SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
______________________________
FORM 8-K/A NO.1
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
____________________________________
Date of report (Date of earliest event reported): October
31, 1996
FIND/SVP, INC.
(Exact Name of Registrant as Specified in Charter)
New York 0-15152
13-2670985
(State or Other Juris- (Commission File
No.) (IRS Employer
diction of Incorporation)
Identification No.)
625 Avenue of the Americas, New York, New York
10011
(Address of Principal Executive Offices)
(Zip Code)
Registrant's telephone number, including area code:
(212) 645-4500
N/A
(Former Name or Former Address, if Changed Since
Last Report)<PAGE>
This Form 8-K/A No.1 serves to amend the
Form 8-K filed by FIND/SVP, Inc. on November 13,
1996, by including as Exhibit A that Note and Warrant
Purchase Agreement referred to in said Form 8-K as
the "Agreement," which was inadvertently omitted from
said filing.
ITEM 7. Financial Statements, Pro Forma
Financial Information and Exhibits
Exhibits:
(a) The Agreement
<PAGE>
Signatures:
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
hereunto duly authorized.
FIND/SVP, INC.
By: /s/
Andrew P. Garvin
Andrew P. Garvin
President
Date: November 18, 1996
<PAGE>
Exhibit A
NOTE AND WARRANT PURCHASE AGREEMENT
Among
FIND/SVP, Inc.
FIND/SVP Published Products, Inc.
FIND/SVP Internet Services, Inc.
and
FURMAN SELZ SBIC, L.P.
Dated as of October 31, 1996<PAGE>
TABLE OF CONTENTS
Page
I. THE NOTES AND THE WARRANTS. . . . . . . . . . . . . .3
SECTION 1.01 Purchase and Sale of the
Notes and the Warrants . . . .3
SECTION 1.02 First Closing Date . . . . . .3
SECTION 1.03 The Obligation to Purchase
Mandatory Notes and
Mandatory Warrants . . . . . .3
SECTION 1.04 Second Closing Date. . . . . .4
SECTION 1.05 The Right to Call the
Additional Securities. . . . .4
SECTION 1.06 Purchase and Sale of the
Additional
Securities . . . . . . . . . .5
SECTION 1.07 Additional Closing Dates . . .6
II. REPRESENTATIONS AND WARRANTIES OF
THE COMPANY. . . . . . . . . . . . . . . . . . . . . . . . .6
SECTION 2.01 Organization, Qualifications
and Corporate Power. . . . . .6
SECTION 2.02 Authorization of Agreement,
Etc. . . . . . . . . . . . . .7
SECTION 2.03 Validity . . . . . . . . . . .8
SECTION 2.04 Capital Stock. . . . . . . . .9
SECTION 2.05 Financial Statements . . . . .9
SECTION 2.06 Events Subsequent to
September 30, 1996 . . . . . 10
SECTION 2.07 Actions Pending. . . . . . . 10
SECTION 2.08 Title to Properties. . . . . 10
SECTION 2.09 Use of Real Property . . . . 11
SECTION 2.10 Taxes. . . . . . . . . . . . 11
SECTION 2.11 Environmental Matters. . . . 11
SECTION 2.12 Governmental Approvals . . . 12
SECTION 2.13 Use of Proceeds. . . . . . . 12
SECTION 2.14 Offering of the Securities . 12
SECTION 2.15 Other Contracts and
Commitments. . . . . . . . . 13
SECTION 2.16 Compliance with Law. . . . . 13
SECTION 2.17 Employee Benefit Plans . . . 13
SECTION 2.18 Intellectual Property Rights 14
SECTION 2.19 SBIC Representations . . . . 15
SECTION 2.20 SEC Filings. . . . . . . . . 15
SECTION 2.21 Burdensome Restrictions. . . 16
SECTION 2.22 Insurance. . . . . . . . . . 16
SECTION 2.23 Registration Rights. . . . . 16
SECTION 2.24 Investment Company Act . . . 16
SECTION 2.25 Compensation . . . . . . . . 16
SECTION 2.26 Bank Debt. . . . . . . . . . 16
SECTION 2.27 Disclosure . . . . . . . . . 17
III. REPRESENTATIONS AND WARRANTIES OF
THE PURCHASER. . . . . . . . . . . . . . . . . . . . . . . 17
IV. CONDITIONS TO THE OBLIGATION OF THE
PURCHASER. . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 4.01 Conditions to the Obligation
of the Purchaser with
Respect to the First Closing 18
SECTION 4.02 Conditions to the Obligation
of the Purchaser with
Respect to the Additional
Closing. . . . . . . . . . . 22
V. COVENANTS . . . . . . . . . . . . . . . . . . . . . 23
VI. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . 27
SECTION 6.01 Expenses . . . . . . . . . . 27
SECTION 6.02 Survival of Representations
and Warranties . . . . . . . 27
SECTION 6.03 Brokerage. . . . . . . . . . 27
SECTION 6.04 Parties in Interest. . . . . 27
SECTION 6.05 Notices. . . . . . . . . . . 27
SECTION 6.06 LAW GOVERNING. . . . . . . . 28
SECTION 6.07 Entire Agreement . . . . . . 28
SECTION 6.08 Counterparts . . . . . . . . 28
<PAGE>
INDEX TO EXHIBITS
Description
EXHIBIT A Form of Series A Senior
Subordinated Note
EXHIBIT B Form of Warrant
EXHIBIT C Form of Registration Rights
Agreement
INDEX TO SCHEDULES
Description
2.01(b) Subsidiaries, Etc.
2.04(a) Warrants, Etc.
2.06 Events Subsequent to September 30,
1996
2.07 Litigation
2.08 Title to Properties
2.17 Employee Benefit Plans
2.25 Compensation Arrangements
<PAGE>
NOTE AND WARRANT PURCHASE
AGREEMENT, dated as of October 31, 1996, among
FIND/SVP, Inc. (the "Company") a New York
corporation, FIND/SVP Published Products, Inc., a
Delaware corporation ("FPPI"), FIND/SVP Internet
Services, Inc., a Delaware corporation ("FISI") (each of
FISI and FPPI, a "Subsidiary" and collectively, the
"Subsidiaries") and FURMAN SELZ SBIC, L.P., a
Delaware limited partnership (the "Purchaser").
WHEREAS the Company and the Subsidiaries
wish to issue and sell to the Purchaser on the First
Closing Date (as defined below) an aggregate of
$2,025,000 principal amount of Series A Senior
Subordinated Notes Due 2001 of the Company and the
Subsidiaries, which shall mature five years from their date
of issuance (the "Initial Notes"), substantially in the form
attached hereto as Exhibit A; and
WHEREAS the Company wishes to issue and sell
to the Purchaser on the First Closing Date a warrant or
warrants (the "Initial Warrants") to subscribe for 900,000
shares of Common Stock, par value $0.0001 per share, of
the Company ("Common Stock"), substantially in the
form attached hereto as Exhibit B; and
WHEREAS the Company and the Subsidiaries
wish to issue and sell to the Purchaser on the Second
Closing Date (as defined below), up to an aggregate of
$475,000 principal amount of additional Series A Senior
Subordinated Notes Due 2001 of the Company and the
Subsidiaries, which shall mature five years from their date
of issuance (the "Mandatory Notes"), substantially in the
form attached hereto as Exhibit A, less the aggregate
principal amount of any debt securities issued and
delivered by the Company and/or the Subsidiaries to SVP,
S.A., a French societe anonyme, or its affiliates ("SVP"),
prior to November 30, 1996 (the "French Securities");
and
WHEREAS the Company wishes to issue and sell
to the Purchaser on the Second Closing Date, a warrant
or warrants (the "Mandatory Warrants") to subscribe for
up to 211,111 shares of Common Stock (assuming all the
Mandatory Notes are issued), substantially in the form
attached hereto as Exhibit B; and
WHEREAS the Company and the Subsidiaries
wish to issue and sell to the Purchaser on each Additional
Closing Date (as defined below), subject to the provisions
of Section 1.05, 1.06 and 1.07 hereof, up to an aggregate
$2,500,000 principal amount of Series B Senior
Subordinated Notes of the Company and the Subsidiaries,
which shall mature five years from their date of issuance
(the "Option Notes", and together with the Initial Notes
and any Mandatory Notes, the "Notes"), substantially in
the form attached hereto as Exhibit A; and
WHEREAS the Company wishes to issue and sell
to the Purchaser on each Additional Closing Date, subject
to the provisions of Section 1.05, 1.06 and 1.07 hereof,
a warrant or warrants to subscribe for up to 1,111,111
Shares of Common Stock (the "Option Warrants" and
together with the Initial Warrants and any Mandatory
Warrants, the "Warrants"), substantially in the form
attached hereto as Exhibit B; and
WHEREAS the Company and the Subsidiaries may
issue and deliver to SVP prior to November 30, 1996, (i)
an aggregate of up to $475,000 principal amount of Series
A Senior Subordinated Notes Due 2001 of the Company
and the Subsidiaries, which notes shall mature five years
from the issue date of the Initial Notes and which vote as
a single class with, the Series A Senior Subordinated
Notes sold to Purchaser hereunder (the "Similar A
Notes"), substantially in the form attached hereto as
Exhibit A, with an option to purchase up to an equivalent
amount of Series B Senior Subordinated Notes Due 2001,
which notes shall mature five years from the date of
issuance and which vote as a single class with the Series
B Senior Subordinated Notes which may be sold to
Purchaser hereunder (the "Similar B Notes") and with the
Similar A Notes, the "Similar Notes"), substantially in the
form attached hereto as Exhibit A, and (ii) a warrant or
warrants to subscribe for up to 211,111 shares of
Common Stock, with an option to purchase up to an
equivalent amount of warrants (the "Similar Warrants"),
substantially in the form attached hereto as Exhibit B, all
pursuant to an agreement with the Company and the
Subsidiaries substantially similar to this Agreement
(except, under the express terms of such agreement, SVP
may not recoup its expenses and SVP may only purchase
an aggregate of up to $900,000 of notes and warrants
(including future optional purchases) (the "SVP
Agreement").
WHEREAS the proceeds of the sale of the Notes
and the Warrants will be used, together with other funds
of the Company and the Subsidiaries, to make strategic
acquisitions and for general corporate purposes but in no
event will such proceeds be used in connection with the
joint venture which is the subject of the Joint Venture
Agreement by and among Findout, Inc., Warner Books,
Inc., and FIND/SVP, Inc., dated as of February 10, 1995
(the "Joint Venture"), so long as any litigation related to
the Joint Venture is active, pending or threatened; and
WHEREAS the Purchaser wishes to purchase said
Notes and Warrants on the terms and subject to the
conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the
premises and mutual covenants herein contained, the
parties hereby agree as follows:
<PAGE>
I.
THE NOTES AND THE WARRANTS
SECTION 1.01 Purchase and Sale of the Notes
and the Warrants. (a) Subject to the terms and conditions
set forth herein, on the First Closing Date (i) the
Company and the Subsidiaries shall issue and sell to the
Purchaser, and the Purchaser shall purchase from the
Company and the Subsidiaries, the Initial Notes,
registered in the name of the Purchaser, at a purchase
price equal to $2,004,750, representing 99% of the
principal amount thereof; and (ii) the Company shall issue
and sell to the Purchaser, and the Purchaser shall
purchase from the Company, the Initial Warrants, having
an exercise price (the "Warrant Exercise Price") of $2.25
per share, registered in the name of the Purchaser, at an
aggregate purchase price of $20,250. The Initial Notes
and the Initial Warrants are herein sometimes collectively
referred to as the "Initial Securities."
(b) As payment in full for the Initial Securities
being purchased by it hereunder on the First Closing
Date, and against delivery thereof as aforesaid, the
Purchaser shall deliver to the Company, on behalf of the
Company and the Subsidiaries, on the First Closing Date
a certified or official bank check in New York Clearing
House funds, payable to the order of the Company, in the
amount of the aggregate purchase price therefore or shall
transfer such sum to the account of the Company by wire
transfer.
SECTION 1.02 First Closing Date. Subject to the
terms and conditions hereof, the closing of the sale and
purchase of the Initial Securities shall take place at the
offices of Dechert Price & Rhoads, 477 Madison Avenue,
New York, New York 10022, at 10:00 am, New York
time concurrently with the execution hereof (such date
and time of closing being herein called the "First Closing
Date").
SECTION 1.03 The Obligation to Purchase
Mandatory Notes and Mandatory Warrants. (a) On the
Second Closing Date, (i) the Company and the
Subsidiaries shall issue and sell to the Purchaser, and the
Purchaser shall purchase from the Company and the
Subsidiaries, the Mandatory Notes, registered in the name
of the Purchaser; and (ii) the Company shall issue and sell
to the Purchaser, and the Purchaser shall purchase from
the Company, the Mandatory Warrants, having the
Warrant Exercise Price, registered in the name of the
Purchaser, or in the event (a "Recalculation Event") that
after the First Closing Date any subdivision or
combination of Common Stock shall have occurred or any
dividend or other distribution upon Common Stock
payable in Common Stock shall have been made or
declared, the number of shares initially issuable upon
exercise of the Mandatory Warrants shall be appropriately
adjusted to take into account such Recalculation Event;
provided that, (x) the aggregate principal amount of
Mandatory Notes to be purchased hereunder shall be
$475,000 minus the aggregate principal amount of French
Securities issued and delivered prior to November 30,
1996 (the "Mandatory Notes Amount"), if any, and (y)
the aggregate number of shares of Common Stock initially
issuable upon exercise of Mandatory Warrants to be
purchased hereunder equals the Mandatory Notes Amount
(expressed as a numeral) multiplied by .4444444. The
purchase price for the Mandatory Notes shall be 99% of
the Mandatory Notes Amount (i.e., $470,250 assuming all
the Mandatory Notes are purchased). The purchase price
for the Mandatory Warrants shall be 1% of the
Mandatory Notes Amount (i.e., $4,750 assuming all the
Mandatory Warrants are purchased). The Mandatory
Notes and the Mandatory Warrants to be so purchased
hereunder are herein sometimes collectively referred to as
the "Mandatory Securities."
(b) As payment in full for the Mandatory Securities
being purchased by it hereunder on the Second Closing
Date, and against delivery thereof as aforesaid, the
Purchaser shall deliver to the Company, on behalf of the
Company and the Subsidiaries, on the Second Closing
Date, a certified or official bank check in New York
Clearing House funds, payable to the order of the
Company, in the amount of the aggregate purchase price
therefore or shall transfer such sum to the account of the
Company by wire transfer.
SECTION 1.04 Second Closing Date. Subject to
the terms and conditions hereof, the closing of the sale
and purchase of the Mandatory Securities, if any, shall
take place at the offices of Dechert Price & Rhoads, 477
Madison Avenue, New York, New York 10022, at 10:00
am, New York time on December 16, 1996 or on such
earlier date as selected by Purchaser (such date and time
of closing being herein called the "Second Closing
Date").
SECTION 1.05 The Right to Call the Additional
Securities. (a) The Additional Securities. In addition to
the securities to be issued and sold to the Purchaser
pursuant to Sections 1.01 and 1.03 hereunder, there shall
be reserved for issuance and sale by the Company and the
Subsidiaries to the Purchaser, and the Purchaser shall
have the right, but not the obligation, from time to time
to purchase, (x) from the Company and the Subsidiaries,
the Option Notes, which Option Notes shall be
substantially similar to the Initial Notes except the issue
date shall be the Additional Closing Date and each other
date in such Option Notes shall be the exact number of
days from any Additional Closing Date that each such
date, as such date appears in the Initial Notes, is from the
First Closing Date, and (y) from the Company, the
Option Warrants, which Option Warrants shall be
substantially similar to the Initial Warrants except the
issue date shall be the Additional Closing Date and each
other date in such Option Warrants shall be the exact
number of days from any Additional Closing Date that
each such date, as such date appears in the Initial
Warrants, is from the First Closing Date, or in the event
of a Recalculation Event, the number of shares initially
issuable upon exercise of the Option Warrants shall be
appropriately adjusted to take into account such
Recalculation Event. The maximum principal amount of
Option Notes which may be purchased hereunder is
$2,025,000 plus the principal amount of Mandatory Notes
actually purchased by Purchaser, and the maximum
number of shares of Common Stock initially issuable upon
exercise of the Option Warrants which may be purchased
hereunder is 900,000 plus the number of shares of
Common Stock initially issuable upon exercise of the
Mandatory Warrants purchased by Purchaser. The Option
Notes and the Option Warrants, if any, may only be
purchased from time to time and sold hereunder in
investment units ("Units") consisting of $1 principal
amount of Option Notes and Option Warrants to subscribe
for 0.4444444 shares of Common Stock (subject to
adjustment in the event of a Recalculation Event and
rounded to the nearest whole share of Common Stock),
respectively. The number of Units purchased at each
Additional Closing Date may not be less than 25,000
Units or such lesser amount of Units which may be
available hereunder. The purchase price for each Unit
shall be $1.00 per Unit, $0.99 of which shall be allocated
to the Option Notes and $0.01 shall be allocated to the
Option Warrants.
(b) The Right to Call. (i) At any time and from
time to time, prior to December 31, 1997, Purchaser shall
have the option to require the Company to issue and sell,
on the terms and conditions set forth herein, both the
Option Notes and the Option Warrants (as adjusted for
any Recalculation Events) available for purchase
hereunder, by an instrument in writing (a "Call Notice"),
executed by Purchaser notifying the Company of
Purchaser's intention to purchase such Option Notes and
Option Warrants. The Call Notice shall specify the
Additional Closing Date for such transaction, which shall
be no less than 30 days after the date of the Call Notice
and no later December 31, 1997, and the number of Units
to be purchased.
(ii) Upon receipt of the Call Notice pursuant to
clause (i) above, the Company shall determine if the
conditions, as set forth in Section 4.02 hereof (the "4.02
Conditions"), will be met by the Additional Closing Date.
If the 4.02 Conditions will not be met, the Company shall
notify Purchaser in writing within 15 days of receipt of
the Call Notice, and shall state with particularity which of
the 4.02 Conditions will not be met (the "4.02 Notice").
If the Company delivers a 4.02 Notice to Purchaser, then,
prior to the Additional Closing Date, Purchaser may
deliver a writing to the Company waiving the 4.02
Conditions for a second closing to occur (the "4.02 Call
Notice"). Purchaser may revoke its option to purchase the
Optional Notes and Optional Warrants and rescind the
Call Notice at any time following receipt of the 4.02
Notice prior to the Additional Closing Date.
SECTION 1.06 Purchase and Sale of the
Additional Securities. (a) Subject to the terms and
conditions set forth herein, if Purchaser shall have
delivered a Call Notice pursuant to Section 1.05(b) above,
then, on the Additional Closing Date specified in such
effective Call Notice, (i) the Company and the
Subsidiaries shall issue and sell to Purchaser, and
Purchaser shall purchase from the Company and the
Subsidiaries, the Option Notes, and (ii) the Company shall
sell to the Purchaser, and the Purchaser shall purchase
from the Company Option Warrants (as adjusted for each
Recalculation Event) at the purchase price set forth in
Section 1.05(a) hereof. The Company shall issue and
deliver to Purchaser the Option Warrants and the
Company Subsidiaries shall issue and deliver to Purchaser
the Option Notes, each registered in the name of
Purchaser. The Option Notes and Option Warrants are
herein collectively sometimes referred to as "Additional
Securities".
(b) As payment in full for the Additional Securities
being purchased by it hereunder, and against delivery
thereof as aforesaid, Purchaser shall deliver to the
Company, on behalf of the Company and the Subsidiaries,
on the Additional Closing Date a certified or official bank
check in New York Clearing House funds, payable to the
order of the Company, in the amount of $25,000 per Unit
or shall transfer such sum to the account of the Company
by wire transfer.
SECTION 1.07 Additional Closing Dates. Each
Additional Closing Date, if any, shall take place at the
offices of Dechert Price & Rhoads, 477 Madison Avenue,
New York, New York 10022 at 10 a.m., New York time,
not more than 30 days following a Call Notice and no
later than December 31, 1997 (which shall not be a day
on which banking institutions in New York State are
required or authorized to close), as shall be specified in
the Call Notice or at such other date and time as may be
mutually agreed upon between such Purchaser and the
Company (each such date, an "Additional Closing Date").
II.
REPRESENTATIONS AND WARRANTIES OF
THE COMPANY AND THE SUBSIDIARIES
The Company and the Subsidiaries, jointly and
severally, represent and warrant to the Purchaser as
follows:
SECTION 2.01 Organization, Qualifications and
Corporate Power. (a) The Company is a corporation duly
incorporated, validly existing and in good standing under
the laws of the State of New York, and is duly licensed
or qualified to do business as a foreign corporation, and
is in good standing in each other jurisdiction in which the
nature of the business transacted by it makes such
licensing or qualification necessary, except where the
failure to be so licensed or qualified would not have a
material adverse effect on the business, operations or
financial condition of the Company. The Company has the
corporate power and authority to own and hold its
properties and to carry on its business as currently
conducted, to execute, deliver and perform this
Agreement, the Notes, the Warrants and the Registration
Rights Agreement annexed hereto as Exhibit C (the
"Registration Rights Agreement") and to issue, sell and
deliver the shares of Common Stock issuable upon
exercise of the Warrants (the "Warrant Shares").
(b) Except as set forth on Schedule 2.01(b) hereof,
and except for the capital stock of the Subsidiaries, the
Company does not own of record or beneficially, directly
or indirectly, (i) any shares of outstanding capital stock or
securities convertible into capital stock of any other
corporation or (ii) any participating interest in any
partnership, trust, joint venture or other business
enterprise. Except as set forth in said Schedule 2.01(b),
the Company owns, directly or indirectly, all the
outstanding capital stock of each Subsidiary (except for
directors' qualifying shares, if any), free and clear of all
liens, charges, pledges, security interests or other
encumbrances. The capital stock of each Subsidiary is
duly authorized and validly issued and outstanding, fully
paid and nonassessable. Except as set forth on Schedule
2.01(b), no Subsidiary has issued or sold any shares of its
capital stock or any securities or obligations convertible
into or exchangeable for, or given any person any right to
acquire from such Subsidiary, any shares of its capital
stock, and no such securities or obligations are
outstanding. Each Subsidiary is a corporation duly
organized, validly existing and in good standing under the
laws of its jurisdiction of incorporation listed in said
Schedule 2.01(b) and is duly licensed or qualified to do
business as a foreign corporation and is in good standing
in each other jurisdiction in which the nature of the
business transacted by it makes such licensing or
qualification necessary, except where the failure to be so
licensed or qualified would not have a material adverse
effect on the business, operations or financial condition of
such Subsidiary, and has the corporate power and
authority to own and hold its properties and to carry on
its business as currently conducted. Complete and correct
copies of the Articles of Incorporation and By-Laws of
the Company and each Subsidiary as in effect on the date
hereof have been delivered to the Purchaser. Other than
the capital stock of the subsidiaries set forth on Schedule
2.01(b), no Subsidiary owns of record or beneficially,
directly or indirectly, (i) any shares of outstanding capital
stock or securities convertible into capital stock of any
other corporation or (ii) any participating interest in any
partnership, trust, joint venture or other business
enterprise.
SECTION 2.02 Authorization of Agreement. Etc.
(a) The execution, delivery and performance by the
Company of this Agreement, the Notes, the Warrants and
the Registration Rights Agreement, and the performance
by the Company of its obligations hereunder and
thereunder, and the issuance, sale and delivery of the
Warrant Shares upon exercise of the Warrants, have been
duly authorized by all requisite corporate action and will
not violate any provision of law (assuming the accuracy
of the representations and warranties of Purchaser in
Article III hereof), any order of any court or other agency
of government, the Articles of Incorporation or By-laws
of the Company, or any provision of any indenture,
agreement or other instrument by which the Company or
any of the Subsidiaries or any of their respective
properties or assets is bound or affected, or conflict with,
result in a breach of, result in or permit the termination
of or acceleration of rights or obligations under, or
constitute (with due notice or lapse of time or both) a
default under any such indenture, agreement or other
instrument, or result in the creation or imposition of any
lien, charge or encumbrance of any nature whatsoever
upon any of the properties or assets of the Company or
any of the Subsidiaries.
(b) The Warrant Shares have been duly reserved
for issuance upon exercise of the Warrants and, when
issued and paid for in accordance with the terms of the
Warrants, will be duly authorized, validly issued and
outstanding, fully paid and nonassessable shares of
Common Stock. Neither the issuance, sale and delivery of
the Warrants nor the issuance, sale and delivery of the
Warrant Shares upon exercise thereof are subject to any
preemptive rights of stockholders of the Company or to
any right of first refusal or other similar right in favor of
any person.
(c) The execution, delivery and performance by
each of the Subsidiaries of this Agreement and the Notes,
and the performance by each Subsidiary of its obligations
hereunder and thereunder, have been duly authorized by
all requisite corporate action and will not violate any
provision of law (assuming the accuracy of the
representations and warranties of Purchaser set forth in
Article III hereof), any order of any court or other agency
of government, the Articles of Incorporation or By-laws
of any Subsidiary, or any provision of any indenture,
agreement or other instrument by which the Subsidiaries
or any of their respective properties or assets is bound or
affected, or conflict with, result in a breach of, result in
or permit the termination of or acceleration of rights or
obligations under, or constitute (with due notice or lapse
of time or both) a default under any such indenture,
agreement or other instrument, or result in the creation or
imposition of any lien, charge or encumbrance of any
nature whatsoever upon any of the properties or assets of
any of the Subsidiaries.
SECTION 2.03 Validity. (a) This Agreement has
been duly executed and delivered by the Company and
constitutes the legal, valid and binding obligation of the
Company, enforceable in accordance with its terms
(subject, as to enforcement of remedies, to applicable
bankruptcy, reorganization, insolvency and similar laws,
to moratorium laws from time to time in effect and to
general equity principles). The Notes, the Warrants and
the Registration Rights Agreement, when executed and
delivered in accordance with this Agreement, will
constitute the legal, valid and binding obligations of the
Company, enforceable in accordance with their respective
terms (subject, as to enforcement of remedies, to
applicable bankruptcy, reorganization, insolvency and
similar laws, to moratorium laws from time to time in
effect and to general equity principles).
(b) This Agreement and the Notes have been duly
executed and delivered by the Subsidiaries and constitute
the legal, valid and binding obligation of each Subsidiary,
enforceable in accordance with its terms (subject, as to
enforcement of remedies to applicable bankruptcy,
reorganization, insolvency and similar laws, to
moratorium laws from time to time in effect and to
general equity principles).
SECTION 2.04 Capital Stock. The authorized
capital stock of the Company consists of 10,000,000
shares of Common Stock, par value $.0001 per share, of
which 6,526,244 shares were validly issued and
outstanding, fully paid and nonassessable as of October
28, 1996 and 2,000,000 shares of Preferred Stock, $.0001
par value per share, none of which are issued and
outstanding. Except as contemplated hereby and as set
forth in Schedule 2.04(a) hereto, (i) no subscription,
warrant, option, convertible security or other right
(contingent or other) to purchase or acquire any shares of
any class of capital stock of the Company is authorized or
outstanding; (ii) there is no commitment of the Company
to issue any shares, warrants, options or other such rights
or to distribute to holders of any class of its capital stock
any evidences of indebtedness or assets and (iii) the
Company has no obligation (contingent or other) to
purchase, redeem or otherwise acquire any shares of its
capital stock or any interest therein or to pay any dividend
or make any other distribution in respect thereof. The
execution, delivery and performance by the Company of
this Agreement, the Notes, the Warrants and the
Registration Rights Agreement, and the performance by
the Company of its obligations hereunder and thereunder
will not cause the acceleration or vesting of any of the
options set forth in Schedule 2.04(a) or otherwise give
rise to any rights or obligations under any so-called
"change-of-control" provisions.
SECTION 2.05 Financial Statements. The
Company has furnished to the Purchaser (i) the audited
consolidated balance sheets of the Company and the
Subsidiaries as of December 31, 1995, 1994 and 1993
and the related audited consolidated statements of
operations, shareholders' equity (net capital deficiency),
and cash flows of the Company and the Subsidiaries for
the fiscal years ended December 31, 1995, 1994 and
1993, certified by the principal financial officer of the
Company; (ii) the unaudited consolidated balance sheet of
the Company and the Subsidiaries as of September 30,
1996 and the related unaudited consolidated statements of
operations of the Company and the Subsidiaries for the
fiscal quarter and nine months then ended (the "September
30th Statements"); and (iii) the statement of cash flows of
the Company for the nine months then ended. Such
financial statements are complete and correct, have been
prepared in accordance with generally accepted
accounting principles, consistently applied, and fairly
present the consolidated financial position of the Company
and the Subsidiaries as of such respective dates, and the
consolidated results of their respective operations and cash
flows for the respective periods then ended; provided
however that the September 30th Statements are subject
to further restructuring charges of approximately
$850,000.
SECTION 2.06 Events Subsequent to September
30, 1996. Since September 30, 1996, the businesses of
the Company and the Subsidiaries have been operated in
the ordinary course and there has not been any material
adverse change in the assets, liabilities, income, business,
operations or prospects of the Company or the
Subsidiaries. Since September 30, 1996, except as set
forth in Schedule 2.06 hereto or as contemplated hereby,
neither the Company nor any of the Subsidiaries has (i)
issued any stock, bonds or other securities, (ii) borrowed
any amount or incurred any liabilities (absolute or
contingent), except current liabilities incurred, and
liabilities under contracts entered into, in the ordinary
course of business, (iii) discharged or satisfied any lien or
incurred or paid any obligation or liability (absolute or
contingent) other than current liabilities shown on its
balance sheet as of September 30, 1996 referred to in
Section 2.05 hereof and current liabilities incurred since
that date in the ordinary course of business, (iv) declared
or made any payment or distribution to stockholders or
purchased or redeemed any shares of its capital stock or
other securities or interests, (v) mortgaged, pledged or
subjected to lien any of its assets, tangible or intangible,
other than liens of current real property taxes not yet due
and payable, (vi) sold, assigned or transferred any of its
tangible assets, except in the ordinary course of business,
or cancelled any debts or claims, (vii) sold, assigned or
transferred any patents, trademarks, trade names,
copyrights, trade secrets or other intangible assets, (viii)
made any changes in officer compensation, or (ix) entered
into any transaction except in the ordinary course of
business.
SECTION 2.07 Actions Pending. Except as set
forth in Schedule 2.07 hereof, there are no (a) actions,
suits, customer claims in excess of $5,000, proceedings
or investigations at law or in equity or by or before any
governmental instrumentality or other agency now
pending or to the Company's or any Subsidiaries'
knowledge, threatened against or affecting the Company
or the Subsidiaries, or (b) judgments, decrees, injunctions
or orders of any court, governmental department,
commission, agency, instrumentality or arbitrator against
or affecting the Company or the Subsidiaries.
SECTION 2.08 Title to Properties. The Company
and each Subsidiary have good and marketable title to all
of their respective owned properties and assets, free and
clear of all mortgages, pledges, security interests, liens,
charges and other encumbrances, except for Permitted
Encumbrances (as defined below). As of the First Closing
Date and after giving effect to the transactions
contemplated hereby, the Company and each Subsidiary
will have good and marketable title to all their respective
properties and assets free and clear of mortgages, pledges,
security interests, liens, charges and other encumbrances,
except for Permitted Encumbrances. As of the First
Closing Date and after giving effect to the transactions
contemplated hereby, the Company and the Subsidiaries
will enjoy peaceful and undisturbed possession under all
leases relating to real property and all other leases (other
than immaterial leases which can be replaced on
substantially the same terms) necessary for the operation
of their properties and business; and all such leases are
valid and subsisting and in full force and effect. As used
herein, "Permitted Encumbrances" means any mortgages,
pledges, security interests, liens, charges and other
encumbrances (i) as described in Schedule 2.08 hereto,
(ii) liens for current taxes, assessments and other
governmental charges not overdue, (iii) mechanic's,
materialmen's and similar liens which may have arisen in
the ordinary course of business and which, in the
aggregate, would not be material to the financial condition
of the Company or such Subsidiary, (iv) security interests
securing indebtedness not in default for the purchase price
of or lease rental payments on property purchased or
leased under capital lease arrangements in the ordinary
course of business, and (v) minor imperfections of title,
if any, not material in amount and not materially
detracting from the value or impairing the use of the
property subject thereto or impairing the operations or
proposed operations of the Company and its Subsidiaries,
taken as a whole.
SECTION 2.09 Use of Real Property. Neither the
Company nor any Subsidiary has received notice of
violation of any applicable zoning or building regulation,
ordinance or other law, order, regulation or requirement
relating to the operations of the Company or any
Subsidiary and there is no such violation which would
result in any material adverse effect on the business,
operations or financial condition of the Company and the
Subsidiaries, taken as a whole, or their properties or
assets, taken as a whole. Neither the Company nor any
Subsidiary owns any real property.
SECTION 2.10 Taxes. The Company and each
Subsidiary has filed or caused to be filed all Federal,
state, local and foreign tax returns that are required to be
filed and has paid or caused to be paid all taxes shown as
due on all such returns or on any assessment received by
it.
SECTION 2.11 Environmental Matters. The
Company and the Subsidiaries have complied with each,
and are not in violation of any, federal, state or local law,
regulation, permit, provision or ordinance relating to the
generation, storage, transportation, treatment or disposal
of hazardous, toxic or polluting substances, except where
such noncompliance or violation would not result in any
material adverse effect on the business, operations or
financial condition of the Company and the Subsidiaries,
taken as a whole, or their properties or assets, taken as a
whole. The Company and the Subsidiaries have obtained
and adhered to all necessary permits and other approvals
necessary to store, dispose, and otherwise handle
hazardous, toxic and polluting substances, the failure of
which to obtain or adhere to would result in any material
adverse effect on the business, operations or financial
condition of the Company and the Subsidiaries, taken as
a whole, or their properties or assets, taken as a whole.
The Company and the Subsidiaries have reported, to the
extent required by federal, state and local law, all past
and present sites where hazardous, toxic or polluting
substances, if any, from the Company and the
Subsidiaries have been treated, stored or disposed.
Neither the Company nor any Subsidiary has transported
any hazardous, toxic or polluting substances or arranged
for the transportation of such substances to any location
which is the subject of federal, state or local enforcement
actions or other investigations which may lead to claims
against the Company or the Subsidiaries for clean-up
costs, remedial work, damages to natural resources or for
personal injury claims, including, but not limited to,
claims under the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as
amended which claims would result in a material adverse
effect on the business, operations or financial condition of
the Company and the Subsidiaries, taken as a whole, or
their properties or assets, taken as a whole.
SECTION 2.12 Governmental Approvals.
Assuming the accuracy of the Representations and
Warranties of the Purchaser as set forth in Article III
hereof, no registration or filing with, or consent or
approval of, or other action by, any Federal, state or
other governmental agency or instrumentality is or will be
necessary for the valid execution, delivery and
performance of this Agreement, the Notes, the Warrants
and the execution and delivery of the Registration Rights
Agreement, or the issuance, sale and delivery of the
Warrant Shares.
SECTION 2.13 Use of Proceeds. The Company
and the Subsidiaries will apply the proceeds of the
issuance and sale of the Securities, together with the other
funds of the Company and the Subsidiaries, to make
strategic acquisitions and for general corporate purposes
but shall not apply any such proceeds towards the Joint
Venture so long as any litigation related to the Joint
Venture is active, pending or threatened.
SECTION 2.14 Offering of the Securities. Neither
the Company, the Subsidiaries nor any person authorized
or employed by the Company or the Subsidiaries as agent,
broker, dealer or otherwise, in connection with the
offering or sale of the Securities or any similar security of
the Company or the Subsidiaries, has offered the
Securities or any similar security for sale to, or solicited
any offers to buy the Securities or any similar security of
the Company or the Subsidiaries from, or otherwise
approached or negotiated with respect thereto with, any
person or persons other than the Purchaser, and neither
the Company, the Subsidiaries nor any person acting on
their behalf has taken or will take any action (including,
without limitation, any offer, issuance or sale of any
security of the Company or the Subsidiaries under
circumstances which might require the integration of such
offer, issuance or sale with the offer, issuance and sale of
the Securities under the Securities Act of 1933, as
amended (the "Securities Act"), or the rules and
regulations of the Securities and Exchange Commission
(the "Commission") thereunder), which might subject the
offering, issuance or sale of the Securities to the
registration provisions of the Securities Act.
SECTION 2.15 Other Contracts and
Commitments. Neither the Company nor any of the
Subsidiaries is in default in the performance, observance
or fulfillment of any of the obligations, covenants or
conditions contained in any agreement or instrument to
which it is a party that may result in any material adverse
change in the business, operations or financial condition
of the Company and the Subsidiaries, taken as a whole.
SECTION 2.16 Compliance with Law. Neither the
Company nor any of the Subsidiaries is in default under
any order of any court, governmental authority or
arbitration board or tribunal to which the Company or
such Subsidiary is or was subject or in violation of any
laws, ordinances, governmental rules or regulations
(including, but not limited to, those relating to
environmental, safety, building, product safety or health
standards or employment matters) to which the Company
or such Subsidiary is or was subject, in each case, that
would result in any material adverse effect on the
business, operations or financial condition of the
Company and the Subsidiaries, taken as a whole, or their
properties or assets, taken as a whole. The businesses of
the Company and the Subsidiaries are being conducted in
compliance with all applicable laws, ordinances, rules and
regulations applicable to them, the non-compliance with
which would have a material adverse effect on the
business, operations or financial condition of the
Company and the Subsidiaries, taken as a whole, or their
properties or assets, taken as a whole. Neither the
Company nor any of the Subsidiaries has failed to obtain
any licenses, permits, franchises or other governmental
authorizations necessary to the ownership of its properties
or to the conduct of the business of the Company or such
Subsidiary, which failure would have a material adverse
effect on the business, operations or financial condition of
the Company and the Subsidiaries, taken as a whole, or
their properties or assets, taken as a whole.
SECTION 2.17 Employee Benefit Plans. (a) The
Company (which term shall include, for purposes of this
Section 2.17, each of the Subsidiaries) has complied and
currently is in compliance, both as to form and operation,
with the applicable provisions of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"),
and the Internal Revenue Codes of 1954 and/or 1986, as
amended, respectively (the "Code"), with respect to each
"employee benefit plan" as defined under Section 3(3) of
ERISA ("Plan") which the Company (i) has ever adopted,
maintained, established or to which the Company has ever
been required to contribute or to which the Company has
ever contributed or (ii) currently maintains or to which
the Company currently contributes or is required to
contribute or (iii) currently participates in or is required
to participate in.
(b) The Company has never maintained, adopted
or established, contributed or been required to contribute
to, or otherwise participated in or been required to
participate in, a "multiemployer plan" (as defined in
Section 3(37) of ERISA). No amount is due or owing
from the Company on account of a "multiemployer plan"
(as defined in Section 3(37) of ERISA) or on account of
any withdrawal therefrom.
(c) Notwithstanding anything else set forth herein,
the Company has not incurred any liability with respect to
a Plan, including, without limitation, under ERISA
(including, without limitation, Title I or Title IV of
ERISA and other than liability for premiums due to the
Pension Benefit Guaranty Corporation), the Code or other
applicable law, which has not been satisfied in full, and
no event has occurred, and there exists no condition or set
of circumstances which could result in the imposition of
any liability with respect to a Plan, including, without
limitation, under ERISA (including, without limitation,
Title I or Title IV of ERISA), the Code or other
applicable law with respect to the Plan.
(d) Except as set forth on Schedule 2.17, the
Company has not committed itself, orally or in writing,
to (i) provide or cause to be provided to any person any
payments or benefits in addition to, or in lieu of, those
payments or benefits set forth under any Plan, or (ii)
continue the payment of, or accelerate the payment of,
benefits under any Plan, except as expressly set forth
thereunder. Complete and correct copies of all written
arrangements described in the preceding sentence as in
effect on the date hereof have been delivered to the
Purchaser.
(e) Except as set forth on Schedule 2.17, the
Company has not committed itself, orally or in writing,
to provide or cause to be provided any severance or other
post-employment benefit, salary continuation, termination,
disability, death, retirement, health or medical benefit, or
similar benefit to any person (including, without
limitation, any former or current employee) except as set
forth under any Plan. Complete and correct copies of all
written arrangements described in the preceding sentence
as in effect on the date hereof have been delivered to the
Purchaser.
SECTION 2.18 Intellectual Property Rights. The
Company and the Subsidiaries own or possess all patents,
trademarks, services marks, trade names, copyrights,
licenses, authorizations and other intangible property, and
all rights with respect to the foregoing, necessary for the
conduct of their respective businesses as now conducted,
without any known material conflict with the rights of
others. The consummation of the transactions
contemplated hereby will not alter or impair in any
material respect any of such rights of the Company or the
Subsidiaries.
SECTION 2.19 SBIC Representations. (a) Neither
the Company nor any Subsidiary does in any manner or
form discriminate, foster discrimination or permit
discrimination against any person belonging to any
minority race or believing in any minority creed or
religion.
(b) The Company, together with its Subsidiaries
and affiliates, (i) is not dominant in its field of operation
and (ii) does not have net worth in excess of $18 million
and did not have average net income after Federal income
taxes (excluding any carryover losses) for the preceding
two completed fiscal years in excess of $6 million, for
purposes of the Small Business Investment Act of 1958,
as amended (the "SBIA"), and the regulations of the
Small Business Administration ("SBA") promulgated
thereunder.
(c) To the Company's knowledge, none of its
stockholders is a small business investment corporation.
SECTION 2.20 SEC Filings. Since January 1,
1994, the Company has timely filed all required reports,
statements, schedules and registration statements with the
Commission required to be filed by the Company
pursuant to the Securities and Exchange Act of 1934, as
amended (the "Exchange Act"), all of which complied in
all material respects with all applicable requirements of
the Exchange Act. The Company has delivered to the
Purchaser (i) its annual reports on Form 10-K for its
fiscal years ended December 31, 1994 and 1995, (ii) its
quarterly report on Form 10-Q for its fiscal quarter ended
June 30, 1996 and (iii) its proxy or information statements
relating to meetings of, or action taken without a meeting
by, the stockholders of the Company held since January
1, 1994 (the items described in clauses (i), (ii) and (iii)
are collectively referred to as "SEC Filings"). The
Company has not made any SEC Filing since the filing of
its quarterly report on Form 10-Q for its fiscal quarter
ending June 30, 1996. As of their respective dates, none
of the SEC Filings, including without limitation, any
financial statements or schedules included therein, at the
time filed, contained any untrue statements of a material
fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they
were made, not misleading. Since June 30, 1996, neither
the Company nor any Subsidiary has entered into any
transaction that would be required to be disclosed in any
SEC Filing pursuant to Item 404 of Regulation S-K
promulgated by the Commission pursuant to the Securities
Act if such SEC Filing was made as of the date hereof.
SECTION 2.21 Burdensome Restrictions. Neither the
Company nor any Subsidiary is obligated under any
contract or agreement or subject to any charter or other
corporate restriction which materially adversely affects the
Company's or any Subsidiary's business, properties,
assets, prospects or condition (financial or otherwise).
SECTION 2.22 Insurance. All policies of liability,
theft, fidelity, business interruption, life, fire, product
liability, workmen's compensation, health and other forms
of insurance held by the Company and its Subsidiaries are
valid and enforceable policies and are outstanding and
duly in force and all premiums with respect thereto are
paid to date. The amounts of coverage under such policies
of insurance for the assets and properties of the Company
and its Subsidiaries are adequate against risks usually
insured against by persons operating similar businesses
and operating similar properties.
SECTION 2.23 Registration Rights. Except as
contemplated by the Registration Rights Agreement, no
person has any right to cause the Company or any
Subsidiary to effect the registration under the Securities
Act of any shares of Common Stock or any other
securities (including debt securities) of the Company or
any Subsidiary.
SECTION 2.24 Investment Company Act. The
Company is not an "investment company" as that term is
defined in, and is not otherwise subject to regulation
under, the Investment Company Act of 1940, as amended.
SECTION 2.25 Compensation Arrangements.
Except as set forth in Schedule 2.25 hereto, (i) neither the
Company nor any of the Subsidiaries is a party to any
employment or deferred compensation agreements that
require payments by the Company or any Subsidiary to
any individual in excess of $100,000, or in the aggregate,
in excess of $500,000, in each case, in any year (ii)
neither the Company nor any of the Subsidiaries has any
bonus, incentive or profit-sharing plans that would require
payments by the Company and its Subsidiaries to any
individual in an amount equal to or exceeding $50,000 in
any one year, and (iii) there are no existing material
arrangements or proposed material transactions between
the Company or any of the Subsidiaries and any officer or
director or holder of more than 5% of the capital stock of
the Company or any of the Subsidiaries. Complete and
correct copies of all written arrangements described in the
preceding sentence as in effect on the date hereof have
been delivered to the Purchaser and shall be amended to
the satisfaction of the Purchaser prior to the Closing.
SECTION 2.26 Bank Debt. The representations
and warranties made by the Company and the Subsidiaries
in the Commercial Revolving Loan, Term Loan and
Security Agreement between the Company and State
Street Bank and Trust Company dated as of April 27,
1995 (the "Credit Agreement") and the related
Commercial Term Promissory Notes between the
Company and State Street Bank and Trust Company dated
as of May 31, 1996 and September 19, 1996 are true and
correct.
SECTION 2.27 Disclosure. Neither this
Agreement nor any other document, certificate,
instrument or statement furnished or made to the
Purchaser by or on behalf of the Company or any
Subsidiary in connection with the transactions
contemplated hereby contain any untrue statement of a
material fact or omits to state a material fact necessary in
order to make the statements contained herein and therein
not misleading. There is no fact known to the Company
or any Subsidiary which materially adversely affects the
business, operations, affairs, prospects, condition,
properties or assets of the Company and the Subsidiaries
which has not been set forth in this Agreement or in the
other documents, certificates, instruments or written
statements furnished to the Purchaser by or on behalf of
the Company and the Subsidiaries.
III.
REPRESENTATIONS AND WARRANTIES OF THE
PURCHASER
The Purchaser represents and warrants to the
Company and the Subsidiaries that it is acquiring the
Securities and will acquire the Warrant Shares for its own
account for the purpose of investment and not with a view
to or for sale in connection with any distribution thereof.
Purchaser further represents that it understands that (i) the
Securities have not been, and the Warrant Shares, when
issued, sold and delivered upon exercise of the Warrants,
will not be, registered under the Securities Act by reason
of their issuance in a transaction exempt from the
registration requirements of the Securities Act pursuant to
Section 4(2) thereof, (ii) the Securities and the Warrant
Shares must be held indefinitely unless a subsequent
disposition thereof is registered under the Securities Act
or is exempt from such registration and (iii) the Initial
Securities, any Additional Securities and the Warrant
Shares will bear a legend to such effect. Purchaser further
understands that the exemption from registration afforded
by Rule 144 under the Securities Act depends on the
satisfaction of various conditions and that, if applicable,
Rule 144 affords the basis of sales of the Initial
Securities, any Mandatory Securities, any Additional
Securities and the Warrant Shares only in limited amounts
under certain conditions. Purchaser further represents and
covenants that it is an "accredited investor", within the
meaning of Rule 501(a) of the Securities Act. Purchaser
further represents and warrants that it has received all
information regarding the Company which it has
requested; and that it has been afforded the opportunity to
ask questions and receive answers from duly authorized
officers or other representatives of the Company
concerning the Company and an investment therein.
IV.
CONDITIONS TO THE OBLIGATION OF THE
PURCHASER
SECTION 4.01 Conditions to the Obligation of the
Purchaser with Respect to the First Closing and the
Second Closing. The obligation of Purchaser to purchase
and pay for the Securities being purchased by it on the
First Closing Date and the Second Closing Date is, at its
option, subject to the satisfaction, on or before such date,
of the following conditions:
(a) Opinion of Counsel. The Purchaser shall have
received from Breslow & Walker, LLP, counsel for the
Company, an opinion dated the First Closing Date and, if
applicable, a separate opinion dated the Second Closing
Date, in form and substance satisfactory to the Purchaser
and its counsel, to the effect that:
(i) The Company is a corporation duly
incorporated, validly existing and in good
standing under the laws of the State of New
York. The Company has the corporate
power and authority to own and hold its
properties and to carry on its business as
currently conducted, to execute, deliver and
perform this Agreement, the Notes, the
Warrants and the Registration Rights
Agreement and to issue, sell and deliver
the Warrant Shares.
(ii) Each Subsidiary is a corporation duly
organized, validly existing and in good
standing under the laws of the State of its
jurisdiction of incorporation; except as set
forth on Schedule 2.01(b) to this
Agreement, the Company owns, directly or
indirectly, all the outstanding capital stock
of each Subsidiary (except for directors'
qualifying shares, if any), free and clear of
all liens, charges, pledges, security
interests or other encumbrances; and the
capital stock of each Subsidiary is duly
authorized and validly issued and
outstanding, fully paid and nonassessable.
(iii) The authorized capital stock of the
Company consists of 10,000,000 shares of
Common Stock, par value $.0001 per
share, of which 6,526,244 shares were
validly issued and outstanding, fully paid
and nonassessable as of the most recent
practicable date and 2,000,000 shares of
Preferred Stock, $.0001 par value per
share, none of which are issued and
outstanding as of the most recent
practicable date.
(iv) The execution, delivery and
performance by the Company of this
Agreement, the Notes, the Warrants and
the Registration Rights Agreement have
been duly authorized by all requisite
corporate action, and each has been duly
executed and delivered by the Company
and constitutes the legal, valid and binding
obligation of the Company, enforceable in
accordance with its terms (subject, as to
enforcement of remedies, to applicable
bankruptcy, reorganization, insolvency and
similar laws, to moratorium laws from time
to time in effect and to general equity
principles), except that such counsel need
express no opinion as to the
indemnification provisions of the
Registration Rights Agreement.
(v) The execution, delivery and
performance by the Subsidiaries of this
Agreement and the Notes have been duly
authorized by all requisite corporate action,
and each has been duly executed and
delivered by the Subsidiaries and
constitutes the legal, valid and binding
obligation of the Subsidiaries, enforceable
in accordance with its terms (subject, as to
enforcement of remedies, to applicable
bankruptcy, reorganization, insolvency and
similar laws, to moratorium laws from time
to time in effect and to general equity
principles).
(vi) The execution, delivery and
performance by the Company of this
Agreement, the Notes, the Warrants and
the Registration Rights Agreement and the
issuance, sale and delivery of the Warrant
Shares will not violate the Articles of
Incorporation or By-laws of the Company,
or, to the best knowledge of such counsel,
any provision of law, any order of any
court or other agency of government, or
any provision of any indenture, agreement
or other instrument by which the Company
or any of the Subsidiaries or any of their
respective properties or assets is bound or
affected, or conflict with, result in a breach
of, result in or permit the termination of or
acceleration of rights or obligations under,
or constitute (with due notice or lapse of
time or both) a default, or result in the
creation or imposition of any lien, charge
or encumbrance of any nature whatsoever
upon any of the properties or assets of the
Company or any of the Subsidiaries, under
any such indenture, agreement or other
instrument.
(vii) The execution, delivery and
performance by the Subsidiaries of this
Agreement and the Notes will not violate
the Articles of Incorporation or Bylaws of
the Subsidiaries, or, to the best knowledge
of such counsel, any provision of law, any
order of any court or other agency of
government, any provision of any
indenture, agreement or other instrument
by which the Subsidiaries or any of their
respective properties or assets is bound or
affected, or conflict with, result in a breach
of, result in or permit the termination of or
acceleration of rights or obligations under,
or constitute (with due notice or lapse of
time or both) a default, or result in the
creation or imposition of any lien, charge
or encumbrance of any nature whatsoever
upon any of the properties or assets of the
Subsidiaries, under any such indenture,
agreement or other instrument.
(viii) The issuance, sale and delivery of the
Warrant Shares upon exercise of the
Warrants have been duly authorized by all
requisite corporate action, and the Warrant
Shares have been duly reserved for
issuance upon exercise of the Warrants
and, when issued and paid for in
accordance with the provisions of the
Warrants, will be duly authorized, validly
issued and outstanding, fully paid and
nonassessable shares of Common Stock.
Neither the issuance, sale and delivery of
the Warrants nor the issuance, sale and
delivery of the Warrant Shares upon
exercise thereof are subject to any
preemptive rights of stockholders of the
Company pursuant to law, the Company's
Certificate of Incorporation, Bylaws or, to
the best knowledge of such counsel, any
contract, any right of first refusal or other
similar right in favor of any person.
(ix) The issuance, sale and delivery of the
Securities to each Purchaser on the closing
date, under the circumstances contemplated
by this Agreement, are exempt from the
registration requirements of the Securities
Act, and the issuance, sale and delivery of
the Warrant Shares upon exercise of the
Warrants will be exempt from such
requirements, provided, in each case, that
such Purchaser is an "accredited investor"
within the meaning of Rule 501(a) of the
Securities Act.
(b) Representations and Warranties to Be True and
Correct. Solely with respect to the second closing, the
representations and warranties contained in Article II
hereof shall be true and correct on and as of the Second
Closing Date with the same effect as though such
representations and warranties had been made on and as
of such date, and the President of the Company shall have
certified to such effect to the Purchasers in writing.
(c) Performance. Solely with respect to the second
closing, the Company and the Subsidiaries shall have
performed and complied with all agreements and
conditions contained herein required to be performed or
complied with by it prior to or at the Second Closing
Date, and the President of the Company shall have
certified to such effect to the Purchasers in writing.
(d) All Proceedings to Be Satisfactory. All
corporate and other proceedings to be taken by the
Company and the Subsidiaries in connection with the
transactions contemplated hereby and all documents
incident thereto shall be satisfactory in form and substance
to the Purchaser and their counsel, Dechert Price &
Rhoads, and the Purchaser and said counsel shall have
received all such counterpart originals or certified or other
copies of such documents as they may reasonably request.
(e) Registration Rights Agreement. The Company
shall have executed and delivered the Registration Rights
Agreement.
(f) Supporting Documents. On or prior to the First
Closing Date, the Purchaser and its counsel shall have
received copies of the following supporting documents:
(i) (A) copies of the Articles of
Incorporation of the Company and each
Subsidiary, and all amendments thereto,
certified as of a recent date by the
Secretaries of State of the States of their
respective jurisdictions and (B) a certificate
of each said Secretaries dated as of a recent
date as to the due incorporation and good
standing of the Company and the
Subsidiaries and listing all documents of
the Company and the Subsidiaries on file
with said Secretaries;
(ii) a certificate of the Secretary or an
Assistant Secretary of the Company and
each Subsidiary dated the Closing Date and
certifying (A) that attached thereto is a true
and complete copy of the By-laws of the
Company or the Subsidiary, as the case
may be, as in effect on the date of such
certification; (B) that attached thereto is a
true and complete copy of resolutions
adopted by the Board of Directors of the
Company or the Subsidiary, as the case
may be, authorizing the execution, delivery
and performance of this Agreement, the
Notes, the Warrants and the Registration
Rights Agreement, the issuance, sale and
delivery of the Initial Securities, the
Mandatory Securities and the Additional
Securities and the reservation, issuance and
delivery of the Warrant Shares, as the case
may be, and that all such resolutions are
still in full force and effect and are all the
resolutions adopted in connection with the
transactions contemplated by this
Agreement, the Notes, the Warrants and
the Registration Rights Agreement, as the
case may be; (C) that the Articles of
Incorporation of the Company or the
Subsidiary, as the case may be, have not
been amended since the date of the last
amendment referred to in the certificate
delivered pursuant to clause (i)(B) above;
and (D) as to the incumbency and specimen
signature of each officer of the Company
or the Subsidiary, as the case may be,
executing this Agreement, the Securities
and the Registration Rights Agreement, and
any certificate or instrument furnished
pursuant hereto, as the case may be, and a
certification by another officer of the
Company or Subsidiary, as the case may
be, as to the incumbency and signature of
the officer signing the certificate referred to
in this paragraph (ii); and
(iii) such additional supporting documents
and other information with respect to the
operations and affairs of the Company and
the Subsidiaries as the Purchaser or their
counsel may reasonably request.
All such documents shall be satisfactory in form and
substance to the Purchaser and its counsel.
SECTION 4.02 Conditions to the Obligation of the
Purchaser with Respect to the Additional Closing. The
obligation of the Purchaser to purchase and pay for the
Additional Securities being purchased by it on each
Additional Closing Date is, at its option, subject to the
satisfaction, on or before each such date, of the following
conditions:
(a) Consummation of First Closing. On the First
Closing Date, the Purchaser shall have purchased and
paid for the Initial Securities.
(b) Call Notice. A Call Notice shall have been
given pursuant to Section 1.03 above.
(c) Legal Opinion. The Purchaser shall have
received from Breslow & Walker, LLP, counsel for the
Company, or a successor counsel to such firm, an opinion
dated each Additional Closing Date, in form and
substance satisfactory to the Purchaser and their counsel,
substantially to the effect as set forth in Section 4.01(a).
(d) Representations and Warranties to Be True and
Correct. The representations and warranties contained in
Article II hereof shall have been true as of the First
Closing Date, and Sections 2.01, 2.02, 2.03, 2.10, 2.11,
2.12, 2.13, 2.14, 2.15, 2.19, 2.20, 2.24 and 2.29 of such
Article shall be true as of the Additional Closing Date, on
both occasions with the same effect as though such
representations and warranties had been made on and as
of such date (except as any such representations or
warranties may have been modified as a result of
transactions contemplated by this Agreement), and the
Company shall have certified to such effect to the
Purchaser in writing.
(e) Performance. The Company shall have
performed and complied with all agreements and
conditions contained herein required to be performed or
complied with by it or prior to the Additional Closing
Date, and the President of the Company shall have
certified to such effect to the Purchaser in writing.
(f) All Proceedings to Be Satisfactory. All
corporate and other proceedings to be taken by the
Company in connection with the transactions contemplated
hereby and all documents incident thereto shall be
satisfactory in form and substance to the Purchaser and its
counsel, Dechert Price & Rhoads, and the Purchaser and
said counsel shall have received all such counterpart
originals or certified or other copies of such documents as
they may reasonably request.
(g) Supporting Documents. On or prior to the
Additional Closing Date the Purchaser and its counsel
shall have received copies of the supporting documents
referred to in Section 4.01(f) hereto.
All such documents shall be satisfactory in form
and substance to the Purchaser and its counsel.
In the event that the Articles of Incorporation
and/or By-laws of the Company shall not have been
amended since the First Closing Date or the immediately
preceding Subsequent Closing Date, as the case may be,
the Company may, in lieu of furnishing such documents,
cause the certificate with respect thereto contemplated by
paragraph (f) above to be replaced by a certificate as to
the fact that such documents were previously furnished
and to the absence of any amendments thereto.
V.
COVENANTS
The Company, the Subsidiaries and the Purchaser
covenant and agree as follows:
(a) Financial Statements, Reports, Etc. So long as
Purchaser or any subsequent holder shall individually hold
of record 25% of Initial Notes, Mandatory Notes and
Option Notes, if any, in the aggregate, 25% of the Initial
Warrants, Mandatory Warrants and Option Warrants, if
any, in the aggregate or 25% of the Warrant Shares
issued and issuable pursuant to the Warrants, the
Company shall furnish to Purchaser, or, in the event the
Company is not subject to the reporting requirements of
the Securities Exchange Act of 1934, any such subsequent
holder of such securities purchased in a private
transaction:
(i) within 90 days after the end of each
fiscal year of the Company, a consolidated
balance sheet of the Company and its
subsidiaries, as of the end of such fiscal
year, and the related consolidated
statements of income, changes in
stockholders' equity and cash flows of the
Company and its subsidiaries for the fiscal
year then ended, together with supporting
notes thereto, certified without qualification
as to scope of audit by a firm of
independent public accountants of
recognized national standing selected by the
Company and reasonably acceptable to
Purchaser;
(ii) within 45 days after the end of each
fiscal quarter in each fiscal year (other than
the last fiscal quarter in each fiscal year), a
consolidated balance sheet of the Company
and its subsidiaries and the related
consolidated statements of income and cash
flows of the Company and its subsidiaries,
unaudited but certified by the principal
financial officer of the Company, such
balance sheet to be as of the end of such
fiscal quarter and such statements of
income and cash flows to be for such fiscal
quarter, for the corresponding fiscal quarter
of the immediately preceding fiscal year,
for the period from the beginning of the
fiscal year to the end of such fiscal quarter
and for the period from the beginning of
the immediately preceding year to the end
of the corresponding fiscal quarter in such
fiscal year, in each case subject to normal
year-end adjustments;
(iii) within 30 days after the end of each
month in each fiscal year (other than the
last month in each fiscal year), a
consolidated balance sheet of the Company
and its subsidiaries and the related
consolidated statement of income,
unaudited but certified by the principal
financial officer of the Company, such
balance sheets to be as of the end of such
month and such statements of income to be
for such month and for the period from the
beginning of the fiscal year to the end of
such month, in each case subject to normal
year-end adjustments;
(iv) within 30 days following the beginning
of each fiscal year of the Company (and
with respect to any revision thereof,
promptly after such revision has been
prepared), a proposed operating budget for
the Company and the subsidiaries,
including anticipated monthly income
statements and cash flow statements during
such fiscal year and a projected balance
sheet as of the end of such fiscal year,
setting forth in each case the assumptions
(which assumptions and projections shall
represent and be based upon the good faith
judgment in respect thereof of the chief
executive officer of the Company) behind
the projections contained in such financial
statements, and each monthly statement of
income furnished pursuant to (iii) above
shall reflect variances from such operating
budget, as the same may from time to time
be revised;
(v) promptly upon filing, copies of all
registration statements, prospectuses,
periodic reports and other documents filed
by the Company with the Commission;
(vi) promptly, from time to time, such
other information regarding the operations,
business, affairs and financial condition of
the Company or any subsidiary as the
Purchaser or such other holders may
reasonably request (the term "subsidiary"
as used herein being defined to mean any
corporation or other business entity a
majority of whose outstanding voting stock
entitled to vote for the election of directors
is at the time owned by the Company
and/or one or more other subsidiaries); and
(vii) within 45 days after the end of each
fiscal quarter in each fiscal year, a
certificate signed by the Chief Executive
Officer of the Company and each
Subsidiary certifying that the Company and
the Subsidiaries are in compliance with all
covenants contained herein and in the
Notes.
(b) Small Business Administration Forms. The
Company shall execute Forms 480 ("Size Status
Declaration") and 652-D ("Assurance of Compliance") of
the SBA and any other documents that may be required
by the SBA or any other governmental agency having
jurisdiction over the activities of the Purchaser, or which
Purchaser may reasonably require in connection
therewith.
(c) Use of Proceeds. The Company and the
Subsidiaries shall use the proceeds received from the sale
of the Securities pursuant to this Agreement as set forth
in Section 2.13. The Company and the Subsidiaries shall
give Purchaser, their agents and representatives,
reasonable access following reasonable prior notice during
normal business hours to the books, records, facilities,
personnel and accountants of the Company and the
Subsidiaries so that Purchaser may review the Company's
compliance with the provisions of this section.
(d) Board of Directors. So long as Purchaser owns
of record either (i) 25% in aggregate principal amount of
the Initial Notes and any Mandatory Notes, in the
aggregate, issued pursuant to this Agreement; (ii) 25% in
aggregate principal amount of the Option Notes; or (iii)
25% of the Warrants issued pursuant to this Agreement
(for purposes of this subsection (d) record ownership of
Warrant Shares issued to Purchaser pursuant to exercise
of the Warrants shall be considered continued ownership
of the Warrants) (the amounts in clauses (i), (ii) and (iii)
above are hereinafter referred to as a "Qualifying
Amount"); then Purchaser shall have the right (x)
following the First Closing Date, to designate one director
(the "Designee") to the Company's board of directors (the
"Board") and (y) following any Additional Closing
Date(s) after which the Purchaser shall have purchased all
of the available Option Securities hereunder, to designate
a second Designee to the Board. The Company and the
Board shall each use its best efforts, at any time and from
time to time so long as Purchaser owns of record a
Qualifying Amount of any Notes or Warrants, to cause
such Designee or Designees as the case may be, to be
elected to the Board. The best efforts of the Board shall
include, but not be limited to, (i) increasing by one or
two, as applicable, the number of directors on the Board,
(ii) the appointment at the First Closing Date or
Additional Closing Date of such Designee or Designees as
the case may be, to the Board as a Director in accordance
with Section 705 of the New York Business Corporation
Law, (iii) the inclusion of the Designee or Designees as
the case may be, on any proxy statement or other
materials prepared and delivered to the Company's
stockholders with respect to any election of Directors,
such inclusion to comply with any applicable legal
requirements and (iv) the recommendation to the
Company's stockholders that the Designee or Designees,
as the case may be, be elected as director(s) of the Board.
(e) Upon notice given as provided in the Notes, the
Company may, at its option, prepay the outstanding
principal amount of Notes in whole or in part, in
multiples of $100,000, from time to time, at the principal
amount thereof so to be prepaid, together with interest
accrued thereon to the date fixed for such prepayment;
provided, however, that any such prepayment shall first
be applied against the principal amount outstanding and
interest accrued thereon of the Option Notes, and the
balance, if any, shall be applied against the principal
amount outstanding and interest accrued thereon of the
Mandatory Notes, and the balance, if any, shall be
applied against the principal amount outstanding and
interest accrued thereon of the Initial Notes.
(f) Indemnity. The Company and its Subsidiaries
hereby jointly and severally agree to indemnify and hold
the Purchaser and its directors, officers, employees,
affiliates, partners and agents (collectively, "Indemnified
Parties") harmless from and against: (a) any loss, damage
or deficiency resulting from any misrepresentation, breach
of warranty or nonfulfillment of any agreement on the
part of the Company or any of its subsidiaries contained
in this Agreement or in any statement or document
furnished to the Indemnified Parties in connection with
the transactions contemplated hereby; (b) any and all suits
(including, without limitation, any active, pending or
threatened litigation relating to the Joint Venture), actions,
proceedings, claims, damages, losses, liabilities and
expenses (including, without limitation, attorney's fees)
which may be incurred by or asserted against the
Indemnified Parties as the result of the Purchaser having
entered into this Agreement, extended credit hereunder or
otherwise; and (c) any all suits,, actions, proceedings,
claims, damages, losses, liabilities and expenses
(including, without limitation, attorney's fees) which may
be incurred by or asserted against the Indemnified Parties
relating in any way, whether as a party or otherwise, to
the action captioned Findout Corporation et al. v.
FIND/SVP et al., Index No. 105079/96 (Supreme Court
of New York, County of New York).
VI.
MISCELLANEOUS
SECTION 6.01 Expenses. The Company and the
Subsidiaries will pay their own expenses in connection
with the transactions contemplated hereby, whether or not
such transactions shall be consummated, and in addition
to any obligations of the Company and the Subsidiaries to
pay certain expenses of the Purchaser as set forth in the
Notes, Warrants and Registration Rights Agreement, the
Company shall pay up to $60,000 of the out-of-pocket
fees, costs and expenses of Furman Selz and its counsel
and accountants in connection with the preparation of this
Agreement, the Notes, the Warrants, the Registration
Rights Agreement and the transactions contemplated
hereby and thereby, including the preparation and filing
(including filing fees) of any documents with the U.S.
Securities and Exchange Commission.
SECTION 6.02 Survival of Representations and
Warranties. All representations and warranties made
herein to each Purchaser and in any certificate or other
instrument delivered by the Company and any Subsidiary
hereunder shall survive the execution and delivery of this
Agreement and the issuance, sale and delivery of the
Initial Securities, the Mandatory Notes or any Additional
Securities pursuant hereto until the earlier of (i) the date
on which no Initial Securities, Mandatory Securities,
Additional Securities or Warrant Shares are issued and
outstanding and owned of record by Purchaser and (ii) 10
years from the First Closing Date.
SECTION 6.03 Brokerage. Each party hereto will
indemnify and hold harmless the others against and in
respect of any claim for brokerage or other commissions
relative to this Agreement or to the transactions
contemplated hereby, based in any way on agreements,
arrangements or understandings made or claimed to have
been made by such party with any third party.
SECTION 6.04 Parties in Interest. All covenants
and agreements contained in this Agreement by or on
behalf of either party hereto shall bind and inure to the
benefit of the respective successors and assigns of such
party hereto, whether so expressed or not.
SECTION 6.05 Notices. All notices, requests,
consents and other communications hereunder shall be in
writing and shall be mailed by first-class registered mail,
postage prepaid, or sent by recognized courier service
addressed as follows:
(a) if to the Company or any
Subsidiary, at
Find/SVP, Inc.
625 Avenue of the Americas
New York, NY 10011
with a copy to:
Breslow & Walker
875 Third Avenue
New York, NY 10022
Attention: Howard S. Breslow, Esq.
and after January 1, 1997
767 Third Avenue
New York, NY 10011
(b) if to Furman Selz at:
230 Park Avenue
New York, NY 10169
Attention: James Luikart
with a copy to:
Dechert Price & Rhoads
4000 Bell Atlantic Tower
1717 Arch Street
Philadelphia, PA 19103
Attention: Carmen J. Romano, Esq.
(c) if to any subsequent holder of
Securities or Warrant Shares, to such holder at its address
appearing on the records of the Company;
or, in any such case, at such other address or addresses
as shall have been furnished in writing by such party to
the others.
SECTION 6.06 LAW GOVERNING. THIS
AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF NEW YORK.
SECTION 6.07 Entire Agreement. This Agreement
constitutes the entire Agreement of the parties with
respect to the subject mater hereof and may not be
modified or amended except in writing.
SECTION 6.08 Counterparts. This Agreement may
be executed in two or more counterparts, each of which
shall be deemed an original, but all of which together
shall constitute one and the same instrument.
<PAGE>
IN WITNESS WHEREOF, the Company, the
Subsidiaries and the Purchaser have executed this
Agreement as of the day and year first above written.
FIND/SVP,
INC.
By/s/ Andrew
P. Garvin
President
[Corporate Seal]
Attest:
/s/ Peter J. Fiorillo
Secretary
FIND/SVP
INTERNET SERVICES, INC.
By/s/ Andrew
P. Garvin
President
[Corporate Seal]
Attest:
/s/ Peter J. Fiorillo
Secretary
FIND/SVP
PUBLISHED PRODUCTS, INC.
By/s/ Andrew
P. Garvin
President
[Corporate Seal]
Attest:
/s/ Peter J. Fiorillo
Secretary
PURCHASER:
FURMAN
SELZ SBIC, L.P.
By:
FURMAN SELZ SBIC INVESTMENTS LLC,
General
Partner
By/s/
James Luikart
Executive Vice President
<PAGE>
EXHIBIT A
SERIES A NOTE
THIS NOTE HAS NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 AND MAY NOT BE
TRANSFERRED OR OTHERWISE DISPOSED OF
UNLESS IT HAS BEEN REGISTERED UNDER THAT
ACT OR, IN THE OPINION OF COUNSEL, AN
EXEMPTION FROM REGISTRATION IS
AVAILABLE.
THIS DOCUMENT AND THE INDEBTEDNESS OR
OTHER OBLIGATION DESCRIBED HEREIN OR
EVIDENCED HEREBY IS SUBORDINATED TO
CERTAIN SENIOR INDEBTEDNESS IN THE
MANNER AND TO THE EXTENT SET FORTH IN A
SUBORDINATION AGREEMENT DATED AS OF
OCTOBER 31, 1996 BY AND AMONG FIND/SVP,
INC., FIND/SVP PUBLISHED PRODUCTS, INC.,
FURMAN SELZ SBIC, L.P. AND STATE STREET
BANK AND TRUST COMPANY.
FIND/SVP, INC.
FIND/SVP PUBLISHED PRODUCTS, INC.
FIND/SVP INTERNET SERVICES, INC.
Series A Senior Subordinated Note
Due October 31, 2001
Registered New York, New York
($2,025,000.00) October 31, 1996
FIND/SVP INC., a New York corporation (the
"Corporation"), FIND/SVP Published Products, Inc., a
Delaware corporation ("FSPP"), and FIND/SVP Internet
Services, Inc., a Delaware corporation ("FISI") (each of
FSPP and FISI a "Subsidiary" and collectively, the
"Subsidiaries"), for value received, hereby jointly and
severally promise to pay to the order of FURMAN SELZ
SBIC, L.P., a Delaware limited partnership or registered
assigns, the principal sum of Two Million Twenty Five
Thousand Dollars ($2,025,000.00), on October 31, 2001
and to pay interest as set forth below.
The payment of principal and interest on this Note
shall be in such currency of the United States of America
as at the time of payment shall be legal tender for
payment of public and private debts.
1. Notes. This Note is one of a series of notes
issued pursuant to or contemplated by a certain Note and
Warrant Purchase Agreement, dated as of October 31,
1996, among the Corporation, the Subsidiaries and
Furman Selz SBIC, L.P. (the "Purchase Agreement").
The Purchase Agreement provides for, among other
things, the issuance of (i) Series A Senior Subordinated
Notes Due 2001 in an aggregate principal amount of
$2,500,000, (ii) warrants (the "Warrants") to subscribe to
up to 1,111,111 shares of the common stock, par value
$.0001 per share, of the Corporation (the "Common
Stock"), (iii) Series B Senior Subordinated Notes in an
aggregate principal amount of $2,500,000 (the "Series B
Notes") and (iv) additional warrants to subscribe to up to
1,111,111 shares of Common Stock, the securities
described in both (iii) and (iv) immediately above to be
issued at the option of the purchasers thereof. This Series
A Senior Subordinated Note Due 2001 and any such Note
subsequently issued upon exchange or transfer thereof are
hereinafter collectively called the "Notes". Capitalized
terms not otherwise defined herein shall have the meaning
set forth in the Purchase Agreement. References herein to
"Series A Subordinated Notes" shall mean all Series A
Senior Subordinated Notes Due 2001 issued pursuant to
the Purchase Agreement and all Similar A Notes (as
defined in the Purchase Agreement).
2. Interest. Interest shall accrue on the unpaid
principal balance of this Note at an annual rate of 12%.
Accrued but unpaid interest shall be due and payable on
the unpaid principal balance of this Note on each of
November 30, 1997, November 30, 1998, and each May
30 and November 30 of each year thereafter, beginning
on May 30, 1999 except the final payment of interest
shall be due and payable on October 31, 1996; provided
that one-half of the interest due and payable on November
30, 1997 shall be deferred and shall be payable on
November 30, 2000 and one-half of the interest due and
payable on November 30, 1998, May 30, 1999 and
November 30, 1999 shall be deferred and shall be payable
on October 31, 2001. Any interest deferred pursuant to
the preceding sentence shall compound and accrue interest
at the rate of this Note until paid. All interest hereunder
shall be computed on the basis of a 360-day year
consisting of twelve 30-day months. Interest on overdue
principal and interest payments shall accrue at an annual
rate of 12% and shall be payable on demand.
3. Payments of Interest and Principal. All
payments of principal and interest hereunder shall be paid
to the holder hereof by wire transfer in immediately
available funds. Wire transfer payments of interest and
principal on this Note is conditioned upon the holder
providing to the Corporation duly authorized instructions
for the wire transfer of such amounts to the holder's
designated account. If principal or interest on this Note
becomes due and payable on a day that is not a Business
Day, the due date thereof shall be extended to the next
succeeding Business Day. For purposes of this Note,
"Business Day" means any day other than a Saturday, a
Sunday or a legal holiday under the laws of the State of
New York.
4. Transfer or Exchange of Notes. The
Corporation shall keep at its office or agency maintained
as provided in subsection (a) of Section 12 a register in
which the Corporation shall provide for the registration of
Notes and for the registration of transfer and exchange of
Notes. The holder of this Note may, at its option, and
either in person or by duly authorized attorney, surrender
the same for registration of transfer or exchange, as a
whole or in part, in multiples of $100,000, at the office
or agency of the Corporation maintained as provided in
subsection (a) of Section 12, and, without expense to such
holder (except for taxes or governmental charges imposed
in connection therewith), receive from the Obligors (as
defined below) in exchange therefor a Note or Notes in
such denomination or denominations as such holder may
request, dated as of the date to which interest has been
paid on the Note or Notes so surrendered for transfer or
exchange, for the same aggregate principal amount as the
then unpaid principal amount of the Note or Notes so
surrendered for transfer or exchange, and registered in the
name of such person or persons as may be designated by
such holder. Every Note presented or surrendered for
registration of transfer or exchange shall be duly
endorsed, or shall be accompanied by a written instrument
of transfer, satisfactory in form to the Corporation, duly
executed by the holder of such Note or his attorney, duly
authorized in writing. Every Note so made and delivered
in exchange for this Note shall in all other respects be in
the same form and have the same terms as this Note. No
transfer or exchange of any Note shall be valid unless
made in the foregoing manner at such office or agency.
5. Loss, Theft, Destruction or Mutilation of Note.
If this Note is lost, stolen, mutilated or destroyed, the
Obligors may, on such terms as to indemnity or otherwise
as the Corporation may in its discretion reasonably
impose (which shall, in the case of a mutilated Note,
include the surrender thereof), issue a new Note of like
denomination and tenor as the Note so lost, stolen,
mutilated or destroyed. Any such new Note shall
constitute an original contractual obligation of the
Obligors, whether or not the allegedly lost, stolen,
mutilated or destroyed Note shall be at any time
enforceable by anyone.
6. Persons Deemed Owners; Holders. The
Obligors may deem and treat the person in whose name
any Note is registered as the owner and holder of such
Note for the purpose of receiving payment of principal of
and premium, if any, and interest on such Note and for
all other purposes whatsoever, whether or not such Note
shall be overdue. With respect to any Note at any time
outstanding, the term "holder," as used herein, shall be
deemed to mean the person in whose name such Note is
registered as aforesaid at such time.
7. Prepayments. Prepayments on this Note may be
made only in accordance with the provisions of the
Purchase Agreement and Sections 8 through 11 hereof.
8. Notice of Prepayment and Other Notices. The
Obligors shall give written notice of prepayment of this
Note or any portion hereof not less than 30 nor not more
than 60 days prior to the date fixed for such prepayment.
Such notice and all other notices to be given to any holder
of this Note shall be given by registered or certified mail
to the person in whose name this Note is registered at its
address designated on the register maintained by the
Corporation on the date of mailing such notice of
prepayment or other notice.
9. Interest After Date Fixed for Prepayment. If this
Note or a portion hereof is called for prepayment, this
Note or such portion shall cease to bear interest on and
after the date fixed for such prepayment unless, upon
presentation for the purpose of prepayment, the Obligors
shall fail to pay this Note or such portion, as the case
may be, on such date, in which event this Note or such
portion, as the case may be, and, so far as may be lawful,
any overdue installment of interest thereon, shall bear
interest on and after the date fixed for such prepayment
and until paid at the rate of 12% per annum.
10. Surrender of Notes; Notation Thereon. Upon
any prepayment of a portion of the principal amount of
this Note, the holder hereof, at its option, may require the
Obligors to execute and deliver at the expense of the
Obligors (other than for transfer taxes, if any), upon
surrender of this Note, a new Note registered in the name
of such person or persons as may be designated by such
holder for the principal amount of this Note then
remaining unpaid, dated as of the date to which interest
has been paid on the principal amount of this Note then
remaining unpaid, or may present this Note to the
Corporation for notation hereon of the payment of the
portion of the principal amount of this Note so prepaid.
11. Allocation of Payments. In the case of a
prepayment of less than all the Notes at the time
outstanding, the aggregate principal amount to be prepaid
shall be allocated (in units of $1,000 or integral multiples
thereof) among the holders of all the Notes at the time
outstanding in proportion, as nearly as practicable, to the
respective aggregate unpaid principal amounts of the
Notes (not theretofore called for prepayment) then held by
them, respectively, with adjustment, to the extent
practicable, to equalize for any prior unequal
prepayments.
12. Affirmative Covenants. The Corporation, the
Subsidiaries and any Future Obligor (as defined below)
(the Corporation, the Subsidiaries and any Future Obligor
are collectively herein referred to as "Obligors"), jointly
and severally, covenant and agree that, so long as any
Note shall be outstanding:
(a) Maintenance of Office. The Obligors will
maintain an office or agency in New York, New York (or
such other place in the United States of America as the
Corporation and the Subsidiaries may designate in writing
to the registered holder hereof), where the Notes may be
presented for registration of transfer and for exchange as
herein provided, where notices and demands to or upon
Obligors in respect of the Notes may be served and
where, at the option of the holders thereof, the Notes may
be presented for payment. Until the Obligors otherwise
notifies the holders of the Notes, said office shall be the
principal office of the Obligors in New York, New York.
(b) Payment of Taxes. Obligors will promptly pay
and discharge or cause to be paid and discharged, before
the same shall become in default, all lawful taxes and
assessments imposed upon any of the Obligors and their
subsidiaries or upon the income and profits of any of the
Obligors and their subsidiaries, or upon any property,
real, personal or mixed, belonging to any of the Obligors
and their subsidiaries, or upon any part thereof by the
United States or any State thereof, as well as all lawful
claims for labor, materials and supplies which, if unpaid,
would become a lien or charge upon such property or any
part thereof; provided, however, that the Obligors and
their subsidiaries shall not be required to pay and
discharge or to cause to be paid and discharged any such
tax, assessment, charge, levy or claim so long as both (x)
the Obligor or its subsidiary, as the case may be, has set
aside adequate reserves for such tax, assessment, charge,
levy or claim and (y)(i) an Obligor or its subsidiary, as
the case may be, shall be contesting the validity thereof in
good faith by appropriate proceedings or (ii) an the
Obligor or its subsidiary, as the case may be, shall, in its
good faith judgment, deem the validity thereof to be
questionable and the party to whom such tax, assessment,
charge, levy or claim is allegedly owed shall not have
made written demand for the payment thereof.
(c) Corporate Existence. The Obligors and their
subsidiaries will do or cause to be done all things
necessary and lawful to preserve and keep in full force
and effect each of their corporate existence, rights and
franchises under the laws of the United States or any State
thereof or the District of Columbia; provided, however,
that nothing in this subsection (c) shall prevent the
abandonment or termination of any rights or franchises of
the Obligors and their subsidiaries, if such abandonment
or termination is, in the good faith business judgment of
the Obligors and their subsidiaries, in the best interests of
the Obligors and not disadvantageous to the holder of this
Note.
(d) Maintenance of Property. The Obligors and
their subsidiaries will at all times maintain and keep, or
cause to be maintained and kept, in good repair, working
order and condition all their respective significant
properties used in the conduct of the business of the
Obligors and their subsidiaries, and will from time to time
make or cause to be made all needful and proper repairs,
renewals, replacements, betterments and improvements
thereto, so that the business carried on in connection
therewith may be properly and advantageously conducted
at all times; provided, however, that nothing in this
subsection (d) shall require (i) the making of any repair or
renewal or (ii) the continuance of the operation and
maintenance of any property or (iii) the retention of any
assets (the sale or other disposition of which would not
constitute an event of default hereunder), if such action
(or inaction) is, in the good faith business judgment of the
Obligors and their subsidiaries, as the case may be, in the
best interests of the Obligors and their subsidiaries, as the
case may be.
(e) Insurance. The Obligors will (i) keep
adequately insured, by financially sound and reputable
insurers, all property of a character usually insured by
corporations engaged in the same or a similar business
similarly situated against loss or damage of the kinds
customarily insured against by such corporations and (ii)
carry, with financially sound and reputable insurers, such
other insurance (including, without limitation, liability
insurance) in such amounts as are available at reasonable
expense and to the extent believed necessary in the good
faith business judgment of the Obligors.
(f) Keeping of Books. The Obligors will at all
times keep proper books of record and account in which
proper entries will be made of its transactions in
accordance with generally accepted accounting principles
consistently applied.
(g) Transactions with Affiliates. Neither the
Corporation, its subsidiaries, nor any Future Obligor or
any of their subsidiaries will enter into any transaction or
series of transactions with any director (other than the
provision of legal services by Breslow & Walker LLP),
officer, stockholder, employee (other than future
compensation of officers or employees in the ordinary
course of business, including grants of stock options
under Company approved plans and employment
contracts) or affiliate thereof (other than transactions by
and among any of the Obligors and their subsidiaries but
not including any subsidiary in which any Obligor,
directly or indirectly, owns less than 95% of the Capital
Stock (as defined below) or other ownership interest, as
the case may be, of such subsidiary), except on terms and
conditions that, in the reasonable judgment of the Board
of Directors, are no less favorable to the Obligors, as the
case may be, than the terms and conditions which the
Obligors, as the case may be, could obtain in a
transaction with an unaffiliated person on an arm's length
basis.
(h) Subsidiary Ownership. So long as this Note
shall remain outstanding, the Corporation shall own 100%
of the Capital Stock (as defined below) of each Subsidiary
or Future Obligor, other than arrangements that exist on
the date of the issuance of this Note and are set forth on
Schedule 2.01(b) of the Purchase Agreement.
(i) Notice of Default. If any one or more events
which constitute, or which with notice or lapse of time or
both would constitute, an Event of Default under Section
15 shall occur, or if the holder of any Note shall demand
payment or take any other action permitted upon the
occurrence of any such Event of Default, the Corporation
shall immediately after it becomes aware that any such
event would with or without notice or lapse of time or
both constitute such an Event of Default or that such
demand has been made or that any such action has been
taken, give notice to the holder of this Note, specifying
the nature of such event or of such demand or action, as
the case may be.
13. Negative Covenants. The Obligors, jointly and
severally, covenant and agree that, so long as any Note
shall be outstanding:
(a) No Obligor nor its subsidiaries shall invest in,
contribute capital to or otherwise acquire or create any
interest in or the right to acquire any interest in, directly
or indirectly, any corporation, partnership, joint venture,
business trust, limited liability company or other business
enterprise (collectively, "Entity"), other than an Obligor
or the Joint Venture unless (i) such Entity agrees, in a
writing satisfactory to the holder hereof, to become a joint
obligor of this Note (a "Future Obligor") and (ii) at the
time of and after giving effect to such transaction, no
Event of Default, and no event with which the giving of
notice or passage of time will be an Event of Default,
exists; provided, however, such Entity shall not be
required to become a Future Obligor if either (x) the
holders of not less than 66 2/3% of the Series A
Subordinated Notes consent in writing to such transaction
or (y) such transaction or transactions, in the aggregate,
will result in the Obligors and their subsidiaries owning,
in the aggregate, directly or indirectly, not more than
10% of the Capital Stock or other ownership interest, as
the case may be, of such Entity and (z) in the case of
either (x) or (y), at the time of and after giving effect to
such transaction, no Event of Default, and no event with
which the giving of notice or passage of time will be an
Event of Default, exists.
(b) Restricted Payments. None of the Obligors or
their subsidiaries shall (i) declare or pay any dividend on,
or authorize or make any distribution in respect of their
Capital Stock (as defined below) or similar payment to the
holders of their Capital Stock (including any payment in
connection with any merger or consolidation involving
any Obligor or its subsidiaries), except dividends or
distributions payable solely in its Capital Stock (other than
Capital Stock which by its terms (or by the terms of any
security into which it is convertible or for which it is
exchangeable) or upon the happening of any event (A)
matures or is mandatorily redeemable pursuant to a
sinking fund obligation or otherwise, (B) is convertible or
exchangeable, at the option of the holder thereof, for Debt
(as defined below) or (C) is redeemable at the option of
the holder thereof, in whole or in part, in each case on or
prior to the maturity date of this Note ("Disqualified
Stock")) and except dividends payable to the Obligors or
their wholly-owned subsidiaries; (ii) purchase, redeem or
otherwise acquire or retire for value any Capital Stock of
the Obligors or their subsidiaries, including the exercise
of any option to exchange any Capital Stock into
Disqualified Stock; or (iii) purchase, repurchase, redeem,
permit or cause defeasance or otherwise acquire or retire
for value, prior to any scheduled maturity, scheduled
repayment or scheduled sinking fund payment of any Debt
(as defined below) which is junior or pari passu in right
of payment to this Note (other than any Debt issued
pursuant to the Purchase Agreement). As used herein,
"Capital Stock" means any and all shares, interests, rights
to purchase, warrants, options, participations or other
equivalents of or interests in (however designated) the
equity of any person, including any preferred stock, but
excluding any debt securities convertible into such equity.
(c) Restrictions on Debt.
(i) As used herein, "Debt" of a person means at
any date, without duplication, whether or not contingent,
(A) all obligations for borrowed money of such person,
(B) all obligations of such person evidenced by bonds,
debentures, notes, letters of credit or similar instruments,
(C) all obligations of such person to pay the deferred
purchase price of property or services, except accounts
payable and other liabilities arising in the ordinary course
of business, (D) all reimbursement obligations of such
person, (E) all obligations of such person as lessee under
capital leases, (F) all debt of others secured by a lien on
any asset of such person and (G) any Debt of others
guaranteed by such person.
(ii) The Obligors and their subsidiaries shall not
have outstanding at any time any Debt other than (A)
Senior Debt (as defined below) not in excess of
$4,500,000; (B) Debt issued pursuant to the Purchase
Agreement; Debt which is issued as Similar Notes (as
defined in the Purchase Agreement) provided that the
terms of the Similar A Notes and the Similar B Notes (as
defined in the Purchase Agreement) state and the holders
thereof have agreed in writing that such Similar A Notes
and Similar B Notes shall constitute the same series of
notes as, and vote as a single class with, this Note and the
Series B Notes, respectively; and (C) any other Debt,
including additional Senior Debt, not exceeding
$5,000,000 in the aggregate. For purposes of the
preceding sentence, Debt of any Entity which is
outstanding on the date such Entity is acquired by any
Obligor or their subsidiaries shall be deemed to be Debt
outstanding of such Obligor or subsidiary as of the date
of such acquisition.
(iii) The Obligors and their subsidiaries shall not
incur, directly or indirectly, any Debt which is senior in
right of payment to the Notes and is subordinate or junior
in any respect in right of payment to any other Debt.
(d) Disposition of Assets Not in the Ordinary
Course. The Obligors and their subsidiaries will not,
directly or indirectly, sell, transfer, assign, convey,
abandon or otherwise dispose of any asset not in the
ordinary course of business other than in exchange for
each such asset's fair market value. In addition, the
Obligors and their subsidiaries shall (i) use the proceeds
of such disposition to repay any Debt which is senior in
right of payment to the Notes, (ii) reinvest such proceeds
in the Obligors and their subsidiaries, or (iii) prepay the
Notes.
(e) Limitation on Payment Restrictions Affecting
Subsidiaries. The Obligors shall not, create or otherwise
cause or suffer to exist or become effective any
consensual encumbrance or restriction which by its terms
expressly restricts the ability of any subsidiary of the
Obligors to (i) pay dividends or make any other
distributions on such subsidiary's capital stock or pay any
Debt owed to the Obligors, (ii) make any loans or
advances to the Obligors or (iii) transfer any of its
property or assets to the Obligors, except for any
restrictions existing under agreements in effect at the time
of, or entered into concurrently with, the issuance of this
Note, including the restrictions contained in the Credit
Agreement, to the extent that such restrictions are set
forth in such agreement as in effect on the date of the
issuance of this Note.
(f) Limitation on Liens. The Obligors and their
subsidiaries shall not incur, or permit to exist any Lien
(as defined below) of any nature whatsoever on any
property of the Obligors and their subsidiaries (including
the Capital Stock of any of the Obligors and their
subsidiaries), whether owned as of the issue date of this
Note or thereafter acquired, which secures Debt that
ranks pari passu with or subordinated to this Note unless
(i) if such Lien secures Debt that ranks pari passu with
this Note, this Note is secured on an equal and ratable
basis with the obligations so secured until such time as
such obligation is no longer secured by a Lien or (ii) if
such Lien secures Debt that is subordinated to this Note,
such Lien shall be subordinated to a Lien granted to the
holder of this Note in the same collateral as that securing
such Lien to the same extent as such subordinated Debt is
subordinated to this Note; and except for Liens (i) in
favor of any of the Obligors or (ii) statutory Liens of
landlords and carriers', warehousemen's, mechanics',
suppliers', materialmens', repairmens' or other like Liens
arising in the ordinary course of business and with respect
to amounts not yet delinquent or being contested in good
faith by appropriate proceedings. As used herein, "Lien"
shall mean any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind (including any
conditional sale or other title retention agreement or lease
in the nature thereof).
14. Modification by Holders; Waiver. The
Obligors may, with the written consent of the holders of
not less than 66 2/3% in principal amount of the Series A
Subordinated Notes then outstanding, modify the terms
and provisions of the Series A Subordinated Notes or the
rights of the holders of the Series A Subordinated Notes
or the obligations of the Obligors thereunder, and the
observance by the Obligors of any term or provision of
the Series A Subordinated Notes may be waived with the
written consent of the holders of not less than 66 2/3% in
principal amount of the Series A Subordinated Notes then
outstanding; provided, however, that no such modification
or waiver shall:
(a) change the maturity of any Note or
reduce the principal amount thereof or reduce the
rate or extend the time of payment of interest
thereon or reduce the amount or change the time
of payment of premium payable on any
prepayment thereof without the consent of the
holder of each Note so affected; or
(b) give any Series A Subordinated Note
any preference over any other Series A
Subordinated Note or other Debt issued pursuant
to the Purchase Agreements; or
(c) reduce the applicable aforesaid
percentages of Series A Subordinated Notes, the
consent of the holders of which is required for any
such modification.
Any such modification or waiver shall apply
equally to all the holders of the Series A Subordinated
Notes and shall be binding upon them, upon each future
holder of any Note and upon the Obligors, whether or not
such Note shall have been marked to indicate such
modification or waiver, but any Series A Subordinated
Note issued thereafter shall bear a notation referring to
any such modification or waiver. Promptly after obtaining
the written consent of the holders as herein provided, the
Corporation shall transmit a copy of such modification or
waiver to all the holders of the Notes at the time
outstanding.
15. Events of Default; Acceleration. If any one or
more of the following events, herein called Events of
Default, shall occur, for any reason whatsoever, and
whether such occurrence shall, on the part of any of the
Obligors, be voluntary or involuntary or come about or be
effected by operation of law or pursuant to or in
compliance with any judgment, decree or order of a court
of competent jurisdiction or any order, rule or regulation
of any administrative or other governmental authority and
such Event of Default shall be continuing:
(a) default shall be made in the payment of
the principal of any Note or the premium thereon,
if any, when and as the same shall become due
and payable, whether at maturity or at a date fixed
for prepayment or by acceleration or otherwise; or
(b) default shall be made in the payment of
any installment of interest on any Note according
to its terms when and as the same shall become
due and payable and such default shall continue for
a period of ten days following written notice of
such default to the Obligors; or
(c) default or breach shall be or shall have
been made in the due observance or performance
of any representation, covenant, condition or
agreement on the part of any of the Obligors to be
observed or performed pursuant to the Purchase
Agreement or the terms hereof and such default
shall continue for 15 days after written notice
thereof, specifying such default and requesting that
the same be remedied, shall have been given to the
Corporation by the holder or holders of at least
25% of the principal amount of the Notes then
outstanding (the Corporation to give forthwith to
all other holders of Notes at the time outstanding
written notice of the receipt of such notice
specifying the default referred to therein); or
(d) the entry of a decree or order for relief
by a court having jurisdiction in the premises in
respect of any Obligor in an involuntary case
under the federal bankruptcy laws, as now
constituted or hereafter amended, or any other
applicable federal or state bankruptcy, insolvency
or other similar law, or appointing a receiver,
liquidator, assignee, custodian, trustee,
sequestrator (or similar official) of any of the
Obligors or for any substantial part of any of their
respective property, or ordering the winding-up or
liquidation of any of their affairs and the
continuance of any such decree or order unstayed
and in effect for a period of 30 consecutive days;
or
(e) the commencement by any of the
Obligors of a voluntary case under the federal
bankruptcy laws, as now constituted or hereafter
amended, or any other applicable federal or state
bankruptcy, insolvency or other similar laws, or
the consent by any Obligor to the appointment of
or taking possession by a receiver, liquidator,
assignee, trustee, custodian, sequestrator (or other
similar official) of any of the Obligors or for any
substantial part of any of their respective property,
or the making by any of the Obligors of any
assignment for the benefit of creditors, or the
failure of any of the Obligors generally to pay its
debts as such debts become due, or the taking of
corporate action by any of the Obligors in
furtherance of or which might reasonably be
expected to result in any of the foregoing; or
(f) (i) failure to make any payment in
respect of any Debt of the Obligors having an
aggregate principal amount (including undrawn
committed or available amounts and including
amounts owing to all creditors under any
combined or syndicated credit arrangement) of
more than $50,000 when due (whether by
scheduled maturity, required prepayment,
acceleration, demand or otherwise) and such
failure continues after the applicable grace or
notice period, if any, specified in the document
relating thereto (unless such failure is waived prior
to the holders of the Notes declaring a default
pursuant to this Section 15); or (ii) failure by the
Obligors to perform or observe any other
condition or covenant, or any other event shall
occur or condition exist, under any agreement or
instrument relating to any such Debt referred to in
clause (i) above, and such failure continues after
the applicable grace or notice period, if any,
specified in the document relating thereto if the
effect of such failure, event or condition is to
cause, or to permit the holder or holders of such
Debt or beneficiary or beneficiaries of such Debt
(or a trustee or agent on behalf of such holder or
holders or beneficiary or beneficiaries) to cause
such Debt to be declared to be due and payable
prior to its stated maturity (unless such failure is
waived prior to the holders of the Notes declaring
a default pursuant to this Section 15); or
(g) final judgment for the payment of
money in excess $50,000 shall be rendered against
the Obligors and the same shall remain
undischarged for a period of 30 days during which
execution shall not be effectively stayed;
(h) a Change of Control (as defined below)
shall have occurred;
then, the holder or holders of at least 25% in aggregate
principal amount of the Series A Subordinated Notes at
the time outstanding may, at its or their option, by written
notice to the Corporation and the Subsidiaries, declare all
the Series A Subordinated Notes to be, and all the Series
A Subordinated Notes shall thereupon be and become,
forthwith due and payable together with interest accrued
thereon without presentment, demand, protest or further
notice of any kind, all of which are expressly waived to
the extent permitted by law; provided, however, that upon
the occurrence of any of the events specified in
subsections (d) or (e) of this Section 15, all the Notes
shall thereupon be and become, forthwith due and payable
together with interest accrued thereon without any action
required by the holders thereof whatsoever. As used
herein, "Change of Control" means (i) any of the
Obligors effects a merger, consolidation, share exchange
or similar transaction with another corporation trust,
limited liability company, any form of partnership, or
other business enterprise (other than the consolidation or
merger of a wholly-owned subsidiary of an Obligor with
or into such Obligor or with or into any other
wholly-owned subsidiary of an Obligor, and other than a
merger involving the Corporation in which the holders of
the Common Stock of the Corporation immediately prior
to such merger hold at least 51% of the outstanding
Capital Stock of the surviving corporation in any such
merger or consolidation, on a fully-diluted basis,
immediately after the merger and further provided that if
an Obligor is not the surviving corporation in such merger
or consolidation, the surviving corporation becomes a
Future Obligor); (ii) any "person" or "group" (as such
terms are used in Section 13(d) of the Exchange Act and
the regulations promulgated hereunder) is or becomes a
beneficial owner, directly or indirectly, of securities of
the Corporation having a majority of the total number of
votes that may be cast for the election of directors of the
Corporation; (iii) the Obligors on a consolidated basis
sell, lease, abandon, transfer, or otherwise dispose of all
or substantially all of their consolidated assets; (iv) as the
result of, or in connection with, any cash tender or
exchange offer, merger or other business combination,
sale of assets or contested election, or any combination of
the foregoing transactions (a "Transaction"), the persons
who were directors of the Corporation before the
Transaction cease to constitute a majority of the Board of
Directors of the Corporation or any successor to the
Corporation; or (v) any director is elected to the
Corporation's Board of Directors without being nominated
thereto by a majority of the Corporation's board of
directors immediately prior to such election.
At any time after any declaration of acceleration
has been made as provided in this Section 15 (except as
provided under subsections (d) or (e) thereunder), the
holders of at least 66 2/3% in principal amount of the
Series A Subordinated Notes then outstanding may, by
notice to the Corporation, rescind such declaration and its
consequences, if (i) the any of the Obligors have paid all
overdue installments of interest on the Notes and all
principal (and premium, if any) that has become due
otherwise than by such declaration of acceleration; and
(ii) all other defaults and Events of Default (other than
nonpayments of principal and interest that have become
due solely by reason of acceleration) shall have been
remedied or cured or shall have been waived pursuant to
this paragraph; provided, however, that no such rescission
shall extend to or affect any subsequent default or Event
of Default or impair any right consequent thereon.
WITHOUT LIMITING THE FOREGOING, THE
OBLIGORS HEREBY WAIVE ANY RIGHT TO TRIAL
BY JURY IN ANY LEGAL PROCEEDING RELATED
IN ANY WAY TO THIS NOTE OR THE NOTES AND
AGREES THAT ANY SUCH PROCEEDING MAY, IF
THE HOLDER SO ELECTS, BE BROUGHT AND
ENFORCED IN THE SUPREME COURT OF THE
STATE OF NEW YORK OR THE UNITED STATES
DISTRICT COURT FOR THE SOUTHERN DISTRICT
OF NEW YORK AND THE OBLIGORS HEREBY
WAIVE ANY OBJECTION TO JURISDICTION OR
VENUE IN ANY SUCH PROCEEDING COMMENCED
IN SUCH COURT. THE CORPORATION AND THE
SUBSIDIARIES FURTHER AGREE THAT ANY
PROCESS REQUIRED TO BE SERVED ON THEM
FOR PURPOSES OF ANY SUCH PROCEEDING MAY
BE SERVED ON THEM, WITH THE SAME EFFECT
AS PERSONAL SERVICE ON THEM WITHIN THE
STATE OF DELAWARE, BY REGISTERED NAIL
ADDRESSED TO THEM AT THE OFFICE OR
AGENCY SET FORTH IN SECTION 22 FOR
PURPOSES OF NOTICES HEREUNDER.
16. Suits for Enforcement. In case any one or
more of the Events of Default specified in Section 15 of
this Note shall happen and be continuing, the holder of
this Note may proceed to protect and enforce its rights by
suit in equity, action at law and/or by other appropriate
proceeding, whether for the specific performance of any
covenant or agreement contained in this Note or in aid of
the exercise of any power granted in this Note, or may
proceed to enforce the payment of this Note or to enforce
any other legal or equitable right of the holder of this
Note.
In case of any default under any Note, the
Obligors, jointly and severally, will pay to the holder
thereof such amounts as shall be sufficient to cover the
costs and expenses of such holder due to said default,
including, without limitation, collection costs and
reasonable attorneys' fees, to the extent actually incurred.
17. Remedies Cumulative. No remedy herein
conferred upon the holder of this Note is intended to be
exclusive of any other remedy and each and every such
remedy shall be cumulative and shall be in addition to
every other remedy given hereunder or now or hereafter
existing at law or in equity or by statute or otherwise.
18. Remedies Not Waived. No course of dealing
between the Obligors and the holders of this Note or any
delay on the part of the holder hereof in exercising any
rights hereunder shall operate as a waiver of any right of
any holder of this Note.
19. Subordination. (a) The obligation of the
Obligors to pay the principal of and interest on this Note,
shall be subordinate and junior in right of payment to the
extent set forth in the following paragraphs (i), (ii), (iii)
and (iv) to all Senior Debt. As used herein, "Senior Debt"
means the principal of, premium, if any, and interest
(including postpetition interest at the contract rate in any
bankruptcy, insolvency or similar proceeding with respect
to the Corporation) on, and other amounts payable on or
in connection with indebtedness for money borrowed by
the Obligors, whether or not outstanding on the date of
this Note, from, or capital lease obligations payable to,
any bank or other financial institution regularly engaged
in the business of making loans or extending credit;
provided, that Senior Debt shall not include any such
indebtedness or capital lease obligations which (a) is
guaranteed by any other entity or person (other than an
Obligor); (b) is convertible into equity of an Obligor or
which was purchased from an Obligor by such bank or
financial institution along with capital stock, warrants or
other rights to receive an equity interest, profit
participation or similar rights in the Obligor; or (c)
provides in any documentation evidencing such
indebtedness or capital lease obligation that such
indebtedness or capital lease obligation is not superior in
right of payment to the Notes.
(i) In the event of any insolvency, bankruptcy,
liquidation, reorganization or other similar proceedings,
or any receivership proceedings in connection therewith,
relative to the Obligors or their respective creditors or
property, and in the event of any proceedings for
voluntary liquidation, dissolution or other winding up of
the Corporation, whether or not involving insolvency or
bankruptcy proceedings, then all Senior Debt shall first be
paid in full, before any payment on account of principal
or interest is made upon this Note.
(ii) In any of the proceedings referred to in
paragraph (i) above, any payment or distribution of any
kind or character, whether in cash, property, stock or
obligations which may be payable or deliverable in
respect of this Note shall be paid or delivered directly to
the holders of Senior Debt for application in payment
thereof, unless and until all Senior Debt shall have been
paid in full.
(iii) In the event (A) any Obligor shall default
under any Senior Debt obligation and as a result thereof
the holder thereof shall cause such obligation to become
due prior to the stated maturity thereof, (B) any Obligor
shall not pay a Senior Debt obligation at maturity or (C)
any Obligor shall not make any payment of principal or
interest under any document evidencing Senior Debt when
due, then upon the occurrence of (x) receipt by the holder
of this Note of written notice from the holder of such
Senior Debt or (y) if such event of default specified in
clauses (A) through (C) above results from the
acceleration of the Notes, the date of such acceleration,
no such payment may be made by any Obligor upon or in
respect of the Notes for a period commencing on the
earlier of the date of receipt of such notice or the date of
such acceleration and ending upon the earlier of (i) the
date such Senior Debt shall have been paid in full and (ii)
the date the holder of such Senior Debt shall have
rescinded such acceleration or cured all such failures to
pay when due.
(iv) In the event any Obligor shall default under
any Senior Debt obligation and the effect of such default
is to permit the holder of such Senior Debt to accelerate
the maturity of such obligation, then upon the occurrence
of (x) receipt by the holder of this Note of written notice
from the holder of such Senior Debt or (y) if such event
of default results from the acceleration of the Notes, the
date of such acceleration, no such payment may be made
by any Obligor upon or in respect of the Notes for a
period (the "Payment Blockage Period") commencing on
the earlier of the date of receipt of such notice or the date
of such acceleration and ending 179 days thereafter
(unless such Payment Blockage Period shall be terminated
earlier by written notice to the holder hereof from the
holder of such Senior Debt commencing the Payment
Blockage Period). Notwithstanding anything herein to the
contrary, in no event shall a Payment Blockage Period
extend beyond 179 days from the date the payment on the
Notes was due. Not more than one Payment Blockage
Period with respect to this Note may be commenced
during any period of 360 consecutive days. For all
purposes of this Section 19(a)(iv), no event of default
which existed or was continuing on the date of the
commencement of any Payment Blockage Period with
respect to Senior Debt initiating such Payment Blockage
Period shall be, or be made, the basis for the
commencement of a second Payment Blockage Period by
the holder of such Senior Debt whether or not within a
period of 360 consecutive days unless such event of
default shall have been cured or waived for a period of
not less than 30 consecutive days.
(b) Subject to the payment in full of all Senior
Debt as aforesaid, the holder of this Note shall be
subrogated to the rights of the holders of Senior Debt to
receive payments or distributions of any kind or
character, whether in cash, property, stock or obligations,
which may be payable or deliverable to the holders of
Senior Debt, until the principal of, and interest on, the
Notes shall be paid in full, and, as between the
Corporation, its creditors other than the holders of Senior
Debt, and the holders of this Note, no such payment or
distribution made to the holders of Senior Debt by virtue
of this Section 19 which otherwise would have been made
to the holder of this Note shall be deemed a payment by
any Obligor on account of the Senior Debt, it being
understood that the provisions of this Section 19 are and
are intended solely for the purposes of defining the
relative rights of the holder of this Note, on the one hand,
and the holders of the Senior Debt, on the other hand.
Subject to the rights, if any, under this Section 19 of
holders of Senior Debt to receive cash, property, stock or
obligations otherwise payable or deliverable to the holder
of this Note, nothing herein shall either impair, as
between the any of the Obligor and the holder of this
Note, the obligation of any of the Obligors, which are
unconditional and absolute, to pay to the holder hereof the
principal hereof and interest hereon in accordance with
the terms and the provisions of this Note or prevent the
holder of this Note from exercising all remedies otherwise
permitted by applicable law or hereunder upon default
hereunder. The failure to make a payment on account of
principal or interest on the Notes by reason of any
provision of this Section 19 shall not be construed as
preventing the occurrence of an Event of Default under
Section 15.
(c) Notwithstanding any provision contained herein
to the contrary, the indebtedness evidenced by this Note
shall not (i) be subordinated to claims of any trade
creditors of the Corporation or (ii) be subordinated in
right of payment to the payment of any existing or future
Debt of the Corporation which is not Senior Debt; but
rather shall rank equally with all existing and future
unsecured Debt of the Corporation except for such Debt
as may be subordinate thereto.
20. GOVERNING LAW. THIS NOTE SHALL
BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE
OF NEW YORK.
21. Headings. The headings of the Sections and
subsections of this Note are inserted for convenience only
and do not constitute a part of this Note.
22. Notices. All notices, requests, consents and
other communications hereunder shall be in writing and
shall be mailed by first class registered mail, postage
prepaid,
(a) if to the Corporation or the Subsidiaries,
at:
625 Avenue of the Americas
New York, NY 10011
with a copy to:
Breslow & Walker
875 Third Avenue
New York, NY 10022
Attention: Howard S. Breslow, Esq.
after January 1, 1997:
767 Third Avenue
New York, NY 10011
(b) if to the holder of this Note, to its address
set forth in the register maintained by the Corporation for
the registration of transfer and exchange of Notes.
<PAGE>
IN WITNESS WHEREOF, the undersigned has
caused this Note to be signed in its corporate name by
one of its officers thereunto duly authorized and to be
dated as of the day and year first above written.
FIND/SVP,
INC.
By
President
[Corporate Seal]
Attest:
Secretary
FIND/SVP
INTERNET SERVICES, INC.
By
President
[Corporate Seal]
Attest:
Secretary
FIND/SVP
PUBLISHED PRODUCTS, INC.
By
President
[Corporate Seal]
Attest:
Secretary<PAGE>
EXHIBIT B
THIS WARRANT HAS BEEN ISSUED IN RELIANCE
UPON THE REPRESENTATION OF THE HOLDER
THAT IT HAS BEEN ACQUIRED FOR INVESTMENT
PURPOSES AND NOT WITH A VIEW TOWARDS
THE RESALE OR OTHER DISTRIBUTION THEREOF.
NEITHER THIS WARRANT NOR THE SHARES
ISSUABLE UPON THE EXERCISE OF THIS
WARRANT HAVE BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED.
THIS DOCUMENT AND THE INDEBTEDNESS OR
OTHER OBLIGATION DESCRIBED HEREIN OR
EVIDENCED HEREBY IS SUBORDINATED TO
CERTAIN SENIOR INDEBTEDNESS IN THE
MANNER AND TO THE EXTENT SET FORTH IN A
SUBORDINATION AGREEMENT DATED AS OF
OCTOBER 31, 1996 BY AND AMONG FIND/SVP,
INC., FIND/SVP PUBLISHED PRODUCTS, INC.,
FURMAN SELZ SBIC, L.P. AND STATE STREET
BANK AND TRUST COMPANY.
WARRANT
FIND/SVP, INC.
Stock Subscription Warrant
Warrant to Subscribe October 31, 1996
for 900,000 shares
Void After October 31, 2006
THIS CERTIFIES that, for value received,
FURMAN SELZ SBIC, L.P., a Delaware limited
partnership, or its registered assigns, is entitled to
subscribe for and purchase from FIND/SVP, INC., a
New York corporation (hereinafter called the
"Corporation"), at the price of $2.25 per share (such
price as from time to time adjusted as hereinafter
provided being hereinafter called the "Warrant Price"), at
any time prior to October 31, 2006, up to 900,000
(subject to adjustment as hereinafter provided) fully paid
and nonassessable shares of Common Stock, par value
$.0001 per share, of the Corporation (hereinafter called
the "Common Stock"), subject, however, to the
provisions and upon the terms and conditions hereinafter
set forth. This Warrant was issued pursuant to a certain
Note and Warrant Purchase Agreement, dated as of
October 31, 1996 (the "Purchase Agreement"), among the
Corporation, certain subsidiaries of the Corporation, and
Furman Selz SBIC, L.P. ("FS"), and the rights and
benefits contained therein shall inure to the benefit of all
subsequent holders of this Warrant. The Warrants issued
pursuant to the Purchase Agreement and any warrant or
warrants subsequently issued upon exchange or transfer
thereof are hereinafter collectively called the "Warrants."
Section 1. Exercise of Warrant.
(a) Method of Exercise. The rights represented by
this Warrant may be exercised by the holder hereof, in
whole at any time or from time to time in part, but not as
to a fractional share of Common Stock, by the surrender
of this Warrant (properly endorsed) at the office of the
Corporation as it may designate by notice in writing to the
holder hereof at the address of such holder appearing on
the books of the Corporation, and as further provided
below in this Section l:
(i) Cash Exercise. By payment to the
Corporation of the Warrant Price in cash or by
certified or official bank check, for each share
being purchased;
(ii) Surrender of Notes. By surrender to the
Corporation for cancellation of Initial Notes,
Mandatory Notes or Option Notes (as each such
term is defined in the Purchase Agreement), or of
any portion of an Initial Note, a Mandatory Note
or an Option Note, for which credit shall be given
toward the Warrant Price for each share being
acquired on a dollar-for-dollar basis with reference
to the principal amount cancelled;
(iii) Net Issue Exercise. If no Initial Notes,
Mandatory Notes or Option Notes (as those terms
are defined in the Purchase Agreement) are
outstanding, by an election to receive shares the
aggregate fair market value of which as of the date
of exercise is equal to the fair market value of this
Warrant (or the portion thereof being cancelled) on
such date, in which event the Corporation, upon
receipt of notice of such election, shall issue to the
holder hereof a number of shares of the
Corporation's Common Stock equal to (A) the
number of shares of Common Stock acquirable
upon exercise of all or any portion of this Warrant
being cancelled, as at such date, multiplied by (B)
the balance remaining after deducting (x) the
Warrant Price, as in effect on such date, from (y)
the fair market value of one share of the
Corporation's Common Stock as at such date and
dividing the result by (C) the fair market value of
one share of the Corporation's Common Stock as
at such date; or
(iv) Combined Payment Method. By
satisfaction of the Warrant Price for each share
being acquired in any combination of two or more
of the methods described in clauses (i), (ii) and
(iii) above.
(b) Definition of Fair Market Value. For the
purposes of this Section 1, "fair market value" shall
mean, as to any security, as follows: if that security is
listed or admitted to trading on one or more national
securities exchanges, the average of the last reported sales
prices per share regular way or, in case no such reported
sales takes place on any such day, the average of the last
reported bid and asked prices per share regular way, in
either case on the principal national securities exchange
on which that security is listed or admitted to trading, for
the 60 trading days immediately preceding the date upon
which the fair market value is determined (the
"Determination Date"); if that security is not listed or
admitted to trading on a national securities exchange but
is quoted by the NASDAQ Stock Market ("NASDAQ"),
the average of the last reported sales prices per share
regular way or, in case no reported sale takes place on
any such day or the last reported sales prices are not then
quoted by NASDAQ, the average for each such day of
the last reported bid and asked prices per share, for the
60 trading days immediately preceding the Determination
Date as furnished by the National Quotation Bureau
Incorporated or any similar successor organization; and if
that security is not listed or admitted to trading on a
national securities exchange or quoted by NASDAQ or
any other nationally recognized quotation service, the
"fair market value" shall be the fair value thereof
determined jointly by the Corporation and the registered
holders of Warrants outstanding representing a majority
of the shares of Common Stock issuable upon exercise of
the Warrants; provided, however, that if such parties are
unable to reach agreement within 60 days after such
determination becomes necessary, the "fair market value"
shall equal the fair market value of all outstanding shares
of Common Stock of the Corporation divided by the
number of shares of Common Stock outstanding, such fair
market value to be determined in good faith by an
independent investment banking firm selected jointly by
the Corporation and the registered holders of Warrants
outstanding representing a majority of the shares of
Common Stock issuable upon exercise of the Warrants or,
if that selection cannot be made within 15 days, by an
independent investment banking firm selected by the
American Arbitration Association in accordance with its
rules. The fees and expenses of any such investment
banking firm shall be shared and paid equally by the
Corporation and the holder(s) of such Warrants who have
required valuation. Anything in this paragraph (b) to the
contrary notwithstanding, the fair market value of this
Warrant or any portion thereof as of any Determination
Date shall be equal to (i) the fair market value of the
shares of Common Stock issuable upon exercise of this
Warrant (or such portion thereof), (determined in
accordance with the foregoing provisions of this
paragraph (b)); minus (ii) the aggregate Warrant Exercise
Price of the Warrant (or such portion thereof).
(c) Delivery of Certificates. Etc. In the event of
any exercise of the rights represented by this Warrant, a
certificate or certificates for the shares of Common Stock
so purchased, registered in the name of the holder, shall
be delivered to the holder hereof within a reasonable
time, not exceeding ten days, after the rights represented
by this Warrant shall have been so exercised; and, unless
this Warrant has expired, a new Warrant representing the
number of shares (except a remaining fractional share), if
any, with respect to which this Warrant shall not then
have been exercised shall also be issued to the holder
hereof within such time. The person in whose name any
certificate for shares of Common Stock is issued upon
exercise of this Warrant shall for all purposes be deemed
to have become the holder of record of such shares on the
date on which the Warrant was surrendered and payment
of the Warrant Price and any applicable taxes was made,
except that, if the date of such surrender and payment is
a date on which the stock transfer books of the
Corporation are closed, such person shall be deemed to
have become the holder of such shares at the close of
business on the next succeeding date on which the stock
transfer books are open.
Section 2. Put Right; Subordination.
(a) Put Right for Warrants. If for ten of the twelve
months immediately preceding October 31, 2001, the
Common Stock does not have a daily average trading
volume of at least 25,000 shares, as reported each day in
The Wall Street Journal (or other national business
publication) and any Warrants remain outstanding, then
the holders of the Warrants shall have the option (the "Put
Right") commencing on October 31, 2001 and expiring on
December 31, 2001 (the "Put Period") to sell to the
Company, and the Company shall have the obligation to
purchase, any or all outstanding Warrants, at a price
equal to the fair market value of the Warrants (as such
term is defined in Section l(b) hereof) (the "Put Payment
Amount"). To exercise its Put Right, such holder shall
notify the Company in writing during the Put Period of its
intention to exercise such Put Right. Within ten days
following delivery of such Notice, a closing shall take
place; at such closing such holder shall surrender the
Warrants with respect to which the Put Right has been
exercised, and the Company shall pay to such holder
one-third (1/3) of the Put Payment Amount in cash, and
the remainder of the Put Payment Amount shall be paid
in two equal installments on each of the first and second
anniversary of such closing, plus interest at the annual
rate of 10%, payable at the time of each installment.
(b) Subordination. (i) The obligation of the
Corporation to pay the Put Payment Amount, shall be
subordinate and junior in right of payment to the extent
set forth in the following paragraphs (A), (B) and (C) to
all Senior Debt. As used herein, "Senior Debt" means the
principal of, premium, if any, and interest (including
post-petition interest at the contract rate in any
bankruptcy, insolvency or similar proceeding with respect
to the Corporation) on, and other amounts payable on or
in connection with indebtedness for money borrowed by
the Corporation, whether or not outstanding on the date
or this Note, from, or capital lease obligations payable to,
any bank or other financial institution regularly engaged
in the business of making loans or extending credit;
provided, that Senior Debt shall not include any such
indebtedness or capital lease obligations which (i) is
guaranteed by any other entity or person (other than a
subsidiary of the Corporation); (ii) is convertible into
equity of the Corporation or any subsidiary of the
Corporation (a "Subsidiary") or which was purchased
from the Corporation or any Subsidiary by such bank or
financial institution along with capital stock, warrants or
other rights to receive an equity interest, profit
participation or similar rights in the Corporation or such
Subsidiary; or (iii) provides in any documentation
evidencing such indebtedness or capital lease obligation
that such indebtedness or capital lease obligation is not
superior in right of payment to the Put Payment Amount.
(A) In the event of any insolvency, bankruptcy,
liquidation, reorganization or other similar proceedings,
or any receivership proceedings in connection therewith,
relative to the Corporation or its respective creditors or
property, and in the event of any proceedings for
voluntary liquidation, dissolution or other winding up of
the Corporation, whether or not involving insolvency or
bankruptcy proceedings, then all Senior Debt shall first be
paid in full, before any payment on account of the Put
Payment Amount.
(B) In any of the proceedings referred to in
paragraph (A) above, any payment or distribution of any
kind or character, whether in cash, property, stock or
obligations which may be payable or deliverable in
respect of this Warrant shall be paid or delivered directly
to the holders of Senior Debt for application in payment
thereof, unless and until all Senior Debt shall have been
paid in full.
(C) In the event (1) the Corporation shall default
under any Senior Debt obligation and the effect of such
default is to accelerate the maturity of such obligation, (2)
the Corporation shall default under any Senior Debt
obligation and as a result thereof the holder thereof shall
cause such obligation to become due prior to the stated
maturity thereof, (3) the Corporation shall not pay a
Senior Debt obligation at maturity or (4) the Corporation
shall not make any payment of principal or interest under
any document evidencing Senior Debt when due, then
upon the occurrence of receipt by the holder of this
Warrant of written notice from the holder of such Senior
Debt, no such payment may be made by the Corporation
upon or in respect of the Put Payment Amount for the
period (the "Payment Blockage Period") commencing on
the date of receipt of such notice and ending 179 days
thereafter (unless such Payment Blockage Period shall be
terminated earlier by written notice to the holder hereof
from the holder of such Senior Debt commencing the
Payment Blockage Period). Notwithstanding anything
herein to the contrary, in no event shall a Payment
Blockage Period extend beyond 179 days from the date
the Put Payment Amount was due. Not more than one
Payment Blockage Period with respect to the Put Payment
Amount may be commenced during any period of 360
consecutive days. For all purposes of this Section
2(b)(i)(C), no event of default which existed or was
continuing on the date of the commencement of any
Payment Blockage Period with respect to Senior Debt
initiating such Payment Blockage Period shall be, or be
made, the basis for the commencement of a second
Payment Blockage Period by the holder of such Senior
Debt whether or not within a period of 360 consecutive
days unless such event of default shall have been cured or
waived for a period of not less than 30 consecutive days.
(ii) Subject to the payment in full of all Senior
Debt as aforesaid, the holder of this Warrant shall be
subrogated to the rights of the holders of Senior Debt to
receive payments or distributions of any kind or
character, whether in cash, property, stock or obligations,
which may be payable or deliverable to the holders of
Senior Debt, until the Put Payment Amount has been paid
or the Put Period shall have expired and no Put Right
shall have been exercised, and, as between the
Corporation, its creditors other than the holders of Senior
Debt, and the holders of this Warrant, no such payment
or distribution made to the holders of Senior Debt by
virtue of this Section 2(b) which otherwise would have
been made to the holder of this Warrant shall be deemed
a payment by the Corporation on account of the Senior
Debt, it being understood that the provisions of this
Section 2(b) are and are intended solely for the purposes
of defining the relative rights of the holder of this
Warrant, on the one hand, and the holders of the Senior
Debt, on the other hand. Subject to the rights, if any,
under this Section 2(b) of holders of Senior Debt to
receive cash, property, stock or obligations otherwise
payable or deliverable to the holder of this Warrant,
nothing herein shall either impair, as between the
Corporation and the holder of this Warrant, the
obligations of the Corporation, which are unconditional
and absolute, to pay to the holder hereof the Put Payment
Amount in accordance with the terms and provisions of
this Warrant or prevent the holder of this Warrant from
exercising all remedies otherwise permitted by applicable
law or hereunder upon default hereunder.
(iii) Notwithstanding any provision contained
herein to the contrary, the obligation to pay the Put
Payment Amount shall not (i) be subordinated to claims
of any trade creditors of the Corporation or (ii) be
subordinated in right of payment to the payment of any
existing or future debt of the Corporation which is not
Senior Debt; but rather shall rank equally with all existing
and future unsecured debt of the Corporation except for
such debt as may be subordinate thereto.
Section 3. Early Expiration of Warrants. If (a)
after the date hereof the Company completes a firm
underwritten secondary public offering at a price to public
of $7.00 or more per share of Common Stock, and gross
proceeds to the Company therefrom equals or exceeds $20
million, and (b) within 60 days after the closing of the
sale of such shares, the Company notifies the holder of
this Warrant in writing that the Warrants will expire at
5:00 p.m. NY time on the 60th day after such holder's
receipt of such notice then this Warrant shall expire at
such time.
Section 4. Adjustment of Warrant Price and
Number of Shares.
(a) In General. The number of shares of Common
Stock for which this Warrant is exercisable, and the price
at which such shares may be purchased upon exercise of
this Warrant, shall be subject to adjustment from time to
time as set forth in this Section 4. The Corporation shall
give the Holder hereof notice of any event described
below which requires an adjustment pursuant to this
Section 4 at the time of such event.
(b) Dividends, Subdivisions, Combinations and
Issuances. In the event that the Corporation subsequent to
the date of issuance hereof shall:
(i) declare a dividend upon, or make any
distribution in respect of, any of its stock, payable in
Common Stock, securities convertible or exchangeable
into Common Stock ("Convertible Securities") or rights
to purchase Common Stock ("Stock Purchase Rights"), or
(ii) subdivide its outstanding shares of Common
Stock into a larger number of shares of Common Stock,
or
(iii) combine its outstanding shares of Common
Stock into a smaller number of shares of Common Stock,
then (i) the number of shares of Common Stock for which
this Warrant is exercisable immediately after the
occurrence of any such event shall be adjusted to equal
the number of shares of Common Stock which a record
holder of the same number of shares of Common Stock
for which this Warrant is exercisable immediately prior to
the occurrence of such event would own or be entitled to
receive after the happening of such event (assuming the
conversion of all Convertible Securities or exercise in full
of Stock Purchase Rights, as the case may be, at the time
of issuance of such Convertible Securities or Stock
Purchase Rights by the record holder thereof) and (ii) the
Warrant Price shall be adjusted to equal the Warrant Price
multiplied by a fraction, the numerator of which shall be
the number of shares of Common Stock for which this
Warrant is exercisable immediately prior to the adjustment
and the denominator of which shall be the number of
shares for which this Warrant is exercisable immediately
after such adjustment.
(c) Readjustment of Warrant Price. In the event the
rate at which any Convertible Securities which are issued
pursuant to Section 4(b)(i) above are convertible into or
exchangeable for additional shares of Common Stock shall
change, the Warrant Price and the number of shares of
Common Stock for which this Warrant may be exercised
in effect at the time of such event shall forthwith be
readjusted to the Warrant Price and number of shares of
Common Stock which would have been in effect at such
time had such Convertible Securities provided for such
conversion rate at the time initially issued. On the
expiration of any such Stock Purchase Rights not
exercised or of any such right to convert or exchange
under any such Convertible Securities not exercised, (i)
the Warrant Price then in effect hereunder shall forthwith
be increased to the Warrant Price which would have been
in effect at the time of such expiration or termination had
such Stock Purchase Rights or Convertible Securities
never been issued, and (ii) the number of shares of
Common Stock for which this Warrant may be exercised
then in effect hereunder shall forthwith be decreased to
the number of shares of Common Stock which would
have been in effect at the time of such expiration or
termination had such Stock Purchase Rights or
Convertible Securities never been issued. No readjustment
of the Warrant Price pursuant to this Subsection (c) shall
have the effect of increasing the Warrant Price by an
amount in excess of the adjustment originally made to the
Warrant Price in respect of the issue, sale or grant of the
applicable Stock Purchase Rights or Convertible
Securities.
(d) No Adjustments under Certain Circumstances.
Anything herein to the contrary notwithstanding, the
Corporation shall not be required to make any adjustment
of the Warrant Price in the case of:
(i) the issuance of shares of Common Stock upon
the exercise in whole or part of the Warrants issued
pursuant to the Purchase Agreement; or
(ii) the declaration of a dividend on or the
distribution in respect of any of its Stock, payable in
Convertible Securities or Stock Purchase Rights if at the
time of such declaration or distribution such Convertible
Securities or Stock Purchase Rights are issued to all of the
holders of the Warrant based upon the number of shares
of Common Stock for which this Warrant is exercisable
at the time of such declaration or distribution; provided,
however, that such Convertible Securities may not be
converted and such Stock Purchase Rights may not be
exercised until the right to purchase shares of Common
Stock on which such Convertible Securities or Stock
Purchase Rights were issued is exercised pursuant to the
terms of this Warrant.
(e) Record Date. In case the Corporation shall take
a record of the holders of its Common Stock for the
purpose of entitling them (i) to receive a dividend or other
distribution payable in Common Stock, Stock Purchase
Rights or Convertible Securities, or (ii) to subscribe for
or purchase Common Stock, Stock Purchase Rights or
Convertible Securities, then such record date shall be
deemed to be the date of the issue or sale of the shares of
Common Stock deemed to have been issued or sold upon
the declaration of such dividend or the making of such
other distribution or the date of the granting of such right
of subscription or purchase, as the case may be.
(f) Reorganization, Reclassification. Consolidation,
Merger or Sale. If any capital reorganization or
reclassification of the capital stock of the Corporation or
any consolidation, merger or share exchange of the
Corporation with another corporation, trust, limited
liability company, any form of partnership or any other
business entity, or the sale, lease, abandonment, transfer
or other disposal of all or substantially all of its assets to
another corporation, trust, limited liability company, any
form of partnership or any other business entity, or the
sale of all or substantially all of the Outstanding Common
Stock of the Corporation shall be effected in such a way
that holders of Common Stock shall be entitled to receive
stock, securities or assets with respect to or in exchange
for Common Stock, then, as a condition of such
reorganization, reclassification, consolidation, merger or
sale, lawful and adequate provisions shall be made
whereby the holder of this Warrant shall thereafter have
the right to receive upon the basis and upon the terms and
conditions specified herein and in lieu of the shares of
Common Stock of the Corporation immediately
theretofore receivable upon the exercise of this Warrant,
the kind and amount of shares of stock, securities or
assets (including cash) as may be issued or payable upon
such reorganization, reclassification, consolidation,
merger or sale with respect to or in exchange for a
number of outstanding shares of such Common Stock
("Successor Securities") equal to the number of shares of
such stock immediately theretofore so receivable upon the
exercise of this Warrant had such reorganization,
reclassification, consolidation, merger or sale not taken
place, and in any such case appropriate provision shall be
made with respect to the rights and interests of such
holder to the end that the provisions hereof shall
thereafter be applicable, as nearly as may be, in relation
to any shares of stock, securities or assets thereafter
deliverable upon the exercise of such exercise rights. In
the event of a merger or consolidation of the Corporation
as a result of which a greater or lesser number of shares
of common stock of the surviving corporation are issuable
to holders of Common Stock of the Corporation
outstanding immediately prior to such merger or
consolidation, the Warrant Price in effect immediately
prior to such merger or consolidation shall be adjusted in
the same manner as though there were a subdivision or
combination of the outstanding shares of Common Stock
of the Corporation. The Corporation will not effect any
such consolidation, merger or any sale of all or
substantially all of its assets of properties, unless prior to
the consummation thereof the successor corporation (if
other than the Corporation) resulting from such
consolidation or merger or the corporation purchasing
such assets or the issuer of the Successor Securities, if
other than such successor corporation, shall assume, by
written instrument executed and mailed or delivered to the
holder of this Warrant (in form satisfactory to such
holder) at the last address of such holder appearing on the
books of the Corporation, (i) the obligation to deliver to
such holder such shares of stock, securities or assets as,
in accordance with the foregoing provisions, such holder
may be entitled to receive and (ii) all of the obligations of
the Corporation with respect to any Registration Rights
Agreement between any holder of this Warrant and the
Corporation including the Registration Rights Agreement
contemplated by the Purchase Agreement and attached
thereto as Exhibit C.
(g) Notice of Adjustment. Upon any adjustment of
the Warrant Price, then and in each such case, the
Corporation shall give written notice thereof, by first
class mail, postage prepaid, addressed to each holder of
the Warrants at the address of such holder as shown on
the books of the Corporation, which notice shall state the
Warrant Price resulting from such adjustment, setting
forth in reasonable detail the method of calculation and
the facts upon which such calculation is based.
(h) Certain Events. If any event occurs as to which
in the opinion of the Board of Directors of the
Corporation the other provisions of this Section 4 are not
strictly applicable or if strictly applicable would not fairly
protect the exercise rights of this Warrant, in accordance
with the essential intent and principles of such provisions
to protect against dilution, then such Board of Directors
shall in good faith make an adjustment in the application
of such provisions, in accordance with such essential
intent and principles, so as to protect such exercise rights
as aforesaid.
(i) Stock to Be Reserved. The Corporation will at
all times reserve and keep available out of its authorized
Common Stock or its treasury shares, solely for the
purpose of issue upon the exercise of this Warrant as
herein provided, such number of shares of Common Stock
as shall then be issuable upon the exercise of this
Warrant. The Corporation covenants that all shares of
Common Stock which shall be so issued shall be duly and
validly issued and fully paid and nonassessable and free
from all taxes, liens and charges with respect to the issue
thereof, and, without limiting the generality of the
foregoing, the Corporation covenants that it will from
time to time take all such action as may be requisite to
assure that the par value per share of the Common Stock
is at all times equal to or less than the effective Warrant
Price. The Corporation will take all such action as may be
necessary to assure that all such shares of Common Stock
may be so issued without violation of any applicable law
or regulation, or of any requirements of any national
securities exchange upon which the Common Stock of the
Corporation may be listed. The Corporation will not take
any action which results in any adjustment of the Warrant
Price if the total number of shares of Common Stock
issued and issuable after such action upon exercise of this
Warrant would exceed the total number of shares of
Common Stock then authorized by the Corporation's
Articles of Incorporation. The Corporation has not
granted and will not grant any right of first refusal with
respect to shares issuable upon exercise of this Warrant,
and there are no preemptive rights associated with such
shares.
(j) Issue Tax. The issuance of certificates for
shares of Common Stock upon exercise of the Warrants
shall be made without charge to the holders of such
Warrants for any issuance tax in respect thereof provided
that the Corporation shall not be required to pay any tax
which may be payable in respect of any transfer involved
in the issuance and delivery of any certificate in a name
other than that of any holder of the Warrants.
(k) Closing of Books. The Corporation will at no
time close its transfer books against the transfer of the
shares of Common Stock issued or issuable upon the
exercise of this Warrant in any manner which interferes
with the timely exercise of this Warrant.
(1) Definition of Common Stock. As used herein
the term "Common Stock" shall mean and include the
Common Stock, par value $.0001 per share, of the
Corporation as authorized on the date hereof and also any
capital stock of any class of the Corporation hereinafter
authorized which shall not be limited to a fixed sum or
percentage in respect of the rights of the holders thereof
to participate in dividends or in the distribution of assets
upon the voluntary or involuntary liquidation, dissolution
or winding up of the Corporation; provided, however,
that the shares purchasable pursuant to this Warrant shall
include only shares designated as Common Stock, par
value $.0001 per share, of the Corporation on the date
hereof or shares of any class or classes resulting from any
reclassification or reclassifications thereof which are not
limited to any such fixed sum or percentage and are not
subject to redemption by the Corporation and, in case at
any time there shall be more than one such resulting
class, the shares of each class then so issuable shall be
substantially in the proportion which the total number of
shares of such class resulting from all such
reclassifications bears to the total number of shares of all
such classes resulting from all such reclassifications.
Section 5. Notices of Record Dates. In the event
of
(i) any taking by the Corporation of a
record of the holders of any class of securities for
the purpose of determining the holders thereof who
are entitled to receive any dividend or other
distribution (other than cash dividends out of
earned surplus), or any right to subscribe for,
purchase or otherwise acquire any shares of stock
of any class or any other securities or property, or
to receive any other right, or
(ii) any capital reorganization of the
Corporation, any reclassification or recapitalization
of the capital stock of the Corporation or any
transfer of all or substantially all the assets of the
Corporation to or consolidation or merger of the
Corporation with or into any other corporation, or
(iii) any voluntary or involuntary
dissolution, liquidation or winding-up of the
Corporation,
then and in each such event the Corporation will give
notice to the holder of this Warrant specifying (i) the date
on which any such record is to be taken for the purpose
of such dividend, distribution or right and stating the
amount and character of such dividend, distribution or
right, and (ii) the date on which any such reorganization,
reclassification, recapitalization, transfer, consolidation,
merger, dissolution, liquidation or winding-up is to take
place, and the time, if any is to be fixed, as of which the
holders of record of Common Stock will be entitled to
exchange their shares of Common Stock for securities or
other property deliverable upon such reorganization,
reclassification, recapitalization, transfer, consolidation,
merger, dissolution, liquidation or winding-up. Such
notice shall be given at least 20 days and not more than
90 days prior to the date therein specified, and such
notice shall state that the action in question or the record
date is subject to the effectiveness of a registration
statement under the Securities Act of 1933, as amended
(the "Securities Act") or to a favorable vote of
stockholders, if either is required.
Section 6. Registration Rights. The rights of the
holder hereof with respect to the registration under the
Securities Act of 1933, as amended, of the shares of
Common Stock issuable upon the exercise of this Warrant
are set forth in the Registration Rights Agreement, dated
as of October 31, 1996, between the Corporation and FS.
Section 7. No Stockholder Rights or Liabilities.
This Warrant shall not entitle the holder hereof to any
voting rights or other rights as a stockholder of the
Corporation. No provision hereof, in the absence of
affirmative action by the holder hereof to purchase shares
of Common Stock, and no mere enumeration herein of the
rights or privileges of the holder hereof, shall give rise to
any liability of such holder for the Warrant Price or as a
stockholder of the Corporation, whether such liability is
asserted by the Corporation or by creditors of the
Corporation.
Section 8. Investment Representation and Legend.
The holder, by acceptance of the Warrant, represents and
warrants to the Corporation that it is acquiring the
Warrant and the shares of Common Stock (or other
securities) issuable upon the exercise hereof for
investment purposes only and not with a view towards the
resale or other distribution thereof and agrees that the
Corporation may affix upon this Warrant the following
legend:
"This Warrant has been issued in reliance
upon the representation of the holder that it has
been acquired for investment purposes and not
with a view towards the resale or other distribution
thereof. Neither this Warrant nor the shares
issuable upon the exercise of this Warrant have
been registered under the Securities Act of 1933,
as amended."
The holder, by acceptance of this Warrant, further agrees
that the Corporation may affix the following legend to
certificates for shares of Common Stock issued upon
exercise of this Warrant:
"The securities represented by this
certificate have been issued in reliance
upon the representation of the holder that
they have been acquired for investment and
not with a view toward the resale or other
distribution thereof, and have not been
registered under the Securities Act of 1933,
as amended. Neither the securities
evidenced hereby, nor any interest therein,
may be offered, sold, transferred,
encumbered or otherwise disposed of
unless either (i) there is an effective
registration statement under said Act
relating thereto or (ii) the Corporation has
received an opinion of counsel, reasonably
satisfactory in form and substance to the
Corporation, stating that such registration
is not required."
Section 9. Lost, Stolen, Mutilated or Destroyed
Warrant. If this Warrant is lost, stolen, mutilated or
destroyed, the Corporation may, on such terms as to
indemnity or otherwise as it may in its discretion
reasonably impose (which shall, in the case of a mutilated
Warrant, include the surrender thereof), issue a new
Warrant of like denomination and tenor as the Warrant so
lost, stolen, mutilated or destroyed. Any such new
Warrant shall constitute an original contractual obligation
of the Corporation, whether or not the allegedly lost,
stolen, mutilated or destroyed Warrant shall be at any
time enforceable by anyone.
Section 10. Undertakings. Upon any issuance of
shares of Common Stock upon exercise of this Warrant,
it shall be the Corporation's responsibility to comply with
the requirements of: (1) the Securities Act of 1933, as
amended; (2) the Securities Exchange Act of 1934, as
amended; (3) any applicable listing requirements of any
national securities exchange; (4) any state securities
regulation or "Blue Sky" laws; and (5) requirements
under any other law or regulation applicable to the
issuance or transfer of such shares. If required by the
Corporation, in connection with each issuance of shares
of Common Stock upon exercise of this Warrant, the
Warrant holder will give: (i) assurances in writing,
satisfactory to the Corporation, that such shares are not
being purchased with a view to the distribution thereof in
violation of applicable laws, (ii) sufficient information, in
writing, to enable the Corporation to rely on exemptions
from the registration or qualification requirements of
applicable laws with respect to such exercise, and (iii) its
cooperation to the Corporation in connection with such
compliance.
Section 11. Notices. All notices, requests and other
communications required or permitted to be given or
delivered hereunder shall be in writing, and shall be
delivered, or shall be sent by certified or registered mail,
postage prepaid and addressed, if to the holder to such
holder at the address shown on such holder's Warrant or
Warrant Shares or at such other address as shall have
been furnished to the Corporation by notice from such
holder. All notices, requests and other communications
required or permitted to be given or delivered hereunder
shall be in writing, and shall be delivered, or shall be sent
by certified or registered mail, postage prepaid and
addressed to the Corporation at such address as shall have
been furnished to the holder by notice from the
Corporation.
IN WITNESS WHEREOF, Find/SVP, Inc. has
executed this Warrant on and as of the day and year first
above written.
FIND/SVP, INC.
By <PAGE>
SUBSCRIPTION AGREEMENT
To:
Dated:
The undersigned, pursuant to the provisions set
forth in the within Warrant, hereby agrees to subscribe
for and purchase ________ shares of Common Stock
covered by such Warrant, and makes payment herewith in
full therefor (at the price per share provided by such
Warrant [in cash] [by surrender of Initial Notes,
Mandatory Notes or Option Notes (as each such term is
defined in the Note and Warrant Purchase Agreement,
dated as of October 31, 1996 between the Corporation,
Furman Selz SBIC, L.P. [as provided in Section l(a)(iii)
of such Warrant].
Signature
Address
<PAGE>
EXHIBIT C
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, (the
"Agreement") dated as of October 31, 1996, by and
between FIND/SVP, INC., a Delaware corporation (the
"Corporation") and FURMAN SELZ SBIC, L.P., a
Delaware limited partnership (the "Purchaser").
WHEREAS, the parties hereto have entered into a
Note and Warrant Purchase Agreement dated as of even
date herewith; and
WHEREAS, pursuant to such agreement,
Purchaser has agreed to acquire Warrants (as defined
below) from the Corporation; and
WHEREAS, it is a condition precedent to the
Purchaser's obligations under such agreement that the
parties hereto enter into this Agreement; and
WHEREAS the Corporation wishes to grant
registration rights for shares of the Corporation's stock
acquirable by the Purchaser pursuant to the exercise of
the Warrants;
NOW, THEREFORE, in consideration of the
premises and mutual covenants herein contained, the
parties hereby agree as follows:
1. Definitions
As used herein, the following terms have the
following respective meanings:
"Common Stock" means the Common Stock, par
value $.0001 per share, of the Corporation.
"Covered Shares" means the Registrable Securities
of the Selling Holders included in a registration statement
pursuant to the terms hereof.
"Demand Registration" has the meaning given to
that term in Section 2 hereof.
"Exchange Act" means the Securities and
Exchange Act of 1934, as amended.
"Holders" means, collectively, the holders of
Registrable Securities granted registration rights pursuant
to this Agreement. A person shall be deemed to be a
Holder whenever person owns Registrable Securities or
has the right to acquire Registrable Securities, whether or
not such acquisition has actually been effected and
disregarding any legal restrictions upon the exercise of
such right.
"Indemnified Party" has the meaning given to that
term in Section 6 hereof.
"Indemnifying Party" has the meaning given to that
term in Section 6 hereof.
"Majority Selling Holders" means the Selling
Holders holding a majority of the Covered Shares.
"Purchase Agreement" means the Note and
Warrant Purchase Agreement, dated as of October 31,
1996 among the Corporation, the Purchaser, FIND/SVP
Internet Services, Inc., a Delaware corporation and
Find/SVP Published Products, Inc., a Delaware
corporation.
"Registrable Securities" means the Warrant Shares
and any Common Stock issued or issuable with respect to
the Warrant Shares by way of a stock dividend or stock
split or in connection with a combination of shares,
recapitalization, merger, consolidation or other
reorganization. Any Registrable Security will cease to be
a Registrable Security when (i) a registration statement
covering such Registrable Security has been declared
effective by the SEC and it has been disposed of pursuant
to such effective registration statement, (ii) it is sold
under circumstances in which all of the applicable
conditions of Rule 144 are met, or (iii) it has been
otherwise transferred, the Corporation has delivered a
new certificate or other evidence of ownership for it not
bearing any restrictive legend citing the absence of
registration thereof and it may be resold without
subsequent registration under the Securities Act.
"Registration Expenses" has the meaning given to
that term in Section 12 hereof.
"Requesting Holder" has the meaning given to that
term in Section 2 hereof.
"SEC" means the U.S Securities and Exchange
Commission.
"Securities Act" means the Securities Act of 1933,
as amended.
"Selling Holder" means a Holder who is selling
Registrable Securities pursuant to a registration statement
in accordance with the terms hereof.
"Warrants" mean any Warrants issued by the
Corporation pursuant to the Purchase Agreement.
"Warrant Shares" mean shares of Common Stock
issued or issuable upon exercise of the Warrants.
All capitalized terms used herein that are not
otherwise defined herein shall have the meanings ascribed
thereto in the Purchase Agreement.
<PAGE>
2. Demand Registration.
(a) Subject to the provisions hereof, at any time on
or after the date hereof, the Holder or Holders of a
majority (by number of shares of Warrant Shares) of the
Registrable Securities (the "Requesting Holders") may
make a written request to the Corporation for registration
with the SEC under and in accordance with the provisions
of the Securities Act of all or part of such Requesting
Holders' Registrable Securities (a "Demand
Registration"); provided, that (x) the Corporation need not
effect the Demand Registration unless the sale of
Registrable Securities held by the Requesting Holders
pursuant to the Demand Registration will result in receipt
by such Requesting Holders of at least $1,000,000 in
aggregate net proceeds, and (y) the Corporation may
defer the Demand Registration for a single period not to
exceed 180 days, if the Board of Directors of the
Corporation determines in the exercise of its reasonable
judgment that due to a pending or contemplated
acquisition, disposition or public offering it would be
inadvisable to effect the Demand Registration at such
time. Within 10 days after receipt of the request for a
Demand Registration, the Corporation will serve written
notice (the "Notice") of such registration request to all
Holders of Registrable Securities. Subject to Section 2(d)
below, the Corporation will include in any Demand
Registration all Registrable Securities of the Holders for
which the Corporation has received written requests for
inclusion therein from such Holder within 15 business
days after the receipt by the applicable Holder of the
Notice. All requests for the sale of Registrable Securities
in any Demand Registration made pursuant to this Section
2(a) will specify the aggregate number of the Registrable
Securities to be registered.
(b) Unless the Demand Registration is effected by
an offering on a continuous or delayed basis under Rule
415 or any successor rule under the Securities Act, a
Demand Registration shall be effected pursuant to a firm
commitment underwritten registration and offering, the
managing underwriter of which shall be a
nationally-recognized investment banking firm named by
the Majority Selling Holders and reasonably acceptable to
the Corporation. The Corporation agrees that the firm of
Furman Selz Inc. is acceptable to the Corporation.
(c) The Holders shall be entitled to no more than
one Demand Registration, and the expenses (including the
reasonable fees and expenses of one counsel for the
Holders in accordance with Section 12) thereof shall be
borne by the Corporation and Holders as set forth in
Section 12. A Demand Registration will not be counted as
a Demand Registration hereunder until such Demand
Registration has been declared effective (and Section
(a)(3) of Rule 430A under the Securities Act shall have
been complied with, if applicable) and maintained
continuously effective for a period (i) in the case of an
underwritten offering, of at least six months or such
shorter period until all Registrable Securities included
therein have been sold in accordance with such Demand
Registration or (ii) in the case of an offering on a
continuous or delayed basis, such period until all
Registrable Securities included therein have been sold in
accordance with such Demand Registration; provided,
however, if a Demand Registration is withdrawn prior to
effectiveness thereof at the request of the holders of a
majority of the Registrable Securities included therein due
to reasons other than material adverse changes in the
Corporation's condition, financial or otherwise, since the
written request for the Demand Registration was delivered
to the Corporation, the Demand Registration will be
counted hereunder unless such Holders agree to pay the
expenses incurred by the Corporation in connection
therewith.
(d) If the managing underwriter of a Demand
Registration advises the Corporation in writing (with a
copy to the Requesting Holders and each other Holder
requesting inclusion of Registrable Securities therein) that,
in its opinion, the number of Registrable Securities
requested to be included in the Demand Registration
exceeds the number which can be sold in such offering,
then the Corporation will include in such registration only
the number of Registrable Securities recommended by the
managing underwriter, selected in the following order of
priority: (i) first, the Registrable Securities that the
Requesting Holders have requested to be included in such
registration (pro rata according to the Registrable
Securities proposed to be included in the registration by
such Requesting Holders); (ii) second, Registrable
Securities that other Holders have requested to be
included in such registration (pro rata according to the
Registrable Securities proposed to be included in the
registration by such other Holders); and (iii) third,
securities held by all other parties.
3. Piggy-Back Registration
(a) Subject to the provisions of this Section 3, if
the Corporation at any time proposes to register any of its
equity securities (as defined in the Exchange Act) under
the Securities Act, whether or not for sale for its own
account (other than pursuant to Section 2 hereof), and the
registration form to be used may be used for the
registration of Registrable Securities, the Corporation
each such time will give written notice of such proposed
filing to the Holders as soon as practicable (but in no
event less than ten days before the anticipated filing date),
and such notice shall offer the Holder the opportunity to
include such number of Registrable Securities in the
registration as the Holder may request.
(b) The Corporation shall use its best efforts to
cause the managing underwriter or underwriters of a
proposed underwritten offering to permit the Registrable
Securities requested to be included in the registration
statement for such offering on the same terms and
conditions as any similar securities of the Corporation
included therein. Notwithstanding the foregoing, if the
managing underwriter of such registration advises the
Corporation in writing (with a copy to the Requesting
Holders and each other Holder requesting inclusion of
Registrable Securities therein) that, in its opinion, the
number of Registrable Securities requested to be included
in the registration exceeds the number which can be sold
in such offering, then the Corporation will include in such
registration only the number of Registrable Securities
recommended by the managing underwriter, selected in
the following order of priority: (i) first, the securities that
the Corporation intends to be included in such
registration; (ii) second, Registrable Securities that
Holders have requested to be included in such registration
(pro rata according to the Registrable Securities proposed
to be included in the registration by such Holders); and
(iii) third, securities held by all other parties.
4. Holdback Agreements
(a) Restrictions on Public Sale by Holder of
Registrable Securities. Each Holder agrees not to effect
any public sale or distribution of Common Stock,
including a sale pursuant to Rule 144, during the 10 days
prior to, and during the 90-day period beginning on, the
effective date of any registration statement filed pursuant
hereto (except as part of such registration), if and to the
extent requested by the Corporation in the case of a
non-underwritten public offering or if and to the extent
requested by the managing underwriter or underwriters in
the case of an underwritten public offering.
(b) Restrictions on Public Sale by the Corporation
and Others. The Corporation agrees (i) not to effect any
public sale or distribution of any Common Stock (other
than pursuant to a registration statement on Form S-8 or
any successor form), during the 14 days before, and
during the 90-day period beginning on, the effective date
of any registration statement filed hereunder (except as
part of such registration statement); and (ii) that any
agreement entered into after the date of this Agreement
pursuant to which the Corporation issues or agrees to
issue any privately placed securities shall contain a
provision under which the holders of such securities agree
not to effect any public sale or distribution of any such
securities during the periods described in (i) above, in
each case including a sale pursuant to Rule 144; provided,
however, that the provisions of this paragraph (b) shall
not prevent the conversion or exchange of any securities
pursuant to their terms into or for other securities.
5. Registration Procedures.
Whenever the Holders have requested that any
Registrable Securities be registered pursuant to Section 2
or Section 3 hereof, the Corporation will use its best
efforts to effect the registration of such Registrable
Securities in accordance with the intended method of
disposition thereof as promptly as practicable, and in
connection with any such request, the Corporation will as
expeditiously as possible (provided that nothing contained
herein prohibits the Corporation from abandoning a
registration in which Holders have requested to participate
pursuant to Section 3 hereof):
(a) prepare and file with the SEC a registration
statement (but in any event within 90 days after the end
of the period within which requests may be given to the
Corporation) on any form for which the Corporation then
qualifies or which counsel for the Corporation deems
appropriate and which form is available for the sale of the
Registrable Securities to be registered thereunder in
accordance with the intended method of distribution
thereof, and use its best efforts to cause such filed
registration statement to become effective; provided that
(i) before filing a registration statement or prospectus or
any amendments or supplements thereto, the Corporation
will furnish to one counsel selected by the Majority
Selling Holders copies of all such documents proposed to
be filed, which documents will be subject to the review of
such counsel, and (ii) that after the filing of the
registration statement, the Corporation will promptly
notify each Selling Holder of any stop order issued or, to
the knowledge of the Corporation, threatened by the SEC
and take all reasonable actions required to prevent the
entry of such stop order or to remove it if entered;
(b) prepare and file with the SEC such
amendments and supplements to the registration statement
and the prospectus used in connection therewith as may be
necessary to keep the registration statement effective for
a period which will terminate when all Covered Shares
have been sold (but not before the expiration of the
90-day period referred to in Section 4(3) of the Securities
Act and Rule 174 thereunder, if applicable, and not
longer than nine months after the effective date of such
registration statement) and comply with the provisions of
the Securities Act with respect to the disposition of all
Covered Shares during such period in accordance with the
intended methods of disposition by the Selling Holders
thereof set forth in the registration statement;
(c) furnish to each Selling Holder, before filing the
registration statement, if requested, copies of the
registration statement as proposed to be filed, and
thereafter furnish to such Selling Holder such number of
copies of the registration statement, each amendment and
supplement thereto (in each case including all exhibits
thereto), the prospectus included in the registration
statement (including each preliminary prospectus) and
such other document as such Selling Holder may
reasonably request in order to facilitate the disposition of
the Covered Shares owned by such Selling Holder;
(d) use its best efforts to register or qualify the
Covered Shares under such other securities or blue sky
laws of such jurisdictions in the United States as any
Selling Holder reasonably (in light of such Selling
Holder's intended plan of distribution) requests and do
any and all other acts and things which may be reasonably
necessary or advisable to enable such Selling Holder to
consummate the disposition in such jurisdictions of its
Covered Shares; provided that the Corporation 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 (d), (ii) subject itself to
taxation in any such jurisdiction or (iii) consent to general
service of process in any such jurisdiction;
(e) use its best efforts to cause the Covered Shares
to be registered with or approved by such other
governmental agencies or authorities as may be necessary
by virtue of the business and operations of the
Corporation to enable Selling Holders to consummate the
disposition of the Covered Shares owned by such Selling
Holders;
(f) notify each Selling Holder, at any time when a
prospectus relating to Covered Shares is required to be
delivered under the Securities Act, of the occurrence of
an event requiring the preparation of a supplement or
amendment to such prospectus so that, as thereafter
delivered to the purchasers of such Covered Shares, such
prospectus will not contain an 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 not misleading and promptly make available to
each Selling Holder any such supplement or amendment;
(g) enter into customary agreements (including an
underwriting agreement in customary form if the
distribution of the Covered Shares is otherwise to be
made in an underwritten offering) and take such other
actions as are reasonably required in order to expedite or
facilitate the disposition of such Covered Shares;
(h) make available for inspection by any Selling
Holder, any underwriter participating in any disposition
pursuant to such registration statement and any attorney,
accountant or other professional retained by any Selling
Holder or underwriter (collectively, the "Inspectors"), all
financial and other records, pertinent corporate documents
and properties of the Corporation (collectively, the
"Records") as are reasonably necessary to enable them to
exercise due diligence, and cause the Corporation's
officers, directors and employees to supply all information
reasonably requested by any such Inspectors in connection
with the registration statement. Each Selling Holder
further agrees that it will, upon learning that disclosure of
such Records is sought in a court of competent
jurisdiction, give notice to the Corporation and allow the
Corporation at its expense, to undertake appropriate
action to prevent disclosure of the Records deemed
confidential;
(i) in the event an offering of Registrable Securities
is pursuant to an underwritten offering, use its best efforts
to obtain a comfort letter or comfort letters from the
Corporation's independent public accountants in
customary form and covering such matters of the type
customarily covered by comfort letters as the managing
underwriter reasonably requests;
(j) otherwise use its best efforts to comply with all
applicable rules and regulations of the SEC, and make
generally available to its security holders, as soon as
reasonably practicable, an earnings statement satisfying
the provisions of Section 11(a) of the Securities Act and
covering a period of twelve months, beginning within
three months after the effective date of the registration
statement;
(k) use its best efforts to cause all Covered Shares
to be listed on each securities exchange on which similar
securities issued by the Corporation are then listed; and
(l) provide a transfer agent and registrar for all of
the Covered Shares not later than the effective date of
such registration statement.
In any underwritten public offering contemplated by
Section 2 or Section 3, the Holders shall be entitled to sell
their Warrants to the underwriters for exercise and sale of
the Warrant Shares issued upon the exercise thereof.
6. Indemnification.
(a) Indemnification by the Corporation. The
Corporation agrees to indemnify and hold harmless each
Selling Holder, its officers, directors, employees and
agents, and each Person, if any, who controls any Selling
Holder within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act against any and all
losses, claims, damages, liabilities and expenses
(including reasonable costs of investigation) arising out of
or based upon any untrue statement or alleged untrue
statement of a material fact contained in any registration
statement or prospectus relating to the Covered Shares, in
any amendment or supplement thereto, in any preliminary
prospectus, or arising out of or based upon any omission
or any alleged omission to state therein a material fact
required to be stated therein or necessary to make the
statements therein not misleading, except insofar as such
losses, claims, damages, liabilities or expenses arise out
of, or are based upon, any such untrue statement or
omission or allegation thereof based upon information
furnished in writing to the Corporation by such Selling
Holder or on such Selling Holder's behalf expressly for
use therein.
(b) Indemnification by the Selling Holders. Each
Selling Holder agrees to indemnify and hold harmless the
Corporation, its directors and officers and each party, if
any, who controls the Corporation within the meaning of
either Section 15 of the Securities Act or Section 20 of
the Exchange Act to the same extent as the foregoing
indemnity from the Corporation to each Selling Holder,
but only with respect to information furnished in writing
by such Selling Holder or on such Selling Holder's behalf
expressly for use in any registration statement or
prospectus relating to the Registrable Securities, or any
amendment or supplement thereto, or any preliminary
prospectus.
(c) Conduct of Indemnification Proceedings. If any
action or proceeding (including any governmental
investigation) is brought or asserted against any party
entitled to indemnification under clauses (a) or (b) above
(an "Indemnified Party") in respect of which indemnity
may be sought from any party who has agreed to provide
such indemnification (an "Indemnifying Party"), the
Indemnifying Party will assume the defense thereof,
including the employment of counsel reasonably
satisfactory to such Indemnified Party, and will assume
the payment of all expenses. Such Indemnified Party will
have the right to employ separate counsel in any such
action and to participate in the defense thereof, but the
fees and expenses of such counsel will be at the expense
of such Indemnified Party unless (i) the Indemnifying
Party has agreed to pay such fees and expenses or (ii) the
named parties to any such action or proceeding (including
any impleaded parties) include both such Indemnified
Party and the Indemnifying Party, and such Indemnified
Party has been advised by counsel that there is a conflict
of interest on the part of counsel employed by the
Indemnifying Party to represent such Indemnified Party
(in which case, if such Indemnified Party notifies the
Indemnifying Party in writing that it elects to employ
separate counsel at the expense of the Indemnifying Party,
the Indemnifying Party will not have the right to assume
the defense of such action or proceeding on behalf of such
Indemnified Party; it being understood, however, that the
Indemnifying Party will not, in connection with any one
such 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 liable for the fees and expenses of more
than one separate firm of attorneys (together with
appropriate local counsel) at any time for all such
Indemnified Parties). The Indemnifying Party will not be
liable for any settlement of any such action or proceeding
effected without its written consent, but if settled with its
written consent, or if there is a final judgment for the
plaintiff in any such action or proceeding, the
Indemnifying Party will indemnify and hold harmless such
Indemnified Parties from and against any loss or liability
(to the extent stated above) by reason of such settlement
or judgment.
7. Contribution
If for any reason the indemnification provided for
in the preceding Sections 6(a) and 6(b) is unavailable to
an Indemnified Party as contemplated by those sections,
then the Indemnifying Party will contribute to the amount
paid or payable by the Indemnified Party as a result of
such loss, claim, damage or liability in such proportion as
is appropriate to reflect not only the relative benefits
received by the Indemnified Party and the Indemnifying
Party, but also the relative fault of the Indemnified Party
and the Indemnifying Party, as well as any other relevant
equitable considerations, provided that no Selling Holder
will be required to contribute in an amount greater than
the difference between the net proceeds received by such
Selling Holder with respect to the sale of any Registrable
Securities and all amounts already contributed by such
Selling Holder with respect to such claims.
8. Participation in Underwritten Registrations
No Holder may participate in any underwritten
registration hereunder unless such Holder (a) agrees to
sell its securities on the basis provided in any
underwriting arrangements approved by the parties
entitled hereunder to approve such arrangements; and (b)
completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other
documents reasonably required under the terms of such
underwriting arrangements and this Agreement.
Notwithstanding the previous sentence, no Holder shall be
required to make any representations or warranties to, or
make any agreements with the Corporation or any
underwriter other than representations, warranties or
agreements regarding such Holder or such Holder's
intended method of distribution.
9. Rule 144
The Corporation covenants that it will file any
reports required to be filed by it under the Securities Act
and the Exchange Act so as to enable Holders to sell
Warrant Shares without registration under the Securities
Act within the limitation of the exemptions provided by
Rule 144. Upon the request of any Holder, the
Corporation will deliver to such Holder a written
statement as to whether it has complied with such
requirements.
10. Information
The Corporation may require each Selling Holder
to promptly furnish in writing to the Corporation such
information regarding the distribution of the Registrable
Securities as it may from time to time reasonably request
and such other information as may be legally required or
reasonably requested in connection with such registration.
11. Amended or Supplemented Prospectus
Each Selling Holder agrees that, upon receipt of
any notice from the Corporation of the happening of any
event of the kind described in Section 5(f) hereof, such
Selling Holder will forthwith discontinue disposition of
any Covered Shares pursuant to the registration statement
covering such Covered Shares until such Selling Holder's
receipt of the copies of the supplemented or amended
prospectus contemplated by Section 5(f) hereof, and, if so
directed by the Corporation, each Selling Holder will
deliver to the Corporation all copies, other than
permanent file copies then in such Selling Holder's
possession, all prospectuses covering such Covered Shares
at the time of receipt of such notice, and shall not effect
any transaction with respect to any Covered Shares except
pursuant to the supplemented or amended prospectus. In
the event the Corporation gives such notice, the
Corporation will extend the period during which such
registration statement will be maintained effective
(including the period referred to in Section 5(f) hereof) by
the number of days during the period from and including
the date of the giving of notice pursuant to Section 5(f)
hereof to the date when the Corporation makes available
to each Selling Holder a prospectus supplemented or
amended to conform with the requirements of Section 5(f)
hereof.
12. Registration Expenses
In connection with any registration statement filed
pursuant to Section 2 or Section 3 hereof, the Corporation
will pay all registration expenses (the "Registration
Expenses"), including but not limited to: (i) all
registration and filing fees, (ii) fees and expenses of
compliance with securities or blue sky laws, subject to the
provisions of Section 5(d), (including reasonable fees and
disbursements of counsel in connection with blue sky
qualifications of the Covered Shares), (iii) printing
expenses, (iv) internal expenses of the Corporation
(including, without limitation, all salaries and expenses of
its officers and employees performing legal or accounting
duties), (v) the fees and expenses incurred in connection
with the listing of the Covered Shares, (vi) fees and
disbursements of counsel for the Corporation and
customary fees and expenses for independent certified
public accountants retained by the Corporation (including
the expenses of any comfort letters or costs associated
with the delivery by independent certified public
accountants of a comfort letter or comfort letters
requested pursuant to Section 5(i) hereof), (vii) the fees
and expenses of any special experts retained by the
Corporation in connection with such registration, and
(viii) reasonable fees and expenses of one law firm
(designated by the Majority Selling Holders and
reasonably acceptable to the Corporation) acting as
counsel for the Selling Holders in connection with the
registration hereunder; provided, however, the
Corporation will not have any obligation to pay any
underwriting fees, discounts or commissions attributable
to the sale of Covered Shares (which will be the
obligation of the Selling Holders) or, except as otherwise
provided in clause (viii) above, any out-of-pocket
expenses of the Selling Holders (or any agents who
manage their accounts) or fees and disbursements of any
counsel for any underwriter in any underwritten offering.
13. Registration Rights.
The Corporation agrees that it will not enter into
any agreement or arrangements which would grant any
party a right to participate in any registration that is
superior to or in contravention of the rights to participate
set forth in this Agreement.
14. Parties in Interest.
(a) This Agreement is for the benefit of any Holder
irrespective of whether such Holder is a signatory to this
Agreement.
(b) All covenants and agreements contained in this
Agreement by or on behalf of either party hereto shall
bind and inure to the benefit of the respective successors
and assigns of such party hereto, whether so expressed or
not, including subsequent Holders of Registrable
Securities.
15. Notices.
All notices, requests, consents and other
communications hereunder shall be in writing and shall be
mailed by first-class registered mail, postage prepaid, or
sent by recognized courier service addressed as follows:
(a) if to the Corporation, at
625 Avenue of the Americas
New York, NY 10011
<PAGE>
with a copy to:
Breslow & Walker
875 Third Avenue
New York, NY 10022
Attention: Howard S. Breslow, Esq.
and after January 1, 1997
767 Third Avenue
New York, NY 10111
(b) if to Furman Selz at:
230 Park Avenue
New York, NY 10169
Attention: Brian P. Friedman
with a copy to:
Dechert Price & Rhoads
4000 Bell Atlantic Tower
1717 Arch Street
Philadelphia, PA 19103
Attention: Carmen J. Romano, Esq.
(c) if to any Holder, to such Holder at
its address appearing on the records of the
Corporation;
or, in any such case, at such other address or addresses
as shall have been furnished in writing by such party to
the others.
16. LAW GOVERNING.
THIS AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK.
17. Entire Agreement.
This Agreement constitutes the entire Agreement
of the parties with respect to the subject mater hereof and
may not be modified or amended except in writing.
18. Counterparts.
This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original,
but all of which together constitute one and the same
instrument.<PAGE>
IN WITNESS WHEREOF, the undersigned have
executed this Agreement as of the day and year first
above written.
By:
FURMAN SELZ SBIC, L.P.
By:
