MERIDIAN MEDICAL TECHNOLOGIES, INC.
NOTE AND WARRANT PURCHASE AGREEMENT
with
NOMURA HOLDING AMERICA INC.
12.0% Senior Subordinated Notes Due 2005.
Warrants to purchase 204,770 Shares of Common Stock.
Dated as of April 30, 1998
658180v11
TABLE OF CONTENTS
(Not Part of Agreement)
Page
Section 1. Definitions .......................................1
Section 1.1. Defined Terms...............................1
Section 1.2. Accounting Terms...........................19
Section 1.3. Rules of Construction......................19
Section 2. Sale and Purchase of Notes and Warrants ..........19
Section 2.1. Authorization of Notes and Warrants........19
Section 2.2. Issuance and Sale of Notes and Warrants....20
Section 2.3. Closing....................................20
Section 2.4. Fees.......................................21
Section 2.5 Interest Rate Limitation...................21
Section 2.6. Allocation of Purchase Price...............21
Section 2.7. Reduced Return.............................22
Section 3. Payments and Prepayments of Notes ................22
Section 3.1. Optional Prepayments of the Notes..........22
Section 3.2. Notice of Prepayment of the Notes..........23
Section 3.3. Allocation of Payments.....................23
Section 3.4. Payments...................................23
Section 3.5. Taxes......................................24
Section 3.6. Surrender of Notes; Notation Thereon.......25
Section 3.7. Purchase of Notes..........................25
Section 4. Representations and Warranties of the Company ....26
Section 4.1. Corporate Existence and Power..............26
Section 4.2. Corporate Authority........................26
Section 4.3. Binding Effect.............................26
Section 4.4. Capital Stock..............................26
Section 4.5. Business Operations and Other
Information; Financial Condition...........27
Section 4.6. Subsidiaries...............................28
Section 4.7. Litigation; No Violation of Governmental
Orders or Laws.............................28
Section 4.8. No Conflicts with Agreements, Statutes,
Orders, Etc................................29
Section 4.9. Consent, Etc...............................29
Section 4.10. Outstanding Indebtedness; Investments.....30
Section 4.11. Assets and Properties......................30
Section 4.12. Taxes......................................31
Section 4.13. Disclosure.................................31
Section 4.14. Offering of Securities.....................32
Section 4.15. Broker's or Finder's Commissions...........32
Section 4.16. Labor Matters..............................32
Section 4.17. Environmental Matters......................33
Section 4.18. Margin Regulations; Use of ▇▇▇▇▇▇▇▇........▇▇
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Section 4.19. Compliance with ERISA......................34
Section 4.20. Material Contracts.........................36
Section 4.21. Insurance..................................38
Section 4.22. Possession of Franchises, Licenses, Etc....38
Section 4.23. Intellectual Property......................38
Section 4.24. Customers and Suppliers....................39
Section 4.25. Status under Certain Laws..................39
Section 4.26. Certain Transactions.......................40
Section 4.27. Solvency...................................40
Section 4.28. Use of Proceeds............................40
Section 4.29. Ranking of Notes...........................40
Section 5. Representations of the Purchaser .................40
Section 6. Closing Conditions ...............................41
Section 6.1. Proceedings Satisfactory...................41
Section 6.2. Opinion of Purchaser's Special Counsel.....41
Section 6.3. Opinions of Counsel to the Company.........42
Section 6.4. Representations and Warranties True,
Etc.; Certificates.........................42
Section 6.5. Absence of Material Adverse Change, Etc....42
Section 6.6. Consents and Approvals.....................42
Section 6.7. Absence of Litigation, Orders, Etc.........42
Section 6.8. Subordination Agreement....................43
Section 6.9. Total Indebtedness under Credit
Agreement..................................43
Section 6.10. Fees.......................................43
Section 6.11. Wire Instructions..........................43
Section 6.12. Put Subordination Agreement................43
Section 7. Financial Statements and Information .............44
Section 8. Inspection of Properties and Books ...............48
Section 9. Affirmative Covenants ............................49
Section 9.1. Payment of Principal and Interest..........49
Section 9.2. Payment of Taxes and Claims................49
Section 9.3. Maintenance of Properties, Records and
Corporate Existence........................50
Section 9.4. Insurance..................................51
Section 9.5. Subsidiary Guarantors......................52
Section 9.6. Pension and Benefit Plan Covenants.........53
Section 9.7. Notice of Default..........................54
Section 10. Negative and Maintenance Covenants ...............54
Section 10.1. Restrictions on Indebtedness...............54
Section 10.2. Restrictions on Liens......................55
Section 10.3. Limitation on Sale and Leasebacks..........57
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Section 10.4. Consolidation. Merger or Disposition of
Assets; Acquisitions.......................57
Section 10.5. Sale or Discount of Receivables............58
Section 10.6. Conduct of Business........................58
Section 10.7. Restricted Payments and Restricted
Investments................................59
Section 10.8. Issuance of Capital Stock..................59
Section 10.9. Transactions with Affiliates...............59
Section 10.10. Termination of Pension Plans...............59
Section 10.11. Maintenance of Capital Expenditures........59
Section 10.12. Certain Contracts..........................60
Section 10.13. Limitation on Dividend Restrictions
Affecting Subsidiaries.....................61
Section 10.14. No Amendment of Charter, By-Laws...........61
Section 10.15. Acquisition of Margin Securities...........61
Section 10.16. Financial Covenants........................62
Section 10.17 Certificate Regarding Additional
Permitted Indebtedness.....................64
Section 11. Events of Default ................................64
Section 11.1. Events of Default; Remedies................64
Section 11.2. Suits for Enforcement......................68
Section 11.3. Remedies Cumulative........................68
Section 11.4. Remedies Not Waived........................69
Section 12. Registration, Exchange, and Transfer of Notes ....69
Section 13. Lost, Stolen, Damaged and Destroyed Notes ........69
Section 14. Miscellaneous ....................................70
Section 14.1. Amendment and Waiver.......................70
Section 14.2. Expenses...................................71
Section 14.3. Survival of Representations and
Warranties.................................72
Section 14.4. Successors and Assigns; Limitation on
Transfer...................................72
Section 14.5. Notices....................................73
Section 14.6. Indemnification............................74
Section 14.7. Public Announcements.......................75
Section 14.8. No Fiduciary Relationship..................75
Section 14.9. Confidentiality............................75
Section 14.10. Integration and Severability...............76
Section 14.11. Counterparts...............................76
Section 14.12. Governing Law..............................76
Section 14.13. Submission to Jurisdiction: Waiver of
Service and Venue..........................76
Section 14.14. Waiver of Right to Trial by Jury...........77
SCHEDULES
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658180v11
Schedule 4.4 Capital Stock
Schedule 4.5 Financial Statements
Schedule 4.6 Subsidiaries
Schedule 4.7 Litigation
Schedule 4.9 Consents
Schedule 4.10A Existing Indebtedness
Schedule 4.10B Existing Investments
Schedule 4.11 Real Property Leases
Schedule 4.16 Labor Matters
Schedule 4.17 Environmental Matters
Schedule 4.19 Pension and Benefit Plans
Schedule 4.20A Material Contracts
Schedule 4.20B Contracting Suspensions
Schedule 4.21 Insurance
Schedule 4.23 Intellectual Property
Schedule 4.24 Customers; Suppliers
Schedule 4.26 Related Party Transactions
EXHIBITS
Exhibit A Form of Senior Subordinated Note
Exhibit B Form of Subsidiary Guarantee
Exhibit C Form of Subordination Agreement
Exhibit D Form of Registration Rights Agreement
Exhibit E Form of Warrant
Exhibit F Form of Opinion of Counsel to the Company
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NOTE AND WARRANT PURCHASE AGREEMENT
This NOTE AND WARRANT PURCHASE AGREEMENT (this "Agreement")
is made and entered into as of April 30, 1998, by and between
MERIDIAN MEDICAL TECHNOLOGIES, INC., a Delaware corporation
(together with its successors, the "Company"), and NOMURA HOLDING
AMERICA INC., a Delaware corporation (together with its
successors, assigns and transferees, the "Purchaser").
RECITALS
WHEREAS, the Company has proposed to issue and sell to the
Purchaser (i) its 12.0% Senior Subordinated Notes Due 2005 in the
aggregate original principal amount of $15,000,000, and (ii) its
Warrants to purchase an aggregate of 204,770 shares (subject to
adjustment as therein provided) of the Company's Common Stock,
all for the consideration and upon the terms and conditions
hereinafter provided; and
WHEREAS, the proceeds of the issuance and sale of the Notes
are to be used to repay certain existing Indebtedness of the
Company and its Subsidiaries and for general corporate purposes
of the Company and its Subsidiaries;
NOW, THEREFORE, the Company and the Purchaser agree as
follows:
Section 1. Definitions{tc "Section 1. Definitions" \f
C \l 1}.
Section 1.1. Defined Terms{tc "Section 1.1. Defined
Terms" \f C \l 2}. For the purposes of this Agreement, the
following terms shall have the following respective meanings:
"Accountants" has the meaning specified in Section 7.
"Additional Debt" means:
(i) the portion, if any, of the aggregate
outstanding principal amount of Senior Indebtedness
(including the maximum aggregate amount of all commitments
to extend any revolving credit, working capital, letter of
credit or similar credit facility in connection therewith,
and including the face amount of all letters of credit and
other contingent obligations (whether issued or guaranteed
by the holders of such Indebtedness) from time to time
outstanding in connection therewith) that exceeds the
Maximum Commitment, as the same may be from time to time
reduced ("Excess Principal") and all interest accrued
thereon (including, without limitation, interest accruing
after the filing of any petition in bankruptcy, or the
commencement of any insolvency, reorganization or like
proceeding, relating to the Company and its Subsidiaries,
658180v11
whether or not a claim for post-filing or post-petition
interest is allowed in such proceeding), prepayment charges,
if any, payable with respect thereto, and all other sums
payable under or in connection with such Senior Loan
Documents, including, without limitation, all indebtedness
and obligations incurred or to be incurred pursuant to
letters of credit (whether issued or guaranteed by the
holders of such Indebtedness) or other commitments by the
holders of such Indebtedness extended for the benefit of the
Company and its Subsidiaries pursuant to the Credit
Agreement or any other such Senior Loan Document, in each
case to the extent the foregoing relate to Excess Principal,
and
(ii) any aggregate outstanding principal amount of
Indebtedness (other than Senior Indebtedness) incurred by
the Company and its Subsidiaries (including the maximum
aggregate amount of all commitments to extend any revolving
credit, working capital, letter of credit or similar credit
facility in connection therewith, and including the face
amount of all letters of credit and other contingent
obligations (whether issued or guaranteed by the holders of
such Indebtedness) from time to time outstanding in
connection therewith) and all interest accrued thereon
(including, without limitation, interest accruing after the
filing of any petition in bankruptcy, or the commencement of
any insolvency, reorganization or like proceeding, relating
to the Company and its Subsidiaries, whether or not a claim
for post-filing or post-petition interest is allowed in such
proceeding), prepayment charges, if any, payable in
connection therewith, and all other sums payable under or in
connection therewith, including, without limitation, all
indebtedness and obligations incurred or to be incurred
pursuant to letters of credit (whether issued or guaranteed
by the holders of such Indebtedness).
"Additional Permitted Indebtedness" means any Additional
Debt incurred by the Company or any of its Subsidiaries after the
date hereof, provided that:
(i) the Pro Forma Interest Coverage Ratio at the
time of such incurrence of Additional Debt is not less than
the Interest Coverage Ratio in effect at such time pursuant
to Section 10.16(d); and
(ii) the Pro Forma Leverage Ratio at the time of
such incurrence of Additional Debt is not more than
4.25:1.00 for any incurrence of Additional Debt on or before
April 30, 1999 and 4.00:1.00 for any incurrence of
Additional Debt thereafter; and provided further that:
(x) if any Additional Debt incurred by the Company
or any of its Subsidiaries by its terms ranks senior in
liquidation (without regard to any security interest) to the
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658180v11
Indebtedness evidenced hereby, such Additional Debt shall
not constitute Additional Permitted Indebtedness unless the
lenders of such Additional Debt, pursuant to a written
instrument satisfactory to the Purchaser, become parties to
and "Senior Lenders" under the Subordination Agreement and
such Additional Debt is included thereunder as Designated
Senior Indebtedness.
(y) any extension, renewal, refunding or
refinancing of any Additional Debt shall be treated as the
incurrence of Indebtedness for the purposes of this
definition.
For such purposes, the "Pro Forma Interest Coverage Ratio"
for any incurrence of Additional Debt means the ratio of (A)
EBITDA to (B) Interest Expense, calculated in the case of each of
such amounts for the period of 12 consecutive full calendar
months most recently ended prior to the incurrence of such
Additional Debt on a pro forma basis, assuming that (x) such
Additional Debt was incurred by the Company or its Subsidiaries
immediately prior to the commencement of such 12-month period,
and (y) the net proceeds of such Additional Debt were applied,
and any related transaction (including, without limitation, any
acquisition of Capital Stock or assets of any Person financed in
whole or in part by means of such Additional Debt and any
concurrent repayment of outstanding Indebtedness) occurred,
immediately prior to the commencement of such 12-month period;
and the "Pro Forma Leverage Ratio" for any incurrence of
Additional Debt means the ratio of (C) Consolidated Total
Indebtedness, calculated as of the date of incurrence of such
Additional Debt immediately after giving effect thereto and to
any concurrent repayment of outstanding Indebtedness, to (D)
EBITDA, calculated for the period of 12 consecutive full calendar
months most recently ended prior to the incurrence of such
Additional Debt on a pro forma basis assuming that the net
proceeds of such Additional Debt were applied, and any related
transaction (including, without limitation, any acquisition of
Capital Stock or assets of any Person financed in whole or in
part by means of such Additional Debt and any concurrent
repayment of outstanding Indebtedness) occurred, immediately
prior to the commencement of such 12-month period. For the
purposes of this definition, Indebtedness of the Company or its
Subsidiaries provided for under a revolving credit or similar
arrangement (including, without limitation, the Indebtedness
provided for under the Senior Loan Documents as in effect on the
date hereof) shall be deemed to be incurred at the time of any
increase in the maximum commitment amount relating thereto
(whether or not such increase is accompanied by an increase in
the principal amount thereof at the time outstanding), but not at
the time of any increase in the outstanding principal amount of
such Indebtedness to an amount which is less than or equal to the
maximum commitment amount thereof at the time in effect.
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658180v11
"Affiliate" means, as to any Person, any other Person which
directly or indirectly controls, is controlled by, or is under
common control with such Person, except ING shall not be deemed
to constitute an Affiliate of the Company. For purposes of this
definition, "control" of a Person shall mean the power, direct or
indirect, (i) to vote or direct the voting of 10% or more of the
outstanding shares of Voting Stock of such Person, or (ii) to
direct or cause the direction of the management and policies of
such Person whether by ownership of Capital Stock, by contract or
otherwise.
"Audited Financial Statements" has the meaning specified in
Section 4.5(b).
"Authorized Officer" with respect to any Person means the
Chief Executive Officer, the President, any Vice President, the
Chief Financial Officer or the Treasurer of such Person, or any
further or different officer of such Person so designated by any
Authorized Officer in a written notice to the holders of Notes.
"Bankruptcy Code" means 11 U.S. C. Sec. 101 et seq., as from
time to time hereafter amended, and any successor or similar
statute.
"Business Day" means any day except a Saturday, a Sunday or
a legal holiday in New York City.
"Capitalized Lease Obligation" means, as to any Person, all
monetary obligations of such Person under any leasing or similar
arrangement which, in accordance with GAAP, are or would be
classified as capitalized leases.
"Capital Stock" means and includes any and all shares,
interests, participations or other equivalents of or interests in
(however designated) corporate stock, including, without
limitation, shares of preferred or preference stock.
"Cash Equivalents" means:
(i) marketable obligations maturing within one year
after acquisition thereof issued or fully guaranteed by the
United States of America or an instrumentality or agency
thereof (provided that the full faith and credit of the
United States of America is pledged in support thereof),
(ii) open market commercial paper, maturing within 180
days after acquisition thereof, which has the highest credit
rating of either Standard & Poor's Rating Services, a
division of the ▇▇▇▇▇▇-▇▇▇▇ Companies or ▇▇▇▇▇'▇ Investor
Services, Inc., or an equivalent rating by any other
nationally recognized credit rating agency of similar
standing, issued by a corporation organized under the laws
of any State of the United States of America or of the
District of Columbia,
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658180v11
(iii) certificates of deposit or bankers
acceptances or other obligations maturing within one year
after acquisition thereof issued by a domestic commercial
bank which is a member of the Federal Reserve System and has
capital and surplus and undivided profits in excess of
$500,000,000, and
(iv) other certificates of deposit maturing within one
year after acquisition thereof in respect of deposits fully
insured by the Federal Deposit Insurance Corporation.
"Certified" when used with respect to any financial
information of any Person to be certified by any of its officers,
indicates that such information is to be accompanied by a
certificate to the effect that such financial information has
been prepared in accordance with GAAP consistently applied (other
than with respect to budgets and projections), subject in the
case of interim financial information to normal year-end audit
adjustments and absence of the footnotes required by GAAP, and
presents fairly, in all material respects, the information
contained therein as at the dates and for the periods covered
thereby.
"Change of Control" means any transaction or event as a
direct or indirect result of which:
(i) any Person is or becomes the beneficial owner (as
defined in Rules 13d-3 and 13d-5 under the Exchange Act),
directly or indirectly, of more than 25% of the outstanding
shares of Voting Stock of the Company; or
(ii) during any period of 12 consecutive months
(whether commencing before or after the Closing Date),
individuals who on the first day of such period constituted
the Board of Directors of the Company (together with any new
directors whose election by such Board of Directors or whose
nomination for election by the stockholders of the Company
was approved by a vote of a majority of the directors of the
Company then still in office who were either directors at
the beginning of such period or whose election or nomination
for election was previously so approved) cease for any
reason to constitute a majority of the Board of Directors of
the Company then in office.
"Closing Date" has the meaning specified in Section 2.3.
"Code" means the Internal Revenue Code of 1986, as amended.
"Common Stock" means the Common Stock, par value $0.10 per
share, of the Company.
"Company" means Meridian Medical Technologies, Inc., a
Delaware corporation, and any successor thereto.
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658180v11
"Company Reports" has the meaning specified in Section
4.5(a).
"Consolidated Capital Expenditure" means, for any period,
without duplication, the sum of (a) the gross dollar amount of
additions during such period to property, plant, equipment and
other fixed assets of the Company and its Subsidiaries, including
those additions made in the ordinary course of business, but
excluding routine maintenance and repairs, plus (b) the aggregate
amount of Capitalized Lease Obligations incurred during such
period by the Company and its Subsidiaries.
"Consolidated Total Indebtedness" means, as of any date of
determination, the aggregate amount of outstanding Indebtedness
of the Company and its Subsidiaries as of such date, determined
on a consolidated basis in accordance with GAAP.
"Control Affiliate" means, as to any Person, any other
Person which directly or indirectly controls, is controlled by,
or is under common control with such Person. For purposes of this
definition, "control" of a Person shall mean the power, direct or
indirect, (i) to vote or direct the voting of a majority of the
Voting Stock of such Person, or (ii) to direct or cause the
direction of the management and policies of such Person whether
by ownership of Voting Stock, by contract or otherwise.
"Contracts" mean all contracts, agreements, mortgages,
indentures, licenses, leases, commitments, plans, arrangements,
sales orders and purchase orders of every kind.
"Credit Agreement" means the Credit Agreement dated as of
April 15, 1996 among Brunswick Biomedical Corporation, a
Massachusetts corporation, various lenders as are, or may become
parties thereto and ING, individually and as Agent, assumed by
the Company by an agreement dated November 20, 1996, as such
Credit Agreement may from time to time be amended, modified or
supplemented in accordance with its terms.
"Default" means any event or condition which, with due
notice or lapse of time or both, would become an Event of
Default.
"Designated Senior Indebtedness" has the meaning specified
in the Subordination Agreement.
"Dollars" and "$" shall mean lawful money of the United
States of America.
"EBITDA" means, for any period, an amount equal to Net
Income plus (to the extent deducted in determining Net Income)
interest expense, provisions for income taxes, depreciation,
amortization of intangible assets and the write-off of in-process
research and development expense, in each case for the Company
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658180v11
and its Subsidiaries on a consolidated basis; provided, that (a)
any calculation of EBITDA that takes into account the fourth
quarter of the Company's 1997 Fiscal Year shall exclude from such
calculation the $1,539,400 pre-tax charge incurred during the
fourth quarter of the Company's 1997 Fiscal Year, which charge is
related to the voluntary product exchange program, and (b) any
calculation of EBITDA shall exclude any extraordinary item
associated with the extinguishment of Indebtedness as a result of
any refinancing of all or any part of the Indebtedness evidenced
by the Estate Subordinated Note or the Junior Subordinated Note
or the obligations under the Senior Loan Documents.
"Environmental Laws" means any and all Federal, state,
local, and foreign Statutes, Orders, permits, regulations,
concessions, grants, franchises, licenses, agreements or
governmental restrictions relating to pollution, the protection
of the environment or the generation, treatment, storage, use,
maintenance, recycling, transportation, release or disposal of
Hazardous Materials, including, without limitation, the
Comprehensive Environmental Response, Compensation and Liability
Act, the Resource Conservation and Recovery Act, the Emergency
Planning and Community Right to Know Act, the Safe Drinking Water
Act, the Hazardous Materials Transportation Act, the Clean Air
Act, the Clean Water Act, the Federal Insecticide, Fungicide and
Rodenticide Act, the Noise Control Act, the Occupational Safety
and Health Act, the Toxic Substances Control Act, any so-called
"Superfund" or "Superlien" law, and any regulation promulgated
under any of the foregoing, all as now or at any time hereafter
may be in effect.
"Environmental Matter" means any claim, investigation,
litigation, administrative proceeding or Order asserted, arising
or entered under or pursuant to any Environmental Law, or
relating to any Hazardous Materials, in each case against or
affecting the Company, any of its Subsidiaries, their respective
operations, or any Properties owned or operated by any of them.
"ERISA" means the Employee Retirement Income Security Act of
1974, as from time to time amended.
"ERISA Affiliate" means any corporation or other Person
(including, without limitation, any Subsidiary of the Company)
which is a member of the same controlled group (within the
meaning of Section 414(b) of the Code) of corporations or other
Persons as the Company, or which is under common control (within
the meaning of Section 414(c) of the Code) with the Company, or
any corporation or other Person which is a member of an
affiliated service group (within the meaning of Section 414(m) of
the Code) with the Company, or any corporation or other Person
which is required to be aggregated with the Company pursuant to
Section 414(o) of the Code or the regulations promulgated
thereunder.
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658180v11
"Estate Subordinated Note" has the meaning specified in the
Credit Agreement.
"Event of Default" has the meaning specified in Section
11.1.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any similar federal statute then in effect, and a
reference to a particular section thereof shall include a
reference to the comparable section, if any, of any such similar
federal statute.
"Existing Senior Debt" has the meaning specified in the
Subordination Agreement.
"Fair Market Value" means what a willing buyer would pay to
a willing seller in an arm's-length transaction.
"Financial Statements" has the meaning specified in Section
4.5(b).
"GAAP" means generally accepted accounting principles as in
effect from time to time in the United States of America, applied
on a consistent basis both as to classification of items and
amounts.
"Governmental Body" means any federal, state, provincial,
county, city, town, village, municipal or other government or
governmental department, commission, council, board, bureau,
agency, authority or instrumentality, of or within the United
States of America or its territories or possessions, or of or
within any other country, or of any international community
established by treaty.
"Government Contract" means any contract or agreement with
or for any Governmental Body (including, without limitation, any
such contract or agreement with respect to which the Company or
any of its Subsidiaries is a subcontractor at any level), other
than any purchase order issued in the ordinary course of business
and having a face amount (including all addenda, modifications
and supplements thereto) of less than $500,000.
"Guarantee" means any guarantee or other contingent
liability (other than any endorsement for collection or deposit
in the ordinary course of business), direct or indirect, with
respect to any obligations of another Person, through an
agreement or otherwise, including, without limitation, (i) any
other endorsement or discount with recourse or undertaking
substantially equivalent to or having economic effect similar to
a guarantee in respect of any such obligations, and (ii) any
agreement (A) to purchase, or to advance or supply funds for the
payment or purchase of, any such obligations, (B) to purchase,
sell or lease Property, products, materials or supplies, or
transportation or services, in respect of enabling such other
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658180v11
Person to pay any such obligation or to assure the owner thereof
against loss regardless of the delivery or nondelivery of the
Property, products, materials or supplies or transportation or
services or (C) to make any loan, advance or capital contribution
to or other investment in, or to otherwise provide funds to or
for, such other Person in respect of enabling such Person to
satisfy any obligation (including any liability for a dividend,
stock liquidation payment or expense) or to assure a minimum
equity, working capital or other balance sheet condition in
respect of any such obligation. The amount of any Guarantee shall
be equal to the outstanding amount of the obligations directly or
indirectly guaranteed.
"Hazardous Material" means the following:
(i) any "hazardous substance" as defined in, or for
purposes of, the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C.A. SS 9601 & 9602,
as may be amended from time to time, or any other so-called
"superfund" or "superlien" law and any judicial
interpretation of any of the foregoing;
(ii) any "regulated substance" as defined pursuant to
40 C.F.R. Part 280;
(iii) any "pollutant or contaminant" as defined in
42 U.S.C.A. S 9601 (33);
(iv) any "hazardous waste" as defined in, or for
purposes of, the Resource Conservation and Recovery Act;
(v) any "hazardous chemical" as defined in 29 C.F.R.
Part 1910;
(vi) any "hazardous material" as defined in, or for
purposes of, the Hazardous Materials Transportation Act; and
(vii) any other substance, regardless of physical
form, or form of energy or pathogenic agent that is subject
to any other past, present or future law or requirement of
any Governmental Body regulating, relating to, or imposing
obligations, liability, or standards of conduct concerning
the protection of human health, plant life, animal life,
natural resources, Property or the reasonable enjoyment of
life or Property from the presence in the environment of any
solid, liquid, gas, odor, pathogen or form of energy, from
whatever source.
Without limiting the generality of the foregoing, the term
"Hazardous Material" thus includes, but is not limited to, any
material, waste or substance that contains petroleum or any
fraction thereof, asbestos, or polychlorinated biphenyls, or that
is flammable, explosive or radioactive.
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658180v11
"Indebtedness" with respect to any Person means, without
duplication:
(i) all indebtedness of such Person for borrowed
money,
(ii) any obligation incurred for all or any part of the
purchase price of Property or services, other than accounts
payable and accrued expenses included in current liabilities
in accordance with GAAP and incurred in respect of Property
or services purchased in the ordinary course of business,
(iii) indebtedness or obligations evidenced by
bonds, notes or similar written instruments,
(iv) all reimbursement obligations of such Person
(whether contingent or otherwise) in respect of letters of
credit, bankers' acceptances, surety or other bonds and
similar instruments,
(v) any obligation (whether or not such Person has
assumed or become liable for the payment of such obligation)
secured by a Lien on any Property of such Person,
(vi) Capitalized Lease Obligations of such Person,
(vii) all obligations, contingent or otherwise, of
such Person with respect to any Interest Rate Protection
Agreement,
(viii) all obligations, contingent or otherwise, of
such Person under any foreign exchange contract, currency
swap agreement or other similar agreement or arrangement
designed to protect such Person against fluctuations in
currency values,
(ix) all obligations of such Person to redeem, purchase
or otherwise retire or extinguish any of its Capital Stock
at a fixed or determinable date (whether by operation of a
sinking fund or otherwise), at another's option or upon the
occurrence of a condition not solely within the control of
such Person (e.g., redemption from future earnings);
provided, that (a) for purposes of determining the amount of
Indebtedness outstanding at any time, the entire amount
required to effect a redemption, repurchase, retirement or
extinguishment of any Capital Stock shall be deemed to be
outstanding Indebtedness and (b) for purposes of determining
whether the tests under the definition of Additional
Permitted Indebtedness have been satisfied, the entire
amount required to effect a redemption, repurchase,
retirement or extinguishment of any Capital Stock shall be
deemed to be incurred at the time of issuance thereof, and
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658180v11
(x) all Guarantees by such Person of obligations of
any other Person of the types described in clauses (i)
through (viii) of this definition, inclusive;
provided, however, Indebtedness shall not include, in
respect of the put right granted to ING under the Warrant
Purchase Agreement dated April 15, 1996 by and between ING
and the Company, any claim or right that would otherwise
constitute a claim if not otherwise subject to the Put
Subordination Agreement.
"ING" means ING (U.S.) Capital Corporation, a Delaware
corporation.
"Intellectual Property" means patents, patent applications,
patent disclosures and inventions (whether or not patentable and
whether or not reduced to practice); all registered and
unregistered statutory and common law copyrights; all registered
and unregistered trademarks, service marks, licenses, logos,
sales materials and trade names; all registrations, applications
and renewals for any of the foregoing; all trade secrets,
confidential information, know-how, customer lists, formulae,
manufacturing and production processes and techniques, research
and development information, product designations, quality
standards, investigations, drawings, specifications, designs,
plans, improvements, proposals, technical and computer data; all
license agreements and sublicense agreements to and from third
parties relating to any of the foregoing; all other confidential
information and proprietary rights (including, without
limitation, all computer software and documentation); and all
copies and tangible embodiments of the foregoing (in whatever
form or medium).
"Interest Coverage Ratio" means, for any period, the ratio
of (a) EBITDA for such period to (b) Interest Expense during such
period.
"Interest Expense" means, for any period, the sum of (a) the
Company's consolidated interest expense accrued during such
period in respect of all Indebtedness of the Company and its
Subsidiaries, minus (b) the Company's consolidated interest
expense accrued during such period in respect of the Estate
Subordinated Note and the Junior Subordinated Note to the extent
that, in accordance with the terms of the Estate Subordinated
Note and the Junior Subordinated Note, such interest expense is
added to the respective principal amounts thereof and is not paid
by the Company in cash, minus (c) to the extent included in the
Company's consolidated interest expense accrued during such
period, the amount of any original issued discount that is
amortized during such period in respect of the Notes or the
obligations under the Senior Loan Documents.
"Interest Rate Protection Agreement" shall mean an interest
rate swap, cap or collar agreement or similar arrangement between
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658180v11
any Person or Persons and one or more financial institutions
providing for the transfer or mitigation of interest rate or
expense risks either generally or under specific contingencies.
"Internal Revenue Service" means the United States Internal
Revenue Service and any successor or similar agency performing
similar functions.
"Inventory" means all goods, merchandise and other personal
Property which are held for sale or lease or consignment or to be
furnished under a contract of service, or are raw materials, work
in process or material used or consumed, or to be used or
consumed, in the business of the Company and its Subsidiaries.
"Investment" when used with reference to any investment of
the Company or any of its Subsidiaries means any investment so
classified under GAAP, and, whether or not so classified,
includes (i) any Indebtedness owed by any Person to the Company
or to any such Subsidiary, (ii) any Guarantee or contingent
obligation of the Company or any such Subsidiary of Indebtedness
or other obligations of any Person, and (iii) any Capital Stock
of, partnership interest in, or other ownership or similar
interest in any Person held by the Company or any such
Subsidiary; and the amount of any Investment shall be the
original principal or capital amount thereof less all cash
returns of principal or equity thereof (and without adjustment by
reason of the financial condition of such other Person).
"Junior Subordinated Note" has the meaning specified in the
Credit Agreement.
"Lien" means any security interest, mortgage, pledge, lien,
claim, charge, encumbrance, conditional sale or title retention
agreement, lessor's interest under a capitalized lease or
analogous instrument, in, of or on any of a Person's Property
(whether held on the date hereof or hereafter acquired), or any
signed or filed financing statement which names such Person as
the debtor, or the execution of any security agreement or the
like authorizing any other Person as the secured party thereunder
to file such a financing statement.
"Majority Holders" means the holders of at least a majority
in principal amount of the Notes at the applicable time
outstanding.
"Material Adverse Effect" means any change or changes or
effect or effects that individually or in the aggregate are
materially adverse to (i) the condition (financial or otherwise),
operations, performance, business, properties or prospects of the
Company and its Subsidiaries taken as a whole, (ii) the rights
and remedies of the Purchaser under this Agreement, the Notes,
the Warrants or the Registration Rights Agreement, (iii) the
ability of the Company to fulfill its obligations under this
Agreement, the Notes, the Warrants or the Registration Rights
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658180v11
Agreement or (iv) the legality, validity or enforceability of
this Agreement, the Notes, the Warrants or the Registration
Rights Agreement.
"Material Contracts" means all oral or written supply
agreements, requirements contracts, customer agreements,
franchise agreements, license agreements, distribution
agreements, joint venture agreements, asset purchase agreements,
stock purchase agreements, merger agreements, agency or
advertising agreements, leases of real or personal property,
credit agreements, loan agreements, security agreements, pledge
agreements, mortgages, trust deeds, trust indentures, stockholder
agreements, consulting agreements, management agreements,
employment agreements, severance agreements, collective
bargaining agreements, employee benefit plans or arrangements,
tax sharing agreements, and other contracts, agreements and
commitments to which the Company or any of its Subsidiaries are
parties, in each case which have a face amount or value
(including all addenda, modifications and supplements thereto) of
$500,000 or more. The term "Material Contract" shall include, in
any event, without limitation, (i) any Government Contract to
which the Company or any of its Subsidiaries is a party, (ii) the
Specified IP Contracts and (iii) any "material" contract
required to be filed with the Company's periodic reports pursuant
to Item 601(b)(10) of Regulation S-K promulgated by the
Securities and Exchange Commission.
"Maximum Commitment" means, at any time, the lesser of (i)
$13,500,000 and (ii) the aggregate commitment at such time under
the Senior Loan Documents.
"Multiemployer Plan" means a multiemployer plan as defined
in Section 3(37) or Section 4001(a)(3) of ERISA or Section 414(f)
of the Code contributed to by the Company or any of its
Subsidiaries or ERISA Affiliates.
"Net Income" means, as to any Person, for any period, the
net income (or loss) of such Person for such period, determined
in accordance with GAAP, but excluding extraordinary gains or
losses for such period.
"Note" and "Notes" have the meanings specified in Section
2.1 (a).
"Officer's Certificate" means, with respect to any
corporation, a certificate signed by the Chief Executive Officer,
the President, one of the Vice Presidents, or the Chief Financial
Officer of the specified corporation.
"Order" means any order, writ, injunction, decree, judgment,
award, determination or written direction or demand of any court,
arbitrator or Governmental Body.
"Other Taxes" has the meaning specified in Section 3.5(c).
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658180v11
"PBGC" means the Pension Benefit Guaranty Corporation, and
any successor agency or Governmental Body performing similar
functions.
"Pension Plan" means an employee pension benefit plan, as
defined in Section 3(2) of ERISA, excluding any Multiemployer
Plans, maintained by or contributed to by the Company or any of
its Subsidiaries or ERISA Affiliates.
"Permitted Lien" means any of the Liens permitted to be
incurred under Section 10.2.
"Person" means and includes an individual, a partnership, a
joint venture, a corporation, a company, a trust, an
unincorporated organization and a government or any department or
agency thereof.
"Plan" and "Plans" means any employee benefit plan as
defined in Section 3(3) of ERISA, excluding a Multiemployer
Plan, established or maintained for the benefit of employees of
the Company or any of its Subsidiaries or ERISA Affiliates.
"Prepayment Premium" means at any time with respect to any
Notes being prepaid in whole or in part pursuant to Section 3.1
during any of the periods set forth below, an amount equal to the
percentage set forth opposite such period of the aggregate
principal amount of the Notes being prepaid at such time:
Percentage of Principal
Amount Being Prepaid
Period
April 30, 1998 to and including 3%
April 30, 2001
May 1, 2001 to and including April 2%
30, 2002
May 1, 2002 to and including April 1%
30, 2003
May 1, 2003 and thereafter 0%
"Property" with respect to any Person, means any interest in
any kind of property or asset, whether real, personal or mixed,
tangible or intangible, of such Person.
"Put Subordination Agreement" means that certain Put
Subordination Agreement by and among the Company, ING and the
Purchaser dated as of the date hereof.
"Registration Rights Agreement" means that certain
Registration Rights Agreement, in the form attached as Exhibit D
hereto, to be dated as of and entered into on the Closing Date,
among the Company and each of the Persons who will be holders of
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658180v11
the Warrants, as from time to time amended, modified or
supplemented in accordance with its terms.
"Reportable Event" means any of the events set forth in
Section 4043(b) of ERISA or the regulations thereunder for which
the 30-day notice requirement applies.
"Restricted Investment" means any Investment other than
(i) any Investment in Cash Equivalents,
(ii) any Investment existing on the Closing Date and
set forth in Schedule 4.10B,
(iii) any loan or advance to or Guarantee of the
obligations of any Subsidiary of the Company by the Company
or any of its Subsidiaries; provided that the aggregate
amount of such loans, investments or Guarantees in all
Subsidiaries of the Company that are not Wholly-owned
Subsidiaries shall not at any time exceed $500,000;
(iv) any Investment by the Company in the Capital Stock
of any Subsidiary of the Company, and any Investment by any
Subsidiary of the Company in the Capital Stock of any other
Subsidiary of the Company; provided that (a) the aggregate
amount of the Investments of the Company and its
Subsidiaries in all Subsidiaries of the Company shall not at
any time exceed 20% of the Company's consolidated assets and
(b) the aggregate amount of such Investments of the Company
and its Subsidiaries in all Subsidiaries of the Company that
are not Wholly-owned Subsidiaries shall not at any time
exceed the lesser of (x) $1,500,000 or (y) 10% of the
consolidated net worth of the Company as determined in
accordance with GAAP;
(v) any Investment by the Company or any of its
Subsidiaries in any Person which is a joint venture of the
Company or any such Subsidiary with a Person that is not the
Company or a Subsidiary of the Company, provided that (x)
such joint venture is not a Subsidiary of the Company or any
of its Subsidiaries and (y) the aggregate amount of all
Investments of the Company and its Subsidiaries referred to
in this subparagraph (iv) (excluding amounts referred to in
subparagraph (v) of this definition) shall not at any time
exceed $500,000, and
(vi) Guarantees by the Company or any of its
Subsidiaries of the obligations of joint ventures referred
to in the foregoing subparagraph (iv) with respect to
accounts payable of such joint ventures included in current
liabilities in accordance with GAAP and incurred in respect
of Property or services purchased in the ordinary course of
business, provided that the aggregate amount of such
Guarantees shall at no time exceed $500,000.
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658180v11
"Restricted Payment" means, with respect to any Person,
(i) the declaration or payment of any dividend or
other distribution on, or the incidence of any liability to
make any other payment in respect of, Capital Stock of such
Person (other than one payable solely in Capital Stock of
such Person),
(ii) any payment or distribution by such Person on
account of the purchase, redemption, defeasance (including
in-substance or legal defeasance) or other retirement of any
Capital Stock of such Person, or of any warrant, option or
other right to acquire such Capital Stock (whether directly
or indirectly, and including, without limitation, any
purchase or other acquisition of such Capital Stock, or of
any warrant, option or other right to acquire such Capital
Stock, by any Subsidiary of such Person),
(iii) any other payment or distribution by such
Person in respect of its Capital Stock, whether directly or
indirectly or through any Subsidiary of such Person, and
(iv) any payment or distribution by such Person on
account of the principal of or prepayment charges, if any,
or interest or other amounts, with respect to any
Indebtedness of the Company or any of its Subsidiaries which
is subordinated in right of payment to the prior payment of
the Notes.
The amount of any Restricted Payment made in the form of
Property shall be deemed to be the greater of the Fair Market
Value or the net book value of such Property. Notwithstanding
anything to the contrary set forth in this definition, the term
"Restricted Payment" shall not include (A) the declaration or
payment of any dividend by, or any other payment or distribution
in respect of the Capital Stock of, any Wholly-owned Subsidiary
of the Company which is payable and paid solely to the Company
and/or one or more other Wholly-owned Subsidiaries of the Company
or (B) any payment or distribution permitted to be made by the
Company pursuant to the terms and conditions of the Put
Subordination Agreement.
"SEC" means the United States Securities and Exchange
Commission and any successor agency, authority, commission or
Governmental Body.
"Securities Act" means as of any date the Securities Act of
1933, as amended, or any similar federal statute then in effect,
and a reference to a particular section thereof shall include a
reference to the comparable section, if any, of any such similar
federal statute.
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658180v11
"Senior Indebtedness" means (i) the Existing Senior Debt and
(ii) the principal amount of any and all extensions, renewals,
refundings or refinancings, in whole or in part, of the Existing
Senior Debt, interest accrued thereon (including, without
limitation, interest accruing after the filing of any petition in
bankruptcy, or the commencement of any insolvency, reorganization
or like proceeding, relating to the Company or any of its
Subsidiaries, whether or not a claim for post-filing or post-
petition interest is allowed in such proceeding), prepayment
premiums payable with respect thereto, and fees, costs, expenses,
indemnities and other amounts payable with respect thereto.
"Senior Loan Documents" has the meaning specified in the
Subordination Agreement.
"Solvent" means when used with respect to any Person, that
(i) the fair value of the property of such Person is greater than
the total amount of liabilities (including, without limitation,
contingent liabilities) of such Person, (ii) the present fair
salable value of the assets of such Person is not less than the
amount that will be required to pay the probable liabilities of
such Person on its debts as they become absolute and matured,
(iii) such Person does not intend to, and does not believe that
it will, incur debts or liabilities beyond such Person's ability
to pay as such debts and liabilities mature, and (iv) such Person
is not engaged in business or a transaction, and is not about to
engage in business or a transaction, for which such Person's
assets would constitute unreasonably small capital. For such
limitation, pending litigation, Guarantees and pension plan
taxes, if any, are valued at the amount that, in light of all the
facts and circumstances existing at such time, represents the
amount that can reasonably be expected to become an actual or
matured liability.
"Specified IP Contracts" means (i) the License Agreement
between University of Ulster and ▇▇▇▇▇ Limited dated December 11,
1992 and (ii) the License Agreement between Survival Technology,
Inc. and Becton, ▇▇▇▇▇▇▇▇▇ and Company dated October 31, 1996.
"Statute" means any statute, ordinance, code, treaty,
directive, law, rule or regulation of any Governmental Body.
"Subordinated Indebtedness" has the meaning specified in the
Subordination Agreement.
"Subordination Agreement" has the meaning specified in
Section 6.8.
"Subsidiary" shall mean, with respect to any Person, any
corporation or other entity of which at least a majority of the
outstanding Voting Stock is at the time directly or indirectly
owned or controlled by such Person or by one or more of any
entities directly or indirectly owned or controlled by such
Person.
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658180v11
"Subsidiary Guarantee" means a Guarantee in the form of
Exhibit B, to be executed and delivered pursuant to Section 9.5
by any Person which thereafter becomes a Subsidiary of the
Company organized under the laws of the United States of America.
"Taxes" has the meaning specified in Section 3.5(a).
"Total Debt Leverage Ratio" means, for any period, the ratio
of (a) the aggregate outstanding principal amount of all
Indebtedness of the Company and its Subsidiaries as of the last
day of such period to (b) EBITDA for such period.
"Total Debt Service" means, for any period, the sum of (a)
Interest Expense with respect to all Indebtedness of the Company
and its Subsidiaries during such period, plus (b) principal
repayments, if any, of the Loans (as such term is defined in the
Credit Agreement) during such period required to be made pursuant
to clause (e) of Section 3.3.1 of the Credit Agreement, plus (c)
principal repayments, if any, of all other Indebtedness of the
Company and its Subsidiaries required to be made during such
period.
"Total Debt Service Ratio" means, for any period, the ratio
of (a) EBITDA to (b) Total Debt Service.
"Unaudited Financial Statements" has the meaning specified
in Section 4.5(b).
"Unfunded Current Liability" of any Pension Plan shall mean
the amount, if any, by which the actuarial present value of the
accumulated plan benefits under the Pension Plan as of the close
of its most recent plan year, determined in accordance with
Statement of Financial Accounting Standards No. 35, based upon
the actuarial assumptions used by the Pension Plan's actuary in
the most recent annual valuation of the Pension Plan, exceeds the
fair market value of the assets allocable thereto, determined in
accordance with Treasury Regulations Sections 1.412(c)(2)-
1(c)(l).
"U.S. Person" means a citizen or resident of the United
States of America, a corporation, partnership or other entity
created or organized in or under any laws of the United States of
America or of any State thereof, or any estate or trust that is
subject to federal income taxation regardless of the source of
its income.
"U.S. Taxes" has the meaning specified in Section 3.5(b).
"Voting Stock" with respect to any Person shall mean Capital
Stock of such Person of any class or classes, the holders of
which are ordinarily, in the absence of contingencies, entitled
to vote for the election of members of the Board of Directors (or
Persons performing similar functions) of such Person.
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658180v11
"Warrant" and "Warrants" have the meanings specified in
Section 2.1(b).
"Wholly-owned Subsidiary" shall mean, with respect to any
Person, any Subsidiary of such Person all of the shares of
Capital Stock (and all rights and options to purchase such
shares) of which, other than directors' qualifying shares, are
owned, beneficially and of record, by such Person and/or one or
more Wholly-owned Subsidiaries of such Person.
Section 1.2. Accounting Terms{tc "Section 1.2.
Accounting Terms" \f C \l 2}. All accounting terms used in
this Agreement shall be applied on a consolidated basis for the
Company and its Subsidiaries, unless otherwise specifically
indicated herein. Any accounting terms not specifically defined
herein shall have the meanings customarily given them in
accordance with GAAP.
Section 1.3. Rules of Construction{tc "Section 1.3.
Rules of Construction" \f C \l 2}. The words "herein,"
"hereof" and "hereunder" and other words of similar import refer
to this Agreement as a whole and not to any particular Section or
subsection. Reference herein to any Section or subsection refers
to such Section or subsection (as the case may be) hereof. Words
in the singular include the plural, and words in the plural
include the singular. Each covenant or agreement contained
herein shall be construed (absent express provision to the
contrary) as being independent of each other covenant or
agreement contained herein, so that compliance with any one
covenant or agreement shall not (absent such an express contrary
provision) be deemed to excuse compliance with any other covenant
or agreement. Where any provision herein refers to action to be
taken by any Person, or which such Person is prohibited from
taking, such provision shall be applicable whether such action is
taken directly or indirectly by such Person.
Section 2. Sale and Purchase of Notes and
Warrants{tc "Section ▇.▇▇▇▇ and Purchase of Notes and Warrants"
\f C \l 1}.
Section 2.1. Authorization of Notes and Warrants{tc
"Section 2.1. Authorization of Notes and Warrants" \f C \l 2}.
The Company has duly authorized the issue, sale and delivery of:
(a) its 12.0% Senior Subordinated Notes Due 2005 in
the aggregate principal amount of $15,000,000, to be dated the
date of issue thereof, (i) to bear interest (computed on the
basis of a 360-day year and actual days elapsed) from such date
at the rate of 12.0% per annum payable in cash quarterly in
arrears on the first day of July, October, January and April in
each year (commencing July 1, 1998) and at maturity, and to bear
interest (so computed) payable in cash on demand at the rate of
14.0% per annum (x) on any overdue principal and Prepayment
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658180v11
Premium, if any, and, to the extent permitted by applicable law,
on any overdue interest, until the same shall be paid and (y)
during the continuance of any Event of Default, (ii) to mature on
April 30, 2005, and (iii) to be substantially in the form of
Exhibit A hereto attached (all such Notes originally issued
pursuant to this Agreement, or delivered in substitution or
exchange for any thereof, being collectively called the "Notes"
and individually a "Note").
(b) its Warrants, initially exercisable to purchase an
aggregate of 204,770 shares (subject to adjustment as therein
provided) of its authorized but unissued Common Stock, at an
initial exercise price of $11.988 per share (subject to
adjustment as therein provided), to be exercisable during the
period commencing on the Closing Date and ending on April 30,
2005, and to be substantially in the form of Exhibit E hereto
attached (all such Warrants originally issued pursuant to this
Agreement, or delivered in substitution or exchange for any
thereof, being collectively called the "Warrants" and
individually a "Warrant").
Section 2.2. Issuance and Sale of Notes and
Warrants.{tc "Section 2.2. Issuance and Sale of Notes and
▇▇▇▇▇▇▇▇" \▇ ▇ \▇ ▇}
(▇) Subject to the terms and conditions herein set
forth, the Company hereby agrees to sell to the Purchaser, and
the Purchaser agrees to purchase from the Company, Notes in the
aggregate principal amount of $15,000,000, at a purchase price of
100% of the principal amount thereof.
(b) Subject to the terms and conditions herein set
forth, the Company hereby agrees to issue to the Purchaser, in
consideration of its purchase of Notes hereunder and as
additional interest on such Notes, Warrants initially exercisable
to purchase an aggregate of 204,770 shares of Common Stock.
Section 2.3. Closing{tc "Section 2.3. Closing" \f C
\l 2}. (a) The initial closing of the sale and delivery of
Notes and Warrants shall take place at the offices of Stroock &
Stroock & ▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ at
10:00 a.m., New York time on May 1, 1998 or such other date as
the parties shall agree (herein called the "Closing Date").
(b) On the Closing Date, the Company will deliver to
the Purchaser:
(i) Notes registered in the name of the Purchaser
or its nominee, duly executed and dated the Closing
Date, in the aggregate principal amount of U.S.
$15,000,000, in such denominations as the Purchaser
shall specify, against the Purchaser's delivery to the
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658180v11
Company of immediately available funds in the amount of
the aggregate purchase price of such Notes, and
(ii) Warrants initially exercisable to purchase an
aggregate of 204,770 shares of Common Stock, registered
in the name of the purchaser or its nominee, duly
executed and dated the Closing Date, in such
denominations as the Purchaser shall specify (or, in
the absence of such notice, one Warrant registered in
the Purchaser's name initially exercisable for such
aggregate number of shares of Common Stock).
Section 2.4. Fees{tc "Section 2.4. Fees" \f C \l
2}. (a) On the Closing Date, the Company will pay to the
Purchaser a non-refundable funding fee in an amount equal to
$37,500.
(b) On the Closing Date, the Company will pay to
Nomura Securities International, Inc. a non-refundable
structuring fee in an amount equal to $37,500.
Section 2.5. Interest Rate Limitation{tc "Section 2.5
Interest Rate Limitation" \f C \l 2}. Notwithstanding any
provisions of this Agreement or the Notes, in no event shall the
amount of interest paid or agreed to be paid by the Company
exceed an amount computed at the highest rate of interest
permissible under applicable law. If, from any circumstances
whatsoever, fulfillment of any provision of this Agreement or the
Notes at the time performance of such provision shall be due,
shall involve exceeding the interest rate limitation validly
prescribed by law which a court of competent jurisdiction may
deem applicable hereto, then, ipso facto, the obligations to be
fulfilled shall be reduced to an amount computed at the highest
rate of interest permissible under applicable law, and if for any
reason whatsoever any Purchaser shall ever receive as interest an
amount which would be deemed unlawful under such applicable law
such interest shall be automatically applied to the payment of
principal of the Notes outstanding hereunder (whether or not then
due and payable), without prepayment charge, premium or penalty,
and not to the payment of interest, or shall be refunded to the
Company if such principal and all other obligations of the
Company to such Purchaser have been paid in full.
Section 2.6. Allocation of Purchase Price{tc "Section
2.6. Allocation of Purchase Price" \f C \l 2}. It is hereby
agreed that, for purposes of Treasury Regulations S 1.1273-2(h),
(i) the aggregate "issue price" of the investment unit consisting
of the Notes and Warrants to be issued pursuant to this Agreement
is $15,000,000, (ii) the aggregate fair market value and
aggregate purchase price of the Notes is $14,070,344, and (iii)
the aggregate fair market value and aggregate purchase price of
the Warrants is $929,656. The Company and the Purchaser agree to
use the foregoing issue price, purchase prices and fair market
values for U.S. federal income tax purposes with respect to this
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658180v11
transaction (unless otherwise required by a final determination
by the Internal Revenue Service or a court of competent
jurisdiction).
Section 2.7. Reduced Return{tc "Section 2.7.
Reduced Return" \f C \l 2}. If the Purchaser shall have
determined that the applicability of any law, rule, regulation or
guideline adopted after the date hereof pursuant to or arising
out of the July 1988 report of the Basle Committee on Banking
Regulations and Supervisory Practices entitled "International
Convergence of Capital Measurement and Capital Standards," or the
adoption after the date hereof of any other law, rule, regulation
or guideline regarding capital adequacy, or any change after the
date hereof in any of the foregoing or in the enforcement or
interpretation or administration of any of the foregoing by any
court or any central bank or other Governmental Body, charged
with the enforcement or interpretation or administration thereof,
or compliance by the Purchaser (or any lending office of the
Purchaser) or the Purchaser's holding company with any request or
directive regarding capital adequacy (whether or not having the
force of law) of any such Governmental Body, has or would have
the effect of reducing the rate of return on the Purchaser's
capital or on the capital of the Purchaser's holding company, if
any, as a consequence of its purchasing any Notes or its
obligations under this Agreement to a level below that which the
Purchaser or the Purchaser's holding company could have achieved
but for such applicability, adoption, change or compliance
(taking into consideration the Purchaser's policies and the
policies of the Purchaser's holding company with respect to
capital adequacy) by an amount deemed by the Purchaser acting
reasonably to be material, then, upon demand by the Purchaser,
the Company shall pay to the Purchaser from time to time such
additional amount or amounts as will compensate the Purchaser or
the Purchaser's holding company for any such reduction suffered.
The certificate of the Purchaser with respect to such additional
amount or amounts shall be conclusive absent manifest error.
Section 3. Payments and Prepayments of Notes{tc
"Section 3. Payments and Prepayments of Notes" \f C \l 1}.
Section 3.1. Optional Prepayments of the Notes{tc
"Section 3.1. Optional Prepayments of the Notes" \f C \l 2}.
(a) Upon notice given as provided in Section 3.2, the Company, at
its option, may prepay at any time all or from time to time any
part (in an aggregate amount of $1,000,000 or any greater amount
which is an even multiple of $100,000, or, if the aggregate
principal balance of the Notes shall be less than $1,000,000,
then in an amount equal to such aggregate principal balance) of
the principal amount of the Notes, together with accrued but
unpaid interest on the principal amount being prepaid to the date
of such prepayment, plus payment of the applicable Prepayment
Premium.
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658180v11
(b) If, on or prior to the third Business Day after
the date of the receipt by the Company of proceeds from a public
offering of any of the Company's Capital Stock (other than
issuances of Capital Stock to employees, officers and directors
of the Company pursuant to stock option plans of the Company),
the Company applies all or a portion of such proceeds from the
offering of its Capital Stock as a prepayment pursuant to Section
3.2(a) above, then the amount of the Prepayment Premium due in
respect of such prepayment (to the extent attributable to such
proceeds) shall be one-half of the amount specified in the
definition thereof.
Each prepayment made pursuant to this Section 3.1 shall be
allocated as provided in Section 3.3.
Section 3.2. Notice of Prepayment of the Notes{tc
"Section 3.2. Notice of Prepayment of the Notes" \f C \l 2}.
The Company shall call Notes for prepayment pursuant to Section
3.1 by giving written notice thereof to each holder of Notes not
less than 15 nor more than 60 days prior to the date fixed for
such prepayment. Such notice shall specify (a) the date fixed
for such prepayment, (b) the principal amount to be prepaid on
such date, (c) the amount of accrued interest to be paid on such
date and (d) the amount of the Prepayment Premium, if any, to be
paid in connection therewith. Notice of prepayment having been
so given, the aggregate principal amount of the Notes so to be
prepaid as specified in such notice, together with interest
accrued thereon to such date fixed for prepayment, plus the
applicable Prepayment Premium, if any, shall become due and
payable on the specified prepayment date.
Section 3.3. Allocation of Payments{tc "Section 3.3.
Allocation of Payments" \f C \l 2}. In the event of any
payment or prepayment of less than the entire outstanding
principal balance of the Notes pursuant to Section 3.1, the
Company shall allocate the principal amount so to be paid or
prepaid by it and the interest and Prepayment Premium, if any,
among the Notes in proportion, as nearly as may be, to the
respective unpaid principal amounts thereof.
Section 3.4. Payments{tc "Section 3.4. Payments"
\f C \l 2}. Each payment by the Company hereunder of the
principal amount of the Notes, interest thereon, Prepayment
Premium fees, costs, expenses, indemnities and other amounts due
hereunder shall be made in Dollars by wire transfer of
immediately available funds, without deduction (except as
provided in Section 3.5), set-off or counterclaim, to each holder
of Notes entitled to receive such payment at such office or bank
account as shall be specified by such holder from time to time by
written notice to the Company, not later than 1:00 p.m. (New York
City time) on the date on which such payment shall become due
(each such payment made after such time on such due date to be
deemed to have been made on the next succeeding Business Day).
Whenever any payment hereunder or under the Notes shall be stated
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658180v11
to be due on a day other than a Business Day, that payment shall
be made on the next succeeding Business Day and the extension of
time shall be included in the computation of interest due
thereon.
Section 3.5. Taxes{tc "Section 3.5. Taxes" \f C \l
2}. (a) All payments by the Company or other payor under this
Agreement or with respect to the Notes shall be made free and
clear of and without deduction for any and all present or future
taxes, levies, imposts, deductions, charges or withholdings
imposed on or with respect to such payments, and all interest,
penalties and other liabilities with respect thereto (all such
taxes, levies, imposts, deductions, charges, withholdings and
liabilities being hereinafter referred to as "Taxes"), excluding
(i) taxes on Purchaser's net income or capital or (ii) franchise
taxes, in each case imposed on Purchaser by the jurisdiction
under the laws of which it is organized or any subdivision
thereof (all such nonexcluded Taxes being hereinafter referred to
as "Covered Taxes").
(b) If the Company shall be required by law to deduct
any Covered Taxes imposed by the United States of America or any
taxing authority thereof ("U.S. Taxes") from or in respect of any
sum payable hereunder to any holder which is not a U.S. Person,
(i) except as provided in subsection (f) below, the sum payable
shall be increased as may be necessary so that after making all
required deductions (including deductions applicable to
additional sums payable under this Section 3.5), such holder
receives an amount equal to the sum it would have received had no
such deductions been made, (ii) the Company shall make such
deductions and (iii) the Company shall pay the full amount
deducted to the relevant taxation authority or other authority in
accordance with applicable law. Upon the occurrence of any event
giving rise to the operation of this Section 3.5(b) with respect
to any holder, such holder shall, if requested by the Company,
use reasonable efforts to designate another office of such holder
through which its Notes are held, with the object of preventing
the consequence of the event giving rise to the operation of this
Section 3.5(b); provided that such designation would not result
in the imposition of any U.S. Taxes or other taxes, levies,
imposts, deductions, charges or withholdings by any jurisdiction
on such holder or with respect to any amounts payable to such
holder hereunder, or other material cost or expense to such
holder, or violate any Statute or Order to which such holder or
the Company is then subject.
(c) In addition, the Company agrees to pay any present
or future stamp or documentary taxes or any other excise or
property taxes, charges or similar levies that arise from any
payment made under this Agreement or the Notes or from the
execution, delivery, enforcement or registration of, or otherwise
with respect to, this Agreement or the Notes, other than any
transfer taxes payable in connection with a change in the
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658180v11
registered holder of any Notes (hereinafter referred to as "Other
Taxes").
(d) The Company will indemnify each holder of Notes
for the full amount of Covered Taxes, U.S. Taxes or Other Taxes
imposed by any jurisdiction and paid by such holder with respect
to any amounts payable pursuant to this Section 3.5, and any
liability (including penalties, additions to tax, interest and
expenses) arising therefrom or with respect thereto, whether or
not such Covered Taxes, U.S. Taxes or Other Taxes were correctly
asserted. This indemnification shall be made within 30 days from
the date such holder makes written demand therefor (which demand
shall identify the nature and amount of Covered Taxes, U.S. Taxes
or Other Taxes for which indemnification is being sought and
shall include a copy of the relevant portion of any written
assessment from the relevant taxing authority demanding payment
of such Covered Taxes, U.S. Taxes or Other Taxes).
(e) Within 30 days after the date of any payment of
Covered Taxes, U.S. Taxes or Other Taxes, the Company will
furnish to the holders of Notes the original or a certified copy
of any receipt furnished by the relevant taxing authority
evidencing payment thereof.
(f) The Company shall have no obligation to pay
additional amounts in respect of U.S. Taxes to any holder of
Notes which is not a U.S. Person pursuant to subsection (b) of
this Section 3.5, or to indemnify such holder in respect of such
U.S. Taxes pursuant to subsection (d) of this Section 3.5, if
such U.S. Taxes are imposed solely by reason of such holder's
failure to comply with applicable certification, information,
documentation or other reporting requirements concerning the
nationality, residence, identity or connections with the United
States of America of such holder.
(g) Without prejudice to the survival of any other
agreement contained herein, the agreements and obligations
contained in this Section 3.5 shall survive the payment in
full of principal, interest, fees and any other amounts
payable hereunder (other than amounts payable pursuant to this
Section 3.5).
Section 3.6. Surrender of Notes; Notation Thereon{tc
"Section 3.6. Surrender of Notes; Notation Thereon " \f C \l 2}.
The Company may, as a condition of payment of all or any part of
the principal of, Prepayment Premium (if any) and interest on,
any Note, require the holder of such Note to present such Note
for notation of such payment and, if such Note be paid in full,
require the surrender thereof.
Section 3.7. Purchase of Notes{tc "Section 3.7.
Purchase of Notes" \f C \l 2}. The Company will not, nor
will it permit any of its Subsidiaries or Affiliates to, acquire
directly or indirectly by purchase or prepayment or otherwise any
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658180v11
of the outstanding Notes except by way of payment or prepayment
in accordance with the provisions of such Notes and of this
Agreement. If the Company or any of its Subsidiaries or
Affiliates acquires any Notes in violation of this Section 3.4 or
in any other manner, such Notes shall thereafter be canceled and
shall not be reissued, no Note shall be issued in substitution
therefor, and such Notes shall not be deemed to be outstanding
for any purpose under this Agreement.
Section 4. Representations and Warranties of the
Company{tc "Section 4. Representations and Warranties of the
Company" \f C \l 1}. The Company represents and warrants to the
Purchaser that:
Section 4.1. Corporate Existence and Power{tc
"Section 4.1. Corporate Existence and Power" \f C \l 2}. Each
of the Company and its Subsidiaries is a corporation duly
organized, validly existing and in good standing under the laws
of their respective jurisdictions of incorporation and are duly
qualified to do business in each additional jurisdiction where
the failure to so qualify would have a Material Adverse Effect.
The Company and each of its Subsidiaries have all requisite
corporate power to own their respective Properties and to carry
on their respective businesses as now being conducted and as
proposed to be conducted, and in the case of the Company to
execute, deliver and perform its obligations under this
Agreement, the Notes, the Warrants and the Registration Rights
Agreement.
Section 4.2. Corporate Authority{tc "Section 4.2.
Corporate Authority" \f C \l 2}. The execution, delivery and
performance by the Company of this Agreement, the Notes, the
Warrants and the Registration Rights Agreement are within the
corporate powers of the Company and have been duly authorized by
all necessary corporate action on the part of the Board of
Directors of the Company and no action on the part of the
stockholders of the Company is required in connection therewith.
Section 4.3. Binding Effect{tc "Section 4.3.
Binding Effect" \f C \l 2}. This Agreement and the
Registration Rights Agreement have been duly executed and
delivered by the Company and are, and the Notes and Warrants when
issued, executed and delivered as contemplated herein will be,
the legal, valid and binding obligations of the Company, in each
case enforceable against the Company in accordance with their
respective terms, except, in each of the foregoing cases, as such
enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, or other laws relative to
or affecting the enforcement of creditors' rights generally in
effect from time to time and by general principles of equity.
Section 4.4. Capital Stock{tc "Section 4.4.
Capital Stock" \f C \l 2}. (a) Except as set forth on
Schedule 4.4, there are no securities outstanding that are
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658180v11
convertible into or exchangeable for any shares of Capital Stock
of the Company, nor, except as set forth on Schedule 4.4, are
there outstanding any rights to subscribe for or purchase, or any
options or warrants for the purchase of, or any agreements
(contingent or otherwise) providing for the issuance of, or any
calls, commitments or claims of any character relating to, any
shares of Capital Stock of the Company, or any securities
convertible into or exchangeable for any such shares.
(b) The shares of Common Stock issuable upon exercise
of the Warrants have been duly and validly reserved for issuance
upon such exercise and, when issued and delivered against payment
therefor as provided therein, will be duly authorized, validly
issued, fully paid and non-assessable and subject to no Liens in
respect of the issuance thereof.
Section 4.5. Business Operations and Other
Information; Financial Condition{tc "Section 4.5. Business
Operations and Other Information; Financial Condition" \f C \l
2}. (a) The Company has delivered to the Purchaser copies of (i)
the Company's Annual Report on Form 10-K for the fiscal year
ended July 31, 1997, (ii) the Company's Annual Report to
Stockholders for the fiscal year ended July 31, 1997, (iii) the
Company's Quarterly Reports on Form 10-Q, as amended, for the
fiscal quarters ended October 31, 1997 and January 31, 1998, and
(iv) the Company's definitive Proxy Statement distributed to its
stockholders in connection with its 1997 annual meeting of
stockholders, each as filed with the SEC (collectively, the
"Company Reports"). The Company Reports do not contain any
misstatement of a material fact or omit to state any material
fact necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading.
The Company Reports, taken together, contain a true and correct
description of the businesses, operations and principal
Properties of the Company and its Subsidiaries as of the
respective dates thereof.
(b) Set forth in the Company Reports are (i) the
audited consolidated balance sheets of the Company and its
Subsidiaries as of July 31, 1997 and June 30, 1996, and the
audited consolidated statements of operations, stockholders'
equity and cash flows of the Company and its Subsidiaries for the
fiscal years ended July 31, 1997, June 30, 1996 and June 30,
1995, together with the notes thereto and the reports thereon of
Ernst & Young LLP, Price Waterhouse LLP and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP
(the "Audited Financial Statements") and (ii) the unaudited
consolidated balance sheets of the Company and its Subsidiaries
as of October 31, 1997 and January 31, 1998, and the related
unaudited consolidated statements of operations and cash flows
for each of the three-month and six-month periods then ended,
together with the notes thereto (the financial statements
referred to in clause (ii) are herein collectively called the
"Unaudited Financial Statements"; the Audited Financial
Statements and the Unaudited Financial Statements are sometimes
- 27 -
658180v11
hereinafter collectively referred to as the "Financial
Statements"). The Audited Financial Statements have been
prepared in accordance with GAAP consistently applied throughout
the periods involved, and present fairly, in all material
respects, the consolidated financial position and related
consolidated results of operations, stockholders' equity and cash
flows of the Company and its Subsidiaries as at each of the dates
and for each of the periods covered thereby, subject, in the case
of the Unaudited Financial Statements, to non-material year-end
audit adjustments, absence of certain of the notes required by
GAAP and absence of statements of stockholders' equity.
(c) As of the date of each of the balance sheets
included in the Audited Financial Statements and the Unaudited
Financial Statements, neither the Company nor any of its
Subsidiaries had any material Indebtedness or material liability,
absolute or contingent, liquidated or unliquidated, except
Indebtedness and liabilities reflected or reserved against on
such respective balance sheets or described in the notes thereto.
Since July 31, 1997, no Material Adverse Effect has occurred.
Section 4.6. Subsidiaries{tc "Section 4.6.
Subsidiaries" \f C \l 2}. Set forth in Schedule 4.6 attached
hereto is a true and complete list of all Subsidiaries of the
Company, setting forth as to each such Subsidiary its
jurisdiction of incorporation and the percentage of each class of
Capital Stock of such Subsidiary owned by the Company or a
Subsidiary of the Company. Except as set forth in Schedule 4.6,
the Company does not own any shares of Capital Stock of, and has
no direct or indirect equity interest in, any Person other than
the Subsidiaries listed in Schedule 4.6. Except as set forth in
Schedule 4.6, the Company has good title to all of the shares of
Capital Stock it owns of each of its Subsidiaries, free and clear
in each case of any Lien. All such shares of Capital Stock of
each Subsidiary have been duly and validly issued, and are fully
paid and non-assessable and owned of record and beneficially by
the Company and/or one or more of its Subsidiaries. There are no
securities outstanding that are convertible into or exchangeable
for any shares of Capital Stock of the Company's Subsidiaries,
nor are there outstanding any rights to subscribe for or
purchase, or any options or warrants for the purchase of, or any
agreements (contingent or otherwise) providing for the issuance
of, or any calls, commitments or claims of any character relating
to, any shares of Capital Stock of the Company's Subsidiaries or
any securities convertible into or exchangeable for any such
shares.
Section 4.7. Litigation; No Violation of Governmental
Orders or Laws{tc "Section 4.7. Litigation; No Violation of
Governmental Orders or Laws" \f C \l 2}. (a) Except as set
forth on Schedule 4.7, there are no judicial, administrative,
arbitral or other actions, suits or proceedings pending or, to
the knowledge of the Company after due inquiry, threatened
against or affecting the Company or any of its Subsidiaries, or
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658180v11
any Properties or rights of any of them which, if adversely
determined, individually or in the aggregate, would have a
Material Adverse Effect.
(b) There are no judicial, administrative, arbitral or
other actions, suits or proceedings pending or, to the knowledge
of the Company after due inquiry, threatened against or affecting
the Company or any of its Subsidiaries which seek to enjoin, or
otherwise prevent the consummation of, the transactions
contemplated herein or to recover any damages or obtain any
relief as a result of any of the transactions contemplated herein
in any court or before any arbitrator of any kind or before or by
any Governmental Body.
(c) Neither the Company nor any of its Subsidiaries is
subject to any Order of any Court, arbitrator or Governmental
Body which individually or in the aggregate, would have a
Material Adverse Effect.
(d) Neither of the Company nor any of its Subsidiaries
is, or will be after giving effect to the consummation of the
transactions contemplated hereby, in default under or in
violation of any federal, state, local and foreign Statute or
Order, which default or violation, individually or in the
aggregate together with all other such defaults and violations,
has had or is reasonably likely to have a Material Adverse
Effect.
Section 4.8. No Conflicts with Agreements, Statutes,
Orders, Etc{tc "Section 4.8. No Conflicts with Agreements,
Statutes, Orders, Etc" \f C \l 2}. Neither the execution and
delivery by the Company of this Agreement, the Notes, the
Warrants and the Registration Rights Agreement, nor the offering,
issuance or sale of the Notes or the Warrants, nor the
fulfillment of or compliance with the terms and provisions hereof
or thereof, will conflict with, or result in a breach or
violation of the terms, conditions or provisions of, or
constitute a default under, or result in the creation of, any
Lien (other than Permitted Liens) on any Properties or assets of
the Company or its Subsidiaries pursuant to, the charter or by-
laws of the Company or its Subsidiaries, or any contract,
agreement, mortgage, indenture, lease or instrument to which any
of them is a party or by which any of them is bound or to which
or any of their respective assets are subject, or any Order or
Statute to which any of them or any of their respective assets
are subject.
Section 4.9. Consents, Etc.{tc "Section 4.9.
Consent, Etc." \f C \l 2} Except as set forth in Schedule
4.9, no consent, approval or authorization of or declaration,
registration or filing with any Governmental Body or any
nongovernmental Person, including, without limitation, any
creditor or stockholder of the Company or any of its
Subsidiaries, is required in connection with the execution or
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658180v11
delivery by the Company of this Agreement, the Notes, the
Warrants or the Registration Rights Agreement, or the performance
by the Company of its obligations hereunder or thereunder, or as
a condition to the legality, validity or enforceability of this
Agreement, the Notes, the Warrants or the Registration Rights
Agreement, except for such consents, approvals, authorizations,
declarations, registrations or filings as are listed in Schedule
4.9, all of which have been obtained or will be obtained on or
prior to the Closing Date and are or will then be in full force
and effect.
Section 4.10. Outstanding Indebtedness;
Investments{tc "Section 4.10. Outstanding Indebtedness;
Investments" \f C \l 2}.
(a) Schedule 4.10A sets forth a correct and complete
list and brief description of all Indebtedness for borrowed money
of the Company and all Liens securing such Indebtedness
(excluding any Indebtedness evidenced by the Notes), indicating
which such Indebtedness will be discharged and paid in full on
the Closing Date (the "Non-Continuing Indebtedness") and which
such Indebtedness will be continuing after giving effect to the
transactions contemplated herein (the "Continuing Indebtedness").
There exists no breach or default under the terms and provisions
of any instrument, agreement or contract pertaining to any such
Indebtedness and no event or condition which, with due notice or
lapse of time or both, would constitute such a breach or default.
(b) Schedule 4.10B sets forth a correct and complete
list and brief description of all Investments of the Company and
its Subsidiaries.
Section 4.11. Assets and Properties{tc "Section 4.11.
Assets and Properties" \f C \l 2}. (a) Schedule 4.11 sets
forth a true and complete list of all fee interests in real
Property and leases of real Property of the Company or its
Subsidiaries.
(b) Each of the Company and its Subsidiaries has good
and marketable title to all of its respective Properties (other
than Properties leased from others), subject to no Lien of any
kind except Permitted Liens.
(c) The Properties owned by, leased to or used by the
Company and its Subsidiaries, taken as a whole, are in good
operating condition and repair, ordinary wear and tear excepted,
are free and clear of any known defects except such defects as do
not materially interfere with the continued use thereof in the
conduct of normal operations of the Company and its Subsidiaries
and are able to serve the function for which they are currently
being used in all material respects, in each case except as
disclosed in Schedule 4.11.
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658180v11
(d) The Company has furnished or made available to the
Purchaser or its representatives true and complete copies of all
leases of real Property leased by the Company or any of its
Subsidiaries from others, together with all amendments,
modifications and supplements thereto to the date hereof. Each
of the Company and its Subsidiaries enjoys peaceful and
undisturbed possession under all leases, whether of realty or
personalty, to which it respectively is a party, and all such
leases are valid and subsisting and in full force and effect.
None of the Company or any of its Subsidiaries is in breach or
violation of the terms of any such lease, and the Company does
not know of any breach or violation of any of such leases by any
third party, except, in each case, for such breaches and
institutions thereof as in the aggregate do not and will not have
a Material Adverse Effect.
Section 4.12. Taxes{tc "Section 4.12. Taxes" \f C \l
2}. Each of the Company and its Subsidiaries has filed, or on
behalf of each of them there have been filed, all federal, state,
local and foreign tax returns, informational returns and excise
tax returns which are required to have been filed by or on behalf
of such Persons, and there have been paid all taxes shown to be
due and payable on such returns and all other material taxes and
assessments payable by any of them, unless any tax liability is
being diligently contested in good faith and the Company or any
of its Subsidiaries, as the case may be, has adequately reserved
against such tax liability on its books and financial statements
in accordance with GAAP. No tax liens have been filed and no
claims are being asserted with respect to any such taxes as of
the date hereof. No tax assessment against the Company or any of
its Subsidiaries has been proposed and all of their respective
tax liabilities are adequately provided for on their respective
books and financial statements in accordance with GAAP. The
federal income tax returns of the Company and its Subsidiaries
have been audited by the Internal Revenue Service, and such
audits have been completed, or the statute of limitations has
run, for all tax years of the Company through and including the
year ended July 31, 1992, and all deficiencies, assessments,
interest and penalties proposed as a result of any such audit
have been paid in full. No issue has been raised in any such
examination that, by application of similar principles, may
reasonably be expected to result in the assertion of a material
deficiency for any other taxable year not so examined.
Section 4.13. Disclosure{tc "Section 4.13.
Disclosure" \f C \l 2}. This Agreement and the documents,
certificates or other writings delivered to the Purchaser by or
on behalf of the Company in connection with the transactions
contemplated hereby, taken as a whole, do not contain any untrue
statement of material fact or omit to state a material fact
necessary to make the statements therein not misleading in light
of the circumstances under which they were made. There is no
fact known to the Company that could reasonably be expected to
have a Material Adverse Effect that has not been set forth herein
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658180v11
or in the other documents, certificates or other writings
delivered to the Purchaser by or on behalf of the Company
specifically for use in connection with the transactions
contemplated hereby.
Section 4.14. Offering of Securities{tc "Section 4.14.
Offering of ▇▇▇▇▇▇▇▇▇▇" \▇ ▇ \▇ ▇}. ▇▇▇▇ of the Company,
any of its Subsidiaries or their respective representatives has,
directly or indirectly, offered any of the Notes or the Warrants
or any security similar to any of them for sale to, or solicited
any offers to buy any of the Notes or the Warrants or any
security similar to any of them from, or otherwise approached or
negotiated with respect thereto with, more than 60 Persons
excluding the Purchaser, and none of the Company, any of its
Subsidiaries or their respective representatives has taken or
will take any action which would subject the issuance or sale of
any of the Notes or Warrants to the provisions of Section 5 of
the Securities Act or violate the provisions of any securities or
Blue Sky laws of any applicable jurisdiction.
Section 4.15. Broker's or Finder's Commissions{tc
"Section 4.15. Broker's or Finder's Commissions" \f C \l 2}.
Except for the structuring fee of Nomura Securities
International, Inc. and fees of ING Baring (U.S.) Securities,
Inc., no broker's or finder's fee or commission will be payable
by the Company with respect to the issuance and sale of the Notes
or the Warrants. The Company agrees to indemnify the Purchaser
and hold it harmless against any loss, cost, claim or liability
(including, without limitation, reasonable attorneys' fees and
disbursements for the investigation and defense of claims)
asserted against Purchaser arising out of or relating to any such
actual or alleged fee or commission.
Section 4.16. Labor Matters{tc "Section 4.16. Labor
Matters" \f C \l 2}. Except as set forth in Schedule 4.16,
during the three years preceding the Closing Date, there has been
no strike, work stoppage, slowdown or other labor dispute or
grievance involving the Company or any of its Subsidiaries, or
employees of any such Person, nor is any such action, dispute or
grievance pending or, to the knowledge of the Company, after due
inquiry, threatened against the Company or any of its
Subsidiaries that could have a Material Adverse Effect. Except
as set forth in Schedule 4.16, none of the Company or any of its
Subsidiaries is a party to any collective bargaining agreement
and none of them has any knowledge after due inquiry of any
pending or threatened effort to organize any of its employees.
Except as set forth in Schedule 4.16, there are no pending
retaliatory or wrongful discharge claims or employment
discrimination charges or complaints or administrative or
judicial complaints arising therefrom pending against the Company
or any of its Subsidiaries or against any of their respective
employees before any Governmental Body, which have had or could
reasonably be expected to have a Material Adverse Effect, nor to
the knowledge of the Company after due inquiry are any such
- 32 -
658180v11
charges or complaints threatened against the Company or any of
its Subsidiaries. The Company and its Subsidiaries are in
compliance with all applicable Statutes and Orders relating to
the employment of labor, including, without limitation, any
provisions thereof relating to wages, bonuses, collective
bargaining agreements, equal pay, occupational safety and health,
equal employment opportunity and wrongful or retaliatory
termination of employment, except for such noncompliance as in
the aggregate would not result in a Material Adverse Effect.
Section 4.17. Environmental Matters{tc "Section 4.17.
Environmental Matters" \f C \l 2}. Except as set forth in
Schedule 4.17:
(a) there is no pending or, to the knowledge of the
Company, threatened Environmental Matter relating to the Company
or any of its Subsidiaries, any of their respective Properties or
the use thereof, and the Company is aware of no facts that could
result in any such Environmental Matter. Neither the Company nor
any of its Subsidiaries has agreed to assume by contract or
otherwise any liability of any other Person for cleanup,
compliance, or required Consolidated Capital Expenditures in
connection with any Environmental Matter arising prior to the
date hereof;
(b) To the knowledge of the Company, the Properties
used, owned, leased, operated, managed or controlled at any time
by the Company or any of its Subsidiaries are and were free of
air, soil, groundwater, or surface water contamination resulting
from the spill, discharge, or release of Hazardous Materials by
the Company or any of its Subsidiaries (other than any such
spill, release, or discharge that is permitted under any
Environmental Law or that would not require investigation,
reporting, or remediation under any Environmental Law). To the
knowledge of the Company, the Properties used, owned, leased,
operated, managed, or controlled at any time by the Company or
any of its Subsidiaries are and were free of any other harmful
chemical or physical conditions;
(c) the Company and its Subsidiaries are currently in
compliance with all applicable Environmental Laws, except for
such non-compliance as in the aggregate would not have a Material
Adverse Effect, are not currently in receipt of any notice of
violation of any Environmental Law or of any potential liability
for cleanup of Hazardous Materials, have cured any past
violations or alleged violations of Environmental Laws asserted
against the Company or any of the Subsidiaries to the
satisfaction of all Governmental Bodies having jurisdiction
thereof and are not now subject to any investigation by a
Governmental Body concerning Hazardous Materials or any
Environmental Laws. The Company and its Subsidiaries hold and
are in compliance with all governmental permits, licenses, and
authorizations necessary under Environmental Laws to operate
their businesses including those that relate to siting, air
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658180v11
emissions, discharges to surface or ground water, discharges to
any sewer or septic system, noise emissions, solid waste disposal
or the generation, use, transportation or other management of
Hazardous Materials, except for such permits, licenses and
authorizations, the absence of which or non-compliance with which
in the aggregate would not have a Material Adverse Effect. To
the Company's knowledge, the Company and its Subsidiaries have
not at any time generated, manufactured, refined, recycled,
discharged, emitted, released, buried, processed, produced,
reclaimed, stored, treated, transported, or disposed of any
Hazardous Materials except in compliance with all applicable
Statutes and Orders, including permit requirements;
(d) no Properties of the Company or its Subsidiaries
are subject to any Lien or claim that might lead to a Lien in
favor of any Person as a result of any Environmental Matter or
response thereto;
(e) neither the Company nor any of its Subsidiaries
has any material liabilities, absolute or contingent, on the date
hereof with respect to Hazardous Materials, except for such
liabilities as are not in the aggregate reasonably likely to have
a Material Adverse Effect; and
Section 4.18. Margin Regulations; Use of Proceeds{tc
"Section 4.18. Margin Regulations; Use of ▇▇▇▇▇▇▇▇" \▇ ▇ \▇ ▇}.
▇▇▇▇ of the Company or any of its Subsidiaries owns or intends to
acquire any "margin stock" as defined in Regulation U of the
Board of Governors of the Federal Reserve System of the United
States (12 CFR S 221). No part of the proceeds from the sale of
the Notes will be used, and no part of the proceeds of any loans
repaid with the proceeds from the sale of the Notes was used,
directly or indirectly, for the purpose of buying or carrying any
margin stock within the meaning of Regulation U of the Board of
Governors of the Federal Reserve System of the United States (12
CFR S 221), or for the purpose of buying or carrying or trading
in any securities under such circumstances as to involve the
Company or of its Subsidiaries in a violation of Regulation X of
said Board (12 CFR S 224) or to involve any broker or dealer in a
violation of Regulation of said Board (12 CFR S 220). Neither
the Company nor any of its Subsidiaries, or any agent acting on
behalf of the Company or its Subsidiaries, has taken or will take
any action which might cause this Agreement or the Notes to
violate Regulation U, Regulation X, Regulation T or any other
regulation of the Board of Governors of the Federal Reserve
System or to violate the Exchange Act, in each case as in effect
now or as the same may hereafter be in effect. As used in this
Section, the term "purpose of buying or carrying" has the meaning
assigned thereto in the aforesaid Regulation U.
Section 4.19. Compliance with ERISA{tc "Section 4.19.
Compliance with ERISA" \f C \l 2}. The Company has
furnished or made available to the Purchaser copies of each
material bonus, deferred compensation, incentive compensation,
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658180v11
stock purchase, stock option, severance or termination pay,
hospitalization or other medical, life or other insurance, or
retirement plan, program, agreement or arrangement or other Plan
maintained as of the Closing Date by the Company or any of its
Subsidiaries or ERISA Affiliates with respect to employees of the
Company or any of its Subsidiaries or ERISA Affiliates, and each
material employment, consulting, severance or similar agreement
between the Company or any of its Subsidiaries and their
respective officers and managerial employees. Except as set
forth on Schedule 4.19:
(a) no Pension Plan which is subject to Part 3 of
Subtitle B of Title 1 of ERISA or Section 412 of the Code had an
accumulated funding deficiency (as such term is defined in
Section 302 of ERISA or Section 412 of the Code), whether or not
waived, as of the last day of the most recent fiscal year of such
Pension Plan heretofore ended;
(b) no liability to the PBGC (other than required
insurance premiums, all of which have been paid) has been
incurred and is outstanding with respect to any Pension Plan, and
there has not been any Reportable Event, or any other event or
condition, which presents a material risk of involuntary
termination of any Pension Plan by the PBGC;
(c) neither any Plan nor any trust created thereunder,
nor, to the Company's knowledge, any trustee or administrator
thereof, has engaged in a prohibited transaction (as such term is
defined in Section 4975 of the Code or Section 406 of ERISA) that
could reasonably be expected to subject the Company or any of its
Subsidiaries or ERISA Affiliates to any tax or penalty imposed
under Section 4975 of the Code or Section 502(i) of ERISA which
would have a Material Adverse Effect; and neither the Company nor
any of its Subsidiaries or ERISA Affiliates has received a notice
that a Multiemployer Plan or trust created thereunder, or any
trustee or administrator thereof, has engaged in any such
prohibited transaction under circumstances which would have a
Material Adverse Effect;
(d) no liability under Title IV of ERISA which would
have a Material Adverse Effect has been incurred and is
outstanding with respect to any Multiemployer Plan as a result of
the complete or partial withdrawal by the Company or any of its
Subsidiaries or ERISA Affiliates from such Multiemployer Plan,
nor has the Company or any of its Subsidiaries or ERISA
Affiliates been notified by any Multiemployer Plan that such
Multiemployer Plan is currently in reorganization or insolvency
under and within the meaning of Section 4241 or 4245 of ERISA or
that such Multiemployer Plan intends to terminate or has been
terminated under Section 4041A of ERISA;
(e) the Company and its Subsidiaries and ERISA
Affiliates are in compliance in all respects with all applicable
provisions of ERISA and the Code and the regulations and
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658180v11
published interpretations thereunder with respect to all Plans
and Multiemployer Plans, except where non-compliance would not
have a Material Adverse Effect;
(f) no Pension Plan has an Unfunded Current Liability
in excess of $750,000 and presents a material risk of termination
by the PBGC or by the Company or any of its Subsidiaries or ERISA
Affiliates;
(g) as of the Closing Date, neither the Company nor
any of its Subsidiaries or ERISA Affiliates has received a notice
within the past two years to the effect that a Multiemployer Plan
has any unfunded vested benefits within the meaning of Section
4213(c) of ERISA;
(h) no event has occurred with respect to any Plan
subject to Title IV of ERISA or with respect to any other
employee benefit pension plan (as defined in Section 3(2) of
ERISA) subject to Title IV of ERISA established or maintained at
any time during the five-year period immediately preceding the
Closing Date for the benefit of employees of the Company or any
of its Subsidiaries or ERISA Affiliates which presents a risk of
material liability of the Company or any of its Subsidiaries or
ERISA Affiliates under Section 4069 of ERISA;
(i) any Plan which provides for continued medical,
health, life or other welfare benefits for employees after they
leave the employment of the Company or any of its Subsidiaries or
ERISA Affiliates (other than any such welfare benefits required
to be provided under the Consolidated Omnibus Budget
Reconciliation Act or other similar law) may be terminated at any
time without the incurrence of any liability which would have a
Material Adverse Effect; and
(j) neither the Company nor any of its Subsidiaries or
ERISA Affiliates is a party in interest (as defined in Section
3(14) of ERISA) with respect to any employee benefit plan (as
defined in Section 3(3) of ERISA), other than the Plans and any
Multiemployer Plans or any other employee benefit plan that would
not cause the purchase or holding of the Notes and Warrants by
the Purchaser or any other holder thereof to be a prohibited
transaction under Section 406(a) of ERISA and Section 4975(c) of
the Code.
Section 4.20. Material Contracts{tc "Section 4.20.
Material Contracts" \f C \l 2}. (a) Schedule 4.20A
contains a list of all Material Contracts to which the Company
and its Subsidiaries are a party. True and complete copies of
each of the Material Contracts to which the Company and its
Subsidiaries are a party, with all amendments, modifications and
supplements thereto to the date hereof, have previously been
furnished or made available to Purchaser or its representatives
by the Company. Each of such Material Contracts is valid,
subsisting and in full force and effect. Neither the Company nor
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658180v11
any of its Subsidiaries is in breach or violation of any of the
terms, conditions or provisions of any of the Material Contracts
and, to the best knowledge of the Company, no other party to any
of the Material Contracts is in breach or violation of any of the
terms, conditions or provisions thereof, except for such breaches
and violations as in the aggregate do not and would not result in
a Material Adverse Effect. Neither the Company nor any of its
Subsidiaries has transferred or subordinated any of its rights or
interests in any of the Material Contracts, and such rights and
interests are subject to no Liens except Permitted Liens.
Neither the Company nor any of its Subsidiaries is a party to any
Material Contract or is subject to any restriction contained in
its charter or by-laws which individually or in the aggregate has
had or is reasonably likely to have a Material Adverse Effect.
(b) Except as set forth in Schedule 4.20B, neither the
Company nor any of its Subsidiaries has during the past 10 years
been debarred or suspended from contracting (as a first tier
contractor or any level of subcontractor) for or bidding on any
Government Contract. Neither the Company nor any of its
Subsidiaries is currently debarred or suspended from (or has
received written notice that it is under investigation with
respect to a possible debarment or suspension from) bidding on or
entering into any Government Contract. Except as set forth in
Schedule 4.20b, neither the Company nor any of its Subsidiaries
has received written notice (i) that any Government Contract may
be or will be terminated for the convenience of a Governmental
Body or by reason of a default or alleged default by the Company
or any of its Subsidiaries, (ii) that a Government Contract or
governmental program involving the Company or any of its
Subsidiaries will be eliminated or substantially reduced or
suspended or (iii) requiring or resulting in loss of use or
substantial impairment or interference of use by the Company or
any of its Subsidiaries of any facilities owned by a Governmental
Body.
(c) Final audits of all of the Government Contracts of
the Company and its Subsidiaries with the United States of
America and its departments, commissions, agencies and
instrumentalities have been completed by the Defense Contract
Audit Agency for all fiscal years of the Company through and
including its fiscal year ended July 31, 1993. No issue has been
raised in any such audit or in any pending audit covering
subsequent years that could reasonably be expected to result in
the suspension or debarment of the Company or any of its
Subsidiaries from bidding on or entering into any Government
Contract.
(d) There are no renegotiations of, attempts to
renegotiate, or outstanding rights to renegotiate any material
amounts paid or payable to the Company or any of its Subsidiaries
under, or any other material term of, any Material Contract with
any Person and, to the knowledge of the Company, no such Person
has made written demand for such renegotiation.
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658180v11
Section 4.21. Insurance{tc "Section 4.21. ▇▇▇▇▇▇▇▇▇"
\▇ ▇ \▇ ▇}. ▇▇▇▇▇▇▇▇ 4.21 sets forth a true and complete list
and brief descriptions of all policies of workers compensation,
general liability, fire, property, casualty, marine, business
interruption, errors and omissions, flood, earthquake and other
insurance carried by the Company as of the Closing Date, true and
complete copies of which policies have previously been delivered
to the Purchaser. Such policies are in full force and effect,
and neither the Company nor any of its Subsidiaries has received
notice of cancellation with respect to any such policy. All
premiums payable with respect to such policies have been or will
then have been paid in respect of the coverage periods specified
in Schedule 4.21 and all premiums payable with respect to such
policies on or before the Closing Date will have been paid as and
when due on or before the Closing Date.
Section 4.22. Possession of Franchises, Licenses,
Etc{tc "Section 4.22. Possession of Franchises, Licenses, Etc"
\f C \l 2}. Each of the Company and its Subsidiaries possesses
all franchises, certificates, licenses (including FDA licenses),
permits, registrations, security clearances and other
authorizations from Governmental Bodies that are necessary for
the ownership, maintenance and operation of its Properties and
assets, and for the conduct of their respective businesses as now
conducted, and none of the Company or any of its Subsidiaries is
in violation of any thereof, except, in each case, for such
matters as in the aggregate do not and will not result in a
Material Adverse Effect.
Section 4.23. Intellectual Property{tc "Section 4.23.
Intellectual Property" \f C \l 2}. (a) Set forth in
Schedule 4.23 is an accurate and complete list of all patents,
trademarks, trade names, service marks and copyrights owned by
the Company and its Subsidiaries and all applications therefor,
and all license agreements with respect to Intellectual Property
used in the business of the Company, specifying with respect to
each such item the owner thereof, the registration or application
number thereof, the jurisdiction by or in which such item has
been issued or registered or in which an application therefor has
been filed, if any, the date of such issuance, registration or
application, and the expiration date thereof.
(b) The Company and its Subsidiaries own and have good
title to, or possess the right to use pursuant to binding and
enforceable agreements, all items of Intellectual Property, free
from Liens, except Permitted Liens, which are necessary for the
present and planned future conduct of their respective
businesses. Except as set forth in Schedule 4.23, (i) to the
best knowledge of the Company, none of the present or
contemplated products or operations of the Company or any of its
Subsidiaries, infringes or otherwise violates, or will then
infringe or otherwise violate, any Intellectual Property owned by
any other Person, and (ii) there is no pending or, to the best
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658180v11
knowledge of the Company, threatened claim, demand, litigation,
investigation, arbitration or other proceeding against or
affecting the Company or any of its Subsidiaries contesting the
right of any of them to manufacture, distribute or sell any such
product or to engage in any such operation, or to use any of such
Intellectual Property.
(c) Set forth in Schedule 4.23 is an accurate and
complete list and summary description, including any royalties
paid or received by the Company and its Subsidiaries, of all
Contracts relating to any Intellectual Property to which the
Company or any Subsidiary is a party or by which the Company or
any Subsidiary is bound (the "IP Contracts"), except for any
license implied by the sale of a product and perpetual, paid-up
licenses for commonly available software programs with a value of
less than $1,000 under which the Company or any Subsidiary is a
licensee. There are no outstanding and, to the Company's
knowledge, no threatened disputes or disagreements with respect
to any such agreement.
Section 4.24. Customers and Suppliers{tc "Section
4.24. Customers and Suppliers" \f C \l 2}. Schedule 4.24
sets forth the principal suppliers and the principal customers of
the Company and its Subsidiaries (being the 10 largest suppliers
and the 10 largest customers of the Company and its Subsidiaries
and any predecessor corporations for the period from August 1,
1997 to March 31, 1998) and since March 31, 1998 there has been
no termination or cancellation of, and no modification or change
in, the Company's and its Subsidiaries' business relationships
with any principal supplier, principal customer or group of
principal customers or suppliers. Except as described in
Schedule 4.24, the Company has no reason to believe that the
benefits of any relationship with any of the principal customers
or suppliers of the Company or any of its Subsidiaries will not
continue after the Closing Date in substantially the same manner
as prior to the date of this Agreement.
Section 4.25. Status under Certain Laws{tc "Section
4.25. Status under Certain Laws" \f C \l 2}. Neither the
Company nor any of its Subsidiaries is an "investment company" or
a "person directly or indirectly controlled by or acting on
behalf of an investment company" within the meaning of the
Investment Company Act of 1940, as amended, or a "holding
company," or a "subsidiary company" of a "holding company," or an
"affiliate" of a "holding company" or of a "subsidiary company"
of a "holding company," within the meaning of the Public Utility
Holding Company Act of 1935, as amended. Neither the Company nor
any of its Subsidiaries is subject to regulation as a "common
carrier" or "contract carrier" or any similar classification by
the Interstate Commerce Commission or under the laws of any
state, or is subject to regulation under any other Statute which
limits its ability to incur indebtedness.
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658180v11
Section 4.26. Certain Transactions{tc "Section 4.26.
Certain Transactions" \f C \l 2}. Except as set forth on
Schedule 4.26 hereto, neither the Company nor any of its
Subsidiaries is indebted, directly or indirectly, to any of their
respective officers, directors or stockholders or to any of the
respective spouses or children of any of such Persons, except
with respect to salaries and related employee compensation and
expense reimbursement, and except as set forth on Schedule 4.26,
none of such officers, directors or stockholders, or any member
of their immediate families, is indebted to the Company or any of
its Subsidiaries in any amount whatsoever. Except as set forth
on Schedule 4.26 hereto, no officer, director or shareholder of
the Company or any of its Subsidiaries, or any member of their
immediate families, is, directly or indirectly, interested in any
Material Contract with the Company or nor any of its
Subsidiaries.
Section 4.27. Solvency{tc "Section 4.27. Solvency"
\f C \l 2}. The Company and its Subsidiaries are Solvent on the
Closing Date both before and after giving effect to the
application of the net proceeds of the issuance and sale of the
Notes and the Warrants to be issued on the Closing Date.
Section 4.28. Use of Proceeds{tc "Section 4.28. Use
of Proceeds" \f C \l 2}. The proceeds from the sale and issuance
of the Notes will be used to repay existing Indebtedness of the
Company and its Subsidiaries.
Section 4.29. Ranking of Notes{tc "Section 4.29.
Ranking of Notes" \f C \l 2}. The Indebtedness represented
by the Notes is intended to constitute senior subordinated
Indebtedness, and accordingly is, and shall be at all times while
the Notes remain outstanding, senior in right of payment to, or
pari passu with, all other Indebtedness (except for Designated
Senior Indebtedness) of the Company and its Subsidiaries;
provided, however, if any of such other Indebtedness is
subordinate to Designated Senior Indebtedness such subordination
shall be on terms substantially similar to the terms of the
Subordination Agreement attached hereto as Exhibit C.
Section 5. Representations of the Purchaser{tc
"Section 5. Representations of the Purchaser" \f C \l 1}. The
Purchaser represents to the Company that (a) it is an "accredited
investor," within the meaning of Rule 501 promulgated by the SEC
under the Securities Act, and (b) it is acquiring the Notes and
the Warrants to be purchased by it hereunder for its own account,
for investment, and not with a view to or for sale in connection
with any distribution thereof in violation of the registration
provisions of the Securities Act or the rules and regulations
promulgated thereunder, and (c) its purchase of the Notes and the
Warrants will not constitute a "prohibited transaction" under
Section 406 of ERISA and Section 4975 of the Code. The Purchaser
acknowledges that the Notes and the Warrants have not been
registered under the Securities Act and may not be sold except
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658180v11
pursuant to an effective registration statement thereunder or an
exemption from registration under the Securities Act and
applicable state securities laws.
Section 6. Closing Conditions{tc "Section 6.
Closing Conditions" \f C \l 1}. The Purchaser's obligation
to purchase and pay for the Notes to be purchased by it hereunder
on the Closing Date shall be subject to the satisfaction, on or
before the Closing Date, of the following conditions:
Section 6.1. Proceedings Satisfactory{tc "Section 6.1.
Proceedings Satisfactory" \f C \l 2}. All corporate and
other proceedings taken or to be taken in connection with the
transactions contemplated to occur on the Closing Date and all
documents incident thereto shall be reasonably satisfactory in
form and substance to the Purchaser and its special counsel, and
the Purchaser and its special counsel shall have received all
such counterpart originals or certified or other copies of such
documents as they may reasonably request, including, without
limitation:
(i) certificates dated as of a recent date
prior to the Closing Date as to the corporate status of
each of the Company and each of its Subsidiaries in
each jurisdiction where each of the Company and each of
its Subsidiaries is organized or is authorized to do
business as a foreign corporation;
(ii) certified copies of the certificate or
articles of incorporation (or other comparable
constituting document) of each of the Company and each
of its Subsidiaries with all amendments thereto to the
Closing Date;
(iii) certified copies of the by-laws (or
other comparable constituting document) of each of the
Company and each of its Subsidiaries with all
amendments thereto to the Closing Date;
(iv) certified copies of resolutions of the
Board of Directors of the Company authorizing the
execution, delivery and performance of this Agreement,
the Notes, the Warrants and the Registration Rights
Agreement; and
(v) certificates as to the incumbency and
signatures of each of the officers of the Company who
shall execute this Agreement or any Note, Warrant or
Registration Rights Agreement on behalf the Company.
Section 6.2. Opinion of Purchaser's Special Counsel{tc
"Section 6.2. Opinion of Purchaser's Special Counsel" \f C \l
2}. The Purchaser shall have received from Stroock & Stroock &
▇▇▇▇▇ LLP, who are acting as special counsel for the Purchaser in
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658180v11
connection with this transaction, a favorable legal opinion dated
the Closing Date and addressed to the Purchaser, covering such
matters as the Purchaser may reasonably request.
Section 6.3. Opinions of Counsel to the Company{tc
"Section 6.3. Opinions of Counsel to the Company" \f C \l 2}.
The Purchaser shall have received from ▇▇▇▇▇▇ & ▇▇▇▇▇▇, counsel
to the Company in connection with the transactions contemplated
by this Agreement, favorable legal opinions (which may include
opinions of local counsel), dated the Closing Date and addressed
to the Purchaser covering the matters specified in Exhibit F.
Section 6.4. Representations and Warranties True,
Etc.; Certificates{tc "Section 6.4. Representations and
Warranties True, Etc.; Certificates" \f C \l 2}. The
representations and warranties of the Company contained in
Section 4 and elsewhere in this Agreement shall be true on and as
of the Closing Date with the same effect as if such
representations and warranties had been made on and as of the
Closing Date. The Company shall have performed all agreements on
its part required to be performed under this Agreement on or
prior to the Closing Date, and there shall exist no Default or
Event of Default on the Closing Date. The Company shall have
delivered to the Purchaser an Officer's Certificate, dated the
Closing Date, to the effect of the matters stated in the
foregoing sentences of this Section 6.4 and in Sections 6.5, 6.6,
6.7 and 6.9.
Section 6.5. Absence of Material Adverse Change,
Etc{tc "Section 6.5. Absence of Material Adverse Change, Etc"
\f C \l 2}. Since July 31, 1997, no Material Adverse Effect
shall have occurred.
Section 6.6. Consents and Approvals{tc "Section 6.6.
Consents and Approvals" \f C \l 2}. All necessary consents,
waivers, approvals and authorizations of, and declarations,
registrations and filings with, Governmental Bodies and
nongovernmental Persons required in order to issue and sell the
Notes and the Warrants as contemplated hereby and to consummate
the other transactions contemplated hereby shall have been
obtained or made and shall be in full force and effect,
including, without limitation, all required consents and waivers
of the holders of Senior Indebtedness and of any agent or
representative thereof.
Section 6.7. Absence of Litigation, Orders, Etc{tc
"Section 6.7. Absence of Litigation, Orders, Etc" \f C \l 2}.
There shall not be pending or, to the knowledge of the Company
after due inquiry, threatened, any action, suit, proceeding,
governmental investigation or arbitration against or affecting
either of the Company or its Subsidiaries or their respective
Property and assets (and, as to any action, suit, proceeding,
governmental investigation or arbitration so disclosed, there
shall not have occurred since the date of this Agreement any
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658180v11
development) which seeks to enjoin or restrain any of the
transactions contemplated herein or which has had or is
reasonably likely to have a Material Adverse Effect. No Order of
any court, arbitrator or Governmental Body shall be in effect
which purports to enjoin or restrain any of the transactions
contemplated herein or which has had or will have a Material
Adverse Effect.
Section 6.8. Subordination Agreement{tc "Section 6.8.
Subordination Agreement" \f C \l 2}. The Company, each
Subsidiary of the Company and ING, as lender and agent under the
Credit Agreement, shall have executed and delivered a
Subordination Agreement in the form of Exhibit C hereto (as from
time to time amended, modified or supplemented in accordance with
its terms, the "Subordination Agreement").
Section 6.9. Total Indebtedness under Credit
Agreement{tc "Section 6.9. Total Indebtedness under Credit
Agreement" \f C \l 2}. The aggregate Indebtedness of the Company
under the Credit Agreement on the Closing Date (after giving
effect to the transactions contemplated hereby) shall not exceed
$23,000,000 and the excess availability under the Credit
Agreement on the Closing Date (after giving effect to the
transactions contemplated hereby) shall be at least $1,000,000.
Section 6.10. Fees.{tc "Section 6.10. Fees." \f C \l
2} The fees required to be paid on the Closing Date pursuant to
Section 2.4 shall be paid concurrently with the issuance and sale
of Notes to be sold on the Closing Date. The fees and expenses
incurred by Stroock & Stroock & ▇▇▇▇▇ LLP and any local or
special counsel to the Purchaser in connection with the
preparation of this Agreement, the Notes, the Warrants and the
Registration Rights Agreement and the transactions contemplated
hereby shall be paid by the Company on the Closing Date.
Section 6.11. Wire Instructions.{tc "Section 6.11.
Wire ▇▇▇▇▇▇▇▇▇▇▇▇." \▇ ▇ \▇ ▇} ▇▇▇ ▇▇▇▇▇▇▇▇▇ shall have
received not less than two Business Days prior to the Closing
Date wire instructions prepared by the Company as to all wire
transfers or other payments to be effected on the Closing Date in
connection with the transactions to be consummated on the Closing
Date pursuant to this Agreement or the other Transaction
Documents, which wire instructions shall identify the payor and
payee of each such wire transfer or payment, shall describe the
manner of transfer or payment, shall direct that all funds be
transferred to a bank chartered under the laws of the United
States of America or any state thereof located within the United
States of America, and shall otherwise be satisfactory in form
and substance to the Purchaser.
Section 6.12. Put Subordination Agreement{tc "Section
6.12. Put Subordination Agreement" \f C \l 2}. The Company,
ING and the Purchaser shall have executed and delivered the ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇.
- ▇▇ -
▇▇▇▇▇▇▇▇▇
Section 7. Financial Statements and Information{tc
"Section 7. Financial Statements and Information" \f C \l 1}.
The Company will furnish to the Purchaser and any other holder of
Notes, so long as any Notes shall be outstanding:
(a) Monthly Financial Statements. As soon as
available and in any event within 45 days after the end of each
month, copies of the consolidated and consolidating balance
sheets of the Company and its Subsidiaries as of the end of such
month and the related consolidated and consolidating statements
of operations and cash flows for such month and for the portion
of the fiscal year ended with the last day of such month, and
stating in comparative form the corresponding figures from the
consolidated budget of the Company and its Subsidiaries for such
period and for the portion of the previous fiscal year ended with
the last day of such period, all Certified by the Chief Financial
Officer of the Company;
(b) Quarterly Financial Statements; Compliance
Certificates. As soon as available and in any event within 45
days after the end of each quarterly accounting period (other
than the fourth quarterly accounting period) in each fiscal year
of the Company,
(i) copies of the Company's Quarterly Report on
Form 10-Q promulgated by the SEC, or any successor form
thereto, and
(ii) an Officer's Certificate of the Chief
Financial Officer of the Company setting forth
computations in reasonable detail showing whether or
not as at the end of such fiscal quarter there existed
any breach or violation of the provisions of Section
10.1, 10.7, 10.11, 10.12 or 10.16 hereof;
(c) Annual Financial Statements; Compliance
Certificates. As soon as available and in any event within 90
days after the end of each fiscal year of the Company,
(i) copies of the audited consolidated and
unaudited consolidating balance sheets of the Company
and its Subsidiaries, in each case as of the end of
such fiscal year, together with, in each case, the
related audited consolidated and unaudited
consolidating statements of operations, stockholders'
equity and cash flows for such fiscal year, and the
notes thereto, all in reasonable detail and stating in
comparative form (A) the respective audited
consolidated and unaudited consolidating figures as of
the end of and for the previous fiscal year and (B) the
corresponding figures from the consolidated budget of
the Company and its Subsidiaries for such fiscal year,
(x) in the case of each of such audited consolidated
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financial statements, accompanied by a report thereon
of Ernst & Young LLP, or other independent public
accountants of recognized national standing selected by
the Company and reasonably acceptable to the Majority
Holders (the "Accountants"), which report shall be
unqualified as to going concern and scope of audit and
shall state that such consolidated financial statements
present fairly, in all material respects, the
consolidated financial position of the Company and its
Subsidiaries as at the end of such fiscal year and
their consolidated results of operations, stockholders'
equity and cash flows for such fiscal year in
conformity with GAAP and that the examination by the
Accountants in connection with such consolidated
financial statements has been made in accordance with
generally accepted auditing standards, and (y) in the
case of such unaudited consolidating financial
statements, Certified by the Chief Financial Officer
of the Company; and
(ii) a written statement of the Accountants (x)
setting forth computations in reasonable detail showing
whether or not as at the end of such fiscal year there
existed any breach or violation of the provisions of
Section 10.1, 10.7, 10.10, 10.11 or 10.16 hereof, and
(y) stating that in making the examination necessary
for their report on such financial statements they
obtained no knowledge of any event or condition
constituting a Default or Event of Default, or if such
Accountants shall have obtained such knowledge,
specifying the nature and status thereof;
(d) Officer's Compliance Certificates. Concurrently
with the reports or financial statements furnished pursuant to
subsections (b) and (c) of this Section 7 an Officer's
Certificate of the Chief Financial Officer of the Company stating
that, based upon such examination or investigation and review of
this Agreement as in the opinion of the signer is necessary to
enable the signer to express an informed opinion with respect
thereto, no Default or Event of Default exists or has existed
during such period or, if such a Default or Event of Default
shall exist or have existed, the nature and period of existence
thereof and what action the Company has taken, is taking or
proposes to take with respect thereto;
(e) Stockholder Reports; SEC Filings. Promptly after
the same are available and in any event within 10 days thereof,
copies of all such proxy statements, financial statements,
notices and other reports as the Company shall send or make
available generally to its stockholders, and copies of all
regular and periodic reports, registration statements and other
documents which the Company shall file with the SEC;
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(f) Management Letters. Promptly after the receipt
thereof by the Company, and in any event within 10 days thereof,
copies of any management letters and any reports as to material
inadequacies in accounting controls (including reports as to the
absence of any such inadequacies) submitted to the Company by the
Accountants in connection with any audit of the Company and its
Subsidiaries made by the Accountants;
(g) Events of Default. Promptly (and in any event
within 5 days) after becoming aware of (i) the existence of any
Default or Event of Default on the part of the Company, an
Officer's Certificate of the Company specifying the nature and
period of existence thereof and what action the Company is
taking or proposes to take with respect thereto; or (ii) any
Indebtedness of the Company or any of its Subsidiaries being
declared due and payable before its expressed maturity, or any
holder of such Indebtedness having the right to declare such
Indebtedness due and payable before its expressed maturity,
because of the occurrence of any default (or any event which,
with notice and/or the lapse of time, shall constitute any such
default) under such Indebtedness, an Officer's Certificate of the
Company describing the nature and status of such matters and what
action the Company or such Subsidiary is taking or proposes to
take with respect thereto;
(h) ERISA Matters. Promptly and in any event within
15 days after the Company knows or, in the case of a Pension Plan
has reason to know, that a Reportable Event with respect to any
Pension Plan has occurred, that any Pension Plan or that any
Multiemployer Plan is or may be terminated, reorganized,
partitioned or declared insolvent under Title IV of ERISA or has
any unfunded vested benefits within the meaning of Section
4213(c) of ERISA, or that the Company or any of its Subsidiaries
or ERISA Affiliates will or may incur any material liability to
or on account of a Pension Plan or Multiemployer Plan under Title
IV of ERISA or any other material liability under ERISA has been
asserted against the Company or any of its Subsidiaries or ERISA
Affiliates, or that any Pension Plan has an Unfunded Current
Liability in excess of $500,000, an Officer's Certificate of the
Company setting forth information as to such occurrence and what
action, if any, the Company or such Subsidiary or ERISA Affiliate
is required or proposes to take with respect thereto, together
with any notices concerning such occurrences which are (a)
required to be filed by the Company or such Subsidiary or ERISA
Affiliate with the Internal Revenue Service or the PBGC, or (b)
received by the Company or such Subsidiary or ERISA Affiliate
from any Multiemployer Plan;
(i) Material Adverse Effect. Promptly after becoming
aware of any Material Adverse Effect with respect to which notice
is not otherwise required to be given pursuant to this Section 7,
an Officer's Certificate of the Company setting forth the details
of such Material Adverse Effect and stating what action the
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Company or any of its Subsidiaries has taken or proposes to take
with respect thereto;
(j) Litigation and Proceedings. Promptly (and in any
event within 15 days) after the Company knows of (i) the
institution of, or threat of, any action, suit, proceeding,
governmental investigation or arbitration against or affecting
the Company or any of its Subsidiaries or any Property of any of
them, or (ii) any material development in any such action, suit,
proceeding, governmental investigation or arbitration, which, in
either case, if adversely determined, is likely to have a
Material Adverse Effect, an Officer's Certificate of the Company
describing the nature and status of such matter in reasonable
detail;
(k) Annual Budget. Not later than 30 days prior to
the beginning of each fiscal year of the Company, a copy of a
consolidated and consolidating budget of the Company and its
Subsidiaries prepared by the Company for such fiscal year, which
shall include at minimum a projected balance sheet and a
projected statement of operations for each month in such fiscal
year;
(l) Notices to Senior Lenders. Copies of all notices,
reports, certificates and other information furnished to the
holders of Senior Indebtedness or to any agent or representative
of such holders, in each case promptly after the same are so
furnished; and
(m) Other Information. Any other information,
including financial statements and computations, relating to the
performance of obligations arising under this Agreement and/or
the affairs of the Company or any of its Subsidiaries that the
Purchaser or any other holder of Notes may from time to time
reasonably request and which is capable of being obtained,
produced or generated by the Company or such Subsidiary; provided
that nothing in this subsection (m) shall be construed to require
the Company or its Subsidiaries to disclose any documents or
information in violation of any Statute or Government Contract
restricting such disclosure for reasons of national security.
It is further understood and agreed that, for the
purpose of effecting compliance with Rule 144A promulgated by the
SEC in connection with any resales of Notes or Warrants that may
hereafter be effected pursuant to the provisions of such Rule, at
any time when the Company shall not be subject to the
requirements of Section 13 or 15(d) of the Exchange Act, (i) each
prospective purchaser of Notes or Warrants designated by a holder
thereof shall have the right to obtain from the Company, upon the
written request of such holder, copies of (A) the consolidated
balance sheet of the Company and its Subsidiaries as of the end
of then most recently completed fiscal year of the Company (or,
if such fiscal year shall have ended within the preceding 90
days, as of the end of the next preceding fiscal year), together
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with the related consolidated statements of operations,
stockholders' equity and cash flows for the fiscal year then
ended, (B) similar financial statements for the two preceding
fiscal years (which financial statements, and the financial
statements referred to in clause (A) of this paragraph, shall be
audited if audited financial statements are available at such
time), (C) a consolidated balance sheet of the Company and its
Subsidiaries as of the end of then most recently completed fiscal
quarter of the Company (or, if such fiscal quarter shall have
ended within the preceding 60 days, as of the end of the next
preceding fiscal quarter), together with the related consolidated
statements of operations, stockholders' equity and cash flows for
the portion of the current fiscal year then ended, and (D) any
other information that is necessary to comply with such Rule, and
(ii) each such holder and each such prospective purchaser shall
have the right to obtain from the Company, upon the written
request of such holder, a very brief statement of the nature of
the business of the Company and the products and services it
offers, dated as of a date within 12 months prior to the date of
such request.
The Company will keep at its principal executive office
a true copy of this Agreement, and cause the same to be available
for inspection at said office during normal business hours by any
holder of Notes or by any prospective purchaser of Notes
designated in writing by the holder thereof.
Section 8. Inspection of Properties and Books{tc
"Section 8. Inspection of Properties and Books" \f C \l 1}.
The Purchaser and each other holder of Notes, so long as any
Notes shall be outstanding, shall have the right to visit and
inspect any of the Properties of the Company and its
Subsidiaries, to examine their books of account and records, to
make copies and extracts therefrom at the expense of the Company
or a Subsidiary, as the case may be, and to discuss their
affairs, finances and accounts with, and to be advised as to the
same by, their officers and management and their independent
public accountants (and by this provision the Company authorizes
the Accountants to discuss their affairs, finances and accounts
and those of its Subsidiaries and agrees to make such Accountants
available to the Purchaser and such other holders for such
discussions together with such officers of the Company and the
Subsidiaries as the Purchaser or any such other holders may
desire to be present), all at such reasonable time and intervals
during normal business hours as the Purchaser and such other
holders may desire and upon reasonable prior notice. The Company
agrees to pay all reasonable out-of-pocket expenses incurred by
the Purchaser and such other holders in connection with the
exercise of their rights under this Section 8 at any time when a
Default or Event of Default shall have occurred and be
continuing. The Purchaser and such holders, through their
representatives, shall be entitled to meet with the senior
management of the Company at least once during each fiscal
quarter of the Company to discuss the Company's and its
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Subsidiaries' financial statements, business, assets, operations
and prospects.
Section 9. Affirmative Covenants{tc "Section 9.
Affirmative Covenants" \f C \l 1}. The Company covenants
and agrees that, so long as any of the Notes shall be
outstanding:
Section 9.1. Payment of Principal and Interest{tc
"Section 9.1. Payment of Principal and Interest" \f C \l 2}.
The Company will duly and punctually pay the principal of and
interest on the Notes, and will timely pay and perform all of its
other Obligations in accordance with the terms of such Notes and
this Agreement. The Company will comply with all of the
covenants, agreements and conditions contained in this Agreement.
Section 9.2. Payment of Taxes and Claims{tc "Section
9.2. Payment of Taxes and Claims" \f C \l 2}. The Company will,
and will cause each of its Subsidiaries to, pay before they
become delinquent:
(a) all taxes, assessments and governmental charges or
levies imposed upon the Company or any of its Subsidiaries (or
any other Subsidiaries of the Company which are part of any
affiliated group, within the meaning of Section 1504(a)(1) of the
Code, with the Company or any of its Subsidiaries) or their
income or profits or upon their Property, real, personal or
mixed, or upon any part thereof;
(b) all claims for labor, materials and supplies
which, if unpaid, would result in the creation of a Lien upon
Property of the Company or any of its Subsidiaries; and
(c) all claims, contributions, assessments or levies
required to be paid by the Company or any of its Subsidiaries
pursuant to any Plan or any agreement, contract, Statute or Order
governing or relating to any Plan;
provided, that the taxes, assessments, claims, charges and levies
described in Section 9.2(a), (b) and (c) need not be paid while
being diligently contested in good faith and by appropriate
proceedings so long as (i) adequate book reserves have been
established with respect thereto in accordance with GAAP and (ii)
neither the Company's nor any such Subsidiary's title to and
right to use its Property is materially adversely affected by
such non-payment. The Company will timely file, and will cause
its Subsidiaries to file, all tax returns required to be filed in
connection with the payment of taxes required by this Section
9.2. If an Event of Default shall have occurred and be
continuing and any such contested items shall have resulted in a
Lien or claim upon any of the Company's or any of its
Subsidiaries' Property, the Majority Holders may, at their
election (but shall not be obligated to), (a) procure the release
and discharge of any such Lien or claim and any judgment or
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658180v11
decree thereon, without inquiring into or investigating the
amount, validity or enforceability of such Lien or claim and (b)
effect any settlement or compromise of the same, and any amounts
expended by the Majority Holders in connection therewith
including premiums paid or security furnished in connection with
the issuance of any surety company bonds, shall be reimbursed by
the Company within five Business Days of demand therefor by the
Purchaser.
Section 9.3. Maintenance of Properties, Records and
Corporate Existence{tc "Section 9.3. Maintenance of
Properties, Records and Corporate Existence" \f C \l 2}. The
Company will, and will cause each of its Subsidiaries to:
(a) maintain their respective Properties in good
condition, reasonable wear and tear excepted, and make all
renewals, repairs, replacements, additions, betterments, and
improvements, except where the failure to do so would not have a
Material Adverse Effect;
(b) keep books of records and accounts in which full
and correct entries will be made of all their respective business
transactions and will reflect in their financial statements
adequate accruals and appropriations to reserves, all in
accordance with GAAP at the time in effect and consistently
applied;
(c) maintain the same fiscal year during and after the
current fiscal year ending July 31, 1998, provided, however, that
the Company shall be able to change its fiscal year with the
written consent of the Purchaser, which consent shall not be
unreasonably withheld;
(d) except as permitted by Section 10.4(a), do or
cause to be done all things necessary to preserve and keep in
full force and effect their respective corporate existence,
rights, powers and franchises including, without limitation, any
necessary qualification or licensing in any foreign jurisdiction,
except where the failure to do so would not have a Material
Adverse Effect;
(e) comply with all applicable Statutes, Orders,
franchises, authorizations, licenses and permits of, and all
applicable restrictions imposed by, any Governmental Body, in
respect of the conduct of its business and the ownership of its
Properties (including, without limitation, all Environmental Laws
and all applicable Statutes, Orders, franchises, authorizations,
licenses and permits relating to fair labor standards, equal
employment opportunities and occupational health and safety),
except for such matters as in the aggregate would not have a
Material Adverse Effect; and
(f) keep any Property owned or operated by it free of
Hazardous Materials and any other potentially materially harmful
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658180v11
chemical or physical conditions. If the Company or any of its
Subsidiaries receives notice or becomes aware of any
Environmental Matter or contamination with Hazardous Materials
that relates to any of them or their respective Properties, then
the Company shall promptly provide written notice thereof to the
Purchaser and, upon written request from the Majority Holders,
shall provide the Purchaser with such reports, certificates,
engineering studies or other written material or data as the
Majority Holders may request so as to satisfy the Purchaser that
the Company and its Subsidiaries are in compliance with their
obligations under this subsection (f) and subsection (e) of this
Section 9.3. The Majority Holders shall also have the right, at
any time and from time to time after receipt of notice or
knowledge of any such Environmental Matter or contamination, to
require the Company at its expense to employ a qualified
environmental consultant acceptable to the Majority Holders to
conduct an environmental review, audit, assessment or report with
respect thereto concerning the Company's and its Subsidiaries'
operations and Property unless the Company has theretofore
employed a qualified environmental consultant acceptable to the
Majority Holders to conduct such an environmental review, audit,
assessment or report in scope and methodology satisfactory to the
Majority Holders. The Company agrees to cooperate fully with
such consultant in connection with any such review, audit,
assessment or report, including, without limitation, by providing
such access to the Company's and its Subsidiaries' books,
records, Properties, employees and agents and by furnishing such
written and oral information as such consultant may reasonably
request in connection with any such review, audit, assessment or
report.
Section 9.4. Insurance{tc "Section 9.4. Insurance"
\f C \l 2}. (a) Subject to the last sentence of this Section
9.4(a), the Company will, and will cause each of its Subsidiaries
to, carry and maintain in full force and effect at all times,
with financially sound and reputable insurance companies or
associations rated A- (Class 12) or better by A.M. Best & Co.
(or, as to workers' compensation or similar insurance, in an
insurance fund or by self-insurance authorized by the
jurisdiction in which its operations are carried on): (i)
insurance against loss or damage to the tangible real and
personal Property of the Company and its Subsidiaries by fire,
theft, explosion, spoilage and all other hazards and risks
ordinarily insured against by other owners or users of such
Property in similar businesses, (ii) all workers' compensation or
similar insurance as may be required under the laws of any
jurisdiction, (iii) public liability insurance against claims for
personal injury, property damage suffered upon, in or about any
premises occupied by them or occurring as a result of the
ownership, maintenance or operation by them of any automobile,
truck or other vehicle or as a result of the use of products
manufactured, constructed or sold by them, or services rendered
by them, (iv) business interruption insurance covering risk of
loss as a result of the cessation of any substantial part of the
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business conducted by them, consistent with past practice, (v)
product liability insurance with coverage and (vi) insurance
against such other risks as are usually insured against by
corporations of established reputation engaged in the same or
similar businesses and similarly situated. If the Company
maintains after the Closing Date any insurance policies with
insurance companies or associations that do not meet the
foregoing standards, the Company shall within 60 days of the
Closing Date obtain replacement policies with insurance companies
or associations that meet the foregoing standards.
(b) Insurance specified in clause (a) of this Section
9.4, shall be maintained in such types, with such coverage and in
such amounts (and with co-insurance, deductibles and self-insured
retention, if any) as are from time to time hereafter customary
for corporations of established reputation engaged in the same or
similar businesses and similarly situated; provided, that in no
event shall the insurance specified in clause (a) be for amounts
lower than, or coverage less than, that currently provided
without the prior written consent of the Majority Holders.
(c) If the Company or any of its Subsidiaries shall
fail to obtain, maintain or renew any insurance required pursuant
to this Section 9.4, or to pay the premiums therefor, or to
deliver to the Purchaser proper evidence thereof beyond any
applicable notice and cure period, if any, for the performance of
such actions, the Majority Holders, at their sole option and
without any obligation to do so, may procure and pay for such
insurance, and any sums expended by it to procure any such
insurance shall be repaid by the Company, together with any late
charge imposed by any such insurer, if applicable, within five
Business Days after receipt of bills therefor from the Majority
Holders.
Section 9.5. Subsidiary Guarantors{tc "Section 9.5.
Subsidiary Guarantors" \f C \l 2}.
(a) (i) STI International Limited, a United Kingdom
corporation ("STI"), a Subsidiary of the Company, shall not be
required to execute a Subsidiary Guarantee if the following
conditions are complied with: STI is (A) dissolved no later than
June 30, 1999 and (B) from the date of this Agreement until June
30, 1999 there is no material change in the assets held by STI.
(ii) MTEC, Inc., (formerly known as Brunswick
Biomedical Technologies, Inc.) a Massachusetts corporation
("MTEC"), a Subsidiary of the Company, shall not be required to
execute a Subsidiary Guarantee if the total fair market value of
the assets of MTEC do not, at any time, exceed $1,000,000 in the
aggregate.
In the event that any of the foregoing conditions is not
satisfied, the appropriate Subsidiary shall execute a Subsidiary
Guarantee in the form attached as Exhibit B hereto.
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658180v11
(b) Promptly upon any Person becoming a Subsidiary of
the Company organized under the laws of the United States of
America or any State thereof, the Company shall provide written
notice thereof to each holder of Notes, and at any time the total
fair market value of the assets of such Subsidiary exceed
$1,000,000, the Company shall cause such Subsidiary to execute
and deliver a Subsidiary Guarantee (in the form attached as
Exhibit B hereto) to the holders of Notes, together with
certified resolutions and other customary documentation relating
to the execution of such a guaranty as Purchaser may reasonably
request.
(c) Promptly upon any Person becoming a Subsidiary of
the Company (other than a Subsidiary referred to in clause (b)
above), the Company shall provide written notice thereof to each
holder of Notes, and at any time the total fair market value of
the assets of such Subsidiary exceed $1,000,000, the Company
shall (i) cause each such Subsidiary to enter into a pledge
agreement reasonably satisfactory to ING and the Majority Holders
providing for a pledge in favor of ING and the Purchaser of two-
thirds of the outstanding Capital Stock of each such Subsidiary
with the Lien to secure the Company's obligations under the
Senior Loan Documents granted to ING being prior to the Lien
granted to the Purchaser hereunder; provided that the Purchaser
shall execute and deliver to ING, any other Senior Lender (as
defined in the Subordination Agreement) and any holder of
Designated Senior Indebtedness who has a security interest in
such pledged Capital Stock an intercreditor agreement
satisfactory to ING and (ii) provide in favor of ING and the
Purchaser, in such form as ING and the Majority Holders shall
reasonably request, a negative pledge with respect to the portion
of outstanding Capital Stock of such Subsidiary not pledged
pursuant to clause (i) above; provided that with respect to
Meridian Medical Technologies Limited, there shall be no default
under this Section 9.5(c) so long as the Company complies with
the terms of this provision within 180 days after the Closing
Date.
Section 9.6. Pension and Benefit Plan Covenants{tc
"Section 9.6. Pension and Benefit Plan Covenants" \f C \l 2}.
The Company will:
(a) take or cause to be taken all necessary steps to
ensure that the representations and warranties set forth under
Section 4.19 of this Agreement continue to be true and correct in
all material respects, as if the same were made on a continuing
basis, on and with effect as of each date while any of the Notes
are outstanding, except to the extent permitted in writing by the
Majority Holders, and
(b) not, and will ensure that its Subsidiaries will
not, amend any Plan or establish or adopt any Plan that would
have the effect of materially adversely affecting the financial
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658180v11
condition of such Plan or of causing a Material Adverse Effect,
without the written consent of the Purchaser, except for such
amendments as may be required by applicable law or any
Governmental Authority.
Section 9.7. Notice of Default{tc "Section 9.7.
Notice of Default" \f C \l 2}. Upon the chief executive officer,
the chief operating officer or the chief financial officer of the
Company learning thereof, the Company will give prompt written
notice (with a description in reasonable detail) to the Purchaser
of the occurrence of any Default or Event of Default.
Section 10. Negative and Maintenance Covenants{tc
"Section 10. Negative and Maintenance Covenants" \f C \l 1}.
The Company covenants and agrees that so long as any of the Notes
shall be outstanding, the Company shall comply with the
provisions set forth in Sections 10.1 through 10.17 hereof,
inclusive.
Section 10.1. Restrictions on Indebtedness{tc "Section
10.1. Restrictions on Indebtedness" \f C \l 2}. The Company
will not, and will not permit any of its Subsidiaries to, incur,
create, assume, guarantee or in any way become liable for, or
permit to exist, Indebtedness other than:
(a) Indebtedness incurred pursuant to this Agreement
and the Notes;
(b) Senior Indebtedness, provided that the aggregate
outstanding principal amount of such Indebtedness (including the
maximum aggregate amount of all commitments to extend any
revolving credit, working capital, letter of credit or similar
credit facility in connection therewith, and including the face
amount of all letters of credit and other contingent obligations
(whether issued or guaranteed by the holders of such
Indebtedness) from time to time outstanding in connection
therewith) shall not at any time exceed the Maximum Commitment;
(c) Indebtedness of the Company and its Subsidiaries
existing on the Closing Date and described on Schedule 4.10A
hereto;
(d) Additional Permitted Indebtedness;
(e) Indebtedness of any Wholly-owned Subsidiary of the
Company to the Company or to another Wholly-owned Subsidiary of
the Company;
(f) Indebtedness secured by Liens permitted by
subsections (a) through (h), inclusive, of Section 10.2;
(g) Guarantees by the Company or any of its
Subsidiaries of other Indebtedness permitted by this Section
10.1; and
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658180v11
(h) Indebtedness secured by Liens permitted by Section
10.2(m) hereof, provided that the aggregate outstanding principal
amount of Indebtedness incurred pursuant to this subsection (h)
shall not at any time exceed the equivalent of U.S. $500,000.
Notwithstanding the foregoing, the Company and its
Subsidiaries will not at any time create or incur any
Indebtedness other than Designated Senior Indebtedness which,
under the terms of the documentation pursuant to which such
Indebtedness is created or incurred, is subordinated in right of
payment to any other Indebtedness of the Company or any of its
Subsidiaries, unless such Indebtedness is also subordinated in
right of payment, in the same manner and to the same extent, to
the Indebtedness represented by the Notes.
Section 10.2. Restrictions on Liens{tc "Section 10.2.
Restrictions on Liens" \f C \l 2}. The Company will not, and
will not permit any of its Subsidiaries directly or indirectly,
to create, assume or suffer to exist any Lien upon any of their
respective Properties whether now owned or hereafter acquired,
except for:
(a) Liens for taxes, assessments or governmental
charges or claims the payment of which is not at the time
required by Section 9.2;
(b) statutory Liens of landlords and Liens of
carriers, warehousemen, mechanics, materialmen and other Liens
imposed by law incurred in the ordinary course of business, in
each case for sums the payment of which is not at the time
required by Section 9.2;
(c) Liens (other than any Lien imposed by ERISA and
other than any Lien securing an obligation for the payment of
borrowed money) incurred or deposits made in the ordinary course
of business in connection with obligations not due or delinquent
with respect to workers' compensation, unemployment insurance and
other types of social security, or to secure the performance of
tenders, statutory obligations, surety and appeal bonds, bids,
leases, government contracts, performance and return-of-money
bonds and other similar obligations; provided, that no such Lien
shall be permitted to the extent it encumbers any real Property
of the Company or its Subsidiaries;
(d) any attachment or judgment Lien (including
judgment or appeal bonds) which shall, within 30 days after the
entry thereof, have been discharged or execution thereof stayed
pending appeal, or shall have been discharged within 30 days
after the expiration of any such stay; provided that such Liens
shall not in any event exceed the equivalent of U.S. $750,000 in
the aggregate at any time outstanding;
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(e) normal and customary rights of set-off upon
deposits of cash in favor of banks or other depositary
institutions;
(f) zoning restrictions, easements, rights-of-way,
servitudes or other similar rights in land (including, without
restriction, rights-of-way and servitudes for railways, sewers,
drains, gas and oil pipelines, gas and water mains, electric
light and power and telephone or telegraph or cable television
conduits, poles, wires and cables) granted to or reserved by
other Persons, and the defects or irregularities of which are of
a minor nature, none of which individually or in the aggregate
materially and adversely impair the usefulness in the operation
of the business of the Company or any of its Subsidiaries or the
value of the property subject to such restrictions, easements,
rights-of-way, servitudes or other similar rights in land granted
to or reserved by other Persons, or title defect;
(g) the right reserved to or vested in any
municipality or governmental or other public authority by the
terms of any lease, license, franchise, grant or permit acquired
by the Company or any of its Subsidiaries or by any statutory
provision, to terminate any such lease, license, franchise, grant
or permit, or to require annual or other payments as a condition
to the continuance thereof;
(h) Liens given to a public utility or any
municipality or governmental or other public authority when
required by such utility, municipality or other authority in
connection with the operations of the Company all in the ordinary
course of its business;
(i) Liens securing Indebtedness of a Wholly-owned
Subsidiary of the Company to the Company or to another Wholly-
owned Subsidiary of the Company;
(j) Liens (including Liens created pursuant to
capitalized leases) existing on the date hereof and described in
Schedule 4.10A hereto;
(k) Liens securing Designated Senior Indebtedness and
incurred pursuant to the Credit Agreement or the other Senior
Loan Documents;
(l) Liens securing Additional Permitted Indebtedness
that is not Designated Senior Indebtedness; provided that the
aggregate principal amount of such Indebtedness secured by such
Liens shall not exceed $5,000,000 in the aggregate.
(m) Liens (including Liens created pursuant to
capitalized leases) in respect of Property acquired, constructed
or improved by the Company or any of its Subsidiaries after the
Closing Date, which Liens exist or are created at the time of
acquisition or completion of construction or improvement of such
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658180v11
Property or within six months thereafter, to secure Indebtedness
which is assumed or incurred to finance all or any part of the
purchase price or cost of acquisition or construction or
improvement of such Property, but any such Lien shall cover only
the Property so acquired or constructed and any improvements
thereto (and any real Property on which such Property is located,
if such Property is a building, improvement or fixture), and may
not exceed the lesser of (x) the Fair Market Value of such
Property or (y) the purchase price or cost of such acquisition,
construction or improvement;
(n) the extension, renewal or replacement of any Lien
permitted by this Section 10.2, but only if the extension,
renewal or replacement of the Indebtedness secured thereby is not
prohibited under Section 10.1 hereof and the principal amount of
the Indebtedness secured by such Lien immediately prior to such
extension, renewal or replacement is not increased and the Lien
is not extended to other Property.
(o) Liens which arise by operation of law under
Article 2 of the Uniform Commercial Code in favor of unpaid
sellers of goods, or liens in any items or any accompanying
documents or proceeds of either arising by operation of law under
Article 4 of the Uniform Commercial Code in favor of a collecting
bank.
(p) Liens consisting of precautionary UCC-1 filings in
respect of operating leases.
Section 10.3. Limitation on Sale and Leasebacks{tc
"Section 10.3. Limitation on Sale and Leasebacks" \f C \l 2}.
The Company will not, and will not permit any of its Subsidiaries
to, enter into any arrangement whereby the Company or any such
Subsidiary shall sell or transfer any Property owned by the
Company or any of its Subsidiaries to any Person other than the
Company or a Subsidiary of the Company and thereupon the Company
or such Subsidiary shall lease or intend to lease, as lessee, the
same Property.
Section 10.4. Consolidation, Merger or Disposition of
Assets; Acquisitions{tc "Section 10.4. Consolidation. Merger or
Disposition of Assets; Acquisitions" \f C \l 2}. The Company
will not, and will not permit any of its Subsidiaries to,
(i) consolidate or amalgamate with or be a party to a merger with
any other Person, (ii) liquidate, wind up or dissolve itself (or
suffer any liquidation or dissolution), (iii) convey, sell,
lease, license, transfer or otherwise dispose of, in one
transaction or a series of transactions, all or any part of the
business or Property (tangible or intangible) of the Company or
any such Subsidiary, whether now owned or hereafter acquired, or
(iv) acquire by purchase or otherwise any of the outstanding
Capital Stock of, or all or substantially all of the business,
operating assets and Property of, any Person or of any operating
division or unit of any Person, provided, however, that:
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658180v11
(a) any Wholly-owned Subsidiary of the Company may
merge or consolidate with or into, or be dissolved or liquidated
into, the Company or any other Wholly-owned Subsidiary of the
Company so long as (x) in any merger or consolidation involving
the Company, the Company shall be the surviving or continuing
corporation, and (y) in any merger or consolidation involving one
or more Wholly-owned Subsidiaries of the Company and one or more
Subsidiaries of the Company that are not Wholly-owned
Subsidiaries, the surviving or continuing corporation shall be
one of such Wholly-owned Subsidiaries;
(b) any Wholly-owned Subsidiary of the Company may
sell, lease or otherwise dispose of all or any part of its assets
to the Company or to any other Wholly-owned Subsidiary of the
Company;
(c) the Company and any of its Subsidiaries may in the
ordinary course of its business sell or otherwise dispose of
Inventory owned by the Company or such Subsidiary;
(d) the Company and any of its Subsidiaries may in the
ordinary course of its business sell or otherwise dispose of
equipment and other Property which is obsolete or no longer used
in the business of the Company and its Subsidiaries;
(e) to the extent such transfers are in the aggregate
permitted under clause (iv) of the definition of Restricted
Investment, the Company and its Subsidiaries may transfer assets
to any Subsidiary of the Company; and
(f) the Company and its Subsidiaries may sell, lease
or otherwise dispose of assets other than in the ordinary course
of business to any Person other than a Subsidiary of the Company,
provided that (i) the Fair Market Value of the assets sold,
leased or otherwise disposed of with respect to each such
transaction shall not exceed $250,000 and (ii) the aggregate Fair
Market Value of all assets sold, leased or otherwise disposed of
pursuant to this subsection (e) in each fiscal year of the
Company shall not exceed $750,000.
Section 10.5. Sale or Discount of Receivables{tc
"Section 10.5. Sale or Discount of Receivables" \f C \l 2}. The
Company will not, and will not permit any of its Subsidiaries to,
directly or indirectly, sell with recourse, or discount or
otherwise sell for less than the face value thereof, any of its
respective Accounts or notes receivable.
Section 10.6. Conduct of Permitted Business{tc
"Section 10.6. Conduct of Business" \f C \l 2}. The Company will
not, and will not permit any of its Subsidiaries to, engage in
any business other than the business of the general character
engaged in by each of them on the date hereof as described in the
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658180v11
Company Reports and any businesses or activities reasonably
related thereto.
Section 10.7. Restricted Payments and Restricted
Investments{tc "Section 10.7. Restricted Payments and Restricted
Investments" \f C \l 2}. (a) The Company will not, and will not
permit any of its Subsidiaries to, directly or indirectly, make
any Restricted Payment, except the declaration and payment of
dividends and distributions by a Wholly-owned Subsidiary of the
Company on its Capital Stock to the Company or to another Wholly-
owned Subsidiary of the Company.
(b) The Company will not, and will not permit any of
its Subsidiaries to, make any Restricted Investment.
Section 10.8. Issuance of Capital Stock{tc "Section
10.8. Issuance of Capital Stock" \f C \l 2}. The Company
will not permit any Subsidiary of the Company to issue, sell or
otherwise dispose of any shares of its Capital Stock, or any
warrants, options, conversion rights, exchange rights or other
rights to subscribe for, purchase or acquire such Capital Stock,
except to the Company or to a Wholly-owned Subsidiary of the
Company (except for directors' qualifying shares).
Section 10.9. Transactions with Affiliates{tc "Section
10.9. Transactions with Affiliates" \f C \l 2}. Except in
the case of transactions between or among the Company and its
Wholly-owned Subsidiaries, the Company will not, and will not
permit any of their Subsidiaries to, directly or indirectly,
enter into or permit to exist any transaction (including, without
limitation, the purchase, sale, lease or exchange of any Property
or the rendering of any service), with any Affiliate of the
Company or such Subsidiary unless such transaction is otherwise
not prohibited under this Agreement, is in the ordinary course of
the Company's or such Subsidiary's business and is on fair and
reasonable terms that are not less favorable to the Company or
such Subsidiary, as the case may be, than those that would
obtainable at the time in any arm's length transaction with a
Person who is not such an Affiliate.
Section 10.10. Termination of Pension Plans{tc
"Section 10.10. Termination of Pension Plans" \f C \l 2}.
The Company will not, and will not permit any of its Subsidiaries
or ERISA Affiliates to, permit any Plan maintained by the Company
or any such Subsidiary or ERISA Affiliate to be terminated in a
manner which could reasonably be expected to result in the
imposition of a Lien on any Property of the Company or any
Subsidiary of the Company pursuant to Section 4068 of ERISA.
Section 10.11. Maintenance of Capital Expenditures{tc
"Section 10.11. Maintenance of Capital Expenditures" \f C \l
2}. The Company will not, and will not permit any of its
Subsidiaries to make or commit to make any Consolidated Capital
Expenditures, except the Company and its Subsidiaries may make
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658180v11
Consolidated Capital Expenditures during any fiscal year provided
(a) no Default or Event of Default has occurred and is
continuing, and (b) the aggregate amount of Consolidated Capital
Expenditures made during such fiscal year (including the amount
of Capital Lease Liabilities incurred during such fiscal year
that in accordance to GAAP is attributable to principal) does not
exceed the amount set forth below opposite such fiscal year:
Fiscal Year Ended Permitted Amount
1998 4,200,000
1999 6,800,000
2000 6,600,000
2001 6,600,000
2002 6,600,000
2003 6,600,000
2004 6,600,000
2005 6,600,000
; provided that to the extent in any fiscal year the Permitted
Amount for such year exceeds the Company's Capital Expenditures
for such year, the Permitted Amount for the following fiscal year
shall be increased by the lesser of such excess or $500,000.
Section 10.12. Certain Contracts{tc "Section 10.12.
Certain Contracts" \f C \l 2}. The Company will not, and
will not permit any of its Subsidiaries to, enter into or be a
party to:
(a) any contract providing for the making of loans
(other than Cash Equivalents), advances or capital contributions
to any Person other than the Company or a Wholly-owned Subsidiary
of the Company, or for the purchase of any Property from any
Person, in each case primarily in order to enable such Person to
maintain working capital, net worth or any other balance sheet
condition or to pay debts, dividends or expenses, or
(b) any contract for the purchase of materials,
supplies or other Property or services if such contract (or any
related document) requires that payment for such materials,
supplies or other Property or services shall be made regardless
of whether or not delivery of such materials, supplies or other
Property or services is ever made or tendered, or
(c) any contract to rent or lease (as lessee) any real
or personal Property if such contract (or any related document)
provides that the obligation to make payments thereunder is
absolute and unconditional under conditions not customarily found
in commercial leases then in general use or requires that the
lessee purchase or otherwise acquire securities or obligations of
the lessor (provided, that this subsection (c) shall not be
construed to prevent the Company or any of its Subsidiaries from
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658180v11
being a party to or complying with any provision of any lease to
which any of them is a party on the date hereof), or
(d) any contract for the sale or use of materials,
supplies or other Property, or the rendering of services, if such
contract (or any related document) requires that payment for such
materials, supplies or other Property, or the use thereof, or
payment for such services, shall be subordinated to any
Indebtedness (of the purchaser or user of such materials,
supplies or other Property or the Person entitled to the benefit
of such services) owed or to be owed to any Person, or
(e) except as permitted by Section 10.1, and except
for Investments which are not Restricted Investments, any other
contract which, in economic effect, is substantially equivalent
to a Guarantee.
Section 10.13. Limitation on Dividend Restrictions
Affecting Subsidiaries{tc "Section 10.13. Limitation on
Dividend Restrictions Affecting Subsidiaries" \f C \l 2}. Except
pursuant to this Agreement, the Company will not permit any of
its Subsidiaries directly or indirectly to create or otherwise
cause or suffer to exist or become effective any consensual
encumbrance or restriction which by its terms restricts the
ability of any such Subsidiary to (a) pay dividends or make any
other distributions on such Subsidiary's Capital Stock, (b) pay
any Indebtedness owed to the Company or any other Subsidiary of
the Company, (c) make any loans or advances to the Company or any
other Subsidiary of the Company or (d) transfer any of its
Property or assets to the Company or any other Subsidiary of the
Company.
Section 10.14. No Amendment of Charter, By-Laws{tc
"Section 10.14. No Amendment of Charter, By-Laws" \f C \l 2}.
The Company will not effect any amendment to or modification of
its charter documents or by-laws, and will not permit any of its
Subsidiaries to effect any amendment to or modification of their
charter documents or by-laws, if any such amendment or
modification would adversely affect the rights or remedies of the
Purchaser under this Agreement and the Notes.
Section 10.15. Acquisition of Margin Securities{tc
"Section 10.15. Acquisition of Margin Securities" \f C \l 2}.
The Company will not, and will not permit any of its Subsidiaries
to, own, purchase or acquire (or enter into any contract to
purchase or acquire) any "margin security" as defined by any
regulation of the Board of Governors of the United States Federal
Reserve System as now in effect or as the same may hereafter be
in effect unless, prior to any such purchase or acquisition or
entering into any such contract, the Purchaser shall have
received an opinion of counsel satisfactory to the Purchaser to
the effect that such purchase or acquisition will not cause this
Agreement or the Notes to be in violation of Regulation U or any
other regulation of such Board then in effect.
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658180v11
Section 10.16. Financial Covenants.{tc "Section 10.16.
Financial Covenants" \f C \l 2} (a) Minimum Net Worth.
The Company shall not permit its net worth determined in
accordance with GAAP as of the last day of any fiscal quarter,
(i) commencing with the fiscal quarter ending on July 31, 1997
and continuing thereafter through and including July 31, 1998 to
be less than $12,000,000 and (ii) commencing with the fiscal
quarter ending on October 31, 1998 and continuing thereafter, to
be less than (A) $12,000,000 plus (B) 50% of Net Income (but not
loss) of the Company for each fiscal quarter of the Company
ending after July 31, 1997 through and including the last day of
the fiscal quarter in which this covenant is being tested;
provided, however, that any calculation of net worth and Net
Income (and loss) shall exclude the after-tax effect of any
extraordinary item associated with the extinguishment of
Indebtedness as a result of any partial refinancing of the Senior
Indebtedness and shall also exclude any increase in net worth
resulting from the issuance of the Warrants.
(b) Total Debt Leverage Ratio. The Company shall not
permit its Total Debt Leverage Ratio with respect to the 12-month
period ending on the last day of any fiscal quarter of the
Company to be greater than the ratio set forth opposite such
fiscal quarter:
Fiscal Quarter Ended Ratio
April 30, 1998 4.25:1.00
July 31, 1998 4.25:1.00
October 31, 1998 4.25:1.00
January 31, 1999 4.25:1.00
April 30, 1999 4.25:1.00
July 31, 1999 and the last
day of any subsequent
fiscal quarter of the 4.00:1.00
Company
(c) Total Debt Service Ratio. The Company will not
permit its Total Debt Service Ratio with respect to the 12-month
period ending on the last day of any fiscal quarter of the
Company to be less than the ratio set forth below opposite such
fiscal quarter:
Fiscal Quarter Ending Ratio
April 30, 1998 1.60:1.0
0
July 31, 1998 1.60:1.0
0
October 31, 1998 1.70:1.0
0
January 31, 1999 1.80:1.0
0
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658180v11
April 30, 1999 1.90:1.0
0
July 31, 1999 2.00:1.0
0
October 31, 1999 2.05:1.0
0
January 31, 2000 2.10:1.0
0
April 30, 2000 2.15:1.0
0
July 31, 2000 2.20:1.0
October 31, 2000 and the 0
last day of any subsequent
fiscal quarter of the
Company 2.25:1.0
0
(d) Interest Coverage Ratio. The Company will not
permit its Interest Coverage Ratio with respect to the 12-month
period ending on the last day of any fiscal quarter to be less
than the ratio set forth opposite such fiscal quarter:
Fiscal Quarter Ending Ratio
April 30, 1998 2.50:1.0
0
July 31, 1998 2.50:1.0
0
October 31, 1998 2.50:1.0
0
January 31, 1999 2.50:1.0
0
April 30, 1999 2:50:1.0
0
July 31, 1999 2.60:1.0
0
October 31, 1999 2.60:1.0
0
January 31, 2000 2.70:1.0
0
April 30, 2000 2.70:1.0
0
July 31, 2000 2.75:1.0
0
and the last day of any
subsequent fiscal quarter
of the Company
(e) EBITDA. The Company will not permit EBITDA for
the 12-month period ending on the last day of any fiscal quarter
of the Company to be less than the amount set forth opposite such
date:
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658180v11
Fiscal Quarter Ended Amount
April 30, 1998 $7,000,000
July 31, 1998 $7,000,000
October 31, 1998 $7,360,000
January 31, 1999 $7,625,000
April 30, 1999 $8,000,000
July 31, 1999 $8,250,000
October 31, 1999 $8,500,000
January 31, 2000 $9,000,000
April 30, 2000 $9,500,000
July 31, 2000 and the
last day of any
subsequent fiscal quarter $10,000,000
of the Company
Section 10.17. Certificate Regarding Additional Permitted
Indebtedness{tc "Section 10.17 Certificate Regarding
Additional Permitted Indebtedness" \f C \l 2}. In connection
with the incurrence of any indebtedness that constitutes
Designated Senior Indebtedness or has an aggregate principal
amount (including the maximum amount of all commitments to extend
any revolving credit, working capital, letter of credit or
similar credit facility in connection therewith and including the
face amount of all letters of credit and other contingent
obligations (whether issued or guaranteed by the holders of such
indebtedness) from time to time outstanding in connection
therewith) of at least $1,000,000 ("Threshold Debt"), the Company
shall provide to the Purchaser, at least three Business Days
prior to the incurrence of such indebtedness, with respect to
Designated Senior Indebtedness, a copy of any certificate to be
provided pursuant to the terms of the Subordination Agreement, or
with respect to Threshold Debt, a certificate, signed by the
chief executive officer or chief financial officer of the
Company, to the effect that such indebtedness constitutes
Additional Permitted Indebtedness under the Note Purchase
Agreement as in effect on the date hereof, such certificate to
set forth, in reasonable detail, the calculations used for the
calculation of the Pro Forma Interest Coverage Ratio and the Pro
Forma Leverage Ratio.
Section 11. Events of Default{tc "Section 11.
Events of Default" \f C \l 1}.
Section 11.1. Events of Default; Remedies{tc "Section
11.1. Events of Default; Remedies" \f C \l 2}. If any of the
following events (herein called "Events of Default") shall have
occurred and be continuing (whatever the reason for such Event of
Default and whether it shall be voluntary or involuntary or by
operation of law or otherwise):
(a) the Company shall default in the due and punctual
payment or prepayment of all or any part of the principal of, or
Prepayment Premium (if any) on, any Note when and as the same
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658180v11
shall become due and payable, whether at stated maturity, by
acceleration, by notice of prepayment or otherwise;
(b) the Company shall default in the due and punctual
payment or prepayment of any interest on any Note when and as
such interest shall become due and payable, and such default
shall continue for a period of five days;
(c) the Company shall default in the performance or
observance of any of the covenants, agreements or conditions
contained in Sections 10.1 through 10.17, inclusive, of this
Agreement;
(d) the Company shall default in the performance or
observance of any of the covenants, agreements or conditions
contained in this Agreement (other than those referred to in any
subsection of this Section 11.1 other than this subsection (d)),
and such default shall continue for a period of 10 days after a
notice thereof shall have been given to the Company by the
Purchaser (or if such default is not reasonably susceptible to
cure within 10 days, such longer period as is reasonably needed
to effect such cure, but in no event longer than 30 days from the
date notice is given, so long as the Company promptly commences
and diligently pursues such cure);
(e) (i) any of the Designated Senior Indebtedness
shall be declared to be due and payable or required to be
prepaid, redeemed, purchased or defeased, or an offer to prepay,
redeem, purchase or defease such Indebtedness shall be required
to be made, in each case prior to the stated maturity thereof, or
the maturity of any or all of such Designated Senior Indebtedness
is otherwise accelerated, or (ii) the Company or any of its
Subsidiaries shall fail to pay all or any portion of the
Designated Senior Indebtedness in full upon the final stated
maturity of such respective Indebtedness (including any extension
thereof);
(f) (i) the Company or any of its Subsidiaries shall
fail to pay any principal of, premium or interest on or any other
amount payable in respect of Indebtedness of such Person that is
outstanding in a principal amount of at least $250,000 in the
aggregate (excluding Designated Senior Indebtedness and excluding
Indebtedness represented by the Notes) when the same becomes due
and payable (whether at scheduled maturity, or by required
prepayment, acceleration, demand or otherwise), and such failure
shall continue after the applicable grace period, if any,
specified in the agreement or instrument relating to such
Indebtedness; or (ii) any other event shall occur or condition
shall exist under any agreement or instrument relating to any
such Indebtedness (excluding Designated Senior Indebtedness and
excluding Indebtedness represented by the Notes) that is
outstanding in the principal amount of at least $500,000 and
shall continue after the applicable grace period, if any,
specified in such agreement or instrument, if the effect of such
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658180v11
event or condition is to permit the acceleration of the maturity
of such Indebtedness (whether or not such acceleration occurs);
provided that if any event specified in clause (i) or (ii) above
occurs as a result of a default under an agreement or instrument
that exclusively provides for or evidences purchase money
indebtedness or Capitalized Lease Obligations (or, if such
agreement or instrument is part of a facility, such facility
exclusively provides for purchase money indebtedness or
Capitalized Lease Obligations) and the maximum principal amount
of indebtedness (including any unused commitments) under such
agreement or instrument (or, if such agreement or instrument is
part of a facility, then the maximum principal amount of
indebtedness (including unused commitments) under such facility)
does not exceed $5,000,000, then no Event of Default shall be
deemed to have occurred as a result of such default unless such
default has resulted in Indebtedness under such agreement or
instrument being declared to be due and payable or required to be
prepaid, redeemed, purchased or defeased, or an offer to prepay,
redeem, purchase or defease such Indebtedness shall be required
to be made, in each case prior to the stated maturity thereof, or
the maturity of any or all of such Indebtedness is otherwise
accelerated.
(g) (i) a notice of debarment or notice of suspension
shall have been issued under any United States Government
Contract, (ii) the Company or any Subsidiary of the Company shall
be barred or suspended from contracting with any United States
Governmental Body or (iii) any United States Government Contract
shall be terminated due to alleged fraud, willful misconduct,
gross negligence or any intentional wrongdoing by the Company or
any of its Subsidiaries;
(h) the Company or any of its Subsidiaries shall (i)
apply for or consent to the appointment of, or the taking of
possession by, a receiver, custodian, trustee or liquidator of
itself or of all or a substantial part of its Property, (ii) be
generally unable to pay its debts as such debts become due, (iii)
make a general assignment for the benefit of its creditors, (iv)
commence a voluntary case under the Bankruptcy Code or the
foreign equivalent thereof, (v) file a petition seeking to take
advantage of any other law providing for the relief of debtors,
(vi) fail to controvert in a timely or appropriate manner, or
acquiesce in writing to, any petition filed against it in an
involuntary case under the Bankruptcy Code or the foreign
equivalent thereof, (vii) admit in writing its inability to pay
its debts generally as such debts become due, (viii) take any
action under the laws of its jurisdiction of organization
analogous to any of the foregoing, or (ix) take any requisite
action for the purpose of effecting any of the foregoing;
(i) a proceeding or case shall be commenced, without
the application or consent of the Company or its Subsidiaries in
any court of competent jurisdiction, seeking (i) the liquidation,
reorganization, dissolution, winding up of the Company or any of
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658180v11
its Subsidiaries or composition or readjustment of the
Indebtedness of any of them, (ii) the appointment of a trustee,
receiver, custodian, liquidator or the like of the Company or any
of its Subsidiaries or of all or any substantial part of the
assets of any of them, or (iii) similar relief in respect of the
Company or any of its Subsidiaries under any law providing for
the relief of debtors, and such proceeding or case shall continue
undismissed, or unstayed and in effect, for a period of 60 days;
or an order for relief shall be entered in an involuntary case
under the Bankruptcy Code, against the Company or any of its
Subsidiaries; or action under the laws of the jurisdiction of
organization of any of the Company or any of its Subsidiaries
analogous to any of the foregoing shall be taken with respect to
any of the Company or any of its Subsidiaries and shall continue
undismissed, or unstayed and in effect, for a period of 60 days;
(j) final judgment for the payment of money shall be
rendered by a court of competent jurisdiction against the Company
or any of its Subsidiaries, and the Company or such Subsidiary,
as the case may be, shall not discharge or bond the same or
provide for its discharge or bonding in accordance with its
terms, or procure a stay of execution thereof, within 45 days
from the date of entry thereof and within said period of 45 days,
or such longer period during which execution of such judgment
shall have been stayed, appeal therefrom and cause the execution
thereof to be stayed during such appeal, and such judgment
together with all other such judgments shall exceed in the
aggregate $750,000;
(k) any representation or warranty made by or on
behalf of the Company in this Agreement or any Officer's
Certificate or other certificate or notice now or hereafter
delivered pursuant to or in connection with any provision of this
Agreement (including, without limitation, any Officer's
Certificate or other certification delivered pursuant to Section
7 hereof), shall prove to be false, incorrect or breached in any
material respect on the date as of which made;
(l) there shall be a Change of Control of the Company;
or
(m) the Company, any Subsidiary Guarantor or ING shall
default in the performance or observance of any of the covenants,
agreements or conditions contained in the Put Subordination
Agreement; provided, however, that failure of a Put Holder (as
defined in the Put Subordination Agreement) to provide notice
pursuant to Section 6 of the Put Subordination Agreement shall
not be deemed to be an Event of Default under this Agreement;
then (i) upon the occurrence of any Event of Default described in
subsection (h) or (i), the unpaid principal amount of all Notes,
together with all interest accrued thereon and all fees, costs,
expenses, indemnities and other amounts payable under this
Agreement or the Notes, shall automatically become immediately
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due and payable, without presentment, demand, notice,
declaration, protest or other requirements of any kind, all of
which are hereby expressly waived, or (ii) upon the occurrence of
any other Event of Default, the Majority Holders may, by written
notice to the Company, declare the unpaid principal amount of all
Notes to be, and the same shall forthwith become, immediately due
and payable, together with the interest accrued thereon, and all
fees, costs, expenses, indemnities and other amounts payable
under this Agreement or the Notes, all without presentment,
demand, notice, protest or other requirements of any kind, all of
which are hereby expressly waived. The provisions of this
Section 11.1 are subject, however, to the condition that if, at
any time after any Note shall have so become due and payable, the
Company shall pay all arrears of interest on the Notes and all
payments on account of the principal of and, to the extent
permitted by law, prepayment charge (if any) on the Notes which
shall have become due otherwise than by acceleration (with
interest on all such overdue principal and prepayment charge, if
any, and, to the extent permitted by law, on overdue payments of
interest, at the applicable rate per annum provided for in the
Notes or this Agreement in respect of overdue amounts of
principal, prepayment charge and interest), and all Events of
Default (other than nonpayment of principal of, Prepayment
Premium (if any) and accrued interest on the Notes, due and
payable solely by virtue of acceleration) shall be remedied or
waived pursuant to Section 14.1, then, and in every such case,
the Majority Holders, by written notice to the Company, may
rescind and annul any such acceleration and its consequences with
respect to the Notes; but no such action shall affect any
subsequent Default or Event of Default or impair any right
consequent thereon.
Section 11.2. Suits for Enforcement {tc "Section 11.2.
Suits for Enforcement" \f C \l 2}. If any Event of Default
shall have occurred and be continuing, the Purchaser may, with
respect to the Notes, proceed to protect and enforce the
respective rights of the holders of such Notes, either by suit in
equity or by action at law, or both, whether for the specific
performance of any covenant or agreement contained in this
Agreement or in aid of the exercise of any power granted in this
Agreement, and may proceed to enforce the payment of all sums due
upon such Notes, and such further amounts as shall be sufficient
to cover the costs and expenses of collection (including, without
limitation, reasonable counsel fees and disbursements), or to
enforce any other legal or equitable right of the holder of such
Notes.
Section 11.3. Remedies Cumulative{tc "Section 11.3.
Remedies Cumulative" \f C \l 2}. No remedy conferred in
this Agreement or the Notes upon the Purchaser, is intended to be
exclusive of any other remedy and each and every such remedy
shall be cumulative and shall be in addition to every other
remedy given hereunder or now or hereafter existing at law or in
equity or otherwise.
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Section 11.4. Remedies Not Waived{tc "Section 11.4.
Remedies Not Waived" \f C \l 2}. No course of dealing
between the Company and no delay or failure in exercising any
rights hereunder or under such Note, shall operate as a waiver of
any of the rights of the Purchaser or of the holder of any Note.
Section 12. Registration, Exchange, and Transfer of
Notes{tc "Section 12. Registration, Exchange, and Transfer of
Notes" \f C \l 1}. The Company will keep at its principal
executive office a register, in which, subject to such reasonable
regulations as it may prescribe, but at its expense (other than
transfer taxes, if any), the Company will provide for the
registration and transfer of Notes. Whenever any Note or Notes
shall be surrendered either at the principal executive office of
the Company, or at the place of payment named in the Note, for
transfer or exchange, accompanied (if so required by the Company)
by a written instrument of transfer in form reasonably
satisfactory to the Company duly executed by the holder thereof
or by such holder's attorney duly authorized in writing, and such
other documentation and information as the Company shall
reasonably request as necessary in connection with such transfer
or exchange, the Company will execute and deliver in exchange
therefor a new Note or Notes in such denominations as may be
requested by such holder, of like tenor and in the same aggregate
unpaid principal amount as the aggregate unpaid principal amount
of the Note or Notes so surrendered. Any Note issued in exchange
for any other Note or upon transfer thereof shall carry the
rights to unpaid interest and interest to accrue which were
carried by the Note so exchanged or transferred, and neither gain
nor loss of interest shall result from any such transfer or
exchange. Any transfer tax or governmental charge relating to
such transaction shall be paid by the holder requesting the
exchange. The Company and any of its agents may treat the Person
in whose name any Note is registered as the sole and exclusive
record and beneficial holder and owner of such Note for the
purpose of receiving payment of the principal of, prepayment
charge (if any) and interest and other amounts on such Note and
for all other purposes whatsoever, whether or not such Note be
overdue.
Section 13. Lost, Stolen, Damaged and Destroyed
Notes{tc "Section 13. Lost, Stolen, Damaged and Destroyed
Notes" \f C \l 1}. At the request of any holder of any Note, the
Company will issue and deliver at its expense, in replacement of
any Note or Notes lost, stolen, damaged or destroyed, upon
surrender thereof, if mutilated, a new Note or Notes in the same
aggregate unpaid principal amount, and otherwise of the same
tenor, as the Note or Notes so lost, stolen, damaged or
destroyed, duly executed by the Company. The Company may
condition the replacement of a Note or Notes reported by the
holder thereof as lost, stolen, damaged or destroyed, upon the
receipt from such holder of an indemnity and/or security
reasonably satisfactory to the Company; provided that if such
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holder shall be the Purchaser or its nominee, the Purchaser's
unsecured agreement of indemnity shall be sufficient for purposes
of this Section.
Section 14. Miscellaneous{tc "Section 14.
Miscellaneous" \f C \l 1}.
Section 14.1. Amendment and Waiver{tc "Section 14.1.
Amendment and Waiver" \f C \l 2}. (a) Any term, covenant,
agreement or condition of this Agreement or of the Notes may,
with the written consent of the Company, be amended, or
compliance therewith may be waived (either generally or in a
particular instance and either retroactively or prospectively),
by one or more substantially concurrent written instruments
signed by the Majority Holders, except that
(i) without the specific prior written consent of
the holders of all of the Notes at the time
outstanding, no such amendment or waiver shall (A)
reduce the principal of, or the rate of interest on, or
the amount of any applicable Prepayment Premium with
respect to, any of the Notes, (B) subject to the
provisions of the last paragraph of Section 11.1,
extend the time of payment of all or any portion of the
principal of or interest on or any Prepayment Premium
payable with respect to any of the Notes, (C) modify
any of the provisions of this Agreement or of the Notes
with respect to the payment or prepayment (whether
mandatory or optional) of the principal thereof,
interest thereon, or Prepayment Premium with respect
thereto, (D) reduce the percentage of Notes required
with respect to any such amendment or to effectuate any
such waiver, (E) alter the definition of the term
"Majority Holders" or (F) modify any provision of this
Section; and
(ii) no such waiver shall extend to or affect any
obligation not expressly waived or impair any right
consequent thereon.
(b) Any amendment or waiver pursuant to subsection (a)
of this Section 14.1 shall apply equally to all holders of the
Notes at the time outstanding and shall be binding upon them,
upon each future holder of any Note, and upon the Company, in
each case whether or not a notation thereof shall have been
placed on any Note.
(c) Notwithstanding any other provision contained in
this Section 14.1 or elsewhere in this Agreement to the contrary,
Notes which at any time are held by the Company or by any
Subsidiary or Affiliate of the Company shall not be deemed
outstanding for purposes of any vote, consent, approval, waiver
or other action required or permitted to be taken by the holders
of Notes, or by any of them, under the provisions of this Section
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14.1 or Section 11 of this Agreement, and neither the Company nor
any such Subsidiary or Affiliate shall be entitled to exercise
any right as a holder of Notes with respect to any such vote,
consent, approval or waiver or to take or participate in taking
any such action at any time.
(d) So long as any Notes remain outstanding, the
Company will not solicit, request or negotiate for or with
respect to any proposed consent with respect to, or waiver or
amendment of, any of the provisions of this Agreement or the
Notes unless each holder of Notes (irrespective of the amount of
Notes then owned by it) shall be informed thereof by the Company
and shall be afforded the opportunity of considering the same and
shall be supplied by the Company with sufficient information to
enable it to make an informed decision with respect thereto. The
Company will not, directly or indirectly, pay or cause to be paid
any remuneration, whether by way of supplemental or additional
interest, fee or otherwise, to any holder of Notes as
consideration for or as an inducement to the entering into by any
holder of Notes of any amendment, waiver or consent with respect
to any of the terms and provisions of this Agreement or the Notes
unless such remuneration is currently paid, on the same terms,
ratably to the holders of all Notes then outstanding.
Section 14.2. Expenses{tc "Section 14.2. Expenses"
\f C \l 2}. The Company agrees, whether or not the transactions
hereby contemplated shall be consummated, to pay and save the
Purchaser and any other holder of Notes harmless against any and
all liability for the payment of all reasonable out-of-pocket
expenses arising in connection with this Agreement, the Notes,
the Warrants, the Registration Rights Agreement, any other
agreements, instruments or documents executed pursuant thereto or
in connection therewith, and the transactions hereby
contemplated, including without limitation all such expenses
incurred with respect to the enforcement of any provision of any
such agreement, instrument or document, all expenses incurred in
connection with the reproduction of such agreements, instruments
and documents and all stamp and other similar taxes (together in
each case with interest and penalties, if any) which may be
payable in respect of the execution and delivery of such
agreements, instruments and documents, or the issuance, delivery
or acquisition by the Purchaser of any Note or Warrant or
otherwise pursuant to this Agreement, the fees and disbursements
of Stroock & Stroock & ▇▇▇▇▇ LLP and of any special or local
counsel in connection with the preparation of such agreements and
instruments and the transactions hereby and thereby contemplated,
and the fees and disbursements of the Accountants. The Company
also agrees to pay all expenses incurred by the Purchaser or any
other holder of Notes or Warrants (including reasonable counsel
fees and disbursements) in connection with any amendment or
requested amendment of, or waiver or consent or requested waiver
or consent under or with respect to, this Agreement, the Notes,
the Warrants, the Registration Rights Agreement, or any of such
other agreements, instruments or documents, whether or not the
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same shall become effective, and all expenses incurred by the
Purchaser or any other holder of Notes or Warrants (including
reasonable counsel fees and disbursements and the reasonable
fees, expenses and disbursements of an investment bank or other
firm acting as financial advisor to the holders of Notes or
Warrants) following the occurrence and during the continuance of
any Default or Event of Default or incident to the negotiation of
any workout, restructuring or similar arrangement relating to the
Company or its Subsidiaries. The obligations of the Company
under this Section 14.2 shall survive the payment or transfer of
any Note or Warrant (including, without limitation, the payment
or prepayment of the Notes in full and the exercise of the
Warrants), the enforcement of any provision hereof or thereof,
any such amendments, waivers or consents, any such Default or
Event of Default, and any such workout, restructuring or similar
arrangement.
Section 14.3. Survival of Representations and
Warranties{tc "Section 14.3. Survival of Representations and
Warranties" \f C \l 2}. All representations and warranties
contained herein or made in writing by or on behalf of any party
to this Agreement or otherwise in connection herewith, shall (i)
survive the execution and delivery of this Agreement and the
Registration Rights Agreement and the delivery of the Notes and
Warrants to the Purchaser and shall continue in effect as long as
any of the Notes or Warrants is outstanding, and thereafter as
provided in Sections 14.2 and 14.6 with respect to the
obligations imposed thereunder, and (ii) be deemed to be material
and to have been relied upon by the Purchaser, regardless of any
investigation made by the Purchaser or on its behalf.
Section 14.4. Successors and Assigns; Limitation on
Transfer{tc "Section 14.4. Successors and Assigns; Limitation
on Transfer" \f C \l 2}. (a) All representations, warranties,
covenants and agreements in this Agreement made by or on behalf
of any of the parties hereto shall bind and inure to the benefit
of the respective successors and assigns of the parties hereto
whether so expressed or not, except that the Purchaser shall not
be obligated to purchase any Note or Warrant from any issuer
other than the Company. The provisions of this Agreement are
intended to be for the benefit of all holders, from time to time,
of any Notes or Warrants purchased pursuant hereto, and shall be
enforceable by any such holder, whether or not an express
assignment to such holder of rights under this Agreement has been
made by the Purchaser or any of its successors or assigns.
(b) Notwithstanding any other provision of this
Agreement to the contrary, without the prior written consent of
the Company, neither the Purchaser nor any other holder of Notes
shall transfer any Notes to any Person unless the aggregate
principal amount of Notes concurrently transferred to such Person
(taken together with any concurrent transfers of Notes by the
transferor or its Control Affiliates to the transferee or its
Control Affiliates) shall be not less than the lesser of (i)
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$1,000,000, or (ii) the entire remaining principal balance of the
Notes held by such transferor; provided that nothing in this
subsection (b) shall be deemed to prohibit any transfer of Notes
by any Person to (x) any Control Affiliate of such Person or (y)
any Person who immediately prior to such transfer is a holder of
Notes or a Control Affiliate of a holder of Notes; provided,
further, that no transfer of Notes shall be permitted if,
immediately after giving effect to such transfer, there would be
more than five holders of Notes (provided that, solely for the
purposes hereof, a Person and all of such Person's Control
Affiliates shall be counted as a single holder of Notes).
Section 14.5. Notices{tc "Section 14.5. Notices"
\f C \l 2}. All notices hereunder shall be in writing and shall
be conclusively deemed to have been received and shall be
effective (a) on the day on which delivered if delivered
personally or transmitted by telecopier, (b) one Business Day
after the date on which the same is delivered to a nationally
recognized overnight courier service, or (c) three Business Days
after being sent by registered or certified United States mail,
return receipt requested, and shall be addressed:
(i) in the case of the Company, to:
Meridian Medical Technologies, Inc.
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇;
with a copy (which shall not constitute
notice) to:
▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇;
(ii) in the case of the Purchaser, to:
Nomura Holding America Inc.
2 World Financial ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇, or his authorized
representative
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Nomura Holding America Inc.
2 World Financial ▇▇▇▇▇▇, ▇▇▇▇. ▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
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658180v11
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇;
or at such other address and/or telecopy number and/or to the
attention of such other Person as any of such Persons shall have
advised the others by notice in the manner herein specified.
Section 14.6. Indemnification{tc "Section 14.6.
Indemnification" \f C \l 2}. In consideration of the
execution and delivery of this Agreement by the Purchaser, the
Company hereby agrees to defend, indemnify, exonerate and hold
harmless the Purchaser, each holder of Notes, and each of their
respective officers, directors, stockholders, affiliates,
trustees, employees and agents, and each other Person, if any,
controlling such Purchaser or holder of Notes or any of its
respective Affiliates (herein collectively called the
"Indemnitees") from and against any and all liabilities,
obligations, losses, damages, claims, actions, suits,
proceedings, judgments, costs and expenses, including, without
limitation, legal fees and other expenses incurred in the
investigation, defense, appeal and settlement of claims, actions,
suits and proceedings (herein collectively called the
"Indemnified Liabilities"), incurred by the Indemnitees or any of
them as a result of, or arising out of or relating to:
(i) the execution, delivery, performance or
enforcement of this Agreement, the Notes, the Warrants,
the Registration Rights Agreement or any other
instrument or document contemplated hereby or thereby
by any of the Indemnitees, or any act, event or
transaction related or attendant thereto or
contemplated hereby or thereby, or any action or
inaction by any Indemnitee under or in connection
therewith, or
(ii) any Environmental Matter, any violation or
alleged violation by the Company or any of its
Subsidiaries of any Environmental Law or the actual or
alleged existence, or release by the Company or any of
its Subsidiaries, of any Hazardous Material that
affects the Company, any of its Subsidiaries, or their
respective operations or Properties,
except for any such Indemnified Liabilities that are finally
judicially determined (or acknowledged by the respective
Indemnitee in writing) to have resulted from the respective
Indemnitee's gross negligence or willful misconduct, and if and
to the extent that the foregoing undertaking may be unenforceable
for any reason, the Company hereby agrees to make the maximum
contribution to the payment and satisfaction of each of the
Indemnified Liabilities which is permissible under applicable
law. The obligations of the Company under this Section 14.6
shall be in addition to any liability that the Company may
otherwise have and shall survive the payment or prepayment in
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658180v11
full or transfer of any Note or Warrant and the enforcement of
any provision hereof or thereof.
Section 14.7. Public Announcements{tc "Section 14.7.
Public Announcements" \f C \l 2}. The Company agrees that
it will not issue any press release or make any other public
announcement, statement or filing with regard to this Agreement,
the Notes, the Warrants, the Registration Rights Agreement or the
transactions hereby or thereby contemplated without the prior
approval of the Majority Holders, which approval shall not be
unreasonably withheld and shall in no event be withheld in any
case where such press release, public announcement, statement or
filing is required by applicable law (including applicable rules
and regulations of the SEC).
Section 14.8. No Fiduciary Relationship{tc "Section
14.8. No Fiduciary Relationship" \f C \l 2}. The Purchaser
shall not, by reason of its purchase or holding of Notes or
Warrants pursuant to this Agreement, be deemed to have any
fiduciary or other special relationship with the Company or any
of its Subsidiaries. No provision of this Agreement, the Notes,
the Warrants, the Registration Rights Agreement or any of the
other documents executed and delivered in connection herewith
shall be construed to create a fiduciary duty on the part of the
Purchaser, any holder of Notes or any trustee or agent therefor
in favor of the Company, any of its Subsidiaries or Affiliates,
or their respective directors, officers, employees, agents,
stockholders or creditors.
Section 14.9. Confidentiality{tc "Section 14.9.
Confidentiality" \f C \l 2}. Each holder of Notes agrees to
use reasonable efforts (in accordance with its customary
procedures with respect to the treatment of confidential
information) not to disclose, or use for any purpose other than
in connection with its investment in the Notes or the Warrants,
without the prior written consent of the Company, any information
with respect to the Company or any of its Subsidiaries which is
furnished by the Company pursuant to or in connection with the
transactions contemplated by this Agreement, provided that such
holder may disclose any such information (a) as has become
generally available to the public (other than through disclosure
by such holder in contravention of this Agreement), (b) to such
holder's directors, trustees, partners, officers, employees,
agents and professional consultants, (c) to any other holder of
Notes, (d) to any Person to which such holder offers to sell or
transfer any Note or any part thereof or participation therein,
provided that the prospective transferee shall agree to be bound
by the provisions of this Section 14.9, (e) in any report,
statement, testimony or other submission to any Governmental Body
having or claiming to have jurisdiction over such holder, and (f)
in order to comply with any Statute or Order applicable to such
holder, or in response to any summons, subpoena or other legal
process or formal or informal investigative demand issued to such
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658180v11
holder in the course of any litigation, investigation or
administrative proceeding.
Section 14.10. Integration and Severability{tc
"Section 14.10. Integration and Severability" \f C \l 2}.
This Agreement (including the schedules and exhibits thereto),
the Notes, the Warrants, the Registration Rights Agreement and
the other documents executed pursuant to this Agreement embody
the entire agreement and understanding between the Purchaser and
the Company, and supersede all prior agreements and
understandings relating to the subject matter hereof. In case
any one or more of the provisions contained in this Agreement,
the Notes, the Warrants, the Registration Rights Agreement or any
other agreement, instrument or document executed in connection
therewith, or any application thereof, shall be invalid, illegal
or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein and
therein, and any other application thereof, shall not in any way
be affected or impaired thereby.
Section 14.11. Counterparts{tc "Section 14.11.
Counterparts" \f C \l 2}. This Agreement may be executed in
two or more counterparts, each of which shall be deemed an
original but all of which shall together constitute one and the
same instrument.
Section 14.12. Governing Law{tc "Section 14.12.
Governing Law" \f C \l 2}. THIS AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK.
Section 14.13. Submission to Jurisdiction; Waiver of
Service and Venue{tc "Section 14.13. Submission to
Jurisdiction: Waiver of Service and Venue" \f C \l 2}. (a) EACH
OF THE COMPANY, THE PURCHASER AND EACH OTHER HOLDER OF NOTES
CONSENTS AND AGREES TO THE JURISDICTION OF ANY STATE OR FEDERAL
COURT SITTING IN THE COUNTY OF NEW YORK, STATE OF NEW YORK,
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY
OBJECTION BASED ON VENUE OR FORUM NON CONVENIENS WITH RESPECT TO
ANY ACTION INSTITUTED THEREIN, AND AGREES THAT, EXCEPT UPON THE
WRITTEN CONSENT OF THE MAJORITY HOLDERS, ANY DISPUTE CONCERNING
THE RELATIONSHIP BETWEEN THE PURCHASER OR ANY OTHER HOLDER OF
NOTES, ON THE ONE HAND, AND THE COMPANY, ON THE OTHER HAND, OR
THE CONDUCT OF ANY PARTY IN CONNECTION WITH THIS AGREEMENT OR
OTHERWISE, SHALL BE HEARD ONLY IN THE COURTS DESCRIBED ABOVE.
(b) THE COMPANY HEREBY WAIVES PERSONAL SERVICE OF ANY
AND ALL PROCESS UPON IT AND CONSENTS THAT ALL SUCH SERVICE OF
PROCESS MAY BE MADE BY HAND DELIVERY TO THE COMPANY AT ITS
ADDRESS SET FORTH ABOVE IN SECTION 14.5, OR, AT THE OPTION OF THE
MAJORITY HOLDERS, BY SERVICE UPON CT CORPORATION, WHICH THE
COMPANY IRREVOCABLY APPOINTS AS ITS AGENT FOR THE PURPOSE OF
ACCEPTING SERVICE OF PROCESS WITHIN THE STATE OF NEW YORK. IN
ADDITION, THE PURCHASER AND EACH OTHER HOLDER OF NOTES AGREES TO
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658180v11
PROMPTLY FORWARD BY REGISTERED MAIL ANY PROCESS SO SERVED UPON
SAID AGENT TO THE COMPANY AT ITS ADDRESS SET FORTH ABOVE IN
SECTION 14.5. THE COMPANY HEREBY CONSENTS TO SERVICE OF PROCESS
AS AFORESAID.
(c) NOTHING IN THIS SECTION 14.13 SHALL AFFECT THE
RIGHT OF THE PURCHASER OR ANY OTHER HOLDER OF NOTES TO SERVE
LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR AFFECT THE
RIGHT OF THE PURCHASER OR ANY OTHER HOLDER OF NOTES (UPON THE
CONSENT OF THE MAJORITY HOLDERS AS PROVIDED IN SECTION 14.13(a))
TO BRING ANY ACTION OR PROCEEDING AGAINST THE COMPANY OR ITS
PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION.
Section 14.14. Waiver of Right to Trial by Jury{tc
"Section 14.14. Waiver of Right to Trial by Jury" \f C \l 2}.
EACH OF THE COMPANY AND THE PURCHASER HEREBY WAIVES ANY RIGHT TO
TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (I)
ARISING UNDER THIS AGREEMENT, ANY NOTE OR ANY OTHER INSTRUMENT,
DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION
HEREWITH OR (II) IN ANY WAY CONNECTED WITH OR RELATED OR
INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM
IN RESPECT TO THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR
AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH OR THE
TRANSACTIONS RELATED HERETO, IN EACH CASE WHETHER NOW EXISTING OR
HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR
OTHERWISE. THE COMPANY AND THE PURCHASER HEREBY AGREE AND
CONSENT THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION
SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT ANY PARTY
MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS AGREEMENT WITH
ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES
HERETO TO THE WAIVER OF THEIR RIGHTS TO TRIAL BY JURY.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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658180v11
IN WITNESS WHEREOF, the Company and the Purchaser have
executed this Agreement by their duly authorized officers as of
the date first written above.
MERIDIAN MEDICAL TECHNOLOGIES, INC.
By:
Its:
NOMURA HOLDING AMERICA INC.
By:
Its:
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658180v11
