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EXHIBIT 10.12
INVESTMENT AGREEMENT
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THIS INVESTMENT AGREEMENT (the "AGREEMENT") is made and entered
into as of this 26th day of June, 1997, by and among ▇▇▇▇▇▇ INTERNATIONAL INC.,
an Ohio corporation (the "COMPANY"), and NATIONSBANC INVESTMENT CORPORATION, a
Delaware corporation (the "PURCHASER").
STATEMENT OF PURPOSE
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1. The Company and its Subsidiaries (as defined below) are
engaged in the business of providing clinical research and drug development
services to the pharmaceutical and biotechnological industries.
2. The Company has entered into a stock purchase agreement with
the stockholders of U-Gene Research B.V., a Netherlands corporation ("U-GENE"),
providing for the purchase of all the stock of such sellers (the acquisition
covered by such stock purchase agreement is referred to as the "U-GENE
ACQUISITION" and the stock purchase agreement, together with all related
agreements, exhibits, documents and schedules, are collectively referred to as
the "U-GENE ACQUISITION DOCUMENTS").
3. The Company also contemplates entering into a stock purchase
agreement with the stockholders of Gesellschaft fur Angewandte Mathematik und
Informatik mbh, a German corporation ("GMI"), providing for the purchase of all
the stock of such sellers (the acquisition covered by such stock purchase
agreement is referred to as the "GMI ACQUISITION" and the stock purchase
agreement, together with all related agreements, exhibits, documents and
schedules, are collectively referred to as the "GMI ACQUISITION DOCUMENTS").
4. In order to obtain funds for the payment of the purchase price
for the U-Gene Acquisition and the gmi Acquisition, the Company proposes to
enter into (a) a credit agreement, dated as of the date hereof (as amended or
otherwise modified from time to time in accordance with Section 7(p), the
"CREDIT AGREEMENT"), among the lenders named therein (the "LENDERS"),
NationsBank, N.A., acting for itself and as agent for the Lenders, and the
Company and certain of its Subsidiaries, to obtain a $20,000,000 senior secured
revolving credit facility and (b) this Agreement providing for the issuance by
the Company of its Series A Note and Series B Note, each in the original
aggregate principal amount of $5,000,000, and each of which shall be accompanied
by common stock purchase warrants.
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants and agreements contained herein, the parties hereto hereby
agree as follows:
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SECTION 1 DEFINITIONS.
(a) DEFINITIONS. As used in this Agreement and unless the
context otherwise requires, the following terms have the meanings
indicated:
"ACQUIRED COMPANIES" means U-Gene and gmi.
"ACQUISITIONS" means, collectively, the U-Gene Acquisition
and the gmi Acquisition.
"ACQUISITION DOCUMENTS" means, collectively, the U-Gene
Acquisition Documents and the gmi Acquisition Documents.
"AFFILIATE" means, with respect to any Person, a Person
(other than a Wholly Owned Subsidiary) (i) which directly or
indirectly controls, or is controlled by, or is under common
control with, such Person, (ii) which owns 5% or more of the
equity interests of such Person, (iii) 5% or more of the voting
stock of which is owned by such Person (or in the case of a
Person which is not a corporation, 5% or more of the equity
interests of which are owned by such Person) or (iv) any
director or executive officer of such Person. The term "CONTROL"
means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of
a Person, whether through the ownership of voting securities, by
contract or otherwise.
"AGREEMENT" has the meaning set forth in the Preamble.
"AMENDED AND RESTATED SHAREHOLDERS' AGREEMENT" has the
meaning set forth in Section 4A(h)(i)4(H)(I).
"BIG SIX ACCOUNTING FIRM" means any of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ &
Co., KPMG Peat Marwick, Coopers & ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Young,
Deloitte & Touche or Price Waterhouse or any of their respective
successors.
"BOARD OF DIRECTORS" shall mean the board of directors of
the Company elected in accordance with the Company's
Regulations.
"CAPITALIZED LEASES" means, as applied to any Person, any
lease of any property (whether real, personal or mixed) by that
Person as lessee which, in accordance with GAAP, is accounted
for as a capital lease on the balance sheet of that Person.
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"CHANGE OF CONTROL" has the meaning set forth in Section
1.1 of the Credit Agreement in effect as of the date hereof.
"CODE" means the Internal Revenue Code of 1986, as amended
from time to time, and the regulations promulgated and rulings
issued thereunder.
"COMMISSION" means the Securities and Exchange Commission.
"COMMON STOCK" means the Company's common stock, no par
value per share.
"CONSOLIDATED CAPITAL EXPENDITURES" has the meaning set
forth in Section 1.1 of the Credit Agreement.
"CONTRACTUAL OBLIGATION" means, with respect to a Person,
any provision of (i) any security issued by such Person,
including provisions contained in the articles or certificate of
incorporation or regulations or other organizational or
governing documents of such Person, or (ii) any agreement,
franchise, license, permit, undertaking, contract, indenture,
mortgage, deed of trust or other instrument or understanding to
which such Person is a party or by which it or any of its assets
or property is bound.
"CREDIT AGREEMENT" has the meaning set forth in the
Statement of Purpose.
"DEFAULT" means any Event of Default or any event that
would constitute an Event of Default but for the requirement
that notice be given or time elapse or both.
"DISQUALIFIED STOCK" has the meaning set forth in Section
1.1 of the Credit Agreement in effect as of the date hereof.
"ENVIRONMENTAL CLAIMS" has the meaning set forth in 7(K).
"ENVIRONMENTAL LAW" has the meaning set forth in Section
7(k)7(K).
"ENVIRONMENTAL NOTICE" has the meaning set forth in Section
7(k)7(K).
"ERISA" means the Employee Retirement Income Security Act
of 1974, as amended from time to time, and the regulations
promulgated and rulings issued thereunder.
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"ERISA AFFILIATE" means any trade, business or Person
(whether or not incorporated) that is a member of a group of
which the Company is a member and that is treated as a single
employer under Section 414 of the Code.
"ERISA EVENT" with respect to any Person means (i) the
occurrence of a reportable event, within the meaning of Section
4043 of ERISA, with respect to any Plan of such Person or any of
its ERISA Affiliates unless the 30-day notice requirement with
respect to such event has been waived by the PBGC; (ii) the
provision by the administrator of any Plan of such Person or any
of its ERISA Affiliates of a notice of intent to terminate such
Plan, pursuant to Section 4041(a)(2) of ERISA (including any
such notice with respect to a plan amendment referred to in
Section 4041(e) of ERISA); (iii) the cessation of operations at
a facility of such Person or any of its ERISA Affiliates in the
circumstances described in Section 4068(f) of ERISA; (iv) the
failure by such Person or any of its ERISA Affiliates to make a
payment to a Plan required under Section 302(f)(1) of ERISA; (v)
the adoption of an amendment to a Plan of such Person or any of
its ERISA Affiliates requiring the provision of security to such
Plan, pursuant to Section 307 of ERISA; or (vi) the institution
by the PBGC of proceedings to terminate a Plan of such Person or
any of its ERISA Affiliates, pursuant to Section 4042 of ERISA,
or the occurrence of any event or condition described in Section
4042 of ERISA that could constitute grounds for the termination
of, or the appointment of a trustee to administer, such Plan.
"EVENT OF DEFAULT" has the meaning set forth in the Notes.
"EXCHANGE ACT" means the Securities Exchange Act of 1934,
as amended, and the rules and regulations of the Commission
thereunder.
"FINANCIAL STATEMENTS" has the meaning set forth in Section
4A(g)4(G).
"FIXED CHARGE COVERAGE RATIO" has the meaning set forth in
Section 1.1 of the Credit Agreement.
"GAAP" means generally accepted United States accounting
principles set forth in the opinions and pronouncements of the
Accounting Principles Board of the American Institute of
Certified Public Accountants and statements and pronouncements
of the Financial Accounting Standards Board that are applicable
to the circumstances as of the date of determination but subject
to the provisions of Section 1.1(b).
"GMI" has the meaning set forth in the Statement of
Purpose.
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"GMI ACQUISITION" has the meaning set forth in the
Statement of Purpose.
"GMI ACQUISITION DOCUMENTS" has the meaning set forth in
the Statement of Purpose.
"GMI CLOSING" has the meaning set forth in Section
3(c)(ii)3(C)(II).
"GMI CLOSING DATE" means the date on which the gmi Closing
occurs.
"GOVERNMENTAL AUTHORITY" means the government of any
nation, state, county or parish, city, locality or other
political subdivision of any thereof, any entity exercising
executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government, and any corporation or
other entity owned or controlled, through stock or capital
ownership or otherwise, by any of the foregoing.
"HAZARDOUS DISCHARGE" has the meaning set forth in Section
5(t)5(T).
"HAZARDOUS MATERIALS" has the meaning set forth in Section
7(k)7(K).
"INDEBTEDNESS" of any Person shall mean (i) all obligations
of such Person for borrowed money, (ii) all obligations of such
Person evidenced by bonds, debentures, letters of credit (other
than the gmi Letters of Credit (as defined in the Credit
Agreement), notes or similar instruments, or upon which interest
payments are customarily made, (iii) all obligations of such
Person under conditional sale or other title retention
agreements relating to property purchased by such Person (other
than customary reservations or retentions of title under
agreements with suppliers entered into in the ordinary course of
business), (iv) all obligations of such Person issued or assumed
as the deferred purchase price of property or services purchased
by such Person (other than trade debt incurred in the ordinary
course of business and due within six months of the incurrence
thereof) which would appear as liabilities on a balance sheet of
such Person, (v) all obligations of such Person under
take-or-pay or similar arrangements or under commodities
agreements, (vi) all Indebtedness of others secured by (or for
which the holder of such Indebtedness has an existing right,
contingent or otherwise, to be secured by) any Lien on, or
payable out of the proceeds of production from, property owned
or acquired by such Person, whether or not the obligations
secured thereby have been assumed, (vii) all guaranty
obligations of such Person, (viii) the principal portion of all
obligations of such Person under Capitalized Leases, (ix) all
net obligations of such Person under interest rate protection
agreements or foreign currency exchange agreements, (x) the
maximum amount of all standby letters of credit issued or
bankers' acceptances facilities created for the account of such
Person and, without duplication, all drafts drawn thereunder (to
the extent unreimbursed), (xi) all Disqualified Stock of such
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Person, and (xii) the Indebtedness of any partnership or
unincorporated joint venture in which such Person is a general
partner or a joint venturer.
"INDEMNIFIED PARTY" has the meaning set forth in Section
7(j)7(J).
"INTELLECTUAL PROPERTY" means all technology, know-how and
trade secrets relating to or used in the business of the Company
and its Subsidiaries, including (i) the computer programs and
software relating to or used in the business of the Company and
its Subsidiaries, together with the operating codes, source
codes, updates, upgrades, modifications, enhancements and any
user and technical documentation or utilities with respect
thereto, (ii) all patents, patent licenses and patent
applications, copyrights and copyright applications, trade
secrets, property information, proposals and rights and other
intellectual proprietary rights relating to the business of the
Company and its Subsidiaries and (iii) all trademarks, trade
names, service marks and logos (including any registration and
any application for registration of any of the foregoing),
relating to or used in the business of the Company and its
Subsidiaries.
"INTELLECTUAL PROPERTY LICENSES" has the meaning set forth
in Section 5(y)5(Y).
"LATEST BALANCE SHEET" has the meaning set forth in Section
5(n)5(N).
"LENDERS" has the meaning set forth in the Statement of
Purpose.
"LIENS" shall mean any mortgage, deed of trust, pledge,
hypothecation, easement, assignment, deposit arrangement,
restriction, restrictive covenant, lease, sublease, option,
security interest, encumbrance, lien (statutory or otherwise),
preference, priority or charge of any kind (including any
agreement to give any of the foregoing, any conditional sale or
other title retention agreement, any financing or similar
statement or notice filed under the Uniform Commercial Code as
adopted and in effect in the relevant jurisdiction or other
similar recording or notice statute, and any lease in the nature
thereof).
"LOSSES" has the meaning set forth in Section 7(j)7(J).
"MATERIAL CONTRACTS" has the meaning set forth in Section
5(p)5(P).
"MULTIEMPLOYER PLAN" means a multiemployer plan as defined
in Section 4001(a)(3) of ERISA.
"NOTES" has the meaning set forth in Section 22.
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"ORGANIC CHANGE" means (i) the sale, assignment, transfer,
pledge or other disposition by the Company of any of equity
interests of any Subsidiary or the authorization or issuance by
any Subsidiary of any equity securities or interests which
results in a dilution of the Company's ownership of such
Subsidiary; (ii) except as permitted under Section 7.5 of the
Credit Agreement in effect as of the date hereof, any sale,
lease or exchange of all or substantially all the property and
assets of the Company or any Subsidiary (it being understood
that the sale, lease, exchange or disposition of more than 25%
of the assets of the Company shall be deemed to be a sale,
lease, exchange or disposition of a substantial part of the
Company's assets) whether or not in the ordinary course of
business and whether directly or through the sale of equity
securities or interests of any Subsidiary or Subsidiaries; (iii)
except as permitted by Section 7(g)7(G) of this Agreement, the
issuance by the Company of any equity securities or interests;
(iv) any merger, consolidation, liquidation or dissolution to
which the Company or any Subsidiary is a party (other than (A)
the merger of the Company or of a Wholly Owned Subsidiary into
the Company or another Wholly Owned Subsidiary, (B) the merger
of a Wholly Owned Subsidiary into another Person so long as the
Wholly Owned Subsidiary shall be the continuing or surviving
Person in such merger or (C) the liquidation or dissolution of a
Wholly Owned Subsidiary or (v) a Change of Control.
"OWNED INTELLECTUAL PROPERTY" has the meaning set forth in
Section 5(y)5(Y).
"PBGC" means the Pension Benefit Guaranty Corporation
established pursuant to Subtitle A of Title IV of ERISA and any
successor thereof.
"PERMITTED INDEBTEDNESS" means: (i) Indebtedness
outstanding or permitted under this Agreement, the Notes and
Section 7.1 of the Credit Agreement; (ii) Indebtedness
outstanding as of the date hereof reflected on the Latest
Balance Sheet or disclosed on SCHEDULE 5 (z); (iii) Indebtedness
secured by a Permitted Lien; and (iv) Indebtedness in respect to
deferred taxes.
"PERMITTED INVESTMENTS" has the meaning given such term in
Section 1.1 of the Credit Agreement in effect as of the date
hereof.
"PERMITTED LIENS" has the meaning given such term in
Section 1.1 of the Credit Agreement in effect as of the date
hereof.
"PERSON" means an individual, a partnership, a corporation,
a limited liability company, an association, a joint stock
company, a trust, a joint venture, an unincorporated
organization or a governmental entity or any department, agency
or political subdivision thereof.
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"PLAN" means any pension plan (other than a Multiemployer
Plan) subject to the provisions of Title IV of ERISA or Section
412 of the Code which is maintained for employees of the Company
or any of its ERISA Affiliates.
"PLEDGE AGREEMENT" has the meaning set forth in Section
3(d)3(D).
"PROJECTIONS" has the meaning given such term in Section
5(m)5(M).
"PROPERTIES" has the meaning given such term in Section
7(k)7(K).
"PURCHASER" has the meaning set forth in the Preamble.
"QUALIFIED INITIAL PUBLIC OFFERING" means an initial
registered public offering pursuant to an effective registration
statement under the Securities Act covering the offer and sale
of common stock of the Company to the public of no more than 50%
of the common stock of the Company and which has been
underwritten by a nationally recognized investment banking firm
or firms at a price per share greater than or equal to $7.50
that generates gross proceeds to the Company of at least
$25,000,000 and pays all principal, interest and premium under
the outstanding Notes.
"REGISTRATION RIGHTS AGREEMENT" has the meaning set forth
in Section 4A(h)(ii)4(H)(II).
"RELATED PARTY" or "RELATED PARTIES" means spouses, lineal
ancestors or descendants, natural or adopted, and spouses of
lineal ancestors or descendants, or trusts for the sole benefit
of any of such persons.
"REQUIREMENT OF LAW" means, with respect to a Person, the
articles or certificate of incorporation bylaws, regulations or
other organizational or governing documents of such Person, and
any law, treaty, rule, regulation, order, right, privilege,
qualification, writ, judgment, injunction, decree, permit,
license or franchise or determination of an arbitrator or a
court or other Governmental Authority, 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 or
pertaining to any or all of the transactions contemplated or
referred to herein.
"SECURITIES ACT" means the Securities Act of 1933, as
amended, and the rules and regulations of the Commission
thereunder.
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"SECURITY AGREEMENT" means the Security Agreement made by
the Company and each of its Subsidiaries in favor of the
Purchaser, as the same may be amended, supplemented or otherwise
modified from time to time.
"SENIOR LEVERAGE RATIO" has the meaning set forth in
Section 1.1 of the Credit Agreement.
"SERIES A NOTE" has the meaning set forth in Section 22.
"SERIES A WARRANT" has the meaning set forth in Section 22.
"SERIES B NOTE" has the meaning set forth in Section 22.
"SERIES B WARRANT" has the meaning set forth in Section 22.
"SUBORDINATION AGREEMENT" has the meaning set forth in
Section 4A(h)(iii)4(H)(III).
"SUBSIDIARY" means, as to any Person, (i) any corporation
more than 50% of whose capital stock or any class or classes
having by the terms thereof ordinary voting power to elect a
majority of the directors of the Company (irrespective of
whether or not at the time, any class or classes of such
corporation shall have or might have voting power by reason of
the happening of any contingency) is at the time owned by such
Person directly or indirectly through Subsidiaries, and (ii) any
partnership, limited liability company or other Person in which
the Person directly or indirectly through Subsidiaries has more
than 50% of the equity interests at any time. For purposes of
this Agreement, each of the Acquired Companies shall be deemed
to be a Subsidiary of the Company.
"TOTAL LEVERAGE RATIO" has the meaning set forth in Section
1.1 of the Credit Agreement.
"TRANSACTION DOCUMENTS" means this Agreement, the Notes,
the Warrants, the Amended and Restated Shareholders' Agreement,
the Registration Rights Agreement, the Subordination Agreement,
the Pledge Agreement, the Security Agreement, the Credit
Agreement, the Acquisition Documents and all other agreements,
exhibits, documents and schedules related thereto.
"U-GENE" has the meaning set forth in the Statement of
Purpose.
"U-GENE ACQUISITION" has the meaning set forth in the
Statement of Purpose.
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"U-GENE ACQUISITION DOCUMENTS" has the meaning set forth in
the Statement of Purpose.
"U-GENE CLOSING" has the meaning set forth in Section
3(c)(i)3(C)(I).
"U-GENE CLOSING DATE" means the date on which the U-Gene
Closing occurs.
"WARRANTS" has the meaning set forth in Section 22.
"WHOLLY OWNED SUBSIDIARY" shall mean any Subsidiary of the
Company 100% of whose equity securities and interests (on a
fully diluted basis) are owned directly or indirectly by the
Company or another Wholly Owned Subsidiary.
(b) ACCOUNTING TERMS; FINANCIAL STATEMENTS. Except as otherwise
expressly provided herein, all accounting terms used herein shall be
interpreted, and all financial statements and certificates and reports as
to financial matters required to be delivered to the Purchaser hereunder
shall be prepared, in accordance with GAAP applied on a consistent basis.
All calculations made for the purposes of determining compliance with this
Agreement shall (except as otherwise expressly provided herein) be made by
application of GAAP applied on a basis consistent with the most recent
annual or quarterly financial statements delivered pursuant to Section
7.1(b) (or, prior to the delivery of the first financial statements
pursuant to Section 7.1(b), consistent with the financial statements as at
December 31, 1996); PROVIDED, THAT, if (i) the Company shall object to
determining such compliance on such basis at the time of delivery of such
financial statements due to any change in GAAP or the rules promulgated
with respect thereto after the Closing Date or (ii) the Purchaser shall so
object in writing within 90 days after delivery of such financial
statements, then calculations shall be made on a basis consistent with the
most recent financial statements delivered by the Company to the Purchaser
as to which no such objection shall have been made. If any changes in
accounting principles are hereafter occasioned by promulgation of rules,
regulations, pronouncements or opinions of or are otherwise required by,
the Financial Accounting Standards Board or the American Institute of
Certified Public Accountants (or successors thereto or agencies with
similar functions), and any of such changes results in a change in the
method of calculation of, or affects the results of such calculation of,
any of the financial covenants, standards or terms found herein, then the
parties hereto agree to enter into and diligently pursue negotiations in
order to amend such financial covenants, standards or terms so as to
reflect fairly and equitably such changes, with the desired result that
the criteria for evaluating the Company's financial condition and results
of operations shall be the same after such changes as if such changes had
not been made.
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SECTION 2 AUTHORIZATION OF ISSUANCE OF THE NOTES AND THE WARRANTS. The
Company has authorized the issuance to the Purchaser of the Company's Series A
Senior Subordinated Promissory Note (the "SERIES A NOTE") and the Company's
Series B Senior Subordinated Promissory Note (the "SERIES B NOTE") (the Series
A Note and the Series B Note are collectively referred to herein as the
"NOTES"), each in the original principal amount of $5,000,000 and in
substantially the form of EXHIBIT 2(a) and EXHIBIT 2(b), respectively. The
Series A Note shall be accompanied by a common stock purchase warrant, in
substantially the form of EXHIBIT 2(c), entitling the holders thereof to
purchase in the aggregate 4,212 shares of Common Stock, representing 4% of the
issued and outstanding shares of the Company's Common Stock on the U-Gene
Closing Date, determined on a fully diluted basis, subject to adjustment as
provided therein (the "SERIES A WARRANT"). The Series B Note shall be
accompanied by a common stock purchase warrant, in substantially the form of
EXHIBIT 2(d), entitling the holders thereof to purchase in the aggregate shares
of Common Stock representing 3% of the issued and outstanding shares of the
Company's Common Stock on the gmi Closing Date, determined on a fully diluted
basis, subject to adjustment as provided therein (the "SERIES B WARRANT") (the
Series A Warrant and the Series B Warrant are collectively referred to herein
as the "WARRANTS").
SECTION 3 PURCHASE AND SALE OF SECURITIES.
(a) PURCHASE AND SALE. Subject to the terms and conditions herein set
forth, and in reliance upon the representations and warranties of the
Company contained herein, the Company shall sell to the Purchaser and the
Purchaser shall purchase from the Company the Notes and the Warrants for
an aggregate purchase price of $10,000,000. The Series A Note and the
Series B Note being purchased by the Purchaser pursuant hereto shall be
accompanied by the Series A Warrant and the Series B Warrant,
respectively.
(b) ORIGINAL ISSUE DISCOUNT.
(i) The Company and the Purchaser hereby acknowledge and agree
that the Series A Note and the Series A Warrant to be issued are part
of an investment unit within the meaning of Section 1273(c)(2) of the
Code. The Company and the Purchaser hereby further acknowledge and
agree that, for United States federal income tax purposes, the
aggregate issue price of the Series A Note within the meaning of
Section 1273(b) of the Code, which issue price was determined
pursuant to Section 1.1273-2(h)(1) of the Treasury Regulations, is
equal to $1,000,000. The Company and the Purchaser agree to use the
foregoing issue price and allocation for all income tax purposes with
respect to the issuance of the Series A Note and the Series A
Warrant.
(ii) The Company and the Purchaser hereby acknowledge and agree
that the Series B Note and the Series B Warrant to be issued are part
of an investment unit within the meaning of Section 1273(c)(2) of the
Code. The Company and the
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Purchaser hereby further acknowledge and agree that, for United
States federal income tax purposes, the aggregate issue price of the
Series B Note within the meaning of Section 1273(b) of the Code,
which issue price was determined pursuant to Section 1.1273-2(h)(1)
of the Treasury Regulations, is equal to $1,500,000. The Company and
the Purchaser agree to use the foregoing issue price and allocation
for all income tax purposes with respect to the issuance of the
Series B Note and the Series B Warrant.
(c) CLOSINGS.
(i) The closing of the issuance, purchase and sale of the Series
A Note and the Series A Warrant (the "U-GENE CLOSING") shall take
place at the time and place of the closing under the U-Gene
Acquisition Documents, or at such other time and place as may be
mutually agreed upon in writing by the Company and the Purchaser;
PROVIDED, HOWEVER, that the U-Gene Closing shall take place no later
than July 3, 1997. At the U-Gene Closing, the Company will issue,
sell and deliver to the Purchaser the Series A Note and the Series A
Warrant in the amounts set forth above and the Purchaser will pay to
the Company the purchase price therefor by wire transfer of
immediately available funds pursuant to written instructions
delivered to the Purchaser by the Company prior to the U-Gene
Closing.
(ii) The closing of the issuance, purchase and sale of the
Series B Note and the Series B Warrant (the "GMI CLOSING") shall take
place at the time and place of the closing under the gmi Acquisition
Documents, or at such other time and place as may be mutually agreed
upon in writing by the Company and the Purchaser; PROVIDED, HOWEVER,
that the gmi Closing shall take place no later than September 30,
1997. At the gmi Closing, the Company will issue, sell and deliver to
the Purchaser the Series B Note and the Series B Warrant in the
amounts set forth above and the Purchaser will pay to the Company the
purchase price therefor by wire transfer of the immediately available
funds pursuant to written instruction delivered to the Purchaser by
the Company prior to the gmi Closing.
(d) PLEDGE OF COLLATERAL. The repayment of the Indebtedness owing
under the Notes shall be secured by (i) the Pledge Agreement among the
parties thereto in favor of the Purchaser, in the form of EXHIBIT
4A(h)(iv) (the "PLEDGE AGREEMENT") and (ii) that certain Security
Agreement among the parties thereto in favor of the Purchaser, in the form
of EXHIBIT 4A(h)(v) (the "SECURITY AGREEMENT"), in each case in accordance
with the provisions of Section 7(r)7(R).
SECTION 4A. CONDITIONS OF U-GENE CLOSING. The Purchaser's obligation to
purchase and pay for the Series A Note and the Series A Warrant at the U-Gene
Closing is subject to the Purchaser determining, in its sole discretion, that
the following conditions have been satisfied
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(or the Purchaser waiving in writing the conditions that it has determined have
not been satisfied), on or before the U-Gene Closing Date:
(a) REPRESENTATIONS, WARRANTIES AND COVENANTS. The representations
and warranties of the Company contained in Section 55 shall be true and
correct at and as of the U-Gene Closing Date with the same force and
effect as if such representations and warranties had been made as of the
U-Gene Closing Date. In addition, the Company shall have performed all
agreements, obligations and covenants required herein to be performed by
it on or prior to the U-Gene Closing.
(b) INSPECTION OF PROPERTY. The Company and U-Gene will have
permitted representatives of the Purchaser to visit and inspect their
respective properties, to examine the organizational, business and
financial records of the Company, U-Gene and their respective
Subsidiaries, and make copies thereof or extracts therefrom, and to
discuss the affairs, finances and accounts of the Company, U-Gene and
their respective Subsidiaries with the directors, managers, officers,
shareholders, members, partners, key employees and independent accountants
of the Company, U-Gene and their respective Subsidiaries; PROVIDED,
HOWEVER, that the Purchaser agrees to hold all such information
confidential in accordance with Section 8(k)8(K).
(c) CONSUMMATION OF THE U-GENE ACQUISITION. The Company shall have
consummated the U-Gene Acquisition on terms and conditions reasonably
satisfactory to the Purchaser.
(d) ADVANCES UNDER CREDIT AGREEMENT. The Company shall have entered
into he Credit Agreement and such Credit Agreement shall be in full force
and effect. At the U-Gene Closing, the Lenders thereunder shall
concurrently with the purchase hereunder make the advances required to be
made at the U-Gene Closing in the full amount contemplated therein in
connection with the U-Gene Acquisition, all on terms and conditions
reasonably satisfactory to the Purchaser.
(e) CONSENT OF THIRD PARTIES, ETC. The Company shall have presented
evidence reasonably satisfactory to the Purchaser to the effect that (i)
all consents, waivers and amendments required in connection with the
consummation of the transactions related to this Agreement and the
purchase contemplated hereby have been obtained, (ii) the transactions
related to this purchase shall not violate, or constitute or trigger the
occurrence of an event of default with respect to, any Contractual
Obligations of the Company, or any of their respective Subsidiaries and
(iii) neither the Company, U-Gene nor any of their respective
Subsidiaries is in violation of or default under or with respect to any
Contractual Obligations.
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(f) NO ADVERSE CHANGE. Prior to the U-Gene Closing, no change shall
have occurred or be anticipated in the condition (financial or otherwise),
properties, proposed business operations, management, potential
competition or any other matter affecting the Company, U-Gene or any of
their respective Subsidiaries or their business prospects, which is
reasonably likely to be materially adverse.
(g) FINANCIAL INFORMATION. The Company shall have provided the
Purchaser with such financial information relative to the Company's and
U-Gene's financial condition which may be reasonably requested by the
Purchaser, which information shall include, at a minimum, the financial
statements listed on SCHEDULE 4A(g) (collectively, the "FINANCIAL
STATEMENTS").
(h) CERTAIN AGREEMENTS. The following agreements shall have been
entered into by the appropriate parties and shall be in full force and
effect:
(i) the Amended and Restated ▇▇▇▇▇▇ Shareholder Agreement, in
the form of EXHIBIT 4A(h)(i) (the "AMENDED AND RESTATED SHAREHOLDER
AGREEMENT"), among the Company, the Purchaser and each other holder
of the Company's capital stock;
(ii) the Registration Rights Agreement, in the form of EXHIBIT
4A(h)(ii) (the "REGISTRATION RIGHTS AGREEMENT"), between the Company
and the Purchaser;
(iii) the Subordination and Intercreditor Agreement, in the form
of EXHIBIT 4A(h)(iii) (the "SUBORDINATION AGREEMENT"), among the
Company, the Purchaser, and the Lenders and NationsBank, N.A., as
agent for the Lenders;
(iv) the Pledge Agreement, in the form of EXHIBIT 4A(h)(iv)
(except as provided in Section 7(r)7(R); and
(v) the Security Agreement, in the form of EXHIBIT 4A(h)(v)
(except as provided in Section 7(r)7(R)).
(i) OPINIONS OF COUNSEL. The Purchaser shall have received (i) from
▇▇▇▇▇▇▇, Muething & ▇▇▇▇▇▇▇, P.L.L., legal counsel for the Company, a
favorable opinion as of the U-Gene Closing Date, substantially in the form
of EXHIBIT 4A(i)(i), and (ii) from Loeff ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, legal counsel for
U-Gene, a favorable opinion, on which the Purchaser shall have the express
right to rely, dated as of the U-Gene Closing Date, substantially in the
form of EXHIBIT 4A(i)(ii), as to the U-Gene Acquisition, which opinion
shall be satisfactory to the Purchaser in scope and substance.
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(j) DELIVERY OF CLOSING DOCUMENTS. The Purchaser shall have received
the following closing documents, in form and substance satisfactory to the
Purchaser, and all of which shall, except as specified below, be fully
executed originals:
(i) this Agreement;
(ii) the Series A Note;
(iii) the Series A Warrant;
(iv) a copy of the Credit Agreement, certified by the secretary
of the Company to be true, correct and complete;
(v) a copy of the U-Gene Acquisition Documents, certified by the
secretary of the Company to be true, correct and complete;
(vi) certificates of the Secretary of State (or the foreign
local law equivalent) of the jurisdictions of incorporation,
formation or organization of the Company, U-Gene and each of their
respective Subsidiaries as to the good standing (or the foreign local
law equivalent) of the Company, U-Gene and each of their respective
Subsidiaries in such jurisdictions as of a date within ten business
days prior to the U-Gene Closing Date;
(vii) certificates of the Secretary of State (or the foreign
local law equivalent) of each jurisdiction in which the Company,
U-Gene and each of their respective Subsidiaries are qualified to do
business as to their good standing (or their foreign local law
equivalent) in such jurisdictions and, where available, certificates
of the relevant state taxing authorities as to the payment by such
Person of all taxes in such jurisdictions;
(viii) certificate, dated as of the U-Gene Closing Date, of the
(A) president and chief operating officer and (B) chief financial
officer and treasurer of the Company, substantially in the form of
EXHIBIT 4A(j)(viii), stating that the conditions specified in Section
4 have been fully satisfied;
(ix) certificates, dated as of the U-Gene Closing Date,
substantially in the form of EXHIBIT 4A(j)(ix), of the respective
secretaries of the Company and each of its Subsidiaries certifying (A)
that the copies of the certificate or articles of incorporation,
formation or organization and bylaws, regulations or other
organizational and governing documents of the Company and each of its
Subsidiaries, attached thereto and as amended to date, are true,
complete and correct, (B) that the copies of the resolutions of the
directors, managers, partners, members
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and shareholders of the Company, authorizing the transactions
contemplated by this Agreement and each of the Transaction Documents
(including the issuance of the Series A Note and the Warrants and
reserving shares of Common Stock issuable upon exercise of the Series
A Warrant) attached thereto are true, complete and correct, (C) as to
the incumbency of each Person executing this Agreement and each of
the Transaction Documents on behalf of the Company or any of its
Subsidiaries, and (D) as to any other matters reasonably requested by
the Purchaser.
(x) copies of the consents, waivers and amendments to be
obtained by the Company and U-Gene pursuant to the provisions of
Section 4(e)4(E), 4(D), the Financial Statements to be provided by
the Company pursuant to the provisions of Section 4(g)4(G) and the
insurance policies to be maintained by the Company pursuant to the
provisions of Section 7(n)7(N);
(xi) to the extent not provided for herein, true, complete and
correct copies of all Transaction Documents; and
(xii) any and all other documents, certificates, and assurances
which may be reasonably requested by the Purchaser in connection with
its commitments as set forth herein.
(k) PAYMENT OF FUNDING FEE AND EXPENSES. The Company shall have paid
all expenses of the Purchaser pursuant to Section 8(b)8(B), including
attorneys' fees and expenses (but excluding the cost of "in-house"
counsel).
(l) LEGALITY OF OFFERING. On the U-Gene Closing Date, the sale and
issuance of the Series A Note and the Series A Warrant shall be legally
permitted by all laws and regulations to which each of the Purchaser and
the Company are subject.
(m) NAME CHANGE. The Company shall have presented evidence
satisfactory to the Purchaser that the name of the Company has been
changed from "▇▇▇▇▇▇ Research Associates, Inc." to "▇▇▇▇▇▇ International
Inc."
SECTION 4B. CONDITIONS OF GMI CLOSING. The Purchaser's obligation to
purchase and pay for the Series B Note and the Series B Warrant at the gmi
Closing is subject to the Purchaser determining, in its sole discretion, that
the following conditions have been satisfied (or the Purchaser waiving in
writing the conditions that it has determined have not been satisfied), on or
before the gmi Closing Date:
(a) REPRESENTATIONS, WARRANTIES AND COVENANTS. The representations
and warranties of the Company contained in Section 5 shall be true and
correct at and as of the gmi Closing Date with the same force and effect
as if such representations and warranties
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had been made as of the gmi Closing Date. In addition, the Company shall
have performed all agreements, obligations and covenants required herein
to be performed by it on or prior to the gmi Closing. The Company shall
have the ability to update its schedules to this Agreement which shall be
in form and substance satisfactory to the Purchaser.
(b) INSPECTION OF PROPERTY. The Company and gmi will have permitted
representatives of the Purchaser to visit and inspect their respective
properties, to examine the organizational, business and financial records
of the Company, gmi and their respective Subsidiaries, and make copies
thereof or extracts therefrom, and to discuss the affairs, finances and
accounts of the Company, gmi and their respective Subsidiaries with the
directors, managers, officers, shareholders, members, partners, key
employees and independent accountants of the Company, gmi and their
respective Subsidiaries; PROVIDED, HOWEVER, that the Purchaser agrees to
hold all such information confidential in accordance with Section
8(k)8(K).
(c) CONSUMMATION OF THE GMI ACQUISITION. The Company shall have
consummated the gmi Acquisition on terms and conditions reasonably
satisfactory to the Purchaser.
(d) CONSENT OF THIRD PARTIES, ETC. The Company shall have presented
evidence reasonably satisfactory to the Purchaser to the effect that (i)
all consents, waivers and amendments required in connection with the
consummation of the transactions related to this Agreement and the
purchase contemplated hereby have been obtained, (ii) the transactions
related to this purchase shall not violate, or constitute or trigger the
occurrence of an event of default with respect to, any Contractual
Obligations of the Company, or any of their respective Subsidiaries and
(iii) neither the Company, gmi nor any of their respective Subsidiaries is
in violation of or default under or with respect to any material
Contractual Obligations.
(e) NO ADVERSE CHANGE. Prior to the gmi Closing, no change shall have
occurred or be anticipated in the condition (financial or otherwise),
properties, proposed business operations, management, potential
competition or any other matter affecting the Company, gmi or any of their
respective Subsidiaries or their business prospects, which is reasonably
likely to be materially adverse.
(f) NO EVENT OF DEFAULT. There shall be no Default or Event of
Default under this Agreement or any of the Transaction Documents.
(g) OPINIONS OF COUNSEL. The Purchaser shall have received (i) from
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, P.L.L., legal counsel for the Company, a
favorable opinion as of the gmi Closing Date, substantially in the form of
EXHIBIT 4A(i)(i) and (ii) from legal counsel for gmi, a favorable opinion,
on which the Purchaser shall have the express right to rely,
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- 18 -
dated as of the gmi Closing Date, substantially in the form of EXHIBIT
4A(i)(ii), as to the gmi Acquisition, which opinion shall be satisfactory
to the Purchaser in scope and substance.
(h) DELIVERY OF CLOSING DOCUMENTS. The Purchaser shall have received
the following closing documents, in form and substance satisfactory to the
Purchaser, and all of which shall, except as specified below, be fully
executed originals:
(i) the Series B Note;
(ii) the Series B Warrant;
(iii) a copy of the gmi Acquisition Documents, certified by the
secretary of the Company to be true, correct and complete;
(iv) certificates of the Secretary of State (or the foreign
local law equivalent) of the jurisdictions of incorporation,
formation or organization of the Company, gmi and each of their
respective Subsidiaries as to the good standing (or the foreign local
law equivalent) of the Company, gmi and each of their respective
Subsidiaries in such jurisdictions as of a date within five business
days prior to the gmi Closing Date;
(v) certificates of the Secretary of State (or the foreign local
law equivalent) of each jurisdiction in which the Company, gmi and
each of their respective Subsidiaries are qualified to do business as
to their good standing (or the foreign local law equivalent) in such
jurisdictions and, where available, certificates of the relevant
state taxing authorities as to the payment by such Person of all
taxes in such jurisdictions;
(vi) certificate, dated as of the gmi Closing Date, of the (A)
president and chief operating officer and (B) chief financial officer
and treasurer of the Company, substantially in the form of EXHIBIT
4A(j)(viii), stating that the conditions specified in Section 44 have
been fully satisfied;
(vii) certificates, dated as of the gmi Closing Date,
substantially in the form of EXHIBIT 4A(j)(ix), of the respective
secretaries of the Company and each of its Subsidiaries certifying
(A) that the copies of the certificate or articles of incorporation,
formation or organization and bylaws, regulations or other
organizational and governing documents of the Company and each of its
Subsidiaries, attached thereto and as amended to date, are true,
complete and correct, (B) that the copies of the resolutions of the
directors, managers, partners, members and shareholders of the
Company, authorizing the transactions contemplated by this Agreement
and each of the Transaction Documents (including the issuance of the
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- 19 -
Notes and the Warrants and reserving shares of Common Stock issuable
upon exercise of the Series B Warrant attached thereto are true,
complete and correct, (C) as to the incumbency of each Person
executing this Agreement and each of the Transaction Documents on
behalf of the Company or any of its Subsidiaries, and (D) as to any
other matters reasonably requested by the Purchaser; and
(viii) copies of the consents, waivers and amendments to be
obtained by the Company and gmi pursuant to the provisions of Section
4B(d)13, 17 and the insurance policies to be maintained by the
Company pursuant to the provisions of Section 7(n)40.
(i) LEGALITY OF OFFERING. On the gmi Closing Date, the sale and
issuance of the Series B Note and the Series B Warrant shall be legally
permitted by all laws and regulations to which each of the Purchaser and
the Company are subject.
SECTION 5 REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
hereby represents and warrants to the Purchaser that, before and after giving
effect to the Acquisitions and the other transactions contemplated by this
Agreement and the other Transaction Documents, as of the date hereof:
(a) ORGANIZATION, GOOD STANDING AND QUALIFICATION. The Company and
each of its Subsidiaries are corporations duly incorporated, formed or
organized, validly existing and in good standing (or foreign local law
equivalent) under the laws of their respective jurisdictions of
incorporation, formation or organization. The Company and each of its
Subsidiaries are qualified and authorized to do business in, and are in
good standing (or foreign local law equivalent) as foreign or alien
corporations in, all other jurisdictions in which such qualification or
authorization is necessary for the conduct of the businesses in which the
Company and each of its Subsidiaries are now engaged, except where the
failure to be so qualified would not have a material adverse effect on the
financial condition, operating results, assets, operations or business
prospects of the Company or its Subsidiaries. SCHEDULE 5(a) lists with
respect to each of the Company and its Subsidiaries (i) its jurisdiction
of incorporation, formation or organization, (ii) all jurisdictions in
which it is qualified to do business and (iii) all licenses and permits of
Governmental Authorities held by it. Neither the Company nor any of its
Subsidiaries owns or leases property or has employees in any jurisdiction
in which it is not qualified to do business. The licenses and permits
listed on SCHEDULE 5(a) constitute all the material licenses and permits
required for each of the Company and its Subsidiaries to carry on its
business as now conducted and as proposed to be conducted.
(b) SUBSIDIARIES AND INVESTMENTS. Neither the Company nor its
Subsidiaries has any Subsidiaries, other than the Subsidiaries listed on
SCHEDULE 5(b). Except for such Subsidiaries listed or disclosed on
SCHEDULE 5(b), neither the Company nor its Subsidiaries
20
- 20 -
(i) owns or controls any securities or owns other investments in any
Person or (ii) is a participant in any joint venture, partnership or
similar arrangement.
(c) AUTHORIZED AND ISSUED CAPITAL. The authorized capitalization of
the Company and each of its Subsidiaries is set forth on SCHEDULE 5(c).
Except as set forth on SCHEDULE 5(c), there are no further subscriptions,
contracts or agreements for the issuance or purchase of any other or
additional equity interest in the Company or any of its Subsidiaries,
either in the form of options, agreements, warrants, calls, convertible
securities or other similar rights, other than the Warrants. Set forth on
SCHEDULE 5(C) is a listing of all directors, managers, officers, partners,
members and shareholders (including the number of shares of each class or
percentage partnership interest, as the case may be, owned by each such
Person) of the Company and each of its Subsidiaries and of the holders of
all outstanding options, agreements, warrants, calls, convertible
securities and other rights relating to the issuance of equity securities
of, or interests in, the Company and each of its Subsidiaries. The number
of shares of the Company's capital stock reserved for issuance as set
forth on SCHEDULE 5(c) is not subject to adjustment by reason of the
issuance of the Warrants or the shares of Common Stock issuable upon the
exercise thereof. Neither the Company nor any of its Subsidiaries is a
party to any "phantom stock", employee stock option plan, other
equity-based incentive plan or similar agreement, except as set forth on
SCHEDULE 5(x). Except as set forth on SCHEDULE 5(c), (i) there are no
preemptive or similar rights to purchase or otherwise acquire equity
securities of, or interests in, the Company or any of its Subsidiaries
pursuant to any Requirement of Law or Contractual Obligation applicable to
the Company or any of its Subsidiaries and (ii) no registration rights
under the Securities Act have been granted by the Company or any of its
Subsidiaries with respect to its equity securities or interests (other
than the registration rights granted or to be granted pursuant to the gmi
Acquisition Documents).
(d) AUTHORIZATION. The execution and delivery by the Company of this
Agreement and each Transaction Document to which it is a party, the
performance by the Company of its obligations hereunder and thereunder,
and the issuance to the Purchaser of the Notes and the Warrants, as herein
provided, have been duly authorized by all necessary corporate action of
the Company and the Board of Directors and shareholders so that when
issued and delivered (i) the Notes and the Warrants will each constitute
the legal, valid and binding obligation of the Company, enforceable in
accordance with its terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, arrangement,
moratorium, fraudulent conveyance or other similar law of general
applicability relating to or affecting the enforcement of creditors'
rights generally or by general equitable principles; (ii) the Common Stock
to be issued upon the exercise of the Warrants will be validly authorized,
have been duly reserved for issuance and, when issued upon due exercise of
the Warrants, will be fully paid and nonassessable; (iii) this Agreement
and each of the Transaction Documents to which it is a party will
constitute the legal, valid and binding agreements of the Company,
enforceable against it in accordance with their
21
- 21 -
respective terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, arrangement, moratorium,
fraudulent conveyance or other similar law of general applicability
relating to or affecting the enforcement of creditors' rights generally or
by general equitable principles; and (iv) neither the execution and
delivery of this Agreement and each of the Transaction Documents to which
it is a party, and the performance by the Company of its obligations
hereunder and thereunder, nor the issuance of the Notes and the Warrants,
will be in contravention of any Requirement of Law applicable to the
Company or any of its Subsidiaries or any Contractual Obligation to which
the Company or any of its Subsidiaries may be subject.
(e) LITIGATION. There is no litigation or proceeding before any
Governmental Authority pending or, to the knowledge of the Company,
threatened against or affecting the Company or any of its Subsidiaries, or
any of their officers, directors, managers, partners, members or
shareholders, which involves the possibility of any judgment or liability
which is reasonably likely to materially and adversely affect any of the
property and assets of the Company or any of its Subsidiaries, or the
right of the Company or any of its Subsidiaries to conduct its or their
businesses as now conducted or as proposed to be conducted.
(f) TAX MATTERS. Each of the Company and each of its Subsidiaries has
filed all tax returns which it is required to file pursuant to any
Requirement of Law and all such returns are complete and correct in all
material respects. Each of the Company and each of its Subsidiaries has
paid all taxes due and owing by it and has withheld and paid over all
taxes which it is obligated to withhold from amounts paid or owing to any
employee, partner, creditor or other third party. Neither the Company nor
any of its Subsidiaries has waived any statute of limitations with respect
to taxes or agreed to any extension of time with respect to a tax
assessment or deficiency. Except as set forth on SCHEDULE 5(f), the
federal income tax returns of the Company and its Subsidiaries have never
been audited and no federal, state or local tax audits are pending or
being conducted with respect to the Company or any of its Subsidiaries, no
information related to tax matters has been requested by any federal,
state or local taxing authority, and no notice indicating an intent to
open an audit or other review has been received by the Company or any of
its Subsidiaries from any federal, state or local taxing authority.
(g) ORGANIZATIONAL AND GOVERNING DOCUMENTS. The certificates or
articles of incorporation, formation or organization, partnership or
operating agreements and regulations of the Company and each of its
Subsidiaries furnished to the Purchaser pursuant to Section 4A(j)15 and
4B(h)18, as the case may be, are in full force and effect, without further
changes, amendments or modification.
(h) GOVERNMENT APPROVALS; CONSENTS. Assuming the accuracy of the
representations and warranties of the Purchaser contained in Section 628
hereof, the Company is not required to obtain any order, consent, approval
or authorization of, or make
22
- 22 -
any declaration or filing with, any Governmental Authority or other Person
in connection with (i) the negotiation, execution, delivery and
performance of this Agreement or any of the other Transaction Documents,
(ii) the offer, issuance, sale and delivery to the Purchaser of the Notes
and the Warrants or (iii) the consummation of any other transaction
contemplated by this Agreement or any of the Transaction Documents.
(i) REPRESENTATIONS AND WARRANTIES IN OTHER AGREEMENTS. The
representations and warranties made by the Company, its Subsidiaries and
the Acquired Companies in the Credit Agreement, the U-Gene Acquisition
Documents, the gmi Acquisition Documents, the Transaction Documents, and
in any other agreements, instruments or certificates delivered pursuant
hereto or thereto, are true and correct in all material respects (except
where any such representation and warranty is stated as being true only as
of a specific date, in which case such representation and warranty was
true and correct in all material respects on such date).
(j) DISCLOSURE. Neither this Agreement or any of the other
Transaction Documents, nor any other written statement or materials
furnished by or on behalf of the Company or its Subsidiaries to the
Purchaser in connection with this Agreement and the transactions
contemplated hereby, contains any untrue statement of any material fact,
or omits to state any material fact that is necessary in order to make the
statements contained herein or therein, in the light of the circumstances
under which they were made, complete and not misleading.
(k) COMPLIANCE WITH SECURITIES LAWS. Assuming the accuracy of the
representations and warranties of the Purchaser contained in Section 628
hereof, the offer and sale of the Notes and the Warrants, and the Common
Stock to be issued upon exercise of the Warrants, are not required to be
registered pursuant to the provisions of Section 519 of the Securities Act
or any state securities laws. Neither the Company nor any agent on its
behalf has solicited or will solicit any offers to sell or has offered to
sell or will offer to sell all or any part of the Notes and the Warrants,
and the Common Stock to be issued upon exercise of the Warrants, to any
Person so as to bring the sale of Notes and the Warrants, and the Common
Stock to be issued upon exercise of the Warrants, by the Company within
the registration provisions of the Securities Act or any state securities
laws. Except as set forth on SCHEDULE 5(k), all prior offerings and sales
of securities of the Company and its Subsidiaries were in compliance with
all applicable federal and state securities laws.
(l) NO BROKERS. The Company has not dealt with any broker, finder,
commission agent or other similar person in connection with the offer and
sale of the Notes and the Warrants by the Company to the Purchaser or the
transactions contemplated by this Agreement, and the Company is not under
any obligation to pay any broker's fee, finder's fee or commission in
connection with such transactions.
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- 23 -
(m) FINANCIAL STATEMENTS.
(i) The audited Financial Statements, complete and correct copies
of which have previously been furnished to the Purchaser by the
Company, present fairly, in all material respects, the financial
condition, results of operations and changes in financial position of
the Company, the Acquired Companies and their respective Subsidiaries
in accordance with GAAP, consistently applied, as of the dates and for
the periods set forth therein. The unaudited Financial Statements,
complete and correct copies of which have previously been furnished to
the Purchaser by the Company, present fairly, in all material
respects, the financial condition and results of operations of the
Company, the Acquired Companies and their respective Subsidiaries as
of the dates and for the periods set forth therein, subject to the
lack of footnote disclosure and changes resulting from normal year-end
adjustments, none of which, alone or in the aggregate, would be
materially adverse to the financial condition, operating results,
assets, operations or business prospects of the Company, the Acquired
Companies or their respective Subsidiaries. Since December 31, 1996,
there has been no material adverse change in the financial condition,
operating results, assets, operations or business prospects of the
Company, the Acquired Companies and their respective Subsidiaries,
taken as a whole.
(ii) As an inducement to the Purchaser to enter into this
Agreement and the other Transaction Documents, the Company has caused
to be provided to the Purchaser the projections listed on SCHEDULE
4A(g) (the "PROJECTIONS") prepared by the Company. The Company
represents and warrants that, after a good faith review of information
currently available: (A) the assumptions underlying the Projections
are reasonable; (B) the Projections are based upon good faith and
reasonably diligent estimates of the anticipated operating results and
consummation of the Investment; and (C) no event has occurred and no
circumstance has arisen since the date of the Projections which would
render the Projections or the assumptions underlying the Projections
materially misleading or no longer reasonable.
(n) ABSENCE OF UNDISCLOSED LIABILITIES. Neither the Company nor any
of its Subsidiaries has any material obligation or liability (whether
accrued, absolute, contingent, unliquidated or otherwise, whether or not
known to the Company, whether due or to become due and regardless of when
asserted), other than (i) liabilities set forth on the unaudited balance
sheet of the Company and its Subsidiaries on a consolidated basis as of
March 31, 1997 (the "LATEST BALANCE SHEET") (including any notes thereto),
(ii) liabilities and obligations which have arisen after the date of the
Latest Balance Sheet in the ordinary course of business and which do not
individually or in the aggregate materially and adversely affect the
financial condition or operation of the Company and its Subsidiaries,
taken as a whole, and (iii) obligations expressly disclosed in the other
schedules and exhibits attached to this Agreement.
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- 24 -
(o) TITLE TO PROPERTIES AND ASSETS. Each of the Company and each of
its Subsidiaries has good and marketable title in fee simple (or its
equivalent under applicable law) to all real property owned by it. Each of
the Company and each of its Subsidiaries has good and valid title to, or a
valid leasehold interest in, all other properties and assets used by it,
located on its premises or shown on the Latest Balance Sheet or acquired
thereafter, free and clear of all Liens, other than for (i) properties and
assets disposed of in the ordinary course of business since the date of
the Latest Balance Sheet, (ii) Liens disclosed on the Latest Balance Sheet
(including the notes thereto) or (iii) Permitted Liens. All facilities,
machinery, equipment, fixtures, vehicles and other properties owned,
leased or used by the Company or any of its Subsidiaries are in good
operating condition and repair (other than ordinary wear and tear) and are
reasonably fit and usable for the purposes for which they are being used.
The Affiliates of the Company do not own or lease any properties or assets
that are used by the Company or any of its Subsidiaries except as set
forth on SCHEDULE 5(s).
(p) CONTRACTS AND COMMITMENTS. Set forth on SCHEDULE 5(p) is a list
of each material existing and proposed Contractual Obligation to which the
Company or any of its Subsidiaries is or may be a party or by which any of
their assets or property is bound (collectively, the "MATERIAL
CONTRACTS"), including, without limitation, all Material Contracts (i)
involving any Contractual Obligations representing liabilities in excess
of $500,000, (ii) relating to any Indebtedness of, or payable to, the
Company or any of its Subsidiaries, (iii) containing any Contractual
Obligations limiting the ability of the Company or any of its Subsidiaries
to engage in any line of business or compete with any Person and (iv)
containing any Contractual Obligation relating to indemnification by or of
the Company or any of its Subsidiaries. Each of the Material Contracts is
valid, binding and enforceable in accordance with its terms, except as the
same may be limited by bankruptcy, insolvency, reorganization,
arrangement, moratorium, fraudulent conveyance or other similar laws of
general applicability relating to or affecting creditors' rights generally
or by general equitable principles. Neither the Company or any of its
Subsidiaries nor, to the Company's best knowledge, any of the other
Parties thereto is in default under any of the Material Contracts, and no
such default is currently threatened. Except as listed on SCHEDULE 5(p),
neither the Company nor any of its Subsidiaries is a party to any
contract, agreement or instrument that is material to the Company's
business or financial condition.
(q) EMPLOYEES. Set forth on SCHEDULE 5(q) is a complete list of all
employment agreements between the Company or any of its Subsidiaries, on
the one hand, and any officer and/or senior level management employee of
the Company or any of its Subsidiaries, on the other hand. Except as set
forth on SCHEDULE 5(q), the Company is not aware that any executive or key
employee of the Company or any of its Subsidiaries or any group of
employees of the Company or any of its Subsidiaries has any plans to
terminate employment with the Company or any of its Subsidiaries. Neither
the Company, any of its Subsidiaries nor, to the Company's best knowledge,
any of its or their employees, is subject to any noncompete,
nondisclosure, confidentiality, employment, consulting or similar
agreement
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relating to, affecting or in conflict with, the present or proposed
business activities of the Company or any of its Subsidiaries or any such
Person's right to participate in the affairs of the Company or any of its
Subsidiaries.
(r) COMPLIANCE WITH LAWS. Neither the Company nor any of its
Subsidiaries has violated any Requirement of Law, which violation would
reasonably be expected to have a material adverse effect upon the
financial condition, operating results, assets, operations or business
prospects of the Company and of its Subsidiaries, taken as a whole, and
neither the Company nor any of its Subsidiaries has received notice of any
such violation.
(s) TRANSACTIONS WITH AFFILIATES. Except as set forth on SCHEDULE
5(s), there are no Contractual Obligations of the Company or any of its
Subsidiaries to any of the officers, directors, managers, shareholders,
members, employees, Affiliates, or their respective Affiliates or Related
Parties of the Company or any of its Subsidiaries other than (i) for
payment of salary for services rendered, (ii) reimbursement for reasonable
expenses incurred on behalf of the Company or its Subsidiaries, (iii) for
standard employee benefits made generally available to all employees of
the Company (including stock option agreements outstanding under any stock
option plan approved by the Board of Directors of the Company), (iv)
pursuant to any of the Transaction Documents and (v) distributions or
payments of actual S corporation taxes of the shareholders pursuant to the
Code of the Company in the form of dividends or distributions. Except as
set forth in SCHEDULE 5(s), none of the officers, directors, managers,
shareholders, members, employees, Affiliates, or their respective
Affiliates or Related Parties, of the Company or any of its Subsidiaries
has incurred Indebtedness to the Company or has any direct or indirect
ownership interest in any Person with which the Company is affiliated or,
to the Company's best knowledge, with which the Company or any of its
Subsidiaries has a business relationship except that such Person may own
stock in publicly traded companies. Except as set forth in SCHEDULE 5(s),
no officer, director, manager, shareholder, member, employee, Affiliate,
or any of their respective Affiliates or Related Parties, of the Company
or any of its Subsidiaries, is, directly or indirectly, interested in any
material Contractual Obligation with the Company. Except as may be
expressly disclosed in notes to the Financial Statements, the Company is
not a guarantor or indemnitor of any Indebtedness of any other Person.
(t) HAZARDOUS AND TOXIC MATERIALS. Neither the Company nor any of its
Subsidiaries has received any complaint, order, citation or notice with
regard to air emissions, Hazardous Discharges (as defined below) or other
environmental, health or safety matters affecting any of the premises
owned or leased by the Company or any of its Subsidiaries or the
businesses therein conducted. There has been no spill, discharge, release
or cleanup of any Hazardous Material with respect to such premises (except
spills, discharges or releases in the ordinary course of business and
permitted by applicable Environmental Law (as defined below)) ("HAZARDOUS
DISCHARGE"), and, accordingly, such properties are clean of all such
Hazardous Materials in accordance with applicable
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Environmental Law. To the extent the premises owned or leased by the
Company or any of its Subsidiaries are used for the handling, storage,
transportation or disposal of Hazardous Materials, such use is in
accordance with applicable Environmental Law and the Company and its
Subsidiaries has obtained all necessary permits, licenses and approvals in
connection with applicable Environmental Law. Except as set forth on
SCHEDULE 5(t), no underground or above-ground storage tanks or surface
impoundments are located on any of the premises owned or leased by the
Company or any of its Subsidiaries.
(u) CERTAIN FEDERAL REGULATIONS. Neither the Company nor any Person
controlling, controlled by or under common control with the Company is an
"investment company" within the meaning of the Investment Company Act of
1940, as amended. The Company is not engaged principally or as one of its
activities in the business of extending credit for the purpose of
"purchasing" or "carrying" any "margin stock" (as each such term is
defined or used in Regulations G and U of the Board of Governors of the
Federal Reserve System). No part of the proceeds of the Notes will be used
for purchasing or carrying margin stock or for any purpose which violates,
or which would be inconsistent with, the provisions of Regulations G, T, U
or X of such Board of Governors.
(v) ACQUISITION AND SENIOR LOAN DOCUMENTS. The U-Gene Acquisition
Documents, the gmi Acquisition Documents and Credit Agreement delivered to
the Purchaser pursuant to Section 4A(j)15 and 4B(h)18 comprise a full and
complete copy of all agreements between the parties thereto with respect
to the subject matter thereof and all transactions related thereto, and
there are no agreements or understandings, oral or written, or side
agreements not contained therein that relate to or modify the substance
thereof.
(w) USE OF PROCEEDS. The proceeds from the issuance of the Notes will
be used for the purposes set forth on SCHEDULE 5(w) and, in furtherance of
such purposes, shall be disbursed to the Persons (including, without
limitation, Subsidiaries of the Company) listed on such SCHEDULE 5(w) in
the amounts set forth opposite their respective names.
(x) EMPLOYEE BENEFIT PLANS. Each of the Company and its ERISA
Affiliates is in compliance in all material respects with the applicable
provisions of ERISA and the regulations and published interpretations
thereunder. No ERISA Event has occurred as to which the Company or any
ERISA Affiliate was required to file a report with the PBGC, and the
present value of all benefit liabilities under each Plan (based on those
assumptions used to fund such Plan) did not, as of the last annual
valuation date applicable thereto, exceed the value of the assets of such
Plan. The Company and its ERISA Affiliates are not required to make, or
accrue an obligation to make, contributions to any Multiemployer Plan and,
during the past five years, neither the Company nor any ERISA Affiliate
has made, has been required to make, or accrued an obligation to make, any
contribution to any Multiemployer Plan. SCHEDULE 5(x) lists and describes
each Plan and Multiemployer Plan of the Company and its Subsidiaries.
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(y) INTELLECTUAL PROPERTY.
(i) SCHEDULE 5(y) sets forth a complete and correct list of all
Intellectual Property that is owned by the Company and its
Subsidiaries (the "OWNED INTELLECTUAL PROPERTY"). The Owned
Intellectual Property constitutes all Intellectual Property used by,
and necessary for the conduct of the business of, the Company and its
Subsidiaries. The Owned Intellectual Property does not infringe the
rights of any other Person in respect of any Intellectual Property,
and to the Company's best knowledge after due inquiry, none of the
Owned Intellectual Property is being infringed in any material
respect by any other Person. SCHEDULE 5(y) lists all Owned
Intellectual Property which has been duly registered with, filed in
or issued by, as the case may be, the United States Patent and
Trademark Office and United States Copyright Office or other filing
offices, domestic or foreign, and identifies the office with which
such filing was made. Each Owned Intellectual Property registration
and filing listed in SCHEDULE 5(y) is in full force and effect.
(ii) SCHEDULE 5(y) sets forth a complete and correct list of all
material Contractual Obligations (A) pursuant to which the use by any
Person of Intellectual Property is licensed or permitted by the
Company or any of its Subsidiaries and (B) pursuant to which the use
by the Company or any of its Subsidiaries of Intellectual Property is
licensed or permitted by any other Person (collectively, the
"INTELLECTUAL PROPERTY LICENSES"). All Intellectual Property Licenses
(A) are in full force and effect in accordance with their terms, and
(B) are free and clear of any Liens (other than Permitted Liens).
Neither the Company or any of its Subsidiaries nor, to the Company's
best knowledge, any of the other Parties thereto is in default under
any of the Intellectual Property Licenses, and to the Company's best
knowledge after due inquiry, no such default is currently threatened.
There is no claim or demand of any Person pertaining to, or any
proceeding which is pending or, to the best knowledge of the Company,
threatened, that challenges the rights of the Company or any of its
Subsidiaries in respect of any Intellectual Property, Owned
Intellectual Property or any of the Intellectual Property Licenses.
None of the Owned Intellectual Property or any Intellectual Property
Licenses is subject to any outstanding order, ruling, decree,
judgment or stipulation by or with any court, tribunal, arbitrator or
other Governmental Authority.
(z) ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth in
SCHEDULE 5(z), since the date of the Latest Balance Sheet, the Company and
each of its Subsidiaries has conducted its business only in the ordinary
course consistent with its past practices, and neither the Company nor any
of its Subsidiaries has (i) incurred, or agreed to incur, Indebtedness,
(ii) experienced any damage, destruction or loss that, to the extent not
covered by insurance, has had or reasonably would be expected to have a
material adverse effect on
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the Company and its Subsidiaries, taken as a whole, (iii) declared, set
aside or paid any dividend or other distribution (whether in cash, equity
securities, interests or property) in respect of its equity securities,
(iv) entered into any material Contractual Obligation involving any
director, officer, manager, shareholder, member, employee, Affiliate or
their respective Affiliate or Related Parties of the Company or any of its
Subsidiaries, (v) granted or committed to grant to any director, officer,
manager, member, employee or Affiliate of the Company or any of its
Subsidiaries any material increase in compensation or benefits (other than
in the ordinary course of business), (vi) granted or committed to grant to
any director, officer, manager, employee or Affiliate of the Company or
any of its Subsidiaries any increase in or right to severance or
termination pay or any other compensation or benefits payable upon a
change in control of any such entity or (vii) taken any action that, if
taken after the U-Gene Closing Date hereof, reasonably would be expected
to constitute a breach of any of the covenants set forth in Section 729.
SECTION 6 REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. The Purchaser
represents and warrants to the Company as follows:
(a) It is an "ACCREDITED INVESTOR" as that term is defined in Rule
501 of the Securities Act and that, in making the purchases contemplated
herein, it is specifically understood and agreed that the Purchaser is
acquiring the Notes and the Warrants for the purpose of investment and not
with a view towards the sale or distribution thereof within the meaning of
the Securities Act; PROVIDED, HOWEVER, that the disposition of the
Purchaser's property shall at all times be and remain within its control.
(b) It understands that the Notes and the Warrants will not be
registered under the Securities Act, by reason of their issuance by the
Company in a transaction exempt from the registration requirements of the
Securities Act, and that it must hold the Notes and the Warrants
indefinitely unless a subsequent disposition thereof is registered under
the Securities Act and applicable state securities laws or is exempt from
registration.
(c) It understands that the exemption from registration afforded by
Rule 144 (the provisions of which are known to the Purchaser) promulgated
by the Commission under the Securities Act depends on the satisfaction of
various conditions, including the requirement that the Company has been
subject to the reporting requirements of Section 13 or Section 15 of the
Exchange Act for at least 90 days, and that, if applicable, Rule 144
affords the basis for sales only in limited amounts and that the Company
does not now qualify under Rule 144 and may not ever qualify.
(d) It has not employed any broker or finder in connection with the
transactions contemplated by this Agreement.
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(e) It has been furnished with or has had access to the information
it has requested from the Company and has had an opportunity to discuss
with management of the Company the business and financial affairs of the
Company and its Subsidiaries, and has generally such knowledge and
experience in business and financial matters and with respect to
investments in securities or privately held companies so as to enable it
to understand and evaluate the risks of such investment and form an
investment decision with respect thereto; PROVIDED, HOWEVER, that the
foregoing shall in no way affect, diminish or derogate from the
representations and warranties made by the Company hereunder or the right
of the Purchaser to rely thereon and to seek indemnification hereunder.
(f) The execution and delivery of this Agreement and the other
Transaction Documents to which it is a party have been duly authorized by
all necessary action of the Purchaser, do not conflict with or result in a
breach of any of the Purchaser's governing documents or any Contractual
Obligation or any Requirement of Law and constitute legal, valid and
binding agreements of the Purchaser enforceable against it in accordance
with their respective terms except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, arrangement,
moratorium, fraudulent conveyance or other similar laws of general
applicability relating to or affecting the enforcement of creditors'
rights generally or by general equitable principles.
SECTION 7 COVENANTS.
(a) PAYMENT OF NOTES. The Company will duly and punctually pay the
principal of, and interest and any premium on, any Notes when the same
become due and payable (whether by scheduled maturity, required
prepayment, acceleration, demand or otherwise).
(b) FINANCIAL STATEMENTS AND OTHER INFORMATION. The Company will
furnish to the Purchaser:
(i) (A) Not later than 30 days prior to the last day of each
fiscal year, simple capital and operating expense budget for the
Company on a consolidated basis for each quarter of the next
succeeding year, all itemized in reasonable detail and prepared by
the Company and (B) within the first 90 days of each fiscal year,
capital and operating expense budgets, projections of sources and
applications of funds and profit and loss projections (prepared in
accordance with GAAP, consistently applied) for the Company (and each
of the Subsidiaries with which it prepares consolidated financial
statements) on a consolidated basis for each month of that fiscal
year, all itemized in reasonable detail and prepared by the Company.
Any material revisions made in such budgets or projections shall be
furnished promptly to the Purchaser.
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(ii) As soon as available and in any event within 90 days after
the end of each fiscal year, audited financial statements of the
Company (and the Subsidiaries with which it prepares consolidated
financial statements) on a consolidated and consolidating basis,
including a balance sheet as at the end of such fiscal year,
statements of income and retained earnings and a related statement of
cash flows for such fiscal year and the figures for the preceding
year, together with all notes thereto, prepared in reasonable detail
and in accordance with GAAP consistently applied and accompanied by
the report thereof of Coopers & ▇▇▇▇▇▇▇ or such other Big Six
Accounting Firm as may be selected by the Company, stating, among
other things, that in the course of their audit, nothing has come to
their attention suggesting that a condition or event has occurred
that constitutes a Default or an Event of Default (or if there was
such a condition or event, specifying the same).
(iii) As soon as available and in any event within 45 days after
the end of each fiscal quarter, unaudited financial statements of the
Company (and the Subsidiaries with which it prepares consolidated
financial statements) on a consolidated and consolidating basis,
including a balance sheet as at the end of the preceding fiscal
quarter, statements of income and retained earnings and a related
statement of cash flows for such quarter (prepared in accordance with
GAAP, consistently applied), such figures for the corresponding
fiscal quarter of the preceding fiscal year and comparisons to the
budget for such fiscal quarter. Such financial statements shall be
certified by the chief financial officer of the Company to be
complete and accurate, to fairly present, in all material respects,
the financial condition of the Company and its Subsidiaries and to be
prepared in accordance with GAAP, consistently applied.
(iv) As soon as available and in any event within 30 days after
the end of each month, monthly financial reports and other
operational data of the Company (and the Subsidiaries with which it
prepares consolidated financial statements) on a consolidated basis,
including a balance sheet as at the end of the preceding calendar
month and statements of income and retained earnings and a related
statement of cash flows for such month (prepared in accordance with
GAAP, consistently applied), such figures for the corresponding month
of the preceding fiscal year and comparisons to the budget for such
month. Such financial statements shall be certified by the chief
financial officer of the Company to be complete and accurate, to
fairly present, in all material respects, the financial condition of
the Company and its Subsidiaries and to be prepared in accordance
with GAAP, consistently applied.
(v) Promptly, and in no event more than ten business days after
receipt thereof, copies of all audit reports, so-called "management
letters" and other communications and reports submitted to the
Company or any of its Subsidiaries by
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independent certified public accountants in connection with each
interim or special audit of the Company or any of its Subsidiaries
made by such accountants.
(vi) Promptly, but in any event within ten business days after
the Company or any of its Subsidiaries has actual knowledge thereof,
(A) written notice of any actual or anticipated material adverse
change in the operations or financial condition of the Company or any
of its Subsidiaries, (B) written notice of any condition or
circumstance that makes the environmental warranties contained in
this Agreement incomplete or inaccurate in any material respect and
(C) copies of any report of any Person or Governmental Authority with
respect to the condition of the Company or any Subsidiary citing any
material adverse condition at the Company or such Subsidiary.
(vii) With each report pursuant to Section 7(b)(ii)30,
7(b)(iii)30 or 7(b)(iv)30 hereof, a certificate of the principal
financial officer of the Company, substantially in the form attached
as EXHIBIT 7(b).
(viii) Promptly and in any event within ten business days after
the Company or any of its ERISA Affiliates knows or has reason to
know that any ERISA Event has occurred, a statement of the chief
financial officer of the Company describing such ERISA Event and the
action, if any, that the Company or such ERISA Affiliate has taken
and proposes to take with respect thereto.
(ix) Promptly and in any event within ten business days after
receipt thereof by the Company or any of its ERISA Affiliates, copies
of each notice from the PBGC stating its intention to terminate any
Plan or to have a trustee appointed to administer any Plan.
(x) Simultaneously with delivery to the Lenders, copies of all
financial statements, information and notices delivered to the
Lenders under the Credit Agreement which are not otherwise delivered
to the Purchaser pursuant to this Section 729.
(xi) Promptly after receipt of any request therefor from the
Purchaser, such information as the Purchaser shall reasonably request
in order for the Purchaser to deliver or make all reports or filings
required to be made by the Purchaser or any of its Affiliates with
any Governmental Authority.
(c) INFORMATION AND INSPECTION. As often as the Purchaser shall
reasonably request, the Company shall furnish to the Purchaser with
reasonable promptness full information pertinent to any covenant,
provision or condition hereof or to any matter in connection with the
business of the Company or any of its Subsidiaries. In addition, during
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normal business hours upon reasonable notice, the Company shall permit any
authorized representative designated by the Purchaser to visit (at its own
expense) and inspect any properties of the Company or any of its
Subsidiaries, including its books and records (and to make extracts
therefrom), and to discuss its affairs, finances and accounts with the
officers, accountants and attorneys of the Company and each of its
Subsidiaries subject to the confidentiality provisions of Section 8(k)38.
(d) ADDITIONAL ADVICE. Promptly, and in any event within ten days
after the discovery or receipt of notice of (i) the existence of any
default in the performance by the Company or any of its Subsidiaries under
any covenant or agreement contained in this Agreement, the other
Transaction Documents to which the Company or any of its Subsidiaries is a
party or any other Contractual Obligations to which the Company or any of
its Subsidiaries is subject or by which the Company or any of its
Subsidiaries is bound or (ii) any pending or threatened litigation or
proceeding against the Company or any of its Subsidiaries (A) in which the
amount in controversy could exceed $100,000 or (B) which involves the
possibility of any judgment or liability that is reasonably likely to
materially and adversely affect any of the property and assets of the
Company or any of its Subsidiaries, or the right of the Company or any of
its Subsidiaries to conduct its or their businesses, the Company shall
give written notice to the Purchaser specifying the nature and period of
existence thereof and what actions the Company or such Subsidiary has
taken and proposes to take with respect thereto.
(e) AFFIRMATIVE COVENANTS. Unless the Purchaser shall otherwise
consent in writing, the Company shall, and shall cause each of its
Subsidiaries to:
(i) maintain in full force and effect all franchises, permits,
licenses, easements and other rights necessary to the operation of
its business;
(ii) maintain its corporate existence (except as permitted under
Section 7(g)35) and its business and all properties which are
reasonably necessary for the conduct of its business, now or
hereafter owned by it, in good repair, working order and condition,
reasonable wear and tear excepted, and make any replacements of
properties necessary for the successful operation of its business;
(iii) maintain on all insurable properties now or hereafter
owned by it insurance against loss or damage by fire or other
casualty (including business interruption coverage) to the extent
customary with respect to similar properties of companies conducting
business similar to that conducted by it, and to maintain public
liability and workers' compensation insurance covering it to the
extent customary with respect to companies conducting business
similar to that conducted by it;
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(iv) comply in all respects with this Agreement, the other
Transaction Documents to which it is a party and in all material
respects with all other Contractual Obligations to which it is now or
hereafter subject or by which it or any of its properties and assets
are now or hereafter bound, unless and to the extent that the same
are being contested in good faith and by appropriate proceedings and
adequate reserves have been established on its books with respect
thereto in accordance with GAAP, consistently applied;
(v) pay and discharge when payable all taxes, assessments and
governmental charges imposed upon its properties or upon the income
or profits therefrom (in each case before the same becomes delinquent
and before penalties accrue thereon) and all claims for labor,
materials or supplies which if unpaid might by law become a Lien upon
any of its properties, unless and to the extent that the same are
being contested in good faith and by appropriate proceedings and
adequate reserves (as determined in accordance with GAAP,
consistently applied) have been established on its books with respect
thereto;
(vi) comply with all applicable Requirements of Law, such
compliance to include, without limitation, compliance with federal
and state antitrust laws, ERISA, Environmental Laws and the Racketeer
Influenced and Corrupt Organizations Chapter of the organized Crime
Control Act of 1970, the violation of which might reasonably be
expected to have material adverse effect upon its financial
condition, operating results or business prospects; and
(vii) maintain proper books of record and account which fairly
represent its financial condition and results of operations and make
provisions on its financial statements for all such proper reserves
as in each case are required in accordance with GAAP, consistently
applied.
(f) FINANCIAL COVENANTS.
(i) The Company will not permit the Fixed Charge Coverage Ratio,
as of the last day of any fiscal quarter of the Company, to be less
than the ratio specified for such fiscal quarter in the table set
forth below:
From To and Including Fixed Charge Ratio
---- ---------------- ------------------
U-Gene Closing Date June 30, 1997 1.05 to 1.00
July 1, 1997 September 30, 1997 1.00 to 1.00
October 1, 1997 December 31, 1997 1.00 to 1.00
January 1, 1998 and thereafter 1.00 to 1.00
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(ii) The Company will not permit the Total Leverage Ratio, as of
the last day of any fiscal quarter of the Company, to be greater than
the ratio specified for such fiscal quarter in the table set forth
below:
Total
From To and Including Leverage Ratio
---- ---------------- --------------
U-Gene Closing Date June 30, 1997 6.90 to 1.00
July 1, 1997 December 31, 1997 5.90 to 1.00
January 1, 1998 December 31, 1998 5.75 to 1.00
January 1, 1999 and thereafter 5.25 to 1.00
(iii) The Company will not permit the Senior Leverage Ratio as
of the last day of any fiscal quarter of the Company, to be greater
than the ratio specified for such fiscal quarter in the table set
forth below:
Senior
From To and Including Leverage Ratio
---- ---------------- --------------
U-Gene Closing Date June 30, 1997 5.85 to 1.00
July 1, 1997 December 31, 1997 4.75 to 1.00
January 1, 1998 December 31, 1998 4.50 to 1.00
January 1, 1999 June 30, 1999 4.25 to 1.00
July 1, 1999 and thereafter 4.25 to 1.00
(iv) The Company will not permit the Consolidated Net Worth as
of the last day of any fiscal quarter of the Company, after giving
pro forma effect to the transaction contemplated by the Credit
Agreement, to be less than the Minimum Compliance Level. The "MINIMUM
COMPLIANCE LEVEL" shall be, on the U-Gene Closing Date, an amount
equal to $943,000 as of March 31, 1997, and shall be increased (A) as
of the last day of each fiscal quarter of the Company ending after
the U-Gene Closing Date, commencing with the fiscal quarter ending
June 30, 1997, by an amount equal to the sum of (i) 50% of
Consolidated Net Income (if positive) of the Company for such fiscal
quarter, and (ii) 95% of the Net Cash Proceeds of any Equity Issuance
(including a Qualified Initial Public Offering) by any Credit Party
during such fiscal quarter and (B) upon the consummation of the
U-Gene Acquisition and the gmi Acquisition, 95% of the Consolidated
Net Worth (if any) of each of U-Gene and gmi, respectively. The
foregoing increases in the Minimum Compliance Level shall be fully
cumulative and no reduction in the Minimum Compliance Level shall be
made to reflect negative Net Income for any period. Other than the
terms "Company" and "Credit Agreement," all capitalized terms used in
this Section 7(f)33 shall have the meanings given such terms in the
Credit Agreement.
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(v) The Company will not permit Consolidated Capital
Expenditures for any fiscal year of the Company to exceed $4,500,000.
(g) NEGATIVE COVENANTS. Without the prior written consent of the
Purchaser, the Company shall not, and shall cause each of its Subsidiaries
not to:
(i) enter into or amend any Contractual Obligation, either
directly or indirectly, or other transaction with any of its
officers, directors, managers, shareholders, members, Affiliates or
their respective Affiliates or Related Parties, except as approved by
a majority of the members of the compensation committee of the Board
of Directors of the Company which shall be on terms and conditions as
favorable to the Company as would be obtainable by it in a comparable
arms' length transaction with an independent unrelated third party;
(ii) enter into any material amendment of, or waive any covenant
or other right with respect to any Contractual Obligation, if such
amendment would by its terms restrict the Company's performance of
its obligations to the Purchaser hereunder or under the Notes, the
Warrants or any other agreement or instrument relating hereto or
contemplated hereby, except in accordance with Section 7(p)40 of this
Agreement with respect to the Credit Agreement;
(iii) enter into any agreement providing for or resulting in an
Organic Change;
(iv) incur any Indebtedness, except Permitted Indebtedness;
(v) make loans or advances to or guarantees for the benefit of
any Person, except for advances or guarantees given to suppliers in
the ordinary course of business and advances to employees in an
amount not to exceed $10,000 per employee pursuant to normal
employment practices;
(vi) purchase, redeem or otherwise acquire or retire for value
any of its equity securities or interests or declare or make any
dividend or other distribution with respect to any of its equity
securities or interests, except the payment of dividends to
distribute (A) actual S corporation taxes of the shareholders of the
Company in accordance with the Code, (B) an aggregate sum not to
exceed $150,000 to be distributed to the Company's shareholders
during each calendar quarter after the U-Gene Closing Date until
December 31, 1997, and (C) the amounts in the Accumulated Adjustments
Accounts (as defined in the Code) immediately prior to the
consummation of a Qualified Initial Public Offering of the Company
immediately at the time of the Company's conversion from an S
corporation to a C corporation in an amount not to exceed in the
aggregate $700,000;
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(vii) acquire any material interest in any Person (whether by a
purchase of assets or securities, merger, joint venture, partnership,
loan or otherwise), except for Permitted Investments;
(viii) (A) amend its certificate or articles of incorporation,
formation or organization, partnership agreement, operating
agreement, bylaws or regulations, (B) issue any of its equity
securities or interests (other than (w) to the former gmi
stockholders in connection with the gmi Acquisition, (x) pursuant to
a Qualified Initial Public Offering, (y) to qualify directors where
required by applicable law or (z) pursuant to the Plans or
Multiemployer Plans) or (C) create any Subsidiaries (other than
Wholly Owned Subsidiaries);
(ix) issue any profit participation or stock appreciation, or
adopt any phantom stock plan, employee stock option plan or other
equity-based incentive plan, except pursuant to the Plans and
Multiemployer Plans in effect as of the date hereof described on
SCHEDULE 5(x); or
(x) create, assume, incur or permit to exist, any Lien on any of
its assets or properties other than (A) Liens arising pursuant to the
Credit Agreement or (B) Permitted Liens.
(h) USE OF PROCEEDS. The Company will use the proceeds of the sale of
the Notes and the Warrants solely for the purposes set forth on SCHEDULE
5(w).
(i) COMPLIANCE WITH AGREEMENTS. The Company will perform and observe,
and will cause each of its Subsidiaries to perform and observe, all of its
material obligations to the Purchaser, and the holders of the Notes and
the Warrants, and the Common Stock issued upon exercise of the Warrants,
set forth in this Agreement, the Notes, the Warrants and the other
Transaction Documents to which it is a party and the certificate or
articles of incorporation, formation or organization and regulations or
other organizational and governing documents of the Company or any of its
Subsidiaries.
(j) INDEMNIFICATION.
(i) The Company, without limitation as to time, will defend and
indemnify the Purchaser and its officers, directors, managers,
employees, attorneys and agents (each, an "INDEMNIFIED PARTY")
against, and hold each Indemnified Party harmless from, all losses,
claims, damages, liabilities, costs (including the costs of
preparation and attorneys' fees and expenses) (collectively, the
"LOSSES") incurred pursuant to any investigation or proceeding
against the Company or any Indemnified Party and arising out of or in
connection with this Agreement, any other Transaction Document or any
other document or instrument executed herewith or pursuant hereto
37
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or thereto, whether or not the transactions contemplated by this
Agreement are consummated, which investigation or proceeding requires
the participation of, or is commenced or filed against, any
Indemnified Party because of this Agreement, any other Transaction
Document or such other documents and the transactions contemplated
hereby or thereby, other than any Losses resulting from action on the
part of such Indemnified Party which is finally determined in such
proceeding to be primarily and directly a result of such party's
gross negligence or willful misconduct. The Company agrees to
reimburse each Indemnified Party promptly for all such Losses as they
are incurred by such Indemnified Party in connection with the
investigation of, preparation for or defense of any pending or
threatened claim or any action or proceeding arising therefrom. The
Purchaser agrees to reimburse the Company for any payments made by
the Company to the Purchaser pursuant to this paragraph for Losses
which are finally determined in such proceeding to primarily and
directly result from the gross negligence or willful misconduct of
the Purchaser. The obligations of the Company under this paragraph
will survive any transfer of the Notes, the Warrants or the Common
Stock issued upon exercise of the Warrants by the Purchaser and the
termination of this Agreement. In the event that the foregoing
indemnity is unavailable or insufficient to hold an Indemnified Party
harmless, then the Company will contribute to amounts paid or payable
by such Indemnified Party in respect of such Indemnified Party's
Losses in such proportions as appropriately reflect the relative
benefits received by and fault of the Company and such Indemnified
Party in connection with the matters as to which such Losses relate
and other equitable considerations.
(ii) If any action, proceeding or investigation is commenced, as
to which any Indemnified Party proposes to demand such
indemnification, it shall notify the Company with reasonable
promptness; PROVIDED, HOWEVER, that any failure by such Indemnified
Party to notify the Company shall not relieve the Company from its
obligations hereunder except to the extent the Company is prejudiced
thereby. The Company shall be entitled to assume the defense of any
such action, proceeding or investigation, including the employment of
counsel and the payment of all fees and expenses. The Indemnified
Party shall have the right to employ separate counsel in connection
with any such action, proceeding or investigation and to participate
in the defense thereof, but the fees and expenses of such counsel
shall be paid by the Indemnified Party, unless (A) the Company has
failed to assume the defense and employ counsel as provided herein,
(B) the Company has agreed in writing to pay such fees and expenses
of separate counsel or (C) an action, proceeding, or investigation
has been commenced against the Indemnified Party and the Company and
representation of both the Company and the Indemnified Party by the
same counsel would be inappropriate because of actual or potential
conflicts of interest between the parties. In the case of any
circumstance described in clauses (A), (B) or (C) of the immediately
preceding sentence, the Company shall be responsible for
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the reasonable fees and expenses of such separate counsel; PROVIDED,
HOWEVER, that the Company shall not in any event be required to pay
the fees and expenses of more than one separate counsel (and, if
deemed necessary by such separate counsel, appropriate local counsel
who shall report to such separate counsel) for all Indemnified
Parties. The Company shall be liable only for settlement of any claim
against an Indemnified Party made with the Company's written consent.
(k) ENVIRONMENTAL MATTERS.
(i) Upon the Purchaser's receipt of any order, notice, permit,
application or other communication or report alleging a violation of
any applicable Environmental Law at any facility of the Company or
any Subsidiary (an "ENVIRONMENTAL NOTICE"), the Company or any of its
Subsidiaries shall at its expense, at the request of the Purchaser,
obtain an environmental site assessment or environmental audit report
or an update of any of the foregoing from an independent
environmental consultant satisfactory to the Purchaser with respect
to the premises identified in the Environmental Notice, all in form
and content satisfactory to Purchaser.
(ii) The conduct of the business operations of the Company and
its Subsidiaries will not violate, in any material respect, any
Environmental Law and the Company and each of its Subsidiaries will
not use or permit any other party to use any Hazardous Materials on
any of their respective properties, whether owned or leased (the
"PROPERTIES"), at any of their respective places of business except
such materials as are incidental to the Company and its Subsidiaries'
normal course of business, maintenance and repairs. The Company and
its Subsidiaries shall provide the Purchaser, its representatives,
contractors and employees with access to and copies of any and all
data and documents relating to or dealing with any Hazardous
Materials used, generated, manufactured, stored or disposed of on,
under or about the Properties or by the Company or any of its
Subsidiaries' business operations within five days of the request
therefor.
(iii) Without limiting the provisions of Section 7(j)36 hereof,
the Company agrees to defend, protect, indemnify and hold harmless
the Purchaser and each of its officers, directors, employees,
managers, attorneys and agents (collectively called the
"INDEMNITEES") from and against all liabilities, obligations
(including removal and remedial actions), losses, damages (including
foreseeable and unforeseeable consequential damages and punitive
damages), penalties, actions, judgments, suits, claims, costs,
expenses and disbursements (including reasonable attorneys' and
consultants' fees and disbursements) of any kind or nature whatsoever
that may at any time be incurred by, imposed on or asserted against
such indemnitees directly or indirectly based on, or arising or
resulting from, (A) the actual or alleged presence
39
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of Hazardous Materials (as defined below) on any property now,
previously or hereafter owned, leased or otherwise held by the
Company or any of its Subsidiaries, (B) any Environmental Claim (as
defined below) relating to the Company, its Subsidiaries or any of
their operations or (C) the exercise of the Purchaser's rights under
any of the provisions of this Section 7(k)38 (the "INDEMNIFIED
MATTERS") regardless of when such indemnified matters arise.
(iv) As used herein "HAZARDOUS MATERIALS" means (A) any
petroleum or petroleum products, radioactive materials, asbestos in
any form that is or could become friable, urea formaldehyde foam
insulation, transformers or other equipment that contain dielectric
fluid containing levels of polychlorinated biphenyls, and radon gas;
(B) any chemicals, materials or substances (including, without
limitation, human blood and blood products, pathological wastes,
sharps, body parts, contaminated bedding, surgical wastes and other
disposable medical equipment and material that may pose a risk to the
public health, welfare or the marine environment) defined as or
included in the definition of "hazardous substances", "hazardous
wastes", "hazardous materials", "extremely hazardous wastes",
"medical wastes", "biological wastes", "laboratory wastes",
"restricted hazardous wastes", "toxic substances", "toxic
pollutants", "contaminants" or "pollutants", or words of similar
import, under any applicable Environmental Law; and (C) any other
chemical, material or substance exposure to which is prohibited,
limited or regulated by any Governmental Authority. "ENVIRONMENTAL
LAW" means any federal, state or local statute, law, rule,
regulation, ordinance, code, policy or rule of common law now or
hereafter in effect and in each case as amended, and any judicial or
administrative interpretation thereof, including any judicial or
administrative order, consent decree or judgment, relating to the
environment, health, safety or Hazardous Materials, including,
without limitation, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, 42 U.S.C. Section
9601 ET SEQ.; the Marine Protection, Research and Sanctuaries Act of
1972, as amended, 33 U.S.C. Section 1401 ET SEQ.; the Resource
Conservation and Recovery Act, as amended, 42 U.S.C. Section 6901 ET
SEQ.; the Federal Water Pollution Control Act, as amended, 33 U.S.C.
Section 1251 ET SEQ.; the Toxic Substances Control Act, 15 U.S.C.
Section 2601 ET SEQ.; the Clean Air Act, 42 U.S.C. Section 7401 ET
SEQ.; the Safe Drinking Water Act, 42 U.S.C. Sections 201 & 300f ET
SEQ.; the Occupational Safety and Health Act, 29 U.S.C. Section 651
ET SEQ.; and their counterparts under applicable state and local
laws. "ENVIRONMENTAL CLAIMS" means any and all administrative,
regulatory or judicial actions, suits, demands, demand letters,
claims, liens, notices of non-compliance or violation, investigations
or proceedings relating in any way to any Environmental Law or any
permit issued under any such Environmental Law, including without
limitation (x) any and all Environmental Claims by governmental or
regulatory authorities for enforcement, cleanup, removal, response,
remedial or other actions or damages, fines or penalties pursuant to
any applicable Environmental Law, and (y) any and all Environmental
Claims by any
40
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third party seeking damages, contribution, indemnification, cost
recovery, compensation or injunctive relief resulting from Hazardous
Materials or arising from alleged injury or threat of injury to
health, safety or the environment.
(l) ERISA. The Company shall, and shall cause each of its
Subsidiaries to comply in all material respects with the applicable
provisions of ERISA and neither the Company nor any of its ERISA
Affiliates will make, or will accrue an obligation to make, any
contribution to any Multiemployer Plan.
(m) BROKERAGE. The Company shall pay, and hold the Purchaser harmless
against, any liability, loss or expense (including, without limitation,
reasonable attorneys' fees and out-of-pocket expenses but excluding costs
of internal in-house counsel) arising in connection with any claim against
the Company, or arising as a result of actions taken by the Company or any
of its officers, directors, employees or agents, for brokerage
commissions, finders' fees or similar compensation in connection with the
transactions contemplated by this Agreement.
(n) LIFE INSURANCE. The Company will comply with the provisions of
Section 6.13 of the Credit Agreement.
(o) MEETINGS; REPRESENTATION. The Company will have regular meetings
of its Board of Directors at least every calendar quarter and its
shareholders at least once a year, as provided for in the Company's
regulations, and minutes of such meetings shall be prepared and maintained
as a part of the permanent records of the Company. The Company will
provide the Purchaser with written notice of all proposed agendas (which
shall not, however, limit the matters which may be acted upon in the event
a majority of the directors or shareholders, as appropriate, present vote
to discuss or act upon any other matter) for all meetings of the directors
or shareholders, as appropriate, of the Company at least five business
days in advance (except in the case of special meetings of the Board of
Directors or meetings of the executive committee, in which case such
notice shall be as prompt as practicable) and at least one representative
of the Purchaser will be permitted to attend such meetings, at the expense
of the Company prior to the consummation of a Qualified Initial Public
Offering. After the consummation of a Qualified Initial Public Offering,
one representative of the Purchaser shall be permitted to attend meetings
of the Board of Directors or meetings of the executive committee at their
own expense.
(p) MODIFICATIONS TO CREDIT AGREEMENT. The Company shall not amend or
otherwise modify the Credit Agreement (i) to increase the Indebtedness
under the Credit Agreement by more than $5,000,000, (ii) to increase the
interest rate with respect to the Indebtedness under the Credit Agreement
by more than ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, (▇▇▇) to extend the maturity of the
Indebtedness under the Credit Agreement beyond December 31, 2000, (iv) to
shorten the time of payment with respect to the Indebtedness under the
Credit Agreement
41
- 41 -
or (v) to amend any financial covenant of the Company with respect to the
Indebtedness under the Credit Agreement to make such covenant more
restrictive; PROVIDED, HOWEVER, that it being understood and agreed that
waivers of conditions precedent, covenants, defaults or events of default
shall not constitute an amendment or modification).
(q) TERMINATION OF COVENANTS. All covenants contained in this Section
7 shall continue until the Purchaser ceases to own any of the Notes, the
Warrants, or any shares of Common Stock underlying such Warrants;
PROVIDED, HOWEVER, that (i) upon payment of all principal, interest and
other amounts under the Notes, the covenants set forth in Sections 7(f),
7(h), 7(n) and 7(p) shall terminate and (ii) upon the consummation of a
Qualified Initial Public Offering by the Company, (A) all covenants set
forth in Section 729 (other than the covenants set forth in Sections
7(j)36, 7(k)(iii)38 and 7(o)40) shall terminate, and (B) the Company shall
provide to the Purchaser, in lieu of the information set forth in Sections
7(b)(ii), 7(b)(iii), 7(b)(iv) and 7(b)(viii), copies of all annual,
quarterly and current reports on Forms 10-K, 10-Q and 8-K, or any
successor forms thereto, within five days after the date such reports are
filed with the Commission.
(r) FURTHER ASSURANCES. The Company agrees that, promptly upon the
request of the Purchaser and in any event no later than 30 days after the
U-Gene Closing Date, the Company will, at its expense, execute and
deliver, and cause each of its Subsidiaries to execute and deliver, to the
Purchaser (i) the Pledge Agreement and (ii) the Security Agreement;
PROVIDED, HOWEVER, that each of the Pledge Agreement and Security
Agreement shall be subordinate and junior in right of payment to the prior
payment of all Senior Debt (as defined in the Subordination Agreement).
The Company agrees that from time to time, at its expense, the Company
will, and will cause each of its Subsidiaries to, promptly execute and
deliver all further instruments and documents, and take all further
action, that may be necessary or desirable, or that the Purchaser may
request, in order to perfect and protect any pledge, assignment or
security interest granted or purported to be granted hereby or by the
Pledge Agreement and Security Agreement, or to enable the Purchaser to
exercise and enforce its rights and remedies hereunder or thereunder with
respect to any collateral. Without limiting the generality of the
foregoing, the Company will, at the time of delivery of the Pledge
Agreement and the Security Agreement and from time to time thereafter,
execute and file such financing or continuation statements, or amendments
thereto, and such other instruments or notices, as may be necessary or
desirable, or as the Purchaser may request, in order to perfect and
preserve the pledge, assignment and security interest granted or purported
to be granted hereby or by the Pledge Agreement and Security Agreement.
SECTION 8 GENERAL. As further and special provisions set forth under this
Agreement, the parties hereto further warrant, covenant, contract and agree
each with the other as follows:
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- 42 -
(a) ENTIRE AGREEMENT. This Agreement, the Transaction Documents and
other documents referred to herein and therein constitute the entire
understanding among the parties as to the subject matter specifically
referred to herein or therein.
(b) REIMBURSEMENT OF EXPENSES. The Company agrees to reimburse the
Purchaser for all reasonable costs and out-of-pocket expenses, including
"due-diligence" investigation, of the Purchaser and related travel and
out-of-pocket expenses and reasonable attorneys' fees and expenses
(excluding in-house counsel), incurred in connection with the preparation,
execution and delivery of this Agreement, and other related documentation,
and any subsequent amendments, modifications or supplements thereto, and
all reasonable expenses (including reasonable attorneys' fees and expenses
(excluding in-house counsel)) incurred by the Purchaser in the collection
of any amounts owed by the Company to the Purchaser following a breach.
All payments to be made by the Company shall be made no later than 30 days
following presentation to the Company of a statement for such expenses.
(c) SURVIVAL OF AGREEMENTS AND REPRESENTATIONS AND WARRANTIES. All
agreements and all representations and warranties contained herein or made
in writing by the Company in connection herewith, to the extent
applicable, shall survive the execution and delivery of this Agreement and
other documents referred to herein and shall continue until the Purchaser
ceases to own any Notes, the Warrants or any shares of Common Stock.
(d) NO WAIVER. No delay by or on behalf of the Purchaser in
exercising any rights conferred hereunder, and no course of dealing
between the Purchaser and the Company shall operate as a waiver of any
right granted hereunder, unless expressly waived in writing by the party
whose waiver is alleged.
(e) BINDING EFFECT. All covenants, representations, warranties and
other stipulations in this Agreement and other documents referred to
herein, given by or on behalf of any of the parties hereto, shall bind and
inure to the benefit of the respective successors, heirs, personal
representatives and assigns of the parties hereto.
(f) INITIAL HOLDER. The Company shall be entitled to treat and deal
with the Purchaser, and shall not be required to recognize any other
Person as the holder of the Notes or the Warrants, except after production
of such Notes or the Warrants duly endorsed for transfer, together with
such documentation as the Company may reasonably require concerning
compliance with federal or state securities laws, or after receipt by the
Company of written notice from the Person theretofore entitled to be
treated as the holder advising the Company of the transfer of such Notes
or the Warrants to such other Person and stating the latter's address,
together with such documentation as the Company may reasonably require
concerning compliance with federal or state securities laws.
43
- 43 -
(g) CUMULATIVE POWERS. No remedy herein conferred upon the Purchaser
or any holder of the Notes or the Warrants is intended to be exclusive of
any other remedy, and each such remedy shall be cumulative and in addition
to every other remedy given hereunder or now or hereafter existing at law,
or in equity or by statute or otherwise.
(h) LOSS OF SECURITIES; REISSUE OF SECURITIES IN LESSER
DENOMINATIONS. Upon:
(i) receipt of evidence satisfactory to the Company of loss,
theft, mutilation or destruction of (A) any of the Notes or (B) any
of the Warrants, and
(ii) in the case of any such loss, theft or destruction, upon
delivery of indemnity in such form and amount as shall be reasonably
satisfactory to the Company, or in the event of such mutilation, upon
surrender and cancellation of such Notes or any of the Warrants,
the Company will make and deliver a new Note or Warrant of like tenor, in
lieu of such lost, stolen, mutilated or destroyed Note or Warrant. In
addition, upon request of any holder of a Note, Warrant or other
securities of the Company now or hereafter issued by the Company to the
Purchaser, and upon surrender of such Note, Warrant or other securities to
the Company and compliance with any restrictive legends, the Company will,
subject to applicable federal and state securities laws, reissue, in
lesser denominations to parties designated by such holder, new
certificates, warrants or other securities in the equivalent amounts of
such other securities surrendered.
(i) COMMUNICATIONS. All communications and notices provided for
hereunder shall be sent by personal delivery, nationally recognized
overnight courier, facsimile or registered or certified mail, to the
Purchaser and the Company at their respective addresses set forth on
SCHEDULE 8(i), or to such other address with respect to any party as such
party shall notify the other parties hereto in writing. Any notice
required to be given hereunder by one party to another shall be deemed to
have been received (i) when delivered, if personally delivered or sent via
facsimile, or (ii) one day following delivery to a nationally recognized
overnight courier or (iii) on the third business day following the date on
which the piece of mail containing such communication is posted, if sent
by certified or registered mail. Except as otherwise provided for herein,
all reasonable requests for disclosure or other provision of information
to be made or otherwise given by the Company shall be completed no later
than seven business days following the receipt by the Company of a written
request therefor in the manner described in this Section.
(j) LEGEND.
(i) Each of the Notes, each of the Warrants and each
certificate, if any, representing the Common Stock issued upon
exercise of the Warrants will bear a
44
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legend in substantially the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE OR INSTRUMENT
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY STATE SECURITIES LAWS, AND MAY NOT BE
TRANSFERRED UNLESS THE COMPANY HAS RECEIVED A WRITTEN OPINION
FROM COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE COMPANY
STATING THAT SUCH TRANSFER IS BEING MADE IN COMPLIANCE WITH ALL
APPLICABLE FEDERAL AND STATE SECURITIES LAWS.
(ii) The Warrants and each certificate, if any, representing
Common Stock issued upon exercise of the Warrants will bear a legend
in substantially the following form:
THE TRANSFER OF SECURITIES REPRESENTED BY THIS CERTIFICATE OR
INSTRUMENT IS SUBJECT TO TRANSFER RESTRICTIONS, OBLIGATIONS AND
OTHER CONDITIONS SPECIFIED IN THE AMENDED AND RESTATED
SHAREHOLDER AGREEMENT DATED AS OF JUNE 26, 1997 AND AS AMENDED
FROM TIME TO TIME, AMONG THE COMPANY AND ITS SECURITYHOLDERS.
(k) CONFIDENTIALITY. The Purchaser shall not make public disclosure
of any information designated by the Company in writing as confidential,
including financial terms and financial and organizational information
contained in any documents, statements, certificates, materials or
information furnished, or to be furnished, by the Company in connection
with the transactions contemplated by this Agreement; PROVIDED, HOWEVER,
that the foregoing shall not be construed, now or in the future, to apply
to any information reflected in any recorded document, information which
is independently developed by the Purchaser, information obtained from
sources other than the Company or information that is or becomes in the
public domain, nor shall it be construed to prevent the Purchaser from (i)
making any disclosure of any information (A) if required to do so by any
Requirement of Law, (B) to any Governmental Authority having or claiming
authority to regulate or oversee any aspect of the Purchaser's business or
that of the corporate parent or affiliates of the Purchaser in connection
with the exercise of such authority or claimed authority, or (C) pursuant
to subpoena; or (ii) to the extent the Purchaser or its counsel deems
necessary or appropriate to do so to effect or preserve its security for
any applicable investment or financing or to enforce any remedy provided
herein or in any applicable investment or financing documents or otherwise
available by law; or (iii) making, on a confidential basis, such
disclosures as the Purchaser deems necessary or appropriate to such
Purchaser's legal
45
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counsel or accountants (including outside auditors); or (iv) making such
disclosures as the Purchaser reasonably deems necessary or appropriate to
any bank or financial institution or other entity, and/or counsel to or
other representatives of such bank or financial institution or other
entity, to which the Purchaser in good faith desires to sell an interest
in any applicable investment or financing; PROVIDED, HOWEVER, that such
bank, financial institution or other entity or counsel to or
representative thereof, agrees to take reasonable steps to maintain the
confidentiality of such disclosures.
(l) GOVERNING LAW. This Agreement shall be governed in all respects
by the laws of the State of North Carolina.
(m) HEADINGS. The descriptive section headings herein have been
inserted for convenience only and shall not be deemed to limit or
otherwise affect the construction of any provisions hereof.
(n) MULTIPLE ORIGINALS. This Agreement may be executed simultaneously
in two or more counterparts, each of which shall be deemed an original,
and it shall not be necessary in making proof of this Agreement to produce
or account for more than one such counterpart.
(o) AMENDMENT OR WAIVER. This Agreement may be amended, and the
Company may take any action herein prohibited, or omit to perform any act
herein required to be performed by it, if the Company shall obtain the
prior written consent of the Purchaser to such amendment, action or
omission to act. Each holder of the Notes or the Warrants, at the time or
times thereafter outstanding, shall be bound by any consent authorized by
this Section, whether or not the Notes or the Warrants shall have been
marked to indicate such consent.
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- 46 -
IN WITNESS WHEREOF, the parties have caused this Agreement to be
duly executed and delivered by their respective duly authorized officers as of
the day and year first above written.
▇▇▇▇▇▇ INTERNATIONAL INC.,
an Ohio corporation
By:/S/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
----------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Director, Mergers and Acquisitions and
Assistant Secretary
NATIONSBANC INVESTMENT CORPORATION
a Delaware corporation
By:/S/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Senior Vice President
47
- 1 -
SCHEDULE 3(a)
PURCHASE AND SALE OF SECURITIES
Purchaser Note Warrant Purchase Price
--------- ---- ------- --------------
NationsBanc 12% Series A Series A Warrant $5,000,000
Investment Senior Subordinated representing 4% of
Corporation Note for $5,000,000 the fully diluted
due June 26, 2002 common stock of
the Company
NationsBanc 12% Series B Series B Warrant $5,000,000
Investment Senior Subordinated representing 3% of
Corporation Note for $5,000,000 the fully diluted
due _______, 200__ common stock of
the Company
48
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SCHEDULE 4A(a)
FINANCIAL INFORMATION
1 Unaudited pro forma consolidated financial statements for the Company, its
Subsidiaries and each Acquired Company as of, and for the period ended,
March 31, 1997, certified by the chief financial officer of the Company.
2 Unaudited consolidated financial statements for the Company, its
Subsidiaries and each Acquired Company as of, and for the period ended,
March 31, 1997, certified by the chief financial officer of each Acquired
Company.
3 Audited financial statements for the Company, its Subsidiaries and each
Acquired Company for fiscal years 1995 and 1996, accompanied by an audit
report from Coopers & ▇▇▇▇▇▇▇, such report to be in customary form and
unqualified.
4 Financial projections for the Company for each fiscal year after the
U-Gene Closing Date through fiscal 2000, giving effect to the
Acquisitions, in form and substance reasonably satisfactory to the
Purchaser.
5 Such other financial information relating to the Company, the
Subsidiaries, the Acquired Companies or the Acquisitions as the Purchaser
may reasonably request.
49
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SCHEDULE 5(a)
ORGANIZATIONAL MATTERS
A. Organization
------------
Jurisdiction of Jurisdictions in
Name of Company Organization Which Qualified
--------------- --------------- ----------------
[to be completed by Company counsel]
B. Licenses and Permits
--------------------
Name of Company Licenses and Permits
-------------- --------------------
[to be completed by Company counsel]
50
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SCHEDULE 5(a)
SUBSIDIARIES AND INVESTMENTS
[to be completed by Company counsel]
51
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SCHEDULE 5(c)
CAPITALIZATION
I. Pre-Closing Capitalization of the Company and the Sellers
---------------------------------------------------------
A. Authorized Capital
------------------
Name of Company Authorized Capital
----------------------------------------
[to be completed by Company counsel]
B. Subscriptions, Contracts and Agreements
---------------------------------------
[to be completed by Company counsel]
C. Directors, Officers, Partners and Security Holders
--------------------------------------------------
Number or Percent of Equity
Interests Issuable upon
Exercise or Conversion of
Number or Percent Type of Equity Options, Warrants or
Name of Equity Interests Interest Convertible Securities
------------------------- -------------- -----------------------
[to be completed by Company counsel]
D. Preemptive and Registration Rights
----------------------------------
[to be completed by Company counsel]
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II. Post-Closing Capitalization of the Company and the Sellers
----------------------------------------------------------
A. Authorized Capital
------------------
Name of Company Authorized Capital
---------------- ------------------
[to be completed by Company counsel]
B. Subscriptions, Contracts And Agreements
---------------------------------------
[to be completed by Company counsel]
C. Directors, Officers, Partners and Security Holders
--------------------------------------------------
Number or Percent of Equity
Interests Issuable upon
Exercise or Conversion of
Number or Percent Type of Equity Options, Warrants or
Name of Equity Interests Interest Convertible Securities
--------------------------------------------------------------------------------
[to be completed by Company counsel]
D. Preemptive and Registration Rights
----------------------------------
[to be completed by Company counsel]
53
- 3 -
SCHEDULE 5(f)
TAX MATTERS
[to be completed by Company counsel]
54
- 4 -
SCHEDULE 5(k)
COMPLIANCE WITH SECURITIES LAWS
[to be completed]
55
- 5 -
SCHEDULE 5(p)
MATERIAL CONTRACTS
[to be completed by Company counsel]
56
- 6 -
SCHEDULE 5(q)
EMPLOYEES
A. Employment Arrangements:
------------------------
Name of Employee Description of Agreement
---------------------------------------------------
[to be completed by Company counsel]
B. Departing Employees:
--------------------
Name of Employee Description Of Severance Benefits
-------------------------------------------------------------
[to be completed by Company counsel]]
57
- 7 -
SCHEDULE 5(s)
AFFILIATE CONTRACTS
Name of Affiliate Description Of Contract
----------------------------------------------------------
[to be completed by Company counsel]
58
- 8 -
SCHEDULE 5(t)
ENVIRONMENTAL MATTERS
[to be completed by Company counsel]
59
- 9 -
SCHEDULE 5(w)
USE OF PROCEEDS
The proceeds from the issuance of the Notes will be used to finance the
Acquisitions, to refinance existing debt, to pay fees and expenses incurred in
connection with the Acquisitions, to provide for working capital requirements
and for general corporate purposes.
The proceeds will be disbursed to the following Persons in the amounts set
forth opposite their respective names:
Disbursement List
-----------------
[Name of Person] $_____________
60
- 10 -
SCHEDULE 5(x)
EMPLOYEE BENEFIT PLANS
61
- 11 -
SCHEDULE 5(y)
INTELLECTUAL PROPERTY
[to be completed by Company counsel]
62
- 12 -
SCHEDULE 5(z)
ABSENCE OF CERTAIN CHANGES OR EVENTS
[to be completed by Company counsel]
63
- 13 -
SCHEDULE 8(i)
ADDRESSES FOR NOTICES
If to the Company, to:
▇▇▇▇▇▇ International Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Chief Financial Officer
with a copy (which shall not
constitute notice) to:
▇▇▇▇▇▇▇, Muething & ▇▇▇▇▇▇▇, P.L.L.
1800 Provident Tower, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
If to the Purchaser, to:
NationsBanc Investment Corporation
NationsBank Corporate Center
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
with a copy (which shall not
constitute notice) to:
Fennebresque, Clark, ▇▇▇▇▇▇▇▇ & Hay
NationsBank Corporate Center
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇, Esq.
64
- 14 -
EXHIBIT 2(a)
FORM OF SERIES A NOTE
[attached]
65
- 1 -
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR ANY STATE SECURITIES LAWS, AND MAY NOT BE TRANSFERRED UNLESS THE COMPANY HAS
RECEIVED A WRITTEN OPINION FROM COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO
THE COMPANY STATING THAT SUCH TRANSFER IS BEING MADE IN COMPLIANCE WITH ALL
APPLICABLE FEDERAL AND STATE SECURITIES LAWS.
▇▇▇▇▇▇ INTERNATIONAL INC.
12% SENIOR SUBORDINATED SERIES A PROMISSORY NOTE
DUE JUNE 26, 2002
$5,000,000 Charlotte, North Carolina
June 26, 1997
FOR VALUE RECEIVED, the undersigned, ▇▇▇▇▇▇ INTERNATIONAL INC., an Ohio
corporation (the "COMPANY"), promises to pay to the order of NATIONSBANC
INVESTMENT CORPORATION, or its registered assigns (the "HOLDER"), the principal
sum of Five Million And No/100 Dollars ($5,000,000) on June 26, 2002, with
interest thereon from time to time as provided herein.
1 INVESTMENT AGREEMENT. This 12% Senior Subordinated Series A
Promissory Note (this "NOTE") is the Series A Note issued pursuant to the
Investment Agreement, dated as of the date hereof (as the same may be amended,
supplemented or otherwise modified from time to time, the "INVESTMENT
AGREEMENT"), between the Company and the purchaser named therein, and the Holder
is subject to the terms and entitled to the benefits of this Note and the
Investment Agreement and may enforce the agreements of the Company contained
herein and therein and exercise the remedies provided for hereby and thereby or
otherwise available in respect hereto and thereto. Capitalized terms used herein
without definition have the meanings assigned thereto in the Investment
Agreement.
2 INTEREST. Subject to the terms and conditions hereof, the Company
promises to pay interest on the principal amount of this Note at the rate of 12%
per annum, payable quarterly on the last day of each September, December, March,
and June of each year (each date upon which interest shall be so payable, an
"INTEREST PAYMENT DATE"), beginning on September 30, 1997. Interest on this Note
shall accrue from the date of issuance until repayment of the principal and
payment of all accrued interest and premium in full, shall be computed on the
basis of a 365-day and shall be paid by wire transfer of immediately available
funds to an account designated by the Holder. Notwithstanding the foregoing
provisions of this Section 24, but subject to applicable law, upon the
occurrence and during the continuance of an Event of Default, the principal of
and overdue interest
66
- 2 -
on this Note shall bear interest, from the date of the occurrence of such Event
of Default until such Event of Default is cured or waived, payable on demand in
immediately available funds, at the rate of 14% per annum.
3 OPTIONAL PREPAYMENT.
(a) Upon notice given to the Holder as provided in Section
3(b)2, the Company, at its option, may at any time prepay all or any
portion of this Note, PRO RATA with the prepayment of all other Notes
issued pursuant to the Investment Agreement, by paying an amount equal
to the outstanding principal amount of this Note, or the portion of
this Note called for prepayment, together with interest accrued and
unpaid thereon to the date fixed for prepayment, and all other amounts
due under this Note and the Investment Agreement.
(b) The Company shall give written notice of prepayment of
this Note or any portion thereof pursuant to Section 3(a)2 not less
than 10 nor more than 60 days prior to the date fixed for such
prepayment. Upon the giving of notice of prepayment by the Company, the
Company covenants and agrees that it will prepay, on the date therein
fixed for prepayment, this Note or the portion hereof so called for
prepayment, by paying an amount equal to the outstanding principal
amount hereof or the portion hereof so called for prepayment together
with interest accrued and unpaid thereon to the date fixed for such
prepayment, and all other amounts due under this Note and the
Investment Agreement.
(c) In the event the Holder gives notice to the Company
pursuant to Section 8(f)42 of the Investment Agreement of its intent to
transfer this Note (the "TRANSFER NOTICE"), the Company may, upon
notice given to the Holder within 10 days following the sending by the
Holder of the Transfer Notice, prepay this Note in whole (or, if this
Note is being transferred in part, in part). Upon the giving of notice
of prepayment by the Company as provided in this Section 3(c)2, the
Company covenants and agrees that it will prepay, no later than the
20th day following the giving of such notice of prepayment, this Note
(or the portion hereof being transferred by the Holder), by paying an
amount equal to the outstanding principal amount of this Note (or the
portion hereof being so transferred), together with interest accrued
and unpaid thereon to the date of prepayment and all other amounts due
under this Note and the Investment Agreement.
(d) All optional prepayments under Section 32 of this Note
shall be applied first to all costs, expenses, indemnities and other
amounts payable hereunder and under the Investment Agreement, then to
payment of default interest, if any, then to payment of premium, if
any, then to payment of accrued interest and thereafter to payment of
principal in the inverse order of the scheduled maturities thereof.
2
67
- 3 -
4 MANDATORY PREPAYMENTS.
(a) If, at any time while this Note is outstanding, any of the
following events occurs (each such event, a "MANDATORY PREPAYMENT
EVENT"), then, at the option of the Holder, the Company shall make a
mandatory prepayment of this Note in whole or in part at the time of
such Mandatory Prepayment Event:
(i) the consummation of any Organic Change; or
(ii) the occurrence of (A) an Event of Default under
the Credit Agreement or the occurrence of an event of default
under any credit facility replacing in whole or in part the
Credit Agreement and (B) the expiration of 15 days after such
Event of Default or event of default; or
(iii) the consummation of a public offering of equity
or debt securities by the Company which is not a Qualified
Initial Public Offering.
(b) The Company shall give written notice of each of the
transactions described in Section 4(a)3 not less than 10 nor more than
60 days prior to the proposed closing date thereof describing in
reasonable detail such transaction and the proposed closing date. Upon
receipt of such notice, the Holder shall have a period of ten days in
which to notify the Company of the principal amount of this Note or
portion thereof to be prepaid. Upon receipt of such notice from the
Holder, the Company covenants and agrees it will prepay, on the closing
date of such transaction, this Note or the portion thereof subject to
prepayment by paying an amount equal to the outstanding principal
amount hereof or the portion hereof subject to prepayment together with
interest accrued and unpaid thereon. Each such payment shall be applied
as provided in Section 3(d)2 hereof.
5 DEFAULTS AND REMEDIES.
(a) EVENTS OF DEFAULT. An "EVENT OF DEFAULT" shall occur
hereunder if:
(i) the Company shall default in the payment of the
principal of this Note, when and as the same shall become due
and payable, whether at maturity or at a date fixed for
prepayment or by acceleration or otherwise; or
(ii) the Company shall default in the payment of any
installment of interest on this Note, when and as the same
shall become due and payable, and such default shall continue
for a period of three business days; or
(iii) the Company shall default in the due observance
or performance of any covenant, condition or agreement on the
part of the Company to be observed
3
68
- 4 -
or performed pursuant to Section 7 of the Investment
Agreement, and such default shall continue for a period of
five business days; or
(iv) the Company shall default in the due observance
or performance of any covenant, condition or agreement on the
part of the Company to be observed or performed pursuant to
the terms hereof or pursuant to the terms of the Investment
Agreement (other than those referred to in clauses (i), (ii)
or (iii) of this Section 5(a)3), and such default is not
remedied or waived within 30 days after receipt by the Company
of notice from the Holder of such default; or
(v) any representation, warranty, certification or
statement made by or on behalf of the Company in the
Investment Agreement, the Notes, or in any certificate or
other document delivered pursuant hereto or thereto shall have
been incorrect in any material respect when made; or
(vi) the Company shall default (as principal or
guarantor) in the payment of any Indebtedness (other than the
Note) in an amount, individually or in the aggregate, in
excess of $500,000 when and as the same shall become due and
payable whether at stated or scheduled maturity, by
acceleration or otherwise, or the Company shall default in the
performance or observance of any covenant, condition or
agreement contained in any such Indebtedness, if, in each
case, the effect of such failure to pay or perform or observe
is to cause or permit the holder or holders thereof to cause
such Indebtedness to become or be declared due prior to its
stated maturity, whether or not such default is waived by such
holder or holders; or
(vii) an involuntary proceeding shall be commenced or
an involuntary petition shall be filed in a court of competent
jurisdiction seeking (A) relief in respect of the Company or
of a substantial part of its property or assets, under Title
11 of the United States Code, as now constituted or hereafter
amended, or any other Federal or state bankruptcy, insolvency,
receivership or similar law, (B) the appointment of a
receiver, trustee, custodian, sequestrator, conservator or a
similar official for the Company or for a substantial part of
its property or assets, or (C) the winding up or liquidation
of the Company; and such proceeding or petition shall continue
undismissed for 60 days, or an order or decree approving or
ordering any of the foregoing shall be entered; or
(viii) the Company shall (A) voluntarily commence any
proceeding or file any petition seeking relief under Title 11
of the United States Code, as now constituted or hereafter
amended, or any other Federal or state bankruptcy,
insolvency, receivership or similar law, (B) consent to the
institution of, or fail to contest in a timely and appropriate
manner, any proceeding for the filing of any petition
described in paragraph (vii) of this Section 5(a)3, (C) apply
for or consent
4
69
- 5 -
to the appointment of a receiver, trustee, custodian,
sequestrator, conservator or similar official for the Company,
or for a substantial part of its property or assets, (D) file
an answer admitting the material allegations of a petition
filed against it in any such proceeding, (E) make a general
assignment for the benefit of creditors, (F) become unable,
admit in writing its inability or fail generally to pay its
debts as they become due or (G) take any action for the
purpose of effecting any of the foregoing; or
(ix) one or more judgments for the payment of money
in an aggregate amount in excess of $500,000 (to the extent
not covered by insurance) shall be rendered against the
Company and the same shall remain undischarged for a period of
45 days during which execution shall not be effectively
stayed, or any action shall be legally taken by a judgment
creditor to levy upon assets or properties of the Company to
enforce any such judgment; or
(x) any ERISA Event shall have occurred with respect
to a Plan of the Company and the sum (determined as of the
date of occurrence of such ERISA Event) of the amount of its
unfunded benefit liabilities, as defined in Section
4001(a)(18) of ERISA (the "INSUFFICIENCY") of such Plan, and
the Insufficiency of any and all other Plans of the Company
with respect to which an ERISA Event shall have occurred and
then exist (or the liability of the Company and its ERISA
Affiliates related to such ERISA Event) exceeds $500,000; or
(xi) an Organic Change occurs.
(b) ACCELERATION. If an Event of Default occurs under Section
5(a)(vii)4 or (viii)4, then the outstanding principal of and interest
and premium on this Note shall automatically become immediately due and
payable, without presentment, demand, protest or notice of any kind,
all of which are expressly waived. If any other Event of Default occurs
and is continuing, the Holder by written notice to the Company, may
(subject to Section 65 hereof) declare the principal of and interest
and premium on this Note to be due and payable immediately. Upon any
such declaration of acceleration, such principal, interest and premium
shall become immediately due and payable and, subject to Section 65
hereof, the Holder shall be entitled to exercise all of its rights and
remedies hereunder and under the Investment Agreement whether at law or
in equity.
6 SUBORDINATION. The Company, for itself and its successors and
assigns, covenants and agrees, and each Holder of this Note, by its acceptance
hereof, shall be deemed to have agreed, that the payment from whatever source of
the indebtedness of the Company evidenced by this Note, including the principal
hereof and interest and premium hereon, shall be subordinate and junior in right
of payment to the prior payment in full of all Indebtedness under the Credit
Agreement to the Lenders of the Company as more particularly described in the
Subordination and Intercreditor
5
70
- 6 -
Agreement, dated the date hereof and as amended, supplemented or otherwise
modified from time to time, among the Company, NationsBanc Investment
Corporation, as the original Holder of the Notes, and the Lenders and
NationsBank, N.A., as Agent for the Lenders.
7 SUITS FOR ENFORCEMENT. Subject to Section 65, upon the occurrence of
any one or more Events of Default, the Holder may proceed to protect and enforce
its rights and remedies hereunder by suit in equity, action at law or by other
appropriate proceeding, whether for the specific performance of any covenant or
agreement contained in the Investment Agreement or this Note or in aid of the
exercise of any power granted in the Investment Agreement or this Note, or may
proceed to enforce the payment of the Notes, or to enforce any other legal or
equitable right of the holders of the Notes.
8 REMEDIES CUMULATIVE. No remedy herein conferred upon the Holder is
intended to be exclusive of any other remedy and each and every such remedy
shall be cumulative and shall be in addition to every other remedy given
hereunder or now or hereafter existing at law or in equity or by statute or
otherwise. To the extent permitted by applicable law, the Company and the Holder
waive presentment for payment, demand, protest and notice of dishonor.
9 HOLDER; TRANSFER.
(a) The term "HOLDER" as used herein shall also include any
transferee of this Note whose name has been recorded by the Company in
the register referred to in Section 9(b)6. Each transferee of this Note
acknowledges that this Note has not been registered under the
Securities Act, and may be transferred only upon receipt by the Company
of an opinion of counsel, which opinion shall be satisfactory in form
and substance to the Company, stating that this Note may be transferred
without registration under the Securities Act in reliance on an
exemption therefrom.
(b) The Company shall maintain a register in its office for
the purpose of registering the Notes and any transfer thereof, which
register shall reflect and identify, at all times, the ownership of any
interest in the Notes. Upon the issuance of this Note, the Company
shall record the name of the initial purchaser of this Note in such
register as the first Holder. Thereafter, the Company shall duly record
the name of a transferee on such register promptly after receipt of the
opinion referred to in Section 9(a)6 above.
10 PAYMENTS. All payments and prepayments of principal of and interest
and premium on this Note shall be made in lawful money of the United States of
America.
11 COVENANTS BIND SUCCESSORS AND ASSIGNS. All the covenants,
stipulations, promises and agreements contained in this Note by or on behalf of
the Company shall bind its successors and assigns, whether so expressed or not.
6
71
- 7 -
12 GOVERNING LAW. This Note shall be governed by and construed in
accordance with the laws of the State of North Carolina.
13 VARIATION IN PRONOUNS. All pronouns and any variations thereof refer
to the masculine, feminine or neuter, singular or plural, as the context may
require.
14 HEADINGS. The headings in this Note are for convenience of reference
only and shall not limit or otherwise affect the meaning hereof.
7
72
- 8 -
IN WITNESS WHEREOF, this Note has been executed by the Company by its
duly authorized officer as of the day and year first above written.
▇▇▇▇▇▇ INTERNATIONAL INC.
By:/S/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
----------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Director, Mergers and Acquisitions and
Assistant ▇▇▇▇▇▇▇▇▇
▇
▇▇
- ▇ -
▇▇▇▇▇▇▇ ▇(▇)
FORM OF SERIES B NOTE
[attached]
74
- 2 -
EXHIBIT 2(c)
FORM OF SERIES A WARRANT
[attached]
75
- 1 -
THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS, AND MAY NOT BE
TRANSFERRED UNLESS THE COMPANY HAS RECEIVED A WRITTEN OPINION FROM COUNSEL IN
FORM AND SUBSTANCE SATISFACTORY TO THE COMPANY STATING THAT SUCH TRANSFER IS
BEING MADE IN COMPLIANCE WITH ALL APPLICABLE FEDERAL AND STATE SECURITIES LAWS.
THE TRANSFER OF THE SECURITIES REPRESENTED BY THIS INSTRUMENT IS SUBJECT TO
TRANSFER RESTRICTIONS, OBLIGATIONS AND OTHER CONDITIONS SPECIFIED IN THE AMENDED
AND RESTATED SHAREHOLDER AGREEMENT DATED AS OF JUNE 26, 1997, AS AMENDED FROM
TIME TO TIME, AMONG THE COMPANY AND ITS SECURITYHOLDERS.
NO. W-1
COMMON STOCK PURCHASE WARRANT
TO SUBSCRIBE FOR AND PURCHASE COMMON STOCK OF
▇▇▇▇▇▇ INTERNATIONAL INC.
THIS CERTIFIES that, for value received, NATIONSBANC INVESTMENT
CORPORATION, a Delaware corporation ("NATIONSBANC"), or registered permitted
assigns, is the owner of 4212 Warrants (subject to adjustment in accordance with
the provisions hereof), each of such Warrants entitling such Holder to subscribe
for and purchase from ▇▇▇▇▇▇ INTERNATIONAL INC., an Ohio corporation (the
"COMPANY"), at the price of $0.01 per share (the "EXERCISE PRICE"), at any time
commencing on an Exercise Event (as defined below) until 5:00 p.m., Charlotte,
North Carolina, time, on June 26, 2007 (the "EXERCISE PERIOD"), one fully paid
and nonassessable share of the Company's Common Stock, no par value per share
(the "COMMON STOCK") (subject to adjustment as noted below) (the "EXERCISE
RATE"). This Common Stock Purchase Warrant shall be referred to herein as the
"COMMON STOCK PURCHASE WARRANT," and the Warrants represented by this Common
Stock Purchase Warrant shall be referred to herein as "WARRANTS."
This Common Stock Purchase Warrant is subject to the following
provisions, terms and conditions:
1 DEFINITIONS. Unless otherwise defined herein, capitalized terms used
herein shall have the meaning given such terms below. Capitalized terms used
herein and not defined shall have the meanings set forth in the Investment
Agreement (as defined below) between the Company and NationsBanc.
76
- 2 -
"ADDITIONAL SHARES OF COMMON STOCK" shall mean the following
but shall not include the Excluded Shares: (i) all Common Stock of the
Company, (ii) any additional class of stock having the right to
dividends or distributions on liquidation (other than preferred stock
the redemption right of which is limited to the repayment of the
purchase price therefor and reasonable dividends thereon), which may be
authorized in the future by amendment to the Company's certificate of
incorporation, (iii) any debt or equity security which has or may be
issued in lieu of or in substitution or exchange for any of the
foregoing or which has or may be issued upon the exercise, exchange or
conversion of any of the foregoing by its terms, and (iv) any debt or
equity security which has or may be issued by a third party in lieu of
or in substitution for any of the foregoing as a result of any merger
of the Company into such third party.
"APPRAISED MARKET VALUE" shall mean the market value of the
Common Stock as agreed by the Company and the Holder hereof, or if the
Company and the Holder cannot agree, as determined by a valuation by an
investment banking company suitable to the Company and the Holder. In
the event the parties cannot agree on an investment banking company to
perform the valuation described above, the Company and the Holder shall
each select an investment banking company and the two investment
banking companies so selected shall select a third investment banking
company which shall determine the market value. In determining the
Appraised Market Value of the Common Stock, no discount shall be
applied because the shares of Common Stock held by the Holders (i) have
not been registered under the 1933 Act, or (ii) represent a minority
interest in the Company. The fees and expenses of the investment
banking companies shall be borne by the Company.
"BOOK VALUE" shall mean the net book value of the Common Stock
as set forth in the Company's most recent audited Financial Statements
for the preceding fiscal year.
"COMMISSION" shall mean the Securities and Exchange
Commission.
"CONVERTIBLE SECURITIES" shall mean evidences of indebtedness,
shares of stock or other securities which are convertible into or
exchangeable, with or without payment of additional consideration, for
Additional Shares of Common Stock.
"CREDIT AGREEMENT" shall have the meaning set forth in the
Investment Agreement.
"EXCLUDED SHARES" shall mean shares of Common Stock (i) issued
upon exercise of the Warrants issued to the Purchaser and represented
by this Common Stock Purchase Warrant or (ii) issued in accordance with
Section 7(g)(viii)(B) of the Investment Agreement.
"EXERCISE EVENT" shall mean the period commencing on the
earliest to occur of the following events: (i) the termination or
cessation of the Company's S corporation status under the Code; (ii) an
Organic Change; (iii) the occurrence of (A) an Event of Default under
the Credit Agreement (or any event of default under any credit facility
replacing in whole or in part the Credit Agreement) that remains
uncured and unwaived for a period of 15 days
2
77
- 3 -
following such Event of Default or event of default or (B) an Event of
Default under the Notes; (iv) the acceleration of the maturity of
Indebtedness under (A) the Credit Agreement (or any credit facility
replacing in whole or in part the Credit Agreement) or (B) the Notes;
(v) the Company shall default in the due observance or performance of
any covenant, condition or agreement on the part of the Company to be
observed or performed pursuant to Section 7 of the Investment
Agreement, and such default shall continue for a period of five
business days; (vi) a Change of Control; or (vii) the consummation of
an initial public offering pursuant to an effective registration
statement under the Securities Act covering the sale of equity or debt
securities.
"HOLDER" shall mean NationsBanc and any registered permitted
assignee hereof.
"INVESTMENT AGREEMENT" shall mean that certain Investment
Agreement by and among the Company and NationsBanc dated as of June 26,
1997.
"MARKET PRICE" of a share of Common Stock on any day shall
mean the average closing price of a share of Common Stock for the 30
consecutive trading days preceding such day on the principal national
securities exchange or NASDAQ National Market System on which the
shares of Common Stock are listed or admitted to trading or, if not
listed or admitted to trading on any national securities exchange, the
average of the reported closing bid and asked prices during such 30
trading day period in the over-the-counter market as furnished by the
National Quotation Bureau, Inc., or, if the shares of Common Stock are
not publicly traded, the Appraised Market Value; PROVIDED, HOWEVER,
that the "Market Price" for a share of Common Stock sold pursuant to a
public offering by the Company shall be deemed to be the price received
by the Company for such share; and PROVIDED FURTHER that in no event
shall "Market Price" be deemed to be less than 237.42 per share
(subject to proportional adjustment upon the occurrence of any event
specified in subparagraph 2(b)(i) or 2(b)(ii)).
"1933 ACT" shall mean the Securities Act of 1933, as amended.
"NOTES" shall have the meaning set forth in the Investment
Agreement.
"NOTICE OF EXERCISE" shall mean a notice which states (i) the
number of Warrants a Holder intends to exercise, (ii) the persons (who
must be permitted assigns) (the "RECIPIENTS") who shall receive the
shares of stock represented by the Warrants to be exercised, (iii) the
addresses of Recipients, and (iv) the number of certificates to be
issued to represent the shares of stock issued as a result of the
exercise of Warrants.
"PUT" shall have the meaning set forth in paragraph 3(a).
"PUT NOTICE" shall have the meaning set forth in paragraph 3
(a).
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"PUT PERIOD" shall mean the period commencing on the earliest
to occur of the following events and continuing until the Company
consummates a Qualified Initial Public Offering: (i) June 26, 2002;
(ii) an Organic Change; (iii) the occurrence of an event of default
under (A) the Credit Agreement (or any credit facility replacing in
whole or in part the Credit Agreement) or (B) the Notes that remains
uncured and unwaived for a period of 45 days immediately following such
event of default; (iv) acceleration of the maturity of indebtedness
under (A) the Credit Agreement (or any credit facility replacing in
whole or in part the Credit Agreement) or (B) the Notes; or (v) the
consummation of an initial public offering pursuant to an effective
Registration Statement under the Securities Act covering the sale of
equity or debt securities made by the Company which is not a Qualified
Initial Public Offering.
"PUT PRICE" shall mean a price equal to (i) a fraction, the
numerator of which shall be the number of shares of Common Stock
(whether issued or issuable upon exercise of this Common Stock Purchase
Warrant) being put to the Company and the denominator of which shall be
the number of shares of Common Stock outstanding (including Excluded
Shares), whether issued or issuable upon conversion or exercise of any
outstanding convertible securities, warrants, options or other rights,
MULTIPLIED by (ii) the highest of (A) the Put Value, (B) the Appraised
Market Value and (C) the Book Value.
"PUT VALUE" shall be equal to (i) eight MULTIPLIED by the sum
of (A) the consolidated net earnings before interest and taxes ("EBIT")
for the Company and its Subsidiaries during the 12-month period ended
immediately prior to the date the Put Notice is given, and (B) all
non-cash charges to such EBIT for such 12-month period, including
depreciation and amortization, PLUS (ii) cash and cash equivalents
MINUS (iii) funded debt as of the end of such 12-month period.
"QUALIFIED INITIAL PUBLIC OFFERING" means an initial
registered public offering pursuant to an effective registration
statement under the Securities Act covering the offer and sale of
common stock of the Company to the public of no more than 50% of the
common stock of the Company and which has been underwritten by a
nationally recognized investment banking firm or firms at a price per
share greater than or equal to $7.50 that generates gross proceeds to
the Company of at least $25,000,000 and pays all principal, interest
and premium under the outstanding Notes.
2 EXERCISE OF WARRANTS.
(a) The Warrants represented by this Common Stock Purchase
Warrant may be exercised by the Holder hereof, in whole or in part from
time to time, by the surrender of this Common Stock Purchase Warrant
at, and delivery of a Notice of Exercise to, the offices of the Company
at the address set forth in paragraph 8 hereof, or such other office
or agency of the Company in the United States as the Company may
designate by notice in writing to the Holder hereof at any time during
the Exercise Period, accompanied by payment to the Company of the
Exercise Price for the number of shares for which Warrants are then
being
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exercised. The Exercise Price shall be payable, at the option of the
Holder, (i) by certified or bank check, (ii) by the surrender of Notes
or portion thereof having an outstanding principal balance equal to the
Exercise Price or (iii) by the surrender of Warrants having a Market
Price equal to the Exercise Price. The Company agrees that the shares
so purchased shall be deemed to be issued to the Holder hereof, or the
Recipients, as the record owner of such shares as of the close of
business on the date on which this Common Stock Purchase Warrant shall
have been surrendered and payment made for such shares. Duly executed
certificates for the shares of stock so purchased shall be delivered to
the Holder hereof, or the Recipients, within five business days after
the Warrants shall have been so exercised, and, unless this Common
Stock Purchase Warrant has expired or been exercised in full, a
notation on this Common Stock Purchase Warrant stating the number of
shares, if any, with respect to which this Common Stock Purchase
Warrant shall not then have been exercised shall be made by the Company
and this Common Stock Purchase Warrant shall then be returned to the
Holder hereof within such time. The issuance of certificates for shares
of Common Stock upon the exercise of this Common Stock Purchase Warrant
shall be made without charge to the Holder of this Common Stock
Purchase Warrant for any cost or expense (including any original issue
or transfer tax) in respect of the issuance of such certificates or
shares and any such cost or expense shall be paid by the Company.
(b) The Exercise Price and Exercise Rate shall be subject to
the following adjustments:
(i) If, at any time during the Exercise Period, the
Company shall declare and pay on Common Stock a dividend or
other distribution payable in shares of Common Stock, the
Exercise Rate in effect at the time of taking of a record for
such dividend shall be proportionately increased so that the
Holder of Warrants thereafter surrendered for exercise shall
be entitled to receive the number of shares of Common Stock
which such Holder would have owned or been entitled to receive
after the declaration and payment of such dividend or other
distribution if the Warrants had been exercised immediately
prior to the record date for the determination of stockholders
entitled to receive such dividend or other distribution, and
the Exercise Price shall be proportionately decreased so that
the aggregate Exercise Price payable upon exercise in full of
the Warrants shall remain the same.
(ii) If the Company shall subdivide the outstanding
shares of Common Stock into a greater number of shares, or
combine the outstanding shares of Common Stock into a lesser
number of shares, or issue by reclassification of its shares
of Common Stock any shares of the Company's capital stock, the
Exercise Rate in effect immediately prior thereto shall be
proportionately adjusted so that the Holder of the Warrants
thereafter surrendered for exercise shall be entitled to
receive the number of shares of Common Stock or such other
shares which such Holder would have owned or been entitled to
receive after the happening of any of the events described
above if the Warrants had been exercised immediately prior to
the happening of such event on the day upon which such
subdivision, combination or
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reclassification, as the case may be, becomes effective, and
the Exercise Price shall be proportionately adjusted so that
the aggregate Exercise Price payable upon exercise in full of
the Warrants represented by this Common Stock Purchase Warrant
shall remain the same.
(iii) If the Company shall issue (other than as
provided in subparagraph 2(b)(i) or 2(b)(ii) and other than
Excluded Shares) or sell any Additional Shares of Common Stock
for a consideration per share less than the Market Price, then
at the time of such issuance or sale the Exercise Rate shall
be adjusted to the number determined by multiplying the
Exercise Rate in effect immediately prior to such issuance or
sale by a fraction, the numerator of which shall be the number
of shares of Common Stock outstanding (including Excluded
Shares), whether issued or issuable upon conversion or
exercise, immediately prior to the issuance or sale of such
Additional Shares of Common Stock plus the number of such
Additional Shares of Common Stock so issued or sold, and the
denominator of which shall be the number of shares of Common
Stock outstanding (including Excluded Shares), whether issued
or issuable upon conversion or exercise, immediately prior to
the issuance or sale of such Additional Shares of Common Stock
plus the number of shares of Common Stock which the aggregate
consideration for such Additional Shares of Common Stock so
issued or sold would purchase at a consideration per share
equal to the Market Price. The Exercise Price shall be
appropriately adjusted by multiplying the Exercise Price at
the close of business on the date of such issuance or sale by
the reciprocal of the fraction described above.
(iv) If the Company shall issue (other than as
provided in subparagraph 2(b)(i) or 2(b)(ii) and other than
Excluded Shares) or sell any warrants, options or other rights
entitling the holders thereof to subscribe for or purchase
either Additional Shares of Common Stock or Convertible
Securities, and the consideration per share for which
Additional Shares of Common Stock may at any time thereafter
be issuable pursuant to such warrants, options or other rights
or such Convertible Securities (when added to the
consideration per share of Common Stock, if any, received for
such warrants, options or other rights), shall be less than
the Market Price, then the Exercise Rate shall be adjusted to
the number determined by multiplying the Exercise Rate in
effect immediately prior to such issuance or sale by a
fraction, the numerator of which shall be the number of shares
of Common Stock outstanding (including Excluded Shares),
whether issued or issuable upon conversion or exercise,
immediately prior to the issuance or sale of such warrants,
options or other rights plus the number of additional
shares of Common Stock issuable upon the exercise of such
warrants, options or other rights, and of which the
denominator shall be the number of shares of Common Stock
outstanding (including Excluded Shares), whether issued or
issuable upon conversion or exercise, immediately prior to the
issuance or sale of such warrants, options or other rights
plus the number of shares which the aggregate offering price
of the total number of Additional Shares of Common Stock so
offered (when added to the consideration per share of Common
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Stock, if any, received for such warrants, options or other
rights) would purchase at the Market Price. The Exercise Price
shall be appropriately adjusted by multiplying the Exercise
Price at the close of business on the date of such issuance or
sale by the reciprocal of the fraction described above.
(v) If the Company shall issue (other than as
provided in subparagraph 2(b)(i) or 2(b)(ii) and other than
Excluded Shares) or sell Convertible Securities and the
consideration per share for which Additional Shares of Common
Stock may at any time thereafter be issuable pursuant to the
terms of such Convertible Securities shall be less than the
Market Price, then the Exercise Rate shall be adjusted to the
number determined by multiplying the Exercise Rate in effect
immediately prior to such issuance or sale by a fraction, the
numerator of which shall be the number of shares of Common
Stock outstanding (including Excluded Shares), whether issued
or issuable upon conversion or exercise, immediately prior to
the issuance or sale of such Convertible Securities plus the
number of Additional Shares of Common Stock issuable upon the
exercise of such Convertible Securities, and of which the
denominator shall be the number of shares of Common Stock
outstanding (including Excluded Shares), whether issued or
issuable upon conversion or exercise, immediately prior to the
issuance or sale of such Convertible Securities plus the
number of shares which the aggregate conversion or exercise
price of the total number of Additional Shares of Common Stock
so offered would purchase at the Market Price. The Exercise
Price shall be appropriately adjusted by multiplying the
Exercise Price at the close of business on the date of such
issuance or sale by the reciprocal of the fraction described
above. No adjustment of the Exercise Rate shall be made under
this subparagraph 2(b)(v) upon the issuance of any Convertible
Securities which are issued pursuant to the exercise of any
warrants, options or other rights, if such adjustment shall
previously have been made upon the issuance of such warrants,
options or other rights pursuant to subparagraph 2(b)(iv).
(vi) For the purposes of subparagraphs 2(b)(iii),
2(b)(iv) and 2(b)(v), the date as of which the Market Price
shall be computed shall be the earlier of (x) the date on
which the Company shall enter into a firm contract for the
issuance of such Additional Shares of Common Stock, warrants,
options or other rights or Convertible Securities, and (y) the
date of the actual issuance of such Additional Shares of
Common Stock, warrants, options or other rights or Convertible
Securities.
(vii) No adjustment of the Exercise Rate shall be
made under subparagraph 2(b)(iii) upon the issuance of any
Additional Shares of Common Stock which are issued pursuant to
the exercise of any warrants, options or other rights or
pursuant to the conversion of Convertible Securities, if such
adjustment shall previously have been made upon the issuance
of such warrants, options or other rights or Convertible
Securities, pursuant to subparagraphs 2(b)(iv) or 2(b)(v).
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(viii) If any warrants, options or other rights (or
any portion thereof) which shall have given rise to an
adjustment pursuant to subparagraph 2(b)(iv) or conversion or
exchange rights pursuant to Convertible Securities which shall
have given rise to an adjustment pursuant to subparagraph
2(b)(v) shall have expired or terminated without the exercise
thereof, or if by reason of the terms of such warrants,
options or other rights or Convertible Securities there shall
have been an increase or increases, with the passage of time
or otherwise, in the exercise or conversion price thereof,
then the Exercise Rate hereunder shall be readjusted (but to
no greater extent than originally adjusted) on the basis of
(x) eliminating from the computation of any Additional Shares
of Common Stock shares of Common Stock attributable to such
warrants, options or other rights or conversion or exchange
rights as shall have expired or terminated, and (y) treating
the Additional Shares of Common Stock, if any, actually issued
pursuant to the previous exercise of such warrants, options or
other rights or conversion or exchange rights pursuant to any
Convertible Securities as having been issued for the
consideration actually received and receivable therefor. In
the event of any such readjustment, an appropriate adjustment
shall be made to the Exercise Price.
(ix) A. In any such case covered by this paragraph
2(b), in determining the amount of consideration
received by the Company as a result of the issuance
of Additional Shares of Common Stock, Convertible
Securities or warrants, options or other rights to
purchase any such Additional Shares of Common Stock,
if the consideration is in whole or in part
consideration other than cash, the amount of the
consideration shall be deemed to be the fair value of
such consideration as reasonably determined by the
Board of Directors of the Company. If Additional
Shares of Common Stock shall be issued as part of a
unit with warrants, options or other rights, then the
amount of consideration for the warrants, options or
other rights shall be deemed to be the amount
reasonably determined by the Board of Directors of
the Company.
B. In case any Additional Shares of Common
Stock, Convertible Securities or any options,
warrants or other rights to purchase such Additional
Shares of Common Stock or Convertible Securities
shall be issued in connection with any merger or
consolidation in which the Company is the surviving
corporation, the amount of consideration
therefor shall be deemed to be the fair value, as
reasonably determined by the Board of Directors of
the Company, of such portion of the assets and
business of the nonsurviving corporation or
corporations as the Board shall determine to be
attributable to such Additional Shares of Common
Stock, Convertible Securities or warrants, options or
other rights to purchase such Additional Shares of
Common Stock or Convertible Securities.
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(x) In case the Company shall effect a
reorganization, shall merge with or consolidate into another
corporation, or shall sell, transfer or otherwise dispose of
all or substantially all its property, assets or business and,
pursuant to the terms of such reorganization, merger,
consolidation or disposition of assets, shares of stock or
other securities, property or assets of the Company, successor
or transferee or other third party or cash are to be received
by or distributed to the holders of Common Stock, then the
Holder of this Common Stock Purchase Warrant shall have the
right thereafter to receive, upon subsequent exercise of the
Warrants represented by this Common Stock Purchase Warrant,
the number of shares of stock or other securities, property or
assets of the Company, successor or transferee or other third
party thereof or cash receivable upon or as a result of such
reorganization, merger, consolidation or disposition of assets
by a holder of the number of shares of Common Stock equal to
the number of shares of Common Stock issuable to the Holder of
this Common Stock Purchase Warrant, if the Warrants
represented by this Common Stock Purchase Warrant had been
exercised immediately prior to such event. The provisions of
this subparagraph 2(b)(x) shall similarly apply to successive
reorganizations, mergers, consolidations or dispositions of
assets.
(xi) If a purchase, tender or exchange offer is made
to and accepted by the holders of more than 50% of the
outstanding shares of Common Stock, the Company shall not
effect any consolidation, merger or sale with the person
having made such offer or with any affiliate of such person,
unless prior to the consummation thereof the Holder of this
Common Stock Purchase Warrant shall have been given a
reasonable opportunity to elect to receive, upon exercise or
exchange of the Warrants represented by this Common Stock
Purchase Warrant, either the stock, securities, cash or assets
then issuable with respect to the Common Stock or the stock,
securities, cash or assets issued to previous holders of the
Common Stock in accordance with such offer, or the equivalent
thereof.
(xii) If a state of facts shall occur which, without
being specifically controlled by the provisions of this
paragraph 2(b), would not fairly protect the exercise rights
of the Holder of this Common Stock Purchase Warrant in
accordance with the essential intent and principles of such
provisions, then the Board of Directors of the Company shall
make an adjustment in the application of such provisions, in
accordance with such essential intent and principles, so as to
protect such exercise rights.
(xiii) Whenever the Exercise Rate and Exercise Price
shall be adjusted pursuant to this paragraph 2(b), the Company
shall deliver to the Holder of this Common Stock Purchase
Warrant a written notice setting forth in reasonable detail
the event requiring the adjustment and the method by which
such adjustment was calculated (including a description of the
basis on which the Board of Directors of the Company
determined the fair value of any consideration other than cash
pursuant to subparagraph 2(b)(ix)) and specifying the new
Exercise Rate and Exercise Price.
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All calculations under this paragraph 2(b) shall be made to
the nearest one-one hundredth of a share. In the case referred
to in subparagraph 2(b)(x), such notice shall be issued
describing the amount and kind of stock, securities, property
or assets or cash which shall be receivable upon exercise of
this Common Stock Purchase Warrant after giving effect to the
provisions of such subparagraph 2(b)(x).
(xiv) The Company shall at all times reserve and keep
available, free from preemptive rights, out of its authorized
but unissued shares of Common Stock, solely for the purpose of
effecting the exercise of the Warrants represented by this
Common Stock Purchase Warrant, the full number of shares of
Common Stock then deliverable upon the exercise of the
Warrants, and each holder thereof agrees to vote any of its
shares of Common Stock that it may own from time to time in
order to enable the Company to do so. The Company shall take
at all times such corporate action as shall be necessary in
order that the Company may validly and legally issue fully
paid and nonassessable shares of Common Stock upon the
exercise of the Warrants in accordance with the provisions
hereof, free from all taxes, liens, charges and security
interests with respect to the issue thereof. The Company
represents to the Holder of this Common Stock Purchase Warrant
that the shares of Common Stock issuable upon the exercise of
the Warrants will, when issued, be duly authorized, validly
issued, fully paid and nonassessable. The Company will, at its
expense, use its best efforts to cause such shares to be
listed (subject to issuance or notice of issuance) on all
stock exchanges, if any, on which the Company's Common Stock
may become listed.
(xv) No fractional shares of Common Stock or scrip
representing fractional shares of Common Stock shall be issued
upon any exercise of this Common Stock Purchase Warrant, but,
in lieu thereof, there shall be paid an amount in cash equal
to the same fraction of the Market Price of a whole share of
Common Stock on the business day preceding the day of
exercise.
3 ADJUSTMENT TO NUMBER OF WARRANTS.
(a) In the event that the Company does not consummate a
Qualified Initial Public Offering on or before December 1, 1997, then
the number of shares issuable upon exercise of the Warrants shall be
automatically increased, without action by the Company or the Holder,
to an amount equal to the number of shares of Common Stock representing
5% of the issued and outstanding shares of Common Stock, determined on
a fully diluted basis (assuming (i) exercise of this Warrant and (ii)
exercise of all options which have vested and are exercisable), on
December 1, 1997, subject to adjustment as provided herein.
(b) In the event that the Company does not consummate a
Qualified Initial Public Offering on or before March 1, 1998, then the
number of shares issuable upon exercise of the Warrants shall be
automatically increased, without action by the Company or the Holder,
to an amount equal to the number of shares of Common Stock representing
6% of the issued
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and outstanding shares of Common Stock, determined on a fully diluted
basis (assuming (i) exercise of this Warrant and (ii) exercise of all
options which have vested and are exercisable), on March 1, 1998,
subject to adjustment as provided herein.
4 PUT OPTION.
(a) Subject to the provisions of paragraph 4(b) below, at any
time during the Put Period, on at least 60 days' written notice to the
Company (the "PUT NOTICE"), the Holder of this Common Stock Purchase
Warrant or the Common Stock issued pursuant to the exercise of the
Warrants shall have the option of requiring the Company (i) to purchase
all or a portion of the Common Stock issued pursuant to the Warrants,
at a price determined as of the date upon which the Put Notice is given
to the Company equal to the Put Price, or (ii) in the event this Common
Stock Purchase Warrant has not been exercised in full, to purchase all
or a portion of the Common Stock Purchase Warrant, at a price equal to
the Put Price determined as of the date upon which the Put Notice is
given to the Company for all shares of Common Stock that are then
issuable upon exercise of the Common Stock Purchase Warrant MINUS the
Exercise Price per share therefor (any such purchase pursuant to this
paragraph 4(a) being a "PUT").
(b) The Company shall not be required to purchase shares of
Common Stock or Common Stock Purchase Warrants pursuant to any exercise
of the rights set forth in paragraph 4(a) above to the extent that the
Company (or any successor) is unable to purchase such securities from
an available source of funds from which it can legally (including
without limitation, pursuant to the general corporation law of the
State of Ohio) pay such Put Price; PROVIDED, HOWEVER, that the Company
(or any successor) shall use all legally permissible methods in
obtaining such legal source of funds, including, without limitation,
the reduction of capital and the revaluation of its assets, including
by appraisal. In such event, the Company shall pay the Put Price to the
extent that it is able to do so in compliance with the terms of this
paragraph 4(b) in cash in immediately available funds with the balance,
if any, to be paid by the delivery to the Holder or Holders hereof of a
Promissory Note of the Company dated the date of the applicable Put
closing, having a term of one year from the date thereof, providing for
a single payment of principal at the end of its term and bearing
interest at a rate per annum (computed for the actual number of days
elapsed on the base of a 360-day year) equal to 15%. The Promissory
Note shall provide for quarterly interest payments and for prepayment
at any time without premium or penalty. In the event the Company is
unable to purchase the securities in compliance with the terms hereof,
the Company shall purchase such securities to the extent that it is
able to do so in compliance with the terms of this paragraph 3(b) on
each three month anniversary of the Put closing.
5 DIVIDENDS AND DISTRIBUTIONS. For so long as any part of this Common
Stock Purchase Warrant remains outstanding and unexercised, the Company will,
upon the declaration of a cash dividend upon its Common Stock or other
distribution to the holders of its Common Stock (except distributions pursuant
to subparagraph 2(b)(x) hereof) and at least 30 days prior to the record date,
notify the Holder hereof of such declaration, which notice will contain, at a
minimum, the
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following information: (a) the date of the declaration of the dividend or
distribution, (b) the amount of such dividend or distribution, (c) the record
date of such dividend or distribution, (d) the payment date or distribution date
of such dividend or distribution, and (e) the Company's best estimate of the
frequency and amount of cash dividends or other distributions to be paid or made
in each of the succeeding three years. In the event dividends are paid by the
Company on any share of Common Stock in cash or cash equivalents after December
31, 1997, a dividend shall be paid by the Company with respect to all Warrants
in an amount equal per share in cash or cash equivalents (on an as-if-exercised
to Common Stock basis) to the amount paid or set aside in cash or cash
equivalents for each share of Common Stock. The provisions of this subparagraph
2(b)(vi) shall not, however, apply to dividends made in accordance with Section
7(g)(vi) of the Investment Agreement.
6 TRANSFER OF WARRANTS. This Common Stock Purchase Warrant and all
rights hereunder are transferable to permitted assigns pursuant to the Amended
and Restated Shareholder Agreement, in whole or in part, at the office or agency
of the Company referred to in paragraph 9 hereof, by the Holder hereof in person
or his duly authorized attorney, upon surrender of this Common Stock Purchase
Warrant properly endorsed.
7 EXCHANGES OF WARRANTS. This Common Stock Purchase Warrant is
exchangeable, upon the surrender hereof by the Holder hereof at the office or
agency of the Company referred to in paragraph 9 hereof, for new Common Stock
Purchase Warrants of like tenor representing in the aggregate the right to
subscribe for and purchase the number of shares which may be subscribed for and
purchased hereunder, each of such new Common Stock Purchase Warrant to represent
the right to subscribe for and purchase such number of shares as shall be
designated by the Holder hereof at the time of such surrender.
8 REMEDIES. The Company stipulates that the remedies at law of the
Holder of this Common Stock Purchase Warrant in the event of any default or
threatened default by the Company in the performance of or compliance with any
of the terms of this Common Stock Purchase Warrant are not and will not be
adequate, and that such terms may be specifically enforced by a decree for the
specific performance of any agreement contained herein or by an injunction
against a violation of any of the terms hereof or otherwise.
9 NONVOTING STOCK. The Company agrees and acknowledges that the Holder
of this Common Stock Purchase Warrant may be subject to regulatory and legal
restrictions which prohibit the Holder from acquiring Common Stock or other
voting securities of the Company (the "RESTRICTIONS"). In the event the Holder
is subject to the Restrictions at the time of exercise of the Common Stock
Purchase Warrant, the Company covenants and agrees to create a class of common
stock of the Company having the identical rights, privileges and characteristics
of the Common Stock, except that such common stock shall (i) not have the right
to vote with respect to matters submitted to a vote of the Company's
shareholders and (ii) be convertible to Common Stock at any time at the option
of the Holder to the extent permitted under the Restrictions.
10 NOTICES. Except as otherwise provided herein, any notices hereunder
shall be deemed to have been received (a) when delivered, if personally
delivered or sent via facsimile, or (b) one day following delivery to a
nationally recognized overnight courier or (c) on the third business day
following the date on which the piece of mail containing such communication is
posted, if sent by
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certified or registered mail, return receipt requested, in each case addressed,
if given to the Company, to the principal office of the Company, Attention:
President, or, if given to a Holder of this Common Stock Purchase Warrant,
addressed to such Holder at his address as the same shall appear on the books of
the Company.
11 MISCELLANEOUS. This Common Stock Purchase Warrant and any term
hereof may be changed, waived, discharged or terminated only by an instrument in
writing signed by both the Company and the Holder hereof. This Common Stock
Purchase Warrant shall be construed and enforced in accordance with, and
governed by the laws of, the State of North Carolina, regardless of conflicts of
law principles. The headings in this Common Stock Purchase Warrant are for
purposes of reference only, and shall not limit or otherwise affect any of the
terms hereof.
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IN WITNESS WHEREOF, the Company has caused this Common Stock Purchase
Warrant to be signed by one of its duly authorized officers under its corporate
seal and this Common Stock Purchase Warrant to be dated as of June 26, 1997.
▇▇▇▇▇▇ INTERNATIONAL INC.
By:/S/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
----------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Director, Mergers and Acquisitions and
Assistant Secretary
14
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EXHIBIT 2(d)
FORM OF SERIES B WARRANT
[attached]
90
- 1 -
EXHIBIT 4A(h)(i)
FORM OF AMENDED AND RESTATED SHAREHOLDER AGREEMENT
[attached]
91
- 2 -
EXHIBIT 4A(h)(ii)
FORM OF REGISTRATION RIGHTS AGREEMENT
[attached]
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- 1 -
REGISTRATION RIGHTS AGREEMENT
-----------------------------
THIS REGISTRATION RIGHTS AGREEMENT (the "AGREEMENT"), is made and
entered into as of June 26, 1997, by and between ▇▇▇▇▇▇ INTERNATIONAL INC., an
Ohio corporation (the "COMPANY"), and NATIONSBANC INVESTMENT CORPORATION, a
Delaware corporation (the "PURCHASER").
WHEREAS, pursuant to the terms of that certain Investment Agreement of
even date herewith by and between the Company and the Purchaser (the "INVESTMENT
AGREEMENT"), the Purchaser is purchasing the Company's Series A Note (as defined
therein) and Series B Note (as defined therein) (the "SERIES A NOTE"), in the
original principal amount of $5,000,000 and accompanied by warrants to purchase
shares (subject to adjustment) of the Company's Common Stock, no par value per
share (the "COMMON STOCK"), evidenced by the Series A Warrant (as defined
therein) (the "WARRANTS"); and
WHEREAS, in order to induce the Purchaser to purchase the Series A Note
and the Warrants from the Company, the Company desires to grant registration
rights to the Purchaser for the shares of Common Stock issuable upon the
exercise of the Warrants;
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, the parties hereto agree as follows:
1 DEFINITIONS. As used herein, the following defined terms shall have
the respective meanings given such terms below. Capitalized terms used herein
and not defined shall have the meanings set forth in the Investment Agreement.
"CAPITAL STOCK" means the Company's Common Stock and any other
class of common stock created by the Company in the future.
"COMMON STOCK" has the meaning set forth in the Recitals.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"EXCHANGE ACT REGISTRATION STATEMENT" means a registration
statement filed with the SEC pursuant to the Exchange Act.
"HOLDERS" means any holder or holders of shares of Capital
Stock issued to the Purchaser pursuant to the Investment Agreement, the
Amended and Restated Shareholder Agreement, the Warrants and all other
agreements executed in connection with the Investment Agreement.
"INDEMNIFIED PARTY" has the meaning set forth in subparagraph
6(c).
"INDEMNIFYING PARTY" has the meaning set forth in subparagraph
6(c).
The terms "REGISTER," "REGISTERED" and "REGISTRATION" refer to
a registration effected by preparing and filing a registration
statement in compliance with the Securities Act or the
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Exchange Act and the declaration or ordering of the effectiveness of
such registration statement.
"REGISTRABLE SECURITIES" means all shares of Capital Stock of
the Company which are Shares.
"SEC" means the Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SHARES" means all shares of Capital Stock of the Company held
by the Purchaser or which the Holders shall have acquired by or through
the Purchaser (including such shares as may represent stock dividends
or a stock split or those acquired pursuant to any conversion right or
preemptive right of purchase in the Investment Agreement, the Amended
and Restated Shareholder Agreement, the Warrants or any other agreement
executed in connection therewith, if any).
2 REQUESTED REGISTRATION.
(a) If at any time following the consummation of an initial
public offering of Capital Stock, the Company receives from the Holders
a written request that the Company effect a registration under the
Securities Act with respect to Registrable Securities, the Company
will, as expeditiously as possible, notify in writing all the Holders
of such request and use its diligent best efforts to effect all such
registrations (including, without limitation, the execution of an
undertaking to file post-effective amendments and appropriate
qualifications and approvals under the laws and regulations applicable
to the Company of any applicable governmental agencies and authorities,
including the applicable blue sky or other state securities laws) as
may be so requested and as would permit or facilitate the sale and
distribution of all or such portion of the Registrable Securities as
are specified in such request, together with any Registrable Securities
held by the other Holders who may desire to participate in such
registrations; PROVIDED, HOWEVER, that a Holder's request may not be
made within six months following the effectiveness of any registered
public offering of Capital Stock; and PROVIDED FURTHER, that before
filing any such registration statement or any amendments or supplements
thereto, the Company will (x) furnish to the Holders of Registrable
Securities which are to be included in such registration copies of all
such documents proposed to be filed, which documents will be subject to
the review of such Holders and their counsel, and (y) give the Holders
of Registrable Securities to be included in such registration statement
and their representatives the opportunity to conduct a reasonable
investigation of the records and business of the Company and to
participate in the preparation of any such registration statement or
any amendments or supplements thereto; and PROVIDED FURTHER, that the
Company shall not be obligated to take any action pursuant to this
subparagraph 2(a) if the Holders request the Company to register an
amount of Shares representing less than 33% of their Shares; and
PROVIDED FURTHER, that the Company shall not be obligated to take any
action to effect any such registration pursuant to this subparagraph
2(a) after the Company has effected one such registration pursuant to
this subparagraph 2(a) at the request of the Holders and such
registration has been declared or ordered effective. With respect to
any registration requested pursuant to this subparagraph 2(a), the
Company may include in such registration any other shares of Capital
Stock, subject to the restrictions
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set forth in subparagraph 2(c) only upon the written consent of the
Holders of a majority of the shares of Registrable Securities being
registered in the registration.
(b) Subject to subparagraph 2(a) above and the other terms and
conditions contained herein, the Company shall file a registration
statement covering the Registrable Securities so requested to be
registered as soon as practicable, but in any event within 90 days
after (i) receipt of the request or requests of the Holders or (ii) the
date on which the Purchaser agrees, pursuant to subparagraph 2(c), on
the terms and conditions of an underwriting, if applicable, as
evidenced by its acceptance of a letter of intent describing such terms
and conditions, whichever is later; PROVIDED, HOWEVER, that if the
Company shall furnish to the Holders a certificate signed by the
President of the Company stating that in the good faith judgment of the
Board of Directors it would be materially detrimental to the Company
and its stockholders for such registration statement to be filed at the
date filing would be required hereunder and it is therefore essential
to defer the filing of such registration statement, the Company shall
have an additional period of not more than 60 days within which to file
such registration statement (which additional period may be extended to
90 days if such deferral will materially reduce the expenses of such
registration due to the elimination of the need for any special audits
to be performed in connection with such registration).
(c) If the Holders intend to distribute the Registrable
Securities covered by their request by means of an underwriting, they
shall so advise the Company as a part of their request made pursuant to
subparagraph 2(a). In such event, if so requested in writing by the
Company, the Holders shall negotiate in good faith with a nationally
recognized underwriter or underwriters, or major regional underwriter
or underwriters acceptable to the Holders, selected by the Company and
reasonably satisfactory to the Holders with regard to the underwriting
of such requested registration; PROVIDED, HOWEVER, that if the Holders
have not agreed with such underwriter(s), in their discretion, as to
the terms and conditions of such underwriting within 30 days following
commencement of such negotiations, the Holders may select an
underwriter of their choice. The right of the Holders to registration
pursuant to this Paragraph 2 shall be conditioned upon the Holder's
participation in such underwriting to the extent provided herein. The
Company shall (together with all Holders proposing to distribute their
securities through such underwriting) enter into an underwriting
agreement in customary form with the underwriter or underwriters
selected pursuant to this Paragraph 2. Notwith standing any other
provision of this Paragraph 2, if the underwriter advises the Company
in writing with a copy to the Holders that marketing factors require a
limitation of the number of shares to be underwritten, the Company
shall so advise all Holders, and the Company will include in such
registration up to the maximum allowed by such underwriter (x) first,
as many shares as possible of Registrable Securities requested to be
included by the applicable Holders, which shall be allocated among all
Holders thereof in proportion, as nearly as practicable, to the
respective amounts of Registrable Securities entitled to inclusion in
such registration held by such Holders at the time of filing the
registration statement and (y) second, shares to be sold by the Company
or other holders of Capital Stock, if any. If any Holder of Registrable
Securities disapproves of the terms of the underwriting, he may elect
to withdraw therefrom by written notice to the Company, the underwriter
and the other Holders. In the event of any such withdrawal, the Company
will include in any such registration in lieu thereof any additional
shares of Registrable Securities which were requested to be included by
a Holder and which were excluded pursuant to the above-described
underwriter limitation up to the maximum set by such underwriter.
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(d) The Company will use its best efforts to do any and all
other acts which may be necessary or advisable to enable each selling
Holder to dispose of the Registrable Securities being sold including,
without limitation, furnishing to each such seller (x) the number of
copies of the registration statement and of the exhibits and the
prospectus contained therein reasonably requested by each such Holder,
and (y) signed counterparts, addressed to each such Holder, of an
opinion of the Company's counsel and a "cold comfort" letter of the
Company's independent certified public accountants with respect to the
matters customarily covered in such documents delivered to underwriters
in underwritten public offerings.
3 COMPANY REGISTRATION.
(a) If at any time or from time to time after the consummation
of an initial public offering of Capital Stock, the Company shall
determine to register any of its securities, either for its own account
or the account of a security holder or holders, in a registration
statement covering the sale of Capital Stock to the general public
pursuant to an underwritten public offering (except with respect to any
registration filed on Form ▇- ▇, ▇▇▇▇ ▇-▇ or any successor forms
thereto), the Company will: (i) give to each Holder written notice
thereof at least 45 days before filing if such registration is a
subsequent registration; PROVIDED, HOWEVER, in the case of a
Registration Statement on Form S-3, the Company shall be required to
give each Holder written notice of the proposed filing thereof promptly
after a decision to make such filing has been made and in no event less
than ten business days prior to filing; and (ii) use its best efforts
to include in such registration (and any related qualification under
blue sky laws) and in any underwriting involved therein, all the
Registrable Securities specified in a written request or requests, made
within 30 days after receipt of such written notice from the Company,
or, in the case of a Registration Statement on Form S-3, within seven
business days after receipt of such written notice, by any Holder or
Holders, except as set forth in subparagraph 3(b) below. The notice
referred to in this subparagraph shall include a list of the
jurisdictions in which the Company intends to attempt to qualify such
securities under the applicable blue sky or other state securities
laws.
(b) The right of any Holder to registration pursuant to this
Paragraph 2 shall be conditioned upon such Holder's participation in
the underwriting to the extent provided herein. All Holders proposing
to distribute their securities through such underwriting shall
(together with the Company) enter into an underwriting agreement in
customary form with the underwriter or underwriters selected for such
underwriting by the Company, and may, at their option, require that any
or all the representations and warranties by, and the covenants and
other agreements on the part of, the Company to and for the benefit of
such underwriter shall also be made to and for the benefit of such
Holders. Such Holders shall not be required to make any representations
or warranties to or agreements with the Company or the underwriter
other than those relating to such Holders, their Shares and their
intended methods of distribution and information about such Holders
provided by such Holders for use in the registration statement. If
requested by the underwriter, the Holders will agree, for themselves
and their affiliates, not to sell or offer to sell any shares of their
Capital Stock for a reasonable period of time (not to exceed 90 days)
after the effective date of the registration statement. Notwithstanding
any other provision of this Paragraph 2, if the underwriter determines
that marketing factors require a limitation of the number of shares to
be underwritten, the Company shall so advise all Holders of Registrable
Securities which would otherwise be registered and underwritten
pursuant hereto, and the Company shall
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include in such registration, prior to the inclusion of any securities
that are not Registrable Securities, the number of shares of
Registrable Securities requested to be included in the registration,
which in the opinion of such underwriter can be sold, PRO RATA among
all Holders thereof in proportion, as nearly as practicable, to the
respective amounts of Registrable Securities held by such Holders at
the time of filing the registration statement, with further
proportional allocations among the Holders and Other Holders if any
such Holder has requested less than all such Registrable Securities it
is entitled to register.
4 EXPENSES OF REGISTRATION. All expenses incurred in connection with
any registration or qualification pursuant to this Agreement, including, without
limitation, all registration, filing and qualification fees, printing expenses,
fees and disbursements of counsel for the Company, and expenses and fees of any
special audits incidental to or required by such registration, shall be borne by
the Company; PROVIDED, HOWEVER, that the Company shall not be required to pay
fees of legal counsel, investment advisors and accountants of the Holders, or
underwriters' discounts or commissions relating to Registrable Securities (such
underwriters' fees, discounts or commissions to be borne by the Holders, on a
PRO RATA basis, based on the number of shares of Registrable Securities sold by
each of them).
5 REGISTRATION PROCEDURES. In the case of each registration effected by
the Company pursuant to this Agreement, the Company will keep each Holder
participating therein advised in writing as to the initiation of such
registration (and any state qualifications) and as to the completion thereof.
6 INDEMNIFICATION.
(a) The Company will indemnify each Holder of Registrable
Securities, each of the Holder's officers, directors, partners and
employees, and each person controlling such Holder, with respect to
such registration or qualification effected pursuant to this Agreement
and in which Registrable Securities of the Holders are included,
against all claims, losses, damages, and liabilities (or actions in
respect thereto) arising out of or based on any untrue statement (or
alleged untrue statement) of a material fact contained in any
prospectus, registration statement or other document incident to any
such registration or qualification, or based on any omission (or
alleged omission) to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading, or any violation by the Company of any rule or regulation
promulgated pursuant to any Federal, state or common law rule or
regulation including, without limitation, the Securities Act,
applicable to the Company and relating to action or inaction required
of the Company in connection with any such registration, qualification
or compliance and will reimburse each such Holder, each of the Holder's
officers, directors, partners and employees, and each person
controlling such Holder, for any legal and any other reasonable
expenses incurred in connection with investigating or defending any
such claim, loss, damage, liability or action, including reasonable
attorneys' fees and expenses; PROVIDED, HOWEVER, that the Company will
not be liable in any such case to the extent that any such claim, loss,
damage or liability arises out of or is based on any untrue statement
or omission based upon and in conformity with written information
furnished to the Company by such Holder in a signed document. Such
indemnity shall be effective notwithstanding any investigation made by
or on behalf of any Holder or any such officer, director, partner,
employee, or controlling person and shall survive any transfer by the
same of the Registrable Securities.
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(b) Each Holder will, if Registrable Securities held by or
issuable to such Holder are included in the securities as to which such
registration or qualification is being effected, indemnify the Company,
each of its directors, officers and employees, each person who controls
the Company, and each other such Holder, each of such other Holder's
officers, directors, partners and employees, and each person
controlling such other Holder, against all claims, losses, damages and
liabilities (or actions in respect thereto) arising out of or based on
any untrue statement (or alleged untrue statement) of a material fact
contained in any such registration statement, prospectus or other
document, or any 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 the Company, such
Holders, such directors, officers, partners, employees or persons for
any legal or any other reasonable expenses incurred in connection with
investigating or defending any such claim, loss, damage, liability or
action, including reasonable attorneys' fees and expenses, in each case
to the extent, but only to the extent, that such untrue statement (or
alleged untrue statement) or omission (or alleged omission) is made in
such registration statement, prospectus or other document in reliance
upon and in conformity with written information furnished to the
Company by such Holder. Notwithstanding the foregoing, the liability of
any such Holder shall not exceed an amount equal to the proceeds
realized by each such Holder of Registrable Securities sold as
contemplated herein. Such indemnity shall be effective notwithstanding
any investigation made by or on behalf of the Company, any such
director, officer, partner, employee, or controlling person and shall
survive the transfer of such securities by such Holder.
(c) Each party entitled to indemnification under this
Paragraph 6 (the "INDEMNIFIED PARTY") shall give notice to the party
required to provide indemnification (the "INDEMNIFYING PARTY") promptly
after such Indemnified Party has actual knowledge of any claim as to
which indemnity may be sought. Unless in the reasonable judgment of the
Indemnified Party a conflict of interest may exist between the
Indemnifying Party and the Indemnified Party, the Indemnifying Party
shall be permitted to assume the defense of any such claim or any
litigation resulting therefrom; PROVIDED, HOWEVER, that in any event
counsel for the Indemnifying Party or Indemnified Party who shall
conduct the defense of such claim or litigation as provided above shall
be approved by the other Party (which approval shall not be
unreasonably withheld), and such other Party may participate in such
defense at such Party's expense; PROVIDED, FURTHER, that the failure of
any Indemnified Party to give notice as provided herein shall not
relieve the Indemnifying Party of its obligations under this Paragraph
6 unless such failure shall have had a material adverse effect on the
Indemnifying Party's ability to defend such claim.
(d) The Indemnified Party shall make no settlement of any
claim or litigation which would give rise to liability on the part of
the Indemnifying Party under any indemnity contained in this Paragraph
6 without the written consent of the Indemnifying Party, which consent
shall not be unreasonably withheld or delayed, and no Indemnifying
Party shall make any settlement of any such claim or litigation without
the consent of the Indemnified Party, which consent shall not be
unreasonably withheld or delayed. If a firm offer is made to settle a
claim or litigation defended by the Indemnified Party and the
Indemnified Party notifies the Indemnifying Party in writing that the
Indemnified Party desires to accept and agree to such offer, but the
Indemnifying Party elects not to accept or agree to such offer within
ten days after receipt of written notice from the Indemnified Party of
the terms of such offer, then, in such event, the Indemnified Party
shall continue to contest or defend such
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claim or litigation and, if such claim or litigation is within the
scope of the Indemnifying Party's indemnity contained in this Paragraph
6, the Indemnified Party shall be indemnified pursuant to the terms
hereof. If a firm offer is made to settle a claim or litigation
defended by the Indemnifying Party and the Indemnifying Party notifies
the Indemnified Party in writing that the Indemnifying Party desires to
accept and agree to such offer, but the Indemnified Party elects not to
accept or agree to such offer within ten days after receipt of written
notice from the Indemnifying Party of the terms of such offer, then, in
such event, the Indemnified Party may continue to contest or defend
such claim or litigation and, in such event, the total maximum
liability of the Indemnifying Party to indemnify or otherwise reimburse
the Indemnified Party in accordance with this Agreement with respect to
such claim or litigation shall be limited to and shall not exceed the
amount of such settlement offer, plus reasonable out-of-pocket costs
and expenses (including reasonable fees and disbursements of counsel)
to the date of notice that the Indemnifying Party desired to accept
such settlement offer.
(e) The indemnification payments required pursuant to this
Paragraph 6 for expenses of the investigation or defense of a claim or
lawsuit shall be made from time to time during the course of the
investigation or defense, as the case may be, upon submission of
reasonably sufficient documentation that any such expenses have been
incurred.
7 INFORMATION BY HOLDER. The Holder or Holders of Registrable
Securities included in any registration shall furnish to the Company such
written information regarding such Holder or Holders and the distribution
proposed by such Holder or Holders as the Company may reasonably request in
writing and as shall be required in connection with any registration or
qualification referred to in this Agreement. The Company agrees to include in
any such registration statement all information concerning the Holders and their
distribution which the Holders shall reasonably request.
8 FILING OF REPORTS UNDER THE EXCHANGE ACT. The Company shall give
prompt notice to the Holders of (a) the filing of any Exchange Act Registration
Statement relating to any class of equity securities of the Company, and (b) the
effectiveness of such Exchange Act Registration Statement, in order to enable
the Holders to comply with any reporting requirements under the Exchange Act or
the Securities Act. The Company shall, at any time after the Company shall
register any shares of Common Stock under the Securities Act and upon the
written request of the Holders, file an Exchange Act Registration Statement
relating to any class of equity securities of the Company then held by the
Holders or issuable upon conversion or exercise of any class of debt or equity
securities or warrants or options of the Company then held by the Holders,
whether or not the class of equity securities with respect to which such request
is made shall be held by at least the number of persons which would require the
filing of a registration statement under Section 12(g)(1) of the Exchange Act.
9 RULE 144 REPORTING. With a view to making available to the Holders
benefits of certain rules and regulations of the SEC which may permit the sale
of the Shares to the public without registration, after the completion of any
registration pursuant to Paragraph 2 or 3 above, the Company agrees to:
(a) make and keep public information available, as those terms
are understood and defined in SEC Rule 144, or any successor provision
thereto, at all times;
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(b) use its best efforts to file with the SEC in a timely
manner all reports and other documents required of the Company under
the Securities Act and the Exchange Act;
(c) so long as a Holder owns any Shares (or other securities
of the Company), to furnish to such Holder forthwith upon its request a
written statement by the Company as to the Company's compliance with
the reporting requirements of Rule 144 and of the Securities Act and
the Exchange Act, a copy of the most recent annual or quarterly report
of the Company, and such other reports and documents so filed 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
(d) take any further action reasonably requested by a Holder
to enable such Holder to sell its Registrable Securities without
registration under Rule 144, under any successor provision, or any
similar rule or regulation promulgated by the SEC from time to time.
10 TRANSFER OF REGISTRATION RIGHTS. The rights to cause the Company to
register Registrable Securities that are granted by the Company under Paragraphs
2 and 3 may be assigned by a Holder to a transferee or assignee of any of its
Registrable Securities; PROVIDED, HOWEVER, that the Company is given written
notice by the Holder at the time of or within a reasonable time after the
transfer, stating the name and address of the transferee or assignee and
identifying the securities with respect to which such registration rights are
being assigned. Subject to the foregoing provision, this Agreement shall be
binding upon, and inure to the benefit of, the parties hereto and their
respective successors and assigns; PROVIDED, FURTHER, that the registration
rights granted in this Agreement shall not be transferred to persons who
received Registrable Securities pursuant to a registration statement under the
Securities Act or pursuant to a transaction under Rule 144 or any successor
provision thereto.
11 CHANGES. The terms and provisions of this Agreement may not be
modified or amended, except that they may be modified or amended with the
written consent of (a) the Company and (b) the Holders of a majority of the
Shares outstanding. None of the terms and provisions of this Agreement may be
waived except in writing by the person so waiving.
12 GRANTING OF REGISTRATION RIGHTS. The Company shall not, without the
prior written consent of Holders of 75% of the Shares then outstanding which
have not already been registered, grant any rights to any persons to register
any shares of Capital Stock or other securities of the Company if such rights
could reasonably be expected to conflict with, or be on parity with, the rights
of the Holders of the Shares; PROVIDED, HOWEVER, that the granting of (i) one
demand registration right exercisable upon the earlier of (A) 12 months after
the gmi Closing Date and (B) six months after the right of the Holders to
exercise their rights set forth in Paragraph 2 and (ii) unlimited piggyback
rights shall not require the written consent of the Holders.
13 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of North Carolina.
14 NOTICE. All notices and other communications required or permitted
to be given in respect of this Agreement shall be sent by personal delivery,
nationally recognized overnight courier, facsimile or certified or registered
mail, to the following parties at the following addresses,
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or, in each case, at such other address or addresses as any party shall
hereafter specify by written notice to the others:
(i) If to the Company, to:
▇▇▇▇▇▇ International Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Chief Financial Officer
with a copy (which shall not constitute notice) to:
▇▇▇▇▇▇▇, Muething & ▇▇▇▇▇▇▇, P.L.L.
1800 Provident Tower, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
(ii) If to the Purchaser, to:
NationsBanc Investment Corporation
NationsBank Corporate Center
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
with a copy (which shall not constitute notice) to:
Fennebresque, Clark, ▇▇▇▇▇▇▇▇ & Hay
NationsBank Corporate Center
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇, Esq.
Any notice required to be given hereunder by one party to another shall be
deemed to have been received (a) when delivered, if personally delivered or sent
via facsimile, (b) one day following delivery to a nationally recognized
overnight courier or (c) on the third business day following the date on which
the piece of mail containing such communication is posted, if sent by certified
or registered mail.
15 TERMINATION. This Agreement shall terminate with respect to any
Holder on the later of (a) the date on which the Holder may sell the Shares
pursuant to Rule 144(k) under the Securities Act and (b) the date that such
Holder's ownership of Shares falls below 1% of the issued and outstanding shares
of Capital Stock.
9
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16 COUNTERPARTS. This Agreement may be executed in counterparts, each
of which shall be deemed an original and which together shall constitute a
single agreement.
17 HEADINGS. The headings of the Paragraphs of this Agreement are
inserted for convenience only and shall not be deemed to constitute a part
hereof.
18 SEVERABILITY. If any provision or any portion of any provision of
this Agreement shall be held to be void or unenforceable, the remaining portions
of this Agreement shall continue in full force and effect.
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IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
duly executed by their authorized officers as of the day and year first above
written.
▇▇▇▇▇▇ INTERNATIONAL INC.,
an Ohio corporation
By:/S/ ▇▇▇▇▇▇▇ ▇. FORECELLINI
---------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Director, Mergers and Acquisitions and
Assistant Secretary
NATIONSBANC INVESTMENT CORPORATION
a Delaware corporation
By:/S/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Senior Vice President
478441.1
11
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EXHIBIT 4A(h)(iii)
FORM OF SUBORDINATION AGREEMENT
[attached]
104
- 1 -
EXHIBIT 4A(h)(iv)
FORM OF PLEDGE AGREEMENT
[attached]
