Exhibit 10.22
NOTE AGREEMENT
GP Strategies Corporation
9 West 57th Street
New York, New York 10019
6% Convertible Exchangeable Subordinated Notes
Due June 30, 2003
June 30, 2000
To each of the Purchasers of the above Notes listed in the Schedule of
Purchasers attached hereto as Schedule 1:
Gentlemen:
GP Strategies Corporation, a Delaware corporation (the "Company"), hereby
agrees with you (each herein called a "Purchaser" and together, the
"Purchasers") as follows:
1. AUTHORIZATION OF NOTES: The Company will authorize the issue and sale of
(i) up to $2,640,000 in aggregate principal amount of its 6% Convertible
Exchangeable Notes due June 30, 2003 (the "Notes"). Each Note issued hereunder
will be dated the date purchased by you hereunder, will mature on June 30, 2003,
will bear interest on its unpaid principal balance from the date of issuance at
the rate of 6% per annum, payable quarterly on September 30, December 31, March
31, and June 30 each year, and upon any conversion or exchange of a Note (or, if
less than all of the principal amount of a Note is converted or exchanged, the
portion of accrued and unpaid interest corresponding to the portion of principal
of such Note converted or exchanged) (an "Interest Payment Date"), commencing on
September 30, 2000 and continuing to June 30, 2003, and thereafter shall bear
interest on its unpaid principal balance at the rate of 12% per annum, payable
quarterly on each Interest Payment Date; provided, however, the Company, at its
option may defer the interest payment that is otherwise due and payable on
September 30, 2000, December 31, 2000, March 31, 2001 and June 30, 2001, to
September 30, 2001, at which date it shall be due and payable together with
interest on the deferred amount at the rate of 6% per annum compounded
quarterly; provided, however, that if a Senior Obligations Default exists or the
payment of any deferred interest due on September 30, 2001, would cause a Senior
Obligations Default, the Company, in accordance with the provisions of Section
9.1(b), may further defer payment of such interest until the next Interest
Payment Date on which payment of such interest would not cause a Senior
Obligations Default at which date it shall be due and payable together with
interest on the deferred amount at the rate of 6% per annum compounded
quarterly. The Notes will have the other terms and provisions provided herein
and in the form of Note attached hereto as Exhibit A, with such changes
therefrom, if any, as may be approved by you and the Company. The term "Note" or
"Notes" as used herein shall include each Note delivered pursuant to any
provision of this Agreement and each Note delivered in substitution or exchange
for any such Note pursuant to any such provision. Certain capitalized terms used
in this Agreement are defined in Section 15.
2. PURCHASE AND SALE OF NOTES. The Company will issue and sell to you and,
subject to the terms and conditions of this Agreement, you will purchase from
the Company, at the Closing provided for in Section 3, the principal amount of
Notes specified opposite your name in the Schedule of Purchasers at the purchase
price of 100% of the principal amount or value thereof.
3. CLOSING. The sale of the Notes to be purchased by you will take place at
the offices of Sanders Morris Harris Inc., 126 East 56th Street, 24th Floor, New
York, New York 10022 at 10:00 a.m., New York Time, at a closing (the "Closing
Date") to occur not later than July 14, 2000, or such other Business Day
thereafter as may be agreed upon by the Purchasers and the Company. The date of
the Closing is referred to herein as the "Closing Date."
At the Closing, the Company will deliver to you the Notes to be purchased
by you in the form of one Note (or such greater number of Notes as you may
request in denominations of not less than $1,000.00 per note and integral
multiples thereof and a minimum principal amount of $10,000 unless otherwise
agreed to by the Company), each Closing Date and registered in your name (or in
the name of your nominee as indicated on the Schedule of Purchasers or otherwise
made known in writing by you to the Company prior to the Closing Date), against
delivery by you to the Company or its order of immediately available funds in
the amount of the purchase price therefor.
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents
and warrants to you that:
4.1. Organization, Qualification, Standing, Capital Stock, etc. The Company
and each of its Subsidiaries is a corporation duly organized, validly existing
and in good standing under the laws of its jurisdiction of incorporation, has
the corporate power to own its properties and to carry on its businesses as the
same are now being conducted and is duly qualified to do business and is in good
standing in each jurisdiction in which the character of the properties owned by
it or the nature of its businesses makes such qualification necessary, except
where the failure to so qualify would not result in a Material Adverse Change.
The authorized capital stock of the Company consists of 25,000,000 shares of
common stock, $0.01 par value per share, of which 11,341,294 shares are issued
and outstanding; 2,800,000 shares of class B capital stock, $0.01 par value, of
which 800,000 shares are issued and outstanding; and 10,000,000 shares of
Preferred Stock, $0.01 par value per share, of which no shares are issued and
outstanding. All of such outstanding shares have been validly issued and are
fully paid and nonassessable. The Company has reserved (i) 1,150,000 shares of
common stock for issuance upon conversion of the class B capital stock, (ii)
3,062,330 shares of common stock for issuance pursuant to outstanding stock
options, (iii) 350,000 shares of class B capital stock for issuance pursuant to
outstanding stock options, (iv) 83,333 shares of common stock for issuance upon
exercise of warrants, and (v) 10,000 shares of Series A Junior Participating
Preferred Stock reserved for issuance pursuant to a Rights Agreement between the
Company and Harris Trust Company of New York, as Rights Agent, dated as of June
23, 1997, as amended. Except as stated on Schedule 4.1 and in this Section 4.1,
the Company has not reserved any additional shares for issuance (except as
expressly required by this Agreement) and has not issued any shares of its
Common Stock. Except for those described in the second preceding sentence, there
are not outstanding, nor is the Company subject to any agreement, arrangement,
or understanding under which there may become outstanding, any option, warrant,
or other right to purchase or subscribe to, or any security convertible into or
exchangeable for, any shares of capital stock of any class of the Company. The
Company's material Subsidiaries (the "Material Subsidiaries") are identified on
Schedule 4.1 and such Schedule correctly states the jurisdiction of organization
and the extent of the Company's ownership of outstanding voting securities of
each such Material Subsidiary. All such voting securities are owned by the
Company free and clear of any liens, claims or encumbrances of any nature except
for a lien in favor of the Banks. No Material Subsidiary is a party to, or
otherwise subject to any legal restriction or any agreement restricting the
ability of such Material Subsidiary to pay dividends out of profits or make any
other similar distributions of profits to the Company or any Material Subsidiary
that owns outstanding shares or capital stock or similar equity interests of
such Material Subsidiary.
4.2. Due Authorization and Compliance with Other Instruments. This
Agreement and the Notes have been duly and validly authorized by all requisite
corporate proceedings and this Agreement constitutes, and the Notes when
executed and delivered will be, valid and legally binding obligations of the
Company enforceable against the Company in accordance with their terms except as
enforceability is limited by bankruptcy, insolvency, reorganization, moratorium,
or other laws relating to or affecting generally the enforcement of creditors'
rights and except to the extent that availability of equitable remedies is
subject to the discretion of courts before which any proceeding therefor may be
brought. The shares of Common Stock to be issued to you upon conversion of the
Notes have been authorized for issuance, are not subject to any preemptive or
similar rights on the part of any holder or holders of shares of capital stock
of the Company and, when issued, will be validly issued, fully paid and
nonassessable. Neither the authorization, execution and delivery of this
Agreement or the Notes, the consummation of the transactions herein and therein
contemplated, nor the fulfillment of or compliance with the terms hereof and
thereof, (a) will conflict with or result in a breach of any (i) of the terms of
the charter or by-laws, (ii) material statute, law, rule or regulation, (iii)
judgment, decree, writ, injunction, order or award of any arbitrator, court or
governmental authority, (iv), except as disclosed on Schedule 4.2, indenture,
mortgage, deed of trust, loan, purchase, or credit agreement, lease, or other
instrument, which is applicable to the Company or its Material Subsidiaries or
by which the Company or any Material Subsidiary is bound, or (b) result in the
imposition of any lien upon any of the properties or assets of the Company or
its Material Subsidiaries, except in the cases of clauses (a)(ii), (iii), (iv)
for any such conflicts or breaches that are not individually or in the aggregate
reasonably expected to result in a Material Adverse Change.
4.3. Financial Statements, Subsequent Changes, etc. The Form 10-K, one or
more copies of which have been furnished to you, contains consolidated balance
sheets of the Company and its consolidated Subsidiary, and the consolidated
statements of income, stockholders' equity, and cash flows of the Company and
its consolidated Subsidiaries for each of the years ended December 31, 1997,
1998, and 1999, including notes thereto, and the opinion of KPMG LLP,
independent certified public accountants with respect to such financial
statements. The Form 10-Q, one or more copies of which have been furnished to
you, contains the unaudited consolidated balance sheet of the Company and its
consolidated Subsidiaries at, and the unaudited consolidated statements of
income, stockholders' equity, and cash flows of the Company and its consolidated
Subsidiaries for the three month period ended March 31, 2000. All of the
foregoing financial statements are complete and correct in all material respects
and fairly present in all material respects the consolidated financial condition
of the Company and its consolidated Subsidiaries at the respective dates of said
balance sheets and the consolidated results of operations of the Company and its
consolidated Subsidiaries for the respective periods covered thereby, except
that unaudited interim financial statements were and are subject to normal and
recurring year-end adjustments. Such financial statements have been prepared in
accordance with generally accepted accounting principles applied on a consistent
basis throughout the periods involved (except as otherwise noted therein or as
permitted by Form 10-Q under the Exchange Act). Except as disclosed on Schedule
4.3, there has been no material change in the consolidated condition, financial
or otherwise, or operations of the Company and its consolidated Subsidiaries
since March 31, 2000, nor has the Company or any Material Subsidiaries, except
for the execution, delivery, and performance of this Agreement, incurred any
Indebtedness for borrowed money, incurred any material liability, contingent or
otherwise, except in the ordinary course of business (including acquisitions of
business and assets), or entered into any material commitment or other
transaction not in the ordinary course of business since such date.
4.4. Other Information as to the Company. Each of the documents filed by
the Company with the SEC since January 1, 1997 (the "SEC Filings"), complied
when filed in all material respects with the applicable requirements of the
Securities Act and the Exchange Act, as applicable, and did not contain any
untrue statement of a material fact or omit to state any material fact required
to be contained therein or necessary in order to make the statements therein not
misleading, except for matters otherwise corrected by subsequent filing with the
SEC of an amendment.. The shares of Common Stock of the Company are registered
under Section 12(b) of the Exchange Act and are listed on the New York Stock
Exchange.
4.5. Litigation. Except as disclosed in the SEC Filings or Schedule 4.5,
there is no action, suit or proceeding at law or in equity or by or before any
governmental instrumentality or agency or any arbitrator now pending or, to the
best of the Company's knowledge, threatened, against, or affecting the Company,
its Material Subsidiaries or any of their respective properties or rights,
which, if adversely determined, would be reasonable likely, either in any case
or in the aggregate, to result in a Material Adverse Change, or result in any
liability in excess of $1,000,000 not adequately covered by insurance, or for
which adequate reserves are not maintained on the Company's consolidated balance
sheet.
4.6. Franchises, Licenses, Trademarks, etc. Except as disclosed in the SEC
Filings or Schedule 4.6, each of the Company and the HMS division have all
franchises, permits, licenses and other authority as are necessary to enable it
to conduct its business as now conducted and as proposed to be conducted, and to
the best of the Company's knowledge, neither the Company nor the HMS division is
in default under any such franchises, permits, licenses or other authority,
except where any such default would not reasonably be expected to result in a
Material Adverse Change.
4.7. Burdensome and Conflicting Agreements and Violations of Charter
Provisions. To the best of the Company's knowledge, neither the Company nor any
Material Subsidiary is bound by any agreement or instrument or subject to any
charter or other corporate restriction that materially and adversely affects its
business, properties, operations, prospects or condition, financial or
otherwise. Except as disclosed on Schedule 4.7, the Company is not in violation
of its charter or by-laws or of any agreement or instrument by which it is
bound, or of any statute, law, rule or regulation, or of any judgment, decree,
writ, injunction, order or award of any arbitrator, court or governmental
authority applicable to it, in a manner that could reasonably be expected to
result in the imposition of substantial penalties or result in a Material
Adverse Change.
4.8. Consents and Approvals. The Company has obtained or made provisions to
obtain all material (a) governmental consents, approvals and authorizations, and
registrations and filings with governmental authorities, and (b) consents,
approvals, waivers and notifications of stockholders, creditors, lessors and
other non-governmental persons, in each case, in connection with the execution
and delivery of this Agreement and the Notes, and the consummation of the
transactions herein and therein contemplated.
4.9. Tax Returns and Payments. The Company and its Material Subsidiaries
have filed all required information and tax returns and reports and have paid,
or adequately provided for the payment of, all taxes, assessments and other
governmental charges that are material in amount imposed upon them or upon any
of their respective assets, income or franchises, other than any such charges
which are currently payable without penalty or interest. The charges, accruals
and reserves on the books of the Company and the Material Subsidiaries with
respect to taxes for all fiscal periods are adequate, in the opinion of the
Company, and neither the Company nor any Material Subsidiary knows of any actual
or proposed tax assessment that is material in amount for any fiscal period or
of any basis therefor against which adequate reserves have not been set up. The
Company has not been advised that any federal income tax or information return
of the Company or any Material Subsidiary has been, or will be, examined or
audited by the Internal Revenue Service.
4.10. Patents and Trademarks. The HMS division has sufficient title and
ownership of or exclusive licenses to all patents, trademarks, service marks,
trade names, copyrights, trade secrets, information, proprietary rights and
processes ("Intellectual Property") necessary for its business as now conducted
and as proposed to be conducted without any conflict with or infringement of the
rights of others. Except as set forth on Schedule 4.10, there are no outstanding
options, licenses, or agreements of any kind relating to the Intellectual
Property, nor is the Company or the HMS division bound by or a party to any
options, licenses or agreements of any kind with respect to the Intellectual
Property of any other person or entity, except, in either case, for standard
end-user, object code, internal-use software license and support/maintenance
agreements. The Company has not received any communications alleging that the
Company or the HMS division has violated or, by conducting its business as
proposed, would violate any of the Intellectual Property of any other person or
entity. The Company will cause each of the HMS division and HMS to use its
reasonable efforts to obtain any additional Intellectual Property that it may
require to operate its business as hereafter proposed to be conducted, prior to
conducting such business, except where the failure to obtain the same would not
have a Material Adverse Change.
4.11. Title to Property and Assets. The Company and each Material
Subsidiary owns its property and assets free and clear of all mortgages, liens,
loans and encumbrances, except for liens in favor of the Banks and such other
encumbrances and liens that arise in the ordinary course of business and do not
materially impair the Company's or a Subsidiary's ownership or use of such
property or assets. Except as disclosed on Schedule 4.11, with respect to the
property and assets they lease, the Company and each Material Subsidiary, to the
best of their knowledge, are in compliance with such lease and hold a valid
leasehold interest free of any liens, claims or encumbrances.
Since March 31, 2000, except for the potential disposition of the IT group
and as disclosed on Schedule 4.12, there has not been:
(a) any change in the assets, liabilities, financial condition or operating
results of the Company from that reflected in the Form 10-Q, except changes in
the ordinary course of business that have not resulted in a Material Adverse
Change;
(b) any damage, destruction or loss, whether or not covered by insurance,
that resulted in a Material Adverse Change;
(c) any waiver by the Company of a valuable right or of a material debt
owed to it;
(d) any satisfaction or discharge of any lien, claim or encumbrance or
payment of any obligation by the Company, except in the ordinary course of
business and that did not result in a Material Adverse Change;
(e) any sale, assignment or transfer of any patents, trademarks,
copyrights, trade secrets or other intangible assets other than the transfer of
the assets of the HMS division to HMS;
(f) any resignation or termination of employment of any key officer of the
HMS division; and the Company, to the best of its knowledge, does not know of
the impending resignation or termination of employment of any such officer;
(g) receipt of notice that there has been a loss of, or material order
cancellation by, any major customer of the HMS division;
(h) any mortgage, pledge, transfer of a security interest in, or lien,
created by the Company, with respect to any of its material properties or
assets, except liens for taxes not yet due or payable;
(i) any issuance of capital stock by the Company, any declaration, setting
aside or payment or other distribution in respect of any of the Company's
capital stock, or any direct or indirect redemption, purchase or other
acquisition of any of such stock by the Company; or
(j) any agreement or commitment by the Company to do any of the foregoing
things.
4.13. Significant Customers and Suppliers. Except as disclosed on Schedule
4.13, no customer or supplier that was significant to the HMS division during
the period covered by the financial statements referred to in Form 10-Q or that
has been significant to the HMS division thereafter, has terminated, materially
reduced or threatened to terminate or materially reduce its purchases from or
provision of products or services to the HMS division.
4.14. Environmental and Safety Laws. Except as disclosed on Schedule 4.14,
to the best of the Company's knowledge, neither the Company nor any Material
Subsidiary is in violation of any Applicable Law relating to the environment or
occupational health and safety that could reasonably be expected to result
either individually or in the aggregate in a Material Adverse Change, and to the
best of its knowledge, no material expenditures are or will be required in order
to comply with any such existing statute, law or regulation.
4.15. Compliance with ERISA Each Employee Benefit Plan is in compliance
with ERISA and the Code, where applicable, in all material respects, except
where non-compliance could not reasonably be expected to result in a Material
Adverse Change. As of the Closing Date, (i) the amount of all Unfunded Pension
Liabilities under the Pension Plans, excluding any plan that is a Multi-employer
Plan, does not exceed $250,000, and (ii) the amount of the aggregate
Unrecognized Retiree Welfare Liability under all applicable Employee Benefit
Plans does not exceed $250,000. The Company and each of its material
Subsidiaries and ERISA Affiliates has complied with the requirements of Section
515 of ERISA with respect to each Pension Plan that is a Multi-employer Plan,
except where non-compliance could not reasonably be expected to result in a
Material Adverse Change. As of the Closing Date, neither the Company, any
Material Subsidiary, nor any ERISA Affiliates have any liability under Section
4201 or 4204 of ERISA (including the obligation to satisfy secondary liability
as a result of purchaser default) and the aggregate potential annual withdrawal
liability payments, as determined in accordance with Title IV of ERISA, of the
Company, its Material Subsidiaries, and ERISA Affiliates with respect to all
Pension Plans that are Multi-employer Plans is approximately $250,000. The
Company, its Material Subsidiaries, and ERISA Affiliates have, as of the Closing
Date, made all contributions or payments to or under each such Pension Plan
required by law or the terms of such Pension Plan or any contract or agreement
with respect thereto, except where non-compliance could not reasonably be
expected to result in a Material Adverse Change. No material liability to the
PGBC has been, or is expected by the Company, and of its Material Subsidiaries,
or any ERISA Affiliate to be, incurred by the Company, and such Material
Subsidiaries, or any ERISA Affiliate, except where non-compliance could not be
reasonably be expected to result in a Material Adverse Change. Liability, as
referred to in this Section includes any joint and several liability. Each
Employee Benefit Plan that is a group health plan within the meaning of Section
5000(b)(1) of the Code is in material compliance with the continuation of health
care coverage requirements of Section 4980B of the Code, except where
non-compliance could not be reasonably expected to result in a Material Adverse
Change.
4.16. Offering of the Securities. Neither the Company nor anyone authorized
to act on its behalf has or will directly or indirectly sell or offer the
Securities or any part thereof or any similar securities to, or solicit any
offer to buy any thereof from, any Person so as to bring the issue and sale of
any thereof within the provisions of Section 5 of the Securities Act.
4.17. Other Adverse Facts, etc. Except as disclosed on Schedule 4.17, to
the best of the Company's knowledge, there are no existing facts or
circumstances which materially and adversely affect, or (insofar as the Company
can now reasonably foresee) in the future may materially and adversely affect,
the business, prospects, results of operations or condition, financial or
otherwise, of the Company and the Subsidiaries, on a consolidated basis, which
are not disclosed in the Form 10-K, the Form 10-Q, other documents filed with
the SEC pursuant to the Exchange Act, or in this Agreement or any exhibit
hereto, or which are required to be disclosed by the Company in an Exchange Act
filing.
4.18. Status Under Certain Statutes. Neither the Company nor any Material
Subsidiary is either (i) a "public utility company" or a "holding company", or
an "affiliate" or a "subsidiary company" of a "holding company", or an
"affiliate" of such a "subsidiary company", as such terms are defined in the
Public Utility Holding Company Act of 1935, as amended, or (ii) a "public
utility" as defined in the Federal Power Act, as amended, or (iii) an
"investment company" or an "affiliated person" thereof or an "affiliated person"
of any such "affiliated person," as such terms are defined in the Investment
Company Act of 1940, as amended.
5. REPRESENTATIONS AND WARRANTIES OF PURCHASERS. Each Purchaser hereby
represents and warrants that:
5.1. Organization, Standing, etc. Such Purchaser is a limited partnership
duly organized, validly existing and in good standing under the laws of its
jurisdiction of organization, has the power to own its properties and to carry
on its businesses as the same are now being conducted.
5.2. Authorization. This Agreement has been duly and validly authorized by
all requisite partnership proceedings and this Agreement constitutes the valid
and legally binding obligation of such Purchaser enforceable against such
Purchaser in accordance with its terms except as enforceability is limited by
bankruptcy, insolvency, reorganization, moratorium, or other laws relating to or
affecting generally the enforcement of creditors' rights and except to the
extent that availability of equitable remedies is subject to the discretion of
courts before which any proceeding therefore may be brought. Neither the
authorization, execution and delivery of this Agreement or the consummation of
the transactions herein contemplated, nor the fulfillment of or compliance with
the terms hereof, will conflict with or result in a breach of any of the terms
of the certificate of limited partnership, limited partnership agreement or
by-laws, or of any material statute, law, rule or regulation, or of any
judgment, decree, writ, injunction, order or award of any arbitrator, court or
governmental authority, or of any indenture, mortgage, deed of trust, loan,
purchase, or credit agreement, lease, or other instrument, which is applicable
to such Purchaser or by which such Purchaser is bound.
5.3. Purchase Entirely for Own Account. This Agreement is made with such
Purchaser in reliance upon such Purchaser's representation to the Company, which
by such Purchaser's execution of this Agreement such Purchaser hereby confirms,
that the Notes to be received by such Purchaser, the Common Stock issuable upon
conversion thereof, and the capital stock of HMS issuable upon exchange thereof
(collectively, the "Securities") will be acquired for investment for such
Purchaser's own account, not as a nominee or agent, and not with a view to the
resale or distribution of any part thereof, and that such Purchaser has no
present intention of selling, granting any participation in, or otherwise
distributing the same. By executing this Agreement, such Purchaser further
represents that such Purchaser does not have any contract, undertaking,
agreement or arrangement with any person to sell, transfer or grant
participations to such person or to any third person, with respect to any of the
Securities.
5.4. Disclosure of Information. Such Purchaser believes it has received all
the information it considers necessary or appropriate for deciding whether to
purchase the Notes. Such Purchaser further represents that it has had an
opportunity to ask questions and receive answers from the Company regarding the
terms and conditions of the offering of the Notes and the business, properties,
prospects and financial condition of the Company. The foregoing, however, does
not limit or modify the representations and warranties of the Company in Section
4 of this Agreement or the right of the Purchasers to rely thereon.
5.5. Investment Experience. Such Purchaser is an investor in securities of
companies in the development stage and acknowledges that it is able to fend for
itself, can bear the economic risk of its investment, and has such knowledge and
experience in financial or business matters that it is capable of evaluating the
merits and risks of the investment in the Notes. If other than an individual,
Investor also represents it has not been organized for the purpose of acquiring
the Notes.
5.6. Accredited Investor. Such Purchaser is an "accredited investor" within
the meaning of SEC Rule 501 of Regulation D, as presently in effect.
5.7. Restricted Securities. Such Purchaser understands that the Securities
it is purchasing are characterized as "restricted securities" under the federal
securities laws inasmuch as they are being acquired from the Company in a
transaction not involving a public offering and that under such laws and
applicable regulations such securities may be resold without registration under
the Securities Act, only in certain limited circumstances. In this connection,
such Purchaser represents that it is familiar with SEC Rule 144, as presently in
effect, and understands the resale limitations imposed thereby and by the
Securities Act.
6. CONDITIONS PRECEDENT.
6.1. Closing. Your obligation to purchase from the Company the principal
amount of Notes specified opposite your name in the Schedule of Purchasers at
the Closing shall be subject to the following conditions precedent:
(a) Opinion of Company Counsel. You shall have received from counsel for
the Company an opinion, dated the Closing Date, reasonably satisfactory in form
and substance to you to the effect that:
(i) the Company is a corporation validly existing and in good standing
under the laws of its state of incorporation, has the corporate power
to own its properties and to carry on its business as now being
conducted, and is duly qualified to do business and is in good standing
in the State of New York;
(ii) HMS is a corporation validly existing and in good standing under
the laws of its state of incorporation, has the corporate power to own
its properties and to carry on its business as now being conducted, and
is duly qualified to do business and is in good standing in the State
of New Jersey;
(iii) the Company has full corporate power and authority to execute and
deliver this Agreement, to make and deliver the Notes and to perform
and observe the terms and provisions of this Agreement and of the
Notes;
(iv) this Agreement has been duly authorized, executed, and delivered
by the Company and constitutes the legal, valid, and binding obligation
of the Company, enforceable in accordance with its terms, subject to
applicable bankruptcy, insolvency, rearrangement, moratorium,
reorganization, or similar debtor relief laws affecting the rights of
creditors generally from time to time in effect and except to the
extent that availability of equitable remedies is subject to the
discretion of the court before which any proceeding therefor may be
brought and that rights to indemnification may be limited by applicable
law;
(v) the Notes sold to you on the Closing Date have been duly
authorized, executed, and delivered by the Company, constitute the
valid and legally binding obligations of the Company and are entitled
to the benefits of this Agreement, subject to applicable bankruptcy,
insolvency, rearrangement, moratorium, reorganization, or similar
debtor relief laws affecting the rights of creditors generally from
time to time in effect and except to the extent that availability of
equitable remedies is subject to the discretion of the court before
which any proceeding therefor may be brought;
(vi) neither the execution and delivery of this Agreement and the Notes
nor performance and observance of the terms and provisions hereof and
thereof violate or conflict with the Certificate of Incorporation or
By-Laws of the Company, conflict with or result in any material breach
or contravention of any provision of any currently applicable statute
or regulation, or of any order, writ, injunction, decree, or award,
known to such counsel, of any court, arbitrator, or governmental
authority so as to result in a Material Adverse Change, or conflict
with or result in any material breach of any of the terms, conditions,
or provisions of, or constitute a default under, or result in the
creation or imposition of any lien, charge, or encumbrance upon any of
the properties or assets of the Company pursuant to the terms of, any
instrument evidencing any Senior Obligations;
(vii) assuming the representations and warranties of the Purchasers
contained herein are true and correct, it is not necessary in
connection with the issuance and delivery of the Notes to you on the
Closing Date under the circumstances contemplated by, and in accordance
with the terms of, this Agreement to register the Notes under the
Securities Act or to register or qualify the Securities under any
applicable state securities of the State of New York or to qualify an
indenture in respect of the Notes under the Trust Indenture Act; and
(viii) all approvals and authorizations by any state or federal agency
or body required for the issuance and sale of the Securities to you and
for the execution and delivery of this Agreement have been obtained or
that no such approvals of authorizations are required.
(b) Representations and Defaults. The representations and warranties made
by the Company herein shall be true and correct in all material respects on and
as of the Closing Date with the same effects as if they had been made on and as
of the Closing Date (except as to any changes resulting from transactions
expressly reflected herein or contemplated hereby) and no Event of Default (as
defined in Section 11), nor any condition or event which, after notice or lapse
of time, or both, would constitute such an Event of Default, shall exist; and
the Company shall deliver to you on the Closing Date a certificate of the
President and the Treasurer of the Company to the foregoing effect.
(c) Documents. All proceedings to be taken in connection with the
transactions contemplated by this Agreement to be consummated at or prior to the
Closing Date, and all documents incident thereto, shall be reasonably
satisfactory in form and substance to you and you shall have received original
counterparts or certified or other copies of all documents which you may have
reasonably requested in connection with said transactions and of all corporate
proceedings in connection therewith, in form and substance reasonably
satisfactory to you and your counsel.
(d) No Material Adverse Change. As of the Closing Date, no Material Adverse
Change has occurred in the business or financial condition of the Company.
(e) Formation of HMS. The Company shall undertake to transfer all of the
tangible and intangible assets and business activities and operations of the
Hydro Med Sciences division of the Company to a newly formed wholly-owned
Delaware corporation subject to the Company and HMS obtaining, where required,
the consent of all third parties to the assignment and transfer of all leases,
licenses, contracts, and commitments that require such consents, including the
consent of Shire Pharmaceuticals Group plc and the FDA.
(f) Bank Consent. The Company shall have received the consent, of its
lenders under the Senior Credit Agreement (as defined in Section 9.7) to the
issuance and sale of up to $2,640,000 in aggregate principal amount of the
Notes, and the execution and performance of this Agreement and the transactions
contemplated hereby including the right of the Holders of the Notes to exchange
the Notes for a portion of the outstanding capital stock of HMS free and clear
of any Liens of the Banks and the Company's grant of a security interest in a
portion of the capital stock of HMS to secure the Notes.
7. COVENANTS OF THE COMPANY. The Company covenants and agrees that, so long
as any of the Notes are outstanding, it will comply with the following
provisions, subject to the provisions of Section 16:
Affirmative Covenants
7.1. Use of Proceeds. The Company will apply all proceeds (net of costs
directly related to the preparation and negotiation of this Agreement and the
offering and sale of the Notes) derived from the sale of the Notes to payment of
debt and for general corporate purposes.
7.2. Taxes. The Company will, and will cause each Material Subsidiary to,
promptly pay and discharge all lawful taxes, assessments, and governmental
charges or levies (other than taxes, assessments, and other governmental charges
imposed by foreign jurisdictions or otherwise which in the aggregate are not
material to the business or assets of the Company on an individual or
consolidated basis) imposed on it or upon its income or profits, or upon any of
its properties, real or personal, before the same shall become in default, as
well as all lawful claims for labor, materials, and supplies or otherwise which,
if unpaid, might become a lien or charge upon its properties or any part
thereof; provided, however, that neither the Company nor any Material Subsidiary
shall be required to pay or cause to be paid any such tax, assessment, charge,
levy or claim prior to institution of foreclosure proceedings if the validity
thereof shall be contested in good faith by appropriate proceedings and if the
Company shall have established reserves deemed by the Company adequate with
respect to such tax, assessment, charge, levy, or claim or as may be required by
generally accepted accounting principles consistently applied.
7.3. Insurance. The Company will, and will cause its Material Subsidiaries
to, maintain liability and property damage insurance on its insurable property
against fire and other hazards with financially sound and responsible insurance
carriers in the relative proportionate amounts usually carried by reasonable and
prudent companies conducting businesses similar to that of the Company.
7.4. Maintenance of Existence and Properties. The Company will keep its
corporate existence in full force and effect. The Company will (except for the
potential disposition of the IT group), and will cause HMS to, keep its
properties in good repair, working order, and condition (ordinary wear and tear
excepted), and from time to time will make all needful and proper repairs,
renewals, replacements, extensions, additions, betterments, and improvements
thereto, so that the business carried on may be properly conducted at all times
in accordance with prudent business management. The Company will, and will cause
each Material Subsidiary to, comply with all applicable laws and regulations
(including Environmental Laws), decrees, orders, judgments, licenses and
permits, including without limitation all environmental permits ("Applicable
Laws"), except where noncompliance with such Applicable Laws would not cause a
Material Adverse Change.
7.5. Financial Statements and Compliance Certificates. The Company will,
and will cause each Material Subsidiary to, keep books of record and account in
which full, true and correct entries in all material respects in accordance with
generally accepted accounting principles will be made of all dealings or
transactions in relation to its business and activities. The Company shall
furnish to each Holder of any of the Notes:
(a) as soon as available and in any event within 50 days after the
close of each fiscal quarter, commencing with the fiscal quarter ending
June 30, 2000, an unaudited consolidated balance sheet of the Company
and its consolidated Subsidiaries as of the end of such quarter and
consolidated statements of income, stockholders' equity, and cash flows
of the Company and its consolidated Subsidiaries for such quarter and
for the expired portion of the then current fiscal year, setting forth
comparable figures for the same quarter and expired portion of the
previous fiscal year, and prepared and certified by the chief financial
officer of the Company, subject to year-end audit adjustment;
(b) as soon as available and in any event within 105 days after the
close of each fiscal year of the Company, a balance sheet of the
Company as of the end of such fiscal year and statements of income,
stockholders' equity, and cash flows of the Company for such fiscal
year, setting forth comparable figures for the previous fiscal year,
all reported upon, and certified, by KPMG LLP or other independent
certified public accountants of nationally recognized standing;
(c) with each financial statement required to be delivered pursuant to
the provisions of paragraph (a) or (b) above, a certificate of the
President and the chief financial officer of the Company stating that
to their knowledge there does not exist any Event of Default or any
condition or event which after notice or lapse of time, or both, would
constitute an Event of Default, or specifying the nature and period of
existence of each such Event of Default, condition or event and the
action the Company is taking or proposes to take with respect thereto;
(d) copies of all financial statements and reports sent by the Company
to its shareholders and of all regular and periodic reports, if any,
filed by it with the SEC pursuant to any statute administered by the
SEC; and
(e) such other information relating to the business and financial
condition of the Company as may from time to time be reasonably
requested by you.
Except as and to the extent required by law or by any regulatory authority
having jurisdiction over you, and except for disclosures to prospective
transferees of any of your Notes, you will not willfully disclose to others
information obtained from the Company, which the Company advises you is
confidential in nature.
7.6. Notice of Default. The Company will within ten Business Days notify
you upon becoming aware of the occurrence of any Event of Default hereunder or
Senior Obligations Default.
7.7. Directors of HMS. The Company shall amend the bylaws of HMS to provide
that the Board of Directors of HMS shall have three directors. The Company
covenants and agrees that it shall elect as directors of HMS: one individual
designated by the Company, one individual designated by a majority in principal
amount of the Holders of the Notes, and the current chief executive officer of
HMS. The Company agrees that it shall not amend the Certificate of Incorporation
or bylaws of HMS without the prior written consent of the Holders of the Notes.
Negative Covenants
7.8. Limitation on Consolidation, Merger and Sale. The Company shall not
consolidate with or merge with any other corporation or convey, transfer or
lease substantially all of its assets in a single transaction or series of
transactions to any Person unless:
(a) the successor formed by such consolidation or the survivor of such
merger or the Person that acquires by conveyance, transfer or lease
substantially all of the assets of the Company as an entirety, as the
case may be, shall be a solvent corporation organized and existing
under the laws of the United States or any State thereof (including the
District of Columbia), and, if the Company is not such corporation,
such corporation shall have executed and delivered to each Holder of
any Notes its assumption of the due and punctual performance and
observance of each covenant and condition of this Agreement and the
Notes; and
(b) immediately after giving effect to such transaction, no Default or
Event of Default shall have occurred and be continuing.
No such conveyance, transfer or lease of substantially all of the assets of
the Company shall have the effect of releasing the Company or any successor
corporation that shall theretofore have become such in the manner prescribed in
this Section 7.8 from its liability under this Agreement or the Notes.
7.9. HMS. So long as the Holders of the Notes have the right to exchange
all or a portion of the Notes for capital stock of HMS, (i) the Company will
cause HMS to keep its corporate existence in full force and effect, and (ii) the
Company shall not permit HMS to issue any shares of capital stock, to sell all
or substantially all of its assets, or to merge or consolidate with any other
Person without the prior written consent of the Holders of the Notes.
8. PAYMENT, REGISTRATION AND TRANSFER OF NOTES.
8.1. Place of Payment. The Company will promptly and punctually pay the
interest on the Notes held by you without any presentment thereof; and the
Company will pay all amounts payable to you in respect of principal of and
interest on the Notes to you or your nominees at the address specified in
Schedule 1, or at such other place as you may from time to time designate in
writing.
8.2. Registration and Transfer. The Company agrees to maintain an office
(or to appoint an agent having an office) in New York, New York, or such other
city as the Company may designate by notice in writing to you, at which Notes
may be surrendered for transfer and reissuance, for conversion, exchange,
replacement, or cancellation. The Company shall keep or cause to be kept, at the
office or agency so maintained, a register or registers in which the Company or
its agent shall register the names and addresses of the Holders and shall
transfer registered Notes in accordance with this Agreement. Upon surrender for
transfer of any registered Note duly assigned by the registered holder (or its
duly authorized attorney) to the transferee(s) thereof and subject to
satisfaction of the requirements set forth in Section 12.11 if such Note is then
a Restricted Note, the Company shall execute and deliver a new registered Note
(or Notes in appropriately subdivided denominations of principal), dated the
most recent date to which interest shall have been paid on the surrendered Note,
in an equal principal amount with notation of payments of principal made
thereon, or in a principal amount equal to the original principal amount as
reduced by payments of principal theretofore made on the Note surrendered, in
the name of, and payable to the order of, the transferee(s) thereof. No service
charge shall be assessed for any transfer, registration, reissuance, exchange,
or notation of payment hereunder.
8.3. Interest. Interest on the Notes shall be computed on the basis of a
365-day year at a rate of 6% per annum from the date of issuance, payable in
quarterly installments on each Interest Payment Date of each year (or such
prorated amount as may be applicable with respect to the first payment) until
the principal on the Notes becomes due and payable. To the extent permitted by
law, interest on any overdue payment of principal or interest shall be payable
quarterly at a rate equal to 12% per annum. Interest on the Notes shall be
payable on each Interest Payment Date in cash.
9. SUBORDINATION OF NOTES. The Company covenants and agrees, and each
Holder of a Note, by acceptance thereof, likewise covenants and agrees (i) that,
to the extent and in the manner set forth in this Section 9, the Company's
Senior Obligations (as defined in Section 9.1), if any, will be senior in right
of payment to the Notes, and (ii) that the subordination provisions set forth in
this Section 9 are, and are intended to be, an inducement and a consideration to
each holder of any Senior Obligations, whether such Senior Obligation was
created or acquired before or after the date of this Agreement, to acquire and
continue to hold, or to continue to hold, such Senior Obligation, and each
holder of Senior Obligations shall be deemed conclusively to have relied on such
subordination provisions in acquiring and continuing to hold, or continuing to
hold, such Senior Obligations.
9.1. Subordination to Senior Obligations. As used herein, "senior in right
of payment to the Notes" means that:
(a) no part of the Debt shall, except as provided in Section 14.1 of
this Agreement, have any claim to the assets of the Company on a parity
with or prior to the claim of the Senior Obligations; and
(b) unless and until the Senior Obligations have been paid in full,
without the express prior written consent of all holders of such Senior
Obligations, no Holder will, except as provided in Section 14.1 of this
Agreement, take, demand (including by means of any legal action) or
receive from the Company, and the Company will not make, give or
permit, directly or indirectly, by set-off, prepayment, purchase or in
any other manner, any cash payment of or security for the whole or any
part of the Debt; provided, however, that (x) so long as no default
exists under or pursuant to the Senior Credit Agreement, the Company
may make, and the Holders may receive, scheduled interest payments on
account of the Debt in accordance with the terms hereof and (y) upon
the acceleration of the maturity of any Senior Obligations, the Holders
may accelerate the scheduled maturities of the Notes if and to the
extent permitted hereby at such time but such acceleration shall not,
except as provided in Section 14.1 of this Agreement, give (i) any
Holder any right to take, demand (including by means of any legal
action) or receive from the Company, or (ii) the Company the right to
make, give or permit, directly or indirectly, by set-off, prepayment,
purchase or in any other manner, any cash payment of or security for
the whole or any part of the Notes unless and until the Senior
Obligations have been paid in full.
9.2. Payments Due Holders of Senior Obligations. Any payment or
distribution by the Company to which any Holder would be entitled except for the
provisions hereof (whether in cash or securities, but excluding additional
Notes) shall be paid or delivered by the Holder, or any receiver, trustee in
bankruptcy, liquidating trustee, disbursing agent or other Person making such
payment or distribution, to the holders of the Senior Obligations or their
representative, ratably in accordance with the amounts thereof, to the extent
necessary to pay in full all Senior Obligations, before any payment or
distribution shall be made to any Holder.
9.3. Meaning of Payment in Full. The expressions "prior payment in full,"
"payment in full," "paid in full" and any other similar terms or phrases when
used herein with respect to the Senior Obligations means the payment in full in
cash of all of the Senior Obligations; and the expression "any cash payment of
or security for the whole or any part of the Debt" and any other similar terms
or phrases when used herein shall not be deemed to include a payment or
distribution of stock or securities of the Company provided for by a plan of
reorganization or readjustment authorized by an order or decree of a court of
competent jurisdiction in a reorganization proceeding under any applicable
bankruptcy law, or of any other corporation provided for by such plan of
reorganization or readjustment, which stock or securities are subordinated in
right of payment to all then outstanding Senior Obligations to substantially the
same extent as the Notes are so subordinated as provided in this Section 9. The
consolidation of the Company with, or the merger of the Company into, another
Person or the liquidation or dissolution of the Company following the conveyance
or transfer of all or substantially all of its properties and assets as an
entirety to another Person upon the terms and conditions set forth in Section
7.8 shall not be deemed a "proceeding" for the purposes of this Section 9 if the
Person formed by such consolidation or into which the Company is merged or the
Person which acquires by conveyance or transfer such properties and assets as an
entirety, as the case may be, shall, as a part of such consolidation, merger,
conveyance or transfer, comply with the conditions set forth in Section 7.8.
9.4. Meaning of Senior Obligations. As used herein, "Senior Obligations"
means collectively all obligations of the Company (i) under or in connection
with the Senior Credit Agreement (as defined below) and the other "Loan
Documents" referred to in the Senior Credit Agreement; (ii) to any Bank (as
defined below) or any affiliate of a Bank under or in connection with (x) any
interest rate, currency or commodity swap agreement, cap agreement or collar
agreement or any other agreement or arrangement designed to protect the Company
against fluctuations in interest rates, currency exchange rates or commodity
prices, or (y) any purchase card or credit card issued by such Bank or such
affiliate, (iii) to any Bank or any affiliate of any Bank under or in connection
with any other credit arrangement (including without limitation any lease by
such Bank or such affiliate, any guaranty issued by the Company in favor of such
Bank or such affiliate and any deposit account services (including in respect of
any overdraft) if such obligation is secured by the assets of the Company; and
(iv) under or in connection with any other secured Indebtedness of the Company
having an initial principal amount in excess of $5,000,000 which by its express
terms states that it is a "Senior Obligation;" in each case (a) whether direct
or indirect, absolute or contingent, due or to become due, now existing or
hereafter incurred, and (b) whether on account of principal, premium, interest
(including, without limitation, interest accruing after the maturity date of any
Senior Obligation and interest accruing after the commencement of any
bankruptcy, insolvency, reorganization or similar proceeding relating to the
Company, whether or not a claim for post-filing or post-petition interest is
allowed in such proceeding), reimbursement obligations, fees, indemnities,
costs, expenses or otherwise. For purposes of the foregoing, "Senior Credit
Agreement" means the Credit Agreement dated as of June 15, 1998, among the
Company, General Physics Canada Ltd., various financial institutions, and Fleet
Bank, National Association, As Agent, Issuing Bank and Arranger, as further
amended, restated or otherwise modified from time to time, together with any
replacement or refinancing thereof; and "Bank" means any bank, insurance
company, mutual fund or other financial institution which from time to time is a
party to the Senior Credit Agreement.
9.5. Meaning of Debt. As used herein, "Debt" means collectively the unpaid
principal of, premium, if any, and interest on (including, without limitation,
interest accruing after the maturity date of any Note and interest accruing
after the filing of any petition in bankruptcy, or the commencement of any
insolvency, reorganization or like proceeding, relating to the Company, whether
or not a claim for post-filing or post-petition interest is allowed in such
proceeding) and all other obligations in respect of the Notes, whether direct or
indirect, absolute or contingent, due or to become due, now existing or
hereafter incurred, in each case whether on account of principal, premium,
interest, reimbursement obligations, rights to rescission, fees, indemnities,
costs, expenses or otherwise.
9.6. Meaning of Designated Holder of Senior Obligations. As used herein,
"Designated Holder of Senior Obligations" means (i) the Administrative Agent
under the Senior Credit Agreement and (ii) the Required Lenders (as defined in
the Senior Credit Agreement).
9.7. Bankruptcy Proceedings. Any Designated Holder of Senior Obligations is
hereby authorized to (i) file an appropriate claim for and on behalf of any
Holder if such Holder does not file, and there is not otherwise filed on behalf
of such Holder, a proper claim or proof of claim in the form required in any
bankruptcy, insolvency, reorganization or similar proceeding with respect to the
Company at least 30 days before the expiration of the time to file such claim or
proof of claim and (ii) file an appropriate ballot for and on behalf of any
Holder if such Holder does not file, and there is not otherwise filed on behalf
of such Holder, a proper ballot in any such proceeding in the form required at
least 10 days before the expiration of the time to file such ballot.
9.8. Actions Following Default. If any Event of Default shall occur and be
continuing, the Holders shall not, without the prior written consent of the
agent under the Senior Credit Agreement (the "Agent"), (i) accelerate the
maturity of any Debt, or institute proceedings to enforce or collect any Debt,
or otherwise exercise any right or remedy in respect of any Debt, except upon
the occurrence of a Standstill Termination Event or (ii) commence or join with
any other creditor of the Company in commencing any bankruptcy, insolvency,
reorganization or similar proceeding against the Company. Any amounts recovered
by reason of the foregoing collection or enforcement actions shall be subject to
the provisions of Sections 9.1(b) and 9.2. For purposes of the foregoing, a
"Standstill Termination Event" will be deemed to occur upon (1) commencement of
a bankruptcy, insolvency, reorganization or similar proceeding by or against the
Company (provided that such proceeding is not commenced by any Holder or joined
in by any Holder as one of the creditors filing an involuntary petition or
otherwise commencing such proceeding in contravention of the foregoing clauses
(ii) or Section 9.1(b) if such proceeding is instituted against the Company, a
Standstill Termination Event shall be deemed to occur in respect thereof only if
such proceeding has not been dismissed within 60 days of commencement thereof or
if the Company acquiesces thereto) or (2) the acceleration of the maturity of
any Senior Obligations.
9.9. No Modifications Without Consent of Designated Holders. The Holders
agree with and for the benefit of each holder of Senior Obligations that (i) no
provision of this Section 9 may be amended or otherwise modified, (ii) no
provisions of this Agreement or and Note may be modified if such modification
would have the effect of (a) changing the date of any payment in respect of the
Notes or the Debt to an earlier date than that in effect prior to such
modification, (b) increasing the rate of interest payable on the Notes or the
Debt or increasing the frequency of the compounding thereof, (c) increasing the
Exchange Ratio except as set forth in Section 14.3 as in effect on the date
hereof, (d) modifying Section 14.3, or (e) changing the Conversion Price except
as set forth in Section 13.4 as in effect on the date hereof, and (iii) no other
provision of this Agreement may be amended or otherwise modified in any manner
that is adverse to the holders of the Senior Obligations (as determined by such
holders), without (in each case) the prior written consent of all Designated
Holders of Senior Obligations.
9.10. Obligations Unimpaired. Nothing contained in this Section 9 shall
affect the rights of the Holders under Section 14.1 of this Agreement to
exchange the Notes for a portion of the outstanding capital stock of HMS or is
intended to or shall impair as between the Company, its creditors other than the
holders of Senior Obligations and the Holders, the obligation of the Company,
which shall be absolute and unconditional, to pay to the Holders the principal
of and interest on the Notes, as and when the same will become due and payable
in accordance with the terms thereof, or to affect the relative rights of the
Holders and creditors of the Company other than the holders of Senior
Obligations, nor shall anything herein or therein prevent the Holder of any Note
from exercising all remedies otherwise permitted by applicable law upon default,
subject to the rights, if any, under this Section 9 of the holders of Senior
Obligations in respect of any required notice of the exercise of any such remedy
or cash, property, or securities of the Company received upon the exercise of
any such remedy.
9.11. Legending. The faces of the Notes and any other documents or
instruments that may evidence the Debt, shall be permanently marked with a
legend indicating that each instrument is subject to this Section 9.
9.12. No Lien or Guaranty. The Note and the Debt shall at no time during
the term of this Agreement be guaranteed as to payment or collection by any
Subsidiary of the Company or secured by any Lien on the assets of the Company or
any Subsidiary, except as expressly permitted by Section 14.4 of this Agreement.
10. SUBSTITUTION OF NOTES. Upon receipt by the Company of evidence
satisfactory to it of the loss, theft, destruction, or mutilation of any Note,
and of indemnity satisfactory to it (which, in the case of any original
purchaser of the Notes, shall be a contractual obligation of such purchaser) and
upon surrender, at the office or agency maintained in accordance with Section 8,
and cancellation of any Note, if mutilated, the Company will execute and deliver
a new Note of like tenor, in lieu of such Note, dated the most recent date to
which interest on such Note shall have been paid.
11. EVENTS OF DEFAULT. If any one or more of the following events (herein
called "Events of Default") shall occur and be continuing:
(a) default shall be made in the payment of principal of any of the
Notes when and as the same shall become due and payable, either at
maturity or by acceleration or otherwise;
(b) default shall be made in the payment of interest on the Notes when
the same becomes due and payable and the default continues for a period
of 30 days;
(c) default shall be made in the due performance or observance of any
other material covenant, agreement, or provision herein to be performed
or observed by the Company or a material breach shall exist in any
representation or warranty herein contained, and such default or
material breach shall have continued for a period of 30 days after
written notice thereof to the Company from any Holder or Holders of
Notes aggregating not less than 66-2/3% of the aggregate principal
amount of the Notes then outstanding; provided, however, that if any
such default or material breach shall be such that it is susceptible of
cure, but cannot be cured or corrected within such 30-day period, such
period shall be extended for such additional period of time (not
exceeding 30 additional days) as shall be necessary to effect such cure
or correction if curative or corrective action is instituted within
said 30-day period and thereafter diligently pursued;
(d) the Company or any Material Subsidiary shall (i) apply for or
consent to the appointment of a receiver, trustee, or liquidator of the
Company or such Material Subsidiary or any of their respective assets,
(ii) make a general assignment for the benefit of creditors, (iii) be
adjudicated a bankrupt or insolvent or (iv) file a voluntary petition
in bankruptcy, or a petition or answer seeking reorganization or an
arrangement with creditors to take advantage of any bankruptcy,
reorganization, insolvency, readjustment of debt, moratorium,
dissolution, liquidation, or debtor relief law, or any chapter of any
such law, or an answer admitting the material allegations of a petition
filed against it in any proceeding under any such law or chapter, or
corporate action shall be taken by the Company or any Material
Subsidiary for the purpose of effecting any of the foregoing; or an
order, judgment, or decree shall be entered, without the application,
approval, or consent of the Company or a Material Subsidiary, by any
court of competent jurisdiction, approving a petition seeking
liquidation or reorganization of the Company or such Material
Subsidiary, as applicable, of all or a substantial part of the assets
of the Company or such Material Subsidiary; and provided that such
order, judgment, or decree remains in effect for more than 60 days,
whether or not consecutive; or
(e) a Senior Obligations Default shall have occurred and the Senior
Obligations shall have been declared immediately due and payable.
then and in each and every such case the Holders of Notes aggregating not less
than 66-2/3% of the aggregate principal amount of the Notes then outstanding may
by notice in writing to the Company declare the unpaid principal of the Notes
together with accrued interest thereon to be forthwith due and payable and
thereupon such principal and interest shall be due and payable without
presentment, protest, or further demand or notice of any kind, all of which are
hereby expressly waived.
This Section 11, however, is subject to the condition that, if at any time
after the principal of the Notes shall have become so due and payable, and
before any judgment or decree for the payment of the moneys so due, or any part
thereof, shall be entered and if all arrears of interest upon the Notes and all
other sums payable under the Notes (except the principal on the Notes which
solely by reason of such declaration shall have become payable) shall have been
duly paid, then and in every such case the Holders of Notes aggregating not less
than 66-2/3% of the aggregate principal amount of the Notes then outstanding
may, by written notice to the Company, either temporarily suspend or permanently
rescind and annul such declaration and its consequences; but no such suspension
or rescission and annulment shall extend to or affect any prior, concurrent, or
subsequent default or Event of Default (other than the ones identified by the
Holders declaring them due as the ones upon which such declaration was based) or
impair any right consequent thereon.
Notwithstanding anything to the contrary herein, if default shall be made
in the payment of any principal of, or interest on, any Note when and as the
same shall become due and payable, at maturity (but not merely by virtue of an
acceleration pursuant to the foregoing provisions of this Section 11), the
Holder of such Note may by notice in writing to the Company declare the unpaid
principal of such Note, with accrued interest, to be forthwith due and payable
and thereupon such principal and interest shall be due and payable without
presentment, protest, or further demand or notice of any kind, all of which are
hereby expressly waived.
If any Holder of a Note shall demand payment thereof or take any other
action (of which the Company has actual knowledge) in respect of an Event of
Default, the Company will forthwith give written notice thereof, specifying such
action and the nature of such event, to each holder of record of the Notes then
outstanding. The Company will also give prompt written notice to each holder of
record of the Notes at the time outstanding of any written notice of suspension,
rescission, or annulment given to it as aforesaid.
The Company covenants that, if an Event of Default occurs, it will pay to
the Holder thereof such further amount as shall be reasonably sufficient to
cover the reasonable cost and expense of collection, including, without
limitation, court costs and reasonable compensation to not more than one
attorney or counsel of the Holder for all services rendered in that connection.
No course of dealing between the Company and any Holder of a Note or any
delay on the part of the Holder of a Note in exercising any rights thereunder or
hereunder shall operate as a waiver of any rights of any such Holder.
12. REGISTRATION RIGHTS.
12.1. Required Registration. Within 60 days following receipt of written
notice from the Holders of the Notes of the conversion of at least 50% in
aggregate principal amount of the Notes to Common Stock (the "Initiating
Holders") and requesting that the Company effect the registration under the
Securities Act of all or part of such Initiating Holders' Conversion Shares and
specifying the intended method of disposition thereof, the Company will use its
commercially reasonable efforts to effect the registration under the Securities
Act of the Conversion Shares that the Company has been requested to register by
such Initiating Holders for disposition in accordance with the intended method
of disposition stated in such request all to the extent requisite to permit the
disposition (in accordance with the intended methods of disposition) of the
Conversion Shares; provided, however, that the provisions of this Section 12.1
shall not require the Company to effect any registration within 180 days
following any underwritten public offering if so restricted by the underwriters
of such offering; and, provided, further, that if the Company is engaged in
negotiations in respect of a merger, acquisition, combination or other business
opportunity and in the good faith judgment of the Board of Directors of the
Company such transaction or opportunity would be adversely affected by such
registration, the Company shall be entitled to postpone the filing of such
registration statement until such transaction would not be adversely affected by
such filing but, in any event, for a period not to exceed 90 days.
12.2. Incidental Registration. Notwithstanding the provisions of Section
12.1 of this Agreement, if the Company at any time proposes to register any of
its Common Stock under the Securities Act (on a form appropriate for the
registration of the Conversion Shares for public offering by the holders thereof
other than a registration on Form S-8, or any successor or similar forms or a
shelf registration under Rule 415 for the sole purpose of registering shares to
be issued in connection with the acquisition of stock or assets of another
person) and there is then not an effective registration statement covering the
Conversion Shares (assuming for purposes of this Section 12.2 that all of the
Notes are to be converted), it will each such time give written notice to the
Holders of the Notes and any holders of Conversion Shares (the Holders of the
Notes and/or Conversion Shares are sometimes referred to herein as the "Eligible
Holders") of its intention to do so and, upon written request from Eligible
Holders given within 30 days after receipt of any such notice (which request
shall state the intended method of disposition of such securities by such
Eligible Holder), the Company will use its commercially reasonable efforts to
cause all or any (but not less than 1,000 shares if less than all) Conversion
Shares held by such Eligible Holder or which such Eligible Holder is then
entitled to acquire pursuant to conversion of a Note to be registered under the
Securities Act, all to the extent requisite to permit the sale or other
disposition (in accordance with the intended methods thereof, as aforesaid by
such Eligible Holder); provided, however, that the Company may at any time
withdraw or cease proceeding with any such registration if it shall at the same
time withdraw or cease proceeding with the registration of such other securities
originally proposed to be registered; provided, further, that if there is an
effective registration statement covering the Conversion Shares, the Conversion
Shares proposed to be registered pursuant to this Section 12.2 shall be
withdrawn from such registration statement. If an offering pursuant to this
Section 12.2 is to be made through underwriters, the managing underwriter may,
if in its reasonable opinion marketing factors so require, limit (pro rata
according to the market value of securities proposed to be registered by each)
the number of (or eliminate entirely from the offering all of the) securities
which Eligible Holders may register pursuant to this Section 12.2.
12.3. Registration Procedures. If and whenever the Company is required by
the provisions of Section 12.1 or 12.2 to use its commercially reasonable
efforts to effect the registration of any of its securities under the Securities
Act, the Company will, as promptly as possible:
(a) prepare and file with the SEC a registration statement with respect
to such securities and use its commercially reasonable efforts to cause
such registration statement to become effective and, in the case of the
registration statement required by Section 12.1, remain effective for a
period of at least 12 consecutive calendar months following the date on
which such registration statement is declared effective (or such
shorter period that terminates on the date all of the securities
covered by the registration statement have been sold or withdrawn;
(b) prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement
effective and to comply with the requirements of the Securities Act and
the rules and regulations promulgated by the SEC thereunder relating to
the sale or other disposition of the securities covered by such
registration statement;
(c) furnish to each Eligible Holder selling securities in such offering
such numbers of copies of a prospectus, including a preliminary
prospectus, complying with the requirements of the Securities Act, and
such other documents as such Eligible Holder may reasonably request in
order to facilitate the public sale or other disposition of the
securities owned by such Eligible Holder; and
(d) use its commercially reasonable efforts to register or qualify the
securities covered by such registration statement under the securities
or blue sky laws of such states as each Eligible Holder selling
securities in such offering shall request, and do any and all such
other acts and things as may be necessary or advisable to enable such
Eligible Holder to consummate the public sale or other disposition in
such jurisdictions of the securities owned by you; provided, however,
that the Company shall not be obligated to register or qualify such
securities in any jurisdiction in which such registration or
qualification would require the Company to qualify as a foreign
corporation or file any general consent to service of process where it
is not then so qualified or has not theretofore so consented; provided
further, however, the Company shall not be obligated to register or
qualify such securities in any jurisdiction (other than a jurisdiction
in which a Purchaser is a resident on the Closing Date) in which, in
the reasonable opinion of the Company, the expense (both legal and
filing fees) and the registration requirements or restrictions imposed
by such jurisdiction outweigh the benefits to be received by the holder
by qualifying the issuance or resale of securities in such jurisdiction
or in which the expense incurred by the Company to register such shares
would be unreasonable.
12.4. Expenses; Conditions Precedent. Except as provided below in this
Section 12.4, all expenses incurred by the Company in connection with action
taken by the Company to comply with this Section 12, including, without
limitation, all registration and filing fees, printing expenses, accounting
fees, fees and disbursements of counsel and other experts, premiums for
liability insurance obtained in connection with a registration statement filed
to effect such compliance, the expenses (including counsel fees) of complying
with securities or blue sky laws, shall be paid by the Company; provided,
however, that all such expenses in connection with any amendment or supplement
to any registration statement filed by the Company hereunder or the related
prospectus which is required to be filed more than nine months after the
effective date of such registration statement because any seller or sellers of
securities of the Company covered thereby or any underwriter of such securities
has not effected the disposition of the securities required to be registered
shall be paid by such seller or sellers pro rata, in the case of two or more
such sellers, in accordance with the respective market values of such
securities. The Company shall not be obligated in any way in connection with any
registration pursuant to this Section 12 for any underwriting discounts or
commissions payable by any Eligible Holder to any underwriter of securities to
be sold by such Eligible Holder or the fees and disbursements of any counsel
retained by any Eligible Holder. It shall be a condition precedent to the
obligation of the Company to take any action under Section 12.1 or 12.2 that the
Company shall receive an undertaking satisfactory to it from each Eligible
Holder of securities registered or to be registered as herein provided to pay
all expenses required to be borne by such Eligible Holder and to furnish or
cause to be furnished to the Company specifically for use in the preparation of
the registration statement and prospectus written information concerning the
securities held by such Eligible Holder and also concerning any underwriter of
such securities and the intended method of disposition thereof as the Company
shall reasonably request and as may be required in connection with the action to
be taken by the Company hereunder.
12.5. Company Indemnification. In the event of any registration of any
securities under the Securities Act pursuant to this Section 12, the Company
will indemnify and hold harmless each offering Eligible Holder, each underwriter
of such securities and each other Person, if any, who controls such Eligible
Holder or such underwriter within the meaning of the Securities Act, against any
losses, claims, damages, or liabilities, joint or several, to which such
Eligible Holder, such underwriter or such controlling Person may become subject
under the Securities Act or otherwise, insofar as such losses, claims, damages,
or liabilities (or actions in respect thereof) arise out of or are based upon
any untrue statement or alleged untrue statement of any material fact contained
in any registration statement under which such securities were registered under
the Securities Act, any preliminary prospectus or final prospectus contained
therein, or any amendment or statement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading;
and will reimburse such Eligible Holder, such underwriter and each such
controlling Person for any reasonable legal and any other expenses reasonably
incurred by such Eligible Holder, such underwriter, or such controlling Person
in connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the Company will not be liable in
any such case to the extent that any such loss, claim, damage, or liability
arises out of or is based upon an untrue statement or alleged untrue statement
or omission or alleged omission made in said registration statement, said
preliminary prospectus, or said prospectus or said amendment or supplement in
reliance upon and in conformity with written information furnished to the
Company through an instrument duly executed by such Eligible Holder or such
underwriter specifically for use in the preparation thereof and, provided
further that the Company shall not be liable to any Eligible Holder or Person
who participates as an underwriter, in the offering or sale of Conversion Shares
or to any other Person, if any, who controls such Eligible Holder or underwriter
within the meaning of the Securities Act, in any such case to the extent that
any such loss, claim, damage, liability (or action or proceeding in respect
thereof) or expense arises out of such Person's failure to send or give a copy
of the final prospectus, as the same may be then supplemented or amended, within
the time required by the Securities Act to the Person asserting an untrue
statement or alleged untrue statement or omission or alleged omission at or
prior to the written confirmation of the sale of Conversion Shares to such
Person if such statement or omission was corrected in such final prospectus.
12.6. Your Indemnification. In the event of any registration of any
securities under the Securities Act pursuant to this Section 12, such Eligible
Holder will (or will furnish the written undertaking of such other Person or
Persons as shall be acceptable to the Company to) indemnify and hold harmless
the Company and each other Person, if any, who controls the Company within the
meaning of the Securities Act, against any losses, claims, damages, or
liabilities, joint or several, to which the Company or such controlling Person
may become subject under the Securities Act or otherwise, insofar as such
losses, claims, damages, or liabilities (or actions in respect thereof) arise
out of or are based upon any untrue statement or alleged untrue statement of any
material fact contained in any registration statement under which such
securities were registered under the Securities Act, any preliminary prospectus
or final prospectus contained therein, or any amendment or supplement thereto,
or arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, in each case to the extent that any such
loss, claim, damage, or liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
said registration statement, said preliminary prospectus, or said prospectus or
said amendment or supplement in reliance upon and in conformity with written
information furnished to the Company through an instrument duly executed by such
Eligible Holder or any underwriter of such Eligible Holder's securities
specifically for use in the preparation thereof, and such Eligible Holder will
(or will furnish the written undertaking of such other Person or Persons as
shall be acceptable to the Company to) reimburse the Company and each such
controlling Person for any legal and any other expenses reasonably incurred by
the Company or such controlling Person in connection with investigation or
defending any such loss, claim, damage, liability, or action.
12.7. Conduct of Litigation; Procedure. If an action is brought against any
Person entitled to indemnification under Section 12.5 or 12.6 above (the
"Indemnitee"), the Indemnitee shall promptly notify the Person or Persons
obligated to indemnify the Indemnitee (whether one or more, the "Indemnitor") of
such action and the Indemnitor shall assume the defense of such action,
including the employment of counsel, reasonably satisfactory to Indemnitee, and
the payment of all court costs and other expenses. The Indemnitee shall have the
right to employ its own counsel in any such action, but the fees and expenses of
such counsel shall be at the Indemnitee's expense unless the Indemnitor shall
not have employed counsel to have charge of the defense of such action or the
Indemnitee shall have reasonably concluded that there may be defenses available
to it which are different from or additional to those available to the
Indemnitor (in which case the Indemnitor shall not have the right to direct the
defense of such action on behalf of Indemnitee), in any of which events such
fees and expenses shall be borne by the Indemnitor; provided, that the
Indemnitor shall only be required to pay the fees and expenses of one counsel
employed by all the Indemnitees in any single action.. Notwithstanding anything
to the contrary in this Section 12.7, the Indemnitor shall not be liable for any
settlement of any claim or action effected without its written consent. The
Company covenants and agrees that it will not settle any action against it
involving possible claims against an Indemnitee without also using its
commercially reasonable efforts to settle the action against such Indemnitee.
12.8. Termination of Restrictions. The restrictions imposed by Section 5 of
this Agreement upon the transferability of the Notes and the Conversion Shares
and the rights granted pursuant to Sections 12.1 and 12.2, shall cease and
terminate as to any particular Note or Conversion Share (i) when such Note or
such Conversion Shares shall have been effectively registered under the
Securities Act and disposed of by the holder thereof in accordance with the
method of disposition described in the registration statement, (ii) when
opinions of counsel shall have been given pursuant to Section 12.11 of this
Agreement to the effect that the legend set forth in Section 12.12 hereof is not
required, (iii) when such Conversion Shares shall have been distributed pursuant
to Rule 144 (or any successor provision) under the Securities Act, or (iv) when
all of the Conversion Shares, which have not been previously sold pursuant to a
registration statement, are eligible for sale as an entirety within a
three-month period under Rule 144 and the Eligible Holder has been afforded an
opportunity for inclusion of such shares in a registration statement pursuant to
Section 12.2. Whenever the restrictions imposed by this Section 5 shall
terminate, as hereinabove provided, the Holder of any Note or Conversion Shares
as to which such restrictions shall have terminated shall be entitled to receive
from the Company, without expense, a new Note or stock certificate not bearing
the restrictive legend set forth in Section 12.12 and not containing any other
reference to the restrictions imposed by Section 12.11.
12.9. Transfer of Your Rights. Your rights under this Section 12 shall
inure to the benefit of all Persons who shall at any time be the Holders of
Notes originally purchased by you hereunder, pro rata in accordance with their
respective interests, and each such Holder, by such Holder's acceptance of such
Note, as the case may be, agrees to be and shall be deemed to be bound by all of
your covenants set forth in Section 5 of this Agreement and this Section 12, to
the extent that such representations are applicable to such Holder's Notes.
12.10. Discontinuance of Use of Prospectus. If at any time during the
period that a holder of Conversion Shares an event (an "Event") occurs that
causes a prospectus to contain an untrue statement of a material fact or to omit
to state any material fact required to be stated therein or necessary to make
the statements therein not misleading in light of the circumstances under which
they were made, the Company shall (i) give such holder a notice (the "No-Sell
Notice") that an Event has occurred, (ii) promptly (or, if in the reasonable
judgment of the Company disclosure of the event would be detrimental to the
Company, promptly after the date that disclosure of the Event would not be
detrimental to the Company) use its commercially reasonable efforts to cause the
registration statement not to contain an untrue statement of a material fact or
to omit to state any material fact required to be stated therein or necessary to
make the statements therein not misleading in light of the circumstances under
which they were made, and (iii) the each holder of Conversion Shares a notice
(the "Sell Notice") when the registration statement does not contain an untrue
statement of a material fact or to omit to state any material fact required to
be stated therein or necessary to make the statements therein not misleading in
light of the circumstances under which they were made. No holder of Conversion
Shares shall sell and Conversion Shares pursuant to the registration statement
after it has received a No-Sell Notice until it has received a subsequent Sell
Notice.
12.11. Further Limitations on Disposition. Without in any way limiting the
representations set forth in Section 5, each Purchaser further agrees not to
make any disposition of all or any portion of the Securities unless and until
the transferee has agreed in writing for the benefit of the Company to be bound
by this Section 12.11 provided and to the extent this Section and such agreement
are then applicable, and:
(a) There is then in effect a registration statement under the
Securities Act covering such proposed disposition and such disposition
is made in accordance with such registration statement; or
(b) (i) Such Purchaser shall have notified the Company of the proposed
disposition and shall have furnished the Company with a detailed
statement of the circumstances surrounding the proposed disposition,
and (ii) if requested by the Company, such Purchaser shall have
furnished the Company with an opinion of counsel, reasonably
satisfactory to the Company that such disposition will not require
registration of such shares under the Securities Act.
12.12. Legends. It is understood that the certificates evidencing the
Securities may bear one or all of the following legends:
"These securities have not been registered under the Securities Act of
1933, as amended. They may not be sold, offered for sale, pledged or
hypothecated in the absence of a registration statement in effect with
respect to the securities under such Act or an opinion of counsel
satisfactory to the Company that such registration is not required or
unless sold pursuant to Rule 144 of such Act."
"Transfer of these securities is restricted by the terms of a Note
Purchase Agreement dated June 30, 2000, between the Company and the
original purchasers of these securities."
13. CONVERSION OF NOTES
13.1. Conversion Privilege and Conversion Price. Subject to and upon
compliance with the provisions of this Section, at the option of the Holder of a
Note, any Note or any portion of the principal amount thereof which is $1,000 or
an integral multiple of $1,000 may be converted, at any time on or prior to the
close of business on June 30, 2003 (except that, in case the Company defaults on
the payment of any Note on its maturity date, such right to convert shall
terminate as to such Note at the close of business on the date it is paid in
full with all accrued interest) at the principal amount thereof, or of such
portion thereof, into fully paid and nonassessable shares (calculated as to each
conversion to the nearest 1/100 of a share) of Common Stock of the Company, at
the Conversion Price, determined as hereinafter provided, in effect at the time
of conversion. The Company shall pay any accrued but unpaid interest through the
Interest Payment Date immediately preceding the Conversion Date upon conversion
of any Note.
The price at which shares of Common Stock shall be delivered upon
conversion (herein called the "Conversion Price") shall be initially $7.50;
provided, however, that the Conversion Price shall be adjusted in certain
instances as provided in Section 13.4.
13.2. Exercise of Conversion Privilege. In order to exercise the conversion
privilege, the Holder of any Note to be converted shall surrender such Note,
duly endorsed or assigned to the Company or in blank, at any office or agency of
the Company maintained for that purpose pursuant to Section 8, accompanied by a
duly signed conversion notice substantially in the form set forth on the Note to
the Company at such office or agency that the Holder elects to convert such Note
or, if less than the entire principal amount thereof is to be converted, the
portion thereof to be converted. No payment or adjustment shall be made upon any
conversion on account of any interest accrued on the Notes surrendered for
conversion after such surrender or on account of any dividends on the Common
Stock issued upon conversion.
Notes shall be deemed to have been converted immediately prior to the close
of business on the day of surrender of such Notes for conversion in accordance
with the foregoing provisions, and at such time the rights of the Holders of
such Notes as holders shall cease, and the Person or Persons entitled to receive
the shares of Common Stock issuable upon conversion shall be treated for all
purposes as the record holder or holders of such shares of Common Stock at such
time. As promptly as practicable on or after the conversion date, the Company
shall issue and shall deliver at such office or agency a certificate or
certificates for the number of full shares of Common Stock issuable upon
conversion, together with payment in lieu of any fraction of a share, as
provided in Section 13.3 and payment of interest accrued on the Note or portion
thereof converted from the last Interest Payment Date to the effective date of
conversion.
In the case of any Note that is converted in part only, upon such
conversion the Company shall execute and the Company shall deliver to the Holder
thereof, at the expense of the Company, a new Note or Notes of authorized
denominations in aggregate principal amount equal to the unconverted portion of
the principal amount of such Note.
13.3. Fractions of Shares. No fractional shares of Common Stock shall be
issued upon conversion of Notes. If more than one Note shall be surrendered for
conversion at one time by the same Holder, the number of full shares which shall
be issuable upon conversion thereof shall be computed on the basis of the
aggregate principal amount of the Notes (or specified portions thereof) so
surrendered. Instead of any fractional share of Common Stock that would
otherwise be issuable upon conversion of any Note or Notes (or specified
portions thereof), the Company shall pay a cash adjustment in respect of such
fraction in an amount equal to the same fraction of the market price per share
of Common Stock (as deemed by the Board of Directors of the Company or in any
manner prescribed by the Board of Directors of the Company) at the close of
business on the day of conversion.
13.4. Conversion Price Adjustments. (a) The Conversion Price shall be
subject to adjustment from time to time as follows:
(ii) Stock Dividends. In case the Company shall, at any time
after the Closing Date, pay or make an extraordinary dividend or other
distribution payable in shares of Common Stock on any class of capital
stock of the Company, the Conversion Price in effect at the opening of
business on the day following the date fixed for the determination of
stockholders entitled to receive such dividend or other distribution
shall be reduced (calculated to the nearest cent) by multiplying such
Conversion Price by a fraction of which the numerator shall be the
number of shares of Common Stock outstanding at the close of business
on the date fixed for such determination and the denominator shall be
the sum of such number of shares and the total number of shares
constituting such dividend or other distribution, such reduction to
become effective immediately after the opening of business on the day
following the date fixed for such determination. For the purposes of
this paragraph, the number of shares of Common Stock at any time
outstanding shall not include shares held in the treasury of the
Company. The Company will not pay any dividend or make any distribution
on shares of Common Stock held in the treasury of the Company.
(ii) Rights Offering. In case the Company shall, at any time
after the Closing Date, issue rights or warrants to all holders of its
Common Stock entitling them to subscribe for or purchase shares of
Common Stock at a price per share less than the Current Market Price
per share of the Common Stock on the date fixed for the determination
of stockholders entitled to receive such rights or warrants, the
Conversion Price in effect at the opening of business on the day
following the date fixed for such determination shall be reduced
(calculated to the nearest cent) by multiplying such Conversion Price
by a fraction of which the numerator shall be the number of shares of
Common Stock outstanding at the close of business on the date fixed for
such determination plus the number of shares of Common Stock which the
aggregate of the offering price of the total number of shares of Common
Stock so offered for subscription or purchase would purchase at such
Current Market Price and the denominator shall be the number of shares
of Common Stock outstanding at the close of business on the date fixed
for such determination plus the number of shares of Common Stock so
offered for subscription or purchase, such reduction to become
effective immediately after the opening of business on the day
following the date fixed for such determination; provided, however,
that if such rights or warrants are only exercisable upon the
occurrence of certain triggering events, then the Conversion Price will
not be adjusted until such triggering events occur. For the purposes of
this Section 13.4(a)(ii), the number of shares of Common Stock at any
time outstanding shall not include shares held in the treasury of the
Company. The Company will not issue any rights or warrants in respect
of shares of Common Stock held in the treasury of the Company. If any
such rights or warrants shall expire without having been exercised, the
Conversion Price shall thereupon be readjusted to eliminate the amount
of its adjustment due to their issuance.
(iii) Stock Splits, Etc. In case outstanding shares of Common
Stock shall, at any time after the Closing Date, be subdivided into a
greater number of shares of Common Stock, the Conversion Price in
effect at the opening of business on the day following the day upon
which such subdivision becomes effective shall be proportionately
reduced (calculated to the nearest cent), and, conversely, in case
outstanding shares of Common Stock shall each be combined (calculated
to the nearest cent) into a smaller number of shares of Common Stock,
the Conversion Price in effect at the opening of business on the day
following the day upon which such combination becomes effective shall
be proportionately increased, such reduction or increase, as the case
may be, to become effective immediately after the opening of business
on the day following the day upon which such subdivision or combination
becomes effective.
(iv) Distributions. In case the Company shall, at any time
after the Closing Date, by dividend or otherwise, distribute to all
holders of its Common Stock evidences of its Indebtedness or assets or
shares of capital stock other than Common Stock (excluding any dividend
or distribution paid in cash out of the retained earnings of the
Company or any dividend or distribution referred above), the Conversion
Price shall be adjusted (calculated to the nearest cent) so that the
same shall equal the price determined by multiplying the Conversion
Price in effect immediately prior to the close of business on the date
fixed for the determination of stockholders entitled to receive such
distribution by a fraction of which the numerator shall be the Current
Market Price per share of the Common Stock on the date fixed for such
determination less the then fair market value of the portion of the
assets or evidences of Indebtedness so distributed applicable to one
share of Common Stock (as determined in good faith by the Board of
Directors of the Company) and the denominator shall be such Current
Market Price per share of the Common Stock, such adjustment to become
effective immediately prior to the opening of business on the day
following the date fixed for the determination of stockholders entitled
to receive such distribution.
(v) Reclassifications. The reclassification of Common Stock
into securities other than Common Stock shall be deemed to involve (i)
a distribution of such securities other than Common Stock to all
holders of Common Stock (and the effective date of such
reclassification shall be deemed to be "the date fixed for the
determination of stockholders entitled to receive such distribution"
and "the date fixed for such determination" within the meaning of
Section 13.4(a)(iv)) and (ii) a subdivision or combination, as the case
may be, of the number of shares of Common Stock outstanding immediately
prior to such reclassification into the number of shares of Common
Stock outstanding immediately thereafter (and the effective date of
such reclassification shall be deemed to be "the day upon which such
subdivision becomes effective" or "the day upon which such combination
becomes effective", as the case may be, and "the day upon which such
subdivision or combination becomes effective" within the meaning of
Section 13.4(a)(iii)).
(vi) Rounding of Calculations; Minimum Adjustment. All
calculations under this Section 13.4(a) shall be made to the nearest
$.05 or to the nearest one hundredth (1/100th) of a share, as the case
may be. Any provision of this Section 13.4 to the contrary
notwithstanding, no adjustment in the Conversion Price shall be made if
the amount of such adjustment would be less than one percent, but any
such amount shall be carried forward and an adjustment with respect
thereto shall be made at the time of and together with any subsequent
adjustment which, together with such amount and any other amount or
amounts so carried forward, shall aggregate one percent or more.
(vii) Timing of Issuance of Additional Common Stock Upon
Certain Adjustments. In any case in which the provisions of this
Section 13.4(a) shall require that an adjustment shall become effective
immediately after a record date for an event, the Company may defer
until the occurrence of such event issuing to the Holder of any Note
converted after such record date and before the occurrence of such
event the additional shares of Common Stock or other property issuable
or deliverable upon such conversion by reason of the adjustment
required by such event over and above the shares of Common Stock or
other property issuable or deliverable upon such conversion before
giving effect to such adjustment; provided, however, that the Company
upon request shall deliver to such Holder a due bill or other
appropriate instrument evidencing such Holder's right to receive such
additional shares or other property, and such cash, upon the occurrence
of the event requiring such adjustment.
(b) Statement Regarding Adjustments. Whenever the Conversion Price shall be
adjusted as provided in Section 13.4, the Company shall forthwith file, at the
office of any transfer agent for the Notes and at the principal office of the
Company a statement showing in detail the facts requiring such adjustment and
the Conversion Price that shall be in effect after such adjustment, and the
Company shall also cause a copy of such statement to be sent by mail, first
class postage prepaid, to each Holder of the Notes at its address appearing on
the Company's records. Where appropriate, such copy may be given in advance and
may be included as part of a notice required to be mailed under the provisions
of Section 13.4(c).
(c) Notice to Holders. In the event the Company shall propose to take any
action of the type described in clause (ii), (iv) or (v) of Section 13.4(a), the
Company shall give notice to each Holder of the Notes, in the manner set forth
in Section 13.4(b), which notice shall specify the record date, if any, with
respect to any such action and the approximate date on which such action is to
take place. Such notice shall also set forth such facts with respect thereto as
shall be reasonably necessary to indicate the effect of such action (to the
extent such effect may be known at the date of such notice) on the Conversion
Price and the number, kind or class of shares or other securities or property
which shall be deliverable or purchasable upon the occurrence of such action or
deliverable upon conversion of the Notes. In the case of any action which would
require the fixing of a record date, such notice shall be given at least 5
Business Days prior to the date so fixed, and in case of all other action, such
notice shall be given at least 10 Business Days prior to the taking of such
proposed action.
(d) Treasury Stock. For the purposes of this Section 13.4, the sale or
other disposition of any Common Stock of the Company theretofore held in its
treasury shall be deemed to be an issuance thereof.
(e) Costs. The Company shall pay all documentary, stamp, transfer or other
transactional taxes attributable to the issuance or delivery of shares of Common
Stock of the Company or other securities or property upon conversion of any
Notes: provided, however, that the Company shall not be required to pay any
taxes which may be payable in respect of any transfer involved in the issuance
or delivery of any certificate for such shares or securities in the name other
than that of the Holder of the Notes in respect of which such shares are being
issued.
(f) Reservation of Shares. The Company shall reserve at all times so long
as any Notes remain outstanding, free from preemptive rights, out of its
treasury stock or its authorized but unissued shares of Common Stock, or both,
solely for the purpose of effecting the conversion of the Notes, sufficient
shares of Common Stock to provide for the conversion of all outstanding Notes
and set aside and keep available any other property deliverable upon conversion
of all outstanding Notes.
(g) Approvals. If any shares of Common Stock or other securities to be
reserved for the purpose of conversion of the Notes require registration with or
approval of any governmental authority under any Federal or state law before
such shares or other securities may be validly issued or delivered upon
conversion, then the Company and the Holders of the Notes will in good faith and
as expeditiously as possible endeavor to secure such registration or approval,
as the case may be.
(h) Valid Issuance. All shares of Common Stock or other securities which
may be issued upon conversion of the Notes will upon issuance by the Company be
duly and validly issued, fully paid and nonassessable and free from all taxes,
liens and charges with respect to the issuance thereof and the Company shall
take no action which will cause a contrary result (including, without
limitation, any action which would cause the Conversion Price to be less than
the par value, if any, of the Common Stock).
14. EXCHANGE RIGHT. The Notes shall be subject to exchange in accordance
with the following provisions:
14.1. Exchange Privilege. Subject to and upon compliance with the
provisions of this Section, at the option of the Holders of the Notes, all of
the Notes (or any portion of the principal amount of the Notes as hereinafter
provided) may be exchanged, at any time on or prior to the close of business on
June 30, 2003 (except that, in case the Company defaults on the payment of any
Note on its maturity date, such right to exchange shall terminate as to such
Note at the close of business on the date it is paid in full with all accrued
interest) into 19.99% of the outstanding capital stock of HMS (the "Exchange
Ratio"). The Company shall pay any accrued but unpaid interest through the
Interest Payment Date immediately preceding the effective date of the exchange
of the Notes. If less than all of the Notes are to be exchanged, the Holders of
the Notes shall exchange Notes representing an aggregate principal amount
exchangeable into at least 10% of the outstanding capital stock of HMS and the
percentage of the capital stock of HMS to be delivered to the Holders of the
Notes shall be proportionately reduced.
14.2. Exercise of Exchange Privilege. In order to exercise the exchange
privilege, the Holders of the Notes to be exchanged shall surrender such Notes,
duly endorsed or assigned to the Company or in blank, at any office or agency of
the Company maintained for that purpose pursuant to Section 8, accompanied by a
duly signed exchange notice substantially in the form set forth on the Note to
the Company at such office or agency that the Holder elects to exchange such
Note or, if less than the entire principal amount thereof is to be exchanged,
the portion thereof to be exchanged. No payment or adjustment shall be made upon
any exchange on account of any interest accrued on the Notes surrendered for
exchange after such surrender.
Notes shall be deemed to have been exchanged immediately prior to the close
of business on the day of surrender of such Notes for exchange in accordance
with the foregoing provisions, and at such time the rights of the Holders of
such Notes as Holders shall cease. As promptly as practicable on or after the
exchange date, the Company shall issue and shall deliver at such office or
agency a certificate or certificates for the number of full shares of HMS
issuable upon exchange and payment of interest accrued on the Note or portion
thereof converted from the last Interest Payment Date to the effective date of
exchange.
14.3. Adjustment of Exchange Ratio. If HMS issues shares of capital stock,
warrants, options, or other rights to purchase capital stock of HMS, or
securities convertible or exchangeable for capital stock of HMS with a purchase,
conversion, or exercise price that represents an aggregate valuation of all of
the outstanding capital stock of HMS, on a fully-diluted basis, of greater than
$13,266,331, the Exchange Ratio shall be reduced proportionately. If HMS issues
shares of capital stock, warrants, options, or other rights to purchase capital
stock, or securities convertible or exchangeable for capital stock of HMS with a
purchase, conversion, or exercise price that represents an aggregate valuation
for all of the outstanding capital stock of HMS, on a fully-diluted basis, of
less than $13,266,331, the Exchange Ratio shall be determined using the
following formula:
A x B + A x C = Exchange Ratio
Where: A = The current Exchange Ratio.
B = The consideration to be received for the capital stock of
HMS to be issued divided by the aggregate valuation for all of
the outstanding capital stock of HMS.
C = The consideration to be received for the capital stock of HMS
to be issued divided by $13,266,331.
14.4. Security. The Company shall grant the Holders of the Notes a security
interest in the number of shares of capital stock of HMS equal to the total
number of shares of capital stock of HMS outstanding multiplied by the Exchange
Ratio to secure the Holders' exchange right.
15. DEFINITIONS.
"Affiliates" of any Person means any Person directly or indirectly
controlling, controlled by or under direct or indirect common control with such
Person. A Person shall be deemed to control a corporation if such Person
possesses, directly or indirectly, the power to direct or cause the direction of
the management and policies of such corporation, whether through the ownership
of voting securities, by contract or otherwise.
"Applicable Law" shall have the meaning given such term in Section 7.4.
"Bank" shall have the meaning given such term in Section 9.4
"Business Day" means any day that the New York Stock Exchange is open for
trading.
"Closing" shall have the meaning given such term in Section 3.
"Closing Date" shall have the meaning given such term in Section 3.
"Code" means the Internal Revenue Code of 1986, as amended.
"Common Stock" means the Company's presently authorized Common Stock, $0.01
par value per share.
"Company" means GP Strategies Corporation, a Delaware corporation.
"Conversion Shares" shall mean shares of Common Stock issuable or issued on
conversion of the Notes.
"Current Market Price" means, as of any date, the average for the 5
consecutive Trading Days prior to such date, of the Market Price on such Trading
Days.
"Debt" shall have the meaning given such term in Section 9.5.
"Designated Holder of Senior Obligations" shall have the meaning given such
term in Section 9.6.
"Eligible Holder" shall have the meaning given such term in Section 12.2.
"Employee Benefit Plan" means an employee benefit plan within the meaning
of Section 3(3) of ERISA maintained, sponsored, or contributed to by the
Company, any of its Material Subsidiaries, or any ERISA Affiliate.
"Environmental Law" means all federal, state, local and foreign laws and
regulations relating to pollution or protection of human health or the
environment (including, without limitation, ambient air, surface water,
groundwater, land surface or subsurface strata), including, without limitation,
laws and regulations relating to emissions, discharges, releases or threatened
releases of Materials of Environmental Concern, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Materials of Environmental Concern.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the rules and regulations promulgated thereunder
from time to time in effect.
"ERISA Affiliate" means any trade or business (whether or not incorporated)
that is treated as a single employer together with the Company under Section 414
of the Code.
"Event" shall have the meaning given such term in Section 12.10.
"Event of Default" shall have the meaning given such term in Section 11.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Ratio" shall have the meaning given such term in Section 14.1.
"FDA" means the U.S. Food and Drug Administration. ---
"Form 10-K" means the Company's Annual Report Pursuant to Section 13 or
Section 15(d) of the Securities Exchange Act of 1934 for the fiscal year ended
December 31, 1999.
"Form 10-Q" means the Company's Quarterly Report Pursuant to Section 13 or
15(d) of the Securities Exchange Act of 1934 for the fiscal quarter ended March
31, 2000.
"Guaranty" means, with respect to any Person, any obligation (except the
endorsement in the ordinary course of business of negotiable instruments for
deposit or collection) of such Person guaranteeing or in effect guaranteeing any
indebtedness, dividend or other obligation of any other Person in any manner,
whether directly or indirectly, including (without limitation) obligations
incurred through an agreement, contingent or otherwise, by such Person:
(a) to purchase such indebtedness or obligation or any property
constituting security therefor;
(b) to advance or supply funds (i) for the purchase or payment of such
indebtedness or obligation, or (ii) to maintain any working capital or other
balance sheet condition or any income statement condition of any other Person or
otherwise to advance or make available funds for the purchase or payment of such
indebtedness or obligation;
(c) to lease properties or to purchase properties or services primarily for
the purpose of assuring the owner of such indebtedness or obligation of the
ability of any other Person to make payment of the indebtedness or obligation;
or
(d) otherwise to assure the owner of such indebtedness or obligation
against loss in respect thereof.
In any computation of the indebtedness or other liabilities of the obligor under
any Guaranty, the indebtedness or other obligations that are the subject of such
Guaranty shall be assumed to be direct obligations of such obligor.
"HMS" means Hydro Med Sciences, Inc., a Delaware corporation and
wholly-owned subsidiary of the Company.
"HMS division" means the Hydro Med Sciences division of the Company.
"Holder" or "Holders" means, with respect to any Note, the Person in whose
name such Note is registered in the register maintained by the Company pursuant
to Section 8.
"Indebtedness" means, with respect to any Person means, at any time,
without duplication,
(a) its liabilities for borrowed money and its redemption obligations in
respect of mandatorily redeemable Preferred Stock;
(b) its liabilities for the deferred purchase price of property acquired by
such Person (excluding accounts payable arising in the ordinary course of
business but including all liabilities created or arising under any conditional
sale or other title retention agreement with respect to any such property);
(c) all liabilities appearing on its balance sheet in accordance with
generally accepted accounting principles for leases with respect to which the
lessee is required concurrently to recognize the acquisition of an asset and the
incurrence of a liability;
(d) all liabilities for borrowed money secured by any Lien with respect to
any property owned by such Person (whether or not it has assumed or otherwise
become liable for such liabilities);
(e) all its liabilities in respect of letters of credit or instruments
serving a similar function issued or accepted for its account by banks and other
financial institutions (whether or not representing obligations for borrowed
money); and
(f) any Guaranty of such Person with respect to liabilities of a type
described in any of clauses (a) through (e) hereof.
"Interest Payment Date" means the date an installment of interest becomes
due and payable on the Notes in accordance with Section 1.
"IT group" means the Information Technology group or business segment of
the Company.
"Lien" means, with respect to any Person, any mortgage, lien, pledge,
charge, security interest or other encumbrance, or any interest or title of any
vendor, lessor, lender or other secured party to or of such Person under any
conditional sale or other title retention agreement or capital lease, upon or
with respect to any property or asset of such Person (including in the case of
stock, stockholder agreements, voting trust agreements and all similar
arrangements).
"Market Price" for any day means (i) if the Common Stock is listed or
admitted for trading on any national securities exchange registered under
Section 6 of the Exchange Act the last sale price, or the closing bid price if
no sale occurred, of such class of stock on the principal national securities
exchange on which such class of stock is listed, or (ii) if not listed or traded
as described in clause (i), the last reported sale price of Common Stock on the
Nasdaq National Market tier of the Nasdaq Stock Market, if so quoted, (iii) if
not quoted as described in clause (ii), the average of the bid and asked price
on the Nasdaq Smallcap Market tier of the Nasdaq Stock Market or any similar
system of automated dissemination of quotations of securities prices then in
common use, if so quoted, or (iv) if not quoted as described in clause (iii),
the mean between the high bid and low asked quotations for Common Stock as
reported by the OTC Bulletin Board Service or National Quotation Bureau
Incorporated if at least two securities dealers have inserted both bid and asked
quotations for such class of stock on at least five of the ten preceding days.
If the Market Price cannot be determined under any of the foregoing methods,
Market Price means the fair value per share of Common Stock on such date
determined by the Board of Directors of the Company in good faith, irrespective
of any accounting treatment.
"Material" means material in relation to the business, operations, affairs,
financial condition, assets or properties of the Company and its Material
Subsidiaries (as such business is presently conducted and as it is proposed to
be conducted) taken as a whole.
"Material Adverse Change" means any single circumstance or event (or series
of circumstances or events) having a material adverse effect on the assets,
properties, financial condition or business operations of the Company and the
Material Subsidiaries (as such business is presently conducted and as it is
proposed to be conducted) taken as a whole.
"Materials of Environmental Concern" means chemicals, pollutants,
contaminants, wastes, toxic substances, hazardous substances, petroleum and
petroleum products.
"Multiemployer Plan" means any Employee Benefit Plan that is a
"multiemployer plan" (as such term is defined in Section 4001(a)(3) of ERISA).
"Nasdaq Stock Market" means The Nasdaq Stock Market, Inc.
"No-Sell Notice" shall have the meaning given such term in Section 12.10.
"Notes" shall have the meaning given such term in Section 1.
"Person" means and include an individual, a partnership, a corporation, a
trust, a joint venture, an unincorporated organization, a government or any
department or agency thereof, and any other entity.
"Restricted Note" means any Note bearing the restrictive legend set forth
in Section 12.12.
"SEC" means the Securities and Exchange Commission, or any other federal
agency at the time administering the Securities Act.
"SEC Filings" shall have the meaning given such term in Section 4.4.
"Securities" shall have the meaning given such term in Section 5.3.
"Securities Act" means the Securities Act of 1933, as amended, or any
similar federal statute, and the rules and regulations of the SEC thereunder,
all as the same shall be in effect at the time.
"Sell Notice" shall have the meaning given such term in Section 12.10.
"Senior Credit Agreement" shall have the meaning given such term in Section
9.4.
"Senior Obligations" shall have the meaning given such term in Section 9.4.
"Senior Obligations Default" means a default in payment of the principal of
or sinking fund installments, if any, due with respect to, fees in respect of or
interest on, any Senior Obligations, or any default, or any event which, with
notice or lapse of time or both, would constitute a default, in any other
agreement, term or condition contained in any agreement under which any Senior
Obligations is issued.
"Subsidiaries" means any Person of which at the time of determination the
Company and/or one or more Subsidiaries owns or controls directly or indirectly
more than 50% of the shares of voting stock of such Person.
"Trading Day" means a day on which the New York Stock Exchange is open for
trading.
16. WAIVERS; MODIFICATIONS OF AGREEMENT. Any provision in this Agreement to
the contrary notwithstanding (except for Section 9.9, which shall control as to
the matters covered thereby), changes in or additions to this Agreement may be
made, and compliance with any covenant or condition herein set forth may be
omitted, if the Company (a) shall obtain from the holders of record of Notes
aggregating not less than 66-2/3% of the aggregate principal amount of the Notes
at the time outstanding their consent thereto in writing and (b) shall deliver
copies of such consent in writing to any such Holders of record who did not
execute the same; provided, however, that without the consent in writing of the
Holder of each Note affected thereby, no such consent shall be effective to
reduce the principal of or rate of interest payable on, or to postpone any date
fixed for the payment of principal of or any installment of interest on, any
Note, to increase the percentage specified in Section 11 of the principal amount
of the Notes the Holders of which may, in accordance with the provisions of such
Section 11, accelerate the maturity of the Notes upon an Event of Default or to
reduce the percentage of the principal amount of the Notes the consent of the
Holders of which shall be required under this Section 16.
17. SURVIVAL OF COVENANTS, ETC. All representations and warranties made
herein and in the Notes and in any certificate delivered pursuant hereto shall
survive any investigation made by you and the execution and delivery to you of
the Notes to be purchased by you and your payment therefor for a period of three
years from the Closing Date.
18. BROKERS; ISSUANCE TAXES. The Company will hold you free and harmless
from any (a) claim, demand, liability for, or expense in connection with, any
brokers' or finders' fees or commissions claimed by any Person asserted to be
acting on behalf of the Company in connection with this Agreement or the
transactions contemplated herein and (b) taxes, if any, payable upon, or on
account of, issuance of the Notes or the Common Stock. Each Purchaser will hold
the Company free and harmless from any claim, demand, liability for, or expense
in connection with, any brokers' or finders' fees or commissions claimed by any
Person asserted to be acting on behalf of such Purchaser in connection with this
Agreement or the transactions contemplated herein.
19. GOVERNING LAW. This Agreement and the Notes are being delivered in New
York and shall be governed by and construed according to the laws of the State
of New York without consideration of its conflict of law provisions.
20. NOTICES. Any notice, consent, request, or other communication required
or permitted hereunder shall be in writing and shall be deemed given when either
(a) personally delivered to the intended recipient, (b) sent by certified or
registered mail, return-receipt requested, or (c) sent by telegraph, telex, or
facsimile and confirmed by letter, addressed to the intended recipient as
follows:
if to the Company, to:
GP Strategies Corporation
9 West 57th Street
New York, New York 10019
Facsimile number 212-230-9545
; if to any of you, to the address given for such of you on Schedule 1 hereto;
and if to any other Holder of a Note to the address of such Holder given to the
Company in accordance with Section 8. Any Person (other than the Company) may
change the address to which notice is to be sent pursuant to the preceding
sentence by giving notice of such new address to the Company in accordance with
this Section 20. The Company may change the address to which notice is to be
sent hereunder by giving notice of such change, in accordance with this Section
20, to each Person against whom such change shall be effective. Any notice
mailed as aforesaid shall, unless otherwise provided herein, be deemed given on
the fifth day after deposited in the Unites States mail in accordance with the
first sentence of this Section 20.
21. TRANSACTION EXPENSES. The Company will pay (a) all reasonable costs and
expenses (including reasonable attorneys' fees and disbursements of not more
than one special counsel for the Holders of the Notes) incurred by you or any
Holder of a Note in connection the negotiation of this Agreement in an amount
not to exceed $20,000 and in connection with any amendments, waivers or consents
under or in respect of this Agreement or the Notes (whether or not such
amendment, waiver or consent becomes effective), (b) the reasonable costs and
expenses incurred in enforcing, defending or declaring (or determining whether
or how to enforce, defend, or declare) any rights or remedies under this
Agreement or the Notes or in responding to any subpoena or other legal process
or informal investigative demand issued in connection with this Agreement or the
Notes, or by reason of being a Holder of any Note, and (c) the reasonable costs
and expenses, including consultants' and advisors' fees, incurred in connection
with the insolvency or bankruptcy of the Company or in connection with any
work-out or restructuring of the transactions contemplated hereby and by the
Notes.
22. PARTIES IN INTEREST. All of the terms and provisions of this Agreement
shall bind and inure to the benefit of the parties hereto and their respective
successors and assigns. The provisions of Section 9 shall inure to the benefit
of the holders from time-to-time of the Senior Obligations.
23. BUSINESS DAYS. Should any installment of the principal of or interest
on any Note become due and payable upon a day other than a day on which national
banks located in New York, are open for the conduct of banking business, the
maturity thereof shall be extended to the next succeeding day upon which such
banks are open for the conduct of banking business and, in the case of an
installment of principal, interest shall be payable thereon at the rate per
annum specified in such Note during such extension.
24. HEADINGS. The headings of the various sections and subsections hereof
have been inserted for convenience of reference only and shall not be deemed to
in any way modify any of the terms or provisions hereof.
25. COUNTERPARTS. This Agreement may be signed by each party hereto upon a
separate copy, in which event all of said copies shall constitute a single
counterpart of this Agreement. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, and it shall not be
necessary in making proof of this Agreement to produce or account for more than
one such counterpart.
[Signatures on following page]
If the foregoing is in accordance with your understanding, please sign the
form of confirmation and acceptance on the enclosed counterpart of this
Agreement and return the same to the Company, whereupon this Agreement shall be
a binding agreement between you and the Company.
Very truly yours,
GP STRATEGIES CORPORATION
By:__________________________
President
The foregoing Agreement is
hereby confirmed and accepted
as of the date first above written
CORPORATE OPPORTUNITIES FUND, L.P.
CORPORATE OPPORTUNITIES FUND
(INSTITUTIONAL), L.P.
By: SMM Corporate Management, L.L.C., general partner
By____________________________
James C. Gale, Manager