AMENDMENT AGREEMENT
This Agreement (the "AGREEMENT") is being entered into as of April
26, 2001 with respect to certain Debentures issued on February 23, 2000 (the
"DEBENTURES") by and among ▇▇▇▇▇▇▇▇▇▇.▇▇▇, Inc. (formerly known as Advanced
Communications Group, Inc.), a Delaware corporation (the "COMPANY"), and
Halifax Fund, L.P., a Cayman Island limited partnership, ▇▇▇▇▇▇▇ Associates,
L.P., a Delaware limited partnership and ▇▇▇▇▇▇▇ International, L.P., a
Cayman Island limited partnership (formerly known as Westgate International,
L.P.) (each, an "INVESTOR" and collectively, the "INVESTORS"). Terms used in
this Agreement but not defined shall have the meaning set forth in the
Debentures or that certain related Convertible Debenture Purchase Agreement
dated as of February 23, 2000 (the "PURCHASE AGREEMENT" and, together with
the Debentures, the Registration Rights Agreement and the Common Stock
Purchase Warrants all dated as of February 23, 2000, the "TRANSACTION
DOCUMENTS") by and among the Company and the Investors, except where the
context expressly indicates to the contrary.
R E C I T A L S:
WHEREAS, shortly following the Closing on February 23, 2000, the
Company changed its name from Advanced Communications Group, Inc. to
▇▇▇▇▇▇▇▇▇▇.▇▇▇, Inc.;
WHEREAS, Westgate International, L.P. has changed its name to
▇▇▇▇▇▇▇ International, L.P.
WHEREAS, each Investor is still the beneficial owner of the
Debentures it purchased from the Company pursuant to Section 1.1 of the
Purchase Agreement;
WHEREAS, there is a dispute concerning the meaning of the proviso
that is contained in the last sentence of the third paragraph of Section 5(c)
of the Debentures, which proviso (the "PROVISO") reads as follows: "Provided,
however, that at no such time shall the additional shares issuable as a
result of this Section 5(c) result in more than 400,000 shares (as adjusted
for stock splits, reverse splits, stock dividends and other dilutive events)
that would otherwise be issuable based on the then existing Conversion
Price.";
WHEREAS, the Company has taken the position that the Proviso applies
to Resets under the second paragraph of Section 5(c) of the Debentures, and
that therefore the number of additional shares issuable as a result of the
August 23, 2000 Reset and each subsequent Reset, if any, is capped at 400,000
per Reset (subject to adjustment);
WHEREAS, each of the Investors disputes the Company's position
concerning the meaning of the Proviso and claims that the Proviso does not
modify any of such Investor's rights set forth in the second paragraph of
Section 5(c) of the Debentures; and
WHEREAS, the dispute between the Company and the Investors
concerning the interpretation and significance of the Proviso is referred to
hereafter as the "DISPUTE";
T E R M S:
NOW THEREFORE, for $1.00 and other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, the parties
hereto agree as follows:
1. Agreements Not to Commence Litigation.
a. Each Investor and the Company hereby severally agrees
not to commence litigation, on or before December 31, 2001, with respect to
the Dispute. The agreement contained in the foregoing sentence shall be of no
force or effect and each Investor and the Company severally shall immediately
have the right to pursue any and all legal or equitable remedies which may be
available to such Investor or the Company in connection with the Dispute or
any other cause of action if, at any time after the date hereof:
(i) INTENTIONALLY OMITTED;
(ii) (A) an Event of Default has occurred or
exists, or (B)(1) an event or circumstance has occurred that, with the giving
of notice or the passage of time or both, will result in an Event of Default
and (2) such event or circumstance continues after notice thereof is given by
any Investor to the Company for the lesser of (I) eight (8) Trading Days and
(II) the duration of the applicable cure period, if any (as set forth in
Section 10 of this Agreement or Section 17 of the Debentures, as applicable);
(iii) the Company discontinues active efforts to
engage in a transaction that will result in a Sale of the Company (as defined
in Section 3 below) (such discontinuance shall be deemed to have occurred,
without limitation, if the Company fails to continue to employ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
or an investment banking firm of comparable reputation as its financial
advisor to assist the Company in exploring the possible Sale of the Company);
(iv) the Company has failed to publicly announce
on or before October 1, 2001 that it has reached an agreement in principle
which will result in the Sale of the Company; or
(v) the Company fails to comply with, or is
otherwise unable to satisfy the conditions of, clauses (ii) and/or (iii) of
Section 1(b) below following a Sale of the Company.
The Investors shall not be entitled to commence litigation
with respect to the Dispute, if (x) the right to commence litigation arises
solely as a result of an event or circumstance that (with the giving of
notice and the passage of time or both) would result in an Event of Default
under Section 10(d) of this Agreement and (y) both of the following are true:
(I) any such event or circumstance could not involve a risk of economic loss
in excess of $25,000 (in the aggregate) to one or more Investors (in the
aggregate) and (II) the Company is in compliance in all material respects
with the Transaction Documents (other than with respect to the Dispute) and
this Agreement. If
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any such event or circumstance referred to in the preceding sentence results
in an economic loss of $25,000 or less (in the aggregate) to one or more
Investors (in the aggregate), then the documented amount of any such loss
suffered by any Investor shall be automatically added to the Outstanding
Principal Amount of such Investor's Debentures.
Solely for purposes of subsection 1(a)(ii) above, a
material breach shall be deemed to exist within the meaning of Section 17(c)
of the Debentures if such breach could involve a risk of economic loss in
excess of $25,000 (in the aggregate) to one or more Investors (in the
aggregate).
b. Except as provided in Section 12 hereof, each Investor
severally and the Company hereby waives its rights to commence litigation
with respect to the Dispute at any time on and subsequent to January 1, 2002
if and only if:
(i) INTENTIONALLY OMITTED.
(ii) the Company shall have redeemed in cash the
full Outstanding Principal Amount of each Investor's Debentures on or before
December 31, 2001; and
(iii) no Investor shall be under any obligation to
deliver, or cause to be delivered, its proceeds from any such redemption to
any Senior Lender, and all proceeds received by any Investor pursuant to any
such redemption shall have been delivered by the Company to such Investor
free and clear of any lien, right or other encumbrance of any kind
whatsoever, other than inchoate liens, claims and encumbrances under
applicable bankruptcy and fraudulent conveyance laws.
With respect to clause (iii) in the immediately preceding
sentence and any references elsewhere in this Agreement to clause (iii) of
this Section 1(b), the Company shall be obligated to deliver to each Investor
whose Debentures are being redeemed, in whole or in part, pursuant to this
Agreement, on or prior to the redemption date, a payoff letter which is
signed by each Senior Lender in the form of Exhibit 2. Alternatively, the
Company may deliver an opinion of independent counsel (which may be subject
to customary exceptions for applicable bankruptcy and fraudulent conveyance
laws) to the effect that any redemption proceeds received or receivable by
such Investor will not be subject to any liens, claims or other encumbrances
with respect to the Senior Lenders. Any such opinion must be in a form and
substance reasonably satisfactory to each Investor receiving such opinion.
c. If any of the conditions to waiver of rights set forth
in Section 1(b) above have not been satisfied, then commencing on January 1,
2002, each Investor and the Company shall have the right to pursue any and
all legal or equitable remedies, without any bond or other security being
required, which may be available to such Investor or the Company with respect
to the Dispute or any other cause of action.
d. The Company agrees that irreparable damages would occur
in the event that any of the provisions of the Transaction Documents or this
Agreement are not
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performed in accordance with their specific terms or are otherwise breached.
It is accordingly agreed that the Investors shall be entitled to swift
specific performance, injunctive relief or other equitable remedies, without
any bond or other security being required, to prevent or cure breaches of the
provisions of the Transaction Documents or this Agreement and to enforce
specifically the terms and provisions hereof and thereof, this being in
addition to any other remedy to which any of them may be entitled under any
other agreement, at law or in equity. In the event that, after the date
hereof, any litigation is commenced (x) by any Investor in accordance with
Section 1 and/or Section 12 of this Agreement or (y) by the Company, the
Company agrees to waive any defense based on a statute of limitations,
waiver, estoppel, laches or any other defense arising out of any passage of
time from January 31, 2001 through and including December 31, 2001, and shall
not oppose any motion for injunctive or other equitable relief based upon any
passage of time from January 31, 2001 through and including December 31,
2001. The parties hereto agree that all statutes of limitations applicable to
any claims held by the Investors arising out of the Transaction Documents are
hereby tolled for the period from January 31, 2001 through and including
December, 31, 2001.
e. The entry into of this Agreement and the provisions
hereof shall be without prejudice to the rights of either the Company or any
Investor to take any position that the Company or any such Investor may
desire to take with respect to the Dispute.
f. The entry into of this Agreement and the provisions
hereof shall not be deemed to give rise to any presumption with respect to
the Dispute and the accuracy of any position with respect thereto.
g. The parties hereto hereby agree to waive as a defense in
any litigation with respect to the Dispute or otherwise in connection with
the Transaction Documents and/or this Agreement that all parties to the
respective Transaction Documents and/or this Agreement must be party to any
such litigation.
h. For the avoidance of doubt, any agreement by the parties
contained in this Agreement not to commence litigation with respect to the
Dispute shall not preclude any party from commencing litigation (except as
provided in Section 1(j) below) for any other reason. However, through
December 31, 2001, no party shall commence litigation solely for the failure
of the opposing party to be in compliance with the Transaction Documents
(other than with respect to the Dispute) and/or this Agreement unless any
such noncompliance continues for the lesser of (x) eight (8) Trading Days
after notice thereof is given by any party to the opposing party and (y) the
duration of such cure period, if any, as is provided for such circumstances
described in Section 10 of this Agreement or 17 of the Debentures.
i. The Company may become aware of the existence of one or
more conditions which conditions provide one or more Investor(s) with a right
to commence litigation with respect to the Dispute under this Agreement.
Within three (3) business days following the date upon which the Company
first becomes aware of the existence of such condition(s), the Company shall
notify each such Investor in writing that conditions
4
exist which provide such Investor with a right to commence litigation with
respect to the Dispute.
j. Notwithstanding anything in this Agreement to the
contrary, subsequent to the closing of a redemption of all of the Investors'
Debenture(s) pursuant to and in accordance with Section 3(a) or Section 3(b)
of this Agreement (a "REDEMPTION CLOSING"), each party's right to commence
litigation shall be subject to Section 12.
2. RIGHT TO CONVERT.
a. The Company agrees that the Investors severally, on a
pro rata basis in accordance with Schedule 1 hereto, shall have the right at
any time to convert their Debentures into the aggregate, for all Investors,
of 2,679,000 shares of Common Stock (the "INITIAL AGREED AMOUNT"). Such
aggregate amount shall be increased to 4,500,000 shares of Common Stock (with
a pro rata increase for each Investor in accordance with Schedule 1 hereto)
(the "INCREASED AGREED AMOUNT") upon the earlier of (i) January 1, 2002 and
(ii) the date (if any) that any Investor is entitled to commence litigation
under Section 1 and/or Section 12 hereof. (The term "AGREED AMOUNT" as used
in this Agreement shall be deemed to refer to the Initial Agreed Amount
and/or the Increased Agreed Amount, as applicable.) Any such conversion shall
be at the Conversion Price applicable at such time (see (x) Section 5(c) of
the Debentures, as modified in this Agreement, and (y) Section 4 of this
Agreement).
For the avoidance of doubt (and ignoring accrued but unpaid
interest (not previously added to principal) and default payments (not
previously added to principal)), if the Investors were to convert their
Debentures into the Initial Agreed Amount of 2,679,000 shares at the current
Conversion Price of $3.875 (see Section 4 below), the Outstanding Principal
Amount of their Debentures would be reduced as a result of such conversion by
an aggregate amount equal to $10,381,125. If the February 23, 2002 Reset were
to result in a new Conversion Price of $2.00 (by way of example only) and the
Investors were to convert their Debentures into the Increased Agreed Amount
of 4,500,000 shares at such Conversion Price, the Outstanding Principal
Amount of their Debentures would be reduced as a result of such conversion by
an aggregate amount equal to $9,000,000. For the further avoidance of doubt,
in the event that the third paragraph of Section 5(c) of the Debentures
(which, without limitation, covers redemption rights under this Agreement) is
applicable, the Investors shall be entitled to convert into the Agreed Amount
at a Conversion Price equal to the lesser of (I) the lowest Market Price for
Shares of Common Stock during any of the five (5) days referred to in such
paragraph and (II) the Conversion Price otherwise applicable at such time,
subject to further adjustment in each case.
b. The Company hereby covenants that any and all shares of
Common Stock issued to one or more Investors pursuant to this Section 2 shall
be issued in accordance with Section 5 of the Debentures (as modified hereby).
c. The Company hereby represents that the Company has
reserved 10,144,700 shares of Common Stock to issue to the Investors upon
conversion of the
5
Debentures in accordance herewith (and/or exercise of the Warrants) and that
4,120,891 shares are subject to Effective Registration.
d. Each Investor severally agrees that it will not seek to
convert its Debentures into more than its pro rata portion of the Agreed
Amount until and unless the Investors are permitted to commence litigation
with respect to the Dispute in accordance with Sections 1 and/or 12 of this
Agreement or the Company commences litigation with respect to the Dispute.
The Company agrees that on January 1, 2002 or at such earlier time as any
Investor is entitled to commence litigation with respect to the Dispute, the
Company shall be obligated to issue the Increased Agreed Amount upon
conversion of the Debentures.
e. The Company acknowledges that the Company's obligation
to issue the Agreed Amount upon the conversion of the Debentures pursuant to
this Section 2 is absolute and unconditional and shall survive, without
limitation, the Sale of the Company and the commencement of the year 2002,
until such time, if any, that there are no longer any Debentures outstanding.
Each Investor acknowledges that once it has converted its Debentures into its
pro rata share of the Initial Agreed Amount, it shall have no further right
to convert its Debentures until and unless any Investor becomes entitled to
commence litigation concerning the Dispute as provided in Section 1 and/or
Section 12 of this Agreement or the Company commences litigation with respect
to the Dispute. In the event that any Investor becomes entitled to commence
litigation or the Company commences litigation with respect to the Dispute,
then each Investor shall, without limitation, be entitled to claim that,
pursuant to the Transaction Documents, it is entitled to convert any and all
of its Debentures at the Conversion Price (i.e., $3.875, as the same may be
Reset and/or adjusted), even if such conversion will exceed its pro rata
share of the Increased Agreed Amount. If any Investor makes such a claim, the
Company shall be entitled to defend against such claim, but nothing in this
Agreement will serve as a defense to such claim. In no event, either before
or after January 1, 2002 or before or after such time (if ever) that the
Investors become entitled to commence litigation under Section 1 above, will
the Company be entitled to contest its obligation to issue the Agreed Amount,
at the Conversion Price then in effect, upon conversion of the Debentures.
f. Notwithstanding anything in this Agreement to the
contrary, the Agreed Amount shall be subject to appropriate adjustment to
reflect adjustments pursuant to Section 7 of the Debentures (for example,
adjustment under Section 7(a) of the Conversion Price shall result in
adjustment of the Agreed Amount by an amount equal to the reciprocal of the
fractional change in the Conversion Price).
g. Any Conversion Notices which may have been submitted to
the Company by any Investor prior to the date hereof shall be deemed
withdrawn, without prejudice to each such Investor's right to submit further
Conversion Notices.
h. The Company covenants that, no later than the earlier
of: (i) 15 calendar days (or 60 calendar days in the case of review of the
Registration Statement by the Securities and Exchange Commission) following
the date upon which any Investor
6
becomes entitled to convert its Debentures into its pro rata shares of the
Increased Agreed Amount and (ii) January 1, 2002, the total Increased Agreed
Amount plus all shares issuable upon exercise of the Warrants shall be
subject to Effective Registration.
3. REDEMPTION RIGHTS.
a. If there occurs a "SALE OF THE COMPANY" (as defined
below) on or before December 31, 2001, each Investor shall be entitled to
cause the Company to redeem up to the Outstanding Principal Amount of such
Investor's Debenture(s), in whole or in part, and the Company shall be
entitled to redeem, at its own initiative, all of the Outstanding Principal
Amount of the Investors' Debentures, in each case at a cash redemption price
equal to 109% of the Outstanding Principal Amount (plus all accrued but
unpaid interest and default payments (not previously added to principal))
being redeemed (the "REDEMPTION PRICE"). The Company may not exercise this
right with respect to any Investor unless it exercises such right with
respect to all of the Investors.
(i) Each Investor shall be entitled to make the
aforementioned election to cause the Company to redeem the Debentures, at any
time following the public announcement of a pending Sale of the Company by
providing the Company with a redemption notice. Except in the case of a
Two-Step Sale (as defined in subsection 3(a)(v) below), the Company's
obligation to effect such redemption following any such election shall be
subject to the consummation of the Sale of the Company and any such election
shall be of no further force and effect if the merger or other definitive
agreement governing the Sale of the Company is terminated for any reason
following public announcement of the Sale of the Company. The redemption
notice, which may be delivered by facsimile, certified mail and/or overnight
courier, shall (x) state that the Investor seeks to have the Company redeem
the Debenture(s) (in whole or in part); (y) set the date for the redemption
to occur (which such date shall not be earlier than the closing date of the
Sale of the Company)(rather than specifying a precise date for the redemption
to occur, the redemption notice need provide that the redemption shall occur
on the closing date of the Sale of the Company or on a precise number of days
following the closing date of the Sale of the Company); and (z) state the
Outstanding Principal Amount of the Debenture(s) that the Investor seeks the
Company to redeem and the Redemption Price therefore (including accrued but
unpaid interest and default payments (not previously added to principal)). On
the redemption date provided for in the redemption notice, the Investor shall
surrender its Debenture(s), in whole or in part (as set forth in the
applicable redemption notice) to the Company, and the Company shall redeem in
cash the full Outstanding Principal Amount thereof in compliance with clauses
(ii) (except that it shall only be necessary that the Sale of the Company,
and not the redemption, shall have occurred on or before December 31, 2001)
and (iii) (including its obligation to deliver a payoff letter or opinion
required in connection therewith) of Section 1(b).
(ii) The Company shall be entitled to make the
aforementioned election to redeem the Debentures, at any time following the
public announcement of a pending Sale of the Company but prior to the fifth
(5th) Trading Day thereafter by providing each Investor with a redemption
notice in accordance with this subsection 3(a)(ii). Except in the case of a
Two-Step Sale, the Company's obligation to effect such
7
redemption following any such election shall be subject to the consummation
of the Sale of the Company and any such election shall be of no further force
and effect if the merger or other definitive agreement governing the Sale of
the Company is terminated for any reason following public announcement of the
Sale of the Company. The redemption notice, which may be delivered by
facsimile, certified mail and/or overnight courier, shall (x) state that the
Company seeks to redeem such Investor's Outstanding Principal Amount under
such Investor's Debenture(s); (y) set the date for the redemption to occur
(subject to the next sentence), and (z) state the Outstanding Principal
Amount to be redeemed thereunder and the Redemption Price therefore
(including accrued but unpaid interest and default payments (not previously
added to principal)). The redemption notice (I) shall set forth that the
closing date of the Sale of the Company shall be the redemption date (the
redemption notice need not set forth a precise date for the redemption to
occur if the Company does not know the precise date of the proposed closing
date of the Sale of the Company at the time the redemption notice is
delivered to the Investors, so long as such date is provided to the Investors
in writing as soon as practical thereafter) and (II) shall be delivered by
the Company and received by each Investor at least 30 calendar days prior to
the closing date of the Sale of the Company.
Notwithstanding anything to the contrary in this Agreement,
the Company shall only be entitled to exercise its redemption rights under
subsection 3(a)(ii) and force the Investors to redeem their Debentures on the
redemption date set forth in a redemption notice prepared in accordance with
subsection 3(a)(ii) in exchange for the Redemption Price if (A) on the date
of the delivery of the redemption notice, on the redemption date set forth in
this Agreement and on each day following the redemption date, the Investor
shall be under no obligation to deliver, or cause to be delivered, its
proceeds from any such redemption to any Senior Lender (subject to inchoate
liens, claims and encumbrances under applicable bankruptcy and fraudulent
conveyance laws) and (B) the Company redeems in cash the full Outstanding
Principal Amount of each Investor's Debentures in compliance with clauses
(ii)(except that it shall only be necessary that the Sale of the Company, and
not the redemption, shall have occurred on or before December 31, 2001) and
(iii) (including its obligation to deliver a payoff letter or opinion
required in connection therewith) of Section 1(b).
(iii) A "SALE OF THE COMPANY" shall mean (A) a
sale or transfer (in a single transaction or a series of transactions) of all
or substantially all of the Company's assets either by the Company or any one
or more subsidiaries thereof (except that each Investor, in its sole
discretion, may elect to exclude from such definition sales or transfers to
▇▇▇▇▇▇▇ ▇'▇▇▇▇ or ▇▇▇ ▇▇▇▇▇▇▇▇▇, or either of their estates, spouses,
ancestors, and lineal descendants, the legal representatives of any of the
foregoing, the trustee of any bona fide trust of which the foregoing are the
beneficiaries or the grantors, or any entity wholly-owned, majority-owned or
controlled by ▇▇▇▇▇▇▇ ▇'▇▇▇▇ and/or ▇▇▇ ▇▇▇▇▇▇▇▇▇ (each, a "PERMITTED
HOLDER")), or (B) a Change in Control Transaction (as defined in the
Debentures, except that each Investor, in its sole discretion, may elect that
clauses (x) and (y) of such definition shall not apply with respect to an
acquisition of control by one or more Permitted Holders). Notwithstanding the
foregoing, (x) the last sentence of the definition of a Change in Control
Transaction contained in the Debentures shall not apply with respect to any
references to a Sale of the Company or a Change in
8
Control Transaction contained in this Agreement and (y) a Change in Control
Transaction shall not be deemed to have occurred solely because, in
connection with a proposed Sale of the Company, ▇▇▇▇▇▇▇ ▇'▇▇▇▇ is required to
enter into a voting agreement with the acquirer in which ▇▇▇▇▇▇▇ ▇'▇▇▇▇
agrees to vote in favor of the Sale of the Company, grants a proxy or
otherwise agrees to restrictions on any future sale of shares of Common Stock
beneficially owned by him.
(iv) The Company hereby covenants that it will not
agree to engage in any transaction resulting in a Sale of the Company unless
the merger agreement or other definitive agreement governing the Sale of the
Company provides, as a closing condition, that, at the closing of the Sale of
the Company, (A) the Debentures shall be redeemed at the Redemption Price and
(B) any Make Whole Amount, if applicable, due and owing to any Investor
pursuant to subsection 3(b)(iii) of this Agreement shall be paid to any such
Investor.
(v) Notwithstanding anything in this Section 3(a)
to the contrary, in the event that a Sale of the Company referred to in this
Section 3(a) involves a tender offer satisfying the conditions of clause (y)
of the definition of a Change in Control Transaction set forth in the
Debentures (a "TENDER OFFER") to be followed by a merger pursuant to which
all untendered shares of Common Stock are acquired by the acquirer (a
"TWO-STEP SALE"), then:
(A) for the avoidance of doubt, a Sale of the
Company shall be deemed to have occurred, for the purposes of this Agreement,
on or before December 31, 2001, if (and only if) the Tender Offer shall have
been consummated and closed on or before December 31, 2001. Clause (z) of the
definition of a Change in Control Transaction shall not apply in the case of
a Two-Step Sale as a result of ▇▇▇▇▇▇▇ ▇'▇▇▇▇ having tendered all or part of
his shares of Common Stock in the Company in the Tender Offer and/or, after
the Tender Offer, at the request of the acquirer, ▇▇▇▇▇▇▇ ▇'▇▇▇▇ having
resigned from the Board of Directors of the Company;
(B) In the case which involves both (1) a
Senior Debt Extension (as defined below) and (2) the establishment and
continued use of the Permitted Holders' Escrow Account (as defined below),
any and all redemptions pursuant to this Section 3(a) shall occur on the
earliest of the following: (a) the date upon which the merger is consummated
or abandoned, (b) the date upon which any Senior Lender shall have the right
to accelerate all or part of the Senior Debt, (c) the date upon which any of
the Senior Debt is (i) refinanced or (ii) paid off (which payoff shall not be
deemed to include the ordinary "paying down" of the revolving credit facility
in the normal course of business in accordance with past practice in an
amount not to exceed $5,000,000 in the aggregate) and (d)(i) if 90% or more
of the Common Stock is deemed beneficially owned by the acquirer following
the Tender Offer, the 30th calendar day following the date upon which the
Tender Offer is consummated or (ii) if less than 90% of the Common Stock is
deemed beneficially owned by the acquirer following the Tender Offer, the
90th calendar day following the date upon which the Tender Offer is
consummated. For the purposes hereof, "SENIOR DEBT EXTENSION" shall mean that
(I) each Senior Lender shall have agreed in writing prior to the Sale of the
Company that
9
such Senior Lender shall not have the right to accelerate any or all of the
Senior Debt as a result of the consummation of the Tender Offer and (II) none
of the Senior Debt shall have been paid off or refinanced on or before the
Tender Offer in connection therewith, and the "PERMITTED HOLDERS' ESCROW
ACCOUNT" shall mean an escrow account set up for the purposes of holding each
Permitted Holder's proceeds from the Tender Offer until such time that the
Debentures are redeemed in full in accordance herewith;
(C) Except as set forth in subsection 3(a)(v)(B)
above, any and all redemptions pursuant to this Section 3(a) shall occur on
the later of (x) the date established as the redemption date in the
redemption notice delivered by the Company and/or an Investor (if both
delivered redemption notices, the date determined in Section 3(c) below) and
(y) the date upon which the Tender Offer is consummated; and
(D) the Company shall be obligated to effect
redemptions pursuant to this subsection 3(a)(v) in the event that the Tender
Offer is consummated (irrespective of whether the merger is ever effected),
subject only to the possible deferral of the redemption date in subsection
3(a)(v)(B) above.
(vi) The redemption rights provided hereunder are
in addition to, and not in lieu of, any other redemption rights which may be
available to the Investors under any of the Transaction Documents; provided,
however, that the redemption price under Section 4 of the Debentures shall be
fixed at 109% of the Outstanding Principal Amount of the Debentures being
redeemed (plus all accrued but unpaid interest and default payment (not
previously added to principal)). Notwithstanding the foregoing, with respect
to each Investor, until the earlier of (x) the close of business on December
31, 2001 and (y) the date upon which any Investor first becomes entitled to
commence litigation with respect to the Dispute as provided in Section 1 of
this Agreement, the respective redemption rights of each Investor in
connection with a Sale of the Company and/or a Change in Control Transaction
shall be governed exclusively by this Section 3 (as opposed to Section 4 of
the Debentures). For the sake of clarity, in the event of a Two-Step Sale in
which the Tender Offer has been consummated but the merger has not been
consummated on or before December 31, 2001, each Investor shall have the
option to cause the Company to redeem its Debentures pursuant to Section 3(a)
hereof or Section 4 of the Debentures, in its sole discretion.
b. (i) The Company shall be entitled to redeem at its own
initiative, all (but not less than all) of the Outstanding Principal Amount
of the Investors' Debentures, at a cash redemption price equal to the
Redemption Price, at any time following the date hereof, subject to the terms
hereof. The Company shall be entitled to make the aforementioned election to
redeem by providing each Investor with a redemption notice. The redemption
notice, which may be delivered by facsimile, certified mail and/or overnight
courier, shall (x) state that the Company seeks pursuant to Section 3(b) of
this Agreement to redeem such Investor's Outstanding Principal Amount under
such Investor's Debenture(s), (y) set the date for the redemption to occur
(which such date shall be at least 10 Trading Days but not more than 30
Trading Days following the date upon which such Investor received such
redemption notice) and (z) state the Outstanding Principal Amount to be
redeemed thereunder and the Redemption Price therefore
10
(including accrued but unpaid interest and default payments (not previously
added to principal)). The Company may not exercise this right with respect to
any Investor unless it exercises such right with respect to all of the
Investors. The redemption rights provided to the Company pursuant to Section
3(a) and 3(b) of this Agreement are in lieu of and replace any redemption
rights which may be available to the Company under any of the Transaction
Documents.
(ii) The Company shall only be entitled to
exercise its redemption rights under this Section 3(b) and force the
Investors to redeem their Debentures on the redemption date set forth in a
redemption notice prepared in accordance with this Section 3(b) in exchange
for the Redemption Price if (A) on the date of the delivery of the redemption
notice, on the redemption date set forth in this Agreement and on each day
following the redemption date, each Investor shall be under no obligation to
deliver, or cause to be delivered, its proceeds from any such redemption to
any Senior Lender, (subject to inchoate liens, claims and encumbrances under
applicable bankruptcy and fraudulent conveyance laws) and (B) the Company
redeems in cash the full Outstanding Principal Amount of each Investor's
Debentures in compliance with clause (ii) (except with respect to the
requirement that any such redemption shall have occurred on or before
December 31, 2001) and clause (iii) (including its obligation to deliver a
payoff letter or opinion required in connection therewith) of Section 1(b).
(iii) In the event that, within sixty (60)
calendar days following the closing of a redemption of all of the Investors'
Debenture(s) pursuant to and in accordance with Section 3(b), the Company has
reached an agreement in principle which will result in the Sale of the
Company, each Investor shall be entitled to receive from the Company, on the
"CLOSING DATE OF THE SALE OF THE COMPANY" (as defined below), additional cash
compensation in an amount (which shall not be less than zero) (the "MAKE
WHOLE AMOUNT") equal to: (x) the "REDEMPTION NUMBER" (as defined below)
multiplied by (y) the positive difference (if any) between (A) the "TAKE OUT
PRICE" (as defined below) minus (B) the product of (1) the "APPLICABLE
CONVERSION PRICE" (as defined below) multiplied by (2) 109%. In the event of
a Two-Step Sale, the "CLOSING DATE OF THE SALE OF THE COMPANY" shall mean the
closing date of the Tender Offer. The "REDEMPTION NUMBER" shall mean the
number of shares of Common Stock (appropriately adjusted for any and all
stock splits, reverse stock splits, mergers, recapitalizations or similar
events which shall have occurred on or before the closing date of the Sale of
the Company) into which such Investor's outstanding Debentures as of the date
of such Investor's receipt of the redemption notice would have been
convertible at the Applicable Conversion Price, such number being capped at
such Investor's proportionate share of the Agreed Amount that would have been
applicable as of the closing date of the Sale of the Company. If, however,
prior to the closing date of the Sale of the Company, as a result of
litigation or settlement of the Dispute, it is determined that such
Investor's Debentures are (or would be if still outstanding) so convertible
into a greater number of shares of Common Stock than the number of shares
determined in accordance with the foregoing sentence, then the Redemption
Number shall mean such greater number of shares of Common Stock. The "TAKE
OUT PRICE" shall mean, in the case of an all-cash transaction, the price per
share of Common Stock received by the public shareholders of the Company in
connection with the Sale of the Company. If,
11
however, the public shareholders receive consideration other than cash in
connection therewith (in whole or in part), the "TAKE OUT PRICE" shall mean
the average of the Market Price for Shares of Common Stock for the five (5)
consecutive Trading Days immediately preceding the closing date of the Sale
of the Company. The "APPLICABLE CONVERSION PRICE" shall mean the Conversion
Price that would have been in effect as of the closing date of the Sale of
the Company, assuming the Debentures had been outstanding through such date.
c. If both the Company and an Investor have delivered a
redemption notice in accordance with this Section 3, then as between the
Company and such Investor, the redemption notice providing for the earlier
redemption date shall apply.
d. The Investors shall be entitled to submit Debentures for
conversion up to the Redemption Closing. A redemption notice delivered in
accordance with this Section 3 of the Debentures shall be of no further force
and effect to the extent that the Debentures at issue have been converted or
redeemed, prior to the redemption date set forth in the redemption notice, in
accordance with this Agreement or the Transaction Documents.
e. For the avoidance of doubt, the Outstanding Principal
Amount of a Debenture shall continue to accrue interest following the
delivery of a redemption notice covering all or part of such Debenture until
such Outstanding Principal Amount has been fully redeemed in cash (or
partially converted and the balance redeemed in full) at the Redemption Price.
f. Unless otherwise provided, redemptions shall occur at
the office of the Investor's counsel on the redemption date set forth in the
redemption notice.
4. RESETS.
a. The parties agree that there shall be no Reset on August
23, 2001 with respect to any Investor if no Investor has the right to
commence litigation under Section 1 hereof on or prior to August 23, 2001. In
the event that there is no Reset on August 23, 2001 as a result of the
foregoing sentence and any Investor thereafter shall have the right to
commence litigation under Section 1 hereof, then, commencing on the date that
any Investor may so commence litigation, the August 23, 2001 Reset shall
apply with respect to each Investor for all conversions effected thereafter
(and, subject to further future adjustment and Reset, the Conversion Price as
of such date shall be deemed to be equal to the Conversion Price that would
have existed if the August 23, 2001 Reset had occurred). Nothing in this
Agreement shall affect the obligations of the Company to honor the August 23,
2000 Reset, and the February 23, 2002 Reset (i) if any results from the
pricing during the Reset Pricing Period and (ii) with respect to Debenture(s)
outstanding (or assumed to be outstanding for purposes of determining the
Make Whole Amount under subsection 3(b)(iii)) on or after such date.
b. It is hereby acknowledged by the Company and each
Investor that the August 23, 2000 Reset resulted in a new Conversion Price,
with respect to the Agreed
12
Amount, which, as of such date, was, and which, as of the date of this
Agreement, is, and hereinafter shall be, equal to $3.875 (subject to further
future adjustments and Resets as provided in this Agreement and the
Debentures). It is further hereby acknowledged that there was no February 23,
2001 Reset. It is further hereby acknowledged by the Company and each
Investor that any future Reset pursuant to the first two paragraphs of
Section 5(c) of the Debentures (as modified by this Agreement) and any future
adjustment to the Conversion Price pursuant to the third paragraph of Section
5(c) of the Debentures (as modified by this Agreement) shall not, in any
event, result in any increase in the Conversion Price, but only a decrease,
if there is to be any modification in the Conversion Price. It is further
agreed that the existence of any cap on the number of shares of Common Stock
into which the Debentures may be converted (whether under this Agreement or
the Transaction Documents) shall not affect the Conversion Price with respect
to the Agreed Amount.
5. MATURITY DATE AND OTHER REDEMPTION DATES. For the avoidance of
doubt, the Company shall pay to each of the Investors holding outstanding
Debentures the Outstanding Principal Amount (plus accrued but unpaid interest
and default payments (not previously added to principal) thereunder and
premium thereon (if any)), on the earlier of (a) the Maturity Date and (b)
the date established for redemption or payoff of the Debentures, in
accordance with Sections 3 or 10 of this Agreement or with the Transaction
Documents.
6. LIMITATIONS ON RIGHT TO CONVERT. Section 12 of the Debentures
shall hereby be modified to read as follows:
LIMITATIONS ON HOLDER'S RIGHT TO CONVERT.
a. Notwithstanding anything to the contrary contained
herein, the number of shares of Common Stock that may be acquired by a Holder
upon conversion pursuant to the terms hereof at any time shall not exceed a
number that, when added to the total number of shares of Common Stock deemed
beneficially owned at such time by such Holder (other than by virtue of the
ownership of securities or rights to acquire securities (including the
Debentures and Warrants) that have limitations on the Holder's right to
convert, exercise or purchase similar to the limitation set forth herein),
together with all shares of Common Stock deemed beneficially owned at such
time (other than by virtue of the ownership of securities or rights to
acquire securities that have limitations on the right to convert, exercise or
purchase similar to the limitation set forth herein) by the Holder's
"affiliates" (as defined in Rule 144 of the Act) ("AGGREGATION PARTIES" that
would be aggregated for purposes of determining whether a group under Section
13(d) of the Securities Exchange Act of 1934 as amended, exists, would exceed
9.99% of the total issued and outstanding shares of the Common Stock (the
"RESTRICTED OWNERSHIP PERCENTAGE"). Each Holder shall have the right (w) at
any time and from time to time to reduce its Restricted Ownership Percentage
immediately upon notice to the Company and (x) (subject to waiver) at any
time and from time to time, to increase its Restricted Ownership Percentage
immediately upon notice to the Company in the event of the announcement as
pending or planned, of a Sale of the Company. For this purpose, any material
modification of the terms of a Sale of the Company will be deemed to result
in a
13
new Sale of the Company. The Company shall provide all Holders with the
later of (i) 20 days' prior written notice of any such Sale of the Company,
to the extent the Company has prior knowledge of a Sale of the Company; or
(ii) notice on the day immediately following the Company's receipt of notice
of, or entering into a definitive agreement with respect to, any such
transaction, but only after, in the case of (i) and (ii), such Sale of the
Company has been publicly disclosed.
b. The Holder covenants at all times on each day (each such
day being referred to as a "COVENANT DAY") as follows: During the balance of
such Covenant Day and the succeeding sixty-one (61) days (the balance of such
Covenant Day and the succeeding 61 days being referred to as the "COVENANT
PERIOD") such Holder will not acquire shares of Common Stock pursuant to any
right (including conversion of Debentures and exercise of Warrants) existing
at the commencement of the Covenant Period to the extent the number of shares
so acquired by such Holder and its Aggregation Parties (ignoring all
dispositions) would exceed:
(x) the Restricted Ownership Percentage of the total
number of shares of Common Stock outstanding at the
commencement of the Covenant Period,
MINUS
(y) the number of shares of Common Stock actually owned
by such Holder and its Aggregation Parties at the
commencement of the Covenant Period.
A new and independent covenant will be deemed to be given
by the Holder as of each moment of each Covenant Day. No covenant will
terminate, diminish or modify any other covenant. The Holder agrees to comply
with each such covenant. Whether or not expressly provided therein, the
delivery of a Conversion Notice to the Company shall henceforth serve as the
Holder's representation to the Company that the issuance of shares in
accordance with such Conversion Notice shall not violate this Section 12, and
the Company shall be entitled to unequivocably rely upon such representation
in issuing shares in accordance therewith. This Section 12 controls in the
case of any conflict with any other provision of the Transaction Documents.
c. The Company's obligation to issue shares of Common Stock
which would exceed such limits referred to in this Section 12 shall be
suspended to the extent necessary until such time, if any, as shares of
Common Stock may be issued in compliance with such restrictions.
7. LIMITATIONS ON EXERCISE. Section 9 of the Warrants shall hereby
be modified to read as follows:
LIMITATIONS ON EXERCISE.
a. Notwithstanding anything to the contrary contained
herein, the number of shares of Common Stock that may be acquired by the
Warrant Holder at any time upon
14
exercise pursuant to the terms hereof shall not exceed a number that, when
added to the total number of shares of Common Stock deemed beneficially owned
at such time by such Warrant Holder (other than by virtue of the ownership of
securities or rights to acquire securities (including the Warrants) that have
limitations on the holder's right to convert, exercise or purchase similar to
the limitation set forth herein), together with all shares of Common Stock
deemed beneficially owned (other than by virtue of the ownership of
securities or rights to acquire securities that have limitations on the right
to convert, exercise or purchase similar to the limitation set forth herein)
by the Warrant Holder's "affiliates" (as defined Rule 144 of the Act)
("AGGREGATION PARTIES") that would be aggregated for purposes of determining
whether a group under Section 13(d) of the Securities Exchange Act of 1934,
as amended, exists, would exceed 9.99% of the total issued and outstanding
shares of the Company's Common Stock (the "RESTRICTED OWNERSHIP PERCENTAGE").
Each Warrant Holder shall have the right (w) at any time and from time to
time to reduce its Restricted Ownership Percentage immediately upon notice to
the Company and (x) (subject to waiver) at any time and from time to time, to
increase its Restricted Ownership Percentage immediately upon notice to the
Company in the event of the announcement as pending or planned, of Sale of
the Company. For this purpose, any material modification of the terms of a
Sale of the Company will be deemed to result in a new Sale of the Company.
The Company shall provide all Warrant Holders with the later of (i) 20 days'
prior written notice of any such Sale of the Company, to the extent the
Company has prior knowledge of a Sale of the Company; or (ii) notice on the
day immediately following the Company's receipt of notice of, or entering
into a definitive agreement with respect to, any such transaction, but only
after, in the case of (i) and (ii), such Sale of the Company has been
publicly disclosed.
b. The Warrant Holder covenants at all times on each day
(each such day being referred to as a "COVENANT DAY") as follows: During the
balance of such Covenant Day and the succeeding sixty-one (61) days (the
balance of such Covenant Day and the succeeding 61 days being referred to as
the "COVENANT PERIOD") such Warrant Holder will not acquire shares of Common
Stock pursuant to any right (including the exercise of the Adjustment
Warrant) existing at the commencement of the Covenant Period to the extent
the number of shares so acquired by such Warrant Holder and its Aggregation
Parties (ignoring all dispositions) would exceed:
(x) the Restricted Ownership Percentage of
the total number of shares of Common Stock
outstanding at the commencement of the Covenant
Period,
minus
(y) the number of shares of Common Stock
actually owned by such Warrant Holder and its
Aggregation Parties at the commencement of the
Covenant Period.
A new and independent covenant will be deemed to be given
by the holder as of each moment of each Covenant Day. No covenant will
terminate, diminish or
15
modify any other covenant. The Warrant Holder agrees to comply with each such
covenant. Whether or not expressly provided therein, the delivery of a
Subscription Notice to the Company shall henceforth serve as the Warrant
Holder's representation to the Company that the issuance of shares in
accordance with such Subscription Notice shall not violate this Section 9,
and the Company shall be entitled to unequivocably rely upon such
representation in issuing shares in accordance therewith. This Section 9
controls in the case of any conflict with any other provision of the
Transaction Documents.
c. The Company's obligation to issue Shares of Common Stock
which would exceed such limits referred to in this Section 9 shall be
suspended to the extent necessary until such time, if any, as shares of
Common Stock may be issued in compliance with such restrictions.
8. PUBLIC DISCLOSURE.
a. The Company shall make such public disclosure of the
existence or terms of this Agreement as it shall determine, upon the advice
of counsel, is legally required. The Company shall make a copy of any such
disclosure available to Investors at least one business day in advance of
making such disclosure.
b. Notwithstanding the foregoing, immediately following the
execution of this Agreement by all of the parties, the Company shall file a
Form 8-K with the Securities Exchange Commission in the form of Exhibit 1
attached hereto. If the Company fails to so file Form 8-K within 1 business
day of the execution of this Agreement, in addition to any other rights and
remedies available to the Investors, each Investor severally shall have the
right to issue a press release covering the terms hereof and complying with
any legal requirement applicable to the Investors, and no Investor shall have
any liability to the Company or any affiliate thereof in connection therewith.
9. CLOSING DOCUMENTS. Prior to or contemporaneously with the
execution and delivery of this Agreement, the Company shall deliver each of
the "Closing Documents" (as defined below) to the Investors. The obligations
and rights of each Investor hereunder is subject to the Investors' receipt of
such Closing Documents. The receipt of the Closing Documents are for each
Investor's benefit and may be waived by each Investor at any time in writing
in its sole discretion. "CLOSING DOCUMENTS" means (x) an opinion of the
independent counsel of the Company, ▇▇▇▇▇▇▇ Berlin Shereff ▇▇▇▇▇▇▇▇, LLP, in
the form previously agreed to by each party's counsel, (y) written consent to
this Agreement executed by the Senior Lenders (as defined in the
Subordination Agreement) in the form attached hereto as Exhibit 3 and (z) an
executed copy of the officer's certificate in the form attached hereto as
Exhibit 4.
10. EVENTS OF DEFAULT. In addition to the Events of Default (as
defined in the Debentures) set forth in Section 17 of the Debentures, the
Company hereby agrees that each of the following shall be included as an
Event of Default under the Debentures:
16
a. the Company shall default in the payment of the
principal of any Debenture;
b. the Company (x) shall fail to issue shares of Common
Stock upon a full or partial conversion of any Debenture(s) in accordance
with the terms of the Debenture(s) as modified hereby, or (y) shall default
in the payment of interest on any Debenture (subject to the Company's option
to pay PIK Interest), and such failure or default shall continue for five (5)
business days from such failure or default; or
c. the Company shall fail to redeem the Debentures pursuant
to a redemption notice delivered by any Investor to the Company or by the
Company to any Investor pursuant to the terms hereof.
d. the Company shall otherwise be in breach of or default
under this Agreement and such breach or default shall continue for five (5)
business days after notice is given to the Company of such breach or default.
11. BANK DOCUMENTS.
a. The Company represents that the Company has delivered to
the Investors prior to the date hereof true, accurate and complete copies of
all of the agreements and other instruments between the Company and one or
more Senior Lenders which sets forth the Company's obligations with respect
to the Senior Debt in effect as of the date hereof (with the exception of any
and all lock-box agreements, which the parties have agreed need not be
delivered). The Company further represents that the list of all such
agreements and other instruments attached hereto as Exhibit 5 is complete and
accurate.
b. The Company hereby agrees that, promptly upon execution
thereof, the Company will provide each Investor with a copy of any future
agreements and any other instruments between the Company and one or more of
the Senior Lenders which sets forth the Company's obligations with respect to
the Senior Debt.
c. The Company hereby represents and covenants that, in
complying with Sections 11(a) and (b) above, it has not delivered material,
non-public information to the Investors, and that if such delivery in the
future would constitute the delivery of material non-public information, it
will notify each Investor in writing that it wishes to comply with Section
11(b) but that, by doing so, it may provide material non-public information
to the Investor. Upon the delivery of such notice, the Company shall only be
obligated to so deliver such agreements and/or other instruments to each
Investor: (i) if the Company receives written notice by such Investor
requiring such delivery or (ii) at such time that the delivery would not
constitute the delivery of material non-public information.
12. SETTLEMENT AND RELEASE UPON REDEMPTION.
a. If the "CLAIM CONDITIONS" (as defined below) are
satisfied, then:
17
(i) with respect to any redemption notice prepared
in accordance with and pursuant to Section 3 and delivered at least 30
Trading Days prior to the scheduled redemption date:
(A) on or before the fifth (5th) Trading Day
prior to the scheduled redemption date set forth in the redemption notice,
each Investor delivering or receiving such redemption notice may provide the
Company with one or more written notice(s) of any Claim(s) that such Investor
has, or reasonably believes it may have, against the Company, which such
Investor wishes to preserve; and/or
(B) prior to the Redemption Closing, the
Investor may provide the Company with one or more "bring-down" notice(s)
which identify any other Claim(s) that such Investor has, or reasonably
believes it may have, against the Company which came to the attention of the
Investor (1) on or after the fifth (5th) Trading Day prior to the scheduled
redemption date (or such earlier date that the Investor delivered its last
notice pursuant to subsection 12(a)(i)(A) above) but (2) prior to the
Redemption Closing, and that such Investor wishes to preserve.
(ii) with respect to any redemption notice which
is prepared in accordance with and pursuant to Section 3 and is in fact
delivered less than thirty (30) Trading Days prior to the scheduled
redemption date, the Investor may provide the Company with one or more
written notice(s), prior to the Redemption Closing, of any Claim(s) that such
Investor has, or reasonably believes it may have, against the Company, which
such Investor wishes to preserve.
Upon the Redemption Closing, each Investor and the Company
shall be thereafter precluded (subject to Section 12(c) below) from
commencing and/or continuing litigation with respect to, and shall be deemed
to have released and forever discharged each other and each other's
affiliates from any and all Claims, whether now known or unknown, whether
vested or contingent, suspected or unsuspected, which have existed or may
have existed or which do exist (including any litigation then existing) or
may exist in the future other than: (x) any Claim(s) identified in a notice
(including a "bring-down" notice) delivered by such Investor to the Company
pursuant to this Section 12; (y) any Claim(s) for failure to pay the full
Make Whole Amount due to such Investor, if any is required, in connection
with a redemption pursuant to Section 3(b) hereof; and/or (z) any Claim(s)
for indemnification for reasonable out-of-pocket expenses (including, without
limitation, reasonable attorney fees) pursuant to Section 14(i) of this
Agreement and/or Section 6.5 of the Purchase Agreement.
The "CLAIM CONDITIONS" shall be deemed to be satisfied if,
on any date subsequent to the date hereof and prior to the Redemption
Closing, the Market Price for Shares of Common Stock (as defined in the
Debentures, except that the closing sale price shall be used rather than the
closing bid price in the instances described in (i), (ii) and (iii) of such
definition) on any such date equaled or exceeded the applicable Conversion
Price. "CLAIMS" shall mean any and all claims, suits, demands, causes of
action, contracts, covenants, obligations, debts, costs, expenses,
liabilities of any kind or nature in law or equity, whether known or unknown,
whether vested or contingent, by statute or
18
otherwise, which have existed, may have existed or which do exist (including
any litigation then existing) or may exist in the future for any reason
whatsoever, including but not limited to any Claim arising in connection with
any of the Transaction Documents (including with respect to the Dispute),
this Agreement or otherwise relating in any way to the purchase, issuance,
ownership or redemption of the Debentures and/or Warrants.
b. Notwithstanding anything in this Agreement to the
contrary, if the Claim Conditions are not satisfied on or before the
Redemption Closing, then each Investor and the Company shall be precluded
(subject to Section 12(c) below) following a Redemption Closing from
commencing litigation with respect to, and shall be deemed to have released
and forever discharged each other and each other's affiliates from, any and
all Claims other than Claims set forth in clauses (y) and (z) of Section
12(a) above.
c. If at any time after a Redemption Closing, any Investor
is obligated to surrender all or part of the redemption payments (including,
without limitation, any Make Whole Amounts) received by such Investor to the
Company or any Senior Lender, any other creditor of the Company (in their
capacity as such), then, notwithstanding Section 12(a) and Section 12(b),
each Investor shall not be precluded from commencing litigation with respect
to, and shall not be deemed to have released the Company from, any Claims.
d. Subject to Section 12(c) hereof, each party agrees that
in the event that a Claim is brought against any party that has been released
under Section 12(a) or (b), this Agreement shall serve as a complete defense
for such party against each such Claim other than Claim(s) preserved in
accordance with (x), (y) and/or (z) of Section 12(a) above.
13. WARRANTS. Notwithstanding anything in this Agreement or in the
Transaction Documents to the contrary, in the event that a redemption notice
has been delivered by any Investor to the Company or to each Investor by the
Company under Section 3 of this Agreement, any such Investor may exercise its
outstanding Warrants (if any) in accordance with the terms thereof, in whole
or in part, through the last day on which such Investor shall be entitled to
convert its Debentures in accordance with this Agreement. Any Warrants which
have not been so exercised shall be automatically, and without further action
on the part of the Company or the Investors, cancelled, for no additional
consideration, contemporaneously with the redemption of such Investor's
Debenture(s) under Section 3 of this Agreement. In connection with any
redemption of the Debentures under Section 3 of this Agreement, each Investor
agrees to deliver to the Company all of its outstanding Warrants (or an
affidavit of lost certificate), for exercise, cancellation or a combination
of both, on or prior to the Redemption Closing.
14. MISCELLANEOUS.
a. The Company hereby represents that all of the Company's
representations and warranties contained in the Purchase Agreement were true
and correct as of February 23, 2000 and are true and correct as of the date
hereof (except for representations and warranties made as of an earlier date,
which shall be true and correct as of such date and except for
representations or warranties that would have to be updated
19
in schedules thereto which either (x) have been disclosed in the Company's
filings with the Securities Exchange Commission, or (y) do not individually
or in the aggregate have a Material Adverse Effect (as defined in the
Purchase Agreement).
b. (i) The Company hereby represents that it has performed
all agreements and satisfied all conditions required to be performed or
satisfied prior to the date hereof by the Transaction Documents when and as
required (other than arguably with respect to the Dispute).
(ii) Without having conducted any investigation or
inquiry, the Investors each severally represent to the Company that (other
than arguably with respect to the Dispute and arguably with respect to the
number of shares required to be registered with the SEC) the Investors are
not aware of any breach by the Company of any of the Transaction Documents.
The foregoing sentence shall not survive the commencement of litigation by
the Company or any Investor and shall not be admissible in any such
litigation, and the Company shall not be entitled to rely on, refer to, or
otherwise make use of, the foregoing sentence in any such litigation.
c. The Company hereby represents that no Event of Default
(as defined in the Debentures) shall have occurred, be likely to occur or be
threatened, and no event shall have occurred which constitutes or would
constitute an Event of Default with notice or the passage of time or both, as
of the date hereof (other than arguably with respect to the Dispute).
d. Article 6 of the Purchase Agreement (except for Section
6.5 thereof) is hereby incorporated in this Agreement by reference and shall
apply to this Agreement with such changes as may be necessary MUTATIS
MUTANDIS to conform to this Agreement. The address for notices to the Company
pursuant to Section 6.4 of the Purchase Agreement is hereby amended as
follows:
▇▇▇▇▇▇▇▇▇▇.▇▇▇, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇
with copies to:
▇▇▇▇▇▇▇ Berlin Shereff ▇▇▇▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
e. Except as set forth above, the Transaction Documents and
the terms thereof shall remain unmodified and in full force and effect.
20
f. All references in the Debentures to the "Debenture(s)"
and any other reference of similar import shall henceforth mean the
Debentures, as amended in this Agreement.
g. In the event of any inconsistency or conflict between
this Agreement and the Transaction Documents, the terms, provisions and
conditions of this Agreement shall govern and control.
h. This Agreement may be executed in two or more
counterparts, all of which when taken together shall be considered one and
the same amendment and shall become effective when counterparts have been
signed by each party and delivered to the other parties, it being understood
that all parties need not sign the same counterpart. In the event that any
signature is delivered by facsimile transmission, such signature shall create
a valid and binding obligation of the executing party with the same force and
effect as if such facsimile signature page were an original thereof.
i. Each party shall indemnify each other party against any
loss, cost or damages (including reasonable attorney's fees but excluding
consequential damages) incurred as a result of such parties' breach of any
representation, warranty, covenant or agreement in this Agreement; or
incurred as a result of the enforcement of this indemnity.
j. The Investors each severally represent to the Company
that the Company has offered to provide to the Investors, on a confidential
basis, information with respect to the status of, and details concerning, any
possible Sale of the Company, and the Investors have instructed the Company
that they do not wish to receive, and the Company should not provide, any
material inside information concerning the possible Sale of the Company.
k. Except as expressly provided herein the contrary, the
Company has not (to the best of its knowledge) and shall not, directly or
indirectly, provide to the Investors any material non-public information, or
any information which, according to applicable law, rule or regulation,
should have been disclosed publicly by the Company but which has not been so
disclosed.
l. With a view to making available to the Investors the
benefits of Rule 144 promulgated under the Act or any other similar rule or
regulation of the SEC that may at any time permit the Investors to sell
securities of the Company to the public without registration ("RULE 144"),
the Company agrees, until such time as all of the Investors' Registrable
Securities (as defined in the Registration Rights Agreement) may be freely
sold to the public under Rule 144(k) (or any successor thereto), to:
(i) make and keep public information available, as
those terms are understood and defined in Rule 144;
(ii) file with the SEC in a timely manner all
reports and other documents required of the Company under the Act and the
Exchange Act so long as the Company remains subject to such requirements (it
being understood that (A) nothing herein shall limit any of the Company's
other obligations under the Transaction
21
Documents and/or this Agreement and (B) the filing of such reports and other
documents is required under the applicable provisions of Rule 144); and
(iii) furnish to each Investor so long as such
Investor owns Securities and/or Registrable Securities, promptly upon
request, (i) a written statement by the Company that it has complied with the
reporting requirements of Rule 144, the Act and the Exchange Act, (ii) a copy
of the most recent annual or quarterly report of the Company and such other
reports and documents so filed by the Company, and (iii) such other
information as may be reasonably requested to permit the Investors to sell
such securities pursuant to Rule 144 without registration.
So long as the safe harbor provided by Rule 144 under the
Act is available to the Investor at such time, the Company agrees that upon
exercise of any Investor's Warrants or conversion of any Investor's
Debentures, all shares of Common Stock issuable upon such exercise or
conversion shall be issued free and clear of any restrictive legends. Each
Investor agrees to sell shares of Common Stock represented by certificates
without registrative legends in accordance with the applicable prospectus
delivery requirements (if copies of a current prospectus are provided to such
Investor by the Company), pursuant to Effective Registration or in accordance
with an exemption from the registration requirements of the Act.
m. (i) Each Investor acknowledges and agrees that, subject
to the following sentence, the redemption rights provided to such Investor in
Section 3(a)(i) of this Agreement are "Redemption Rights" for purposes of the
Subordination Agreement. Notwithstanding the foregoing, even if the Senior
Indebtedness (as defined in the Subordination Agreement) is outstanding at
such time, each Investor (x) may give a redemption notice setting forth its
election under Section 3(a)(i) to cause the Company to redeem some or all of
the Debentures in connection with a Sale of the Company (or a transaction
which results in the Sale of the Company) and (y) may declare an Event of
Default under Section 10 of this Agreement and/or Section 17 of the
Debentures if the Company fails to timely redeem the Debentures in accordance
with the terms of this Agreement (so long as such failure is not due to a
failure to consummate the Sale of the Company); provided, however, that
except to the extent expressly set forth in clause (ii) below and the
preceding clauses (x) and (y), (A) any exercise of remedies by an Investor
shall be subject to the terms and provisions of the Subordination Agreement
(including Section 2A thereof) and (B) to the extent prohibited by the
Subordination Agreement, the Company shall not be required to make (and no
Investor shall take any action to cause) any payment in respect of any
redemption of the Debentures until such time as all Senior Indebtedness has
been paid in full in cash.
(ii) If a Sale of the Company is consummated and
each Senior Lender (as defined in the Subordination Agreement) (A) consents
in writing to the Sale of the Company without requiring that the Senior
Indebtedness be paid in full or (B) in writing waives its rights to require
that the Senior Indebtedness be paid in connection with the Sale of the
Company, then nothing contained in this Agreement or the Subordination
Agreement shall prevent the redemption of the Debentures in accordance with
this Agreement and/or the Debentures. For the avoidance of doubt, in such
case, each Investor
22
may waive the requirement that the Company deliver a payoff letter or opinion
on the redemption date.
(iii) Except as set forth in clauses (i) and (ii)
above of this subsection 14(m), nothing in this Agreement shall change the
provisions of the Subordination Agreement as between the Senior Lenders and
the Investors. The Company and the Investors expressly agree that Senior
Lenders may be considered third party beneficiaries of the provisions of
Section 14(m), and until the Senior Indebtedness has been paid in full,
Section 14(m) may not be modified without the consent of the Senior Lenders.
23
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the date first above written.
▇▇▇▇▇▇▇▇▇▇.▇▇▇, INC.
(formerly known as Advanced Communications
Group, Inc.)
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice-President
INVESTORS:
HALIFAX FUND, L.P.
By: THE PALLADIN GROUP, L.P.,
Attorney-in-Fact
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Counsel
▇▇▇▇▇▇▇ ASSOCIATES, L.P.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
--------------------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Authorized Signatory
▇▇▇▇▇▇▇ INTERNATIONAL, L.P. (formerly known as
Westgate International, L.P.)
By: ▇▇▇▇▇▇▇ INTERNATIONAL CAPITAL ADVISORS INC.
(formerly known as Martley International,
Inc.), Attorney-in-Fact
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-----------------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Vice President
24
SCHEDULE 1
INVESTOR PRO RATA SHARE
-------- --------------
Halifax Fund, L.P. 75%
▇▇▇▇▇▇▇ Associates, L.P. 12.5%
▇▇▇▇▇▇▇ International, L.P. 12.5%
25
