing by the Borrower to the
Lenders); provided, that except as otherwise specifically provided herein, all
computations determining compliance with Section 6, including the definitions
used therein, shall utilize accounting principles and policies in conformity
with those used to prepare the historical financial statements for the fiscal
year ended December 31, 1997 delivered to the Lenders pursuant to Section
4.05(a); provided further that for purposes of determining compliance with
Sections 6.07 and 6.08, calculations of Consolidated EBITDA shall be determined
on a Pro Forma Basis.
(b) All computations of interest hereunder shall be made on the basis
of a year of 360 days for the actual number of days (including the first day but
excluding the last day) occurring in the period for which such interest is
payable.
10.08 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER OF JURY
TRIAL. (a) THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL BE CONSTRUED IN
ACCORDANCE WITH AND BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK. ANY LEGAL
ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT
MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES
FOR THE SOUTHERN DISTRICT OF NEW YORK, AND, BY EXECUTION AND DELIVERY OF THIS
AGREEMENT, THE BORROWER HEREBY IRREVOCABLY DESIGNATES, ACCEPTS AND EMPOWERS FOR
ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE
EXCLUSIVE JURISDICTION OF THE AFORESAID COURTS. BORROWER HEREBY FURTHER
IRREVOCABLY WAIVES ANY CLAIM THAT ANY SUCH COURTS LACK JURISDICTION OVER THE
BORROWER, AND AGREES NOT TO PLEAD OR CLAIM, IN ANY LEGAL ACTION OR PROCEEDING
WITH RESPECT TO THIS AGREEMENT OR ANY LOAN DOCUMENT BROUGHT IN ANY OF THE
AFORESAID COURTS, THAT ANY SUCH COURT LACKS JURISDICTION OVER THE BORROWER. THE
BORROWER FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF
THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF
COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO THE BORROWER
AT ITS ADDRESS SET FORTH OPPOSITE ITS SIGNATURE BELOW, SUCH SERVICE TO BECOME
EFFECTIVE 30 DAYS AFTER SUCH MAILING. THE BORROWER HEREBY IRREVOCABLY WAIVES ANY
<PAGE>
OBJECTION TO SUCH SERVICE OF PROCESS AND FURTHER IRREVOCABLY WAIVES AND AGREES
NOT TO PLEAD OR CLAIM IN ANY ACTION OR PROCEEDING COMMENCED HEREUNDER OR UNDER
ANY OTHER LOAN DOCUMENT THAT SERVICE OF PROCESS IN THE MANNER DESCRIBED ABOVE
WAS IN ANY WAY INVALID OR INEFFECTIVE. NOTHING HEREIN SHALL AFFECT THE RIGHT OF
ANY LENDER OR THE HOLDER OF ANY NOTE TO SERVE PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST
ANY PARTY IN ANY OTHER JURISDICTION.
(b) THE BORROWER HEREBY IRREVOCABLY WAIVES ANY OBJECTION WHICH IT MAY
NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY OF THE AFORESAID ACTIONS OR
PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER
LOAN DOCUMENT BROUGHT IN THE COURTS REFERRED TO IN CLAUSE (a) ABOVE AND HEREBY
FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT
THAT ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN
AN INCONVENIENT FORUM.
(c) EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES
ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING
OUT OF OR RELATING TO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
10.09 Counterparts. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which when so executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument. A set of counterparts
executed by all the parties hereto shall be maintained by the Borrower and the
Lenders.
10.10 Effectiveness. This Agreement shall become effective on the date
(the "Effective Date") on which the Borrower and each of the Lenders shall have
signed a copy hereof (whether the same or different copies) and shall have
delivered the same to each other party hereto at the appropriate address
required by Section 10.03.
<PAGE>
10.11 Headings Descriptive. The headings of the several sections and
subsections of this Agreement are inserted for convenience only and shall not in
any way affect the meaning or construction of any provision of this Agreement.
10.12 Amendment or Waiver. Neither this Agreement nor any other Loan
Document nor any terms hereof or thereof may be amended, changed, waived,
discharged or terminated unless such amendment, change, waiver, discharge or
termination is in writing signed by the respective Loan Parties party thereto
and the Required Lenders; provided, that no such amendment, change, waiver,
discharge or termination shall, without the consent of each Lender: (i) extend
the final scheduled maturity of any Loan or Note beyond the Maturity Date, or
reduce the rate or extend the time of payment of interest thereon, or reduce the
principal amount thereof; (ii) amend, modify or waive any provision of this
Section 10.12; (iii) reduce the percentage specified in, or otherwise modify,
the definition of Required Lenders (it being understood that, with the consent
of the Required Lenders, additional extensions of credit pursuant to this
Agreement may be included in the determination of the Required Lenders on
substantially the same basis as the extensions of Loans are included on the
Effective Date); (iv) consent to the assignment or transfer by the Borrower any
of its rights and obligations under this Agreement; or (v) amend or waive the
provisions of Section 6.17 or 9 or the first parenthetical appearing in the last
paragraph of Section 7; provided further, that the provisions of Section 6.03
may not be amended, changed or waived in connection with a proposed purchase of
Warrants by the Borrower from Paribas, any Exeter Entity or any of their
respective Affiliates, as the case may be, pursuant to Section 14(d) of the
Warrant Agreement without the consent of Paribas and each Exeter Entity. The
Borrower and the Lenders hereby agree for the benefit of the holders of Senior
Indebtedness that no amendment of, supplement of, modification to or waiver
under any provision of this Agreement or any Notes will be entered into or
effected (x) with respect to Section 2.02 or 9 or (y) with respect to any other
provisions, if the same would be adverse in any material respect to the holders
of Senior Indebtedness (or any of them), without the prior consent of the Bank
under the Credit Agreement.
10.13 Survival. All indemnities set forth herein including, without
limitation, in Sections 2.04 and 10.01 shall survive the execution and delivery
of this Agreement and the Notes and the making and repayment of the Loans.
10.14 Domicile of Loans. Each Lender may transfer and carry its Loans
at, to or for the account of any office, Subsidiary or Affiliate of such Lender.
10.15 Post-Closing Obligations. The Borrower hereby acknowledges that
in connection with certain assignments hereof, any of the Lenders may be
required to obtain a rating of the Subordinated Obligations and Commitments
hereunder of the Borrower and the Borrower hereby consents to such Lenders
providing to the respective rating agency on a confidential basis such
information regarding the Subordinated Obligations and creditworthiness of the
Borrower as is customary practice of such rating agency.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused their duly
authorized officers to execute and deliver this Agreement as of the date first
above written.
Address
380 Allwood Road CONSOLIDATED DELIVERY &
Clifton, New Jersey 07012 LOGISTICS, INC.
Attention: Chief Executive Officer
Telephone: (973) 471-1005
Facsimile: (973) 471-5519
By: /s/ Albert Van Ness, Jr.
Title: Chief Executive Officer
787 Seventh Avenue PARIBAS CAPITAL FUNDING LLC
New York, New York 10019
Attention: Joseph Kaufman
Telephone: (212) 841-2000 By: /s/ Jeffrey J. Youle
Facsimile: (212) 841-2144 Title: Managing Director
10 East 53rd Street, 32nd Floor EXETER VENTURE LENDERS L.P
New York, New York 10022
Attention: Keith R. Fox By: EXETER VENTURE ADVISORS, INC.,
as its general partner
Telephone: (212) 872-1172
Facsimile: (212) 872-1198 By: /s/ Kurt Bergquist
Title: Vice President
10 East 53rd Street, 32nd Floor EXETER CAPITAL PARTNERS IV, L.P
New York, New York 10022
Attention: Keith R. Fox By: EXETER IV ADVISORS, L.P,
as its general partner
Telephone: (212) 872-1172
By: EXETER IV ADVISORS, INC.,
as its general partner
Facsimile: (212) 872-1198
By: /s/ Kurt Bergquist
Title: Vice President
<PAGE>
SCHEDULE I
COMMITMENTS
Lender Commitment
Paribas Capital Funding LLC $10,000,000
Exeter Capital Partners IV, L.P. $2,500,000
Exeter Venture Lenders L.P. $2,500,000
$15,000,000
<PAGE>
INSURANCE POLICIES
<PAGE>
SUBSIDIARIES
<PAGE>
EXISTING LIENS
<PAGE>
EXISTING INDEBTEDNESS
<PAGE>
REAL PROPERTY
<PAGE>
MATERIAL CONTRACTS
<PAGE>
STOCK OPTIONS AND OTHER RIGHTS
<PAGE>
Schedules and Exhibits
SCHEDULE I Commitments
SCHEDULE II Insurance Policies
SCHEDULE III Subsidiaries
SCHEDULE IV Existing Liens
SCHEDULE V Existing Indebtedness
SCHEDULE VI Real Property
SCHEDULE VII Material Contracts
SCHEDULE VIII Stock Options and Other Rights
<PAGE>
EXHIBIT A Form of Note
EXHIBIT B Form of Section 2.04(b)(ii) Certificate
EXHIBIT C-1 Form of Opinion of Winston & Strawn, special counsel
to the Loan Parties
EXHIBIT C-2 Form of Opinion of Mark Carlesimo, Esq., general
counsel of the Borrower
EXHIBIT D Form of Subordinated Guaranty
EXHIBIT E Form of Officers' Certificate
EXHIBIT F Form of Assignment and Assumption Agreement
EXHIBIT G Form of Permitted Seller Note
EXHIBIT H Form of Warrant
EXHIBIT I Form of Warrant Agreement
EXHIBIT J Form of Registration Rights Agreement
EXHIBIT 99.4
================================================================================
WARRANT AGREEMENT
By and Between
CONSOLIDATED LOGISTICS & DELIVERY, INC.,
PARIBAS CAPITAL FUNDING LLC,
EXETER VENTURE LENDERS, L.P.
and
EXETER CAPITAL PARTNERS IV, L.P.
___________________________
Dated as of January 29, 1999
____________________________
================================================================================
<PAGE>
WARRANT AGREEMENT
THIS WARRANT AGREEMENT (this "Agreement") dated as of January 29, 1999 and
entered into by and between CONSOLIDATED DELIVERY & LOGISTICS, INC., a Delaware
corporation (the "Company"), and PARIBAS CAPITAL FUNDING LLC ("PCF"), EXETER
VENTURE LENDERS, L.P. and EXETER CAPITAL PARTNERS IV, L.P. (collectively,
"Exeter") (each of PCF and Exeter, a "Purchaser" and collectively, the
"Purchasers").
W I T N E S S E T H :
WHEREAS, in connection with the Purchasers making certain loans to the
Company on the terms and conditions set forth in the Subordinated Loan
Agreement, the Company has agreed to issue and sell to the Purchasers on the
date hereof, certain common stock purchase warrants, as hereinafter described
(the "Warrants") to purchase initially in the aggregate, subject to the terms of
Section 9 hereof, 506,250 shares of Common Stock, par value $.001 per share, of
the Company (the "Common Stock");
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereto agree as follows:
SECTION 1.
DEFINED TERMS
(a) The following terms when used in this Agreement, including its
preamble and recitals, shall have the following meanings:
"1933 Act" shall mean the Securities Act of 1933, as amended.
"1934 Act" shall mean the Securities Exchange Act of 1934, as amended.
"Actual Investor IRR" shall have the meaning provided in Section
16(i).
"Additional Shares" means any shares of Common Stock issued after the
date hereof except (i) Common Stock issued upon the exercise of any Warrant,
(ii) securities issued by the Company on or prior to the Closing Date (and
securities issued upon the direct or indirect conversion or exercise of any
securities (including, but not limited to, warrants, options, rights or other
convertible or exchangeable securities) issued by the Company on or prior to the
Closing Date), (iii) Equity Securities issued pursuant to Section 10 of this
<PAGE>
Agreement (iv) with respect to any Holder, shares of Common Stock purchased by
such Holder from the Company, and (v) the issuance or sale of any securities
(including stock options) of the Company issued pursuant to any stock option or
stock bonus or incentive plan or arrangement of the Company in effect on the
date hereof for the benefit of its officers, directors or employees.
"Affiliate" shall mean, as applied to any Person, any other Person
directly or indirectly controlling (including, but not limited to, all directors
and officers of such Person), controlled by, or under direct or indirect common
control with, such Person. A Person shall be deemed to "control" another Person
if such Person possesses, directly or indirectly, the power to direct or cause
the direction of the management and policies of such other Person, whether
through the ownership of voting securities, by contract or otherwise.
"Agreement" shall have the meaning provided in the preamble of this
Agreement.
"Applicable Law" shall mean all provisions of laws, statutes,
ordinances, rules, regulations, permits or certificates of any Governmental
Authority applicable to such Person or any of its assets or property, and all
judgments, injunctions, orders and decrees of all courts, arbitrators or
Governmental Authorities in proceedings or actions in which such Person is a
party or by which any of its assets or properties are bound.
"Business Day" shall mean any day except Saturday, Sunday and any day
which in New York shall be a legal holiday or a day on which banking
institutions are authorized or required by law or other government action to
close.
"Certificate" shall mean the Certificate of Incorporation of the
Company, as amended through the date hereof.
"Change of Control" shall mean, at any time and for any reason
whatsoever (i) any Person or "group" (within the meaning of Rules 13d-3 and
13d-5 under the 1934 Act, other than Management Investors (as defined in the
Subordinated Loan Agreement)) shall become the "beneficial owner" (as defined in
Rules 13(d) and 13(d)-5 under the 1934 Act, except that a Person shall be deemed
to have "beneficial ownership" of all securities that such Person has the right
to acquire, whether such right is exercisable immediately or only after the
passage of time) of 30% or more of any class of capital stock of the Company
having ordinary voting power in the election of directors of the Company, (ii)
the Board of Directors of the Company shall cease to consist of a majority of
Continuing Directors or (iii) any Change of Control under and as defined in the
Credit Agreement or the Subordinated Loan Agreement.
"Closing Date" shall mean the initial date of issuance of Warrants
under this Agreement.
"Commission" shall mean the Securities and Exchange Commission or any
other federal agency at the time administering the 1933 Act.
"Common Stock" shall have the meaning provided in the recitals of this
Agreement.
"Common Stock Per Share Market Value" means the price per share of
Common Stock obtained by dividing (A) the Market Value by (B) the number of
shares of Common Stock outstanding (on a Fully-Diluted Basis) at the time of
determination.
<PAGE>
"Company" shall have the meaning provided in the preamble of this
Agreement.
"Continuing Directors" shall mean the directors of the Company on the
Closing Date and each other director of the Company, if such other director's
nomination for election to the Board of Directors of the Company is recommended
by a majority of the then Continuing Directors.
"Credit Agreement" shall mean the Loan and Security Agreement dated as
of July 14, 1997, among the Company, certain of its Subsidiaries and the Bank
(as defined in the Subordinated Loan Agreement), as amended by the Modification
Agreement (as defined in the Subordinated Loan Agreement) and as such agreement
may, subject to Section 6.17 of the Subordinated Loan Agreement, be further
amended, restated, extended, replaced, supplemented, restructured or otherwise
modified or refinanced pursuant to a Permitted Refinancing (as defined in the
Subordinated Loan Agreement) from time to time (in whole or in part without
limitation as to terms, extensions of maturities, increasing the amount of
borrowings or other conditions or covenants), including all related notes,
collateral documents, guarantees, Interest Rate Contracts (as defined in the
Subordinated Loan Agreement), instruments and agreements entered into in
connection therewith, as the same may be amended, modified, supplemented,
restated, restructured, replaced or refinanced pursuant to a Permitted
Refinancing (as defined in the Subordinated Loan Agreement) from time to time.
"Election Period" shall have the meaning provided in Section 14(d).
"Equity Securities" shall mean all shares of capital stock of the
Company, all securities convertible into or exchangeable for shares of capital
stock of the Company, and all options, warrants, and other rights to purchase or
otherwise acquire from the Company shares of such capital stock, or securities
convertible into or exchangeable for shares of such capital stock.
"Exercise Price" shall have the meaning provided in Section 5.
"Exeter" shall have the meaning provided in the preamble to this
Agreement.
"Exeter Cancelable Warrants" shall have the meaning provided in
Section 16(i).
"Exeter Holdback Warrants" shall have the meaning provided in Section
16(i).
"Expiration Date" shall have the meaning provided in Section 5.
"Fully Diluted Basis" means, as applied to the calculation of the
total number of shares of Common Stock outstanding at any time, after giving
effect to (a) all shares of Common Stock outstanding at the time of
determination and (b) without duplication, the additional amount of shares of
Common Stock that would be issuable if all outstanding rights, as of the time of
calculation, to purchase, exchange or convert Equity Securities were exercised
and then so convertible or exchangeable at a conversion or exchange price equal
to or less than the Market Price per share of Common Stock at such time.
<PAGE>
"Governmental Authority" means any federal, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality,
or any court, in each case whether of the United States of America or foreign.
"Holdback Period" shall have the meaning provided in Section 16(i).
"Holder" means any Purchaser (so long as it holds any Warrants or
Warrant Shares) and any other registered holder of any of the Warrants or
Warrant Shares.
"Independent Financial Expert" means a nationally recognized
investment banking firm (a) that does not (and whose directors, officers,
employees and Affiliates do not) have a direct or indirect material financial
interest in the Company, (b) that has not been, and, at the time it is called
upon to serve as an Independent Financial Expert under this Agreement is not
(and none of whose directors, officers, employees or Affiliates is) a promoter,
director or officer of the Company, (c) that has not been retained during the
preceding two years by the Company for any purpose, and (d) that is otherwise
qualified to serve as an independent financial advisor. Any such Person may
receive customary compensation and indemnification by the Company for opinions
or services it provides as an Independent Financial Expert.
"Independent Third Party" shall mean any Person who, prior to such
sale, does not own in excess of 5% of the Company's Common Stock on a Fully
Diluted Basis, who is not controlling, controlled by or under common control
with any such 5% owner of the Company's Common Stock and who is not the spouse,
ancestor or descendant (by birth or adoption) of any such 5% owner of the
Company's common Stock.
"Issuance Notice" shall have the meaning provided in Section 15.
"Investor Pro Forma IRR" shall have the meaning provided in Section
16(i).
"Management Shareholder" shall be Albert W. Van Ness, Jr.
"Market Price" means, with respect to a share of Common Stock on any
Business Day:
(a) if the Common Stock is Publicly Traded at the time of
determination, the average of the closing prices on such day of the Common
Stock on all domestic securities exchanges on which the Common Stock is
then listed, or, if there have been no sales on any such exchange on such
day, the average of the highest bid and lowest asked prices on all such
exchanges at the end of such day or, if on any such day the Common Stock is
not so listed, the average of the representative bid and asked prices
quoted on NASDAQ as of 4:00 P.M., New York time, on such day, or if on any
day such security is not quoted on NASDAQ, the average of the highest bid
and lowest asked prices on such day in the domestic over-the-counter market
as reported by the National Quotation Bureau, Incorporated, or any similar
successor organization, in each such case averaged over a period of 20 days
consisting of the day as of which "Market Price" is being determined and
the nineteen consecutive Business Days prior to such day; or
<PAGE>
(b) if the Common Stock is not Publicly Traded at the time of
determination, the Common Stock Per Share Market Value.
"Market Value" means the price that would be paid for the entire
common equity of the Company on a going-concern basis in an arm's-length
transaction between a willing buyer and a willing seller (neither acting under
compulsion), using valuation techniques then prevailing in the securities
industry (but without giving effect to any discount in respect of a minority
interest and giving effect to any value attributed to the rights of the Holders
to receive dividends and distributions as provided in Section 10 hereof) and
determined in accordance with the Valuation Procedure, and assuming full
disclosure and understanding of all relevant information and a reasonable period
of time for effectuating such sale. For the purposes of determining the Market
Value, (a) the exercise price of options or warrants to acquire Common Stock
which are deemed to have been exercised for the purpose of determining the
number of shares of Common Stock outstanding on a Fully-Diluted Basis, shall be
deemed to have been received by the Company and (b)(i) the liquidation
preference or indebtedness, as the case may be, represented by securities which
are deemed exercised for or converted into Common Stock for the purpose of
determining the number of shares of Common Stock outstanding on a Fully-Diluted
Basis and (ii) any contractual limitation in respect of the shares of Common
Stock relating to voting rights, shall be deemed to have been eliminated or
canceled.
"NASDAQ" means the National Association of Securities Dealers, Inc.,
Automated Quotation System.
"New Securities" shall mean any common stock of the Company of any
class and any other equity security of the Company, whether authorized now or in
the future, and any rights, options or warrants to purchase any such capital
stock ("Options"), and securities (including, without limitation, debt
obligations) of any type whatsoever, that are, or may become, convertible into
or exchangeable for any such capital stock or Options; provided, that "New
Securities" shall not include (i) securities issued to officers, directors or
employees of the Company pursuant to any stock option or stock bonus or
incentive plan or arrangement, (ii) shares sold by the Company in a public
offering, (iii) shares of Common Stock issued as consideration in any merger or
recapitalization of the Company or issued as consideration for the acquisition
of another Person or business or all or substantially all of the assets of
another Person and (iv) securities issued upon the exercise of Options or upon
the conversion of any securities convertible or exchangeable into any capital
stock or Options.
"Offer Election Notice" shall have the meaning provided in Section
14(d).
"Offer Election Period" shall have the meaning provided in Section
14(d).
"Offer Notice" shall have the meaning provided in Section 14(d).
"Offer Right" shall have the meaning provided in Section 14(d).
"Offered Warrants" shall have the meaning provided in Section 14(d).
"Offeror" shall have the meaning provided in Section 14(d).
<PAGE>
"Organizational Documents" means, with respect to any Person, each
instrument or other document that (a) defines the existence of such Person,
including its articles or certificate of incorporation, as filed or recorded
with an applicable Governmental Authority or (b) governs the internal affairs of
such Person, including its bylaws, in each case as amended, supplemented or
restated.
"PCF" shall have the meaning provided in the preamble of this
Agreement.
"PCF Cancelable Warrants" shall have the meaning provided in Section
16(i).
"PCF Holdback Warrants" shall have the meaning provided in Section
16(i).
"Permitted Transferee" shall mean any "Lender" under and as defined in
the Subordinated Loan Agreement or any Affiliate, officer, director, partner or
employee thereof, any Affiliate of any Holder or any officer, director, partner
or employee of any Holder.
"Person" or "Persons" means and includes natural persons,
corporations, limited partnerships, general partnerships, joint stock companies,
joint ventures, associations, companies, trusts, banks, trust companies, land
trusts, business trusts or other organizations, whether or not legal entities,
and governments and agencies and political subdivisions thereof.
"Publicly Traded" means, with respect to any security, that such
security is (a) listed on a domestic securities exchange, (b) quoted on NASDAQ
or (c) traded in the domestic over-the-counter market, which trades are reported
by the National Quotation Bureau, Incorporated.
"Purchaser" shall have the meaning provided in the preamble of this
Agreement.
"Refinancing Agreement" shall mean any "refinancing" of the
Subordinated Loan Agreement or any Refinancing Agreement (i.e., borrowing under
a different credit agreement in which Paribas Capital Funding LLC is not a party
and using the proceeds of such borrowing to repay all obligations under such
refinanced agreement).
"Registration Rights Agreement" shall mean the registration rights
agreement, dated as of January 29, 1999, by and among the Company and the
Purchasers.
"Regulated Holder" means any stockholder of the Company (i) that,
directly or indirectly because of its ownership by an entity that is subject to
Regulation Y, is subject to the provisions of Regulation Y and (ii) that holds
Common Stock or Warrants to purchase Common Stock.
"Regulation Y" means Regulation Y of the Board of Governors of the
Federal Reserve System, 12 C.F.R. Part 225 (or any successor to such
Regulation).
"Reorganization" shall have the meaning provided in Section 9(g).
"Requisite Holders" means Holders holding Warrants and/or Warrant
Shares representing at least a majority of all Warrant Shares issued or issuable
upon exercise of Warrants outstanding on the date of determination.
<PAGE>
"Section 12(d) Transaction" shall have the meaning provided in Section
12(d).
"Subordinated Loan Agreement" means the Senior Subordinated Loan
Agreement, dated as of January 29, 1999, among the Company and the Purchasers,
as amended, amended and restated, supplemented, restructured or otherwise
modified from time to time (in whole or in part and without limitation as to
terms, conditions or covenants and without regard to the principal amount
thereof) and in effect, including all related notes, collateral documents,
guaranties, instruments and agreements entered into in connection therewith, and
any successive restructurings, renewals, extensions or refinancings thereof.
"Tag-Along Notice" shall have the meaning provided in Section 15(b).
"Target IRR" shall have the meaning provided in Section 16(i).
"Valuation Procedure" means, with respect to the determination of any
amount or value required to be determined in accordance with such procedure, a
determination (which shall be final and binding on the Company and the Holders)
made (i) by agreement among the Company and the Requisite Holders within 20 days
following the event requiring such determination or (ii) in the absence of such
an agreement, by an Independent Financial Expert selected in accordance with the
further provisions of this definition. If required, an Independent Financial
Expert shall be selected within five days following the expiration of the 20-day
period referred to above, either by agreement among the Company and the
Requisite Holders or, in the absence of such agreement, by lot from a list of
four potential Independent Financial Experts remaining after the Company
nominates three, the Requisite Holders nominate three, and each side eliminates
one potential Independent Financial Expert. The Independent Financial Expert
shall be instructed by the Company and the Requisite Holders to make its
determination within 20 days of its selection. The fees and expenses of an
Independent Financial Expert selected hereunder shall be paid by the Company
unless the Independent Financial Expert's determination pursuant to the
Valuation Procedure is within 5% of the amount proposed by the Company in
connection with the Valuation Procedure and not agreed to by the Requisite
Holders, in which case such fees and expenses shall be paid 50% by the Holders
(on a pro rata basis) participating in the transaction to which the
determination relates and 50% by the Company.
"Warrant Certificates" shall have the meaning provided in Section 2.
"Warrant Documents" means this Agreement, the Subordinated Loan
Agreement, the Warrant Certificates and the Registration Rights Agreement.
"Warrant Number" shall have the meaning provided in Section 9.
"Warrant Shares" means (a) the shares of Common Stock issued or
issuable upon exercise of a Warrant in accordance with Section 5 or upon
exchange of a Warrant in accordance with Section 5, (b) all other securities or
other property issued or issuable upon any such exercise or exchange in
accordance with this Agreement and (c) any securities of the Company distributed
with respect to, or issued upon the conversion of, the securities referred to in
the preceding clauses (a) and (b); provided, however, Warrant Shares shall cease
<PAGE>
to be Warrant Shares when they have been distributed to the public pursuant to
an offering registered under the 1933 Act or sold to the public through a
broker, dealer or market maker in compliance with Rule 144 under the 1933 Act or
any successor rule.
"Warrants" shall have the meaning provided in the recitals of this
Agreement.
SECTION 2.
WARRANT CERTIFICATES
The Company will issue and deliver certificates evidencing the
Warrants (the "Warrant Certificates") in accordance with Section 3.17 of the
Subordinated Loan Agreement. Warrant Certificates shall be dated the date of
issuance by the Company.
SECTION 3.
EXECUTION OF WARRANT CERTIFICATES;
MUTILATED OR MISSING WARRANT CERTIFICATES
Warrant Certificates shall be signed on behalf of the Company by its
Chairman of the Board or its President or a Vice President of the Company. Each
Warrant Certificate shall also be manually signed on behalf of the Company by
its Secretary or an Assistant Secretary of the Company.
In case any of the Warrant Certificates shall be mutilated, lost,
stolen or destroyed, the Company shall, upon request of the Holder of any such
Warrant Certificate, issue, in exchange and substitution for and upon
cancellation of the mutilated Warrant Certificate, or in lieu of and
substitution for the Warrant Certificate lost, stolen or destroyed, a new
Warrant Certificate of like tenor and representing an equivalent number of
Warrants, but only upon receipt of evidence reasonably satisfactory to the
Company of such loss, theft or destruction of such Warrant Certificate and
indemnity, if requested, also reasonably satisfactory to the Company.
SECTION 4.
REGISTRATION/RESERVATION OF WARRANT SHARES
The Company shall number and register the Warrant Certificates in a
register as they are issued. The Company may deem and treat the registered
Holders of the Warrant Certificates as the absolute owners thereof
(notwithstanding any notation of ownership or other writing thereon made by
anyone) for all purposes and shall not be affected by any notice to the
contrary. The Warrants shall be registered initially in such name or names as
the Purchaser shall designate.
The Company shall at all times reserve and keep available shares of
Common Stock, free from preemptive rights, out of the aggregate of its
authorized but unissued Common Stock, for the purpose of enabling it to satisfy
any obligation to issue Warrant Shares upon exercise of Warrants.
<PAGE>
The Company covenants that all Warrant Shares and other capital stock
issued upon exercise of Warrants or upon conversion of Warrant Shares will, upon
payment of the Exercise Price therefor (in the case of an exercise of Warrants)
and issue thereof, be validly authorized and issued, fully paid, nonassessable,
free of preemptive rights (except as may be granted by this Agreement) and free
from all taxes, liens, charges and security interests with respect to the issue
thereof.
If and so long as the outstanding Common Stock may be listed on any
securities exchange in the United States, the Company shall use its best efforts
to cause all reserved Warrant Shares to be listed on each such exchange upon
official notice of issuance upon such exercise.
SECTION 5.
WARRANTS; EXERCISE OF WARRANTS
Subject to the terms of this Agreement, each Holder shall have the
right, which may be exercised at any time or from time to time until 5:00 p.m.,
New York time, on January 29, 2009 (the "Expiration Date") to receive from the
Company the number of fully paid and nonassessable Warrant Shares which the
Holder may at the time be entitled to receive on exercise of such Warrants and
payment of the Exercise Price then in effect for such Warrant Shares. Each
Warrant not exercised prior to 5:00 p.m., New York time, on the Expiration Date
shall become void and all rights thereunder and all rights in respect thereof
under this Agreement shall cease as of such time; provided that the occurrence
of the Expiration Date shall not relieve the Company of any obligation to any
Holder which arose pursuant to the terms of this Agreement prior to such date.
The price at which each Warrant shall be exercisable (as such price
may be adjusted from time to time, in accordance with the terms hereof, the
"Exercise Price") shall initially be $.001 per share. The Common Stock shall
have a par value of no greater than the then effective Exercise Price.
A Warrant may be exercised upon surrender to the Company at its
address set forth on the signature pages hereto of the Warrant Certificate or
Warrant Certificates to be exercised with the form of election to purchase
attached thereto duly completed and signed, and upon payment to the Company of
the Exercise Price for the number of Warrant Shares in respect of which such
Warrants are then exercised. Payment of the aggregate Exercise Price may be
made, at the option of the applicable Holder, (i) by cash, certified or bank
cashier's check or wire transfer, (ii) by surrendering to the Company the number
of Warrants which, when exercised, would entitle the Holder thereof to that
number of Warrant Shares which is equal to (A) such aggregate Exercise Price
divided by (B) the excess of (x) the product of the number of Warrant Shares
which may be purchased with one Warrant, multiplied by the Market Price per
share of Common Stock minus (y) the Exercise Price, (iii) by surrendering to the
Company the number of shares of Common Stock which is equal to (A) such
aggregate Exercise Price divided by (B) the Market Price per share of Common
Stock or (iv) any combination of the foregoing.
Subject to the provisions of Sections 6 and 8, upon such surrender of
Warrants and payment of the Exercise Price the Company shall issue and cause to
<PAGE>
be delivered with all reasonable dispatch to or upon the written order of the
Holder and in such name or names as such Holder may designate a certificate or
certificates for the number of full Warrant Shares issuable upon the exercise of
such Warrants (and such other consideration as may be deliverable upon exercise
of such Warrants) together with, at the sole option of the Company, cash for
fractional Warrant Shares as provided in Section 7. Such certificate or
certificates shall be deemed to have been issued and the Person so named therein
shall be deemed to have become a holder of record of such Warrant Shares as of
the date of the surrender of such Warrants and payment of the Exercise Price,
irrespective of the date of delivery of such certificate or certificates for
Warrant Shares.
Each Warrant shall be exercisable, at the election of the Holder
thereof, either in full or from time to time in part and, in the event that a
Warrant Certificate is exercised in respect of fewer than all of the Warrant
Shares issuable on such exercise at any time prior to the date of expiration of
the Warrants, a new certificate evidencing the remaining Warrant or Warrants
will be issued and delivered pursuant to the provisions of this Section 5 and of
Section 2.
All Warrant Certificates surrendered upon exercise of Warrants shall
be canceled and disposed of by the Company. The Company shall keep copies of
this Agreement and any notices given or received hereunder available for
inspection by the Holders during normal business hours at its office.
SECTION 6.
PAYMENT OF TAXES
The Company will pay all taxes and other governmental charges
(including all documentary stamp taxes, but excluding all foreign, federal,
state or local income taxes payable by a Holder) in connection with the issuance
or delivery of the Warrants hereunder, including all such taxes attributable to
the initial issuance or delivery of Warrant Shares upon the exercise of Warrants
and payment of the Exercise Price. The Company shall not, however, be required
to pay any tax that may be payable in respect of any subsequent transfer of the
Warrants or any transfer involved in the issuance and delivery of Warrant Shares
in a name other than that in which the Warrants to which such issuance relates
were registered, and, if any such tax would otherwise be payable by the Company,
no such issuance or delivery shall be made unless and until the Person
requesting such issuance has paid to the Company the amount of any such tax, or
it is established to the reasonable satisfaction of the Company that any such
tax has been paid.
SECTION 7.
FRACTIONAL INTERESTS
The Company shall not be required to issue fractional Warrant Shares
on the exercise of Warrants. If more than one Warrant shall be presented for
exercise in full at the same time by the same Holder, the number of full Warrant
Shares which shall be issuable upon the exercise thereof shall be computed on
the basis of the aggregate number of Warrant Shares purchasable on exercise of
the Warrants so presented. If any fraction of a Warrant Share would, except for
the provisions of this Section 7, be issuable on the exercise of any Warrants
<PAGE>
(or specified portion thereof), the Company shall, at its sole option, pay an
amount in cash equal to the Market Price of the Warrant Share so issuable
multiplied by such fraction.
SECTION 8.
LIMITATIONS ON CERTAIN HOLDERS
Notwithstanding anything in this Agreement or any Warrant Certificate
to the contrary, no Regulated Holder and no transferee of such Regulated Holder,
may exercise the Warrants for a number of Warrant Shares which would permit such
Regulated Holder, together with its Affiliates and transferees, to own or
control a number of Warrant Shares greater than that permitted by Applicable Law
including, without limitation, Regulation Y.
SECTION 9.
ADJUSTMENT OF NUMBER OF WARRANT SHARES ISSUABLE
AND EXERCISE PRICE
The number of shares of Common Stock issuable upon the exercise of
each Warrant (the "Warrant Number") is initially one. The Warrant Number is
subject to adjustment from time to time upon the occurrence of any event
enumerated in, or as otherwise provided in this Section 9.
(a) Adjustment for Change in Capital Stock. If the Company:
(i) subdivides or reclassifies its outstanding shares of Common
Stock into a greater number of shares or declares a stock dividend on its Common
Stock in shares of its capital stock (whether Additional Shares or capital stock
of another class);
(ii) combines or reclassifies its outstanding shares of Common
Stock into a smaller number of shares; or
(iii) issues by reclassification of its Common Stock any shares
of its capital stock;
then the Warrant Number in effect immediately prior to such action shall be
adjusted so that the Holder of any Warrant thereafter exercised may receive the
aggregate number and kind of shares of capital stock of the Company which it
would have owned immediately following such action if such Warrant had been
exercised immediately prior to such action. The adjustment shall become
effective immediately after the effective date in the case of a subdivision,
combination or reclassification and shall become effective immediately after the
record date in the case of a dividend. Such adjustment shall be made
successively whenever any event listed above shall occur. If, as a result of an
adjustment made pursuant to this paragraph, the Holder of any Warrant thereafter
exercised shall become entitled to receive shares of two or more classes of
capital stock of the Company, the Board of Directors of the Company shall in
good faith determine the allocation of each adjusted Exercise Price between or
among shares of such classes of capital stock.
(b) Additional Issuance. If the Company at any time shall issue any
Additional Shares at a price less than the Market Price or any other Equity
Securities (excluding any such issuance for which the number of Warrant Shares
purchasable hereunder shall have been adjusted pursuant to subsection (a) of
this Section 9), which are exercisable or convertible for Additional Shares at
<PAGE>
an exercise or conversion price less than the Market Price, the Warrant Number
after such issuance shall be determined by multiplying the Warrant Number by a
fraction, (i) the denominator of which shall be the number of shares of Common
Stock on a Fully Diluted Basis immediately prior to such issuance plus the
number of shares that the aggregate consideration to be received by the Company
for the total number of such Additional Shares issued or issuable in connection
with the conversion or exercise of such other Equity Securities (including the
issue price of any such other Equity Securities) would purchase at the Market
Price and (ii) the numerator of which shall be the number of shares of Common
Stock on a Fully Diluted Basis immediately after such issuance; provided, that
with respect to the issuance of Equity Securities that are exercisable or
convertible into Additional Shares at an exercise or conversion price less than
the Market Price and after the corresponding adjustment to the Warrant Number
provided for in the sentence immediately preceding this proviso is effected, the
Warrant Number shall not be successively adjusted under this Section 9(b) upon
the exercise or conversion of such Equity Securities; and provided, further,
with respect to any adjustment made pursuant to this Section 9(b) upon the
issuance of any Equity Securities which are convertible or exchangeable for
Additional Shares, (i) notwithstanding the foregoing proviso, if such other
Equity Securities by their terms provide, with the passage of time or otherwise,
for any increase in the consideration payable to the Company, or decrease in the
number of Additional Shares issuable, upon the exercise or conversion thereof,
the Warrant Number, as adjusted pursuant to this Section 9(b), shall, upon any
such increase or decrease becoming effective, be recomputed in a manner
consistent with this Section 9(b) to reflect such increase or decrease and (ii)
upon the expiration of any such other Equity Securities or any rights of
conversion or exchange under any such other Equity Securities, to the extent not
previously exercised or converted, the Warrant Number, as adjusted by this
Section 9(b) shall, upon such expiration, be recomputed in a manner consistent
with this Section 9(b), taking into account the number of Additional Shares
actually issued upon the conversion or exercise thereof and the amount of
consideration actually received by the Company in connection with the original
issuance of such Equity Securities and such conversion or exercise; provided,
further, however, that no readjustment pursuant to the immediately preceding
proviso, shall have the effect of decreasing the Warrant Number (or increasing
the Exercise Price in connection with any corresponding adjustment made under
Section 9(k)) by an amount in excess of the amount of the adjustment initially
made in respect of the issuance of such other Equity Securities (calculated by
adjusting the amount of such readjustment to account for all adjustments made to
the Warrant Number (and Exercise Price) after the date of the initial
adjustment). Shares of Common Stock owned by or held for the account of the
Company or any subsidiary on such date shall not be deemed outstanding for the
purpose of any such computation. Such adjustment shall be effective immediately
after such issuance. Such adjustment shall be made successively whenever any
such event shall occur. If the Company at any time shall issue two or more
securities as a unit and one or more of such securities shall be Additional
Shares or other Equity Securities subject to this subsection (b), the
consideration allocated to each such security shall be determined in good faith
by the Board of Directors of the Company.
(c) Distribution of Evidences of Indebtedness or Assets. If the
Company at any time shall fix a record date for the making of a distribution to
the holders of its Common Stock or other class of common stock (including any
such distribution to be made in connection with a consolidation or merger in
which the Company is to be the continuing corporation) of evidences of its
<PAGE>
indebtedness or assets (excluding dividends paid in or distributions of Company
capital stock for which the Warrant Number shall have been adjusted pursuant to
subsection (a) of this Section 9 or dividends or distributions which have been
paid to the Holder pursuant to Section 10) the Warrant Number after such record
date shall be determined by multiplying the Warrant Number immediately prior to
such record date by a fraction, of which the denominator shall be the Market
Price per share of Common Stock on such record date, less the fair market value
(as determined in good faith by the Board of Directors of the Company and
described in a statement mailed by certified mail to each Holder) of the portion
of the assets or evidences of indebtedness to be distributed to a holder of one
share of Common Stock, and the numerator shall be such Market Price per share of
Common Stock. Such adjustment shall become effective immediately after such
record date. Such adjustment shall be made whenever such a record date is fixed;
and in the event that such distribution is not so made, the number of Warrant
Shares purchasable hereunder shall again be adjusted to be the number that was
in effect immediately prior to such record date.
(d) Consideration Received. For purposes of any computation respecting
consideration received pursuant to subsections (b) and (c) of this Section 9,
the following shall apply:
(i) in the case of an issuance of shares of Common Stock for
cash, the consideration shall be the amount of such cash (without any deduction
being made for any commissions, discounts or other expenses incurred by the
Company for any underwriting of the issue or otherwise in connection therewith);
(ii) in the case of the issuance of shares of Common Stock for a
consideration in whole or in part other than cash, the consideration other than
cash shall be deemed to be the fair market value thereof (irrespective of the
accounting treatment thereof) as determined in accordance with the Valuation
Procedure; and
(iii) in the case of the issuance of other Equity Securities, the
aggregate consideration received therefor shall be deemed to be the
consideration received by the Company for the issuance of such securities plus
the additional minimum consideration, to be received by the Company upon the
conversion, exchange or exercise thereof (the consideration in each case to be
determined in the same manner as provided in clauses (i) and (ii) of this
subsection).
(e) When De Minimis Adjustment Deferred. No adjustment in the Warrant
Number need be made unless the adjustment would require an increase or decrease
of at least one-tenth of one percent in the Warrant Number. Any adjustments that
are not made shall be carried forward and taken into account in any subsequent
adjustment, provided that no such adjustment shall be deferred beyond the date
on which a Warrant is exercised. All calculations under this Section 9 shall be
made to the nearest 1/10th of a share.
(f) Notice of Adjustment. Whenever the Warrant Number is adjusted, the
Company shall provide the notices required by subsection 12(a) hereof. Whenever
the Warrant Number is required to be adjusted, as herein provided, the Company
shall mail by first class, postage prepaid, to each Holder, notice of such
<PAGE>
adjustment or adjustments and a certificate of a firm of nationally recognized
independent public accountants selected by the Board of Directors of the Company
(who may be the regular accountants employed by the Company) setting forth the
Warrant Number after such adjustment, setting forth a brief statement of the
facts requiring such adjustment and setting forth the computation by which such
adjustment was made.
(g) Reorganizations. In case of any capital reorganization, other than
in the cases referred to in subsections 9(a), (b) or (c) hereof, or the
consolidation or merger of the Company with or into another Person (other than a
merger or consolidation in which the Company is the surviving entity and which
does not result in any reclassification of the outstanding shares of Common
Stock into shares of other stock or other securities or property), or the sale
of all or substantially all of the property or assets of the Company other than
in the cases referred to in Subsections 9(a), (b) or (c) hereof (collectively,
such actions being hereinafter referred to as "Reorganizations"), there shall
thereafter be deliverable upon exercise of any Warrant (in lieu of the number of
shares of Warrant Shares theretofore deliverable) the number of shares of stock
or other securities or property to which a Holder, of the number of shares of
Common Stock that would otherwise have been deliverable upon the exercise of
such Warrant, would have been entitled upon such Reorganization if such Warrant
had been exercised in full immediately prior to such Reorganization. In case of
any Reorganization, appropriate adjustment, as determined in good faith by the
Board of Directors of the Company, whose determination shall be described in a
duly adopted resolution certified by the Company's Secretary or Assistant
Secretary, shall be made in the application of the provisions herein set forth
with respect to the rights and interests of Holders so that the provisions set
forth herein shall thereafter be applicable, as nearly as possible, in relation
to any shares or other property thereafter deliverable upon exercise of
Warrants. The Company shall not effect or permit any such Reorganization unless
(i) the successor entity resulting from such Reorganization or the Person
purchasing such assets is a corporation duly organized and validly existing
under the laws of a state of the United States and (ii) prior to or
simultaneously with the consummation of such Reorganization the successor entity
(if other than the Company) resulting from such Reorganization or the Person
purchasing such assets shall expressly assume, by a supplemental Warrant
Agreement or other acknowledgment executed and delivered to the Holder(s) in
form and substance satisfactory to the Requisite Holders, the obligation to
deliver to each such Holder such shares of stock, securities or assets as, in
accordance with the foregoing provisions, such Holder may be entitled to
purchase, and all other obligations and liabilities under this Agreement. No
non-cash distributions of Common Stock shall be made to a Regulated Holder or
its Affiliate or transferee which would cause such Regulated Holder, Affiliate
or transferee to be in violation of any Applicable Law.
(h) Form of Warrants. Irrespective of any adjustments in the number or
kind of shares purchasable upon the exercise of the Warrants, Warrants
theretofore or thereafter issued may continue to express the same price and
number and kind of shares as are stated in the Warrant Certificates initially
issuable pursuant to this Agreement.
(i) Adjustments in Other Securities. If as a result of any event or
for any other reason, any adjustment is made which increases the number of
shares of Common Stock issuable upon conversion, exercise or exchange of, or in
the conversion or exercise price or exchange ratio applicable to, any Equity
Securities outstanding on the Closing Date, then a corresponding adjustment
shall be made hereunder to adjust the number of shares of Common Stock issuable
<PAGE>
upon exercise of the Warrants, but only to the extent that no such adjustment
has been made pursuant to subsection 9(a), (b) or (c) with respect to such event
or for such other reason.
(j) Other Dilutive Events. If any corporate action shall occur as to
which the provisions of this Section 9 are not strictly applicable but as to
which the failure to make any adjustment would adversely affect the purchase
rights or value represented by the Warrants in accordance with the essential
intent and principles of this Section 9 (which are to place the Holder in a
position as nearly equal as possible to the position the Holder would have
occupied had the Holder purchased shares of Common Stock on the date hereof)
then, in each such case, the Company shall appoint a firm of independent
certified public accountants of recognized national standing (which may be the
regular auditors of the Company) to give their written advice upon the
adjustment, if any, on a basis consistent with the essential intent and
principles established in this Section 9, necessary to preserve, without
dilution, the purchase rights represented by Warrants. Upon receipt of such
written advice, the Company will promptly mail a copy thereof to Holders and
will make the adjustments described therein.
(k) Exercise Price Adjustment. Whenever the Warrant Number is
adjusted as herein provided, the Exercise Price payable upon exercise of this
Warrant shall be adjusted by multiplying such Exercise Price immediately prior
to such adjustment by a fraction, of which the numerator shall be the Warrant
Number immediately prior to such adjustment, and of which the denominator shall
be the Warrant Number immediately thereafter; provided, however, notwithstanding
any to the contrary contained in this Section 9(k), the Company will not be
required to reduce the Exercise Price below the par value of its Common Stock or
reduce the par value of its Common Stock.
(l) Dissolution, Liquidation or Winding Up. Notwithstanding any other
provision of this Agreement, in the event of any voluntary or involuntary
liquidation, dissolution or winding up of the Company, each Holder shall be
entitled to share, with respect to the Warrant Shares issuable upon exercise of
the Holder's Warrants, equally and ratably in any cash or non-cash distributions
payable to holders of Common Stock, less the aggregate Exercise Price payable
upon the exercise of such Warrants. The Company shall give notice to each Holder
at the earliest practicable time (and, in any event, not less than 20 days
before the date of such dissolution, liquidation or winding-up, as the case may
be) and each Holder of outstanding Warrants shall be entitled to share equally
and ratably in any cash or noncash distributions payable to holders of Common
Stock. In case of any such voluntary or involuntary dissolution, liquidation or
winding up of the Company, the Company shall hold in escrow any funds or other
property which a Holder is entitled to receive in respect of such Holder's
Warrant Shares at the time of any distribution. No such Holder will be entitled
to receive payment of any such distribution until such Holder has surrendered
the Warrant Certificates evidencing such Warrant to the Company. From and after
such voluntary or involuntary dissolution, liquidation or winding up with
respect to the Company, all rights of the Holders, except the right to receive
such distribution, without interest, upon the surrender of the Warrant
Certificates, shall cease and terminate and such Warrants shall not thereafter
be transferred (except with the consent of the Company) and such Warrants shall
not be deemed to be outstanding for any other purpose whatsoever. For the
purposes of this Agreement, neither the voluntary sale, lease, conveyance,
exchange or transfer (for cash, shares of stock, securities or other
<PAGE>
consideration) of all or substantially all the property or assets of the
Company, nor the consolidation or merger of the Company with one or more other
corporations, shall be deemed to be a liquidation, dissolution or winding up,
voluntary or involuntary, with respect to the Company.
(m) Miscellaneous. In the event that at any time, as a result of an
adjustment made pursuant to this Section 9, the Holders shall become entitled to
purchase any securities of the Company other than, or in addition to, shares of
Common Stock, thereafter the number or amount of such other securities so
purchasable upon exercise of each Warrant shall be subject to adjustment from
time to time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Warrant Shares contained in this Section 9, and
the provisions of Sections 5, 6, 7 and 8 with respect to the Warrant Shares or
the Common Stock shall apply on like terms to any such other securities.
(n) Regulated Holders. If, in the written opinion of counsel to any
Regulated Holder (which may be internal counsel), the receipt by such Regulated
Holder of Warrant Shares (or any security included therein) upon any exercise or
exchange pursuant to this Section 9 or the receipt of any dividend or
distribution pursuant to Section 10 would cause such Regulated Holder to violate
any provision of Applicable Law with respect to its ownership of securities of
the Company, then the Company shall cooperate with such Regulated Holder in any
efforts by such Regulated Holder to dispose of some or all of such securities in
a prompt and orderly manner, including providing (and authorizing such Regulated
Holder to provide) financial and other information concerning the Company to any
prospective purchaser of such securities sufficient in the written opinion of
counsel to such Regulated Holder (which may be internal counsel) needed to
prevent such exercise or exchange or the receipt of such dividend or
distribution from causing the ownership of the capital stock or voting
securities of such Regulated Holder to exceed the quantity of such capital stock
as such Regulated Holder is permitted under Applicable Law to own.
SECTION 10.
PAYMENTS IN RESPECT OF DIVIDENDS AND DISTRIBUTIONS
If the Company pays any dividend or makes any distribution (whether in
cash, property or securities of the Company) on its capital stock (other than
with respect to any series of preferred stock of the Company), then the Company
shall simultaneously pay to each Holder of Warrants, other than to any Holder of
Warrants delivering a written notice to the Company within 10 Business Days of
the notice delivered to such Holder pursuant to Section 12 hereof, an amount
equal to the dividend or distribution which would have been paid to such Holder
on the Warrant Shares receivable upon the exercise in full of such Warrant had
such Warrant been fully exercised immediately prior to the record date for such
dividend or distribution or, if no record is taken, the date as of which the
record holders of shares of Common Stock entitled to such dividend or
distribution are to be determined; provided however, that in the event the
receipt by any Holder of any such asset distribution would result in a violation
of Applicable Law applicable to such Holder, such Holder shall be entitled to
receive an amount of cash in lieu of such asset distribution equal to the value
(determined in accordance with the Valuation Procedure) of the asset
distribution which would otherwise be received by such Holder.
<PAGE>
SECTION 11.
REPRESENTATIONS AND WARRANTIES
The Company hereby represents and warrants to the Holders that the
representations and warranties contained in the Subordinated Loan Agreement
(including, without limitation, those representations and warranties
incorporated by reference therein as though specifically set forth herein) are
incorporated by reference herein and are true and correct as of the date hereof.
SECTION 12.
COVENANTS
(a) Notices of Certain Actions. In the event that the Company:
(i) shall have authorized the issuance of rights or warrants to
subscribe for or purchase capital stock of the Company since the last notice
delivered pursuant to this Section 12(a)(i) or the date hereof, whichever is
later, or of any other subscription rights or warrants to purchase capital stock
to holders of any type of capital stock of the Company since the last notice
delivered pursuant to this Section 12(a)(i) or the date hereof, whichever is
later; or
(ii) shall authorize a dividend or other distribution of
evidences of its indebtedness, cash or other property or assets to holders of
any type of capital stock of the Company; or
(iii) proposes to become a party to any consolidation or merger
for which approval of any stockholders of the Company will be required, or to a
conveyance or transfer of all or substantially all of the properties and assets
of the Company or of any capital reorganization or reclassification or change of
any type of capital stock of the Company; or
(iv) commences a voluntary or involuntary dissolution,
liquidation or winding up; or
(v) fails to comply with the provisions of this Agreement; or
(vi) proposes to take any other action which would require an
adjustment pursuant to Section 9; or
(vii) proposes any refinancing of the Credit Agreement, the
Subordinated Loan Agreement or any Refinancing Agreement; or
(viii) sends any notice or information to the holders of Common
Stock of the Company or the Company becomes aware of any potential Change of
Control;
then the Company shall provide a written notice to each Holder stating (i) the
date as of which the holders of record of capital stock are to be entitled to
receive any such rights or warrants to subscribe for or purchase capital stock
of the Company, (ii) the record date of such dividend or other distribution of
evidence of its indebtedness, cash or other property or assets, (iii) the
material terms of any such consolidation or merger and the expected effective
date thereof, and the material terms of any such conveyance or transfer, and the
date on which any such conveyance, transfer, dissolution, liquidation or winding
<PAGE>
up is expected to become effective or consummated, and the date as of which it
is expected that holders of record of capital stock will be entitled to exchange
their shares for securities or other property, if any, deliverable upon such
reclassification, conveyance, transfer, dissolution, liquidation or winding up,
(iv) the nature of the lack of compliance, any corrective action taken and any
rights or remedies which such lack of compliance has bestowed on the Holders,
(v) a notice as is required by Section 9(f), (vi) a copy of such notice sent to
the holders of Common Stock of the Company with respect to any such potential
Change of Control and (vii) the material terms of any refinancing of either the
Credit Agreement, the Subordinated Loan Agreement or any Refinancing Agreement
(including delivery of the definitive credit documents to be executed in
connection therewith together with any other information reasonably requested by
any Holder of Warrants and/or Warrant Shares) and the expected effective date
thereof. Such notice shall be given not later than ten (10) Business Days prior
to the effective date (or the applicable record date, if earlier) of such event.
(b) Financial Statements and Reports. The Company shall furnish,
without duplication, to each Holder the information described in Sections
5.01(a) through (k) of the Subordinated Loan Agreement and such other
information relating to the Company and its subsidiaries and their operations
and financial condition as any Holder shall reasonably request.
(c) Information Rights and Access Rights. Each Holder shall have the
right, whether or not such Holder has exercised or exchanged any Warrants, (to
the extent such information is reasonably related to the Holder's investment) to
receive lists of stockholders or other information respecting the Company, to
inspect the books and records of the Company and to visit the properties of the
Company, and to discuss the affairs, finances and accounts of the Company or its
subsidiaries with, and be advised as to the same, by its and their officers.
Nothing contained in this Agreement shall be construed as conferring upon any
Holder, prior to its exercise of any Warrant, the right to vote or to consent or
to receive notice as stockholders in respect of meetings of stockholders or the
election of directors of the Company or any other matter, or any rights
whatsoever as stockholders of the Company, except as expressly provided
hereunder or under Applicable Law.
(d) Regulated Holders. (i) Notwithstanding any other provision of
this Agreement to the contrary, except as provided in this subsection 12(d),
without the prior written consent of any Regulated Holder, the Company shall
not, directly or indirectly, redeem, purchase or otherwise acquire, convert or
take any action (including any amendment to the Certificate) with respect to the
voting rights of, or undertake any other action or transaction (including any
merger, consolidation or recapitalization) affecting, any shares of its capital
stock or other voting securities if the result of the foregoing would be to
cause the ownership of the capital stock of the Company by such Regulated
Holder, or the ownership of voting securities of the Company (or any class
thereof) by such Regulated Holder, to exceed the quantity of such capital stock
or voting securities (or any class thereof) that such Regulated Holder is
permitted under Applicable Law to own. Any action or transaction referred to in
the preceding sentence shall be referred to herein as a "Section 12(d)
Transaction". If the Company proposes to undertake any action or transaction
which could constitute a Section 12(d) Transaction, it shall provide the Holders
at least 15 days prior written notice thereof. If, in the written opinion of
<PAGE>
counsel to any Regulated Holder (which may be internal counsel) delivered within
10 days following receipt of such notice, such action or transaction constitutes
a Section 12(d) Transaction with respect to such Regulated Holder, then the
Company shall delay undertaking such Section 12(d) Transaction for the purpose
of using its best efforts to agree on a manner in which to restructure such
action or transaction in a manner reasonably satisfactory to the Company and
such Regulated Holder so that it no longer would constitute a Section 12(d)
Transaction. If the Company and such Regulated Holder are unable to agree,
within 20 days of the delivery of such written opinion, upon a manner in which
to so restructure such Section 12(d) Transaction, and such Section 12(d)
Transaction is a bona fide action or transaction proposed by the Company in good
faith, then the Company shall be permitted to undertake such Section 12(d)
Transaction if prior to or concurrently with doing so, at the election of such
Regulated Holder, the Company shall cooperate with such Regulated Holder in any
efforts by such Regulated Holder to dispose of some or all of such Warrants or
Warrant Shares in a prompt and orderly manner, including providing (and
authorizing such Regulated Holder to provide) financial and other information
concerning the Company to any prospective purchaser of such Warrants or Warrant
Shares sufficient in the written opinion of counsel to such Regulated Holder
(which may be internal counsel) needed to prevent such Section 12(d) Transaction
from causing the ownership of the capital stock or voting securities of such
Regulated Holder to exceed the quantity of such capital stock as such Regulated
Holder is permitted under Applicable Law to own.
(ii) If it becomes unlawful for any Regulated Holder to continue
to hold some or all of the Warrants or Warrant Shares held by it, or
restrictions are imposed on any Regulated Holder by Applicable Law which, in the
reasonable judgment of such Regulated Holder, make it unduly burdensome to
continue to hold such Warrants or Warrant Shares, the Company shall take such
actions as reasonably requested by such Regulated Holder, including, but not
limited to, cooperating with such Regulated Holder in any efforts by such
Regulated Holder to dispose of some or all of such Warrants or Warrant Shares in
a prompt and orderly manner, including providing (and authorizing such Regulated
Holder to provide) financial and other information concerning the Company to any
prospective purchaser of such Warrants or Warrant Shares.
(e) Current Public Information. The Company will file all reports
required to be filed by it under the 1933 Act and the 1934 Act and the rules and
regulations adopted by the Commission thereunder, and will take such further
action as any Holder may reasonably request, all to the extent required to
enable such Holder to sell Warrant Shares pursuant to Rule 144 or Rule 144A
adopted by the Commission under the 1933 Act. Upon request, the Company will
deliver to any such Holder a written statement as to whether it has complied
with such requirements.
(f) Public Disclosures. The Company will not disclose any Holder's
name or identity as an investor in the Company in any press release or other
public announcement, unless such disclosure is required by Applicable Law or
governmental regulations or by order of a court of competent jurisdiction in
which case prior to making such disclosure the Company will give written notice
to such Holder describing in reasonable detail the proposed content of such
disclosure and will permit the Holder to review and comment upon the form and
substance of such disclosure.
(g) Certain Restrictions. The Company will not without the consent of
the Requisite Holders, take any action, corporate or otherwise, the effect of
which would be to alter, impair or affect adversely either the rights of the
Holders or the duties and obligations of the Company under the Warrant
Documents.
<PAGE>
(h) Specific Performance. Each Holder shall have the right to specific
performance by the Company of the provisions of this Agreement, in addition to
any other remedies it may have at law or in equity. The Company hereby
irrevocably waives, to the extent that it may do so under Applicable Law, any
defense based on the adequacy of a remedy at law which may be asserted as a bar
to the remedy of specific performance in any action brought against the Company
for specific performance of this Agreement by any Holder of the Warrants or
Warrant Shares.
SECTION 13.
AMENDMENTS AND WAIVERS
(a) Consent of Holders. No amendment, modification, termination or
waiver of any provision of this Agreement and the Warrant Certificates or
consent to any departure by the Company therefrom, shall in any event be
effective without the written concurrence of the Requisite Holders; provided,
however, that without the consent of each Holder affected, no amendment,
modification, termination or waiver may:
(i) make any change to the definition of "Requisite Holders";
(ii) make any change that adversely affects any Holder; or
(iii) make any change in the foregoing amendment and waiver
provisions.
After an amendment, modification, termination or waiver under this
Section 13 becomes effective, the Company shall mail to the Holders affected
thereby a notice briefly describing such amendment, modification, termination or
waiver. Any failure of the Company to mail such notice, or any defect therein,
shall not, however, in any way impair or affect the validity of any such
amendment, modification, termination or waiver.
In connection with any amendment, modification, termination or waiver
under this Section 13, the Company may offer, but shall not be obligated to
offer, to any Holder who consents to such amendment, modification, termination
or waiver, consideration for such Holder's consent, so long as such
consideration is offered to all Holders.
(b) Solicitation of Holders. The Company will not effect any proposed
amendment, modification, termination or waiver of any of the provisions of this
Agreement or the Warrant Certificates unless each Holder (irrespective of the
amount of Warrants or Warrant Shares then owned by it) shall be informed thereof
by the Company prior to the effectuation thereof and shall be afforded the
opportunity of considering the same and shall be supplied by the Company with
information which is sufficient in the Company's reasonable discretion to enable
such Holder to make an informed decision with respect thereto. Executed or true
and correct copies of any amendment, modification, termination or waiver
effected pursuant to the provisions of this Section 13 shall be delivered by the
Company to each Holder of outstanding Warrants or Warrant Shares forthwith
following the date on which the same shall have been executed and delivered by
the Holder or Holders of the requisite percentage of outstanding Warrant Shares.
<PAGE>
Any failure by the Company to deliver such copies shall not, however, in any way
impair or affect the validity of any such amendment, modification, termination
or waiver.
(c) Revocation and Effect of Consents. Until an amendment,
modification, termination or waiver becomes effective, a consent to it by a
Holder is a continuing consent by the Holder and every subsequent Holder of a
Warrant or Warrant Shares, even if notation of the consent is not made on any
Warrant Certificate or stock certificate. However, any such Holder or subsequent
Holder may revoke any such consent by notice to the Company received before the
date on which the Requisite Holders have consented (and not theretofore revoked
such consent) to such amendment, modification, termination or waiver.
The Company may, but shall not be obligated to, fix a record date for
the purpose of determining the Holders entitled to consent to any amendment,
modification, termination or waiver, which record date shall be at least ten
(10) Business Days prior to the first solicitation of such consent. If a record
date is fixed, then notwithstanding the last sentence of the immediately
preceding paragraph, those Persons who were Holders at such record date (or
their duly designated proxies), and only those Persons, shall be entitled to
revoke any consent previously given, whether or not such Persons continue to be
Holders after such record date. No such consent shall be valid or effective for
more than ninety (90) days after such record date.
SECTION 14.
TRANSFERS; RIGHT OF FIRST OFFER
(a) Permitted Transferees. Each Holder shall be permitted, subject to
the provisions of subsection 14(e) below, to transfer any Warrants or Warrant
Shares (and the rights relating thereto under this Agreement and the other
Warrant Documents) to any Permitted Transferee.
(b) Limitations on Transfers. In addition to the rights of transfer
under Section 14(a), each Holder, subject to the provisions of subsections
14(c), (d) and (e) below, shall be permitted to transfer any Warrants or Warrant
Shares (and the rights relating thereto under this Agreement and the other
Warrant Documents) to any other Person; provided that:
(i) such transfer is made pursuant to a registration statement
under the 1933 Act or Rule 144 promulgated under the 1933 Act; or
(ii) such transfer is made to a Person other than a Permitted
Transferee pursuant to an exemption from the registration requirements of the
1933 Act; provided, that if such transfer is being made pursuant to an exemption
from such registration requirements, then:
(A) if requested by the Company, counsel for such Holder
(which counsel may be internal counsel), shall furnish to
the Company an opinion to the effect that such transfer is being made
pursuant such an exemption;
(B) the applicable transferee (or, in the case of an account
manager, the managed account on behalf of which the account manager is
acting) is an "accredited investor" as defined in Regulation D
promulgated under the 1933 Act; and
<PAGE>
(C) such transferee represents to the Company in writing
that it is acquiring such Warrants or Warrant Shares solely for its
own account (or in the case of account managers, on behalf of managed
accounts) and not as nominee or agent for any other Person (other than
for such managed accounts, if applicable) and not with a view to, or
for offer or sale in connection with, any distribution thereof (within
the meaning of the 1933 Act), without prejudice, however, to its right
at all times to sell or otherwise dispose of all or any part of said
Warrants or Warrant Shares pursuant to a registration statement under
the 1933 Act or pursuant to an exemption from the registration
requirements of the 1933 Act, and subject, nevertheless, to the
disposition of its property being at all times within its control.
(c) Warrant Register. The Company shall promptly register the transfer
of any outstanding Warrants in the Warrant register and any outstanding Warrant
Shares in a Common Stock register to be maintained by the Company upon surrender
thereof accompanied by a written instrument or instruments of transfer in form
reasonably satisfactory to the Company, duly executed by the registered Holder
or Holders thereof or by the duly appointed legal representative thereof or by a
duly authorized attorney. Upon any such registration of transfer, a new Warrant
or Warrant Share, as the case may be, shall be issued and delivered with all
reasonable dispatch to the transferee(s) and such transferee(s) shall be deemed
to have become the Holder(s) of record of such Warrant or Warrant Share, as the
case may be, and the surrendered Warrant or Warrant Share, as the case may be,
shall be canceled and disposed of by the Company.
(d) First Offer Right. (i) If, at any time any Purchaser (an
"Offeror") wishes to make a transfer of Warrants in compliance with Section
14(b)(ii) above (other than to a Person who is simultaneously therewith
purchasing Loans from such Offeror and agrees to be bound by the provisions of
this Section 14(d)), then, at least ten (10) Business Days before making any
such transfer (the "Offer Election Period"), the Offeror will deliver a written
notice (the "Offer Notice") to the Company. The Offer Notice will specify the
proposed number of Warrants to be the subject of such transfer (the "Offered
Warrants") and disclose in reasonable detail the proposed terms and conditions
of the transfer.
(ii) The Company shall have the right to purchase all (but not
less than all) of the Offered Warrants, at the price and on the terms
specified in the Offer Notice (the "Offer Right") by delivering written
notice of such election (the "Offer Election Notice") to the Offeror as
provided in this Section 14(d)(ii); provided that in the event the Company
wishes to purchase Offered Warrants but is prohibited from purchasing all
of the Offered Warrants from the Offeror by virtue of (and only of) the
restrictions contained in Section 6.03(ii) of the Subordinated Loan
Agreement limiting the amount of dividends payable thereunder for such
purposes (and each Purchaser hereby agrees that it shall (or cause its
relevant Affiliate to) waive any such restrictions on such purchase under
the Subordinated Loan Agreement in the event that (x) it or any of its
Affiliates desires to sell its Warrants and the Company elects to purchase
such Offered Warrants and (y) each other Purchaser (and/or each of its
Affiliates) with Loans under the Subordinated Loan Agreement agrees to
waive such restrictions), then the Company shall have the right to purchase
such lesser number (the "Maximum Permitted Number") of the Offered Warrants
as the Company shall be permitted to purchase under said Section 6.03(ii)
at the price and on the other relevant terms specified in the Offer Notice
by delivering an Offer Election Notice to the Offeror as specified in this
Section 14(d)(ii). Within five (5) Business Days after receipt of the Offer
Notice (the "Election Period"), the Company shall provide the Offer
Election Notice to the Offeror, specifying the number of Offered Warrants
it has elected to purchase. If the Company does not elect to purchase all
(or, in the event the Company is prohibited from purchasing all of the
Offered Warrants pursuant to Section 6.03 of the Subordinated Loan
Agreement, the Maximum Permitted Number) of the Offered Warrants within the
Election Period, then the Offer Right shall expire and be of no further
force and effect.
<PAGE>
(iii) If the Company elects to purchase all (or the Maximum
Permitted Number, as applicable) of the Offered Warrants, the transfer of
such Warrants will be consummated as soon as practicable, but in any event
within ten (10) Business Days after the delivery of the Offer Election
Notice by the Company; provided, however, in the event that the Company
elects to purchase the Offered Warrants but is prohibited from purchasing
all or any portion of the Offered Warrants by the terms of Section 6.03 of
the Subordinated Loan Agreement because (and only because) a Default or an
Event of Default (as each such term is defined in the Subordinated Loan
Agreement) is in existence at the time of the proposed purchase, then (x)
the Offeror shall not sell any Offered Warrants to any third party for the
30-day period following the delivery of the Offer Election Notice by the
Company (the "Cure Period") and (y) if the Company cures such Default or
Event of Default during the Cure Period (and no other Default or Event of
Default is then in existence), the transfer of such Warrants as
contemplated above will instead be consummated as soon as practicable, but
in any event within ten (10) Business Days, after the date of such cure. If
the Company did not elect to purchase all of the Offered Warrants (or the
Maximum Permitted Number of Offered Warrants, as applicable) or is
otherwise prohibited from purchasing all or any portion of the Offered
Warrants as a result of the restrictions under Section 6.03 of the Loan
Agreement proscribing such purchases 0during the existence of a Default or
an Event of Default after the lapse of the Cure Period, the Offeror may,
within one hundred and eighty (180) days after the expiration of the later
of the Offer Election Period or the Cure Period, as applicable, transfer
all or any portion of such Offered Warrants to one or more third parties at
a price not less than the price per Warrant specified in the Offer Notice
and on other terms no more favorable to the transferors in any material
respect than the terms specified in the Offer Notice.
(e) Transferees to be Bound. Each transferee acquiring Warrants or
Warrant Shares pursuant to this Agreement shall agree (so long as any such
Warrant Shares would continue to be Warrant Shares upon the consummation of such
transfer) in writing to be bound by the provisions of this Agreement prior to or
concurrently with any such acquisition of Warrants or Warrant Shares.
SECTION 15.
PREEMPTIVE RIGHTS; TAG-ALONG RIGHTS
(a) Preemptive Rights. The Company shall not issue or sell any New
Securities or sell any rights to subscribe for or options to purchase such New
Securities for cash or debt, unless the Company shall first provide to the
Holders notice (the "Issuance Notice") of its intent to offer such New
Securities. The Issuance Notice shall contain (i) a description of the New
Securities, (ii) the total number of New Securities authorized to be sold and
(iii) the price and payment terms. Each Holder shall have the right (pro rata)
according to its then respective ownership interest in the Company, determined
on a Fully Diluted Basis, to purchase the number of New Securities as will
enable such Holder to maintain its proportionate ownership interest in the
Company. Each Holder electing to purchase New Securities shall tender the
purchase price therefor within twenty (20) days from the date of the Issuance
Notice. During the ninety (90) day period following the delivery of the Issuance
Notice, the Company may sell any New Securities described in the Issuance Notice
which were not purchased by the Holders, at a price equal to or greater than
that specified in the Issuance Notice. If such sale is not consummated within
one hundred forty (140) days from the date of Issuance Note, the Company shall
not again sell New Securities without again complying with this Section 15.
(b) Tag-Along. If the Management Shareholder shall propose to sell or
convey in a single transaction or in a series of related transactions a number
of shares of Common Stock or options or warrants to acquire Common Stock equal
to or greater than 5% of the then outstanding shares of Common Stock to an
Independent Third Party (other than in a sale pursuant to a registration
statement in which the Holders may exercise their "piggyback" registration
<PAGE>
rights under the Registration Rights Agreement), the Management Shareholder
shall provide each Holder with written notice (the "Tag-Along Notice") setting
forth the terms and conditions of the proposed transfer, including the identity
of the Independent Third Party, the number of shares of Common Stock to be
transferred, the per share price to be paid for the shares of Common Stock to be
transferred and the type and nature of the consideration to be received
therefor; provided, however, notwithstanding the foregoing, the Management
Shareholder shall not be required to provide any Holder with a Tag-Along Notice,
and the Holders shall not be entitled to sell any Warrant Shares under this
Section 15(b), if the Management Shareholder proposes to sell or convey shares
of Common Stock on account of personal hardship, including, but not limited to,
(i) the commencement of a voluntary or involuntary case under the United States
Code entitled "Bankruptcy" by the Management Shareholder or his creditors, (ii)
a sale or other transfer pursuant to a separation agreement or a final decree or
judgment of divorce in favor of or against the Management Shareholder, or (iii)
a serious illness of the Management Shareholder or any parent, spouse, sibling
or child of the Management Shareholder. Each Holder, by written notice to the
Management Shareholder delivered within 10 days after the date of such Tag-Along
Notice, shall be entitled to require the Management Shareholder to include in
the proposed sale to the Independent Third Party in the same transaction all of
their Warrant Shares (or, if the Management Shareholder is selling less than all
of his Common Stock or the prospective transferee is not willing to purchase all
of the shares of Common Stock and Warrant Shares proposed to be sold by the
Management Shareholder and the Holders exercising their rights pursuant to this
Section 15(b), then the Management Shareholder and the Holders participating in
such sale shall each be entitled to sell their pro rata portion of the total
number of shares of Common Stock and Warrant Shares to be purchased by the
proposed transferee computed on the basis of the number of shares of Common
Stock or Warrant Shares, as the case may be, proposed to be sold by the
Management Shareholder or such Holder, as the case may be, on the same terms and
conditions set forth in the Tag-Along Notice. All fractional shares resulting
from the calculation contained in the prior sentence will be rounded to the
nearest whole share. The Management Shareholder shall use his best efforts to
obtain the agreement of the prospective transferee(s) to the participation of
the Holders in any contemplated transfer. Following his compliance with the
foregoing, the Management Shareholder and any Holders who have elected to
participate in the contemplated transfer may, within 120 days after the
expiration of the 10-day period referenced above, transfer all of the shares
specified in the Tag-Along Notice to the transferee(s) specified in the
Tag-Along Notice at a price not less than the price per share specified in the
Tag-Along Notice and on other terms no less favorable to the transferors in any
material respect than the terms specified in the Tag-Along Notice.
SECTION 16.
MISCELLANEOUS
(a) Notices. Unless otherwise specifically provided herein, any notice
or other communication herein required or permitted to be given shall be in
writing and shall be made by personal service, telecopy, United States mail or
reputable courier service:
<PAGE>
(i) if to the Purchaser or subsequent Holder, at the address or
telecopy number set forth on the signature pages to this Agreement, or such
other address as shall be designated in a written notice delivered to the
Company; and
(ii) if to the Company, at the address or telecopy number set
forth on the signature pages to this Agreement, or such other address as
shall be designated in a written notice delivered to the other parties
hereto.
Unless otherwise specifically provided herein, any notice or other
communication shall be deemed to have been given when delivered in person or by
courier service, upon receipt of telecopy, or three Business Days after
depositing it in the United States mail with postage prepaid and properly
addressed.
(b) Failure or Indulgence Not Waiver: Remedies Cumulative. No failure
or delay on the part of any Holder in the exercise of any power, right or
privilege hereunder or under any other Warrant Document shall impair such power,
right or privilege or be construed to be a waiver of any default or acquiescence
therein, nor shall any single or partial exercise of any such power, right or
privilege preclude other or further exercise thereof or of any other power,
right or privilege. All rights and remedies existing under this Agreement and
the other Warrant Documents are cumulative to, and not exclusive of, any rights
or remedies otherwise available.
(c) Severability. In case any provision in or obligation under this
Agreement or the Warrant Certificates shall be invalid, illegal or unenforceable
in any jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby.
(d) Headings. Section and subsection headings in this Agreement are
included herein for convenience of reference only and shall not constitute a
part of this Agreement for any other purpose or be given any substantive effect.
(e) Applicable Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
(f) Successors and Assigns. This Agreement shall be binding on the
parties hereto and their respective successors and assigns and shall insure to
the benefit of the parties hereto and the successors and assigns and Permitted
Transferees of each Holder.
(g) Counterparts. This Agreement and any amendments, waivers, consents
or supplements hereto or in connection herewith may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed an original, but all such
counterparts together shall constitute but one and the same instrument;
signature pages may be detached from multiple separate counterparts and attached
to a single counterpart so that all signature pages are physically attached to
the same document.
<PAGE>
(h) Survival of Representation and Warranties, Entire Agreement. All
representations and warranties contained herein or made in writing or on behalf
of the Company in connection herewith shall survive the execution and delivery
of this Agreement and the Warrant Shares and the transfer by each Holder of any
Warrant Shares or any portion thereof on interest therein, and may be relied
upon by each Holder regardless of any investigation made at any time by or on
behalf of each Holder. This Agreement, the Subordinated Loan Agreement, the
Warrant Certificates and the Registrations Rights Agreement embody the entire
agreement and understanding between the parties hereto and supersede all prior
agreements and understandings, if any, relating to the subject matter hereof.
(i) Subordinated Loan Prepayment. (A) If, upon prepayment in full, in
cash, of a Loan or Loans (as such term is defined in the Subordinated Loan
Agreement) on or after the first anniversary of the Funding Date (such term
being used herein as defined in the Subordinated Loan Agreement) and on or
before the third anniversary of the Funding Date pursuant to Section 2.02 of the
Subordinated Loan Agreement, a Purchaser shall have obtained on the original
principal amount of its respective Loan an aggregate annualized cash on cash
internal rate of return (calculated as of the date of such prepayment and as
reasonably determined by such Purchaser in accordance with traditional methods
of making such calculation, but, in any event, compounding on an annual basis)
(the "Actual Investor IRR"), a copy of such calculation to be provided to the
Company, through (1) the receipt of cash on or after the Funding Date in
connection with the payment of interest, dividends and fees and the prepayment
(including any prepayment penalty) of such Loan or Loans and the sale of such
Warrants and/or Warrant Shares on or before the date of such prepayment of such
Loan plus (2) the aggregate Market Price of any Warrant Shares held by such
Purchaser on the date of calculation (assuming the exercise of all of the
Warrants held by such Purchaser), and calculated as if such Purchaser held on
the date of calculation the amount of Loans made by such Purchaser on the
Funding Date, which is in either range of the target rates of return (the
"Target IRR") set forth below, then the Company shall be entitled to cancel
those number of Warrants held by such Purchaser (the "PCF Cancelable Warrants"
and the "Exeter Cancelable Warrants") representing those number of Warrant
Shares of such Purchaser (as such amounts are equitably adjusted from time to
time for stock splits, stock combinations and other similar transactions) set
forth opposite the applicable Target IRR (as prorated among affiliated entities
based on the Warrants originally issued to such affiliates); provided, that in
no event shall the cancellation of the PCF Cancelable Warrants or the Exeter
Cancelable Warrants, as the case may be, under this Section 16(i) exceed that
amount which shall (when subtracting such amount from such Purchaser's cash on
cash return) reduce the Actual Investor IRR of such Purchaser to a level below
the following Target IRRs:
<TABLE>
PCF Exeter
Target IRR Cancelable Warrants Cancelable Warrants
<S> <C> <C>
Greater than 25% and less than or equal to 30% 12,500 6,250
Greater than 30% 37,500 18,750
</TABLE>
The Company's right to cancel Warrants held by a Purchaser under this Section
16(i) shall be exercisable solely on the date on which all of the Loans shall
have been prepaid in full in accordance with the requirements of Section 2.02 of
the Subordinated Loan Agreement.
<PAGE>
(B) Each of PCF and Exeter hereby covenant and agree to not sell or
otherwise transfer (other than to its respective Affiliates and other than as
may be required by Applicable Law; provided, that PCF and Exeter shall not
knowingly take any action, the direct result of which would require PCF or
Exeter, as the case may be, to dispose of the PCF Holdback Warrants or the
Exeter Holdback Warrants, as the case may be, in order to comply with Applicable
Law) during the period beginning on the date hereof through the third
anniversary of the Funding Date (the "Holdback Period") (i) in the case of PCF,
37,500 Warrants (the "PCF Holdback Warrants") as such amount is equitably
adjusted from time to time for stock splits, stock combinations and other
similar transactions and (ii) in the case of Exeter, 18,750 Warrants (the
"Exeter Holdback Warrants") as such amount is allocated pro rata among
affiliated entities holding Warrants and is equitably adjusted from time to time
for stock splits, stock combinations and other similar transactions. If, upon
the proposed sale by PCF of all of its Warrants and/or Warrant Shares (including
the PCF Holdback Warrants) or upon the proposed sale by Exeter of all of its
Warrants and/or Warrant Shares (including the Exeter Holdback Warrants), then
PCF or Exeter, as the case may be, shall compute its respective Actual Investor
IRR (x) by taking into account (1) all cash received on or after the Funding
Date through the date of such proposed sale in connection with the payment of
interest, dividends and fees and any prior prepayment of all Loan or Loans of
PCF or Exeter, as the case may be, and all prior sales of Warrants and/or
Warrant Shares plus (2) the aggregate Market Price of any Warrant Shares held on
the date of sale (assuming the exercise of all Warrants held by such Purchaser)
of PCF or Exeter, as the case may be, and (y) as if (i) all outstanding Loans of
PCF or Exeter, as the case may be, shall be prepaid pursuant to Section 2.02(a)
of the Subordinated Loan Agreement on the date of such proposed sale at the
prepayment penalty set forth in such Section 2.02(a) which would be payable on
such date if such Loans were prepaid on such date and (ii) all accrued but
unpaid interest, dividends and fees through the date of such proposed sale shall
be paid to PCF or Exeter, as the case may be, on the date of such proposed sale
(such calculation hereinafter referred to as the "Investor Pro Forma IRR"),
calculated as of the proposed sale date and as if such Purchaser held on the
date of such proposed sale the amount of Loans made by such Purchaser on the
Funding Date. If the Investor Pro Forma IRR of PCF or Exeter, as the case may
be, is less than 25%, then PCF or Exeter, as the case may be, may sell the PCF
Holdback Warrants or Exeter Holdback Warrants, as the case may be, at such time.
PCF or Exeter, as the case may be, shall provide the Company with a copy of the
Investor Pro Forma IRR of PCF or Exeter, as the case may be, two days prior to
the date of such sale (using the Market Price of the Warrant Shares on the date
prior to the date of such notice), and shall deliver a copy of the actual
calculation to the Company within 3 days after the consummation of such sale..
If the Investor Pro Forma IRR of PCF or Exeter, as the case may be, falls within
either Target IRR range set forth in subparagraph (A) above (the "Target IRR
Range"), then PCF or Exeter, as the case may be, shall hold the PCF Holdback
Warrants or Exeter Holdback Warrants, as the case may be, until the earlier of
(I) the expiration of the Holdback Period or (II) an actual prepayment in full
of a Loan or Loans of PCF or Exeter, as the case may be, at which point the
Actual Investor IRR will be recalculated and, if within the Target IRR Range,
the PCF Holdback Warrants and the Exeter Holdback Warrants, as the case may be,
will be subject to cancellation in accordance with this Section 16(i). Upon
expiration of the Holdback Period, PCF and Exeter shall be entitled to exercise
or sell any remaining PCF Holdback Warrants or Exeter Holdback Warrants, as the
case may be, without further restriction under this Section 16(i)(B) but in
accordance with the other provisions of this Agreement.
<PAGE>
(C) Notwithstanding anything in Sections 16(i)(A) or (B) hereof or in
the Subordinated Loan Agreement to the contrary, if the Company prepays more
than 331/3% of any Loan or Loans of PCF or Exeter, as the case may be, on or
after the Funding Date and on or before the first anniversary of the Funding
Date, PCF or Exeter, as the case may be, shall be entitled to exercise or sell
any and all of its respective Warrants and/or Warrant Shares (including the PCF
Holdback Warrants or the Exeter Holdback Warrants, as the case may be) at any
time and from time to time in accordance with the other provisions of this
Agreement and the Company shall not be entitled to cancel any Warrants of PCF or
Exeter, as the case may be.
(D) For purposes of this Section 16(i), any reference to a Purchaser,
PCF or Exeter, shall be deemed to include its respective Affiliates.
* * * * *
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective officers thereunto duly authorized as of
the day and year first above written.
Notice Address: CONSOLIDATED DELIVERY & LOGISTICS, INC.
380 Allwood Road
Clifton, New Jersey 07012 By /s/ Albert Van Ness, Jr.
Tel: (973) 471-1005 Name: Albert Van Ness, Jr.
Fax: (973) 471-5519 Title: Chief Executive Officer
Attention: Albert W. Van Ness, Jr.
with a copy to:
Winston & Strawn
200 Park Avenue
New York, New York 10166
Tel: (212) 294-6700
Fax: (212) 294-4700
Attention: Andrea L. Flink, Esq.
Notice Address: PARIBAS CAPITAL FUNDING LLC
Paribas Capital Funding LLC
787 Seventh Avenue By /s/ Jeffrey J. Youle
New York, New York 10019 Name: Jeffrey J. Youle
Tel: (212) 841-2000 Title: Managing Director
Fax: (212) 841-2144
Attention: Joseph Kaufman By________________________
Name:
Title:
with a copy to:
White & Case LLP
1155 Avenue of the Americas
New York, New York 10036
Tel: (212) 819-8200
Fax: (212) 354-8113
Attention: John M. Reiss, Esq.
Notice Address: EXETER VENTURE LENDERS, L.P.
10 East 53rd Street, 32nd Floor
New York, New York 10022
Tel: (212) 872-1172 By: Exeter Venture Advisors, Inc.,
Tel: (212) 872-1198 its General Partner
Attention: Keith R. Fox
with a copy to: By /s/ Kurt Bergquist
Name: Kurt Bergquist
O'Sullivan Graev & Karabell, LLP Title: Vice President
30 Rockefeller Plaza
New York, New York 10112
Tel: (212) 408-2400
Fax: (212) 408-2420
Attention: Phyllis Schwartz, Esq.
Notice Address: EXETER CAPITAL PARTNERS IV, L.P.
10 East 53rd Street, 32nd Floor
New York, New York 10022 By Exeter IV Advisors, L.P., its
Tel: (212) 872-1172 General Partner
Tel: (212) 872-1198
Attention: Keith R. Fox
with a copy to:
O'Sullivan Graev & Karabell, LLP By Exeter IV Advisors, Inc., its
30 Rockefeller Plaza General Partner
New York, New York 10112
Tel: (212) 408-2400
Fax: (212) 408-2420 By /s/ Kurt Bergquist
Attention: Phyllis Schwartz, Esq. Name: Kurt Bergquist
Title: Vice President
THE MANAGEMENT SHAREHOLDER -
ONLY WITH RESPECT TO SECTION
15(b) HEREOF:
By /s/ Albert Van Ness, Jr.
Name: Albert W. Van Ness, Jr.
================================================================================
REGISTRATION RIGHTS AGREEMENT
by and between
CONSOLIDATED DELIVERY & LOGISTICS, INC.,
PARIBAS CAPITAL FUNDING LLC,
EXETER VENTURE LENDERS, L.P.
and
EXETER CAPITAL PARTNERS IV, L.P.
dated as of
January 29, 1999
================================================================================
<PAGE>
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is dated as of
January 29, 1999 and entered into by and between CONSOLIDATED DELIVERY &
LOGISTICS, INC., a Delaware corporation (the "Company"), PARIBAS CAPITAL FUNDING
LLC, EXETER VENTURE LENDERS, L.P. and EXETER CAPITAL PARTNERS IV, L.P. (each, a
"Purchaser" and collectively, the "Purchasers"). Unless otherwise provided in
this Agreement, capitalized terms used herein shall have the meanings set forth
in the Warrant Agreement.
WHEREAS, the Purchasers and the Company are parties to the
Subordinated Loan Agreement and the Warrant Agreement;
WHEREAS, in order to induce the Purchasers to enter into the
Subordinated Loan Agreement and the Warrant Agreement, the Company has agreed to
provide the registration rights set forth in this Agreement; and
WHEREAS, the execution and delivery of this Agreement is a condition
to the issuance of the Warrants;
NOW THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereto agree as follows;
SECTION 1. Registration on Request.
(a) Registration on Request. (i) At any time and from time to time
after the date hereof, upon the request of any Holder or group of Holders of
Warrants and/or Warrant Shares equal to at least 1.5% of the issued and
outstanding number of shares of Common Stock for a registration of Registrable
Securities (a "Demand Request"), the Company will promptly give written notice
of such requested registration to all registered holders of Registrable
Securities, and thereupon the Company, in accordance with the provisions of
Section 4 hereof, will use its best efforts to effect the registration under the
Securities Act of:
(A) the Registrable Securities which the Company has been so
requested to register in accordance with the Demand Request for disposition
in accordance with the intended method or methods of disposition stated in
such request, and
(B) all other Registrable Securities which the Company has been
requested to register by the holders thereof by written request given to
the Company within 20 days after the giving of such written notice by the
Company (which request shall specify the intended method of disposition of
such Registrable Securities),
all to the extent requisite to permit the disposition (in accordance with the
intended methods thereof as aforesaid) of the Registrable Securities so to be
registered. The Company shall not be required to effect more than four (4)
registrations pursuant to this Section 1 (each, a "Demand Registration") and, in
any event, not more than one such Demand Registration within any twelve-month
period.
(ii) Effective Registration Statement. A registration requested
pursuant to this Section 1 shall not be deemed to be effected (A) if a
registration statement with respect thereto shall not have become effective, (B)
if, after it has become effective, such registration is interfered with for any
reason by any stop order, injunction or other order or requirement of the
Commission or any other governmental agency or any court, and the result of such
interference is to prevent the holders of Registrable Securities to be sold
thereunder from disposing thereof in accordance with the intended methods of
disposition, or (C) if the conditions to closing specified in the purchase
agreement or underwriting agreement entered into in connection with any
underwritten registration shall not be satisfied or waived with the consent of
the underwriters of such Registrable Securities that were to have been sold
thereunder, other than as a result of any breach by any such holder of its
obligations thereunder or hereunder or (D) if the registration statement with
respect thereto shall not have remained effective for a period of 180 days
unless all of the Registrable Securities requested to be registered by the
Holders have been sold prior to the expiration of such 180-day period.
(iii) Registration Statement Form. Registrations under this Section 1
shall be on such appropriate registration form of the Commission, including an
offering on a continuous or delayed basis in the future of all or some portion
of the Registrable Securities to the extent and under the terms and conditions
set forth in the Securities Act (a "Shelf Registration"), as shall be selected
by the Company and as shall permit the disposition of the Registrable Securities
so to be registered in accordance with the intended method or methods of
disposition specified in the request of the holders of Registrable Securities
being registered for such registration. The Company agrees to include in any
such registration statement all information which the holders of Registrable
Securities being registered shall reasonably request. In the event the Company
is not permitted to file a Demand Registration as a Shelf Registration or on
Form S-3 because it is not current with its Commission filings or for any other
reason, then the Company shall file such Demand Registration on Form S-1. If a
Demand Registration is filed as a Shelf Registration, then the Company will use
its best efforts keep such Shelf Registration filed pursuant to this Section 1
continuously effective for the period beginning on the date on which the Shelf
Registration is declared effective and ending on the earlier of (a) the first
date that there are no Registrable Securities and (b) the date as of which the
Shelf Registration Statement has been effective for 180 days; provided, that the
Company shall take no affirmative actions to deregister any Registrable
Securities not sold within such 180-day period. During the period during which
the Shelf Registration is effective, the Company shall supplement or make
amendments to the Shelf Registration, if required by the Securities Act and the
policies, rules and regulations of the Commission as announced from time to
time, or if reasonably requested by any holder of Registrable Securities or an
underwriter of Registrable Securities, including to reflect any specific plan of
distribution or method of sale, and shall use its best efforts to have such
supplements and amendments declared effective, if required, as soon as
practicable after filing.
(iv) Selection of Underwriters. If a requested registration pursuant
to this Section 1 involves an underwritten offering, the managing underwriter or
underwriters shall be selected by the majority of the Holders of Registrable
Securities initiating a Demand Registration, such underwriter to be reasonably
satisfactory to the Company.
<PAGE>
(v) Priority in Requested Registrations. If a requested registration
pursuant to this Section 1 involves an underwritten offering, and the managing
underwriter shall advise the Company in writing (with a copy to each Person
requesting registration of Registrable Securities) that, in its opinion, the
number of securities requested to be included in such registration exceeds the
number which can be sold in such offering within a price range acceptable to the
holders of a majority of the Registrable Securities requested to be included
therein, the Company will include in such registration to the extent of the
number which the Company is so advised can be sold in such offering such
securities in the following order: (x) first, Registrable Securities which are
proposed to be included in such registration by the Holders pro rata among such
Holders on the basis of the number of Registrable Securities owned by such
Holders; and (y) second, all other securities requested to be included in such
registration by the Company and other Persons exercising piggyback rights pro
rata among the Company and such holders.
(b) If, while a registration request is pending pursuant to this
Section 1, the Company has been advised by legal counsel that the filing of a
registration statement would require the disclosure of a material financing or
investment transaction the Company reasonably determines in good faith would
have a material adverse effect on the Company, the Company shall not be required
to effect a registration pursuant to this Section 1 until the earlier of (A) the
date upon which such material financing or investment transaction is otherwise
disclosed to the public or ceases to be material and (B) ninety (90) days after
the Company makes such good faith determination, provided that the Company shall
not be permitted to delay a requested registration in reliance on this paragraph
(b) more than once in any 12-month period and provided, further, that in the
event the Company exercises its rights under this Section 1(b), the registration
shall not be counted as a Demand Registration for purposes of Section 1(a)(i)
hereof.
(c) A requested registration under this Section 1 may be rescinded by
written notice to the Company by the Requisite Holders. Such rescinded
registration shall not count as a registration statement initiated pursuant to
this Section 1 for purposes of paragraph (a)(i) above if such request is
rescinded by the Requisite Holders not later than five (5) Business Days prior
to the filing of a registration statement with the Commission.
SECTION 2. Piggyback Registrations.
(a) Right to Piggyback. Whenever the Company proposes to register any
of its equity securities under the Securities Act (other than pursuant to a
transaction described in Rule 145 of the Securities Act or on Form S-4 or S-8),
whether or not for sale for its own account, the Company will each time give
prompt written confidential notice of such proposed filing to all Holders (i) in
all cases at least 20 days before the anticipated filing date and (ii) in the
case of a proposed registration in connection with the exercise of any demand
registration rights (other than the demand registration rights under Section 1
hereof) within five (5) Business Days after the Company receives notice of such
demand. Such notice shall offer such Holders the opportunity to register such
amount of Registrable Securities as they shall request (a "Piggyback
Registration"). Subject to Sections 3(a) and 3(b) hereof, the Company shall
include in each such Piggyback Registration all Registrable Securities with
respect to which the Company has received written requests for inclusion therein
within fifteen (15) days after such notice has been given by the Company to the
<PAGE>
Holders. If the Registration Statement relating to the Piggyback Registration is
to cover an underwritten offering, such Registrable Securities shall be included
in the underwriting on the same terms and conditions as the securities otherwise
being sold through the underwriters. The Holders shall be permitted to withdraw
all or part of the Registrable Securities from a Piggyback Registration at any
time prior to the effective time of such Piggyback Registration.
(b) Priority on Primary Registrations. If a Piggyback Registration is
an underwritten primary registration on behalf of the Company by or through one
or more underwriters of recognized standing and the managing underwriters
thereof advise the Company in writing that in their good faith judgment the
number of securities requested to be included in such registration exceeds the
number which can be sold in such offering without materially and adversely
affecting the marketability of the offering, then the Company will include in
the Registration Statement relating to such registration (i) first, the
securities the Company proposes to sell, (ii) second, the Registrable Securities
requested to be included in such registration by the Holders thereof, reduced,
if necessary, on a pro rata basis, based on the number of shares of Registrable
Securities owned by each such Holder, and (iii) third, if no Registrable
Securities had to be excluded pursuant to this Section 2(b), securities other
than Registrable Securities requested to be included in such registration,
reduced, if necessary, on a pro rata basis, based on the amount of such other
securities owned by such other holders; provided that, if such registration
contemplates an "over-allotment option" on the part of underwriters, to the
extent such over-allotment option is exercised and the Holders were excluded
from registering any of the Registrable Securities they requested be included in
such registration (the "Excluded Registrable Securities") pursuant to the
priority provisions of Section 2(b) or 2(c), then the over-allotment option
shall be fulfilled through the registration and sale of the Excluded Registrable
Securities, subject to the priority provisions of Section 2(b)(ii) above.
(c) Priority on Secondary Registrations. If a Piggyback Registration
is an underwritten secondary registration on behalf of any holders of the
Company's securities, by or through one or more underwriters of recognized
standing and the managing underwriters advise the Company in writing that in
their good faith judgment the number of securities requested to be included in
such registration exceeds the number which can be sold in such offering without
materially and adversely affecting the marketability of the offering, the
Company will include in such registration, (i) first, the securities proposed to
be sold by the Person initiating such registration, (ii) second, the Registrable
Securities requested to be included in such registration by the Holders thereof
and other securities requested to be included in such registration by other
Persons exercising piggyback rights granted to them by the Company on or prior
to the date hereof, reduced, if necessary, on a pro rata basis, based on the
number of shares of Registrable Securities and such other securities owned by
each Holder and each other Person and (iii) third, the securities owned by such
other holders exercising the piggyback rights granted by the Company after the
date hereof.
SECTION 3. Holdback Agreements; Participation in Underwritten
Registrations.
(a) Holdback Agreement of Holders of Registrable Securities. If the
Company shall at any time register securities under the Securities Act
(including any registration pursuant to Sections 1 and 2 hereof), each Holder
agrees, if so requested (pursuant to timely notice) by the managing underwriter
<PAGE>
of an underwritten registration not to effect any public sale or public
distribution of any securities of the Company, other than those securities
included in a registration pursuant Sections 1 or 2 hereof without the prior
written consent of the Company (or such managing underwriter), during the thirty
(30) days prior to the effective date of such registration and until the earlier
of (i) the end of the 90-day period beginning on the effective date of such
registration and (ii) the abandonment of such offering. Notwithstanding the
provisions of the preceding sentence, a Holder may sell any or all of its
Registrable Securities in a private sale. The Company may legend and impose stop
transfer instructions on any certificate evidencing securities relating to the
restrictions provided in this Section 3(a).
None of the foregoing provisions of this Section 3(a) shall apply to
any Holder if such Holder is prevented by applicable statute or regulation from
entering into any such agreement; provided, that any such Holder shall undertake
not to effect any public sale or public distribution of the applicable class of
Registrable Securities unless it has provided 45 days' prior written notice of
such sale or distribution to the underwriter or underwriters.
(b) Holdback Agreement of the Company. During the period (x) beginning
30 days prior to the effective date of any registration statement filed with
respect to Registrable Securities pursuant to a Demand Registration or Piggyback
Registration in which any Holder or any group of Holders has requested the sale
of Registrable Securities representing more than 3% of the then outstanding
Common Stock of the Company and such registration is an underwritten public
offering and (y) ending 90 days after the effective date of any such
registration statement (if such lock-up period is required by the underwriters),
the Company shall not (except as part of such registration) effect any public
sale or public distribution of any of its equity securities or of any security
convertible into or exchangeable or exercisable for any equity security of the
Company (other than in connection with any employee stock option or other
benefit plan). The Company shall use its reasonable best efforts to cause each
of its directors and members of management to agree, orally or in writing to be
bound to provisions substantially similar to those set forth in this Section
3(b).
(c) Participation in Underwritten Registrations. No Person may
participate in any registration hereunder which is underwritten unless such
Person (i) agrees to sell such Person's securities on the basis provided in any
underwriting arrangements approved by the Person or Persons entitled hereunder
to approve such arrangements and (ii) timely completes and executes all
questionnaires, customary powers of attorney, customary indemnities, customary
underwriting agreements and other customary documents required under the terms
of such underwriting arrangements; provided, that no Holder included in any
underwritten registration shall be required to make any representations or
warranties to the Company or the underwriters other than representations and
warranties regarding such Holder's title to securities included in such
registration and its authorization to transfer such securities.
<PAGE>
SECTION 4. Registration Procedures. Whenever the Company is required
to register Registrable Securities pursuant to Section 1 or 2 hereof, the
Company will use its best efforts to effect the registration to permit the sale
of such Registrable Securities in accordance with the intended method or methods
of disposition thereof, and pursuant thereto the Company will as expeditiously
as possible:
(a) prepare and file with the Commission as soon as practicable a
Registration Statement with respect to such Registrable Securities as
prescribed by Section 1 or 2 on a form available for the sale of the
Registrable Securities by the holders thereof in accordance with the
intended method or methods of distribution thereof and use its best efforts
to cause each such Registration Statement to become and remain effective
for up to 180 days; provided, however, that before filing a Registration
Statement, the Company will furnish to the Holders of the Registrable
Securities covered by such Registration Statement, the underwriters, if
any, and any attorney, accountant or other agent retained by any such
Holder of Registrable Securities or underwriters (i) copies of all such
documents proposed to be filed, which documents will be subject to the
review and comment of such Holders, their counsel and underwriters, if any,
and (ii) if requested, financial and other information required by the
Commission to be included in such Registration Statement and all financial
and other records, pertinent corporate documents and properties of the
Company customarily reviewed in connection with an underwritten
registration; and shall cause the officers, directors and employees of the
Company, counsel to the Company and independent certified public
accountants of the Company, to respond to such inquiries and supply all
information, as shall be necessary, in the opinion of respective counsel to
such Holders and underwriters, to conduct a reasonable investigation within
the meaning of the Securities Act, and will not file any Registration
Statement to which the holders of at least a majority of the Registrable
Securities covered by such Registration Statement or the underwriters, if
any, shall reasonably object;
(b) prepare and file with the Commission such amendments,
post-effective amendments and prospectus supplements to such Registration
Statement as may be necessary to keep such Registration Statement effective
and to comply with the provisions of the Securities Act with respect to the
disposition of all securities covered by such Registration Statement until
such time as all of such securities have been disposed of in accordance
with the intended methods of disposition by the seller or sellers thereof
set forth in such Registration Statement; provided, that the Company shall
be deemed not to have used its best efforts to keep a Registration
Statement effective during the applicable period if it voluntarily takes
any action that results in the selling Holders of the Registrable
Securities covered thereby not being able to sell such Registrable
Securities during that period;
(c) furnish to each selling Holder of Registrable Securities covered
by a registration statement and to each underwriter, if any, such number of
copies of such registration statement, each amendment and post-effective
amendment thereto, the prospectus included in such registration statement
(including each preliminary prospectus and any supplement to such
<PAGE>
prospectus and any other prospectus filed under Rule 424 of the Securities
Act), in each case including all exhibits, and such other documents as such
seller may reasonably request in order to facilitate the disposition of the
Registrable Securities owned by such seller or to be disposed of by such
underwriter (the Company hereby consenting to the use in accordance with
all applicable law of each such registration statement (or amendment or
post-effective amendment thereto) and each such prospectus (or preliminary
prospectus or supplement thereto) by each such seller and the underwriters,
if any, in connection with the offering and sale of the Registrable
Securities covered by such registration statement or prospectus);
(d) use its best efforts to register or qualify and, if applicable, to
cooperate with the selling Holders of Registrable Securities, the
underwriters, if any, and their respective counsel in connection with the
registration or qualification (or exemption from such registration or
qualification) of, the securities to be included in a Registration
Statement for offer and sale under the securities or blue sky laws of such
jurisdictions within the United States of America as any selling Holder or
managing underwriters (if any) shall reasonably request, to keep each such
registration or qualification (or exemption therefrom) effective during the
period such Registration Statement is required to be kept effective and to
do any and all other acts or things necessary or advisable to enable the
disposition in such jurisdictions of the securities covered by the
applicable Registration Statement; provided that the Company will not be
required to (i) qualify generally to do business in any jurisdiction where
it would not otherwise be required to qualify but for this paragraph or
(ii) consent to general service of process in any such jurisdiction;
(e) cause all such Registrable Securities to be listed on each
securities exchange on which securities of the same class as the
Registrable Securities are then listed and, if not so listed, to be listed
on the NASD automated quotation system and, if listed on the NASD automated
quotation system, use its best efforts to secure designation of all such
Registrable Securities covered by such Registration Statement as a NASDAQ
Security within the meaning of Rule 11Aa3-l under the Exchange Act or,
failing that, to secure NASDAQ authorization for such Registrable
Securities and, without limiting the generality of the foregoing, to use
its best efforts to arrange for at least two market makers to register as
such with respect to such Registrable Securities with the NASD;
(f) provide a transfer agent and registrar for all such Registrable
Securities and a CUSIP number for all such Registrable Securities not later
than the effective date of such Registration Statement;
(g) comply with all applicable rules and regulations of the
Commission, and make available to its security holders an earnings
statement satisfying the provisions of Section 11(a) of the Securities Act
and Rule 158 thereunder (or any similar rule promulgated under the
Securities Act) no later than 45 days after the end of any 12-month period
(or 90 days after the end of any 12-month period if such period is a fiscal
year) (or in each case within such extended period of time as may be
permitted by the Commission for filing the applicable report with the
Commission) (i) commencing at the end of any fiscal quarter in which
Registrable Securities are sold to underwriters in a firm commitment or
best efforts underwritten offering or (ii) if not sold to underwriters in
<PAGE>
such an offering, commencing on the first day of the first fiscal quarter
of the Company after the effective date of a Registration Statement, which
earnings statement shall cover said 12-month periods;
(h) permit any Holder which, in its sole and exclusive judgment, might
be deemed to be an underwriter or a controlling person of the Company, to
participate in the preparation of such registration or comparable statement
and to require the insertion therein of material, furnished to the Company
in writing, which in the reasonable judgment of such Holder and its counsel
should be included;
(i) use its best efforts to prevent the issuance of any order
suspending the effectiveness of a Registration Statement or suspending the
qualification (or exemption from qualification) of any of the securities
included therein for sale in any jurisdiction within the United States of
America, and, in the event of the issuance of any stop order suspending the
effectiveness of a Registration Statement, or of any order suspending the
qualification of any securities included in such Registration Statement for
sale in any jurisdiction within the United States of America, the Company
will use its best efforts promptly to obtain the withdrawal of such order
at the earliest possible moment;
(j) if the Piggyback Registration or Demand Registration is an
underwritten registration, obtain "cold comfort" letters and updates
thereof (which letters and updates (in form, scope and substance) shall be
reasonably satisfactory to the managing underwriters, if any, and counsel
to the selling Holders of Registrable Securities) from the independent
certified public accountants of the Company (and, if necessary, any other
independent certified public accountants of any subsidiary of the Company
or of any business acquired by the Company for which financial statements
and financial data are, or are required to be, included in the Registration
Statement), addressed to each of the underwriters, if any, and each selling
Holder of Registrable Securities, such letters to be in customary form and
covering matters of the type customarily covered in "cold comfort" letters
in connection with underwritten offerings and such other matters as the
underwriters, if any, or the Holders of a majority of the Registrable
Securities being sold may reasonably request;
(k) obtain opinions of independent counsel to the Company and updates
thereof (which counsel and opinions (in form, scope and substance) shall be
reasonably satisfactory to the managing underwriters, if any, and counsel
to the selling Holders of the Registrable Securities being sold), addressed
to each selling Holder and each of the underwriters, if any, covering the
matters customarily covered in opinions of issuer's counsel requested in
underwritten offerings, such as the effectiveness of the Registration
Statement and such other matters as may be requested by such counsel and
underwriters, if any;
<PAGE>
(l) promptly (but in any event, within two (2) business days) notify
the selling Holders of Registrable Securities, their counsel and the
managing underwriters, if any, and confirm such notice in writing,
(i) when a prospectus or any supplement or post-effective
amendment to such prospectus has been filed, and, with respect to a
Registration Statement or any post-effective amendment thereto, when
the same has become effective,
(ii) of any request by the Commission or any other Federal or
state governmental authority for amendments or supplements to a
Registration Statement or related prospectus or for additional
information,
(iii) of the issuance by the Commission of any stop order
suspending the effectiveness of a Registration Statement or of any
order preventing or suspending the use of any prospectus or the
initiation of any proceedings by any Person for that purpose,
(iv) if at any time the representations and warranties of the
Company contemplated by clause (i) of paragraph (q) below cease to be
true and correct in any respect,
(v) of the receipt by the Company of any notification with
respect to the suspension of the qualification or exemption from
qualification of a Registration Statement or any of the Registrable
Securities for offer or sale under the securities or blue sky laws of
any jurisdiction, or the contemplation, initiation or threatening, of
any proceeding for such purpose,
(vi) of the happening of any event that makes any statement made
in such Registration Statement untrue in any material respect or that
requires the making of any changes in such Registration Statement so
that it will not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which they were made (in the case of any
prospectus), not misleading, and
(vii) of the Company's reasonable determination that a
post-effective amendment to a Registration Statement would be
appropriate;
(m) if requested by the managing underwriters, if any, or a Holder of
Registrable Securities being sold, promptly incorporate in a prospectus,
supplement or post-effective amendment such information as the managing
underwriters, if any, and the Holders of the Registrable Securities being
sold reasonably request to be included therein relating to the sale of the
Registrable Securities, including, without limitation, information with
respect to the number of shares of Registrable Securities being sold to
underwriters, the purchase price being paid therefor by such
<PAGE>
underwriters and with respect to any other terms of the underwritten
offering of the Registrable Securities to be sold in such offering, and
make all required filings of such prospectus, supplement or post-effective
amendment promptly following notification of the matters to be incorporated
in such supplement or post-effective amendment;
(n) furnish to each selling Holder of Registrable Securities and the
managing underwriter, without charge, at least one signed copy of the
Registration Statement;
(o) cooperate with the selling Holders of Registrable Securities and
the managing underwriters, if any, to facilitate the timely preparation and
delivery of certificates representing the Registrable Securities not
bearing any restrictive legends and in a form eligible for deposit with The
Depository Trust Company to be sold and cause such Registrable Securities
to be in such denominations and registered in such names as the managing
underwriters, if any, or each Holder of Registrable Securities may request
at least three (3) business days prior to any sale of Registrable
Securities to the underwriters;
(p) as promptly as practicable upon the occurrence of any event
contemplated by clause0 (vi) of paragraph (l) above, prepare a supplement
or post-effective amendment to the Registration Statement, or file any
other required document so that, as thereafter delivered to the purchasers
of the Registrable Securities being sold hereunder, the prospectus will not
contain an untrue statement of a material fact or an omission to state a
material fact required to be stated in a Registration Statement or
prospectus or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading;
(q) enter into such agreements (including underwriting agreements in
customary form, scope and substance) and take all such other actions in
connection therewith as the Holders of a majority of the Registrable
Securities being sold or the underwriters, if any, reasonably request in
order to expedite or facilitate the registration or the disposition of such
Registrable Securities, and in such connection, whether or not an
underwriting agreement is entered into and whether or not the registration
is an underwritten registration:
(i) make such representations and warranties to the Holders of
such Registrable Securities and the underwriters, if any, with respect
to the business of the Company and the Registration Statement, in
form, substance and scope as are customarily made by issuers to
underwriters in underwritten offerings and confirm the same, if and
when requested;
(ii) if an underwriting agreement is entered into, cause the same
to include the indemnification and contribution provisions and
procedures substantially similar to (and no less favorable to the
selling holders of Registrable Securities and the underwriters than)0
those contained in Section 6 hereof with respect to all parties to be
indemnified pursuant to said Section (or, with respect to the
indemnification of such underwriters, such similar indemnification and
contribution provisions as such underwriters shall customarily
require); and
<PAGE>
(iii) deliver such documents and certificates as may be requested
by the Holders of Registrable Securities being sold and managing
underwriters, if any, to evidence compliance with clause (i) above and
with any conditions contained in the underwriting agreement or other
similar agreement entered into by the Company, it being understood
that the above shall be done at each closing under such underwriting
or similar agreement or as and to the extent otherwise reasonably
requested by the holders of a majority of the Registrable Securities
being sold.
(r) cooperate with each seller of Registrable Securities covered by
any Registration Statement and each underwriter, if any, participating in
the disposition of such Registrable Securities and their respective counsel
in connection with any filings required to be made with the NASD;
(s) use its best efforts to take all other steps necessary to effect
the registration of the Registrable Securities covered by the Registration
Statement contemplated hereby; and
(t) cause its employees and personnel to use their commercially
reasonable efforts to support the marketing of the Registrable Securities
(including, without limitation, the participation in one (1) "road show"
as requested by a majority of the Holders participating in a Demand
Registration) to the extent possible taking into account the Company's
business needs and the requirements of the marketing process.
Each Holder agrees by acquisition of such Registrable Securities that,
upon receipt of written notice from the Company of the happening of any event of
the kind described in Section 4(l)(ii), 4(l)(iii), 4(l)(v), 4(l)(vi) or
4(l)(vii), such Holder will forthwith discontinue disposition of such
Registrable Securities covered by such Registration Statement until such
Holder's receipt of the copies of the supplemented or amended Registration
Statement contemplated by Section 4(p), or until it is advised in writing (the
"Advice") by the Company that the use of the applicable prospectus may be
resumed, and has received copies of any additional or supplemental filings that
are incorporated or deemed to be incorporated by reference in such prospectus,
and, if so directed by the Company, such Holder will deliver to the Company (at
the Company's expense) all copies, other than permanent file copies then in such
Holder's possession, of the prospectus covering such Registrable Securities
current at the time of receipt of such notice. If the Company shall give any
such notice, the time periods mentioned in Section 1 hereof shall be extended by
the number of days during such periods from and including the date of the giving
of such notice to and including the date when each seller of Registrable
Securities covered by such Registration Statement receives (x) the copies of the
supplemented or amended prospectus contemplated by Section 4(p) hereof or (y)
the Advice, as the case may be.
SECTION 5. Registration Expenses.
(a) All expenses incident to the Company's performance of or
compliance with this Agreement, including without limitation (i) all
registration, filing fees and expenses (including fees with respect to filings
<PAGE>
made with NASD (including, if applicable, the fees and expenses of any
"qualified independent underwriter", as may be required by the rules and
regulations of the NASD), (ii) fees and expenses of compliance with all Federal
securities and State "blue sky" laws (including fees and disbursements of
counsel for the underwriters and selling Holders (including local counsel) in
connection with blue sky qualifications of the Registrable Securities and
determinations of their eligibility for investment under the laws of such
jurisdiction as the managing underwriters or Holders of a majority of the
Registrable Securities being sold may designate), (iii) printing expenses
(including printing certificates for the Registrable Securities to be sold and
the Registration Statements), messenger and delivery expenses, duplication, word
processing, and telephone expenses, (iv) fees and disbursements of counsel for
the Company, and (v) fees and disbursements of all independent certified public
accountants of the Company incurred in connection with such registration
(including the expenses of any special audit and "cold comfort" letters incident
to such registration), underwriters (excluding discounts, commissions or fees of
underwriters, selling brokers, dealer managers or similar securities industry
professionals relating to the distribution of the Registrable Securities) and
other Persons retained by the Company (all such expenses being herein called
"Registration Expenses"), will be borne by the Company regardless of whether a
Registration Statement becomes effective; provided that the Company will, in any
event, pay its internal expenses (including, without limitation, all salaries
and expenses of its officers and employees performing legal or accounting
duties), the expenses of any annual audit or quarterly review, the fees and
expenses of any Person, including special experts, retained by the Company, the
expense of any liability insurance and the fees and expenses of one special
counsel for the Holders of Registrable Securities being sold and expenses and
fees for listing the securities to be registered on each securities exchange on
which similar securities issued by the Company are then listed or on the NASD
automated quotation system.
SECTION 6. Indemnification.
(a) Indemnification by the Company. The Company agrees to indemnify,
to the fullest extent permitted by law, each Holder and each officer, director,
employee, counsel, agent or representative of such Holder and each Person who
controls any such Person (within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act) against, and hold it and them
harmless from, all losses, claims, damages, liabilities, costs (including,
without limitation, costs of preparation and attorneys' fees and disbursements)
and expenses, including expenses of investigation (collectively, "Losses")
arising out of, caused by or based upon any untrue or alleged untrue statement
of material fact contained in any Registration Statement, or any omission or
alleged omission of a material fact required to be stated therein or necessary
to make the statements therein not misleading (a "Misstatement/Omission"),
except that the Company shall not be liable (i) insofar as such
Misstatement/Omission is based upon and in conformity with information furnished
in writing to the Company by a Holder expressly for use therein and (ii) to the
extent that any such claim arises out of or is based upon a
Misstatement/Omission made in any preliminary prospectus, (x) to the extent such
Misstatement/Omission is corrected in the final prospectus and (y) having
previously been timely furnished by or on behalf of the Company with sufficient
copies of the final prospectus, such indemnified Person thereafter fails to
deliver such prospectus prior to or concurrently with the sale to the Person who
purchased a Registrable Security from such indemnified Person and who is
asserting such claim. In connection with an underwritten offering, the Company
will indemnify such underwriters, selling brokers, dealer managers and similar
<PAGE>
securities industry professionals participating in the distribution, their
officers and directors and each Person who controls (within the meaning of
either Section 15 of the Securities Act or Section 20 of the Exchange Act) such
underwriters to the same extent as provided above with respect to the
indemnification of the Holders. This indemnity shall be in addition to any other
indemnification arrangements to which the Company may otherwise be party.
(b) Indemnification by Holders. In connection with any Registration
Statement in which a Holder is participating, each such Holder will furnish to
the Company in writing such powers of attorney, custody agreements and letters
of direction and other information and affidavits as the Company reasonably
requests for use in connection with any such Registration Statement, and each
such Holder agrees to indemnify, to the fullest extent permitted by law, the
Company, its directors and officers and each Person who controls the Company
(within the meaning of either Section 15 of the Securities Act or Section 20 of
the Exchange Act) against, and hold it and them harmless from, any Losses
resulting from any Misstatement/Omission, but only to the extent that such
Misstatement/Omission is based upon and in conformity with information furnished
in writing by such Holder expressly for use in such Registration Statement;
provided that the obligation to indemnify will be individual (several and not
joint) to each Holder and will be limited to the net amount of proceeds (net of
payment of all expenses) received by such Holder from the sale of Registrable
Securities pursuant to such Registration Statement giving rise to such
indemnification obligation.
(c) In case any action, claim or proceeding shall be brought against
any Person entitled to indemnification hereunder, such indemnified party shall
promptly notify each indemnifying party in writing, and such indemnifying party
shall assume the defense thereof, including the employment of counsel reasonably
satisfactory to such indemnified party and payment of all fees and expenses
incurred in connection with the defense thereof. The failure to so notify such
indemnifying party shall not affect any obligation it may have to any
indemnified party under this Agreement or otherwise except to the extent that
(as finally determined by a court of competent jurisdiction (which determination
is not subject to review or appeal)) such failure materially and adversely
prejudiced such indemnifying party. Each indemnified party shall have the right
to employ separate counsel in such action, claim or proceeding and participate
in the defense thereof, but the fees and expenses of such counsel shall be at
the expense of each indemnified party unless: (i) such indemnifying party has
agreed to pay such expenses; (ii) such indemnifying party has failed promptly to
assume the defense and employ counsel reasonably satisfactory to such
indemnified party; or (iii) the named parties to any such action, claim or
proceeding (including any impleaded parties) include both such indemnified party
and such indemnifying party or an affiliate or controlling person of such
indemnifying party, and such indemnified party shall have been advised in
writing by counsel that either (x) there may be one or more legal defenses
available to it which are different from or in addition to those available to
such indemnifying party or such affiliate or controlling person or (y) a
conflict of interest may exist if such counsel represents such indemnified party
and such indemnifying party or its Affiliate or controlling person; provided,
however, that such indemnifying party shall not, in connection with any one such
<PAGE>
action or proceeding or separate but substantially similar or related actions or
proceedings in the same jurisdiction arising out of the same general allegations
or circumstances, be responsible hereunder for the fees and expenses of more
than one separate firm of attorneys (in addition to any local counsel), which
counsel shall be designated by such indemnified party.
No indemnified party shall be liable for any settlement effected
without its written consent. Each indemnifying party agrees, jointly and
severally, that it will not, without the indemnified party's prior written
consent, consent to entry of any judgment or settle or compromise any pending or
threatened claim, action or proceeding in respect of which indemnification or
contribution may be sought hereunder unless the foregoing contains an
unconditional release, in form and substance reasonably satisfactory to the
indemnified parties, of the indemnified parties from all liability and
obligation arising therefrom.
(d) The indemnifying party's liability to any such indemnified party
hereunder shall not be extinguished solely because any other indemnified party
is not entitled to indemnity hereunder.
(e) The indemnification provided for under this Agreement will remain
in full force and effect regardless of any investigation made by or on behalf of
the indemnified party or any officer, director or controlling Person of such
indemnified party, and will survive the transfer of securities.
(f) Contribution. If the indemnification provided for in this Section
6 is unavailable to, or insufficient to hold harmless, an indemnified party
under Section 6(a) or Section 6(b) above in respect of any Losses referred to in
such Sections, then each applicable indemnifying party shall have an obligation
to 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, on the one hand, and of the Holder, on the other,
in connection with the Misstatement/Omission which resulted in such Losses,
taking into account any other relevant equitable considerations. The amount paid
or payable by a party as a result of the Losses referred to above shall be
deemed to include, subject to the limitations set forth in Section 6(c) above,
any legal or other fees or expenses reasonably incurred by such party in
connection with any investigation, lawsuit or legal or administrative action or
proceeding.
The relative fault of the Company, on the one hand, and of the Holder,
on the other, shall be determined by reference to, among other things, whether
the relevant Misstatement/Omission relates to information supplied by the
Company or by the Holder and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such Misstatement/Omission.
The Company and each Holder agree that it would not be just and
equitable if contribution pursuant to this Section 6(f) were determined by pro
rata allocation or by any other method of allocation which does not take account
of the equitable considerations referred to above. Notwithstanding the
provisions of this Section 6(f), a Holder shall not be required to contribute
any amount in excess of the amount such Holder would have been required to pay
to an indemnified party if the indemnity under Section 6(b) was available.
<PAGE>
No Person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any Person who was not guilty of such fraudulent misrepresentation.
The indemnity and contribution agreements contained in this Section 6
are in addition to any liability that the indemnifying parties may have to the
indemnified parties.
SECTION 7. Rules 144 and 144A.
The Company shall timely file the reports required to be filed by it
under the Securities Act and the Exchange Act (including but not limited to the
reports under sections 13 and 15(d) of the Exchange Act referred to in
subparagraph (c) of Rule 144 adopted by the Commission under the Securities Act)
and the rules and regulations adopted by the Commission thereunder (or, if the
Company is not required to file such reports, it will, upon the request of any
Holder of Registrable Securities, make publicly available other information) and
will take such further action as any Holder of Registrable Securities may
reasonably request, all to the extent required from time to time to enable such
Holder to sell Registrable Securities without registration under the Securities
Act within the limitation of the exemptions provided by (a) Rule 144 and Rule
144A under the Securities Act, as such Rules may be amended from time to time,
or (b) any similar rule or regulation hereafter adopted by the Commission. Upon
the request of any Holder of Registrable Securities, the Company will deliver to
such Holder a written statement as to whether it has complied with the filing
requirements of this Section 6.
SECTION 8. Definitions.
"Advice" shall have the meaning provided in Section 4.
"Commission" means the Securities and Exchange Commission or any other
Federal agency at the time administering the Securities Act.
"Common Stock" means the Company's Common Stock, par value $.001 per
share, or any other shares of capital stock or other securities of the Company
into which such shares of Common Stock shall be reclassified or changed,
including, by reason of a merger, consolidation, reorganization or
recapitalization. If the Common Stock has been so reclassified or changed, or if
the Company pays a dividend or makes a distribution on the Common Stock in
shares of capital stock, or subdivides (or combines) its outstanding shares of
Common Stock into a greater (or smaller) number of shares of Common Stock, a
share of Common Stock shall be deemed to be such number of shares of stock and
amount of other securities to which a holder of a share of Common Stock
outstanding immediately prior to such change, reclassification, exchange,
dividend, distribution, subdivision or combination would be entitled. "Company"
shall have the meaning provided in the first paragraph of this Agreement.
"Demand Registration" shall have the meaning provided in Section 1(a).
"Demand Request" shall have the meaning provided in Section 1(a).
<PAGE>
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, or any similar Federal statute, and the rules and regulations
of the Commission thereunder, all as the same shall be in effect at the time.
"Holder" means any Person who owns Warrants or Warrant Shares.
"Losses" shall have the meaning provided in Section 6(a).
"Misstatement/Omission" shall have the meaning provided in Section
6(a).
"NASD" means the National Association of Securities Dealers, Inc.
"Person" means any natural person, corporation, partnership, firm,
association, trust, government, governmental agency, limited liability company
or any other entity, whether acting in an individual, fiduciary or other
capacity.
"Piggyback Registration" shall have the meaning provided in Section
2(a).
"Purchaser" shall have the meaning provided in the first paragraph of
this Agreement.
"Registrable Securities" means (i) any of the shares of Common Stock
issuable upon the exercise of the Warrants and (ii) any securities issued or
issuable with respect to such Common Stock referred to in clause (i) above by
way of stock dividends or stock splits or in connection with a combination of
shares, recapitalization, merger, consolidation, or other reorganization or
otherwise. As to any particular Registrable Securities, such securities will
cease to be Registrable Securities when they have been distributed to the public
pursuant to an offering registered under the Securities Act or sold to the
public through a broker, dealer or market maker in compliance with Rule 144
under the Securities Act or any successor rule. The foregoing notwithstanding, a
security will not cease to be a Registrable Security until all stop transfer
instructions or notations and restrictive legends with respect to such security
have been lifted or removed.
"Registration Expenses" shall have the meaning provided in Section
5(a).
"Registration Statement" means any registration statement (including a
shelf registration) under the Securities Act of the Company that covers any of
the Registrable Securities pursuant to the provisions of this Agreement,
including the related prospectus, all amendments and supplements to such
registration statement, including pre- and post-effective amendments, all
exhibits thereto and all material incorporated by reference or deemed to be
incorporated by reference in such registration statement.
"Required Holders" means Holders of at least a majority of the
aggregate amount of all Registrable Securities.
<PAGE>
"Securities Act" means the Securities Act of 1933, as amended from
time to time, or any similar Federal statute, and the rules and regulations of
the Commission promulgated thereunder, all as the same shall be in effect at the
time.
"Shelf Registration" shall have the meaning set forth in Section 1(b)
of this Agreement.
"Subordinated Loan Agreement" shall mean the Senior Subordinated Loan
Agreement dated as of January 29, 1999 among the Company and the Purchasers, as
amended, amended and restated, supplemented, restructured or otherwise modified
from time to time (in whole or in part and without limitation as to terms,
conditions or covenants and without regard to the principal amount thereof) and
in effect, including all related notes, collateral documents, guaranties,
instruments and agreements entered into in connection therewith, and any
successive restructurings, renewals, extensions or refinancings thereof.
"Warrant Agreement" means the Warrant Agreement dated as of the date
hereof by and between the Company and the Purchasers.
"Warrants" shall mean the warrants to purchase in the aggregate
506,250 shares of Warrant Shares issued to the Purchasers pursuant to the
Subordinated Loan Agreement.
"Warrant Shares" means the Common Stock issuable upon the exercise of
Warrants.
Unless otherwise stated, other capitalized terms contained herein have
the meanings set forth in the Warrant Agreement.
SECTION 10. Miscellaneous.
(a) No Inconsistent Agreements. The registration rights granted to the
Purchasers hereby do not and shall not conflict with any other registration
rights granted by the Company. The Company shall not, after the date hereof,
grant any other registration rights which conflict with, impair or are otherwise
senior to the registration rights granted hereby.
(b) Remedies. Any Person having rights under any provision of this
Agreement will be entitled to enforce such rights specifically to recover
damages caused by reason of any breach of any provision of this Agreement and to
exercise all other rights provided in the Warrant Purchase Agreement, the
Warrant Agreement or granted by law, it being understood and agreed that the
Company shall not be liable for any decrease in value of Registrable Securities
arising from circumstances beyond its control. The parties hereto agree and
acknowledge that money damages may not be an adequate remedy for any breach of
the provisions of this Agreement and hereby agree to waive the defense in any
action for specific performance or injunctive relief that a remedy at law would
be adequate. Accordingly, any party may in its sole discretion apply to any
court of law or equity of competent jurisdiction (without posting any bond or
other security) for specific performance and for other injunctive relief in
order to enforce or prevent violation of the provisions of this Agreement.
<PAGE>
(c) Amendments and Waivers. Except as otherwise provided herein, the
provisions of this Agreement, including the provisions of this sentence, may be
amended, modified, supplemented or waived only upon the prior written consent of
the Company and the Holders of a majority of the outstanding Warrants and
Warrant Shares; provided that any such amendment, modification, supplement or
waiver shall not effect the rights of any Holder under this Agreement without
such Holder's consent.
(d) Successors and Assigns. All covenants and agreements in this
Agreement by or on behalf of any of the parties hereto will bind and inure to
the benefit of the respective successors and assigns of the parties hereto
whether so expressed or not. In addition, whether or not any express assignment
has been made, the provisions of this Agreement which are for the benefit of any
Purchaser or Holder are also for the benefit of, and enforceable by, any
subsequent Holder of Registrable Securities (except in the event such subsequent
Holder is a direct competitor of the Company (as determined in good faith by
management of the Company)). The Company may not assign its rights or
obligations hereunder without prior written consent of each Holder except by
operation of law.
(e) Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstances, 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 or affected, it
being intended that the rights and privileges of the parties hereto shall be
enforceable to the fullest extent permitted by law.
(f) Counterparts. This Agreement may be executed in any number of
counterparts, any one of which need not contain the signatures of more than one
party, but each of which when so executed shall be deemed to be an original and
all such counterparts taken together shall constitute one and the same
Agreement.
(g) Descriptive Headings: Interpretation. The descriptive headings of
this Agreement are inserted for convenience of reference only and shall not
limit or otherwise affect the meaning hereof. The use of the word "including" in
this Agreement shall be by way of example rather than by limitation.
(h) Notices. All notices, demands or other communications to be given
or delivered under or by reason of the provisions of this Agreement shall be in
writing and shall be deemed to have been given when delivered personally to the
recipient, sent to the recipient by reputable air courier guaranteeing overnight
delivery (charges prepaid), mailed to the recipient by certified or registered
mail, return receipt requested and postage prepaid or sent by facsimile. Such
notices, demands and other communications shall be sent to each Purchaser at the
address indicated below the Purchasers' name on the signature pages hereto and
to the Company at the address indicated below:
Consolidated Delivery & Logistics, Inc.
380 Allwood Road
Clifton, New Jersey 07012
Attention: Albert W. Van Ness, Jr.
Chief Executive Officer
Tel: (973) 471-1005
Fax: (973) 471-5519
<PAGE>
or to such other address or to the attention of such other person as the
recipient party has specified by prior written notice to the sending party. Any
notice, demand or other communication given hereunder will be deemed to have
been given as of the date so delivered; as of the first business day after being
delivered to an overnight air courier guaranteeing overnight delivery; on the
fifth business day after being mailed; when answered back, if telexed; when
receipt acknowledged, if telecopied; as the case may be.
(i) Governing Law; Submission to Jurisdiction. This Agreement shall be
governed by and construed in accordance with the internal laws of the State of
New York. Each of the Company and each Holder hereby irrevocably submits to the
jurisdiction of any New York State Court sitting in the Borough of Manhattan in
the City of New York or any Federal court sitting in the Borough of Manhattan in
the City of New York in respect of any suit, action or proceeding arising out of
or relating to this Agreement and the Registrable Securities, and irrevocably
accepts for itself and in respect of its property, generally and
unconditionally, jurisdiction of the aforesaid courts. Each of the Company and
each Holder irrevocably waives, to the fullest extent it may effectively do so
under applicable law, any objection which it may now or hereafter have to the
laying of the venue of any such suit, action or proceeding brought in any such
court and any claim that any such suit, action or proceeding has been brought in
an inconvenient forum. Nothing herein shall affect the right of any Holder to
serve process in any other manner permitted by law or to commence legal
proceedings or otherwise proceed against the Company in any other jurisdiction.
(j) Entire Agreement. This Agreement is intended by the parties as a
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. This Agreement supersedes all prior
agreements and understandings between the parties with respect to such subject
matter.
(k) Attorneys' Fees. In any action or proceeding brought to enforce
any provision of this Agreement, or where any provision hereof is validly
asserted as a defense, the prevailing party, as determined by the court, shall
be entitled to recover reasonable attorneys' fees in addition to any other
available remedy.
* * * *
<PAGE>
IN WITNESS WHEREOF the parties hereto have or have caused this
Registration Agreement to be duly executed as of the date first above written.
CONSOLIDATED DELIVERY &
LOGISTICS, INC.
By: /s/ Albert Van Ness, Jr.
Name: Albert Van Ness, Jr.
Title: Chief Executive Officer
PARIBAS CAPITAL FUNDING LLC
By: /s/ Jeffrey Youle
Name: Jeffry Youle
Title: Managing Director
By:
Name:
Title:
Address for Notices:
787 Seventh Avenue
New York, New York 10019
Attention: Joseph Kaufman
Tel:(212) 841-2000
Fax:(212) 841-2144
EXETER VENTURE LENDERS, L.P.
By Exeter Venture Advisors, Inc.,
its General Partner
By: /s/ Kurt Bergquist
Name: Kurt Bergquist
Title: Vice President
Address for Notices:
10 East 53rd Street, 32nd Floor
New York, New York 10022
Attention: Keith R. Fox
Tel:(212) 872-1172
Fax:(212) 872-1198
EXETER CAPITAL PARTNERS IV, L.P.
By Exeter IV Advisors, L.P.,
its General Partner
By Exeter IV Advisors, Inc.,
its General Partner
By: /s/ Kurt Bergquist
Name: Kurt Bergquist
Title: Vice President
Address for Notices:
10 East 53rd Street, 32nd Floor
New York, New York 10022
Attention: Keith R. Fox
Tel:(212) 872-1172
Fax:(212) 872-1198
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Dated: July 16, 1999 CONSOLIDATED DELIVERY & LOGISTICS, INC.
(Registrant)
By:___________________________
Albert W. Van Ness, Jr.
Chairman of the Board, Chief
Executive Officer and Chief
Financial Officer
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Dated: July 16, 1999 CONSOLIDATED DELIVERY & LOGISTICS, INC.
(Registrant)
By: /s/ Albert W. Van Ness, Jr.
Albert W. Van Ness, Jr.
Chairman of the Board, Chief Executive
Officer and Chief Financial Officer
