EXHIBIT 10.6
FINANCIAL MONITORING AGREEMENT DATED 31 MARCH 1994
BETWEEN X.X. XXXXXXXXX, XX AND ALPNET, INC.
FINANCIAL MONITORING AGREEMENT
This Financial Monitoring Agreement (the "AGREEMENT") is made effective as
of 31 March 1994 by and between X. X. Xxxxxxxxx XX ("XXXXXXXXX") and ALPNET,
Inc., a Utah corporation ("ALPNET" or the "COMPANY").
R E C I T A L S :
X. Xxxxxxxxx is the largest single shareholder of ALPNET. Prior to the
transactions that are described in the recitals below, Xxxxxxxxx was the
beneficial owner of 6,507,891 shares of the Company's common stock and common
stock equivalents, which represent approximately 31.60% of the Company's common
stock, assuming that Xxxxxxxxx exercised all of his available warrants to
acquire common stock and converted all of his preferred stock to common stock
and assuming that no other shareholder made the same type of exercise or
conversion. Prior to the transactions that are described in the recitals below,
ALPNET had approximately 16,940,456 issued and outstanding common shares and
common share equivalents.
B. ALPNET and Xxxxxxxxx have heretofore entered into certain financing
transactions whereby Xxxxxxxxx has provided ALPNET with substantial debt and
equity financing, including the Company issuing in favor of Xxxxxxxxx a
promissory note in the principal amount of $2,157,544, dated April 16, 1990 (the
"NOTE").
C. In conjunction with the issuance of the Note, ALPNET, as borrower, and
Xxxxxxxxx, as lender, entered into that certain Loan and Security Agreement
dated 16 April 1990 (the "LOAN AGREEMENT").
D. Contemporaneously herewith and pursuant to a "Debt Conversion
Agreement" (the "DEBT CONVERSION AGREEMENT"), Xxxxxxxxx is (1) converting all of
the principal balance of the debt evidenced by the Note, in the amount of
$1,632,544.90, into ALPNET $3.09 convertible, voting, non-cumulative 10%
preferred stock, series C, without par value; and (2) surrendering warrants to
purchase 4,416,171 additional shares of ALPNET common, voting, no par value
stock ("ALPNET COMMON STOCK"), all on the terms and conditions as herein set
forth.
E. In the Loan Agreement, ALPNET made certain debt covenants running to
Xxxxxxxxx. As a result of the debt-to-equity conversion described in Recital D
above, the debt covenants contained in the Loan Agreement will be terminated.
F. After the debt-to-equity conversion described above, Xxxxxxxxx will be
the beneficial owner of 6,840,939 shares of ALPNET Common Stock and Common
Stock equivalents, which represent approximately 32.69% of ALPNET Common Stock,
assuming that no other ALPNET shareholder has exercised or surrendered warrants
or converted preferred stock into ALPNET Common Stock. After completion of
certain debt conversion transactions taking place contemporaneously herewith,
ALPNET will have approximately 22,198,769 issued and outstanding ALPNET Common
Stock and Common Stock equivalents.
NOW, THEREFORE, for and in consideration of the mutual promises and other
consideration herein set forth, it is agreed by the parties as follows:
1. APPROVAL RIGHTS. During the term of this Agreement, ALPNET shall not,
without the prior written consent of Xxxxxxxxx (which consent shall not be
unreasonably withheld), issue securities, borrow money or purchase or dispose of
assets if the aggregated amount of any such transaction exceeds ten percent
(10%) of the then current assets of the Company and its subsidiaries determined
on a consolidated basis. ALPNET agrees to defend, indemnify and hold Xxxxxxxxx
harmless from and against any and all liabilities, claims, demands, damages,
losses (including, without limitation, reasonable attorneys' fees), actions and
causes of action, or suits at law or in equity of whatsoever kind or nature,
arising from actions taken, or actions that allegedly should have been taken, by
Xxxxxxxxx pursuant to or under this Agreement.
2. LEGAL EXISTENCE AND LAWS; INSURANCE COVERAGE. During the term of this
Agreement, ALPNET shall guarantee and annually certify to Xxxxxxxxx (i) its
material compliance with all applicable laws, and with all material contracts
and corporate agreements to which it is a party, and (ii) that it is keeping and
maintaining insurance to such extent and against such risks as is customary for
companies of comparable size in the same or similar business and property in the
same general area.
3. IAB DELEGATE. During the term of this Agreement, Xxxxxxxxx shall have
the right to have a delegate of his choice participate in ALPNET's International
Advisory Board meetings, once per quarter, at ALPNET's expense.
4. TERM OF AGREEMENT. This Agreement shall automatically terminate upon
the fulfillment of whichever of the following conditions shall first occur:
4.1. Ten (10) years after the date of this Agreement set forth
above; or
4.2. The market value of ALPNET Common Stock, determined by
taking the average of the bid and ask price as reported on the NASDAQ system,
exceeds $4.00 per share for a period of ninety (90) consecutive calendar days;
or
4.3. Xxxxxxxxx'x actual holdings of ALPNET Common Stock and
Common Stock equivalents constitutes less than twenty percent (20%) of the
issued and outstanding shares of ALPNET Common Stock and Common Stock
equivalents.
5. MISCELLANEOUS PROVISIONS.
5.1. NOTICES. Notice required by this Agreement shall be given
in writing sent by certified U.S. Mail, Federal Express (or equivalent courier
service) or facsimile telecopy addressed as follows (or to such other address or
facsimile number subsequently provided in writing by such party):
Xxxxxxxxx: 00000 Xxxxxx Xxxxxxxxx
Xxxxxxxxx, XX 00000
Fax No. (000) 000-0000
ALPNET: 0000 Xxxxx 000 Xxxx, #000
Xxxx Xxxx Xxxx, XX 00000-0000
Fax No. (000) 000-0000
Any notice sent pursuant to this paragraph shall be deemed effective: (i) if by
certified U.S. mail or Federal Express, on the date of the first attempted
delivery (excluding Saturdays, Sundays and holidays); and (ii) if by facsimile
transmission, immediately upon confirmed transmission.
5.2. ASSIGNMENT. This Agreement may not be assigned by either
party without the written consent of the other party first had and obtained.
5.3. ENTIRE AGREEMENT. The parties acknowledge that this
Agreement and the instruments referred to herein contain their entire
understanding with respect to the specific matters referred to herein and
supersede all prior understandings, correspondence, memoranda, representations,
negotiations, letters of intent or other prior agreements with respect thereto
and that this Agreement may not be amended or modified except by a written
instrument signed by all parties affected thereby.
5.4. APPLICABLE LAW. This Agreement shall be governed by, and
construed in accordance with the laws of the State of Utah.
5.5. APPROVALS. Unless otherwise provided in this Agreement,
whenever approval or consent is required by any party hereto, such approval or
consent shall not be unreasonably withheld or delayed. If any party hereto
disapproves of some matter hereunder, then the reasons therefor shall be stated.
5.6. WAIVER. No waiver of any breach or default by any party to
this Agreement shall be considered to be a waiver of any other breach or
default.
5.7. SEVERABILITY. Whenever possible, each provision of this
Agreement and every related document shall be interpreted in such manner as to
be valid under applicable law; however, if any provision of any of the foregoing
is invalid or prohibited under applicable law, then such provision shall be
ineffective to the extent of such invalidity or prohibition without invalidating
the remainder of such provision or the remaining provisions of this Agreement.
5.8. COUNTERPARTS. For the convenience of the parties, this
Agreement may be executed in counterparts, each of which shall be deemed to be
an original, but all of which taken together shall constitute one and the same
instrument. The counterparts are in all respects identical, and each of the
counterparts shall be deemed to be complete in itself so that any one may be
introduced in evidence or used for any other purpose without the production of
the other counterparts. This Agreement shall be effective when one or more of
such counterparts has been executed by each party and delivered. If a party
receives a facsimile transmission of this Agreement from another party, which
transmission bears the signature of the other party, then it shall be deemed
that (i) the Agreement that is sent by facsimile transmission conforms to the
original, (ii) the original Agreement bears a genuine signature of the other
party and (iii) the Agreement has been delivered by the other party. In such
event, the other party shall send an original of the Agreement to the receiving
party by regular mail.
5.9. AUTHORIZATION. Each individual executing this Agreement
does thereby represent and warrant to any other individual so signing (and to
each other entity for which another individual is signing) that the individual
has been duly authorized to deliver this Agreement in the capacity and for the
entity that is set forth where he signs.
5.10. COSTS AND ATTORNEYS' FEES. In the event that either party
shall be required to engage legal counsel to enforce the provisions of this
Agreement, the prevailing party shall be entitled to recover all cost and
expenses, including reasonable attorneys' fees, whether suit be instituted or
not, and whether at trial or on appeal.
5.11. NEGATION OF THIRD PARTY RIGHTS. This Agreement is not
intended, nor shall it be construed, to create any third party beneficiary
rights in any person or entity unless expressly otherwise provided.
IN WITNESS WHEREOF, the parties have signed this Agreement effective as of
the day and year first set forth above.
\s\ X. X. XXXXXXXXX
X. X. XXXXXXXXX, XX
ALPNET, INC., a Utah Corporation
By: \s\ Xxxxxx X. Seal
XXXXXX X. SEAL
President
ATTEST:
\s\ Xxx X. Xxxxxxx
XXX X. XXXXXXX
Secretary
