Exhibit 4.8
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CONSENT, AGREEMENT AND AMENDMENT
CONSENT, AGREEMENT AND AMENDMENT, dated as of December
3, 1999, by and among TOUCHSTONE APPLIED SCIENCE ASSOCIATES,
INC., a Delaware corporation (the "Company"), XXXXXX, XXXXXXX
STRATEGIC PARTNERS FUND, L.P., a limited partnership organized
under the laws of the State of Delaware, and STRATEGIC
ASSOCIATES, L.P., a limited partnership organized under the
laws of the State of Delaware (each, a "Purchaser", and
collectively, the "Purchasers").
W I T N E S S E T H:
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WHEREAS, the Company and the Purchasers entered into
that certain Securities Purchase Agreement, dated as of
September 4, 1998 (the "Agreement"), pursuant to which the
Purchasers purchased from the Company, and the Company issued
and sold to the Purchasers, the debentures and warrants
described therein;
WHEREAS, the Company, the Purchasers and certain
individual shareholders of the Company entered into that
certain Investor Rights Agreement, dated as of September 4,
1998 (the "Investor Rights Agreement"), pursuant to which the
parties thereto agreed to certain restrictions with respect to
their ownership of shares of the Company's Common Stock and
the operation of the Company's business;
WHEREAS, in connection with acquisitions proposed to be
undertaken by the Company and disclosed to the Purchasers, the
Company has requested certain consents of the Purchasers
pursuant to the Agreement and the Investor Rights Agreement,
and the Purchasers have agreed to give such consents, on the
terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing and
of the mutual covenants and agreements set forth herein, the
parties hereto agree as follows:
1. Definitions. Capitalized terms used herein and
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not otherwise defined herein, shall have the same respective
meanings as in the Agreement.
2. Proposed Transactions. The Company has disclosed
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to the Purchasers the following transactions (the "Proposed
Transactions"), and the Purchasers hereby acknowledge and agree
that the Company has disclosed to the Purchasers and discussed
with them the Proposed Transactions as follows:
a. the Company (or a wholly-owned subsidiary of the
Company) proposes to acquire the Xxxxxx Schools;
b. the Company may be required to incur indebtedness
in connection with the foregoing acquisitions; and
c. the Company will obtain a line of credit in the
amount of $750,000 from Xxxxxx United Bank or equivalent
institution (the "Line of Credit").
3. Consent and Agreement. In consideration of the
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agreements of the Company contained in this Consent and
Agreement, the Purchasers hereby consent and agree:
a. to the Company's negotiation and closing of the
Proposed Transactions;
b. that the consummation of the Proposed Transactions
will not constitute a default by the Company under
Section 5.6 of the Investor Rights Agreement or under
Sections 8.9(b), 8.9(c) or 10.1 of the Agreement;
c. that, in connection with the Proposed
Transactions, (i) the financing to be obtained by the
Company in connection with the acquisitions of the
Xxxxxx Schools and the Worldwide Schools and the Line
of Credit shall constitute "Senior Indebtedness" (as
such term is defined in the Debentures), and the
Debentures shall be expressly subordinate to, and
junior in right of payment to, the prior payment in
full of all principal of and interest on all Senior
Indebtedness (including the aforementioned indebtedness
and line of credit), and (ii) the Company and its
subsidiaries may, if required by the financial
institutions providing the financing for the Proposed
Transactions or in connection with the Line of Credit,
grant security interests in the receivables of the
Company or its subsidiaries; and
d. that the calculation of the Company's compliance
with the One Million Dollar Debt Basket pursuant to
Section 10.1(i) of the Agreement shall not include (i)
any indebtedness, whether secured or unsecured, assumed
by the Company or its subsidiaries in connection with
the Proposed Transactions, (ii) indebtedness of the
acquired companies in the Proposed Transactions
existing on the date of the closing of the Proposed
Transactions, (iii) indebtedness incurred by the
Company or its subsidiaries in order to consummate the
Proposed Transactions, or (iv) the Line of Credit.
4. Agreements of the Company. In consideration of
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the foregoing, the Company hereby agrees as follows:
a. the Exercise Price of the Warrants shall be
reduced from $1.40 per share (the existing Exercise
Price post-reverse stock split in March 1999) to $1.125
per share (the closing price of the Company's Common
Stock on the date hereof), and the term "Exercise
Price" as used in the Agreement, shall hereinafter be
amended to mean $1.125 per share;
b. the Company shall issue an amendment to each of
the Warrants amending Section 1 of each such Warrant to
substitute $1.125 as the Exercise Price of the
Warrants; and
c. the Company shall issue an amendment to each of
the Debentures amending (i) Section 1(c) of each such
Debenture to substitute $1.125 as the Exercise Price
for the Warrants; and (ii) Section 12(b) of each such
Debenture to amend the definition of "Senior
Indebtedness" as contemplated by Section 3(c) hereof.
5. No Other Amendments. Except as set forth in this
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Consent, Amendment and Agreement or as contemplated
hereby, the provisions of the Agreement, the Investor
Rights Agreement, the Warrants and the Debentures shall
continue in full force and effect and unmodified as of
the date hereof.
6. Governing Law. This Consent, Amendment and
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Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
7. Counterparts. This Consent, Amendment and
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Agreement may be executed in two or more counterparts,
each of which shall constitute an original and all of
which, taken together, shall constitute one and the
same instrument.
IN WITNESS WHEREOF, this Consent, Amendment and
Agreement has been executed as of the date first written
above.
TOUCHSTONE APPLIED SCIENCE ASSOCIATES, INC.
By /s/ XXXXXX X. XXXXX
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Xxxxxx X. Xxxxx
President
XXXXXX, XXXXXXX STRATEGIC PARTNERS FUND, L.P.
By XXXXXX XXXXXXX STRATEGIC PARTNERS, L.P.
General Partner
By /s/ XXXXX X. XXXXXXX
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STRATEGIC ASSOCIATES, L.P.
By XXXXXX, XXXXXXX & COMPANY, LLC, its
General Partner
By /s/ XXXXX X. XXXXXXX
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