EXECUTION COPY
$25,000,000
LOAN AGREEMENT
DATED AS OF FEBRUARY 19, 1999
BETWEEN
INTEK GLOBAL CORPORATION
AS BORROWER
AND
SECURICOR COMMUNICATIONS LIMITED
AS LENDER
LOAN AGREEMENT, dated as of February 19, 1999, between INTEK GLOBAL
CORPORATION, a Delaware corporation having an office at 00 Xxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000 (the "Borrower"), and SECURICOR COMMUNICATIONS LIMITED, a
company incorporated under the laws of England and Wales having an office at 00
Xxxxxxxxxx Xxxx, Xxxxxx, Xxxxxx, XX0 0XX, Xxxxxxx ("Lender").
W I T N E S S E T H :
WHEREAS, Lender has agreed to provide Borrower a revolving credit
facility in an amount not to exceed $25,000,000 plus interest, which, at the
option of Lender, may be convertible into shares of Borrower's Common Stock; and
WHEREAS, Lender has made an advance to Borrower in the amount of
$2,500,000 on December 17, 1998 (the "Initial Advance") and additional advances
in the amount of $2,500,000 on January 14, 1999 and in the amount of $7,500,000
on February 3, 1999 (the "Additional Advances") with the agreement and
understanding by Borrower and Lender that such Initial Advance and Additional
Advances shall be integrated into this Agreement and all treated as an "Advance"
(as defined herein) made pursuant to this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants hereinafter contained, the parties hereto agree as follows:
1. DEFINITIONS
In addition to the defined terms appearing above, capitalized terms
used in this Agreement shall have (unless otherwise provided elsewhere in this
Agreement) the following respective meanings when used herein:
"Additional Advances" shall mean the Advances provided by Lender to
Borrower in the amount of $2,500,000 on January 14, 1999 and in the amount of
$7,500,000 on February 3, 1999.
"Advance" shall have the meaning ascribed to it in Section 2.1(a)
hereof.
"Advance Date" shall mean with respect to any Advance, the date such
Advance was made.
"Affiliate" shall mean, with respect to any Person, any other Person
that controls such Person or is controlled by or under common control with such
Person.
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"Agreement" shall mean this Loan Agreement, including all amendments,
modifications and supplements hereto and any appendices, exhibits or schedules
to any of the foregoing, and shall refer to the Agreement as the same may be in
effect at the time such reference becomes operative.
"Ancillary Agreements" shall mean any and all supplemental agreements,
undertakings, instruments, documents or other writings executed by Borrower
pursuant to this Agreement.
"Business Day" shall mean any day that is not a Saturday, a Sunday or a
day on which banks are required or permitted to be closed in the State of New
York.
"Charges" shall mean all federal, state, county, city, municipal,
local, foreign or other governmental taxes at the time due and payable, levies,
assessments, charges, liens, claims or encumbrances upon or relating to (i) the
Obligations, (ii) Borrower's or any of its Subsidiaries' ownership or use of any
of its assets, or (iii) any other aspect of Borrower's or any of its
Subsidiaries' business.
"Closing Date" shall mean the date on which all of the conditions
precedent to the effectiveness of this Agreement have been satisfied.
"Code" shall mean the Uniform Commercial Code of the jurisdiction with
respect to which such term is used, as in effect from time to time.
"Commitment Termination Date" shall mean December 31, 1999.
"Common Stock" shall mean common stock, par value $0.01, of Borrower.
"Conversion Date" shall have the meaning ascribed to it in Section
2.11(b) hereof.
"Conversion Value" shall mean the U.S. dollar exchange value of
Borrower's Common Stock for purposes of determining the conversion of any dollar
amount due from Borrower to Lender under the Loan into Borrower's Common Stock.
With respect to the first $12,500,000 of Advances made by Lender to Borrower and
the amount of interest accrued or capitalized and payable with respect to such
Advances, the Conversion Value of the Common Stock shall mean the average Market
Price for such Common Stock for the twenty (20) consecutive trading days ending
the day before the Initial Advance Date as shown on Schedule 2.11 attached
hereto. For all other Advances and the amount of interest accrued or capitalized
and payable with respect to such Advances, the Conversion Value of the Common
Stock shall mean the average Market Price for such Common Stock for the twenty
(20) consecutive trading days ending the day before the applicable Advance Date.
For all other Obligations, the Conversion Value of the Common Stock shall mean
the average Market Price for such Common Stock for the twenty (20) consecutive
trading days ending the day before the Conversion Date.
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"Default" shall mean any event which, with the passage of time or
notice or both would, unless cured or waived, become an Event of Default.
"Event of Default" shall have the meaning ascribed to it in Section 9.1
hereof.
"Federal Reserve Board" shall have the meaning ascribed to it in
Section 4.8 hereof.
"Fiscal Year" shall mean the fiscal year ended September 30. Subsequent
changes of the fiscal year of Borrower shall not change the term "Fiscal Year,"
unless Lender shall consent in writing to such changes.
"GAAP" shall mean generally accepted accounting principles in the
United States of America as in effect from time to time.
"Governmental Authority" means any nation or government, any state or
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
"Guaranteed Indebtedness" shall mean, as to any Person, any obligation
of such Person guaranteeing any indebtedness, lease, dividend, or other
obligation ("primary obligations") of any other Person (the "primary obligor")
in any manner including, without limitation, any obligation or arrangement of
such Person (a) to purchase or repurchase any such primary obligation, (b) to
advance or supply funds (i) for the purchase or payment of any such primary
obligation or (ii) to maintain working capital or equity capital of the primary
obligor or otherwise to maintain the net worth or solvency or any balance sheet
condition of the primary obligor, (c) to purchase property, securities or
services primarily for the purpose of assuring the owner of any such primary
obligation of the ability of the primary obligor to make payment of such primary
obligation, or (d) to indemnify the owner of such primary obligation against
loss in respect thereof.
"Indebtedness" of any Person shall mean (i) all indebtedness of such
Person for borrowed money or for the deferred purchase price of property or
services (including, without limitation, reimbursement and all other obligations
with respect to surety bonds, letters of credit and bankers' acceptances,
whether or not matured, but not including obligations to trade creditors
incurred in the ordinary course of business), (ii) all obligations evidenced by
notes, bonds, debentures or similar instruments, (iii) all indebtedness created
or arising under any conditional sale or other title retention agreements with
respect to property acquired by such Person (even though the rights and remedies
of the seller or lender under such agreement in the event of default are limited
to repossession or sale of such property), (iv) all Indebtedness referred to in
clause (i), (ii) or (iii) above secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be secured by)
any Lien upon or in property (including, without limitation, accounts and
contract rights) owned by such Person, even though such Person has not assumed
or become liable for the payment of such Indebtedness, (v) all Guaranteed
Indebtedness, and (vi) the Obligations.
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"Initial Advance" shall mean the Advance in the amount of $2,500,000
provided by Lender to Borrower on December 17, 1998.
"Initial Advance Date" shall mean December 17, 1998.
"Lien" shall mean any mortgage or deed of trust, pledge, hypothecation,
assignment, deposit arrangement, lien, charge, claim, security interest,
easement or encumbrance, or preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever (including, without
limitation, any lease or title retention agreement, any financing lease having
substantially the same economic effect as any of the foregoing, and the filing
of, or agreement to give, any financing statement perfecting a security interest
under the Code or comparable law of any jurisdiction).
"Loan" shall mean the aggregate amount of Advances (including the
Initial Advance and the Additional Advances) outstanding at any time plus the
amount of any interest capitalized with respect thereto.
"Loan Documents" shall mean this Agreement, the Note, and any other
Ancillary Agreements as to which Lender is a party or a beneficiary and all
other agreements, instruments, documents and certificates, including, without
limitation, pledges, powers of attorney, consents, assignments, contracts,
notices, and all other written matter whether heretofore, now or hereafter
executed by or on behalf of Borrower or any of its Affiliates, or any employee
of Borrower or any of its Affiliates, and delivered to Lender in connection with
this Agreement or the transactions contemplated hereby.
"Material Adverse Effect" or "Material Adverse Change" shall mean an
event or circumstance which materially and adversely affects the business,
properties, financial condition or operations of Borrower and its Subsidiaries
(taken as a whole).
"Market Price" shall have the meaning ascribed to it in Section
2.11(a)(ii) hereof.
"Maximum Lawful Rate" shall have the meaning ascribed to it in Section
2.3(b) hereof.
"Note" shall have the meaning ascribed to it in Section 2.1(b).
"Obligations" shall mean all loans, advances, debts, liabilities, and
obligations, for monetary amounts (whether or not such amounts are liquidated or
determinable) owing by Borrower to Lender, and all covenants and duties
regarding such amounts, of any kind or nature, present or future, whether or not
evidenced by any note, agreement or other instrument, arising under any of the
Loan Documents. This term includes, without limitation, all interest (whether
capitalized or otherwise), charges, expenses, attorneys' fees and any other sum
chargeable to Borrower under any of the Loan Documents.
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"Person" shall mean any individual, sole proprietorship, partnership,
joint venture, trust, unincorporated organization, association, corporation,
institution, public benefit corporation, entity or government (whether federal,
state, county, city, municipal or otherwise, including, without limitation, any
instrumentality, division, agency, body or department thereof).
"Repayment Date" means December 31, 1999.
"Senior Debt" shall mean all Indebtedness of Borrower (including
without limitation all principal of and premium, if any, and interest on, and
all other amounts of any nature whatsoever owing in respect of such
Indebtedness, as the same may be amended, modified or supplemented and any
refinancing thereof from time to time) other than Indebtedness which, in
accordance with its terms, ranks pari passu or junior to the Loan.
"Senior Indebtedness" shall have the meaning ascribed to it in Section
10.1 hereof.
"Solvent" shall mean, when used with respect to any Person, that:
the present fair saleable value of such Person's assets
(including, without limitation, the fair saleable value of the
goodwill and other intangible assets) is in excess of the
total amount of such Person's liabilities;
such Person is able to pay its debts as they become due; and
such Person does not have unreasonably small capital to carry
on such Person's business as theretofore operated and all
businesses in which such Person is about to engage.
"Stock" shall mean all shares, options, warrants, general or limited
partnership interests, participations or other equivalents (regardless of how
designated) of or in a corporation, partnership or equivalent entity whether
voting or nonvoting, including, without limitation, common stock, preferred
stock, or any other "equity security" (as such term is defined in Rule 3a11-1 of
the General Rules and Regulations promulgated by the Securities and Exchange
Commission under the Securities Exchange Act of 1934, as amended).
"Subordinated Indebtedness" shall have the meaning ascribed to it in
Section 10.1 hereof.
"Subsidiary" shall mean any Person 50% or more of whose issued and
outstanding voting securities is owned or controlled, directly or indirectly, by
the specified Person.
"Taxes" shall have the meaning ascribed thereto in Section 2.10 hereof.
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"Trademarks" shall mean the Trademarks described on Schedule 4.12(b)
hereto and the trade name "Midland" and similar variations thereof, and all
registrations, applications and renewals thereof and all logos, whether or not
registered, used in connection therewith.
Any accounting term used in this Agreement shall have, unless otherwise
specifically provided herein, the meaning customarily given such term in
accordance with GAAP, and all financial computations hereunder shall be
computed, unless otherwise specifically provided herein, in accordance with GAAP
consistently applied. That certain terms or computations are explicitly modified
by the phrase "in accordance with GAAP" shall in no way be construed to limit
the foregoing. All other undefined terms contained in this Agreement shall,
unless the context indicates otherwise, have the meanings provided for by the
Code as in effect in the State of New York to the extent the same are used or
defined therein. The words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Agreement as a whole, including the Exhibits and
Schedules hereto, as the same may from time to time be amended, modified or
supplemented, and not to any particular section, subsection or clause contained
in this Agreement.
Wherever from the context it appears appropriate, each term stated in
either the singular or plural shall include the singular and the plural, and
pronouns stated in the masculine, feminine or neuter gender shall include the
masculine, the feminine and the neuter.
2. AMOUNT AND TERMS OF CREDIT
2.1. (1) REVOLVING ADVANCES. Upon and subject to the terms and
conditions hereof, Lender shall make available, from time to time on a revolving
basis, until the Commitment Termination Date, for Borrower's use and upon the
request of Borrower therefor, advances (each, an "Advance") in an aggregate
amount which shall not exceed $25,000,000. The Initial Advance and the
Additional Advances in the aggregate principal amount of $12,500,000 were made
to Borrower on December 17, 1998 (the "Initial Advance Date") and on January 14,
1999 and February 3, 1999, respectively, and such Initial Advance and Additional
Advances shall be treated as Advances for all purposes of this Agreement. Each
subsequent Advance shall be made on notice, given no later than thirty (30) days
prior to the proposed Advance, by Borrower to Lender and no Advance shall be
requested unless the amount thereof is equal to the greater of (i) $2,500,000
and (ii) a whole number multiple of $2,500,000 in excess thereof unless the
availability under this Agreement is less than $2,500,000 in which case such
Advance shall equal such amount. Each such notice (a "Notice of Advance") shall
be in writing in substantially the form of Exhibit A hereto, executed by any
duly authorized officer of Borrower, specifying therein the requested date and
amount of such Advance. Lender shall, before 5:00 P.M. (New York City time) on
the date of the proposed Advance, upon fulfillment of the applicable conditions
set forth in Section 3, wire to a bank in the United States or the United
Kingdom designated by Borrower and reasonably acceptable to Lender the amount of
such Advance.
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(2) NOTE. The Loan made by Lender shall be evidenced by a
promissory note, dated as of the Initial Advance Date, to be executed and
delivered by Borrower at or prior to the Closing Date, the form of which is
attached hereto and made a part hereof as Exhibit B (the "Note"). The Note shall
be payable to the order of Lender and shall represent the obligation of Borrower
to pay the amount of the Loan, with interest thereon as prescribed in Section
2.4. The date and amount of each Advance and each payment of principal and
interest or any capitalization of interest with respect thereto shall be
recorded on the books and records of Lender, which books and records shall
constitute prima facie evidence of the accuracy of the information therein
recorded. The entire unpaid balance of the Loan and all other Obligations shall
be due and payable on the Repayment Date.
2.2. USE OF PROCEEDS. Borrower shall apply the proceeds of the Advances
for the general corporate purposes of Borrower and its Subsidiaries.
2.3. INTEREST ON LOAN.
(1) From the Initial Advance Date through and including the
Commitment Termination Date, interest accrues on the amount outstanding from
time to time under the Loan at the rate of eleven and one-half percent (11-1/2%)
per annum, calculated on the basis of a 360 day year for the number of days
elapsed. Interest will accrue on the Initial Advance through, and will be
capitalized on, March 31, 1999 and added to the principal amount outstanding at
such time under the Loan. Interest on all other Advances will accrue through the
last day of each calendar quarter and will be capitalized on such date and added
to the principal amount outstanding at such time under the Loan. Interest
accrued and uncapitalized on the Repayment Date shall be payable on such date.
(2) Notwithstanding anything to the contrary set forth in this
Section 2.3, if at any time until payment in full of all of the Obligations, the
applicable rate of interest under this Agreement exceeds the highest rate of
interest permissible under any law which a court of competent jurisdiction
shall, in a final determination, deem applicable hereto (the "Maximum Lawful
Rate"), then in such event and so long as the Maximum Lawful Rate would be so
exceeded, the rate of interest payable hereunder shall be equal to the Maximum
Lawful Rate; provided, however, that if at any time thereafter the applicable
rate of interest under this Agreement is less than the Maximum Lawful Rate,
Borrower shall continue to pay interest hereunder at the Maximum Lawful Rate
until such time as the total interest received by Lender from the making of
Advances hereunder is equal to the total interest which Lender would have
received had the applicable rate of interest under this Agreement been (but for
the operation of this paragraph) the interest rate payable since the Initial
Advance Date. Thereafter, the interest rate payable hereunder shall be the
applicable rate of interest under this Agreement, unless and until such rate
shall again exceeds the Maximum Lawful Rate, in which event this paragraph shall
again apply.
2.4. QUARTERLY INTEREST PAYMENTS.
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(1) Borrower shall have the option, in lieu of capitalization
of accrued interest, to pay any such quarterly interest amount either in cash or
in Borrower's Common Stock by giving Lender notice thereof ten (10) Business
Days before such payment is due. If Borrower elects to make a quarterly interest
payment in Common Stock, such Common Stock shall be valued for payment of the
amount due at the Conversion Value applicable with respect to such interest
payment. Payment in Common Stock of quarterly interest payments shall be the
number of shares of Borrower's Common Stock having an aggregate Conversion Value
equal to such interest payment, provided that the value of any fractional shares
shall be paid in cash.
(2) Notwithstanding Borrower's election to make a cash payment
of any accrued quarterly interest payment, Lender by giving written notice to
Borrower no later than three (3) Business Days prior to the date such payment is
due may elect, at its sole option, to receive the value of such quarterly
interest payment in Borrower's Common Stock based on the Conversion Value with
respect to such interest payment.
2.5. PREPAYMENTS.
Borrower shall have the right, at any time, to prepay the
Loan, in whole or in part, without premium or penalty, upon at least ten (10)
Business Days irrevocable notice to Lender specifying (i) the amount to be
repaid and (ii) the date of such repayment. Each partial prepayment of the Loan
pursuant to this Section 2.5 shall be in a principal amount equal to the lesser
of $500,000 or a whole number multiple of $500,000 in excess thereof or such
lesser amount outstanding and shall be accompanied by payment of interest
allocable to the amount of principal prepaid. If any such notice is given,
Borrower shall make the prepayment specified therein, and such prepayment shall
be due and payable as specified therein. Any election by Borrower to make a
prepayment of the Loan, in whole or in part, shall be made in cash only, unless
Lender provides Borrower with written notice three Business Days prior to the
specified prepayment date of Lender's election to receive Borrower's Common
Stock as the form of payment. In the event Lender elects to receive the
prepayment from Borrower in Common Stock, such prepayment amount shall be
allocated by Lender to the Advances in accordance with Section 2.7 hereof and
the Common Stock to be issued with respect to such prepayment shall be valued at
the Conversion Value applicable to such amounts. Amounts prepaid may be
reborrowed until the Commitment Termination Date.
2.6. RECEIPT OF PAYMENTS. Borrower shall make each cash payment under
this Agreement not later than 11:00 A.M. (New York City time) on the day when
due in lawful money of the United States of America in immediately available
funds to Lender's depositary bank as designated by Lender from time to time for
deposit in Lender's depositary account. For purposes only of computing interest
hereunder, all payments shall be applied by Lender on the day payment has been
credited by Lender's depository bank to Lender's account in immediately
available funds. For purposes of determining the amount of funds available for
borrowing by Borrower pursuant to Section 2.1(a) hereof, such payments shall be
applied by Lender against the outstanding amount of the Loan at the time they
are credited to its account. All payments made in Common Stock shall be made in
fully paid, non-assesable shares delivered to Lender on the date such payment is
due.
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2.7. APPLICATION OF PAYMENTS. Borrower irrevocably waives the right to
direct the application of any and all payments at any time or times hereafter
received by Lender from or on behalf of Borrower, and Lender shall have the
continuing exclusive right to apply any and all such payments (including the
right to apply any payments to any Advance, and interest accrued with respect
thereto, for purposes of determining the Conversion Value of Common Stock for
any such payment) against the then due and payable Obligations of Borrower and
in repayment of the Loan as Lender may deem advisable. Lender is authorized to,
and at its option may, make advances on behalf of Borrower for payment of all
fees, expenses, charges, costs, principal and interest incurred by Borrower
hereunder when and as Borrower fails to pay promptly any such amounts. At
Lender's option and to the extent permitted by law, any advances so made may be
deemed Advances constituting part of the Loan hereunder.
2.8. ACCOUNTING. Lender will, upon Borrower's request, provide a
monthly accounting of transactions under the Loan to Borrower within 10 days of
the end of the month. Each and every such accounting shall (absent manifest
error) be deemed final, binding and conclusive upon Borrower in all respects as
to all matters reflected therein, unless Borrower, within 20 days after the date
any such accounting is rendered, shall notify Lender in writing of any objection
which Borrower may have to any such accounting, describing the basis for such
objection with specificity. In that event, only those items expressly objected
to in such notice shall be deemed to be disputed by Borrower. Lender's
determination, based upon the facts available, of any item objected to by
Borrower in such notice shall (absent manifest error) be final, binding and
conclusive on Borrower, unless Borrower shall commence a judicial proceeding to
resolve such objection within 45 days following Lender's notifying Borrower of
such determination.
2.9. ACCESS. Lender and any of its officers, employees and/or agents
shall have the right, exercisable as frequently as Lender determines to be
appropriate, during normal business hours (or at such other times as may
reasonably be requested by Lender), to inspect the properties and facilities of
Borrower and to inspect, audit and make extracts from all of Borrower's records,
files and books of account. Borrower shall deliver any document or instrument
reasonably necessary for Lender to obtain records from any service bureau
maintaining records for Borrower, and shall maintain duplicate records or
supporting documentation on media, including, without limitation, computer tapes
and discs owned by Borrower. Borrower shall instruct its banking and other
financial institutions to make available to Lender such information and records
as Lender may reasonably request.
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2.10. TAXES. (1) Any and all payments by Borrower hereunder or under
the Note shall be made, in accordance with this Section 2.10, free and clear of
and without deduction for any and all present or future taxes, levies, imposts,
deductions, charges or withholdings, and all liabilities with respect thereto,
excluding taxes imposed on or measured by the net income of Lender by the
jurisdiction under the laws of which Lender is organized or any political
subdivision thereof (all such non-excluded taxes, levies, imposts, deductions,
charges, withholdings and liabilities being hereinafter referred to as "Taxes").
If Borrower shall be required by law to deduct any Taxes from or in respect of
any sum payable hereunder or under the Note to Lender, (i) the sum payable shall
be increased as may be necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this Section
2.10) Lender receives an amount equal to the sum it would have received had no
such deductions been made, (ii) Borrower shall make such deductions, and (iii)
Borrower shall pay the full amount deducted to the relevant taxing or other
authority in accordance with applicable law.
(2) In addition, Borrower shall pay any present or future
stamp or documentary taxes or any other sales, transfer, excise, mortgage
recording or property taxes, charges or similar levies that arise from any
payment made hereunder or under the Note or from the execution, sale, transfer,
delivery or registration of, or otherwise with respect to the Loan Documents and
any other agreements and instruments contemplated thereby (hereinafter referred
to as "Other Taxes").
(3) Borrower shall indemnify Lender for the full amount of
Taxes or Other Taxes (including without limitation, any Taxes or Other Taxes
imposed by any jurisdiction on amounts payable under this Section 2.10) paid by
Lender and any liability (including penalties, interest and expenses) arising
therefrom or with respect thereto, whether or not such Taxes or Other Taxes were
correctly or legally asserted. This indemnification shall be made within 30 days
from the date such Lender makes written demand therefor.
(4) Within 30 days after the date of any payment of Taxes,
Borrower shall furnish to Lender, at its address referred to in Section 11.9,
the original or a certified copy of a receipt evidencing payment thereof.
(5) Without prejudice to the survival of any other agreement
of Borrower hereunder, the agreements and obligations of Borrower contained in
this Section 2.10 shall survive both (i) the payment in full of principal and
interest hereunder and under the Note and (ii) the termination of this
Agreement.
2.11. LENDER CONVERSION RIGHTS. Lender shall have, at Lender's sole
option, the right to convert all or any portion of the outstanding Loan amount,
plus the monetary value of all other Obligations owing by Borrower to Lender
under this Agreement or the Note, into Borrower's Common Stock upon the terms
and conditions set forth herein (the "Conversion Rights"):
(1) Number of Shares.
(1) Lender shall be entitled to convert all or any portion of
the entire unpaid balance of the Loan and the monetary value of all other
Obligations, at Lender's option, at any time into that number of fully-paid and
non-assessable shares of Borrower's Common Stock derived by dividing (i) the
amount to be converted by (ii) the Conversion Value, provided that any
fractional shares shall be paid in cash.
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(2) "Market Price", when used with reference to shares of
Borrower's Common Stock on any date, shall mean the closing price per share of
Common Stock on such date and, when used with reference to shares of Common
Stock for any period shall mean the average of the daily closing prices per
share of Common Stock for such period. If the Borrower's Common Stock is listed
or admitted to trading on a national securities exchange, the closing price
shall be the last sale price, regular way, or, in case no such sale takes place
on such day, the average of the closing bid and asked prices, regular way, in
either case, as reported in the principal consolidated transaction reporting
system with respect to securities listed on the principal national securities
exchange on which the Common Stock is listed or admitted to trading or, if the
Borrower's Common Stock is not so listed on any national securities exchange, as
reported in the transaction reporting system applicable to securities designated
as a "national market system security" or "small cap market security" on the
Nasdaq Stock Market. If the Borrower's Common Stock is not publicly held or so
listed or designated, "Market Price" shall mean the fair market value per share
of Borrower's Common Stock as determined in good faith by the Borrower's Board
of Directors based on an opinion of an independent investment banking firm with
an established national reputation with respect to the valuation of securities.
(2) Mechanics of Conversion. To convert the outstanding Loan amount or
other Obligations into shares of Borrower's Common Stock, Lender shall deliver,
in accordance with Section 11.9, a copy of the fully executed notice of
conversion substantially in the form attached as Exhibit C to this Agreement
("Notice of Conversion") to Borrower, which notice shall specify the dollar
amount of the Loan or other Obligations to be converted, the applicable
conversion price and a calculation of the number of shares of Borrower's Common
Stock issuable upon such conversion prior to Midnight, New York City time (the
"Conversion Notice Deadline") on the date of conversion specified on the Notice
of Conversion (the "Conversion Date"). Borrower shall issue and deliver within
three (3) Business Days after delivery to Borrower of the Notice of Conversion
to Lender at the address of Lender (or such other address as may be specified by
Lender), a certificate or certificates for the number of shares of Borrower's
Common Stock issuable upon such conversion.
(3) Reservation of Stock Issuable Upon Conversion. Borrower shall at
all times reserve and keep available out of its authorized but unissued shares
of Common Stock, solely for the purpose of effecting the Conversion Rights of
Lender, such number of its shares of Common Stock as shall from time to time be
sufficient to effect the conversion of the entire amount of all outstanding and
unpaid Obligations; and if at any time the number of authorized but unissued
shares of Common Stock shall not be sufficient to effect the conversion of the
entire amount of all outstanding and unpaid Obligations, Borrower shall take
such corporate action as may be necessary to increase its authorized but
unissued shares of Common Stock to such number of shares as shall be sufficient
for such purpose.
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(4) Corporate Change. The Conversion Value shall be appropriately
adjusted to reflect, as deemed equitable and appropriate by the Borrower's Board
of Directors, any stock dividend, stock split or share combination of the Common
Stock or any dividend or other distribution of assets to the holders of Common
Stock. In the event of a merger, reorganization, recapitalization or similar
event of or with respect to Borrower (a "Corporate Change") (other than a
Corporate Change in which Borrower is the surviving entity or in which all or
substantially all of the consideration received by the holders of the Borrower's
Common Stock upon such Corporate Change consists of cash or assets other than
securities issued by the acquiring entity or any affiliate thereof), the
Lender's Conversion Rights shall be assumed by the acquiring entity and
thereafter the outstanding and unpaid Obligations owing by Borrower to Lender
shall be convertible into such class and type of securities as Lender would have
received had Lender converted such Obligations immediately prior to such
Corporate Change.
(5) Representations and Warranties of Lender Upon Conversion. Lender
understands, and represents and warrants to Borrower, that:
(1) Upon exercise of its Conversion Rights, the Borrower will
issue its Common Stock to Lender in reliance on specific exemptions from the
registration requirements of United States federal and state securities laws and
that Borrower will be relying upon the truth and accuracy of the
representations, warranties, agreements, acknowledgments and understandings of
Lender set forth herein to determine the applicability of such exemptions and
the suitability of Lender to acquire the Common Stock.
(2) The Common Stock has not been and will not be registered
under the Securities Act of 1933, as amended (the "Act"), and may only be
offered or sold pursuant to registration under the Act (which registration may
be pursuant to that Registration Rights Agreement, among Borrower, Lender and
other parties, dated December 3, 1996 or otherwise) or an available exemption
therefrom, and subject to the terms and conditions set forth herein.
(3) The transaction contemplated by this Loan Agreement is not
part of a plan or scheme to evade the registration provisions of the Act.
(4) If Lender exercises its Conversion Rights, Lender will be
acquiring the Common Stock for its own account and not with a view to, or for
sale in connection with, any "distribution" (as such term is used in Section
2(11) of the Act) thereof.
3. CONDITIONS PRECEDENT
3.1. CONDITIONS TO THE EFFECTIVENESS. Notwithstanding any other
provision of this Agreement, this Agreement shall not be effective, and Borrower
shall have no rights under this Agreement, and Lender shall not be obligated to
make available any Advance hereunder, unless and until Borrower shall have
delivered to Lender, in form and substance satisfactory to Lender and (unless
otherwise indicated) each dated not later than the Closing Date:
(1) The Note to the order of Lender duly executed by Borrower.
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(2) Resolutions of the board of directors of Borrower
certified by the Secretary or Assistant Secretary of Borrower, as of the Closing
Date, to be duly adopted and in full force and effect on such date, authorizing
(i) the consummation of each of the transactions contemplated by the Loan
Documents and (ii) specific officers to execute and deliver this Agreement and
the other Loan Documents.
(3) A certificate of the chief executive officer of Borrower
stating that all of the representations and warranties of Borrower contained
herein or in any of the Loan Documents are correct on and as of the Closing Date
as though made on and as of such date, and no event has occurred and is
continuing, or would result from any Advance, if made on the Closing Date, which
constitutes or would constitute a Default or an Event of Default.
(4) Certificates of the Secretary or an Assistant Secretary of
Borrower, dated the Closing Date, as to the incumbency and signatures of the
officers of Borrower executing any of the Loan Documents and any other
certificate or other document to be delivered pursuant hereto or thereto,
together with evidence of the incumbency of such Secretary or Assistant
Secretary.
(5) A Notice of Advance, substantially in the form of Exhibit
A hereto, duly executed by an authorized officer of Borrower specifying the date
and the amount of the first Advance.
(6) Such additional information and materials as Lender may
reasonably request, including, without limitation, copies of any debt
agreements, security agreements and other material contracts.
3.2. FURTHER CONDITIONS TO EACH ADVANCE. It shall be a further
condition to the funding of each subsequent Advance that the following
statements shall be true on the date of each such Advance:
(1) All of the representations and warranties of Borrower
contained herein or in any of the Loan Documents shall be correct on and as of
the Closing Date and the date of each such Advance as though made on and as of
such date, except to the extent that any such representation or warranty
expressly relates to an earlier date and for changes therein permitted or
contemplated by this Agreement.
(2) No event shall have occurred and be continuing, or would
result from the funding of any Advance, which constitutes or would constitute a
Default or an Event of Default.
(3) The aggregate principal amount of the Advances outstanding
made to Borrower hereunder after giving effect to such Advance shall not exceed
$25,000,000 plus interest.
The acceptance by Borrower of the proceeds of any Advance shall be deemed to
constitute, as of the date of such acceptance, a representation and warranty by
Borrower that the conditions in this Section 3.2 have been satisfied.
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4. REPRESENTATIONS AND WARRANTIES
To induce Lender to make the Loan, as herein provided for, Borrower
makes the following representations and warranties to Lender, each and all of
which shall be true and correct as of the date of execution and delivery of this
Agreement:
4.1. CORPORATE EXISTENCE; COMPLIANCE WITH LAW. Borrower and each
Subsidiary of Borrower (i) is a corporation duly organized, validly existing and
in good standing under the laws of its state of incorporation; (ii) except as
indicated on Schedule 4.1(ii) hereto, is duly qualified to do business and is in
good standing under the laws of each jurisdiction where its ownership or lease
of property or the conduct of its business requires such qualification (except
for jurisdictions in which such failure to so qualify or to be in good standing
would not have a Material Adverse Effect); (iii) has the requisite corporate
power and authority and the legal right to own, pledge, mortgage or otherwise
encumber and operate its properties, to lease the property it operates under
lease, and to conduct its business as now, heretofore and proposed to be
conducted; (iv) except as indicated on Schedule 4.1(iv) hereto, has all material
licenses, permits, consents or approvals from or by, and has made all material
filings with, and has given all material notices to, all Governmental
Authorities having jurisdiction, to the extent required for such ownership,
operation and conduct; (v) is in compliance with its certificate of
incorporation and bylaws; and (vi) is in compliance with all applicable
provisions of law where the failure to comply would have a Material Adverse
Effect.
4.2. EXECUTIVE OFFICES. The location of Borrower's executive offices
and principal place of business is set forth in Schedule 4.2 hereto, and, after
the Closing Date, as set forth in a written amendment thereto delivered by
Borrower to Lender.
4.3. SUBSIDIARIES. There exist no Subsidiaries of Borrower other than
(a) as set forth on Schedule 4.3 hereto, which sets forth such Subsidiaries,
together with their respective jurisdictions of organization, and the authorized
and outstanding capital Stock of each such Subsidiary, by class and number and
percentage of each class legally owned by Borrower or a Subsidiary of Borrower
or any other Person, or to be owned by the Closing Date or (b) after the Closing
Date, as set forth in a written amendment to Schedule 4.3 delivered by Borrower
to Lender. There are no options, warrants, rights to purchase or similar rights
covering capital Stock for any such Subsidiary.
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4.4. CORPORATE POWER; AUTHORIZATION; ENFORCEABLE OBLIGATIONS. The
execution, delivery and performance by Borrower of the Loan Documents, Ancillary
Agreements and all instruments and documents to be delivered by Borrower, to the
extent it is a party thereto, hereunder and thereunder: (i) are within
Borrower's corporate power; (ii) have been duly authorized by all necessary or
proper corporate action; (iii) are not in contravention of any provision of
Borrower's certificates or articles of incorporation or bylaws; (iv) will not
violate any law or regulation, or any order or decree of any court or
governmental instrumentality in any material respect; (v) will not conflict with
or result in the breach or termination of, constitute a default under or
accelerate any performance required by, any indenture, mortgage, deed of trust,
lease, agreement or other instrument to which Borrower or any of its
Subsidiaries is a party or by which Borrower or any of its Subsidiaries or any
of their respective properties is bound; (vi) will not result in the creation or
imposition of any Lien upon any of the property of Borrower or any of its
Subsidiaries; and (vii) do not require the consent or approval of any
Governmental Authority or any other Person. Each of the Loan Documents has been
duly executed and delivered for the benefit of or on behalf of Borrower and each
constitutes a legal, valid and binding obligation of Borrower, to the extent it
is a party thereto, enforceable against it in accordance with its terms.
4.5. SOLVENCY. After giving pro forma effect to the Initial Advance and
Additional Advances, if made on the Closing Date, and the payment of all
estimated legal, accounting and other fees related hereto, Borrower will be
Solvent as of and on the Closing Date.
4.6. LABOR MATTERS. There are no strikes or other labor disputes
against Borrower pending or, to Borrower's knowledge, threatened which would
have a Material Adverse Effect.
4.7. INVESTMENT COMPANY ACT. Neither Borrower nor any of its
Subsidiaries is an "investment company" or an "affiliated person" of, or
"promoter" or "principal underwriter" for, an "investment company", as such
terms are defined in the Investment Company Act of 1940, as amended. The making
of the Advances by Lender, the application of the proceeds and repayment thereof
by Borrower and the consummation of the transactions contemplated by this
Agreement and the other Loan Documents will not violate any provision of such
Act or any rule, regulation or order issued by the Securities and Exchange
Commission thereunder.
4.8. MARGIN REGULATIONS. Neither Borrower nor any of its Subsidiaries
owns any "margin security," as that term is defined in Regulations G and U of
the Board of Governors of the Federal Reserve System (the "Federal Reserve
Board"), and the proceeds of the Advances will be used only for the purposes
contemplated hereunder. The Advances will not be used, directly or indirectly,
for the purpose of purchasing or carrying any margin security, for the purpose
of reducing or retiring any indebtedness which was originally incurred to
purchase or carry any margin security or for any other purpose which might cause
any of the loans under this Agreement to be considered a "purpose credit" within
the meaning of Regulations G, T, U or X of the Federal Reserve Board. Borrower
will not take or permit any Subsidiary or agent acting on its behalf to take any
action which might cause this Agreement or any document or instrument delivered
pursuant hereto to violate any regulation of the Federal Reserve Board.
4.9. NO LITIGATION. Except as set forth on Schedule 4.9 hereto, no
action, claim or proceeding is now pending or, to the knowledge of Borrower,
threatened against Borrower or any of its Subsidiaries at law, in equity or
otherwise, before any court, board, commission, agency or instrumentality of any
federal, state, or local government or of any agency or subdivision thereof, or
before any arbitrator or panel of arbitrators, which, if determined adversely,
could have a Material Adverse Effect, nor to the knowledge of Borrower does a
state of facts exist which is reasonably likely to give rise to such
proceedings.
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4.10. PATENTS, TRADEMARKS, COPYRIGHTS AND LICENSES. Borrower and each
of its Subsidiaries owns all material patents, patent applications, copyrights,
trademarks, trademark applications, and know-how (collectively, "Intangible
Property") necessary to continue to conduct its business as heretofore conducted
by it, now conducted by it and proposed to be conducted by it, each of which is
listed, together with Patent and Trademark Office application or registration
numbers, where applicable, on Schedule 4.10 hereto. Further, (i) Borrower and
each of its Subsidiaries has good and lawful title to the Intangible Property
owned by it (subject to the licenses set forth on Schedule 4.10(d) hereto); (ii)
to Borrower's knowledge, the Intangible Property is valid and subsisting and is
enforceable; (iii) to Borrower's knowledge, there are no actual or threatened
claims by third parties regarding the Intangible Property; and (iv) to
Borrower's knowledge, the Intangible Property does not infringe or otherwise
violate any rights of any third party, except where any violation or
infringement would not have a Material Adverse Effect.
4.11. NO MATERIAL ADVERSE EFFECT. No event has occurred and is
continuing which has had or could have a Material Adverse Effect.
5. FINANCIAL STATEMENTS AND INFORMATION
5.1. REPORTS AND NOTICES. Borrower covenants that from and after the
Closing Date and until the Commitment Termination Date, it shall deliver to
Lender:
(1) Within 45 days after the end of each fiscal month, (i) a
copy of the unaudited consolidated balance sheets of Borrower as of the end of
such month and the related statements of income and cash flows for that portion
of the Fiscal Year ending as of the end of such month, and (ii) a copy of the
unaudited consolidated statements of income of Borrower for such month, all
prepared in accordance with GAAP (subject to normal year-end adjustments),
accompanied by the certification of the chief executive officer or chief
financial officer of Borrower that all such financial statements are complete
and correct and present fairly in accordance with GAAP (subject to normal
year-end adjustments), the financial position, the results of operations and the
statements of cash flows of Borrower as at the end of such month and for the
period then ended, and that there was no Default or Event of Default in
existence as of such time.
(2) As soon as practicable, but in any event within two (2)
Business Days after Borrower becomes aware of the existence of any Default or
Event of Default, or any development or other information which would have a
Material Adverse Effect, telephonic or telegraphic notice specifying the nature
of such Default or Event of Default or development or information, including the
anticipated effect thereof, which notice shall be promptly confirmed in writing
within five (5) days.
(3) If requested by Lender, copies of all federal, state,
local and foreign tax returns and reports in respect of income, franchise or
other taxes on or measured by income (excluding sales, use or like taxes) filed
by Borrower or any of its Subsidiaries.
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(4) Such other information respecting Borrower's or its
Subsidiaries' business (including with respect to orders received and inventory
purchased), financial condition or prospects as Lender may, from time to time,
reasonably request.
5.2. COMMUNICATION WITH ACCOUNTANTS. Borrower authorizes Lender to
communicate directly with its (or any of its Subsidiaries') independent
certified public accountants and tax advisors and authorizes those accountants
to disclose to Lender any and all financial statements and other supporting
financial documents and schedules including copies of any management letter with
respect to the business, financial condition and other affairs of Borrower or
any of its Subsidiaries. At Lender's request, Borrower shall deliver a letter
addressed to such accountants and tax advisors instructing them to comply with
the provisions of this Section 5.2.
6. AFFIRMATIVE COVENANTS
Borrower covenants that, unless Lender shall otherwise consent in
writing, from and after the date hereof and until the Obligations are repaid:
6.1. MAINTENANCE OF EXISTENCE AND CONDUCT OF BUSINESS. Borrower shall:
(a) do or cause to be done all things necessary to preserve and keep in full
force and effect the corporate existence, and the rights and franchises of
Borrower and each of its Subsidiaries; (b) transact business on behalf of itself
or any Subsidiary only in such names as Borrower shall specify to Lender in
writing not less than thirty (30) days prior to the first date such name is used
by Borrower and (c) at all times maintain, preserve and protect all of its
Trademarks and any tradenames.
6.2. PAYMENT OF OBLIGATIONS.
(1) Borrower shall: (i) pay and discharge or cause to be paid
and discharged all its and its Subsidiaries' Indebtedness, including, without
limitation, all the Obligations as and when due and payable, and (ii) pay and
discharge or cause to be paid and discharged promptly all (A) Charges imposed
upon it, its income and profits, or any of its property (real, personal or
mixed), and (B) lawful claims for labor, materials, supplies and services or
otherwise before any thereof shall become in default.
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(2) Borrower, on behalf of itself or any Subsidiary, may in
good faith contest, by proper legal actions or proceedings diligently pursued,
the validity or amount of any Charges or claims arising under Section
6.2(a)(ii), provided that at the time of commencement of any such action or
proceeding, and during the pendency thereof (i) adequate reserves with respect
thereto are maintained on the books of Borrower, in accordance with GAAP; (ii)
such contest operates to suspend collection of the contested Charges or claims
and is maintained and prosecuted continuously with diligence; and (iii) Lender
has not advised Borrower in writing that Lender reasonably believes that
nonpayment or nondischarge thereof would have a Material Adverse Effect.
Borrower shall promptly pay or discharge such contested Charges and all
additional charges, interest, penalties and expenses, if any, and shall deliver
to Lender evidence acceptable to Lender of such compliance, payment or
discharge, if such contest is terminated or discontinued adversely to Borrower.
(3) Notwithstanding anything to the contrary contained in
Section 6.2(b) above, Borrower shall have the right to pay the Charges or claims
arising under Section 6.2(a)(ii) and in good faith contest, by proper legal
actions or proceedings, the validity or amount of such Charges or claims.
6.3. BOOKS AND RECORDS. Borrower shall keep, and shall cause its
Subsidiaries to keep, all books, accounts and records in the ordinary course of
business.
6.4. LITIGATION. Borrower shall notify Lender in writing, promptly upon
learning thereof, of any litigation commenced against Borrower or any of its
Subsidiaries, and of the institution against any of them of any suit or
administrative proceeding that may have a Material Adverse Effect.
6.5. INSURANCE. Borrower shall maintain insurance covering, without
limitation, fire, theft, burglary, public liability, property damage, product
liability and insurance on all property and assets of Borrower and its
Subsidiaries, all in amounts customary for its business and in any event with a
lender's loss payable clause for the benefit of Lender.
6.6. COMPLIANCE WITH LAW. Borrower shall, and shall cause its
Subsidiaries to, comply in all material respects with all federal, state and
local laws and regulations applicable to it.
6.7. SUPPLEMENTAL DISCLOSURE. From time to time as may be necessary (in
the event that such information is not otherwise delivered by Borrower to Lender
pursuant to this Agreement), so long as there are Obligations outstanding
hereunder, Borrower will supplement each Schedule (if any) or representation
herein with respect to any matter hereafter arising which, if existing or
occurring at the date of this Agreement, would have been required to be set
forth or described in such Schedule or as an exception to such representation or
which is necessary to correct any information in such Schedule or representation
which has been rendered inaccurate thereby; provided, however, that such
supplement to such Schedule or representation shall not be deemed an amendment
thereof unless otherwise consented to by the Lender.
7. NEGATIVE COVENANTS
Borrower covenants and agrees that, without Lender's prior written
consent, from and after the date hereof and until the Obligations are repaid:
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7.1. MAINTENANCE OF BUSINESS. Borrower shall not and shall not permit
any of its Subsidiaries to engage in any business other than the business
currently engaged in by Borrower or such Subsidiary.
7.2. TRANSACTIONS WITH AFFILIATES. Except as set forth on Schedule 7.2,
Borrower shall not, and shall not permit any of its Subsidiaries to, enter into
or be a party to any transaction with any Affiliate of Borrower, except in the
ordinary course of and pursuant to the reasonable requirements of Borrower's or
such Subsidiary's business and upon fair and reasonable terms that are fully
disclosed to Lender and are no less favorable to Borrower or such Subsidiary
than would be obtained in a comparable arm's-length transaction with a Person
not an Affiliate of Borrower.
7.3. EVENTS OF DEFAULT. Borrower shall not, and shall not permit any of
its Subsidiaries to, take or omit to take any action, which act or omission
would constitute (i) a default or an event of default pursuant to, or
noncompliance with any of, the terms of any of the Loan Documents or (ii) a
material default or an event of default pursuant to, or noncompliance with any
other contract, lease, mortgage, deed of trust or instrument to which it is a
party or by which it or any of its property is bound, or any document creating a
Lien, unless such default, event of default or non-compliance would not have a
Material Adverse Effect.
8. TERM
8.1. TERMINATION. Subject to the provisions of Section 2 hereof, the
financing arrangement contemplated hereby in respect of the Loan shall be in
effect until the Commitment Termination Date.
8.2. SURVIVAL OF OBLIGATIONS UPON TERMINATION OF FINANCING ARRANGEMENT.
Except as otherwise expressly provided for in the Loan Documents, no termination
or cancellation (regardless of cause or procedure) of any financing arrangement
under this Agreement shall in any way affect or impair the powers, obligations,
duties, rights and liabilities of Borrower or the rights of Lender relating to
any transaction or event occurring prior to such termination. Except as
otherwise expressly provided herein or in any other Loan Document, all
undertakings, agreements, covenants, warranties and representations contained in
the Loan Documents shall survive such termination or cancellation and shall
continue in full force and effect until such time as all of the Obligations have
been paid in full in accordance with the terms of the agreements creating such
Obligations, at which time the same shall terminate.
9. EVENTS OF DEFAULT; RIGHTS AND REMEDIES
9.1. EVENTS OF DEFAULT. The occurrence of any one or more of the
following events (regardless of the reason therefor) shall constitute an "Event
of Default" hereunder:
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(1) Borrower shall fail to make any payment of principal of,
or interest on or any other amount owing in respect of, the Loan or any of the
other monetary Obligations when due and such failure continues for a period of
five (5) days.
(2) Borrower shall fail or neglect to perform, keep or observe
any of the provisions of Section 7 hereof.
(3) Borrower shall fail or neglect to perform, keep or observe
any other provision of this Agreement or of any of the other Loan Documents and
the same shall remain unremedied for a period ending on the first to occur of
twenty (20) days after Borrower shall receive written notice of any such failure
from any Lender or forty five (45) days after Borrower shall become aware
thereof.
(4) A default shall occur under any other agreement, document
or instrument to which Borrower or any of its Subsidiaries is a party or by
which Borrower's or any of its Subsidiaries' property is bound, and such default
causes (or permits any holder of Indebtedness or a trustee to cause)
Indebtedness or a portion thereof in an aggregate amount exceeding $250,000 to
become due prior to its stated maturity or prior to its regularly scheduled
dates of payment.
(5) Any representation or warranty herein or in any Loan
Document or in any written statement pursuant thereto or hereto, report,
financial statement or certificate made or delivered to Lender by Borrower shall
be untrue or incorrect in any material respect, as of the date when made or
deemed made (including those made or deemed made pursuant to Section 3.2).
(6) Any of the assets of Borrower or any of its Subsidiaries
shall be attached, seized, levied upon or subjected to a writ or distress
warrant, or come within the possession of any receiver, trustee, custodian or
assignee for the benefit of creditors of Borrower or any Subsidiary of Borrower
and shall remain unstayed or undismissed for thirty (30) consecutive days; or
any Person other than Borrower shall apply for an order for the appointment of a
receiver, trustee or custodian for any of the assets of Borrower or any
Subsidiary of Borrower and shall remain unstayed or undismissed for thirty (30)
consecutive days; or Borrower or any Subsidiary of Borrower shall have
concealed, removed or permitted to be concealed or removed, any part of its
property, with intent to hinder, delay or defraud its creditors or any of them
or made or suffered a transfer of any of its property or the incurring of an
obligation which may be fraudulent under any bankruptcy, fraudulent conveyance
or other similar law.
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(7) A case or proceeding shall have been commenced against
Borrower or any Subsidiary of Borrower in a court having competent jurisdiction
seeking a decree or order in respect of Borrower or any Subsidiary of Borrower
(i) under title 11 of the United States Code, as now constituted or hereafter
amended, or any other applicable federal, state or foreign bankruptcy or other
similar law, (ii) appointing a custodian, receiver, liquidator, assignee,
trustee or sequestrator (or similar official) of Borrower or any Subsidiary of
Borrower or of any substantial part of its or their properties, or (iii)
ordering the winding-up or liquidation of the affairs of Borrower or any
Subsidiary of Borrower and such case or proceeding shall remain undismissed or
unstayed for thirty (30) consecutive days or such court shall enter a decree or
order granting the relief sought in such case or proceeding.
(8) Borrower or any Subsidiary of Borrower shall (i) file a
petition seeking relief under title 11 of the United States Code, as now
constituted or hereafter amended, or any other applicable federal, state or
foreign bankruptcy or other similar law, (ii) consent to the institution of
proceedings thereunder or to the filing of any such petition or to the
appointment of or taking possession by a custodian, receiver, liquidator,
assignee, trustee or sequestrator (or similar official) of Borrower or any
Subsidiary of Borrower or of any substantial part of its or their properties,
(iii) fail generally to pay its debts as such debts become due, or (iv) take any
corporate action in furtherance of any such action.
9.2. REMEDIES. If any Event of Default specified in Section 9.1 shall
have occurred and be continuing, Lender may, by written notice to Borrower and
the lender with respect to any Senior Debt (the "Senior Lender") declare all
Obligations to be forthwith due and payable, whereupon all such Obligations,
without presentment, demand, protest or further notice of any kind, all of which
are expressly waived by Borrower, shall become due and payable (x) if none of
the Senior Debt is outstanding, immediately and (y) if any Senior Debt is
outstanding, upon the first to occur of (1) acceleration of any Senior Debt or
(2) the fifth Business Day after receipt by Borrower and the Senior Lender of
such written notice given hereunder, unless on or prior to the date such amounts
become due and payable Borrower shall have cured the default, event or condition
resulting in such Event of Default and no other Event of Default is then
continuing and Borrower shall have given notice of such cure to Lender;
provided, however, that upon the occurrence of an Event of Default specified in
Section 9.1(f), (g) or (h) hereof, such Obligations shall become due and payable
without declaration, notice or demand by Lender. Notwithstanding the above, at
any time after such declaration of acceleration has been made and before payment
in full of the Obligations, Lender, by written notice to Borrower, may rescind
and annul such declaration and its consequences if all Events of Default, other
than the non-payment of principal of the Loan which has become due solely by
such declaration of acceleration, have been cured or waived.
9.3. WAIVERS BY BORROWER. Except as otherwise provided for in this
Agreement and applicable law, Borrower waives (i) presentment, demand and
protest and notice of presentment, dishonor, notice of intent to accelerate,
notice of acceleration, protest, default, nonpayment, maturity, release,
compromise, settlement, extension or renewal of any or all commercial paper,
accounts, contract rights, documents, instruments, chattel paper and guaranties
at any time held by Lender on which Borrower may in any way be liable and hereby
ratifies and confirms whatever Lender may do in this regard, (ii) all rights to
notice and a hearing prior to Lender's taking possession or control of, or to
Lender's replevy, attachment or levy upon, any bond or security which might be
required by any court prior to allowing Lender to exercise any of its remedies,
and (iii) the benefit of all valuation, appraisal and exemption laws. Borrower
acknowledges that it has been advised by counsel of its choice with respect to
this Agreement, the other Loan Documents and the transactions evidenced by this
Agreement and the other Loan Documents.
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9.4. RIGHT OF SET-OFF. Upon the occurrence and during the continuance
of any Event of Default, Lender is hereby authorized at any time and from time
to time, to the fullest extent permitted by law and subject to Section 10, to
set off and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held and other indebtedness at any time owing
by Lender to or for the credit or the account of Borrower against any and all of
the obligations of Borrower now or hereafter existing under this Agreement, and
the Note held by Lender irrespective of whether or not Lender shall have made
any demand under this Agreement or such Note and although such obligations may
be unmatured. Lender agrees promptly to notify Borrower after any such set-off
and application made by Lender; provided, however, that the failure to give such
notice shall not affect the validity of such set-off and application. The rights
of Lender under this Section are in addition to other rights and remedies
(including, without limitation, other rights of set-off) which Lender may have.
10. SUBORDINATION
10.1. LOAN SUBORDINATED TO SENIOR INDEBTEDNESS. Borrower covenants, and
Lender likewise covenants, that all payments of the principal of (and premium,
if any), and interest on, the Loan and all other Obligations by Borrower
pursuant to this Agreement (collectively the "Subordinated Indebtedness") shall
be subordinated in accordance with the provisions of this Section 10 to the
prior payment in full of all Senior Indebtedness of Borrower. Notwithstanding
the foregoing sentence, the monetary Obligations hereunder shall be pari passu
with the "Indebtedness" and all monetary "Obligations" under the Second Amended
and Restated Loan Agreement (as such terms are defined therein). For purposes of
this Section 10, the term "Senior Indebtedness" shall mean the Senior Debt of
Borrower and shall include principal of and premium, if any, and interest
(including interest accruing at the rate provided for in the documents
evidencing such Senior Indebtedness after the commencement of any proceeding of
the type referred to in Section 10.2(a) hereof, whether or not an allowed claim
in such proceeding) on all loans and other extensions of credit under, and all
expenses, fees, reimbursements, indemnities and other amounts owing pursuant to,
all such Senior Debt of the Borrower.
10.2. PRIORITY AND PAYMENT OVER OF PROCEEDS IN CERTAIN EVENTS.
22
(1) Upon payment or distribution of assets or securities of
Borrower of any kind or character, whether in cash, property or securities, upon
any dissolution or winding up or total or partial liquidation or reorganization
of Borrower, whether voluntary or involuntary, or in bankruptcy, insolvency,
receivership or other proceedings or upon an assignment for the benefit of
creditors or any other marshaling of the assets and liabilities of Borrower, all
Senior Indebtedness shall first be paid in full in cash, or payment provided for
in cash or cash equivalents in a manner satisfactory to the holders of Senior
Indebtedness, before any direct or indirect payments or distributions,
including, without limitation, by exercise of set-off, of any cash, property or
securities on account of principal of (or premium, if any) or interest on the
Subordinated Indebtedness and to that end the holders of Senior Indebtedness
shall be entitled to receive (pro rata on the basis of the respective amounts of
Senior Indebtedness held by them) directly, for application to the payment
thereof (to the extent necessary to pay all Senior Indebtedness in full after
giving effect to any substantially concurrent payment or distribution to or
provision for payment to the holders of such Senior Indebtedness), any payment
or distribution of any kind or character, whether in cash, property or
securities, in respect of the Subordinated Indebtedness. The holders of Senior
Indebtedness are hereby authorized to file an appropriate claim for and on
behalf of Lender if it does not file, and there is not otherwise filed on behalf
of the Lender, a proper claim or proof of claim in the form required in any such
proceeding prior to 30 days before the expiration of the time to file such claim
or claims.
(2) No direct or indirect payment by or on behalf of Borrower
of principal of (premium, if any), or interest on, the Loan, whether pursuant to
the terms of this Agreement, upon acceleration or otherwise, shall be made if at
the time of such payment there exists (i) a default in the payment of all or any
portion of principal of (premium, if any), interest on, fees or other amounts
owing in connection with any Senior Indebtedness, or (ii) any other default or
event of default under any document or instrument evidencing the Senior
Indebtedness as the same may be amended, modified or otherwise refinanced (and
Lender has received notice thereof from the agent for or representative of the
holders of a majority of the outstanding principal amount of the Senior
Indebtedness (the "Representative") as provided below), and in either case such
default or event of default shall not have been cured or waived in writing;
provided, however, that if within the period specified in the next sentence with
respect to a default or event of default referred to in clause (ii) above, the
holders of Senior Indebtedness have not declared the Senior Indebtedness to be
immediately due and payable (or have declared such Senior Indebtedness to be
immediately due and payable and within such period have rescinded such
acceleration), then and in that event, payment of principal of, and interest on,
the Loan shall be resumed. With respect to any default or event of default under
clause (ii) above the period referred to in the preceding sentence shall
commence upon receipt by Lender of a written notice or notices (which shall
specify all defaults and events of default existing under such documents or
instruments on the date of such notice and of which the Representative,
whichever is giving such notice, had actual knowledge at such time) of the
commencement of such period from the Representative, and shall end at the
completion of the 180th day after the beginning of such period. Only one such
180 day period may commence within any 360 consecutive days. Upon termination of
any such period, Borrower shall resume payments on account of the principal of
(premium, if any), and interest on, the Loan, and on account of all other
Subordinated Indebtedness, subject to the provisions of Sections 10.1 and 10.2
hereof.
(3) (1) In the event that, notwithstanding the foregoing
provision prohibiting such payment or distribution, Lender shall have received
any payment on account of the Subordinated Indebtedness at a time when such
payment is prohibited by such provision before the Senior Indebtedness is paid
in full, then and in such event, such payment or distribution shall be received
and held in trust by Lender apart from its other assets and paid over or
delivered to the holders of the Senior Indebtedness remaining unpaid to the
extent necessary to pay in full in cash the principal of (premium, if any), and
interest on, such Senior Indebtedness in accordance with its terms and after
giving effect to any concurrent payment or distribution to the holders of such
Senior Indebtedness.
23
(2) Nothing contained in this Section 10 will limit
the right of the Lender to take any action to accelerate the maturity of the
Subordinated Indebtedness pursuant to Section 9.2 hereof.
(3) Upon any payment or distribution of assets or
securities referred to in this Section 10, Lender shall be entitled to rely upon
any order or decree of a court of competent jurisdiction in which such
dissolution, winding up, liquidation or reorganization proceedings are pending,
and upon a certificate of the receiver, trustee in bankruptcy, liquidating
trustee, agent or other person making any such payment or distribution,
delivered to Lender for the purpose of ascertaining the persons entitled to
participate in such distribution, the holders of Senior Indebtedness and other
Indebtedness of Borrower, the amount thereof or payable thereon, the amount or
amounts paid or distributed thereon and all other facts pertinent thereto or to
this Section 10.
10.3. RIGHTS OF HOLDERS OF SENIOR INDEBTEDNESS NOT TO BE IMPAIRED. No
right of any present or future holder of any Senior Indebtedness to enforce
subordination as herein provided shall at any time in any way be prejudiced or
impaired by any act or failure to act by any such holder, or by any
noncompliance by Borrower with the terms and provisions and covenants herein
regardless of any knowledge thereof such holder may have or otherwise be charged
with.
The provisions of this Section 10 are intended to be for the
benefit of, and shall be enforceable directly by, the holders of the Senior
Indebtedness. Borrower and Lender acknowledges that the holders of the Senior
Indebtedness are or will be relying upon the provisions of this Section 10 in
extending such Senior Indebtedness.
10.4. SUBROGATION . Upon the payment in full of all Senior
Indebtedness, Lender shall be subrogated to the extent of the payments or
distributions made to the holders of, or otherwise applied to payment of, the
Senior Indebtedness pursuant to the provisions of this Section 10 and to the
rights of the holders of Senior Indebtedness to receive payments or
distributions of assets of Borrower made on the Senior Indebtedness until the
Loan and all other monetary Obligations shall be paid in full; and for the
purposes of such subrogation, no payments or distributions to holders of Senior
Indebtedness of any cash, property or securities to which Lender would be
entitled except for the provisions of this Section 10, and no payment over
pursuant to the provisions of this Section 10 to holders of Senior Indebtedness
by Lender, shall, as between Borrower, their creditors other than holders of
Senior Indebtedness and Lender, be deemed to be payment by Borrower to or on
account of Senior Indebtedness, it being understood that the provisions of this
Section 10 are solely for the purpose of defining the relative rights of the
holders of Senior Indebtedness, on the one hand, and Lender, on the other hand.
24
If any payment or distribution to which Lender would otherwise
have been entitled but for the provisions of this Section 10 shall have been
applied, pursuant to the provisions of this Section 10, to the payment of Senior
Indebtedness, then and in such case, Lender shall be entitled to receive from
the holders of Senior Indebtedness at the time outstanding any payments or
distributions received by such holders of Senior Indebtedness in excess of the
amount sufficient to pay all Senior Indebtedness in full.
10.5. OBLIGATIONS OF BORROWER UNCONDITIONAL. Nothing contained in this
Section 10 or elsewhere in this Agreement or in the Note is intended to or shall
impair, as between Borrower and Lender, the obligations of Borrower, which are
absolute and unconditional, to pay to Lender the principal of (premium, if any),
and interest on, the Loan and all other monetary Obligations as and when the
same shall become due and payable in accordance with their terms, or is intended
to or shall affect the relative rights of Lender and creditors of Borrower other
than the holders of the Senior Indebtedness, nor shall anything herein or
therein prevent any Holder from exercising all remedies otherwise permitted by
applicable law upon the occurrence of a Default or Event of Default under this
Agreement, subject to the rights, if any, under this Section 10 of the holders
of Senior Indebtedness in respect of cash, property or securities of Borrower
received upon the exercise of any such remedy.
The failure to make a payment on account of principal of, or
interest on, the Loan by reason of any provision of this Section 10 shall not be
construed as preventing the occurrence of a Default or an Event of Default
hereunder.
10.6. NOTICE TO LENDER . Borrower shall give prompt written notice to
Lender of any fact known to Borrower which would prohibit the making of any
payment on or in respect of the Loan, but failure to give such notice shall not
affect the subordination of the Subordinated Indebtedness to the Senior
Indebtedness provided in this Section 10. Notwithstanding the provisions of this
Section 10 or any other provision of this Agreement, Lender shall not be charged
with knowledge of the existence of any facts which would prohibit the making of
any payment to or in respect of the Loan, unless and until Lender shall have
received written notice thereof from Borrower, the Representative or other
holder of Senior Indebtedness, and, prior to the receipt of any such written
notice, subject to the provisions of this Section 10, Lender shall be entitled
in all respects to assume no such facts exist. Nothing contained in this Section
10.6 shall limit the right of the holders of Senior Indebtedness to recover
payments as contemplated by Sections 10.1 and 10.2.
10.7. RIGHT OF LENDER AS HOLDER OF SENIOR INDEBTEDNESS. Lender in its
individual capacity shall be entitled to all the rights set forth in this
Section 10 with respect to any Senior Indebtedness which may at any time be held
by it, to the same extent as any other holder of Senior Indebtedness, and
nothing in this Agreement shall deprive Lender of any of its rights as such
holder.
10.8. REINSTATEMENT. The provisions of this Section 10 shall continue
to be effective or be reinstated, and the Senior Indebtedness shall not be
deemed to be paid in full, as the case may be, if at any time any payment of any
of the Senior Indebtedness is rescinded or must otherwise be returned by the
holder thereof upon the insolvency, bankruptcy or reorganization of the Borrower
or otherwise, all as though such payment had not been made.
25
11. MISCELLANEOUS
11.1. COMPLETE AGREEMENT; MODIFICATION OF AGREEMENT; SALE OF INTEREST.
(1) The Loan Documents constitute the complete agreement
between the parties with respect to the subject matter hereof and may not be
modified, altered or amended except by an agreement in writing signed by
Borrower and Lender. Borrower may not sell, assign or transfer any of the Loan
Documents or any portion thereof including, without limitation, Borrower's
rights, title, interests, remedies, powers and duties hereunder or thereunder.
Borrower hereby consents to Lender's sale of participations, assignment,
transfer or other disposition, at any time or times, of any of the Loan
Documents or of any portion thereof or interest therein, including, without
limitation, Lender's rights, title, interests, remedies, powers or duties
thereunder, whether evidenced by a writing or not. Borrower agrees that it will
use its best efforts to assist and cooperate with Lender in any manner
reasonably requested by Lender to effect the sale of participations in or
assignments of any of the Loan Documents or of any portion thereof or interest
therein.
(2) In the event Lender assigns or otherwise transfers all or
any part of the Note, Borrower shall, upon the request of Lender, issue a new
Note to effectuate such assignment or transfer.
11.2. FEES AND EXPENSES. If, at any time or times, regardless of the
existence of an Event of Default, Lender shall employ counsel or other advisors
for advice or other representation or shall incur reasonable legal or other
costs and expenses in connection with any litigation, contest, dispute, suit,
proceeding or action (whether instituted by Lender, Borrower or any other
Person) in any way relating to any of the Loan Documents or any other agreements
to be executed or delivered in connection herewith, including any future
amendments, supplements, waivers or consents at the request of Borrower, then,
and in any such event, the attorneys' and other parties' fees reasonably arising
from such services, including those of any appellate proceedings, and all
expenses, costs, charges and other fees reasonably incurred by such counsel and
others in any way or respect arising in connection with or relating to any of
the events or actions described in this Section shall be payable, on demand, by
Borrower to Lender and shall be additional Obligations secured under this
Agreement and the other Loan Documents. Without limiting the generality of the
foregoing, such expenses, costs, charges and fees may include: paralegal fees,
costs and expenses; accountants' and investment bankers' fees, costs and
expenses; court costs and expenses; photocopying and duplicating expenses; court
reporter fees, costs and expenses; long distance telephone charges; air express
charges; telegram charges; secretarial overtime charges; and expenses for
travel, lodging and food paid or incurred in connection with the performance of
such legal services.
26
11.3. NO WAIVER BY LENDER. Lender's failure, at any time or times, to
require strict performance by Borrower of any provision of this Agreement or in
any of the other Loan Documents shall not waive, affect or diminish any right of
Lender thereafter to demand strict compliance and performance therewith. Any
suspension or waiver by Lender of an Event of Default by Borrower under the Loan
Documents shall not suspend, waive or affect any other Event of Default by
Borrower under this Agreement and any of the other Loan Documents whether the
same is prior or subsequent thereto and whether of the same or of a different
type. None of the undertakings, agreements, warranties, covenants and
representations of Borrower contained in this Agreement or any of the other Loan
Documents and no Event of Default by Borrower under this Agreement and no
defaults by Borrower under any of the other Loan Documents shall be deemed to
have been suspended or waived by Lender, unless such suspension or waiver is by
an instrument in writing signed by an officer of Lender and directed to Borrower
specifying such suspension or waiver.
11.4. REMEDIES. Lender's rights and remedies under this Agreement shall
be cumulative and nonexclusive of any other rights and remedies which Lender may
have under any other agreement, including without limitation, the Loan
Documents, by operation of law or otherwise.
11.5. SEVERABILITY. Wherever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.
11.6. PARTIES. This Agreement and the other Loan Documents shall be
binding upon, and inure to the benefit of, the successors of Borrower and Lender
and the assigns, transferees and endorsees of Lender.
11.7. CONFLICT OF TERMS. Except as otherwise provided in this Agreement
or any of the other Loan Documents by specific reference to the applicable
provisions of this Agreement, if any provision contained in this Agreement is in
conflict with, or inconsistent with, any provision in any of the other Loan
Documents, the provision contained in this Agreement shall govern and control.
27
11.8. GOVERNING LAW . EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN ANY OF
THE LOAN DOCUMENTS, IN ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION,
VALIDITY AND PERFORMANCE, THIS AGREEMENT AND THE OBLIGATIONS ARISING HEREUNDER
SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE,
WITHOUT REGARD TO THE PRINCIPLES THEREOF REGARDING CONFLICT OF LAWS, AND ANY
APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. LENDER AND BORROWER AGREE TO
SUBMIT TO PERSONAL JURISDICTION AND TO WAIVE ANY OBJECTION AS TO VENUE IN THE
COUNTY OF NEW YORK, STATE OF NEW YORK. SERVICE OF PROCESS ON BORROWER OR LENDER
IN ANY ACTION ARISING OUT OF OR RELATING TO ANY OF THE LOAN DOCUMENTS SHALL BE
EFFECTIVE IF MAILED TO SUCH PARTY AT THE ADDRESS LISTED IN SECTION 11.9 HEREOF.
NOTHING HEREIN SHALL PRECLUDE LENDER OR BORROWER FROM BRINGING SUIT OR TAKING
OTHER LEGAL ACTION IN ANY OTHER JURISDICTION.
11.9. NOTICES. Except as otherwise provided herein, whenever it is
provided herein that any notice, demand, request, consent, approval, declaration
or other communication shall or may be given to or served upon any of the
parties by another, or whenever any of the parties desires to give or serve upon
another any communication with respect to this Agreement, each such notice,
demand, request, consent, approval, declaration or other communication shall be
in writing and either shall be delivered in person with receipt acknowledged or
by registered or certified mail, return receipt requested, postage prepaid, or
telecopied and confirmed by telecopy answer back addressed as follows:
(1) If to Lender at:
00 Xxxxxxxxxx Xxxx
Xxxxxx Xxxxxx XX0 0XX
Xxxxxxx
Attention: Xxxxx Xxxxxxxxx, LLB
Telecopy No. (0000) 000 0000
With copies to:
Weil, Gotshal & Xxxxxx LLP
Xxx Xxxxx Xxxxx
Xxxxxx, XX0X 0XX
Xxxxxxx
Attention: Xxxxx Xxxxxxxxx, Esq.
Telecopy No. (0000) 000-0000
(2) If to Borrower, at:
Intek Global Corporation
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxx
Telecopy No.: (000) 000-0000
28
With copies to:
Intek Global Corporation
0000 Xxxxx Xxxxxxx Xxxxxx
Xxxxxx Xxxx, Xxxxxxxx 00000
Attention: Xxxxxx Xxxxxxx
Telecopy No.: (000) 000-0000
and
Manatt, Xxxxxx & Xxxxxxxx, LLP
00000 Xxxx Xxxxxxx Xxxxxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxx, Esq.
Telecopy No.: (000) 000-0000
or at such other address as may be substituted by notice given as herein
provided. The giving of any notice required hereunder may be waived in writing
by the party entitled to receive such notice. Every notice, demand, request,
consent, approval, declaration or other communication hereunder shall be deemed
to have been duly given or served on the date on which personally delivered,
with receipt acknowledged, telecopied and confirmed by telecopy answer back or
seven (7) Business Days after the same shall have been deposited (i) in the
United States mail (in the case of notice being given by Borrower or any other
Person in the United States) or (ii) in the United Kingdom mail (in the case of
notice being given by Lender or any other Person located in the United Kingdom).
Failure or delay in delivering copies of any notice, demand, request, consent,
approval, declaration or other communication to the persons designated above to
receive copies shall in no way adversely affect the effectiveness of such
notice, demand, request, consent, approval, declaration or other communication.
11.10. SURVIVAL. The representations and warranties of Borrower in this
Agreement shall survive the execution, delivery and acceptance hereof by the
parties hereto and the closing of the transactions described herein or related
hereto.
11.11. SECTION TITLES. The Section titles contained in this Agreement
are and shall be without substantive meaning or content of any kind whatsoever
and are not a part of the agreement between the parties hereto.
11.12. COUNTERPARTS. This Agreement may be executed in any number of
separate counterparts, each of which shall, collectively and separately,
constitute one agreement.
29
IN WITNESS WHEREOF, this Agreement has been duly executed as of the
date first written above.
INTEK GLOBAL CORPORATION
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------------------
Xxxxxx X. Xxxxxx
Chairman and Chief Executive Officer
SECURICOR COMMUNICATIONS LIMITED
By: /s/ X. X. Xxxxxxxxx
-----------------------------------------
Name: X. X. Xxxxxxxxx
Title: Director
The undersigned hereby guarantees to Borrower the performance by Lender of all
of its obligations under this Agreement.
SECURITY SERVICES PLC
By: /s/ Xxxxx Xxxxxxxx
-----------------------------------------
Name: Xxxxx Xxxxxxxx
Title: Director
Date: February 19, 1999
30
EXHIBIT A
NOTICE OF ADVANCE
_____________, 1999
Securicor Communications Limited
00 Xxxxxxxxxx Xxxx
Xxxxxx, Xxxxxx
XX0 0XX Xxxxxxx
Attention: Xxxxxxx Xxxxxxxxx
Gentlemen:
The undersigned, INTEK GLOBAL CORPORATION, refers to the Loan
Agreement, dated as of February __, 1999 (the "Loan Agreement", the terms
defined therein being used herein as therein defined), between the undersigned
and SECURICOR COMMUNICATIONS LIMITED, and hereby gives you notice, irrevocably,
pursuant to Section 2.1 of the Loan Agreement, that the undersigned hereby
requests an Advance under the Loan Agreement, and in that connection sets forth
below the information relating to such Advance as required by Section 2.1(a) of
the Loan Agreement:
(i) The date of the requested Advance shall be __________,
1999.
(ii) The aggregate amount of the requested Advance is
$__________.
(iii) The Advance shall be used solely as permitted by Section
2.3 of the Loan Agreement.
The undersigned hereby certifies that the statements contained
in Section 3.2 of the Loan Agreement are true on the date hereof, and will be
true on the date of the requested Advance, before and after giving effect
thereto and to the application of the proceeds therefrom.
Very truly yours,
INTEK GLOBAL CORPORATION
By:__________________________________
Name:
Title:
By:__________________________________
Name:
Title:
EXHIBIT B
PROMISSORY NOTE
$25,000,000 New York, New York
December 17, 1998
FOR VALUE RECEIVED, the undersigned INTEK GLOBAL CORPORATION, a
Delaware corporation (hereinafter referred to as "Borrower"), hereby promises to
pay to the order of SECURICOR COMMUNICATIONS LIMITED, a corporation formed under
the laws of England and Wales ("Lender"), at 00 Xxxxxxxxxx Xxxx, Xxxxxx Xxxxxx,
SM14LD, or at such other place as the holder of this Note may designate from
time to time in writing, in lawful money of the United States of America and in
immediately available funds, the amount of Twenty-Five Million Dollars
($25,000,000), or such lesser principal amount of outstanding Advances under the
Loan Agreement (as hereinafter defined) plus the unpaid amount of any interest
on the unpaid principal amount of the Note outstanding from time to time from
the Initial Advance Date at the rate or rates provided in the Loan Agreement.
This Note is issued pursuant to that certain Loan Agreement, dated as
of February 19, 1999, between Borrower and Lender (the "Loan Agreement"), to
which reference is hereby made for a statement of all of the terms and
conditions under which the Advances evidenced hereby are made. All capitalized
terms, unless otherwise defined herein, shall have the meanings ascribed to them
in the Loan Agreement.
The principal amount of the indebtedness evidenced hereby shall be
payable on the dates and in the amounts set forth in the Loan Agreement.
Interest thereon shall accrue on a daily basis at the rate specified in the Loan
Agreement and shall be capitalized at the end of each calendar quarter and will
be paid in the manner set forth in the Loan Agreement. All accrued and unpaid
interest shall be due and payable on the Repayment Date.
If any payment on this Note becomes due and payable on a day other than
a Business Day, the maturity thereof shall be extended to the next succeeding
Business Day and, with respect to payments of principal, interest thereon shall
continue to accrue at the then applicable rate during such extension.
The rights of Lender under this Note are subordinate and junior to the
rights of the holders of Senior Debt, as defined in, and to the extent set forth
in, Article 10 of the Loan Agreement, but are pari passu with the rights of
Lender under the Second Amended and Restated Loan Agreement. This Note is
subject to the provisions of such Article 10, and any payment pursuant hereto
shall be made in accordance with the provisions thereof.
Upon and after the occurrence of an Event of Default, this Note may, as
provided in the Loan Agreement and without demand, notice or legal process of
any kind, be declared or may automatically become, and immediately shall become,
due and payable.
Demand, presentment, protest and notice of nonpayment are hereby waived
by Borrower.
THIS NOTE HAS BEEN EXECUTED, DELIVERED AND ACCEPTED AT NEW YORK, NEW
YORK AND SHALL BE INTERPRETED, GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK.
INTEK GLOBAL CORPORATION
By:
--------------------------------------
Xxxxxx X. Xxxxxx
Chairman and Chief Executive Officer
EXHIBIT C
FORM OF NOTICE AND AGREEMENT OF CONVERSION
(To Be Executed Upon Exercise Of Lender's Conversion Rights)
The undersigned Securicor Communications Limited ("Lender"), hereby
irrevocably elects to exercise its Conversion Rights under Section 2.11 of the
Loan Agreement between Lender and Intek Global Corporation ("Borrower"), dated
February __, 1999 (the "Loan Agreement") to purchase ___ shares of Borrower's
Common Stock in exchange for $____________ of the outstanding and unpaid Loan
amount and other Obligations owing by Borrower to Lender as payment for such
shares in the amount of $________ per share of Common Stock in accordance with
the terms thereof.
Lender hereby acknowledges, represents and warrants to (which
representations and warranties will be true and correct as of the Conversion
Date as if made on such Date), and agrees with, Borrower as follows:
1. Lender is acquiring the Common Stock for its own account as
principal, for investment purposes only, and not with a view to, or for, resale,
distribution or fractionalization thereof, in whole or in part;
2. Lender acknowledges its understanding that the offering and sale of
the Common Stock is intended to be exempt from registration under the 1933 Act
by virtue of Section 4(2) of the 1933 Act and the provisions of Regulation D
thereunder. In furtherance thereof, Lender represents and warrants to and agrees
with Borrower as follows:
(a) Lender has the financial ability to bear the economic risk
of its investment, has adequate means for providing for its current needs and
has no need for liquidity with respect to its investment in Borrower;
(b) Lender is a corporation, trust, estate benefit plan,
partnership other entity, which comes within a category of "accredited investor"
as that term is defined in Rule 501(a) of Regulation D under the 1933 Act (17
C.F.R. 230.501(a));
3. Lender:
(a) has relied on all of Borrower's reports and filings since
January 1, 1996 under the United States Securities Exchange Act of 1934, as
amended (the "1934 Act") and the representations of Borrower set forth in the
Loan Agreement (the "Documents") and any other documents which may have been
requested and has carefully read the Documents and understands and has evaluated
the risks of a purchase of the Common Stock, and has relied solely (except as
indicated in subsections (b) and (c) below) on the information contained in the
Documents;
(b) has been provided an opportunity to obtain additional
information concerning Borrower and all other information to the extent Borrower
possesses such information or can acquire it without unreasonable effort or
expense;
(c) has been given the opportunity to ask questions of and
receive answers from Borrower concerning the terms and conditions of this
investment, and has been given the opportunity to obtain such additional
information necessary to verify the accuracy of the information contained in the
Documents or that which was otherwise provided in order for Lender to evaluate
the merits and risks of a purchase of the Common Stock to the extent Borrower
possesses such information or can acquire it without unreasonable efforts or
expense, and has not been furnished any other offering literature or prospectus
except as mentioned herein;
(d) has not relied on any oral representation or oral
information in connection with the offering of the Common Stock which is not
contained in the Documents; and
(e) has determined that the Common Stock is a suitable
investment and that Lender could bear a complete loss of its investment;
4. Lender represents, warrants and agrees that it will not sell or
otherwise transfer the Common Stock unless registered under the 1933 Act (which
registration may be pursuant to that Registration Rights Agreement dated
December 3, 1996 or otherwise) or in reliance upon an exemption therefrom, and
fully understands and agrees that it must bear the economic risk of its purchase
for an indefinite period of time because, among other reasons, the Common Stock
has not been registered under the 1933 Act or under the securities laws of
certain states and, therefore, cannot be resold, pledged, assigned or otherwise
disposed of unless they are subsequently registered under the 1933 Act and under
the applicable securities laws of such states or an exemption from such
registration is available. Lender also understands that except for Borrower's
independent obligation to remain current in its filings under the 1934 Act, as
amended, Borrower is under no obligation to register the Common Stock on its
behalf or to assist the Lender in complying with any exemption from registration
under the 1933 Act. Lender further understands that sales or transfers of the
Common Stock or underlying securities are restricted by the provisions of state
securities laws;
5. The person signing this Notice and Agreement of Conversion on behalf
of such entity has been duly authorized by such entity to do so;
6. No representation or warranties have been made to Lender by
Borrower, or any officer, employee, agent, affiliate or subsidiary of Borrower,
other than the representations of Borrower herein;
7. The execution and delivery by Lender of, and the performance by
Lender of its obligations under this Notice will not contravene any provision of
applicable law or the charter documents of Lender or any agreement or other
instrument binding upon Lender, or any judgment, order or decree of any
governmental body, agency or court having jurisdiction over Lender, and no
consent, approval, authorization or order of, or qualification with, any
governmental body or agency is required for the performance by Lender of its
obligations under this Notice in accordance with its terms;
8. Lender has been duly organized, is validly existing and is in good
standing under the laws of England and Wales. Lender has full corporate power
and authority to enter into this Notice and Agreement of Conversion and this
Notice and Agreement of Conversion has been duly and validly authorized,
executed and delivered by Lender and is a valid and binding obligation of
Lender, enforceable against Lender in accordance with its terms, except as such
enforcement may be limited by the laws effecting creditors rights, generally and
general equitable principles.
9. The foregoing representations, warranties and agreements shall
survive the issuance of the certificate and shares of Common Stock to Lender.
The undersigned requests that a certificate for such shares be
registered in the name of _______________________, whose address is
_____________________________, and that such shares be delivered to
________________________, whose address is _______________.
------------------------------------
Signature
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Date
[-----------------------------------
Signature Guaranteed
Participant in a recognized
Signature Guarantee Medallion
Program (or other signature
guarantor program reasonably
acceptable to the Transfer Agent)]
