<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
----------------------------------
Washington, D.C. 20549
----------------------
SCHEDULE 13D
------------
Under the Securities Exchange Act of 1934
-----------------------------------------
(Amendment No. )*
-----------------
AFGL INTERNATIONAL, INC.
------------------------
(Name of Issuer)
Common Stock, Par Value $0.01 Per Share
---------------------------------------
(Title of Class of Securities)
000946103
---------
(CUSIP Number)
Mr. William Austin
212-446-1930
Internationale Nederlanden (U.S.) Capital Corporation
135 East 57th Street
New York, New York 10022
------------------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
Copy to:
Walter W. Driver, Jr.
King & Spalding
191 Peachtree Street, N.E.
Atlanta, Georgia 30303
May 31, 1996
------------
(Date of Event Which Requires
Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box: / /
<PAGE> 2
Check the following box if a fee is being paid with the Statement. / X / (A
fee is not required only if the reporting person (1) has a previous statement
on file reporting beneficial ownership of more than five percent of the class
of securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7.)
NOTE: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are to
be sent.
* The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities,
and for any subsequent amendment containing information which would alter
disclosure provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 (the "Act") or otherwise subject to the liabilities of that section
of the Act but shall be subject to all other provisions of the Act (however,
see the Notes).
(Continued on following pages)
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CUSIP NO. 000946103
1. NAME OF REPORTING PERSON
S.S. OR IRS IDENTIFICATION NO. OF ABOVE PERSON
Internationale Nederlanden (U.S.) Capital Corporation
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) / X /
3. SEC USE ONLY
4. SOURCE OF FUNDS*
WC
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) / /
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
NUMBER OF 7. SOLE VOTING POWER 575,000
SHARES
BENEFICIALLY 8. SHARED VOTING POWER -0-
OWNED BY
EACH 9. SOLE DISPOSITIVE POWER 575,000
REPORTING
PERSON
WITH 10. SHARED DISPOSITIVE POWER -0-
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
575,000
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* / /
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
11.74%
<PAGE> 4
14. TYPE OF REPORTING PERSON*
CO
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION
<PAGE> 5
STATEMENT PURSUANT TO RULE 13d-1
OF THE
GENERAL RULES AND REGULATIONS
UNDER THE
SECURITIES EXCHANGE ACT OF 1934
Item 1. Security and Issuer
The class of equity securities to which this Statement on Schedule 13D
relates is the common stock, par value $0.01 per share (the "Common Stock"), of
AFGL International, Inc. (the "Issuer"), a Nevada corporation, with its
principal executive offices located at 850 Third Avenue, 11th Floor, New York,
New York 10002. Internationale Nederlanden (U.S.) Capital Corporation
("Holder"), a Delaware corporation, has entered into a Credit Agreement with
the Issuer, described in Item 6. Simultaneously with entering into the Credit
Agreement with the Issuer, the Holder purchased warrants ("Warrants")
exercisable for 575,000 shares of Series E Convertible Preferred Stock, par
value $0.001 per share ("Series E Preferred Stock") which shares of Series E
Preferred Stock are convertible into 575,000 shares of Common Stock of the
Issuer, as described in Item 6.
Item 2. Identity and Background
This statement is being filed on behalf of Internationale Nederlanden
(U.S.) Capital Corporation, a Delaware corporation. Holder is engaged
principally in the lending and financial services business. The principal
place of business and principal office of Holder is located at 135 East 57th
Street, New York, New York 10022.
Holder is a wholly owned subsidiary of Internationale Nederlanden (U.S.)
Capital Holdings Corporation ("U.S. Holdings"), a holding company with
subsidiaries engaged principally in the financial services business. U.S.
Holdings is organized under the laws of the State of Delaware and its principal
executive office is located at 135 East 57th Street, New York, New York 10022.
U.S. Holdings is a wholly owned subsidiary of ING Bank N.V. ("INB"). INB
is organized under the laws of The Netherlands and has its principal executive
offices at De Amesterdamse Poort, 1102 MG, Amsterdam Zuid - Oost, Postbus 1800,
1000 AV, Amsterdam, The Netherlands. INB is engaged principally in the
financial services business.
INB is a wholly owned subsidiary of ING Groep N.V. ("ING"), a holding
company organized under the laws of The Netherlands with subsidiaries engaged
principally in the financial services business. ING's principal executive
office is located at Strawinskylaan 2631, Postbus 810, 1000 AV Amsterdam, The
Netherlands.
<PAGE> 6
Schedule 1 attached hereto and incorporated herein by reference sets forth
certain additional information with respect to each executive officer and
director of (i) Holder, (ii) U.S. Holdings, (iii) INB and (iv) ING.
During the last five years, none of (i) Holder, (ii) U.S. Holdings, (iii)
INB, (iv) ING and, (v) to the best knowledge of Holder, the persons identified
in Schedule 1, has been (a) convicted in a criminal proceeding (excluding
traffic violations or similar misdemeanors) or (b) a party to a civil
proceeding of a judicial or administrative body of competent jurisdiction and
as a result of such proceeding was or is subject to a judgment, decree or final
order enjoining future violations of, or prohibiting or mandating activities
subject to, federal or state securities laws or finding any violations with
respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration.
The funds required for the loan to the Issuer pursuant to the Credit
Agreement and for the purchase of the Warrants of the Issuer have been provided
from the working capital of the Holder. It is anticipated that the exercise
price of the Warrants will be paid from the working capital of the Holder.
Item 4. Purpose of Transaction.
The purpose of the transaction, described in Item 6, was to provide an
inducement to Holder for entering into the Credit Agreement and providing
certain loans to Issuer, as well as for general investment purposes. Except as
set forth above and in Item 6 and the exhibits hereto, Holder has no plans or
proposals relating to any matters specified in paragraphs (a) through (j) of
Item 4 of Schedule 13D. However, Holder reserves the right to adopt such plans
or proposals in the future, subject to applicable regulatory requirements, if
any.
Item 5. Interest in Securities of the Issuer.
(a) Holder may be deemed to own beneficially (as that term is defined in
Rule 13d-3 ("Rule 13d-3") under the Act) the shares of Common Stock of the
Issuer which it has a right to acquire pursuant to the exercise of the Warrants
for Series E Preferred Stock, and conversion of the Series E Preferred Stock
into Common Stock. According to the Issuer there were 4,899,592 shares of
Common Stock outstanding as of May 31, 1996. Based on such number and assuming
the exercise of the Warrants in full, the Common Stock that Holder may be
deemed to own beneficially (as the term is defined in Rule 13d-3) represents
approximately 11.74% of the outstanding Common Stock. Except as described
herein, none of (i) Holder, (ii) U.S. Holdings, (iii) INB, (iv) ING and (v) to
the best knowledge of Holder, the persons identified in Schedule 1 hereto,
presently beneficially own any Common Stock.
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(b) Upon of the Warrants and subsequent conversion of Series E Preferred
Stock, Holder will have sole power to vote or to direct the vote of, and to
dispose or to direct the disposition of, the Common Stock which Holder may be
deemed to own beneficially (as the term is defined in Rule 13d-3).
(c) Except as indicated herein, no transactions in the shares of Common
Stock have been effected by (i) Holder, (ii) U.S. Holdings, (iii) INB, (iv) ING
or, (v) to the best knowledge of Holder, by any of the persons listed on
Schedule 1 hereto, during the past 60 days.
(d) No other person is known to have the right to receive or the power to
direct the receipt of dividends from, or the proceeds from the sale of, the
securities described above.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect
to Securities of the Issuer.
On May 31, 1996, Holder, as agent for various lenders, entered into a
credit agreement ("Credit Agreement") with the Issuer, as the borrower,
providing for (i) a term loan in the principal amount of Nine Million Dollars
($9,000,000) ("Term Loan"); and (ii) a revolving loan commitment in an
aggregate amount of up to Six Million Dollars ($6,000,000).
Simultaneously with entering into the Credit Agreement, Holder purchased
Warrants exercisable, at an exercise price of $0.02 per Warrant Share, for
575,000 shares of Series E Preferred Stock. The Series E Preferred Stock is
convertible, at the rate of one to one, in whole or in part at any time into
Common Stock of the Issuer at the option of the Holder. In certain
circumstances the Holder has a right to require the Issuer to repurchase the
Warrant Securities (as defined in the Warrant Purchase Agreement). These
circumstances include a repurchase of the entire amount of the Warrant
Securities upon an Event of Default (as defined in the Credit Agreement) and a
portion of the Warrant Securities (the portion determined in accordance with
Section 19 of the Warrant Purchase Agreement) in the event (i) any
representation or warranty of the Issuer under any of the documents relating to
the Credit Agreement is incorrect when made in any material respect; (ii) the
Issuer defaults in performance and observance of its obligations under the
Warrant Documents; (iii) of a merger or consolidation of the Issuer with or
into any other person, except certain permitted mergers; (iv) of a Change of
Control (as defined in the Warrant Purchase Agreement); or, (v) of a
refinancing under certain circumstances.
On May 31, 1996, Holder and the Issuer also entered into a registration
rights agreement ("Registration Rights Agreement") providing for the
registration, under certain circumstances, of Holder's Common Stock issuable
upon conversion of Series E Preferred Stock.
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The description of the transactions contained herein is qualified in its
entirety by reference to the Credit Agreement, the Warrant Purchase Agreement
and the Registration Rights Agreement, and the letter agreement between AFGL
International, Inc. and Internationale Nederlanden (U.S.) Capital Corporation
dated May 31, 1996, which are attached as Exhibits to this statement on
Schedule 13D.
Item 7. Material to be filed as Exhibits.
1 Credit Agreement dated as of May 31, 1996, among AFGL International,
Inc., as the Borrower, Various Lenders and Internationale Nederlanden
(U.S.) Capital Corporation as the Agent for the Lenders.
2 Warrant Purchase Agreement Between AFGL International, Inc. and
Internationale Nederlanden (U.S.) Capital Corporation, Dated as of May 31,
1996.
3 Registration Rights Agreement between AFGL International, Inc. and
Internationale Nederlanden (U.S.) Capital Corporation, Dated as of May 31,
1996.
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SIGNATURES
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: June 6, 1996
INTERNATIONALE NEDERLANDEN (U.S.)
CAPITAL CORPORATION
By: /s/ Teresa Ellenson
------------------------------
Name: Teresa Ellenson
Title: Vice President
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SCHEDULE 1
Set forth below is the name and position of each of the executive officers
and directors of (i) Holder, (ii) U.S. Holdings, (iii) INB and (iv) ING.
Except as otherwise indicated, the principal occupation of each person
listed below is as a Senior Officer of Holder, U.S. Holdings, INB and/or ING,
as the case may be. Unless otherwise indicated, each person listed below is a
citizen of The Netherlands.
The business address of each person at Holder and U.S. Holdings is 135
East 57th Street, New York, New York 10022. The business address of each
person at INB is De Amsterdamse Poort, 1102 MG, Amsterdam Zuid - Oost, Postbus
1800, 1000 AV, Amsterdam, The Netherlands. The business address of each person
at ING is Strawinskylaan 2631, Postbus 810, 1000 AV Amsterdam, The Netherlands.
INTERNATIONALE NEDERLANDEN (U.S.) CAPITAL CORPORATION
Executive Officers
Name Position
- ---- --------
L.C. Grijns Chairman
H.D. Bartges President
(U.S.)
Directors
- ---------
Principal Occupation
Name (if other than as indicated above)
- ---- ----------------------------------
L.C. Grijns Chairman
H.D. Bartges President
(U.S.)
J.C. Gray Treasurer Senior Managing Director of Holder
(U.S.)
Bart Staal
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INTERNATIONALE NEDERLANDEN (U.S.) CAPITAL HOLDINGS CORPORATION
Executive Officers
- ------------------
Name Position
- ---- --------
L.C. Grijns Chairman
H.D. Bartges President
(U.S.)
Directors
- ---------
Principal Occupation
Name (if other than as indicated above)
- ---- ----------------------------------
L.C. Grijns,
Chairman
J.C. Gray
(U.S.)
H.D. Bartges
(U.S.)
H.H. Idzerda
C. Maas
Bart Staal
ING BANK N.V.
Executive Officers
- ------------------
Name Position
- ---- --------
G.J.A. van der Lugt Chairman
J.H.M. Lindenbergh Member
C. Maas Member
M. Minderhoud Member
<PAGE> 12
Directors
- ---------
Principal Occupation
Name (if other than as indicated above)
- ---- ----------------------------------
J. W. Berghuis Vice Chairman, Executive Board, Koninklijke
Pakhoed N.V.
J. Kamminga Chairman of the Board, MKB Nederland; director of
Makelaarskantoor J. Kamminga & Zonen B.V.
O.H.S. van Royen Retired
G. Verhagen Retired
P.F. van der Heijden
ING GROUP N.V.
Executive Officers
- ------------------
Name Position
- ---- --------
A.G. Jacobs Chairman
G.J.A. van der Lugt Vice Chairman
J.H. Holsboer Member
H. Huizinga Member
E. Kist Member
J.H.M. Lindenbergh Member
C. Maas Member
M. Minderhoud Member
Directors
- ---------
Principal Occupation
Name (if other than as indicated above)
- ---- --------------------------------
J.B. Erbe, Retired
Chairman
L.A.A. van den Berghe Professor at Erasmus University of Rotterdam,
(Belgium) The Netherlands (Economics and management of
insurance companies)
<PAGE> 13
J.W. Berghuis Vice Chairman, Executive Board, Koninklijke
Pakhoed N.V.
J. Kamminga Chairman of the Board, MKB Nederland; director
of Makelaarskantoor J. Kamminga & Zonen B.V.
O.H.A. van Royen Retired
J.J. van Rijn Retired
G. Verhagen Retired
Vice Chairman
P.F. van der Heijden
M. Ververs Chairman of Executive Board, Wolters Kluwer N.V.
Vice Chairman
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EXHIBIT INDEX
Exhibit Description
- ------- -----------
1 Credit Agreement dated May 31, 1996, among AFGL International,
Inc., as the Borrower, Various Lenders and Internationale
Nederlanden (U.S.) Capital Corporation, as the Agent for the
Lenders.
2 Warrant Purchase Agreement between AFGL International, Inc. and
Internationale Nederlanden (U.S.) Capital Corporation, Dated
May 31, 1996.
3 Registration Rights Agreement between AFGL International, Inc. and
Internationale Nederlanden (U.S.) Capital Corporation, Dated
May 31, 1996.
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EXHIBIT 1
- --------------------------------------------------------------------------------
CREDIT AGREEMENT
Dated as of May 31, 1996
by and among
AFGL INTERNATIONAL, INC.
As Borrower,
VARIOUS LENDERS
and
INTERNATIONALE NEDERLANDEN (U.S.) CAPITAL CORPORATION,
as Agent for the Lenders
- -------------------------------------------------------------------------------
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ARTICLE 1. DEFINITIONS ....................................................................................... 1
SECTION 1.1. Defined Terms ..................................................................... 1
SECTION 1.2. Use of Defined Terms ............................................................. 26
SECTION 1.3. Cross-References ................................................................. 27
SECTION 1.4. Accounting and Financial Determinations ........................................... 27
ARTICLE 2. COMMITMENTS ....................................................................................... 27
SECTION 2.1. Term Loan and Revolving Loan Commitment ........................................... 27
SECTION 2.1.1. Term Loan ......................................................................... 27
SECTION 2.1.2. Revolving Loan Commitment ......................................................... 27
SECTION 2.1.3. Limitations on Revolving Credit Commitment ....................................... 27
SECTION 2.2. Changes in Advance Rations; Establishment of Reserves ............................. 27
SECTION 2.2.2 Establishment of Reserves ........................................................ 27
SECTION 2.2.1. Advance Ratios ................................................................... 28
SECTION 2.3. Commitment Fee .................................................................... 28
SECTION 2.4. Increased Costs; Capital Adequacy ................................................. 28
ARTICLE 3. LOANS AND NOTES ................................................................................... 30
SECTION 3.1. Borrowing Procedure ............................................................... 30
SECTION 3.2. Notes ............................................................................. 30
SECTION 3.3. Principal Payments ................................................................ 31
SECTION 3.3.1. Repayments and Prepayments ........................................................ 31
SECTION 3.3.2. Application ....................................................................... 33
SECTION 3.3.3. Revolving Loans on Borrower's Behalf .............................................. 33
SECTION 3.3.4. Reduction of Revolving Loan Commitment ............................................ 33
SECTION 3.4. Interest .......................................................................... 34
SECTION 3.4.1. Term Loan Rate ................................................................... 34
SECTION 3.4.2. Revolving Loan Rate .............................................................. 34
SECTION 3.4.3. Continuation and Conversion Elections ............................................. 34
SECTION 3.4.4. Post-Default Rates ............................................................... 35
SECTION 3.4.5. Payment Dates .................................................................... 35
SECTION 3.4.6. Rate Determinations .............................................................. 36
SECTION 3.4.7. Limitation on Types of Loans ...................................................... 36
SECTION 3.4.8. Illegality ....................................................................... 36
SECTION 3.4.9. Treatment of Affected Loans ....................................................... 36
SECTION 3.4.10. Compensation ..................................................................... 37
SECTION 3.5. Taxes ............................................................................ 37
SECTION 3.6. Payments, Interest Rate Computations, Other
Computations, etc. ............................................................. 39
SECTION 3.7. Proration of Payments ............................................................. 39
SECTION 3.8. Setoff ........................................................................... 40
SECTION 3.9. Use of Proceeds ................................................................... 40
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ARTICLE 4. CONDITIONS TO LOANS .............................................................................. 41
SECTION 4.1. Initial Loan .................................................................... 41
SECTION 4.1.1. Resolutions, etc. ................................................................ 41
SECTION 4.1.2. Notes ........................................................................... 42
SECTION 4.1.3. Subsidiary Guaranty ............................................................. 42
SECTION 4.1.4. No Contest, etc. ................................................................ 42
SECTION 4.1.5. Certificate as to Completed Conditions,
Warranties, No Default, etc. ................................................. 42
SECTION 4.1.6. Opinions of Counsel ............................................................. 43
SECTION 4.1.7. Closing Fees, Expenses, etc. .................................................... 43
SECTION 4.1.8. Security Documents and Perfection ................................................ 43
SECTION 4.1.9. Employment Agreements; Compensation ............................................. 44
SECTION 4.1.10. Pension and Welfare Liabilities ................................................. 44
SECTION 4.1.11. Insurance ....................................................................... 44
SECTION 4.1.12. Key Man Insurance ............................................................... 45
SECTION 4.1.13. Financial Information, etc. ...................................................... 45
SECTION 4.1.14. Solvency, etc. .................................................................. 45
SECTION 4.1.15. Acquisition ..................................................................... 45
SECTION 4.1.16 Additional Equity ............................................................... 44
SECTION 4.1.17 Releases of Liens on Assets ...................................................... 44
SECTION 4.1.18 Review of the Borrower's Operations .............................................. 44
SECTION 4.1 19 Material Contracts ............................................................... 45
SECTION 4.1.20. Letter to Accountants ........................................................... 45
SECTION 4.1.21. Other Documents, Certificates, Etc ............................................... 47
SECTION 4.2All Loans ............................................................................ 45
SECTION 4.2.1. Compliance with Warranties, No Default, etc. ..................................... 47
SECTION 4.2.2. Borrowing Request, etc. .......................................................... 47
SECTION 4.2.3. Satisfactory Legal Form .......................................................... 48
SECTION 4.2.4. Margin Regulations ............................................................... 48
SECTION 4.2.5. Adverse Change ................................................................... 48
SECTION 4.2.6. Change in Law .................................................................... 48
ARTICLE 5. WARRANTIES, ETC. .............................................................................. 48
SECTION 5.1. Organization, Power, Authority, etc. ............................................. 49
SECTION 5.2. Due Authorization ............................................................... 49
SECTION 5.3. Validity, etc. ................................................................... 49
SECTION 5.4. Financial Information; Solvency ................................................. 49
SECTION 5.5. Material Adverse Change ......................................................... 50
SECTION 5.6. Absence of Default ............................................................... 51
SECTION 5.7. Litigation, Legislation, etc. .................................................... 51
SECTION 5.8. Regulations G, T, U and X ....................................................... 51
SECTION 5.9. Government Regulation ........................................................... 51
SECTION 5.10. Taxes ........................................................................... 51
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SECTION 5.11. Pension and Welfare Plans............................................................... 52
SECTION 5.12. Labor Controversies ................................................................... 53
SECTION 5.13. Ownership of Properties; Collateral ................................................... 54
SECTION 5.14. Intellectual Property .................................................................. 54
SECTION 5.15. Accuracy of Information ................................................................ 54
SECTION 5.16. Insurance .............................................................................. 55
SECTION 5.17. Certain Indebtedness ................................................................... 55
SECTION 5.18. Environmental Matters .................................................................. 55
SECTION 5.19. No Burdensome Agreements ............................................................... 55
SECTION 5.20. Consents ............................................................................... 56
SECTION 5.21. Contracts .............................................................................. 56
SECTION 5.22. Employment Agreements .................................................................. 56
SECTION 5.23. Condition of Property .................................................................. 56
SECTION 5.24. Subsidiaries ........................................................................... 56
SECTION 5.25. Acquisition Agreement .................................................................. 56
SECTION 5.26. Trade Relations ........................................................................ 57
ARTICLE 6.COVENANTS................................................................................................. 57
SECTION 6.1. Affirmative Covenants................................................................... 57
SECTION 6.1.1. Financial Information, etc. ............................................................ 57
SECTION 6.1.2. Maintenance of Corporate Existence, etc. ............................................... 59
SECTION 6.1.3. Foreign Qualification .................................................................. 59
SECTION 6.1.4. Payment of Taxes, etc. ................................................................. 59
SECTION 6.1.5. Insurance .............................................................................. 59
SECTION 6.1.6. Notice of Default, Litigation, etc. .................................................... 60
SECTION 6.1.7. Books and Records ...................................................................... 62
SECTION 6.1.8. Maintenance of Properties, Etc. ........................................................ 62
SECTION 6.1.9. Maintenance of Licenses and Permits .................................................... 62
SECTION 6.1.10. Employee Plans.......................................................................... 62
SECTION 6.1.11. Environmental Management................................................................ 62
SECTION 6.1.12. Compliance with Laws.................................................................... 62
SECTION 6.1.13. Interest Rate Protection ............................................................... 63
SECTION 6.1.14. Real Estate ............................................................................ 63
SECTION 6.1.15. Underwriting Offering .................................................................. 63
SECTION 6.1.16. Whitney Group .......................................................................... 63
SECTION 6.2. Negative Covenants ..................................................................... 63
SECTION 6.2.1. Business Activities .................................................................... 63
SECTION 6.2.2. Indebtedness ........................................................................... 64
SECTION 6.2.3. Liens .................................................................................. 65
SECTION 6.2.4. Financial Condition .................................................................... 66
SECTION 6.2.5. Capital ................................................................................ 68
SECTION 6.2.6. Lease .................................................................................. 68
SECTION 6.2.8. Restricted Payments, etc. ............................................................. 69
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SECTION 6.2.9. Take or Pay Contracts; Sale/Leasebacks ................................................. 70
SECTION 6.2.10. Consolidation, Merger, Subsidiaries, etc. ............................................. 70
SECTION 6.2.11. Asset Dispositions, etc. .............................................................. 70
SECTION 6.2.12. Modification of Organic Documents, ..................................................... 70
SECTION 6.2.13. Transactions with Affiliates ........................................................... 71
SECTION 6.2.14. Inconsistent Agreements ................................................................ 71
SECTION 6.2.15. Change in Accounting Method ............................................................ 71
SECTION 6.2.16. Change in Fiscal Year End .............................................................. 71
SECTION 6.2.17. Compliance with ERISA .................................................................. 71
SECTION 6.2.18. Limitation on Restrictions on Subsidiary Dividends ..................................... 71
SECTION 6.2.19. Whitney Group .......................................................................... 71
ARTICLE 7. EVENTS OF DEFAULT ...................................................................................... 72
SECTION 7.1. Events of Default ...................................................................... 72
SECTION 7.1.1. Non-Payment of Obligations ............................................................. 72
SECTION 7.1.2. Non-Performance of Certain Covenants ................................................... 72
SECTION 7.1.3. Defaults Under Other Loan Documents;
Non-Performance of Other Obligations .................................................. 72
SECTION 7.1.4. Bankruptcy, Insolvency, etc. .......................................................... 72
SECTION 7.1.5. Breach of Warranty ..................................................................... 73
SECTION 7.1.6. Default on Other Indebtedness, etc. .................................................... 73
SECTION 7.1.7. Failure of Valid, Perfected Security Interest .......................................... 74
SECTION 7.1.8. Employee Plans ......................................................................... 74
SECTION 7.1.9. Judgments .............................................................................. 74
SECTION 7.1.10. Cessation of Business; Dissolution ..................................................... 75
SECTION 7.2. Action if Bankruptcy ................................................................... 75
SECTION 7.3. Action if Other Event of Default ....................................................... 75
ARTICLE 8. THE AGENT .............................................................................................. 75
SECTION 8.1. Actions ................................................................................ 75
SECTION 8.2. Funding Reliance, etc. ................................................................. 76
SECTION 8.3. Exculpation ............................................................................ 77
SECTION 8.4. Successor .............................................................................. 77
SECTION 8.5. Loans by the Agent ..................................................................... 77
SECTION 8.6. Credit Decisions ...................................................................... 77
SECTION 8.7. Copies, etc. ........................................................................... 78
ARTICLE 9. MISCELLANEOUS .......................................................................................... 78
SECTION 9.1. Waivers, Amendments, etc. .............................................................. 78
SECTION 9.2. Notices ................................................................................ 79
SECTION 9.3. Costs and Expenses ..................................................................... 80
SECTION 9.4. Indemnification ........................................................................ 81
SECTION 9.5. Survival ............................................................................... 83
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SECTION 9.6. Severability .......................................................................... 83
SECTION 9.7. Headings .............................................................................. 83
SECTION 9.8. Counterparts, Effectiveness, etc. ..................................................... 83
SECTION 9.9. Governing Law; Entire Agreement ....................................................... 83
SECTION 9.10. Successors and Assigns ................................................................ 84
SECTION 9.11. Sale and Transfers, Participations, etc. ............................................. 85
SECTION 9.12. Other Transactions .................................................................... 87
SECTION 9.13. Confidentiality ....................................................................... 87
SECTION 9.14. Change in Accounting Principles ....................................................... 88
SECTION 9.15. Waiver of Jury Trial, Etc. ............................................................ 88
SECTION 9.16. Limitation of Liability ............................................................... 88
SECTION 9.17. Usury Savings Clause .................................................................. 89
</TABLE>
SCHEDULES AND EXHIBITS
- ----------------------
Schedule 1 - Disclosure Schedule
<TABLE>
<S> <C> <C>
Exhibit A - Form of Borrowing Request
Exhibit B - Form of Borrowing Base Certificate
Exhibit C - Form of Compliance Certificate
Exhibit D - Form of Continuation/Conversion Notice
Exhibit E-1 - Form of Revolving Note
Exhibit E-2 - Form of Term Note
Exhibit F - Form of Transfer Supplement
Exhibit G - Form of Acknowledgment of Interest Rate Contract Counterparty
</TABLE>
v
<PAGE> 21
CREDIT AGREEMENT
THIS CREDIT AGREEMENT, dated as of May 31, 1996, by and among AFGL
INTERNATIONAL, INC., a Nevada corporation, various lenders as are, or may from
time to time become, parties hereto, and INTERNATIONALE NEDERLANDEN (U.S.)
CAPITAL CORPORATION, a Delaware corporation, as Agent for the Lenders.
W I T N E S S E T H:
RECITALS.
A. The Borrower desires to obtain from the Lenders (i) a Term Loan in the
principal amount of Nine Million Dollars ($9,000,000), and (ii) a Revolving
Loan Commitment in an aggregate amount of up to Six Million Dollars
($6,000,000);
B. The Lenders are willing, on the terms and conditions set forth herein
to make the Term Loan and to extend the Revolving Loan Commitment; and
C. The Term Loan and the Revolving Loans will be used in the manner
described in Section 3.9 below;
NOW, THEREFORE, for good and valuable consideration, the receipt and legal
sufficiency of which are hereby acknowledged, the parties hereto, intending to
be legally bound, agree as follows:
ARTICLE 1.
DEFINITIONS
SECTION 1.1 Defined Terms. The following terms (whether or not
underscored) when used in this Agreement, including its preamble and recitals,
shall, except where the context otherwise requires, have the following meanings
(such meanings to be equally applicable to the singular and plural forms
thereof):
"Account" means any "account" (as such term is defined in Section 9-106 of
the UCC) of the Borrower or its Eligible Subsidiaries arising from the sale or
lease of goods or providing of services in the ordinary course of business.
"Account Debtor" means any Person who is or may become obligated to the
Borrower or its Eligible Subsidiaries under, with respect to, or on account of,
an Account.
<PAGE> 22
"Acquisition" means the acquisition by the Borrower of the "Companies
Stock" (as such term is defined in the Acquisition Agreement) in exchange for
the payment of the "Preliminary Purchase Price" and the "Additional Amount" (as
such terms are defined in the Acquisition Agreement) pursuant to the terms and
conditions of the Acquisition Agreement.
"Acquisition Agreement" means that certain Stock Purchase Agreement, dated
as of April 10, 1996, between the Borrower, Irene Cohen, CSA, CTS, and the
Sellers, as amended, modified or supplemented to the date hereof.
"Affiliate" of any Person means any other Person which, directly or
indirectly, controls or is controlled by or under common control with such
Person (excluding any trustee under, or any committee with responsibility for
administering, any Plan). A Person shall be deemed to be "controlled by" any
other Person if such other Person possesses, directly or indirectly, power (a)
to vote 5% or more of the securities having ordinary voting power for the
election of directors of such Person, or (b) to direct or cause the direction
of the management or policies of such Person whether by contract or otherwise;
provided that no Lender shall be deemed to constitute an Affiliate of the
Borrower.
"AFGL" means AFGL, Inc., a Delaware corporation which is a wholly-owned
Subsidiary of the Borrower.
"Agent" means ING as agent for the Lenders pursuant hereto, or such other
Person as shall have subsequently been appointed as the successor agent
pursuant to Section 8.4.
"Agreement" means, on any date, this Credit Agreement as originally in
effect on the Closing Date and as thereafter from time to time amended,
supplemented, amended and restated, extended or otherwise modified and in
effect.
"Applicable Lending Office" means, with respect to any Lender, the branch
or office of such Lender at which Loans of a certain type are maintained.
"Approved Acquisition Expenditures" means, in connection with any purchase
or other acquisition of all or substantially all of the assets or stock of any
Person (or of any operating division or unit thereof), the net consideration
paid in the form of a Cash Equivalent Investment in connection with such
purchase or acquisition; provided, that nothing contained in this definition
shall in any event be deemed a consent to any purchase or acquisition which is
otherwise prohibited under the terms of this Agreement or the other Loan
Documents unless such purchase or acquisition is consented to in writing by the
Required Lenders.
"Authorized Officer" means, relative to any Loan Party those officers of
such Loan Party whose signatures, incumbency and authority shall have been
certified to the Agent and the Lenders pursuant to Section 4.1.1.
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<PAGE> 23
"Base Rate Loans" means Loans, or portions thereof, interest rates on
which are determined on the basis of the ING Alternate Base Rate.
"Borrower" means AFGL International, Inc., a Nevada corporation.
"Borrowing" means the Loans or portions thereof of the same type and, in
the case of Eurodollar Loans, having the same Interest Period, in each case
made, converted or continued by the Lenders on the same Business Day pursuant
to the same Borrowing Request or Continuation/Conversion Notice in accordance
with Sections 3.1 or 3.4.3.
"Borrowing Request" means a loan request and certificate duly executed by
an Authorized Officer of the Borrower in the form of Exhibit A.
"Borrower Pledge Agreement" means the Stock and Notes Pledge Agreement,
dated as of the Closing Date, made by the Borrower in favor of the Agent, for
its benefit and the ratable benefit of the Lenders as originally in effect on
the Closing Date and as thereafter from time to time amended, supplemented,
amended and restated, extended or otherwise modified and in effect, pursuant to
which the Borrower shall pledge to the Agent as security for the Obligations
all of the issued and outstanding Stock of its direct Subsidiaries and all
promissory notes, other instruments and securities held by the Borrower
(including without limitation, the Subsidiary Notes).
"Borrower Trademark Assignment" means the Collateral Assignment and
Security Agreement (Trademarks), dated as of the Closing Date, made by the
Borrower in favor of the Agent, for its benefit and the ratable benefit of the
Lenders, as originally in effect on the Closing Date and as thereafter from
time to time amended, supplemented, amended and restated, extended or otherwise
modified and in effect, as originally in effect on the Closing Date and as
thereafter from time to time amended, supplemented, amended and restated,
extended or otherwise modified and in effect.
"Borrowing Base" means an amount equal to: (a) eighty-five percent (85%)
of Eligible Accounts, as the percentage set forth in this clause (a) may be
increased or decreased pursuant to Section 2.2.1 hereof, minus (b) reserves
established from time to time pursuant to Section 2.2.2 hereof.
"Borrowing Base Certificate" means a certificate of the chief executive,
accounting or financial Authorized Officer of the Borrower in the form of
Exhibit B attached hereto.
"Business Day" means:
(a) any day which is neither a Saturday or Sunday nor a legal holiday on
which banks are authorized or required to be closed in New York, New York; and
(b) relative to the making, continuing, prepaying or repaying of any
Eurodollar Loans, any day on which dealings in Dollars are carried on in the
London interbank market.
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<PAGE> 24
"Capitalized Lease Liabilities" means all monetary obligations of the
Borrower and its Subsidiaries under any leasing or similar arrangement which,
in accordance with GAAP, are or would be classified as capitalized leases.
"Cash Equivalent Investment" means, at any time:
(a) any direct obligation issued or guaranteed by the United States of
America or any agency or instrumentality thereof and backed by the full faith
and credit of the United States of America, or issued by any state or
political subdivision or public instrumentality thereof, (i) which has a
remaining maturity at the time of purchase of not more than one (1) year or
which is subject to a repurchase agreement with any Lender or any Eligible
Lending Institution exercisable within one (1) year from the time of purchase
so long as such direct obligation remains in the possession of the Borrower or
in the possession of any Lender and (ii) which, in the case of obligations of
any state or political subdivision or public instrumentality thereof, is rated
AA or better by Moody's Investors Service, Inc.;
(b) certificates of deposit, time deposits, demand deposits and bankers'
acceptances, having a remaining maturity at the time of purchase of not more
than one (1) year, issued by any Lender or by any Eligible Lending Institution;
(c) corporate obligations rated Prime-1 by Moody's Investors Service, Inc.
or A-1 by Standard & Poor's Corporation, having a remaining maturity at the
time of purchase of not more than one (1) year; and
(d) shares of funds registered under the Investment Company Act of 1940,
as amended, having assets of at least $100,000,000 which invest only in
obligations described above and which shares are rated by Moody's Investors
Service, Inc. or Standard & Poor's Corporation in one of the two highest rating
categories assigned by such agencies for obligations of such nature.
"Cash Flow" means, for any period, an amount equal to (without
duplication) the consolidated Net Income of the Borrower and its Subsidiaries,
plus depreciation, amortization of intangible assets and other non-cash charges
of the Borrower and its Subsidiaries, minus non-cash credits and revenues, plus
decreases in the Borrower's and its Subsidiaries' working capital (excluding
changes in cash, Cash Equivalent Investments and current maturities of
Indebtedness), minus increases in the Borrower's and its Subsidiaries' working
capital (excluding changes in cash, Cash Equivalent Investments and current
maturities of Indebtedness).
"Change in Control" means (i) the failure of Gary S. Goldstein to own at
least 85% of the Stock of the Borrower which he owns on the Closing Date,
provided, however, that any Stock of the Borrower sold or transferred to the
Borrower in satisfaction of the Goldstein Note shall not be considered for the
purposes of this clause (i), or (ii) the failure of either (A) Gary S.
Goldstein to be the Chief Executive Officer and President of the Borrower and
to be actively involved in the management of the Borrower and its Subsidiaries
or (B) any two of the following individuals to be
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<PAGE> 25
actively involved in the management of the Borrower and its Subsidiaries at any
time prior to the third anniversary of the Closing Date or, thereafter, at
least one of the following individuals to be actively involved in the
management of the Borrower and its Subsidiaries at any time after the Closing
Date: (1) Irene Cohen, (2) Michael List, and (3) Ron Wendlinger, (iii) the
acquisition by any Person or group of Persons of beneficial ownership of more
than 20% of the outstanding Stock of the Borrower (within the meaning of
Section 13(d) or 14(d) of the Securities and Exchange Act of 1934, as amended,
and the applicable rules and regulations thereunder); provided, however, that
this clause (iii) shall not apply to an underwriter(s) who acquires Stock of
the Borrower in connection with a public offering of Stock of the Borrower
which is being underwritten by such underwriter(s), or (iv) during any period
of 12 consecutive months (whether commencing before or after the Closing Date),
the failure of individuals who on the first day of such period were directors
of the Borrower (together with any replacement or additional directors who were
nominated or elected by a majority of directors then in office) to constitute a
majority of the Board of Directors of the Borrower.
"Charges" means all federal, state, county, city, municipal, local,
foreign or other governmental (including, without limitation, PBGC) (a) taxes
at the time due and payable and (b) levies, assessments, charges, liens, claims
or encumbrances upon or relating to (i) the Collateral, (ii) the Obligations,
(iii) the Borrower's and its Subsidiaries' employees, payroll, income or gross
receipts, (iv) the Borrower's and its Subsidiaries' ownership or use of their
assets, or (v) any other aspect of the Borrower's and its Subsidiaries'
business.
"Citigate Shares" means the 64,000 shares of stock of Citigate
Communications Group Limited, a limited liability company in England and Wales
owned by AFGL.
"Closing Date" the date of the funding of the Term Loan and the initial
Borrowing of the Revolving Loans.
"Closing Date Pro Forma Balance Sheet" means the pro forma balance sheet
of the Borrower as of the Closing Date, prepared by the Borrower based on the
financial statements described in clauses (a)(i) and (ii) of Section 5.4 and
after giving effect to the consummation of the transactions contemplated by
this Agreement to occur on the Closing Date, including the Acquisition and the
making of the Term Loan and the initial Borrowing of the Revolving Loans.
"Collateral" means all property and interests in property and proceeds
thereof now owned or hereafter acquired by the Borrower or any Subsidiary in or
upon which a Lien is granted to the Agent, for its benefit and the ratable
benefit of the Lenders, under any of the Loan Documents.
"Commitment" means, collectively, the Lenders' Revolving Loan Commitments
and Term Loan Commitments.
"Commitment Letter" means the Commitment Letter dated April 26, 1996
between the Borrower and ING.
-5-
<PAGE> 26
"Commonly Controlled Entity" means, with respect to any Person, an entity
or trade or business, whether or not incorporated, which is from time to time a
member of a controlled group or a group under common control with such Person
within the meaning of Sections 414(b), 414(c), 414(m) or 414(o) of the IRC or
Section 4001(a)(14) of ERISA. Unless otherwise indicated in this Agreement,
Commonly Controlled Entity shall refer to a Commonly Controlled Entity with
respect to the Borrower.
"Compliance Certificate" means a certificate duly executed by the chief
executive, operating, accounting or financial Authorized Officer of the
Borrower in the form of Exhibit C, together with such changes as the Required
Lenders may from time to time reasonably request through the Agent for purposes
of monitoring the Borrower's compliance herewith.
"Consolidated Capital Expenditures" means, for any period, without
duplication, the sum of (a) the gross dollar amount of additions during such
period to property, plant, equipment and other fixed assets of the Borrower and
its Subsidiaries, including those additions made in the ordinary course of
business, but excluding routine maintenance and repairs, plus (b) the aggregate
amount of Capitalized Lease Liabilities incurred during such period by the
Borrower and its Subsidiaries.
"Continuation/Conversion Notice" means a notice of continuation or
conversion and certificate duly executed by the chief executive, accounting or
financial Authorized Officer of the Borrower in the form of Exhibit D attached
hereto.
"Contract" means any agreement or agreements pursuant to or under which an
Account Debtor shall be obligated to pay for services rendered or merchandise
sold to any Person from time to time.
"Contractual Obligation" means, relative to any Person, any provision of
any security issued by such Person or of any Instrument or undertaking to which
such Person is a party or by which it or any of its property is bound.
"CSA" means Corporate Staffing Alternatives, Inc., a New York corporation
which upon consummation of the Acquisition Agreement will be a wholly-owned
Subsidiary of HCSS.
"CTS" means Certified Technical Staffing, Inc., a New York corporation
which upon consummation of the Acquisition Agreement will be a wholly-owned
Subsidiary of HCSS.
"Current Ratio" means, at any date, the ratio at such date of (a) current
assets at such date, to (b) current liabilities excluding current maturities of
the Obligations at such date, determined on a consolidated basis for the
Borrower and its Subsidiaries in accordance with GAAP.
"Default" means any Event of Default or any condition or event which,
after notice or lapse of time or both, would constitute an Event of Default.
-6-
<PAGE> 27
"Disclosure Schedule" means the Disclosure Schedule attached hereto as
Schedule 1, as it may be amended, supplemented or otherwise modified from time
to time by the Borrower with the consent of the Required Lenders as provided in
Section 4.3.2.
"Dollar" and the sign "$" mean lawful money of the United States.
"EBITDA" means, for any period, an amount equal to Net Income plus (to the
extent deducted in determining Net Income) interest expense, provisions for
income taxes, depreciation, amortization of intangible assets and other
non-cash charges, minus (to the extent included in determining Net Income)
non-cash credits and revenues, in each case for the Borrower and its
Subsidiaries on a consolidated basis.
"Eligible Accounts" means the net outstanding balance, less all finance
charges, late fees and other fees which are unearned, of all Accounts of the
Borrower and its Eligible Subsidiaries, provided that no Account shall be
deemed eligible if:
(a) any representation or warranty contained in this Agreement, the
Security Agreement or any of the other Loan Documents applicable either to
Accounts in general or to any such specific Account has been breached as of any
date made in any material respect with respect to such Account;
(b) fifty percent (50%) or more of the outstanding Accounts from the
Account Debtor are ineligible;
(c) the Account Debtor has (i) become insolvent or generally failed to
pay, or admitted in writing its inability to pay, debts as they become due,
(ii) applied for, consented to, or acquiesced in, the appointment of a trustee,
receiver, sequestrator or other custodian for such Account Debtor or any
property thereof or made a general assignment for the benefit of creditors,
(iii) in the absence of such application, consent or acquiescence, permitted or
suffered to exist the appointment of a trustee, receiver, sequestrator or other
custodian for such Account Debtor or for a substantial part of its property, or
(iv) permitted or suffered to exist the commencement of any bankruptcy,
reorganization, debt arrangement or other case or proceeding under any
bankruptcy or insolvency law or any dissolution, winding up or liquidation
proceeding in respect of such Account Debtor;
(d) such Account is billed on other than standard terms of payment;
(e) as of any date, such Account has remained unpaid for a period
exceeding 90 days after the due date of the invoice issued with respect
thereto;
(f) the sale represented by such Account is to an Account Debtor outside
the United States, unless the payment of such Account is backed by a letter of
credit denominated in Dollars issued or confirmed by a United States bank or a
foreign bank with an office located in the
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<PAGE> 28
United States, in each case acceptable to the Agent and on terms acceptable to
the Agent, and the Agent has received an assignment of the Borrower's or its
Eligible Subsidiary's rights under such letter of credit or acceptance or has
been irrevocably designated the payee of such letter of credit or acceptance;
(g) the Account Debtor is an Affiliate or employee of the Borrower or any
Subsidiary;
(h) the Account is subject to any set-off by the Account Debtor, in which
event such Account will be deemed ineligible to the extent of such set-off;
(i) the Account is denominated in other than Dollars or is payable outside
the United States;
(j) based on the customary credit decisions of the Agent, collection of
such Account is insecure for any reason or there is a reasonable probability
that such Account may not be paid provided that no such Account shall be
excluded unless the Agent shall have given to the Borrower not less than ten
(10) days prior written notice;
(k) the Account is subject to a material claim or dispute by the Account
Debtor;
(l) the Account is subject to any Lien whatsoever, other than Liens in
favor of the Agent, for its benefit and the ratable benefit of the Lenders;
(m) the Account is not evidenced by an invoice or other writing in form
reasonably acceptable to the Agent;
(n) the Account is evidenced by chattel paper or an instrument unless such
chattel paper or instrument is pledged to the Agent as security pursuant to the
Borrower Pledge Agreement or the Subsidiary Pledge Agreement;
(o) the Account or Accounts represent, individually or when aggregated
with all other outstanding Accounts of the same Account Debtor, (i) more than
fifteen percent (15%) of the net outstanding balance of all Eligible Accounts
of the Borrower and the Eligible Subsidiaries (on a consolidated basis) then
outstanding for all Account Debtors other than Merrill Lynch & Co. and
Affiliates or (ii) more than twenty percent (20%) of the net outstanding
balance of all Eligible Accounts of the Borrower and the Eligible Subsidiaries
(on a consolidated basis) then outstanding for Merrill Lynch & Co. and
Affiliates as Account Debtor;
(p) the Account or Accounts exceed any credit limit established by the
Borrower or its Eligible Subsidiary (which limit shall be reasonably
satisfactory to the Agent) for the Account Debtor based on the Borrower's
customary credit considerations, in which case such Account or Accounts will be
deemed ineligible to the extent of such excess;
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<PAGE> 29
(q) the Borrower or its Eligible Subsidiary, in order to be entitled to
collect such Account (or, if such Account is evidenced by multiple invoices,
the amount of such Account evidenced by any such invoice), is required to
perform any additional service for, or perform or incur any additional
obligation to, the Account Debtor in respect of such Account (or amount so
invoiced);
(r) the Account is an account of the United States government or any
agency or instrumentality of the United States, unless the Borrower or its
Subsidiary has complied with the requirements of the Federal Assignment of
Claims Act (31 U.S.C. 3727), or the Account is an account of any state
government or agency thereof unless the Borrower or its Eligible Subsidiary has
complied with any state assignment of claims or similar laws relative to the
assignment of such Account to and the right to receive payment thereof by, the
Agent, for its benefit and the ratable benefit of the Lenders;
(s) the Borrower or its Eligible Subsidiary, as the case may be, has not
submitted all necessary documentation or supplied all necessary information to
the Account debtor for payment of such Account or has not fulfilled all other
obligations in respect thereof, including verification of the eligibility of
the Account for payment by such Account Debtor;
(t) the Account or the Contract related thereto contravenes in any
material respect any laws, rules or regulations applicable thereto (including,
without limitation, laws, rules and regulations relating to usury, consumer
protection, truth-in-lending, fair credit billing, fair credit reporting, equal
credit opportunity, fair debt collection practices and privacy) or any party
related to such Contract is in violation of any such law, rule or regulation in
any material respect;
(u) the Account Debtor is located in the State of Minnesota or any other
state imposing conditions on the right of a foreign (out-of-state) creditor to
collect accounts receivable from Accounts Debtors located in such state, and
the Borrower or the Eligible Subsidiary has not satisfied such conditions for
the then current year;
(v) the Account has not been adjusted to reflect reimbursement policies of
the Account Debtor with respect thereto including, without limitation, any
capitation arrangement, fee schedule, discount formula, cost-based
reimbursement, or other adjustment or limitation to the usual charges; and
(w) the related Contract is not, or was not at the time of the services
giving rise to the Account, in full force and effect, such Contract does not
constitute the legal, valid and binding obligation of the Account Debtor
enforceable against such Account Debtor in accordance with its terms, or such
account was not created in accordance with the requirements of the Contract or
applicable Requirements of Law, including, without limitation, compliance with
any restrictions on fees or charges.
The determination by the Agent that any Account shall be deemed ineligible by
virtue of its being described by one of such categories shall not be deemed to
indicate that such Account may not also
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<PAGE> 30
be deemed ineligible by virtue of being described by any other such category or
to preclude the Agent from reclassifying such Account into such other category,
should the Account cease to be described by the first such category.
"Eligible Lending Institution" means a financial institution having a
branch or office in the United States and having capital and surplus and
undivided profits aggregating at least $100,000,000 and rated Prime-1 or better
by Moody's Investors Service, Inc. or A-1 or better by Standard & Poor's
Corporation.
"Eligible Subsidiaries" means, collectively, (a) AFGL, (b) Furash, (c)
Whitney Partners, (d) HCSS, (e) Irene Cohen, (f) CSA, (g) CTS, and (h) Headway
Personnel.
"Eligible Subsidiary" means any of the Eligible Subsidiaries.
"Environment" means soil, surface waters, ground waters, land, streams,
sediments, surface or subsurface strata and ambient air.
"Environmental Laws" means all federal, state, local and foreign laws or
regulations, codes, common law, consent agreements, orders, decrees, judgments
or injunctions issued, promulgated, approved or entered thereunder relating to
pollution or protection of the Environment, natural resource or occupational
health and safety.
"Environmental Liabilities and Costs" means all liabilities, obligations,
responsibilities, remedial actions, losses, damages, punitive damages,
consequential damages, treble damages, costs and expenses (including all
reasonable fees, disbursements and expenses of counsel, expert and consulting
fees and costs of investigation and feasibility studies), fines, penalties,
settlement costs, sanctions and interest incurred as a result of any claim or
demand, by any Person, whether based in contract, tort, implied or express
warranty, strict liability, criminal or civil statute, any Environmental Law,
permit, order, variance or agreement with a Governmental Authority or other
Person, arising from or related to the administration of any Environmental Law
or arising from environmental, health or safety conditions or a release or
threatened release resulting from the past, present or future operations of the
Borrower or its Subsidiaries or affecting any of their properties, or any
release or threatened release for which the Borrower or any of its Subsidiaries
is otherwise responsible under any Environmental Law.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and any successor statute of similar import, together with the
regulation thereunder, in each case as in effect from time to time. References
to sections of ERISA also refer to any successor sections.
"ERISA Insolvency" or "ERISA Insolvent" means, at any particular time, a
Multiemployer Pension Plan is insolvent within the meaning of Section 4245 of
ERISA.
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<PAGE> 31
"Eurodollar Base Rate" means, with respect to any Borrowing of Eurodollar
Loans for any Interest Period therefor, the rate per annum (rounded upwards, if
necessary, to the nearest 1/16 of 1%) which appears on Telerate Page 3750 for
Dollar deposits comparable to the amount of such Borrowing in the London
interbank market as of 11:00 a.m. London time (or as soon thereafter as
practicable) on the date two (2) Business Days prior to the first day of such
Interest Period having a term comparable to such Interest Period. If such
Telerate Page is unavailable, the "Eurodollar Base Rate" shall mean with
respect to any Borrowing of Eurodollar Loans for any Interest Period therefor,
the arithmetic average (rounded upwards, if necessary, to the nearest 1/16 of
1%) of the rates per annum which appear on the Reuters Screen LIBO Page, or if
such Reuters Screen LIBO Page is unavailable, the "Eurodollar Base Rate" shall
mean with respect to any Borrowing of Eurodollar Loans for any Interest Period
therefor, the arithmetic average (rounded upwards, if necessary, to the nearest
1/16 of 1%) of the rates per annum for Dollar deposits comparable to the amount
of such Borrowing offered to each of the Reference Lenders in the London
interbank market as of 11:00 a.m. London time (or as soon thereafter as
practicable) on the date two (2) Business Days prior to the first day of such
Interest Period of Dollar deposits having a term comparable to such Interest
Period.
"Eurodollar Loans" means Loans or portions thereof interest rates on which
are determined on the basis of the Eurodollar Rate.
"Eurodollar Rate" means, with respect to any Borrowing of Eurodollar Loans
for any Interest Period therefor, the rate per annum (rounded upward, if
necessary, to the nearest 1/16 of 1%) determined by the Agent to be equal to
(i) the Eurodollar Base Rate for such Borrowing for such Interest Period
divided by (ii) one (1) minus the Reserve Requirement. The Eurodollar Rate for
any Interest Period will be determined initially by the Agent on the basis of
the Reserve Requirement in effect on the date two (2) Business Days prior to
the commencement of such Interest Period and, from time to time thereafter
during such Interest Period, such Eurodollar Rate shall be adjusted
automatically on and as of the effective date of any change in the Reserve
Requirement during such Interest Period.
"Event of Default" means any of the events set forth in Section 7.1.
"Excess Cash Flow" means, for any Fiscal Year, the excess of : (a) Cash
Flow for such Fiscal Year minus (b) the sum of (i) the lesser of the amount of
Consolidated Capital Expenditures permitted during such Fiscal Year pursuant to
Section 6.2.5 and actual Consolidated Capital Expenditures during such Fiscal
Year, plus (ii) repayments of the Term Loan during such Fiscal Year pursuant to
clause (c) of Section 3.3.1, minus (c) Approved Acquisition Expenditures.
"Facility Fee Letter" means the letter agreement, dated as of the Closing
Date, between ING and the Borrower.
"Fair Saleable Value Balance Sheet" means, with respect to any Person, a
hypothetical balance sheet of such Person, prepared by such Person based on the
Closing Date Pro Forma Balance Sheet, setting forth (a) the assets of such
Person (restated at the fair saleable value thereof based upon
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such evidence of the fair saleable value thereof as such Person shall
reasonably deem pertinent), (b) the liabilities of such Person (including all
liabilities and obligations of such Person, fixed or contingent, direct or
indirect, disputed or undisputed, and whether or not required to be reflected on
a balance sheet prepared in accordance with GAAP), and (c) the excess of such
assets over such liabilities. The amount of attributed contingent liabilities
shall be discounted to reflect the likelihood that such liabilities shall become
payable.
"Federal Funds Rate" means, for any period, a fluctuating interest rate
per annum equal for each day during such period to:
(a) the weighted average of the rates on overnight federal funds
transactions with members of the Federal Reserve System arranged by federal
funds brokers, as published for such day (or, if such day is not a Business
Day, for the next preceding Business Day) by the Federal Reserve Bank of New
York; or
(b) if such rate is not so published for any day which is a Business Day,
the arithmetic average of the quotations for such transactions received by the
Agent, in its sole discretion, either from (i) three federal funds brokers of
recognized standing selected by the Agent in its sole discretion or (ii) the
Reference Lenders.
"Financing Statements" means the financing statements under the Uniform
Commercial Codes of the applicable jurisdictions, filed with respect to the
Security Documents pursuant to clause (c) of Section 4.1.8.
"Fiscal Quarter" means any quarter of a Fiscal Year.
"Fiscal Year" means, subject to Sections 6.2.16 and 9.14 (b), each
twelve-month accounting period ending December 31. References to a Fiscal Year
with a number corresponding to any calendar year (e.g., the "1996 Fiscal Year")
refer to the Fiscal Year ending on December 31 in such calendar year.
"Fixed Charge Coverage Ratio" means, for any period, the ratio of (a)
EBITDA for such period to (b) Fixed Charges during such period.
"Fixed Charges" means, for any period, the sum of (a) Interest Expense
during such period, plus (b) scheduled repayments of Indebtedness (including,
without limitation, scheduled payments of principal in respect of Capitalized
Lease Liabilities).
"Foreign Lender" means any Lender organized under the laws of a
jurisdiction outside the United States.
"F.R.S. Board" means the Board of Governors of the Federal Reserve System
(or any successor).
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"Furash" means Furash & Company, Inc., a Maryland corporation which is a
wholly-owned Subsidiary of the Borrower.
"GAAP" means generally accepted accounting principles in effect from time
to time in the United States.
"Goldstein Note" means that certain promissory note dated May 31, 1996
made by Gary S. Goldstein payable to the order of the Borrower in the original
principal amount of $1,065,722.
"Governmental Authority" means any nation or government, any state or
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
"HCSS" means Headway Corporate Staffing Services, Inc., a Delaware
corporation which is a wholly owned Subsidiary of the Borrower.
"Headway Personnel" means Headway Personnel, Inc., a Delaware corporation
which is a wholly-owned Subsidiary of HCSS.
"herein", "hereof", "hereto", "hereunder" and similar terms contained in
this Agreement or any other Loan Document refer to this Agreement or such other
Loan Document, as the case may be, as a whole and not to any particular
Section, clause or provision of this Agreement or such other Loan Document.
"including" means including without limiting the generality of any
description preceding such term.
"Indebtedness" of any Person means, without duplication:
(a) all obligations of such Person for borrowed money (including all notes
payable and drafts accepted representing extensions of credit) and all
obligations of such Person evidenced by bonds, debentures, notes or other
similar instruments on which interest charges are customarily paid;
(b) all obligations, contingent or otherwise, relative to the face amount
of all letters of credit, whether or not drawn, and banker's acceptances issued
for the account of such Person;
(c) all Capitalized Lease Liabilities of such Person (to the extent
required by GAAP to be included on the balance sheet of such Person);
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(d) whether or not so included as liabilities in accordance with GAAP (i)
all obligations of such Person to pay the deferred purchase price of property
or services (excluding trade accounts payable for other than borrowed money
arising in the ordinary course of business) and indebtedness secured by a Lien
on property owned or being purchased by such Person (including indebtedness
arising under conditional sales or other title retention agreements), whether
or not such indebtedness shall have been assumed by such Person or is limited
in recourse, and (ii) all obligations of such Person in respect of, and
obligations (contingent or otherwise) to purchase or otherwise acquire, or
otherwise assure a creditor against loss in respect of, Indebtedness of another
Person;
(e) all net obligations of such Person under Interest Rate Contracts; and
(f) all obligations of such Person to redeem, purchase or otherwise retire
or extinguish any of its Stock at a fixed or determinable date (whether by
operation of a sinking fund or otherwise), at another's option or upon the
occurrence of a condition not solely within the control of such Person (e.g.,
redemption from future earnings).
"Indemnified Liabilities" means any and all actions, causes of action,
suits, losses, costs, liabilities, damages and expenses incurred by or asserted
or awarded against any Lender Party and against which the Borrower has
indemnified the Lender Parties as provided in Section 9.4.
"ING" means Internationale Nederlanden (U.S.) Capital Corporation, a
Delaware corporation.
"ING Alternate Base Rate" means a fluctuating rate of interest per annum
equal to the higher of:
(a) the arithmetic average of rates of interest announced by each of the
Reference Lenders from time to time at such Reference Lender's principal New
York City office as its prime (or base) rate for U.S. domestic commercial
loans; and
(b) the Federal Funds Rate from time to time in effect plus 1/2 of 1%
(0.50%).
Changes in the rate of interest on the Base Rate Loans shall take effect on the
date of each change in the ING Alternate Base Rate. The Agent shall give
notice promptly to the Borrower and the Lenders of changes in the ING Alternate
Base Rate.
"Instrument" means any contract, agreement, letter of credit, indenture,
mortgage, deed, certificate of title, document or writing (whether by formal
agreement, letter or otherwise) under which any obligation is evidenced,
assumed or undertaken, any Lien (or right or interest therein) is granted or
perfected, or any property (or right or interest therein) is conveyed.
"Intellectual Property" means, collectively, (a) patents, patent rights
and patent applications, copyrights and copyright applications, trademarks,
trademark rights, trade names,
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name rights, service marks, service mark rights, applications for
registration of trademarks, trade names and service marks, fictitious names
registrations and trademark, trade name and servicemark registrations,
including, without limitation, the names Whitney Group, Viva, On-Line and all
derivations thereof, and (b) patent licenses, trademark licenses, copyright
licenses and other licenses to use any of the items described in clause (a), or
any other items necessary to conduct or operate the business of the Borrower and
its Subsidiaries.
"Interest Coverage Ratio" means, for any period, the ratio of (a) EBITDA
for such period to (b) Interest Expense during such period.
"Interest Expense" means, for any period, the sum of the Borrower's
consolidated interest expense accrued during such period in respect of all
Indebtedness of the Borrower and its Subsidiaries; provided, however, that the
effect of original issue discount, if any, which is attributable to
Indebtedness in connection with the issuance of warrants shall not be taken
into account when calculating Interest Expense.
"Interest Period" means, relative to any Eurodollar Loans comprising part
of the same Borrowing, the period beginning on (and including) the date on
which such Eurodollar Loans are made or continued as, or converted into,
Eurodollar Loans pursuant to Section 3.1 or Section 3.4.3 and ending on (but
excluding) the date which numerically corresponds to such date one, two, three
or six months thereafter (or, if such month has no numerically corresponding
date, on the last Business Day of such month), in either case as the Borrower
may select in its relevant notice pursuant to Section 3.1 or Section 3.4.3;
provided, however, that:
(a) the Borrower shall not be permitted to select Interest Periods to be
in effect at any one time which have expiration dates occurring on more than
three (3) dates with respect to the Term Loan and two (2) dates with respect to
the Revolving Loans;
(b) if such Interest Period would otherwise end on a day which is not a
Business Day, such Interest Period shall end on the next following Business Day
(unless such next following Business Day is the first Business Day of a
calendar month, in which case such Interest Period shall end on the Business
Day next preceding such numerically corresponding date);
(c) in the case of Interest Periods for Revolving Loans, no such Interest
Period may end later than the Stated Maturity Date for Revolving Loans; and
(d) in the case of Interest Periods for the Term Loan, no such Interest
Period may end later than (i) the Stated Maturity Date of the Term Loan, or
(ii) the date of any principal repayment with respect to the Term Loan as set
forth in clause (c) of Section 3.3.1, if on such date the Borrower otherwise
would be required to repay any portion of any Borrowing prior to the end of the
Interest Period relative to such Borrowing.
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"Interest Rate Contract" means any interest rate cap agreement, interest
rate collar agreement, interest rate swap agreement or other agreement or
arrangement designed to protect against fluctuations in interest rates.
"Interest Rate Contract Counterparty" means any counterparty to an
Interest Rate Contract which the Borrower is required to enter into pursuant to
Section 6.1.13.
"Internal Revenue Service" means the Internal Revenue Service of the
United States of America.
"Investment" means, relative to any Person:
(a) any loan or advance made by such Person to any other Person (excluding
commission, travel and similar advances to officers, employees and consultants
made in the ordinary course of business);
(b) any ownership or similar interest held by such Person in any other
Person; and
(c) the purchase of any debt or equity securities or instruments issued by
any other Person (including, without limitation, Stock, notes, debentures,
drafts and acceptances, trust certificates, partnership interests or units or
membership interests in limited liability companies).
The amount of any Investment of the nature referred to in clause (a) or (b)
shall be the original principal or capital amount thereof less all returns of
principal or equity thereon (and without adjustment by reason of the financial
condition of such other Person) and shall, if made by the transfer or exchange
of property other than cash, be deemed to have been made in an original
principal or capital amount equal to the fair market value of such property.
"IRC" means the Internal Revenue Code of 1986, as amended, and any
successor statute of similar import, together with the regulations thereunder,
in each case as in effect from time to time. References to sections of the IRC
also refer to any successor sections.
"Irene Cohen" means Irene Cohen Temps, Inc., a New York corporation which
upon consummation of the Acquisition will be a wholly-owned Subsidiary of HCSS.
"Lender" means any of the various lenders as are, or may from time to time
become, parties to this Agreement.
"Lender Parties" means, collectively, the Agent and each Lender, and each
of their respective successors and assigns, and each of the respective
officers, directors, employees, attorneys and agents of the Agent and each
Lender and of each of their respective successors and assigns, indemnified by
the Borrower as provided in Section 9.4.
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"Leverage Ratio" means, for any period, the ratio of (a) the aggregate
outstanding principal amount of Indebtedness of the Borrower and its
Subsidiaries as of the last day of such period to (b) EBITDA for such period;
provided, however that the effect of original issue discount, if any, which is
attributable to Indebtedness in connection with the issuance of warrants shall
not be taken into account when calculating the Leverage Ratio.
"Lien" means any mortgage, pledge, hypothecation, assignment, charge,
deposit arrangement, encumbrance, lien (statutory or other), adverse claim or
preference, priority or other security agreement or preferential arrangement of
any kind or nature whatsoever (including any conditional sale or other title
retention agreement, any financing lease involving substantially the same
economic effect as any of the foregoing and the filing of any financing
statement under the UCC or comparable law of any jurisdiction).
"Loan" means, as the context may require, the Term Loan or the Revolving
Loans.
"Loan Documents" means, collectively, this Agreement, the Notes, each
Security Document, each Borrowing Request, any Interest Rate Contract entered
into by the Borrower with a Lender that has executed and delivered to the Agent
an acknowledgment in the form of Exhibit F, and each other Instrument executed
and delivered by the Borrower as of the date hereof or at any time thereafter,
in connection with the transactions contemplated by this Agreement, in each
case, as amended, modified or supplemented from time to time.
"Loan Party" means any of the Borrower, its Subsidiaries which is a party
to any of the Loan Documents.
"Loss" means any loss, damage, destruction, theft, or seizure of, or any
other casualty with respect to, or any condemnation of, any property or asset
of any Person in an amount in excess of $100,000 individually or $250,000 in
the aggregate for any Fiscal Year; and the "amount" of any Loss means (i) if
such asset or property is repaired or replaced, the greater of (A) the cost to
repair or replace the property or asset that was the subject of such Loss and
(B) the amount of insurance proceeds or condemnation awards payable as a result
of such Loss, and (ii) if such asset or property is not repaired or replaced,
the amount of insurance proceeds or condemnation awards payable as a result of
such loss.
"Material Adverse Change" means a material adverse change in (a) the
condition (financial or otherwise), operations, performance, business,
properties or prospects of the Borrower and its Subsidiaries taken as a whole;
or (b) the rights and remedies of the Lenders or the Agent under the Loan
Documents; or (c) the ability of the Borrower to repay the Obligations or of
the Borrower or any Subsidiary to perform their respective obligations under
the Loan Documents; or (d) the legality, validity or enforceability of any Loan
Document; or (e) the Liens granted the Agent pursuant to the Security
Documents.
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"Maturity" means relative to any Loan or portion thereof, the earlier of
such Loan's Stated Maturity Date or such other date when such Loan or portion
thereof shall be or become due and payable in accordance with the terms of this
Agreement, whether by required repayment, prepayment, declaration or otherwise.
"Mortgage" means any mortgage, deed of trust, deed to secure debt,
leasehold mortgage, leasehold deed of trust or leasehold deed to secure debt
covering real property, as such instruments are originally executed or
supplemented, amended, renewed, extended or otherwise modified from time to
time.
"Multiemployer Pension Plan" means a Multiemployer Plan which is subject
to Subtitle E of Title IV of ERISA.
"Multiemployer Plan" means a Plan which is a "multiemployer plan" within
the meaning of Section 3(37) of ERISA.
"Net Disposition Proceeds" means, with respect to any disposition of the
assets of the Borrower or any Subsidiary, the excess of: (a) the gross cash
proceeds received by the Borrower or any Subsidiary from such disposition
(including any cash proceeds subsequently received in respect of notes and
other non-cash proceeds received by the Borrower or any of its Subsidiaries
from such disposition), minus (b) the sum of (i) all reasonable out-of-pocket
fees and expenses incurred in connection therewith, plus (ii) all taxes paid or
payable in connection with such sale.
"Net Income" means, as to any Person, for any period, the net income (or
loss) of such Person for such period, determined in accordance with GAAP, but
excluding extraordinary gains or losses for such period.
"Net Indebtedness Proceeds" means, with respect to the issuance or
incurrence by the Borrower or any Subsidiary of any Indebtedness, the excess
of: (a) the gross cash proceeds received by the Borrower or any Subsidiary
from such Indebtedness, minus (b) all reasonable out-of-pocket fees and
expenses incurred in connection therewith.
"Net Securities Proceeds" means, with respect to the issuance or sale by
the Borrower or any Subsidiary of any equity securities (not including upon the
exercise of existing stock options or employee stock options or any dividend
investment plan), the excess of: (a) the gross cash proceeds received by the
Borrower or any Subsidiary from such issuance and sale minus (b) all reasonable
out-of-pocket fees and expenses incurred in connection with such issuance and
sale.
"Note" means, as the context may require, any Term Note or any Revolving
Note.
"Notes" means, collectively, the Term Notes and the Revolving Notes.
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"Obligations" means all payment and performance obligations of the Loan
Parties (monetary or otherwise) arising under or in connection with this
Agreement, the Notes and the other Loan Documents.
"Organic Document" means, relative to any Person, its articles or
certificate of incorporation or organization or certificate of limited
partnership or organization, its bylaws, partnership or operating agreement or
other organizational documents, and all stockholders agreements, voting trusts
and similar arrangements applicable to any of its Stock or partnership
interests or other ownership interests.
"Participant" means the banks or other entities that purchase
participating interests in any Loan, Note, Revolving Loan Commitment or other
interest hereunder, as provided in clause (a) of Section 9.11.
"PBGC" means the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.
"Pension Plan" means any Plan which is subject to the provisions of Title
IV of ERISA, or to the provisions of Section 302 of ERISA or Section 412 of the
IRC.
"Percentage" means, as the context requires, either (a) the Revolving
Percentage, (b) the Term Percentage or (c) both of the above.
"Person" means any natural person, corporation, partnership, limited
liability company, firm, association, government, governmental agency or any
other entity, whether acting in an individual, fiduciary or other capacity.
"Plan" shall mean, at a particular time, any employee benefit plan (within
the meaning of Section 3(3) of ERISA), which is covered by ERISA and in respect
of which the Borrower, a Subsidiary or a Commonly Controlled Entity is (or, if
such plan were terminated at such time, would under Section 4069 of ERISA be
deemed to be) an "employer" as defined in Section 3(5) of ERISA.
"Plan Reorganization" means with respect to any Multiemployer Pension
Plan, the condition that such plan is in reorganization within the meaning of
such term as used in Section 4241 of ERISA.
"Plan Reportable Event" means (i) a reportable event described in Section
4043 of ERISA and regulations thereunder (other than any reportable event
described in Section 4043(b)(2) or (7)), (ii) a withdrawal by a "substantial
employer" (within the meaning of Section 4001(a)(2) of ERISA) from a Single
Employer Plan to which more than one employer contributes, as referred to in
Section 4063(b) of ERISA, or (iii) a cessation of operations at a facility
causing more than twenty percent (20%) of participants under a Single Employer
Plan to be separated from employment, as referred to in Section 4062(e) of
ERISA.
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"Post-Default Rate" means (a) in the case of each Loan, the sum of the
rate per annum otherwise applicable to such Loan from time to time plus two
percent (2%) per annum and (b) in the case of all other Obligations, the sum of
the highest rate per annum then applicable to any Loan (other than by
application of the Post-Default Rate) plus two percent (2%) per annum.
"Pro Forma Balance Sheets" means the Closing Date Pro Forma Balance Sheet.
"Projections" means the projected balance sheets and statements of
operations and changes in cash flows of the Borrower (after giving effect to
the Acquisition) for the Fiscal Years 1996-2001 inclusive, dated May 31, 1996,
prepared by the Borrower on a quarterly basis for the 1996 Fiscal Year, and on
an annual basis for the 1997 - 2001 Fiscal Years, together with supporting
details and a statement of underlying assumptions, which have been delivered to
the Lenders prior to the Closing Date.
"Purchase Money Indebtedness" means Indebtedness incurred to finance part
or all of (but not more than) the purchase price of equipment in which neither
the Borrower nor any of its Subsidiaries had an interest at any time prior to
such purchase.
"Purchasing Lender" means any Person purchasing all or any part of the
rights and obligations under this Agreement and the Notes of any Lender
pursuant to a Transfer Supplement in accordance with Section 9.11.
"Quarterly Payment Date" means the last day of each March, June, September
and December or, if such day is not a Business Day, the immediately preceding
Business Day.
"Reference Lenders" means, collectively, The Chase Manhattan Bank, N.A.
(or any successor thereto), Citibank, N.A. and Morgan Guaranty Trust Company of
New York.
"Register" means the register for the recordation of the names and
addresses of the Lenders and the Revolving Loan Commitment of, and the
principal amounts of the Loans owing to, each Lender from time to time, as
provided in clause (c) of Section 9.11.
"Regulatory Approval" means each and every approval, consent, filing and
registration by or with any federal, state or other regulatory authority
(domestic or foreign) necessary to authorize or permit the execution, delivery
or performance of this Agreement, the Notes or any other Loan Document, for the
granting of any security contemplated hereby or thereby, for the validity or
enforceability hereof or thereof, or for the consummation of the transaction
contemplated by the Loan Documents, including, without limitation, the
Acquisition.
"Regulatory Change" means, as to any or all of the Lenders or the Agent,
the adoption of or any change in (including, without limitation, any change in
the interpretation of) any:
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(a) United States federal or state law or foreign law applicable to the
Agent or such Lender; or
(b) regulation, interpretation, directive, guideline or request (whether
or not having the force of law) applicable to the Agent or such Lender of any
court or Governmental Authority charged with the interpretation or
administration of any law referred to in clause (a) or of any central bank or
fiscal, monetary or other authority having jurisdiction over the Agent or such
Lender.
"Required Lenders" means, as the context may require at any time, Lenders
having, in the aggregate, 66-2/3% or more of the Revolving Loan Commitment, the
Revolving Loans and the Term Loan.
"Requirements of Law" means, as to any Person, the Organic Documents of
such Person, and all federal, state and local laws, rules, regulations, orders,
decrees or other determinations of an arbitrator, court or other Governmental
Authority, including, without limitation, all disclosure and other requirements
of ERISA, the requirements of Environmental Laws and Environmental Permits, the
requirements of OSHA, in each case applicable to or binding upon such Person or
any of its property or to which such Person or any of its property is subject.
"Reserve Requirement" means, relative to any Interest Period for any
Eurodollar Loans, from time to time during such Interest Period, the reserve
percentage (expressed as a decimal) equal to the maximum aggregate reserve
requirements (including all basic, emergency, supplemental, marginal and other
reserves and taking into account any transitional adjustments or other
scheduled changes in reserve requirements) specified under regulations issued
from time to time by the F.R.S. Board and then applicable to assets or
liabilities consisting of or including "Eurodollar Liabilities", as currently
defined under Regulation D of the F.R.S. Board, having a term approximately
equal or comparable to such Interest Period.
"Responsible Officer" means the chief executive officer, the chief
operating officer or the chief financial officer of any Person.
"Revolving Loan" means, relative to any Lender, any Loan made by such
Lender to the Borrower pursuant to Section 2.1.2.
"Revolving Loan Availability" means, on any date, the excess of (a) the
Revolving Loan Commitment Amount minus (b) the then aggregate principal amount
of all outstanding Revolving Loans.
"Revolving Loan Commitment" means the collective commitments of the
Lenders to make Revolving Loans pursuant to Section 2.1.2 if the conditions set
forth in Section 4.1 and 4.2 are met.
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"Revolving Loan Commitment Amount" means $6,000,000.
"Revolving Loan Commitment Termination Date" means the earliest of:
(a) the Stated Maturity Date for Revolving Loans;
(b) immediately and without further action upon the occurrence of any
Event of Default described in Section 7.1.4;
(c) immediately when any other Event of Default shall have occurred and be
continuing and either:
(i) the Revolving Loans shall be declared to be due and payable
pursuant to Section 7.3; or
(ii) in the absence of such declaration, the Agent, acting at the
direction of the Required Lenders, shall give notice to the Borrower that
the Revolving Loan Commitment has been terminated; and
(d) immediately upon the occurrence of a Change in Control.
"Revolving Note" means a promissory note of the Borrower dated the date
hereof and substantially in the form of Exhibit E-1, and shall also refer to
all other promissory notes accepted from time to time in substitution therefor
or renewal thereof.
"Revolving Percentage" of any Lender means, at any time, in respect of the
Revolving Loan Commitment and the Revolving Loans, the percentage set forth
opposite such Lender's signature hereto under the caption "Percentage," as the
same may be adjusted pursuant to Section 9.11.
"Secretary" means, with respect to any Person, the secretary, assistant
secretary, clerk, assistant clerk or comparable officer of such Person.
"Security Agreement" means the Security Agreement, dated as of the Closing
Date, made by the Borrower and its Subsidiaries in favor of the Agent, for its
benefit and the ratable benefit of the Lenders as originally in effect on the
Closing Date and as thereafter from time to time amended, supplemented, amended
and restated, extended or otherwise modified and in effect.
"Security Documents" means, collectively, the Security Agreement, the
Borrower Pledge Agreement, the Borrower Trademark Assignment, the Subsidiary
Guaranty, the Subsidiary Pledge Agreement, the Subsidiary Trademark Assignment,
the assignment of "key-man" life insurance described in clause (g) of Section
4.1.8, the assignment of the Interest Rate Contracts described in
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Section 6.1.13, the assignment of rights described in clause (f) of Section
4.1.8, each other Instrument at any time delivered in connection with this
Agreement to secure the Obligations.
"Sellers" means the "Stockholders" as such terms is defined in the
Acquisition Agreement.
"Single Employer Plan" means any Plan which is covered by Title IV of
ERISA, other than a Multiemployer Plan.
"Solvent" means, with respect to any Person on a particular date, that on
such date (i) the fair value of the assets of such Person (both at fair
valuation and at present fair saleable value) is, on the date of determination,
greater than the total amount of liabilities of such Person (including all
liabilities and obligations of such Person, fixed or contingent, direct or
indirect, disputed or undisputed, and whether or not required to be reflected
on a balance sheet prepared in accordance with GAAP), (ii) such Person is able
to pay all liabilities of such Person as they mature, and (iii) such Person
does not have unreasonably small capital with which to carry on its business.
The amount attributed to contingent liabilities shall be discounted to reflect
the likelihood that such liabilities shall become payable.
"Stated Maturity Date" means, with respect to the Term Loan and the
Revolving Loans, June 30, 2001.
"Stock" means all shares of capital stock of or in a corporation, whether
voting or non-voting, and including, without limitation, common stock and
preferred stock.
"Subsidiary" of any corporation means any other corporation greater than
50% of the outstanding shares of Stock of which having ordinary voting power
for the election of directors is owned directly or indirectly by such
corporation, and, except as otherwise indicated herein, references to
Subsidiaries shall refer to Subsidiaries of the Borrower. For purposes of this
Agreement and the other Loan documents, references to Subsidiaries of the
Borrower shall include, at all times, the Eligible Subsidiaries.
"Subsidiary Guaranty" means the Subsidiary Guaranty, dated as of the
Closing Date, made by each of the Borrower's Subsidiaries in favor of the Agent
and the Lenders as originally in effect on the Closing Date and as thereafter
from time to time amended, supplemented, amended and restated, extended or
otherwise modified and in effect.
"Subsidiary Note" means a promissory note made by a Subsidiary payable to
the Borrower and meeting the requirements of Section 6.2.7(e).
"Subsidiary Pledge Agreement" means the Stock and Notes Pledge Agreement,
dated as of the Closing Date, made by the Subsidiaries in favor of the Agent,
for its benefit and the ratable benefit of the Lenders, as originally in effect
on the Closing Date and as thereafter from time to time
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amended, supplemented, amended and restated, extended or otherwise modified and
in effect, pursuant to which each Subsidiary shall pledge to the Agent all of
the Stock held by such Subsidiary and all promissory notes, other instruments
and securities held by such Subsidiary as security for the Obligations.
"Subsidiary Trademark Assignment" means the Collateral Assignment and
Security Agreement (Trademarks), dated as of the Closing Date, made by the
Subsidiaries in favor of the Agent, for its benefit and the ratable benefit of
the Lenders as originally in effect on the Closing Date and as thereafter from
time to time amended, supplemented, amended and restated, extended or otherwise
modified and in effect.
"Taxes" means all taxes, levies, imposts, deductions, charges or
withholdings, and all liabilities with respect thereto, excluding, in the case
of each Lender and the Agent, taxes imposed on or measured by its net income
and franchise taxes imposed on it.
"Term Loan" means, collectively, the Loans, in an aggregate principal
amount equal to $9,000,000 made to the Borrower on the Closing Date by the
Lenders pursuant to Section 2.1.1.
"Term Loan Commitment" means the collective commitments of the Lenders to
extend the Term Loan pursuant to Section 2.1.1.
"Term Note" means a promissory note of the Borrower dated the date hereof
and substantially in the form of Exhibit E-2, and shall also refer to all other
promissory notes accepted from time to time in substitution therefor or renewal
thereof.
"Term Percentage" of any Lender means, at any time, in respect of the Term
Loan, the percentage set forth opposite such Lender's signature hereto under
the caption "Percentage," as the same may be adjusted pursuant to Section 9.11.
"Transfer Supplement" means a Commitment Transfer Supplement,
substantially in the form of Exhibit F, executed pursuant to Section 9.11.
"type" means, relative to any Borrowing or Loan, the portion thereof being
maintained as a Base Rate Loan or a Eurodollar Rate Loan.
"UCC" means the Uniform Commercial Code of any applicable jurisdiction, as
in effect from time to time.
"United States" or "U.S." means the United States of America, its 50
States and the District of Columbia.
"Whitney Group" means Whitney Group (Europe) Limited, a corporation
organized under the laws of the United Kingdom which is 76.42% owned by Whitney
Partners.
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<PAGE> 45
"Whitney Partners" means Whitney Partners, Inc., a Delaware corporation
which is a wholly-owned Subsidiary of the Borrower.
"written" or "in writing" means any form of written communication or a
communication by means of telephonic facsimile device.
SECTION 1.2. Unless otherwise defined or the context otherwise
requires, terms for which meanings are provided in this Agreement shall have
such meanings when used in the Disclosure Schedule and each Note, Borrowing
Request, Compliance Certificate, Continuation/Conversion Notice, notice and
other communication delivered from time to time in connection with this
Agreement or any other Loan Document.
SECTION 1.3. Unless otherwise specified, references in this Agreement
and in each other Loan Document to any Article or Section are references to such
Article or Section of this Agreement or such other Loan Document, as the case
may be, and unless otherwise specified, references in any Article, Section, or
definition to any clause are references to such clause of such Section, Article
or definition.
SECTION 1.4. Unless otherwise specified, all accounting terms used
herein or in any other Loan Document shall be interpreted, all accounting
determinations and computations hereunder or thereunder shall be made, and all
financial statements required to be delivered hereunder or thereunder shall be
prepared in accordance with GAAP.
ARTICLE 2.
COMMITMENTS
SECTION 2.1. Subject to the terms and conditions of this Agreement,
each Lender severally and for itself alone agrees to make its Term Percentage of
the Term Loan described in Section 2.1.1 and to provide its Revolving Percentage
of the Revolving Loan Commitment described in this Section 2.1.2.
On the Closing Date, each Lender will make a single term loan to the
Borrower equal to its Term Percentage of the Term Loan.
SECTION 2.1. Each Lender will, from time to time on any Business Day
occurring during the period commencing on the Closing Date and continuing to
(but not including) the Revolving Loan Commitment Termination Date, make
Revolving Loans to the Borrower equal to its Revolving Percentage of the
aggregate amount of any Borrowing of Revolving Loans requested by the Borrower
to be made on such Business Day in accordance with Section 3.1.
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<PAGE> 46
SECTION 2.1.3. Limitations on Revolving Credit Commitment.
No Lender shall be required to make any Revolving Loan, if after giving effect
thereto:
(a) the then aggregate outstanding principal amount of
all Revolving Loans would exceed the lesser of (i) the Revolving Loan
Commitment Amount or (ii) the Borrowing Base; or
(b) the then aggregate outstanding principal amount of
such Lender's Revolving Loans would exceed its Revolving Percentage of the
lesser of (i) the Revolving Loan Commitment Amount or (ii) the Borrowing Base.
Subject to the terms hereof, the Borrower may from time to time borrow, prepay
and reborrow Revolving Loans, in all cases pursuant to the Revolving Loan
Commitment.
SECTION 2.2. Changes in Advance Ratios; Establishment of
Reserves.
SECTION 2.2.1. Advance Ratios. The Borrower acknowledges
that the advance ratio against Eligible Accounts provided for in the definition
of "Borrowing Base" in Section 1.1 have been established based upon the
Agent's determination of the loan value of the Borrower's Eligible Accounts as
of the date of this Agreement. Upon the occurrence and during the continuation
of an Event of Default, based on the Agent's customary credit considerations,
the Agent may decrease the advance ratios against Eligible Accounts, and any
such decrease shall become effective immediately upon the Agent's giving notice
thereof to the Borrower.
SECTION 2.2.2. Establishment of Reserves. The Agent shall
have the right to establish, in such amounts, and with respect to such matters,
as the Agent, based on the Agent's customary credit considerations, shall deem
necessary or appropriate, reserves with respect to (i) Charges and Liens; (ii)
Environmental Liabilities and Costs, (iii) sums as to which the Agent and the
Lenders are permitted to make Revolving Loans on the Borrower's behalf under
Section 3.3.3 of this Agreement; and (iv) such other matters, events,
conditions or contingencies as to which the Agent, based on the Agent's
customary credit considerations, reasonably determines reserves should be
established from time to time hereunder.
SECTION 2.3. Commitment Fee. The Borrower agrees to pay
to the Agent, for the account of each Lender, a nonrefundable fee for the
period from the Closing Date to and including the Revolving Loan Commitment
Termination Date, equal to such Lender's Revolving Percentage of one-half of
one percent (0.50%) per annum of the difference between (A) the Revolving Loan
Commitment Amount and (B) the average daily aggregate outstanding principal
amount of all Revolving Loans. The fee described in this Section 2.3 shall be
calculated on a daily basis and shall be payable by the Borrower in arrears on
each Quarterly Payment Date and on the Revolving Loan Commitment Termination
Date.
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<PAGE> 47
SECTION 2.4. Increased Costs; Capital Adequacy.
(a) The Borrower shall pay to each Lender from time to
time on demand such amounts as such Lender may determine to be reasonably
necessary to compensate it or its holding company for any costs which such
Lender determines are attributable to its making or maintaining Loans, or
maintaining Commitments hereunder or its obligation to make any such Loans
hereunder, or any reduction in any amount receivable by such Lender hereunder
in respect of any such Loans, Commitments or obligation, in each case resulting
from any Regulatory Change which: (i) changes the basis of taxation of any
amounts payable to such Lender under this Agreement in respect of any of such
Loans or Commitments (other than taxes imposed on the overall net income of
such Lender or of its Applicable Lending Office); or (ii) imposes or modifies
any reserve, special deposit, deposit insurance or assessment, minimum capital,
capital ratio or similar requirements relating to any extensions of credit or
other assets of, or any deposits with or other liabilities of, such Lender or
any holding company of such bank (including, without limitation, a request or
requirement which affects the manner in which any Lender or the holding company
of any thereof allocates capital resources to commitments, including the
Commitments and obligations of such Lender hereunder). Each Lender will notify
the Borrower of any event occurring after the date of this Agreement which will
entitle such Lender to compensation pursuant to this clause (a) as promptly as
practicable after it obtains knowledge thereof and determines to request such
compensation.
(b) Without limiting the effect of the foregoing
provisions of this Section 2.4 (but without duplication), the Borrower shall
pay to each Lender from time to time upon demand by such Lender such amounts as
the Lender may determine to be reasonably necessary to compensate such Lender
for any costs which it determines are attributable to the maintenance by it or
its holding company, pursuant to any law or regulation of any jurisdiction or
any interpretation, directive or request (whether or not having the force of
law) of any court or governmental or monetary authority, whether in effect on
the date of this Agreement or thereafter, of capital in respect of its Loans
its obligation to make the Loans hereunder (such compensation to include,
without limitation, an amount equal to any reduction in return on assets or
equity of such Lender or its holding company to a level below that which it
could have achieved but for such law, regulation, interpretation, directive or
request). The Lender will notify the Borrower with a copy to the Agent) if it
is entitled to compensation pursuant to this clause (b) as promptly as
practicable after it determines to request such compensation.
(c) Each notice delivered by any Lender pursuant to this
Section 2.4 shall contain a statement of such Lender as to any such additional
amount or amounts (including calculations thereof in reasonable detail) which
shall, in the absence of manifest error, be conclusive of the matters stated
therein and be binding upon the Borrower. In determining such amount, any
Lender may use any method of averaging and attribution that it in good faith
shall deem applicable.
(d) Without prejudice to the survival of any other
agreement of the Borrower hereunder or under any other Loan Document, the
agreements and obligations of the Borrower contained in this Section 2.4 shall
survive the payment in full of principal, interest and other amounts
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<PAGE> 48
payable hereunder and under the other Loan Documents for a period of one year
after the date of the last payment.
(e) Notwithstanding anything in this Section 2.4 to the
contrary, to the extent that notice is given by any Lender to the Borrower of
any amount owing to such Lender under this Section 2.4 more than 180 days
after the occurrence of the event giving rise to such obligation, such Lender
shall not be entitled to compensation under this Section 2.4 for any amounts
incurred or accruing 180 days prior to the giving of such notice to the
Borrower.
(f) Each Lender agrees that, upon the occurrence of any
event giving rise to a claim for any amount owing to such Lender under this
Section 2.4, it will, if requested by the Borrower, use reasonable efforts
(subject to overall policy considerations of such Lender) to designate another
Applicable Lending Office, provided that such designation is made on terms
that such Lender suffers no economic, legal, regulatory or other disadvantage,
with the object of avoiding the consequence which gave rise to the claim for
any amount owing under this Section 2.4.
ARTICLE 3.
LOANS AND NOTES
SECTION 3.1. Borrowing Procedure. By delivering a
Borrowing Request to the Agent at the Agent's Atlanta Office on or before 11:00
a.m., New York City time, on a Business Day, the Borrower may (a) request, on
not less than one (1) Business Day's advance notice in the case of Base Rate
Loans and not less than three (3) Business Days' advance notice in the case of
Eurodollar Loans, that the Term Loan be made on the Closing Date; and (b) from
time to time request, on not less than one (1) nor more than three (3) Business
Days' notice, in the case of Base Rate Loans, and not less than three (3) nor
more than five (5) Business Days' notice in the case of Eurodollar Loans, that
a Borrowing of Revolving Loans be made on the Business Day specified in such
Borrowing Request. Borrowings of Base Rate Loans shall be in a minimum
aggregate amount equal to $100,000 and in integral multiples of $25,000 or, if
less, the amount of the Revolving Loan Availability immediately prior to such
Borrowing. Borrowings of Eurodollar Loans shall be in a minimum aggregate
amount of $250,000 and in integral multiples of $50,000. The Term Loan shall
be made on the Closing Date, and each Revolving Loan shall be made on the
Business Day specified in the Borrowing Request therefor (including the initial
Revolving Loans to be made on the Closing Date), which Business Day shall be on
or after the Closing Date. On such Business Day, each Lender shall, on or
before 2:00 p.m., New York City time, deposit same day funds with the Agent in
an amount equal to such Lender's Percentage of the requested Borrowing, such
deposit to be made to such account as the Agent shall specify from time to time
by notice to the Lenders. The proceeds of all Borrowings shall be made
available to the Borrower on the Business Day specified in the Borrowing
Request by wire transfer of such proceeds to such transferees, or to such
accounts of the Borrower, as the Borrower shall have specified in the Borrowing
Request therefor; provided, however, that in each case the Agent shall be
required to make available to the Borrower the
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<PAGE> 49
proceeds of any Borrowing only to the extent received by it in same day funds
from the Lenders. No Lender's obligation to make any Loan shall be affected by
any other Lender's failure to make any Loan.
SECTION 3.2. Notes. All Loans made by each Lender shall
be evidenced:
(a) in the case of such Lender's portion of the Term
Loan, by a Term Note payable to the order of such Lender in a principal amount
equal to such Lender's Term Percentage of the Term Loan; and
(b) in the case of such Lender's Revolving Loans, by a
Revolving Note payable to the order of such Lender in a principal amount equal
to such Lender's Revolving Percentage of the Revolving Loan Commitment Amount.
The Borrower hereby irrevocably authorizes each Lender to make (or cause to be
made) appropriate notations on a grid schedule attached to such Lender's
Revolving Note (or on a continuation of any such grid attached to any Revolving
Note and made a part thereof), which notations shall evidence, inter alia, the
date and outstanding principal amount of the Revolving Loans evidenced thereby.
The notations on any such grid (and on any such continuation) indicating the
outstanding principal amount of such Lender's Revolving Loans shall be
presumptive evidence of the principal amount thereof owing and unpaid, but the
failure to record any such amount on any such grid (or on any such
continuation) shall not limit or otherwise affect the obligations of the
Borrower hereunder or under such Note to make payments of principal of or
interest on such Loans when due.
SECTION 3.3. Principal Payments. Repayments and
prepayments of principal of the Loans shall be made in accordance with this
Section 3.3.
SECTION 3.3.1. Repayments and Prepayments. The Borrower
will make payment in full of all unpaid principal of each Loan at its Stated
Maturity Date (or such earlier date as such Loan may become or be declared due
and payable pursuant to Article 7). Prior thereto, the Borrower:
(a) may, from time to time on any Business Day, make a
voluntary prepayment, in whole or in part, of the outstanding principal amount
of any Loans; provided, however, that (i) as to partial prepayments of the
Term Loan and Revolving Loans, all such voluntary prepayments shall require at
least two (2) Business Days prior notice to the Agent, (ii) as to the Term Loan
and the Revolving Loans, all such voluntary prepayments shall be in a minimum
amount of $50,000 (subject to the Borrower's right to prepay in full the entire
unpaid principal amount of the Term Loan or the Revolving Loans, as the case
may be), and (iii) as to the voluntary prepayment in full of the Term Loan and
the termination of the Revolving Loan Commitment, such prepayment shall require
at least five (5) Business Days prior written notice to the Agent;
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<PAGE> 50
(b) shall, on any Business Day on which the aggregate
outstanding principal amount of all Revolving Loans exceeds the lesser of (i)
the Revolving Loan Commitment Amount or (ii) the Borrowing Base, make a
mandatory prepayment of the outstanding principal amount of Revolving Loans in
an amount equal to such excess amount;
(c) shall, on each Quarterly Payment Date, commencing on
September 30, 1996, make a scheduled payment of a portion of the outstanding
principal amount of the Term Loan equal to the amount shown below opposite each
such Quarterly Payment Date:
<TABLE>
Caption>
Quarterly
Principal
Quarterly Payment Dates Occurring During the Period from: Payment
- --------------------------------------------------------- ---------
<S> <C>
Closing Date through (and including) June 30, 1997 $250,000
July 1, 1997 through (and including) June 30, 1998 375,000
July 1, 1998 through (and including) June 30, 1999 450,000
July 1, 1999 through (and including) June 30, 2000 525,000
July 1, 2000 through (and including) June 30, 2001 650,000
</TABLE>
(d) shall, concurrently with the receipt by the Borrower
or any Subsidiary of any Net Disposition Proceeds in excess of $20,000 in the
aggregate during any Fiscal Year, make a mandatory prepayment of the Loans, in
each case in an aggregate amount equal to such Net Disposition Proceeds;
provided, that should Borrower or any Subsidiary receive Net Disposition
Proceeds in excess of $2,368,000 from the disposition of the Citigate Shares,
the mandatory prepayment of the Loans Borrower shall be required to make under
this clause (d) of Section 3.3.1 shall be limited to $2,368,000; provided,
further, that this clause (d) of Section 3.3.1 shall not in any event be
deemed a consent to any disposition by the Borrower or any Subsidiary which is
otherwise prohibited by the terms of this Agreement or of any of the other Loan
Documents;
(e) shall, concurrently with the receipt by the Borrower
or any Subsidiary of any Net Securities Proceeds in excess of $2,000,000 in
the aggregate during the term of this Agreement, make a mandatory prepayment of
the Loans, (x) if the outstanding principal balance of the Term Loan is equal
to or greater than $4,500,000, in an aggregate amount equal to 50% of such Net
Securities Proceeds or (y) if the outstanding principal balance of the Term
Loan is less than $4,500,000, in an aggregate amount equal to 25% of such Net
Securities Proceeds; provided that this clause (e) of Section 3.3.1 shall not
in any event be deemed a consent to any issuance of Stock or the incurrence of
Indebtedness by the Borrower or any Subsidiary which is otherwise prohibited by
the terms of this Agreement or of any of the other Loan Documents;
(f) shall, concurrently with receipt by the Borrower or
any Subsidiary of any Net Indebtedness Proceeds in excess of $50,000 in the
aggregate during any Fiscal Year, make a mandatory prepayment of the Loans, in
an aggregate amount equal to such Net Indebtedness Proceeds; provided that
this clause (f) of Section 3.3.1 shall not in any event be deemed a consent
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<PAGE> 51
to any issuance of Indebtedness by the Borrower or any Subsidiary which is
otherwise prohibited by the terms of this Agreement or any of the other Loan
Documents;
(g) shall, concurrently with the delivery of the
financial information required under clause (a)(i) of Section 6.1.1 (but in no
event later than the date such information is required to be delivered), make a
mandatory prepayment of a portion of the outstanding principal amount of the
Loans in an amount equal to 70% of Excess Cash Flow for the Fiscal Year with
respect to which such financial information was delivered or is required to be
delivered;
(h) shall, within 180 days after receipt by the Borrower
or any Subsidiary or the Agent of any condemnation awards with respect to any
Loss, make a mandatory prepayment of the Loans in an amount by which such
condemnation awards exceed the actual cost incurred to replace or restore the
property or asset which was the subject of such Loss as nearly as practicable
to conditions prior to such Loss;
(i) shall, within 180 days after receipt by the Borrower
or any Subsidiary or the Agent of any insurance proceeds with respect to any
Loss resulting from a casualty, make a mandatory prepayment of the Loans in an
amount by which such insurance proceeds exceed the actual cost incurred by the
Borrower or such Subsidiary to repair or replace the property or asset which
was the subject of the Loss or deemed Loss giving rise to such insurance
proceeds;
(j) shall, within 180 days after receipt by the Borrower
or any Subsidiary or the Agent of any insurance proceeds with respect to any
Loss resulting from a liability, make a mandatory prepayment of the Loans in an
amount by which such insurance proceeds exceed the amount of the liability to
be satisfied with such proceeds (to the extent such liability is so satisfied);
(k) shall, concurrently with the receipt by the Borrower
of any proceeds of the life insurance policies described in clause (b) of
Section 6.1.5, make a mandatory prepayment of the Loans in an amount equal to
the amount of such insurance proceeds;
(l) shall, concurrently with the receipt by the Borrower
of any amount payable by the Sellers to the Borrower pursuant to or as a result
of the breach by the Sellers of the Acquisition Agreement, make a mandatory
prepayment in an aggregate amount equal to the amount so received; and
(m) shall prepay the entire outstanding principal amount
of the Loans together with accrued and unpaid interest and all of the
outstanding Obligations hereunder upon the occurrence of a Change in Control.
SECTION 3.3.2. Application. Each prepayment or repayment of
principal required under clauses (d) through (l) of Section 3.3.1 shall be
applied (y) first, to the scheduled installments due on the Term Loan under
clause (c) of Section 3.3.1 on a pro rata basis and (z) second, to any
Revolving Loans.
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<PAGE> 52
SECTION 3.3.3. Revolving Loans on Borrower's Behalf. The
Lenders are authorized to, and at their option may, make Revolving Loans on
behalf of the Borrower for payment of all fees, expenses, charges, costs,
principal and interest owed by the Borrower to the Lenders or the Agent under
this Agreement and the other Loan Documents. Such Revolving Loans shall be
made when and as the Borrower fails promptly to pay same, and all such
Revolving Loans shall constitute Revolving Loans made to the Borrower and
shall be secured by all of the Collateral.
SECTION 3.3.4. Reduction of Revolving Loan Commitment. The
Revolving Loan Commitment shall be permanently reduced by the amount of any
prepayments required to be applied to any Revolving Loans pursuant to Section
3.3.2 (such reduction to occur regardless of whether any Revolving Loans are
outstanding).
SECTION 3.4. Interest. Interest on the outstanding
principal amount of the Loans and other outstanding Obligations shall accrue
and be payable in accordance with this Section 3.4.
SECTION 3.4.1. Term Loan Rate. Subject to Section 3.4.4,
the Term Loan or any portion thereof shall accrue interest at the following
rates per annum, at the election of the Borrower, pursuant to an appropriately
delivered Borrowing Request or Continuation/Conversion Notice:
(a) during such periods as the Term Loan or portion
thereof is a Base Rate Loan, the ING Alternate Base Rate (as in effect
from time to time) plus 1.75%, and
(b) during such periods as the Term Loan or portion
thereof is a Eurodollar Loan, for each Interest Period relating
thereto, the Eurodollar Rate for such Interest Period plus 3.25%.
SECTION 3.4.2. Revolving Loan Rate. Subject to Section
3.4.4, Borrowings of Revolving Loans shall accrue interest at the following
rates per annum, at the election of the Borrower pursuant to an appropriately
delivered Borrowing Request or Continuation/Conversion Notice:
(a) during such periods as such Borrowing consists of
Base Rate Loans, the ING Alternate Base Rate (as in effect from time
to time) plus 1.25%, and
(b) during such periods as such Borrowing consists of
Eurodollar Loans, for each Interest Period relating thereto, the
Eurodollar Rate for such Interest Period plus 2.75%.
SECTION 3.4.3. Continuation and Conversion Elections. By
delivering a Continuation/Conversion Notice to the Agent on or before 11:00
a.m., New York City time, on a Business Day, the Borrower may from time to time
irrevocably elect, on not less than three (3) nor more than five (5) Business
Days' notice, that all or any portion in an aggregate minimum amount of
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<PAGE> 53
$250,000 and an integral multiple of $50,000 in excess thereof of Revolving
Loans or the Term Loan be, in the case of Base Rate Loans, converted to
Eurodollar Loans or continued as Eurodollar Loans; provided, however, that:
(a) each such continuation or conversion shall be pro
rata among the applicable outstanding Term Percentages of the Term Loan or
Revolving Percentages of Revolving Loans, as the case may be, of all Lenders;
and
(b) no portion of the outstanding principal amount of any
Loan may be continued as, or converted into, a Eurodollar Loan when any Default
has occurred and is continuing.
The Agent shall give prompt telephonic notice to each Lender of the interest
rate determined pursuant to this Section 3.4.3 with respect to such Loans.
Absent delivery of a Continuation/Conversion Notice with respect to any
Eurodollar Loan at least three (3) Business Days before the last day of the
then current Interest Period with respect thereto, such Eurodollar Loan shall,
on such last day, automatically convert to a Base Rate Loan.
SECTION 3.4.4. Post-Default Rates. From and after the
occurrence of an Event of Default and during the continuance thereof, the
Borrower shall pay interest (after as well as before judgment) on the
outstanding principal amount of all Loans and other Obligations at a rate per
annum equal to the Post-Default Rate applicable to such Loans and Obligations.
SECTION 3.4.5. Payment Dates. Accrued interest on any
Loans shall be payable, without duplication:
(a) on the Stated Maturity Date applicable to such Loans;
(b) with respect to any portion of any Loan prepaid or
repaid pursuant to Section 3.3.1, on the date such prepayment or repayment is
due as provided in Section 3.3.1 and, in the case of a voluntary prepayment,
on the date set forth in any notice required for such prepayment;
(c) with respect to Base Rate Loans, on each Quarterly
Payment Date, commencing with the first such day following the Closing Date;
(d) with respect to Eurodollar Loans, on the last day of
each applicable Interest Period (and if such Interest Period shall exceed three
months, also on the numerically corresponding day of the third calendar month
after the commencement of such Interest Period);
(e) with respect to any Base Rate Loans converted into
Eurodollar Loans on a day which is not a Quarterly Payment Date, on the date of
such conversion; and
(f) on the date of acceleration of such Loans pursuant to
Section 7.2 or 7.3.
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<PAGE> 54
Interest accruing at the Post-Default Rate and, to the extent permitted by
applicable law, interest on overdue amounts (including overdue interest), shall
be payable upon demand.
SECTION 3.4.6. Rate Determinations. All determinations by
the Agent of the rate of interest applicable to any Loan shall be conclusive in
the absence of manifest error.
SECTION 3.4.7. Limitation on Types of Loans. Anything
herein to the contrary notwithstanding, if on or prior to the determination of
any Eurodollar Rate for any Interest Period:
(a) the Agent determines in good faith, which
determination shall be conclusive, that quotations of interest rates for the
relevant deposits referred to in the definition of "Eurodollar Rate" are not
being provided in the relevant amounts or for the relevant maturities for
purposes of determining rates of interest for Eurodollar Loans as provided
herein; or
(b) the Required Lenders determine in good faith, which
determination shall be conclusive, and notify the Agent that the relevant rates
of interest referred to in the definition of "Eurodollar Rate" upon the basis
of which the rate of interest for Eurodollar Loans for such Interest Period is
to be determined are not likely to cover adequately the cost to such Lenders of
making or maintaining Eurodollar Loans for such Interest Period;
then the Agent shall give the Borrower and each Lender prompt notice thereof,
and so long as such condition remains in effect, the Lenders shall be under no
obligation to make additional Eurodollar Loans, to continue Eurodollar Loans or
to convert Base Rate Loans into Eurodollar Loans, and the Borrower shall, on
the last day(s) of the then current Interest Period(s) for the outstanding
Eurodollar Loans, either prepay such Loans or such Loans shall be converted
into Base Rate Loans in accordance with Section 3.4.9 hereof.
SECTION 3.4.8. Illegality. Notwithstanding any other
provision of this Agreement, in the event that it becomes unlawful for any
Lender or its Applicable Lending Office to honor its obligation to make or
maintain Eurodollar Loans hereunder, then such Lender shall promptly notify the
Borrower thereof (with a copy to the Agent) and such Lender's obligation to
make or continue, or to convert Base Rate Loans into, Eurodollar Loans shall be
suspended until such time as such Lender may again make and maintain Eurodollar
Loans (in which case the provisions of Section 3.4.9 hereof shall be
applicable).
SECTION 3.4.9. Treatment of Affected Loans. If the
obligation of any Lender to make Eurodollar Loans or continue, or to convert
Base Rate Loans into, Eurodollar Loans shall be suspended pursuant to Sections
3.4.7 or 3.4.8 hereof, such Lender's Eurodollar Loans shall be automatically
converted into Base Rate Loans on the last day(s) of the then current Interest
Period(s) for Eurodollar Loans (or, in the case of a conversion required by
Sections 3.4.7 or 3.4.8 hereof, on such earlier date as such Lender may
specify to the Borrower with a copy to the Agent) and, unless and until such
Lender gives notice as provided below that the circumstances specified in
Sections 3.4.7 or 3.4.8 hereof which gave rise to such conversion no longer
exist:
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<PAGE> 55
(a) to the extent that such Lender's Eurodollar Loans
have been so converted, all payments and prepayments of principal which would
otherwise be applied to such Lender's Eurodollar Loans shall be applied instead
to its Base Rate Loans; and
(b) all Loans which would otherwise be made or continued
by such Lender as Eurodollar Loans shall be made or continued instead as Base
Rate Loans and all Base Rate Loans of such Lender which would otherwise be
converted into Eurodollar Loans shall remain as Base Rate Loans.
Promptly after the circumstances specified in Sections 3.4.7 or 3.4.8 which
gave rise to the conversion of such Lender's Eurodollar Loans pursuant to this
Section 3.4.9 no longer exist, such Lender shall give the Agent and the
Borrower notice thereof, and the Borrower may thereafter request conversion of
such Loans to Eurodollar Loans, subject to the subsequent application of
Section 3.4.7 or 3.4.8.
SECTION 3.4.10. Compensation. The Borrower shall pay to the
Agent for the account of each Lender, upon the request of such Lender through
the Agent, such amount or amounts as shall be sufficient (in the reasonable
opinion of such Lender) to compensate it for any loss, cost or expense which
such Lender determines is attributable to:
(a) any payment, prepayment or conversion of a Eurodollar
Loan made by such Lender for any reason (including, without limitation, the
acceleration of the Loans pursuant to Article 7 hereof) on a date other than
the last day of the Interest Period for such Loan; or
(b) any failure by the Borrower for any reason
(including, without limitation, the failure of any of the conditions precedent
specified in Article 4 hereof to be satisfied) to borrow a Eurodollar Loan
from such Lender on the date for such borrowing specified in the Borrowing
Request given pursuant to Section 3.1 hereof.
SECTION 3.5. Taxes.
(a) Any and all payments by the Borrower hereunder or
under the Notes or any other Loan Document shall be made, in accordance with
this Section 3.5, free and clear of and without deduction for any and all
present or future Taxes. If the Borrower shall be required by law to deduct
any Taxes from or in respect of any sum payable hereunder or under any Note to
any Lender or the Agent, (i) the sum payable shall be increased as may be
necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this Section 3.5), such Lender or
the Agent (as the case may be) receives an amount equal to the sum it would
have received had no such deductions been made, (ii) the Borrower shall make
such deductions and (iii) the Borrower shall pay the full amount deducted to
the relevant taxation authority or other authority in accordance with
applicable law.
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(b) In addition, the Borrower agrees to pay any present
or future stamp or documentary taxes or intangibles taxes or any other excise
or property taxes, transfer taxes, charges or similar levies which arise from
any payment made hereunder or under the Notes or from the execution, delivery
or registration of, or otherwise with respect to this Agreement, the Notes, or
any other Loan Document.
(c) The Borrower will indemnify each Lender and the Agent
for the full amount of the taxes, charges and levies described in clauses (a)
and (b) of this Section 3.5 (including, without limitation, any such taxes,
charges and levies imposed by any jurisdiction on amounts payable under this
Section 3.5) paid by such Lender or the Agent (as the case may be) and any
liability (including penalties, interest and expenses) arising therefrom or
with respect thereto, whether or not such taxes, charges and levies were
correctly or legally asserted. Payment under this clause (c) shall be made
within 30 days from the date such Lender or the Agent (as the case may be)
makes written demand therefor.
(d) Within 30 days after the date of any payment of
Taxes, the Borrower will furnish to the Agent, at its address referred to in
Section 9.2, the original or a certified copy of any receipt received by the
Borrower evidencing payment thereof.
(e) On or prior to the Closing Date and on or prior to
the first Business Day of each calendar year thereafter, each Foreign Lender
shall provide the Agent and the Borrower with two properly executed original
Forms 4224 and 1001 (or any successor form) prescribed by the Internal Revenue
Service or other documents satisfactory to the Borrower and the Agent, and
properly executed Internal Revenue Service Forms W-8 or W-9, as the case may
be, certifying (i) as to such Foreign Lenders's status for purposes of
determining exemption from United States withholding taxes with respect to all
payments to be made to such Foreign Lender hereunder and under the Notes or
(ii) that all payments to be made to such Foreign Lender hereunder and under
the Notes are subject to such taxes at a rate reduced to zero by an applicable
tax treaty. Each Foreign Lender agrees to provide the Agent and the Borrower
with new forms prescribed by the Internal Revenue Service upon the expiration
or obsolescence of any previously delivered form, or after the occurrence of
any event requiring a change in the most recent forms delivered by it to the
Agent and the Borrower.
(f) In the event that the Agent or any Lender receives a
refund or credit that, in the sole determination of the Agent or such Lender,
is attributable to any taxes paid on its behalf by the Borrower in accordance
with this Section 3.5, the Agent or such Lenders, as the case may be, shall
pay an amount equal to such refund or credit to the Borrower.
(g) Without prejudice to the survival of any other
agreement hereunder, the agreements and obligations contained in this Section
3.5 shall survive the payment in full of principal and interest hereunder and
under the Notes.
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SECTION 3.6. Payments, Interest Rate Computations, Other
Computations, etc. All payments by the Borrower pursuant to this Agreement,
the Notes or any other Loan Document, (a) in respect of principal or interest
on the Term Notes, shall be made by the Borrower to the Agent for the account
of the Lenders, pro rata according to their respective unpaid principal
amounts of the Term Notes, and, (b) in respect of principal or interest on the
Revolving Notes, shall be made by the Borrower to the Agent for the account of
the Lenders, pro rata according to their respective unpaid principal amounts
of the Revolving Notes. The payment of the commitment fee referred to in
Section 2.4 shall be made by the Borrower to the Agent for the account of the
Lenders entitled thereto pro rata according to their respective Revolving
Percentages. All other amounts payable to the Agent or any Lender under this
Agreement or any other Loan Document (except under Section 2.4) shall be paid
to the Agent for the account of the Person entitled thereto. All such payments
required to be made to the Agent shall be made, without setoff, deduction or
counterclaim, not later than 2:00 p.m., New York City time, on the date due, in
immediately available funds, to such account as the Agent shall specify from
time to time by notice to the Borrower. Funds received after that time shall
be deemed to have been received by the Agent on the next following Business
Day. The Agent shall promptly remit in the type of funds received to each
Lender notified to the Agent its share, if any, of such payments received by
the Agent for the account of such Lender or holder. All interest and fees
shall be computed on the basis of the actual number of days (including the
first day but excluding the last day) occurring during the period for which
such interest or fee is payable over a year comprised of 360 days (365 days in
the case of interest computed on the basis of the ING Alternate Base Rate).
Whenever any payment to be made shall otherwise be due on a day which is not a
Business Day, such payment shall be made on the immediately preceding Business
Day.
SECTION 3.7. Proration of Payments. If any Lender shall
obtain any payment or other recovery (whether voluntary, involuntary, by
application of setoff or otherwise) on account of principal of or interest on
any Loan or other Obligations in excess of such Lender's or holder's pro rata
share of payments then or therewith obtained thereon by all Lenders, such
Lender which has received in excess of its pro rata share shall purchase from
the other Lenders such participations in such Notes or other Obligations held
by them as shall be necessary to cause such purchaser to share the excess
payment or other recovery ratably with each of them; provided, however, that
if all or any portion of the excess payment or other recovery is thereafter
recovered from such purchasing holder, the purchase shall be rescinded and the
purchase price restored to the extent of such recovery, but without interest.
The Borrower agrees that any Lender so purchasing a participation from another
Lender pursuant to this Section 3.7 may, to the fullest extent permitted by
law, exercise all its rights of payment (including pursuant to Section 3.8)
with respect to such participation as fully as if such Lender were the direct
creditor of the Borrower in the amount of such participation. If under any
applicable bankruptcy, insolvency or other similar law, any Lender receives a
secured claim in lieu of a setoff to which this Section 3.7 applies, such
Lender shall, to the extent practicable, exercise its rights in respect of such
secured claim in a manner consistent with the rights of the Lenders under this
Section 3.7 to share in the benefits of any recovery on such secured claim.
SECTION 3.8. Setoff. In addition to, and not in
limitation of, any rights of any Lender under applicable law, each Lender
shall, upon the occurrence and during the continuance of
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any Event of Default, have the right to appropriate and apply to the payment
of the Obligations owing to it (whether or not then due), and (as security for
such Obligations) the Borrower hereby grants to each Lender, a continuing
security interest in, any and all balances, credits, deposits, accounts or
moneys of the Borrower then or thereafter maintained with such Lender;
provided, however, that any such appropriation and application shall be
subject to the provisions of Section 3.7.
SECTION 3.9. Use of Proceeds.
(a) The Borrower shall use the proceeds of the Term Loan
and the initial Revolving Loans on the Closing Date (i) to pay a portion of the
"Preliminary Purchase Price" (as such term is defined in the Acquisition
Agreement), (ii) to pay costs and expenses arising in connection with the
transactions contemplated hereby which are set forth in Item 1 ("Transaction
Costs") of the Disclosure Schedule (subject to the Agent's approval of such
costs and expenses), (iii) to refinance existing Indebtedness set forth on
Item 4 ("Indebtedness to be Refinanced") of the Disclosure Schedule and (iv) to
make loans in an aggregate amount not to exceed $700,000 to various employees
of the Borrower and its Subsidiaries, which loans will be used to finance the
employees' acquisition of the Borrower's Series A Preferred Stock all as more
specifically described in Item 2 ("Sources and Uses") of the Disclosure
Schedule.
(b) The Borrower shall use the proceeds of the Revolving
Loans made after the Closing Date for the on-going working capital needs of the
Borrower and its Subsidiaries.
(c) No part of the proceeds of any Loans shall be used
for any purpose which violates Regulations G, T, U or X of the F.R.S. Board.
ARTICLE 4.
CONDITIONS TO LOANS
SECTION 4.1. Initial Loan. The obligations of the
Lenders to fund the Term Loan and the initial Revolving Loans on the Closing
Date shall be subject to the prior or concurrent satisfaction of each of the
conditions precedent set forth in this Section 4.1.
SECTION 4.1.1. Resolutions, etc. The Agent shall have
received:
(a) a certificate, dated the Closing Date, of the
Secretary of each Loan Party as of the Closing Date as to:
(i) resolutions of its Board of Directors, then in full
force and effect authorizing the execution, delivery and performance
of the Loan Documents to which such Loan Party is a party and the
related transactions contemplated thereby, and
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(ii) the incumbency and signatures of those of its
officers authorized to act with respect to the Loan Documents to which
it is party, upon which certificate each Lender may conclusively rely
until it shall have received further certificates of the Secretary of
such Loan Party canceling or amending such prior certificates;
(b) copies of the Organic Documents of each Loan Party as
of the Closing Date certified by, in the case of the charters, the appropriate
Governmental Authority of the State of such Loan Party's incorporation and, in
the case of its other Organic Documents, such Loan Party's Secretary, which
documents shall be satisfactory to the Agent;
(c) a so-called "good standing" certificate with respect
to each Loan Party as of the Closing Date from the appropriate Governmental
Authority of the State of its incorporation;
(d) evidence of qualification of each Loan Party as of
the Closing Date to do business in each other jurisdiction in which the failure
to so qualify could result in a Material Adverse Change; and
(e) such other documents (certified if requested) as the
Agent or the Required Lenders may reasonably request, with respect to this
Agreement, the Notes, any other Loan Document, the transactions contemplated
hereby and thereby, or any Organic Document, Contractual Obligation or
Regulatory Approval.
SECTION 4.1.2. Notes. The Agent shall have received for
the account of each Lender, such Lender's Term Note and Revolving Note, in each
case duly executed and delivered pursuant to Section 3.2.
SECTION 4.1.3. Subsidiary Guaranty. The Agent shall have
received for the account of each Lender the Subsidiary Guaranty, duly executed
and delivered by each Subsidiary of the Borrower.
SECTION 4.1.4. No Contest, etc. No litigation,
arbitration, governmental investigation, injunction, proceeding or inquiry
shall be pending or, to the knowledge of the Borrower, threatened which:
(a) seeks to enjoin or otherwise prevent the consummation
of, or to recover any damages or obtain relief as a result of, the transactions
contemplated by or in connection with the Acquisition Agreement, this Agreement
or any Loan Document; or
(b) would, in the opinion of the Agent, be materially
adverse to any of the parties hereto with respect to the transactions
contemplated hereby;
No litigation set forth in Item 3 (Litigation) of the Disclosure Schedule, in
the reasonable opinion of the Agent, could result in a Material Adverse Change
or give rise to any liability on the part of the
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Agent or any Lender in connection with this Agreement or the other Loan
Documents or the transactions contemplated hereby or thereby.
SECTION 4.1.5. Certificate as to Completed Conditions,
Warranties, No Default, etc. The Agent shall have received a certificate,
dated the Closing Date, of the chief executive officer of the Borrower, to the
effect that:
(a) all conditions precedent set forth in this Section
4.1 have been satisfied;
(b) all representations and warranties set forth in
Article 5 are true and correct in all material respects;
(c) all representations and warranties set forth in the
Loan Documents are true and correct in all material respects; and
(d) no Default or Event of Default has occurred and is continuing.
SECTION 4.1.6. Opinions of Counsel. The Agent shall have
received opinion letters, dated the Closing Date and addressed to the Agent and
all Lenders, from Christy & Viener, counsel to the Borrower and its
Subsidiaries, in form and substance satisfactory to the Agent, and covering
such matters as the Agent may request. Additionally, the Agent shall have
received opinion letters, dated the Closing Date and addressed to the Agent and
all Lenders from local counsel to the Borrower and the Subsidiaries in the
states of Delaware, Maryland and Nevada, in form and substance satisfactory to
the Agent and covering such matters as the Agent may request.
SECTION 4.1.7. Closing Fees, Expenses, etc. The Agent
shall have received the facility fee, which was due and payable pursuant to the
terms of the Facility Fee Letter, and all costs and expenses which have been
invoiced and are payable upon the initial Borrowing pursuant to Section 9.3.
SECTION 4.1.8. Security Documents and Perfection. The
Agent shall have received:
(a) The Security Agreement, duly executed by an
Authorized Officer of the Borrower and each Eligible Subsidiary of the
Borrower;
(b) The Borrower Trademark Assignment duly executed by an
Authorized Officer of the Borrower, and the Subsidiary Trademark Assignment
duly executed by an Authorized Officer of each Subsidiary of the Borrower
owning U.S. patents or trademarks;
(c) Evidence of the execution and delivery of all filings
of the Financing Statements with respect to the Security Agreement and other
Security Documents; searches or other evidence as to the absence of any
perfected security interests or Liens (except those previously
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disclosed to and consented to by the Lenders); and evidence that all other
actions (including all actions necessary such that the Trademark Assignment are
acceptable for filing in the United States Patent and Trademark Office and the
payment of all documentary, intangibles, filing and recording taxes and fees)
with respect to the Liens created by the Security Documents have been taken as
are necessary or appropriate to perfect such Liens;
(d) The Borrower Pledge Agreement, duly executed by an
Authorized Officer of the Borrower, and the Subsidiary Pledge Agreement, duly
executed by an Authorized Officer of each Subsidiary.
(e) All (i) stock certificates and undated stock powers
duly executed in blank relating thereto with respect to the pledged securities
under the Borrower Pledge Agreement or the Subsidiary Pledge Agreement, which
pledged securities shall consist of the Citigate Shares, all outstanding Stock
of all other Subsidiaries of the Borrower, and all stock of the Borrower
pledged to the Borrower by its employees, officers and directors, and (ii) all
promissory notes, including, without limitation, the Goldstein Note, and other
instruments owned by Borrower duly endorsed in blank pledged under the Borrower
Pledge Agreement or the Subsidiary Pledge Agreement.
(f) A collateral assignment to the Agent, for its benefit
and the ratable benefit of the Lenders, of the Borrower's rights under the
Acquisition Agreement and all other documents executed or delivered by the
Sellers pursuant to the Acquisition Agreement, duly consented to by the
Sellers, which assignment shall be in form and substance satisfactory to the
Agent; and
(g) An assignment to the Agent, for its benefit and the
ratable benefit of the Lenders, of the insurance policies described in Section
4.1.12 (with respect to which the insurer shall have executed and delivered to
the Agent a written consent), which assignment shall be in form and substance
satisfactory to the Agent.
SECTION 4.1.9. Employment Agreements; Compensation. The
Agent shall have received, certified by the Borrower, copies of all employment
agreements to which the Borrower or any of its Subsidiaries is a party and the
Agent shall be satisfied in all respects with the levels of compensation
(including, without limitation, fees, wages, salaries, bonuses, deferred
payment arrangements, stock options, incentive plans and pension or employee
benefit contributions) paid to key members of management.
SECTION 4.1.10. Pension and Welfare Liabilities. The Agent
shall have received (i) the most recent actuarial valuation report for each
Single Employer Plan, if any, and a copy of Schedule B to the Annual Report on
Form 5500 of the Internal Revenue Service for each such Single Employer Plan
most recently filed with the Internal Revenue Service, and (ii) a report
prepared by the Borrower in form and substance satisfactory to the Agent
detailing any liabilities of the Borrower and each of its Subsidiaries, and of
each Commonly Controlled Entity of the Borrower for post-retirement benefits
under Plans which are welfare benefit plans.
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SECTION 4.1.11. Insurance. The Agent shall have received
evidence satisfactory to it that the insurance maintained by the Borrower and
its Subsidiaries is issued by an insurance company with a Best's rating of "A"
or better and a financial size category of not less than XII, is in amounts
satisfactory to the Agent and, in the case of insurance maintained by the
Borrower and its Subsidiaries, under policies naming the Agent as loss payee
(in the case of casualty insurance policies) and as additional insured (in the
case of liability policies), and otherwise complying with the requirements of
this Agreement and the Security Documents.
SECTION 4.1.12. Key Man Insurance. The Borrower shall have
purchased "key-man" life insurance policies in the total amount of
$11,510,700.00 on the lives of Gary S. Goldstein, Alicia C. Lazaro, Eugene Y.
Shen, Russ Gerson, Ken Watanabe, Ronald Wendlinger, Michael List and Irene
Cohen.
SECTION 4.1.13. Financial Information, etc. The Agent shall
have received the historical financial statements referred to in Section 5.4,
the Closing Date Pro Forma Balance Sheet, a Fair Saleable Value Balance Sheet
for the Borrower as of the Closing Date and the Projections.
SECTION 4.1.14. Solvency, etc. The Fair Saleable Value
Balance Sheet for the Borrower and each Subsidiary as of the Closing Date shall
show that the assets of the Borrower and each Subsidiary are at least
$_________________ greater than the liabilities of the Borrower and each
Subsidiary (including all liabilities and obligations of the Borrower and each
Subsidiary, fixed or contingent, direct or indirect, disputed or undisputed,
and whether or not required to be reflected on a balance sheet prepared in
accordance with GAAP, except to the extent noted thereon); and the Agent shall
have received a certificate of the chief operating officer of the Borrower and
each Subsidiary dated the Closing Date, stating that, after giving effect to
the consummation of the transactions contemplated by this Agreement to occur on
the Closing Date (including the Acquisition and the making of the Term Loan and
the initial Revolving Loans), the Borrower and each Subsidiary is Solvent.
SECTION 4.1.15. Acquisition. The Acquisition Agreement
shall remain in full force and effect and shall not have been amended, modified
or supplemented without the Agent's approval, all conditions precedent to the
consummation by the Borrower of the transactions contemplated by the
Acquisition Agreement shall have been fully satisfied or waived with the
consent of the Agent, the Borrower shall have delivered to the Agent evidence
satisfactory to the Agent that the Acquisition shall be consummated
simultaneously with the funding of the Term Loan and the initial Revolving
Loans substantially in accordance with the terms of the Acquisition Agreement,
and the Borrower shall have delivered to the Agent each of the following:
(a) resolutions of the boards of directors and, to the
extent required, the stockholders of the Borrower, certified by the Secretary
of the Borrower, to be duly adopted and in full force and effect on the Closing
Date, authorizing the execution, delivery and performance of the Acquisition
Agreement;
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(b) certified copies of all documents evidencing any
other necessary corporate action, consents and Regulatory Approvals with
respect to the consummation of the transactions contemplated by the Acquisition
Agreement;
(c) copies of all legal opinions delivered in connection
with the Acquisition together with an original of a reliance letter in favor of
the Agent and the Lenders from each of the counsel delivering such opinions;
and
(d) a certificate from the chief executive officer of
Borrower to the effect that attached thereto are true and correct copies of the
Acquisition Agreement and each of the material documents, instruments and
agreements executed and delivered pursuant to the Acquisition Agreement and
making such statements of fact concerning the Acquisition and the other
transactions consummated pursuant to such agreements as the Agent shall
reasonably request.
SECTION 4.1.16. Additional Equity. The Agent shall have
received evidence that, since April 9, 1996, the Borrower has received not less
than $6,000,000 in cash proceeds from the issuance of its Stock. Additionally,
the Agent shall have received copies, certified by the Borrower, evidencing
such additional stock and the Required Lenders shall be satisfied with the
terms and conditions of such documents.
SECTION 4.1.17. Releases of Liens on Assets. All
Indebtedness of the Borrower and any other Loan Party described on Item 4
("Indebtedness to be Refinanced") of the Disclosure Schedule shall have been
paid in full and all holders of such Indebtedness shall have acknowledged such
repayment, released the Borrower and any other Loan Party from any liability in
respect of such Indebtedness, and released all Liens on the assets securing
such Indebtedness by executing and delivering to the Agent UCC-3 termination
statements and other Instruments as shall be suitable or appropriate in
connection therewith.
SECTION 4.1.18. Review of the Borrower's Operations. The
Agent or its representatives shall have completed their review of the
Borrower's management information systems, accounting, financial reporting and
cash management systems as well as the legal structure of each Loan Party and
the nature of each Loan Party's asset composition and contingent liabilities,
and the Agent shall be satisfied in all respects with the results of such
review.
SECTION 4.1.19. Material Contracts. The Agent shall have
received a certificate from an Authorized Officer of the Borrower to the effect
that attached thereto are true and correct copies of each of the items listed
on Item 5 ("Material Contracts") of the Disclosure Schedule, and the Agent
shall be satisfied in all respects with terms of such items.
SECTION 4.1.20. Letter to Accountants. The Agent shall have
received satisfactory evidence that the Borrower has delivered a letter to its
independent public accountants authorizing such public accountants to discuss
the Borrower's and each other Loan Party's financial
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matters with the Agent and each Lender or any of their respective
representatives whether or not a representative of the Borrower is present.
SECTION 4.1.21. Other Documents, Certificates, Etc. The
Agent shall have received such other documents, certificates, opinions of
counsel or other materials as it reasonably requests from any Loan Party.
SECTION 4.2. All Loans. The obligations of the Lenders
to fund the Revolving Loans after Date shall be subject to the prior or
concurrent satisfaction of each of the conditions precedent set forth in this
Section 4.2.
SECTION 4.2.1. Compliance with Warranties, No Default, etc.
The representations and warranties set forth in Article 5 shall have been true
and correct in all material respects as of the date initially made. In
addition, both before and after giving effect to the making of any such Loan:
(a) such representations and warranties shall be
true and correct in all material respects with the same effect as if
then made (except to the extent expressly made as of a specified date,
in which case such representations and warrants shall be true as of
such specified date);
(b) all representations and warranties set forth
in the Security Documents shall be true and correct in all material
respects with the same effect as if then made (except to the extent
expressly made as of a specified date, in which case such
representations and warrants shall be true as of such specified date);
(c) no material adverse development shall have
occurred in any litigation, arbitration or governmental investigation,
proceeding or inquiry disclosed pursuant to Section 5.7 which renders
such litigation, arbitration or governmental investigation or inquiry
or proceeding, in the reasonable opinion of the Required Lenders,
likely to be adversely determined and, if adversely determined, could
result in a Material Adverse Change; and
(d) no Default or Event of Default shall have occurred and be continuing.
SECTION 4.2.2. Borrowing Request, etc. The Agent shall
have received a duly completed Borrowing Request. The delivery of any such
Borrowing Request, and the acceptance by the Borrower of the proceeds of any
such Loan, shall constitute a representation and warranty by the Borrower that
on the date of such request for a Loan, and before and after giving effect to
the making of such Loan and the application of any proceeds of such Loan, all
statements set forth in Section 4.2.1 are true and correct. In the event
that, in connection with the delivery of any such Borrowing Request the
Borrower is required to amend any Item of the Disclosure Schedule in order that
the statement set forth in clause (a) or (b) of Section 4.2.1 shall be true
and correct, the Borrower shall deliver to the Agent at least three (3)
Business Days prior to the date of the
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Borrowing requested or to be requested, a request that such Item of the
Disclosure Schedule be amended, and the Agent shall promptly forward such
request to the Lenders. To the extent that the Required Lenders agree to such
requested amendment or otherwise make any Loans after receipt of such request,
the representations and warranties proposed to be amended by such amendment to
the Disclosure Schedule will be deemed amended for purposes of this Agreement.
SECTION 4.2.3. Satisfactory Legal Form. All documents
executed or submitted by or on behalf of the Borrower or any Subsidiary shall
be reasonably satisfactory in form and substance to the Agent and its counsel,
the Agent and its counsel shall have received all information, and such
counterpart originals or such certified or other copies of such Instruments, as
the Agent or its counsel may request. All legal matters incident to the
transactions contemplated by this Agreement shall be satisfactory to counsel to
the Agent.
SECTION 4.2.4. Margin Regulations. The making of such Loan
and the use of the proceeds thereof shall not violate Regulations G, T, U and X
of the F.R.S. Board.
SECTION 4.2.5. Adverse Change. In the reasonable judgment
of the Required Lenders, no Material Adverse Change shall have occurred since
the Closing Date.
SECTION 4.2.6. Change in Law. On the date of such Loan, no
change shall have occurred in applicable law, or in applicable regulations
thereunder or in interpretations thereof by any court or Governmental Authority
which, in the opinion of any Lender, would make it illegal for such Lender to
make the Loan required to be made on such date.
ARTICLE 5.
WARRANTIES, ETC.
In order to induce the Lenders and the Agent to enter into
this Agreement, to engage in the transactions contemplated herein and in the
other Loan Documents and to make the Loans, the Borrower represents and
warrants to the Agent and each Lender as set forth in this Article 5.
SECTION 5.1. Organization, Power, Authority, etc. Each
of the Borrower and its Subsidiaries (i) is a corporation validly organized and
existing and in good standing under the laws of the jurisdiction of its
incorporation, (ii) is duly qualified to do business and is in good standing as
a foreign corporation in each jurisdiction where the failure to so qualify
could result in a Material Adverse Change, and (iii) has full power and
authority, and, except as set forth in Item 6 ("Governmental Licenses") of the
Disclosure Schedule, holds all governmental licenses, permits, registrations
and other Regulatory Approvals required under all Requirements of Law, to own
and hold under lease its property and to conduct its business as conducted
prior to the Closing Date and as contemplated to be conducted subsequent to the
Closing Date. The Borrower has full power and
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authority to enter into and perform its Obligations under this Agreement, the
Notes and each other Loan Document executed or to be executed by it and to
obtain Loans hereunder.
SECTION 5.2. Due Authorization. The execution and
delivery by each Loan Party of each Loan Document executed or to be executed by
it, and the incurrence and performance by such Loan Party of the Obligations
have been duly authorized by all necessary corporate action, do not require any
Regulatory Approval (except those Regulatory Approvals already obtained), do
not and will not conflict with, result in any violation of, or constitute any
default under, any provision of any Organic Document or Contractual Obligation
of such Loan Party or any law or governmental regulation or court decree or
order, and will not result in or require the creation or imposition of any such
Lien on such Loan Party's properties pursuant to the provisions of any
Contractual Obligation of such Loan Party.
SECTION 5.3. Validity, etc. Each of this Agreement, the
Notes and the other Loan Documents constitutes, the legal, valid and binding
obligation of the each Loan Party executing and delivering such Loan Document,
enforceable in accordance with its terms subject to the effect of any
applicable bankruptcy, insolvency, moratorium or similar laws affecting
creditors' rights generally, and the effect of general principles of equity
(regardless of whether considered in a proceeding in equity or at law).
SECTION 5.4. Financial Information; Solvency.
(a) Except as disclosed in Item 7 ("Exceptions to GAAP")
of the Disclosure Schedule, all balance sheets, all statements of operations,
stockholders' equity and cash flows, and all other financial information of the
Borrower and its Subsidiaries which have been furnished by or on behalf of the
Borrower and its Subsidiaries to the Agent and the Lenders for the purposes of
or in connection with this Agreement or any transaction contemplated hereby,
including:
(i) the consolidated audited balance sheets of the
Borrower as of December 31, 1994 and December 31, 1995, and the
related consolidated statements of income and cash flows for each of
the two (2) fiscal years of the Borrower ending December 31, 1994 and
December 31, 1995, together with the opinion thereon of Mortenson and
Associates, P.C.;
(ii) the unaudited consolidated balance sheets of the
Borrower as of March 31, 1996, and the related consolidated statements
of income for the fiscal quarter of the Borrower ending March 31,
1996, together with the report of the chief financial officer of the
Borrower;
(iii) the consolidated reviewed balance sheets of Irene
Cohen as of December 31, 1994 and December 31, 1995, and the related
consolidated statements of income and cash flows for each of the two
(2) fiscal years of Irene Cohen ending December 31, 1994 and December
31, 1995, together with the opinion thereon of Rosenblatt, Slavet &
Redezky, C.P.A., P.C.;
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(iv) the unaudited consolidated balance sheets of Irene
Cohen as of March 31, 1996 and the related consolidated statements of
income for the fiscal quarter of Irene Cohen ending March 31, 1996,
together with the report of the chief financial officer of Irene
Cohen;
(v) the Closing Date Pro Forma Balance Sheet;
(vi) the Projections;
have been prepared in accordance with GAAP consistently applied (except to the
extent items in the Closing Date Pro Forma Balance Sheet, and the Projections
are based upon estimates) throughout the periods involved and present fairly in
all material respects the matters reflected therein subject, in the case of
unaudited statements, to changes resulting from normal year-end audit
adjustments and except as to the absence of footnotes. As of the Closing Date,
the Borrower nor any of its respective Subsidiaries has material contingent
liabilities or material liabilities for taxes, long-term leases or unusual
forward or long-term commitments which are not reflected in the financial
statements described in clauses (i), (ii), (iii), (iv), and (v).
(b) After giving effect to the consummation of the
transactions contemplated by this Agreement and the other Loan Documents to
occur on the Closing Date (including the Acquisition and the Loan and the
initial Revolving Loans), the Borrower and each Subsidiary is Solvent.
SECTION 5.5. Material Adverse Change. Since December 31,
1995, there has been no material adverse change in the condition (financial or
otherwise), operations, performance, business, properties or prospects of the
Borrower and its Subsidiaries taken as a whole, or in any industry in which the
Borrower or any of its Subsidiaries is engaged in any material respect.
SECTION 5.6. Absence of Default. Neither the Borrower
nor any Subsidiary is in default in the payment of (or in the performance of
any material obligation applicable to) any Indebtedness, or is in material
default under any regulation of any Governmental Agency or court decree or
order, or is in default under any Requirements of Law which default could
result in a Material Adverse Change.
SECTION 5.7. Litigation, Legislation, etc. Except as
disclosed in Item 3 (Litigation) of the Disclosure Schedule, there is no
pending or, to the knowledge of the Borrower, threatened litigation,
arbitration or governmental investigation, proceeding or inquiry which, if
adversely determined, could result in a Material Adverse Change; and none of
the proceedings set forth in such Item 3 seeks to amend, modify or enjoin the
transactions contemplated hereby or is likely to be adversely determined. To
the knowledge of the Borrower, there is no legislation, governmental regulation
or judicial decision that could result in a Material Adverse Change.
SECTION 5.8. Regulations G, T, U and X. Neither the
Borrower nor any Subsidiary is engaged principally, or as one of its important
activities, in the business of extending
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credit for the purpose of purchasing or carrying Margin Stock (as defined in
F.R.S. Board Regulation G or U) and, no assets of the Borrower or any
Subsidiary consist of Margin Stock. The Loans hereunder will not be used for a
purpose which violates, or would be inconsistent with, F.R.S. Board Regulation
G, T, U or X.
SECTION 5.9. Government Regulation. Neither the Borrower
nor any Subsidiary is an "investment company" within the meaning of the
Investment Holding Company Act of 1940, as amended, or a "holding company," or
a "subsidiary company" of a "holding company," or an "affiliate" of a "holding
company" or of a "subsidiary company" of a "holding company," within the
meaning of the Public Utility Holding Company Act of 1935, as amended, or
subject to regulation under the Federal Power Act, the Interstate Commerce Act
or any other federal or state law limiting its ability to incur Indebtedness or
to execute, deliver or perform the Loan Documents to which it is party.
SECTION 5.10. Taxes. Each of the Borrower and its present
or past Subsidiaries has filed all tax returns and reports required by law to
have been filed by it and has paid all taxes and Charges thereby shown to be
owing, except any such taxes or Charges which are being diligently contested in
good faith by appropriate proceedings and for which adequate reserves in
accordance with GAAP shall have been set aside on its books.
SECTION 5.11. Pension and Welfare Plans. (a) Except as
disclosed in Item 8 (Benefit Plans) of the Disclosure Schedule, neither the
Borrower nor any Subsidiary or Commonly Controlled Entity has assumed any
material liability under any employee benefit plan, fund, program,
arrangement, agreement or commitment maintained by or on behalf of or
contributed to by or on behalf of any entity or trade or business which,
together with any of such corporations, is treated as a single employer under
Sections 414(b), (c), (m) or (o) of the IRC. Neither the Borrower nor any
Subsidiary or Commonly Controlled Entity shall be subject (directly or
indirectly) to any material liability, tax or penalty whatsoever to any person
whomsoever with respect to any employee benefit plan, fund, program,
arrangement, agreement or commitment described in the immediately preceding
sentence.
(b) No Reportable Event which could result in a Material
Adverse Change has occurred during the six-year period prior to the date on
which this representation is made or deemed made with respect to any Single
Employer Plan. The Borrower, each Commonly Controlled Entity, each Subsidiary,
each Plan, and each trust maintained pursuant to any such Plan have complied in
all material respects with the applicable provisions of ERISA, the IRC, and any
other applicable laws. Except as disclosed in Item 8 (Benefit Plans) of the
Disclosure Schedule, the present value of all "benefit liabilities" (within the
meaning of Section 4001(a)(16) of ERISA) under each Single Employer Plan
maintained by the Borrower, any Subsidiary or any Commonly Controlled Entity
(based on those assumptions that would be used in a termination of each such
Plan) did not, as of the last annual valuation date for which an actuarial
valuation report has been done, exceed the value of the assets of such Plan as
of such date. Except as disclosed in such Item 8, neither the Borrower nor
any Commonly Controlled Entity or Subsidiary has incurred any liability to the
PBGC or to any other
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Person under Section 4062, 4063 or Section 4064 of ERISA on account of the
termination of, or its withdrawal from, a Single Employer Plan, and no Lien has
been imposed on the assets of the Borrower or any Commonly Controlled Entity
or Subsidiary under Section 4068 of ERISA. To the knowledge of the Borrower
and any Commonly Controlled Entities and Subsidiaries, there does not exist any
event or condition which would permit the institution of proceedings to
terminate any Single Employer Plan pursuant to Section 4042 of ERISA. Except
as disclosed in Item 8 of the Disclosure Schedule, no "accumulated funding
deficiency" (as defined in Section 302 of ERISA or Section 412 of IRC), whether
or not waived, exists with respect to any Pension Plan. The Borrower and each
Commonly Controlled Entity and Subsidiary have timely made in full each
quarterly installment payment to any Pension Plan required under Section 302(e)
of ERISA or Section 412(m) of the IRC and have also made full and timely
payment of any other costs or expenses related to such a Plan. The Borrower
and all Commonly Controlled Entities and Subsidiaries have made full and timely
payment of all contributions to Multiemployer Plans required under ERISA, the
IRC or applicable collective bargaining agreements. Neither the Borrower nor
any Commonly Controlled Entity or Subsidiary has had a complete or partial
withdrawal from any Multiemployer Pension Plan and the liability to which the
Borrower or any Commonly Controlled Entity or Subsidiary would become subject
under ERISA if the Borrower or any such Commonly Controlled Entity or
Subsidiary were to withdraw completely from all Multiemployer Pension Plans as
of the valuation date most closely preceding the date hereof is not in excess
of $100,000. No such Multiemployer Pension Plan has been terminated or is in
Plan Reorganization or ERISA Insolvent, nor, to the knowledge of the Borrower
and any Commonly Controlled Entities and Subsidiaries, is any such
Multiemployer Pension Plan likely to be terminated or to become in Plan
Reorganization or ERISA Insolvent. To the knowledge of the Borrower and any
Commonly Controlled Entities and Subsidiaries, no "accumulated funding
deficiency" (as defined in Section 302 of ERISA or Section 412 of the IRC),
whether or not waived, exists with respect to any Multiemployer Plan. The
present value (determined using assumptions which are reasonable in respect of
the benefits provided and the employees participating) of the aggregate
liability of the Borrower and each Subsidiary and Commonly Controlled Entity
for post-retirement benefits to be provided to their current and former
employees under Plans which are welfare benefit plans (as defined in Section
3(1) of ERISA) is not in excess of $100,000. No written notice of liability
has been received with respect to the Borrower, any of its Subsidiaries, or any
Plan for any "prohibited transaction" (within the meaning of Section 4975 of
the IRC or Section 406 of ERISA), nor has any such prohibited transaction
resulting in material liability to the Borrower or any of its Subsidiaries
occurred. Neither the Borrower nor any Subsidiary or Commonly Controlled
Entity will, as a result of consummating the transactions contemplated by this
Agreement (pursuant to the provisions of the Agreement, by operation of law or
otherwise) (i) have incurred or become liable for any tax assessed by the
Internal Revenue Service for any alleged violations of Section 4975 of the IRC
or any civil penalty imposed by the Department of Labor for any alleged
violations of Section 406 of ERISA, (ii) have caused or permitted to occur any
"prohibited transaction" within the meaning of such Section 4975 of the IRC or
Section 406 of ERISA with respect to any Plan for which no exemption is
available or (iii) have incurred any liability to the PBGC (other than ordinary
and usual PBGC premium liability) or any liability for complete or partial
withdrawal to any Multiemployer Plan. Neither the Borrower nor any Subsidiary
is subject (directly or indirectly) to, and no facts exist which could subject
the Borrower or any Subsidiary
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(directly or indirectly) to, any other liability, penalty, tax or lien
whatsoever, which could result in a Material Adverse Change and which is
directly or indirectly related to any Plan, including, but not limited to,
liability for any damages or penalties arising under Title I or Title IV of
ERISA, liability for any tax or penalty resulting from a loss of deduction
under Section 404 or 419 of the IRC, any tax or penalty under chapter 43 of the
IRC, or any taxes or penalties under any other applicable law, but excluding
any liability to make contributions or pay premiums to or under an ongoing Plan
before the last due date on which such contributions or premiums could be paid
or made without penalty or to pay benefits when due in accordance with Plan
terms.
SECTION 5.12. Labor Controversies. Except as disclosed in
Item 9 (Labor Controversies) of the Disclosure Schedule, there are no labor
controversies pending or, to the best knowledge of the Borrower, threatened,
relating to the Borrower or any Subsidiary. There is (i) no unfair labor
practice complaint pending against the Borrower, or any of its Subsidiaries or,
to the best knowledge of the Borrower, threatened against any of them, before
the National Labor Relations Board, and no arbitration proceeding arising out
of or under any collective bargaining agreement or the Borrower's internal
grievance procedures is so pending against the Borrower or any of its
Subsidiaries or, to the best knowledge of the Borrower, threatened against any
of them, (ii) no strike, labor dispute, slowdown or stoppage is pending against
the Borrower or any of its Subsidiaries or, to the best knowledge of the
Borrower, threatened against the Borrower or any of its Subsidiaries and (iii)
no union representation question existing with respect to the employees of the
Borrower or any of its Subsidiaries. Each of the Borrower and its Subsidiaries
is in compliance in all material respects with all collective bargaining
agreements to which it is subject.
SECTION 5.13. Ownership of Properties; Collateral. (a)
Each of the Borrower and its Subsidiaries owns good title to all of its
material personal properties and assets of any nature whatsoever, free and
clear of all Liens except as permitted pursuant to Section 6.2.3.
(b) The provisions of the Security Agreement are
effective to create in favor of the Agent for the benefit of the Agent and the
Lenders, a legal, valid and enforceable security interest in all right, title
and interest of the Loan Parties in the Collateral described therein, and, upon
the filing of the Financing Statements and any required filing in the United
States Patent and Trademark Office pursuant to Section 4.1.8, the Security
Documents will create a fully perfected first Lien on, and the security
interest in, all right, title and interest of the Loan Parties in all of the
Collateral described therein, to the extent that a security interest therein
can be perfected by such a filing, subject to no other Liens other than Liens
permitted by Section 6.2.3.
SECTION 5.14. Intellectual Property. Each of the Borrower
and its Subsidiaries owns or licenses all such Intellectual Property, and has
obtained assignments of all licenses and other rights, as the Borrower
considers necessary for or as are otherwise material to the conduct of the
business of the Borrower and its Subsidiaries as now conducted without,
individually or in the aggregate, any infringement upon rights of other Persons
which could result in a Material Adverse Change. All Intellectual Property
owned or licensed from third Persons described in this Section 5.14 is set
forth in Item 10 (Intellectual Property) of the Disclosure Schedule.
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SECTION 5.15. Accuracy of Information. All factual
information heretofore or contemporaneously furnished by or on behalf of the
Borrower in writing to the Agent or any Lender for purposes of or in connection
with this Agreement or any transaction contemplated hereby is true and accurate
in every material respect on the date as of which such information is dated or
certified and as of the date of execution and delivery of this Agreement by the
Agent or such Lender and such information is not incomplete by omitting to
state any material fact necessary to make such information not misleading.
Neither this Agreement nor any document or statement furnished to the Agent or
any of the Lenders by or on behalf of the Borrower contains any untrue
statement of a material fact or omits to state any material fact necessary in
order to make the statements contained herein or therein not materially
misleading. The Agent and the Lenders recognize that the Projections are not
to be viewed as facts and that actual results during the period or periods
covered by the Projections may differ from the projected or forecasted results.
SECTION 5.16. Insurance. All policies of insurance in
effect of any kind or nature owned by or issued to the Borrower and its
Subsidiaries, including policies of life, fire, theft, product liability,
public liability, property damage, other casualty, employee fidelity, workers'
compensation, property and liability insurance, (a) are listed in Item 11
(Insurance) of the Disclosure Schedule as of the Closing Date, (b) are,
together with all policies of employee health and welfare and title insurance,
in full force and effect, (c) comply in all respects with the applicable
requirements set forth herein and in the Security Documents and (d) are of a
nature and provide such coverage as is customarily carried by companies engaged
in similar businesses and owning similar properties in the same general areas
in which the Borrower and its Subsidiaries operate. Neither the Borrower nor
any of its Subsidiaries provides any of its insurance through self-insurance
except as disclosed in Item 11 of the Disclosure Schedule.
SECTION 5.17. Certain Indebtedness. Item 12 (Existing
Indebtedness) of the Disclosure Schedule sets forth all Indebtedness of the
Borrower and its Subsidiaries as of the Closing Date that is not to be
refinanced on the Closing Date, and which (a) is for borrowed money, or (b) is
not incurred in the ordinary course of the business of the Borrower or any
Subsidiary in a manner and to the extent consistent with past practice, or (c)
is material to the financial condition, operations, businesses, properties or
prospects of the Borrower or any Subsidiary.
SECTION 5.18. Environmental Matters. Except as disclosed
in Item 13 (Environmental Matters) of the Disclosure Schedule, the Borrower
and each of its Subsidiaries are in compliance in all material respects with
all applicable Environmental Laws, and to the best of the Borrower's knowledge,
there are no conditions or circumstances associated with the currently or
previously owned, operated, used or leased properties or current or past
operations of the Borrower or any Subsidiary which may give rise to
Environmental Liabilities and Costs which could result in a Material Adverse
Change or which may give rise to any Environmental Lien.
SECTION 5.19. No Burdensome Agreements. Neither the
Borrower nor any Subsidiary is a party to or has assumed any indenture, loan or
credit agreement or any lease or other
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agreement or instrument or subject to any charter or other corporate
restriction that could result in a Material Adverse Change.
SECTION 5.20. Consents. Except as disclosed in Item 14
(Consents) of the Disclosure Schedule, the Borrower and its Subsidiaries have
all material permits and governmental consents and Regulatory Approvals
necessary under Requirements of Law or, in the reasonable business judgment of
the Borrower, deemed advisable under Requirements of Law, in connection with
the transactions contemplated hereby (including the Acquisition and the Loans)
and the ongoing business and operations of the Borrower and its Subsidiaries.
SECTION 5.21. Contracts. Set forth in Item 5 (Material
Contracts) of the Disclosure Schedule is an accurate and complete list of all
material Contractual Obligations of the Borrower and its Subsidiaries as of the
Closing Date. Each such material Contractual Obligation is in full force and
effect in accordance with the terms thereof. There are no material defaults by
the Borrower or any Subsidiary or, to the Borrower's knowledge after due
inquiry, any other default in existence under any such material Contractual
Obligations, in each case that could result in a Material Adverse Change.
SECTION 5.22. Employment Agreements. Set forth in Item
15 (Employment Contracts) of the Disclosure Schedule is a complete and accurate
list of each employment agreement to which the Borrower or any Subsidiary is a
party, or by which it is bound.
SECTION 5.23. Condition of Property. All of the assets
and properties owned by, leased to or used by the Borrower and its Subsidiaries
material to the conduct of their business are in adequate operating condition
and repair, ordinary wear and tear excepted, and are free and clear of known
defects except for defects which do not substantially interfere with the use
thereof in the conduct of normal operations.
SECTION 5.24. Subsidiaries. Item 16 of the Disclosure
Schedule sets forth all Subsidiaries of the Borrower as of the Closing Date.
SECTION 5.25. Acquisition Agreement. The closing of the
transactions contemplated by the Acquisition Agreement shall occur on the
Closing Date simultaneously with the making of the Term Loan and the initial
Revolving Loans, and the Borrower has not waived or in any way amended, without
the prior written consent of the Agent, any condition to the obligations to
consummate the Acquisition. A true and complete copy of the Acquisition
Agreement (including all exhibits, schedules and amendments thereto) has been
delivered to the Agent. The Borrower is not in default under the Acquisition
Agreement or under any instrument or document to be delivered in connection
therewith. The representations and warranties made in the Acquisition
Agreement by the Borrower and, to the best knowledge of the Borrower, the
Sellers are true and correct in all material respects on and as of the Closing
Date as though made on and as of such date.
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SECTION 5.26. Trade Relations. There exists no actual or,
to the best of Borrower's knowledge, threatened termination, cancellation or
limitation of, or any modification or change in, the business relationship of
the Borrower with any material customer or group of customers of the Borrower.
ARTICLE 6.
COVENANTS
SECTION 6.1. Affirmative Covenants. The Borrower agrees
with each Lender that until all Obligations (other than Obligations that
expressly survive the termination of this Agreement pursuant to Section 9.5)
have been paid and performed in full and the Commitments have terminated, the
Borrower will perform the Obligations set forth in this Section 6.1.
SECTION 6.1.1. Financial Information, etc. The Borrower
will furnish, or will cause to be furnished, to each Lender and to the Agent
copies of its financial statements, reports and information:
(a) (i) promptly when available and in any event within
ninety (90) days after the close of each Fiscal Year, a consolidated
and consolidating balance sheet at the close of such Fiscal Year, and
related consolidated and consolidating statements of operations,
retained earnings, and cash flows for such Fiscal Year, of the
Borrower and its Subsidiaries (with comparable information at the
close of and for the prior Fiscal Year), certified (in the case of
consolidated statements) without qualification by Ernst & Young, LLC
or other independent public accountants satisfactory to the Agent,
together with a report containing a description of projected business
prospects (including capital expenditures) and management's discussion
and analysis of the financial condition and results of operation of
the Borrower and its Subsidiaries;
(ii) promptly when available and in any event within
ninety (90) days after the close of each Fiscal Year, a letter report
of such independent public accountants at the close of such Fiscal
Year to the effect that it has reviewed the provisions of this
Agreement and the most recent Compliance Certificate being furnished
pursuant to clause (a)(iii) of this Section 6.1.1 and that, in the
course of performing its duties it did not become aware of any Default
or Event of Default or any miscalculation in such Compliance
Certificate relating to the financial tests set forth in Section
6.2.4 or relating to the calculation of Excess Cash Flow, except as
such may be disclosed in such statement; and
(iii) promptly when available and in any event within
ninety (90) days after the close of each Fiscal Year, a Compliance
Certificate calculated as of the computation date at the close of such
Fiscal Year; and
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(b) promptly when available and in any event within
thirty (30) days after the close of each calendar month of each Fiscal Year
consolidated and consolidating balance sheets at the close of such month, and
consolidated and consolidating statements of operations, retained earnings, and
cash flows for such month and for the period commencing at the close of the
previous Fiscal Year and ending with the close of such month, of the Borrower
and Subsidiaries (with comparable information at the close of and for the
corresponding month of the prior Fiscal Year and for the corresponding portion
of such prior Fiscal Year), certified by the principal accounting or chief
financial Authorized Officer of the Borrower, together with a description of
projected business prospects (including capital expenditures) and a brief
report containing management's discussion and analysis of the financial
condition and results of operations of the Borrower and its Subsidiaries
(including a discussion and analysis of any changes compared to prior results);
(c) within thirty (30) days after the close of each
Fiscal Quarter, a Compliance Certificate calculated as of the close of such
Fiscal Quarter;
(d) promptly upon receipt thereof, copies of all detailed
financial and management reports submitted to the Borrower by its independent
public accountants in connection with each annual or interim audit made by such
independent public accountants of the books of the Borrower or any Subsidiary;
(e) within thirty (30) days prior to the end of each
Fiscal Year of the Borrower, (i) a business plan of the Borrower and its
Subsidiaries, in form, scope and detail satisfactory to the Agent, and (ii)
consolidated and consolidating operating budgets for the twelve (12) months
following the end of such Fiscal Year, prepared on a quarterly basis, and for
each Fiscal Year thereafter through the 2001 Fiscal Year, prepared on an annual
basis, which budgets shall include estimated capital expenditures and other
costs to be incurred by the Borrower and its Subsidiaries, on a consolidated
and consolidating basis, during the applicable Fiscal Year, in each case, with
accompanying detail, together with a report containing management's discussion
and analysis of the projected financial condition and results of operations of
the Borrower and its Subsidiaries;
(f) promptly after approved by the Borrower's Board of
Directors, any updates or revisions to any business plan described in clause
(e) of this Section 6.1.1;
(g) promptly upon the sending or filing thereof, copies
of all reports that the Borrower sends to its security holders generally, and
copies of all reports and registration statements that the Borrower or any of
its Subsidiaries files with the Securities and Exchange Commission or any
national securities exchange; and
(h) such other information with respect to the financial
condition, business, property, assets, revenues and operations of the Borrower
and any Subsidiary as the Agent or the Required Lenders may from time to time
reasonably request.
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SECTION 6.1.2. Maintenance of Corporate Existence, etc.
Except as permitted by Section 6.2.10, the Borrower will cause to be done at
all times all things necessary to maintain and preserve the corporate existence
of the Borrower and each Subsidiary.
SECTION 6.1.3. Foreign Qualification. The Borrower will,
and will cause each Subsidiary to, cause to be done at all times all things
necessary to be duly qualified to do business and be in good standing as a
foreign corporation in each jurisdiction where the failure to so qualify could
result in a Material Adverse Change.
SECTION 6.1.4. Payment of Taxes, etc. The Borrower will,
and will cause each Subsidiary to, pay and discharge, as the same become due
and payable, (a) all Charges against it or on any of its property, as well as
claims of any kind which, if unpaid, might become a Lien upon any one of its
properties, and (b) all lawful claims for labor, materials, supplies, services
or otherwise before any thereof become a default; provided, however, that the
foregoing shall not require the Borrower or any Subsidiary to pay or discharge
any such Charge or claim so long as it shall be diligently contesting the
validity thereof in good faith by appropriate proceedings and shall have set
aside on its books adequate reserves in accordance with GAAP.
SECTION 6.1.5. Insurance. In addition to any insurance
required to be maintained pursuant to any other Loan Document, the Borrower
will, and (with respect to the insurance described in clauses (a) and (b)
below) will cause each Subsidiary to, maintain or cause to be maintained:
(a) insurance with respect to its properties and business
against such casualties, contingencies and liabilities (including, without
limitation, business interruption insurance) and of such types and in such
amounts as are customary in the industries in which the Borrower and
Subsidiaries are engaged, and will furnish to the Agent annual certification
from the respective insurers (or their authorized agents) of the extent of all
insurance maintained by the Borrower and its Subsidiaries in accordance with
this Section 6.1.5; and
(b) the "key-man" life insurance policies referred to in
Section 4.1.12, which policies shall at all times have a minimum face value of
not less than $11,510,700.00 in the aggregate.
Each such policy shall be issued by an insurance company with a Best's rating
of "A" or better and a financial size category of not less than XII shall be in
effect on the Closing Date. The premiums for each such policy shall be paid as
such premiums shall come due. All policies of casualty insurance shall contain
an endorsement, in the form submitted to the Borrower by the Agent, showing
loss payable to the Agent, for its benefit and the ratable benefit of the
Lenders, as their interests may appear. All policies of liability insurance,
including, without limitation, all primary and umbrella liability policies
(including errors and omissions), shall name the Agent, for its benefit and the
ratable benefit of the Lenders, as additional insured. All such insurance
policies shall provide, or shall be properly endorsed to provide, that the
insurer shall give the Agent not less than 10 days prior written notice of any
cancellation or non-renewal of any such policy. The Borrower shall retain all
the
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incidents of ownership of the insurance maintained pursuant to this Section
6.1.5, but shall not borrow upon or otherwise impair its right to receive the
proceeds of such insurance. So long as no Event of Default has occurred and is
continuing, the Borrower and its Subsidiaries shall have the right to use the
proceeds of casualty insurance to repair or replace damaged or destroyed
property, shall have the right to use the proceeds of business interruption
insurance for its ongoing business needs and shall have the right to use the
proceeds of liability insurance to pay covered claims.
SECTION 6.1.6. Notice of Default, Litigation, etc. Upon a
Responsible Officer learning thereof, the Borrower will give prompt written
notice (with a description in reasonable detail) to the Agent of:
(a) the occurrence of any Default;
(b) the occurrence of any litigation, arbitration or
governmental investigation or proceeding not previously disclosed in writing by
the Borrower to the Lenders which has been instituted or, to the knowledge of
the Borrower, is threatened against, the Borrower or any Subsidiary or to which
any of its properties, assets or revenues is subject which, if adversely
determined, could result in a Material Adverse Change;
(c) any material development which shall occur in any
litigation, arbitration or governmental investigation or proceeding previously
disclosed by the Borrower to the Lenders pursuant to Section 5.7 which renders
such litigation, arbitration or governmental investigation likely to be
adversely determined and, if adversely determined, could result in a Material
Adverse Change;
(d) the occurrence of any other circumstance which could
result in a Material Adverse Change;
(e) the occurrence of any Loss; and
(f) (i) the occurrence or expected occurrence of any
Reportable Event with respect to any Single Employer Plan, or any withdrawal
from, or the termination, Plan Reorganization or ERISA Insolvency of any
Multiemployer Pension Plan, (ii) the institution of proceedings or the taking
of any other action by the PBGC or the Borrower or any Commonly Controlled
Entity or Subsidiary or any Multiemployer Pension Plan with respect to the
withdrawal from, or the termination, Plan Reorganization or ERISA Insolvency
of, any Single Employer Plan or Multiemployer Pension Plan, or the receipt of
notice by the Borrower or any Commonly Controlled Entity or Subsidiary that the
institution of any such proceedings or the taking of any such action is under
consideration or anticipated, (iii) the institution of any proceedings or other
action by the Internal Revenue Service or the Department of Labor with respect
to the minimum funding requirements of any Pension Plan, or the receipt of
notice by the Borrower or any Commonly Controlled Entity or Subsidiary that the
institution of any such proceedings or the taking of any such action is under
consideration or anticipated, (iv) the occurrence or expected occurrence of any
event which could result in the incurrence of unpredictable contingent event
benefits under Section 302 of
- 56 -
<PAGE> 77
ERISA or Section 412 of the IRC with respect to any Pension Plan, (v) any event
or condition which could increase the liability of the Borrower or any
Commonly Controlled Entity or Subsidiary with respect to post-retirement
welfare benefits under any Plan, or (vi) the occurrence of any other event or
condition with respect to any Plan which could subject the Borrower or any
Subsidiary (directly or indirectly) to any tax, penalty or liability under
Title I or Title IV of ERISA, Section 404 or 419 and Chapter 43 of the IRC, or
any other applicable laws, and in each case in clauses (i) through (vi) above,
such event or condition, together with all other events or conditions, if any,
could subject the Borrower or any Subsidiary (directly or indirectly) to any
tax, fine, penalty, or other liabilities in amounts which in the aggregate
could result in a Material Adverse Change. The Borrower will deliver to each
of the Lenders a true and complete copy of each annual report (Form 5500) of
each Plan (other than a Multi-Employer Plan) required to be filed with the
Internal Revenue Service, promptly after the filing thereof; and
(g) the condemnation or threat of condemnation with
respect to any property used or necessary in the conduct of the businesses of
the Borrower or any of its Subsidiaries.
SECTION 6.1.7. Books and Records. The Borrower will, and
will cause each Subsidiary to, keep books and records reflecting all of its
business affairs and transactions in accordance with GAAP and, subject to any
government security limitations, permit the Agent and each Lender or any of
their respective representatives, during normal business hours, to visit all of
its offices, to discuss its financial matters with its officers and independent
public accountants and to examine (and, at the expense of the Borrower,
photocopy extracts from) any of its books or other corporate records. The
Borrower shall pay any fees of its independent public accountants incurred in
connection with the Agent's or any Lender's exercise of its rights pursuant to
this Section 6.1.7; provided that unless an Event of Default shall have
occurred and be continuing, the Borrower shall be required to pay any such fees
only in respect of the Agent's exercise of its rights pursuant to this Section
6.1.7 for one occasion during each Fiscal Year.
SECTION 6.1.8. Maintenance of Properties, Etc. The
Borrower will maintain and preserve, and cause each of its Subsidiaries to
maintain and preserve, all of its properties (real and personal and including
all intangible assets), except obsolete properties, which are used or necessary
in the conduct of its business in good working order and condition, ordinary
wear and tear excepted.
SECTION 6.1.9. Maintenance of Licenses and Permits. The
Borrower will maintain and preserve, and will cause each of its Subsidiaries to
maintain and preserve, all Intellectual Property, rights, permits, licenses,
Regulatory Approvals and privileges issued under or arising under any
Requirements of Law to the extent material to the conduct of the business of
the Borrower or any of its Subsidiaries.
SECTION 6.1.10. Employee Plans. The Borrower will at all
times comply in all material respects with the provisions of ERISA and the IRC
which are applicable to any of the Plans, and cause each of its Subsidiaries so
to do.
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<PAGE> 78
SECTION 6.1.11. Environmental Management. The Borrower
will, and will cause each Subsidiary to, adopt and maintain prudent solid and
hazardous waste management and disposal practices, including at a minimum such
practices as are required or dictated from time to time by current and future
Environmental Laws and Environmental Permits.
SECTION 6.1.12. Compliance with Laws. The Borrower will,
and will cause each Subsidiary to, comply with all applicable Requirements of
Law; provided, however, that this Section 6.1.12 shall not apply to any
circumstance of noncompliance that together with all other noncompliance could
not result in a Material Adverse Change.
SECTION 6.1.13. Interest Rate Protection. Within 90 days
after the Closing, the Borrower shall obtain and thereafter maintain in full
force and effect, from ING or an Eligible Lending Institution, one or more
Interest Rate Contracts, protecting the Borrower against increases in the
Eurodollar Rate for an aggregate notional amount equal to 50% of the aggregate
principal amount of the Term Loan for a term of three (3) years. ING shall
make available to the Borrower various proposals for Interest Rate Contracts.
Should the Borrower obtain any proposal for Interest Rate Contracts from a
source other than ING, the Borrower agrees that ING shall have a right to
provide such Interest Rate Contracts on the same terms as those set forth in
such proposal. The Borrower will collaterally assign such Interest Rate
Contracts to the Agent, for its benefit and the ratable benefit of the Lenders,
pursuant to documentation acceptable to the Agent.
SECTION 6.1.14. Real Estate. If the Borrower or any
Subsidiary shall acquire a fee or leasehold interest in real estate which the
Agent reasonably designates as material to the Borrower or such Subsidiary at
any time prior to the date on which all Commitments have terminated and all
Obligations under this Agreement have been paid in full, the Borrower or such
Subsidiary will execute a Mortgage subject only to the Liens described in
clauses (c) and (g) of Section 6.2.3, in form and substance satisfactory to
the Agent, in favor of the Agent, for its benefit and the ratable benefit of
the Lenders, and shall use its reasonable efforts to deliver to the Agent such
title insurance policies, surveys and landlords' estoppel agreements with
respect thereto as the Agent shall reasonably request.
SECTION 6.1.15. Underwriting Offering. The Borrower shall
use its best efforts to allow ING or one of its Affiliates to manage and serve
as underwriter, co-underwriter, placement agent, co-placement agent or in a
similar capacity, in assisting the Borrower in any offering of equity
securities or debt securities.
SECTION 6.1.16. Whitney Group. Within ninety (90) days of
the Closing Date, the Borrower shall (i) cause Whitney Partners to acquire the
remaining 23.58% of the issued Stock of Whitney Group not currently owned by
Whitney Partners, (ii) enter into a management contract with Whitney Group,
(iii) assign such management contract to the Agent, and (iv) cause Whitney
Partners to pledge 100% of the issued Stock of the Whitney Group to the Agent
as security for the Obligations.
- 58 -
<PAGE> 79
SECTION 6.2. Negative Covenants. The Borrower agrees
with each Lender that until all Commitments have terminated and all Obligations
(other than Obligations that expressly survive the termination of this
Agreement pursuant to Section 9.5) have been paid and performed in full, the
Borrower will perform the Obligations set forth in this Section 6.2.
SECTION 6.2.1. Business Activities. The Borrower will not,
and will not permit any Subsidiary to, engage in any business activity, except
those in the fields in which the Borrower and its Subsidiaries are engaged on
the Closing Date and such activities as may be incidental or related thereto.
SECTION 6.2.2. Indebtedness. The Borrower will not, and
will not permit any Subsidiary to, create, incur, assume or suffer to exist or
otherwise become or be liable in respect of any Indebtedness other than:
(a) Indebtedness in respect of the Loans and other
Obligations;
(b) Indebtedness in respect of the Interest Rate
Contracts required pursuant to Section 6.1.13 to the extent such do not
constitute Obligations;
(c) obligations that constitute Indebtedness solely by
virtue of being secured by Liens permitted under Section 6.2.3;
(d) Indebtedness in respect of liabilities resulting from
(i) endorsements of negotiable instruments in the ordinary course of business;
and (ii) surety bonds and other bonds issued for the Borrower's account in the
ordinary course of business;
(e) Indebtedness of the Borrower and its Subsidiaries
existing on the Closing Date and set forth in Item 12 (Existing Indebtedness)
of the Disclosure Schedule.
(f) Indebtedness of any Subsidiary owing to the Borrower,
provided that such Indebtedness is evidenced by a demand promissory note that
is pledged to the Agent, for its benefit and the benefit of the Lenders, as
security for the Obligations pursuant to the Pledge Agreement;
(g) Capitalized Lease Liabilities provided that (i) the
aggregate amount thereof which in accordance with GAAP is attributable to
principal, together with the aggregate outstanding principal amount of all
Purchase Money Indebtedness of the Borrower and its Subsidiaries, does not
exceed $500,000 at any one time outstanding, (ii) payments under each
capitalized lease giving rise to such Capitalized Lease Liabilities shall be
made in equal periodic installments, (iii) the original term of each
capitalized lease giving rise to such Capitalized Lease Liabilities shall not
be less than the useful life of the item of property for which such Capitalized
Lease Liabilities are incurred and (iv) the Consolidated Capital Expenditures
financed by such Capitalized Lease Liabilities are not prohibited under
Section 6.2.5;
- 59 -
<PAGE> 80
(h) Purchase Money Indebtedness provided that (i) the
amount of such Indebtedness, together with the amount of any outstanding
Capitalized Lease Liabilities of the Borrower and its Subsidiaries that in
accordance with GAAP are attributable to principal, does not exceed $500,000 at
any one time outstanding, (ii) such Indebtedness provides for the payment of
principal in equal periodic installments, (iii) each issue of such Purchase
Money Indebtedness shall have an original maturity date that is not earlier
than the useful life of the item of property for which such Purchase Money
Indebtedness is incurred, and (iv) the Consolidated Capital Expenditures
financed by such Purchase Money Indebtedness are not prohibited under Section
6.2.5;
(i) extensions, refinancings, replacements and renewals
of any of the foregoing Indebtedness described in clauses (e) and (h) of this
Section 6.2.2, provided that the principal amount thereof is not increased,
such extension, refinancing, replacement or renewal does not impose more
burdensome terms upon the Borrower or its Subsidiaries, as the case may be,
than the Indebtedness being extended, refinanced, replaced or renewed.
SECTION 6.2.3. Liens. The Borrower will not, and will not
permit any Subsidiary to, create, incur, assume or suffer to exist any Lien
upon any of its property, revenues or assets, whether now owned or hereafter
acquired, except:
(a) Liens in favor of the Agent or the Lenders granted
pursuant to any Loan Document;
(b) Liens identified in Item 17 ("Permitted Liens") of
the Disclosure Schedule;
(c) Liens for taxes, assessments or other governmental
charges or levies not at the time delinquent or thereafter payable with penalty
or being contested in good faith by appropriate proceedings and for which
adequate reserves in accordance with GAAP shall have been set aside on its
books;
(d) Liens of carriers, warehousemen, mechanics, and
materialmen incurred in the ordinary course of business for sums not overdue or
being contested in good faith by appropriate proceedings (which proceedings
have the effect of preventing the forfeiture or sale of the asset subject to
such Lien) and for which adequate reserves shall have been set aside on its
books;
(e) Liens (other than Liens arising under ERISA or
Section 412(n) of the Code) incurred in the ordinary course of business in
connection with workmen's compensation, unemployment insurance or other forms
of governmental insurance or benefits, or to secure performance of tenders,
statutory obligations, leases and contracts (other than for borrowed money)
entered into in the ordinary course of business or to secure obligations on
surety or appeal bonds;
(f) judgment Liens with respect to judgments to the
extent such judgments do not constitute an Event of Default described in
Section 7.1.9;
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<PAGE> 81
(g) easements (including, without limitation, reciprocal
easement agreements and utility agreements), rights-of-way, covenants,
consents, reservations, encroachments, variations and other restrictions,
charges or encumbrances (whether or not recorded) affecting the use of
property, which do not materially detract from the value of such property or
impair the use thereof;
(h) Liens upon any equipment acquired by the Borrower or
any of its Subsidiaries after the Closing Date to secure Indebtedness permitted
under clause (h) of Section 6.2.2 or arising by virtue of a capital lease
permitted under clause (g) of Section 6.2.2;
(i) Leases and subleases granted to others in the
ordinary course of business not interfering in any material respect with any
business of the Borrower or any of its Subsidiaries;
(j) Liens which constitute rights of set-off of a
customary nature or bankers' liens with respect to amounts on deposit, whether
arising by operation of law or by contract, in connection with arrangements
entered into with banks in the ordinary course of business;
(k) Liens consisting of precautionary UCC-1 filings in
respect of operating leases to the extent permitted under Section 6.2.6; and
(l) extensions, renewals or replacements of any Lien
referred to in clause (b) of this Section 6.2.3, provided that the principal
amount of the obligation secured thereby is not increased and that any such
extension, renewal or replacement is limited to the property originally
encumbered thereby.
SECTION 6.2.4. Financial Condition. From and after the
Closing Date, the Borrower hereby covenants and agrees as set forth below:
(a) Fixed Charge Coverage Ratio. The Borrower will not
permit its Fixed Charge Coverage Ratio with respect to the twelve-month period
ending on the last day of any Fiscal Quarter to be less than the ratio set
forth opposite such Fiscal Quarter (for each Fiscal Quarter ending prior to
June 30, 1997, such ratio to be calculated as provided in clause (g) of this
Section 6.2.4):
<TABLE>
<CAPTION>
Fiscal Quarter Ending: Ratio
---------------------- -----
<S> <C>
September, 1996 1.25:1.0
December, 1996 1.25:1.0
March, 1997 1.50:1.0
June, 1997 1.75:1.0
September, 1997 1.75:1.0
December, 1997 1.75:1.0
March, 1998 1.75:1.0
June, 1998 1.75:1.0
September, 1998 1.75:1.0
</TABLE>
- 61 -
<PAGE> 82
<TABLE>
<S> <C>
December, 1998 and for each Fiscal 2.00:1.0
Quarter thereafter
</TABLE>
(b) Leverage Ratio. the Borrower will not permit its
Leverage Ratio with respect to the twelve- month period ending on the last day
of any Fiscal Quarter to be less than the ratio set forth opposite such Fiscal
Quarter (for each Fiscal Quarter ending prior to June 30, 1997, to be
calculated as provided in clause (g) of this Section 6.2.4):
<TABLE>
<CAPTION>
Fiscal Quarter Ending: Ratio
---------------------- -----
<S> <C>
September, 1996 11.5:1.0
December, 1996 8.0:1.0
March, 1997 6.0:1.0
June, 1997 5.0:1.0
September, 1997 4.0:1.0
December, 1997 4.0:1.0
March, 1998 3.5:1.0
June, 1998 3.5:1.0
September, 1998 3.0:1.0
December, 1998 3.0:1.0
March, 1999 and for each Fiscal 2.5:1.0
Quarter thereafter
</TABLE>
(c) Interest Coverage Ratio. the Borrower will not
permit its Interest Coverage Ratio with respect to the twelve-month period
ending on the last day of any Fiscal Quarter to be less than the ratio set
forth below opposite such Fiscal Quarter (for each Fiscal Quarter ending prior
to June 30, 1997, such ratio to be calculated as provided in clause (g) of
this Section 6.2.4):
<TABLE>
<CAPTION>
Fiscal Quarter Ending: Ratio
---------------------- -----
<S> <C>
June, 1996 2.40:1.0
September, 1996 2.40:1.0
December, 1996 2.40:1.0
March, 1997 2.75:1.0
June, 1997 3.00:1.0
September, 1997 3.00:1.0
December, 1997 3.25:1.0
March, 1998 3.25:1.0
June, 1998 and for each Fiscal 3.50:1.0
Quarter thereafter
</TABLE>
(d) Net Worth. The Borrower will not permit its net
worth determined in accordance with GAAP as of the last day of any Fiscal
Quarter to be less than the amount set forth opposite such Fiscal Quarter:
- 62 -
<PAGE> 83
<TABLE>
<CAPTION>
Fiscal Quarter Ending: Amount
---------------------- ------
<S> <C>
June, 1996 $10,500,000
September, 1996 10,750,000
December, 1996 11,000,000
March, 1997 11,250,000
June, 1997 11,500,000
September, 1997 11,750,000
December, 1997 12,000,000
March, 1998 12,500,000
June, 1998 13,000,000
September, 1998 13,500,000
December, 1998 14,000,000
March, 1999 14,500,000
June, 1999 and for each Fiscal 15,000,000
Quarter thereafter
</TABLE>
(e) EBITDA. The Borrower will not permit EBITDA for the
twelve-month period ending on the last day of any Fiscal Quarter to be less
than the amount set forth opposite such Fiscal Quarter (for each Fiscal Quarter
ending prior June 30, 1997, such amount to be calculated as provided in clause
(g) of this Section 6.2.4):
<TABLE>
<CAPTION>
Fiscal Quarter Ending: Amount
---------------------- ------
<S> <C>
June, 1996 $ 290,000
September, 1996 1,320,000
December, 1996 1,820,000
March, 1997 3,720,000
June, 1997 5,330,000
September, 1997 5,550,000
December, 1997 5,675,000
March, 1998 5,775,000
June, 1998 5,975,000
September, 1998 6,025,000
December, 1998 6,100,000
March, 1999 6,200,000
June, 1999 6,300,000
September, 1999 6,400,000
December, 1999 6,500,000
March, 2000 6,600,000
June, 2000 6,700,000
September, 2000 6,800,000
December, 2000 6,900,000
</TABLE>
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<PAGE> 84
<TABLE>
<S> <C>
March, 2001 7,000,000
June, 2001 7,100,000
</TABLE>
(f) Current Ratio. The Borrower will not permit the
Current Ratio of the Borrower and its Subsidiaries on the last day of any
Fiscal Quarter to be less than 1.5:1.0.
(g) Calculations for Stub Periods. Notwithstanding
anything contained herein to the contrary, for any period ending prior to June
30, 1997, calculation of all items relating to income or expense (including,
without limitation, EBITDA, Interest Expense, repayments of the Term Loan
pursuant to clause (c) of Section 3.3.l and increases or decreases in working
capital) shall be made for the period commencing on the Closing Date and ending
on the date of determination.
SECTION 6.2.5. Capital Expenditures. The Borrower will
not, and will not permit any Subsidiary to make or commit to make Consolidated
Capital Expenditures, except that, during any Fiscal Year, the Borrower and its
Subsidiaries may make Consolidated Capital Expenditures (including the amount
of Capitalized Lease Liabilities incurred during such Fiscal Year that in
accordance with GAAP is attributable to principal) which in the aggregate do
not exceed the amount set forth below opposite such Fiscal Year (in the case of
the 1996 Fiscal Year, for the period commencing on the Closing Date and ending
on December 31, 1996):
<TABLE>
Fiscal Year: Amount
------------ ------
<S> <C>
1996 $ 75,000
1997 $225,000
1998 $225,000
1999 $225,000
2000 $225,000
2001 $225,000
</TABLE>
provided further, however, that expenditures from insurance proceeds
received upon the occurrence of a Loss which are made to replace or repair
damaged or destroyed assets will not be included in the foregoing calculation.
Notwithstanding the foregoing provisions of Section 6.2.5, the Borrower may
make Consolidated Capital Expenditures for the period between January 1, 1996
and December 31, 1996 in connection with the relocation of the offices of Irene
Cohen not exceeding $400,000.
SECTION 6.2.6. Lease Obligations. The Borrower will not,
and will not permit any Subsidiary to, create or suffer to exist any obligation
for the payment of rent for any property under any operating lease or agreement
to lease having a term of one year or more, except for (a) leases in existence
on the Closing Date and described in Item 18 (Leases) of the Disclosure
Schedule, and (b) any lease of real property entered into by the Borrower or
any Subsidiary after the Closing Date in the ordinary course of business;
provided, however, that no such lease shall subject the Borrower or any
Subsidiary to Environmental Liabilities and Costs and that the aggregate amount
of payments due from the Borrower and its Subsidiaries for all leases referred
to in this Section 6.2.6
- 64 -
<PAGE> 85
less any amounts received by the Borrower and its Subsidiaries in connection
with any sublease of the property subject to any lease referred to in this
Section 6.2.6 during any Fiscal Year set forth below is less than the amount
set forth below opposite such Fiscal Year (in the case of the 1996 Fiscal Year,
for the period commencing on the Closing Date and ending on December 31, 1996):
<TABLE>
<CAPTION>
Fiscal Year: Amount
------------ ------
<S> <C>
1996 $1,100,000
1997 2,100,000
1998 2,100,000
1999 2,300,000
2000 2,400,000
2001 2,500,000
</TABLE>
SECTION 6.2.7. Investments. The Borrower will not, and
will not permit any Subsidiary to, make, incur, assume or suffer to exist any
Investment in any other Person except:
(a) Cash Equivalent Investments;
(b) deposits for utilities, security deposits under
leases and similar prepaid expenses;
(c) accounts receivable arising in the ordinary course of
business;
(d) Investments existing on the Closing Date and
disclosed in Item 19 ("Existing Investments") of the Disclosure Schedule.
(e) Investments made by the Borrower in its Subsidiaries
after the Closing Date to the extent such Investments are evidenced by demand
promissory notes in principal amounts equal to the amount of such Investments,
payable to the Borrower and pledged by the Borrower in favor of the Agent
pursuant to the Borrower Pledge Agreement;
(f) Investments made by the Borrower in its Subsidiaries
after the Closing Date to the extent permitted under subsection (b) of Section
6.2.10;
(g) Investments (including debt obligations) received in
connection with a bankruptcy or Plan Reorganization of customers or suppliers
and in settlement of delinquent obligations of, and other disputes with,
customers or suppliers arising in the ordinary course of business, provided
that if such Investments are evidenced by promissory notes or other
instruments, and such instruments are pledged to the Agent, for its benefit and
the benefit of the Lenders;
(h) Investments arising under Interest Rate Contracts; and
- 65 -
<PAGE> 86
(i) Investments consisting of deposit accounts of the
Borrower and its Subsidiaries maintained in the ordinary course of business.
SECTION 6.2.8. Restricted Payments, etc. The Borrower will
not declare, pay or make any dividend or distribution (in cash, property or
obligations) on any shares of any class of Stock (now or hereafter outstanding)
of the Borrower or on any warrants, options or other rights in respect of any
class of Stock (now or hereafter outstanding) of the Borrower or apply, or
permit any Subsidiary to apply, any of its funds, property or assets to the
purchase, redemption, sinking fund or other retirement of any shares of any
class of Stock (now or hereafter outstanding), of the Borrower or any
Subsidiary, or make any deposit for any of the foregoing; provided, however,
that the Borrower shall be permitted to declare and pay the following
dividends: (a) ordinary dividends on the Borrower's Series A Preferred Stock in
an amount not to exceed $56,000 in any single Fiscal Year or during any
consecutive 12 month period and (b) stock dividends on the Borrower's Series C
and Series D Preferred Stock; provided, however, that the Borrower shall be
permitted to use the Net Securities Proceeds in excess of $3,000,000 received
by the Borrower from the issuance of its Series D Preferred Stock, up to a
maximum amount of $1,000,000, to repurchase outstanding common stock of the
Borrower.
SECTION 6.2.9. Take or Pay Contracts; Sale/Leasebacks.
(a) The Borrower will not, and will not permit any
Subsidiary to, enter into or be a party to any arrangement for the purchase of
materials, supplies, other property or services if such arrangement by its
express terms requires that payment be made by the Borrower or such Subsidiary
regardless of whether or not such materials, supplies, other properties or
services are delivered or furnished to it.
(b) The Borrower will not enter into, or permit any
Subsidiary to enter into, any arrangement with any Person providing for the
leasing by the Borrower or one or more Subsidiaries of any property or assets,
which property or assets has been or is to be sold or transferred by the
Borrower or such Subsidiary to such Person except as permitted by Section
6.2.2(g).
SECTION 6.2.10. Consolidation, Merger, Subsidiaries, etc.
(a) The Borrower will not, and will not permit any
Subsidiary to, liquidate or dissolve, consolidate with, or merge into or with,
any Person, or purchase or otherwise acquire all or substantially all of the
assets or stock of any Person (or of any operating division or unit thereof),
except that any such Subsidiary may liquidate or dissolve voluntarily into, and
may merge with and into, the Borrower or any other wholly-owned Subsidiary (so
long as the Borrower or such wholly-owned Subsidiary is the surviving
corporation).
(b) The Borrower will not, and will not permit any
Subsidiary to, create any Subsidiary or transfer any assets to any Subsidiary.
- 66 -
<PAGE> 87
SECTION 6.2.11. Asset Dispositions, etc. The Borrower will
not, and will not permit any Subsidiary to, sell, transfer, lease or otherwise
dispose of, or grant options, warrants or other rights with respect to, any of
its assets (including accounts receivable and capital stock of Subsidiaries) to
any Person in excess of $20,000 in the aggregate during any Fiscal Year, unless
(a) such disposition is made in the ordinary course of business and consists of
inventories; or (b) such disposition constitutes a disposition of obsolete or
retired assets no longer used in the business of the Borrower and its
Subsidiaries.
SECTION 6.2.12. Modification of Organic Documents, etc. The
Borrower will not consent to any amendment, supplement or other modification of
any of the terms or provisions contained in, or applicable to, the charter or
the by-laws of the Borrower.
SECTION 6.2.13. Transactions with Affiliates. The Borrower
will not, and will not permit any Subsidiary to, enter into, or cause, suffer
or permit to exist:
(a) any arrangement or contract with any of its
Affiliates (other than its Subsidiaries) of a nature customarily entered into
by Persons which are Affiliates of each other (including management or similar
contracts or arrangements relating to the allocation of revenues, expenses or
otherwise) requiring any payments to be made by the Borrower or any
Subsidiaries to any such Affiliate, other than the transactions provided for in
the Loan Documents; and
(b) any other transaction, arrangement or contract with
any of its Affiliates which is on terms which are less favorable than are
obtainable from any Person which is not one of its Affiliates.
SECTION 6.2.14. Inconsistent Agreements . The Borrower will
not, and will not permit any Subsidiary to, enter into any material agreement
containing any provision which would be violated or breached in any material
respect by any Loan or by the performance by the Borrower or any Subsidiary of
its obligations hereunder or under any Loan Document.
SECTION 6.2.15. Change in Accounting Method. The Borrower
will not, and will not permit any Subsidiary to, make any change in accounting
treatment and reporting practices except as required by GAAP.
SECTION 6.2.16. Change in Fiscal Year End. The Borrower will
not change its Fiscal Year end without the Required Lenders' prior written
consent, which consent will not be unreasonably withheld but will not be given
with respect to more than one such change during the term of this Agreement.
SECTION 6.2.17. Compliance with ERISA. The Borrower will
not, and will not permit any Subsidiary to take, or fail to take, any action
with respect to a Plan, including establishing, amending, or terminating or
withdrawing from any Plan, without first obtaining the Agent's written
Approval, where such action or failure to act could result in any liabilities
under the IRC, ERISA, or
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any other applicable law which individually or in the aggregate could result in
a Material Adverse Change.
SECTION 6.2.18. Limitation on Restrictions on Subsidiary
Dividends. The Borrower will not, and will not permit any of its Subsidiaries
to, directly or indirectly, create or otherwise cause or suffer to exist or
become effective any encumbrance or restriction on the ability of any such
Subsidiary to (a) pay dividends or make other distributions on its Stock or
other interests or participations in profits owned by the Borrower or any
Subsidiary of the Borrower or pay any Indebtedness owed to the Borrower or any
Subsidiary of the Borrower, (b) make loans or advances to the Borrower or any
Subsidiary of the Borrower or (c) transfer any of its property or assets to the
Borrower or any Subsidiary of the Borrower, except for such encumbrances and
restrictions existing under or by reason of this Agreement and the other Loan
Documents.
SECTION 6.2.19. Whitney Group. The Borrower will not, and
will not permit any of its Subsidiaries to, make any Investment in the Whitney
Group, except for the acquisition of the remaining Stock of the Whitney Group
pursuant to Section 6.1.16 hereof.
ARTICLE 7.
EVENTS OF DEFAULT
SECTION 7.1. Events of Default. The term "Event of
Default" shall mean any of the events set forth in this Section 7.1.
SECTION 7.1.1. Non-Payment of Obligations. The Borrower
shall default:
(a) in the payment or prepayment when due of any
principal of any Loan;
(b) in the payment when due of the interest payable in
respect of any Loan, the commitment fee provided for in Section 2.4 hereof or
any other Obligations and such default shall continue unremedied for a period
of five (5) days.
SECTION 7.1.2. Non-Performance of Certain Covenants. The
Borrower shall default in the due performance and observance of any of its
obligations under Section 6.1 and such default shall continue unremedied for a
period of ten (10) days after notice thereof shall have been given to the
Borrower by the Agent (or if such default is not reasonably susceptible to cure
within 10 days and so long as the Borrower promptly commences and diligently
pursues such cure, such longer period as is reasonably needed to effect such
cure, but in no event longer than 30 days from the date notice is given), or
shall default in the due performance or observation of any of its obligations
under Section 6.2.
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SECTION 7.1.3. Defaults Under Other Loan Documents;
Non-Performance of Other Obligations. Any "Event of Default" shall occur under
the other Loan Documents; or the Borrower or any Subsidiary shall default in
the due performance and observance of any other obligation, covenant or
agreement contained herein or in any other Loan Document and such default shall
continue unremedied for a period of ten (10) days after notice thereof shall
have been given to the Borrower by the Agent (or if such default is not
reasonably susceptible to cure within 10 days and so long as the Borrower
promptly commences and diligently pursues such cure, such longer period as is
reasonably needed to effect such cure, but in no event longer than 30 days from
the date notice is given).
SECTION 7.1.4. Bankruptcy, Insolvency, etc. The Borrower
or any Subsidiary shall:
(a) become insolvent or generally fail to pay, or admit
in writing its inability to pay, debts as they become due;
(b) apply for, consent to, or acquiesce in, the
appointment of a trustee, receiver, sequestrator or other custodian for the
Borrower or any Subsidiary or any property of any thereof, or make a general
assignment for the benefit of creditors;
(c) in the absence of such application, consent or
acquiescence, permit or suffer to exist the appointment of a trustee, receiver,
sequestrator or other custodian for the Borrower or any Subsidiary or for a
substantial part of the property of any thereof, and such trustee, receiver,
sequestrator or other custodian shall not be discharged within sixty (60) days;
(d) permit or suffer to exist the commencement of any
bankruptcy, Plan Reorganization, debt arrangement or other case or proceeding
under any bankruptcy or insolvency law, or any dissolution, winding up or
liquidation proceeding, in respect of the Borrower or any Subsidiary, and, if
such case or proceeding is not commenced by the Borrower or such Subsidiary,
such case or proceeding shall be consented to or acquiesced in by Borrower or
such Subsidiary or shall result in the entry of an order for relief or shall
remain for sixty (60) days undismissed; or
(e) take any corporate action authorizing, or in
furtherance of, any of the foregoing.
SECTION 7.1.5. Breach of Warranty. Any representation or
warranty of the Borrower or any Loan Party hereunder or in any other Loan
Document or in any other writing furnished by or on behalf of the Borrower to
the Agent or any Lender for the purposes of or in connection with this
Agreement or any such Loan Document is or shall be incorrect when made in any
material respect.
SECTION 7.1.6. Default on Other Indebtedness, etc. (a) Any
Indebtedness of the Borrower or any Subsidiary in an aggregate principal amount
exceeding $100,000 (i) shall be duly
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<PAGE> 90
declared to be or shall become due and payable prior to the stated maturity
thereof, or (ii) shall not be paid as and when the same becomes due and payable
including any applicable grace period; or (b) there shall occur and be
continuing any event under any Instrument relating to any Indebtedness of the
Borrower or any Subsidiary in an aggregate principal amount exceeding $100,000,
the effect of which is to cause such Indebtedness to become due prior to its
stated maturity or to permit the holder or holders of such Indebtedness, or a
trustee, agent or other representative on behalf of such holder or holders, to
cause such Indebtedness to become due prior to its stated maturity or to
require (or permit the holder or holders to require) the Borrower or any
Subsidiary to redeem, repurchase or otherwise acquire or retire such
Indebtedness for value.
SECTION 7.1.7. Failure of Valid, Perfected Security
Interest. The security interest or Lien in the Collateral and all proceeds
thereof, securing the Obligations shall cease to be valid or perfected at any
time after the Closing Date (other than as a result of (i) the Agent's failure
to make any required filing to the extent the necessity of such filing was
disclosed to the Agent in an opinion of counsel to the Borrower or in the
Perfection Certificate delivered by the Loan Parties or (ii) the release of
possession of any Instrument delivered to the Agent or its agent or
representative pursuant to any of the Security Documents).
SECTION 7.1.8. Employee Plans. Any of the following events
shall occur with respect to any Plan: (i) any Person shall engage in any
"prohibited transaction" (as defined in Section 406 of ERISA or Section 4975 of
the Code) involving any Plan, (ii) any "accumulated funding deficiency" (as
defined in Section 412 of the Code or Section 302 of ERISA) not disclosed in
Item 8 ("Benefit Plans") of the Disclosure Schedule, whether or not waived,
shall exist with respect to any Single Employer Plan, (iii) a Reportable Event
shall occur with respect to, or proceedings shall commence to have a trustee
appointed, or a trustee shall be appointed, to administer or to terminate, any
Single Employer Plan, which Reportable Event or commencement of proceedings or
appointment of a trustee is, in the reasonable opinion of the Required Lenders,
likely to result in the termination of such Plan for purposes of Title IV of
ERISA, (iv) a notice of intent to terminate any Single Employer Plan for
purposes of Title IV of ERISA is issued by the plan administrator thereof
without the prior written consent of the Required Lenders, or the PBGC shall
commence proceedings to terminate any Single Employer Plan, (v) the Borrower or
any Commonly Controlled Entity or Subsidiary shall, or in the reasonable
opinion of the Required Lenders is likely to, incur any liability in connection
with a withdrawal from, or the ERISA Insolvency, Plan Reorganization or
termination of, a Multiemployer Plan, (vi) the Borrower or any Commonly
Controlled Entity or Subsidiary shall fail to make any quarterly installment
payment to a Pension Plan required under Section 302(e) of ERISA or Section
412(m) of the Code, (vii) the Borrower or any Commonly Controlled Entity or
Subsidiary shall fail to make any contribution to a Multiemployer Plan which is
required under ERISA, the Code or applicable collective bargaining agreements,
or (viii) any other event or condition shall occur or exist with respect to a
Plan; and in each case in clauses (i) through (viii) above, such event or
condition, together with all other such events or conditions, if any, could
subject the Borrower or any Subsidiary (directly or indirectly) to any tax,
penalty or other liabilities under Title I or Title IV of ERISA, Section 404 or
419 and Chapter 43 of the IRC or any other applicable law which in the
aggregate could result in a Material Adverse Change.
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SECTION 7.1.9. Judgments. A final judgment which, with
other such outstanding final judgments against the Borrower or any of its
Subsidiaries (in each case to the extent not covered by insurance), exceeds an
aggregate of $250,000, shall be entered against the Borrower or any of its
Subsidiaries and, within 30 days after entry thereof, such judgment shall not
have been discharged or execution thereof stayed pending appeal, or, within 30
days after the expiration of any such stay, such judgment shall not have been
discharged or stayed.
SECTION 7.1.10. Cessation of Business; Dissolution. The
entry of any order of a court enjoining, restraining or otherwise preventing
the Borrower or any Subsidiary from conducting all or any material part of its
business affairs; or the cessation of business or dissolution of the Borrower.
SECTION 7.2. Action if Bankruptcy. If any Event of
Default described in subsection (d) of Section 7.1.4 shall occur, the
outstanding principal amount of all outstanding Loans and all other Obligations
shall automatically be and become immediately due and payable and all
Commitments shall automatically be terminated, in either case without notice,
demand or presentment.
SECTION 7.3. Action if Other Event of Default. If any
Event of Default (other than any Event of Default described in Section 7.1.4)
shall occur for any reason, whether voluntary or involuntary, and be
continuing, the Agent may, and upon the direction of the Required Lenders,
shall upon notice or demand, declare all or any portion of the outstanding
principal amount of the Loans to be due and payable and any or all other
Obligations to be due and payable and all Commitments to be terminated,
whereupon the full unpaid amount of such Loans and any and all other
Obligations which shall be so declared due and payable shall be and become
immediately due and payable and any and all Commitments which shall be so
declared terminated shall be and become immediately terminated, in each case
without further notice, demand, or presentment, and to the extent any
obligations are paid by the Borrower, they shall constitute a prepayment under
this Agreement.
ARTICLE 8.
THE AGENT
SECTION 8.1. Actions. Each Lender and the holder of
each Note authorize the Agent to act on behalf of such Lender or holder under
this Agreement and any other Loan Document and, in the absence of other written
instructions from the Required Lenders received from time to time by the Agent
(with respect to which the Agent agrees that it will, subject to the last two
sentences of this Section 8.1, comply, except as otherwise advised by
counsel), to exercise such powers hereunder and thereunder as are specifically
delegated to or required of the Agent by the terms hereof and thereof, together
with such powers as may be reasonably incidental thereto. Each Lender agrees
(which agreement shall survive any termination of this Agreement) to indemnify
the
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Agent, pro rata according to such Lender's Percentage, from and against any
and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever which may at any time be imposed on, incurred by, or asserted
against the Agent in any way relating to or arising out of this Agreement, the
Notes, or any other Loan Document, including the reimbursement of the Agent for
all out-of-pocket expenses (including attorneys' fees) incurred by the Agent
hereunder or in connection herewith or in enforcing the Obligations of the
Borrower under this Agreement or any other Loan Document, in all cases as to
which the Agent is not reimbursed by the Borrower; provided that no Lender
shall be liable for the payment of any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements determined by a court of competent jurisdiction in a
final proceeding to have resulted solely from the Agent's gross negligence or
wilful misconduct. The Agent shall not be required to take any action
hereunder or under any other Loan Document, or to prosecute or defend any suit
in respect of this Agreement or any other Loan Document, unless it is
indemnified to its satisfaction by the Lenders against loss, costs, liability
and expense. If any indemnity in favor of the Agent shall become impaired, it
may call for additional indemnity and cease to do the acts indemnified against
until such additional indemnity is given.
SECTION 8.2. Funding Reliance, etc. Unless the Agent
shall have been notified by telephone, confirmed in writing, by any Lender by
5:00 p.m., New York City time, on the day prior to a Borrowing that such Lender
will not make available the amount which would constitute its Percentage of
such Borrowing on the date specified therefor, the Agent may assume that such
Lender has made such amount available to the Agent and, in reliance upon such
assumption, make available to the Borrower a corresponding amount; provided,
however, that the Agent shall have no obligation to do so. If such amount is
made available by such Lender to the Agent on a date after the date of such
Borrowing, such Lender shall pay to the Agent on demand interest on such amount
at the Federal Funds Rate for the number of days from and including the date of
such Borrowing to the date on which such amount becomes immediately available
to the Agent, together with such other compensatory amounts as may be required
to be paid by such Lender to the Agent pursuant to the Rules for Interbank
Compensation of the Council on International Banking or the Clearinghouse
Compensation Committee, as the case may be, as in effect from time to time. A
statement of the Agent submitted to any Lender with respect to any amounts
owing under this Section 8.2 shall be conclusive, in the absence of manifest
error. If such amount is not in fact made available to the Agent by such
Lender within three Business Days after the date of such Borrowing, the Agent
shall be entitled to recover such amount, with interest thereon at the rate per
annum then applicable to the Loans comprising such Borrowing, within five
Business Days after demand, from the Borrower. Nothing herein shall be
construed to release any Lender from its obligation to make Loans subject to
the terms and conditions set forth in this Agreement.
SECTION 8.3. Exculpation. Neither the Agent nor any of
its directors, officers, employees or agents shall be liable to any Lender for
any action taken or omitted to be taken by it under this Agreement, the Notes,
or any Loan Document, or in connection herewith or therewith, except for its
own wilful misconduct or gross negligence. The Agent shall not be responsible
to any Lender for any recitals, statements, representations or warranties
herein or in any
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certificate or other document delivered in connection herewith or for the
authorization, execution, effectiveness, genuineness, validity, enforceability,
perfection, collectibility, or sufficiency of any of the Loan Documents, the
financial condition of the Borrower or any Subsidiary or the condition or value
of any of the Collateral, or be required to make any inquiry concerning either
the performance or observance of any of the terms, provisions or conditions of
any of the Loan Documents, the financial condition of the Borrower or any
Subsidiary or the existence or possible existence of any Default. The Agent
shall be entitled to rely upon advice of counsel concerning legal matters and
upon any notice, consent, certificate, statement or writing which it believes
to be genuine and to have been presented by a proper Person.
SECTION 8.4. Successor. The Agent may resign as such at
any time upon at least thirty (30) days' prior notice to the Borrower and all
Lenders, such resignation not to be effective until a successor Agent is in
place. If the Agent at any time shall resign, the Required Lenders may appoint
another Lender as a successor Agent which shall thereupon become the Agent
hereunder. If no successor Agent shall have been so appointed by the Required
Lenders, and shall have accepted such appointment, within 30 days after the
retiring Agent's giving notice of resignation, then the retiring Agent may, on
behalf of the Lenders, appoint a successor Agent, which shall be one of the
Lenders or another financial institution which shall (i) be reasonably
acceptable to the Borrower, (ii) be organized under the laws of the United
States and (iii) have a combined capital and surplus of at least $500,000,000.
Upon the acceptance of any appointment as Agent hereunder by a successor Agent,
such successor Agent shall be entitled to receive from the retiring Agent such
documents of transfer and assignment as such successor Agent may reasonably
request, and shall thereupon succeed to and become vested with all rights,
powers, privileges, and duties of the retiring Agent, and the retiring Agent
shall be discharged from its duties and obligations under this Agreement and
the other Loan Documents.
SECTION 8.5. Loans by the Agent. The Agent shall have
the same rights and powers with respect to (a) the Loans made by it or any of
its Affiliates and (b) the Notes held by it or any of its Affiliates, as any
Lender and may exercise the same as if it were not the Agent.
SECTION 8.6. Credit Decisions. Each Lender acknowledges
that it has, independently of the Agent and each other Lender, and based on
such financial information and such other documents, information and
investigations as it has deemed appropriate, made its own credit decision to
extend its Commitments, to make the Loans. Each Lender also acknowledges that
it will, independently of the Agent and each other Lender, and based on such
other documents, information and investigations as it shall deem appropriate at
any time, continue to make its own credit decisions as to exercising or not
exercising from time to time any rights and privileges available to it under
this Agreement or any other Loan Document.
SECTION 8.7. Copies, etc. The Agent shall give prompt
notice to each Lender of each notice or request required or permitted to be
given to the Agent by the Borrower pursuant to the terms of this Agreement.
The Agent will distribute to each Lender each Instrument received for its
account and copies of all other communications received by the Agent from the
Borrower for
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distribution to the Lenders by the Agent in accordance with the terms of this
Agreement. Notwithstanding anything herein contained to the contrary, all
notices to and communications with the Borrower under this Agreement and the
other Loan Documents shall be effected by the Lenders through the Agent.
ARTICLE 9.
MISCELLANEOUS
SECTION 9.1. Waivers, Amendments, etc. (a) The
provisions of this Agreement and of each Loan Document may from time to time be
amended, modified or waived, if such amendment, modification or waiver is in
writing and, (x) in the case of an amendment or modification, is consented to
by the Borrower and the Required Lenders and (y) in the case of a waiver of any
obligation of the Borrower or compliance with any prohibition contained in this
Agreement or any other Loan Document, is consented to by the Required Lenders;
provided, however, that no such amendment, modification or waiver:
(i) which would modify any requirement hereunder that any
particular action be taken by all the Lenders or by the Required
Lenders shall be effective unless consented to by each Lender;
(ii) which would modify this Section 9.1, change the
definition of "Required Lenders," increase the Revolving Loan
Commitment Amount or change any Percentage for any Lender, reduce any
fees payable to the Lenders described in Article 2 and Article 3,
extend the Revolving Loan Commitment Termination Date or subject any
Lender to any additional obligations shall be made without the consent
of each Lender;
(iii) which would extend the due date for, or reduce the
amount of, any payment or prepayment of principal of or interest on
any Loan (or reduce the principal amount of or rate of interest on
any Loan) shall be made without the consent of the holder of the Note
evidencing such Loan; or
(iv) which would affect adversely the interests, rights,
compensation or obligations of the Agent qua the Agent shall be made
without consent of the Agent.
(b) No failure or delay on the part of the Agent, any
Lender or the holder of any Note in exercising any power or right under this
Agreement or any other Loan Document shall operate as a waiver thereof, nor
shall any single or partial exercise of any such power or right preclude any
other or further exercise thereof or the exercise of any other power or right.
No notice to or demand on the Borrower in any case shall entitle it to any
notice or demand in similar or other circumstances. No waiver or approval by
the Agent, any Lender, or the holder of any Note under this Agreement or any
other Loan Document shall, except as may be otherwise stated in such waiver
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or approval, be applicable to subsequent transactions. No waiver or approval
hereunder shall require any similar or dissimilar waiver or Regulatory Approval
thereafter to be granted hereunder.
(c) Neither any Lender nor the Agent shall be under any
obligation to marshal any assets in favor of the Borrower or any other party or
against or in payment of any or all of the Obligations. Recourse for security
shall not be required at any time. To the extent that the Borrower makes a
payment or payments to the Agent or the Lenders, or the Agent or the Lenders
enforce their security interests or exercise their rights of setoff, and such
payment or payments or the proceeds of such enforcement or setoff or any part
thereof are subsequently for any reason invalidated, set aside or required to
be repaid to a trustee, receiver or any other party under any bankruptcy law,
state or federal law, common law or equitable cause, then to the extent of such
recovery, the obligation or part thereof originally intended to be satisfied,
and all Liens, rights and remedies therefor, shall be revived and continued in
full force and effect as if such payment had not been made or such enforcement
or setoff had not occurred.
SECTION 9.2. Notices. All notices hereunder shall be in
writing or by telecopy and shall be sufficiently given to the Agent, the
Lenders or the Borrower if addressed or delivered to them at the following
addresses:
If to the Agent: ING Capital
135 East 57th Street
New York, New York 10022
Attention: Chief Credit Officer
Telecopier No.: (212) 750-8935
with copies to: ING Capital
Atlanta Office
200 Galleria Parkway, N.W.
Suite 950
Atlanta, Georgia 30339
Attention: John N. Lanier
Telecopier No.: (770) 951-1005
and a copy to: King & Spalding
191 Peachtree Street
Atlanta, Georgia 30303-1763
Attention: Walter W. Driver, Jr., Esq.
Telecopier No.: (404) 572-5100
If to any other Lender: At its address set forth beneath its name on
the signature pages hereof
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<TABLE>
<S> <C>
If to the Borrower AFGL International, Inc.
850 Third Avenue
New York, New York 10022
Attention: Mr. Barry S. Roseman
Telecopier No.: (212) 508-3540
with a copy to: Christy & Viener
620 Fifth Avenue
New York, New York 10020
Attention: Richard B. Salomon, Esq.
Telecopier No.: (212) 632-5555
</TABLE>
or at such other address as any party may designate to any other party by
written notice. All such notices and communications shall be deemed to have
been duly given: at the time delivered by hand, if personally delivered; when
received, if deposited in the mail, postage prepaid; when transmission is
verified, if telecopied; and on the next Business Day, if timely delivered to
an air courier guaranteeing overnight delivery.
SECTION 9.3. Costs and Expenses. The Borrower agrees to
pay all reasonable out-of-pocket expenses of the Agent (including reasonable
fees and expenses of counsel to the Agent, or of any consultants or other
experts retained by the Agent) in connection with (i) the negotiation,
preparation, execution, and delivery of this Agreement and each other Loan
Document, including schedules and exhibits, and any amendments, waivers,
consents, supplements, terminations, releases or other modifications to this
Agreement or any other Loan Document as may from time to time hereafter be
required whether or not the transactions contemplated hereby are consummated,
and (ii) the consideration of legal questions relevant to this Agreement of any
other Loan Document. The Borrower also agrees to pay and hold the Agent and
the Lenders harmless from any stamp, documentary, intangibles, transfer or
similar taxes or charges, and all recording or filing fees with respect to the
Loan Documents or any payments to be made thereunder and all title insurance
premiums, surveyors costs and valuation fees, and to reimburse the Agent and
each Lender upon demand for all reasonable out-of-pocket expenses (including
reasonable attorneys' fees and expenses) incurred by the Agent or such Lender
in enforcing the Obligations of the Borrower or any Subsidiary under this
Agreement or any other Loan Document or related Document or in connection with
any restructuring or "work-out" of any Obligations.
SECTION 9.4. Indemnification. In consideration of the
execution and delivery of this Agreement by the Agent and each Lender, the
making of the Term Loan and the extension of the Revolving Loan Commitment, the
Borrower hereby indemnifies, exonerates and holds the Agent and each Lender,
each of their respective successors and assigns, each of the respective
officers, directors, employees, attorneys and agents of the Agent and each
Lender and each of their respective successors and assigns (collectively, the "
Lender Parties") free and harmless from and against any and all actions, causes
of action, suits, losses, costs, liabilities (including, but not limited to,
Environmental Liabilities and Costs), damages and expenses (irrespective of
whether such Lender Party is a party
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to the action for which indemnification hereunder is sought), including
reasonable attorneys' fees and disbursements (the "Indemnified Liabilities"),
incurred by the Lender Parties or any of them or asserted or awarded against
the Lender Parties or any of them as a result of, or arising out of, or
relating to:
(a) any transaction financed or to be financed in whole
or in part, directly or indirectly, with the proceeds of any Loan, including,
without limitation, the Acquisition;
(b) the use of any of the proceeds of the Loans by the
Borrower for any other purpose;
(c) the making of any claim by any investment banking
firm, broker or third party that it is entitled to compensation from the Agent
or any Lender in connection with this Agreement (other than investment banking
firms and brokers retained by the Agent or any Lender);
(d) the entering into and performance of this Agreement
and any other Loan Document by any of the Lender Parties (other than the breach
by such Lender Party of this Agreement or the failure to comply with any
applicable law);
(e) any of the Loan Documents or any proposed acquisition
by the Borrower of all or any portion of the stock or assets of any Person,
whether or not the Agent or such Lender is party thereto;
(f) the existence of any contaminant, in, under, on or
otherwise affecting any property owned, used, operated, or leased by Borrower
or any Subsidiary in the past, present, or future or any surrounding areas
affected by such property, regardless of whether the existence of the
contaminant is related to the past, present, or future operations of the
Borrower and its Subsidiaries, or their predecessors in interest or any other
Person; any Environmental Liabilities and Costs related to any property owned,
used, operated, or leased by Borrower or any Subsidiary in the past, present,
or future; any Environmental Liabilities and Costs related to the past,
present, or future operations of the Borrower or any Subsidiaries; any alleged
violations of any Environmental Law related to any property owned, used,
operated, or leased by Borrower or any Subsidiary in the past, present, or
future; any alleged violations of any Environmental Law related to the past,
present, or future operations of the Borrower or any Subsidiaries; the
performance of any remedial action that is related to any property owned, used,
operated, or leased by Borrower or any Subsidiaries in the past, present, or
future; the performance of any remedial action that is related to the past,
present, or future operations of the Borrower or any Subsidiaries; and the
imposition of any Lien on any property affected by this Agreement or any of the
other Loan Documents arising from any Environmental Liabilities or Costs;
(g) the breach in any material respect by Borrower of any
representation or warranty set forth in this Agreement or any Loan Document;
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(h) the failure of Borrower to comply in any material
respect with any term, condition, or covenant set forth in this Agreement or
any Loan Document; or
(i) any claim, litigation, investigation or proceeding
relating to any of the foregoing, whether or not the Agent or any Lender (or
any of their respective officers, directors, employees or agents) is a party
thereto;
except for any such Indemnified Liabilities arising for the account of a
particular Lender Party by reason of the relevant Lender Party's material
breach of any of its obligations under this Agreement or any other Loan
Document or by reason of the relevant Loans Party's bad faith, gross negligence
or wilful misconduct, in each such case as determined by a final and
nonappealable decision of a court of competent jurisdiction. If and to the
extent that the foregoing undertaking may be unenforceable for any reason, the
Borrower hereby agrees to make the maximum contribution to the payment and
satisfaction of each of the Indemnified Liabilities which is permissible under
applicable law. The foregoing indemnity shall become effective immediately
upon the execution and delivery hereof and shall remain operative and in full
force and effect notwithstanding the consummation of the transactions
contemplated hereunder, the repayment of any of the Loans made hereunder, the
invalidity or unenforceability of any term or provision of this Agreement or
any other Loan Document, or any investigation made by or on behalf of any
Lender or the Agent.
SECTION 9.5. Survival. The obligations of the Borrower
under Sections 2.4, 3.5, 9.3 and 9.4, and the obligations of the Lenders
under Section 8.1, shall in each case survive any termination of this
Agreement. The representations and warranties made by the Borrower in this
Agreement, the Notes and in each other Loan Document shall survive the
execution and delivery of this Agreement, the Notes and each such other Loan
Document.
SECTION 9.6. Severability. Any provision of this
Agreement, the Notes or any other Loan Document which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions of this Agreement, the Notes or such
other Loan Document or affecting the validity or enforceability of such
provision in any other jurisdiction.
SECTION 9.7. Headings. The various headings of this
Agreement, the Notes and of each other Loan Document are inserted for
convenience only and shall not affect the meaning or interpretation of this
Agreement, the Notes or such other Loan Document or any provisions hereof or
thereof.
SECTION 9.8. Counterparts, Effectiveness, etc. This
Agreement may be executed by the parties hereto in several counterparts, each
of which shall be deemed to be an original and all of which shall constitute
together but one and the same agreement. This Agreement shall become effective
when counterparts hereof executed on behalf of the Borrower and each Lender (or
notice thereof satisfactory to the Agent) shall have been received by the Agent
and notice thereof shall have been given by the Agent to the Borrower and each
Lender.
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<PAGE> 99
SECTION 9.9. Governing Law; Entire Agreement. (a) THIS
AGREEMENT AND THE NOTES SHALL EACH BE DEEMED TO BE A CONTRACT MADE UNDER AND
GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK. This Agreement, the
Notes and the other Loan Documents constitute the entire understanding among
the parties hereto with respect to the subject matter hereof and supersede any
prior agreements, written or oral, with respect thereto including the
Commitment Letter.
(b) EACH PARTY TO THIS AGREEMENT HEREBY IRREVOCABLY
SUBMITS TO THE JURISDICTION OF ANY NEW YORK STATE OR FEDERAL COURT SITTING IN
NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT OR RELATED DOCUMENT, AND EACH HEREBY
IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY
BE HEARD AND DETERMINED IN SUCH NEW YORK STATE OR FEDERAL COURT. THE BORROWER
AGREES THAT SUCH JURISDICTION SHALL BE EXCLUSIVE WITH RESPECT TO ANY SUCH
ACTION OR PROCEEDING BROUGHT BY IT AGAINST THE AGENT OR ANY LENDER. EACH PARTY
TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY
EFFECTIVELY DO SO, THE DEFENSE OF ANY INCONVENIENT FORUM TO THE MAINTENANCE OF
SUCH ACTION OR PROCEEDING.
(c) The Borrower hereby irrevocably designates, appoints
and empowers CT Corporation System, whose present address is 1633 Broadway, New
York, New York 10019, as its authorized agent to receive, for and on its behalf
and its property, service of process in the State of New York when and as such
legal actions or proceedings may be brought in the courts of the State of New
York or of the United States of America sitting in New York, and such service
of process shall be deemed complete upon the date of delivery thereof to such
agent whether or not such agent gives notice thereof to the Borrower, or upon
the earliest of any other date permitted by applicable law. The Borrower shall
furnish the consent of CT Corporation System so to act to the Agent on or prior
to the Closing Date. It is understood that a copy of said process served on
such agent will as soon as practicable be forwarded to the Borrower, at its
address set forth below, but its failure to receive such copy shall not affect
in any way the service of said process on said agent as the agent of the
Borrower. The Borrower irrevocably consents to the service of process out of
any of the aforementioned courts in any such action or proceeding by the
mailing of the copies thereof by certified mail, return receipt requested,
postage prepaid, to it at its address set forth herein, such service to become
effective upon the earlier of (i) the date 10 calendar days after such mailing
or (ii) any earlier date permitted by applicable law. The Borrower agrees that
it will at all times continuously maintain an agent to receive service of
process in the State of New York on behalf of itself and its properties and in
the event that, for any reason, the agent named above or its successor shall no
longer serve as its agent to receive service of process in the State of New
York on its behalf, it shall promptly appoint a successor so to serve and shall
advise the Agent and the Lenders thereof (and shall furnish to the Agent the
consent of any successor agent so to act). Nothing in this Section 9.9 shall
affect the right of the Agent or any Lender to bring proceedings against the
Borrower in the courts of any other jurisdiction or to serve process in any
other manner permitted by applicable law.
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<PAGE> 100
SECTION 9.10. Successors and Assigns. This Agreement
shall be binding upon and shall inure to the benefit of the parties hereto and
their respective successors and assigns; provided, however, that the Borrower
may not assign or transfer its rights or obligations hereunder without the
prior written consent of all Lenders; and the rights of sale, assignment and
transfer of the Lenders are subject to Section 9.11.
SECTION 9.11. Sale and Transfers, Participations, etc.
(a) Any Lender may at any time sell to one or more
Participants participating interests in any Loan owing to such Lender, any
Note held by such Lender, the Term Loan Commitment or the Revolving Loan
Commitment of such Lender, or any other interest of such Lender under this
Agreement. In the event of any such sale by a Lender of participating
interests to a Participant, such Lender's obligations under this Agreement
shall remain unchanged and such Lender shall remain solely responsible for the
performance thereof, such Lender shall remain the holder of any such Note for
all purposes under this Agreement and the other Loan Documents, and the
Borrower and the Agent shall continue to deal solely and directly with such
Lender in connection with such Lender's rights and obligations under this
Agreement and the other Loan Documents. The Borrower agrees that if amounts
outstanding under this Agreement and the Notes are due or unpaid, or shall have
been declared or shall have become due and payable upon the occurrence of an
Event of Default, each Participant shall be deemed to have the right of setoff
in respect of its participating interest in amounts owing under this Agreement
and any Note to the same extent as if the amount of its participating interest
were owing directly to it as a Lender under this Agreement or any Note,
provided that such right of setoff shall be subject to the approval of the
Required Lenders and to the obligations of such Participant to share with the
Lenders, and the Lenders agree to share with such Participant, as provided in
Section 3.8 as if the Participant were a Lender hereunder and the Borrower
shall have been notified of the name, address and amount of such Participant's
participating interest in the Loans and the Commitments. The Borrower also
agrees that each Participant shall be entitled to the benefits of (i) Section
9.4 and (ii) Sections 2.4 and 3.7, with respect to its participation in the
Commitments and the Loans outstanding from time to time; provided, that no
Participant shall be entitled to receive any greater amount pursuant to the
Sections referred to in clauses (i) and (ii) than the transferor Lender would
have been entitled to receive in respect of the amount of the participation
transferred by such transferor Lender to such Participant had no such transfer
occurred.
(b) With the consent of the Agent and the consent of the
Borrower (which consent shall not be unreasonably withheld or delayed), any
Lender may at any time sell to any Purchasing Lender all or any part in a
minimum amount of $2,500,000, of its rights and obligations under this
Agreement and the Notes pursuant to a Transfer Supplement, executed by such
Purchasing Lender, such transferor Lender, the Agent and the Borrower. Upon
(i) such execution of such Transfer Supplement, and (ii) delivery of a fully
executed copy thereof to the Borrower, such Purchasing Lender shall for all
purpose be a Lender party to this Agreement and shall have all the rights and
obligations of a Lender under this Agreement, to the same extent as if it were
an original party hereto, with a Percentage of the Revolving Loan Commitment
Amount and the Term Loan set forth in such Transfer Supplement, and no further
consent or action by the Borrower, the Lenders or the Agent
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<PAGE> 101
shall be required. Such Transfer Supplement shall be deemed to amend this
Agreement to the extent, and only to the extent, necessary to reflect the
addition of such Purchasing Lender and the resulting adjustment of Percentages
arising from the purchase by such Purchasing Lender of all or a portion of the
rights and obligations of such transferor Lender under this Agreement and the
Notes. Upon the consummation of any transfer to a Purchasing Lender pursuant
to this paragraph (b), the transferor Lender, the Agent and the Borrower shall
make appropriate arrangements so that, if required, replacement Notes are
issued to such transferor Lender and new Notes to the Purchasing Lender in the
amount equal to their respective Commitments and outstanding Loans, as
appropriately adjusted pursuant to such Transfer Supplement.
(c) The Agent shall maintain at its address referred to
herein a copy of each Transfer Supplement delivered to it and the Register for
the recordation of the names and addresses of the Lenders and the Commitments
of, and principal amount of the Loans owing to, each Lender from time to time.
The entries in the Register shall be conclusive, in the absence of manifest
error, and the Borrower, the Agent and the Lenders may treat each Person whose
name is recorded in the Register as the owner of the Loans recorded therein for
all purposes of this Agreement. The Register shall be available for inspection
by the Borrower or any Lender at any reasonable time and from time to time upon
reasonable prior notice.
(d) Upon its receipt of a Transfer Supplement executed by
a transferor Lender, the Agent and a Purchasing Lender together with payment by
such Purchasing Lender to the Agent, for the account of the Agent and not for
the account of the Lenders, of a registration and processing fee of $2,500, and
the Notes subject to such Transfer Supplement, the Agent shall (i) accept such
Transfer Supplement, (ii) record the information therein in the Register and
(iii) give prompt notice of such acceptance and recordation to the Lenders and
the Borrower.
(e) If, pursuant to this Section 9.11, any interest in
this Agreement or any Note is transferred to any Participant or Purchasing
Lender which is organized under the laws of any jurisdiction other than the
United States or any State thereof, the transferor Lender shall cause such
Participant or Purchasing Lender, concurrently with the effectiveness of such
transfer, (i) to represent to the transferor Lender (for the benefit of the
transferor Lender, the Agent and the Borrower) that under applicable law and
treaties no taxes will be required to be withheld by the Agent, the Borrower or
the transferor Lender with respect to any payments to be made to such
Participant or Purchasing Lender in respect of the Loans or Commitments, (ii)
to furnish to the transferor Lender, the Agent and the Borrower two properly
executed original Internal Revenue Service Forms 4224 or 1001 (or any successor
forms) and properly executed Internal Revenue Service Forms W-8 and W-9, as the
case may be, (wherein such Participant or Purchasing Lender claims entitlement
to complete exemption from the United States federal withholding tax on all
interest payments hereunder and all fees payable under Section 2.4) and (iii)
to agree (for the benefit of the transferor Lender, the Agent and the Borrower)
to provide the transferor Lender, the Agent and the Borrower new Internal
Revenue Service Forms 4224 or 1001 upon the expiration or obsolescence of any
previously delivered form or after the occurrence of any event requiring a
change in the most recent forms delivered by it to the Transferor Lender, the
Agent and the Borrower, and comparable statements in
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<PAGE> 102
accordance with applicable United States laws and regulations and amendments
duly executed and completed by such Participant or Purchasing Lender, and to
comply from time to time with all applicable United States laws and regulations
with regard to such withholding tax exemption.
(f) Notwithstanding anything to the contrary set forth in
this Section 9.11, (i) any Lender may sell to any of its Affiliates all or any
part of its rights and obligations under this Agreement and the Notes (provided
that no such Affiliate shall be entitled to receive any greater amount pursuant
to Sections 2.4 or 3.7 than that which the transferor Lender would have been
entitled to receive in respect of the amount so assigned by such transferor
Lender to such Affiliate had no such transfer occurred) and, upon the
occurrence and during the continuance of an Event of Default, any Lender may
sell to any Purchasing Lender all or any part of its rights and obligations
under this Agreement and the Notes, in either case notwithstanding that the
Borrower has not or does not consent to such sale, provided such Lender has
obtained the consent of the Agent and otherwise meets the requirements of this
Section 9.11 and (ii) any Lender may create a security interest in all or any
portion of its rights under this Agreement (including the Loans owing to it and
the notes held by it) in favor of the Federal Reserve Bank in accordance with
Regulation A of the F.R.S. Board.
SECTION 9.12. Other Transactions. Nothing contained
herein shall preclude the Agent or any other Lender from engaging in any
transaction, in addition to those contemplated by this Agreement or any other
Loan Document, with the Borrower or any of its Affiliates in which the Borrower
or such Affiliate is not restricted hereby from engaging with any other Person.
SECTION 9.13. Confidentiality. The Lenders and the Agent
shall hold all non-public, proprietary or confidential information (which has
been identified as such by the Borrower) obtained pursuant to the requirements
of this Agreement in accordance with their customary procedures for handling
confidential information of this nature and in accordance with safe and sound
banking practices; however, the Lenders and the Agent may make disclosure of
any such information to its examiners, Affiliates, outside auditors, counsel,
consultants, appraisers and other professional advisors in connection with this
Agreement or as required by any proposed syndicate member or any proposed
transferee or participant in connection with the contemplated transfer of any
Note or participation therein or as required or requested by any Governmental
Authority or representative thereof or in connection with the enforcement
hereof or of any Loan Document or related document or pursuant to legal
process; provided, however, that any such proposed syndicate member or
proposed transferee or participant shall have agreed in writing for the
Borrower's benefit to be bound by the terms of this Section 9.13. In no event
shall any Lender or the Agent be obligated or required to return any materials
furnished to it by the Borrower.
SECTION 9.14. Change in Accounting Principles. If
(a) any changes in accounting principles from those used
in the preparation of the financial statements referred to in clause (a)(i) of
Section 5.4 hereafter occur as a result of the promulgation of rules,
regulations, pronouncements or opinions by the Financial Accounting Standards
Board or the American Institute of Certified Public Accountants (or successors
thereto or
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<PAGE> 103
agencies with similar functions) result in a change in the method of
calculation of financial covenants, standards or terms found in this Agreement;
or
(b) there is any change in the Borrower's Fiscal Year
with the Required Lenders' prior written consent pursuant to Section 6.2.16
hereof;
the parties hereto agree to enter into negotiations in order to amend such
financial covenants, standards or terms so as to equitably reflect such changes
with the desired result that the evaluations of the Borrower's financial
condition shall be the same after such changes as if such changes had not been
made.
SECTION 9.15. Waiver of Jury Trial, Etc. THE AGENT, THE
LENDERS AND THE BORROWER HEREBY KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVE
ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED
HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT, THE
NOTES OR ANY OTHER LOAN DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING,
STATEMENTS (WHETHER VERBAL OR WRITTEN), OR ACTIONS OF THE AGENT, SUCH LENDERS,
OR THE BORROWER. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE AGENT AND
SUCH LENDERS ENTERING INTO THIS AGREEMENT.
SECTION 9.16. Limitation of Liability. Neither the Agent,
the Lenders nor any Affiliate thereof shall have any liability with respect to,
and THE BORROWER HEREBY WAIVES, RELEASES AND AGREES NOT TO SUE UPON, ANY CLAIM
FOR ANY SPECIAL, INDIRECT, PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES
SUFFERED BY THE BORROWER IN CONNECTION WITH, ARISING OUT OF, OR IN ANY WAY
RELATED TO THIS AGREEMENT, THE LOAN DOCUMENTS, THE TRANSACTIONS CONTEMPLATED
HEREIN, OR ANY ACT, OMISSION OR EVENT OCCURRING IN CONNECTION THEREWITH.
SECTION 9.17. Usury Savings Clause. Notwithstanding
anything to the contrary in this Agreement or any other Loan Document, if at
any time any rate of interest accruing on any Obligation, when aggregated with
all amounts payable by the Borrower or any other Loan Party under any of the
Loan Documents that are deemed or construed to be interest accrued or accruing
on such Obligation under applicable law, exceeds the highest rate of interest
permissible under any law which a court of competent jurisdiction shall, in a
final determination, deem applicable to such Lender with respect to such
Obligation (each a "Maximum Lawful Rate"), then in such event and so long as
the Maximum Lawful Rate would be so exceeded, such rate of interest shall be
reduced to the Maximum Lawful Rate; provided that if at any time thereafter
such rate of interest accruing on Obligations held by such Lender is less than
the Maximum Lawful Rate, the Borrower shall continue to pay interest to such
Lender at the Maximum Lawful Rate until such time as the total interest
received by such Lender in respect of the Obligations held by it is equal to
the total interest which such Lender would have received had interest on all
Obligations held by such Lender (but for
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<PAGE> 104
the operation of this Section 9.17) accrued at the rate otherwise applicable
under this Agreement and the other Loan Documents. Thereafter, interest
payable to such Lender in respect of the Obligations held by it shall accrue at
the applicable rate set forth in this Agreement or other Loan Documents unless
and until such rate again exceeds the Maximum Lawful Rate, in which event this
Section 9.17 shall again apply. In no event, shall the total interest received
by any Lender pursuant to the terms hereof exceed the amount which such Lender
could lawfully have received had interest been calculated for the full term of
this Agreement at the Maximum Lawful Rate. In the event that the Maximum
Lawful Rate is calculated pursuant to this Section 9.17, (a) if required by
applicable law, such interest shall be calculated at a daily rate equal to the
Maximum Lawful Rate divided by the number of days in the year in which such
calculation is made, and (b) if permitted by applicable law, the Borrower and
such Lender shall (i) characterize any non-principal payment as an expense, fee
or premium rather than as interest, (ii) exclude voluntary prepayments and the
effect thereof, and (iii) amortize, prorate, allocate and spread in equal or
unequal parts the total amount of interest throughout the entire contemplated
term of the Loans so that interest for the entire term of the Loans shall not
exceed the Maximum Lawful Rate. In the event that a court of competent
jurisdiction, notwithstanding the provisions of this Section 9.17 shall make a
final determination that any Lender has received interest in excess of the
Maximum Lawful Rate, such Lender shall, to the extent permitted by applicable
law, promptly apply such excess, first to any interest due and outstanding
under this Agreement and the other Loan Documents, second to any principal due
and payable under this Agreement and the Notes, third to the remaining
principal amount of the Notes and fourth to other unpaid Obligations held by
such Lender, and thereafter shall refund any excess to the Borrower or as a
court of competent jurisdiction may otherwise order.
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<PAGE> 105
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto duly authorized
as of the day and year first above written.
AFGL INTERNATIONAL, INC.
By:_________________________________
Name:
Title:
Attest:_____________________________
Name:
Title:
Percentage
100% - Revolving INTERNATIONALE NEDERLANDEN (U.S.)
100% - Term CAPITAL CORPORATION, as Agent and as
Lender
By:_________________________________
Name:
Title:
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<PAGE> 106
SCHEDULE 1
DISCLOSURE SCHEDULE
<TABLE>
<S> <C>
Item 1 (Transaction Costs)
Item 2 (Sources and Uses)
Item 3 (Litigation)
Item 4 (Indebtedness to be Refinanced)
Item 5 (Material Contracts)
Item 6 (Governmental Licenses)
Item 7 (Exceptions to GAAP)
Item 8 (Benefit Plans)
Item 9 (Labor Controversies)
Item 10 (Intellectual Property)
Item 11 (Insurance)
Item 12 (Existing Indebtedness)
Item 13 (Environmental Matters)
Item 14 (Consents)
Item 15 (Employment Contracts)
Item 16 (Subsidiaries)
Item 17 (Permitted Liens)
Item 18 (Leases)
Item 19 (Existing Investments)
</TABLE>
<PAGE> 107
EXHIBIT A
FORM OF
BORROWING REQUEST
,
------------- ----
Internationale Nederlanden
(U.S.) Capital Corporation,
as Agent
200 Galleria Parkway, N.W.
Suite 950
Atlanta, Georgia 30339
Attention: Mr. John Lanier
Ladies and Gentlemen:
This Borrowing Request is delivered to you, in your capacity as Agent,
under Section 3.1 of the Credit Agreement, dated as of May __, 1996 (as
amended, restated, supplemented or otherwise modified from time to time, the
"Credit Agreement"), by and among AFGL International, Inc. (the "Borrower"),
the various lenders (the "Lenders") as are, or may from time to time become,
parties thereto, and Internationale Nederlanden (U.S.) Capital Corporation, as
Agent for the Lenders (the "Agent"). Unless otherwise defined, capitalized
terms used herein have the meanings provided in the Credit Agreement.
The Borrower hereby requests that Revolving Loans be made in the aggregate
principal amount of $___________ on ___________, ____. The Revolving Loans
requested hereby shall be [Base Rate Loans.] [Eurodollar Loans having an
initial Interest Period of ____ month[s].]
The Borrower hereby acknowledges that, pursuant to Section 4.2.2 of the
Credit Agreement, each of the delivery of this Borrowing Request and the
acceptance by the Borrower of the proceeds of the Revolving Loans requested
hereby, constitutes a representation and warranty that, on the date of the
making of such Revolving Loans, and before and after giving effect thereto,
all statements set forth in Section 4.2.1 of the Credit Agreement are true and
correct.
<PAGE> 108
The Borrower agrees that if, prior to the time of the making of the
Revolving Loans requested hereby, any matter certified to herein or in
connection herewith by it will not be true and correct at such time as if then
made, it will immediately so notify the Agent. Unless prior to the making of
the Revolving Loans requested hereby, the Agent shall receive written notice to
the contrary from the Borrower, each matter certified to herein or in
connection herewith shall be deemed once again to be certified as true and
correct at the date of the making of such Revolving Loans as if then made.
IN WITNESS WHEREOF, the Borrower has authorized this Borrowing Request to
be executed and delivered, and the certifications, representations and
warranties contained herein to be made, by its duly authorized officer as of
the day and year first above written.
AFGL INTERNATIONAL, INC.
By:
-----------------------------------
Name:
Title:
<PAGE> 109
EXHIBIT B
FORM OF
BORROWING BASE CERTIFICATE
In accordance with that certain Credit Agreement, dated as of May ___,
1996 (as amended, restated, supplemented or otherwise modified from time to
time, the "Credit Agreement"), by and among AFGL International, Inc. (the
"Borrower"), the various lenders (the "Lenders") as are, or may from time to
time become, parties thereto, and Internationale Nederlanden (U.S.) Capital
Corporation, as Agent for the Lenders (the "Agent"), the undersigned hereby
certifies that as of the date indicated below (the "Borrowing Base Calculation
Date") the amounts and representations set forth below are true and correct.
Unless otherwise defined, capitalized terms used herein (including the
attachments hereto) have the meanings ascribed to them in the Credit Agreement.
Borrowing Base Calculation Date: ______________________________
The calculations contained herein are based, in the case of Accounts, upon
Borrower's book value, which meet the criteria set forth in the Credit
Agreement for Eligible Accounts, respectively, and as computed on Schedule I
hereto.
1. Eligible Accounts
as supported by Schedule I: $
------------
2. Deductions for Reserves as $
supported by Schedule II: ------------
3. Borrowing Base
(item 1 minus item 2): $
------------
Attached as Schedule III is an "Accounts Aging Report" (as herein defined)
prepared as of the Borrowing Base Calculation Date and upon which the foregoing
calculations are based. For the purposes of this Borrowing Base Certificate,
"Accounts Aging Report" means a detailed aged trial balance of Accounts
existing as of a specified date, specifying the names, addresses, face value
and dates of invoices of each Account Debtor obligated on any Accounts so
listed.
The information contained in this Borrowing Base Certificate and in the
attachments hereto is true and complete in all material respects as of the
Borrowing Base Calculation Date or as of any more recent date on which the
undersigned officer of Borrower has obtained or acquired new information.
<PAGE> 110
Except as disclosed in this Borrowing Base Certificate, or in the Accounts
Aging Report attached hereto, there has been no Material Adverse Change in
Borrower's Eligible Accounts since the Closing Date.
IN WITNESS WHEREOF, the Borrower has caused this Certificate to be
executed and delivered and the certification and warranties contained herein to
be made by an Authorized Officer of Borrower authorized to execute and deliver
this Certificate.
Dated this ___ day of _____________, _____.
AFGL INTERNATIONAL, INC.
By:______________________________
Name:
Title:
<PAGE> 111
<TABLE>
<CAPTION>
SCHEDULE I
Period Ending _________________
<S> <C>
I. Total Accounts per Accounts Aging Report $ _________
(See attached Schedule III)
II. Less non-Eligible Accounts:
a. Accounts as to which a representation or warranty contained in $ _________
the Credit Agreement, the Security Agreement or any of the other
Loan Documents has been breached in any material respect.
b. Accounts owed by an Account Debtor as to which more than 50% of $ _________
the outstanding Accounts of such Account Debtor are not Eligible
Accounts.
c. Accounts owed by an Account Debtor which has become insolvent or $ _________
otherwise met one of the enumerated conditions set out in
subsection (c) of the "Eligible Accounts" definition in the
Credit Agreement.
d. Accounts billed on other than standard terms of payment. $ _________
e. Accounts more than 90 days past due. $ _________
f. Accounts owed by Account Debtors outside the U.S. (not backed by $ _________
letters of credit or acceptances acceptable to the Agent).
g. Affiliate and employee Accounts. $ _________
h. Accounts subject to set-off (ineligible to the extent of set-off). $ _________
i. Accounts denominated other than in Dollars or payable outside the $ _________
United States.
j. Accounts the collection of which, based upon the customary credit $ _________
decisions of the Agent, are insecure or may not be paid.
</TABLE>
B-5
<PAGE> 112
<TABLE>
<S> <C>
k. Accounts subject to material claims or disputes. $ _________
l. Accounts subject to Liens (other than in favor of the Agent). $ _________
m. Accounts not evidenced by invoices. $ _________
n. Accounts evidenced by chattel paper or other instruments, unless $ _________
pledged to Agent.
o. Accounts which, together with other Eligible Accounts of the same $ _________
Account Debtor, represent more than 15% of net outstanding
balance of all Eligible Accounts for all Account Debtors other
than Merrill Lynch & Co. and Affiliates or more than 20% of net
outstanding balance of all Eligible Accounts for Merrill Lynch &
Co. and Affiliates as Account Debtor.
p. Accounts of Account Debtors exceeding credit limit for such $ _________
Account Debtors established by the Borrower and satisfactory to
the Agent (to the extent of such excess).
q. Accounts (or amounts thereof evidenced by a single invoice) as to $ _________
which additional services are required before collection of such
invoiced amount.
r. Government Accounts, absent compliance with the Federal $ _________
Assignment of Claims Act in the case of Accounts owed by the U.S.
Government or similar state laws, if any, in the case of Accounts
owed by states or agencies thereof.
s. Accounts for which documentation has not been submitted to $ _________
Account Debtor.
t. Accounts (or underlying Contracts) which contravene in any $ _________
material respect any laws, rules or regulations applicable
thereto.
u. Accounts where Account Debtor is located in the State of $ _________
Minnesota or any other state imposing conditions on the right of
a foreign (out-of-state) creditor to collect accounts receivable
from Account Debtors located in such state and the Borrower or
the Eligible Subsidiary has not satisfied such conditions for the
then current year.
</TABLE>
B-6
<PAGE> 113
<TABLE>
<S> <C>
v. Accounts which have not been adjusted to reflect reimbursement $ _________
policies of Account Debtor.
w. Accounts which were created when underlying Contract was not in $ _________
full force and effect.
Total non-Eligible Accounts [sum of a-w] $ _________
Total Eligible Accounts (total Accounts less total non-Eligible Accounts) $ _________
Advance Rate 85%
Borrowing Base $ _________
</TABLE>
B-7
<PAGE> 114
SCHEDULE II
Period Ending
------------------
1. Charges and Liens $
------------------
2. Environmental Liabilities and Costs $
------------------
3. Revolving Loans which Agent is permitted to $
make on Borrower's behalf ------------------
4. Other $
------------------
Total Reserves $
------------------
B-8
<PAGE> 115
SCHEDULE III
Accounts Aging Report
Period Ending
---------------------
[Borrower to Attach]
<PAGE> 116
EXHIBIT C
FORM OF
COMPLIANCE CERTIFICATE
This Compliance Certificate is delivered pursuant to [clause (a)(iii)]
[clause (c)] of Section 6.1.1 of the Credit Agreement, dated as of May __, 1996
(as amended, restated, supplemented or otherwise modified from time to time
made thereto, the "Credit Agreement"), by and among AFGL International, Inc.
(the "Borrower"), the various lenders (the "Lenders"), as are, or may from
time to time become, parties thereto and Internationale Nederlanden (U.S.)
Capital Corporation, as Agent for the Lenders (the "Agent"). Unless otherwise
defined, capitalized terms used herein (including the attachments hereto) have
the meanings provided in the Credit Agreement.
The undersigned, being the duly elected, qualified and acting chief
[executive/operating/accounting/financial] officer of the Borrower, on behalf
of the Borrower and solely in his/her capacity as an officer of the Borrower,
hereby certifies and warrants that:
1. [He/she] is the chief [executive/operating/accounting/financial]
Authorized Officer of the Borrower and that, as such, [he/she] is
authorized to execute this Certificate on behalf of the Borrower.
2. As of ________ __, ____ (the "Computation Date"):
(a) except as previously disclosed to the Agent and the Lenders in
writing pursuant to Section 6.1.6 of the Credit Agreement,
(i) no Default or Event of Default, and
(ii) no event of any other type described in such
Section 6.1.6,
occurred during the period as to which this Compliance Certificate
relates;
(b) the Fixed Charge Coverage Ratio (as calculated pursuant to
clause (a) of Section 6.2.4 of the Credit Agreement) was _______, as
computed on Attachment 1 hereto;
(c) the Leverage Ratio (as calculated pursuant to clause (b) of
Section 6.2.4 of the Credit Agreement) was _______, as computed on
Attachment 2 hereto;
<PAGE> 117
(d) the Borrower's Interest Coverage Ratio (as calculated pursuant
to clause (c) of Section 6.2.4, of the Credit Agreement) was _________,
as computed on Attachment 3 hereto;
(e) the Borrower's Net Worth (as determined in accordance with GAAP)
was ________________;
(f) the Borrower's EBITDA (as calculated pursuant to clause (e) of
Section 6.2.4 of the Credit Agreement) was _________, as detailed on
Attachment 4 hereto;
(g) the Borrower's Current Ratio (as calculated pursuant to clause
(f) of Section 6.2.4 of the Credit Agreement) was __________, as detailed
on Attachment 5 hereto;
(h) Consolidated Capital Expenditures (as calculated pursuant to
Section 6.2.5 of the Credit Agreement) for the 199___ Fiscal Year is
$______________, as detailed on Attachment 6 hereto;
(i) the aggregate amount of payments due from the Borrower and its
Subsidiaries during the 199__ Fiscal Year (as calculated pursuant to
Section 6.2.6 of the Credit Agreement), in respect of operating leases
and agreements to lease having a term of one year or more, is $________,
as detailed on Attachment 7 hereto.
IN WITNESS WHEREOF, the undersigned has executed and delivered this
Certificate, this _____ day of __________, ____.
By:
-------------------------------------
Name:
Title:
<PAGE> 118
Attachment 1
Period Ending
------------
Fixed Charge Coverage Ratio
(All figures consolidated)
1. EBITDA (as calculated on Attachment 4): $
--------------
2. Fixed Charges:
(a) Interest Expense $
--------------
(b) Scheduled principal repayments
of Indebtedness $
--------------
(c) Total (sum of (a) and (b)) $
==============
Ratio: EBITDA (Item 1) to Fixed Charges (Item 2(c)) is .
---------
C-3
<PAGE> 119
Attachment 2
Period Ending
------------
Leverage Ratio
(All figures consolidated)
1. Aggregate outstanding principal amount
of Indebtedness of Borrower and its
Subsidiaries $
--------------
2. EBITDA (as calculated
on Attachment 4 hereto) $
--------------
Leverage Ratio: Outstanding Indebtedness (Item 1) to EBITDA (Item 2) is
.
-------------
<PAGE> 120
Attachment 3
Period Ending
------------
Interest Coverage Ratio
(All figures consolidated)
1. EBITDA (as calculated on Attachment 4) $
--------------
2. Interest Expense (as listed on Attachment 4) $
--------------
Ratio: EBITDA (Item 1) to Interest Expense (Item 2) is .
-----------
<PAGE> 121
Attachment 4
Period Ending
------------
EBITDA
(All figures consolidated)
1. Net Income $
--------------
2. Interest Expense $
--------------
3. Provisions for Income Taxes
4. Depreciation, amortization of intangible $
assets, and other non-cash charges --------------
5. Subtotal (Sum of Items 1-4) $
--------------
6. Non-cash credits and revenues $
--------------
7. Total (Item 5 less Item 6) $
==============
C-6
<PAGE> 122
Attachment 5
Period Ending
------------
Current Ratio
(All figures consolidated)
1. Current Assets $
----------
2. Current Liabilities $
(excluding current maturities of the Obligations) ----------
3. Ratio: Current Assets (Item 1)
to Current Liabilities (Item 2) $
----------
<PAGE> 123
Attachment 6
Period Ending
-------------
Consolidated Capital Expenditures
(All figures consolidated)
<TABLE>
<S> <C>
1. Gross dollar amount of additions to property, plant, $______________
equipment and other fixed assets of the Borrower and its
Subsidiaries, including those additions made in the ordinary
course of business (excluding routine maintenance and repairs)
2. Capitalized Lease Liabilities incurred $______________
by the Borrower and its Subsidiaries (to the extent
not included in Item 1)
Borrower's Consolidated Capital Expenditures:
Sum of Item 1 and Item 2 $
=============
</TABLE>
[BORROWER TO PROVIDE DETAILED BREAKDOWN]
<PAGE> 124
Attachment 7
------------
Period Ending
------------
(All figures consolidated)
Borrower's and Subsidiaries "Lease Obligations"
under Section 6.2.6 of the Credit Agreement
- -----------------------------------------------
1. Aggregate amount of payments due from the Borrower
and its Subsidiaries during the ______ Fiscal Year in
respect of operating leases and agreements described in
Section 6.2.6 of the Credit Agreement $
--------------
[BORROWER TO PROVIDE DETAILED BREAKDOWN]
<PAGE> 125
EXHIBIT D
---------
FORM OF
CONTINUATION/CONVERSION NOTICE
____________, ______
Internationale Nederlanden
(U.S.) Capital Corporation,
as Agent
200 Galleria Parkway, N.W.
Suite 950
Atlanta, Georgia 30339
Attention: Mr. John Lanier
Ladies and Gentlemen:
This Continuation/Conversion Notice is delivered to you pursuant to
Section 3.4.3 of the Credit Agreement, dated as of May ___, 1996 (as amended,
restated, supplemented or otherwise modified from time to time, the "Credit
Agreement"), by and among AFGL International, Inc. (the "Borrower"), the
various lenders (the "Lenders"), as are, or may become parties thereto, and
Internationale Nederlanden (U.S.) Capital Corporation, as Agent for the Lenders
(the "Agent"). Unless otherwise defined herein, capitalized terms used herein
have the meanings provided in the Credit Agreement.
The Borrower hereby requests that on ____________, _____ [all] [a portion]
of the aggregate principal amount of [the Revolving Loans] [the Term Loan] in
an outstanding principal amount of $__________ being presently maintained as
[Base Rate Loans] [Eurodollar Loans having an Interest Period of ______
month[s]], be [converted into] [continued as] [Base Rate Loans] [Eurodollar
Loans having an Interest Period of _____ month[s]].
The Borrower hereby:
(a) certifies and warrants that no Default has occurred and is
continuing or will (after giving effect to the continuation or conversion
requested hereby) occur and be continuing; and
(b) agrees that if prior to the time of such continuation or
conversion any matter certified to herein by it will not be true and
correct at such time as if then made, it will immediately upon becoming
aware of such matter, so notify the Agent.
<PAGE> 126
Except to the extent, if any, that prior to the time of the continuation or
conversion requested hereby the Agent shall receive written notice to the
contrary from the Borrower, each matter certified to herein shall be deemed to
be certified at the date of such continuation or conversion as if then made.
IN WITNESS WHEREOF, the Borrower has authorized this
Continuation/Conversion Notice to be executed and delivered, and the
certifications and warranties contained herein to be made, by its Authorized
Officer as of the day and year first above written.
AFGL INTERNATIONAL, INC.
By:
---------------------------
Name:
Title:
<PAGE> 127
EXHIBIT E-1
-----------
FORM OF
REVOLVING NOTE
--------------
$ ,
------------- ------- -- ----
FOR VALUE RECEIVED, the undersigned, AFGL INTERNATIONAL, INC. (the
"Borrower"), promises to pay to the order of __________________________, a
_________________ (the "Lender"), at the times and in the manner provided in
the Credit Agreement referenced hereinafter, the principal sum of
_______________________ DOLLARS ($__________) or, if less, the outstanding
principal amount of all Revolving Loans made by the Lender from time to time
pursuant to that certain Credit Agreement, dated as of May __, 1996 (as
amended, restated, supplemented or otherwise modified from time to time, the
"Credit Agreement"; capitalized terms used herein and not defined herein shall
have the meaning ascribed to them in the Credit Agreement), by and among the
Borrower, the various lenders (including the Lender) as are, or may from time
to time become, parties thereto, and Internationale Nederlanden (U.S.) Capital
Corporation, as Agent for the Lenders (the "Agent"). Notations indicating
Revolving Loans made by the Lender pursuant to the Credit Agreement and all
payments on account of the principal thereof may be endorsed by the holder
hereof on the grid Schedule attached to this Note, as provided in the Credit
Agreement.
The unpaid principal amount of this Note from time to time shall bear
interest as provided in Section 3.4 of the Credit Agreement. All payments of
principal of and interest on this Note shall be payable in lawful currency of
the United States of America to the account designated by the Agent (and as to
which the Agent has notified the Borrower) in immediately available funds in
accordance with Section 3.6 of the Credit Agreement.
This Note is a Revolving Note referenced in, and evidences Indebtedness
incurred under, the Credit Agreement, to which reference is made for a
description of the security for this Note and for a statement of the terms and
conditions on which the Borrower is permitted and required to make prepayments
and repayments of principal of the Indebtedness evidenced by this Note and on
which such Indebtedness may be declared to be or may automatically become
immediately due and payable.
THIS NOTE SHALL BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE
INTERNAL LAWS OF THE STATE OF NEW YORK.
<PAGE> 128
The Borrower hereby waives all requirements as to diligence, presentment,
demand of payment, protest and notice of any kind with respect to this Note.
All amounts owing hereunder are payable by the Borrower without relief from any
valuation or appraisal laws.
AFGL INTERNATIONAL, INC.
By:
------------------------------
Name:
Title:
Attest:
---------------------------
Name:
Title:
[CORPORATE SEAL]
<PAGE> 129
Schedule of Revolving Loans and Repayments
- ------------------------------------------------------------------
Amount of Amount of Outstanding Person Making
Date Revolving Loan Repayment Balance Notation
- ------------------------------------------------------------------
- ------------------------------------------------------------------
- ------------------------------------------------------------------
- ------------------------------------------------------------------
- ------------------------------------------------------------------
- ------------------------------------------------------------------
- ------------------------------------------------------------------
- ------------------------------------------------------------------
- ------------------------------------------------------------------
- ------------------------------------------------------------------
- ------------------------------------------------------------------
- ------------------------------------------------------------------
- ------------------------------------------------------------------
- ------------------------------------------------------------------
- ------------------------------------------------------------------
- ------------------------------------------------------------------
- ------------------------------------------------------------------
- ------------------------------------------------------------------
- ------------------------------------------------------------------
- ------------------------------------------------------------------
<PAGE> 130
EXHIBIT E-2
-----------
FORM OF
TERM NOTE
---------
$ ,
-------------- -------- -- ----
FOR VALUE RECEIVED, the undersigned, AFGL INTERNATIONAL, INC. (the
"Borrower"), promises to pay to the order of __________________________, a
_________________ (the "Lender"), at the times and in the manner provided in
the Credit Agreement referenced hereinafter, the principal sum of
_______________________ DOLLARS ($__________) or, if less, the outstanding
principal amount of the Term Loan made by the Lender pursuant to that certain
Credit Agreement, dated as of May __, 1996 (as amended, restated, supplemented
or otherwise modified from time to time, the "Credit Agreement"; capitalized
terms used herein and not defined herein shall have the meaning ascribed to
them in the Credit Agreement),by and among the Borrower, the various lenders
(including the Lender) as are, or may from time to time become, parties
thereto, and Internationale Nederlanden (U.S.) Capital Corporation, as Agent
for the Lenders (the "Agent"). Notations indicating the principal amount of
the Term Loan made by the Lender pursuant to the Credit Agreement and all
payments on account of the principal thereof may be endorsed by the holder
hereof on the grid Schedule attached to this Note, as provided in the Credit
Agreement.
The unpaid principal amount of this Note from time to time shall bear
interest as provided in Section 3.4 of the Credit Agreement. All payments of
principal of and interest on this Note shall be payable in lawful currency of
the United States of America to the account designated by the Agent (and as to
which the Agent has notified the Borrower) in immediately available funds in
accordance with Section 3.6 of the Credit Agreement.
This Note is a Term Note referenced in, and evidences Indebtedness
incurred under, the Credit Agreement, to which reference is made for a
description of the security for this Note and for a statement of the terms and
conditions on which the Borrower is permitted and required to make prepayments
and repayments of principal of the Indebtedness evidenced by this Note and on
which such Indebtedness may be declared to be or may automatically become
immediately due and payable.
THIS NOTE SHALL BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE
INTERNAL LAWS OF THE STATE OF NEW YORK.
<PAGE> 131
The Borrower hereby waives all requirements as to diligence, presentment,
demand of payment, protest and notice of any kind with respect to this Note.
All amounts owing hereunder are payable by the Borrower without relief from any
valuation or appraisal laws.
AFGL INTERNATIONAL, INC.
By:
------------------------------
Name:
Title:
Attest:
---------------------------
Name:
Title:
[CORPORATE SEAL]
<PAGE> 132
Schedule of Term Loan and Repayments
- ------------------------------------------------------------------
Amount of Amount of Outstanding Person Making
Date Term Loan Repayment Balance Notation
- ------------------------------------------------------------------
$9,000,000.00
- ------------------------------------------------------------------
-----
- ------------------------------------------------------------------
-----
- ------------------------------------------------------------------
-----
- ------------------------------------------------------------------
-----
- ------------------------------------------------------------------
-----
- ------------------------------------------------------------------
-----
- ------------------------------------------------------------------
-----
- ------------------------------------------------------------------
-----
- ------------------------------------------------------------------
-----
- ------------------------------------------------------------------
-----
- ------------------------------------------------------------------
-----
- ------------------------------------------------------------------
-----
- ------------------------------------------------------------------
-----
- ------------------------------------------------------------------
-----
- ------------------------------------------------------------------
-----
- ------------------------------------------------------------------
-----
- ------------------------------------------------------------------
-----
- ------------------------------------------------------------------
-----
- ------------------------------------------------------------------
<PAGE> 133
EXHIBIT F
---------
FORM OF
TRANSFER SUPPLEMENT
-------------------
THIS COMMITMENT TRANSFER SUPPLEMENT, dated as of the date set forth in
Item 1 of Schedule I hereto, among the Transferor Lender set forth in Item 2 of
Schedule I hereto (the "Transferor Lender"), each Purchasing Lender set forth
in Item 3 of Schedule I hereto (each, a "Purchasing Lender"), and
Internationale Nederlanden (U.S.) Capital Corporation, as Agent for the Lenders
under the Credit Agreement described below (in such capacity, the "Agent").
W I T N E S S E T H:
-------------------
RECITALS.
- --------
A. This Transfer Supplement is being executed and delivered in accordance
with clause (b) of Section 9.11 of the Credit Agreement, dated as of May __,
1996 (as from time to time amended, supplemented or otherwise modified from
time to time, the "Credit Agreement"; unless otherwise defined herein, terms
defined in the Credit Agreement being used herein as therein defined), by and
among AFGL International, Inc. (the "Borrower"), the Transferor Lender and the
other Lenders party thereto, and the Agent;
B. Each Purchasing Lender (if it is not already a Lender party to the
Credit Agreement) wishes to become a Lender party to the Credit Agreement; and
C. The Transferor Lender is selling and assigning to each Purchasing
Lender, rights, obligations, a portion of the [Term Loan] [and the Revolving
Loan Commitment] under the Credit Agreement;
NOW, THEREFORE, the parties hereto hereby agree as follows:
SECTION 1. From and after the Transfer Effective Date set forth in Item 4
of Schedule I hereto (the "Transfer Effective Date"), each Purchasing Lender
shall be a Lender party to the Credit Agreement for all purposes thereof.
SECTION 2. (a) On the Transfer Effective Date, each Purchasing Lender
shall pay to the Transferor Lender, in immediately available funds, an amount
equal to the purchase price, as agreed between the Transferor Lender and such
Purchasing Lender (the "Purchase Price"), for the percentage set forth in Item
5 of Schedule I hereto (such Purchasing Lender's "Purchased Percentage") being
purchased by such Purchasing Lender of the Transferor Lender's portion of the
<PAGE> 134
[the Commitments] [the Revolving Loan Commitment], the outstanding principal
amount of the Loans and other amounts owing to the Transferor Lender under the
Credit Agreement and Notes.
(b) As of the Transfer Effective Date, the Transferor Lender hereby
irrevocably sells, assigns and transfers to each Purchasing Lender, without
recourse, representation or warranty, and each Purchasing Lender hereby
irrevocably purchases, takes and assumes from the Transferor Lender, such
Purchasing Lender's Purchased Percentage of the [Commitments] [Revolving Loan
Commitment] of the Transferor Lender, the Loans outstanding as of the Transfer
Effective Date held by the Transferor Lender and other amounts owing as of the
Transfer Effective Date to the Transferor Lender under the Credit Agreement and
the Notes, together with all instruments, documents and collateral security
pertaining thereto.
SECTION 3. From and after the Transfer Effective Date, principal,
interest, fees pursuant to Section 2.3 of the Credit Agreement, and other
amounts that would otherwise be payable to or for the account of the Transferor
Lender pursuant to the Credit Agreement and the Notes shall, instead, be
payable to or for the account of the Transferor Lender and the Purchasing
Lenders, as the case may be, in accordance with their respective percentages as
set forth on Schedule II of this Transfer Supplement, whether such amounts have
accrued prior to the Transfer Effective Date or accrue subsequent to the
Transfer Effective Date.
SECTION 4. The Notes of the Transferor Lender (the "Exchanged Notes") are
being delivered to the Agent concurrently with this Transfer Supplement. On or
prior to the Transfer Effective Date, the Borrower, at the Borrower's expense,
shall execute and deliver to the Agent, in exchange for (but not in payment of)
the Exchanged Notes, (a) a new [Revolving Note] [and a new Term Note, in each
case,] to the order of each Purchasing Lender in an amount equal to its
Percentage, as set forth on Schedule II hereto, of the aggregate [Revolving
Loan Commitment] [and Term Loan, respectively,] and (b) if the Transferor
Lender has retained a portion of the [Revolving Loan Commitment] [and Term
Loan,] a new [Revolving Note] [and Term Note] to the order of the Transferor
Lender in an amount equal to its retained Percentage, as set forth on Schedule
II hereto, of the aggregate [Revolving Loan Commitment Amount] [and Term Loan].
Such new Notes shall be dated the Closing Date and shall otherwise be in the
Form of the respective Notes replaced thereby. The Exchanged Notes shall be
returned by the Agent to the Borrower marked "exchanged".
SECTION 5. Concurrently with the execution and delivery hereof, the Agent
will, at the request of any Purchasing Lender but at the expense of the
Transferor Lender, provide to such Purchasing Lender (if it is not already a
Lender party to the Credit Agreement) photocopies or conformed copies of all
documents delivered to the Agent on the date of the initial Loans under the
Credit Agreement in satisfaction of the conditions precedent set forth in the
Credit Agreement.
F-3
<PAGE> 135
SECTION 6. Each of the parties to this Transfer Supplement agrees that at
any time and from time to time upon written request of any other party, it will
execute and deliver such further documents and do such further acts and things
as such other party may reasonably request in order to effect the purposes of
this Transfer Supplement.
SECTION 7. By executing and delivering this Transfer Supplement, the
Transferor Lender and each Purchasing Lender confirm to and agree with each
other and the Agent and the Lenders as follows: (i) other than the
representation and warranty that it is the legal and beneficial owner of the
interest being assigned hereby free and clear of any adverse claim, the
Transferor Lender makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with the Credit Agreement or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of the Credit
Agreement, the Notes or any other Loan Document or any other instrument or
document furnished pursuant thereto; (ii) the Transferor Lender makes no
representation or warranty and assumes no responsibility with respect to the
financial condition of the Borrower or any Subsidiary, the value or perfection
of any collateral securing the Obligations or the obligations of any Subsidiary
under the Subsidiary Guaranty, the performance or observance by the Borrower of
any of its obligations under the Credit Agreement, the Notes or any other Loan
Document or any other instrument or document furnished pursuant thereto, or the
performance or observance by any Subsidiary of its obligations under the
Subsidiary Guaranty or any other Loan Document; (iii) each Purchasing Lender
confirms that it has received a copy of the Credit Agreement, together with
copies of the financial statements referred to in Section 5.4 of the Credit
Agreement and such other documents and information as it has deemed appropriate
to make its own credit analysis and decision to enter into this Commitment
Transfer Supplement; (iv) each Purchasing Lender will, independently and
without reliance upon the Agent, the Transferor Lender or any other Lender and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action
under the Credit Agreement; (v) each Purchasing Lender appoints and authorizes
the Agent to take such action as agent on its behalf and to exercise such
powers under the Credit Agreement and the other Loan Documents as are delegated
to the Agent by the terms thereof, together with such powers as are reasonably
incidental thereto, all in accordance with Article 9 of the Credit Agreement;
and (vi) each Purchasing Lender agrees that it will perform in accordance with
their terms all of the obligations which by the terms of the Credit Agreement
and the other Loan Documents are required to be performed by it as a Lender.
SECTION 8. Each party hereto represents and warrants to and agrees with
the Agent that it is aware of and will comply with the provisions of clause
(e) of Section 9.11 of the Credit Agreement (if applicable).
SECTION 9. Schedule II hereto sets forth the revised Percentages (as
defined in the Credit Agreement) of the Transferor Lender and each Purchasing
Lender as well as administrative information with respect to each Purchasing
Lender.
F-3
<PAGE> 136
SECTION 10. The Purchasing Lender agrees to pay the Agent a registration
and processing fee of $2,500 in connection with this Transfer Supplement.
Further, the Purchasing Lender acknowledges that this Commitment Transfer
Supplement will not be recorded by the Agent until such fee is paid.
SECTION 11. THIS TRANSFER SUPPLEMENT SHALL BE DEEMED TO BE A CONTRACT
MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK.
SECTION 12. Without limitation of anything else contained in this
Transfer Supplement, the Purchasing Lender acknowledges and agrees to be bound
by the terms and conditions of Section 9.11 of the Credit Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Transfer
Supplement to be executed by their respective duly authorized officers on
Schedule I hereto as of the date set forth in Item 1 of Schedule I hereto.
CONSENTED TO:
INTERNATIONALE NEDERLANDEN (U.S.)
CAPITAL CORPORATION, as Agent
By:
----------------------------
Name:
Title:
AFGL INTERNATIONAL, INC.
By:
----------------------------
Name:
Title:
ACCEPTED FOR RECORDATION
IN REGISTER UPON PAYMENT
OF THE RECORDATION FEE
DESCRIBED IN SECTION 10 HEREOF:
F-4
<PAGE> 137
INTERNATIONALE NEDERLANDEN (U.S.)
CAPITAL CORPORATION, as Agent
By:
----------------------------
Name:
Title:
<PAGE> 138
SCHEDULE I
TO COMMITMENT
TRANSFER
SUPPLEMENT
----------
COMPLETION OF INFORMATION AND
SIGNATURES FOR COMMITMENT
TRANSFER SUPPLEMENT
-----------------------
Item 1 Date of Commitment [Insert date of Commitment Transfer
------ Transfer Supplement: Supplement]
Item 2 Transferor Lender: [Insert name of Transferor Lender]
------
Item 3 Purchasing Lender[s]: [Insert name[s] of Purchasing Lender[s]]
------
Item 4 Transfer Effective [Insert Transfer Effective Date] [To be a date
------ Date not less than five business days after date of
Commitment Transfer Supplement]
Item 5 Purchased Percentage [Insert percentage to be sold of Lender's Term
- ------ Loan and Revolving Loan Commitment]
Item 6 Signature of Parties to
- ------ Commitment Transfer
Supplement:
, as Transferor Lender
----------------
By:
---------------------------------
Title:
, as a Purchasing Lender
-------------
By:
---------------------------------
Title:
<PAGE> 139
SCHEDULE II
TO COMMITMENT
TRANSFER
SUPPLEMENT
----------
LIST OF ADDRESSES
FOR NOTICES AND PERCENTAGES
---------------------------
[Name of Transferor Lender]
Revised [Revolving and Term] Percentage: %
- ---------------------------------------- -----
[Name of Purchasing Lender]
New [Revolving and Term] Percentage: %
- ------------------------------------- -----
Address for Notices of Purchasing Lender:
- ----------------------------------------
- ----------------------------------------
- ----------------------------------------
- ----------------------------------------
Attn.:
----------------------------------
Telecopy No.:
---------------------------
F-7
<PAGE> 140
EXHIBIT G
---------
FORM OF
ACKNOWLEDGMENT OF INTEREST RATE CONTRACT COUNTERPARTY
-----------------------------------------------------
THIS ACKNOWLEDGMENT OF INTEREST RATE CONTRACT COUNTERPARTY
("Acknowledgment"), dated as of ____________, ______ , between the
___________________ (the "Interest Rate Contract Counterparty") and
INTERNATIONALE NEDERLANDEN (U.S.) CAPITAL CORPORATION, as Agent for the Lenders
under the Credit Agreement described below (in such capacity, the "Agent").
W I T N E S S E T H:
-------------------
RECITALS.
- --------
A. This Acknowledgment is being executed and delivered in accordance with
the Credit Agreement, dated as of May __, 1996 (as from time to time amended,
supplemented or otherwise modified from time to time, the "Credit Agreement";
unless otherwise defined herein, capitalized terms defined in the Credit
Agreement being used herein as therein defined), by and among AFGL
INTERNATIONAL, INC. (the "Borrower"), the various lenders (the "Lenders") as
are, or may from time to time become, parties thereto, and the Agent;
B. The Interest Rate Contract Counterparty has entered into an [Describe
the Interest Rate Contract] (the "Interest Rate Contract") with the Borrower
pursuant to the terms and conditions of Section 6.1.13 of the Credit Agreement,
and the Interest Rate Contract Counterparty desires to execute this
Acknowledgment in order to enjoy the benefits, subject itself to certain of the
obligations, and otherwise evidence its status, as a Lender.
NOW, THEREFORE, the parties hereto hereby agree as follows:
SECTION 1. The Interest Rate Contract Counterparty hereby acknowledges
and agrees that (a) it assumes all obligations of a Lender with respect to the
Interest Rate Contract, (b) the Interest Rate Contract shall be subject to all
terms in the Credit Agreement and the other Loan Documents and (c) the
obligations of the Borrower under the Interest Rate Contract are "Obligations"
under the Credit Agreement.
SECTION 2. Each of the parties to this Acknowledgment agrees that at any
time and from time to time upon written request of any other party, it will
execute and deliver such further documents and do such further acts and things
as such other party may reasonably request in order to effect the purposes of
this Acknowledgment.
<PAGE> 141
SECTION 3. THIS ACKNOWLEDGMENT SHALL BE DEEMED TO BE A CONTRACT MADE UNDER
---------
AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the parties hereto have caused this Acknowledgment to
be executed by their respective duly authorized officers as of the date first
above written.
INTEREST RATE CONTRACT COUNTERPARTY
By:
----------------------------------
Name:
Title:
Address for Notices:
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INTERNATIONALE NEDERLANDEN
(U.S.) CAPITAL CORPORATION, as Agent
By:
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Name:
Title:
G-2
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ACKNOWLEDGED AND AGREED TO:
AFGL INTERNATIONAL, INC.
By:
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Name:
Title:
G-3
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EXHIBIT 2
EXECUTION COPY
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WARRANT PURCHASE AGREEMENT
BETWEEN
AFGL INTERNATIONAL, INC.
AND
INTERNATIONALE NEDERLANDEN
(U.S.) CAPITAL CORPORATION
Dated as of May 31, 1996
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TABLE OF CONTENTS
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RECITALS: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
(a) Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 2. Purchase and Sale of Warrants; Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 3. Investment Representations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 4. Conditions Precedent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 5. Warranties, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
(a) Credit Agreement Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
(b) Power, Authority, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
(c) Due Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
(d) Absence of Takeover Statutes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(e) Validity, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(f) Capitalization and Ownership of the Company . . . . . . . . . . . . . . . . . . . . . . . . . 14
(g) Authorization and Issuance of Warrants . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
(h) Securities Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
(i) No Integration of Issue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 6. Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
(a) Financial and Business Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
(b) Public Company Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(c) Maintenance of Corporate Existences, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(d) Maintenance of Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(e) Inconsistent Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(f) Organic Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(g) Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
(h) Issuance of Additional Rights, Options and Warrants . . . . . . . . . . . . . . . . . . . . . 18
(i) Antitakeover Statutes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
(j) Governmental Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
(k) Issuance of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 7. Warrant Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
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SECTION 8. Execution of Warrant Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 9. Registration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 10. Registration of Transfers and Exchanges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 11. Exercise of Warrants; Conversion of Warrants . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 12. Payment of Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 13. Mutilated or Missing Warrant Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 14. Reservation of Warrant Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 15. Adjustment of Exercise Price and Number of Warrant Shares Issuable . . . . . . . . . . . . . . . 24
(a) Reorganization of the Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
(b) When Issuance or Payment May Be Deferred. . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 16. Fractional Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 17. Notice to Warrant Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 18. Cash Distributions and Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 19. Put Rights; Tag-Along Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
(a) Put by Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
(b) Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
(c) Restrictions on Purchase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
(d) Tag-Along Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
(e) Limitation on Put Rights of Others . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
(f) Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 20. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 21. Costs and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 22. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 23. Successors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
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SECTION 24. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 25. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 26. Benefits of this Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 27. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 28. Amendments; Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 29. Waiver of Jury Trial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 30. Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 31. Specific Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 32. Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 33. Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Exhibit A Form of Series E Warrant Certificate
Exhibit B Schedule of Exceptions
Exhibit C Holders of 5% of More of the Company's Stock
Exhibit D Existing Registration Rights
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WARRANT PURCHASE AGREEMENT
THIS WARRANT PURCHASE AGREEMENT (this "Agreement") is made and
entered into as of May 31, 1996 by and between AFGL INTERNATIONAL, INC., a
Nevada corporation (the "Company"), and INTERNATIONALE NEDERLANDEN (U.S.)
CAPITAL CORPORATION, a Delaware corporation (the "Purchaser").
W I T N E S S E T H:
RECITALS:
A. Simultaneously herewith, the Purchaser is entering
into a Credit Agreement, dated of even date herewith, by and among the Company,
the Purchaser and various other lenders that may become parties thereto (the
"Lenders") and the Purchaser in its capacity as Agent for the Lenders (the
"Agent");
B. It is a condition precedent to the extensions of
credit by the Purchaser to the Company contemplated by the Credit Agreement
that the Company agree to issue to the Purchaser (1) Series E Warrants
initially exercisable for 575,000 shares of Series E Convertible Preferred
Stock, par value $0.001 per share, of the Company ("Series E Convertible
Preferred Stock") for an exercise price of $0.02 per share;
C. Shares of Series E Convertible Preferred Stock are
convertible, at the option of each of the holders thereof, into shares of
common stock, par value $.01 per share, of the Company (the "Common Stock");
and
D. The Purchaser and the Company desire to set forth in
this Agreement the terms and provisions of the Series E Warrants (the
"Warrants") and the conditions to the issuance and sale of the Warrants to the
Purchaser;
NOW, THEREFORE, in consideration of the premises and the
agreements herein set forth and to induce the Purchaser to proceed with the
transactions contemplated by the Credit Agreement, the parties hereto,
intending to be legally bound, hereby agree as follows:
SECTION 1. Definitions.
(a) Defined Terms. Capitalized terms appearing herein
and not otherwise defined herein shall have the meanings ascribed thereto in
the Credit Agreement (irrespective of whether the Credit Agreement is in effect
or has been terminated). The following terms (whether or not underscored) when
used in this Agreement, including its preamble and recitals, shall, except
where the context otherwise requires, have the following meanings (such
meanings to be equally applicable to the singular and plural forms thereof):
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"Affiliate" of any Person means any other Person which,
directly or indirectly, controls or is controlled by or under common control
with such Person (excluding any trustee under, or any committee with
responsibility for administering, any Plan). A Person shall be deemed to be
"controlled by" any other Person if such other Person possesses, directly or
indirectly, power (a) to vote 5% or more of the securities having ordinary
voting power for the election of directors of such Person, or (b) to direct or
cause the direction of the management or policies of such Person whether by
contract or otherwise; provided that no Lender shall be deemed to constitute an
Affiliate of the Company solely by virtue of holding Warrants or Warrant
Shares.
"Agent" is defined in Recital A.
"Agreement" means this Warrant Purchase Agreement as in effect
on the date hereof and as hereafter amended, supplemented, restated or
otherwise modified.
"Authorized Officer" means, relative to the Company, those
officers of the Company whose signature, incumbency and authority shall have
been certified to the Agent and the Lenders pursuant to Section 4.1.1 or
Section 4.2.1 of the Credit Agreement.
"Business Day" means any day which is neither a Saturday or
Sunday nor a legal holiday on which banks are authorized or required to be
closed in New York, New York.
"Capitalized Lease Liabilities" shall have the meaning set
forth in the Credit Agreement.
"Cash Equivalent Investment" means, at any time:
(a) any direct obligation issued or guaranteed by the
United States of America or any agency or instrumentality thereof and backed by
the full faith and credit of the United States of America, or issued by any
state or political subdivision or public instrumentality thereof, (i) which
has a remaining maturity at the time of purchase of not more than one (1) year
or which is subject to a repurchase agreement with any Lender or any Eligible
Lending Institution exercisable within one (1) year from the time of purchase
so long as such direct obligation remains in the possession of the Borrower or
in the possession of any Lender and (ii) which, in the case of obligations of
any state or political subdivision or public instrumentality thereof, is rated
AA or better by Moody's Investors Service, Inc.;
(b) certificates of deposit, time deposits, demand
deposits and bankers' acceptances, having a remaining maturity at the time of
purchase of not more than one (1) year, issued by any Lender or by any Eligible
Lending Institution;
(c) corporate obligations rated Prime-1 by Moody's
Investors Service, Inc. or A-1 by Standard & Poor's Corporation, having a
remaining maturity at the time of purchase of not more than one (1) year;
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(d) shares of funds registered under the Investment
Company Act of 1940, as amended, having assets of at least $100,000,000 which
invest only in obligations described above and which shares are rated by
Moody's Investors Service, Inc. or Standard & Poor's Corporation in one of the
two highest rating categories assigned by such agencies for obligations of such
nature.
"Certificate of Designation" means the Certificate of
Designation, Preferences and Rights for the Series E Convertible Preferred
Stock filed with the Secretary of State of Nevada on May 29, 1996.
"Change in Control" means (i) the failure of Gary S. Goldstein
to own at least 85% of the Stock of the Company which he owns on the Closing
Date, provided, however, that any Stock of the Company sold or transferred to
the Company in satisfaction of the Goldstein Note shall not be considered for
the purposes of this clause (i), or (ii) the failure of either (A) Gary S.
Goldstein to be the Chief Executive Officer and President of the Company and to
be actively involved in the management of the Company and its Subsidiaries or
(B) any two of the following individuals to be actively involved in the
management of the Company and its Subsidiaries at any time prior to the third
anniversary of the Closing Date or thereafter, at least one of the following
three individuals to be actively involved in the management of the Company and
its Subsidiaries at any time prior to the fifth anniversary of the Closing
Date: (1) Irene Cohen, (2) Michael List, and (3) Ron Wendlinger, (iii) the
acquisition by any Person or group of Persons of beneficial ownership of more
than 20% of the outstanding Stock of the Company (within the meaning of Section
13(d) or 14(d) of the Exchange Act and the applicable rules and regulations
thereunder); provided, however, that this clause (iii) shall not apply to an
underwriter(s) who acquires Stock of the Company in connection with a public
offering of Stock of the Company which is being underwritten by such
underwriter(s), or (iv) during any period of 12 consecutive months (whether
commencing before or after the Closing Date), the failure of individuals who on
the first day of such period were directors of the Company (together with any
replacement or additional directors who were nominated or elected by a majority
of directors then in office) to constitute a majority of the Board of Directors
of the Company.
"Closing" means the closing of the sale and purchase of the
Warrants as contemplated hereby.
"Closing Date" means May 31, 1996, the date of the Closing.
"Common Stock" means shares now or hereafter authorized of any
class of common stock of the Company and any other capital stock of the
Company, however designated, that has the right (subject to any prior rights of
any class or series of preferred stock) to participate in any distribution of
the assets upon voluntary or involuntary liquidation, dissolution or winding up
of the Company or in the earnings of the Company without limit as to per share
amount, and shall include, without limitation, the presently authorized
20,000,000 shares of Common Stock, $0.01 par value per share, of the Company.
"Common Stock" shall not include preferred or special stock.
"Company"is defined in the preamble to this Agreement.
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"Contract Value per Share" means the value determined in
accordance with paragraphs (i), (ii) and, if the Company is not a Public
Company, (iii) below, and shall equal the highest number yielded by such
determination:
(i) If the Common Stock is traded on a national
securities exchange or quoted in a national inter- dealer quotation
system, the Contract Value per Share determined pursuant to this
paragraph (i) shall be an amount equal to the average of the Quoted
Prices for Common Stock for the thirty (30) consecutive trading days
commencing forty-five (45) trading days before the date of
determination.
(ii) The Contract Value per Share determined pursuant to
this paragraph (ii) shall equal the quotient of (A) five and one half
(5.5) times trailing twelve months EBITDA as of the end of the end of
the last fiscal month immediately preceding a Put Date, minus (1) the
outstanding principal amount of Funded Indebtedness as of the last day
of the fiscal month ending immediately prior to the date of
determination, plus (2) cash and Cash Equivalent Investments on the
balance sheet of the Company and its Subsidiaries as of the last day
of the fiscal month ending immediately prior to the date of
determination, all determined in accordance with GAAP, divided by (B)
the sum of (1) the number of shares of Common Stock outstanding on the
date of determination, plus (2) the number of Warrant Shares
purchasable and receivable upon exercise of the rights represented by
the Warrant Certificates as of the date of determination.
(iii) If the Company is not a Public Company, the Contract
Value per Share determined pursuant to this paragraph (iii) shall be
equal to the Fair Market Value per Share.
"Conversion Right" is defined in Section 11(b).
"Convertible Securities" means any evidences of indebtedness,
shares of stock or other securities which are convertible into or exchangeable,
with or without payment of additional consideration in cash or property, for
shares of Stock, either immediately or upon the occurrence of a specified date
or a specified event.
"Credit Agreement" means the Credit Agreement, dated of even
date herewith, by and among the Company, the Purchaser and various other
Lenders that may become parties thereto and the Purchaser as Agent for the
Lenders, as in effect on the date hereof and as hereafter amended,
supplemented, restated or otherwise modified.
"EBITDA" shall have the meaning specified for such term in the
Credit Agreement as in effect on the Closing Date.
"Eligible Lending Institution" means a financial institution
having a branch or office in the United States and having capital and surplus
and undivided profits aggregating at least
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$100,000,000 and whose long-term debt securities are rated Prime-1 or better by
Moody's Investor Service, Inc. or A-1 or better by Standard & Poor's
Corporation.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time.
"Excluded Shares" means (i) shares of Common Stock to be
issued upon exercise or conversion of the Company's Series A Convertible
Preferred Stock, Series B Convertible Preferred Stock, Series C 8% Convertible
Preferred Stock, Series D 8% Convertible Preferred Stock and the Warrants, (ii)
shares of Stock issued on exercise of warrants to purchase Common Stock which
the Board of Directors has, by resolution duly adopted prior to May 31, 1996,
authorized to be granted or issued, not to exceed 809,711 shares, and (iii)
shares of Stock issued to officers, directors or employees of, or consultants
to, the Company upon exercise of any stock option granted prior to the Closing
Date not in excess of 701,113 shares plus shares issued or options granted to
employees pursuant to a stock option plan approved in good faith by the Board
of Directors of the Company after the Closing Date not exceeding 500,000
shares.
"Exercise Price" means the Series E Exercise Price.
"Fair Market Value per Share" means the fair market value of
a share of Common Stock of the Company, and shall be equal to the quotient of
(A) the fair market value of the Company and its Subsidiaries taken as a whole
on the date of determination, taking into account all the factors relevant
thereto, including, without limitation, the highest of the prices that could be
obtained from an arms'-length sale without time constraints of (1) all or
substantially all of the assets of the Company and the Subsidiaries subject to
or after satisfaction of all liabilities of the Company and the Subsidiaries or
(2) all of the Fully Diluted Shares of Common Stock of the Company, whether by
stock sale, merger, consolidation or otherwise, divided by (B) the number of
Fully Diluted Shares of Common Stock on the date of determination. In no event
shall the Fair Market Value per Share be reduced or discounted on the basis
that any securities to be valued on the basis of such Fair Market Value per
Share may represent the right to acquire a minority interest in the Company or
may not be freely transferable under federal or state securities laws, or for
any other reason. The Fair Market Value per Share shall be determined as
provided in clause (a) or (b) below, as applicable.
(a) In any circumstances in which the Fair Market Value
per Share is required to be determined, not later than ten (10) days following
the date as of which such determination is required to be made, the Board of
Directors of the Company shall determine in good faith the Fair Market Value
per Share, and the Company shall give to the Holders (or, if such determination
affects less than all of the Holders, to the Holders so affected) prompt
written notice of such determination. If within thirty (30) days after the
date such notice is given, the Company and the Required Holders agree upon the
Fair Value per Share, then the Fair Market Value per Share shall be as so
agreed. If within such 30-day period, the Company and the Required Holders do
not agree upon such Fair Market Value per Share, then the Fair Market Value per
Share shall be determined as provided in clause (b) of this definition.
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(b) If the Required Holders and the Company do not agree
upon such Fair Market Value per Share within the 30-day period specified in
clause (a) of this definition, then the Required Holders and the Company shall
appoint a recognized investment banking firm of national reputation, reasonably
acceptable to the Required Holders and the Company. If the Company and the
Required Holders cannot agree on the appointment of a mutually acceptable
investment banking firm, or if the firm so appointed declines or fails to
serve, then the Required Holders and the Company shall each choose one such
investment banking firm and the respective firms so chosen shall appoint
another recognized investment banking firm of national reputation. The
investment banking firm so selected shall appraise the value of the Company
(which shall be in the form of a written report signed by such investment
banking firm), and such appraised value of the Company determined as herein
provided shall be final and conclusive and binding on the Company and the
Holders. If the appraised value of the Company as determined by such
investment banking firm is equal to or less than that determined by the Board
of Directors of the Company in accordance with clause (a) of this definition,
then all fees and expenses of such investment banking firm shall be paid by the
Required Holders requesting such appraisal. If the appraised value of the
Company as determined by such investment banking firm is greater than that
determined by the Board of Directors in accordance with clause (a) of this
definition, then all fees and expenses of such investment banking firm shall be
paid by the Company.
"Fiscal Quarter" means any quarter of a Fiscal Year.
"Fiscal Year" means each accounting period ending December 31.
"Fully Diluted Shares" means, as of any date of determination,
the number of shares of Common Stock of the Company equal to the sum of (i) the
number of shares of Common Stock outstanding on such date of determination,
plus (ii) the number of Warrant Shares receivable upon conversion of all
outstanding Warrants as of such date of determination pursuant to Section
11(b), plus (iii) the number of shares of Common Stock that would be issued in
respect of all Option Securities of the Company outstanding and immediately
exercisable as of such date of determination if such Option Securities were to
be converted into shares of Common Stock in accordance with the following
formula:
<TABLE>
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X = Y (A - B)
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A
where: X = the number of shares to be issued to the holders of
such Option Securities;
Y = the number of shares for which such Option
Securities are exercisable;
A = the Fair Market Value per Share determined on the basis of the then
outstanding Common Stock and assuming that all Option Securities
outstanding are
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<TABLE>
<S> <C> <C>
converted to Common Stock as of the date of determination; and
B = the exercise price for such Option Securities.
</TABLE>
"Funded Indebtedness" means (i) the indebtedness under the
Credit Agreement, (ii) Capitalized Lease Liabilities, and (iii) all other
indebtedness of the Company and its Subsidiaries which matures more than one
year from the date of its creation or matures within one year from such date
but is renewable or extendable, at the option of the Company or any of its
Subsidiaries, to a date more than one year from such date or arises under an
agreement which obligates the lender or lenders to extend credit during a
period of more than one year from such date.
"GAAP" means generally accepted accounting principles in
effect from time to time in the United States.
"Governmental Authority" means any nation or government, any
state or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"Holders" means, collectively, Purchaser and any subsequent
registered holders, from time to time, of Warrant Securities; provided,
however, that the rights of any Holder under this Agreement shall terminate
when all Warrant Shares beneficially owned by such Holder have been effectively
registered under the Securities Act and sold pursuant to a Registration
Statement or Shelf Registration Statement covering such Holder's Warrant
Shares.
"Indemnified Liabilities" is defined in Section 22.
"Indemnified Parties" is defined in Section 22.
"Legally Available Funds" means, with respect to any purchase
of Warrant Securities pursuant to Section 19(a), the amount of funds of the
Company legally available therefor under the corporate laws under which the
Company is organized and existing.
"Lenders" is defined in Recital A.
"Lien" means any mortgage, pledge, hypothecation, assignment,
charge, deposit arrangement, encumbrance, lien (statutory or other), adverse
claim or preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever (including any conditional sale or
other title retention agreement, any financing lease involving substantially
the same economic effect as any of the foregoing and the filing of any
financing statement under the Uniform Commercial Code or comparable law of any
jurisdiction).
"Loans" shall have the meaning set forth in the Credit
Agreement.
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"Obligations" means all obligations of the Company with
respect to the repayment or performance of any obligations (monetary or
otherwise) of the Company arising under or in connection with the Credit
Agreement, the "Notes" or the other "Loan Documents" (as such terms are defined
in the Credit Agreement) and the Warrant Documents.
"Option Securities" is defined in Section 15.
"Organic Document" means, relative to any Person, its articles
or certificate of incorporation or organization or certificate of limited
partnership, its by-laws, partnership or operating agreement or other
organizational documents, and all stockholders agreements, voting trusts and
similar arrangements applicable to any of its Stock or partnership interests or
other ownership interests, in each case, as amended.
"Person" means any natural person, corporation, partnership,
limited liability company, firm, association, government, governmental agency
or any other entity, whether acting in an individual, fiduciary or other
capacity.
"Preferred Stock" means shares now or hereafter authorized of
any class of capital stock of the Company other than Common Stock, and shall
include, without limitation, the presently authorized 5,000,000 shares of
Preferred Stock of which (i) 2,800 shares have been designated Series A 8%
Convertible Preferred Stock, $0.001 par value, 2,800 shares of which are
outstanding, (ii) 6,858 shares have been designated Series B Convertible
Preferred Stock, $0.001 par value, 6,858 shares of which are outstanding,
(iii) 150 shares have been designated Series C 8% Convertible Preferred Stock,
$0.001 par value, 101.74 shares of which are outstanding, (iv) 80 shares have
been designated Series D 8% Convertible Preferred Stock, $0.001 par value, 66
of which are outstanding, (v) 575,000 shares of Series E Convertible Preferred
Stock, $0.001 par value, of which no shares are outstanding, and (vi) 4,415,112
shares are undesignated and unissued.
"Prospective Purchaser" shall have the meaning set forth in
Section 19(d).
"Public Company" means a company (i) which is subject to the
reporting requirements of Section 15(d) of the Exchange Act, or (ii) any of
whose securities are registered pursuant to Section 12(b) or 12(g) of the
Exchange Act.
"Put Closing Date" is defined in Section 19(b).
"Put Event" means any of the following: (a) any
representation or warranty of the Company under any Warrant Document is or
shall be incorrect when made in any material respect; (b) the Company shall
default in the due performance and observance of any of its obligations under
any Warrant Document and such default shall have continued for a period of
thirty (30) days after written notice thereof has been given to the Company by
the Required Holders; (c) an Event of Default shall have occurred and be
continuing under the Credit Agreement; (d) a merger or consolidation of the
Company with or into any other Person or any acquisition of the Company by
means of a share exchange; and (e) a Change of Control.
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"Put Exercise Notice" is defined in Section 19(a).
"Put Purchase Price" is the amount payable to each Holder for
such Holder's Warrant Securities, as calculated in accordance with Section
19(a).
"Put Notice" is the written notice to the Company specifying
the number and type of Warrant Securities with respect to which the Put Right
is being exercised.
"Put Right" is the right of each Holder to require that the
Company purchase all or any portion of the Warrant Securities then owned by
such Holder.
"Quoted Price" of Common Stock for each day means the last
reported sales price of Common Stock on such day as reported by NASDAQ or, if
Common Stock is listed on a national securities exchange, the last reported
sales price of Common Stock on such exchange (which shall be consolidated
trading if applicable to such exchange) on such day, or if not so reported or
listed, the average of the last reported bid and ask prices of Common Stock on
such day, in each case as appropriately adjusted for any stock splits or
reverse stock splits occurring after the Closing Date.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated of even date herewith, between the Company and the Purchaser,
as in effect on the date hereof and as hereafter amended, supplemented,
restated or otherwise modified.
"Registration Statement" is defined in the Registration Rights
Agreement.
"Regulatory Approval" means each and every approval, consent,
filing and registration by or with any federal, state or other regulatory
authority (domestic or foreign) necessary to authorize or permit the execution,
delivery or performance of this Agreement or any other Warrant Document, for
the validity or enforceability hereof or thereof or for the consummation of the
transactions contemplated hereby or thereby.
"Required Holders" means Holders holding at least 66-2/3% of
the Warrant Securities outstanding (treating all Warrants as fully exercised
for the Warrant Shares to which Holders would be entitled upon exercise of such
Warrants) or, if any matter affects the interest of less than all of the
Holders, then Holders holding at least 66-2/3% of the Warrant Securities so
affected, as the context may require.
"Restriction on Purchase" exists if, at the time of a Put
Closing, (i) the purchase of such Warrant Securities would result in a default
under or a breach of any Restrictive Provision (assuming that the covenants
applicable to the Company at the end of the Fiscal Quarter in which such
purchase is to occur were applicable on the date of such purchase), or (ii) the
Company would not have sufficient Legally Available Funds to pay the Purchase
Price for the Warrant Securities.
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<PAGE> 156
"Restrictive Provision" means any of the financial covenants
contained in Section 6.2.4 or the negative covenants contained in Section 6.2.8
of the Credit Agreement, in each case as the same may be amended from time to
time; provided, however, that to the extent noncompliance with any such
covenant as a result of the purchase by the Company of Warrant Securities is
waived in accordance with Section 9.1 of the Credit Agreement, such covenant
shall not constitute a Restrictive Provision.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended
from time to time.
"Securities Legend" is defined in Section 10.
"Selling Holder" is defined in Section 19(c).
"Selling Holder Notice" is defined in Section 19(d).
"Selling Holder Offer" is defined in Section 19(d).
"Series E Convertible Preferred Stock" means the Series E
Convertible Preferred Stock, $0.001 par value per share, of the Company,
convertible into Common Stock at the option of the Holder.
"Series E Exercise Price" means an amount per share equal to
$0.02.
"Series E Warrant Certificates" means the certificates
evidencing the Series E Warrants in the form of Exhibit A.
"Series E Warrants" means the warrants referred to in clause
(1) of Recital B as evidenced by the Series E Warrant Certificates.
"Stock" means any capital stock of the Company.
"Shelf Registration Statement" is defined in the Registration
Rights Agreement.
"Subsidiary" of any corporation means any other corporation
greater than 50% of the outstanding shares of Stock of which having ordinary
voting power for the election of directors is owned directly or indirectly by
such corporation, and, except as otherwise indicated herein, references to
Subsidiaries shall refer to Subsidiaries of the Company.
"Substitute Securities" is defined in Section 15.
"Transfer Agent" is defined in Section 14.
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<PAGE> 157
"Warrant Certificates" means, the Series E Warrant
Certificates.
"Warrant Documents" means, collectively, this Agreement, the
Warrants, the Registration Rights Agreement, the Certificate of Designation and
any other document, instrument or agreement executed or delivered in connection
with any of the foregoing to which the Company is a party, but excluding the
Credit Agreement and the other Loan Documents (as defined in the Credit
Agreement).
"Warrant Securities" means, collectively, the Warrants and
Warrant Shares.
"Warrant Shares" means the securities which a Holder may
acquire upon exercise or conversion of a Warrant, together with any other
securities which such Holder may acquire on account of any such securities,
including, without limitation, as the result of the shares of Series E
Convertible Preferred Stock being converted into shares of Common Stock and/or
any dividend or other distribution on Common Stock, any split-up of such Common
Stock, or in accordance with a recapitalization, merger, consolidation, share
exchange, reorganization or other transaction or series of related transactions
in which shares of Common Stock are changed into or exchanged for securities of
another corporation or the exercise of any preemptive right (or the exercise or
conversion of any security which such Holder may acquire in connection with the
exercise of any preemptive right) with respect to any such Common Stock.
"Warrants" means the Series E Warrants together with any
warrants issued in substitution or replacement therefor.
(b) Cross-References. Unless otherwise specified,
references in this Agreement to any Article or Section are references to such
Article or Section of this Agreement, and unless otherwise specified,
references in any Article, Section, or definition to any clause are references
to such clause of such Section, Article or definition.
SECTION 2. Purchase and Sale of Warrants; Closing.
(a) The Company hereby agrees to sell to the Purchaser
and, subject to the provisions of Section 4, the Purchaser hereby agrees to
purchase from the Company for a total purchase price of $1.00 Series E Warrants
to purchase 575,000 shares of Series E Convertible Preferred Stock of the
Company for an initial exercise price of $0.02 per share.
(b) The sale and purchase of the Warrants shall take
place at the Closing at the offices of Christy & Viener, 620 Fifth Avenue, New
York, New York 10020-2457, at 10:00 a.m. on May 31, 1996, or such other place
and time as may be agreed upon by the Purchaser and the Company. At the
Closing, the Company will deliver to the Purchaser, upon payment therefor, (1)
Series E Warrant Certificates in the form of Exhibit A evidencing the Series E
Warrants to be purchased by the Purchaser in such denomination or denominations
as the Purchaser may request and registered in its name or the name of its
nominee and dated the Closing Date.
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<PAGE> 158
SECTION 3. Investment Representations. Purchaser represents
and warrants that it is purchasing the Warrants and any Warrant Shares issuable
upon exercise or conversion of the Warrants for its own account, for investment
purposes and not with a view to the distribution thereof; provided, however,
that the foregoing representation shall not be construed as imposing any
limitation on the Purchaser's right to transfer any of the Warrants or Warrant
Shares that is not otherwise expressly set forth in the Warrant Documents or
required under applicable law. Each Holder agrees that it will not, directly
or indirectly, offer, transfer, sell, assign, pledge, hypothecate or otherwise
dispose of any of the Warrant Securities (or solicit any offers to buy,
purchase or otherwise acquire or take a pledge of the Warrant Securities),
except in compliance with the Securities Act and applicable state securities
laws. Each Holder agrees that it will not transfer, sell, assign, pledge,
hypothecate or otherwise dispose of any of the Warrant Securities if any such
disposition would cause the Company to be required to register any Warrant
Securities pursuant to Section 12(g) of the Exchange Act.
SECTION 4. Conditions Precedent. The obligation of the
Purchaser to purchase the Series E Warrants on the Closing Date pursuant to
Section 2 hereof shall be subject to the prior or concurrent satisfaction of
each of the conditions precedent set forth in this Section 4, except as the
Purchaser shall otherwise consent:
(a) the accuracy of the representations set forth in this
Agreement and in the other Warrant Documents in all material respects;
(b) the compliance by the Company in all material
respects with all covenants and agreements required to be performed by it on or
prior to the Closing;
(c) the satisfaction of all of the conditions precedent
set forth in Sections 4.1 through 4.2.6 of the Credit Agreement;
(d) Purchaser's receipt of Warrant Certificates
registered in Purchaser's name (or in the name of a nominee of Purchaser)
evidencing the Warrants;
(e) Purchaser's receipt of the Registration Rights
Agreement with respect to the Warrants, in form and substance satisfactory to
Purchaser, duly executed and delivered by the Company and dated the Closing
Date;
(f) Purchaser's receipt of a copy of the Company's
articles of incorporation including provisions satisfactory to the Purchaser
relating to the Company's capital structure, certified as of a recent date by
the Secretary of State of Nevada.
(g) Purchaser's receipt of a certificate of the secretary
or an assistant secretary of the Company, together with true and correct copies
of the resolutions of the Board of Directors and, to the extent necessary, the
stockholders of the Company authorizing or ratifying the execution, delivery
and performance of this Agreement and the other Warrant Documents, authorizing
the adoption and filing of the Certificate of Designation and authorizing the
creation
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<PAGE> 159
and issuance of the Warrants and the Warrant Shares; and setting forth the
names of the Authorized Officers of the Company executing this Agreement and
the other Warrant Documents, together with a sample of the true signature of
each such Authorized Officer;
(h) Purchaser's receipt of certified copies of all
documents evidencing any other necessary corporate action, consents and
governmental approvals or filings (if any) with respect to this Agreement and
the other Warrant Documents;
(i) Purchaser's receipt of opinions, dated the Closing
Date, from Christy & Viener, counsel to the Company, and Kravitz, Schnitzer &
Sloane, special Nevada counsel to the Company, in form and substance
satisfactory to Purchaser and its counsel, and covering such matters as the
Purchaser may request;
(j) All proceedings taken in connection with the
transactions contemplated by this Agreement and the other Warrant Documents
shall be satisfactory in form and substance to Purchaser and its counsel, and
Purchaser and its counsel shall have received copies (executed or certified as
may be appropriate) of all documents, instruments and agreements which
Purchaser or its counsel may request in connection with the consummation of
such transactions.
SECTION 5. Warranties, etc. In order to induce Purchaser to
enter into this Agreement, to engage in the transactions contemplated herein
and in the other Warrant Documents and to purchase the Warrants hereunder, the
Company represents and warrants unto Purchaser as set forth in this Section 5,
except as provided in the Schedule of Exceptions attached as Exhibit B, each
and all of which representations and warranties are made as of the Closing Date
and shall survive the execution and delivery of this Agreement and the Closing
hereunder:
(a) Credit Agreement Warranties. Each of the
representations and warranties of the Company set forth in the Credit Agreement
is true and correct.
(b) Power, Authority, etc. The Company has full power
and authority to enter into and perform its obligations under this Agreement
and each of the other Warrant Documents.
(c) Due Authorization. The Certificate of Designation
has been duly adopted pursuant to applicable law, has been duly filed with the
Nevada Secretary of State and is in full force and effect. The execution and
delivery by the Company of this Agreement and each of the other Warrant
Documents, the performance by the Company of its obligations hereunder and
thereunder and the issuance of the Warrants hereunder by the Company have been
duly authorized by all necessary corporate action, do not require any
Regulatory Approval (except those Regulatory Approvals already obtained), do
not and will not conflict with, result in any violation of, or constitute any
default under, any provision of any Organic Document of the Company or any
Subsidiary, any agreement or instrument to which the Company or any of it's
Subsidiaries is a party or by which it or any of its property is bound, or any
law or governmental regulation or court decree or order and will not result in
or require the creation or imposition of any Lien on any of the Company's or
any Subsidiary's properties pursuant to the provisions of any such agreement or
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<PAGE> 160
instrument. No vote (including any vote under the rules of any securities
exchange or trading system or market on which any of the Company's securities
are listed or traded) on the part of the stockholders of the Company, other
than those which have been obtained, is required to approve or authorize the
adoption and filing of the Certificate of Designation, any of the transactions
contemplated by this Agreement, any of the other Warrant Documents or any of
the Loan Documents or the authorization of the issuance of Series E Convertible
Preferred Stock or the Warrant Securities or any shares of capital stock to be
issued pursuant to the Loan Documents. None of the transactions contemplated
by this Agreement, any of the other Warrant Documents or any of the Loan
Documents (including the issuance of Series E Convertible Preferred Stock, the
Warrant Securities or any shares of capital stock to be issued pursuant to the
Loan Documents) will give rise to any payment or the acceleration of any
obligation (whether with or without the passage of time or upon the occurrence
of any event) to any director, officer or employee of the Company or any
Subsidiary.
(d) Absence of Takeover Statutes. The Board of Directors
of the Company has approved for purposes of Sections 78.411 through 78.444
inclusive of the Nevada Revised Statutes (the "Nevada Business Combination
Statute- Combinations with Interested Stockholders) the transactions
contemplated by this Agreement, the Warrant Documents and the issuance of the
Warrant Securities. No other "fair price," "moratorium," "control share
acquisition," "shareholder protection", or similar antitakeover statute will
apply to any Holder, this Agreement, any of the other Warrant Documents or the
authorization or issuance of the Warrant Securities, other than as may result
from the place of incorporation or domicile of any Holder. The Company is not a
party to, and is not subject to, any stockholder rights plan, rights agreement
or similar agreement, arrangement or understanding.
(e) Validity, etc. This Agreement and each of the other
Warrant Documents constitutes the legal, valid and binding obligations of the
Company enforceable in accordance with their respective terms, subject to (i)
the effect of any applicable bankruptcy, insolvency, moratorium or similar laws
affecting creditors' rights generally; and (ii) the effect of general
principles of equity (regardless of whether considered in a proceeding in
equity or at law).
(f) Capitalization and Ownership of the Company. The
authorized capital stock of the Company consists of (1) 20,000,000 shares of
Common Stock, 4,899,592 of which will be outstanding on the Closing Date; and
(2) 5,000,000 shares of Preferred Stock of which (i) 2,800 shares have been
designated Series A 8% Convertible Preferred Stock, $0.001 par value, 2,800
shares of which are outstanding, (ii) 6,858 shares have been designated Series
B Convertible Preferred Stock, $0.001 par value, 6,858 shares of which are
outstanding, (iii) 150 shares have been designated Series C 8% Convertible
Preferred Stock, $0.001 par value, 101.74 shares of which are outstanding, (iv)
80 shares have been designated Series D 8% Convertible Preferred Stock, $0.001
par value, 66 shares of which are outstanding, (v) 575,000 shares have been
designated Series E Convertible Preferred Stock, $0.001 par value, of which no
shares are outstanding; and (vi) 4,415,112 shares are undesignated and
unissued. The record and, to the best knowledge of the Company, beneficial
ownership of five percent (5%) or more of the outstanding capital stock of the
Company as of the Closing Date is set forth in Exhibit C. All such outstanding
shares are duly
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<PAGE> 161
authorized, validly issued, fully paid and nonassessable, and are not, and will
not have been, issued in violation of any preemptive rights. Except as set
forth in Exhibit C, no issued, no authorized but unissued and no treasury
shares of capital stock of the Company are subject to any preemptive right,
option, warrant, right of conversion or purchase or any similar right issued or
granted by the Company or, to the best knowledge of the Company, by any of its
shareholders. Except as set forth in the Organic Documents of the Company or
in Section 19, there are no agreements or understandings with respect to the
voting, sale or transfer of any shares of capital stock of the Company to which
the Company or, to the best knowledge of the Company, any of its Affiliates is
a party.
(g) Authorization and Issuance of Warrants. The issuance
of the Warrants has been duly authorized and, upon delivery to Purchaser of the
Warrant Certificates therefor in accordance with the terms hereof, the Warrants
will have been validly issued and fully paid and nonassessable, free and clear
of all Liens and the issuance thereof will not give rise to any preemptive
rights. The issuance of the shares of Series E Convertible Preferred Stock
subject to the Warrants has been duly authorized and, when issued upon exercise
of the Warrants in accordance with the terms thereof, such shares will have
been validly issued and will be fully paid and nonassessable. The issuance of
the shares of Common Stock issuable upon conversion of the Series E Convertible
Preferred Stock has been duly authorized and, when issued upon conversion of
the Series E Convertible Preferred Stock in accordance with the terms thereof,
such shares will have been validly issued and will be fully paid and
nonassessable and the issuance thereof will not give rise to any preemptive
rights. 575,000 shares of Series E Convertible Preferred Stock have been duly
reserved for issuance upon the exercise of the Warrants. Except as set forth
in the Registration Rights Agreement and on Exhibit D, no Person has the right
to demand or any other right to cause the Company to file any registration
statement under the Securities Act relating to any securities of the Company
or any right to participate in the any such registration.
(h) Securities Laws. In reliance on the investment
representations contained in Section 3, the offer, issuance, sale and delivery
of the Warrants to the Purchaser as provided in this Agreement, the issuance
and delivery of Series E Convertible Preferred Stock upon the exercise of the
Warrants by the Purchaser, and the conversion of the Series E Convertible
Preferred Stock into Common Stock, are and will be exempt from the registration
requirements of the Securities Act and all applicable state securities laws, as
such laws are currently in effect.
(i) No Integration of Issue. Neither the Company nor any
Person authorized or employed by the Company as agent, broker or otherwise in
connection with the offering of the Warrants has offered the Warrants for sale
to, or solicited any offers to buy the Warrants from, or otherwise approached
or negotiated or communicated in respect thereof with, anyone other than
Purchaser. Neither the Company nor any Person acting on behalf of the Company
will sell or offer any class of securities to, or solicit any offers to buy any
class of securities from, or otherwise approach, negotiate or communicate in
respect thereof with, any Person so as to require the registration of the
Warrants under the Securities Act or any applicable state securities laws.
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SECTION 6. Covenants. The Company agrees with each Holder
that, until the termination of this Agreement pursuant to Section 24 hereof,
the Company will perform the obligations set forth in this Section 6:
(a) Financial and Business Information. For so long as
the Company is not a Public Company, the Company will furnish, or will cause to
be furnished, to each Holder copies of the following financial statements,
reports and information:
(i) promptly when available and in any event
within ninety (90) days after the close of each Fiscal Year, a
consolidated and consolidating balance sheet at the close of
such Fiscal Year, and related consolidated and consolidating
statements of operations, retained earnings, and cash flows
for such Fiscal Year, of the Company and its Subsidiaries
(with comparable information at the close of and for the prior
Fiscal Year), certified (in the case of consolidated
statements) without qualification by Mortenson & Co., Inc. or
other independent public accountants satisfactory to the
Required Holders, together with a report containing a
description of projected business prospects (including capital
expenditures) and management's discussion and analysis of the
financial condition and results of operation of the Company
and its Subsidiaries; and
(ii) promptly when available and in any event
within forty-five (45) days after the close of each Fiscal
Quarter, consolidated and consolidating balance sheets at the
close of such Fiscal Quarter, and consolidated and
consolidating statements of operations, retained earnings, and
cash flows for such Fiscal Quarter and for the period
commencing at the close of the previous Fiscal Year and ending
with the close of such Fiscal Quarter, of the Company and its
Subsidiaries (with comparable information at the close of and
for the corresponding Fiscal Quarter of the prior Fiscal Year
and for the corresponding portion of such prior Fiscal Year),
certified by the chief financial or executive officer of the
Company, together with a brief report containing management's
discussion and analysis of the financial condition and results
of operations of the Company and its Subsidiaries (including a
discussion and analysis of any changes compared to prior
results) generally similar in scope to that which would be
required in a quarterly report on Form 10-Q filed under the
Exchange Act (delivery to the Holders of such a quarterly
report on Form 10-Q with respect to any Fiscal Quarter will
satisfy the requirements of this clause (a)(ii) with respect
to such Fiscal Quarter.
(iii) promptly when available and in any event
within thirty (30) days after the close of each calendar month
of each Fiscal Year consolidated and consolidating balance
sheets at the close of such month, and consolidated and
consolidating statements of operations, retained earnings, and
cash flows for such month and for the period commencing at the
close of the previous Fiscal Year and ending with the close of
such month, of the Company and Subsidiaries (with comparable
information at the close of and for the corresponding month of
the prior
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<PAGE> 163
Fiscal Year and for the corresponding portion of such prior
Fiscal Year), certified by the principal accounting or chief
financial Authorized Officer of the Company, together with a
description of projected business prospects (including capital
expenditures) and a brief report containing management's
discussion and analysis of the financial condition and results
of operations of the Company and its Subsidiaries (including a
discussion and analysis of any changes compared to prior
results); and
(iv) promptly upon the sending or filing thereof,
copies of all reports that the Company sends to its security
holders generally, and copies of all reports and registration
statements that the Company or any of its Subsidiaries files
with the Securities and Exchange Commission or any national
securities exchange; and
(b) Public Company Information. During any period while
the Company is a Public Company:
(i) Filings. The Company will file with the SEC
on or before the required date all regular or periodic reports
required pursuant to the Exchange Act and deliver to each
Holder, promptly upon its becoming available, one copy of each
report, notice or proxy statement sent by the Company to its
stockholders generally, and of each regular or periodic report
filed pursuant to the Exchange Act and any registration
statement, prospectus or written communication (other than
transmittal letters) pursuant to the Securities Act filed by
the Company with (i) the SEC or (ii) any national securities
exchange; and
(ii) Rule 144. The Company will make publicly
available information concerning the Company sufficient to
allow any Holder to dispose of all or a portion of the Warrant
Securities pursuant to Rule 144 (or any successor provision)
promulgated by the SEC under the Securities Act.
(c) Maintenance of Corporate Existences, etc. Except as
permitted pursuant to Section 6.2.10 of the Credit Agreement, the Company will
cause to be done at all times all things necessary to maintain and preserve the
corporate existences of the Company and its Subsidiaries.
(d) Maintenance of Books and Records. The Company will,
and will cause each Subsidiary to, keep books and records reflecting all of its
business affairs and transactions in accordance with GAAP.
(e) Inconsistent Agreements. The Company will not, and
will not permit any Subsidiary to, enter into any agreement containing any
provision which would be violated or breached by the issuance of the Warrants
or the Warrant Shares or by the performance by the Company or any Subsidiary of
its obligations under this Agreement or under any other Warrant Documents.
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<PAGE> 164
(f) Organic Documents. So long as any Warrant Securities
are outstanding, the Company's articles of incorporation shall contain the
provisions regarding the Series E Convertible Preferred Stock set forth in its
Organic Documents as constituted on the date hereof. The Company shall not
permit to occur any amendment, alteration or modification to its Organic
Documents, as constituted on the date hereof, the effect of which, in
Purchaser's or the Required Holders' judgment, would be to alter, impair or
adversely affect either the rights and benefits of Purchaser or the Holders or
the duties and obligations of the Company under this Agreement and the other
Warrant Documents.
(g) Transactions with Affiliates. The Company will not,
and will not permit any Subsidiary to, enter into, or cause, suffer or permit
to exist:
(i) any arrangement or contract with any of its
Affiliates of a nature customarily entered into by Persons which are
Affiliates of each other (including management or similar contracts or
arrangements relating to the allocation of revenues, expenses or
otherwise) requiring any payments to be made by the Company or any of
its Subsidiaries to any Affiliate, other than (i) any arrangement
solely among the Company and its wholly- owned Subsidiaries, and (ii)
the Merger; and
(ii) any other transaction, arrangement or contract with
any of its Affiliates which is on terms which are less favorable than
are obtainable in a transaction from any Person which is not one of
its Affiliates.
(h) Issuance of Additional Rights, Options and Warrants.
The Company will not issue any rights, options or warrants to subscribe for or
purchase or otherwise acquire Common Stock or Convertible Securities, whether
or not the right to exercise such rights, options or warrants or to convert or
exchange such Convertible Securities is immediately exercisable or is
conditioned upon the passage of time, an occurrence or non-occurrence of some
other event, or both, other than any rights, options or warrants which
constitute Excluded Shares.
(i) Antitakeover Statutes. The Company shall take all
action necessary to avoid the application of any "fair price," "moratorium,"
"control share acquisition," "business combination," "shareholder protection"
or similar antitakeover statute to the transactions contemplated by this
Agreement or any other Warrant Document (including the issuance of the Warrant
Securities).
(j) Governmental Approvals. The Company will, and will
cooperate with the Holders to, secure all necessary consents, approvals,
authorizations and exemptions from all governmental authorities in connection
with the exercise of the Warrants, the issuance of shares of Series E
Convertible Preferred Stock upon exercise of the Warrants and the issuance of
shares of Common Stock upon the conversion of such shares of Series E
Convertible Preferred Stock.
(k) Issuances of Shares. The Company will not issue any
shares of Series E Convertible Preferred Stock other than pursuant to the
exercise of the Warrants.
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<PAGE> 165
SECTION 7. Warrant Certificates. The Warrant Certificates to
be delivered pursuant to this Agreement shall be in registered form only as
provided in Section 9 and in the form set forth as Exhibit A.
SECTION 8. Execution of Warrant Certificates. Warrant
Certificates shall be signed on behalf of the Company by the duly authorized
officers of the Company under its corporate seal. Each such signature upon the
Warrant Certificates may be in the form of a facsimile signature of the duly
authorized officers of the Company and may be printed or otherwise reproduced
on the Warrant Certificates and for that purpose the Company may adopt and use
the facsimile signature of any person who shall have been a duly authorized
officer of the Company, notwithstanding the fact that at the time the Warrant
Certificates shall be delivered or disposed of such person shall have ceased to
hold such office. The seal of the Company may be in the form of a facsimile
thereof and may be impressed, affixed, imprinted or otherwise reproduced on the
Warrant Certificates. In case any officer of the Company who shall have signed
any of the Warrant Certificates shall cease to be such officer before the
Warrant Certificates so signed shall have been disposed of by the Company, such
Warrant Certificates nevertheless may be delivered or disposed of as though
such person had not ceased to be such officer of the Company; and any Warrant
Certificate may be signed on behalf of the Company by any person who, at the
actual date of the execution of such Warrant Certificate, shall be a proper
officer of the Company to sign such Warrant Certificate although at the date of
the execution of this Agreement such person was not such officer.
SECTION 9. Registration. The Company shall number and
register the Warrant Certificates in a register as they are issued. The
Company may deem and treat the registered holder(s) of the Warrant Certificates
as the absolute owner(s) thereof (notwithstanding any notation of ownership or
other writing thereon made by anyone) for all purposes and shall not be
affected by any notice to the contrary.
SECTION 10. Registration of Transfers and Exchanges. (a)
The Company shall from time to time register the transfer of any outstanding
Warrant Certificates in a Warrant register to be maintained by the Company upon
surrender of such Warrant Certificates accompanied by a written instrument or
instruments of transfer in form reasonably satisfactory to the Company, duly
executed by the registered Holder or Holders thereof or by the duly appointed
legal representative thereof or by a duly authorized attorney; provided,
however, that prior to effecting such transfer, the transferee shall agree (in
a form reasonably satisfactory to the Company) to be bound by the terms of this
Agreement, including, without limitation, Section 19. Upon any such
registration of transfer, a new Warrant Certificate shall be issued to the
transferee(s) and the surrendered Warrant Certificate shall be canceled and
disposed of by the Company. Until the Warrant Certificate is transferred on
the Warrant register of the Company, the Company may treat the Holder as shown
in the Warrant register as the absolute owner of the Warrant Certificate for
all purposes, and notwithstanding any notice to the contrary. The Company
agrees that it will make the Warrant register available for inspection by the
Holders during normal business hours at its office and that the Holders may
rely on the Warrant register for purposes of complying with the preceding
sentence.
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<PAGE> 166
(b) The Warrants shall be transferable in whole or in
part and, in the event that a Warrant Certificate is transferred in respect of
fewer than all the Warrants evidenced by the Warrant Certificate, a new Warrant
Certificate evidencing the remaining Warrant or Warrants will be issued and
delivered pursuant to the provisions of this Section 10 and of Section 8.
(c) If any transfer of Warrants or Warrant Shares is not
made pursuant to an effective registration statement under the Securities Act,
the Holder will, if reasonably requested by the Company, deliver to the Company
an opinion of counsel, which may be counsel to the Holder but which must be
reasonably satisfactory to the Company, reasonably satisfactory in form, scope
and substance to the Company, that such Warrants or Warrant Shares may be sold
without registration under the Securities Act and applicable state securities
laws, as well as:
(1) an investment covenant reasonably
satisfactory to the Company signed by the proposed transferee (except
that no such covenant will be required in connection with a transfer
effected in accordance with Rule 144A under the Securities Act);
(2) an agreement by such transferee to the
impression of the restrictive legends set forth below on the Warrant
Certificate or on the certificate evidencing such Warrant Shares.
The Holders agree that each Warrant Certificate and each certificate
representing Warrant Shares will bear the following legend (the "Securities
Legend"):
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR ANY STATE SECURITIES LAWS. SAID
SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION, OR AN
OPINION OF COUNSEL (WHICH MAY BE COUNSEL TO THE
HOLDER) AS TO AN EXEMPTION, FROM THE REGISTRATION
PROVISIONS OF SAID ACT OR LAWS."
Notwithstanding the foregoing provisions of this Section 10, the restrictions
upon the transferability of the Warrant Securities and the Securities Legend
requirement set forth above in this Section 10 shall terminate as to any of the
Warrant Securities (i) when and so long as such Warrant Security shall have
been effectively registered under the Securities Act and disposed of pursuant
thereto or (ii) when the Company shall have received an opinion of counsel
reasonably satisfactory to it that such Securities Legend is not required in
order to ensure compliance with the Securities Act and applicable state
securities laws. Whenever the restrictions imposed by this Section 10 shall
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<PAGE> 167
terminate as to any Warrant Security, as hereinabove provided, the Holder
thereof shall be entitled to receive from the Company, at the expense of the
Company, a new Warrant Certificate or certificate for Warrant Shares bearing
the following legend in place of the Securities Legend set forth above:
"THE RESTRICTIONS ON TRANSFERABILITY OF THE
SECURITIES REPRESENTED BY THIS CERTIFICATE TERMINATED
ON ______________, 19__, AND ARE OF NO FURTHER FORCE
AND EFFECT."
The Holders further agree that each Warrant Certificate and each certificate
representing Warrant Shares will bear the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT TO THE TERMS OF A WARRANT PURCHASE AGREEMENT,
DATED AS OF MAY 31, 1996, BETWEEN AFGL INTERNATIONAL,
INC. (THE "COMPANY") AND INTERNATIONALE NEDERLANDEN
(U.S.) CAPITAL CORPORATION (THE "PURCHASER"), AND A
REGISTRATION RIGHTS AGREEMENT, DATED AS OF MAY 31,
1996, AMONG THE COMPANY AND THE PURCHASER, COPIES OF
EACH OF WHICH ARE ON FILE AT THE MAIN OFFICE OF THE
COMPANY. ANY SALE OR TRANSFER OF THE SECURITIES
EVIDENCED BY THIS CERTIFICATE IS SUBJECT TO THE TERMS
OF THOSE AGREEMENTS AND ANY SALE OR TRANSFER OF SUCH
SECURITIES IN VIOLATION OF SAID AGREEMENTS SHALL BE
INVALID."
Warrant Certificates may be exchanged at the option of the Holder(s) thereof
when surrendered to the Company at its office for another Warrant Certificate
or other Warrant Certificates of like tenor and representing in the aggregate a
like number of Warrants, including, without limitation, upon an adjustment in
the Exercise Price or in the number of Warrant Shares purchasable upon exercise
of the Warrants. Warrant Certificates surrendered for exchange shall be
canceled and disposed of by the Company.
SECTION 11. Exercise of Warrants; Conversion of Warrants.
(a) Subject to the terms of this Agreement, each Holder shall have the right,
which may be exercised at any time or from time to time prior to May 31, 2004,
to receive from the Company the number of fully paid and nonassessable Warrant
Shares which such Holder may at the time be entitled to receive on exercise of
all or any part of the Warrants and payment of the appropriate Exercise Price
then in effect for such Warrant Shares. A Warrant may be exercised upon
surrender to the Company at its office
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<PAGE> 168
designated for such purpose (the address of which is set forth in Section 20)
of the certificate or certificates evidencing the Warrants to be exercised with
the form of election to purchase attached thereto properly completed and
signed, upon payment to the Company of the appropriate Exercise Price for the
number of Warrant Shares in respect of which such Warrants are then exercised.
Payment of the aggregate Exercise Price shall be made in cash or by check
payable to the order of the Company. Upon such surrender of Warrant
Certificates and payment of the appropriate Exercise Price, the Company shall
issue and cause to be delivered with all reasonable dispatch (and in any event
within five (5) Business Days of such surrender and payment) to or upon the
written order of the Holder, and in the name of the Holder or the Holder's
nominee, a certificate or certificates for the number of full Warrant Shares
issuable upon the exercise of such Warrants together with such other property
(including cash) and securities as may then be deliverable upon such exercise,
including cash for fractional Warrant Shares as provided in Section 16. Such
certificate or certificates shall be deemed to have been issued and the Person
so named therein shall be deemed to have become a holder of record of such
Warrant Shares as of the date of the surrender of such Warrant Certificates
and payment of the Exercise Price.
(b) Subject to the terms of this Agreement, each Holder
shall have the right (the "Conversion Right"), which may be exercised at any
time or from time to time prior to May 31, 2004, to convert the Warrants, in
whole or in part, into the number of fully paid and nonassessable Warrant
Shares calculated pursuant to the following formula:
<TABLE>
<S> <C> <C> <C>
X = Y (A-B)
-------
A
where: X = the number of Warrant Shares to be issued to the Holders;
Y = the number of Warrant Shares for which the Conversion Right
is being exercised;
A = the Fair Market Value per Share as of the date of exercise of
such Conversion Right; and
B = the Exercise Price with respect to such Warrants.
</TABLE>
A Warrant may be converted upon surrender to the Company at its office
designated for such purpose (the address of which is set forth in Section 20)
of the certificate or certificates evidencing the Warrants to be converted with
the form of election to convert attached thereto properly completed and signed.
Upon such surrender of Warrant Certificates, the Company shall issue and cause
to be delivered with all reasonable dispatch (and in any event within ten (10)
Business Days of such surrender) to or upon the written order of the Holder,
and in the name of the Holder or the Holder's nominee, a certificate or
certificates for the number of full Warrant Shares issuable upon the conversion
of such Warrants together with such other property (including cash) and
securities
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<PAGE> 169
as may then be deliverable upon such conversion, including cash for fractional
Warrant Shares as provided in Section 16. Such certificate or certificates
shall be deemed to have been issued and the Person so named therein shall be
deemed to have become a holder of record of such Warrant Shares as of the date
of the surrender of such Warrant Certificates.
(c) The Warrants shall be exercisable and convertible, at the
election of the Holders thereof, either in full or from time to time in part,
and in the event that a Warrant Certificate is exercised or converted in
respect of fewer than all of the Warrant Shares issuable pursuant to such
Warrant Certificate at any time prior to the date of expiration of the
Warrants, a new Warrant Certificate evidencing the remaining Warrant or
Warrants will be issued and delivered pursuant to the provisions of this
Section 11 and of Section 8. All Warrant Certificates surrendered upon
exercise or conversion of Warrants shall be canceled and disposed of by the
Company. The Company shall keep copies of this Agreement and any notices
received hereunder available for inspection during normal business hours at its
office. The Company will furnish, at its expense, copies of this Agreement and
all such notices, upon request, to any Holder of any Warrant Certificates.
SECTION 12. Payment of Taxes. The Company will pay all stamp
and transfer taxes in connection with the issuance, sale and delivery of the
Warrants hereunder, as well as all such taxes attributable to the initial
issuance of Warrant Shares upon the exercise of Warrants and payment of the
appropriate Exercise Price or upon conversion of the Warrants. The Company
will not, however, be required to pay any tax or other similar charges
imposed in connection with any transfer of any Warrant Securities. Nothing
herein shall be construed as requiring the Company to pay any taxes imposed in
respect of income realized by any Holder upon the purchase, transfer or exercise
of Warrants.
SECTION 13. Mutilated or Missing Warrant Certificates. Upon
receipt by the Company of evidence reasonably satisfactory to the Company
(which shall include an affidavit of the Holder) that any Warrant Certificate
shall have been mutilated, lost, stolen or destroyed and, in the case of loss,
theft or destruction, a customary indemnity agreement from the Holder of such
Warrant Certificate, the Company shall issue, in exchange and substitution for
and upon cancellation of the mutilated Warrant Certificate, or in lieu of and
substitution for the Warrant Certificate lost, stolen or destroyed, a new
Warrant Certificate of like tenor and representing an equivalent number of
Warrants.
SECTION 14. Reservation of Warrant Shares. The Company will
at all times that any Warrant is exercisable reserve and keep available, free
from preemptive or similar rights, out of the aggregate of its authorized but
unissued capital stock or its authorized and issued capital stock held in its
treasury, for the purpose of enabling it to satisfy any obligation to issue
Warrant Shares upon exercise of Warrants, (i) the maximum number of shares of
each class of capital stock constituting a part of the Warrant Shares which may
then be deliverable upon the exercise of all outstanding Warrants and (ii) the
maximum number of shares of each class of capital stock of the Company which
may then be delivered upon the conversion of all issued Warrant Shares into
Common Stock of the Company. The Company shall cause all shares of Common
Stock into which
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<PAGE> 170
shares of Series E Convertible Preferred Stock issuable upon exercise of the
Warrants are convertible to be (x) listed (or to be listed subject to notice of
issuance) on each securities exchange on which shares of Common Stock are
listed, or (y) admitted for trading in any inter-dealer quotation system on
which shares of Common Stock are traded. The Company or, if appointed, the
transfer agent for shares of each class of capital stock of the Company (the
"Transfer Agent") and every subsequent transfer agent for any shares of the
Company's capital stock issuable upon the exercise of the Warrants will be
irrevocably authorized and directed at all times to reserve such number of
authorized shares as shall be required for such purpose. The Company will keep
a copy of this Agreement on file with the Transfer Agent and with every
subsequent transfer agent for any shares of the Company's capital stock
issuable upon the exercise of the rights of purchase represented by the
Warrants or of the rights of conversion of the Warrant Shares. The Company
will furnish such Transfer Agent a copy of all notices of adjustments, and
certificates related thereto, transmitted to each Holder pursuant to Section
17. Before taking any action which would cause an adjustment pursuant to
Section 15 to the maximum number of Warrant Shares deliverable upon the
exercise of all outstanding Warrants above the then authorized number of shares
of Series E Convertible Preferred Stock, the Company shall cause to be
authorized additional shares of Series E Convertible Preferred Stock such that
such maximum number of shares of Series E Convertible Preferred Stock
deliverable upon exercise of all outstanding Warrants does not exceed the
number of shares of Series E Convertible Preferred Stock authorized pursuant to
the Organic Documents of the Company. Before taking any action which would
cause an adjustment pursuant to Section 15 to reduce the Exercise Price below
the then par value (if any) of the Warrant Shares, the Company will take any
corporate action which may, in the opinion of its counsel (which may be counsel
employed by the Company), be necessary in order that the Company may validly
and legally issue fully paid and nonassessable Warrant Shares at the Exercise
Price as so adjusted.
SECTION 15. Adjustment of Exercise Price and Number of
Warrant Shares Issuable. The Exercise Price and the number of Warrant Shares
issuable upon the exercise of each Warrant are subject to adjustment from time
to time upon the occurrence of any of the events enumerated in this Section 15.
(a) Reorganization of the Company. In the event of any
capital reorganization, recapitalization or reclassification of the capital
stock of the Company, or consolidation, merger or amalgamation of the Company
with another entity, any acquisition of capital stock of the Company by means
of a share exchange, or the sale, lease, transfer, conveyance or other
disposition of all or substantially all of its assets to another entity, then,
as a condition of such reorganization, recapitalization, reclassification,
consolidation, merger, amalgamation, share exchange or sale, lease, transfer,
conveyance or other disposition, lawful and adequate provision shall be made
whereby the Holders of the Warrant Certificates shall thereafter have the right
to purchase and receive, on the basis and upon the terms and conditions
specified in this Agreement and in lieu of the Warrant Shares immediately
theretofore purchasable and receivable upon the exercise of the rights
represented by the Warrants, such shares of stock, securities, cash or property
as may be issued or payable with respect to or in exchange for the number of
Warrant Shares immediately theretofore purchasable and receivable upon the
exercise of the rights represented by the Warrant Certificates had such
reorganization, recapitalization, reclassification, consolidation, merger,
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<PAGE> 171
amalgamation, share exchange or sale, lease, transfer, conveyance or other
disposition not taken place. If such consolidation, merger, amalgamation,
share exchange, sale, lease, transfer, conveyance or other disposition is with
any Person or group of Persons (within the meaning of Section 13(d) or 14(d) of
the Exchange Act) who shall have made a purchase, tender or exchange offer
which was accepted by the holders of not less than twenty percent (20%) of the
outstanding shares of Common Stock of the Company, the Holders of the Warrants
shall have been given a reasonable opportunity (and, in no event, less than 30
days) to elect to receive, either (x) the stock, securities, cash or property
it would have received pursuant to the immediately preceding sentence or (y)
the stock, securities, cash or property issued or paid (or to be issued or
paid) to holders of the Common Stock in accordance with such offer. In any
such case appropriate provision shall be made with respect to the rights and
interests of the Holders of the Warrants to the end that the provisions of this
Agreement (including, without limitation, provisions for adjustment of the
Exercise Price and of the number and type of securities purchasable upon the
exercise of the Warrants) shall thereafter be applicable, as nearly as may be,
in relation to any shares of stock, securities, cash or property thereafter
deliverable upon the exercise of the Warrants. The Company shall not effect
any such consolidation, merger, amalgamation, share exchange or sale, lease,
transfer, conveyance or other disposition unless prior to or simultaneously
with the consummation thereof the successor entity (if other than the Company)
resulting from such consolidation, merger or amalgamation, share exchange or
the entity purchasing or otherwise acquiring such assets or shares (i) shall
assume by a supplemental Warrant Agreement, satisfactory in form, scope and
substance to the Required Holders (which shall be mailed or delivered to the
registered Holders of the Warrants at the last address of such Holders
appearing on the books of the Company) the obligation to deliver to such
Holders such shares of stock, securities, cash or property as, in accordance
with the foregoing provisions, such Holders may be entitled to purchase (the
"Substitute Securities") and (ii) shall assume all of the obligations of the
Company set forth in this Agreement and the Registration Rights Agreement.
Following such assumption such obligations shall apply to the Substitute
Securities rather than to the Warrant Shares. If the issuer of securities
deliverable upon exercise of Warrants under the supplemental Warrant Agreement
is an Affiliate of the formed, surviving, transferee or lessee entity, such
issuer shall join the supplemental Warrant Agreement. The foregoing provisions
of this paragraph shall similarly apply to successive reorganizations,
recapitalizations, reclassifications, consolidations, mergers, amalgamations,
share exchanges, sales, leases, transfers, conveyances or other dispositions.
(b) When Issuance or Payment May Be Deferred. In any
case in which this Section 15 shall require that an adjustment in the Exercise
Price be made effective as of a record date for a specified event, the Company
may elect to defer until the occurrence of such event (i) issuing to the Holder
of any Warrant exercised after such record date the Warrant Shares issuable
upon such exercise over and above the Warrant Shares issuable upon such
exercise on the basis of the Exercise Price prior to such adjustment and (ii)
paying to such Holder any amount in cash in lieu of a fractional share pursuant
to Section 16; provided, however, that the Company shall deliver to such Holder
a bill or other appropriate instrument evidencing such Holder's right to
receive such additional Warrant Shares and cash upon the occurrence of the
event requiring such adjustment.
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<PAGE> 172
SECTION 16. Fractional Interests. The Company shall not be
required to issue fractional Warrant Shares on the exercise of Warrants. If
more than one Warrant shall be presented for exercise in full at the same time
by the same Holder, the number of full Warrant Shares which shall be issuable
upon exercise thereof shall be computed on the basis of the aggregate number of
Warrant Shares purchasable on exercise of the Warrants so presented. If any
fraction of the Warrant Shares would, except for the provisions of this Section
16, be issuable on the exercise of any Warrants (or specified portion thereof),
the Company shall pay an amount in cash equal to the Fair Market Value per
Share on the day immediately preceding the date the Warrant is presented for
exercise, multiplied by such fraction.
SECTION 17. Notice to Warrant Holders. Upon any adjustment
of the Exercise Price or number or type of securities purchasable upon exercise
of the Warrants pursuant to Section 15, and as otherwise required by Section
15, the Company shall promptly thereafter (i) upon the request of the Required
Holders, cause to be filed with the Company a certificate of the chief
financial officer of the Company setting forth the Exercise Price and the
number and type of securities or other property constituting Warrant Shares
after such adjustment and setting forth in reasonable detail the method of
calculation and the facts upon which such calculations are based and, in the
case of an adjustment pursuant to Section 15, setting forth the number and type
of securities or other property constituting Warrant Shares (or portion
thereof) issuable, after such adjustment in the Exercise Price or number of
Warrant Shares purchasable upon exercise of the Warrants, upon exercise of a
Warrant and payment of the adjusted Exercise Price, and (ii) cause to be given
to each of the Holders of the Warrant Certificates written notice of such
adjustments, together with a copy of such certificate. Where appropriate, such
notice may be given in advance and included as a part of the notice required to
be given under the other provisions of this Section 17. In the event:
(a) the Company shall authorize the issuance to holders
(although not necessarily to all such holders) of shares of Stock or rights,
options or warrants to subscribe for or purchase or otherwise acquire shares of
Stock or of any other securities or property (including securities of any other
issuer) or of any other subscription rights, options or warrants; or
(b) the Company shall authorize the payment of any
dividend or distribution to holders of shares of Stock of cash, Stock or other
securities or property (including securities of any other issuer) of the
Company; or
(c) of any capital reorganization, reclassification or
recapitalization of the capital stock of the Company, or any amalgamation,
consolidation or merger to which the Company is a party, or any acquisition of
capital stock of the Company through a share exchange, or of the sale, lease,
conveyance, transfer or other disposition of the properties and assets of the
Company substantially as an entirety, or a purchase, tender or exchange offer
for shares of Common Stock or other securities constituting part of the Warrant
Shares (whether by the Company or some other party); or
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<PAGE> 173
(d) of the voluntary or involuntary dissolution,
liquidation or winding up of the Company; or
(e) the Company proposes to take any action which would
require an adjustment of the Exercise Price or number of Warrant Shares
purchasable upon exercise of the Warrants pursuant to Section 15;
then the Company shall cause to be given to each of the Holders, at least 20
days prior to the applicable record date hereinafter specified (or promptly in
the case of events for which there is no record date), a written notice stating
(as applicable) (i) the date as of which the holders of record of shares of
Stock entitled to receive any such rights, options, warrants or dividends or
distribution are to be determined, (ii) the date on which any such
reclassification, recapitalization or reorganization, consolidation, merger,
amalgamation, share exchange, sale, lease, conveyance, transfer, disposition,
dissolution, liquidation or winding up is expected to become effective or be
consummated, or (iii) the initial expiration date set forth in any purchase,
tender or exchange offer for shares of Stock, and the date as of which it is
expected that holders of record of shares of Stock or other securities
constituting a part of the Warrant Shares (or securities into which the Warrant
Shares may be converted) shall be entitled to exchange such shares or
securities for securities or other property, if any, deliverable upon such
reclassification, recapitalization, reorganization, consolidation, merger,
amalgamation, share exchange, sale, lease, conveyance, transfer, disposition,
dissolution, liquidation or winding up. The failure to give the notice
required by this Section 17 or any defect therein shall not affect the legality
or validity of any distribution, right, option, warrant, reorganization,
recapitalization, reclassification, consolidation, merger, amalgamation, share
exchange, sale, lease, conveyance, transfer, disposition, dissolution,
liquidation or winding up, or the vote upon any action. Nothing contained in
this Agreement or in any of the Warrant Certificates shall be construed as
conferring upon the Holders the right to vote or to consent as stockholders in
respect of the meetings of stockholders or the election of members of the Board
of Directors of the Company or any other matter, or any rights whatsoever as
stockholders of the Company.
SECTION 18. Cash Distributions and Dividends. If the Company
pays a dividend or makes a distribution to the holders of its Stock of any
securities (other than Stock) or property (including cash and securities of
other companies) of the Company, or any rights, options or warrants to purchase
securities (other than Stock) or property (including securities of other
companies) of the Company, then, simultaneously with the payment of such
dividend or the making of such distribution, and as a condition precedent to
its right to do so, it will pay or distribute to the Holders of Series E
Warrant Certificates an amount of property (including without limitation cash)
and/or securities (including without limitation securities of other companies)
of the Company as would have been received by such Holders had they exercised
all of the Series E Warrants represented by the Series E Warrant Certificates
immediately prior to the record date (or other applicable date) used for
determining stockholders of the Company entitled to receive such dividend or
distribution. No adjustment to the Exercise Price shall be made for any
distribution of Convertible Securities of the Company to the Holders pursuant
to the provisions of this Section 18.
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<PAGE> 174
SECTION 19. Put Rights; Tag-Along Rights.
(a) Put by Holders. Unless the Required Holders have otherwise
agreed in writing, at any time and from time to time on or after the occurrence
of a Put Event, the Put Right shall be exercisable by each of the Holders.
After receipt of a Put Notice from any Holder, the Company will promptly (and
in any event within ten (10) days) give written notice (the "Put Exercise
Notice") to each of the other Holders of Warrant Securities that a Put Right
has been exercised. Each Holder will have the right to participate in the Put
Right and require the Company to repurchase all or any portion of such Holder's
Warrant Securities by delivering written notice to the Company within ten (10)
days following receipt of the Put Exercise Notice. All such notices delivered
by such other Holders will be deemed to have been delivered as of the date of
the initial Put Notice and taken together will be deemed to be one exercise of
the Put Right. Upon the exercise by a Holder of the Put Right, the purchase
price payable to such Holder (the "Put Purchase Price") by the Company for such
Holder's Warrant Securities shall be as follows:
(i) in the case of Warrants, an amount equal to the
product of (A) the Contract Value per Share, multiplied by (B) the
number of shares of Common Stock that may be acquired upon the
conversion by such Holder of the shares of Series E Convertible
Preferred Stock that would be received upon exercise of such Holder's
Warrants with respect to which the Put Right is being exercised;
(ii) in the case of Series E Convertible Preferred Stock,
an amount equal to the product of (A) the Contract Value per Share,
multiplied by (B) the number of shares of Common Stock that may be
acquired upon the conversion by such Holder of the shares of Series E
Convertible Preferred Stock with respect to which the Put Right is
being exercised; and
(iii) in the case of Common Stock, an amount equal to the
product of (A) the Contract Value per Share, multiplied by (B) the
number of shares of Common Stock with respect to which the Put Right
is being exercised.
Promptly upon the receipt of a Put Notice pursuant to Section 19(a) the Company
shall cause the Contract Value per Share to be determined, and shall give
written notice of the determination thereof to each Holder, promptly upon the
determination thereof and in any event within thirty (30) days following the
Company's receipt of the Put Notice. The provisions of this Section 19(a)
shall apply until the termination of this Agreement pursuant to Section 24 to
any Person who acquires in any manner any Warrant Securities from any Holder.
(b) Closing. Each closing of the purchase and sale of any Warrant
Securities pursuant to Section 19(a) shall take place on a date (a "Put Closing
Date") which is the later of (i) thirty (30) days after the giving of the Put
Notice, and (ii) ten (10) days after determination of the Contract Value per
share, provided that if such day is not a Business Day such closing shall be on
the next succeeding Business Day. Payment of the Put Purchase Price shall be
due and payable in full on the Put Closing Date. The closing of such purchase
and sale of Warrant Securities shall take place
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<PAGE> 175
at 10:00 a.m. on the Put Closing Date at such location in Atlanta, Georgia, or
New York, New York, as the Required Holders may reasonably determine and
notify the Company or at such other location as may be agreed to by the Company
and the Required Holders. The Put Purchase Price shall be paid in full at each
such closing, by wire transfer of immediately available federal funds, and the
Warrant Securities to be repurchased at such closing shall be duly endorsed for
transfer. Such Warrant Securities shall be free and clear of all liens and
encumbrances of any kind, nature and description, other than applicable
restrictions under federal and state securities laws, and each Holder shall
represent and warrant to the Company to such effect with respect to such
Holder's Warrant Securities. The Company will pay all stamp and transfer taxes
in connection with the repurchase of the Warrant Securities hereunder.
(c) Restrictions on Purchase. The Company covenants and agrees
that, other than the Restrictive Provisions, it shall not, and shall not permit
any of its Subsidiaries to, without the prior written consent of the Required
Holders, enter into or agree to become subject to any term, condition,
provision or agreement that would conflict with or restrict in any way the
performance of the Company's obligations under this Agreement or that would by
its terms restrict the availability of Legally Available Funds with which to
perform such obligations. Anything in this Agreement to the contrary
notwithstanding, the Company shall not be required to purchase Warrant
Securities under Section 19(a) if at the time of closing of the purchase and
sale of any Warrant Securities pursuant to Section 19(a) there exists any
Restrictions on Purchase. Upon receipt of a Put Notice, if the Company's
obligations under Section 19(a) at the time of performance would be subject to
Restrictions on Purchase, then the Company (i) shall promptly use all
reasonable efforts (excluding the payment of waiver, consent or similar
transactional fees, but including reasonable documentation costs and other
similar expenses) to cause the Required Lenders to waive compliance with any
such Restrictive Provisions and/or to amend the Restrictive Provisions so as to
permit the purchase of the Warrant Securities pursuant to this Agreement, (ii)
shall not repay, redeem, purchase or otherwise retire any indebtedness for
borrowed money of, or any debt securities issued by, the Company in an amount
or for a price or other consideration in excess of the principal amount
thereof, and (iii) shall not declare or pay any dividend or distribution on any
shares of Stock (other than dividends that accrue and cumulate on Preferred
Stock in accordance with the terms of such Preferred Stock as is in effect on
the date such Put Notice is received by the Company). If, notwithstanding the
Company's reasonable efforts required under this Section 19(c), the Company is
unable to fulfill its obligations under Section 19(a) because of the existence
of one or more Restrictions on Purchase, the Company shall give prompt written
notice thereof to each Holder exercising Put Rights, specifying in reasonable
detail the nature thereof and the extent, if any, to which the Company would be
able to fulfill its obligation to pay the Purchase Price within the
Restrictions on Purchase. If any Restrictions on Purchase exist on the
proposed Put Closing Date, then at the sole and independent election of each
such Holder, and pursuant to written notice given by any such Holder to the
Company: (i) such Holder's Put Right shall remain exercised and the closing of
the purchase and sale of Warrant Securities pursuant to such Holder's Put Right
shall be deferred until not more than five Business Days after all such
Restrictions on Purchase cease to exist; provided, however, that, as and to the
extent that such Restrictions on Purchase cease to exist, the Company shall
promptly make partial payments of the Purchase Price to such Holder, in which
case there shall be a series of such closings, each of which shall take place
not more than five
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<PAGE> 176
Business Days after such Restrictions on Purchase have ceased to exist to an
extent that would permit such partial payments of the Purchase Price in
increments of not less than $100,000 ("Partially Available Funds"); or (ii) the
exercise of such Holder's Put Right shall be rescinded and such Holder shall
reserve its right to exercise the Put Right at any subsequent time. In the
event that any Holders make the election provided in clause (i) of the
immediately preceding sentence, the Company shall purchase from such selling
Holders that number of Warrant Securities as may be purchased at the Purchase
Price using that portion of Partially Available Funds for such purchase as
equals the product of (a) all Partially Available Funds, and (b) the ratio of
(i) the Warrant Securities originally proposed to be sold by such Holders
electing to sell and not electing to rescind pursuant to clause (ii) of the
immediately preceding sentence, to (ii) the Warrant Securities originally
proposed to be sold by all Holders (treating all Warrants as fully exercised
for the Warrant Shares to which the Holders would be entitled upon exercise of
such Warrants). Such purchase shall be made from each selling Holder pro rata
based on the ratio of (i) the number of Warrant Securities originally proposed
to be sold by such Holder to (ii) the Warrant Securities originally proposed to
be sold by all Holders. None of the provisions of this Section 19(c) shall be
construed to limit any other right or remedy under applicable law which any
Holder may have as a result of the failure by the Company to purchase Warrant
Securities as herein provided.
(d) Tag-Along Rights. Without limitation to the right of any
Holder to exercise its Put Right pursuant to Section 19(a), if at any time
either the Company or Gary S. Goldstein (each a "Selling Shareholder") shall
determine to enter into any transaction or series of transactions that would
result in a Change of Control (a "Change of Control Transaction") (any third
party proposing to enter into such transaction or transactions being
hereinafter referred to in this Section 19(d) as a "Prospective Purchaser"),
the Company or Selling Shareholder, as the case may be, and any Prospective
Purchaser shall first give written notice (the "Offer Notice") to all of the
Holders, specifying the name and address of the Prospective Purchaser and the
number of shares, if any, of Stock proposed to be issued, sold, transferred or
otherwise disposed of and setting forth in reasonable detail the price,
structure and other terms and conditions of the Change of Control Transaction,
as applicable. The Offer Notice shall represent the offer (the "Offer") from
the Prospective Purchaser to each of the Holders of the right to sell to the
Prospective Purchaser as a condition to the consummation of the proposed
transaction described in the Offer Notice, all Warrant Securities then owned by
each Holder to the Prospective Purchaser and, at the option of the Holders, on
the same terms and conditions (including price and form of consideration) as
are being offered by the Prospective Purchaser to the Company or the Selling
Shareholder, as the case may be, or at the Fair Market Value per Share,
determined as of the date of the Offer Notice. Each Holder shall have thirty
(30) days from the date of receipt of the Offer Notice to give written notice
of its intention to accept or reject the Offer. Failure to respond within such
thirty-day period shall be deemed notice of rejection. In the event that any
Holder gives written notice to the Company or the Selling Shareholder, as the
case may be, and the Prospective Purchaser of its intention to accept such
Offer, then such written notice, taken in conjunction with the Offer Notice,
shall constitute a valid and legally binding agreement, and each of the Holders
so giving such written notice shall be entitled to sell to the Prospective
Purchaser, contemporaneously with the consummation of the Change of Control
Transaction, all of the Warrant Securities at the price specified therefor by
such Holder in accordance with this Section 19(d). In the event that all of
the
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<PAGE> 177
Holders reject or are deemed to have rejected the offer represented by the
Offer Notice, the Company or the Selling Shareholder, as the case may be, shall
be free to proceed to consummate such Change of Control Transaction on the
terms and conditions set forth in the Offer Notice, provided that such sale is
not otherwise prohibited by any agreement between the Company and the
Purchaser. In the event the Company fails to complete the proposed sale,
transfer or other disposition within ninety (90) days after the Holder or
Holders rejected or were deemed to have rejected the Offer, such transaction or
transactions shall again be subject to the provisions of this Section 19(d).
The provisions of this Section 19(d) shall apply until the termination of this
Agreement pursuant to Section 24 to any Person who acquires in any manner any
Warrant Securities from any Holder.
(e) Limitation on Put Rights of Others. The Company covenants and
agrees that, neither the Company nor any of its Subsidiaries shall, directly
or indirectly, grant to any Person or agree to or otherwise become obligated in
respect of any rights to require the Company or any of its Subsidiaries to
purchase securities of the Company upon the demand of any Person. The Company
represents and warrants that neither it nor any of its Subsidiaries has
previously entered into any agreement granting any such rights to any Person.
(f) Severability. If any provision of this Agreement shall be
held or deemed to be, or shall in fact be, invalid, inoperative or
unenforceable as applied to any particular case in any jurisdiction or
jurisdictions, or in all jurisdictions or in all cases, because of the conflict
of any provision with any constitution, statute, rule or public policy, or for
any other reason, such circumstances shall not have the effect of rendering the
provision or provisions in question, invalid, inoperative or unenforceable in
any other jurisdiction or in any other case or circumstance or of rendering any
other provision or provisions herein contained invalid, inoperative or
unenforceable to the extent that such other provisions are not themselves
actually in conflict with such constitution, statute, rule or public policy,
but this Agreement shall be reformed and construed in any such jurisdiction or
case as if such invalid, inoperative or unenforceable provision had never been
contained herein and such provision reformed so that it would be valid,
operative and enforceable to the maximum extent permitted in such jurisdiction
or in such case.
SECTION 20. Notices. All notices, consents, approvals,
agreements and other communications provided hereunder shall be in writing or
by telecopy and shall be sufficiently given to the Purchaser, the Holders and
the Company if addressed or delivered to them at the following addresses:
If to the Purchaser: ING Capital
135 East 57th Street
New York, New York 10022
Attention: Chief Credit Officer
Telecopier No.: (212) 750-8935
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<PAGE> 178
with copies to: ING Capital
Atlanta Office
200 Galleria Parkway
Suite 950
Atlanta, Georgia 30339
Attention: John N. Lanier
Telecopier No.: (770) 951-1005
and a copy to: King & Spalding
191 Peachtree Street
Atlanta, Georgia 30303-1763
Attention: Walter W. Driver, Jr., Esq.
Telecopier No.: (404) 572-5100
If to any other At its last known address appearing
Holder: on the books of the Company maintained for
such purpose
If to the Company: AFGL International, Inc.
850 Third Avenue. 11th Floor
New York, New York 10022
Date: Attention: Barry S. Roseman
Telecopier No.: (212) 508-3540
with a copy to: Christy & Viener
620 Fifth Avenue
New York, New York
Attention: Richard B. Salomon, Esq.
Telecopier No.: (212) 632-5555
or at such other address as any party may designate to any other party by
written notice. All such notices and communications shall be deemed to have
been duly given: (i) at the time delivered by hand, if personally delivered,
(ii) when received, if deposited in the mail, postage prepaid, (iii) when
transmission is verified, if telecopied, and (iv) on the next Business Day, if
timely delivered to an air courier guaranteeing overnight delivery.
SECTION 21. Costs and Expenses. The Company agrees to pay
all expenses of the Purchaser for the negotiation, preparation, execution, and
delivery of this Agreement and each other Warrant Document and any consents,
waivers, supplements or other modifications to this Agreement or any Warrant
Document (including the reasonable fees of counsel retained by Purchaser in
connection therewith), whether or not the transactions contemplated hereby are
consummated, and the consideration of legal questions relevant hereto and
thereto. The Company also agrees to reimburse the Purchaser and each Holder
upon demand for all out-of-pocket
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<PAGE> 179
expenses (including reasonable attorneys' fees and expenses) incurred by the
Purchaser or such Holder in enforcing the obligations of the Company under this
Agreement or any other Warrant Document or in connection with any amendment,
waiver, consent, supplement or other modification to this Agreement or any
Warrant Document.
SECTION 22. Indemnification. (a) In consideration of the
transactions contemplated by this Agreement and the other Warrant Documents,
the Company hereby agrees to indemnify, exonerate and hold the Purchaser and
each Holder, each of their respective successors and assigns, each of the
respective officers, directors, employees, attorneys and agents of the
Purchaser and each Holder and each of their respective successors and assigns
(collectively, the "Indemnified Parties") free and harmless from and against
any and all actions, causes of action, suits, losses, costs, liabilities,
damages and expenses (irrespective of whether such Indemnified Party is a party
to the action for which indemnification hereunder is sought), including
attorneys' fees and disbursements (the "Indemnified Liabilities"), incurred by
the Indemnified Parties or any of them or asserted or awarded against the
Indemnified Parties or any of them as a result of, or arising out of, or
relating to:
(i) any transaction contemplated by this Agreement or any other
Warrant Document;
(ii) the making of any claim by any investment banking firm, broker
or third party that it is entitled to compensation from any
Indemnified Party in connection with this Agreement;
(iii) any claim, investigation, litigation, or proceeding made or
commenced by a third party related to this Agreement or any
other Warrant Documents, whether or not the Indemnified Party
or any other Indemnified Party is party thereto;
(iv) the breach by the Company of any representation or warranty
set forth in this Agreement or in any other Warrant Document;
or
(v) the failure of the Company to comply with all terms,
conditions, and covenants set forth in this Agreement or in
any other Warrant Document;
except for any such Indemnified Liabilities arising for the account of a
particular Indemnified Party by reason of the relevant Indemnified Party's
gross negligence or wilful misconduct as determined by a final and
nonappealable decision of a court of competent jurisdiction. If and to the
extent that the foregoing undertaking may be unenforceable for any reason, the
Company hereby agrees to make the maximum contribution to the payment and
satisfaction of each of the Indemnified Liabilities which is permissible under
applicable law. The foregoing indemnity shall become effective immediately
upon the execution and delivery hereof and shall remain operative and in full
force and effect notwithstanding the consummation of the transactions
contemplated hereunder, the issuance or exercise of the Warrants hereunder, the
termination of this Agreement pursuant to Section 24, the invalidity or
unenforceability of any term or provision of this Agreement or any other
Warrant Document, or any investigation made by or on behalf of any Holder or
the Purchaser.
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<PAGE> 180
(b) Promptly after receipt by an Indemnified Party of
notice of the commencement of any action (including any governmental
investigation or inquiry), such Indemnified Party will, if such Indemnified
Party intends to make a claim in respect thereof against the Company, give
written notice to the Company of the commencement thereof, but the omission so
to notify the Company shall not relieve the Company from any of its obligations
hereunder. In case any such action is brought against any Indemnified Party
and it notifies the Company of the commencement thereof, the Company shall be
entitled to participate in and to the extent that it may wish, to assume the
defense thereof, with counsel reasonably satisfactory to such Indemnified
Party, and after notice from the Company to such Indemnified Party, the Company
shall not be responsible for any legal or other expenses subsequently incurred
by such Indemnified Party in connection with the defense thereof. The Company
will not consent to entry of any judgment or enter into any settlement which
does not include as an unconditional term thereof the giving by the claimant or
plaintiff to such Indemnified Party of a release from all liability in respect
of such claim or litigation.
SECTION 23. Successors. All the covenants and provisions of
this Agreement by or for the benefit of the Company or the Holders shall bind
and inure to the benefit of their respective successors and assigns, including
those by operation of law, merger, consolidation or as otherwise provided in
subsection (i) or (j) of Section 15.
SECTION 24. Termination. Except as otherwise provided
herein, this Agreement shall terminate (i) with respect to any Holder, with
respect to any Warrant Shares beneficially owned by such Holder which have been
effectively registered under the Securities Act and sold pursuant to a
Registration Statement or Shelf Registration Statement and (ii) in its entirety
when (a) all Warrants have been exercised or expired unexercised in accordance
with their terms or all Warrant Securities have been purchased pursuant to
Section 19 hereof, and (b) all obligations of the Company (or any successor)
shall have been satisfied in full and all contingencies in respect thereof
shall no longer exist, including, without limitation, the obligations set forth
in subsection (a) or (b) of Section 15.
SECTION 25. Governing Law. THIS AGREEMENT AND THE WARRANTS
SHALL BE GOVERNED BY THOSE PROVISIONS OF THE CORPORATE CODE OF THE JURISDICTION
IN WHICH THE COMPANY IS INCORPORATED AND ARTICLE 8 OF THE UNIFORM COMMERCIAL
CODE OF THE JURISDICTION IN WHICH THE COMPANY IS INCORPORATED WHICH ARE
NECESSARILY APPLICABLE TO SECURITIES ISSUED BY A CORPORATION INCORPORATED IN
SUCH JURISDICTION AND OTHERWISE SHALL BE DEEMED TO BE A CONTRACT MADE UNDER THE
LAWS OF THE STATE OF NEW YORK AND FOR ALL PURPOSES SHALL BE CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF SAID STATE.
SECTION 26. Benefits of this Agreement. Nothing in this
Agreement shall be construed to give to any Person other than the Company and
the Holders any legal or equitable right, remedy or claim under this Agreement;
but this Agreement shall be for the sole and exclusive benefit of the Company
and the Holders.
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<PAGE> 181
SECTION 27. Counterparts. This Agreement may be executed in
any number of counterparts and each such counterpart shall for all purposes be
deemed to be an original, and all such counterparts shall together constitute
one and the same instrument.
SECTION 28. Amendments; Waiver. No provision of this
Agreement may be amended or waived except by an instrument in writing signed by
the party sought to be bound; provided, however, that any amendment requested
or waiver sought from the Holders of any provision of this Agreement which
affects Holders generally may be given by the Required Holders and any waiver
so given shall be binding on all Holders; provided further, that the provisions
of Section 11 with respect to the type of securities for which the Warrants are
exercisable may not be changed without the consent of each Holder affected
thereby. No failure or delay by any party in exercising any right or remedy
hereunder shall operate as a waiver thereof, nor shall a waiver of a particular
right or remedy on one occasion be deemed a waiver of any other right or remedy
or a waiver of the same right or remedy on any subsequent occasion.
SECTION 29. Waiver of Jury Trial. THE PURCHASER, EACH HOLDER
AND THE COMPANY HEREBY KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVE ANY
RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED
HEREON, ON THE WARRANTS OR ON ANY OF THE OTHER WARRANT DOCUMENTS, OR ARISING
OUT OF, UNDER OR IN CONNECTION WITH, THIS AGREEMENT, THE WARRANTS OR ANY OF THE
OTHER WARRANT DOCUMENTS, OR ANY COURSE OF CONDUCT, COURSE OF DEALING,
STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF THE PURCHASER, ANY HOLDER OR
THE COMPANY. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE PURCHASER'S
ENTERING INTO THIS AGREEMENT.
SECTION 30. Jurisdiction. The Company hereby agrees that any
legal action or proceeding against it with respect to this Agreement, the
Warrants or any of the other Warrant Documents may be brought in the courts of
the State of New York or of the United States of America for the Southern
District of New York as any Holder may elect, and, by execution and delivery
hereof, it accepts and consents for itself and in respect of its property,
generally and unconditionally, the jurisdiction of the aforesaid courts and
agrees that such jurisdiction shall be exclusive, unless waived by the Required
Holders in writing, with respect to any action or proceeding brought by it
against such Holders. The Company hereby irrevocably designates, appoints and
empowers CT Corporation System whose present address is 1633 Broadway, New
York, New York 10019, as its authorized agent to receive, for and on its behalf
and its property, service of process in the State of New York when and as legal
actions or proceedings may be brought in the courts of the State of New York or
of the United States of America sitting in New York, and such service of
process shall be deemed complete upon the date of delivery thereof to such
agent, or upon the earliest of any other date permitted by applicable law. It
is understood that a copy of said process served on such agent will be
forwarded to the Company as soon as practicable, at its address set forth
herein, but its failure to receive such copy shall not affect in any way the
service of said process on said agent as the agent of the Company. The Company
irrevocably consents to the service of process out of any of the aforementioned
courts in any such
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<PAGE> 182
action or proceeding by the mailing of the copies thereof by certified mail,
return receipt requested, postage prepaid, to it at its address set forth
herein, such service to become effective upon the earlier of (i) the date 10
calendar days after such mailing and (ii) any earlier date permitted by
applicable law. The Company agrees that it will at all times continuously
maintain an agent to receive service of process in the State of New York on
behalf of itself and its properties and in the event that, for any reason, the
agent named above or its successor shall no longer serve as its agent to
receive service of process in the State of New York on its behalf, it shall
promptly appoint a successor so to serve and shall advise the Holders thereof.
The Company agrees that Sections 5-1401 and 5-1402 of the General Obligations
Law of the State of New York shall apply to this Agreement and each of the
other Warrant Documents and waives any right to stay or to dismiss any action
or proceeding brought before said courts on the basis of forum non conveniens.
Nothing herein shall affect the right of any Holder to bring proceedings
against the Company in the courts of any other jurisdiction or to serve
process in any other manner permitted by applicable law.
SECTION 31. Specific Performance. The Company recognizes
that the rights of the Holders under this Agreement and the other Warrant
Documents are unique and, accordingly, the Holders shall, in addition to such
other remedies as may be available to any of them at law or in equity, have the
right to enforce their rights hereunder and thereunder by actions for
injunctive relief and specific performance to the extent permitted by law. The
Company agrees that monetary damages would not be adequate compensation for any
loss incurred by reason of a breach by it of the provisions of this Agreement
or any of the other Warrant Documents and hereby agrees to waive in any action
for specific performance the defense that a remedy at law would be adequate.
This Agreement is not intended to limit or abridge any rights of the Holders
which may exist apart from this Agreement.
SECTION 32. Confidentiality. The Holders shall hold all
non-public, proprietary or confidential information (which has been identified
as such by the Company) obtained pursuant to the requirements of this Agreement
in accordance with their customary procedures for handling confidential
information of this nature; provided, however, that each Holder may make
disclosure of any such information to its examiners, Affiliates, outside
auditors, counsel, consultants, appraisers and other professional advisors in
connection with this Agreement or as reasonably required by any proposed
transferee in connection with the contemplated transfer of any Warrant
Securities (but only if the proposed transferee agrees to be bound by the terms
of this Section 32) or as required or requested by an Governmental Authority or
representative thereof or in connection with the enforcement hereof or of any
other Warrant Document or pursuant to legal process. In no event shall any
Holder be obligated or required to return any materials furnished to it by the
Company.
SECTION 33. Entire Agreement. The parties hereto agree that
this Agreement, the Registration Rights Agreement and the Loan Documents
constitute the entire agreement among the parties with respect to the subject
matter hereof and supersedes all prior agreements and understandings between
them as to such subject matter; and there are no restrictions, agreements,
arrangements, oral or written, between any or all of the parties relating to
the subject matter hereof which are not fully expressed or referred to herein
or therein.
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<PAGE> 183
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto duly authorized
as of the day and year first above written.
AFGL INTERNATIONAL, INC.
By:
-----------------------------------
Name:
Title:
INTERNATIONALE NEDERLANDEN
(U.S.) CAPITAL CORPORATION
By:
-----------------------------------
Name:
Title:
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<PAGE> 184
EXHIBIT A
FORM OF SERIES E WARRANT CERTIFICATE
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. SAID
SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION
OR AN EXEMPTION, OR AN OPINION OF COUNSEL (WHICH MAY BE COUNSEL TO THE HOLDER)
AS TO AN EXEMPTION, FROM THE REGISTRATION PROVISIONS OF SAID ACT OR LAWS.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS OF A
WARRANT PURCHASE AGREEMENT, DATED AS OF MAY 31, 1996, BETWEEN AFGL
INTERNATIONAL, INC. (THE "COMPANY") AND INTERNATIONALE NEDERLANDEN (U.S.)
CAPITAL CORPORATION ("ING") AND A REGISTRATION RIGHTS AGREEMENT, DATED AS OF
MAY 31, 1996, AMONG THE COMPANY AND THE PURCHASERS IDENTIFIED IN EXHIBIT A
ATTACHED THERETO, COPIES OF EACH OF WHICH ARE ON FILE AT THE MAIN OFFICE OF THE
COMPANY. ANY SALE OR TRANSFER OF THE SECURITIES EVIDENCED BY THIS CERTIFICATE
IS SUBJECT TO THE TERMS OF THOSE AGREEMENTS AND ANY SALE OR TRANSFER OF SUCH
SECURITIES IN VIOLATION OF SAID AGREEMENTS SHALL BE INVALID.
Certificate No. Warrants
-- -------
Warrant Certificate
AFGL INTERNATIONAL, INC.
This Warrant Certificate certifies that INTERNATIONALE
NEDERLANDEN (U.S.) CAPITAL CORPORATION ("ING"), or registered assigns, is the
registered holder of the number of Warrants (the "Warrants") set forth above to
purchase shares of Series E Convertible Preferred Stock, par value $0.001 per
share (the "Series E Convertible Preferred Stock"), of AFGL INTERNATIONAL,
INC., a Nevada corporation (the "Company"). Each Warrant entitles the holder
upon exercise to receive from the Company one fully paid and nonassessable
share of Series E Convertible Preferred Stock (a "Warrant Share") at the
initial exercise price (the "Exercise Price") of $0.02, payable in lawful money
of the United States of America, upon surrender of this Warrant Certificate and
payment of the Exercise Price, if applicable, at the office of the Company
designated for such purpose, subject to the conditions set forth herein and in
the Warrant Agreement referenced below. The Exercise Price and number and type
of Warrant Shares issuable upon
<PAGE> 185
exercise of the Warrants are subject to adjustment upon the occurrence of
certain events, as set forth in the Warrant Agreement and the Certificate of
Designation, Preferences and Rights for the Series E Convertible Preferred
Stock. Each Warrant also entitles the holder to convert such Warrant into the
number of Warrant Shares determined in accordance with Section 11(b) of the
Warrant Agreement.
The Warrants evidenced by this Warrant Certificate are part of
a duly authorized issue of Series E Warrants, and are issued or to be issued
pursuant to a Warrant Purchase Agreement dated as of May 31, 1996 (the "Warrant
Agreement"), duly executed and delivered by the Company and ING, which Warrant
Agreement is hereby incorporated by reference in and made a part of this
instrument and is hereby referred to for a description of the rights,
obligations and duties hereunder of the Company and the holders of the Warrants
(the words "holders" or "holder" meaning the registered holders or registered
holder). A copy of the Warrant Agreement may be obtained by the holder hereof
upon written request to the Company.
The holder of Warrants evidenced by this Warrant Certificate
may exercise such Warrants under and pursuant to the terms and conditions of
the Warrant Agreement by surrendering this Warrant Certificate, with the form
of election to purchase attached hereto (and by this reference made a part
hereof) properly completed and executed, together with payment of the Exercise
Price in cash at the office of the Company designated for such purpose. In the
event that any exercise of Warrants evidenced hereby shall be for less than the
total number of Warrants evidenced hereby, there shall be issued by the Company
to the holder hereof or his or its registered assignee a new Warrant
Certificate evidencing the number of Warrants not exercised.
The Warrant Agreement provides that upon the occurrence of
certain events the Exercise Price set forth on the face hereof may, subject to
certain conditions, be adjusted. If the Exercise Price is adjusted, the
Warrant Agreement provides that the number of shares of Warrant Shares issuable
upon the exercise of each Warrant shall be adjusted. No fractional shares of
Warrant Shares will be issued upon the exercise of any Warrant, but the Company
will pay the cash value thereof determined as provided in the Warrant
Agreement.
The Holders of the Warrants possess certain rights to require
the Company to purchase the Warrants (the "Put Rights"), and the Holders have
been granted certain rights to participate in a sale of the Common Stock of the
Company by certain shareholders of the Company (and certain of their successors
and assigns) all at the times specified in, and pursuant to the terms and
conditions set forth in, the Warrant Agreement.
The Holders of the Warrants are entitled to certain
registration rights as set forth in a Registration Rights Agreement dated as of
May 31, 1996, among the Company and the purchasers identified in Exhibit A
attached thereto (the "Registration Rights Agreement"). By acceptance of this
Warrant Certificate, the Holder hereof agrees that upon exercise of any or all
of the Warrants evidenced hereby, such Holder will be bound by the Registration
Rights Agreement. A copy of the Registration Rights Agreement may be obtained
by the holder hereof upon written request to the Company.
A-2
<PAGE> 186
Warrant Certificates, when surrendered at the office of the
Company by the registered holder thereof in person or by legal representative
or attorney duly authorized in writing, may be exchanged, in the manner and
subject to the limitations provided in the Warrant Agreement, for another
Warrant Certificate or Warrant Certificates of like tenor evidencing in the
aggregate a like number of Warrants.
The Company may deem and treat the registered holder(s)
thereof as the absolute owner(s) of this Warrant Certificate (notwithstanding
any notation of ownership or other writing made hereon) for the purpose of any
exercise hereof, of any distribution to the holder(s) hereof and for all other
purposes, and the Company shall not be affected by any notice to the contrary.
Neither the Warrants nor this Warrant Certificate entitles any holder hereof to
any rights of a stockholder of the Company (other than the right to receive
dividends and distributions as set forth in Section 18 of the Warrant
Agreement).
IN WITNESS WHEREOF, the Company has caused this Warrant
Certificate to be signed by its duly authorized officer and has caused its
corporate seal to be affixed hereunto or imprinted hereon.
Dated: May 31, 1996
AFGL INTERNATIONAL, INC.
By:
------------------------------------
Name:
Title:
A-3
<PAGE> 187
FORM OF ELECTION TO PURCHASE
[To Be Executed Upon Exercise of Warrant]
The undersigned holder hereby represents that he or it is the registered holder
of this Warrant Certificate, and hereby irrevocably elects to exercise the
right, represented by this Warrant Certificate, to receive ____________ shares
of Series E Convertible Preferred Stock, par value $0.001 per share ("Series E
Convertible Preferred Stock"), of AFGL INTERNATIONAL, INC. (the "Company") and
herewith tenders payment for such shares to the order of the Company in the
amount of $___________ in accordance with the terms hereof. The undersigned
requests that a certificate for such shares be registered in the name of the
undersigned or his/its nominee hereinafter set forth, and further that such
certificate be delivered to the undersigned at the address hereinafter set
forth or to such other person or entity as is hereinafter set forth. If said
number of shares is less than all of the shares of Series E Convertible
Preferred Stock purchasable hereunder, the undersigned requests that a new
Warrant Certificate representing the remaining balance of such shares be
registered in the name of the undersigned or his/its nominee hereinafter set
forth, and further that such Warrant Certificate be delivered to the
undersigned at the address hereinafter set forth or to such other person or
entity as is hereinafter set forth.
Certificate to be registered as follows:
Name: Internationale Nederlanden (U.S.) Capital Corporation
Address: 135 East 57th Street
New York, New York 10022
Attn: Chief Credit Officer
Certificate to be delivered as follows:
----------- -- -- --------- -- -------
Name: Internationale Nederlanden (U.S.) Capital Corporation
Address: 135 East 57th Street
New York, New York 10022
Attn: Chief Credit Officer
Date:
--------------------
--------------------------------------------------
(Signature must conform in all respects to the
name of the holder as specified on the fact of the
Warrant Certificate, unless Form of Assignment
has been executed)
A-4
<PAGE> 188
FORM OF ELECTION TO CONVERT
[To be Executed Upon Conversion of Warrant]
The undersigned holder hereby represents that he or it is the registered holder
of this Warrant Certificate, and hereby irrevocably elects to exercise the
right, represented by this Warrant Certificate, to convert the Warrants
evidenced by this Warrant Certificate into ____________ shares of Series E
Convertible Preferred Stock, par value $0.001 per share (the "Series E
Convertible Preferred Stock"), of AFGL INTERNATIONAL, INC. (the "Company").
The undersigned requests that a certificate for such shares be registered in
the name of the undersigned or his/its nominee hereinafter set forth, and
further that such certificate be delivered to the undersigned at the address
hereinafter set forth or to such other person or entity as is hereinafter set
forth. If said number of shares is less than all of the shares of Series E
Convertible Preferred Stock convertible hereunder, the undersigned requests
that a new Warrant Certificate representing the remaining balance of such
shares be registered in the name of the undersigned or his/its nominee
hereinafter set forth, and further that such Warrant Certificate be delivered
to the undersigned at the address hereinafter set forth or to such other person
or entity as is hereinafter set forth.
Certificate to be registered as follows:
Name: Internationale Nederlanden (U.S.) Capital Corporation
Address: 135 East 57th Street
New York, New York 10022
Attn: Chief Credit Officer
Certificate to be delivered as follows:
----------- -- -- --------- -- -------
Name: Internationale Nederlanden (U.S.) Capital Corporation
Address: 135 East 57th Street
New York, New York 10022
Attn: Chief Credit Officer
Date:
--------------------
----------------------------------------------
(Signature must conform in all respects to the
name of the holder as specified on the fact of
the Warrant Certificate, unless Form of
Assignment has been executed)
A-5
<PAGE> 189
FORM OF ASSIGNMENT
[To be executed upon Transfer of Warrant]
FOR VALUE RECEIVED, the undersigned registered holder of the enclosed
Warrant Certificate hereby sells, assigns and transfers unto
________________________________________ the right represented by such Warrant
Certificate to purchase _____________ shares of Series E Convertible Preferred
Stock of AFGL INTERNATIONAL, INC. to which such Warrant Certificate relates,
and appoints __________________ _______________________________ Attorney to
make such transfer on the books of AFGL INTERNATIONAL, INC. maintained for such
purpose, with full power of substitution in the premises.
Date:
-------------------
-----------------------------------------------
(Signature must conform in all respects to name
of holder as specified on the face of the Warrant
Certificate)
-----------------------------------------------
(Street Address)
-----------------------------------------------
(City) (State) (Zip Code)
A-6
<PAGE> 190
EXHIBIT C
HOLDERS OF 5% OR MORE OF THE COMPANY'S STOCK
RECORD OWNER CLASS OF STOCK NO. OF SHARES
------ ----- ----- -- ----- --- -- ------
C-1
<PAGE> 191
EXHIBIT D
EXISTING REGISTRATION RIGHTS
-------- ------------ ------
D-1
<PAGE> 192
EXHIBIT 3
- --------------------------------------------------------------------------------
REGISTRATION RIGHTS AGREEMENT
BETWEEN
AFGL INTERNATIONAL, INC.
AND
INTERNATIONALE NEDERLANDEN
(U.S.) CAPITAL CORPORATION
Dated as of May 31, 1996
- --------------------------------------------------------------------------------
<PAGE> 193
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
Section 1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 2. Registration of Securities by the Company . . . . . . . . . . . . . 4
Section 3. Shelf Registration . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 4. Registration Expenses . . . . . . . . . . . . . . . . . . . . . . . 16
Section 5. Conditions to Registration . . . . . . . . . . . . . . . . . . . . . 18
Section 6. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 7. Exchange Act Registration;
Rule 144 Reporting . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 8. Limitation on Registration Rights of
Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 9. Mergers, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 10. Notices, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 11. Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 12. Waivers and Further Agreements . . . . . . . . . . . . . . . . . . . 24
Section 13. Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 14. Assignment; Successors and Assigns . . . . . . . . . . . . . . . . . 24
Section 15. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 16. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 17. Section Headings . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 18. Gender; Usage . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 19. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 20. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
</TABLE>
<PAGE> 194
<TABLE>
<CAPTION>
<S> <C> <C>
Section 21. Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 22. Specific Performance . . . . . . . . . . . . . . . . . . . . . . . . 26
</TABLE>
- ii -
<PAGE> 195
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made and
entered into as of May 31, 1996, by and between AFGL INTERNATIONAL, INC., a
Nevada corporation (the "Company"), and INTERNATIONALE NEDERLANDEN (U.S.)
CAPITAL CORPORATION, a Delaware corporation (the "Purchaser").
W I T N E S S E T H:
RECITALS.
A. Simultaneously herewith, the Purchaser is entering into a
Credit Agreement dated of even date herewith, by and among the Company, the
Purchaser and various other lenders that may become parties thereto (the
"Lenders") and the Purchaser in its capacity as Agent for the Lenders (the
Agent"); and
B. It is a condition precedent to extensions of credit by the
Purchaser to the Company contemplated by the Credit Agreement that the Company
agree to issue to the Purchaser Warrants initially exercisable for 575,000
shares of Series E Convertible Preferred Stock, par value $0.001 per share, of
the Company (the "Series E Convertible Preferred Stock") for an exercise price
of $0.02 per share; and
C. The Purchaser is unwilling to extend credit to the Company
pursuant to the Credit Agreement or to purchase the Warrants pursuant to the
Warrant Agreement (as defined in Section 1) unless it receives the assurances
set forth in this Agreement; and
D. The Company and the Purchaser desire to set forth certain
understandings with respect to the Warrants;
NOW, THEREFORE, in consideration of the premises and the agreements
herein set forth and to induce the Purchaser to proceed with the transactions
contemplated by the Warrant Agreement and the Credit Agreement, the parties
hereto, intending to be legally bound, hereby agree as follows:
SECTION 1. Definitions.
(a) Defined Terms. The following terms (whether or not
underscored) when used in this Agreement, including its preamble and recitals,
shall, except where the context otherwise requires, have the following meanings
(such meanings to be equally applicable to the singular and plural forms
thereof):
"Agreement" means this Registration Rights Agreement as in effect on
the date hereof and as hereafter amended, supplemented, restated or otherwise
modified.
<PAGE> 196
"Available Securities" is defined in Section 2.
"Business Day" is defined in the Warrant Agreement.
"Certificate of Designation" is the Certificate of Designation,
Preferences and Rights of the Series E Convertible Preferred Stock.
"Common Stock" is defined in the Warrant Agreement.
"Company" means AFGL International, Inc.
"Credit Agreement" is defined in the Warrant Agreement.
"Exchange Act" is defined in the Warrant Agreement.
"Holder" is defined in the Warrant Agreement.
"Indemnified Person" is defined in Section 6(a).
"Indemnifying Person" is defined in Section 6(c).
"NASD" means the National Association of Securities Dealers, Inc.
"Person" is defined in the Warrant Agreement.
"Prospectus" means each prospectus included as part of any
Registration Statement, as amended or supplemented, including each preliminary
prospectus and all material incorporated by reference in such prospectus.
"Purchaser" is defined in the Preamble.
"Quoted Price" is defined in the Warrant Agreement.
"Registrable Securities" shall mean the shares of Common Stock or any
other securities issued or issuable upon the conversion of shares of Series E
Convertible Preferred Stock (including any conversion in accordance with Part
2B or Part 2C of the Certificate of Designation), but excluding (i) shares that
have been disposed of under a Registration Statement, the Shelf Registration
Statement or any other effective registration statement, and (ii) shares
distributed to the public pursuant to Rule 144 under the Securities Act.
"Registration Expenses" is defined in Section 4(c).
-2-
<PAGE> 197
"Registration Statement" means any registration statement of the
Company which covers Registrable Securities pursuant to Section 2 of this
Agreement, including the Prospectus, amendments, including post-effective
amendments, and supplements to such registration statement and Prospectus and
all exhibits and all material incorporated by reference in such registration
statement.
"Required Holders" shall mean the holders of Series E Convertible
Preferred Stock and/or Warrant Securities which when fully converted would
represent at least two-thirds of the voting power of such securities held by
all of the Holders.
"Securities Act" is defined in the Warrant Agreement.
"SEC" is defined in the Warrant Agreement.
"Shelf Prospectus" shall mean the prospectus included in the Shelf
Registration Statement, including any preliminary prospectus, and any amendment
or supplement thereto, including any supplement relating to the terms of the
offering of any portion of the Registrable Securities covered by the Shelf
Registration Statement, and in each case including all material incorporated by
reference therein.
"Shelf Registration" shall mean a registration required to be effected
pursuant to Section 3 hereof.
"Shelf Registration Statement" shall mean a registration statement of
the Company (and any other entity required to be a registrant with respect to
such registration statement pursuant to the requirements of the Securities Act)
that covers all of the Registrable Securities to be offered on a delayed or
continuous basis pursuant to Rule 415 under the Securities Act, or any similar
rule that may be adopted by the SEC, and all amendments (including post-
effective amendments) to such registration statement, and all exhibits thereto
and materials incorporated by reference therein.
"Specified Registrable Securities" is defined in Section 2(a).
"Stock" is defined in the Warrant Agreement.
"Warrant Agreement" means the Warrant Purchase Agreement, dated of
even date herewith, by and between the Purchaser and the Company, as in effect
on the date hereof and as hereafter amended, supplemented, restated or
otherwise modified.
"Warrant Securities" is defined in the Warrant Agreement.
"Warrants" is defined in the Warrant Agreement.
-3-
<PAGE> 198
(b) Cross-References. Unless otherwise specified,
references in this Agreement to any Article or Section are references to such
Article or Section of this Agreement, and unless otherwise specified,
references in any Article, Section, or definition to any clause are references
to such clause of such Section, Article or definition.
SECTION 2. Registration of Securities by the Company.
(a) Piggyback Registration. If at any time or from time to
time the Company shall propose to file on its behalf or on behalf of any of its
security holders a registration statement under the Securities Act on Form S-1,
S-2 or S-3 (or on any other form for the general registration of securities)
with respect to any class of securities (other than a Shelf Registration
Statement filed pursuant to Section 3), the Company shall in each case:
(i) promptly give written notice to each Holder
at least thirty (30) days before the anticipated filing date,
indicating the proposed offering price and describing the plan
of distribution;
(ii) include in such registration (and any related
qualification under blue sky or other state securities laws or
other compliance) and, at the request of any Holder, in any
underwriting involved therein, all the Registrable Securities
specified by any Holder or Holders of Registrable Securities
(the "Specified Registrable Securities") in a written request
(the "Registration Request") made within twenty (20) days
after receipt of such written notice from the Company,
specifying the number or amount of Specified Registrable
Securities; and
(iii) use its best efforts to cause the managing
underwriter(s) of such proposed underwritten offering to
permit the Specified Registrable Securities to be included in
the Registration Statement for such offering on the same terms
and conditions as any similar securities of the Company
included therein.
Notwithstanding the foregoing, if the managing underwriter(s) of such
offering advise(s) the Holders of Specified Registrable Securities in writing
that marketing considerations require a limitation on the securities, other
than the securities the Company intends to sell, to be included in any
Registration Statement filed under this Section 2 to a certain number of shares
(the "Available Securities"), then the Company shall in such case be obligated
to such Holders only with respect to such number of Available Securities. The
limitation on the number of Specified Registrable Securities will be imposed
pro rata (based upon the ratio of the number of shares of Specified Registrable
Securities which the managing underwriter(s) propose to include at the
anticipated initial public offering price to the number of Specified
Registrable Securities owned by each Holder) among all Holders of Specified
Registrable Securities.
-4-
<PAGE> 199
Notwithstanding any other provision of this Agreement to the
contrary, neither the delivery of the notice by the Company nor of the
Registration Request by any Holder shall in any way obligate the
Company to file a Registration Statement and, notwithstanding such
filing, the Company may, at any time prior to the effective date
thereof, in its sole discretion, determine not to offer the securities
to which the Registration Statement relates without liability to any
of the Holders, other than to pay Registration Expenses in connection
with such Registration Statement. No registration of Registrable
Securities effected under this Section 2 shall relieve the Company of
its obligation to effect the registration of Registrable Securities
pursuant to Section 3.
(b) Piggyback Registration Procedures. If and when the
Company shall be required by the provisions of this Section 2 to effect the
registration of Registrable Securities under the Securities Act, the Company
will use its best efforts to effect such registration to permit the sale of
such Registrable Securities in accordance with the intended method or methods
of disposition thereof, and pursuant thereto it will, as expeditiously as
possible:
(i) before filing a Registration Statement or
Prospectus or any amendments or supplements thereto, furnish
to the Holders of the Registrable Securities covered by such
Registration Statement and the underwriter(s), if any, copies
of all such documents proposed to be filed, which documents
will be made available, on a timely basis, for review by such
Holders and underwriters;
(ii) prepare and file with the SEC such amendments
and post-effective amendments to any Registration Statement,
and such supplements to the Prospectus, as may be reasonably
requested by any Holder of Registrable Securities or the
managing underwriter(s), if any, or as may be required by the
Securities Act, the Exchange Act or by the rules, regulations
or instructions applicable to the registration form utilized
by the Company or as may otherwise be necessary to keep such
Registration Statement effective for the applicable period;
and cause the Prospectus as so supplemented to be filed
pursuant to Rule 424 (or any successor rule) under the
Securities Act; and comply with the provisions of the
Securities Act with respect to the disposition of all
securities covered by such Registration Statement during the
applicable period in accordance with the intended methods of
disposition by the sellers thereof set forth in such
Registration Statement or Prospectus;
(iii) promptly notify the selling Holders of
Registrable Securities and the managing underwriter(s), if
any, and if requested by any such Person, confirm such advice
in writing:
(a) of the filing of the Prospectus or any
supplement to the Prospectus and of the
effectiveness of the Registration Statement and/or
any post-effective amendment,
-5-
<PAGE> 200
(b) of any request by the SEC for amendments
or supplements to the Registration Statement or the
Prospectus or for additional information,
(c) of the issuance by the SEC of any stop
order suspending the effectiveness of the
Registration Statement or the initiation of any
proceedings for that purpose,
(d) of the Company's becoming aware at any
time that the representations and warranties of the
Company contemplated by paragraph (xiv)(a) below
have ceased to be true and correct,
(e) of the receipt by the Company of any
notification with respect to the suspension of the
qualification of the Registrable Securities for
sale in any jurisdiction or the initiation or
threat of any proceeding for such purpose, and
(f) of the existence of any fact which, to
the knowledge of the Company, results in the
Registration Statement, the Prospectus or any
document incorporated therein by reference
containing an untrue statement of material fact or
omitting to state a material fact required to be
stated therein or necessary to make the statements
therein not misleading;
(iv) make every reasonable effort to obtain the
withdrawal of any order suspending the effectiveness of the
Registration Statement or any qualification referred to in
paragraph (iii)(e) at the earliest possible moment;
(v) if reasonably requested by the managing
underwriter(s) or the Required Holders of Registrable
Securities being sold in connection with an underwritten
offering, immediately incorporate in a supplement to the
Prospectus or post-effective amendment to the Registration
Statement such information as the managing underwriter(s) or
the Required Holders of the Registrable Securities being sold
reasonably request to have included therein relating to the
plan of distribution with respect to such Registrable
Securities, including, without limitation, information with
respect to the amount of Registrable Securities being sold to
such underwriters, the purchase price being paid therefor by
such underwriters and any other terms of the underwritten (or
best-efforts underwritten) offering of the Registrable
Securities to be sold in such offering; and make all required
filings of such supplement to the Prospectus or post-effective
amendment to the Registration Statement as soon as notified of
the matters to be incorporated in such supplement to the
Prospectus or post-effective amendment to the Registration
Statement;
-6-
<PAGE> 201
(vi) at the request of any selling Holder of
Registrable Securities, furnish to such selling Holder of
Registrable Securities and each managing underwriter, if any,
without charge, at least one signed copy of the Registration
Statement and any post-effective amendment thereto, including
financial statements and schedules, all documents incorporated
therein by reference and all exhibits (including those
incorporated by reference);
(vii) deliver to each selling Holder of Registrable
Securities and the managing underwriter(s), if any, without
charge, as many copies of the Registration Statement, each
Prospectus (including each preliminary prospectus) and any
amendment or supplement thereto (in each case including all
exhibits), as such Persons may reasonably request, together
with all documents incorporated by reference in such
Registration Statement or Prospectus, and such other documents
as such selling Holder may reasonably request in order to
facilitate the disposition of its Registrable Securities
covered by such Registration Statement; the Company consents
to the use of each Prospectus and any supplement thereto by
each of the selling Holders of Registrable Securities and the
managing underwriter(s), if any, in connection with the
offering and sale of the Registrable Securities covered by
each Prospectus or any supplement thereto;
(viii) prior to any public offering of Registrable
Securities, register or qualify or reasonably cooperate with
the selling Holders of Registrable Securities, the managing
underwriter(s), if any, and their respective counsel in
connection with the registration or qualification of such
Registrable Securities for offer and sale under the securities
or blue sky laws of such jurisdictions as any selling Holder
or managing underwriter(s) reasonably request(s) and do any
and all other acts or things necessary to enable the
disposition in such jurisdictions of the Registrable
Securities covered by the Registration Statement;
(ix) cooperate with the selling Holders of
Registrable Securities and the managing underwriter(s), if
any, to facilitate the timely preparation and delivery of
certificates representing Registrable Securities to be sold
and not bearing any legends restricting the transfer thereof;
and enable such Registrable Securities to be in such
denominations and registered in such names as the managing
underwriters may request at least two Business Days prior to
any sale of Registrable Securities to the underwriters;
(x) use its best efforts to cause the Registrable
Securities covered by the applicable Registration Statement to
be registered with or approved by such United States, state
and local governmental agencies or authorities as may be
necessary to enable the seller or sellers thereof or the
underwriters, if any, to consummate the disposition of such
Registrable Securities;
-7-
<PAGE> 202
(xi) if any fact contemplated by paragraph (iii)(b)
or (iii)(f) above shall exist, promptly notify each Holder on
whose behalf Registrable Securities have been registered and
promptly prepare and furnish to such Holders a supplement or
post-effective amendment to the Registration Statement or the
related Prospectus or any document incorporated therein by
reference and promptly file any other required document so
that, as thereafter delivered to the purchasers of the
Registrable Securities, neither the Registration Statement nor
the Prospectus will 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;
(xii) if requested by the Required Holders of the
Registrable Securities or by the managing underwriter(s), if
any, cause all Registrable Securities covered by the
Registration Statement to be (A) listed on each securities
exchange on which securities of the same class are then listed
or (B) admitted for trading in any inter-dealer quotation
system on which securities of the same class are then traded;
(xiii) not later than the effective date of the
applicable Registration Statement, provide a CUSIP number for
all Registrable Securities covered by the Registration
Statement and provide the applicable transfer agent with
printed certificates for such Registrable Securities which are
in a form eligible for deposit with Depository Trust Company;
(xiv) enter into agreements (including underwriting
agreements) and take all other reasonable actions in order to
expedite or facilitate the disposition of such Registrable
Securities and in such connection, except as otherwise
provided, whether or not an underwriting agreement is entered
into and whether or not the registration is an underwritten
registration:
(a) make such representations and warranties
to the Holders selling such Registrable Securities
and, in connection with any underwritten offering,
to the underwriters, in form, substance and scope
as are customarily made by issuers to underwriters
in similar underwritten offerings;
(b) obtain opinions of counsel to the Company
and updates thereof addressed to each selling
Holder and the underwriters, if any, covering the
matters customarily covered in opinions requested
in similar underwritten offerings and such other
matters as may be reasonably requested by such
Holders and underwriters, which counsel and
opinions shall be reasonably satisfactory (in form,
scope and substance) to the managing underwriters,
if any, and the Required Holders of such
Registrable Securities;
-8-
<PAGE> 203
(c) in connection with any underwritten
offering, obtain so-called "cold comfort" letters
and updates thereof from the Company's independent
certified public accountants addressed to the
selling Holders of Registrable Securities and the
underwriters, such letters to be in customary form
and covering matters of the type customarily
covered in "cold comfort" letters to underwriters
in connection with similar underwritten offerings;
(d) if an underwriting agreement is entered
into, cause the same to set forth in full the
indemnification and contribution provisions and
procedures of Section 6 (or such other
substantially similar provisions and procedures as
the underwriters shall reasonably request) with
respect to all parties to be indemnified pursuant
to said Section 6; and
(e) deliver such documents and certificates
as may reasonably be requested by the Required
Holders of the Registrable Securities being sold,
or the managing underwriter(s), if any, to evidence
compliance with this paragraph (xiv) and with any
customary conditions contained in the underwriting
agreement or other agreement entered into by the
Company;
the foregoing to be done upon each closing under any underwriting or
similar agreement as and to the extent required thereunder and from
time to time as may reasonably be requested by any selling Holder of
Registrable Securities in connection with the disposition of
Registrable Securities pursuant to such Registration Statement, all in
a manner consistent with customary industry practice;
(xv) upon execution and delivery of such
confidentiality agreements as the Company may reasonably
request, make available to the Holders of the Registrable
Securities being sold, any underwriter participating in any
disposition pursuant to such Registration Statement, and any
attorney or accountant retained by such Holders or
underwriter, all financial and other records, pertinent
corporate documents and properties of the Company, and cause
the Company's officers, directors and employees to supply all
information reasonably requested by any such Holder,
underwriter, attorney or accountant in connection with the
registration, at such time or times as the Person requesting
such information shall reasonably determine;
(xvi) otherwise use its best efforts to comply with
the Securities Act, the Exchange Act, all applicable rules and
regulations of the SEC and all applicable state blue sky and
other securities laws, rules and regulations, and make
generally available to its security holders an earnings
statement satisfying the provisions of Section 11(a) of the
Securities Act, as soon as practicable, but in no event later
than ninety (90) days after the end of the 12 calendar month
period commencing after the effective date of the Registration
Statement;
-9-
<PAGE> 204
(xvii) cooperate and assist in any filings required to
be made with the NASD and in the performance of any due
diligence investigation by any underwriter (including any
"qualified independent underwriter" that is required to be
retained in accordance with the rules and regulations of the
NASD); and
(xviii) prior to the filing of any document which is
being prepared for incorporation by reference into the
Registration Statement or the Prospectus, upon receipt of such
confidentiality agreements as the Company may reasonably
request, provide copies of such document to counsel to the
selling Holders of Registrable Securities, and to the managing
underwriter(s), if any, and make the Company's representatives
available for discussion of such document.
SECTION 3. Shelf Registration.
(a) Filing of Shelf Registration Statement. Promptly
after the date hereof, the Company shall cause to be filed the Shelf
Registration Statement providing for the sale by the Holders of all of the
Registrable Securities in accordance with the terms hereof, and the Company
will use its best efforts to cause such Shelf Registration Statement to be
declared effective by the SEC on or before May 30, 1997. The Company agrees to
use its best efforts to keep the Shelf Registration Statement with respect to
the Registrable Securities continuously effective so long as any Holder holds
Registrable Securities until such time as each Holder has received an opinion
of counsel to the Company (which opinion and counsel shall be reasonably
satisfactory to the Holder) to the effect that each such Holder is permitted
under Rule 144 to dispose of all of its Registrable Securities within three
months without such registration. The Company further agrees to amend the
Shelf Registration Statement if and as required by the rules, regulations or
instructions applicable to the registration form used by the Company for such
Shelf Registration Statement or by the Securities Act or any rules and
regulations thereunder; provided, however, that the Company shall not be
deemed to have used its best efforts to keep the Shelf Registration Statement
effective during the applicable period if it voluntarily takes any action that
would result in selling Holders not being able to sell Registrable Securities
covered thereby during that period, unless such action is permitted by this
Agreement or required under applicable law or the Company has filed a
post-effective amendment to the Shelf Registration Statement and the SEC has
not declared it effective.
(b) Shelf Registration Procedures. In connection with
the obligations of the Company with respect to the Shelf Registration Statement
contemplated by this Section 3, the Company shall use its best efforts to
effect such registration to permit the sale of such Registrable Securities in
accordance with the intended method or methods of disposition thereof, and
pursuant thereto it will, as expeditiously as possible:
(i) before filing a Shelf Registration Statement or Shelf
Prospectus or any amendments or supplements thereto, furnish to the
Holders of the Registrable Securities covered by such Shelf
Registration Statement and the underwriter(s), if any, copies of all
such documents proposed to be filed, which documents will be made
available, on a timely basis,
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for review by such Holders and underwriters; and the Company will not
file any Shelf Registration Statement or amendment thereto or any
Shelf Prospectus or any supplement thereto to which the Required
Holders of the Registrable Securities covered by such Shelf
Registration Statement or the managing underwriter(s), if any, shall
reasonably object;
(ii) prepare and file with the SEC, within the time period
set forth in Section 3(a) hereof, the Shelf Registration Statement,
which Shelf Registration Statement (a) shall be available for the sale
of the Registrable Securities in accordance with the intended method
or methods of distribution by the selling Holders thereof and (b)
shall comply as to form in all material respects with the requirements
of the applicable form and include all financial statements required
by the SEC to be filed therewith;
(iii) (a) prepare and file with the SEC such amendments to
such Shelf Registration Statement as may be reasonably requested by
any Holder of Registrable Securities or the managing underwriter(s),
if any, or as may be required by the Securities Act, the Exchange Act
or by the rules, regulations or instructions applicable to the
registration form utilized by the Company or as may otherwise be
necessary to keep such Shelf Registration Statement effective for the
applicable period; (b) cause the Shelf Prospectus to be amended or
supplemented as may be reasonably requested by any Holder of
Registrable Securities or the managing underwriter(s), if any, or as
may be required by the Securities Act, the Exchange Act or by the
rules, regulations or instructions applicable to the registration form
utilized by the Company or as may otherwise be necessary to keep such
Shelf Registration Statement effective for the applicable period; (c)
cause the Shelf Prospectus as so amended or supplemented to be filed
pursuant to Rule 424 (or any successor rule) under the Securities Act;
(d) respond as promptly as practicable to any comments received from
the SEC with respect to the Shelf Registration Statement or any
amendment thereto; and (e) comply with the provisions of the
Securities Act with respect to the disposition of all securities
covered by such Shelf Registration Statement during the applicable
period in accordance with the intended method or methods of
distribution by the selling Holders thereof;
(iv) promptly notify the selling Holders of Registrable
Securities and the managing underwriter(s), if any, and if requested
by any such Person, confirm such advice in writing:
(a) of the filing of the Shelf Prospectus or any
supplement to the Shelf Prospectus and of the effectiveness
of the Shelf Registration Statement and/or any post-effective
amendment,
(b) of any request by the SEC for amendments or
supplements to the Shelf Registration Statement or the Shelf
Prospectus or for additional information,
(c) of the issuance by the SEC of any stop order
suspending the effectiveness of the Shelf Registration
Statement or the initiation of any proceedings for that
purpose,
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(d) of the Company's becoming aware at any time
that the representations and warranties of the Company
contemplated by paragraph (xv)(a) below have ceased to be
true and correct,
(e) of the receipt by the Company of any
notification with respect to the suspension of the
qualification of the Registrable Securities for sale in any
jurisdiction or the initiation or threat of any proceeding
for such purpose, and
(f) of the existence of any fact which, to the
knowledge of the Company, results in the Shelf Registration
Statement, the Shelf Prospectus or any document incorporated
therein by reference containing an untrue statement of
material fact or omitting to state a material fact required
to be stated therein or necessary to make the statements
therein not misleading;
(v) make every reasonable effort to obtain the withdrawal
of any order suspending the effectiveness of the Shelf Registration
Statement or any qualification referred to in paragraph (iii)(e) at
the earliest possible moment;
(vi) if reasonably requested by the managing
underwriter(s) or the Required Holders of Registrable Securities being
sold in connection with an underwritten offering, immediately
incorporate in a supplement to the Shelf Prospectus or post-effective
amendment to the Shelf Registration Statement such information as the
managing underwriter(s) or the Required Holders of the Registrable
Securities being sold reasonably request to have included therein
relating to the plan of distribution with respect to such Registrable
Securities, including, without limitation, information with respect to
the amount of Registrable Securities being sold to such underwriters,
the purchase price being paid therefor by such underwriters and any
other terms of the underwritten (or best-efforts underwritten)
offering of the Registrable Securities to be sold in such offering;
and make all required filings of such supplement to the Shelf
Prospectus or post-effective amendment to the Shelf Registration
Statement as soon as notified of the matters to be incorporated in
such supplement to the Shelf Prospectus or post-effective amendment to
the Shelf Registration Statement;
(vii) at the request of any selling Holder of Registrable
Securities, furnish to such selling Holder of Registrable Securities
and each managing underwriter, if any, without charge, at least one
signed copy of the Shelf Registration Statement and any post-effective
amendment thereto, including financial statements and schedules, all
documents incorporated therein by reference and all exhibits
(including those incorporated by reference);
(viii) deliver to each Holder of Registrable Securities and
the managing underwriter(s), if any, without charge, as many copies of
the Shelf Registration Statement, each Shelf Prospectus and any
amendment or supplement thereto (in each case including all exhibits),
as such Persons may reasonably request, together with all documents
incorporated by reference in such Shelf Registration Statement or
Shelf Prospectus, and such other
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documents as such selling Holder may reasonably request in order to
facilitate the disposition of its Registrable Securities; the Company
consents to the use of the Shelf Prospectus and any amendment or
supplement thereto by each such Holder of Registrable Securities and
the underwriter(s), if any, in connection with the offering and sale
of the Registrable Securities covered by the Shelf Prospectus or
amendment or supplement thereto;
(ix) prior to the time the Shelf Registration Statement is
declared effective by the SEC, register or qualify the Registrable
Securities or reasonably cooperate with the selling Holders, the
underwriter(s), if any, and their respective counsel in connection
with the registration or qualification of such Registrable Securities
for offer and sale under the securities or blue sky laws of such
jurisdictions as any selling Holder or managing underwriter(s), if
any, reasonably request(s), keep each such registration or
qualification effective during the period such Shelf Registration
Statement is required to be kept effective, and do any and all other
acts or things necessary to enable the disposition in such
jurisdictions of the Registrable Securities covered by the Shelf
Registration Statement;
(x) cooperate with the selling Holders of Registrable
Securities and the managing underwriter(s), if any, to facilitate the
timely preparation and delivery of certificates representing
Registrable Securities to be sold and not bearing any legends
restricting the transfer thereof; and enable such Registrable
Securities to be in such denominations and registered in such names as
the selling Holders or the managing underwriters, if any, may request
at least two Business Days prior to any sale of Registrable
Securities;
(xi) use its best efforts to cause the Registrable
Securities covered by the Shelf Registration Statement to be
registered with or approved by such United States, state and local
governmental agencies or authorities as may be necessary to enable the
seller or sellers thereof or the underwriters, if any, to consummate
the disposition of such Registrable Securities;
(xii) if any fact contemplated by paragraph (iv)(b) or
(iv)(f) above shall exist, promptly notify each Holder on whose behalf
Registrable Securities have been registered and promptly prepare and
furnish to such Holders a supplement or post-effective amendment to
the Shelf Registration Statement or the related Shelf Prospectus or
any document incorporated therein by reference and promptly file any
other required document so that, as thereafter delivered to the
purchasers of the Registrable Securities, neither the Shelf
Registration Statement nor the Shelf Prospectus will 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;
(xiii) if requested by the Required Holders of the
Registrable Securities or by the managing underwriter(s), if any,
cause all Registrable Securities covered by the Shelf Registration
Statement to be (A) listed on each securities exchange on which
securities of the
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same class are then listed or (B) admitted for trading in any
inter-dealer quotation system on which securities of the same class
are then traded;
(xiv) not later than the effective date of the Shelf
Registration Statement, provide a CUSIP number for all Registrable
Securities covered by the Shelf Registration Statement and provide the
applicable transfer agent with printed certificates for such
Registrable Securities which are in a form eligible for deposit with
Depository Trust Company;
(xv) enter into agreements (including underwriting
agreements) and take all other reasonable actions in order to expedite
or facilitate the disposition of such Registrable Securities and in
such connection, except as otherwise provided, whether or not an
underwriting agreement is entered into and whether or not the
registration is an underwritten registration:
(a) make such representations and warranties to
the Holders selling such Registrable Securities and, in
connection with any underwritten offering, to the
underwriters, in form, substance and scope as are
customarily made by issuers to underwriters in similar
underwritten offerings;
(b) obtain opinions of counsel to the Company and
updates thereof addressed to each selling Holder and the
underwriters, if any, covering the matters customarily
covered in opinions requested in similar underwritten
offerings and such other matters as may be reasonably
requested by such Holders and underwriters, which counsel
and opinions shall be reasonably satisfactory (in form,
scope and substance) to the managing underwriters, if any,
and the Required Holders of such Registrable Securities;
(c) in connection with any underwritten offering,
to obtain so-called "cold comfort" letters and updates
thereof from the Company's independent certified public
accountants addressed to the selling Holders of
Registrable Securities and the underwriters, if any, such
letters to be in customary form and covering matters of
the type customarily covered in "cold comfort" letters to
underwriters in connection with similar underwritten
offerings;
(d) if an underwriting agreement is entered into,
cause the same to set forth in full the indemnification
and contribution provisions and procedures of Section 6
(or such other substantially similar provisions and
procedures as the underwriters shall reasonably request)
with respect to all parties to be indemnified pursuant to
said Section 6; and
(e) deliver such documents and certificates as
may reasonably be requested by the Required Holders of the
Registrable Securities being sold, or the managing
underwriter(s), if any, to evidence compliance with this
paragraph (xiv)
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<PAGE> 209
and with any customary conditions contained in the
underwriting agreement or other agreement entered into by
the Company;
the foregoing to be done upon each closing under any underwriting or
similar agreement as and to the extent required thereunder and from
time to time as may reasonably be requested by any selling Holder of
Registrable Securities in connection with the disposition of
Registrable Securities pursuant to such Shelf Registration Statement,
all in a manner consistent with customary industry practice;
(xvi) upon execution and delivery of such confidentiality
agreements as the Company may reasonably request, make available to
the Holders of the Registrable Securities being sold, any underwriter
participating in any disposition pursuant to such Shelf Registration
Statement, and any attorney or accountant retained by such Holders or
underwriter, all financial and other records, pertinent corporate
documents and properties of the Company, and cause the Company's
officers, directors and employees to supply all information reasonably
requested by any such Holder, underwriter, attorney or accountant in
connection with the registration, at such time or times as the Person
requesting such information shall reasonably determine;
(xvii) otherwise use its best efforts to comply with the
Securities Act, the Exchange Act, all applicable rules and regulations
of the SEC and all applicable state blue sky and other securities
laws, rules and regulations, and make generally available to its
security holders, as soon as practicable, an earnings statement
satisfying the provisions of Section 11(a) of the Securities Act;
(xviii) cooperate and assist in any filings required to be
made with the NASD and in the performance of any due diligence
investigation by any underwriter (including any "qualified independent
underwriter" that is required to be retained in accordance with the
rules and regulations of the NASD); and
(xix) prior to the filing of any document which is being
prepared for incorporation by reference into the Registration
Statement or the Prospectus, upon receipt of such confidentiality
agreements as the Company may reasonably request, provide copies of
such document to counsel to the selling Holders of Registrable
Securities, and to the managing underwriter(s), if any, and make the
Company's representatives available for discussion of such document.
(c) Covenants of Holders. In connection with and as a
condition to the Company's obligations with respect to the Shelf Registration
Statement pursuant to this Section 3, each Holder covenants and agrees that (i)
upon receipt of any notice from the Company contemplated by Section 3(b)(iv)
(in respect of the occurrence of an event contemplated by clause (f) of Section
3(b)(iv)), such Holder shall not offer or sell any Registrable Securities
pursuant to the Shelf Registration Statement until such Holder receives copies
of the supplemented or amended Shelf Prospectus contemplated
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by Section 3(b)(xii) hereof and receives notice that any post-effective
amendment has become effective, and, if so directed by the Company, such Holder
will deliver to the Company (at the expense of the Company) all copies in its
possession, other than permanent file copies then in such Holder's possession,
of the Shelf Prospectus as amended or supplemented at the time of receipt of
such notice; (ii) such Holder and any of its officers, directors or affiliates,
if any, will comply with the provisions of Rule 10b-6 and 10b-7 under the
Exchange Act as applicable to them in connection with sales of Registrable
Securities pursuant to the Shelf Registration Statement; and (iii) such Holder
and any of its officers, directors or affiliates, if any, will comply with the
prospectus delivery requirements of the Securities Act as applicable to them in
connection with sales of Registrable Securities pursuant to the Shelf
Registration Statement.
(d) Mechanics of Shelf Registration. Each registration
effected pursuant to this Section 3 shall be effected by the filing of a Shelf
Registration Statement on Form S-1 or Form S-3 (provided that if Form S-3 is
used the Shelf Prospectus shall contain the information that would have been
required to be included therein had Form S-1 been used), unless the use of a
different form has been agreed upon in writing by the Required Holders;
provided, however, that if the intended method of disposition by the requesting
Holders is to be an underwritten offering, the Company shall use such form of
Registration Statement as is acceptable to the underwriter(s).
(e) Representation, Warranty and Covenant of the Company.
The Company represents and warrants that it meets all the requirements for the
use of Form S-3 for the registration and sale by the Holders of the
Registrable Securities, and the Company shall file all reports required to be
filed by the Company with the SEC in a timely manner so as to maintain such
eligibility for the use of Form S-3.
(f) Holdback Agreement. From the date of this Agreement
until the first anniversary thereof, each Holder of Registrable Securities
agrees not to effect any public or private sale or distribution of Registrable
Securities.
SECTION 4. Registration Expenses.
(a) All expenses incident to the Company's performance of
or compliance with its obligations under this Agreement (excluding underwriting
discounts, selling commissions and brokerage fees, which will be paid by the
selling Holders) will be paid by the Company, regardless of whether Registrable
Securities are sold pursuant to any Registration Statement or Shelf
Registration Statement, including, without limitation:
(i) all registration, filing and listing fees;
(ii) fees and expenses of compliance with
securities or blue sky laws (including, without limitation,
the fees and disbursements of counsel for the underwriters, if
any, or selling Holders in connection with blue sky and state
securities qualifications of Registrable Securities and
determination of their eligibility for
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investment under the laws of such jurisdictions as the
managing underwriter(s), if any, or the Required Holders of
the Registrable Securities covered by such Registration
Statement or Shelf Registration Statement may reasonably
designate);
(iii) printing (including, without limitation,
expenses of printing or engraving certificates for the
Registrable Securities in a form eligible for deposit with
Depository Trust Company and of printing prospectuses),
messenger, telephone and delivery expenses;
(iv) fees and disbursements of counsel for the
Company and, subject to Section 4(b), counsel for the selling
Holders of the Registrable Securities;
(v) fees and disbursements of all independent
certified public accountants of the Company (including,
without limitation, the expenses of any special audit and, in
connection with any underwritten offering, "cold comfort"
letters required by or incident to such performance);
(vi) Securities Act liability insurance if the
Company so desires or if the managing underwriters, if any, so
require(s);
(vii) fees and expenses of other Persons (including
special experts) retained by the Company; and
(viii) fees and expenses associated with any NASD
filing required to be made in connection with any Registration
Statement or Shelf Registration Statement, including, if
applicable, the fees and expenses of any "qualified
independent underwriter" (and its counsel) that is required to
be retained in accordance with the rules and regulations of
the NASD.
The Company will, in any event, pay its internal expenses, the expense
of any annual audit, the fees and expenses incurred in connection with the
listing of the securities to be registered on each securities exchange on which
securities of the same class are then listed or the qualification for trading
of the securities to be registered in each inter-dealer quotation system in
which securities of the same class are then traded, and rating agency fees.
(b) In connection with each Registration Statement or
Shelf Registration Statement required hereunder, the Company will reimburse the
Holders of Registrable Securities being registered pursuant to such
Registration Statement or Shelf Registration Statement for the reasonable fees
and disbursements of not more than one counsel chosen by the Required Holders
of the Registrable Securities being sold; the expense of any additional counsel
for the Holders shall be paid by the Holders.
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(c) The term "Registration Expenses" shall mean the
expenses payable by the Company pursuant to the provisions of this Section 4.
SECTION 5. Conditions to Registration.
Each Holder's right to have Registrable Securities included in any
Registration Statement or Shelf Registration Statement filed by the Company in
accordance with the provisions of Section 2 or Section 3 shall be subject to
the following conditions:
(a) The Holders on whose behalf such Registrable
Securities are to be included shall be required to furnish the Company in a
timely manner with all information required by the applicable rules and
regulations of the SEC concerning the proposed method of sale or other
disposition of such securities, the identity of and compensation to be paid to
any proposed underwriters to be employed in connection therewith, and such
other information as may be reasonably required by the Company properly to
prepare and file such Registration Statement or Shelf Registration Statement in
accordance with applicable provisions of the Securities Act;
(b) If any such Holder desires to sell and distribute
Registrable Securities over a period of time, or from time to time, at then
prevailing market prices, then any such Holder shall execute and deliver to the
Company such written undertakings as the Company and its counsel may reasonably
require in order to assure full compliance with relevant provisions of the
Securities Act and the Exchange Act;
(c) In the case of any registration requested pursuant to
the provisions of Section 2, the offering price for any Registrable Securities
to be so registered shall be no less than for any securities of the same class
then to be registered for sale for the account of the Company or other security
holders, unless such Registrable Securities are to be offered from time to time
based on the prevailing market price;
(d) Upon receipt of any notice from the Company of the
happening of any event of the kind described in paragraph (xi) of Section 2(b)
or paragraph (xii) of Section 3(b), such Holder will forthwith discontinue
disposition of Registrable Securities until such Holder's receipt of the copies
of the supplemented Prospectus contemplated by such paragraph, or until it is
advised in writing by the Company that the use of the Prospectus may be
resumed, and has received copies of any additional or supplemental filings
which are incorporated by reference in the Prospectus, and, if so directed by
the Company, such Holder will deliver to the Company (at the Company's expense)
all copies, other than permanent file copies then in such Holder's possession,
of the Prospectus covering such Registrable Securities current at the time of
receipt of such notice; and
(e) In the case of any underwritten offering on behalf of
the Holders of Registrable Securities, such Holders will enter into such
agreements (including underwriting agreements and lock-up agreements) as the
managing underwriters shall reasonably request and as are customary in similar
circumstances.
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SECTION 6. Indemnification.
(a) Indemnification by the Company. In the event of the
registration of any Registrable Securities under the Securities Act pursuant to
the provisions hereof, the Company will indemnify and hold harmless the seller
of such Registrable Securities, its partners, directors, officers, employees
and agents, each underwriter, broker and dealer, if any, who participates in
the offering or sale of such securities, and each other Person, if any, who
controls such seller or any such underwriter, broker or dealer within the
meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act (each such Person being hereinafter sometimes referred to as an
"Indemnified Person", provided that for purposes of clauses (b), (c) and (d) of
this Section 6 "Indemnified Person" shall include the Company, its partners,
directors, officers, employees and agents, and each other Person, if any who
controls the Company within the meaning of either Section 15 of the Securities
Act or Section 20 of the Exchange Act) from and against any losses, claims,
damages, liabilities or expenses, joint or several, to which such indemnified
Person may become subject under the Securities Act, the Exchange Act or
otherwise, insofar as such losses, claims, damages, liabilities or expenses (or
actions in respect thereof) arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact contained or incorporated by
reference in any Registration Statement, Shelf Registration Statement,
Prospectus or Shelf Prospectus or any amendment or supplement thereto, or any
document incorporated by reference therein, or arise out of or are based upon
the omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading,
and will reimburse each such Indemnified Person for any legal or other expenses
reasonably incurred by such Indemnified Person in connection with investigating
or defending any such loss, claim, damage, liability or action; provided,
however, that the Company will not be liable in any such case to the extent
that any such loss, claim, damage or liability arises out of or is based upon
an untrue statement or alleged untrue statement or omission or alleged omission
made or incorporated by reference in the Registration Statement, Shelf
Registration Statement, Prospectus or Shelf Prospectus or any amendment or
supplement thereto, in reliance upon and in conformity with written information
furnished to the Company by such Indemnified Person for use in preparation
thereof. Such indemnity shall remain in full force and effect regardless of
any investigation made by or on behalf of such Indemnified Person and shall
survive the transfer of such Registrable Securities by such seller.
(b) Indemnification by Holders of Registrable Securities.
In the event of the registration of any Registrable Securities under the
Securities Act pursuant to the provisions hereof, each Holder on whose behalf
such Registrable Securities shall have been registered will indemnify and hold
harmless each and every Indemnified Person against any losses, claims, damages
or liabilities, joint or several, to which such Indemnified Person may become
subject under the Securities Act, the Exchange Act or otherwise, insofar as
such losses, claims, damages, liabilities or expenses (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained or incorporated by reference in any
Registration Statement, Shelf Registration Statement, Prospectus or Shelf
Prospectus or any amendment or supplement thereto or any document incorporated
by reference therein, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the
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statements therein not misleading, which untrue statement or alleged untrue
statement or omission or alleged omission has been made or incorporated therein
in reliance upon and in conformity with written information furnished to the
Company by such Holder specifically stating that it is for use in preparation
thereof, and will reimburse each such Indemnified Person for any legal and
other expenses reasonably incurred by such Indemnified Person in connection
with investigating or defending any such loss, claim, damage, liability or
action; provided, however, that the liability of each Holder hereunder shall be
limited to the proceeds received by such Holder from the sale of Registrable
Securities covered by such Registration Statement or Shelf Registration
Statement.
(c) Procedure. Promptly after receipt by an Indemnified
Person of notice of the commencement of any action (including any governmental
investigation or inquiry), such Indemnified Person will, if such Indemnified
Person intends to make a claim in respect thereof against the party agreeing to
indemnify such Indemnified Person pursuant to paragraphs (a) or (b) hereof
(each such Person being hereinafter referred to as an "Indemnifying Person"),
give written notice to such Indemnifying Person of the commencement thereof,
but the omission so to notify the Indemnifying Person shall not relieve the
Indemnifying Person from any of its obligations pursuant to the provisions of
this Section 6 except to the extent that the Indemnifying Person is actually
prejudiced by such failure to give notice. In case any such action is brought
against any Indemnified Person and it notifies an Indemnifying Person of the
commencement thereof, the Indemnifying Person shall be entitled to participate
in, and to the extent that it may wish, jointly with any other Indemnifying
Person similarly notified, to assume the defense thereof, with counsel
reasonably satisfactory to such Indemnified Person, and after notice from the
Indemnifying Person to such Indemnified Person, the Indemnifying Person shall
not, except as hereinafter provided, be responsible for any legal or other
expenses subsequently incurred by such Indemnified Person in connection with
the defense thereof. No Indemnifying Person will consent to entry of any
judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Person of a release from all liability in respect of such claim or
litigation.
Such Indemnified Person shall 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 shall be the expense of such Indemnified
Person unless (a) the Indemnifying Person has agreed to pay such fees and
expenses or (b) the Indemnifying Person shall have failed to assume the defense
of such action or proceeding or has failed to employ counsel reasonably
satisfactory to such Indemnified Person in any such action or proceeding or (c)
the named parties to any such action or proceeding (including any impleaded
parties) include both such Indemnified Person and the Indemnifying Person and
such Indemnified Person shall have been advised by counsel that representation
of both parties by the same counsel would be inappropriate due to actual or
potential material differing interests between them (in which case, if such
Indemnified Person notifies the Indemnifying Person in writing that it elects
to employ separate counsel at the expense of the Indemnifying Person, the
Indemnifying Person shall not have the right to assume the defense of such
action or proceeding on behalf of such Indemnified Person). The Indemnifying
Person shall not be liable for any settlement of any such action or proceeding
effected without its written consent, which consent shall not unreasonably be
withheld, delayed or conditioned, but if settled with its written consent, or
if there is a final judgment for the
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plaintiff in any such action or proceeding, the Company agrees to indemnify and
hold harmless such Indemnified Persons from and against any loss or liability
by reason of such settlement or judgment.
(d) Contribution. If the indemnification provided for in
this Section 6 is unavailable to a party that would have been an Indemnified
Person under this Section 6 in respect of any losses, claims, damages,
liabilities or expenses (or actions in respect thereof) referred to herein,
then each party that would have been an Indemnifying Person thereunder shall,
in lieu of indemnifying such Indemnified Person, contribute to the amount paid
or payable by such Indemnified Person as a result of such losses, claims,
damages, liabilities or expenses (or actions in respect thereof) in such
proportion as is appropriate to reflect the relative fault of the Indemnifying
Person on the one hand and the Indemnified Person on the other in connection
with the statement or omission which resulted in such losses, claims, damages,
liabilities or expenses (or actions in respect thereof), as well as any other
relevant equitable considerations. The relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission of a material
fact relates to information supplied by the Indemnifying Person or the
Indemnified Person and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The amount paid or payable by a party as a result of the losses, claims,
damages, liabilities and expenses referred to above shall be deemed to include,
subject to the limitations set forth in Section 6(c), any legal or other fees
or expenses reasonably incurred by such party in connection with the
investigation or defense of any action or claim. The Company and each Holder
of Registrable Securities agrees that it would not be just and equitable if
contribution pursuant to this Section 6 were determined by pro rata allocation
or by any other method of allocation which does not take account of the
equitable considerations referred to in this Section 6. Notwithstanding the
provisions of this Section 6(d), no Holder of Registrable Securities shall be
required to contribute any amount in excess of the amount by which the total
price at which the Registrable Securities sold by it exceeds the amount of any
damages which such Holder has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission.
No Person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any Person who was not guilty of such fraudulent misrepresentation.
Indemnification or, if appropriate, contribution, similar to that
specified in the preceding provisions of this Section 6 (with appropriate
modifications) shall be given by the Company and each seller of Registrable
Securities with respect to any required registration or other qualification of
such securities under any federal or state law or regulation or governmental
authority other than the Securities Act.
In the event of any underwritten offering of Registrable Securities
under the Securities Act pursuant to the provisions of Section 2 or Section 3,
the Company and each Holder on whose behalf such Registrable Securities shall
have been registered agree to enter into an underwriting agreement,
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in standard form, with the underwriters, which underwriting agreement may
contain additional provisions with respect to indemnification and contribution
in lieu thereof.
SECTION 7. Exchange Act Registration; Rule 144 Reporting.
The Company covenants and agrees that until such time as the Holders
no longer hold any Registrable Securities it will:
(a) if required by law, maintain an effective
registration statement (containing such information and documents as the SEC
shall specify) with respect to the Common Stock of the Company under Section
12(g) of the Exchange Act;
(b) make and keep public information available, as those
terms are understood and defined in Rule 144 under the Securities Act, at all
times after the effective date that the Company becomes subject to the
reporting requirements of the Securities Act or the Exchange Act (even if the
Company subsequently ceases to be subject to such reporting requirements);
(c) file with the SEC in a timely manner all reports and
documents required of the Company under the Securities Act and the Exchange
Act;
(d) furnish to any Holder promptly upon request (i) a
written statement by the Company as to its compliance with the reporting
requirements of Rule 144 (and any similar or successor rules) and of the
Securities Act and the Exchange Act, (ii) a copy of the most recent annual or
quarterly report of the Company (beginning after the Company becomes subject to
such reporting requirements), and (iii) such other reports and documents of the
Company and other information in the possession of or reasonably attainable by
the Company as such Holder may reasonably request in availing itself of any
rule or regulation of the SEC allowing such Holder to sell any such securities
without registration; and
(e) take such further action as any Holder of Registrable
Securities may from time to time reasonably request to enable such Holder to
sell Registrable Securities without registration under the Securities Act
within the limitation of the exemptions provided by (i) Rule 144 under the
Securities Act, as such rule may be amended from time to time, or (ii) any
similar rule or regulation hereafter adopted by the SEC.
The Company represents and warrants that such registration statement
or any information, document or report filed with the SEC in connection
therewith or any information so made public shall not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements contained therein
not misleading. The Company agrees to indemnify and hold harmless (or to the
extent the same is not enforceable, make contribution to) the Holders, their
partners, officers, directors, employees and agents, each broker, dealer or
underwriter (within the meaning of the Securities Act) acting for any Holder in
connection with any offering or sale by such Holder of Registrable Securities
or any Person controlling (within
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the meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act) such Holder and any such broker, dealer or underwriter from and
against any and all losses, claims, damages, liabilities or expenses (or
actions in respect thereof) arising out of or resulting from any breach of the
foregoing representation or warranty, all on terms and conditions comparable to
those set forth in Section 6.
SECTION 8. Limitation on Registration Rights of Others.
The Company represents and warrants that, except as set forth on
Exhibit D to the Warrant Agreement, it has not granted to any Person the right
to request or require the Company to register any securities issued by the
Company. The Company covenants and agrees that, so long as any Holder holds
any Warrant Securities, the Company will not, directly or indirectly, grant to
any Person or agree to or otherwise become obligated in respect of (a) any
registration rights of securities of the Company upon the demand of any Person
(including any shelf registration) without the prior written consent of the
Required Holders; or (b) rights of registration in the nature or substantially
in the nature of those set forth in Section 2 unless such rights are expressly
subject and subordinated to the rights of registration of the Holders pursuant
to Section 2 hereof on terms reasonably satisfactory to the Required Holders.
SECTION 9. Mergers, etc.
In addition to any other restrictions on mergers, consolidations and
reorganizations contained in the Credit Agreement, the Warrant Agreement or in
the certificate of incorporation, by-laws or agreements of the Company, the
Company covenants and agrees that it shall not, directly or indirectly, enter
into any merger, consolidation or reorganization in which the Company shall not
be the surviving corporation and in which the Holders shall not have had the
right to receive cash for all their Registrable Securities, unless the
surviving corporation shall, prior to such merger, consolidation or
reorganization, agree in a writing satisfactory in form, scope and substance to
the Required Holders to assume the obligations of the Company under this
Agreement, and for such purpose references hereunder to "Registrable
Securities" shall be deemed to include the securities which such Holders would
be entitled to receive in exchange for Registrable Securities pursuant to any
such merger, consolidation or reorganization.
If, and as often as, there are any changes in the Registrable
Securities by way of stock split, stock dividend, combination or
classification, or through merger, consolidation, reorganization or
recapitalization, or by any other means, appropriate adjustments shall be made
in the provisions hereof as may be required, so that the rights and privileges
granted hereby shall continue with respect to the Registrable Securities as so
changed.
SECTION 10. Notices, etc.
All notices, consents, approvals, agreements and other communications
provided hereunder shall be in writing or by telex or telecopy and shall be
sufficiently given to the Purchasers, the Holders
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and the Company if addressed or delivered to them in accordance with Section 20
of the Warrant Agreement.
SECTION 11. Entire Agreement.
The parties hereto agree that this Agreement and the agreements
specifically referred to in Section 33 of the Warrant Agreement constitute the
entire agreement among the parties with respect to the subject matter hereof
and supersedes all prior agreements and understandings between them as to such
subject matter; and there are no restrictions, agreements, arrangements, oral
or written, between any or all of the parties relating to the subject matter
hereof which are not fully expressed or referred to herein or therein.
SECTION 12. Waivers and Further Agreements.
Any waiver of any terms or conditions of this Agreement shall not
operate as a waiver of any other breach of such terms or conditions or any
other term or condition, nor shall any failure to enforce any provision hereof
operate as a waiver of such provision or of any other provision hereof;
provided, however, that no such written waiver unless it by its own terms
explicitly provides to the contrary, shall be construed to effect a continuing
waiver of the provision being waived and no such waiver in any instance shall
constitute a waiver in any other instance or for any other purpose or impair
the right of the party against whom such waiver is claimed in all other
instances or for all other purposes to require full compliance with such
provision. Each of the parties hereto agrees to execute all such further
instruments and documents and to take all such further action as the other
parties may reasonably require in order to effectuate the terms and purposes of
this Agreement.
SECTION 13. Amendments.
This Agreement may not be amended nor shall any waiver, change,
modification, consent or discharge be effected except by an instrument in
writing executed by or on behalf of the party or parties against whom
enforcement of any amendment, waiver, change, modification, consent or
discharge is sought; provided, however, that any waiver sought from the Holders
of any provision of this Agreement which affects the Holders generally, and any
action required to be taken by the Holders as a group pursuant to this
Agreement, shall be given or taken by the Required Holders, and any such waiver
or action so given or taken shall be binding on all Holders. No failure or
delay by any party in exercising any right or remedy hereunder shall operate as
a waiver thereof, and a waiver of a particular right or remedy on one occasion
shall not be deemed a waiver of any other right or remedy or a waiver of the
same right or remedy on any subsequent occasion.
SECTION 14. Assignment; Successors and Assigns.
This Agreement shall be binding upon and shall inure to the benefit of
the parties hereto and their respective heirs, executors, legal
representatives, successors and permitted assigns, including, without
limitation, any Holders, from time to time of the Registrable Securities.
Anything in this
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Agreement to the contrary notwithstanding, the term "Holders" as used in this
Agreement shall be deemed to include the registered Holders from time to time
of the Warrant Securities.
SECTION 15. Severability.
If any provision of this Agreement shall be held or deemed to be, or
shall in fact be, invalid, inoperative or unenforceable as applied to any
particular case in any jurisdiction or jurisdictions, or in all jurisdictions
or in all cases, because any provision conflicts with any constitution,
statute, rule or public policy, or for any other reason, such circumstance
shall not have the effect of rendering the provision or provisions in question,
invalid, inoperative or unenforceable in any other jurisdiction or in any other
case or circumstance or of rendering any other provision or provisions herein
contained invalid, inoperative or unenforceable to the extent that such other
provisions are not themselves actually in conflict with such constitution,
statute, rule or public policy, but this Agreement shall be reformed and
construed in any such jurisdiction or case as if such invalid, inoperative or
unenforceable provision had never been contained herein and such provision
reformed so that it would be valid, operative and enforceable to the maximum
extent permitted in such jurisdiction or in such case.
SECTION 16. Counterparts.
This Agreement may be executed in two or more counterparts (each of
which need not be executed by each of the parties), each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument, and in pleading or proving any provision of this Agreement, it
shall not be necessary to produce more than one such counterpart.
SECTION 17. Section Headings.
The headings contained in this Agreement are for reference purposes
only and shall not in any way affect the meaning or interpretation of this
Agreement.
SECTION 18. Gender; Usage.
Whenever used herein the singular number shall include the plural, the
plural shall include the singular, and the use of any gender shall include all
genders. The words "hereof," "herein" and "hereunder," and words of similar
import, when used in this Agreement shall refer to this Agreement as a whole
and not to any particular provision of this Agreement.
SECTION 19. Governing Law.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK OTHER THAN THE CONFLICTS OF
LAWS PRINCIPLES THEREOF.
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SECTION 20. Termination.
The rights of any Holder under Sections 2 and 3 of this Agreement
shall terminate as to any Registrable Securities when such Registrable
Securities have been effectively registered under the Securities Act and sold
pursuant to a Registration Statement or Shelf Registration Statement covering
such Registrable Securities. The indemnification and contribution provisions
of Sections 6 and 7 shall survive any termination of this Agreement.
SECTION 21. Expenses.
The Company shall be obligated to pay to the Holders, on demand, all
costs and expenses (including, without limitation, court costs and reasonable
attorneys' fees and expenses and interest to the extent permitted by applicable
law on overdue amounts) paid or incurred in collecting any sums due from, or
enforcing any other obligations of, the Company.
SECTION 22. Specific Performance.
The Company recognizes that the rights of the Holders under this
Agreement are unique and, accordingly, the Holders shall, in addition to such
other remedies as may be available to any of them at law or in equity, have the
right to enforce their rights hereunder by actions for injunctive relief and
specific performance to the extent permitted by law. The Company agrees that
monetary damages would not be adequate compensation for any loss incurred by
reason of a breach by it of the provisions of this Agreement and hereby agrees
to waive the defense in any action for specific performance that a remedy at
law would be adequate. This Agreement is not intended to limit or abridge any
rights of the Holders which may exist apart from this Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized as of the
day and year first above written.
AFGL INTERNATIONAL, INC.
By:
-------------------------
Name:
Title:
INTERNATIONALE NEDERLANDEN
(U.S.) CAPITAL CORPORATION
By:
-------------------------
Name:
Title:
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