<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- --- EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1998
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- --- EXCHANGE ACT OF 1934
For the transition period from _____________________ to _____________________
Commission File Number: 0-27202
ADVANCED LIGHTING TECHNOLOGIES, INC.
- -------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
OHIO 34-1803229
- ------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
32000 AURORA ROAD, SOLON, OHIO 44139
- ------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
440 / 519-0500
- -------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes __X____ No _____
There were 20,121,153 shares of the Registrant's Common Stock, $.001 par value
per share, outstanding as of May 6, 1998.
<PAGE> 2
INDEX
ADVANCED LIGHTING TECHNOLOGIES, INC.
<TABLE>
<CAPTION>
PAGE NO.
PART I FINANCIAL INFORMATION
<S> <C> <C>
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets -- March 31, 1998
and June 30, 1997....................................................... 2
Condensed Consolidated Statements of Operations -- Three months and
nine months ended March 31, 1998 and 1997.............................. 3
Condensed Statement of Consolidated Shareholders' Equity --
Nine months ended March 31, 1998....................................... 4
Condensed Consolidated Statements of Cash Flows -- Nine
months ended March 31, 1998 and 1997.................................. 5
Notes to Condensed Consolidated Financial Statements...................... 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.............................................. 13
PART II OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds.................................... 22
Item 6. Exhibits and Reports on Form 8-K............................................. 23
SIGNATURES..................................................................................... 25
EXHIBIT INDEX.................................................................................. 26
</TABLE>
<PAGE> 3
ADVANCED LIGHTING TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
(Unaudited)
MARCH 31, JUNE 30,
1998 1997
--------- --------
(In thousands)
ASSETS
Current assets:
<S> <C> <C>
Cash and cash equivalents $ 30,621 $ 4,198
Short-term investments 4,075 4,075
Trade receivables, less allowances of $397 and $315 38,433 28,916
Receivables from related parties 1,087 346
Inventories:
Finished goods 28,599 21,143
Raw materials and work-in-process 12,862 7,982
--------- --------
41,461 29,125
Prepaid expenses 3,018 l,363
Deferred taxes 5,995 2,566
--------- --------
Total current assets 124,690 70,589
Property, plant and equipment:
Land and buildings 27,816 6,143
Machinery and equipment 49,731 32,712
Furniture and fixtures 15,119 7,704
--------- --------
92,666 46,559
Less accumulated depreciation 10,869 8,558
--------- --------
81,797 38,001
Deferred taxes 2,050 535
Receivables from related parties 2,532 1,209
Net assets associated with discontinued operations -- Note K 2,358 --
Investments in affiliates 21,902 7,565
Intangible assets 34,485 4,737
Other assets 7,445 4,217
Excess of cost over net assets of businesses acquired, net 31,440 7,985
--------- --------
$ 308,699 $134,838
========= ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term debt and current portion of long-term debt $ 2,247 $ 3,731
Accounts payable 15,761 15,773
Payables to related parties 731 699
Employee-related liabilities 3,670 2,674
Accrued income and other taxes 3,377 1,689
Other accrued expenses 11,258 3,643
--------- --------
Total current liabilities 37,044 28,209
Long-term debt 117,520 35,908
Other liabilities 866 463
Deferred taxes 4,491 4,226
Shareholders'equity
Common stock 20 13
Paid-in-capital 171,854 59,087
Retained earnings (deficit) (23,096) 6,932
--------- --------
148,778 66,032
--------- --------
$ 308,699 $134,838
========= ========
</TABLE>
See notes to condensed consolidated financial statements.
2
<PAGE> 4
ADVANCED LIGHTING TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(In thousands, except per share dollar amounts)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
MARCH 31, MARCH 31,
-------------------- ---------------------
1998 1997 1998 1997
-------- -------- --------- --------
<S> <C> <C> <C> <C>
Net sales $ 49,075 $ 22,034 $ 110,891 $ 60,291
Costs and expenses:
Cost of sales -- Note I 30,448 11,801 66,241 32,299
Marketing and selling 7,523 3,784 16,854 10,299
Research and development 2,848 1,291 6,069 3,851
General and administrative 3,087 1,855 7,307 5,378
Fiber optic joint venture formation costs -- -- 212 --
Purchased in-process research & development--Note I 18,220 -- 18,220 --
Special charges -- Note I 15,700 15,700 --
Settlement of claim -- -- -- 771
Amortization of intangible assets 505 101 930 195
-------- -------- ------- --------
Income (loss) from operations (29,256) 3,202 (20,642) 7,498
Other income (expense):
Interest expense (1,325) (392) (1,649) (749)
Interest income 274 283 1,079 610
Loss from equity investment (2) -- (2) --
-------- -------- ------- --------
Income (loss) from continuing operations before income
taxes and extraordinary charge (30,309) 3,093 (21,214) 7,359
Income taxes (2,356) 1,123 918 2,616
-------- -------- ------- --------
Income (loss) from continuing operations before
extraordinary charge (27,953) 1,970 (22,132) 4,743
Loss from discontinued operations, net of
income tax benefits - Note K (6,753) (88) (7,292) (241)
-------- -------- ------- --------
Income (loss) before extraordinary charge (34,706) 1,882 (29,424) 4,502
Extraordinary charge from early extinguishment
of debt, net of income tax benefits - Note E (604) -- (604) --
-------- -------- ------- --------
Net income (loss) $(35,310) $ 1,882 $ (30,028) $ 4,502
======== ======== ======== ========
Earnings per share - Basic:
Income (loss) from continuing operations $ (1.40) $ .15 $ (1.26) $ .36
Loss from discontinued operations (.34) (.01) (.42) (.02)
Extraordinary charge (.03) -- (.03) --
-------- -------- ------- --------
Earnings per share - Basic $ 1.77 $ .14 $ (1.71) $ .34
======== ======== ======== ========
Earnings per share - Diluted
Income (loss) from continuing operations $ (1.40) $ .14 $ (1.26) $ .35
Loss from discontinued operations (.34) -- (.42) (.02)
Extraordinary charge (.03) -- (.03) --
-------- -------- ------- --------
Earnings per share - Diluted $ (1.77) $ .14 $ (1.71) $ .33
======== ======== ======== ========
Weighted average shares outstanding
Basic 19,917 13,438 17,540 13,205
======== ======== ======== ========
Diluted 19,917 13,802 17,540 13,503
======== ======== ======== ========
</TABLE>
See notes to consolidated financial statements.
3
<PAGE> 5
ADVANCED LIGHTING TECHNOLOGIES, INC.
CONDENSED STATEMENT OF CONSOLIDATED SHAREHOLDERS' EQUITY (UNAUDITED)
NINE MONTHS ENDED MARCH 31, 1998
<TABLE>
<CAPTION>
------------------------------------------------------------------
COMMON STOCK
---------------------- PAID-IN RETAINED
SHARES PAR VALUE CAPITAL EARNINGS TOTAL
------ ----- --------- --------- -----------
(In thousands)
<S> <C> <C> <C> <C> <C>
Balance at July 1, 1997 13,435 $ 13 $ 59,087 $ 6,932 $ 66,032
Net loss - - - (30,028) (30,028)
Net proceeds from public offering
of common shares 3,000 3 69,317 - 69,320
Issuance of shares in connection
with purchases of businesses 3,600 4 42,619 - 42,623
Stock options exercised 70 - 831 - 831
------ ----- --------- --------- ----------
BALANCE AT MARCH 31, 1998 20,105 $ 20 $ 171,854 $ (23,096) $ 148,778
====== ===== ========= ========= ==========
</TABLE>
4
<PAGE> 6
ADVANCED LIGHTING TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
NINE-MONTHS ENDED
MARCH 31,
------------------
1998 1997
---- ----
(In thousands)
OPERATING ACTIVITIES
<S> <C> <C>
Net income (loss) $ (30,028) $ 4,5O2
Adjustments to reconcile net income (loss) to net cash used in
operating activities:
Purchased in-process research and development 18,220 --
Depreciation and amortization 3,335 1,829
Provision for discontinued operations 9,100 --
Special charges 18,500 --
Deferred income taxes (5,750) 1,782
Extraordinary loss 604 --
Changes in operating assets and liabilities:
Trade receivables (8,063) (9,400)
Inventories (5,673) (5,612)
Prepaids and other assets (15,008) (2,430)
Accounts payable and accrued expenses (3,384) 2,869
Other liabilities 84 (74)
--------- -------
Net cash used in operating activities (18,063) (6,534)
INVESTING ACTIVITIES
Capital expenditures (7,058) (11,589)
Purchase of short-term investments -- (10,229)
Purchases of businesses (50,441) (6,595)
Investments in affiliates (4,343) (1,023)
Use of net proceeds from public offering:
Capital expenditures (14,507) --
Investment in joint venture with Rohm & Haas Company (2,000) --
Acquisition of minority interest in Fiberstars, Inc. (4,780) --
--------- -------
Net cash used in investing activities (83,129) (29,436)
FINANCING ACTIVITIES
Proceeds from revolving credit facility 313,196 65,189
Payments of revolving credit facility (305,237) (47,344)
Proceeds from long-term debt 104,353 14,822
Payments of long-term debt and capital leases (21,848) (5,896)
Issuance of common stock 831 434
Net proceeds from public offering 69,320 30,091
Use of net proceeds from public offering (excluding $11,199
used for working capital purposes for the nine months ended
March 31, 1998):
Payment of long-term debt (7,400) --
Payment of revolving credit facility (25,600) (16,800)
--------- -------
Net cash provided by financing activities 127,615 40,496
--------- -------
Increase in cash and cash equivalents 26,423 4,526
Cash and cash equivalents, beginning of period 4,198 l,682
--------- -------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 30,621 $ 6,208
========= ========
SUPPLEMENTAL CASH FLOW INFORMATION
Interest paid $ 1,673 $ 684
Income taxes paid 2,280 81
Capitalized interest 680 206
Noncash transactions:
Equipment acquired through capital leases 376 1,004
Property acquired by assuming mortgage 4,807 --
Stock issued for purchases of businesses 42,623 1,537
Detail of acquisitions:
Assets acquired $ 120,972 $ 14,212
Liabilities assumed (26,149) (5,688)
Stock issued (42,623) (1,537)
--------- -------
Cash paid 52,200 6,987
Less cash acquired (1,759) (392)
--------- -------
Net cash paid for acquisition $ 50,441 $ 6,595
========= =======
</TABLE>
See notes to condensed consolidated financial statements.
5
<PAGE> 7
ADVANCED LIGHTING TECHNOLOGIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
MARCH 31, 1998
(Dollar amounts in thousands)
A. ORGANIZATION
Advanced Lighting Technologies, Inc. (the "Company" or "ADLT") is an
innovation-driven designer, manufacturer and marketer of metal halide lighting
products, including materials, system components, systems, and production
equipment.
B. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions for Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all the information and
disclosures required by generally accepted accounting principles for complete
financial statements. In the opinion of management, the financial statements
include all material adjustments necessary for a fair presentation, including
adjustments of a normal and recurring nature as well as the special charges
described in Note I. For further information, refer to the consolidated
financial statements and notes thereto included in the Company's annual report
on Form 10-K for the year ended June 30, 1997. Operating results for the three
months or nine months ended March 31, 1998 are not necessarily indicative of the
results that may be expected for the full-year ending June 30, 1998.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions in
certain circumstances that affect amounts reported in the consolidated financial
statements and notes. Actual results could differ from those estimates.
In April 1998, the American Institute of Certified Public Accountants issued
Statement of Position ("SOP") 98-5, "Reporting on the Costs of Start-Up
Activities." SOP 98-5 provides authoritative guidance on accounting for and
financial reporting of start-up costs and organization costs. The Company is
required to adopt the SOP on July 1, 1999 (though earlier application is
encouraged) and, upon adoption, expense all previously capitalized start-up
costs and organization costs as a cumulative effect of a change in accounting
principle. Management is reviewing its capitalization policies and determining
the impact that the adoption of this SOP is expected to have on its consolidated
results of operations and financial position.
6
<PAGE> 8
ADVANCED LIGHTING TECHNOLOGIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
MARCH 31, 1998
(Dollar amounts in thousands)
C. ISSUANCE OF COMMON STOCK
In July 1997, the Company issued three million shares of its Common Stock in a
public offering, resulting in net proceeds of $69,320. Approximately $33,000 of
the net proceeds from this offering were used to repay substantially all amounts
outstanding under its Revolving Credit and Security Agreement and its Term Note
(the "Loan Agreement"). Of the remaining net proceeds, $14,507 was used for
capital expenditures, primarily production equipment and leasehold improvements,
$4,780 was used to purchase 29% of Fiberstars, Inc., a company specializing in
the marketing and distribution of fiber optic lighting products, $2,000 was
contributed to Unison Fiber Optics Lighting Systems LLC, the Company's joint
venture with Rohm and Haas Company, and $11,199 was used for working capital
purposes for the nine months ended March 31, 1998.
D. ACQUISITIONS
During the nine months ended March 31, 1998, the Company completed the
following business combinations, both of which were accounted for by the
purchase method and, accordingly, results of operations for the acquired
businesses have been included in the condensed consolidated statement of
operations from their respective dates of acquisition. Assets acquired and
liabilities assumed have been recorded at fair value based on appraisals and
the best estimates available.
On January 2, 1998, the Company acquired all of the capital stock outstanding
(the "Stock") of Ruud Lighting, Inc. ("Ruud"), located in Racine, Wisconsin.
Ruud manufactures and directly markets high-intensity discharge ("HID") lighting
systems, with a strong focus on metal halide installations, for commercial,
industrial, outdoor, and related lighting applications. The purchase price
consisted of $35,500 in cash and three million shares of the Company's Common
Stock (valued at $33,023). The excess of the purchase price over the net
tangible assets acquired was allocated as $29,928 to various intangible assets
such as trade name and customer service infrastructure and $29,031 to the
excess of cost over net assets acquired ("goodwill"), which are being amortized
over 40 years.
The following unaudited pro forma results of operations give effect to the
acquisition of Ruud Lighting as if it had occurred on July 1, 1996. These pro
forma results have been prepared for comparative purposes only and do not
purport to be indicative of the results of operations which would have
resulted had the acquisition occurred on July 1, 1996, or which may result in
the future.
<TABLE>
<CAPTION>
Nine months ended
-----------------
March 31, 1998 March 31, 1997
-------------- --------------
<S> <C> <C>
Net sales $147,052 $111,681
Income (loss) before extraordinary charge (28,551) 6,238
Net income (loss) (29,155) 6,238
Earnings (loss) per share - diluted:
Before extraordinary charge $(1.63) $.38
Net income $(1.66) $.38
</TABLE>
7
<PAGE> 9
ADVANCED LIGHTING TECHNOLOGIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
MARCH 31, 1998
(Dollar amounts in thousands)
D. ACQUISITIONS (CONTINUED)
On January 28, 1998, the Company completed the acquisition of Deposition
Sciences, Inc.("DSI"), of Santa Rosa, California. DSI is the leader in the
development of sophisticated thin film deposition systems (equipment) and
coatings for lighting applications, with particular emphasis on coatings for
metal halide lighting systems. The purchase price consisted of $14,500 in cash
and 599,717 shares of the Company's Common Stock (valued at $9,600). The excess
of the purchase price over the net tangible assets acquired was allocated as
$18,220 to in-process research and development ("R&D") and $3,840 to intangible
assets. Intangibles consist of trade names, assembled workforce and goodwill,
and are amortized over 10 years. Purchased in-process R&D includes the value of
products in the development stage and not considered to have reached
technological feasibility and, in accordance with generally accepted accounting
principles, was capitalized but immediately written-off subsequent to the
acquisition of DSI.
E. REVOLVING BANK CREDIT FACILITY
On January 2, 1998, the Company replaced its existing Loan Agreement and other
borrowings in North America with an $85,000 revolving credit facility provided
by several North American financial institutions ("Bank Credit Facility").
Proceeds from this facility were partially used to finance the $35,500 cash
portion of the Ruud purchase price and the $14,500 cash portion of the DSI
purchase price. Proceeds were also used to repay $19,200 of existing and
outstanding North American bank borrowings of ADLT, Ruud and DSI.
The facility has a three-year term expiring in December 2000, extendable
annually for a three-year term. Interest rates on loans outstanding are based,
at the Company's option, on LIBOR (plus .625% to 1.75%) or the agent bank's
prime rate. The Company is also obligated to pay commitment fees of between .20%
and .375% on the unused portion of the facility. The facility contains certain
affirmative and negative covenants customary for this type of agreement,
prohibits cash dividends, and includes financial covenants with respect to
interest coverage, cash flow and tangible net worth. The principal security for
the facility is substantially all of the personal property of the Company and
each of its North American subsidiaries and a pledge of stock of each of the
Company's principal subsidiaries.
The early extinguishment of debt under the Loan Agreement resulted in a noncash
write-off of deferred financing costs and an extraordinary charge amounting to
$604, net of applicable income tax benefits of $311, in the three months ended
March 31, 1998.
8
<PAGE> 10
ADVANCED LIGHTING TECHNOLOGIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
MARCH 31, 1998
(Dollar amounts in thousands)
F. SENIOR NOTES OFFERING
On March 13, 1998, the Company sold $100,000 of Senior Notes due March 15, 2008,
resulting in net proceeds of approximately $96,150. The Notes have an annual
coupon of 8% and are redeemable at the Company's option, in whole or in part, on
or after March 15, 2003 at certain preset redemption prices. In addition, at any
time prior to March 15, 2001, the Company may redeem up to 35% of the aggregate
principal amount of the Notes at 108% of par with the proceeds of one or more
public equity offerings. Interest on the Senior Notes is payable semiannually on
March 15 and September 15 of each year beginning on September 15, 1998. There
are no sinking fund requirements.
The Indenture contains covenants that, among other things, limit the ability of
the Company and its Restricted Subsidiaries (as defined therein) to incur
indebtedness, pay dividends, prepay subordinated indebtedness, repurchase
capital stock, make investments, create liens, engage in transactions with
stockholders and affiliates, sell assets and, with respect to the Company only,
engage in mergers and consolidations.
Approximately $76,300 of the net proceeds from the Senior Notes were used to
repay amounts outstanding under the Bank Credit Facility, thereby lengthening
the term of the Company's debt, most of which had been incurred to finance the
acquisitions of Ruud Lighting and DSI.
G. PURCHASE OF CORPORATE HEADQUARTERS
During March 1998, the Company purchased land and building in Solon, Ohio for
$7,758, which includes the assumption of an existing mortgage of approximately
$4,800. The mortgage has a 9.39% interest rate, a prepayment penalty that
approximates $1,000, requires monthly amortizing payments and a final term
payment of $4,100 due in June 2006. Prior to the purchase, a portion of the
property was leased and used by the Company for system components manufacturing
and office space. Subsequent to the purchase, the Company relocated its world
headquarters to the facility. The Company has invested and intends to invest
additional amounts for expanded manufacturing, sales and training facilities.
H. ADDITIONAL INVESTMENT IN FIBERSTARS, INC.
During July 1997, the Company purchased an equity interest in Fiberstars, Inc.,
a marketer and distributor of fiber optic lighting products. At December 31,
1997, the Company owned approximately 669,000 common shares, or 19.6% of
Fiberstars' shares outstanding. On February 11, 1998, the Company increased its
equity ownership to approximately 1,023,000 common shares, or 29% of Fiberstars'
shares outstanding. Accordingly, the Company has changed its method of carrying
the investment to equity from cost in the quarter ended March 31, 1998. The
Company can not purchase additional shares of Fiberstars without the consent of
the board of directors of Fiberstars.
9
<PAGE> 11
ADVANCED LIGHTING TECHNOLOGIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
MARCH 31, 1998
(Dollar amounts in thousands)
I. SPECIAL CHARGES
During the three months ended March 31, 1998, the Company recorded special
charges related to the purchase price allocation for Deposition Sciences Inc.
("DSI") and an assessment of the Company's global power supply operations.
The Company completed the acquisition of DSI in January 1998. The special
charges include $18,220 for purchased in-process research and development,
determined by an independent valuation, relating to the DSI acquisition.
The special charges also include $18,500 principally relating to the
rationalization of the Company's global power supply operations. With the
January 1998 acquisition of Ruud Lighting, Inc., the Company accelerated the
rationalization of its existing power supply manufacturing operations and
distribution activities in order to capitalize on new opportunities not
previously available. This assessment resulted in (a) the discontinuance of
certain power supply products at the Company's power supply facilities and (b)
the write-down of certain intangible and fixed assets.
In addition, the charges cover the consolidation and rationalization cost of
distribution activities and facilities, the write-down of assets in connection
with the implementation of new information systems and a reassessment of
investments resulting from a change in expansion strategy arising from the Ruud
Lighting acquisition.
The special charges were determined in accordance with formal plans developed by
the Company's management using the best information available to it at the time
and, subsequently, approved by the Company's Board of Directors. The amounts the
Company may ultimately incur may change as the plans are executed.
The amounts are classified in the March 31, 1998 statement of operations as:
cost of sales--$2,800; purchased in-process research and development--$18,220;
and, special charges--$15,700. The activity impacting the accrual related to
special charges is summarized in the following table:
<TABLE>
<CAPTION>
Charged to Charges Balance as of
Operations Utilized March 31, 1998
---------- -------- --------------
<S> <C> <C> <C>
Inventories $ 2,800 $ 91 $2,709
Asset write-downs:
Intangibles 8,942 8,942 -0-
Fixed assets 2,650 1,004 1,646
Other assets 2,393 2,070 323
Contractual commitments
and other accruals 1,600 473 1,127
Other 115 115 -0-
------- ------- ------
$18,500 $12,695 $5,805
======= ======= ======
</TABLE>
10
<PAGE> 12
ADVANCED LIGHTING TECHNOLOGIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
MARCH 31, 1998
(Dollar amounts in thousands)
I. SPECIAL CHARGES (CONTINUED)
Intangible assets primarily represent the excess of the purchase price of
acquisition over the fair market value of the net assets acquired ("goodwill")
and other costs allocated to tradenames, know-how, and other specifically
identifiable intangibles arising from business acquisitions. Asset writedowns
for the impairment of long-lived intangibles and fixed assets were determined in
accordance with Financial Accounting Standards No. 121.
Actions required by the plans are expected to be completed by June 30, 1999.
Cash outlays to complete the balance of the Company's initiative to rationalize
the Company's global power supply operations are estimated to be approximately
$1,300.
The March 31, 1998 balance of the accrual for special charges is classified
within the balance sheet as follows:
Inventories $2,709
Property, plant, and equipment 1,646
Other assets 323
Other accrued expenses 1,127
------
$5,805
=======
After an income tax benefit of $4,664, these special charges reduced net income
by $32,056, or $1.61 diluted earnings per share for the three months ended
March 31, 1998.
J. INCOME TAXES
The provision for income taxes differs from the amount computed by applying the
statutory federal income tax rate to loss before income taxes as a result of the
difference between the financial reporting and tax bases of (a) the net assets
of Deposition Sciences, Inc. reflected in the March 31, 1998 statement of
operations as purchased in-process research and development and (b) a portion of
the special charges related asset write-downs.
11
<PAGE> 13
ADVANCED LIGHTING TECHNOLOGIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
MARCH 31, 1998
(Dollar amounts in thousands)
K. DISCONTINUED OPERATIONS, SPIN-OFF OF MICROSUN BUSINESS
In March 1998, the Company approved a plan to distribute to its shareholders all
of the ownership of Microsun Technologies, Inc., the subsidiary primarily
responsible for development, design, assembly and marketing of metal halide
portable fixtures for residential and hospitality uses, in a spin-off
transaction which is expected to be tax-free. The Company believes the creation
of two separate companies will enable the Company and Microsun to devote the
resources necessary to develop their core strategies in pursuit of their growth
objectives.
Summary operating information for Microsun for the three month and nine month
periods ended March 31, 1998 and 1997, is presented below for informational
purposes only and does not necessarily reflect what the results of operations
would have been had Microsun operated as a stand-alone entity.
<TABLE>
<CAPTION>
Three Months Nine Months
Ended March 31, Ended March 31,
--------------- ---------------
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Sales $ 1,610 $ 300 $ 2,764 $ 485
Costs and expenses 2,765 437 4,761 861
------- ----- -------- -------
Loss before income taxes (1,155) (137) (1,997) (376)
Income tax benefit ( 416) ( 49) ( 719) (135)
------- ----- -------- -------
Net loss $( 739) $( 88) $(1,278) $( 241)
======= ===== ======== =======
</TABLE>
Operating losses through the intended date of the spin-off follow:
<TABLE>
<CAPTION>
Before
Income Income
Taxes Taxes Net
----- ----- ---
<S> <C> <C> <C>
Operating losses for the nine
months ended March 31, 1998 $ 1,997 $ 719 $1,278
Estimated operating losses from
April 1, 1998 to December 31, 1998 9,100 3,086 6,014
------- ------ ------
Operating losses through spin-off $11,097 $3,805 $7,292
======= ====== ======
</TABLE>
The estimated date of disposition extends to December 31, 1998 pending the
determination of the spin-off as tax-free. As a result of the Board of
Directors' approval to spin-off the Microsun business, the consolidated
financial statements of ADLT have been adjusted and restated to reflect the
results of operations of Microsun as a discontinued operation in accordance with
generally accepted accounting principles.
12
<PAGE> 14
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
(Dollar amounts in thousands)
This report on Form 10-Q may contain forward-looking statements. For this
purpose, any statement contained herein that is not a statement of historical
fact may be deemed to be a forward-looking statement. Without limiting the
foregoing, the words "believes," "anticipates," "plans," "expects," and similar
expressions are intended to identify forward-looking statements. There are a
number of factors that could cause the Company's actual results to differ
materially from those indicated by such forward-looking statements. Such factors
are detailed in the Company's Annual Report on Form 10-K for the fiscal year
ended June 30, 1997 filed with the Securities and Exchange Commission.
The following is management's discussion and analysis of certain significant
factors which have affected the results of operations and should be read in
conjunction with the accompanying unaudited Condensed Consolidated Financial
Statements and notes thereto.
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<PAGE> 15
RESULTS OF OPERATIONS - SELECTED ITEMS AS A PERCENTAGE OF NET SALES
The following table sets forth, as a percentage of net sales, certain items in
the Company's Condensed Consolidated Statements of Operations for the indicated
periods:
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
------------------ -----------------
MARCH 31, MARCH 31,
-------------- ---------------
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net sales ............................................ 100.0 100.0 100.0 100.0
Costs and expenses:
Cost of sales ....................................... 62.0 53.5 59.7 53.6
Marketing and selling ............................... 15.3 17.2 15.2 17.1
Research and development ............................ 5.8 5.9 5.5 6.4
General and administrative .......................... 6.3 8.4 6.6 8.9
Fiber optic joint venture formation costs ........... -- -- 0.2 --
Purchased in-process R & D .......................... 37.1 -- 16.4 --
Special charges ..................................... 32.0 -- 14.2 --
Settlement of claim ................................. -- -- -- 1.3
Amortization of intangible assets ................... 1.1 0.5 0.8 0.3
------------------------------------------
Income (loss) from operations ......................... (59.6) 14.5 (18.6) 12.4
Other income (expense):
Interest expense ................................... (2.7) (1.8) (1.5) (1.2)
Interest income .................................... 0.6 1.3 1.0 1.0
Loss from equity investment ........................ (0.0) -- (0.0) --
------------------------------------------
Income (loss) from continuing operations
before income taxes and extraordinary charge ....... (61.7) 14.0 (19.1) 12.2
Income taxes .......................................... (4.8) 5.1 0.8 4.3
------------------------------------------
Income (loss) from continuing operations
before extraordinary charge ........................ (56.9) 8.9 (19.9) 7.9
Loss from discontinued residential portable
fixture operations, net of income taxes ............ (13.8) (0.4) (6.6) (0.4)
------------------------------------------
Income (loss) before extraordinary charge ............. (70.7) 8.5 (26.5) 7.5
Extraordinary charge, net of applicable
income tax benefits ................................ (1.2) -- (0.6) --
------------------------------------------
Net income ............................................ (71.9) 8.5 (27.1) 7.5
------------------------------------------
</TABLE>
Factors which have affected the results of operations for the third quarter of
fiscal 1998 as compared to the third quarter of fiscal 1997 and the comparison
of the first nine months of fiscal years 1998 and 1997 are discussed below.
14
<PAGE> 16
QUARTER ENDED MARCH 31, 1998 COMPARED WITH QUARTER ENDED MARCH 31, 1997
Net sales. Net sales increased 122.7% to $49,075 for the third quarter of fiscal
1998 from $22,034 for the third quarter of fiscal 1997. The increase in system
components, materials, and systems ($24,473) was primarily attributable to
increased unit volume, including a $14,913 increase from the Company's Ruud
Lighting subsidiary, which was acquired on January 2, 1998. The increase in
equipment sales ($2,568) was primarily attributable to the acquisition of
Deposition Sciences, Inc., which was acquired on January 28, 1998.
Cost of Sales. Cost of sales increased 158.0% to $30,448 in the third quarter of
fiscal 1998 from $11,801 in the third quarter of fiscal 1997. As a percentage of
net sales, cost of sales increased to 62.0% in the third quarter of fiscal 1998
from 53.5% in the third quarter of fiscal 1997. Cost of sales included $2,800
write-down of inventory related to the rationalization of the Company's global
power supply operations and the elimination of certain nonfocus product lines.
After excluding this write-down, cost of sales increased 134.3% for the quarter
to $27,648, or 56.3% of net sales. The increase was primarily attributable to
increased unit volume, but also reflects a change in the product mix, whereby
lower-margin power supplies products represented a larger component of total
sales in fiscal 1998.
Marketing and Selling Expenses. Marketing and selling expenses increased 98.8%
to $7,523 in the third quarter of fiscal 1998 from $3,784 in the third quarter
of fiscal 1997. Marketing and selling expenses, as a percentage of net sales,
decreased to 15.3% in the third quarter of fiscal 1998 from 17.2% in the third
quarter of fiscal 1997. This decrease reflects the leveraging of certain fixed
marketing and selling expenses as sales levels increase and relatively lower
marketing expenses associated with the sale of power supplies.
Research and Development Expenses. Research and development expenses increased
120.6% to $2,848 in the third quarter of fiscal 1998 from $1,291 in the third
quarter of fiscal 1997. This increase arose from increased spending for the: (i)
expansion of the line of new lamps intended to replace many first generation
metal halide lamps in industrial and commercial applications; (ii) development
and testing of electronic power supply systems; and (iii) development of new
materials for the world's major lighting manufacturers. As a percentage of net
sales, research and development expenses decreased slightly to 5.8% in the third
quarter of fiscal 1998 from 5.9% in the third quarter of fiscal 1997.
General and Administrative Expenses. General and administrative expenses
increased 66.4% to $3,087 in the third quarter of fiscal 1998 from $1,855 in the
third quarter of fiscal 1997. As a percentage of net sales, general and
administrative expenses decreased to 6.3% in the third quarter of fiscal 1998
from 8.4% in the third quarter of fiscal 1997. The decrease as a percentage of
net sales primarily reflects a spending growth rate considerably lower than
sales increases through the leveraging of fixed costs as sales levels increase.
Purchased In-Process Research & Development. In connection with its acquisition
of Deposition Sciences, Inc. in January 1998, the Company acquired in-process
research and development valued at $18,220. In accordance with generally
accepted accounting principles, the entire amount has been recorded as an
expense in the third quarter of fiscal 1998.
Special Charges. During the third quarter of fiscal 1998, the Company recorded
special charges related to the rationalization of the Company's global power
supply businesses. Additionally, the special charges, which total $18,500
(including the $2,800 write-down of inventory discussed above), cover the
elimination of certain nonfocus product lines, the consolidation and
15
<PAGE> 17
rationalization cost of distribution activities and facilities, the write-down
of assets in connection with the implementation of new information systems and a
reassessment of the Company's prospective investments.
Income (Loss) from Operations. As a result of the aforementioned factors, during
the third quarter of fiscal 1998, the Company incurred a loss from operations of
$29,256, as compared to income from operations of $3,202 during the third
quarter of fiscal 1997. Excluding the total special charges and the purchased
in-process R&D, income from operations increased 133.1% to $7,464, or 15.2% of
net sales, from $3,202, or 14.5% of net sales in the third quarter of fiscal
1997.
Interest Expense. Interest expense increased to $1,325 during the third quarter
of fiscal 1998 as compared to $392 for the third quarter of fiscal 1997. This
increase resulted primarily from the higher average debt outstanding during the
third quarter of fiscal 1998 as compared to the third quarter of fiscal 1997.
Interest Income. Interest income of $274 during the third quarter of fiscal 1998
was comparable to the $283 earned in the third quarter of fiscal 1997.
Loss from Equity Investment. During the third quarter of fiscal 1998, the
Company increased its equity ownership in Fiberstars, Inc. to approximately 29%
of total shares outstanding. Accordingly, the Company changed its method of
carrying the investment to equity from cost in the quarter ended March 31,
1998, and recognized a loss of $2 from this investment.
Income (Loss) from Continuing Operations before Income Taxes and Extraordinary
Charge. As a result of the aforementioned factors, during the third quarter of
fiscal 1998, the Company incurred a loss from continuing operations before
income taxes and extraordinary charge of $30,309, as compared to income from
continuing operations before income taxes and extraordinary charge of $3,093
during the third quarter of fiscal 1997. Excluding the total special charges and
the purchased in-process R&D, income from continuing operations before income
taxes and extraordinary charge increased 107.3% to $6,411, or 13.1% of net
sales, from $3,093, or 14.0% of net sales in the third quarter of fiscal 1997.
Income Taxes. The Company recorded an income tax benefit of $2,356 in the third
quarter of fiscal 1998, as compared to income tax expense of $1,123 in the third
quarter of fiscal 1997. The income tax benefit consists of a tax benefit of
$4,664 related to the tax-deductible portion of the special charges, and income
tax expense of $2,308 related to income from continuing operations (excluding
the special charges and the purchased in-process R&D). The income tax expense of
$2,308 results in an effective tax rate of 36% on income from continuing
operations, which is comparable to the tax rate of 36% incurred in fiscal 1997.
Loss from Discontinued Operations. In March 1998, the Company approved a plan to
distribute to its shareholders all of the ownership of Microsun Technologies,
Inc., the subsidiary primarily responsible for development, design, assembly and
marketing of metal halide portable fixtures for residential and hospitality
uses, in a spin-off transaction which is expected to be tax-free. The Company
believes the creation of two separate companies will enable the Company and
Microsun to devote the resources necessary to develop their core strategies in
pursuit of their growth objectives. The loss from discontinued operations of
$6,753 represents the total of Microsun's loss from operations in the third
quarter of fiscal 1998 and operating losses through the intended date of the
spin-off.
Extraordinary Charge. The Company recorded a $604 extraordinary charge (net of
applicable income taxes of $311) during the third quarter of fiscal 1998,
representing costs associated with the early extinguishment of debt.
16
<PAGE> 18
NINE MONTHS ENDED MARCH 31, 1998 COMPARED WITH NINE MONTHS ENDED MARCH 31, 1997
Net sales. Net sales increased 83.9% to $110,891 for the first nine months of
fiscal 1998 from $60,291 for the first nine months of fiscal 1997. The increase
in system components, materials, and systems ($46,381) was primarily
attributable to increased unit volume, including a $22,011 increase from the
Company's power supply subsidiaries acquired in the second half of fiscal 1997
and a $14,913 increase from the Company's Ruud Lighting subsidiary, which was
acquired on January 2, 1998. The increase in equipment sales ($4,218) resulted
from an increase in equipment contracts-in-progress, as compared with the number
of contracts-in-progress during the first nine months of fiscal 1997, due in
part to the acquisition of Deposition Sciences, Inc. in January 1998.
Cost of Sales. Cost of sales increased 105.1% to $66,241 in the first nine
months of fiscal 1998 from $32,299 in the first nine months of fiscal 1997. As a
percentage of net sales, cost of sales increased to 59.7% in the first nine
months of fiscal 1998 from 53.6% in the first nine months of fiscal 1997. Cost
of sales included a $2,800 write-down of inventory related to the
rationalization of the Company's global power supply operations and the
elimination of certain nonfocus product lines. After excluding this write-down,
cost of sales increased 96.4% to $63,441, or 57.2% of net sales. The increase
was primarily attributable to increased unit volume, but also reflects a change
in the product mix, whereby lower-margin power supply products represented a
larger component of total sales in fiscal 1998.
Marketing and Selling Expenses. Marketing and selling expenses increased 63.7%
to $16,854 in the first nine months of fiscal 1998 from $10,299 in the first
nine months of fiscal 1997. Marketing and selling expenses, as a percentage of
net sales, decreased to 15.2% in the first nine months of fiscal 1998 from 17.1%
in the first nine months of fiscal 1997. This decrease as a percentage of net
sales reflects the leveraging of certain fixed marketing and selling expenses as
sales levels increase and relatively lower marketing expenses associated with
the sale of power supplies.
Research and Development Expenses. Research and development expenses increased
57.6% to $6,069 in the first nine months of fiscal 1998 from $3,851 in the first
nine months of fiscal 1997. This increase arose from increased spending for the:
(i) expansion of the line of new lamps intended to replace many first generation
metal halide lamps in industrial and commercial applications; (ii) development
and testing of electronic power supply systems; and, (iii) development of new
materials for the world's major lighting manufacturers. As a percentage of net
sales, research and development expenses decreased to 5.5% in the first nine
months of fiscal 1998 from 6.4% in the first nine months of fiscal 1997.
General and Administrative Expenses. General and administrative expenses
increased 35.9% to $7,307 in the first nine months of fiscal 1998 from $5,378 in
the first nine months of fiscal 1997. As a percentage of net sales, general and
administrative expenses decreased to 6.6% in the first nine months of fiscal
1998 from 8.9% in the first nine months of fiscal 1997. The decrease as a
percentage of net sales primarily reflects a spending growth rate considerably
lower than sales increases through the leveraging of fixed costs as sales levels
increase.
Fiber Optic Joint Venture Formation Costs. On May 6, 1997, the Company entered
into a joint development agreement with Rohm and Haas Company ("Rohm and Haas")
for the development of advanced fiber optic cable systems using metal halide
lamps. On December 31, 1997, the Company and Rohm and Haas completed a series of
agreements that resulted in the formation of Unison Fiber Optics Lighting
Systems LLC ("Unison"), a joint venture that focuses on the manufacture and sale
of fiber optic lighting systems to the worldwide lighting market. In
17
<PAGE> 19
connection with this joint venture, the Company incurred $212 of formation and
development costs which were charged to operations during the first quarter of
fiscal 1998.
Purchased In-Process Research & Development. In connection with its acquisition
of Deposition Sciences, Inc. in January 1998, the Company acquired in-process
research and development valued at $18,220. In accordance with generally
accepted accounting principles, the entire amount has been recorded as an
expense in the third quarter of fiscal 1998.
Special Charges. During the third quarter of fiscal 1998, the Company recorded
special charges related to the rationalization of the Company's global power
supply businesses. Additionally, the special charges, which total $18,500
(including the $2,800 write-down of inventory discussed above), cover the
elimination of certain nonfocus product lines, the consolidation and
rationalization cost of distribution activities and facilities, the write-down
of assets in connection with the implementation of new information systems and a
reassessment of the Company's prospective investments.
Settlement of Claim. During the second quarter of fiscal 1997, the Company paid
$475 in an out-of-court settlement of a claim brought by certain former common
shareholders of a predecessor of the Company. The charge of $771 ($.06 per
share) represents the $475 settlement plus legal and other directly-related
costs, net of anticipated insurance recoveries.
Income (Loss) from Operations. As a result of the aforementioned factors, during
the first nine months of fiscal 1998, the Company incurred a loss from
operations of $20,642, as compared to income from operations of $7,498 during
the first nine months of fiscal 1997. Excluding the fiber optic joint venture
formation costs, total special charges, purchased in-process R & D, and the
settlement of claim, income from operations increased 97.0% to $16,290, or
14.7% of net sales, from $8,269, or 13.7% of net sales in the first nine months
of fiscal 1997.
Interest Expense. Interest expense increased to $1,649 during the first nine
months of fiscal 1998 as compared to $749 for the first nine months of fiscal
1997. This increase resulted primarily from the higher average debt outstanding
during the first nine months of fiscal 1998 as compared to the first nine months
of fiscal 1997.
Interest Income. Interest income increased to $1,079 during the first nine
months of fiscal 1998 as compared to $610 in the first nine months of fiscal
1997. This increase is attributable to higher average cash equivalents and
short-term investments during the first nine months of fiscal 1998 as compared
to the first nine months of fiscal 1997.
Income (Loss) from Continuing Operations before Income Taxes and Extraordinary
Charge. As a result of the aforementioned factors, during the first nine months
of fiscal 1998, the Company incurred a loss from continuing operations before
income taxes and extraordinary charge of $21,214, as compared to income from
continuing operations before income taxes and extraordinary charge of $7,359
during the first nine months of fiscal 1997. Excluding the fiber optic joint
venture formation costs, total special charges, purchased in-process R&D, and
the settlement of claim, income from continuing operations before income taxes
and extraordinary charge increased 93.3% to $15,718, or 14.2% of net sales, from
$8,130, or 13.5% of net sales in the first nine months of fiscal 1997.
Income Taxes. The Company recorded income tax expense of $918 for the first nine
months of fiscal 1998, as compared to $2,616 in the first nine months of fiscal
1997. The income tax expense for the first nine months of fiscal 1998 was
reduced by a tax benefit of $4,664 related to
18
<PAGE> 20
the tax-deductible portion of the special charges. Without this reduction, the
income tax expense would have been $5,582, resulting in an effective tax rate of
36% on income from continuing operations, which is comparable to the tax rate of
36% incurred in fiscal 1997.
Loss from Discontinued Operations. In March 1998, the Company approved a plan to
distribute to its shareholders all of the ownership of Microsun Technologies,
Inc., the subsidiary primarily responsible for development, design, assembly and
marketing of metal halide portable fixtures for residential and hospitality
uses, in a spin-off transaction which is expected to be tax-free. The Company
believes the creation of two separate companies will enable the Company and
Microsun to devote the resources necessary to develop their core strategies in
pursuit of their growth objectives. The loss from discontinued operations of
$7,292 represents the total of Microsun's loss from operations in the first nine
months of fiscal 1998 and operating losses through the intended date of the
spin-off.
Extraordinary Charge. The Company recorded a $604 extraordinary charge (net of
applicable income taxes of $311) during the third quarter of fiscal 1998,
representing costs associated with the early extinguishment of debt.
LIQUIDITY AND CAPITAL RESOURCES
The Company's principal capital requirements are for developing manufacturing
equipment, market development activities, research and development efforts,
investments in business acquisitions, joint ventures and working capital. These
requirements have been, and the Company expects they will continue to be,
financed through a combination of cash flow from operations, borrowings under
various credit facilities and the sale of common stock (including the remaining
proceeds from the July 1996 and July 1997 issuances of common stock currently
invested in cash equivalents).
During July 1997, the Company received $74,250 of proceeds from the sale of
three million shares of its common stock in connection with a public offering.
Underwriting fees amounted to $3,720 and additional costs associated with the
public offering, primarily for legal, accounting, consulting and printing fees,
amounted to $1,210. The net proceeds were $69,320, of which $33,000 was used to
reduce debt outstanding under the Company's domestic Revolving Credit and
Security Agreement and its Term Note (the "Loan Agreement"). Of the remaining
net proceeds, $14,507 was used for capital expenditures, primarily production
equipment and leasehold improvements, $4,780 was used to purchase a 29% interest
in Fiberstars, Inc., a company specializing in the marketing and distribution of
fiber optic lighting products, $2,000 was contributed to Unison Fiber Optics
Lighting Systems LLC, the Company's joint venture with Rohm and Haas Company,
and $11,199 was used for working capital purposes for the nine months ended
March 31, 1998.
The Company's working capital (current assets less current liabilities) at March
31, 1998 was $87,646, resulting in a working capital ratio of current assets to
current liabilities of 3.4 to 1.0, as compared to $42,380 or 2.5 to 1.0 at June
30, 1997. As of March 31, 1998, the Company had approximately $34,696 in cash
and cash equivalents and short-term investments.
On January 2, 1998, the Company replaced its existing Loan Agreement and other
borrowings in North America with an $85,000 revolving credit facility provided
by several North American financial institutions ("Bank Credit Facility").
Proceeds from this facility were also used to finance the $35,500 cash portion
of the Ruud Lighting purchase price and the $14,500 cash portion of the DSI
purchase price (see Note D to the condensed consolidated financial statements
for a description of these acquisitions). Proceeds were also used
19
<PAGE> 21
to repay $19,200 of existing and outstanding North American bank borrowings of
ADLT, Ruud Lighting and DSI.
The early extinguishment of debt under the Loan Agreement resulted in a noncash
write-off of deferred financing costs and an extraordinary charge of $604 (net
of applicable income tax benefits of $311) in the quarter ended March 31, 1998.
On March 13, 1998, the Company sold $100,000 of 8% Senior Notes due March 15,
2008, resulting in net proceeds of $96,150. Approximately $76,300 of the net
proceeds of the Senior Notes were used to repay amounts outstanding under the
Bank Credit Facility, thereby lengthening the term of the Company's debt, most
of which has been incurred to finance the acquisitions of Ruud Lighting and DSI.
Net cash used in operating activities during the nine months ended March 31,
1998 amounted to $20,569, primarily as a result of higher accounts receivable
arising from increased sales, an increase in inventory levels to support higher
sales service levels, an increase in prepaids and other assets, and a reduction
in accounts payable.
For the nine months ended March 31, 1998, the Company invested approximately
$26,372 in capital expenditures as compared with $11,589 for the first nine
months of fiscal 1997. Over the next twelve months the Company intends to spend
approximately $20,000 on capital expenditures, primarily production equipment,
and $14,400 on the expansion and upgrading of distribution, training center,
lighting demonstration and office facilities at the Company's world
headquarters.
The Company believes that the successful completion of the July 1997 stock
offering and the March 1998 senior note offering has strengthened its financial
position and enhanced its ability to obtain additional financing. In addition,
the Company believes that the acquisition of Ruud will favorably impact its cash
flow from operations, as Ruud has historically achieved significant positive
cash flows from its operations.
The Company believes that the combination of its anticipated cash flows from
Ruud's operations, available cash, current borrowing facilities and strengthened
financial position will be sufficient for the Company to fund its operations for
at least the next 12 months. In addition, it is the Company's intention to avail
itself of appropriate financing alternatives to ensure that growth
opportunities, including those arising from acquisitions and additional
investments in existing relationships, are realized.
IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS
In June 1997, the Financial Accounting Standards Board issued FAS No. 131,
"Disclosures about Segments of an Enterprise and Related Information". The
statement requires a "management" approach to reporting financial and
descriptive information about a Company's operating segments. The Company must
adopt this statement in the first quarter of fiscal 1999. Management is
currently studying the potential effect of adopting this statement.
In April 1998, the American Institute of Certified Public Accountants issued
Statement of Position ("SOP") 98-5, "Reporting on the Costs of Start-Up
Activities." SOP 98-5 provides authoritative guidance on accounting for and
financial reporting of start-up costs and organization costs. The Company is
required to adopt the SOP on July 1, 1999 (though earlier application is
encouraged) and, upon adoption, expense all previously capitalized start-up
costs and organization costs as a cumulative effect of a change in accounting
principle. Management is reviewing its capitalization policies and determining
the impact that the adoption of this SOP is expected to have on its consolidated
results of operations and financial position.
20
<PAGE> 22
YEAR 2000 COMPLIANCE
The Company utilizes and is dependent upon data processing systems and software
to conduct its business. The data processing systems and software include those
developed and maintained by the Company and purchased software which is run on
in-house computer networks. The Company has initiated a review and assessment of
all hardware and software to confirm that it will function properly in the year
2000. To date, those vendors which have been contacted have indicated that their
hardware or software is or will be Year 2000 compliant in time frames that meet
the Company's requirements. The Company presently believes that costs associated
with the compliance efforts will not have a significant impact on the Company's
ongoing results of operations.
21
<PAGE> 23
PART II. OTHER INFORMATION
Except as noted below, the items in Part II are inapplicable or, if applicable,
would be answered in the negative. These items have been omitted and no other
reference is made thereto.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
(a) On January 2, 1998, the Company acquired all of the capital stock
outstanding of Ruud Lighting, Inc. ("Ruud"), located in Racine, Wisconsin.
Under the terms of the agreement, Ruud's shareholders received, in the
aggregate, $35.5 million in cash and 3 million shares of Company Common Stock,
par value $.001 per share ("Common Stock"). The transaction was exempt from
registration under the Act pursuant to Section 4(2) and Regulation D. The Common
Stock was issued to the five existing shareholders of Ruud, who certified
themselves to be "accredited investors," as defined in Rule 501 under the
Securities Act of 1933, as amended (the "Act"). Each shareholder agreed to
contractual restrictions on the transfer of the Common Stock for a period of two
years, the shareholders made customary representations and warranties and the
share certificates bear restrictive legends.
(b) On January 28, 1998 the Company acquired Deposition Sciences, Inc.
("DSI"), located in Santa Rosa, California. The acquisition was accomplished by
a merger of DSI into a wholly-owned subsidiary of the Company. DSI shareholders
received, in the aggregate, $14.5 million in cash and 599,717 shares of Common
Stock. The transaction was exempt from registration under the Act pursuant to
Section 4(2) and Regulation D. The Common Stock was issued to 33 of the 34
existing shareholders of DSI, at least nine of whom certified themselves to be
"accredited investors," as defined in Rule 501 under the Act. Each DSI
shareholder made customary representations and warranties, including
acknowledgment of the requirements of Rule 144 and their ability to evaluate the
investment and bear the economic risk, and the share certificates bear
restrictive legends.
22
<PAGE> 24
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
<TABLE>
<CAPTION>
SEQUENTIAL
PAGE NUMBER/
EXHIBIT INCORPORATED
NUMBER TITLE BY REFERENCE
- ------ ----- ------------
<S> <C> <C>
3.1 Amended and Restated Articles of Incorporation. *
3.2 Code of Regulations. **
10.1 Stock Purchase Agreement among Advanced Lighting Technologies,
Inc., Ruud Lighting, Inc. and Alan J. Ruud, Theodore O. Sokoly,
Donald Wandler, Christopher A. Ruud and Cynthia A. Johnson,
Dated December 19, 1997. ***
10.2 Credit Agreement between Advanced Lighting Technologies, Inc.,
The Lending Institutions Named Therein and National City Bank,
as Administrative Agent, Dated as of January 2, 1998. ___
10.3 Amendment No. 1 dated as of February 26, 1998 to Credit
Agreement between Advanced Lighting Technologies, Inc., The
Lending Institutions Named Therein and National City Bank,
as Administrative Agent, Dated as of January 2, 1998. ___
10.4 Indenture between Advanced Lighting Technologies, Inc., and
The Bank of New York, as Trustee dated March 18, 1998. ___
11 Statement Re: Computation of Earnings Per Share ___
27 Financial Data Schedule ___
* Incorporated by reference to Exhibit of same number in Company's
Quarterly Report on Form 10-Q for the Quarterly Period ended December 31,
1996.
** Incorporated by reference to Company's Registration Statement on Form S-1,
Registration No. 33-97902, effective December 11, 1995.
*** Incorporated by reference to Exhibit 2.1 in Company's Current Report on
Form 8-K dated January 2, 1998.
</TABLE>
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<PAGE> 25
(b) Reports on Form 8-K. During the third quarter of fiscal 1998, the
Company filed the following Reports on Form 8-K:
1. Report on Form 8-K dated January 2, 1998, filed January 14, 1998,
reporting under Item 2 the acquisition of Ruud Lighting, Inc., and under
Item 5 the replacement to the Company's credit agreement. The report
includes a Pro Forma Condensed Balance Sheet (unaudited) of Advanced
Lighting Technologies, Inc., as at September 30, 1997, Pro Forma
Consolidated Combined Statements of Income (unaudited) of Advanced
Lighting Technologies, Inc., for the year ended June 30, 1997 and the
three months ended September 30, 1997, Balance Sheets of Ruud Lighting,
Inc., as at November 30, 1997 and 1996 and Statements of Income of Ruud
Lighting, Inc., for the years ended November 30, 1997, 1996 and 1995.
2. Report on Form 8-K dated February 27, 1998, filed March 4, 1998,
reporting under Item 5 the offering of Senior Notes and the Company's
press release regarding special charges. The Report includes Selected
Financial Data of Advanced Lighting Technologies, Inc., for the years
ended June 30, 1997, 1996, 1995, 1994 and 1993 and Earnings per Share
Calculations of Advanced Lighting Technologies, Inc., for the years
ended June 30, 1997, 1996 and 1995.
24
<PAGE> 26
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: May 14, 1998 ADVANCED LIGHTING TECHNOLOGIES, INC.
By: /s/ Wayne R. Hellman
----------------------------------
Wayne R. Hellman
Chief Executive Officer
By: /s/ Nicholas R. Sucic
----------------------------------
Nicholas R. Sucic
Chief Financial Officer
25
<PAGE> 27
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
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PAGE NO.
<S> <C> <C>
3.1 Amended and Restated Articles of Incorporation. *
3.2 Code of Regulations. **
10.1 Stock Purchase Agreement among Advanced Lighting Technologies,
Inc., Ruud Lighting, Inc. and Alan J. Ruud, Theodore O. Sokoly,
Donald Wandler, Christopher A. Ruud and Cynthia A. Johnson,
Dated December 19, 1997. ***
10.2 Credit Agreement between Advanced Lighting Technologies, Inc.,
The Lending Institutions Named Therein and National City Bank,
as Administrative Agent, Dated as of January 2, 1998. ___
10.3 Amendment No. 1 dated as of February 26, 1998 to Credit
Agreement between Advanced Lighting Technologies, Inc., The
Lending Institutions Named Therein and National City Bank,
as Administrative Agent, Dated as of January 2, 1998. ___
10.4 Indenture between Advanced Lighting Technologies, Inc., and
The Bank of New York, as Trustee dated March 18, 1998. ___
11 Statement Re: Computation of Earnings Per Share ___
27 Financial Data Schedule ___
</TABLE>
* Incorporated by reference to Exhibit of same number in Company's
Quarterly Report on Form 10-Q for the Quarterly Period ended December 31,
1996.
** Incorporated by reference to Company's Registration Statement on Form S-1,
Registration No. 33-97902, effective December 11, 1995.
*** Incorporated by reference to Exhibit 2.1 in Company's Current Report on
Form 8-K dated January 2, 1998.
26
<PAGE> 1
EXHIBIT 10.2
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================================================================================
CREDIT AGREEMENT
DATED AS OF
JANUARY 2, 1998
AMONG
ADVANCED LIGHTING TECHNOLOGIES, INC.
AS BORROWER
THE LENDING INSTITUTIONS NAMED THEREIN
AS LENDERS
AND
NATIONAL CITY BANK
AS ADMINISTRATIVE AGENT
================================================================================
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
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PAGE
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SECTION 1. DEFINITIONS AND TERMS...........................................................................1
1.1. CERTAIN DEFINED TERMS...........................................................................1
1.2. COMPUTATION OF TIME PERIODS....................................................................15
1.3. ACCOUNTING TERMS...............................................................................15
1.4. TERMS GENERALLY................................................................................15
1.5. CURRENCY EQUIVALENTS...........................................................................16
SECTION 2. AMOUNT AND TERMS OF LOANS......................................................................16
2.1. COMMITMENTS FOR LOANS..........................................................................16
2.2. MINIMUM BORROWING AMOUNTS, ETC.; PRO RATA BORROWINGS...........................................17
2.3. NOTICE OF BORROWING............................................................................17
2.4. DISBURSEMENT OF FUNDS FROM BORROWINGS..........................................................18
2.5. NOTES..........................................................................................19
2.6. VOLUNTARY CONVERSION OF DOLLAR DENOMINATED LOANS; REDENOMINATION OF LOANS......................19
2.7. INTEREST ON LOANS..............................................................................20
2.8. INTEREST PERIODS...............................................................................21
2.9. INCREASED COSTS, ILLEGALITY, ETC...............................................................22
2.10. COMPENSATION...................................................................................24
2.11. CHANGE OF LENDING OFFICE; REPLACEMENT OF LENDERS...............................................24
SECTION 3. LETTERS OF CREDIT..............................................................................25
3.1. LETTERS OF CREDIT..............................................................................25
3.2. LETTER OF CREDIT REQUESTS: NOTICES OF ISSUANCE.................................................26
3.3. AGREEMENT TO REPAY LETTER OF CREDIT DRAWINGS...................................................26
3.4. LETTER OF CREDIT PARTICIPATIONS................................................................26
3.5. INCREASED COSTS................................................................................28
3.6. GUARANTY OF SUBSIDIARY LETTER OF CREDIT OBLIGATIONS............................................29
3.7. SEPARATE DOCUMENTARY LETTERS OF CREDIT.........................................................30
SECTION 4. FEES; COMMITMENTS..............................................................................30
4.1. FEES...........................................................................................30
4.2. VOLUNTARY TERMINATION/REDUCTION OF COMMITMENTS.................................................31
4.3. MANDATORY TERMINATION/ADJUSTMENTS OF COMMITMENTS, ETC..........................................31
4.4. EXTENSION OF MATURITY DATE.....................................................................32
SECTION 5. PAYMENTS.......................................................................................32
5.1. VOLUNTARY PREPAYMENTS..........................................................................32
5.2. MANDATORY PREPAYMENTS..........................................................................33
5.3. METHOD AND PLACE OF PAYMENT....................................................................34
5.4. NET PAYMENTS...................................................................................34
SECTION 6. CONDITIONS PRECEDENT...........................................................................36
6.1. CONDITIONS PRECEDENT AT INITIAL BORROWING DATE.................................................36
6.2. CONDITIONS PRECEDENT TO ALL CREDIT EVENTS......................................................38
SECTION 7. REPRESENTATIONS AND WARRANTIES.................................................................38
7.1. CORPORATE STATUS, ETC..........................................................................39
7.2. SUBSIDIARIES...................................................................................39
7.3. CORPORATE POWER AND AUTHORITY, ETC.............................................................39
7.4. NO VIOLATION...................................................................................39
</TABLE>
ii
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<TABLE>
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7.5. GOVERNMENTAL APPROVALS.........................................................................39
7.6. LITIGATION.....................................................................................40
7.7. USE OF PROCEEDS; MARGIN REGULATIONS............................................................40
7.8. FINANCIAL STATEMENTS, ETC......................................................................40
7.9. NO MATERIAL ADVERSE CHANGE.....................................................................41
7.10. TAX RETURNS AND PAYMENTS.......................................................................41
7.11. TITLE TO PROPERTIES, ETC.......................................................................41
7.12. LAWFUL OPERATIONS, ETC.........................................................................41
7.13. ENVIRONMENTAL MATTERS..........................................................................41
7.14. COMPLIANCE WITH ERISA..........................................................................42
7.15. INTELLECTUAL PROPERTY, ETC.....................................................................42
7.16. INVESTMENT COMPANY.............................................................................42
7.17. BURDENSOME CONTRACTS; LABOR RELATIONS..........................................................43
7.18. EXISTING INDEBTEDNESS..........................................................................43
7.19. SECURITY INTERESTS.............................................................................43
7.20. TRUE AND COMPLETE DISCLOSURE...................................................................43
SECTION 8. AFFIRMATIVE COVENANTS..........................................................................44
8.1. REPORTING REQUIREMENTS.........................................................................44
8.2. BOOKS, RECORDS AND INSPECTIONS.................................................................47
8.3. INSURANCE......................................................................................47
8.4. PAYMENT OF TAXES AND CLAIMS....................................................................47
8.5. CORPORATE FRANCHISES...........................................................................48
8.6. GOOD REPAIR....................................................................................48
8.7. COMPLIANCE WITH STATUTES, ETC..................................................................48
8.8. COMPLIANCE WITH ENVIRONMENTAL LAWS.............................................................48
8.9. FISCAL YEARS, FISCAL QUARTERS..................................................................49
8.10. CERTAIN SUBSIDIARIES TO JOIN IN SUBSIDIARY GUARANTY............................................49
8.11. ADDITIONAL SECURITY; FURTHER ASSURANCES........................................................49
8.12. CORPORATE SEPARATENESS.........................................................................51
8.13. ERISA..........................................................................................51
8.14. HEDGE AGREEMENTS, ETC..........................................................................51
8.15. LANDLORD/MORTGAGEE WAIVERS; BAILEE LETTERS.....................................................52
8.16. SENIOR DEBT....................................................................................52
SECTION 9. NEGATIVE COVENANTS.............................................................................52
9.1. CHANGES IN BUSINESS............................................................................52
9.2. CONSOLIDATION, MERGER OR SALE OF ASSETS, ETC...................................................52
9.3. LIENS..........................................................................................54
9.4. INDEBTEDNESS...................................................................................56
9.5. ADVANCES, INVESTMENTS, LOANS AND GUARANTY OBLIGATIONS..........................................57
9.6. DIVIDENDS, ETC.................................................................................59
9.7. TOTAL INDEBTEDNESS/EBITDA RATIO................................................................59
9.8. INTEREST COVERAGE RATIO........................................................................59
9.9. CAPITAL EXPENDITURES...........................................................................59
9.10. CERTAIN LEASES.................................................................................59
9.11. MINIMUM CONSOLIDATED TANGIBLE NET WORTH........................................................59
9.12. PREPAYMENTS AND REFINANCINGS OF OTHER DEBT, ETC................................................60
9.13. TRANSACTIONS WITH AFFILIATES...................................................................60
9.14. LIMITATION ON CERTAIN RESTRICTIONS ON SUBSIDIARIES.............................................60
9.15. LIMITATION ON SALE AND LEASE-BACK TRANSACTIONS.................................................60
SECTION 10. EVENTS OF DEFAULT..............................................................................61
10.1. EVENTS OF DEFAULT..............................................................................61
</TABLE>
ii
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<TABLE>
<S> <C> <C>
10.2. ACCELERATION, ETC..............................................................................63
10.3. APPLICATION OF LIQUIDATION PROCEEDS............................................................63
SECTION 11. THE ADMINISTRATIVE AGENT.......................................................................64
11.1. APPOINTMENT....................................................................................64
11.2. DELEGATION OF DUTIES...........................................................................64
11.3. EXCULPATORY PROVISIONS.........................................................................64
11.4. RELIANCE BY ADMINISTRATIVE AGENT...............................................................64
11.5. NOTICE OF DEFAULT..............................................................................65
11.6. NON-RELIANCE...................................................................................65
11.7. INDEMNIFICATION................................................................................65
11.8. THE ADMINISTRATIVE AGENT IN INDIVIDUAL CAPACITY................................................66
11.9. SUCCESSOR ADMINISTRATIVE AGENT.................................................................66
11.10. OTHER AGENTS...................................................................................66
SECTION 12. GUARANTY BY THE BORROWER.......................................................................66
12.1. GUARANTY OF CERTAIN SUBSIDIARY BORROWINGS......................................................66
12.2. ADDITIONAL UNDERTAKING.........................................................................66
12.3. GUARANTY UNCONDITIONAL, ETC....................................................................66
12.4. BORROWER OBLIGATIONS TO REMAIN IN EFFECT; RESTORATION..........................................67
12.5. WAIVER OF ACCEPTANCE, ETC......................................................................67
12.6. SUBROGATION....................................................................................67
12.7. EFFECT OF STAY.................................................................................67
SECTION 13. MISCELLANEOUS..................................................................................68
13.1. PAYMENT OF EXPENSES ETC........................................................................68
13.2. RIGHT OF SETOFF................................................................................68
13.3. NOTICES........................................................................................69
13.4. BENEFIT OF AGREEMENT...........................................................................69
13.5. NO WAIVER: REMEDIES CUMULATIVE.................................................................70
13.6. PAYMENTS PRO RATA..............................................................................70
13.7. CALCULATIONS: COMPUTATIONS.....................................................................71
13.8. GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER OF JURY TRIAL.........................71
13.9. COUNTERPARTS...................................................................................72
13.10. EFFECTIVENESS..................................................................................72
13.11. HEADINGS DESCRIPTIVE...........................................................................72
13.12. AMENDMENT OR WAIVER............................................................................72
13.13. SURVIVAL OF INDEMNITIES........................................................................73
13.14. DOMICILE OF LOANS..............................................................................73
13.15. CONFIDENTIALITY................................................................................73
13.16. LENDER REGISTER................................................................................73
13.17. LIMITATIONS ON LIABILITY OF THE LETTER OF CREDIT ISSUERS.......................................74
13.18. GENERAL LIMITATION OF LIABILITY................................................................74
13.19. NO DUTY........................................................................................74
13.20. LENDERS AND ADMINISTRATIVE AGENT NOT FIDUCIARY TO BORROWER, ETC................................75
13.21. JUDGMENT CURRENCY..............................................................................75
13.22. SURVIVAL OF REPRESENTATIONS AND WARRANTIES.....................................................75
</TABLE>
iii
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- ------------
ANNEX I - INFORMATION AS TO LENDERS
ANNEX II - INFORMATION AS TO SUBSIDIARIES
ANNEX III - DESCRIPTION OF EXISTING INDEBTEDNESS
ANNEX IV - DESCRIPTION OF EXISTING LIENS
ANNEX V - DESCRIPTION OF EXISTING ADVANCES, LOANS, INVESTMENTS AND
GUARANTEES
ANNEX VI - DESCRIPTION OF LETTERS OF CREDIT DEEMED ISSUED UNDER THE
CREDIT AGREEMENT
EXHIBIT A - FORM OF NOTE
EXHIBIT B-1 - FORM OF NOTICE OF BORROWING
EXHIBIT B-2 - FORM OF NOTICE OF CONVERSION
EXHIBIT B-3 - FORM OF LETTER OF CREDIT REQUEST
EXHIBIT B-4 - FORM OF REDENOMINATION REQUEST
EXHIBIT C - FORM OF SUBSIDIARY GUARANTY
EXHIBIT D - FORM OF SECURITY AGREEMENT
EXHIBIT E-1 - FORM OF PLEDGE AGREEMENT
EXHIBIT E-2 - FORM OF MORTGAGE OF SHARES OF PARRY POWER SYSTEMS LIMITED
EXHIBIT F-1 - FORM OF LANDLORD WAIVER
EXHIBIT F-2 - FORM OF MORTGAGEE WAIVER
EXHIBIT G - FORM OF BAILEE WAIVER
EXHIBIT H - FORM OF COMPLIANCE CERTIFICATE
EXHIBIT I - FORM OF OPINION OF SPECIAL COUNSEL TO THE BORROWER
EXHIBIT J - FORM OF ASSIGNMENT AGREEMENT
EXHIBIT K - FORM OF SECTION 5.4(B)(II) CERTIFICATE
iv
<PAGE> 6
CREDIT AGREEMENT
THIS CREDIT AGREEMENT, dated as of January 2, 1998, among the
following:
(i) ADVANCED LIGHTING TECHNOLOGIES, INC., an Ohio corporation
(herein, together with its successors and assigns, the "Borrower");
(ii) the lending institutions listed in Annex I hereto (each a
"Lender" and collectively, the "Lenders"); and
(iii) NATIONAL CITY BANK, a national banking association, as
administrative agent (the "Administrative Agent"):
PRELIMINARY STATEMENTS:
(1) Unless otherwise defined herein, all capitalized terms used herein
and defined in section 1 are used herein as so defined.
(2) The Borrower has applied to the Lenders for credit facilities in
order to refinance certain indebtedness of the Borrower and its Subsidiaries and
in order to provide working capital and funds for other lawful purposes.
(3) Subject to and upon the terms and conditions set forth herein, the
Lenders are willing to make available to the Borrower the credit facilities
provided for herein.
NOW, THEREFORE, it is agreed:
SECTION 1. DEFINITIONS AND TERMS
1.1. Certain Defined Terms. As used herein, the following terms shall
have the meanings herein specified unless the context otherwise requires.
Defined terms in this Agreement shall include in the singular number the plural
and in the plural the singular:
"ACQUISITION" shall mean and include:
(i) any acquisition on a going concern basis (whether by
purchase, lease or otherwise) of any facility and/or business operated
by any person who is not a Wholly-Owned Subsidiary of the Borrower, and
(ii) acquisitions of equity or other similar interests in any
such person (whether by merger, stock purchase or otherwise) which
result in the ownership by the Borrower and its Subsidiaries of a
majority of the outstanding equity or other similar interests in any
such person.
"ADDITIONAL SECURITY DOCUMENT" shall have the meaning provided in
section 8.11(a).
"ADMINISTRATIVE AGENT" shall have the meaning provided in the first
paragraph of this Agreement and shall include any successor to the
Administrative Agent appointed pursuant to section 11.9.
"AFFILIATE" shall mean, with respect to any person, any other 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 second
person if such first person possesses, directly or indirectly, the power (i) to
vote 20% or more of the securities having ordinary voting power for the election
of directors or managers of such second person or (ii) to direct or cause
<PAGE> 7
the direction of the management and policies of such second person, whether
through the ownership of voting securities, by contract or otherwise.
Notwithstanding the foregoing, (x) a director, officer or employee of a person
shall not, solely by reason of such status, be considered an Affiliate of such
person; and (y) neither the Administrative Agent nor any Lender shall in any
event be considered an Affiliate of the Borrower or any other Credit Party or
any of their respective Subsidiaries.
"AGREEMENT" shall mean this Credit Agreement, as the same may be from
time to time further modified, amended and/or supplemented.
"ALTERNATIVE CURRENCY" shall mean and include (i) German Marks, French
Francs, Pounds Sterling, Australian Dollars and Canadian Dollars, if at the time
any such currency is readily and freely transferable and convertible into
Dollars; and (ii) any other lawful currency other than Dollars which is readily
and freely transferable and convertible into Dollars and is acceptable to the
Lenders as provided in section 2.3(b) or 2.6(b), as applicable, and any
applicable Letter of Credit Issuer.
"APPLICABLE EUROCURRENCY MARGIN" shall have the meaning provided in
section 2.7(g).
"APPLICABLE COMMITMENT FEE RATE" shall have the meaning provided in
section 4.1(a).
"APPLICABLE LENDING OFFICE" shall mean, with respect to each Lender,
(i) such Lender's Domestic Lending Office in the case of Borrowings consisting
of Prime Rate Loans and (ii) such Lender's Eurocurrency Lending Office in the
case of Borrowings consisting of Eurocurrency Loans.
"APPLICABLE PRIME RATE MARGIN" shall have the meaning provided in
section 2.7(g).
"ASSET SALE" shall mean the sale, transfer or other disposition
(including by means of Sale and Lease-Back Transaction and by means of mergers,
consolidations, and liquidations of a corporation, partnership or limited
liability company of the interests therein of the Borrower or any Subsidiary) by
the Borrower or any Subsidiary to any person other than the Borrower or any
Subsidiary of any of their respective assets (other than sales of inventory and
equipment in the ordinary course of business, and sales, transfers or other
dispositions of obsolete or excess furniture, fixtures, equipment or other
property, tangible or intangible, also in the ordinary course of business).
"ASSIGNMENT AGREEMENT" shall mean an Assignment Agreement substantially
in the form of Exhibit J hereto.
"AUTHORIZED OFFICER" shall mean any officer or employee of the Borrower
designated as such in writing to the Administrative Agent by the Borrower.
"BANKRUPTCY CODE" shall have the meaning provided in section 10.1(g).
"BORROWER" shall have the meaning provided in the introductory
paragraph hereof.
"BORROWING" shall mean the incurrence of Loans consisting of one Type
of Loan, by the Borrower from all of the Lenders having Commitments in respect
thereof on a PRO RATA basis on a given date (or resulting from conversions on a
given date), which in the case of Eurocurrency Loans have the same Interest
Period and are denominated in the same currency.
"BUSINESS DAY" shall mean (i) for all purposes other than as covered by
clause (ii) below, any day excluding Saturday, Sunday and any day which shall be
in the city in which the applicable Payment Office is located a legal holiday or
a day on which banking institutions are authorized by law or other governmental
actions to close and (ii) with respect to all notices and determinations in
connection with, and payments of principal and interest on, Eurocurrency Loans,
any day which is a Business Day described in clause (i) and which is also a day
on which dealings are carried on in the London interbank market and banks are
open for business in London and in the country of issue of any Alternative
Currency in which any applicable Eurocurrency Loans are denominated.
2
<PAGE> 8
"CAPITAL LEASE" as applied to any person shall mean any lease of any
property (whether real, personal or mixed) by that person as lessee which, in
conformity with GAAP, is accounted for as a capital lease on the balance sheet
of that person.
"CAPITALIZED LEASE OBLIGATIONS" shall mean all obligations under
Capital Leases of the Borrower or any of its Subsidiaries in each case taken at
the amount thereof accounted for as liabilities identified as "capital lease
obligations" (or any similar words) on a consolidated balance sheet of the
Borrower and its Subsidiaries prepared in accordance with GAAP.
"CASH EQUIVALENTS" shall mean any of the following:
(i) securities issued or directly and fully guaranteed or
insured by the United States of America or any agency or
instrumentality thereof (PROVIDED that the full faith and credit of the
United States of America is pledged in support thereof) having
maturities of not more than one year from the date of acquisition;
(ii) U.S. dollar denominated time deposits, certificates of
deposit and bankers' acceptances of (x) any Lender or (y) any bank
whose short-term commercial paper rating from S&P is at least A-1 or
the equivalent thereof or from Moody's is at least P-1 or the
equivalent thereof (any such bank, an "APPROVED BANK"), in each case
with maturities of not more than 90 days from the date of acquisition;
(iii) commercial paper issued by any Lender or Approved Bank
or by the parent company of any Lender or Approved Bank and commercial
paper issued by, or guaranteed by, any industrial or financial company
with a short-term commercial paper rating of at least A-1 or the
equivalent thereof by S&P or at least P-1 or the equivalent thereof by
Moody's, or guaranteed by any industrial company with a long term
unsecured debt rating of at least A or A2, or the equivalent of each
thereof, from S&P or Moody's, as the case may be, and in each case
maturing within 90 days after the date of acquisition;
(iv) investments in money market funds substantially all the
assets of which are comprised of securities of the types described in
clauses (i) through (iii) above;
(v) investments in money market funds access to which is
provided as part of "sweep" accounts maintained with a Lender or an
Approved Bank; and
(vi) only in the case of any Foreign Subsidiary or a foreign
branch or permanent establishment of the Borrower, short term deposits,
certificates of deposit, repurchase agreements and similar financial
instruments, in any currency, incident to normal operations in any
foreign jurisdiction outside the United States, with or issued by any
local or international financial institution with undivided capital and
surplus of at least $250,000,000 (or the equivalent in any applicable
currency), not exceeding $1,100,000 (or the equivalent in any other
currency) in the case of any single financial institution.
"CASH PROCEEDS" shall mean, with respect to any Asset Sale, the
aggregate cash payments (including any cash received by way of deferred payment
pursuant to a note receivable issued in connection with such Asset Sale, other
than the portion of such deferred payment constituting interest, but only as and
when so received) received by the Borrower and/or any Subsidiary from such Asset
Sale.
"CERCLA" shall mean the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as the same may be amended from time to
time, 42 U.S.C. Sec. 9601 ET SEQ.
"CHANGE OF CONTROL" shall mean and include any of the following:
(i) during any period of two consecutive calendar years,
individuals who at the beginning of such period constituted the
Borrower's Board of Directors (together with any new directors whose
election by the Borrower's Board of Directors or whose nomination for
election by the Borrower's shareholders was
3
<PAGE> 9
approved by a vote of at least two-thirds of the directors then still
in office who either were directors at the beginning of such period or
whose election or nomination for election was previously so approved)
cease for any reason to constitute a majority of the directors then in
office;
(ii) any person or group (as such term is defined in section
13(d)(3) of the 1934 Act), other than the Borrower, any trustee or
other fiduciary holding securities under an employee benefit plan of
the Borrower, and Wayne R. Hellman (and (x) trusts for the benefit of
such person, his family and descendants, and (y) any voting trust over
which Mr. Hellman exercises control), shall acquire, directly or
indirectly, beneficial ownership (within the meaning of Rule 13d-3 and
13d-5 of the 1934 Act) of more than 25%, on a fully diluted basis, of
the economic or voting interest in the Borrower's capital stock;
(iii) Wayne R. Hellman (and trusts for the benefit of such
person, his family and descendants) shall, for any reason, cease to
have, directly or indirectly, beneficial ownership (within the meaning
of Rule 13d-3 and 13d-5 of the 1934 Act) of at least 12%, on a fully
diluted basis, of the economic or voting interest in the Borrower's
capital stock;
(iv) the full time active employment of Wayne R. Hellman as
chief executive officer of the Borrower shall be voluntarily terminated
by the Borrower or Mr. Hellman (other than by reason of death or
disability), unless a successor acceptable to the Required Lenders
shall have been appointed or elected and actually taken office within
three months following any such termination, in which case the name of
such successor shall be substituted for the name of the person he or
she replaces for purposes of this clause (iv);
(v) the shareholders of the Borrower approve (A) a merger or
consolidation of the Borrower with any other person, other than a
merger or consolidation which would result in the voting securities of
the Borrower outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted or
exchanged for voting securities of the surviving or resulting entity)
more than 75% of the combined voting power of the voting securities of
the Borrower or such surviving or resulting entity outstanding after
such merger or consolidation, or (B) a merger or consolidation effected
to implement a recapitalization of the Borrower (or similar
transaction), other than any such transaction in which no person or
group (as hereinabove defined) not excepted from the provisions of
clause (ii) above acquires more than 25% of the combined voting power,
on a fully diluted basis, of the Borrower's then outstanding voting
securities; and/or
(vi) the shareholders of the Borrower approve a plan of
complete liquidation of the Borrower or an agreement or agreements for
the sale or disposition by the Borrower of all or substantially all of
the Borrower's assets.
"CODE" shall mean the Internal Revenue Code of 1986, as amended from
time to time, and the regulations promulgated and the rulings issued thereunder.
Section references to the Code are to the Code, as in effect at the Effective
Date and any subsequent provisions of the Code, amendatory thereof, supplemental
thereto or substituted therefor.
"COLLATERAL" shall mean any collateral covered by any Security
Document.
"COLLATERAL AGENT" shall mean the Administrative Agent acting as
Collateral Agent for the Lenders pursuant to the Security Documents.
"COMMITMENT" shall mean, with respect to each Lender, the amount set
forth opposite such Lender's name in Annex I as its "Commitment" as the same may
be reduced from time to time pursuant to section 4.2, 4.3 and/or 10 or adjusted
from time to time as a result of assignments to or from such Lender pursuant to
section 13.4.
"COMMITMENT FEE" shall have the meaning provided in section 4.1(a).
4
<PAGE> 10
"CONSOLIDATED CAPITAL EXPENDITURES" shall mean, for any period, the
aggregate of all expenditures (whether paid in cash or accrued as liabilities
and including in all events amounts expended or capitalized under Capital Leases
but excluding any amount representing capitalized interest) by the Borrower and
its Subsidiaries during that period that, in conformity with GAAP, are or are
required to be included in the property, plant or equipment reflected in the
consolidated balance sheet of the Borrower and its Subsidiaries.
"CONSOLIDATED NET INCOME" shall mean for any period, the net income (or
loss), without deduction for minority interests, of the Borrower and its
Subsidiaries on a consolidated basis for such period taken as a single
accounting period determined in conformity with GAAP, PROVIDED that there shall
be excluded therefrom (i) the income, (or loss) of any entity accrued prior to
the date it becomes a Subsidiary or is merged into or consolidated with the
Borrower or any of its Subsidiaries or on which its assets are acquired by the
Borrower or any of its Subsidiaries, and (ii) the income of any Subsidiary to
the extent that the declaration or payment of dividends or similar distributions
by that Subsidiary of that income is not at the time permitted by operation of
the terms of its charter or any agreement, instrument, judgment, decree, order,
statute, rule or governmental regulation applicable to that Subsidiary.
"CONSOLIDATED TANGIBLE NET WORTH" shall mean at any time for the
determination thereof (i) all amounts which, in conformity with GAAP, would be
included under the caption "total stockholders' equity" (or any like caption) on
a consolidated balance sheet of the Borrower as at such date, REDUCED BY (ii)
the sum (without duplication), on a consolidated basis, of the following, to the
extent reflected as consolidated assets: (A) any write-up in the book value of
any assets subsequent to September 30, 1997, (B) goodwill, (C) organizational
expenses, research and development expenses, patents, trademarks, copyrights
licenses and other intangible assets, (D) unamortized debt discount and expense,
(E) securities which are not readily marketable, (F) cash or Cash Equivalents
held in a sinking or other analogous fund established for the purpose of
redemption, retirement or prepayment of capital stock or Indebtedness, and (G)
any items not included in the foregoing clauses (A) through (F) which are
treated as intangibles in accordance with GAAP.
"CREDIT DOCUMENTS" shall mean this Agreement, the Notes, the Subsidiary
Guaranty, the Security Documents and any Letter of Credit Document.
"CREDIT EVENT" shall mean the making of any Loans and/or the issuance
of any Letter of Credit.
"CREDIT PARTY" shall mean the Borrower and each Subsidiary which is a
party to any Credit Document.
"DEFAULT" shall mean any event, act or condition which with notice or
lapse of time, or both, would constitute an Event of Default.
"DEFAULTING LENDER" shall mean any Lender with, respect to which a
Lender Default is in effect.
"DESIGNATED HEDGE AGREEMENT" shall mean any Hedge Agreement to which
the Borrower or any of its Subsidiaries is a party which, pursuant to a written
instrument signed by the Administrative Agent, has been designated as a
Designated Hedge Agreement so that the Borrower's or Subsidiaries's
counterparty's credit exposure thereunder will be entitled to share in the
benefits of the Subsidiary Guaranty and the Security Documents to the extent
such Subsidiary Guaranty and Security Documents provide guarantees or security
for creditors of the Borrower or any Subsidiary under Designated Hedge
Agreements. The Administrative Agent may, without the approval or consent of the
Lenders, designate a Hedge Agreement as a Designated Hedge Agreement if the
counterparty is a Lender or an Affiliate of a Lender and the maximum credit
exposure of such counterparty under such Hedge Agreement to the Borrower and its
Subsidiaries is reasonably determined by the Administrative Agent, in accordance
with its own customary valuation practices, not to exceed $3,000,000; however,
if the counterparty is not a Lender or an Affiliate of a Lender, or such credit
exposure is so determined by the Administrative Agent to be greater than
$3,000,000, the Administrative Agent shall only designate the Hedge Agreement
involving such counterparty as a Designated Hedge Agreement if the
Administrative Agent is instructed to do so by the Required Lenders. As a matter
of present intention, the Administrative Agent intends to offer to Lenders the
opportunity to participate in any Designated Hedge Agreement arranged by it. The
Administrative Agent may impose as a condition to any designation
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<PAGE> 11
of a Designated Hedge Agreement a requirement that the counterparty enter into
an intercreditor or similar agreement with the Administrative Agent under which
recoveries from the Borrower and its Subsidiaries with respect to such
Designated Hedge Agreement will be shared in a manner consistent with the
provisions of section 10.3 hereof.
"DOLLARS", "U.S. DOLLARS" and the sign "$" each means lawful money of
the United States.
"DOMESTIC LENDING OFFICE" shall mean, with respect to any Lender, the
office of such Lender specified as its Domestic Lending Office in Annex I or in
the Assignment Agreement pursuant to which it became a Lender, or such other
office of such Lender as such Lender may from time to time specify to the
Borrower and the Administrative Agent.
"EBIT" shall mean, for any period, the sum of the amounts for such
period of (i) Consolidated Net Income, (ii) provisions for taxes based on
income, and (iii) Total Interest Expense, all as determined for the Borrower and
its Subsidiaries on a consolidated basis in accordance with GAAP.
"EBITDA" shall mean, for any period, (A) the sum of the amounts for
such period of (i) EBIT, (ii) depreciation and amortization, and (iii)
extraordinary, infrequent or unusual, and other non-recurring non-cash losses
and non-cash charges, LESS (B) gains on sales of assets (excluding sales in the
ordinary course of business) and extraordinary gains, all as determined for the
Borrower and its Subsidiaries on a consolidated basis in accordance with GAAP.
"EFFECTIVE DATE" shall have the meaning provided in section 13.10.
"ELIGIBLE TRANSFEREE" shall mean and include a commercial bank,
financial institution or other "accredited investor" (as defined in SEC
Regulation D), in each case which
(i) so long as no Default under section 10.1(a) or Event of
Default shall have occurred and be continuing, and so long as the
financial covenants contained in sections 9.7 through 9.13 of this
Agreement have not been modified (or compliance therewith waived)
following a deterioration in the financial condition or results of
operations of the Borrower and its Subsidiaries, is not disapproved in
writing by the Borrower in a notice given to a requesting Lender and
the Administrative Agent, specifying the reasons for such disapproval,
within five Business Days following the giving of notice to the
Borrower of the identity of any proposed transferee (any such
disapproval by the Borrower must be reasonable), and
(ii) is not a direct competitor of the Borrower or engaged in
the same or similar business as the Borrower, or any of its respective
Subsidiaries or is not an Affiliate of any such competitors of the
Borrower or any of its respective Subsidiaries.
"ENVIRONMENTAL CLAIMS" shall mean any and all administrative,
regulatory or judicial actions, suits, demands, demand letters, claims, liens,
notices of non-compliance or violation, investigations or proceedings arising
under any Environmental Law or any permit issued under any such law (hereafter
"CLAIMS"), including, without limitation, (a) any and all Claims by governmental
or regulatory authorities for enforcement, cleanup, removal, response, remedial
or other actions or damages pursuant to any applicable Environmental Law, and
(b) any and all Claims by any third party seeking damages, contribution,
indemnification, cost recovery, compensation or injunctive relief resulting from
the storage, treatment or Release (as defined in CERCLA) of any Hazardous
Materials or arising from alleged injury or threat of injury to health, safety
or the environment.
"ENVIRONMENTAL LAW" shall mean any applicable Federal, state, foreign
or local statute, law, rule, regulation, ordinance, code, binding and
enforceable guideline, binding and enforceable written policy and rule of common
law now or hereafter in effect and in each case as amended, and any binding and
enforceable judicial or administrative interpretation thereof, including any
judicial or administrative order, consent, decree or judgment issued to or
rendered against the Borrower or any of its Subsidiaries relating to the
environment, employee health and safety or Hazardous Materials, including,
without limitation, CERCLA; RCRA; the Federal Water Pollution Control Act, 33
U.S.C. Sec. 2601 ET SEQ.; the Clean Air Act, 42 U.S.C. Sec. 7401 ET SEQ.; the
Safe Drinking Water Act,
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42 U.S.C. Sec. 3803 ET SEQ.; the Oil Pollution Act of 1990, 33 U.S.C. Sec. 2701
ET SEQ.; the Emergency Planning and the Community Right-to-Know Act of 1986, 42
U.S.C. Sec. 11001 ET SEQ., the Hazardous Material Transportation Act, 49 U.S.C.
Sec. 1801 ET SEQ. and the Occupational Safety and Health Act, 29 U.S.C. Sec. 651
ET SEQ. (to the extent it regulates occupational exposure to Hazardous
Materials); and any state and local or foreign counterparts or equivalents, in
each case as amended from time to time.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended from time to time, and the regulations promulgated and rulings issued
thereunder. Section references to ERISA are to ERISA, as in effect at the
Effective Date and any subsequent provisions of ERISA, amendatory thereof,
supplemental thereto or substituted therefor.
"ERISA AFFILIATE" shall mean each person (as defined in section 3(9) of
ERISA) which together with the Borrower or a Subsidiary of the Borrower would be
deemed to be a "single employer" (i) within the meaning of section 414(b),(c),
(m) or (o) of the Code or (ii) as a result of the Borrower or a Subsidiary of
the Borrower being or having been a general partner of such person.
"EUROCURRENCY LENDING OFFICE" shall mean, with respect to any Lender,
the office of such Lender specified as its Eurocurrency Lending Office in Annex
I or in the Assignment Agreement pursuant to which it became a Lender, or such
other office or offices (for Eurocurrency Loans denominated in Dollars or
particular Alternative Currencies) of such Lender as such Lender may from time
to time specify to the Borrower and the Administrative Agent.
"EUROCURRENCY LOANS" shall mean each Loan, denominated in U.S. Dollars
or in an Alternative Currency, bearing interest at the rates provided in section
2.7(b).
"EUROCURRENCY RATE" shall mean with respect to each Interest Period for
a Eurocurrency Loan, (A) either (i) the rate per annum for deposits in Dollars
or in the relevant Alternative Currency for a maturity most nearly comparable to
such Interest Period which appears on page 3740 or 3750, as applicable, of the
Dow Jones Telerate Screen as of 11:00 A.M. (local time at the Notice Office) on
the date which is two Business Days prior to the commencement of such Interest
Period, or (ii) if such a rate does not appear on such a page, an interest rate
per annum equal to the average (rounded upward to the nearest whole multiple of
1/16 of 1% per annum, if such average is not such a multiple) of the rate per
annum at which deposits in Dollars or in the relevant Alternative Currency are
offered to each of the Reference Banks by prime banks in the London interbank
Eurocurrency market for deposits of amounts in same day funds comparable to the
outstanding principal amount of the Eurocurrency Loan for which an interest rate
is then being determined with maturities comparable to the Interest Period to be
applicable to such Eurocurrency Loan, determined as of 11:00 A.M. (London time)
on the date which is two Business Days prior to the commencement of such
Interest Period, in each case divided (and rounded upward to the nearest whole
multiple of 1/16th of 1%) by (B) a percentage equal to 100% minus the then
stated maximum rate of all reserve requirements (including, without limitation,
any marginal, emergency, supplemental, special or other reserves) applicable to
any member bank of the Federal Reserve System in respect of Eurocurrency
liabilities as defined in Regulation D (or any successor category of liabilities
under Regulation D).
"EVENT OF DEFAULT" shall have the meaning provided in section 10.1.
"EXISTING INDEBTEDNESS" shall have the meaning provided in section
7.18.
"EXISTING INDEBTEDNESS AGREEMENTS" shall have the meaning provided in
section 7.18.
"EXISTING LETTER OF CREDIT" shall have the meaning provided in section
3.1(d).
"FACING FEE" shall have the meaning provided in section 4.1(c).
"FEDERAL FUNDS EFFECTIVE RATE" shall mean, for any period, a
fluctuating interest rate equal for each day during such period to the weighted
average of the rates on overnight Federal Funds transactions with members of
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<PAGE> 13
the Federal Reserve System arranged by Federal Funds brokers, as published for
such day (or, if such day is not a Business Day, for the next preceding Business
Day) by the Federal Reserve Bank of New York, or, if such rate is not so
published for any day which is a Business Day, the average of the quotations for
such day on such transactions received by the Administrative Agent from three
Federal Funds brokers of recognized standing selected by the Administrative
Agent.
"FEES" shall mean all amounts payable pursuant to, or referred to in,
section 4.1.
"FOREIGN SUBSIDIARY" shall mean any Subsidiary (i) substantially all of
whose assets and properties are located, or substantially all of whose business
is carried on, outside the United States, or (ii) substantially all of whose
assets consist of Subsidiaries that are Foreign Subsidiaries as defined in
clause (i) of this definition.
"GAAP" shall mean generally accepted accounting principles in the
United States of America as in effect from time to time; it being understood and
agreed that determinations in accordance with GAAP for purposes of section 9,
including defined terms as used therein, are subject (to the extent provided
therein) to section 13.7(a).
"GUARANTEED OBLIGATIONS" shall have the meaning provided in section
12.1.
"GUARANTY OBLIGATIONS" shall mean as to any person (without
duplication) any obligation of such person guaranteeing any Indebtedness
("PRIMARY INDEBTEDNESS") of any other person (the "PRIMARY OBLIGOR") in any
manner, whether directly or indirectly, including, without limitation, any
obligation of such person, whether or not contingent, (a) to purchase any such
primary Indebtedness or any property constituting direct or indirect security
therefor, (b) to advance or supply funds (i) for the purchase or payment of any
such primary Indebtedness or (ii) to maintain working capital or equity capital
of the primary obligor or otherwise to maintain the net worth or solvency of the
primary obligor, (c) to purchase property, securities or services primarily for
the purpose of assuring the owner of any such primary Indebtedness of the
ability of the primary obligor to make payment of such primary Indebtedness, or
(d) otherwise to assure or hold harmless the owner of such primary Indebtedness
against loss in respect thereof, PROVIDED, HOWEVER, that the term Guaranty
Obligation shall not include endorsements of instruments for deposit or
collection in the ordinary course of business. The amount of any Guaranty
Obligation shall be deemed to be an amount equal to the stated or determinable
amount of the primary Indebtedness in respect of which such Guaranty Obligation
is made or, if not stated or determinable, the maximum reasonably anticipated
liability in respect thereof (assuming such person is required to perform
thereunder) as determined by such person in good faith.
"HEDGE AGREEMENT" shall mean (i) any interest rate swap agreement, any
interest rate cap agreement, any interest rate collar agreement or other similar
agreement or arrangement designed to protect against fluctuations in interest
rates, and (ii) any currency swap agreement, forward currency purchase agreement
or similar agreement or arrangement designed to protect against fluctuations in
currency exchange rates.
"HAZARDOUS MATERIALS" shall mean (i) any petrochemical or petroleum
products, radioactive materials, asbestos in any form that is or could become
friable, urea formaldehyde foam insulation, transformers or other equipment that
contain dielectric fluid containing levels of polychlorinated biphenyls, and
radon gas; and (ii) any chemicals, materials or substances defined as or
included in the definition of "hazardous substances", "hazardous wastes",
"hazardous materials", "restricted hazardous materials", "extremely hazardous
wastes", "restrictive hazardous wastes", "toxic substances", "toxic pollutants",
"contaminants" or "pollutants", or words of similar meaning and regulatory
effect under any applicable Environmental Law.
"INDEBTEDNESS" of any person shall mean without duplication:
(i) all indebtedness of such person for borrowed money,
(ii) all bonds, notes, debentures and similar debt securities
of such person,
(iii) the deferred purchase price of capital assets or
services which in accordance with GAAP would be shown on the liability
side of the balance sheet of such person,
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(iv) the face amount of all letters of credit issued for the
account of such person and, without duplication, all drafts drawn
thereunder,
(v) all Indebtedness of a second person secured by any Lien on
any property owned by such first person, whether or not such
indebtedness has been assumed,
(vi) all Capitalized Lease Obligations of such person,
(vii) all obligations of such person to pay a specified
purchase price for goods or services whether or not delivered or
accepted, I.E., take-or-pay and similar obligations,
(viii) all net obligations of such person under Hedge
Agreements,
(ix) the full outstanding balance of trade receivables sold
with full or limited recourse, other than solely for purposes of
collection of delinquent accounts, and
(x) all Guaranty Obligations of such person,
PROVIDED that neither trade payables and accrued expenses, in each case arising
in the ordinary course of business, nor obligations in respect of insurance
policies or performance or surety bonds which themselves are not guarantees of
Indebtedness, shall constitute Indebtedness.
"INITIAL BORROWING DATE" shall mean the date, on or after the Effective
Date, upon which the conditions specified in section 6.1 are satisfied.
"INTEREST COVERAGE RATIO" shall mean, for any Testing Period, the ratio
of (i) the sum of EBIT and amortization, to (ii) Total Interest Expense, in each
case on a consolidated basis for the Borrower and its Subsidiaries for such
Testing Period.
"INTEREST PERIOD" with respect to any Eurocurrency Loan shall mean the
interest period applicable thereto, as determined pursuant to section 2.8.
"LEASEHOLDS" of any person means all the right, title and interest of
such person as lessee or licensee in, to and under leases or licenses of land,
improvements and/or fixtures.
"LENDER" shall have the meaning provided in the first paragraph of this
Agreement.
"LENDER DEFAULT" shall mean (i) the refusal (which has not been
retracted) of a Lender in violation of the requirements of this Agreement to
make available its portion of any incurrence of Loans or to fund its portion of
any unreimbursed payment under section 3.4(c) or (ii) a Lender having notified
the Administrative Agent and/or the Borrower that it does not intend to comply
with the obligations under section 2.1 and/or section 3.4(c), in the case of
either (i) or (ii) as a result of the appointment of a receiver or conservator
with respect to such Lender at the direction or request of any regulatory agency
or authority.
"LENDER REGISTER" shall have the meaning provided in section 13.16.
"LETTER OF CREDIT" shall have the meaning provided in section 3.1(a).
"LETTER OF CREDIT DOCUMENTS" shall have the meaning specified in
section 3.2(a).
"LETTER OF CREDIT FEE" shall have the meaning provided in section
4.1(b).
"LETTER OF CREDIT ISSUER" shall mean (i) in respect of each Existing
Letter of Credit, the Lender that has issued same as of the Effective Date; (ii)
in any other case, any of the original Lenders named in this Agreement;
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<PAGE> 15
and/or (iii) any other Lender that is requested, and agrees, to so act by the
Borrower, and is approved by the Administrative Agent and the Required Lenders;
PROVIDED, that unless otherwise agreed by the Borrower, NCB and NBD Bank, NBD
Bank will act as the Letter of Credit Issuer for Letters of Credit issued after
the Effective Date for any of the purposes contemplated by clause (ii) of
section 3.1(a).
"LETTER OF CREDIT OUTSTANDINGS" shall mean, at anytime, the sum,
without duplication, of (i) the aggregate Stated Amount of all outstanding
Letters of Credit and (ii) the aggregate amount of all Unpaid Drawings.
"LETTER OF CREDIT REQUEST" shall have the meaning provided in section
3.2(a).
"LIEN" shall mean any mortgage, pledge, security interest, encumbrance,
lien or charge of any kind (including any agreement to give any of the
foregoing, any conditional sale or other title retention agreement or any lease
in the nature thereof).
"LOAN" shall have the meaning provided in section 2.1.
"MARGIN STOCK" shall have the meaning provided in Regulation U.
"MATERIAL ADVERSE EFFECT" (i) when used with reference to either (x)
the Borrower, or (y) any of its Subsidiaries, shall mean a material adverse
effect on the business, operations, property, assets, liabilities or condition
(financial or otherwise) of the Borrower and its Subsidiaries, taken as a whole;
or (ii) when used with reference to any other person, shall mean a material
adverse effect on the business, operations, property, assets, liabilities or
condition (financial or otherwise) of such person and its Subsidiaries, taken as
a whole.
"MATERIAL SUBSIDIARY" shall mean, at any time, with reference to any
person, any Subsidiary of such person (i) that has assets at such time
comprising 5% or more of the consolidated assets of such person and its
Subsidiaries, or (ii) whose operations in the current fiscal year are expected
to, or whose operations in the most recent fiscal year did (or would have if
such person had been a Subsidiary for such entire fiscal year), represent 5% or
more of the consolidated earnings before interest, taxes, depreciation and
amortization of such person and its Subsidiaries for such fiscal year.
"MATURITY DATE" shall mean December 31, 2000, unless earlier
terminated, or extended in accordance with section 4.4.
"MINIMUM BORROWING AMOUNT" shall mean (i) for Loans which are Prime
Rate Loans, $1,000,000, with minimum increments thereafter of $250,000 and (ii)
for Loans which are Eurocurrency Loans, $1,000,000 (or the substantial
equivalent thereof in any Alternative Currency), with minimum increments
thereafter of $500,000 (or the substantial equivalent thereof in any Alternative
Currency).
"MOODY'S" shall mean Moody's Investors Service, Inc. and its
successors.
"MULTIEMPLOYER PLAN" shall mean a multiemployer plan, as defined in
section 4001(a)(3) of ERISA to which the Borrower or any ERISA Affiliate is
making or accruing an obligation to make contributions or has within any of the
preceding three plan years made or accrued an obligation to make contributions.
"MULTIPLE EMPLOYER PLAN" shall mean an employee benefit plan, other
than a Multiemployer Plan, to which the Borrower or any ERISA Affiliate, and one
or more employers other than the Borrower or an ERISA Affiliate, is making or
accruing an obligation to make contributions or, in the event that any such plan
has been terminated, to which the Borrower or an ERISA Affiliate made or accrued
an obligation to make contributions during any of the five plan years preceding
the date of termination of such plan.
"NCB" shall mean National City Bank, a national banking association,
together with its successors and assigns.
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"NET CASH PROCEEDS" shall mean, with respect to any Asset Sale, the
Cash Proceeds resulting therefrom net of (i) reasonable and customary expenses
of sale incurred in connection with such Asset Sale, and other reasonable and
customary fees and expenses incurred, and all state, and local taxes paid or
reasonably estimated to be payable by such person, as a consequence of such
Asset Sale and the payment of principal, premium and interest of Indebtedness
secured by the asset which is the subject of the Asset Sale and required to be,
and which is, repaid under the terms thereof as a result of such Asset Sale,
(ii) amounts of any distributions payable to holders of minority interests in
the relevant person or in the relevant property or assets and (iii) incremental
income taxes paid or payable as a result thereof.
"1934 ACT" shall mean the Securities Exchange Act of 1934, as amended.
"NON-DEFAULTING LENDER" shall mean each Lender other than a Defaulting
Lender.
"NOTE" shall have the meaning provided in section 2.5(a).
"NOTICE OF BORROWING" shall have the meaning provided in section
2.3(a).
"NOTICE OF CONVERSION" shall have the meaning provided in section
2.6(a).
"NOTICE OF REDENOMINATION" shall have the meaning provided in section
2.6(b).
"NOTICE OFFICE" shall mean the office of the Administrative Agent at
1900 East Ninth Street, Cleveland, Ohio 44114, Attention: Anthony J. DiMare,
Senior Vice President (telephone: (216) 575-3344; facsimile: (216) 575-9396), or
such other office, located in a city in the United States Eastern Time Zone, as
the Administrative Agent may designate to the Borrower from time to time.
"OBLIGATIONS" shall mean all amounts, direct or indirect, contingent or
absolute, of every type or description, and at any time existing, owing by the
Borrower to the Administrative Agent or any Lender pursuant to the terms of this
Agreement or any other Credit Document.
"PARTICIPANT" shall have the meaning provided in section 3.4(a).
"PAYMENT OFFICE" shall mean the office of the Administrative Agent at
1900 East Ninth Street, Cleveland, Ohio 44114, Attention: Connie Djukic
(telephone: (216) 575-2578; facsimile: (216) 575-9396), or such other office,
located in a city in the United States Eastern Time Zone, as the Administrative
Agent may designate to the Borrower from time to time.
"PBGC" shall mean the Pension Benefit Guaranty Corporation established
pursuant to Section 4002 of ERISA, or any successor thereto.
"PERCENTAGE" shall mean at any time for any Lender, the percentage
obtained by dividing such Lender's Commitment by the Total Commitment, PROVIDED,
that if the Total Commitment has been terminated, the Percentage for each Lender
shall be determined by dividing such Lender's Commitment immediately prior to
such termination by the Total Commitment immediately prior to such termination.
"PERMITTED ACQUISITION" shall mean and include any Acquisition as to
which all of the following conditions are satisfied:
(i) such transaction is not actively opposed by the Board of
Directors (or similar governing body) of the selling person or the
person whose equity interests are to be acquired, UNLESS all of the
Lenders consent to such transaction;
(ii) the aggregate consideration for such transaction
(including the principal amount of any assumed Indebtedness and
(without duplication) any Indebtedness of any acquired person or
persons), does
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not exceed $10,000,000, UNLESS the Required Lenders consent to such
transaction; PROVIDED that this limitation shall not apply to the
acquisition of the company identified to the Lenders prior to the
Effective Date if the aggregate consideration does not exceed
$15,000,000 plus 600,000 shares of the Borrower's common stock; and
(iii) such Acquisition would not involve the Borrower and its
Subsidiaries in a business which is not similar or related to the
businesses engaged in by the Borrower and its Subsidiaries on the
Effective Date.
Notwithstanding the foregoing, the term Permitted Acquisition does not include
(x) the acquisition of Ruud Lighting, Inc.; (y) any Consolidated Capital
Expenditures; or (z) any loans, advances or investments (including investments
in joint ventures) otherwise permitted pursuant to section 9.5.
"PERMITTED LIENS" shall mean Liens described in section 9.3.
"PERSON" shall mean any individual, partnership, joint venture, firm,
corporation, limited liability company, association, trust or other enterprise
or any government or political subdivision or any agency, department or
instrumentality thereof.
"PLAN" shall mean any multiemployer or single-employer plan as defined
in section 4001 of ERISA, which is maintained or contributed to by (or to which
there is an obligation to contribute by) the Borrower or a Subsidiary of the
Borrower or an ERISA Affiliate, and each such plan for the five year period
immediately following the latest date on which the Borrower, or a Subsidiary of
the Borrower or an ERISA Affiliate maintained, contributed to or had an
obligation to contribute to such plan.
"PLEDGE AGREEMENT" shall have the meaning provided in section 6.1(c).
"PRIME RATE" shall mean, for any period, a fluctuating interest rate
per annum as shall be in effect from time to time which rate per annum shall at
all times be equal to the greater of (i) the rate of interest established by the
Administrative Agent at its principal office, from time to time, as its prime
rate, whether or not publicly announced, which interest rate may or may not be
the lowest rate charged by it for commercial loans or other extensions of
credit; and (ii) the Federal Funds Effective Rate in effect from time to time
PLUS 1/2 of 1% per annum.
"PRIME RATE LOAN" shall mean each Loan, denominated in U. S. Dollars,
bearing interest at the rates provided in section 2.7(a).
"PROHIBITED TRANSACTION" shall mean a transaction with respect to a
Plan that is prohibited under section 4975 of the Code or section 406 of ERISA
and not exempt under section 4975 of the Code or section 408 of ERISA.
"RCRA" shall mean the Resource Conservation and Recovery Act, as the
same may be amended from time to time, 42 U.S.C. Sec. 6901 et seq.
"REAL PROPERTY" of any person shall mean all of the right, title and
interest of such person in and to land, improvements and fixtures, including
Leaseholds.
"REDENOMINATE", "REDENOMINATION" and "REDENOMINATED" each refers to
redenomination of each Eurocurrency Loan comprising the same Borrowing from
Dollars into an Alternative Currency or from an Alternative Currency into
Dollars or another Alternative Currency pursuant to section 2.6.
"REFERENCE BANKS" shall mean (i) NCB, NBD Bank, and PNC Bank, National
Association, and (ii) any other Lender or Lenders selected as a Reference Bank
by the Administrative Agent and the Required Lenders, PROVIDED, that if any of
such Reference Banks is no longer a Lender, such other Lender or Lenders as may
be selected by the Administrative Agent acting on instructions from the Required
Lenders.
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"REGULATION D" shall mean Regulation D of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor to all
or a portion thereof establishing reserve requirements.
"REGULATION U" shall mean Regulation U of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor to all
or a portion thereof establishing margin requirements.
"REPORTABLE EVENT" shall mean an event described in section 4043(c) of
ERISA with respect to a Plan other than those events as to which the 30-day
notice period is waived under subsection .13, .14, .16, .18, .19 or .20 of PBGC
Regulation section 2615.
"REQUIRED LENDERS" shall mean Non-Defaulting Lenders whose outstanding
Loans and Unutilized Commitments constitute at least 66+2/3% of the sum of the
total outstanding Loans and Unutilized Commitments of Non-Defaulting Lenders
(PROVIDED that, for purposes hereof, neither the Borrower, nor any of its
Affiliates, shall be included in (i) the Lenders holding such amount of the
Loans or having such amount of the Unutilized Commitments, or (ii) determining
the aggregate unpaid principal amount of the Loans or Unutilized Commitments).
"RUUD ACQUISITION DOCUMENTS" shall have the meaning provided in section
6.1(l).
"SALE AND LEASE-BACK TRANSACTION" shall mean any arrangement with any
person providing for the leasing by the Borrower or any Subsidiary of the
Borrower of any property (except for temporary leases for a term, including any
renewal thereof, of not more than one year and except for leases between the
Borrower and a Subsidiary or between Subsidiaries), which property has been or
is to be sold or transferred by the Borrower or such Subsidiary to such person.
"S&P" shall mean Standard & Poor's Ratings Group, a division of McGraw
Hill, Inc., and its successors.
"SEC" shall mean the United States Securities and Exchange Commission.
"SEC REGULATION D" shall mean Regulation D as promulgated under the
Securities Act of 1933, as amended, as the same may be in effect from time to
time.
"SECTION 5.4(B)(II) CERTIFICATE" shall have the meaning provided in
section 5.4(b)(ii).
"SECURITY AGREEMENT" shall have the meaning provided in section 6.1(c).
"SECURITY DOCUMENTS" shall mean the Security Agreement, the Pledge
Agreement and each other document pursuant to which any Lien or security
interest is granted by any Credit Party to the Collateral Agent as security for
any of the Obligations.
"SEPARATE DOCUMENTARY LETTER OF CREDIT OBLIGATIONS" shall mean all
obligations of the Borrower or any of its Subsidiaries under documentary letters
of credit issued by NCB as contemplated by section 3.7.
"STATED AMOUNT" of each Letter of Credit shall mean the maximum
available to be drawn thereunder (regardless of whether any conditions or other
requirements for drawing could then be met).
"SUBSIDIARY" of any person shall mean and include (i) any corporation
more than 50% of whose stock of any class or classes having by the terms thereof
ordinary voting power to elect a majority of the directors of such corporation
(irrespective of whether or not at the time stock of any class or classes of
such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time owned by such person directly or
indirectly through Subsidiaries and (ii) any partnership, association, joint
venture or other entity in which such person directly or indirectly through
Subsidiaries, has more than a 50% equity interest at the time. Unless otherwise
expressly provided, all references herein to "Subsidiary" shall mean a
Subsidiary of the Borrower.
"SUBSIDIARY GUARANTY" shall have the meaning provided in section
6.1(c).
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"SUBORDINATED INDEBTEDNESS" shall mean any Indebtedness which has been
subordinated to the Obligations in such manner and to such extent as the
Required Lenders may require.
"TESTING PERIOD" shall mean for any determination a single period
consisting of the four consecutive fiscal quarters of the Borrower most recently
ended (whether or not such quarters are all within the same fiscal year).
"TOTAL COMMITMENT" shall mean the sum of the Commitments of the
Lenders.
"TOTAL INDEBTEDNESS" shall mean the sum (without duplication) of the
following, for the Borrower and/or any of its Subsidiaries, all as determined on
a consolidated basis of:
(i) all indebtedness for borrowed money,
(ii) all bonds, notes, debentures and similar debt securities,
(iii) the deferred purchase price of capital assets or
services which in accordance with GAAP would be shown on the liability
side of a consolidated balance sheet of the Borrower and its
Subsidiaries,
(iv) the face amount of all letters of credit issued for the
account of the Borrower or any Subsidiary, and, without duplication,
all drafts drawn thereunder, EXCEPT that, to the extent any such
letters of credit support Indebtedness of a Subsidiary referred to in
section 9.4(b) hereof, such amount shall only be counted (without
duplication) to the extent of the principal amount of such Indebtedness
of such Subsidiary which is outstanding;
(v) all Indebtedness of a second person secured by any Lien on
any property owned by such first person, whether or not such
Indebtedness has been assumed,
(vi) all Capitalized Lease Obligations,
(vii) all obligations of the Borrower or any Subsidiary to pay
a specified purchase price for goods or services whether or not
delivered or accepted, I.E., take-or-pay and similar obligations,
(viii) the full outstanding balance of trade receivables sold
with full or limited recourse, other than solely for purposes of
collection of delinquent accounts, PROVIDED that if the structure of
any receivables sales program provides for "over-collateralization",
the outstanding balance of the trade receivables attributable to the
"over-collateralization" may be excluded, and
(ix) all Guaranty Obligations of such person,
PROVIDED that neither trade payables and accrued expenses, in each case arising
in the ordinary course of business, nor obligations in respect of insurance
policies or performance or surety bonds which themselves are not guarantees of
Indebtedness, shall be included.
"TOTAL INTEREST EXPENSE" shall mean, for any period, (i) total interest
expense (including that which is attributable to Capital Leases, in accordance
with GAAP) of the Borrower and its Subsidiaries on a consolidated basis with
respect to all outstanding Indebtedness of the Borrower and its Subsidiaries
including, without limitation, all commissions, discounts and other fees and
charges owed with respect to letters of credit and net costs under Hedge
Agreements, but excluding, however, any amortization of deferred financing
costs, all as determined in accordance with GAAP, MINUS (ii) gross interest
income of the Borrower and its Subsidiaries on a consolidated basis, all as
determined in accordance with GAAP.
"TOTAL LIABILITIES" shall mean the sum (without duplication) of (i)
Total Indebtedness, and (ii) all other liabilities which in accordance with GAAP
which would be shown on a consolidated balance sheet as liabilities, all as
determined on a consolidated basis for the Borrower and its Subsidiaries.
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"TYPE" shall mean any type of Loan determined with respect to the
interest option applicable thereto, i.e., a Prime Rate Loan or a Eurocurrency
Loan.
"UCC" shall mean the Uniform Commercial Code.
"UNFUNDED CURRENT LIABILITY" of any Plan shall mean the amount, if any,
by which the actuarial present value of the accumulated plan benefits under the
Plan as of the close of its most recent plan year exceeds the fair market value
of the assets allocable thereto, each determined in accordance with Statement of
Financial Accounting Standards No. 87, based upon the actuarial assumptions used
by the Plan's actuary in the most recent annual valuation of the Plan.
"UNITED STATES" and "U.S." each means United States of America.
"UNPAID DRAWING" shall have the meaning provided in section 3.3(a).
"UNUTILIZED COMMITMENT" for any Lender at any time shall mean the
excess of (i) such Lender's Commitment at such time over (ii) the sum of the
principal amount of Loans made by such Lender and outstanding at such time and
(y) such Lender's Percentage of Letter of Credit Outstandings at such time.
"UNUTILIZED TOTAL COMMITMENT" shall mean, at any time, the excess of
(i) the Total Commitment at such time over (ii) the sum of (x) the aggregate
principal amount of all Loans then outstanding plus (y) the aggregate Letter of
Credit Outstandings at such time.
"VALUE" shall mean, with respect to a Sale and Lease-Back Transaction,
as of any particular time, the amount equal to the greater of (i) the net
proceeds of the sale or transfer of the property leased pursuant to such Sale
and Lease-Back Transaction or (ii) the fair value in the opinion of the
Borrower, acting in good faith, of such property at the time of entering into
such Sale and Lease-Back Transaction.
"WHOLLY-OWNED SUBSIDIARY" shall mean each Subsidiary of the Borrower at
least 95% of whose capital stock, equity interests and partnership interests,
other than director's qualifying shares or similar interests, are owned directly
or indirectly by the Borrower.
"WRITTEN", "WRITTEN" or "IN WRITING" shall mean any form of written
communication or a communication by means of telex, facsimile transmission,
telegraph or cable.
1.2. COMPUTATION OF TIME PERIODS. In this Agreement in the computation
of periods of time from a specified date to a later specified date, the word
"from" means "from and including" and the words "to" and "until" each means "to
but excluding".
1.3. ACCOUNTING TERMS. Except as otherwise specifically provided
herein, all terms of an accounting or financial nature shall be construed in
accordance with GAAP, as in effect from time to time; provided that, if the
Borrower notifies the Administrative Agent that the Borrower requests an
amendment to any provision of section 8 or 9 hereof to eliminate the effect of
any change occurring after the Effective Date in GAAP or in the application
thereof to such provision (or if the Administrative Agent notifies the Borrower
that the Required Lenders request an amendment to any such provision hereof for
such purposes), regardless of whether any such notice is given before or after
such change in GAAP or in the application thereof, then such provision shall be
interpreted on the basis of GAAP as in effect and applied immediately before
such change shall have become effective until such notice shall have been
withdrawn or such provision amended in accordance with the requirements of this
Agreement.
1.4. TERMS GENERALLY. The definitions of terms herein shall apply
equally to the singular and plural forms of the terms defined. Whenever the
context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words "include", "includes" and "including" shall
be deemed to be followed by the phrase "without limitation". The word "will"
shall be construed to have the same meaning and effect as the word "shall".
Unless the context requires otherwise, (a) any definition of or reference to any
agreement,
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<PAGE> 21
instrument or other document herein shall be construed as referring
to such agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein), (b) any reference
herein to any person shall be construed to include such person's successors and
assigns, (c) the words "herein", "hereof" and "hereunder", and words of similar
import, shall be construed to refer to this Agreement in its entirety and not to
any particular provision hereof, (d) all references herein to sections, Annexes
and Exhibits shall be construed to refer to sections of, and Annexes and
Exhibits to, this Agreement, and (e) the words "asset" and "property" shall be
construed to have the same meaning and effect and to refer to any and all real
property, tangible and intangible assets and properties, including cash,
securities, accounts and contract rights, and interests in any of the foregoing.
1.5. CURRENCY EQUIVALENTS. For purposes of this Agreement, except as
otherwise specified herein, (i) the equivalent in Dollars of any Alternative
Currency shall be determined by using the quoted spot rate at which the
Administrative Agent offers to exchange Dollars for such Alternative Currency at
its Payment Office at 9:00 A.M. (local time at the Payment Office) two Business
Days prior to the date on which such equivalent is to be determined, (ii) the
equivalent in any Alternative Currency of any other Alternative Currency shall
be determined by using the quoted spot rate at which the Administrative Agent's
Payment Office offers to exchange such Alternative Currency for the equivalent
in Dollars of such other Alternative Currency at such Payment Office at 9:00
A.M. (local time at the Payment Office) two Business Days prior to the date on
which such equivalent is to be determined, and (iii) the equivalent in any
Alternative Currency of Dollars shall be determined by using the quoted spot
rate at which the Administrative Agent's Payment Office offers to exchange such
Alternative Currency for Dollars at the Payment Office at 9:00 A.M. (local time
at the Payment Office) two Business Days prior to the date on which such
equivalent is to be determined; provided, that (A) the equivalent in Dollars of
each Eurocurrency Loan made in an Alternative Currency shall be recalculated
hereunder on each date that it shall be necessary (or the Administrative Agent
shall elect) to determine the unused portion of each Lender's Commitment, or any
or all Loan or Loans outstanding on such date; (B) the equivalent in Dollars of
any Unpaid Drawing in respect of any Letter of Credit denominated in an
Alternative Currency shall be determined at the time the drawing under such
Letter of Credit was paid or disbursed by the applicable Letter of Credit
Issuer; (C) for purposes of sections 2.1(a), 3.1(b) and 5.2(a), the equivalent
in Dollars of the Stated Amount of any Letter of Credit denominated in an
Alternative Currency shall be calculated (x) on the date of the issuance of the
respective Letter of Credit, (y) on the first Business Day of each calendar
month thereafter and (z) in any other case where the same is required or
permitted to be calculated, on such other day as the Administrative Agent may,
in its sole discretion, consider appropriate; and (D) for purposes of sections
4.1(b) and (c), the equivalent in Dollars of the Stated Amount of any Letter of
Credit denominated in an Alternative Currency shall be calculated on the first
day of each calendar month in the quarterly period in which the respective
payment is due pursuant to said sections.
SECTION 2. AMOUNT AND TERMS OF LOANS.
2.1. COMMITMENTS FOR LOANS. Subject to and upon the terms and
conditions set forth in this Agreement, each Lender severally agrees to make a
loan or loans (each a "LOAN" and, collectively, the "LOANS") to the Borrower,
which Loans shall be drawn, in accordance with the following provisions: (a)
Loans may be made pursuant to a Borrowing by the Borrower at any time and from
time to time on and after the Initial Borrowing Date and prior to the Maturity
Date; (b) Loans may, except as otherwise provided, at the option of the
Borrower, be incurred and maintained as, or converted or Redenominated into,
Loans which are Prime Rate Loans or Eurocurrency Loans, denominated in Dollars
or an Alternative Currency, PROVIDED that all Loans made as part of the same
Borrowing by the Borrower shall, unless otherwise specifically provided herein,
consist of Loans of the same Type and currency; and provided, further, that the
aggregate outstanding principal amount of Loans to the Borrower denominated in
any Alternative Currency shall not exceed $8,000,000 at any time outstanding;
(c) Loans may be repaid or prepaid and reborrowed in accordance with the
provisions hereof; and (d) Loans shall not exceed for any Lender at any time
outstanding that aggregate principal amount which, when added to the product at
such time of (i) such Lender's Percentage, times (ii) the aggregate Letter of
Credit Outstandings, equals the Commitment of such Lender at such time.
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2.2. MINIMUM BORROWING AMOUNTS, ETC.; Pro Rata Borrowings. (a) The
aggregate principal amount of each Borrowing by the Borrower shall not be less
than the Minimum Borrowing Amount. More than one Borrowing may be incurred by
the Borrower on any day, provided that (i) if there are two or more Borrowings
on a single day by the Borrower which consist of Eurocurrency Loans denominated
in the same currency, each such Borrowing shall have a different initial
Interest Period, and (ii) at no time shall there be more than 14 Borrowings of
Eurocurrency Loans outstanding hereunder.
(b) All Borrowings shall be made by the Lenders pro rata on the basis
of their respective Commitments. It is understood that no Lender shall be
responsible for any default by any other Lender in its obligation to make Loans
hereunder and that each Lender shall be obligated to make the Loans provided to
be made by it hereunder, regardless of the failure of any other Lender to
fulfill its Commitment hereunder.
2.3. NOTICE OF BORROWING. (a) Whenever the Borrower desires to incur
Loans, the Borrower shall give the Administrative Agent at its Notice Office,
(A) BORROWINGS OF EUROCURRENCY LOANS DENOMINATED IN DOLLARS:
prior to 11:00 A.M. (local time at its Notice Office), at least three
Business Days' prior written or telephonic notice (in the case of
telephonic notice, promptly confirmed in writing if so requested by the
Administrative Agent) of each Borrowing of Eurocurrency Loans
denominated in Dollars to be made hereunder,
(B) BORROWINGS OF EUROCURRENCY LOANS DENOMINATED IN AN
ALTERNATIVE CURRENCY: prior to 11:00 A.M. (local time at its Notice
Office), at least five Business Days' prior written or telephonic
notice (in the case of telephonic notice, promptly confirmed in writing
if so requested by the Administrative Agent) of each Borrowing of Loans
consisting of Eurocurrency Loans denominated in an Alternative Currency
to be made hereunder, or
(C) BORROWINGS OF PRIME RATE LOANS: prior to 11:00 A.M. (local
time at its Notice Office) on the proposed date thereof written or
telephonic notice (in the case of telephonic notice, promptly confirmed
in writing if so requested by the Administrative Agent) of each
Borrowing of Prime Rate Loans to be made hereunder.
Each such notice (each such notice, a "NOTICE OF BORROWING") shall (if requested
by the Administrative Agent to be confirmed in writing), be substantially in the
form of Exhibit B-1, and in any event shall be irrevocable and shall specify:
(i) the aggregate principal amount of the Loans to be made pursuant to such
Borrowing; (ii) the date of the Borrowing (which shall be a Business Day); (iii)
whether the Borrowing shall consist of Prime Rate Loans or Eurocurrency Loans;
(iv) if the requested Borrowing consists of Eurocurrency Loans, the Interest
Period to be initially applicable thereto; and (v) in the case of a requested
Borrowing consisting of Loans which are Eurocurrency Loans, the currency, if
other than Dollars, in which such Loans are requested. The Administrative Agent
shall promptly give each Lender written notice (or telephonic notice promptly
confirmed in writing) of each proposed Borrowing, of such Lender's proportionate
share thereof and of the other matters covered by the Notice of Borrowing
relating thereto.
(b) In the case of a proposed Borrowing comprised of Loans which are
Eurocurrency Loans denominated in an Alternative Currency, the obligation of
each affected Lender to make its Eurocurrency Loan in the requested Alternative
Currency as part of such Borrowing is subject to:
(A) if such requested Alternative Currency is an Alternative
Currency described in clause (i) of the definition of the term
Alternative Currency, the confirmation by the Administrative Agent to
the Borrower not later than the fourth Business Day before the
requested date of such Borrowing that such Alternative Currency is
readily and freely transferable and convertible into Dollars, or
(B) if such requested Alternative Currency is not an
Alternative Currency described in clause (i) of the definition of the
term Alternative Currency, the confirmation by such Lender to the
Administrative Agent not later than the fourth Business Day before the
requested date of such Borrowing that such
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Alternative Currency is acceptable to such Lender, which confirmation
shall be notified immediately by the Administrative Agent to the
Borrower.
If the Administrative Agent shall not have provided the confirmation referred to
in clause (A) above, or any affected Lender shall not have so provided to the
Administrative Agent the confirmation referred to in clause (B) above, the
Administrative Agent shall promptly notify the Borrower and each affected Lender
that a Lender has not provided any such confirmation referred to in such clause
(B), whereupon the Borrower may, by notice to the Administrative Agent not later
than the third Business Day before the requested date of such Borrowing,
withdraw the Notice of Borrowing relating to such requested Borrowing. If the
Borrower does so withdraw such Notice of Borrowing, the Borrowing requested in
such Notice of Borrowing shall not occur and the Administrative Agent shall
promptly so notify each affected Lender. If the Borrower does not so withdraw
such Notice of Borrowing, the Administrative Agent shall promptly so notify each
affected Lender and such Notice of Borrowing shall be deemed to be a Notice of
Borrowing which requests a Borrowing of Loans comprised of Eurocurrency Loans in
an aggregate amount in Dollars equivalent, on the date the Administrative Agent
so notifies each affected Lender, to the amount of the originally requested
Borrowing in an Alternative Currency; and in such notice by the Administrative
Agent to each affected Lender the Administrative Agent shall state such
aggregate equivalent amount of such Borrowing in Dollars and such Lender's
ratable portion of such Borrowing.
(c) Without in any way limiting the obligation of the Borrower to
confirm in writing any telephonic notice permitted to be given hereunder, the
Administrative Agent may act prior to receipt of written confirmation without
liability upon the basis of such telephonic notice believed by the
Administrative Agent in good faith to be from an Authorized Officer of the
Borrower entitled to give telephonic notices under this Agreement on behalf of
the Borrower. In each such case, the Administrative Agent's record of the terms
of such telephonic notice shall be conclusive absent manifest error.
2.4. DISBURSEMENT OF FUNDS FROM BORROWINGS. (a) No later than 2:00 P.M.
(local time at the Payment Office of the Administrative Agent) on the date
specified in each Notice of Borrowing relating to Eurocurrency Loans, and no
later than 2:00 P.M. (local time at the Payment Office of the Administrative
Agent) on the date specified in each Notice of Borrowing relating to Prime Rate
Loans, each Lender will make available its pro rata share of each Borrowing
requested to be made on such date in the manner provided below. All amounts
relating to any Borrowing by the Borrower shall be made available to the
Administrative Agent in U.S. dollars or the applicable Alternative Currency and
immediately available funds at the Administrative Agent's Payment Office and the
Administrative Agent promptly will make available to the Borrower by depositing
to its account at such Payment Office, or at such other account in another
financial institution designated by the Borrower to the Administrative Agent,
the aggregate of the amounts so made available in the currency and type of funds
received. Unless the Administrative Agent shall have been notified by any Lender
prior to the date of a Borrowing that such Lender does not intend to make
available to the Administrative Agent its portion of the Borrowing or Borrowings
to be made on such date, the Administrative Agent may assume that such Lender
has made such amount available to the Administrative Agent on such date of
Borrowing, and the Administrative Agent, in reliance upon such assumption, may
(in its sole discretion and without any obligation to do so) make available to
the Borrower a corresponding amount. If such corresponding amount is not in fact
made available to the Administrative Agent by such Lender and the Administrative
Agent has made available same to the Borrower, the Administrative Agent shall be
entitled to recover such corresponding amount from such Lender. If such Lender
does not pay such corresponding amount forthwith upon the Administrative Agent's
demand therefor, the Administrative Agent shall promptly notify the Borrower,
and the Borrower shall immediately pay such corresponding amount to the
Administrative Agent. The Administrative Agent shall also be entitled to recover
from such Lender or the Borrower, as the case may be, interest on such
corresponding amount in respect of each day from the date such corresponding
amount was made available by the Administrative Agent to the Borrower to the
date such corresponding amount is recovered by the Administrative Agent at a
rate per annum equal to (x) if paid by such Lender, at the overnight Federal
Funds Effective Rate, in the case of any Loan denominated in Dollars, or at the
weighted average overnite or weekend borrowing rate for immediately available
and freely transferrable funds in the applicable Alternative Currency which is
offered to the Administrative Agent in the international markets, in the case of
any Loan denominated in an Alternative Currency, or (y) if paid by the Borrower,
the then applicable rate of interest, calculated in accordance
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with section 2.7, for the respective Loan (but without any requirement to pay
any amounts in respect thereof pursuant to section 2.10).
(b) Nothing herein and no subsequent termination of the Commitments
pursuant to section 4.2 or 4.3 shall be deemed to relieve any Lender from its
obligation to fulfill its Commitments hereunder and in existence from time to
time or to prejudice any rights which the Borrower may have against any Lender
as a result of any default by such Lender hereunder.
2.5. Notes. (a) The Borrower's obligation to pay the principal of, and
interest on, the Loans made to it by each Lender shall be evidenced by a
promissory note of the Borrower substantially in the form of Exhibit A (each a
"Note" and, collectively, the "Notes").
(b) The Note issued by the Borrower to a Lender shall: (i) be executed
by the Borrower; (ii) be payable to the order of such Lender and be dated on or
prior to the date the first Loan outstanding thereunder is made; (iii) be
payable in the principal amount of Loans evidenced thereby; (iv) mature on the
Maturity Date; (v) bear interest as provided in section 2.7 in respect of the
Prime Rate Loans or Eurocurrency Loans, as the case may be, evidenced thereby;
(vi) be subject to mandatory prepayment as provided in section 5.2; and (vii) be
entitled to the benefits of this Agreement and the other Credit Documents.
(c) Each Lender will note on its internal records the amount of each
Loan made by it and each payment in respect thereof and will, prior to any
transfer of any of the Notes issued to it by the Borrower, endorse on the
reverse side thereof or the grid attached thereto the outstanding principal
amount of Loans evidenced thereby. Failure to make any such notation or any
error in any such notation shall not affect the Borrower's obligations in
respect of such Loans.
2.6. VOLUNTARY CONVERSION OF DOLLAR DENOMINATED LOANS; REDENOMINATION
OF LOANS. (a) The Borrower shall have the option to convert on any Business Day
all or a portion at least equal to the applicable Minimum Borrowing Amount of
the outstanding principal amount of its Loans denominated in Dollars of one Type
owing by it into a Borrowing or Borrowings of another Type of Loans denominated
in Dollars which can be made by the Borrower, provided that: (i) no partial
conversion of a Borrowing of Eurocurrency Loans shall reduce the outstanding
principal amount of the Eurocurrency Loans made pursuant to such Borrowing to
less than the Minimum Borrowing Amount applicable thereto; (ii) any conversion
of Eurocurrency Loans into Prime Rate Loans shall be made on, and only on, the
last day of an Interest Period for such Eurocurrency Loans; (iii) Prime Rate
Loans may only be converted into Eurocurrency Loans if no Default under section
10.1(a) or Event of Default is in existence on the date of the conversion unless
the Required Lenders otherwise agree; and (iv) Borrowings of Eurocurrency Loans
resulting from this section 2.6 shall conform to the requirements of section
2.2. Each such conversion shall be effected by the Borrower giving the
Administrative Agent at its Notice Office, prior to 11:00 A.M. (local time at
such Notice Office), at least three Business Days' (or prior to 11:00 A.M.
(local time at such Notice Office) same Business Day's, in the case of a
conversion into Prime Rate Loans) prior written notice (or telephonic notice
promptly confirmed in writing if so requested by the Administrative Agent) (each
a "NOTICE OF CONVERSION"), substantially in the form of Exhibit B-2, specifying
the Loans to be so converted, the Type of Loans to be converted into and, if to
be converted into a Borrowing of Eurocurrency Loans, the Interest Period to be
initially applicable thereto. The Administrative Agent shall give each Lender
prompt notice of any such proposed conversion affecting any of its Loans. For
the avoidance of doubt, the prepayment or repayment of any Loans out of the
proceeds of other Loans by the Borrower is not considered a conversion of Loans
into other Loans.
(b) The Borrower may, upon notice given to the Administrative Agent at
least five Business Days prior to the date of the proposed Redenomination,
request that all Loans comprising the same Borrowing by the Borrower be
Redenominated from Dollars into an Alternative Currency or from an Alternative
Currency into Dollars or another Alternative Currency; PROVIDED, HOWEVER, that
any Redenomination of Eurocurrency Loans shall be made on, and only on, the last
day of an Interest Period for such Loans; and PROVIDED, FURTHER, that no
Redenomination shall be made which would cause any Prime Rate Loans to be
denominated in any currency other than Dollars.. Each such notice of request of
a Redenomination (a "NOTICE OF REDENOMINATION") shall be by telecopier, telex or
cable (confirmed immediately in writing if so requested by the Administrative
Agent), in substantially the form of Exhibit
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B-4 hereto, specifying (i) the Loans comprising the Borrowing to be
Redenominated, (iii) the date of the proposed Redenomination (which shall be a
Business Day), (iv) the currency into which such Loans are to be Redenominated,
and (v) if such Loans as so Redenominated are to be Eurocurrency Loans, the
duration of the Interest Period for such Loans upon being so Redenominated. The
Administrative Agent shall promptly notify each affected Lender of any such
requested Redenomination. In the case of a Notice of Redenomination which
requests a Redenomination of Loans into an Alternative Currency, such
Redenomination is subject to the confirmation by each Lender to the
Administrative Agent, not later than the third Business Day before the requested
date of such Redenomination that such Lender agrees to such Redenomination,
which confirmation shall be notified immediately by the Administrative Agent to
the Borrower. If any affected Lender shall not have so provided to the
Administrative Agent such confirmation, the requested Redenomination will not
occur and the Administrative Agent shall promptly notify the Borrower and each
affected Lender that a Lender has not provided such confirmation and that the
requested Redenomination will not occur. If each affected Lender shall have so
provided to the Administrative Agent such confirmation or if such Notice of
Redenomination requests a Redenomination of Loans into Dollars, each Loan so
requested to be Redenominated will be Redenominated, on the date specified
therefor in such Notice of Redenomination, into an equivalent amount thereof in
the currency requested in such Notice of Redenomination, such equivalent amount
to be determined on such date by the Administrative Agent in accordance with
section 1.4, and in the case of any such Loan being so Redenominated which will
be a Eurocurrency Loan, such Eurocurrency Loan will have an initial Interest
Period as requested in such Notice of Redenomination.
2.7. INTEREST ON LOANS. (a) The unpaid principal amount of each Loan
which is a Prime Rate Loan shall bear interest from the date of the Borrowing
thereof until maturity (whether by acceleration or otherwise) at a fluctuating
rate per annum which shall at all times be equal to the Prime Rate in effect
from time to time plus the Applicable Prime Rate Margin (as defined below) in
effect at the time.
(b) The unpaid principal amount of each Loan which is a Eurocurrency
Loan shall bear interest from the date of the Borrowing thereof until maturity
(whether by acceleration or otherwise) at a rate per annum which shall at all
times be the Applicable Eurocurrency Margin (as defined below) for such Loan
plus the relevant Eurocurrency Rate.
(c) Notwithstanding the above provisions, if a Default under section
10.1(a) or Event of Default is in existence, all outstanding amounts of
principal and, to the extent permitted by law, all overdue interest, in respect
of each Loan shall bear interest, payable on demand, at a fluctuating rate per
annum equal at all times to 2% per annum above the Prime Rate in effect from
time to time. If any amount (other than the principal of and interest on the
Loans) payable by the Borrower under the Credit Documents is not paid when due,
such amount shall bear interest, payable on demand, at a fluctuating rate per
annum equal at all times to 2% per annum above the Prime Rate in effect from
time to time.
(d) Interest shall accrue from and including the date of any Borrowing
to but excluding the date of any prepayment or repayment thereof and shall be
payable (i) in respect of each Prime Rate Loan, quarterly in arrears on the last
Business Day of March, June, September and December, (ii) in respect of each
Eurocurrency Loan, on the last day of each Interest Period applicable thereto
and, in the case of an Interest Period in excess of three months, on the dates
which are successively three months after the commencement of such Interest
Period, and (iii) in respect of each Loan, on any prepayment or conversion (on
the amount prepaid or converted), at maturity (whether by acceleration or
otherwise) and, after such maturity, on demand.
(e) All computations of interest hereunder shall be made in accordance
with section 13.7(b).
(f) Each Reference Bank agrees to furnish the Administrative Agent
timely information for the purpose of determining the Eurocurrency Rate for any
Borrowing consisting of Eurocurrency Loans. If any one or more of the Reference
Banks shall not timely furnish such information, the Administrative Agent shall
determine the Eurocurrency Rate on the basis of timely information furnished by
the remaining Reference Banks. The Administrative Agent upon determining the
interest rate for any Borrowing shall promptly notify the Borrower and the
Lenders thereof.
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(g) As used herein, the term "APPLICABLE EUROCURRENCY MARGIN", as
applied to any Loan which is a Eurocurrency Loan, means 75 basis points per
annum, and the term "APPLICABLE PRIME RATE MARGIN", as applied to any Loan which
is a Prime Rate Loan, means zero basis points per annum; provided, that
subsequent to the fiscal quarter of the Borrower ended nearest to March 31,
1998, the Applicable Eurocurrency Margin and the Applicable Prime Rate Margin
will be determined by the Administrative Agent in accordance with the Pricing
Grid Table which appears below, based on the Borrower's ratio of Total
Indebtedness to EBITDA referred to in section 9.7 and identified in such Table.
Changes in the Applicable Eurocurrency Margin and Applicable Prime Rate Margin
based upon changes in such ratio shall become effective on the first day of the
month following the receipt by the Administrative Agent pursuant to section
8.1(a) or (b) of the financial statements of the Borrower, accompanied by the
certificate referred to in section 8.1(c), demonstrating the computation of such
ratio, based upon the ratio in effect at the end of the applicable period
covered (in whole or in part) by such financial statements; PROVIDED that if any
financial statements referred to in section 8.1(a) or (b), or the related
certificate referred to in section 8.1(c), are not timely delivered, the
Administrative Agent may determine the Applicable Eurocurrency Margin and the
Applicable Prime Rate Margin based upon a good faith estimate by the Borrower of
such ratio as in effect at the end of the applicable period to be covered (in
whole or in part) by such financial statements, PROVIDED, FURTHER, that if upon
delivery of such delinquent financial statements and related certificate, such
financial statements indicate that such good faith estimate was incorrect and,
as a result thereof, the Applicable Eurocurrency Margin or Applicable Prime Rate
Margin for any Loans was too low at such determination, the Applicable
Eurocurrency Margin or Applicable Prime Rate Margin, as the case may be, for
such Loans shall be increased, as appropriate, with retroactive effect to the
date of the change made on the basis of such determination, and the Borrower
will immediately pay to the Administrative Agent, for the account of the Lenders
all additional interest due by reason of such increased Applicable Eurocurrency
Margin or Applicable Prime Rate Margin, as the case may be. Any changes in the
Applicable Eurocurrency Margin or Applicable Prime Rate Margin shall be
determined by the Administrative Agent in accordance with the foregoing
provisions and the Administrative Agent will promptly provide notice of such
determinations to the Borrower and the Lenders. Any such determination by the
Administrative Agent pursuant to this section 2.7(g) shall be conclusive and
binding absent manifest error.
PRICING GRID TABLE
(Expressed in Basis Points)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
APPLICABLE APPLICABLE APPLICABLE
TOTAL INDEBTEDNESS/EBITDA RATIO EUROCURRENCY PRIME RATE COMMITMENT
MARGIN MARGIN FEE RATE
- ----------------------------------------------------------------------------------------------------------------
less than 1.50 to 1.00 62.50 -0- 20.00
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
greater than = 1.50 to 1.00 and less than 2.00 to 1.00 75.00 -0- 22.50
- ----------------------------------------------------------------------------------------------------------------
greater than = 2.00 to 1.00 and less than 2.50 to 1.00 100.00 -0- 25.00
- ----------------------------------------------------------------------------------------------------------------
greater than = 2.50 to 1.00 and less than 3.00 to 1.00 125.00 -0- 27.50
- ----------------------------------------------------------------------------------------------------------------
greater than = 3.00 to 1.00 and less than 3.50 to 1.00 150.00 -0- 30.00
- ----------------------------------------------------------------------------------------------------------------
greater than = 3.50 to 1.00 175.00 25.00 37.50
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
2.8. INTEREST PERIODS. (a) At the time the Borrower gives a Notice of
Borrowing or Notice of Conversion in respect of the making of, or conversion
into, a Borrowing of Eurocurrency Loans (in the case of the initial Interest
Period applicable thereto) or prior to 11:00 A.M. (local time at the applicable
Notice Office) on the third Business Day prior to the expiration of an Interest
Period applicable to a Borrowing of Eurocurrency Loans,
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<PAGE> 27
it shall have the right to elect by giving the Administrative Agent written or
telephonic notice (in the case of telephonic notice, promptly confirmed in
writing if so requested by the Administrative Agent) of the Interest Period
applicable to such Borrowing, which Interest Period shall, at the option of the
Borrower, be a one, two, three or six month period. Notwithstanding anything to
the contrary contained above:
(i) the initial Interest Period for any Borrowing of
Eurocurrency Loans shall commence on the date of such Borrowing
(including the date of any conversion from a Borrowing of Prime Rate
Loans) and each Interest Period occurring thereafter in respect of such
Borrowing shall commence on the day on which the next preceding
Interest Period expires;
(ii) if any Interest Period begins on a day for which there is
no numerically corresponding day in the calendar month at the end of
such Interest Period, such Interest Period shall end on the last
Business Day of such calendar month;
(iii) if any Interest Period would otherwise expire on a day
which is not a Business Day, such Interest Period shall expire on the
next succeeding Business Day, PROVIDED that if any Interest Period
would otherwise expire on a day which is not a Business Day but is a
day of the month after which no further Business Day occurs in such
month, such Interest Period shall expire on the next preceding Business
Day;
(iv) no Interest Period for any Loan may be selected which
would end after the Maturity Date; and
(v) no Interest Period may be elected at any time when a
Default under section 10.1(a) or an Event of Default is then in
existence unless the Required Lenders otherwise agree.
(b) If upon the expiration of any Interest Period the Borrower has
failed to (or may not) elect a new Interest Period to be applicable to the
respective Borrowing of Eurocurrency Loans as provided above, (i) in the case of
any such Eurocurrency Loans which are denominated in Dollars, the Borrower shall
be deemed to have elected to convert such Borrowing to Prime Rate Loans
effective as of the expiration date of such current Interest Period, and (ii) in
the case of any such Eurocurrency Loans which are denominated in an Alternative
Currency, the Borrower shall be deemed to have elected effective as of the
expiration date of such current Interest Period to Redenominate such Loans from
the applicable Alternative Currency into an equivalent amount thereof in
Dollars, such equivalent amount to be determined on such date by the
Administrative Agent in accordance with section 1.4, and to treat such Loans as
so Redenominated as Prime Rate Loans.
2.9. INCREASED COSTS, ILLEGALITY, ETC. (a) In the event that (x) in the
case of clause (i) below, the Administrative Agent or (y) in the case of clauses
(ii) and (iii) below, any Lender, shall have determined on a reasonable basis
(which determination shall, absent manifest error, be final and conclusive and
binding upon all parties hereto):
(i) on any date for determining the Eurocurrency Rate for
Eurocurrency Loans denominated in Dollars or in an Alternative Currency
for any Interest Period that, by reason of any changes arising after
the Effective Date affecting the interbank Eurocurrency market,
adequate and fair means do not exist for ascertaining the applicable
interest rate on the basis provided for in the definition of
Eurocurrency Rate; or
(ii) at any time, that such Lender shall incur increased costs
or reductions in the amounts received or receivable hereunder in an
amount which such Lender deems material with respect to any
Eurocurrency Loans (other than any increased cost or reduction in the
amount received or receivable resulting from the imposition of or a
change in the rate of taxes or similar charges) because of any change
since the Effective Date in any applicable law, governmental rule,
regulation, guideline, order or request (whether or not having the
force of law), or in the interpretation or administration thereof and
including the introduction of any new law or governmental rule,
regulation, guideline, order or request (such as, for example, but not
limited to, a change in official reserve requirements, but, in all
events, excluding reserves includable in the Eurocurrency Rate pursuant
to the definition thereof); or
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<PAGE> 28
(iii) at any time, that the making or continuance of any
Eurocurrency Loan denominated in Dollars or in an Alternative Currency
has become unlawful by compliance by such Lender in good faith with any
change since the Effective Date in any law, governmental rule,
regulation, guideline or order, or the interpretation or application
thereof, or would conflict with any thereof not having the force of law
but with which such Lender customarily complies;
THEN, and in any such event, such Lender (or the Administrative Agent in the
case of clause (i) above) shall (x) on or promptly following such date or time
and (y) within 10 Business Days of the date on which such event no longer exists
give notice (by telephone confirmed in writing) to the Borrower and to the
Administrative Agent of such determination (which notice the Administrative
Agent shall promptly transmit to each of the other applicable Lenders).
Thereafter (x) in the case of clause (i) above, Eurocurrency Loans shall no
longer be available in the applicable currency until such time as the
Administrative Agent notifies the Borrower and the applicable Lenders that the
circumstances giving rise to such notice by the Administrative Agent no longer
exist, and any Notice of Borrowing, Notice of Conversion or Notice of
Redenomination given by or on behalf of the Borrower with respect to
Eurocurrency Loans denominated in such currency which have not yet been
incurred, converted or Redenominated shall be deemed rescinded by the Borrower
or, in the case of a Notice of Borrowing, shall, at the option of the Borrower,
be deemed converted into a Notice of Borrowing for Prime Rate Loans to be made
on the date of Borrowing contained in such Notice of Borrowing, (y) in the case
of clause (ii) above, the Borrower shall pay to such Lender, upon written demand
therefor, such additional amounts (in the form of an increased rate of, or a
different method of calculating, interest or otherwise as such Lender shall
determine) as shall be required to compensate such Lender, for such increased
costs or reductions in amounts receivable hereunder (a written notice as to the
additional amounts owed to such Lender, showing the basis for the calculation
thereof, which basis must be reasonable, submitted to the Borrower by such
Lender shall, absent manifest error, be final and conclusive and binding upon
all parties hereto) and (z) in the case of clause (iii) above, the Borrower
shall take one of the actions specified in section 2.9(b) as promptly as
possible and, in any event, within the time period required by law.
(b) At any time that any Eurocurrency Loan denominated in Dollars or an
Alternative Currency is affected by the circumstances described in section
2.9(a)(ii) or (iii), the Borrower may (and in the case of a Eurocurrency Loan
affected pursuant to section 2.9(a)(iii) the Borrower shall) either (i) if the
affected Eurocurrency Loan is then being made pursuant to a Borrowing, by giving
the Administrative Agent telephonic notice (confirmed promptly in writing if
requested) thereof on the same date that the Borrower was notified by a Lender
pursuant to section 2.9(a)(ii) or (iii), cancel said Borrowing, convert the
related Notice of Borrowing into one requesting a Borrowing of Prime Rate Loans
or require the affected Lender to make its requested Loan as a Prime Rate Loan,
or (ii) if the affected Eurocurrency Loan is then outstanding, upon at least one
Business Day's notice to the Administrative Agent, require the affected Lender
to convert each such Eurocurrency Loan denominated in Dollars into a Prime Rate
Loan, or require the affected Lender to Redenominate each such Eurocurrency Loan
denominated in an Alternative Currency into a Prime Rate Loan, provided that if
more than one Lender is affected at any time, then all affected Lenders must be
treated the same pursuant to this section 2.9(b).
(c) If any Lender shall have determined that after the Effective Date,
the adoption of any applicable law, rule or regulation regarding capital
adequacy, or any change therein, or any change in the interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged by law with the interpretation or administration thereof, or
compliance by such Lender or its parent corporation with any request or
directive regarding capital adequacy (whether or not having the force of law) of
any such authority, central bank, or comparable agency, in each case made
subsequent to the Effective Date, has or would have the effect of reducing by an
amount reasonably deemed by such Lender to be material the rate of return on
such Lender's or its parent corporation's capital or assets as a consequence of
such Lender's commitments or obligations hereunder to a level below that which
such Lender or its parent corporation could have achieved but for such adoption,
effectiveness, change or compliance (taking into consideration such Lender's or
its parent corporation's policies with respect to capital adequacy), then from
time to time, within 15 days after demand by such Lender (with a copy to the
Administrative Agent), the Borrower shall pay to such Lender such additional
amount or amounts as will compensate such Lender or its parent corporation for
such reduction. Each Lender, upon determining in good faith that any additional
amounts will be payable pursuant to this section 2.9(c), will give prompt
written notice thereof to the Borrower, which notice shall set forth, in
reasonable detail, the basis of the calculation of such additional amounts,
23
<PAGE> 29
which basis must be reasonable, although the failure to give any such notice
shall not release or diminish the Borrower's obligations to pay additional
amounts pursuant to this section 2.9(c) upon the subsequent receipt of such
notice.
(d) Notwithstanding anything in this Agreement to the contrary, (i) no
Lender shall be entitled to compensation or payment or reimbursement of other
amounts under section 2.9, 3.5 or 5.4 for any amounts incurred or accruing more
than 180 days prior to the giving of notice to the Borrower of additional costs
or other amounts of the nature described in such sections, and (ii) no Lender
shall demand compensation for any reduction referred to in section 2.9(c) or
payment or reimbursement of other amounts under section 3.5 or 5.4 if it shall
not at the time be the general policy or practice of such Lender to demand such
compensation, payment or reimbursement in similar circumstances under comparable
provisions of other credit agreements.
2.10. COMPENSATION. The Borrower shall compensate each applicable
Lender, upon its written request (which request shall set forth the detailed
basis for requesting and the method of calculating such compensation), for all
reasonable losses, expenses and liabilities (including, without limitation, any
loss, expense or liability incurred by reason of the liquidation or reemployment
of deposits or other funds required by such Lender to fund its Eurocurrency
Loans) which such Lender may sustain: (i) if for any reason (other than a
default by such Lender or the Administrative Agent) a Borrowing of Eurocurrency
Loans by the Borrower does not occur on a date specified therefor in a Notice of
Borrowing or Notice of Conversion (whether or not withdrawn by or on behalf of
the Borrower or deemed withdrawn pursuant to section 2.9(a)); (ii) if any
repayment, prepayment or conversion of any of its Eurocurrency Loans occurs on a
date which is not the last day of an Interest Period applicable thereto; (iii)
if any prepayment of any of its Eurocurrency Loans is not made on any date
specified in a notice of prepayment given by the Borrower; or (iv) as a
consequence of (x) any other default by the Borrower to repay its Eurocurrency
Loans when required by the terms of this Agreement or (y) an election made
pursuant to section 2.9(b).
2.11. CHANGE OF LENDING OFFICE; REPLACEMENT OF LENDERS. (a) Each Lender
agrees that, upon the occurrence of any event giving rise to the operation of
section 2.9(a)(ii) or (iii), 2.9(c), 3.5 or 5.4 with respect to such Lender, it
will, if requested by the Borrower, use reasonable efforts (subject to overall
policy considerations of such Lender) to designate another Applicable Lending
Office for any Loans or Commitment affected by such event, provided that such
designation is made on such terms that such Lender and its Applicable Lending
Office suffer no economic, legal or regulatory disadvantage, with the object of
avoiding the consequence of the event giving rise to the operation of any such
section.
(b) If any Lender requests any compensation, reimbursement or other
payment under section 2.9(a)(ii) or (iii), 2.9(c) or 3.5 with respect to such
Lender, or if the Borrower is required to pay any additional amount to any
Lender or governmental authority pursuant to section 5.4, or if any Lender is a
Defaulting Lender, then the Borrower may, at its sole expense and effort, upon
notice to such Lender and the Administrative Agent, require such Lender to
assign and delegate, without recourse (in accordance with the restrictions
contained in section 13.4(b)), all its interests, rights and obligations under
this Agreement to an assignee that shall assume such obligations (which assignee
may be another Lender, if a Lender accepts such assignment); provided that (i)
the Borrower shall have received the prior written consent of the Administrative
Agent, which consent shall not be unreasonably withheld, (ii) such Lender shall
have received payment of an amount equal to the outstanding principal of its
Loans, accrued interest thereon, accrued fees and all other amounts payable to
it hereunder, from the assignee (to the extent of such outstanding principal and
accrued interest and fees) or the Borrower (in the case of all other amounts),
and (iii) in the case of any such assignment resulting from a claim for
compensation, reimbursement or other payments required to be made under section
2.9(a)(ii) or (iii), 2.9(c) or 3.5 with respect to such Lender, or resulting
from any required payments to any Lender or governmental authority pursuant to
section 5.4, such assignment will result in a reduction in such compensation,
reimbursement or payments. A Lender shall not be required to make any such
assignment and delegation if, prior thereto, as a result of a waiver by such
Lender or otherwise, the circumstances entitling the Borrower to require such
assignment and delegation cease to apply.
(c) Nothing in this section 2.11 shall affect or postpone any of the
obligations of the Borrower or the right of any Lender provided in section 2.9,
3.5 or 5.4.
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<PAGE> 30
SECTION 3. LETTERS OF CREDIT.
3.1. LETTERS OF CREDIT. (a) Subject to and upon the terms and
conditions herein set forth, the Borrower may request a Letter of Credit Issuer
at any time and from time to time on or after the Initial Borrowing Date and
prior to the date that is 15 Business Days prior to the Maturity Date to issue,
for the account of the Borrower or any of its Subsidiaries and in support of
(i) worker compensation, liability insurance, releases of
contract retention obligations, contract performance guarantee
requirements and other bonding obligations of the Borrower or any such
Subsidiary incurred in the ordinary course of its business, and such
other standby obligations of the Borrower and its Subsidiaries that are
acceptable to the Letter of Credit Issuer, and/or
(ii) Indebtedness of any Foreign Subsidiary of the Borrower
incurred as contemplated by section 9.4(b) to any other persons or
persons that are acceptable to the Letter of Credit Issuer,
and subject to and upon the terms and conditions herein set forth, such Letter
of Credit Issuer agrees to issue from time to time, irrevocable standby letters
of credit denominated in Dollars or an Alternative Currency in such form as may
be approved by such Letter of Credit Issuer and the Administrative Agent (each
such letter of credit (and each Existing Letter of Credit described in section
3.1(d)), a "LETTER OF CREDIT" and collectively, the "LETTERS OF CREDIT").
(b) Notwithstanding the foregoing, (i) no Letter of Credit shall be
issued the Stated Amount of which, when added to the Letter of Credit
Outstandings at such time, would exceed either (x) $15,000,000 or (y) when added
to the aggregate principal amount of all Loans then outstanding, an amount equal
to the Total Commitment at such time; (ii) no Letter of Credit shall be issued
for any of the purposes specified in clause (i) or (ii) of section 3.1(a) if
after giving effect thereto the Letter of Credit Outstandings at such time in
respect of all Letters of Credit issued for the purposes specified in clauses
(i) of section 3.1(a) would exceed $5,000,000; (iii) no Letter of Credit shall
be issued in support of Indebtedness of any Foreign Subsidiary of the Borrower
if after giving effect thereto the Letter of Credit Outstandings at such time in
respect of all Letters of Credit issued to support any Indebtedness of the
Foreign Subsidiaries of the Borrower would exceed $10,500,000; and (iv) each
Letter of Credit shall have an expiry date (including any renewal periods)
occurring not later than the earlier of (A) one year from the date of issuance
thereof, unless a longer period is approved by the relevant Letter of Credit
Issuer and Lenders (other than any Defaulting Lender) holding a majority of the
Total Commitment, and (B) 15 Business Days prior to the Maturity Date, in each
case on terms acceptable to the Administrative Agent and the relevant Letter of
Credit Issuer.
(c) Notwithstanding the foregoing, in the event a Lender Default
exists, no Letter of Credit Issuer shall be required to issue any Letter of
Credit unless either (i) such Letter of Credit Issuer has entered into
arrangements satisfactory to it and the Borrower to eliminate such Letter of
Credit Issuer's risk with respect to the participation in Letters of Credit of
the Defaulting Lender or Lenders, including by cash collateralizing such
Defaulting Lender's or Lenders' Percentage of the Letter of Credit Outstandings;
or (ii) the issuance of such Letter of Credit, taking into account the potential
failure of the Defaulting Lender or Lenders to risk participate therein, will
not cause the Letter of Credit Issuer to incur aggregate credit exposure
hereunder with respect to Loans and Letter of Credit Outstandings in excess of
its Commitment, and the Borrower has undertaken, for the benefit of such Letter
of Credit Issuer and the Lenders (other than any Defaulting Lender), pursuant to
an instrument satisfactory in form and substance to such Letter of Credit
Issuer, not to thereafter incur Loans or Letter of Credit Outstandings hereunder
which would cause the Letter of Credit Issuer to incur aggregate credit exposure
hereunder with respect to Loans and Letter of Credit Outstandings in excess of
its Commitment.
(d) Annex VI hereto contains a description of all letters of credit
outstanding on, and to continue in effect after, the Initial Borrowing Date.
Each such letter of credit issued by a bank that is or becomes a Lender under
this Agreement on the Effective Date (each, an "EXISTING LETTER OF CREDIT")
shall constitute a "Letter of Credit" for all purposes of this Agreement,
issued, for purposes of section 3.4(a), on the Initial Borrowing Date, and the
Borrower, the Administrative Agent and the applicable Lenders hereby agree that,
from and after such date, the terms of this Agreement shall apply to such
Letters of Credit, superseding any other agreement theretofore applicable to
them to the extent inconsistent with the terms hereof.
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<PAGE> 31
3.2. LETTER OF CREDIT REQUESTS: NOTICES OF ISSUANCE. (a) Whenever it
desires that a Letter of Credit be issued, the Borrower shall give the
Administrative Agent and the Letter of Credit Issuer written or telephonic
notice (in the case of telephonic notice, promptly confirmed in writing if so
requested by the Administrative Agent) which, if in the form of written notice
shall be substantially in the form of Exhibit B-3, or transmit by electronic
communication (if arrangements for doing so have been approved by the Letter of
Credit Issuer), prior to 11:00 A.M. (local time at its Notice Office) at least
three Business Days (or such shorter period as may be acceptable to the relevant
Letter of Credit Issuer) prior to the proposed date of issuance (which shall be
a Business Day) (each a "Letter of Credit Request"), which Letter of Credit
Request shall include such supporting documents that such Letter of Credit
Issuer customarily requires in connection therewith (including, in the case of a
Letter of Credit for an account party other than the Borrower, an application
for, and if applicable a reimbursement agreement with respect to, such Letter of
Credit). Any such documents executed in connection with the issuance of a Letter
of Credit, including the Letter of Credit itself, are herein referred to as
"LETTER OF CREDIT DOCUMENTS". In the event of any inconsistency between any of
the terms or provisions of any Letter of Credit Document and the terms and
provisions of this Agreement respecting Letters of Credit, the terms and
provisions of this Agreement shall control. The Administrative Agent shall
promptly notify each Lender of each Letter of Credit Request.
(b) Each Letter of Credit Issuer shall, on the date of each issuance of
a Letter of Credit by it, give the Administrative Agent and the Borrower written
notice of the issuance of such Letter of Credit, accompanied by a copy to the
Administrative Agent of the Letter of Credit or Letters of Credit issued by it.
Each Letter of Credit Issuer shall provide to the Administrative Agent a
quarterly (or monthly if requested by any applicable Lender) summary describing
each Letter of Credit issued by such Letter of Credit Issuer and then
outstanding and an identification for the relevant period of the daily aggregate
Letter of Credit Outstandings represented by Letters of Credit issued by such
Letter of Credit Issuer.
3.3. AGREEMENT TO REPAY LETTER OF CREDIT DRAWINGS. (a) The Borrower
hereby agrees to reimburse (or cause any Subsidiary for whose account a Letter
of Credit was issued to reimburse) each Letter of Credit Issuer, by making
payment directly to such Letter of Credit Issuer in immediately available funds
at the payment office of such Letter of Credit Issuer, for any payment or
disbursement made by such Letter of Credit Issuer under any Letter of Credit
(each such amount so paid or disbursed until reimbursed, an "UNPAID DRAWING")
immediately after, and in any event on the date on which, such Letter of Credit
Issuer notifies the Borrower (or any such Subsidiary for whose account such
Letter of Credit was issued) of such payment or disbursement (which notice to
the Borrower (or such Subsidiary) shall be delivered reasonably promptly after
any such payment or disbursement), such payment to be made in Dollars (and in
the amount which is the Dollar equivalent of any such payment or disbursement
made or denominated in an Alternative Currency), with interest on the amount so
paid or disbursed by such Letter of Credit Issuer, to the extent not reimbursed
prior to 1:00 P.M. (local time at the payment office of the Letter of Credit
Issuer) on the date of such payment or disbursement, from and including the date
paid or disbursed to but not including the date such Letter of Credit Issuer is
reimbursed therefor at a rate per annum which shall be the rate then applicable
to Loans which are Prime Rate Loans (plus an additional 2% per annum if not
reimbursed by the third Business Day after the date of such payment or
disbursement), any such interest also to be payable on demand.
(b) The Borrower's obligation under this section 3.3 to reimburse, or
cause a Subsidiary to reimburse, each Letter of Credit Issuer with respect to
Unpaid Drawings (including, in each case, interest thereon) shall be absolute
and unconditional under any and all circumstances and irrespective of any
setoff, counterclaim or defense to payment which the Borrower may have or have
had against such Letter of Credit Issuer, the Administrative Agent, any other
Letter of Credit Issuer or any Lender, including, without limitation, any
defense based upon the failure of any drawing under a Letter of Credit to
conform to the terms of the Letter of Credit or any non-application or
misapplication by the beneficiary of the proceeds of such drawing, provided,
however that the Borrower shall not be obligated to reimburse, or cause a
Subsidiary to reimburse, a Letter of Credit Issuer for any wrongful payment made
by such Letter of Credit Issuer under a Letter of Credit as a result of acts or
omissions constituting willful misconduct or gross negligence on the part of
such Letter of Credit Issuer.
3.4. LETTER OF CREDIT PARTICIPATIONS. (a) Immediately upon the issuance
by a Letter of Credit Issuer of any Letter of Credit (and on the Initial
Borrowing Date with respect to any Existing Letter of Credit), such Letter of
Credit Issuer shall be deemed to have sold and transferred to each Lender, and
each such Lender (each a
26
<PAGE> 32
"PARTICIPANT") shall be deemed irrevocably and unconditionally to have purchased
and received from such Letter of Credit Issuer, without recourse or warranty, an
undivided interest and participation, to the extent of such Lender's Percentage,
in such Letter of Credit, each substitute letter of credit, each drawing made
thereunder, the obligations of the Borrower under this Agreement with respect
thereto (although Letter of Credit Fees shall be payable directly to the
Administrative Agent for the account of the Lenders as provided in section
4.1(b) and the Participants shall have no right to receive any portion of any
fees of the nature contemplated by section 4.1(c)), the obligations of any
Subsidiary of the Borrower under any Letter of Credit Documents pertaining
thereto, and any security for, or guaranty pertaining to, any of the foregoing.
Upon any change in the Commitments of the Lenders pursuant to section 13.4(b),
it is hereby agreed that, with respect to all outstanding Letters of Credit and
Unpaid Drawings, there shall be an automatic adjustment to the participations
pursuant to this section 3.4 to reflect the new Percentages of the assigning and
assignee Lender.
(b) In determining whether to pay under any Letter of Credit, a Letter
of Credit Issuer shall not have any obligation relative to the Participants
other than to determine that any documents required to be delivered under such
Letter of Credit have been delivered and that they appear to comply on their
face with the requirements of such Letter of Credit. Any action taken or omitted
to be taken by a Letter of Credit Issuer under or in connection with any Letter
of Credit if taken or omitted in the absence of gross negligence or willful
misconduct, shall not create for such Letter of Credit Issuer any resulting
liability.
(c) In the event that a Letter of Credit Issuer makes any payment under
any Letter of Credit and the Borrower shall not have reimbursed (or caused any
applicable Subsidiary to reimburse) such amount in full to such Letter of Credit
Issuer pursuant to section 3.3(a), such Letter of Credit Issuer shall promptly
notify the Administrative Agent, and the Administrative Agent shall promptly
notify each Participant of such failure, and each Participant shall promptly and
unconditionally pay to the Administrative Agent for the account of such Letter
of Credit Issuer, the amount of such Participant's Percentage of such payment in
U.S. Dollars (the Administrative Agent having determined in the case of any
payment by a Letter of Credit Issuer made in an Alternative Currency the
equivalent thereof in Dollars) and in same day funds, PROVIDED, HOWEVER, that no
Participant shall be obligated to pay to the Administrative Agent its Percentage
of such unreimbursed amount for any wrongful payment made by such Letter of
Credit Issuer under a Letter of Credit as a result of acts or omissions
constituting willful misconduct or gross negligence on the part of such Letter
of Credit Issuer. If the Administrative Agent so notifies any Participant
required to fund a payment under a Letter of Credit prior to 11:00 A.M. (local
time at its Notice Office) on any Business Day, such Participant shall make
available to the Administrative Agent for the account of the relevant Letter of
Credit Issuer such Participant's Percentage of the amount of such payment on
such Business Day in same day funds. If and to the extent such Participant shall
not have so made its Percentage of the amount of such payment available to the
Administrative Agent for the account of the relevant Letter of Credit Issuer,
such Participant agrees to pay to the Administrative Agent for the account of
such Letter of Credit Issuer, forthwith on demand such amount, together with
interest thereon, for each day from such date until the date such amount is paid
to the Administrative Agent for the account of such Letter of Credit Issuer at
the Federal Funds Effective Rate. The failure of any Participant to make
available to the Administrative Agent for the account of the relevant Letter of
Credit Issuer its Percentage of any payment under any Letter of Credit shall not
relieve any other Participant of its obligation hereunder to make available to
the Administrative Agent for the account of such Letter of Credit Issuer its
Percentage of any payment under any Letter of Credit on the date required, as
specified above, but no Participant shall be responsible for the failure of any
other Participant to make available to the Administrative Agent for the account
of such Letter of Credit Issuer such other Participant's Percentage of any such
payment.
(d) Whenever a Letter of Credit Issuer receives a payment of a
reimbursement obligation as to which the Administrative Agent has received for
the account of such Letter of Credit Issuer any payments from the Participants
pursuant to section 3.4(c) above, such Letter of Credit Issuer shall pay to the
Administrative Agent and the Administrative Agent shall promptly pay to each
Participant which has paid its Percentage thereof, in U.S. dollars and in same
day funds, an amount equal to such Participant's Percentage of the principal
amount thereof and interest thereon accruing after the purchase of the
respective participations, as and to the extent so received.
(e) The obligations of the Participants to make payments to the
Administrative Agent for the account of each Letter of Credit Issuer with
respect to Letters of Credit shall be irrevocable and not subject to
counterclaim,
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set-off or other defense or any other qualification or exception whatsoever and
shall be made in accordance with the terms and conditions of this Agreement
under all circumstances, including, without limitation, any of the following
circumstances:
(i) any lack of validity or enforceability of this Agreement
or any of the other Credit Documents;
(ii) the existence of any claim, set-off defense or other
right which the Borrower (or any Subsidiary) may have at any time
against a beneficiary named in a Letter of Credit, any transferee of
any Letter of Credit (or any person for whom any such transferee may be
acting), the Administrative Agent, any Letter of Credit Issuer, any
Lender, or other person, whether in connection with this Agreement, any
Letter of Credit, the transactions contemplated herein or any unrelated
transactions (including any underlying transaction between the Borrower
(or any Subsidiary) and the beneficiary named in any such Letter of
Credit), other than any claim which the Borrower (or any Subsidiary
which is the account party with respect to a Letter of Credit) may have
against any applicable Letter of Credit Issuer for gross negligence or
wilful misconduct of such Letter of Credit Issuer in making payment
under any applicable Letter of Credit;
(iii) any draft, certificate or other document presented under
the Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or
inaccurate in any respect;
(iv) the surrender or impairment of any security for the
performance or observance of any of the terms of any of the Credit
Documents: or
(v) the occurrence of any Default or Event of Default.
(f) To the extent the Letter of Credit Issuer is not indemnified by the
Borrower, the Participants will reimburse and indemnify the Letter of Credit
Issuer, in proportion to their respective Percentages, for and against any and
all liabilities, obligations, losses, damages, penalties, claims, actions,
judgments, costs, expenses or disbursements of whatsoever kind or nature which
may be imposed on, asserted against or incurred by the Letter of Credit Issuer
in performing its respective duties in any way related to or arising out of its
issuance of Letters of Credit, PROVIDED that no Participants shall be liable for
any portion of such liabilities, obligations, losses, damages, penalties,
claims, actions, judgments, costs, expenses or disbursements resulting from the
Letter of Credit Issuer's gross negligence or willful misconduct.
3.5. INCREASED COSTS. If after the Effective Date, the adoption of any
applicable law, rule or regulation, or any change therein, or any change in the
interpretation or administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by any Letter of Credit Issuer or any Lender with any
request or directive (whether or not having the force of law) by any such
authority, central bank or comparable agency (in each case made subsequent to
the Effective Date) shall either (i) impose, modify or make applicable any
reserve, deposit, capital adequacy or similar requirement against Letters of
Credit issued by such Letter of Credit Issuer or such Lender's participation
therein, or (ii) shall impose on such Letter of Credit Issuer or any Lender any
other conditions affecting this Agreement, any Letter of Credit or such Lender's
participation therein; and the result of any of the foregoing is to increase the
cost to such Letter of Credit Issuer or such Lender of issuing, maintaining or
participating in any Letter of Credit, or to reduce the amount of any sum
received or receivable by such Letter of Credit Issuer or such Lender hereunder
(other than any increased cost or reduction in the amount received or receivable
resulting from the imposition of or a change in the rate of taxes or similar
charges), then, upon demand to the Borrower by such Letter of Credit Issuer or
such Lender (a copy of which notice shall be sent by such Letter of Credit
Issuer or such Lender to the Administrative Agent), the Borrower shall pay to
such Letter of Credit Issuer or such Lender such additional amount or amounts as
will compensate any such Letter of Credit Issuer or such Lender for such
increased cost or reduction. A certificate submitted to the Borrower by any
Letter of Credit Issuer or any Lender, as the case may be (a copy of which
certificate shall be sent by such Letter of Credit Issuer or such Lender to the
Administrative Agent), setting forth, in reasonable detail, the basis for the
determination of such additional amount or amounts necessary to compensate any
Letter of Credit Issuer
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or such Lender as aforesaid shall be conclusive and binding on the Borrower
absent manifest error, although the failure to deliver any such certificate
shall not release or diminish any of the Borrower's obligations to pay
additional amounts pursuant to this section 3.5. Reference is hereby made to the
provisions of section 2.9(d) for certain limitations upon the rights of a Letter
of Credit Issuer or Lender under this section.
3.6. GUARANTY OF SUBSIDIARY LETTER OF CREDIT OBLIGATIONS. (a) The
Borrower hereby unconditionally guarantees, for the benefit of the
Administrative Agent and the Lenders, the full and punctual payment of the
Obligations of each Subsidiary under each Letter of Credit Document to which
such Subsidiary is now or hereafter becomes a party. Upon failure by any such
Subsidiary to pay punctually any such amount, the Borrower shall forthwith on
demand by the Administrative Agent pay the amount not so paid at the place and
in the currency and otherwise in the manner specified in this Agreement or any
applicable Letter of Credit Document.
(b) As a separate, additional and continuing obligation, the Borrower
unconditionally and irrevocably undertakes and agrees, for the benefit of the
Administrative Agent and the Lenders, that, should any amounts not be
recoverable from the Borrower under section 3.6(a) for any reason whatsoever
(including, without limitation, by reason of any provision of any Credit
Document or any other agreement or instrument executed in connection therewith
being or becoming void, unenforceable, or otherwise invalid under any applicable
law) then, notwithstanding any notice or knowledge thereof by any Lender, the
Administrative Agent, any of their respective Affiliates, or any other person,
at any time, the Borrower as sole, original and independent obligor, upon demand
by the Administrative Agent, will make payment to the Administrative Agent, for
the account of the Lenders and the Administrative Agent, of all such obligations
not so recoverable by way of full indemnity, in such currency and otherwise in
such manner as is provided in the Credit Documents.
(c) The obligations of the Borrower under this section shall be
unconditional and absolute and, without limiting the generality of the foregoing
shall not be released, discharged or otherwise affected by the occurrence, one
or more times, of any of the following:
(i) any extension, renewal, settlement, compromise, waiver or
release in respect to any obligation of any Subsidiary under any Letter
of Credit Document, by operation of law or otherwise;
(ii) any modification or amendment of or supplement to this
Agreement, any Note or any other Credit Document;
(iii) any release, non-perfection or invalidity of any direct
or indirect security for any obligation of the Borrower under this
Agreement, any Note or any other Credit Document or of any Subsidiary
under any Letter of Credit Document;
(iv) any change in the corporate existence, structure or
ownership of any Subsidiary or any insolvency, bankruptcy,
reorganization or other similar proceeding affecting any Subsidiary or
its assets or any resulting release or discharge of any obligation of
any Subsidiary contained in any Letter of Credit Document;
(v) the existence of any claim, set-off or other rights which
the Borrower may have at any time against any Subsidiary, the
Administrative Agent, any Lender or any other person, whether in
connection herewith or any unrelated transactions;
(vi) any invalidity or unenforceability relating to or against
any Subsidiary for any reason of any Letter of Credit Document, or any
provision of applicable law or regulation purporting to prohibit the
payment by any Subsidiary of any Obligations in respect of any Letter
of Credit; or
(vii) any other act or omission to act or delay of any kind by
any Subsidiary, the Administrative Agent, any Lender or any other
person or any other circumstance whatsoever which might, but for the
provisions of this section, constitute a legal or equitable discharge
of the Borrower's obligations under this section.
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(d) The Borrower's obligations under this section shall remain in full
force and effect until the Commitments shall have terminated and the principal
of and interest on the Notes and all other amounts payable by the Borrower under
the Credit Documents and by any Subsidiary under the Letter of Credit Documents
shall have been paid in full. If at any time any payment of any of the
Obligations of any Subsidiary in respect of any Letter of Credit Documents is
rescinded or must be otherwise restored or returned upon the insolvency,
bankruptcy or reorganization of such Subsidiary, the Borrower's obligations
under this section with respect to such payment shall be reinstated at such time
as though such payment had been due but not made at such time.
(e) The Borrower irrevocably waives acceptance hereof, presentment,
demand, protest and any notice not provided for herein, as well as any
requirement that at any time any action be taken by any person against any
Subsidiary or any other person, or against any collateral or guaranty of any
other person.
(f) Until the indefeasible payment in full of all of the Obligations
and the termination of the Commitments of the Lenders hereunder, the Borrower
shall have no rights, by operation of law or otherwise, upon making any payment
under this section to be subrogated to the rights of the payee against any
Subsidiary with respect to such payment or otherwise to be reimbursed,
indemnified or exonerated by any Subsidiary in respect thereof.
(g) In the event that acceleration of the time for payment of any
amount payable by any Subsidiary under any Letter of Credit Document is stayed
upon insolvency, bankruptcy or reorganization of such Subsidiary, all such
amounts otherwise subject to acceleration under the terms of any applicable
Letter of Credit Document shall nonetheless be payable by the Borrower under
this section forthwith on demand by the Administrative Agent.
3.7. SEPARATE DOCUMENTARY LETTERS OF CREDIT. If after the Effective
Date, NCB in its sole discretion issues any documentary letter of credit for the
account of the Borrower or any of its Subsidiaries, it may do so, provided that
the aggregate Separate Documentary Letter of Credit Outstandings do not exceed
$1,000,000 at any time. Such documentary letters of credit will not constitute
Letters of Credit hereunder, but the documentation incident thereto shall be
deemed to constitute Letter of Credit Documents for purposes of section 10
hereof and the reimbursement obligations of the Borrower (or any Subsidiary) in
respect of such letters of credit shall be deemed covered by the guaranty
provided in section 3.6 and shall be entitled to the benefits of the Subsidiary
Guaranty and the Security Documents, subject to the provisions of section 10.3
in the event of the recovery of any proceeds or payments under any of the Credit
Documents.
SECTION 4. FEES; COMMITMENTS.
4.1. FEES. (a) The Borrower agrees to pay to the Administrative Agent a
Commitment Fee ("COMMITMENT FEE"), for the account of each Non-Defaulting
Lender, for the period from and including the Effective Date to, but not
including, the Maturity Date or, if earlier, the date upon which the Total
Commitment has been terminated, computed for each day at a rate per annum equal
to the Applicable Commitment Fee Rate for such day on such Lenders' aggregate
Unutilized Commitments for such day. Such Commitment Fee shall be due and
payable in arrears on the last Business Day of each June, September, December
and March and on the Maturity Date or, if earlier, the date upon which the Total
Commitment has been terminated. As used herein, the term "APPLICABLE COMMITMENT
FEE RATE" means 22.50 basis points per annum; PROVIDED, that subsequent to the
fiscal quarter of the Borrower ended nearest to March 31, 1998, the Applicable
Commitment Fee Rate will be determined by the Administrative Agent in accordance
with the Pricing Grid Table which appears in section 2.8(g), based on the ratio
referred to in such Table. Changes in the Applicable Commitment Fee Rate based
upon changes in such ratio shall become effective on the first day of the month
following the receipt by the Administrative Agent pursuant to section 8.1(a) or
(b) of the financial statements of the Borrower, accompanied by the certificate
referred to in section 8.1(c), demonstrating the computation of such ratio,
based upon the ratio in effect at the end of the applicable period covered (in
whole or in part) by such financial statements; provided that if any financial
statements referred to in section 8.1(a) or (b), or the related certificate
referred to in section 8.1(c), are not timely delivered, the Administrative
Agent may determine the Applicable Commitment Fee Rate based upon a good faith
estimate by the Borrower of such ratio as in effect at the end of the applicable
period to be covered (in whole or in part) by such financial statements,
PROVIDED, FURTHER, that if upon delivery of such delinquent financial statements
and related certificate, such financial statements indicate that such good faith
estimate was incorrect and, as a result thereof, the Applicable Commitment
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Fee Rate was too low at such determination, the Applicable Commitment Fee Rate
shall be increased, as appropriate, with retroactive effect to the date of the
change made on the basis of such determination, and the Borrower will
immediately pay to the Administrative Agent for the account of the affected
Lenders all additional Commitment Fee due by reason of such increased Applicable
Commitment Fee Rate. Any changes in the Applicable Commitment Fee Rate shall be
determined by the Administrative Agent and the Administrative Agent will
promptly provide notice of such determinations to the Borrower and the Lenders.
Any such determination by the Administrative Agent pursuant to this section
4.1(a) shall be conclusive and binding absent manifest error.
(b) The Borrower agrees to pay to the Administrative Agent, for the
account of each Non-Defaulting Lender, pro rata on the basis of its Percentage,
on or prior to the date of issuance of any Letter of Credit (an increase in the
amount of a Letter of Credit, or an extension of the expiration date thereof,
shall be considered an issuance to the extent of the increase or extension), a
fee in respect of such Letter of Credit (the "LETTER OF CREDIT FEE"), computed
at the rate per annum equal to the Applicable Eurocurrency Margin then in
effect, on the daily Stated Amount of such Letter of Credit, for the period from
and including the date of issuance to but excluding the date of expiration date
thereof (assuming exercise of any renewal rights applicable thereto).
(c) The Borrower agrees to pay directly to each Letter of Credit Issuer
a fee in respect of each Letter of Credit issued by it (a "FACING FEE"). A
Facing Fee shall be due and payable on or prior to the date of issuance of any
Letter of Credit (an increase in the amount of a Letter of Credit, or an
extension of the expiration date thereof, shall be considered an issuance to the
extent of the increase or extension), computed at the rate of 1/8 of 1% per
annum, on the daily Stated Amount of such Letter of Credit, for the period from
and including the date of issuance to but excluding the date of expiration date
thereof (assuming exercise of any renewal rights applicable thereto).
(d) The Borrower agrees to pay directly to each Letter of Credit Issuer
upon each issuance of, drawing under, and/or amendment, extension, renewal or
transfer of, a Letter of Credit issued by it such amount as shall at the time of
such issuance, drawing, amendment, extension, renewal or transfer be the
administrative or processing charge which such Letter of Credit Issuer is
customarily charging for issuances of, drawings under or amendments, extensions,
renewals or transfers of, letters of credit issued by it.
(e) The Borrower shall pay to the Administrative Agent on the Effective
Date and thereafter for its own account and/or for distribution to the Lenders
such fees as heretofore agreed by the Borrower and the Administrative Agent.
(f) All computations of Fees shall be made in accordance with section
13.7(b).
4.2. VOLUNTARY TERMINATION/REDUCTION OF COMMITMENTS. Upon at least
three Business Days' prior written notice (or telephonic notice confirmed in
writing) to the Administrative Agent at its Notice Office (which notice the
Administrative Agent shall promptly transmit to each of the Lenders), the
Borrower shall have the right, without premium or penalty, to
(a) terminate the Total Commitment, provided that: (i) any and
all outstanding Loans are contemporaneously prepaid in accordance with
section 5.1; and (ii) if there are any Letter of Credit Outstandings,
the Borrower contemporaneously completes the cash collateralization
actions contemplated by section 5.2(a); and/or
(b) partially and permanently reduce the Unutilized Total
Commitment, provided that (i) any such reduction shall apply to
proportionately and permanently reduce the Commitment of each of the
Lenders; (ii) any such reduction of the Unutilized Total Commitment
pursuant to this section 4.2 shall be in the amount of at least
$1,000,000 (or, if greater, in integral multiples of $1,000,000).
4.3. MANDATORY TERMINATION/ADJUSTMENTS OF COMMITMENTS, ETC. (a) The
Total Commitment (and the Commitment of each Lender) shall terminate on January
31, 1998, unless the Initial Borrowing Date has occurred on or prior to such
date.
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(b) The Total Commitment (and the Commitment of each Lender) shall
terminate on the earlier of (x) the Maturity Date and (y) the date on which a
Change of Control occurs.
(c) The Total Commitment shall be permanently reduced, without premium
or penalty, at the time that any mandatory prepayment of Loans would be made
pursuant to section 5.2(b) if Loans were then outstanding in the full amount of
the Total Commitment, in an amount at least equal to the required prepayment of
principal of Loans which would be required to be made in such circumstance. Any
such reduction shall apply to proportionately and permanently reduce the
Commitment of each of the Lenders, and any partial reduction of the Total
Commitment pursuant to this section 4.3(c) shall be in the amount of at least
$1,000,000 (or, if greater, in integral multiples of $1,000,000). The Borrower
will provide at least three Business Days' prior written notice (or telephonic
notice confirmed in writing) to the Administrative Agent at its Notice Office
(which notice the Administrative Agent shall promptly transmit to each of the
Lenders), of any reduction of the Total Commitment pursuant to this section
4.3(c), specifying the date and amount of the reduction.
4.4. EXTENSION OF MATURITY DATE. At any time after February 1, 1999 and
during the 30 day period following delivery by the Borrower pursuant to section
8.1(a) of its consolidated financial statements for its fiscal year then most
recently ended, and annually thereafter during the 30 day period following
delivery by the Borrower of its consolidated financial statements pursuant to
section 8.1(a), the Borrower may request the Administrative Agent to determine
if all of the Lenders are then willing to extend the Maturity Date for a single
additional year. If the Borrower so requests, the Administrative Agent will so
advise the Lenders. If all of the Lenders in their sole discretion are all
willing to so extend the Maturity Date, after taking into account such
considerations as any Lender may deem relevant, the Borrower, the Administrative
Agent and all of the Lenders (including each Letter of Credit Issuer) shall
execute and deliver a definitive written instrument so extending the Maturity
Date. No such extension of the Maturity Date shall be valid or effective for any
purpose unless such definitive written instrument is so signed and delivered
within 60 days following the giving by the Administrative Agent of notice to the
Lenders that the Borrower has requested such an extension.
SECTION 5. PAYMENTS.
5.1. VOLUNTARY PREPAYMENTS. The Borrower shall have the right to prepay
any of its Loans, in whole or in part, without premium or penalty, from time to
time on the following terms and conditions:
(i) the Borrower shall give the Administrative Agent at the
Notice Office written or telephonic notice (in the case of telephonic
notice, promptly confirmed in writing if so requested by the
Administrative Agent) of its intent to prepay the Loans, the amount of
such prepayment and (in the case of Eurocurrency Loans) the specific
Borrowing(s) pursuant to which made, which notice shall be received by
the Administrative Agent by
(x) 11:00 A.M. (local time at the Notice Office)
three Business Days prior to the date of such prepayment, in
the case of any prepayment of Eurocurrency Loans, or
(y) 12:00 noon (local time at the Notice Office) on
the date of such prepayment, in the case of any prepayment of
Prime Rate Loans,
and which notice shall promptly be transmitted by the Administrative
Agent to each of the Lenders;
(ii) each partial prepayment of any Borrowing by the Borrower
shall be in an aggregate principal amount which is $1,000,000 or an
integral multiple of $250,000 in excess thereof, in the case of Loans
which are Prime Rate Loans, and $1,000,000 or an integral multiple of
$1,000,000 in excess thereof, in the case of Loans which are
Eurocurrency Loans;
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(iii) no partial prepayment of Eurocurrency Loans of the
Borrower made pursuant to a Borrowing shall reduce the aggregate
principal amount of the Eurocurrency Loans outstanding pursuant to such
Borrowing to an amount less the Minimum Borrowing Amount applicable
thereto;
(iv) each prepayment in respect of any Loans of the Borrower
made pursuant to a Borrowing shall be applied pro rata among such
Loans; and
(v) each prepayment of Eurocurrency Loans pursuant to this
section 5.1 on any date other than the last day of the Interest Period
applicable thereto shall be accompanied by any amounts payable in
respect thereof under section 2.10.
5.2. MANDATORY PREPAYMENTS. The Loans shall be subject to mandatory
prepayment in accordance with the following provisions:
(a) IF OUTSTANDING LOANS AND LETTER OF CREDIT OUTSTANDINGS
EXCEED TOTAL COMMITMENT. If on any date (after giving effect to any
other payments on such date) the sum of (i) the aggregate outstanding
principal amount of Loans plus (ii) the aggregate amount of Letter of
Credit Outstandings, exceeds the Total Commitment as then in effect,
the Borrower shall prepay on such date that principal amount of Loans
and, after Loans have been paid in full, Unpaid Drawings, in an
aggregate amount, conforming to the requirements of section 5.1 as to
the amount of any partial prepayments provided for therein, at least
equal to such excess. If, after giving effect to the prepayment of
Loans and Unpaid Drawings, the aggregate amount of Letter of Credit
Outstandings exceeds the Total Commitment as then in effect, the
Borrower shall pay to the Administrative Agent an amount in cash and/or
Cash Equivalents equal to such excess and the Administrative Agent
shall hold such payment as security for the obligations of the Borrower
hereunder pursuant to a cash collateral agreement to be entered into in
form and substance reasonably satisfactory to the Administrative Agent
and the Borrower (which shall permit certain investments in Cash
Equivalents satisfactory to the Administrative Agent and the Borrower
until the proceeds are applied to the secured obligations).
(b) CERTAIN ASSET SALES. If during any fiscal year of the
Borrower, the Borrower and its Subsidiaries have received cumulative
Cash Proceeds during such fiscal year from one or more Asset Sales
of at least $1,000,000, not later than the third Business Day following
the date of receipt of any Cash Proceeds in excess of such amount, an
amount, conforming to the requirements of section 5.1 as to the amount
of any partial prepayments provided for therein, at least equal to 100%
of the Net Cash Proceeds then received in excess of such amount from
any Asset Sale shall be applied as a mandatory prepayment of the then
outstanding Loans; provided, that (i) if no Default under section
10.1(a) or Event of Default shall have occurred and be continuing, (ii)
the Borrower and its Subsidiaries have scheduled Consolidated Capital
Expenditures during the following six months, and the Borrower notifies
the Administrative Agent of the amount and nature thereof and of its
intention to reinvest all or a portion of such Net Cash Proceeds in
such Consolidated Capital Expenditures during such six month period,
then no such prepayment shall be required to the extent the Borrower so
indicates that such reinvestment will take place. If at the end of any
such six month period any portion of such Net Cash Proceeds has not
been so reinvested, the Borrower will immediately make a prepayment of
principal of the then outstanding Loans in an amount, conforming to the
requirements as to the amount of partial prepayments contained in
section 5.1, at least equal to such remaining amount.
(c) CHANGE OF CONTROL. On the date on which a Change of
Control occurs, notwithstanding anything to the contrary contained in
this Agreement, no further Borrowings shall be made and the then
outstanding principal amount of all Loans, if any, shall become due and
payable and shall be prepaid in full, and the Borrower shall
contemporaneously either (i) cause all outstanding Letters of Credit to
be surrendered for cancellation (any such Letters of Credit to be
replaced by letters of credit issued by other financial institutions),
or (ii) the Borrower shall pay to the Administrative Agent an amount in
cash and/or Cash Equivalents equal to 100% of the Letter of Credit
Outstandings and the Administrative Agent shall hold such payment as
security for the obligations of the Borrower hereunder pursuant to a
cash collateral agreement
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to be entered into in form and substance reasonably satisfactory to the
Administrative Agent and the Borrower (which shall permit certain
investments in Cash Equivalents satisfactory to the Administrative
Agent and the Borrower until the proceeds are applied to the secured
obligations).
(d) PARTICULAR LOANS TO BE PREPAID. With respect to each
prepayment of Loans required by this section 5.2, the Borrower shall
designate the Types of Loans which are to be prepaid and the specific
Borrowing(s) pursuant to which such prepayment is to be made, PROVIDED
that (i) the Borrower shall first so designate all Loans that are Prime
Rate Loans and Eurocurrency Loans with Interest Periods ending on the
date of prepayment prior to designating any other Eurocurrency Loans
for prepayment, (ii) if the outstanding principal amount of
Eurocurrency Loans made pursuant to a Borrowing is reduced below the
applicable Minimum Borrowing Amount as a result of any such prepayment,
then all the Loans outstanding pursuant to such Borrowing shall be
converted into Prime Rate Loans, and (iii) each prepayment of any Loans
made pursuant to a Borrowing shall be applied pro rata among such
Loans. In the absence of a designation by the Borrower as described in
the preceding sentence, the Administrative Agent shall, subject to the
above, make such designation in its sole discretion with a view, but no
obligation, to minimize breakage costs owing under section 2.10. Any
prepayment of Eurocurrency Loans pursuant to this section 5.2 shall in
all events be accompanied by such compensation as is required by
section 2.10.
5.3. METHOD AND PLACE OF PAYMENT. Except as otherwise specifically
provided herein, all payments by the Borrower under this Agreement shall be made
to the Administrative Agent for the ratable (based on its pro rata share)
account of the Lenders entitled thereto, not later than 11:00 A.M. (local time
at the Payment Office) on the date when due and shall be made in immediately
available funds and in lawful money of the United States of America (in the case
of Loans denominated in Dollars), or in the applicable Alternative Currency (in
the case of Loans denominated in an Alternative Currency), at the Payment
Office, it being understood that written notice by the Borrower to the
Administrative Agent to make a payment from the funds in the Borrower's account
at the Payment Office shall constitute the making of such payment to the extent
of such funds held in such account which are so applied. Any payments under this
Agreement which are made later than 11:00 A.M. (local time at the Payment
Office) shall be deemed to have been made on the next succeeding Business Day.
Whenever any payment to be made hereunder shall be stated to be due on a day
which is not a Business Day, the due date thereof shall be extended to the next
succeeding Business Day and, with respect to payments of principal, interest
shall be payable during such extension at the applicable rate in effect
immediately prior to such extension.
5.4. NET PAYMENTS. (a) All payments made by the Borrower hereunder,
under any Note or any other Credit Document, will be made without setoff,
counterclaim or other defense. Except as provided for in section 5.4(b), all
such payments will be made free and clear of, and without deduction or
withholding for, any present or future taxes, levies, imposts, duties, fees,
assessments or other charges of whatever nature now or hereafter imposed by any
jurisdiction or by any political subdivision or taxing authority thereof or
therein with respect to such payments (but excluding, except as provided in the
second succeeding sentence, any tax, imposed on or measured by the net income or
net profits of a Lender pursuant to the laws of the jurisdiction under which
such Lender is organized or the jurisdiction in which the principal office or
Applicable Lending Office of such Lender is located or any subdivision thereof
or therein) and all interest, penalties or similar liabilities with respect to
such non excluded taxes, levies imposts, duties, fees, assessments or other
charges (all such nonexcluded taxes levies, imposts, duties, fees assessments or
other charges being referred to collectively as "TAXES"). If any Taxes are so
levied or imposed, the Borrower agrees to pay the full amount of such Taxes and
such additional amounts as may be necessary so that every payment by it of all
amounts due hereunder, under any Note or under any other Credit Document, after
withholding or deduction for or on account of any Taxes will not be less than
the amount provided for herein or in such Note or in such other Credit Document.
If any amounts are payable in respect of Taxes pursuant to the preceding
sentence, the Borrower agrees to reimburse each Lender, upon the written request
of such Lender for taxes imposed on or measured by the net income or profits of
such Lender pursuant to the laws of the jurisdiction in which such Lender is
organized or in which the principal office or Applicable Lending Office of such
Lender is located or under the laws of any political subdivision or taxing
authority of any such jurisdiction in which the principal office or Applicable
Lending Office of such Lender is located and for any withholding of income or
similar taxes imposed by the United States of America as such Lender shall
determine are payable by, or withheld from, such Lender in respect of such
amounts so paid to or on behalf of such Lender pursuant to the preceding
sentence, which request shall be
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accompanied by a statement from such Lender setting forth, in reasonable detail,
the computations used in determining such amounts. The Borrower will furnish to
the Administrative Agent within 45 days after the date the payment of any Taxes,
or any withholding or deduction on account thereof, is due pursuant to
applicable law certified copies of tax receipts, or other evidence satisfactory
to the Lender, evidencing such payment by the Borrower. The Borrower will
indemnify and hold harmless the Administrative Agent and each Lender, and
reimburse the Administrative Agent or such Lender upon its written request, for
the amount of any Taxes so levied or imposed and paid or withheld by such
Lender.
(b) Each Lender that is not a United States person (as such term is
defined in section 7701(a)(30) of the Code) for Federal income tax purposes
agrees to provide to the Borrower and the Administrative Agent on or prior to
the Effective Date, or in the cases of a Lender that is an assignee or
transferee of an interest under this Agreement pursuant to section 13.4 (unless
the respective Lender was already a Lender hereunder immediately prior to such
assignment or transfer and such Lender is in compliance with the provisions of
this section 5.4(b)), on the date of such assignment or transfer to such Lender,
(i) two accurate and complete original signed copies of Internal Revenue Service
Form 4224 or 1001 (or successor forms) certifying to such Lender's entitlement
to a complete exemption from United States withholding tax with respect to
payments to be made under this Agreement, any Note or any other Credit Document,
or (ii) if the Lender is not a "bank" within the meaning of section 881(c)(3)(A)
of the Code and cannot deliver either Internal Revenue Service Form 1001 or 4224
pursuant to clause (i) above, (x) a certificate substantially in the form of
Exhibit K (any such certificate, a "SECTION 5.4(B)(II) CERTIFICATE") and (y) two
accurate and complete original signed copies of Internal Revenue Service Form
W-8 (or successor form) certifying to such Lender's entitlement to a complete
exemption from United States withholding tax with respect to payments of
interest to be made under this Agreement, any Note or any other Credit Document.
In addition, each Lender agrees that from time to time after the Effective Date,
when a lapse in time or change in circumstances renders the previous
certification obsolete or inaccurate in any material respect, it will deliver to
the Borrower and the Administrative Agent two new accurate and complete original
signed copies of Internal Revenue Service Form 4224 or 1001, or Form W-8 and a
Section 5.4(b)(ii) Certificate, as the case may be, and such other forms as may
be required in order to confirm or establish the entitlement of such Lender to a
continued exemption from or reduction in United States withholding tax with
respect to payments under this Agreement, any Note or any other Credit Document,
or it shall immediately notify the Borrower and the Administrative Agent of its
inability to deliver any such Form or Certificate, in which case such Lender
shall not be required to deliver any such Form or Certificate pursuant to this
section 5.4(b). Notwithstanding anything to the contrary contained in section
5.4(a), but subject to section 13.4(b) and the immediately succeeding sentence,
(x) the Borrower shall be entitled, to the extent it is required to do so by
law, to deduct or withhold income or other similar taxes imposed by the United
States (or any political subdivision or taxing authority thereof or therein)
from interest, fees or other amounts payable hereunder for the account of any
Lender which is not a United States person (as such term is defined in section
7701(a)(30) of the Code) for United States federal income tax purposes and which
has not provided to the Borrower such forms that establish a complete exemption
from such deduction or withholding and (y) the Borrower shall not be obligated
pursuant to section 5.4(a) hereof to gross-up payments to be made to a Lender in
respect of income or similar taxes imposed by the United States or any
additional amounts with respect thereto (I) if such Lender has not provided to
the Borrower the Internal Revenue Service forms required to be provided to the
Borrower pursuant to this section 5.4(b) or (II) in the case of a payment other
than interest, to a Lender described in clause (ii) above, to the extent that
such forms do not establish a complete exemption from withholding of such taxes.
Notwithstanding anything to the contrary contained in the preceding sentence or
elsewhere in this section 5.4 and except as specifically provided for in section
13.4(b), the Borrower agrees to pay additional amounts and indemnify each Lender
in the manner set forth in section 5.4(a) (without regard to the identity of the
jurisdiction requiring the deduction or withholding) in respect of any Taxes
deducted or withheld by it as described in the previous sentence as a result of
any changes after the Effective Date in any applicable law, treaty, governmental
rule, regulation, guideline or order, or in the interpretation thereof, relating
to the deducting or withholding of income or similar Taxes.
(c) If any Lender, in its sole opinion, determines that it has finally
and irrevocably received or been granted a refund in respect of any Taxes paid
as to which indemnification has been paid by the Borrower pursuant to this
section, it shall promptly remit such refund (including any interest received in
respect thereof), net of all out-of-pocket costs and expenses; PROVIDED, that
the Borrower agrees to promptly return any such refund (plus interest) to such
Lender in the event such Lender is required to repay such refund to the relevant
taxing authority. Any such
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Lender shall provide the Borrower with a copy of any notice of assessment from
the relevant taxing authority (redacting any unrelated confidential information
contained therein) requiring repayment of such refund. Nothing contained herein
shall impose an obligation on any Lender to apply for any such refund.
(d) Reference is hereby made to the provisions of section 2.9(d) for
certain limitations upon the rights of a Lender under this section.
SECTION 6. CONDITIONS PRECEDENT.
6.1. CONDITIONS PRECEDENT AT INITIAL BORROWING DATE. The obligation of
the Lenders to make Loans, and of any Letter of Credit Issuer to issue Letters
of Credit, is subject to the satisfaction of each of the following conditions on
the Initial Borrowing Date:
(a) EFFECTIVENESS; NOTES. On or prior to the Initial Borrowing
Date, (i) the Effective Date shall have occurred and (ii) there shall
have been delivered to the Administrative Agent for the account of each
Lender each appropriate Note executed by the Borrower, in each case, in
the amount, maturity and as otherwise provided herein.
(b) FEES, ETC. The Borrower shall have paid or caused to be
paid all fees required to be paid by it on or prior to such date
pursuant to section 4 hereof and all reasonable fees and expenses of
the Administrative Agent and of special counsel to the Administrative
Agent which have been invoiced on or prior to such date in connection
with the preparation, execution and delivery of this Agreement and the
other Credit Documents and the consummation of the transactions
contemplated hereby and thereby.
(c) OTHER CREDIT DOCUMENTS. The Credit Parties named therein
shall have duly executed and delivered and there shall be in full force
and effect, and original counterparts shall have been delivered to the
Administrative Agent, in sufficient quantities for the Administrative
Agent and the Lenders, of, (i) the Subsidiary Guaranty (as modified,
amended or supplemented from time to time in accordance with the terms
thereof and hereof, the "SUBSIDIARY GUARANTY"), substantially in the
form attached hereto as Exhibit C; (ii) the Security Agreement (as
modified, amended or supplemented from time to time in accordance with
the terms thereof and hereof, the "SECURITY AGREEMENT"), substantially
in the form attached hereto as Exhibit D; (iii) the Pledge Agreement
(as modified, amended or supplemented from time to time in accordance
with the terms thereof and hereof, the "PLEDGE AGREEMENT"),
substantially in the form attached hereto as Exhibit E-1; and (iv) the
pledge agreement, substantially in the form attached hereto as Exhibits
E-2, relating to the pledge of a portion of the shares of a United
Kingdom company which is a Subsidiary of the Borrower.
(d) CORPORATE RESOLUTIONS AND APPROVALS. The Administrative
Agent shall have received, in sufficient quantity for the
Administrative Agent and the Lenders, certified copies of the
resolutions of the Board of Directors of the Borrower and each other
Credit Party, approving the Credit Documents to which the Borrower or
any such other Credit Party, as the case may be, is or may become a
party, and of all documents evidencing other necessary corporate action
and governmental approvals, if any, with respect to the execution,
delivery and performance by the Borrower or any such other Credit Party
of the Credit Documents to which it is or may become a party.
(e) INCUMBENCY CERTIFICATES. The Administrative Agent shall
have received, in sufficient quantity for the Administrative Agent and
the Lenders, a certificate of the Secretary or an Assistant Secretary
of the Borrower and of each other Credit Party, certifying the names
and true signatures of the officers of the Borrower or such other
Credit Party, as the case may be, authorized to sign the Credit
Documents to which the Borrower or such other Credit Party is a party
and any other documents to which the Borrower or any such other Credit
Party is a party which may be executed and delivered in connection
herewith.
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(f) RECORDATION OF SECURITY DOCUMENTS, DELIVERY OF COLLATERAL,
TAXES, ETC. The Security Documents (or proper notices or financing
statements in respect thereof) shall have been duly recorded, published
and filed in such manner and in such places as is required by law to
establish, perfect, preserve and protect the rights and security
interests of the parties thereto and their respective successors and
assigns, all collateral items required to be physically delivered to
the Collateral Agent under the Security Documents shall have been so
delivered, accompanied by any appropriate instruments of transfer, and
all taxes, fees and other charges then due and payable in connection
with the execution, delivery, recording, publishing and filing of such
instruments and the issue and delivery of the Notes shall have been
paid in full.
(g) SEARCH REPORTS. The Administrative Agent shall have
received completed requests for information on Form UCC-11, or search
reports from one or more commercial search firms acceptable to the
Administrative Agent, listing all of the effective financing statements
filed against any Credit Party which is a party to the Security
Agreement in any jurisdiction in which such Credit Party maintains an
office or in which any Collateral of such Credit Party is located,
together with copies of such financing statements.
(h) COMPLIANCE CERTIFICATE. The Administrative Agent shall
have received, in sufficient quantity for the Administrative Agent and
the Lenders, a certificate, dated the Initial Borrowing Date, of a
responsible financial or accounting officer of the Borrower, in form
and substance satisfactory to each Lender, (i) certifying compliance
with the financial covenants contained in sections 9.7 and 9.8 of this
Agreement, and (ii) covenanting to provide to the Lenders by January
15, 1998 computations as to compliance with such financial covenants on
a pro forma basis after giving effect to the acquisition of Ruud
Lighting, Inc.
(i) EVIDENCE OF INSURANCE. The Collateral Agent shall have
received certificates of insurance and other evidence, satisfactory to
it, of compliance with the insurance requirements of this Agreement and
the Security Agreement.
(j) OPINIONS OF COUNSEL. On the Initial Borrowing Date, the
Administrative Agent shall have received (i) an opinion, addressed to
the Administrative Agent and each of the Lenders and dated the Initial
Borrowing Date, from Cowden, Humphrey & Sarlson, special counsel to the
Borrower, substantially in the form of Exhibit I hereto and covering
such other matters incident to the transactions contemplated hereby as
the Administrative Agent may reasonably request, such opinion to be in
form and substance satisfactory to the Administrative Agent; and (ii)
if requested by the Administrative Agent, an opinion, addressed to the
Administrative Agent and each of the Lenders and dated the Initial
Borrowing Date, from United Kingdom counsel to the Borrower, with
respect to the pledge document executed and delivered in substantially
the form attached as Exhibit E-2 hereto, such opinion to be in form and
substance satisfactory to the Administrative
Agent.
(k) EXISTING CREDIT AGREEMENT. Contemporaneously with the
initial Borrowing hereunder, the Borrower and the other borrowers named
therein shall have terminated the commitments of the lenders under the
existing financing arrangements with Bank of New York (or its
Affiliates), shall have prepaid all borrowings thereunder, shall have
made effective provision satisfactory to the Administrative Agent for
the termination, or assignment to the Collateral Agent, of the liens
and security thereunder, and if required in connection with such
termination, made effective provision for any letters of credit issued
thereunder to be supported or replaced by Letters of Credit issued
hereunder.
(l) TRANSACTION. Contemporaneously with the initial Borrowing
hereunder, the Borrower shall have completed the acquisition of Ruud
Lighting, Inc. in accordance with the acquisition documents (the "RUUD
ACQUISITION DOCUMENTS"), true, correct and complete copies of which
shall have been furnished to the Lenders prior to the Effective Date.
The purchase price (which may be subject to customary audit and other
similar adjustments) for such acquisition shall not exceed $35,500,000
in cash and 3,000,000 shares of the Borrower's common stock, and each
Lender shall be reasonably satisfied with all of the material terms of
such acquisition. Without limitation of the foregoing, (i) such
acquisition shall have been completed in compliance with all applicable
laws; (ii) there shall have been no amendment to or other modification
of the
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terms or conditions of the Ruud Acquisition Documents, or any waiver of
performance of any of the terms thereof, which in the opinion of the
Required Lenders is materially adverse; and (iii) the Borrower shall
have made arrangements for all Indebtedness for borrowed money, if any,
of the seller which is assumed, or to which the assets acquired are
subject, in such transaction, to be repaid or prepaid, and all Liens on
acquired assets securing such Indebtedness terminated, on or
immediately following completion of such transactions. In addition, the
Lenders shall be satisfied, in their sole discretion, with their "due
diligence" review of the business, properties, liabilities and
commitments of Ruud Lighting to which the Borrower will be subject
following completion of such acquisition.
(m) APPROVALS, ETC. On the Initial Borrowing Date, (i) all
material governmental and third party approvals in connection with the
transactions contemplated by the Ruud Acquisition Documents and the
Credit Documents and otherwise referred to herein shall have been
obtained and remain in effect, and all applicable waiting periods shall
have expired without any action being taken by any competent authority
(including any court having jurisdiction) which restrains or prevents
such transactions or imposes, in the judgment of the Required Lenders
or the Administrative Agent, materially adverse conditions upon the
consummation of such transactions; and (ii) there shall be no legal
restriction upon any Lender which prohibits, or imposes any material
burdens upon any Lender in connection with, the extensions of credit
contemplated by the Credit Documents.
(n) PROCEEDINGS AND DOCUMENTS. All corporate and other
proceedings and all documents incidental to the transactions
contemplated hereby shall be satisfactory in substance and form to the
Administrative Agent and the Lenders and the Administrative Agent and
its special counsel and the Lenders shall have received all such
counterpart originals or certified or other copies of such documents as
the Administrative Agent or its special counsel or any Lender may
reasonably request.
6.2. CONDITIONS PRECEDENT TO ALL CREDIT EVENTS. The obligations of the
Lenders to make each Loan and/or of a Letter of Credit Issuer to issue each
Letter of Credit is subject, at the time thereof, to the satisfaction of the
following conditions:
(a) NOTICE OF BORROWING, ETC. The Administrative Agent shall
have received a Notice of Borrowing meeting the requirements of section
2.3 with respect to the incurrence of Loans or a Letter of Credit
Request meeting the requirement of section 3.2 with respect to the
issuance of a Letter of Credit.
(b) NO DEFAULT; REPRESENTATIONS AND WARRANTIES. At the time
thereof and also after giving effect thereto, (i) there shall exist no
Default or Event of Default and (ii) all representations and warranties
of the Credit Parties contained herein or in the other Credit Documents
shall be true and correct in all material respects with the same effect
as though such representations and warranties had been made on and as
of the date of such Loan or issuance of such Letter of Credit, except
to the extent that such representations and warranties expressly relate
to an earlier date, in which case such representations and warranties
shall be true and correct on and as of such earlier date.
The acceptance of the benefits of each Loan or issuance of a Letter of Credit
shall constitute a representation and warranty by the Borrower to each of the
Lenders that all of the applicable conditions specified in section 6.1 and/or
6.2, as the case may be, exist as of that time. All of the certificates, legal
opinions and other documents and papers referred to in section 6.1 or this
section 6.2, unless otherwise specified, shall be delivered to the
Administrative Agent for the account of each of the Lenders and, except for the
Notes, in sufficient counterparts for each of the Lenders, and the
Administrative Agent will promptly distribute to the Lenders their respective
Notes and the copies of such other certificates, legal opinions and documents.
SECTION 7. REPRESENTATIONS AND WARRANTIES.
In order to induce the Lenders to enter into this Agreement and to make
the Loans, and/or to issue and/or to participate in the Letters of Credit
provided for herein, the Borrower makes the following representations and
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warranties to, and agreements with, the Lenders, all of which shall survive the
execution and delivery of this Agreement and each Credit Event:
7.1. CORPORATE STATUS, ETC. Each of the Borrower and its Material
Subsidiaries (i) is a duly organized or formed and validly existing corporation,
partnership or limited liability company, as the case may be, in good standing
under the laws of the jurisdiction of its formation and has the corporate,
partnership or limited liability company power and authority, as applicable, to
own its property and assets and to transact the business in which it is engaged
and presently proposes to engage, and (ii) except for the Subsidiary which has
been identified to the Lenders and as to which its qualification as a foreign
corporation and good standing in a particular jurisdiction is excepted from the
operation and effect of this clause (ii) during a period of 60 days following
the Effective Date, has duly qualified and is authorized to do business in all
jurisdictions where it is required to be so qualified except where the failure
to be so qualified would not have a Material Adverse Effect.
7.2. SUBSIDIARIES. Annex II hereto lists, as of the date hereof, each
Material Subsidiary of the Borrower and certain other Subsidiaries of the
Borrower (and the direct and indirect ownership interest of the Borrower
therein). As of the Initial Borrowing Date and after giving effect to the Ruud
Acquisition, the only Material Subsidiaries of the Borrower are the following:
DOMESTIC SUBSIDIARIES FOREIGN SUBSIDIARIES
- --------------------- --------------------
APL Engineered Materials, Inc. Ballastronix Incorporated
Venture Lighting International, Inc. Parry Power Systems Limited
Lighting Resources International, Inc.
Ruud Lighting, Inc.
7.3. CORPORATE POWER AND AUTHORITY, ETC. Each Credit Party has the
corporate power and authority to execute, deliver and carry out the terms and
provisions of the Credit Documents to which it is party and has taken all
necessary corporate or other organizational action to authorize the execution,
delivery and performance of the Credit Documents to which it is party. Each
Credit Party has duly executed and delivered each Credit Document to which it is
party and each Credit Document to which it is party constitutes the legal, valid
and binding agreement or obligation of such Credit Party enforceable in
accordance with its terms, except to the extent that the enforceability thereof
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or other similar laws generally affecting creditors' rights and by equitable
principles (regardless of whether enforcement is sought in equity or at law).
7.4. NO VIOLATION. Neither the execution, delivery and performance by
any Credit Party of the Credit Documents to which it is party nor compliance
with the terms and provisions thereof (i) will contravene any provision of any
law, statute, rule, regulation, order, writ, injunction or decree of any court
or governmental instrumentality applicable to such Credit Party or its
properties and assets, (ii) will conflict with or result in any breach of, any
of the terms, covenants, conditions or provisions of, or constitute a default
under, or result in the creation or imposition of (or the obligation to create
or impose) any Lien (other than the Liens created pursuant to the Security
Documents) upon any of the property or assets of such Credit Party pursuant to
the terms of any promissory note, bond, debenture, indenture, mortgage, deed of
trust, credit or loan agreement, or any other material agreement or other
instrument, to which such Credit Party is a party or by which it or any of its
property or assets are bound or to which it may be subject, or (iii) will
violate any provision of the certificate or articles of incorporation, code of
regulations or by-laws, or other charter documents of such Credit Party.
7.5. GOVERNMENTAL APPROVALS. No order, consent, approval, license,
authorization, or validation of, or filing, recording or registration with, or
exemption by, any foreign or domestic governmental or public body or authority,
or any subdivision thereof, is required to authorize or is required as a
condition to (i) the execution, delivery and performance by any Credit Party of
any Credit Document to which it is a party, or (ii) the legality, validity,
binding effect or enforceability of any Credit Document to which any Credit
Party is a party, other than filings and recordings necessary to establish or
perfect any Liens or security interests purported to be granted by any of the
Security Documents.
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7.6. LITIGATION. There are no actions, suits or proceedings pending or,
to, the knowledge of the Borrower, threatened with respect to the Borrower or
any of its Material Subsidiaries (i) that have, or could reasonably be expected
to have, a Material Adverse Effect, or (ii) which question the validity or
enforceability of any of the Credit Documents, or of any action to be taken by
any Credit Party pursuant to any of the Credit Documents to which it is a party.
7.7. USE OF PROCEEDS; MARGIN REGULATIONS. (a) The proceeds of all Loans
shall be utilized (i) to retire the Indebtedness referred to in section 6.1(k)
and (l), (ii) to pay the cash purchase payable in connection with the
Acquisition referred to in section 6.1(l), and (iii) for other lawful purposes
not inconsistent with the requirements of this Agreement.
(b) No part of the proceeds of any Credit Event will be used directly
or indirectly to purchase or carry Margin Stock, or to extend credit to others
for the purpose of purchasing or carrying any Margin Stock. Neither any Credit
Event, nor the use of the proceeds thereof, will violate or be inconsistent with
the provisions of Regulation G, T, U or X of the Board of Governors of the
Federal Reserve System. The Borrower is not engaged in the business of extending
credit for the purpose of purchasing or carrying any Margin Stock. At no time
would more than 25% of the value of the assets of the Borrower or of the
Borrower and its consolidated Subsidiaries that are subject to any "arrangement"
(as such term is used in section 221.2(g) of such Regulation U) hereunder be
represented by Margin Stock.
7.8. FINANCIAL STATEMENTS, ETC. (a) The Borrower has furnished to the
Lenders and the Administrative Agent complete and correct copies of (i) the
audited consolidated balance sheets of the Borrower and its consolidated
subsidiaries as of June 30, 1997 and as of June 30, 1996, and the related
audited consolidated statements of income, shareholders' equity, and cash flows
for the fiscal years then ended, accompanied by the unqualified report thereon
of the Borrower's independent accountants; and (ii) the unaudited condensed
consolidated balance sheets of the Borrower and its consolidated subsidiaries as
of September 30, 1997, and the related unaudited condensed consolidated
statements of income and of cash flows of the Borrower and its consolidated
subsidiaries for the fiscal quarter then ended, as contained in the Form 10-Q
Quarterly Report of the Borrower filed with the SEC. All such financial
statements have been prepared in accordance with GAAP, consistently applied
(except as stated therein), and fairly present the financial position of the
Borrower and its consolidated subsidiaries as of the respective dates indicated
and the consolidated results of their operations and cash flows for the
respective periods indicated, subject in the case of any such financial
statements which are unaudited, to normal audit adjustments, none of which will
involve a Material Adverse Effect.
(b) The Borrower has received consideration which is the reasonable
equivalent value of the obligations and liabilities that the Borrower has
incurred to the Administrative Agent and the Lenders. The Borrower now has
capital sufficient to carry on its business and transactions and all business
and transactions in which it is about to engage and is now solvent and able to
pay its debts as they mature and the Borrower, as of the Initial Borrowing Date,
owns property having a value, both at fair valuation and at present fair salable
value, greater than the amount required to pay the Borrower's debts; and the
Borrower is not entering into the Credit Documents with the intent to hinder,
delay or defraud its creditors. Without limitation of the foregoing, on and as
of the Initial Borrowing Date, and after giving effect to the acquisition
contemplated by the Ruud Acquisition Documents referred to in section 6.1(l) and
to all Indebtedness incurred and to be incurred by the Borrower and its
Subsidiaries in connection therewith, (i) the sum of the assets, at a fair
valuation, of the Borrower will exceed its debts, (ii) the Borrower will not
have incurred or intended to, or believe that it will, incur debts beyond its
ability to pay such debts as such debts mature and (iii) the Borrower will have
sufficient capital with which to conduct its business. For purposes of this
section 7.8(b), "debt" means any liability on a claim, and "claim" means (x)
right to payment whether or not such a right is reduced to judgment, liquidated,
unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed,
legal, equitable, secured or unsecured; or (y) right to an equitable remedy for
breach of performance if such breach gives rise to a payment, whether or not
such right to an equitable remedy is reduced to judgment, fixed, contingent,
matured, unmatured, disputed, undisputed, secured or unsecured.
(c) The Borrower has delivered to the Lenders prior to the execution
and delivery of this Agreement (i) a copy of the Borrower's Report on Form 10-K
as filed (without Exhibits) with the SEC for its fiscal year ended
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June 30, 1997, which contains a general description of the business and affairs
of the Borrower and its Subsidiaries as of the end of such fiscal year, and (ii)
financial projections prepared by management of the Borrower for the Borrower
and its Subsidiaries for the fiscal years 1998-2000 which take into account the
acquisition contemplated by the Ruud Acquisition Documents (the "Financial
Projections"). The Financial Projections were prepared on behalf of the Borrower
in good faith after taking into account the existing and historical levels of
business activity of the Borrower and its Subsidiaries, historical financial
information with respect to the properties and business acquired pursuant to the
Ruud Acquisition Documents, as supplied by the seller, known trends, including
general economic trends, and all other information, assumptions and estimates
considered by management of the Borrower and its Subsidiaries to be pertinent
thereto, taking into account the fact that such management is not intimately
familiar with the properties and business acquired pursuant to the Ruud
Acquisition Documents. The Financial Projections were considered by management
of the Borrower, as of such date of preparation, to be realistically achievable;
provided, that no representation or warranty is made as to the impact of future
general economic conditions or as to whether the Borrower's projected
consolidated results as set forth in the Financial Projections will actually be
realized. No facts are known to the Borrower at the date hereof which, if
reflected in the Financial Projections, would result in a material adverse
change in the assets, liabilities, results of operations or cash flows reflected
therein.
7.9. NO MATERIAL ADVERSE CHANGE. Since June 30, 1997, there has been no
change in the condition, business or affairs of the Borrower and its
Subsidiaries taken as a whole, or their properties and assets considered as an
entirety, except for changes none of which, individually or in the aggregate,
has had or could reasonably be expected to have, a Material Adverse Effect.
7.10. TAX RETURNS AND PAYMENTS. The Borrower and each of its Material
Subsidiaries has filed all federal income tax returns and all other material tax
returns, domestic and foreign, required to be filed by it and has paid all
material taxes and assessments payable by it which have become due, other than
those not yet delinquent and except for those contested in good faith. The
Borrower and each of its Material Subsidiaries has established on its books such
charges, accruals and reserves in respect of taxes, assessments, fees and other
governmental charges for all fiscal periods as are required by GAAP. The
Borrower knows of no proposed assessment for additional federal, foreign or
state taxes for any period, or of any basis therefor, which, individually or in
the aggregate, taking into account such charges, accruals and reserves in
respect thereof as the Borrower and its Subsidiaries have made, could reasonably
be expected to have a Material Adverse Effect.
7.11. TITLE TO PROPERTIES, ETC. At the date of the most recent
consolidated balance sheet referred to in section 7.8, the Borrower and each of
its Subsidiaries had good and marketable title, in the case of real property,
and good title (or valid leasehold interests, in the case of any leased
property), in the case of all other property, to all of its properties and
assets reflected in such consolidated balance sheet. The interests of the
Borrower and each of its Subsidiaries in the properties reflected in the most
recent consolidated balance sheet referred to in section 7.8, taken as a whole,
were sufficient, in the judgment of the Borrower, as of the date of such
consolidated balance sheet, for purposes of the ownership and operation of the
businesses conducted by the Borrower and such Subsidiaries.
7.12. LAWFUL OPERATIONS, ETC. Except for known situations or incidents
which are reserved for on the consolidated financial statements of the Borrower
and its Subsidiaries pursuant to this Agreement or which, if not so reserved,
could not reasonably be expected to have a Material Adverse Effect, the Borrower
and each of its Material Subsidiaries is in full compliance with all material
requirements imposed by law, whether federal or state, including (without
limitation) Environmental Laws and zoning ordinances.
7.13. ENVIRONMENTAL MATTERS. (a) The Borrower and each of its Material
Subsidiaries is in compliance with all Environmental Laws governing its business
except to the extent that any such failure to comply (together with any
resulting penalties, fines or forfeitures) would not reasonably be expected to
have a Material Adverse Effect. All licenses, permits, registrations or
approvals required for the business of the Borrower and each of its Material
Subsidiaries, as conducted as of the Initial Borrowing Date, under any
Environmental Law have been secured and the Borrower and each of its Material
Subsidiaries is in substantial compliance therewith, except for such licenses,
permits, registrations or approvals the failure to secure or to comply therewith
is not reasonably likely to have a Material Adverse Effect. Neither the Borrower
nor any of its Material Subsidiaries has received written notice, or
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otherwise knows, that it is in any respect in noncompliance with, breach of or
default under any applicable writ, order, judgment, injunction, or decree to
which the Borrower or such Material Subsidiary is a party or which would affect
the ability of the Borrower or such Material Subsidiary to operate any real
property and no event has occurred and is continuing which, with the passage of
time or the giving of notice or both, would constitute noncompliance, breach of
or default thereunder, except in each such case, such noncompliance, breaches or
defaults as would not reasonably be expected to, in the aggregate, have a
Material Adverse Effect. There are as of the Initial Borrowing Date no
Environmental Claims pending or, to the best knowledge of the Borrower,
threatened wherein an unfavorable decision, ruling or finding would reasonably
be expected to have a Material Adverse Effect. There are no facts,
circumstances, conditions or occurrences on any Real Property now or at any time
owned, leased or operated by the Borrower or any of its Material Subsidiaries,
which are known by the Borrower or as to which the Borrower or any such Material
Subsidiary has received written notice, that could reasonably be expected (i) to
form the basis of an Environmental Claim against the Borrower or any of its
Material Subsidiaries or any Real Property of the Borrower or any of its
Material Subsidiaries, or (ii) to cause such Real Property to be subject to any
restrictions on the ownership, occupancy, use or transferability of such Real
Property under any Environmental Law, except in each such case, such
Environmental Claims or restrictions that individually or in the aggregate would
not reasonably be expected to have a Material Adverse Effect.
(b) Hazardous Materials have not at any time been (i) generated, used,
treated or stored on, or transported to or from, any Real Property of the
Borrower or any of its Material Subsidiaries or (ii) released on any such Real
Property, in each case where such occurrence or event is not in compliance with
Environmental Laws and is reasonably likely to have a Material Adverse Effect.
7.14. COMPLIANCE WITH ERISA. Compliance by the Borrower with the
provisions hereof and Credit Events contemplated hereby will not involve any
prohibited transaction within the meaning of ERISA or section 4975 of the Code.
The Borrower and each of its Subsidiaries, (i) has fulfilled all obligations
under minimum funding standards of ERISA and the Code with respect to each Plan
that is not a Multiemployer Plan or a Multiple Employer Plan, (ii) has satisfied
all respective contribution obligations in respect of each Multiemployer Plan
and each Multiple Employer Plan, (iii) is in compliance in all material respects
with all other applicable provisions of ERISA and the Code with respect to each
Plan, each Multiemployer Plan and each Multiple Employer Plan, and (iv) has not
incurred any liability under the Title IV of ERISA to the PBGC with respect to
any Plan, any Multiemployer Plan, any Multiple Employer Plan, or any trust
established thereunder. No Plan or trust created thereunder has been terminated,
and there have been no Reportable Events, with respect to any Plan or trust
created thereunder or with respect to any Multiemployer Plan or Multiple
Employer Plan, which termination or Reportable Event will or could result in the
termination of such Plan, Multiemployer Plan or Multi Employer Plan and give
rise to a material liability of the Borrower or any ERISA Affiliate in respect
thereof. Neither the Borrower nor any ERISA Affiliate is at the date hereof, or
has been at any time within the two years preceding the date hereof, an employer
required to contribute to any Multiemployer Plan or Multiple Employer Plan, or a
"contributing sponsor" (as such term is defined in section 4001 of ERISA) in any
Multiemployer Plan or Multiple Employer Plan. Neither the Borrower nor any ERISA
Affiliate has any contingent liability with respect to any post-retirement
"welfare benefit plan" (as such term is defined in ERISA) except as has been
disclosed to the Lenders in writing.
7.15. INTELLECTUAL PROPERTY, ETC. The Borrower and each of its Material
Subsidiaries has obtained or has the right to use all material patents,
trademarks, servicemarks, trade names, copyrights, licenses and other rights
with respect to the foregoing necessary for the present and planned future
conduct of its business, without any known conflict with the rights of others,
except for such patents, trademarks, servicemarks, trade names, copyrights,
licenses and rights, the loss of which, and such conflicts, which in any such
case individually or in the aggregate would not reasonably be expected to have a
Material Adverse Effect.
7.16. INVESTMENT COMPANY ACT, ETC. Neither the Borrower nor any of its
Material Subsidiaries is subject to regulation with respect to the creation or
incurrence of Indebtedness under the Investment Company Act of 1940, as amended,
the Interstate Commerce Act, as amended, the Federal Power Act, as amended, the
Public Utility Holding Company Act of 1935, as amended, or any applicable state
public utility law.
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7.17. BURDENSOME CONTRACTS; LABOR RELATIONS. The Borrower and its
Material Subsidiaries (i) are not subject to any burdensome contract, agreement,
corporate restriction, judgment, decree or order, (ii) are not parties to any
labor dispute, (iii) are not subject to any material strikes, slow downs,
workouts or other concerted interruptions of operations by employees of the
Borrower or any Material Subsidiary, whether or not relating to any labor
contracts, (iv) are not subject to any significant pending or, to the knowledge
of the Borrower, threatened, unfair labor practice complaint, before the
National Labor Relations Board, and (v) are not subject to any significant
pending or, to the knowledge of the Borrower, threatened, grievance or
significant arbitration proceeding arising out of or under any collective
bargaining agreement, (vi) are not subject to any significant pending or, to the
knowledge of the Borrower, threatened, significant strike, labor dispute,
slowdown or stoppage, and (vii) to the knowledge of the Borrower, no union
representation question exists with respect to the employees of the Borrower or
any of its Material Subsidiaries, except (with respect to any matter specified
in any of the above clauses), for such matters as, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect.
7.18. EXISTING INDEBTEDNESS. Annex III sets forth a true and complete
list, as of the date or dates set forth therein, of all Indebtedness of the
Borrower and each of its Subsidiaries, on a consolidated basis, which (i) has an
outstanding principal amount of at least $250,000 or (ii) is secured by any Lien
on any property of the Borrower or any Subsidiary, and which will be outstanding
on the Initial Borrowing Date after giving effect to the initial Borrowing
hereunder, other than the Indebtedness created under the Credit Documents (all
such Indebtedness, whether or not in a principal amount meeting such threshold
and required to be so listed in Annex III, the "EXISTING INDEBTEDNESS"). The
Borrower has provided to the Administrative Agent prior to the date of execution
hereof true and complete copies of all agreements and instruments governing the
Indebtedness listed on Annex III (the "EXISTING INDEBTEDNESS AGREEMENTS").
7.19. SECURITY INTERESTS. Once executed and delivered, and until
terminated in accordance with the terms thereof, each of the Security Documents
creates, as security for the obligations purported to be secured thereby, a
valid and enforceable perfected security interest in and Lien on all of the
Collateral subject thereto from time to time, in favor of the Collateral Agent
for the benefit of the Secured Creditors referred to in the Security Documents,
superior to and prior to the rights of all third persons and subject to no other
Liens (except that the Collateral under the Security Agreement may be subject to
Permitted Liens). No filings or recordings are required in order to perfect the
security interests created under any Security Document except for filings or
recordings required in connection with any such Security Document which shall
have been made, or for which satisfactory arrangements have been made, upon or
prior to the execution and delivery thereof. All recording, stamp, intangible or
other similar taxes required to be paid by any person under applicable legal
requirements or other laws applicable to the property encumbered by the Security
Documents in connection with the execution, delivery, recordation, filing,
registration, perfection or enforcement thereof have been paid.
7.20. TRUE AND COMPLETE DISCLOSURE. All factual information (taken as a
whole) heretofore or contemporaneously furnished by or on behalf of the Borrower
or any of its Subsidiaries in writing to the Administrative Agent or any Lender
for purposes of or in connection with this Agreement or any transaction
contemplated herein, other than the Financial Projections (as to which
representations are made only as provided in section 7.8), is, and all other
such factual information (taken as a whole) hereafter furnished by or on behalf
of such person in writing to any Lender will be, true and accurate in all
material respects on the date as of which such information is dated or certified
and not incomplete by omitting to state any material fact necessary to make such
information (taken as a whole) not misleading at such time in light of the
circumstances under which such information was provided, except that any such
future information consisting of financial projections prepared by management of
the Borrower is only represented herein as being based on good faith estimates
and assumptions believed by such persons to be reasonable at the time made, it
being recognized by the Lenders that such projections as to future events are
not to be viewed as facts and that actual results during the period or periods
covered by any such projections may differ materially from the projected
results. As of the Effective Date, there is no fact known to the Borrower or any
of its Subsidiaries which has, or could reasonably be expected to have, a
Material Adverse Effect which has not theretofore been disclosed to the Lenders.
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SECTION 8. AFFIRMATIVE COVENANTS.
The Borrower hereby covenants and agrees that so long as this Agreement
is in effect and until such time as the Total Commitment has been terminated, no
Notes are outstanding and the Loans, together with interest, Fees and all other
Obligations hereunder, have been paid in full:
8.1. REPORTING REQUIREMENTS. The Borrower will furnish to each Lender
and the Administrative Agent:
(a) ANNUAL FINANCIAL STATEMENTS. As soon as available and in
any event within 90 days after the close of each fiscal year of the
Borrower, the consolidated and consolidating balance sheets of the
Borrower and its consolidated Subsidiaries as at the end of such fiscal
year and the related consolidated and consolidating statements of
income, of stockholder's equity and of cash flows for such fiscal year,
in each case setting forth comparative figures for the preceding fiscal
year, all in reasonable detail and accompanied by
(i) the opinion with respect to such consolidated
financial statements of independent public accountants of
recognized national standing selected by the Borrower, which
opinion shall be unqualified and shall (A) state that such
accountants audited such consolidated financial statements in
accordance with generally accepted auditing standards, that
such accountants believe that such audit provides a reasonable
basis for their opinion, and that in their opinion such
consolidated financial statements present fairly, in all
material respects, the consolidated financial position of the
Borrower and its consolidated subsidiaries as at the end of
such fiscal year and the consolidated results of their
operations and cash flows for such fiscal year in conformity
with generally accepted accounting principles, or (B) contain
such statements as are customarily included in unqualified
reports of independent accountants in conformity with the
recommendations and requirements of the American Institute of
Certified Public Accountants (or any successor organization);
and
(ii) a certificate of or letter from such independent
accountants containing certified computations with respect to
compliance with the provisions of sections 9.7, 9.8, 9.9, 9.10
and 9.11 of this Agreement and stating whether or not their
examination of such financial statements has disclosed the
existence, during the fiscal year covered by such financial
statements, of any condition or event which constitutes a
Default or Event of Default, and if their examination has
disclosed any such condition or event, specifying the nature
and period of existence thereof (which certificate or letter
may contain such statements as are customarily included in
similar certifications of independent accountants in
conformity with the recommendations and requirements of the
American Institute of Certified Public Accountants (or any
successor organization)).
(b) QUARTERLY FINANCIAL STATEMENTS. As soon as available and
in any event within 45 days after the close of each of the first three
quarterly accounting periods in each fiscal year of the Borrower, the
unaudited condensed consolidated and consolidating balance sheets of
the Borrower and its consolidated Subsidiaries as at the end of such
quarterly period and the related unaudited condensed consolidated and
consolidating statements of income and of cash flows for such quarterly
period, and setting forth, in the case of such unaudited consolidated
statements of income and of cash flows, comparative figures for the
related periods in the prior fiscal year, and which consolidated
financial statements shall be certified on behalf of the Borrower by
the Chief Financial Officer or other Authorized Officer of the
Borrower, subject to changes resulting from normal year-end audit
adjustments.
(c) OFFICER'S COMPLIANCE CERTIFICATES. At the time of the
delivery of the financial statements provided for in sections 8.1(a)
and (b), a certificate on behalf of the Borrower of the Chief Financial
Officer or other Authorized Officer of the Borrower to the effect that,
to the best knowledge of the Borrower, no Default or Event of Default
exists or, if any Default or Event of Default does exist, specifying
the nature and extent thereof, which certificate shall be substantially
in the form attached hereto as Exhibit H and shall
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set forth the calculations required to establish compliance with the
provisions of sections 9.7, 9.8, 9.9, 9.10 and 9.11 of this Agreement
and the other provisions of this Agreement referred to in the form of
such certificate.
(d) MONTHLY FINANCIAL STATEMENTS. As soon as available and in
any event within 45 days after the close of each month during each
fiscal year of the Borrower, the unaudited consolidated and
consolidating balance sheets of the Borrower and its consolidated
Subsidiaries as at the end of such month and the related unaudited
consolidated and consolidating statements of income and of cash flows
for such month, and setting forth comparative figures for prior
periods, in the form customarily prepared by the Borrower for internal
review by senior management.
(e) BUDGET. Not later than 90 days after the commencement of
any fiscal year of the Borrower and its Subsidiaries, a consolidated
budget in reasonable detail for each of the four fiscal quarters of
such fiscal year, and (if and to the extent prepared by management of
the Borrower) for any subsequent fiscal years, as customarily prepared
by management for its internal use, setting forth, with appropriate
discussion, the forecasted balance sheet, income statement, operating
cash flows and capital expenditures of the Borrower and its
Subsidiaries for the period covered thereby, and the principal
assumptions upon which forecasts and budget are based.
(f) SEC REPORTS AND REGISTRATION STATEMENTS. Promptly upon
transmission thereof or other filing with the SEC, copies of all
registration statements (other than the exhibits thereto and any
registration statement on Form S-8 or its equivalent) and annual,
quarterly or current reports that the Borrower or any of its
Subsidiaries files with the SEC.
(g) AUDITORS' INTERNAL CONTROL COMMENT LETTERS, ETC. Promptly
upon receipt thereof, a copy of each letter or memorandum commenting on
internal accounting controls, which is submitted to the Borrower by its
independent accountants in connection with any annual or interim audit
made by them of the books of the Borrower or any of its Subsidiaries.
(h) NOTICE OF DEFAULT, LITIGATION OR CERTAIN MATTERS INVOLVING
MAJOR CUSTOMERS OR SUPPLIERS. Promptly, and in any event within three
Business Days, in the case of clause (i) below, or five Business Days,
in the case of clause (ii) or (iii) below, after the Borrower or any of
its Material Subsidiaries obtains knowledge thereof, notice of
(i) the occurrence of any event which constitutes a
Default or Event of Default, which notice shall specify the
nature thereof, the period of existence thereof and what
action the Borrower proposes to take with respect thereto,
(ii) any litigation or governmental or regulatory
proceeding pending against the Borrower or any of its Material
Subsidiaries which is likely to have a Material Adverse Effect
or a material adverse effect on the ability of the Borrower to
perform its obligations hereunder or under any other Credit
Document, and
(iii) any significant adverse change (in the
Borrower's reasonable judgment) in the Borrower's or any
Subsidiary's relationship with, or any significant event or
circumstance which is in the Borrower's reasonable judgment
likely to adversely affect the Borrower's or any Subsidiary's
relationship with, (A) any customer (or related group of
customers) representing more than 10% of the Borrower's
consolidated revenues during its most recent fiscal year, or
(B) any supplier which is significant to the Borrower and its
Subsidiaries considered as an entirety.
(i) ERISA. Promptly, and in any event within 10 days after the
Borrower, any Subsidiary of the Borrower or any ERISA Affiliate knows
of the occurrence of any of the following, the Borrower will deliver to
each of the Lenders a certificate on behalf of the Borrower of an
Authorized Officer of the Borrower setting forth the full details as to
such occurrence and the action, if any, that the Borrower, such
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Subsidiary or such ERISA Affiliate is required or proposes to take,
together with any notices required or proposed to be given to or filed
with or by the Borrower, the Subsidiary, the ERISA Affiliate, the PBGC,
a Plan participant or the Plan administrator with respect thereto:
(i) that a Reportable Event has occurred with respect
to any Plan;
(ii) the institution of any steps by the Borrower,
any ERISA Affiliate, the PBGC or any other person to terminate
any Plan;
(iii) the institution of any steps by the Borrower or
any ERISA Affiliate to withdraw from any Plan;
(iv) the institution of any steps by the Borrower or
any Subsidiary to withdraw from any Multiemployer Plan or
Multiple Employer Plan, if such withdrawal could result in
withdrawal liability (as described in Part 1 of Subtitle E of
Title IV of ERISA) in excess of $1,000,000;
(v) a non-exempt "prohibited transaction" within the
meaning of section 406 of ERISA in connection with any Plan;
(vi) that a Plan has an Unfunded Current Liability
exceeding $1,000,000;
(vii) any material increase in the contingent
liability of the Borrower or any Subsidiary with respect to
any post-retirement welfare liability; or
(viii) the taking of any action by, or the
threatening of the taking of any action by, the Internal
Revenue Service, the Department of Labor or the PBGC with
respect to any of the foregoing.
(j) ENVIRONMENTAL MATTERS. Promptly upon, and in any event
within 10 Business Days after, an officer of the Borrower obtains
actual knowledge thereof, notice of any of the following environmental
matters which involves any reasonable likelihood (in the Borrower's
reasonable judgment) of resulting in a Material Adverse Effect:
(i) any pending or threatened (in writing)
Environmental Claim against the Borrower or any of its
Material Subsidiaries or any Real Property owned or operated
by the Borrower or any of its Material Subsidiaries;
(ii) any condition or occurrence on or arising from
any Real Property owned or operated by the Borrower or any of
its Material Subsidiaries that results in noncompliance by the
Borrower or any of its Material Subsidiaries with any
applicable Environmental Law;
(iii) any condition or occurrence on any Real
Property owned, leased or operated by the Borrower or any of
its Material Subsidiaries that could reasonably be expected to
cause such Real Property to be subject to any restrictions on
the ownership, occupancy, use or transferability by the
Borrower or any of its Material Subsidiaries of such Real
Property under any Environmental Law; and
(iv) the taking of any removal or remedial action in
response to the actual or alleged presence of any Hazardous
Material on any Real Property owned, leased or operated by the
Borrower or any of its Material Subsidiaries as required by
any Environmental Law or any governmental or other
administrative agency.
All such notices shall describe in reasonable detail the nature of the
Environmental Claim and the Borrower's or such Material Subsidiary's
response thereto.
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(k) OTHER INFORMATION. With reasonable promptness, such other
information or documents (financial or otherwise) relating to the
Borrower or any of its Subsidiaries as any Lender may reasonably
request from time to time.
8.2. BOOKS, RECORDS AND INSPECTIONS. The Borrower will, and will cause
each of its Subsidiaries to, (i) keep proper books of record and account, in
which full and correct entries shall be made of all financial transactions and
the assets and business of the Borrower or such Subsidiaries, as the case may
be, in accordance with GAAP, in the case of the Borrower, or which are
reconcilable to a GAAP presentation, in the case of any Subsidiary; and (ii)
permit, upon at least five Business Days' notice to the Chief Financial Officer
or any other Authorized Officer of the Borrower, officers and designated
representatives of the Administrative Agent or any of the Lenders to visit and
inspect any of the properties or assets of the Borrower and any of its Material
Subsidiaries in whomsoever's possession (but only to the extent the Borrower or
such Material Subsidiary has the right to do so to the extent in the possession
of another person), and to examine the books of account of the Borrower and any
of its Material Subsidiaries and discuss the affairs, finances and accounts of
the Borrower and of any of its Subsidiaries with, and be advised as to the same
by, the Borrower's officers and independent accountants and independent
actuaries, if any, all at such reasonable times and intervals and to such
reasonable extent as the Administrative Agent or any of the Lenders may request.
8.3. INSURANCE. (a) The Borrower will, and will cause each of its
Subsidiaries to, (i) maintain insurance coverage by such insurers and in such
forms and amounts and against such risks as are generally consistent with the
insurance coverage maintained by the Borrower and its Subsidiaries at the date
hereof, and (ii) forthwith upon any Lender's written request, furnish to such
Lender such information about such insurance as such Lender may from time to
time reasonably request, which information shall be prepared in form and detail
satisfactory to such Lender and certified by an Authorized Officer of the
Borrower.
(b) The Borrower will, and will cause each of its Subsidiaries which is
a Credit Party to, at all times keep their respective property which is subject
to the Lien of any Security Document insured in favor of the Collateral Agent,
and all policies or certificates (or certified copies thereof) with respect to
such insurance (and any other insurance maintained by the Borrower or any such
Subsidiary) (i) shall be endorsed to the Collateral Agent's satisfaction for the
benefit of the Collateral Agent (including, without limitation, by naming the
Collateral Agent as loss payee (with respect to Collateral) or, to the extent
permitted by applicable law, as an additional insured), (ii) shall state that
such insurance policies shall not be cancelled without 30 days' prior written
notice thereof (or 10 days' prior written notice in the case of cancellation for
the non-payment of premiums) by the respective insurer to the Collateral Agent,
(iii) shall provide that the respective insurers irrevocably waive any and all
rights of subrogation with respect to the Collateral Agent and the Lenders, and
(iv) shall in the case of any such certificates or endorsements in favor of the
Collateral Agent, be delivered to or deposited with the Collateral Agent. In no
event shall the Borrower be required to deposit the actual insurance policies
with the Collateral Agent. The Administrative Agent shall deliver copies of any
certificates of insurance to a Lender upon such Lender's request.
(c) If the Borrower or any of its Subsidiaries shall fail to maintain
all insurance in accordance with this section 8.3, or if the Borrower or any of
its Subsidiaries which is a Credit Party shall fail to so endorse and deliver or
deposit all endorsements or certificates with respect thereto, the
Administrative Agent and/or the Collateral Agent shall have the right (but shall
be under no obligation), upon prior notice to the Borrower, to procure such
insurance and the Borrower agrees to reimburse the Administrative Agent or the
Collateral Agent, as the case may be for all costs and expenses of procuring
such insurance.
8.4. PAYMENT OF TAXES AND CLAIMS. The Borrower will pay and discharge,
and will cause each of its Subsidiaries to pay and discharge, all taxes,
assessments and governmental charges or levies imposed upon it or upon its
income or profits, or upon any properties belonging to it, prior to the date on
which penalties attach thereto, and all lawful claims which, if unpaid, might
become a Lien or charge upon any properties of the Borrower or any of its
Subsidiaries; PROVIDED that neither the Borrower nor any of its Subsidiaries
shall be required to pay any such tax, assessment, charge, levy or claim which
is being contested in good faith and by proper proceedings if it has maintained
adequate reserves with respect thereto in accordance with GAAP; and PROVIDED,
FURTHER, that the Borrower will not be considered to be in default of any of the
provisions of this sentence if the Borrower or any
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<PAGE> 53
Subsidiary fails to pay any such amount which, individually or in the aggregate,
is immaterial to the Borrower and its Subsidiaries considered as an entirety.
8.5. CORPORATE FRANCHISES. The Borrower will do, and will cause each of
its Subsidiaries to do, or cause to be done, all things necessary to preserve
and keep in full force and effect its corporate or other organizational
existence, rights, authority and franchises, provided that nothing in this
section 8.5 shall be deemed to prohibit (i) any transaction permitted by section
9.2; (ii) the termination of existence of any Subsidiary if (A) the Borrower
determines that such termination is in its best interest and (B) such
termination is not adverse in any material respect to the Lenders; or (iii) the
loss of any rights, authorities or franchises if the loss thereof, in the
aggregate, could not reasonably be expected to have a Material Adverse Effect.
8.6. GOOD REPAIR. The Borrower will, and will cause each of its
Material Subsidiaries to, ensure that its material properties and equipment used
or useful in its business in whomsoever's possession they may be, are kept in
good repair, working order and condition, normal wear and tear excepted, and
that from time to time there are made in such properties and equipment all
needful and proper repairs, renewals, replacements, extensions, additions,
betterments and improvements, thereto, to the extent and in the manner customary
for companies in similar businesses.
8.7. COMPLIANCE WITH STATUTES, ETC. The Borrower will, and will cause
each of its Subsidiaries to, comply, in all material respects, with all
applicable statutes, regulations and orders of, and all applicable restrictions
imposed by, all governmental bodies, domestic or foreign, in respect of the
conduct of its business and the ownership of its property, other than those (i)
being contested in good faith by appropriate proceedings, as to which adequate
reserves are established to the extent required under GAAP, and (ii) the
noncompliance with which would not have, and which would not be reasonably
expected to have, a Material Adverse Effect or a material adverse effect on the
ability of the Borrower to perform its obligations under any Credit Document.
8.8. COMPLIANCE WITH ENVIRONMENTAL LAWS. Without limitation of the
covenants contained in section 8.7:
(a) The Borrower will, and will cause each of its Subsidiaries
to, (i) comply in all material respects, with all Environmental Laws
applicable to the ownership, lease or use of all Real Property now or
hereafter owned, leased or operated by the Borrower or any of its
Subsidiaries, and promptly pay or cause to be paid all costs and
expenses incurred in connection with such compliance, except for such
noncompliance as would not have, and which would not be reasonably
expected to have, a Material Adverse Effect or a material adverse
effect on the ability of the Borrower to perform its obligations under
any Credit Document; and (ii) keep or cause to be kept all such Real
Property free and clear of any Liens imposed pursuant to such
Environmental Laws which are not permitted under section 9.3.
(b) Neither the Borrower nor any of its Subsidiaries will
generate, use, treat, store, release or dispose of, or permit the
generation, use, treatment, storage, release or disposal of, Hazardous
Materials on any Real Property now or hereafter owned, leased or
operated by the Borrower or any of its Subsidiaries or transport or
permit the transportation of Hazardous Materials to or from any such
Real Property other than in compliance with applicable Environmental
Laws and in the ordinary course of business, except for such
noncompliance as would not have, and which would not be reasonably
expected to have, a Material Adverse Effect or a material adverse
effect on the ability of the Borrower to perform its obligations under
any Credit Document.
(c) If required to do so under any applicable order of any
governmental agency, the Borrower will undertake, and cause each of its
Subsidiaries to undertake, any clean up, removal, remedial or other
action necessary to remove and clean up any Hazardous Materials from
any Real Property owned, leased or operated by the Borrower or any of
its Subsidiaries in accordance with, in all material respects, the
requirements of all applicable Environmental Laws and in accordance
with, in all material respects, such orders of all governmental
authorities, except (i) to the extent that the Borrower or such
Subsidiary is contesting such order in good faith and by appropriate
proceedings and for which adequate reserves have
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been established to the extent required by GAAP, or (ii) for such
noncompliance as would not have, and which would not be reasonably
expected to have, a Material Adverse Effect or a material adverse
effect on the ability of the Borrower to perform its obligations under
any Credit Document.
8.9. FISCAL YEARS, FISCAL QUARTERS. The Borrower will, for consolidated
financial reporting purposes, continue to use June 30 as the end of its fiscal
year and September 30, December 31, and March 31 as the end of its first three
fiscal quarters. If the Borrower shall change any of its Subsidiaries' fiscal
years or fiscal quarters (other than the fiscal year or fiscal quarters of a
person which becomes a Subsidiary, made at the time such person becomes a
Subsidiary, to conform to the Borrower's fiscal year and fiscal quarters or to
conform to the fiscal year or fiscal quarters which the Borrower generally
utilizes for its Subsidiaries), the Borrower will promptly, and in any event
within 30 days following any such change, deliver a notice to the Administrative
Agent and the Lenders describing such change and any material accounting entries
made in connection therewith and stating whether such change will have any
impact upon any financial computations to be made hereunder, and if any such
impact is foreseen, describing in reasonable detail the nature and extent of
such impact. If the Required Lenders determine that any such change will have
any impact upon any financial computations to be made hereunder which is adverse
to the Lenders, the Borrower will, if so requested by the Administrative Agent,
enter into an amendment to this Agreement, in form and substance satisfactory to
the Administrative Agent and the Required Lenders, modifying any of the
financial covenants or related provisions hereof in such manner as the Required
Lenders determine is necessary to eliminate such adverse effect.
8.10. CERTAIN SUBSIDIARIES TO JOIN IN SUBSIDIARY GUARANTY. (a) In the
event that at any time after the Initial Borrowing Date
(x) the Borrower has any Material Subsidiary which is not a
party to the Subsidiary Guaranty, or
(y) an Event of Default shall have occurred and be continuing
and the Borrower has any Subsidiary which is not a party to the
Subsidiary Guaranty,
the Borrower will notify the Administrative Agent in writing of such event,
identifying the Subsidiary in question and referring specifically to the rights
of the Administrative Agent and the Lenders under this section. The Borrower
will, within 30 days following request therefor from the Administrative Agent
(who may give such request on its own initiative or upon request by the Required
Lenders), cause such Subsidiary to deliver to the Administrative Agent, in
sufficient quantities for the Lenders, (i) a joinder supplement, satisfactory in
form and substance to the Administrative Agent and the Required Lenders, duly
executed by such Subsidiary, pursuant to which such Subsidiary joins in the
Subsidiary Guaranty as a guarantor thereunder, and (ii) if such Subsidiary is a
corporation, resolutions of the Board of Directors of such Subsidiary, certified
by the Secretary or an Assistant Secretary of such Subsidiary as duly adopted
and in full force and effect, authorizing the execution and delivery of such
joinder supplement, or if such Subsidiary is not a corporation, such other
evidence of the authority of such Subsidiary to execute such joinder supplement
as the Administrative Agent may reasonably request.
(b) Notwithstanding the foregoing or the provisions of section 8.11
hereof, the Borrower shall not, unless an Event of Default shall have occurred
and be continuing, be required to cause a Foreign Subsidiary to join in the
Subsidiary Guaranty or to become a party to an Additional Security Document if
(i) to do so would subject the Borrower to liability for additional United
States income taxes by virtue of section 956 of the Code in an amount the
Borrower considers material, and (ii) the Borrower provides the Administrative
Agent with documentation, including computations prepared by the Borrower's
internal tax officer, its independent accountants or tax counsel, acceptable to
the Required Lenders, in support thereof.
8.11. ADDITIONAL SECURITY; FURTHER ASSURANCES. (a) In the event that at
any time after the Initial Borrowing Date
(x) the Borrower or any Subsidiary acquires, or a person which
has become a Subsidiary owns or holds, an interest in any Real Property
or any other property or interest, located in the United States,
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which is not at the time included in the Collateral and is not subject
to a Permitted Lien securing Indebtedness, the Borrower will notify the
Administrative Agent in writing of such event, identifying the property
in question and referring specifically to the rights of the
Administrative Agent and the Lenders under this section,
(y) the Borrower or any Subsidiary at any time owns or holds
an interest in any Real Property or any other property or interest,
located in the United States, (1) which is not at the time included in
the Collateral and is not subject to a Permitted Lien securing
Indebtedness, and (2) as to which the Administrative Agent on its own
initiative or upon instructions from the Required Lenders has notified
the Borrower that it requires that the same be included in the
Collateral,
(z) an Event of Default shall have occurred and be continuing
and the Borrower or any Subsidiary at any time owns or holds an
interest in any Real Property or any other property or interest,
located within or outside of the United States, which is not at the
time included in the Collateral and is not subject to a Permitted Lien
securing Indebtedness,
the Borrower will, or will cause such Subsidiary to, within 20 days following
request by the Collateral Agent (who may make such request on its own initiative
or upon instructions from the Required Lenders), grant the Collateral Agent for
the benefit of the Secured Creditors (as defined in the Security Documents)
security interests and mortgages (each an "ADDITIONAL SECURITY DOCUMENT") in
such interests or properties of the Borrower or any Subsidiary, subject to
obtaining any required consents from third parties (including third party
lessors and co-venturers) necessary to be obtained for the granting of a Lien on
the interests or assets involved (with the Borrower hereby agreeing to use its
reasonable best efforts to obtain such consents), and subject to the provisions
of section 8.11(b). Each Additional Security Document (i) shall be granted
pursuant to documentation satisfactory in form and substance to the
Administrative Agent and the Collateral Agent, which documentation shall in the
case of Real Property or interests therein be accompanied by such Phase I
environmental assessments, surveys and surveyor's certifications, a mortgage
policy of title insurance, consents of landlords and other supporting
documentation requested by and satisfactory in form and substance to the
Administrative Agent and the Collateral; and (ii) shall constitute a valid and
enforceable perfected Lien upon the interests or properties so included in the
Collateral, superior to and prior to the rights of all third persons and subject
to no other Liens except those permitted by section 9.3 or otherwise agreed by
the Administrative Agent at the time of perfection thereof and (in the case of
Real Property or interests therein) such other encumbrances as may be set forth
in the mortgage policy, if any, relating to such Additional Security Document
which shall be delivered to the Collateral Agent together with such Additional
Security Document and which shall be satisfactory in form and substance to the
Collateral Agent. The Borrower, at its sole cost and expense, will cause each
Additional Security Document or instruments related thereto to be duly recorded
or filed in such manner and in such places as are required by law to establish,
perfect, preserve and protect the Liens created thereby required to be granted
pursuant to the Additional Security Document, and will pay or cause to be paid
in full all taxes, fees and other charges payable in connection therewith. For
the avoidance of doubt, it is noted that as of the Initial Borrowing date the
Lenders have determined not to request the Borrower to provide a mortgage or
deed of trust covering any of the Real Property owned by the entities to be
acquired pursuant to the Ruud Acquisition Documents.
(b) The Borrower will, and will cause each of its Subsidiaries to, at
the expense of the Borrower, make, execute, endorse, acknowledge, file and/or
deliver to the Collateral Agent from time to time such conveyances, financing
statements, transfer endorsements, powers of attorney, certificates, and other
assurances or instruments and take such further steps relating to the Collateral
covered by any of the Security Documents as the Collateral Agent may reasonably
require. If at any time the Collateral Agent determines, based on applicable
law, that all applicable taxes (including, without limitation, mortgage
recording taxes or similar charges) were not paid in connection with the
recordation of any mortgage or deed of trust, the Borrower shall promptly pay
the same upon demand. Furthermore, the Borrower shall cause to be delivered to
the Collateral Agent such opinions of local counsel, appraisals, title
insurance, surveys, environmental assessments, consents of landlords, lien
waivers from landlords or mortgagees and other related documents as may be
reasonably requested by the Administrative Agent or the Collateral Agent in
connection therewith, all of which documents shall be in form and substance
satisfactory to the Administrative Agent and the Collateral Agent, except that
no title insurance or surveys shall be required for any leasehold properties
(unless the lessee has a nominal or bargain purchase option).
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(c) The Borrower will if requested by any Lender at any time, in order
to meet any legal requirement applicable to such Lender, provide to
Administrative Agent, the Collateral Agent and the Lenders, at the sole cost and
expense of the Borrower, appraisals and other supporting documentation relating
to the any mortgage or deed of trust delivered as an Additional Security
Document hereunder, as specified by any Lender, meeting the appraisal and other
documentation requirements of the Real Estate Reform Amendments of the Financial
Institution Reform, Recovery and Enforcement Act of 1989, as amended, or any
other legal requirements applicable to any Lender, which in the case of any such
appraisal shall be prepared by one or more valuation firms of national standing,
acceptable to the Required Lenders, utilizing appraisal standards satisfying
such Amendments, Act or other legal requirements.
(d) The Borrower will provide the Administrative Agent with sufficient
copies of each Additional Security Document and any additional supporting
documents delivered in connection therewith for distribution of copies thereof
to the Lenders, and the Administrative Agent will promptly so distribute such
copies.
8.12. CORPORATE SEPARATENESS. The Borrower will take, and will cause
each of its Subsidiaries to take, all such action as is necessary to keep the
operations of the Borrower and its Subsidiaries separate and apart from those of
each Subsidiary which has outstanding Indebtedness, including, without
limitation, ensuring that all customary formalities regarding corporate
existence, including holding regular board of directors' meetings and
maintenance of corporate records, are followed. All financial statements of the
Borrower and its Subsidiaries provided to creditors will clearly evidence the
corporate separateness of the Borrower and its other Subsidiaries from each
Subsidiary which has Indebtedness outstanding. Finally, neither the Borrower nor
any of its other Subsidiaries will take any action, or conduct its affairs in a
manner which is likely to result in the corporate existence of a Subsidiary
which has Indebtedness outstanding, on the one hand, and the Borrower and its
other Subsidiaries, on the other hand, being ignored, or in the assets and
liabilities of the Borrower or any of its other Subsidiaries being substantively
consolidated with those of a Subsidiary which has Indebtedness outstanding in a
bankruptcy, reorganization or other insolvency proceeding. No action or
indemnity, or provision of support in the form of a letter of credit, expressly
permitted by this Agreement will breach this covenant.
8.13. ERISA. As soon as possible and, in any event, within 10 days
after the Borrower, any Subsidiary of the Borrower or any ERISA Affiliate knows
or has reason to know of the occurrence of any of the following, the Borrower
will deliver to each of the Lenders a certificate of the chief financial officer
of the Borrower setting forth the full details as to such occurrence and the
action, if any, that the Borrower, such Subsidiary or such ERISA Affiliate is
required or proposes to take, together with any notices required or proposed to
be given to or filed with or by the Borrower, the Subsidiary, the ERISA
Affiliate, the PBGC, a Plan participant or the Plan administrator with respect
thereto: that a Reportable Event has occurred; that an accumulated funding
deficiency, within the meaning of section 412 of the Code or section 302 of
ERISA, has been incurred or an application may be or has been made for a waiver
or modification of the minimum funding standard (including any required
installment payments) or an extension of any amortization period under section
412 of the Code or section 303 or 304 of ERISA with respect to a Plan; that any
contribution required to be made with respect to a Plan has not been timely
made; that a Plan has been or may be terminated, reorganized, partitioned or
declared insolvent under Title IV of ERISA; that a Plan has an Unfunded Current
Liability; that proceedings may be or have been instituted to terminate or
appoint a trustee to administer a Plan which is subject to Title IV of ERISA;
that a proceeding has been instituted pursuant to section 515 of ERISA to
collect a delinquent contribution to a Plan; that the Borrower, any Subsidiary
of the Borrower or any ERISA Affiliate will or may incur any liability
(including any indirect, contingent, or secondary' liability) to or on account
of the termination of or withdrawal from a Plan under section 4062, 4063, 4064,
4069, 4201, 4204 or 4212 of ERISA or with respect to a Plan under section
401(a)(29), 4971, 4975 or 4980 of the Code or section 409 or 502(i) or 502(l) of
ERISA or with respect to a group health plan (as defined in section 607(1) of
ERISA or section 4980B(g)(2) of the Code) under section 4980B of the Code; or
that the Borrower or any Subsidiary of the Borrower may incur any material
liability pursuant to any employee welfare benefit plan (as defined in section
3(1) of ERISA) that provides benefits to retired employees or other former
employees (other than as required by section 601 of ERISA) or any Plan.
8.14. HEDGE AGREEMENTS, ETC. The Borrower will, and will cause each of
its Subsidiaries to, enter into Hedge Agreements in order to provide protection
to the Borrower or any such Subsidiary from fluctuations and other
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changes in interest rates and currency exchange rates, as and to the extent
considered reasonably necessary by the Borrower, but without exposing the
Borrower or its Subsidiaries to predominantly speculative risks unrelated to the
amount of Indebtedness, assets or liabilities intended to be subject to coverage
on a notional basis under all such Hedge Agreements. Without limitation of the
foregoing, the Borrower will obtain within 60 days following the Initial
Borrowing Date, and thereafter maintain in effect, a Hedge Agreement, in form
and substance satisfactory to the Administrative Agent, with a notional amount
of at least $35,000,000, protecting the Borrower for a period of at least three
years against such changes in interest rates as can be obtained at reasonable
cost in light of prevailing market conditions. In the case of any Hedge
Agreement to be entered into in order to comply with the requirements of the
preceding sentence, the Borrower will provide the proposed form thereof
(including any proposed pricing or other material terms) to the Administrative
Agent contemporaneously with or prior to the entry into such Hedge Agreement.
8.15. LANDLORD/MORTGAGEE WAIVERS; BAILEE LETTERS. The Borrower will
promptly (and in any event within 60 days following request by the
Administrative Agent) obtain, and will maintain in effect, (a) waivers from
landlords and mortgagees having any interest in any Real Property on which any
tangible items of Collateral having a value of at least $100,000 are located,
substantially in the form attached hereto as Exhibits F-1 and F-2, and (b)
bailee letters, substantially in the form attached hereto as Exhibit G, from
persons unrelated to any of the Credit Parties who are parties to the Security
Agreement to whom any tangible items of Collateral having a value of at least
$100,000 have been delivered for storage, use in the manufacture of products for
the Borrower and its Subsidiaries, consignment or similar purposes.
8.16. SENIOR DEBT. The Borrower will at all times ensure that (a) the
claims of the Lenders in respect of the Obligations of the Borrower will not be
subordinate to, and will in all respects at least rank pari passu with, the
claims of every other senior secured or unsecured creditor of the Borrower, and
(b) any Indebtedness subordinated in any manner to the claims of any senior
secured or unsecured creditor of the Borrower will be subordinated in like
manner to such claims of the Lenders.
SECTION 9. NEGATIVE COVENANTS.
The Borrower hereby covenants and agrees that on the Effective Date and
thereafter for so long as this Agreement is in effect and until such time as the
Total Commitment has been terminated, no Notes remain outstanding and the Loans,
together with interest, Fees and all other Obligations incurred hereunder are
paid in full:
9.1. CHANGES IN BUSINESS. Neither the Borrower nor any of its
Subsidiaries will engage in any business if, as a result, the general nature of
the business, taken on a consolidated basis, which would then be engaged in by
the Borrower and its Subsidiaries, would be substantially changed from the
general nature of the business engaged in by the Borrower and its Subsidiaries
on the date hereof, it being understood that any acquisition by the Borrower of
the company identified to the Lenders prior to the Effective Date would not be
considered a violation of this covenant.
9.2. CONSOLIDATION, MERGER OR SALE OF ASSETS, ETC. The Borrower will
not, and will not permit any Subsidiary to, wind up, liquidate or dissolve its
affairs, or enter into any transaction of merger or consolidation or sell or
otherwise dispose of any of its property or assets (but excluding any sale or
disposition of obsolete or excess furniture, fixtures or equipment or excess
vacant land in the ordinary course of business), or purchase, lease or otherwise
acquire (in one transaction or a series of related transactions) all or any part
of the property or assets of any person (excluding any purchases, leases or
other acquisitions of property or assets in, and for use in, the ordinary course
of business) or agree to do any of the foregoing at any future time, except that
the following shall be permitted:
(a) CAPITAL EXPENDITURES: Consolidated Capital Expenditures
permitted by section 9.11;
(b) PERMITTED INVESTMENTS: the investments permitted pursuant
to section 9.5;
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(c) CERTAIN INTERCOMPANY MERGERS, ETC.: if no Default or Event
of Default shall have occurred and be continuing or would result
therefrom, (i) the merger, consolidation or amalgamation of any Wholly-
Owned Subsidiary with or into the Borrower or another Wholly-Owned
Subsidiary, so long as in any merger, consolidation or amalgamation
involving the Borrower it is the surviving or continuing or resulting
corporation, or the liquidation or dissolution of any Subsidiary, or
(ii) the transfer or other disposition of any property by the Borrower
to any Wholly-Owned Subsidiary which is a Subsidiary Guarantor or by
any Wholly-Owned Subsidiary to the Borrower or any other Wholly-Owned
Subsidiary of the Borrower which is a Subsidiary Guarantor;
(d) RUUD LIGHTING TRANSACTION: the acquisition of Ruud
Lighting, Inc. and its Subsidiaries may be completed as contemplated by
section 6.1;
(e) PERMITTED ACQUISITIONS: if no Default or Event of Default
shall have occurred and be continuing or would result therefrom, the
Borrower or any Subsidiary may make Permitted Acquisitions, provided
that at least five Business Days prior to the date of any such
Permitted Acquisition which involves consideration (including the
amount of any assumed Indebtedness and (without duplication) any
outstanding Indebtedness of any person which becomes a Subsidiary as a
result of such Permitted Acquisition) of $3,000,000 or more, the
Borrower shall have delivered to the Administrative Agent an officer's
certificate executed on behalf of the Borrower by an Authorized Officer
of the Borrower, which certificate shall (A) contain the date such
Permitted Acquisition is scheduled to be consummated, (B) contain the
estimated purchase price of such Permitted Acquisition, (C) contain a
description of the property and/or assets acquired in connection with
such Permitted Acquisition, (D) demonstrate that at the time of making
any such Permitted Acquisition the covenants contained in sections 9.7
and 9.8 shall be complied with on a pro forma basis as if the
properties and/or assets so acquired had been owned by the Borrower,
and the Indebtedness assumed and/or incurred to acquire and/or finance
same has been outstanding, for the 12 month period immediately
preceding such acquisition (without giving effect to any credit for
unobtained or unrealized gains or any adjustments to overhead in
connection with any such Permitted Acquisition), and (E) if requested
by the Administrative Agent, attach thereto a true and correct copy of
the then proposed purchase agreement, merger agreement or similar
agreement, partnership agreement and/or other contract entered into in
connection with such Permitted Acquisition;
(f) PERMITTED DISPOSITIONS: if no Default or Event of Default
shall have occurred and be continuing or would result therefrom, the
Borrower or any of its Subsidiaries may (i) sell any property, land or
building (including any related receivables or other intangible assets)
to any person which is not a Subsidiary of the Borrower, or (ii) sell
the entire capital stock (or other equity interests) and Indebtedness
of any Subsidiary owned by the Borrower or any other Subsidiary to any
person which is not a Subsidiary of the Borrower, or (iii) permit any
Subsidiary to be merged or consolidated with a person which is not an
Affiliate of the Borrower, or (iv) consummate any other Asset Sale with
a person who is not a Subsidiary of the Borrower; provided that (A) the
consideration for such transaction represents fair value (as determined
by management of the Borrower), and at least 90% of such consideration
consists of cash, (B) in the case of any such transaction involving
consideration in excess of $3,000,000, at least five Business Days
prior to the date of completion of such transaction the Borrower shall
have delivered to the Administrative Agent an officer's certificate
executed on behalf of the Borrower by an Authorized Officer of the
Borrower, which certificate shall contain a description of the proposed
transaction, the date such transaction is scheduled to be consummated,
the estimated purchase price or other consideration for such
transaction, financial information pertaining to compliance with the
preceding clause (A), and which shall (if requested by the
Administrative Agent) include a certified copy of the draft or
definitive documentation pertaining thereto, and (C) contemporaneously
therewith, the Borrower prepays Loans as and to the extent contemplated
by section 5.2(b);
(g) CONTRIBUTIONS TO JOINT VENTURES, ETC.: if no Default or
Event of Default shall have occurred and be continuing or would result
therefrom, the Borrower or any of its Subsidiaries may contribute
assets to joint ventures and other persons in accordance with section
9.5(o); and
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(h) LEASES: the Borrower or any of its Subsidiaries may enter
into leases of property or assets not constituting Permitted
Acquisitions in the ordinary course of business not otherwise in
violation of this Agreement.
To the extent the Required Lenders (or all of the Lenders as shall be required
by section 13.12) waive the provisions of this section 9.2 with respect to the
sale, transfer or other disposition of any Collateral, or any Collateral is
sold, transferred or disposed of as permitted by this section 9.2, (i) such
Collateral shall be sold, transferred or disposed of free and clear of the Liens
created by the respective Security Documents; (ii) if such Collateral includes
all of the capital stock of a Subsidiary which is a Party to the Subsidiary
Guaranty or other Security Document, such capital stock shall be released from
the Pledge Agreement and such Subsidiary shall be released from the Subsidiary
Guaranty; and (iii) the Administrative Agent and the Collateral Agent shall be
authorized to take actions deemed appropriate by them in order to effectuate the
foregoing.
9.3. LIENS. The Borrower will not, and will not permit any of its
Subsidiaries to, create, incur, assume or suffer to exist any Lien upon or with
respect to any property or assets of any kind (real or personal, tangible or
intangible) of the Borrower or any such Subsidiary whether now owned or
hereafter acquired, or sell any such property or assets subject to an
understanding or agreement, contingent or otherwise, to repurchase such property
or assets (including sales of accounts receivable or notes with or without
recourse to the Borrower or any of its Subsidiaries, other than for purposes of
collection in the ordinary course of business) or assign any right to receive
income, or file or permit the filing of any financing statement under the UCC or
any other similar notice of Lien under any similar recording or notice statute,
except that the foregoing restrictions shall not apply to:
(a) Liens for taxes not yet delinquent or Liens for taxes
being contested in good faith and by appropriate proceedings for which
adequate reserves (in the good faith judgment of the management of the
Borrower) have been established;
(b) Liens in respect of property or assets imposed by law
which were incurred in the ordinary course of business, such as
carriers', warehousemen's, materialmen's and mechanics' Liens and other
similar Liens arising in the ordinary course of business, which do not
in the aggregate materially detract from the value of such property or
assets or materially impair the use thereof in the operation of the
business of the Borrower or any Subsidiary;
(c) Liens created by this Agreement or the other Credit
Documents;
(d) Liens (i) in existence on the Initial Borrowing Date which
are listed, and the Indebtedness secured thereby and the property
subject thereto on the Initial Borrowing Date described, in Annex IV,
(ii) consisting of cash collateral for letters of credit issued by
other financial institutions which are outstanding on the Initial
Borrowing Date in an aggregate undrawn amount not in excess of
$1,000,000, PROVIDED such letters of credit are replaced or supported
within 60 days following the Initial Borrowing Date with Letters of
Credit issued hereunder and such cash collateral is released in
connection with such replacement or support, or (iii) arising out of
the refinancing, extension, renewal or refunding of any Indebtedness
referred to in the preceding clause (i) which is secured by any such
Liens, provided that the principal amount of such Indebtedness is not
increased and such Indebtedness is not secured by any additional
assets, and PROVIDED, FURTHER, that the Indebtedness referred to in
section 6.1(k) may only be refinanced by Loans made, Letters of Credit
issued and collateral granted pursuant to the Credit Documents;
(e) Liens arising from judgments, decrees or attachments in
circumstances not constituting an Event of Default under section
10.1(f);
(f) Liens (other than any Lien imposed by ERISA) incurred or
deposits made in the ordinary course of business in connection with
workers' compensation, unemployment insurance and other types of social
security; and mechanic's Liens, carrier's Liens, and other Liens to
secure the performance of tenders, statutory obligations, contract
bids, government contracts, performance and return-of-money bonds and
other similar obligations, incurred in the ordinary course of business
(exclusive of obligations in respect of
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the payment for borrowed money), whether pursuant to statutory
requirements, common law or consensual arrangements;
(g) Leases or subleases granted to others not interfering in
any material respect with the business of the Borrower or any of its
Subsidiaries and any interest or title of a lessor under any lease not
in violation of this Agreement;
(h) easements, rights-of-way, zoning or deed restrictions,
minor defects or irregularities in title and other similar charges or
encumbrances not interfering in any material respect with the ordinary
conduct of the business of the Borrower or any of its Subsidiaries
considered as an entirety;
(i) Liens arising from financing statements regarding property
subject to leases not in violation of the requirements of this
Agreement, provided that such Liens are only in respect of the property
subject to, and secure only, the respective lease (and any other lease
with the same or an affiliated lessor);
(j) Liens on specifically identifiable receivables, chattel
paper, inventory and related property and rights of Lighting Resources,
securing Indebtedness permitted by section 9.4(d) incurred in
connection with the financing thereof;
(k) Liens which
(i) are placed upon equipment or machinery used in
the ordinary course of business of the Borrower or any
Subsidiary at the time of (or within 180 days after) the
acquisition thereof by the Borrower or any such Subsidiary to
secure Indebtedness incurred to pay or finance all or a
portion of the purchase price thereof, PROVIDED that the Lien
encumbering the equipment or machinery so acquired does not
encumber any other asset of the Borrower or any such
Subsidiary; or
(ii) are existing on property or other assets at the
time acquired by the Borrower or any Subsidiary or on assets
of a person at the time such person first becomes a Subsidiary
of the Borrower; provided that (A) any such Liens were not
created at the time of or in contemplation of the acquisition
of such assets or person by the Borrower or any of its
Subsidiaries; (B) in the case of any such acquisition of a
person, any such Lien attaches only to the property and assets
of such person; and (C) in the case of any such acquisition of
property or assets by the Borrower or any Subsidiary, any such
Lien attaches only to the property and assets so acquired and
not to any other property or assets of the Borrower or any
Subsidiary;
PROVIDED that (1) the Indebtedness secured by any such Lien does not
exceed 100% of the fair market value of the property and assets to
which such Lien attaches, determined at the time of the acquisition of
such property or asset or the time at which such person becomes a
Subsidiary of the Borrower (except in the circumstances described in
clause (ii) above to the extent such Liens constituted customary
purchase money Liens at the time of incurrence and were entered into in
the ordinary course of business), and (2) the Indebtedness secured
thereby is permitted by section 9.4(e);
(l) Liens placed on (A) the Real Property and improvements
thereto acquired by the Borrower for a corporate headquarters, training
center and showroom, to secure Indebtedness incurred to pay or finance
up to 100% of the purchase price thereof, and/or (B) other unencumbered
Real Property and the improvements thereto, to finance up to 100% of
the fair value thereof; PROVIDED in either such case that the Lien
encumbering such Real Property and improvements does not encumber any
other asset of the Borrower or any Subsidiary, and the Indebtedness
secured thereby is permitted by section 9.4(f); and
(m) Liens on any property of any Subsidiary organized under
the laws of Canada, or any Province thereof, substantially all of whose
property (exclusive of any consigned inventory) is located in Canada,
securing Indebtedness permitted by section 9.4(b).
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If any specifically identifiable Collateral is subjected to a Lien contemplated
by clause (j), (k) or (l) of this section 9.3, the Administrative Agent and the
Collateral Agent shall be authorized to release such specifically identifiable
Collateral from the Lien of any Security Document and to take any related
actions deemed appropriate by them in connection therewith.
9.4. INDEBTEDNESS. The Borrower will not, and will not permit any of
its Subsidiaries to, contract, create, incur, assume or suffer to exist any
Indebtedness of the Borrower or any of its Subsidiaries, EXCEPT:
(a) Indebtedness incurred under this Agreement and the other
Credit Documents;
(b) Indebtedness of Subsidiaries of the Borrower organized
under the laws of Canada, or any Province thereof, substantially all of
whose property (exclusive of any consigned inventory) is located in
Canada, not in excess of $10,000,000 (or the equivalent amount thereof
in any other applicable currency) at any time outstanding, and any
guaranty by the Borrower or any Subsidiary of any such Indebtedness,
provided that if any such Indebtedness is supported by a Letter of
Credit, such Indebtedness so supported is secured by substantially all
of the otherwise unencumbered property of the Subsidiary which has
incurred such Indebtedness;
(c) Indebtedness of the Borrower or any Subsidiary in respect
of Capital Leases; provided that (i) the aggregate Capitalized Lease
Obligations of the Borrower and its Subsidiaries, plus the aggregate
outstanding principal amount of Indebtedness permitted under clause (e)
below, shall not exceed $15,000,000 in the aggregate at any time
outstanding, and (ii) at the time of any incurrence thereof after the
date hereof, and after giving effect thereto, no Event of Default shall
have occurred and be continuing or would result therefrom;
(d) Indebtedness of Lighting Resources International, Inc.,
one of the Borrower's Subsidiaries, subject to Liens permitted by
section 9.3(j), and any guaranty by the Borrower of any such
Indebtedness; provided that (i) the aggregate principal amount of such
Indebtedness shall not exceed $10,000,000 in the aggregate at any time
outstanding, (ii) such Indebtedness is supported by a guaranty or other
form of credit support supplied by Eximbank (or any comparable U.S.
government authority) and the credit initially evidenced by such
Indebtedness shall have been offered to one or more of the Lenders (or
their respective Affiliates) on the same terms as offered to any other
financial institution, and (iii) at the time of any incurrence thereof
after the date hereof, and after giving effect thereto, no Event of
Default shall have occurred and be continuing or would result
therefrom;
(e) Indebtedness of the Borrower or any Subsidiary subject to
Liens permitted by section 9.3(k), including and any guaranty by the
Borrower of any such Indebtedness; PROVIDED that (i) the aggregate
principal amount of such Indebtedness shall not exceed $10,000,000 in
the aggregate at any time outstanding, (ii) if at the time any such
Indebtedness is incurred the aggregate outstanding principal amount of
Indebtedness secured by Liens permitted by section 9.3(k), after giving
effect to such incurrence, would exceed $5,000,000, the Borrower shall
have demonstrated to the reasonable satisfaction of the Administrative
Agent that the incurrence of such additional Indebtedness would be
likely to result in a weighted average borrowing cost less than the
weighted average borrowing cost which would have resulted if Loans had
been incurred hereunder in lieu of such additional Indebtedness, and
(iii) at the time of any incurrence thereof after the date hereof, and
after giving effect thereto, no Event of Default shall have occurred
and be continuing or would result therefrom;
(f) secured Indebtedness of the Borrower in the aggregate
principal amount of up to $45,000,000, having a weighted average life
to maturity (computed in accordance with standard financial practices)
at the time of incurrance thereof in excess of five years, incurred to
finance Real Property and improvements referred to in section 9.3(l)(A)
or (B), and secured by Liens permitted under such section 9.3(l);
PROVIDED that (A) at the time of incurrence thereof, and after giving
effect thereto, no Event of Default shall have occurred and be
continuing or would result therefrom, and the Borrower is and will be
in compliance with the covenant contained in section 9.7; and (B) the
aggregate outstanding principal
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amount of Indebtedness incurred to finance the corporate headquarters,
training center and showroom which is referred to in section 9.3(l)(A)
does not exceed $30,000,000;
(g) Indebtedness of Foreign Subsidiaries of the Borrower, and
Indebtedness of branches of the Borrower that are incorporated under
the laws of a country other than the United States, not otherwise
permitted by the foregoing clauses, provided that (i) the aggregate
principal amount of such Indebtedness outstanding at any time is not in
excess of $8,000,000 (or the equivalent in any applicable currency or
currencies), and (ii) at the time of incurrence thereof, and after
giving effect thereto, no Event of Default shall have occurred and be
continuing or would result therefrom;
(h) Existing Indebtedness, to the extent not otherwise
permitted pursuant to the foregoing clauses; and any refinancing,
extension, renewal or refunding of any such Existing Indebtedness not
involving an increase in the principal amount thereof or a reduction of
more than 10% in the remaining weighted average life to maturity
thereof (computed in accordance with standard financial practice);
(i) Indebtedness of the Borrower or any Subsidiary under Hedge
Agreements;
(j) Indebtedness of the Borrower to any of its Subsidiaries,
and Indebtedness of any of the Borrower's Subsidiaries to the Borrower
or to another Subsidiary of the Borrower, in each case to the extent
permitted under section 9.5; and
(k) Guaranty Obligations permitted under section 9.5.
9.5. ADVANCES, INVESTMENTS, LOANS AND GUARANTY OBLIGATIONS. The
Borrower will not, and will not permit any of its Subsidiaries to, (1) lend
money or credit or make advances to any person, (2) purchase or acquire any
stock, obligations or securities of, or any other interest in, or make any
capital contribution to, or other investment in, any person, (3) create, acquire
or hold any Subsidiary, (4) be or become a party to any joint venture or
partnership, or (5) be or become obligated under any Guaranty Obligations (other
than those created in favor of the Lenders pursuant to the Credit Documents),
EXCEPT:
(a) the Borrower or any of its Subsidiaries may invest in cash
and Cash Equivalents;
(b) any endorsement of a check or other medium of payment for
deposit or collection, or any similar transaction in the normal course
of business;
(c) the Borrower and its Subsidiaries may acquire and hold
receivables owing to them in the ordinary course of business and
payable or dischargeable in accordance with customary trade terms;
(d) investments acquired by the Borrower or any of its
Subsidiaries (i) in exchange for any other investment held by the
Borrower or any such Subsidiary in connection with or as a result of a
bankruptcy, workout, reorganization or recapitalization of the issuer
of such other investment, or (ii) as a result of a foreclosure by the
Borrower or any of its Subsidiaries with respect to any secured
investment or other transfer of title with respect to any secured
investment in default;
(e) loans and advances to employees for business-related
travel expenses, moving expenses, costs of replacement homes and other
similar expenses, in each case incurred in the ordinary course of
business, shall be permitted;
(f) investments in the capital of any Wholly-Owned Subsidiary
which is (i) a Subsidiary Guarantor, and (ii) not a Foreign Subsidiary;
(g) to the extent not permitted by the foregoing clauses,
existing investments in any Subsidiaries (and any increases thereof
attributable to increases in retained earnings);
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<PAGE> 63
(h) to the extent not permitted by the foregoing clauses, the
existing loans, advances, investments and guarantees described on Annex
V hereto;
(i) any unsecured guaranty by the Borrower of any Indebtedness
of a Subsidiary permitted by section 9.4, and any guaranty by any
Subsidiary described in section 9.4;
(j) investments of the Borrower and its Subsidiaries in Hedge
Agreements;
(k) loans and advances by any Subsidiary of the Borrower to
the Borrower, provided that the Indebtedness represented thereby
constitutes Subordinated Indebtedness;
(l) loans and advances by the Borrower or by any Subsidiary of
the Borrower to, or other investments in, any Subsidiary of the
Borrower which is (i) a Subsidiary Guarantor, (ii) a Wholly-Owned
Subsidiary, and (iii) not a Foreign Subsidiary;
(m) loans and advances by any Subsidiary of the Borrower which
is not a Subsidiary Guarantor to, or other investments by any such
Subsidiary in, any other Subsidiary of the Borrower which is a Wholly-
Owned Subsidiary;
(n) Acquisitions permitted by section 9.2; and loans, advances
and investments of any person which are outstanding at the time such
person becomes a Subsidiary of the Borrower in an Acquisition permitted
by section 9.2, but not any increase in the amount thereof;
(o) loans, advances and investments by the Borrower or any
Subsidiary in or to any Foreign Subsidiary made after September 30,
1997, PROVIDED that (i) at the time of making any such loan, advance or
investment no Event of Default shall have occurred or would result
therefrom, and (ii) taking into account any repayment of any such loans
or advances or return of such investments, the aggregate amount so
expended does not exceed $10,000,000;
(p) Guaranty Obligations, not otherwise permitted by the
foregoing clauses, of (i) the Borrower or any Subsidiary in respect of
leases of the Borrower or any Subsidiary the entry into which is not
prohibited by this Agreement, (ii) the Borrower or any Subsidiary in
respect of any other person (other than in respect of (x) Indebtedness
for borrowed money or represented by bonds, notes, debentures or
similar securities, or (y) Indebtedness constituting Capital Leases)
arising as a matter of applicable law because the Borrower or such
Subsidiary is or is deemed to be a general partner of such other
person, or (iii) the Borrower or any Subsidiary in respect of any other
person (other than in respect of (x) Indebtedness for borrowed money or
represented by bonds, notes, debentures or similar securities, or (y)
Indebtedness constituting Capital Leases) arising in the ordinary
course of business;
(q) any other loans, advances, investments (whether in the
form of cash or contribution of property, and if in the form of a
contribution of property, such property shall be valued for purposes of
this clause (q) at the fair value thereof as reasonably determined by
the Borrower) and Guaranty Obligations, including, without limitation,
in or to or for the benefit of, Subsidiaries, joint ventures, or other
persons, not otherwise permitted by the foregoing clauses, made after
September 30, 1997 (such loans, advances and investments, collectively,
"BASKET INVESTMENTS", and such Guaranty Obligations, collectively
"BASKET GUARANTEES") described below:
(i) Basket Investments of up to an aggregate of
$15,000,000, taking into account the repayment of any loans or
advances comprising such Basket Investments, shall be
permitted to be made in joint venture or similar arrangements
with Rohm & Haas or any of its Affiliates, provided that no
Event of Default shall have occurred and be continuing, or
would result therefrom;
(ii) additional Basket Investments of up to an
aggregate of $25,000,000, taking into account the repayment of
any loans or advances comprising such Basket Investments,
shall be
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permitted to be made, PROVIDED that (A) no Event of Default
shall have occurred and be continuing, or would result
therefrom, and (B) the aggregate Basket Investments made
pursuant to this provision in any single person or related
group of persons does not exceed $10,000,000, taking into
account the repayment of any loans or advances comprising such
Basket Investments; and
(iii) if no Event of Default shall have occurred and
be continuing, or would result therefrom, Basket Guarantees
covering up to $5,000,000 aggregate principal amount of
Indebtedness outstanding at any time, shall be permitted to be
incurred.
9.6. DIVIDENDS, ETC. The Borrower will not declare or pay any dividends
(other than dividends payable solely in common stock of the Borrower) on, or
make any other distribution or payment on account of (other than in shares of
the common stock of the Borrower), and the Borrower will not, and will not
permit any of its Subsidiaries to, purchase, redeem, retire or otherwise
acquire, any shares of any class of the capital stock of the Borrower, whether
now or hereafter outstanding.
9.7. TOTAL INDEBTEDNESS/EBITDA RATIO. The Borrower will not at any time
permit the ratio of (i) the amount of Total Indebtedness at such time to (ii)
EBITDA for any Testing Period, to exceed (A) 4.00 to 1.00 for any Testing Period
ending on or prior to December 31, 1998, (B) 3.75 to 1.00 for any subsequent
Testing Period ending on or prior to December 31, 1999, or (C) 3.50 to 1.00 for
any subsequent Testing Period.
9.8. INTEREST COVERAGE RATIO. The Borrower will not permit its Interest
Coverage Ratio for any Testing Period to be less than 4.00 to 1.00.
9.9. CAPITAL EXPENDITURES. The Borrower will not, and will not permit
any of its Subsidiaries to, make or incur Consolidated Capital Expenditures
during any fiscal period of the Borrower described below which exceed the
aggregate amount set forth for such fiscal period:
<TABLE>
<CAPTION>
Fiscal Period Amount
------------- ------
<S> <C>
Fiscal Quarter ended 3/31/98 $6,500,000
Fiscal Quarter ended 6/30/98 $6,500,000
Fiscal Year ended 6/30/99 $26,000,000
Fiscal Year ended 6/30/2000 $20,000,000
Any Fiscal Year thereafter $15,000,000
</TABLE>
; PROVIDED that Consolidated Capital Expenditures of up to $30,000,000 related
to the acquisition, renovation and expansion of the Borrower's Solon, Ohio
headquarters shall be excluded from computations of this covenant.
9.10. CERTAIN LEASES. The Borrower will not permit the aggregate
payments (excluding any property taxes, insurance or maintenance obligations
paid by the Borrower and its Subsidiaries as additional rent or lease payments)
by the Borrower and its Subsidiaries on a consolidated basis under agreements to
rent or lease any real or personal property for a period exceeding 12 months
(including any renewal or similar option periods), other than:
(i) any leases constituting Capital Leases; and
(ii) any operating lease of any Real Property which could have
been subjected to a Lien permitted under section 9.3(l), or any
equipment located thereon;
to exceed $2,500,000 in any fiscal year of the Borrower.
9.11. MINIMUM CONSOLIDATED TANGIBLE NET WORTH. The Borrower will not
permit its Consolidated Tangible Net Worth at any time to be less than
$100,800,000, except that (i) effective as of the end of the Borrower's fiscal
quarter ended March 31, 1998, and as of the end of each fiscal quarter
thereafter, the foregoing amount (as
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it may from time to time be increased as herein provided), shall be increased by
75% of the consolidated net income of the Borrower and its Subsidiaries for the
fiscal quarter ended on such date, if any, without deduction for minority
interests, as determined in conformity with GAAP (there being no reduction in
the case of any such consolidated net income which reflects a deficit), (ii) the
foregoing amount (as it may from time to time be increased as herein provided),
shall be increased by an amount equal to 100% of the cash proceeds (net of
underwriting discounts and commissions and other customary fees and costs
associated therewith) from any sale or issuance of equity by the Borrower after
the Initial Borrowing Date (other than any sale or issuance to management or
employees pursuant to employee benefit plans of general application), and (iii)
the foregoing amount (as it may from time to time be increased as herein
provided), shall be increased by an amount equal to 90% of any increase in
Consolidated Tangible Net Worth attributable to the issuance of common stock or
other equity interests in connection with the completion of any acquisition
after September 30, 1997.
9.12. PREPAYMENTS AND REFINANCINGS OF OTHER DEBT, ETC. The Borrower
will not, and will not permit any of its Subsidiaries to, make (or give any
notice in respect thereof) any voluntary or optional payment or prepayment or
redemption or acquisition for value of (including, without limitation, by way of
depositing with the trustee with respect thereto money or securities before due
for the purpose of paying when due) or exchange of, or refinance or refund, any
Indebtedness of the Borrower or its Subsidiaries (other than the Obligations);
provided that the Borrower or any Subsidiary may refinance or refund any such
Indebtedness if the aggregate principal amount thereof is not increased and the
weighted average life to maturity thereof (computed in accordance with standard
financial practice) is not reduced by more than 10%.
9.13. TRANSACTIONS WITH AFFILIATES. The Borrower will not, and will not
permit any Subsidiary to, enter into any transaction or series of transactions
with any Affiliate (other than, in the case of the Borrower, any Subsidiary, and
in the case of a Subsidiary, the Borrower or another Subsidiary) other than in
the ordinary course of business of and pursuant to the reasonable requirements
of the Borrower's or such Subsidiary's business and upon fair and reasonable
terms no less favorable to the Borrower or such Subsidiary than would obtain in
a comparable arm's-length transaction with a person other than an Affiliate,
except (i) loans, advances and investments permitted by section 9.5, (ii) sales
of goods to an Affiliate for use or distribution outside the United States which
in the good faith judgment of the Borrower complies with any applicable legal
requirements of the Code, or (iii) agreements and transactions with and payments
to officers, directors and shareholders which are either (A) entered into in the
ordinary course of business and not prohibited by any of the provisions of this
Agreement, or (B) entered into outside the ordinary course of business, approved
by the directors or shareholders of the Borrower, and not prohibited by any of
the provisions of this Agreement.
9.14. LIMITATION ON CERTAIN RESTRICTIONS ON SUBSIDIARIES. The Borrower
will not, and will not permit any of its Subsidiaries to, directly or
indirectly, create or otherwise cause or suffer to exist or become effective any
contractual encumbrance or restriction in or on the ability of any such
Subsidiary to (a) pay dividends or make any other distributions on its capital
stock or any other interest or participation in its profits owned by the
Borrower or any Subsidiary of the Borrower, or pay any Indebtedness owed to the
Borrower or a Subsidiary of the Borrower, (b) make loans or advances to the
Borrower or any of the Borrower's other Subsidiaries, or transfer any of its
property or assets to the Borrower or any of the Borrower's other Subsidiaries,
EXCEPT for such encumbrances or restrictions existing under or by reason of (i)
applicable law, (ii) this Agreement and the other Credit Documents, (iii)
customary provisions restricting subletting or assignment of any lease governing
a leasehold interest of a Subsidiary of the Borrower, (iv) customary provisions
restricting assignment of any licensing agreement entered into by any Subsidiary
of the Borrower in the ordinary course of business, (v) customary provisions
restricting the transfer of assets subject to Liens permitted under section
9.3(k), (vi) encumbrances and restrictions contained in the Existing
Indebtedness Agreements as in effect on the Effective Date and customary
restrictions governing any of the Indebtedness of a Subsidiary permitted
pursuant to 9.4, (vii) any document relating to Indebtedness secured by a Lien
permitted by section 9.3, insofar as the provisions thereof limit grants of
junior liens on the assets securing such Indebtedness, and (viii) any operating
lease or Capital Lease, insofar as the provisions thereof limit grants of a
security interest in, or other assignments of, the related leasehold interest to
any other person.
9.15. LIMITATION ON SALE AND LEASE-BACK TRANSACTIONS. The Borrower will
not, nor will it permit any Subsidiary to, enter into any Sale and Lease-Back
Transaction involving any individual property (or related group
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of properties as part of the same Sale and Lease-Back Transaction) having a
Value over $250,000 unless either (a) the Borrower or such Subsidiary would be
entitled to incur Indebtedness secured by a Lien on such property pursuant to
section 9.4(e) or (f), or (b) the Borrower complies with the provisions of
section 5.2(b).
SECTION 10. EVENTS OF DEFAULT.
10.1. EVENTS OF DEFAULT. Upon the occurrence of any of the following
specified events (each an "EVENT OF DEFAULT"):
(a) PAYMENTS: the Borrower shall (i) default in the payment
when due of any principal of the Loans or any reimbursement obligation
in respect of any Unpaid Drawing or (ii) default in the payment when
due of any interest on the Loans or any Fees or any other amounts owing
hereunder or under any other Credit Document; or
(b) REPRESENTATIONS, ETC.: any representation, warranty or
statement made by the Borrower or any other Credit Party herein or in
any other Credit Document or in any statement or certificate delivered
or required to be delivered pursuant hereto or thereto shall prove to
be untrue in any material respect on the date as of which made or
deemed made; or
(c) COVENANTS: the Borrower shall (i) default in the due
performance or observance by it of any term, covenant or agreement
contained in sections 9.2 through 9.13 (inclusive) of this Agreement,
or (ii) default in the due performance or observance by it of any term,
covenant or agreement (other than those referred to in clause (a) or
(b) above or the preceding clause (i) of this clause (c)) contained in
this Agreement or any other Credit Document and such default shall
continue unremedied for a period of at least 30 days after notice by
the Administrative Agent or the Required Lenders; or
(d) CROSS DEFAULT UNDER OTHER AGREEMENTS: the Borrower or any
of its Subsidiaries shall (i) default in any payment with respect to
any Indebtedness (other than the Obligations) having an unpaid
principal amount of $250,000 or greater, and such default shall
continue after the applicable grace period, if any, specified in the
agreement or instrument relating to such Indebtedness, or (ii) default
in the observance or performance of any agreement or condition relating
to any such Indebtedness or contained in any instrument or agreement
evidencing, securing or relating thereto (and all grace periods
applicable to such observance, performance or condition shall have
expired), or any other event shall occur or condition exist, the effect
of which default or other event or condition is to cause, or to permit
the holder or holders of such Indebtedness (or a trustee or agent on
behalf of such holder or holders) to cause any such Indebtedness to
become due prior to its stated maturity; or any such Indebtedness of
the Borrower or any of its Subsidiaries shall be declared to be due and
payable, or shall be required to be prepaid (other than by a regularly
scheduled required prepayment or redemption, prior to the stated
maturity thereof); or
(e) OTHER CREDIT DOCUMENTS: the Subsidiary Guaranty or any
Security Document (once executed and delivered) shall cease for any
reason (other than termination in accordance with its terms) to be in
full force and effect; or any Credit Party shall default in any payment
obligation thereunder; or any Credit Party shall default in any
material respect in the due performance and observance of any other
obligation thereunder and such default shall continue unremedied for a
period of at least 30 days after notice by the Administrative Agent or
the Required Lenders; or any Credit Party shall (or seek to) disaffirm
or otherwise limit its obligations thereunder otherwise than in strict
compliance with the terms thereof; or
(f) JUDGMENTS: one or more judgments or decrees shall be
entered against the Borrower and/or any of its Subsidiaries involving a
liability (whether or not covered by insurance) of $500,000 or more in
the aggregate for all such judgments and decrees for the Borrower and
its Subsidiaries) and any such judgments or decrees shall not have been
vacated, discharged or stayed or bonded pending appeal within 30 days
(or such longer period, not in excess of 60 days, during which
enforcement thereof, and the filing of any judgment lien, is
effectively stayed or prohibited) from the entry thereof; or
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(g) BANKRUPTCY, ETC.: any of the following shall occur:
(i) the Borrower or any of its Material Subsidiaries
or any other Credit Party (the Borrower or any of such other
persons, each a "PRINCIPAL PARTY") shall commence a voluntary
case concerning itself under Title 11 of the United States
Code entitled "Bankruptcy," as now or hereafter in effect, or
any successor thereto (the "BANKRUPTCY CODE"); or
(ii) an involuntary case is commenced against any
Principal Party and the petition is not controverted within 10
days, or is not dismissed within 60 days, after commencement
of the case; or
(iii) a custodian (as defined in the Bankruptcy Code)
is appointed for, or takes charge of, all or substantially all
of the property of any Principal Party; or
(iv) any Principal Party commences (including by way
of applying for or consenting to the appointment of, or the
taking of possession by, a rehabilitator, receiver, custodian,
trustee, conservator or liquidator (collectively, a
"CONSERVATOR") of itself or all or any substantial portion of
its property) any other proceeding under any reorganization,
arrangement, adjustment of debt, relief of debtors,
dissolution, insolvency, liquidation, rehabilitation,
conservatorship or similar law of any jurisdiction whether now
or hereafter in effect relating to such Principal Party; or
(v) any such proceeding is commenced against any
Principal Party to the extent such proceeding is consented by
such person or remains undismissed for a period of 60 days; or
(vi) any Principal Party is adjudicated insolvent or
bankrupt; or
(vii) any order of relief or other order approving
any such case or proceeding is entered; or
(viii) any Principal Party suffers any appointment of
any conservator or the like for it or any substantial part of
its property which continues undischarged or unstayed for a
period of 60 days; or
(ix) any Principal Party makes a general assignment
for the benefit of creditors; or
(x) any corporate (or similar organizational) action
is taken by any Principal Party for the purpose of effecting
any of the foregoing; or
(h) ERISA: (i) any of the events described in clauses (i)
through (viii) of section 8.1(i) shall have occurred; or (ii) there
shall result from any such event or events the imposition of a lien,
the granting of a security interest, or a liability or a material risk
of incurring a liability; and (iii) any such event or events or any
such lien, security interest or liability, individually, and/or in the
aggregate, in the opinion of the Required Lenders, has had, or could
reasonably be expected to have, a Material Adverse Effect; or
(i) MATERIAL ADVERSE EFFECT: (i) the forced liquidation value
of the Collateral, considered as an entirety, shall in the reasonable
written opinion of the Required Lenders delivered to the Borrower,
decline substantially over a period of not less than three months, or
(ii) any other objective event or circumstance shall occur or exist
after the date hereof which, in the reasonable opinion of the Required
Lenders, (A) casts reasonable and substantial doubt upon the Borrower's
ability to repay or refinance the Obligations, or (B) has resulted in a
Material Adverse Effect upon the Borrower and its Subsidiaries,
considered as an entirety, as compared to the business, operations,
property, assets, liabilities or condition (financial or otherwise) of
the Borrower and its Subsidiaries, considered as an entirety, as
reflected in the most recent consolidated financial statements referred
to in section 7.8.
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10.2. ACCELERATION, ETC. Upon the occurrence of any Event of Default,
and at any time thereafter, if any Event of Default shall then be continuing,
the Administrative Agent shall, upon the written request of the Required
Lenders, by written notice to the Borrower, take any or all of the following
actions, without prejudice to the rights of the Administrative Agent or any
Lender to enforce its claims against the Borrower, except as otherwise
specifically provided for in this Agreement (provided that, if an Event of
Default specified in section 10.1(g) shall occur with respect to the Borrower,
the result which would occur upon the giving of written notice by the
Administrative Agent as specified in clauses (i) and (ii) below shall occur
automatically without the giving of any such notice): (i) declare the Total
Commitment terminated, whereupon the Commitment of each Lender shall forthwith
terminate immediately without any other notice of any kind; (ii) declare the
principal of and any accrued interest in respect of all Loans, all Unpaid
Drawings and all obligations owing hereunder and thereunder to be, whereupon the
same shall become, forthwith due and payable without presentment, demand,
protest or other notice of any kind, all of which are hereby waived by the
Borrower; (iii) terminate any Letter of Credit which may be terminated in
accordance with its terms; and (iv) direct the Borrower to pay (and the Borrower
hereby agrees that on receipt of such notice or upon the occurrence of an Event
of Default with respect to the Borrower under section 10.1(g), it will pay) to
the Administrative Agent an amount of cash equal to the aggregate Stated Amount
of all Letters of Credit then outstanding (such amount to be held as security
after the Borrower's reimbursement obligations in respect thereof).
10.3. APPLICATION OF LIQUIDATION PROCEEDS. All monies received by the
Administrative Agent or any Lender from the exercise of remedies hereunder or
under the other Credit Documents or under any other documents relating to this
Agreement shall, unless otherwise required by the terms of the other Credit
Documents or by applicable law, be applied as follows:
(i) FIRST, to the payment of all expenses (to the extent not
paid by the Borrower) incurred by the Administrative Agent and the
Lenders in connection with the exercise of such remedies, including,
without limitation, all reasonable costs and expenses of collection,
attorneys' fees, court costs and any foreclosure expenses;
(ii) SECOND, to the payment PRO RATA of interest then accrued
on the outstanding Loans;
(iii) THIRD, to the payment PRO RATA of any fees then accrued
and payable to the Administrative Agent, any Letter of Credit Issuer or
any Lender under this Agreement in respect of the Loans or the Letter
of Credit Outstandings;
(iv) FOURTH, to the payment PRO RATA of (A) the principal
balance then owing on the outstanding Loans, (B) the amounts then due
under Designated Hedge Agreements to creditors of the Borrower or any
Subsidiary, subject to confirmation by the Administrative Agent of any
calculations of termination or other payment amounts being made in
accordance with normal industry practice, and (C) the Stated Amount of
the Letter of Credit Outstandings (to be held and applied by the
Administrative Agent as security for the reimbursement obligations in
respect thereof);
(v) FIFTH, to the payment to the Lenders of any amounts then
accrued and unpaid under sections 2.9, 2.10 and 3.5 hereof, and if such
proceeds are insufficient to pay such amounts in full, to the payment
of such amounts PRO RATA;
(vi) SIXTH, to the payment PRO RATA of all other amounts owed
by the Borrower to the Administrative Agent, to any Letter of Credit
Issuer or any Lender under this Agreement or any other Credit Document,
and to any counterparties under Designated Hedge Agreements of the
Borrower and its Subsidiaries, and if such proceeds are insufficient to
pay such amounts in full, to the payment of such amounts PRO RATA;
(vii) SEVENTH, to the extent proceeds remain, to NCB in
respect of the reimbursement and other obligations in respect of
Separate Document Letter of Credit Outstandings; and
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(viii) FINALLY, any remaining surplus after all of the
Obligations have been paid in full, to the Borrower or to whomsoever
shall be lawfully entitled thereto.
SECTION 11. THE ADMINISTRATIVE AGENT.
11.1. APPOINTMENT. Each Lender hereby irrevocably designates and
appoints NCB as Administrative Agent (such term to include, for the purposes of
this section 11, NCB acting as Collateral Agent) to act as specified herein and
in the other Credit Documents, and each such Lender hereby irrevocably
authorizes NCB as the Administrative Agent for such Lender, to take such action
on its behalf under the provisions of this Agreement and the other Credit
Documents and to exercise such powers and perform such duties as are expressly
delegated to the Administrative Agent by the terms of this Agreement and the
other Credit Documents, together with such other powers as are reasonably
incidental thereto. The Administrative Agent agrees to act as such upon the
express conditions contained in this section 11. Notwithstanding any provision
to the contrary elsewhere in this Agreement, the Administrative Agent shall not
have any duties or responsibilities, except those expressly set forth herein or
in the other Credit Documents, nor any fiduciary relationship with any Lender,
and no implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or otherwise exist against the
Administrative Agent. The provisions of this section 11 are solely for the
benefit of the Administrative Agent, and the Lenders, and the Borrower and its
Subsidiaries shall not have any rights as a third party beneficiary of any of
the provisions hereof. In performing its functions and duties under this
Agreement, the Administrative Agent shall act solely as agent of the Lenders and
does not assume and shall not be deemed to have assumed any obligation or
relationship of agency or trust with or for the Borrower or any of its
Subsidiaries.
11.2. DELEGATION OF DUTIES. The Administrative Agent may execute any of
its duties under this Agreement or any other Credit Document by or through
agents or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. The Administrative Agent shall
not be responsible for the negligence or misconduct of any agents or
attorneys-in-fact selected by it with reasonable care except to the extent
otherwise required by section 11.3.
11.3. EXCULPATORY PROVISIONS. Neither the Administrative Agent nor any
of its respective officers, directors, employees, agents, attorneys-in-fact or
affiliates shall be (i) liable for any action lawfully taken or omitted to be
taken by it or such person under or in connection with this Agreement (except
for its or such person's own gross negligence or willful misconduct) or (ii)
responsible in any manner to any of the Lenders for any recitals, statements,
representations or warranties made by the Borrower or of its Subsidiaries or any
of their respective officers contained in this Agreement, any other Credit
Document or in any certificate, report, statement or other document referred to
or provided for in, or received by the Administrative Agent under or in
connection with, this Agreement or any other Credit Document or for any failure
of the Borrower or any Subsidiary of the Borrower or any of their respective
officers to perform its obligations hereunder or thereunder. The Administrative
Agent shall not be under any obligation to any Lender to ascertain or to inquire
as to the observance or performance of any of the agreements contained in, or
conditions of, this Agreement, or to inspect the properties, books or records of
the Borrower or any of its Subsidiaries. The Administrative Agent shall not be
responsible to any Lender for the effectiveness, genuineness, validity,
enforceability, collectibility or sufficiency of this Agreement or any Credit
Document or for any representations, warranties, recitals or statements made
herein or therein or made in any written or oral statement or in any financial
or other statements, instruments, reports, certificates or any other documents
in connection herewith or therewith furnished or made by the Administrative
Agent to the Lenders or by or on behalf of the Borrower or any of its
Subsidiaries to the Administrative Agent or any Lender or be required to
ascertain or inquire as to the performance or observance of any of the terms,
conditions, provisions, covenants or agreements contained herein or therein or
as to the use of the proceeds of the Loans or of the existence or possible
existence of any Default or Event of Default.
11.4. RELIANCE BY ADMINISTRATIVE AGENT. The Administrative Agent shall
be entitled to rely, and shall be fully protected in relying, upon any note,
writing, resolution, notice, consent, certificate, affidavit, letter, cablegram,
telegram, facsimile transmission, telex or teletype message, statement, order or
other document or conversation believed by it, in good faith, to be genuine and
correct and to have been signed, sent or made by the
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proper person or persons and upon advice and statements of legal counsel
(including, without limitation, counsel to the Borrower or any of its
Subsidiaries), independent accountants and other experts selected by the
Administrative Agent. The Administrative Agent shall be fully justified in
failing or refusing to take any action under this Agreement or any other Credit
Document unless it shall first receive such advice or concurrence of the
Required Lenders as it deems appropriate or it shall first be indemnified to its
satisfaction by the Lenders against any and all liability and expense which may
be incurred by it by reason of taking or continuing to take any such action. The
Administrative Agent shall in all cases be fully protected in acting, or in
refraining from acting, under this Agreement and the other Credit Documents in
accordance with a request of the Required Lenders (or all of the Lenders, as to
any matter which, pursuant to section 13.12, can only be effectuated with the
consent of all Lenders), and such request and any action taken or failure to act
pursuant thereto shall be binding upon all the Lenders.
11.5. NOTICE OF DEFAULT. The Administrative Agent shall not be deemed
to have knowledge or notice of the occurrence of any Default or Event of Default
hereunder unless the Administrative Agent has received notice from a Lender or
the Borrower referring to this Agreement, describing such Default or Event of
Default and stating that such notice is a "notice of default". In the event that
the Administrative Agent receives such a notice, the Administrative Agent shall
give prompt notice thereof to the Lenders. The Administrative Agent shall take
such action with respect to such Default or Event of Default as shall be
reasonably directed by the Required Lenders, provided that unless and until the
Administrative Agent shall have received such directions, the Administrative
Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Default or Event of Default as it shall
deem advisable in the best interests of the Lenders.
11.6. NON-RELIANCE. Each Lender expressly acknowledges that neither the
Administrative Agent nor any of its officers, directors, employees, agents,
attorneys-in-fact or Affiliates have made any representations or warranties to
it and that no act by the Administrative Agent hereinafter taken, including any
review of the affairs of the Borrower or any of its Subsidiaries, shall be
deemed to constitute any representation or warranty by the Administrative Agent
to any Lender. Each Lender represents to the Administrative Agent that it has,
independently and without reliance upon the Administrative Agent, or any other
Lender, and based on such documents and information as it has deemed
appropriate, made its own appraisal of and investigation into the business,
assets, operations, property, financial and other conditions, prospects and
creditworthiness of the Borrower and its Subsidiaries and made its own decision
to make its Loans hereunder and enter into this Agreement. Each Lender also
represents that it will, independently and without reliance upon the
Administrative Agent, or any other Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit analysis, appraisals and decisions in taking or not taking action under
this Agreement, and to make such investigation as it deems necessary to inform
itself as to the business, assets, operations, property, financial and other
conditions, prospects and creditworthiness of the Borrower and its Subsidiaries.
The Administrative Agent shall not have any duty or responsibility to provide
any Lender with any credit or other information concerning the business,
operations, assets, property, financial and other conditions, prospects or
creditworthiness of the Borrower or any of its Subsidiaries which may come into
the possession of the Administrative Agent or any of its officers, directors,
employees, agents, attorneys-in-fact or Affiliates.
11.7. INDEMNIFICATION. The Lenders agree to indemnify the
Administrative Agent in its capacity as such ratably according to their
respective Loans and Unutilized Commitments, from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, reasonable expenses or disbursements of any kind whatsoever which may at
any time (including, without limitation, at any time following the payment of
the Obligations) be imposed on, incurred by or asserted against the
Administrative Agent in its capacity as such in any way relating to or arising
out of this Agreement or any other Credit Document, or any documents
contemplated by or referred to herein or the transactions contemplated hereby or
any action taken or omitted to be taken by the Administrative Agent under or in
connection with any of the foregoing, but only to the extent that any of the
foregoing is not paid by the Borrower, PROVIDED that no Lender shall be liable
to the Administrative Agent for the payment of any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements to the extent resulting solely from the Administrative
Agent's gross negligence or willful misconduct. If any indemnity furnished to
the Administrative Agent for any purpose shall, in the opinion of the
Administrative Agent, be insufficient or become impaired, the Administrative
Agent may call for additional indemnity
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and cease, or not commence, to do the acts indemnified against until such
additional indemnity is furnished. The agreements in this section 11.7 shall
survive the payment of all Obligations.
11.8. THE ADMINISTRATIVE AGENT IN INDIVIDUAL CAPACITY. The
Administrative Agent and its Affiliates may make loans to, accept deposits from
and generally engage in any kind of business with the Borrower, its Subsidiaries
and their Affiliates as though not acting as Administrative Agent hereunder.
With respect to the Loans made by it and all Obligations owing to it, the
Administrative Agent shall have the same rights and powers under this
Agreement as any Lender and may exercise the same as though it were not the
Administrative Agent, and the terms "Lender" and "Lenders" shall include the
Administrative Agent in its individual capacity.
11.9. SUCCESSOR ADMINISTRATIVE AGENT. The Administrative Agent may
resign as the Administrative Agent upon 20 days' notice to the Lenders and the
Borrower. The Required Lenders shall appoint from among the Lenders a successor
Administrative Agent for the Lenders subject to prior approval by the Borrower
(such approval not to be unreasonably withheld or delayed), whereupon such
successor agent shall succeed to the rights, powers and duties of the
Administrative Agent, and the term "Administrative Agent" shall include such
successor agent effective upon its appointment, and the resigning Administrative
Agent's rights, powers and duties as the Administrative Agent shall be
terminated, without any other or further act or deed on the part of such former
Administrative Agent or any of the parties to this Agreement. After the retiring
Administrative Agent's resignation hereunder as the Administrative Agent, the
provisions of this section 11 shall inure to its benefit as to any actions taken
or omitted to be taken by it while it was Administrative Agent under this
Agreement.
11.10. OTHER AGENTS. Any Lender identified herein as a Co-Agent,
Syndication Agent, Managing Agent, Manager or any other corresponding title,
other than "Administrative Agent" or "Collateral Agent", shall have no right,
power, obligation, liability, responsibility or duty under this Agreement or any
other Credit Document except those applicable to all Lenders as such. Each
Lender acknowledges that it has not relied, and will not rely, on any Lender so
identified in deciding to enter into this Agreement or in taking or not taking
any action hereunder.
SECTION 12. GUARANTY BY THE BORROWER.
12.1. GUARANTY OF CERTAIN SUBSIDIARY BORROWINGS. The Borrower hereby
unconditionally guarantees, for the benefit of any Lender or any of its
Affiliates which has extended credit to any Subsidiary of the Borrower which is
supported by a Letter of Credit issued hereunder, the full and punctual payment
of all amounts owed by any such Subsidiary in respect of any such extension or
extensions of credit (collectively, the "GUARANTEED OBLIGATIONS"). Upon failure
by any Subsidiary to pay punctually any such amount, the Borrower shall
forthwith on demand by the Administrative Agent (acting on instructions from any
affected Lender, on its own behalf or on behalf of any of its Affiliates) pay
the amount not so paid at the place and in the currency and otherwise in the
manner specified in any other applicable agreement or instrument.
12.2. ADDITIONAL UNDERTAKING. As a separate, additional and continuing
obligation, the Borrower unconditionally and irrevocably undertakes and agrees,
for the benefit of the Lenders and their Affiliates referred to in section 12.1,
that, should any amounts not be recoverable from the Borrower under section 12.1
for any reason whatsoever (including, without limitation, by reason of any
provision of any Credit Document or any other agreement or instrument executed
in connection therewith being or becoming void, unenforceable, or otherwise
invalid under any applicable law) then, notwithstanding any notice or knowledge
thereof by any Lender, the Administrative Agent, any of their respective
Affiliates, or any other person, at any time, the Borrower as sole, original and
independent obligor, upon demand by the Administrative Agent (acting on
instructions from any affected Lender, on its own behalf or on behalf of any of
its Affiliates), will make payment to the Administrative Agent, for the account
of the affected Lenders (or any such Affiliate), of all such obligations not so
recoverable by way of full indemnity, in such currency and otherwise in such
manner as is provided in any applicable agreement or instrument.
12.3. GUARANTY UNCONDITIONAL, ETC. The obligations of the Borrower
under this section shall be unconditional and absolute and, without limiting the
generality of the foregoing shall not be released, discharged or otherwise
affected by the occurrence, one or more times, of any of the following:
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(i) any extension, renewal, settlement, compromise, waiver or
release in respect to any Guaranteed Obligation of any Subsidiary under
any agreement or instrument, by operation of law or otherwise;
(ii) any modification or amendment of or supplement to this
Agreement, any Note, any other Credit Document, or any agreement or
instrument evidencing or relating to any Guaranteed Obligation;
(iii) any release, non-perfection or invalidity of any direct
or indirect security for any Guaranteed Obligation of any Subsidiary
under any agreement or instrument evidencing or relating to any
Guaranteed Obligation;
(iv) any change in the corporate existence, structure or
ownership of any Subsidiary or any insolvency, bankruptcy,
reorganization or other similar proceeding affecting any Subsidiary or
its assets or any resulting release or discharge of any obligation of
any Subsidiary contained in any agreement or instrument evidencing or
relating to any Guaranteed Obligation;
(v) the existence of any claim, set-off or other rights which
the Borrower may have at any time against any Subsidiary, the
Administrative Agent, any Lender, any Affiliate of any Lender or any
other person, whether in connection herewith or any unrelated
transactions;
(vi) any invalidity or unenforceability relating to or against
any Subsidiary for any reason of any agreement or instrument evidencing
or relating to any Guaranteed Obligation, or any provision of
applicable law or regulation purporting to prohibit the payment by any
Subsidiary of any Guaranteed Obligations; or
(vii) any other act or omission to act or delay of any kind by
any Subsidiary, the Administrative Agent, any Lender, any of their
Affiliates, or any other person, or any other circumstance whatsoever,
which might, but for the provisions of this section, constitute a legal
or equitable discharge of the Borrower's obligations under this
section.
12.4. BORROWER OBLIGATIONS TO REMAIN IN EFFECT; RESTORATION. The
Borrower's obligations under this section shall remain in full force and effect
until the Commitments shall have terminated, and the principal of and interest
on the Notes and other Guaranteed Obligations, and all other amounts payable by
the Borrower or any Subsidiary under the Credit Documents or any other agreement
or instrument evidencing or relating to any of the Guaranteed Obligations, shall
have been paid in full. If at any time any payment of any of the Guaranteed
Obligations of any Subsidiary in respect of any Guaranteed Obligations is
rescinded or must be otherwise restored or returned upon the insolvency,
bankruptcy or reorganization of such Subsidiary, the Borrower's obligations
under this section with respect to such payment shall be reinstated at such time
as though such payment had been due but not made at such time.
12.5. WAIVER OF ACCEPTANCE, ETC. The Borrower irrevocably waives
acceptance hereof, presentment, demand, protest and any notice not provided for
herein, as well as any requirement that at any time any action be taken by any
person against any Subsidiary or any other person, or against any collateral or
guaranty of any other person.
12.6. SUBROGATION. Until the indefeasible payment in full of all of the
Obligations and any other Guaranteed Obligations and the termination of the
Commitments of the Lenders hereunder and the termination of any commitments of
any Lender or its Affiliate to any Subsidiary for any extension of credit to be
supported by a Letter of Credit issued hereunder, the Borrower shall have no
rights, by operation of law or otherwise, upon making any payment under this
section to be subrogated to the rights of the payee against any Subsidiary with
respect to such payment or otherwise to be reimbursed, indemnified or exonerated
by any Subsidiary in respect thereof.
12.7. EFFECT OF STAY. In the event that acceleration of the time for
payment of any amount payable by any Subsidiary under any Guaranteed Obligation
is stayed upon insolvency, bankruptcy or reorganization of such
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Subsidiary, all such amounts otherwise subject to acceleration under the terms
of any applicable agreement or instrument evidencing or relating to any
Guaranteed Obligation shall nonetheless be payable by the Borrower under this
section forthwith on demand by the Administrative Agent.
SECTION 13. MISCELLANEOUS.
13.1. PAYMENT OF EXPENSES ETC. The Borrower agrees to: (i) whether or
not the transactions herein contemplated are consummated, pay all reasonable
out-of-pocket costs and expenses of the Administrative Agent in connection with
the negotiation, preparation, execution and delivery of the Credit Documents and
the documents and instruments referred to therein and any amendment, waiver or
consent relating thereto (including, without limitation, the reasonable fees and
disbursements of Jones, Day, Reavis & Pogue, special counsel to the
Administrative Agent), and of the Administrative Agent and each of the Lenders
in connection with the enforcement of the Credit Documents and the documents and
instruments referred to therein (including, without limitation, the reasonable
fees and disbursements of counsel for the Administrative Agent and for each of
the Lenders and any allocated costs of internal counsel for any of the Lenders);
(ii) in the event of the bankruptcy, insolvency, rehabilitation or other similar
proceeding in respect of the Borrower or any of its Subsidiaries, pay all costs
of collection and defense, including reasonable attorneys' fees in connection
therewith and in connection with any appellate proceeding or post-judgment
action involved therein, which shall be due and payable together with all
required service or use taxes; (iii) pay and hold each of the Lenders harmless
from and against any and all present and future stamp and other similar taxes
with respect to the foregoing matters and save each of the Lenders harmless from
and against any and all liabilities with respect to or resulting from any delay
or omission (other than to the extent attributable to such Lender) to pay such
taxes; and (iv) indemnify each Lender, its officers, directors, employees,
representatives and agents (collectively, the "INDEMNITEES") from and hold each
of them harmless against any and all losses, liabilities, claims, damages or
expenses reasonably incurred by any of them as a result of, or arising out of,
or in any way related to, or by reason of (a) any investigation, litigation or
other proceeding (whether or not any Lender is a party thereto) related to the
entering into and/or performance of any Credit Document or the use of the
proceeds of any Loans hereunder or the consummation of any transactions
contemplated in any Credit Document, other than any such investigation,
litigation or proceeding arising out of transactions solely between any of the
Lenders or the Administrative Agent, transactions solely involving the
assignment by a Lender of all or a portion of its Loans and Commitment, or the
granting of participations therein, as provided in this Agreement, or arising
solely out of any examination of a Lender by any regulatory authority having
jurisdiction over it, or (b) the actual or alleged presence of Hazardous
Materials in the air, surface water or groundwater or on the surface or
subsurface of any Real Property owned, leased or at any time operated by the
Borrower or any of its Subsidiaries, the release, generation, storage,
transportation, handling or disposal of Hazardous Materials at any location,
whether or not owned or operated by the Borrower or any of its Subsidiaries, if
the Borrower or any such Subsidiary could have or is alleged to have any
responsibility in respect thereof, the non-compliance of any Real Property with
foreign, federal, state and local laws, regulations and ordinances (including
applicable permits thereunder) applicable to any Real Property, or any
Environmental Claim asserted against the Borrower or any of its Subsidiaries, in
respect of any Real Property owned, leased or at any time operated by the
Borrower or any of its Subsidiaries, including, in each case, without
limitation, the reasonable fees and disbursements of counsel incurred in
connection with any such investigation, litigation or other proceeding (but
excluding any such losses, liabilities, claims, damages or expenses to the
extent incurred by reason of the negligence or willful misconduct of the person
to be indemnified or of any other Indemnitee who is such person or an Affiliate
of such person). To the extent that the undertaking to indemnify, pay or hold
harmless any person set forth in the preceding sentence may be unenforceable
because it is violative of any law or public policy, the Borrower shall make the
maximum contribution to the payment and satisfaction of each of the indemnified
liabilities which is permissible under applicable law.
13.2. RIGHT OF SETOFF. In addition to any rights now or hereafter
granted under applicable law or otherwise, and not by way of limitation of any
such rights, upon the occurrence of an Event of Default, each Lender is hereby
authorized at any time or from time to time, without presentment, demand,
protest or other notice of any kind to the Borrower or to any other person, any
such notice being hereby expressly waived, to set off and to appropriate and
apply any and all deposits (general or special) and any other Indebtedness at
any time held or owing by such Lender (including, without limitation, by
branches and agencies of such Lender wherever located) to or for
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the credit or the account of the Borrower against and on account of the
Obligations and liabilities of the Borrower (or any of them) to such Lender
under this Agreement or under any of the other Credit Documents, including,
without limitation, all interests in Obligations purchased by such Lender
pursuant to section 13.4(b), and all other claims of any nature or description
arising out of or connected with this Agreement or any other Credit Document,
irrespective of whether or not such Lender shall have made any demand hereunder
and although said Obligations, liabilities or claims, or any of them, shall be
contingent or unmatured.
13.3. NOTICES. Except as otherwise expressly provided herein, all
notices and other communications provided for hereunder shall be in writing
(including telegraphic, telex, facsimile transmission or cable communication)
and mailed, telegraphed, telexed, transmitted, cabled or delivered, (a) if to
the Borrower, to the Borrower at 2307 East Aurora Road, Suite One, Twinsburg,
Ohio 44087, attention: Nicholas R. Sucic, Chief Financial Officer & Treasurer
(facsimile: (216) 405-1335); (b) if to any Lender at its address specified for
such Lender on Annex I hereto; (c) if to the Administrative Agent, at its Notice
Address; or (d) at such other address as shall be designated by any party in a
written notice to the other parties hereto. All such notices and communications
shall be mailed, telegraphed, telexed, telecopied, or cabled or sent by
overnight courier, and shall be effective when received.
13.4. BENEFIT OF AGREEMENT. (a) This Agreement shall be binding upon
and inure to the benefit of and be enforceable by the parties hereto and their
respective successors and assigns, provided that the Borrower may not assign or
transfer any of its rights or obligations hereunder without the prior written
consent of all the Lenders, and, PROVIDED, FURTHER, that any assignment by a
Lender of its rights and obligations hereunder shall be effected in accordance
with section 13.4(b). Each Lender may at any time grant participations in any of
its rights hereunder or under any of the Notes to another financial institution
or any other "accredited investor" (as defined in SEC Regulation D), PROVIDED
that in the case of any such participation, (i) the participant shall not have
any rights under this Agreement or any of the other Credit Documents, including
rights of consent, approval or waiver (the participant's rights against such
Lender in respect of such participation to be those set forth in the agreement
executed by such Lender in favor of the participant relating thereto), (ii) such
Lender's obligations under this Agreement (including, without limitation, its
Commitment hereunder) shall remain unchanged, (iii) such Lender shall remain
solely responsible to the other parties hereto for the performance of such
obligations, (iv) such Lender shall remain the holder of any Note for all
purposes of this Agreement and (v) the Borrower, the Administrative Agent, and
the other Lenders shall continue to deal solely and directly with the selling
Lender in connection with such Lender's rights and obligations under this
Agreement, and all amounts payable by the Borrower hereunder shall be determined
as if such Lender had not sold such participation, except that the participant
shall be entitled to the benefits of sections 2.9, 2.10 and 5.4 of this
Agreement to the extent that such Lender would be entitled to such benefits if
the participation had not been entered into or sold, and, PROVIDED FURTHER, that
no Lender shall transfer, grant or sell any participation under which the
participant shall have rights to approve any amendment to or waiver of this
Agreement or any other Credit Document except to the extent such amendment or
waiver would (x) extend the final scheduled maturity of the Loans in which such
participant is participating (it being understood that any waiver of the making
of any mandatory prepayment of the Loans shall not constitute an extension of
the final maturity date thereof), or reduce the rate or extend the time of
payment of interest or Fees thereon (except in connection with a waiver of the
applicability of any post-default increase in interest rates), or reduce the
principal amount thereof, or increase such participant's participating interest
in any Commitment over the amount thereof then in effect (it being understood
that a waiver of any Default or Event of Default or of any mandatory prepayment
or a mandatory reduction in the Total Commitment, shall not constitute a change
in the terms of any Commitment) or (y) release all or any substantial portion of
the Collateral, or release any Credit Party from any obligations under any
Security Document or the Subsidiary Guaranty, except in accordance with the
explicit terms hereof or thereof, or (z) consent to the assignment or transfer
by the Borrower of any of its rights and obligations under this Agreement.
(b) Notwithstanding the foregoing, (x) any Lender may assign all or a
portion of its Loans and/or Commitment and its rights and obligations hereunder
to another Lender that is not a Defaulting Lender, or to an Affiliate of any
Lender (including itself) which is not a Defaulting Lender which is a commercial
bank, financial institution or other "accredited investor" (as defined in SEC
Regulation D), and (y) any Lender may assign all, or if less than all, a portion
equal to at least $5,000,000 in the aggregate for the assigning Lender or
assigning Lenders, of its Loans and/or Commitments and its rights and
obligations hereunder, to one or more Eligible Transferees, each
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of which assignees shall become a party to this Agreement as a Lender by
execution of an Assignment Agreement, PROVIDED that, (i) in the case of any
assignment of a portion of the Loans and/or Commitment of a Lender, such Lender
shall retain a minimum fixed portion thereof equal to at least $5,000,000
($10,000,000, if such Lender is also the Administrative Agent), (ii) at the time
of any such assignment Annex I shall be deemed modified to reflect the
Commitments of such new Lender and of the existing Lenders, (iii) upon surrender
of the old Notes, new Notes will be issued, at the Borrower's expense, to such
new Lender and to the assigning Lender, such new Notes to be in conformity with
the requirements of section 2.5 (with appropriate modifications) to the extent
needed to reflect the revised Commitments, (iv) in the case of clause (y) only,
the consent of the Administrative Agent and each Letter of Credit Issuer shall
be required in connection with any such assignment (which consent shall not be
unreasonably withheld or delayed), and (v) the Administrative Agent shall
receive at the time of each such assignment, from the assigning or assignee
Lender, the payment of a non-refundable assignment fee of $3,000 and, PROVIDED
FURTHER, that such transfer or assignment will not be effective until recorded
by the Administrative Agent on the Lender Register maintained by it as provided
herein. To the extent of any assignment pursuant to this section 13.4(b), the
assigning Lender shall be relieved of its obligations hereunder with
respect to its assigned Commitments. At the time of each assignment pursuant to
this section 13.4(b) to a person which is not already a Lender hereunder and
which is not a United States person (as such term is defined in section
7701(a)(30) of the Code) for Federal income tax purposes, the respective
assignee Lender shall provide to the Borrower and the Administrative Agent the
appropriate Internal Revenue Service Forms (and, if applicable a Section
5.4(b)(ii) Certificate) described in section 5.4(b). To the extent that an
assignment of all or any portion of a Lender's Commitment and related
outstanding Obligations pursuant to this section 13.4(b) would, at the time of
such assignment, result in increased costs under section 2.9 from those being
charged by the respective assigning Lender prior to such assignment, then the
Borrower shall not be obligated to pay such increased costs (although the
Borrower shall be obligated to any other increased costs of the type described
above resulting from changes after the date of the respective assignment).
Nothing in this section 13.4(b) shall prevent or prohibit any Lender from
pledging its Notes or Loans to a Federal Reserve Bank in support of borrowings
made by such Lender from such Federal Reserve Bank.
(c) Notwithstanding any other provisions of this section 13.4, no
transfer or assignment of the interests or obligations of any Lender hereunder
or any grant of participation therein shall be permitted if such transfer,
assignment or grant would require the Borrower to file a registration statement
with the SEC or to qualify the Loans under the "Blue Sky" laws of any State.
(d) Each Lender initially party to this Agreement hereby represents,
and each person that became a Lender pursuant to an assignment permitted by this
section 13.4 will, upon its becoming party to this Agreement, represent that it
is a commercial lender, other financial institution or other "accredited"
investor (as defined in SEC Regulation D) which makes or acquires loans in the
ordinary course of its business and that it will make or acquire Loans for its
own account in the ordinary course of such business, provided that subject to
the preceding sections 13.4(a) and (b), the disposition of any promissory notes
or other evidences of or interests in Indebtedness held by such Lender shall at
all times be within its exclusive control.
13.5. NO WAIVER: REMEDIES CUMULATIVE. No failure or delay on the part
of the Administrative Agent or any Lender in exercising any right, power or
privilege hereunder or under any other Credit Document and no course of dealing
between the Borrower and the Administrative Agent or any Lender shall operate as
a waiver thereof; nor shall any single or partial exercise of any right, power
or privilege hereunder or under any other Credit Document preclude any other or
further exercise thereof or the exercise of any other right, power or privilege
hereunder or thereunder. The rights and remedies herein expressly provided are
cumulative and not exclusive of any rights or remedies which the Administrative
Agent or any Lender would otherwise have. No notice to or demand on the Borrower
in any case shall entitle the Borrower to any other or further notice or demand
in similar or other circumstances or constitute a waiver of the rights of the
Administrative Agent or the Lenders to any other or further action in any
circumstances without notice or demand.
13.6. PAYMENTS PRO RATA. (a) The Administrative Agent agrees that
promptly after its receipt of each payment from or on behalf of the Borrower in
respect of any Obligations, it shall distribute such payment to the Lenders
(other than any Lender that has expressly waived in writing its right to receive
its PRO RATA share thereof) PRO RATA based upon their respective shares, if any,
of the Obligations with respect to which such payment was
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received. As to any such payment received by the Administrative Agent prior to
1:00 P.M. (local time at its Payment Office) in funds which are immediately
available on such day, the Administrative Agent will use all reasonable efforts
to distribute such payment in immediately available funds on the same day to the
Lenders as aforesaid.
(b) Each of the Lenders agrees that, if it should receive any amount
hereunder (whether by voluntary payment, by realization upon security, by the
exercise of the right of setoff or banker's lien, by counterclaim or cross
action, by the enforcement of any right under the Credit Documents, or
otherwise) which is applicable to the payment of the principal of, or interest
on, the Loans or Fees, of a sum which with respect to the related sum or sums
received by other Lenders is in a greater proportion than the total of such
Obligation then owed and due to such Lender bears to the total of such
Obligation then owed and due to all of the Lenders immediately prior to such
receipt, then such Lender receiving such excess payment shall purchase for cash
without recourse or warranty from the other Lenders an interest in the
Obligations to such Lenders in such amount as shall result in a proportional
participation by all of the Lenders in such amount, provided that if all or any
portion of such excess amount is thereafter recovered from such Lender, such
purchase shall be rescinded and the purchase price restored to the extent of
such recovery, but without interest.
(c) Notwithstanding anything to the contrary contained herein, the
provisions of the preceding sections 13.6(a) and (b) shall be subject to the
express provisions of this Agreement which require, or permit, differing
payments to be made to Lenders which are not Defaulting Lenders, as opposed to
Defaulting Lenders.
13.7. CALCULATIONS: COMPUTATIONS. (a) The financial statements to be
furnished to the Lenders pursuant hereto shall be made and prepared in
accordance with GAAP consistently applied throughout the periods involved
(except as set forth in the notes thereto or as otherwise disclosed in writing
by the Borrower to the Lenders); provided, that if at any time the computations
determining compliance with section 9 utilize accounting principles different
from those utilized in the financial statements furnished to the Lenders, such
computations shall set forth in reasonable detail a description of the
differences and the effect upon such computations.
(b) All computations of interest on Eurocurrency Loans and Prime Rate
Loans hereunder and all computations of Commitment Fees, Letter of Credit Fees
and other Fees hereunder shall be made on the actual number of days elapsed over
a year of 360 days.
13.8. GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER OF JURY
TRIAL. (a) THIS AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL BE CONSTRUED IN
ACCORDANCE WITH AND BE GOVERNED BY THE LAW OF THE STATE OF OHIO, TO THE FULLEST
EXTENT PERMITTED BY LAW, THE BORROWER HEREBY UNCONDITIONALLY AND IRREVOCABLY
WAIVES ANY CLAIM TO ASSERT THAT THE LAW OF ANY JURISDICTION OTHER THAN THE STATE
OF OHIO GOVERNS THIS AGREEMENT OR ANY OF THE OTHER CREDIT DOCUMENTS. Any legal
action or proceeding with respect to this Agreement or any other Credit Document
may be brought in the Courts of the State of Ohio, or of the United States for
the Northern District of Ohio, and, by execution and delivery of this Agreement,
the Borrower hereby irrevocably accepts for itself and in respect of its
property, generally and unconditionally, the jurisdiction of the aforesaid
courts. The Borrower hereby further irrevocably consents to the service of
process out of any of the aforementioned courts in any such action or proceeding
by the mailing of copies thereof by registered or certified mail, postage
prepaid, to the Borrower at its address for notices pursuant to section 13.3,
such service to become effective 30 days after such mailing or at such earlier
time as may be provided under applicable law. Nothing herein shall affect the
right of the Administrative Agent or any Lender to serve process in any other
manner permitted by law or to commence legal proceedings or otherwise proceed
against the Borrower in any other jurisdiction.
(b) The Borrower hereby irrevocably waives any objection which it may
now or hereafter have to the laying of venue of any of the aforesaid actions or
proceedings arising out of or in connection with this Agreement or any other
Credit Document brought in the courts referred to in section 13.8(a) above and
hereby further irrevocably waives and agrees not to plead or claim in any such
court that any such action or proceeding brought in any such court has been
brought in an inconvenient forum.
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(c) EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES ALL
RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT
OF OR RELATING TO THIS AGREEMENT, THE OTHER CREDIT DOCUMENTS OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY.
13.9. COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which when so executed and delivered shall be an original, but all of which
shall together constitute one and the same agreement. A set of counterparts
executed by all the parties hereto shall be lodged with the Borrower and the
Administrative Agent.
13.10. EFFECTIVENESS. This Agreement shall become effective on the date
(the "EFFECTIVE DATE") on which the Borrower and each of the Lenders shall have
signed a copy hereof (whether the same or different copies) and shall have
delivered the same to the Administrative Agent at the Notice Office of the
Administrative Agent or, in the case of the Lenders, shall have given to the
Administrative Agent telephonic (confirmed in writing), written telex or
facsimile transmission notice (actually received) at such office that the same
has been signed and mailed to it.
13.11. HEADINGS DESCRIPTIVE. The headings of the several sections and
other portions of this Agreement are inserted for convenience only and shall not
in any way affect the meaning or construction of any provision of this
Agreement.
13.12. AMENDMENT OR WAIVER. Neither this Agreement nor any terms hereof
or thereof may be changed, waived, discharged or terminated unless such change,
waiver, discharge or termination is in writing signed by the Borrower and the
Required Lenders, provided that no such change, waiver, discharge or termination
shall, without the consent of each Lender (other than a Defaulting Lender)
affected thereby,
(i) extend any interim or final maturity date provided for
herein (including any extension of any interim maturity date to be
effected in accordance with section 4.4 hereof) applicable to a Loan or
a Commitment (it being understood that any waiver of the making of, or
application of, any mandatory prepayment of the Loans shall not
constitute an extension of such final maturity thereof);
(ii) reduce the rate or extend the time of payment of interest
(other than as a result of waiving the applicability of any
post-default increase in interest rates) or Fees thereon, or reduce the
principal amount thereof, or increase the Commitment of any Lender over
the amount thereof then in effect (it being understood that a waiver of
any Default or Event of Default or of any mandatory prepayment or a
mandatory reduction in the Total Commitment shall not constitute a
change in the terms of any Commitment of any Lender);
(iii) release the Borrower from any obligations as a guarantor
of any of its Subsidiaries' obligations under any Credit Document or
other agreement or instrument referred to herein;
(iv) release any Credit Party from the Subsidiary Guaranty,
except in connection with a transaction permitted by section 9.2(f);
(v) release all or any substantial portion of the Collateral
(in each case except as expressly provided in the Credit Documents);
(vi) change the definition of the term "Change of Control" or
any of the provisions of section 5.2(c) which are applicable upon a
Change of Control;
(vii) change the definition of the term "Permitted
Acquisition" or any of the provisions of section 9.2(e) which are
applicable to Permitted Acquisitions which would have the effect of
depriving such Lender of its rights with respect to "hostile
acquisitions" as contemplated by such definition;
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(viii) amend, modify or waive any provision of this section
13.12, or section 11.7, 13.1, 13.4, 13.6 or 13.7(b), or any other
provision of any of the Credit Documents pursuant to which the consent
or approval of all Lenders is by the terms of such provision explicitly
required;
(ix) reduce the percentage specified in, or otherwise modify,
the definition of Required Lenders; or
(x) consent to the assignment or transfer by the Borrower of
any of its rights and obligations under this Agreement.
No provision of section 3 or 11 may be amended without the consent of (x) any
Letter of Credit Issuer adversely affected thereby or (y) the Administrative
Agent, respectively.
13.13. SURVIVAL OF INDEMNITIES. All indemnities set forth herein
including, without limitation, in section 2.9, 2.10, 3.5, 11.7 and 13.1, shall
survive the execution and delivery of this Agreement and the making, prepayment
and repayment of Loans for the longest period permitted under any applicable
statute of limitations.
13.14. DOMICILE OF LOANS. Each Lender may transfer and carry its Loans
at, to or for the account of any branch office, subsidiary or affiliate of such
Lender, PROVIDED that the Borrower shall not be responsible for costs arising
under section 2.9 resulting from any such transfer (other than a transfer
pursuant to section 2.11) to the extent not otherwise applicable to such Lender
prior to such transfer.
13.15. CONFIDENTIALITY. Subject to section 13.4, the Lenders shall hold
all non-public information obtained pursuant to the requirements of this
Agreement which has been identified as such by the Borrower or any Subsidiary in
accordance with its customary procedure for handling confidential information of
this nature and in accordance with safe and sound banking practices and in any
event may make disclosure:
(i) to other Lenders and the Administrative Agent;
(ii) reasonably required by any BONA FIDE transferee or
participant in connection with the contemplated transfer of any Loans
or Commitment or participation therein (PROVIDED that each such
prospective transferee and/or participant shall execute an agreement
for the benefit of the Borrower with such prospective transferor Lender
containing provisions substantially identical to those contained in
this section 13.15);
(iii) to its auditors or attorneys on a confidential basis
consistent with the requirements of this section 13.15;
(iv) as required or requested by any governmental agency or
representative thereof in connection with an examination of the
financial condition of such Lender or any of its Affiliates by such
governmental agency; and/or
(v) as required pursuant to legal process (or, if approved by
the Borrower, as requested in lieu of legal process), provided that,
unless specifically prohibited by applicable law or court order, each
Lender shall notify the Borrower of any such request or demand for
disclosure of any such non-public information prior to disclosure of
such information;
PROVIDED that in no event shall any Lender be obligated or required to return
any materials furnished by or on behalf of the Borrower or any of its
Subsidiaries. The Borrower hereby agrees that the failure of a Lender to comply
with the provisions of this section 13.15 shall not relieve the Borrower of any
of the obligations to such Lender under this Agreement and the other Credit
Documents.
13.16. LENDER REGISTER. The Borrower hereby designates the
Administrative Agent to serve as its agent, solely for purposes of this section
13.16, to retain a copy of each Assignment Agreement delivered to and accepted
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by it and to maintain a register (the "LENDER REGISTER") on or in which it will
record the names and addresses of the Lenders, and the Commitments from time to
time of each of such Lenders to the Borrower, the Loans made to the Borrower by
each of such Lenders and each repayment or prepayment in respect of the
principal amount of such Loans of each such Lender. Failure to make any such
recordation, or (absent manifest error) any error in such recordation, shall not
affect the Borrower's obligations in respect of such Loans. With respect to any
Lender, the transfer of the Commitments of such Lender and the rights to the
principal of, and interest on, any Loan made pursuant to such Commitments shall
not be effective until such transfer is recorded on the Lender Register
maintained by the Administrative Agent with respect to ownership of such
Commitments and Loans and prior to such recordation all amounts owing to the
transferor with respect to such Commitments and Loans shall remain owing to the
transferor. The registration of assignment or transfer of all or part of any
Commitments and Loans shall be recorded by the Administrative Agent on the
Lender Register only upon the acceptance by the Administrative Agent of a
properly executed and delivered Assignment Agreement pursuant to section
13.4(b). The Borrower agrees to indemnify the Administrative Agent from and
against any and all losses, claims, damages and liabilities of whatsoever nature
which may be imposed on, asserted against or incurred by such Administrative
Agent in performing its duties under this section 13.16. The Lender Register
shall be available for inspection by the Borrower or any Lender at any
reasonable time and from time to time upon reasonable prior notice.
13.17. LIMITATIONS ON LIABILITY OF THE LETTER OF CREDIT ISSUERS. The
Borrower assumes all risks of the acts or omissions of any beneficiary or
transferee of any Letter of Credit with respect to its use of such Letters of
Credit. Neither any Letter of Credit Issuer nor any of its officers or directors
shall be liable or responsible for: (a) the use which may be made of any Letter
of Credit or any acts or omissions of any beneficiary or transferee in
connection therewith; (b) the validity, sufficiency or genuineness of documents,
or of any endorsement thereon, even if such documents should prove to be in any
or all respects invalid, insufficient, fraudulent or forged; (c) payment by a
Letter of Credit Issuer against presentation of documents that do not comply
with the terms of a Letter of Credit, including failure of any documents to bear
any reference or adequate reference to such Letter of Credit; or (d) any other
circumstances whatsoever in making or failing to make payment under any Letter
of Credit, except that the Borrower (or a Subsidiary which is the account party
in respect of the Letter of Credit in question) shall have a claim against a
Letter of Credit Issuer, and a Letter of Credit Issuer shall be liable to the
Borrower (or such Subsidiary), to the extent of any direct, but not
consequential, damages suffered by the Borrower (or such Subsidiary) which the
Borrower (or such Subsidiary) proves were caused by (i) such Letter of Credit
Issuer's willful misconduct or gross negligence in determining whether documents
presented under a Letter of Credit comply with the terms of such Letter of
Credit or (ii) such Letter of Credit Issuer's willful failure to make lawful
payment under any Letter of Credit after the presentation to it of documentation
strictly complying with the terms and conditions of such Letter of Credit. In
furtherance and not in limitation of the foregoing, a Letter of Credit Issuer
may accept documents that appear on their face to be in order, without
responsibility for further investigation.
13.18. GENERAL LIMITATION OF LIABILITY. No claim may be made by the
Borrower, any Lender, the Administrative Agent, any Letter of Credit Issuer or
any other person against the Administrative Agent, any Letter of Credit Issuer,
or any other Lender or the Affiliates, directors, officers, employees, attorneys
or agents of any of them for any damages other than actual compensatory damages
in respect of any claim for breach of contract or any other theory of liability
arising out of or related to the transactions contemplated by this Agreement or
any of the other Credit Documents, or any act, omission or event occurring in
connection therewith; and the Borrower, each Lender, each Administrative Agent
and each Letter of Credit Issuer hereby, to the fullest extent permitted under
applicable law, waives, releases and agrees not to sue or counterclaim upon any
such claim for any special, consequential or punitive damages, whether or not
accrued and whether or not known or suspected to exist in its favor.
13.19. NO DUTY. All attorneys, accountants, appraisers, consultants and
other professional persons (including the firms or other entities on behalf of
which any such person may act) retained by the Administrative Agent or any
Lender with respect to the transactions contemplated by the Credit Documents
shall have the right to act exclusively in the interest of the applicable
Administrative Agent or such Lender, as the case may be, and shall have no duty
of disclosure, duty of loyalty, duty of care, or other duty or obligation of any
type or nature whatsoever to the Borrower, to any of its Subsidiaries, or to any
other person, with respect to any matters within the scope of such
representation or related to their activities in connection with such
representation.
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13.20. LENDERS AND ADMINISTRATIVE AGENT NOT FIDUCIARY TO BORROWER, ETC.
The relationship among the Borrower and its Subsidiaries, on the one hand, and
the Administrative Agent, each Letter of Credit Issuer and the Lenders, on the
other hand, is solely that of debtor and creditor, and the Administrative Agent,
each Letter of Credit Issuer and the Lenders have no fiduciary or other special
relationship with the Borrower and its Subsidiaries, and no term or provision of
any Credit Document, no course of dealing, no written or oral communication, or
other action, shall be construed so as to deem such relationship to be other
than that of debtor and creditor.
13.21. JUDGMENT CURRENCY. (a) The Credit Parties' obligations hereunder
and under the other Credit Documents to make payments in U.S. dollars shall not
be discharged or satisfied by any tender or recovery pursuant to any judgment
expressed in or converted into any currency other than U.S. dollars, except to
the extent that such tender or recovery results in the effective receipt by the
Administrative Agent or the applicable Lender of the full amount of U.S. dollars
expressed to be payable to the Administrative Agent or such Lender under this
Agreement or the other Credit Documents. If, for the purpose of obtaining or
enforcing judgment against any Credit Party in any court or in any jurisdiction,
it becomes necessary to convert into or from any currency other than U.S.
dollars (such other currency being hereinafter referred to as the "JUDGMENT
CURRENCY") an amount due in U.S. dollars, the conversion shall be made at the
equivalent thereof in Dollars determined as of the Business Day immediately
preceding the day on which the judgment is given (such Business Day being
hereinafter referred to as the "JUDGMENT CURRENCY CONVERSION DATE").
(b) If there is a change in the rate of exchange prevailing between the
Judgment Currency Conversion Date and the date of actual payment of the amount
due, the Borrower covenants and agrees to pay, or cause to be paid, such
additional amounts, if any (but in any event not a lesser amount) as may be
necessary to ensure that the amount paid in the Judgment Currency, when
converted at the rate of exchange prevailing on the date of payment, will
produce the amount of U.S. dollars which could have been purchased with the
amount of Judgment Currency stipulated in the judgment or judicial award at the
rate of exchange prevailing on the Judgment Currency Conversion Date.
(c) For purposes of determining the equivalent in Dollars for this
section, such amount shall include any premium and costs payable in connection
with the conversion into or from the Judgment Currency.
13.22. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations
and warranties herein shall survive the making of Loans and the issuance of
Letters of Credit hereunder, the execution and delivery of this Agreement, the
Notes and the other documents the forms of which are attached as Exhibits
hereto, the issue and delivery of the Notes, any disposition thereof by any
holder thereof, and any investigation made by the Administrative Agent or any
Lender or any other holder of any of the Notes or on its behalf. All statements
contained in any certificate or other document delivered to the Administrative
Agent or any Lender or any holder of any Notes by or on behalf of the Borrower
or of its Subsidiaries pursuant hereto or otherwise specifically for use in
connection with the transactions contemplated hereby shall constitute
representations and warranties by the Borrower hereunder, made as of the
respective dates specified therein or, if no date is specified, as of the
respective dates furnished to the Administrative Agent or any Lender.
[The balance of this page is intentionally blank.]
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IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart
of this Agreement to be duly executed and delivered as of the date first above
written.
ADVANCED LIGHTING TECHNOLOGIES, INC.
BY: /S/______________________________________
CHIEF FINANCIAL OFFICER & TREASURER
NATIONAL CITY BANK, INDIVIDUALLY
AND AS ADMINISTRATIVE AGENT
BY: /S/______________________________________
SENIOR VICE PRESIDENT
NBD BANK
BY: /S/______________________________________
FIRST VICE PRESIDENT
PNC BANK, NATIONAL ASSOCIATION
BY: /S/______________________________________
VICE PRESIDENT
NATIONAL BANK OF CANADA,
A CANADIAN CHARTERED BANK,
CLEVELAND REPRESENTATIVE OFFICE
BY: /S/______________________________________
VICE PRESIDENT
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<PAGE> 1
Exhibit 10.3
================================================================================
================================================================================
ADVANCED LIGHTING TECHNOLOGIES, INC.
AS THE BORROWER
AND
THE FINANCIAL INSTITUTIONS NAMED HEREIN
AS LENDERS
AND
NATIONAL CITY BANK
AS ADMINISTRATIVE AGENT
---------------------
AMENDMENT NO. 1
DATED AS OF
FEBRUARY 26, 1998
TO
CREDIT AGREEMENT
DATED AS OF
JANUARY 2, 1998
---------------------
================================================================================
================================================================================
<PAGE> 2
AMENDMENT NO. 1 TO CREDIT AGREEMENT
THIS AMENDMENT NO. 1 TO CREDIT AGREEMENT, dated as of February 26,
1998 ("THIS AMENDMENT"), among:
(I) ADVANCED LIGHTING TECHNOLOGIES, INC., an Ohio
corporation (herein, together with its successors and assigns, the
"BORROWER");
(II) the financial institutions listed on the signature
pages hereof (the "LENDERS"); and
(III) NATIONAL CITY BANK, a national banking association,
as Administrative Agent (the "ADMINISTRATIVE AGENT") for the
Lenders under the Credit Agreement:
PRELIMINARY STATEMENTS:
(1) The Borrower, the Lenders named therein, and the Administrative
Agent entered into the Credit Agreement, dated as of January 2, 1998 (herein
referred to as the "CREDIT AGREEMENT"; with the terms defined therein, or the
definitions of which are incorporated therein, being used herein as so defined).
(2) The Borrower has requested the Lenders and the Administrative
Agent to modify certain of the provisions of the Credit Agreement in order,
among other things, to permit the Borrower to issue and sell up to $100,000,000
aggregate principal amount of its Senior Notes due 2008, and the Lenders and the
Administrative Agent are willing to so modify the provisions of the Credit
Agreement, all as more fully set forth below.
NOW, THEREFORE, the parties hereby agree as follows:
SECTION 1. AMENDMENTS.
1.1. INDEBTEDNESS COVENANT. Effective on the Effective Date (as
hereinafter defined),
(a) the Lenders consent to the incurrence by the Borrower
of additional Indebtedness consisting of up to $100,000,000
aggregate principal amount of its Senior Notes due 2008 offered and
sold as contemplated by the Company's offering memorandum relating
thereto, as furnished by the Company to the Lenders prior to the
execution and delivery hereof by any Lender; and
(b) in order to give full effect to the foregoing consent,
Annex III to the Credit Agreement is amended by adding thereto a
reference to such aggregate principal amount of the Company's
Senior Notes due 2008.
1.2. PRICING. The Borrower agrees that, effective on the Effective
Date and continuing until changed in accordance with the terms of the Credit
Agreement in connection with the delivery subsequent to the Effective Date of
consolidated financial statements of the Company which reflect the issuance of
the Borrower's Senior Notes due 2008 and demonstrate the basis for any change,
the Applicable Eurocurrency Margin will be 175.00 basis points, the Applicable
Prime Rate Margin will be 25.00 basis points and the
<PAGE> 3
Applicable Commitment Fee Rate will be 37.50 basis points. The Credit Agreement
shall be deemed amended to take into account the preceding sentence,
notwithstanding anything to the contrary contained in the Credit Agreement.
SECTION 2. REPRESENTATIONS AND WARRANTIES.
The Borrower represents and warrants as follows:
2.1. AUTHORIZATION, VALIDITY AND BINDING EFFECT. This Amendment has
been duly authorized by all necessary corporate action on the part of the
Borrower, has been duly executed and delivered by a duly authorized officer or
officers of the Borrower, and constitutes the valid and binding agreement of the
Borrower, enforceable against the Borrower in accordance with its terms.
2.2. REPRESENTATIONS AND WARRANTIES TRUE AND CORRECT. The
representations and warranties of the Borrower contained in the Credit
Agreement, as amended hereby, are true and correct on and as of the date hereof
as though made on and as of the date hereof, except to the extent that such
representations and warranties expressly relate to a specified date, in which
case such representations and warranties are hereby reaffirmed as true and
correct when made.
2.3. NO EVENT OF DEFAULT, ETC. No condition or event has occurred
or exists which constitutes or which, after notice or lapse of time or both,
would constitute an Event of Default.
2.4. COMPLIANCE. The Borrower is in full compliance with all
covenants and agreements contained in the Credit Agreement, as amended hereby.
SECTION 3. EFFECTIVENESS.
This Amendment shall become effective on and as of the date (the
"EFFECTIVE DATE"), on or before March 31, 1998, on which the following
conditions are satisfied:
(a) this Amendment shall have been executed by the
Borrower and the Administrative Agent, and counterparts hereof as
so executed shall have been delivered to the Administrative Agent;
(b) the Acknowledgment and Consent appended hereto shall
have been executed by the Credit Parties named therein, and
counterparts hereof as so executed shall have been delivered to the
Administrative Agent;
(c) the Administrative Agent shall have been notified by
all of the Lenders that such Lenders have executed this Amendment
(which notification may be by facsimile or other written
confirmation of such execution); and
2
<PAGE> 4
(d) the Borrower shall have completed the issuance and
sale of its Senior Notes due 2008 as contemplated by the Company's
offering memorandum relating thereto, as furnished by the Company
to the Lenders prior to the execution and delivery hereof by any
Lender, and the Borrower shall have notified the Administrative
Agent that such issuance and sale have been completed.
The Administrative Agent shall notify the Borrower and each Lender in writing of
the effectiveness hereof.
4. SECTION RATIFICATIONS.
The terms and provisions set forth in this Amendment shall modify
and supersede all inconsistent terms and provisions set forth in the Credit
Agreement, and except as expressly modified and superseded by this Amendment,
the terms and provisions of the Credit Agreement are ratified and confirmed and
shall continue in full force and effect.
5. SECTION MISCELLANEOUS.
5.1. SUCCESSORS AND ASSIGNS. This Amendment shall be binding upon
and inure to the benefit of the Borrower, each Lender and the Administrative
Agent and their respective permitted successors and assigns.
5.2. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties made in this Amendment shall survive the
execution and delivery of this Amendment, and no investigation by the
Administrative Agent or any Lender or any subsequent Loan or issuance of a
Letter of Credit shall affect the representations and warranties or the right of
the Administrative Agent or any Lender to rely upon them.
5.3. REFERENCE TO CREDIT AGREEMENT. The Credit Agreement and any
and all other agreements, instruments or documentation now or hereafter executed
and delivered pursuant to the terms of the Credit Agreement as amended hereby,
are hereby amended so that any reference therein to the Credit Agreement shall
mean a reference to the Credit Agreement as amended hereby.
5.4. EXPENSES. As provided in the Credit Agreement, but without
limiting any terms or provisions thereof, the Borrower agrees to pay on demand
all costs and expenses incurred by the Administrative Agent in connection with
the preparation, negotiation, and execution of this Amendment, including without
limitation the costs and fees of the Administrative Agent's special legal
counsel, regardless of whether this Amendment becomes effective in accordance
with the terms hereof, and all costs and expenses incurred by the Administrative
Agent or any Lender in connection with the enforcement or preservation of any
rights under the Credit Agreement, as amended hereby.
5.5. SEVERABILITY. Any term or provision of this Amendment held by
a court of competent jurisdiction to be invalid or unenforceable shall not
impair or invalidate the remainder of this Amendment and the effect thereof
shall be confined to the term or provision so held to be invalid or
unenforceable.
5.6. APPLICABLE LAW. This Amendment shall be governed by and
construed in accordance with the laws of the State of Ohio.
3
<PAGE> 5
5.7. HEADINGS. The headings, captions and arrangements used in this
Amendment are for convenience only and shall not affect the interpretation of
this Amendment.
5.8. ENTIRE AGREEMENT. This Amendment is specifically limited to
the matters expressly set forth herein. This Amendment and all other
instruments, agreements and documentation executed and delivered in connection
with this Amendment embody the final, entire agreement among the parties hereto
with respect to the subject matter hereof and supersede any and all prior
commitments, agreements, representations and understandings, whether written or
oral, relating to the matters covered by this Amendment, and may not be
contradicted or varied by evidence of prior, contemporaneous or subsequent oral
agreements or discussions of the parties hereto. There are no oral agreements
among the parties hereto relating to the subject matter hereof or any other
subject matter relating to the Credit Agreement.
5.9. COUNTERPARTS. This Amendment may be executed by the parties
hereto separately in one or more counterparts, each of which when so executed
shall be deemed to be an original, but all of which when taken together shall
constitute one and the same agreement.
4
<PAGE> 6
IN WITNESS WHEREOF, this Amendment has been duly executed and
delivered as of the date first above written.
ADVANCED LIGHTING TECHNOLOGIES, INC.
By:/s/
----------------------------------------
Chief Financial Officer & Treasurer
NATIONAL CITY BANK,
individually and as Administrative Agent
By:/s/
----------------------------------------
Senior Vice President
NBD BANK
By:/s/
----------------------------------------
First Vice President
PNC BANK, NATIONAL ASSOCIATION
By:/s/
----------------------------------------
Vice President
NATIONAL BANK OF CANADA,
a Canadian Chartered Bank,
Cleveland Representative Office
By:/s/
----------------------------------------
Vice President
5
<PAGE> 7
ACKNOWLEDGMENT AND CONSENT
For the avoidance of doubt, and without limitation of the intent and
effect of sections 6 and 10 of the Subsidiary Guaranty (as such term is defined
in the Credit Agreement referred to in the Amendment No. 1 to Credit Agreement
(the "AMENDMENT"), to which this Acknowledgment and Consent is appended), each
of the undersigned hereby unconditionally and irrevocably (i) acknowledges
receipt of a copy of the Credit Agreement and the Amendment, and (ii) consents
to all of the terms and provisions of the Credit Agreement as amended by the
Amendment.
Capitalized terms which are used herein without definition shall have
the respective meanings ascribed thereto in the Credit Agreement referred to
herein. This Acknowledgment and Consent is for the benefit of the Lenders and
the Administrative Agent, any other person who is a third party beneficiary of
the Subsidiary Guaranty, and their respective successors and assigns. No term or
provision of this Acknowledgment and Consent may be modified or otherwise
changed without the prior written consent of the Administrative Agent, given as
provided in the Credit Agreement. This Acknowledgment and Consent shall be
binding upon the successors and assigns of each of the undersigned. This
Acknowledgment and Consent may be executed by any of the undersigned in separate
counterparts, each of which shall be an original and all of which together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, each of the undersigned has duly executed and
delivered this Acknowledgment and Consent as of the date of the Amendment
referred to herein.
<TABLE>
<S> <C>
APL ENGINEERED MATERIALS, INC. LIGHTING RESOURCES INTERNATIONAL, INC.
VENTURE LIGHTING INTERNATIONAL, INC. BALLASTRONIX (DELAWARE), INC.
SPECIALTY DISCHARGE LIGHTING, INC. ADVANCED LIGHTING SYSTEMS, INC.
METAL HALIDE TECHNOLOGIES, INC.
THE LIGHT SOURCE, INC.
ENERGY-WISE LIGHTING, INC. By: /s/
HID DIRECT, INC. -------------------------------------
BRIGHT IDEAS ADVERTISING AND DESIGN, INC. Louis S. Fisi, Secretary,
METAL HALIDE CONTROLS, INC. on behalf of each of the above corporations
a/k/a Current Industries, Inc.
HID RECYCLING, INC.
MICROSUN TECHNOLOGIES, INC.
ENERGY EFFICIENT PRODUCTS, INC. RUUD LIGHTING, INC.
BIO LIGHT, INC.
ADLT SERVICES, INC.
ADVANCED ACQUISITIONS, INC. By:/s/
------------------------------------
Alan J. Ruud, President
By: /s/
------------------------------------------
Nicholas R. Sucic, Vice President,
on behalf of each of the above corporations
</TABLE>
<PAGE> 1
Exhibit 10.4
================================================================================
ADVANCED LIGHTING TECHNOLOGIES, INC.,
Issuer
and
THE BANK OF NEW YORK,
Trustee
------------------
Indenture
Dated as of March 18, 1998
8% Senior Notes due 2008
------------------
================================================================================
<PAGE> 2
CROSS-REFERENCE TABLE
---------------------
<TABLE>
<CAPTION>
TIA Sections Indenture Sections
- ------------ ------------------
<S> <C>
Sec. 310(a)(1)......................................................... 7.10
(a)(2).......................................................... 7.10
(b)............................................................. 7.03; 7.08
Sec.311(a)............................................................. 7.03
(b)............................................................. 7.03
Sec. 312(a)............................................................ 2.04
(b)............................................................. 10.02
(c)............................................................. 10.02
Sec.313(a)............................................................. 7.06
(b)(2).......................................................... 7.07
(c)............................................................. 7.05; 7.06; 10.02
(d)............................................................. 7.06
Sec. 314(a)............................................................ 7.05; 10.02
(a)(4).......................................................... 4.17; 10.02
(c)(1).......................................................... 10.03
(c)(2).......................................................... 10.03
(e)............................................................. 4.17; 10.04
Sec.315(a)............................................................. 7.02
(b)............................................................. 7.05; 10.02
(c)............................................................. 7.02
(d)............................................................. 7.02
(e)............................................................. 6.11
Sec. 316(a)(1)(A)...................................................... 6.05
(a)(1)(B)....................................................... 6.04
(b)............................................................. 6.07
(c)............................................................. 9.03
Sec. 317(a)(1)......................................................... 6.08
(a)(2).......................................................... 6.09
(b)............................................................. 2.05
Sec. 318(a)............................................................ 10.01
(c)............................................................. 10.01
</TABLE>
Note: The Cross-Reference Table shall not for any purpose be deemed to be a
part of this Indenture.
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
<S> <C> <C>
SECTION 1.01. DEFINITIONS ........................................................ 1
SECTION 1.02. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT .................. 21
SECTION 1.03. RULES OF CONSTRUCTION .............................................. 22
ARTICLE TWO
THE NOTES
SECTION 2.01. FORM AND DATING .................................................... 23
SECTION 2.02. RESTRICTIVE LEGENDS ................................................ 24
SECTION 2.03. EXECUTION, AUTHENTICATION AND DENOMINATIONS ........................ 26
SECTION 2.04. REGISTRAR AND PAYING AGENT ......................................... 27
SECTION 2.05. PAYING AGENT TO HOLD MONEY IN TRUST ................................ 28
SECTION 2.06. TRANSFER AND EXCHANGE .............................................. 28
SECTION 2.07. BOOK-ENTRY PROVISIONS FOR GLOBAL NOTES ............................. 29
SECTION 2.08. SPECIAL TRANSFER PROVISIONS ........................................ 31
SECTION 2.09. REPLACEMENT NOTES .................................................. 33
SECTION 2.10. OUTSTANDING NOTES .................................................. 34
SECTION 2.11. TEMPORARY NOTES .................................................... 34
SECTION 2.12. CANCELLATION ....................................................... 35
SECTION 2.13. CUSIP NUMBERS ...................................................... 35
SECTION 2.14. DEFAULTED INTEREST ................................................. 35
SECTION 2.15. ISSUANCE OF ADDITIONAL NOTES ....................................... 35
ARTICLE THREE
REDEMPTION
SECTION 3.01. RIGHT OF REDEMPTION ................................................ 35
SECTION 3.02. NOTICES TO TRUSTEE ................................................. 36
SECTION 3.03. SELECTION OF NOTES TO BE REDEEMED .................................. 36
</TABLE>
- --------
Note: The Table of Contents shall not for any purposes be deemed to be a part
of this Indenture.
<PAGE> 4
ii
<TABLE>
<S> <C> <C>
SECTION 3.04. NOTICE OF REDEMPTION ............................................... 37
SECTION 3.05. EFFECT OF NOTICE OF REDEMPTION ..................................... 38
SECTION 3.06. DEPOSIT OF REDEMPTION PRICE ........................................ 38
SECTION 3.07. PAYMENT OF NOTES CALLED FOR REDEMPTION ............................. 38
SECTION 3.08. NOTES REDEEMED IN PART ............................................. 38
ARTICLE FOUR
COVENANTS
SECTION 4.01. PAYMENT OF NOTES ................................................... 39
SECTION 4.02. MAINTENANCE OF OFFICE OR AGENCY .................................... 39
SECTION 4.03. LIMITATION ON INDEBTEDNESS ......................................... 39
SECTION 4.04. LIMITATION ON RESTRICTED PAYMENTS .................................. 42
SECTION 4.05. LIMITATION ON DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING
RESTRICTED SUBSIDIARIES .......................................... 44
SECTION 4.06. LIMITATION ON THE ISSUANCE AND SALE OF CAPITAL STOCK OF
RESTRICTED SUBSIDIARIES .......................................... 45
SECTION 4.07. LIMITATION ON ISSUANCES OF GUARANTEES BY RESTRICTED SUBSIDIARIES ... 45
SECTION 4.08. LIMITATION ON TRANSACTIONS WITH SHAREHOLDERS AND AFFILIATES ........ 46
SECTION 4.09. LIMITATION ON LIENS ................................................ 47
SECTION 4.10. LIMITATION ON SALE-LEASEBACK TRANSACTIONS .......................... 47
SECTION 4.11. LIMITATION ON ASSET SALES .......................................... 48
SECTION 4.12. REPURCHASE OF NOTES UPON A CHANGE OF CONTROL ....................... 49
SECTION 4.13. EXISTENCE .......................................................... 49
SECTION 4.14. PAYMENT OF TAXES AND OTHER CLAIMS .................................. 49
SECTION 4.15. MAINTENANCE OF PROPERTIES AND INSURANCE ............................ 50
SECTION 4.16. NOTICE OF DEFAULTS ................................................. 50
SECTION 4.17. COMPLIANCE CERTIFICATES ............................................ 50
SECTION 4.18. COMMISSION REPORTS AND REPORTS TO HOLDERS .......................... 51
SECTION 4.19. WAIVER OF STAY, EXTENSION OR USURY LAWS ............................ 51
ARTICLE FIVE
SUCCESSOR CORPORATION
SECTION 5.01. WHEN COMPANY MAY MERGE, ETC. ....................................... 52
SECTION 5.02. SUCCESSOR SUBSTITUTED .............................................. 53
</TABLE>
<PAGE> 5
iii
<TABLE>
<CAPTION>
ARTICLE SIX
DEFAULT AND REMEDIES
<S> <C> <C>
SECTION 6.01. EVENTS OF DEFAULT .................................................. 53
SECTION 6.02. ACCELERATION ....................................................... 54
SECTION 6.03. OTHER REMEDIES ..................................................... 55
SECTION 6.04. WAIVER OF PAST DEFAULTS ............................................ 55
SECTION 6.05. CONTROL BY MAJORITY ................................................ 55
SECTION 6.06. LIMITATION ON SUITS ................................................ 56
SECTION 6.07. RIGHTS OF HOLDERS TO RECEIVE PAYMENT ............................... 56
SECTION 6.08. COLLECTION SUIT BY TRUSTEE ......................................... 56
SECTION 6.09. TRUSTEE MAY FILE PROOFS OF CLAIM ................................... 57
SECTION 6.10. PRIORITIES ......................................................... 57
SECTION 6.11. UNDERTAKING FOR COSTS .............................................. 58
SECTION 6.12. RESTORATION OF RIGHTS AND REMEDIES ................................. 58
SECTION 6.13. RIGHTS AND REMEDIES CUMULATIVE ..................................... 58
SECTION 6.14. DELAY OR OMISSION NOT WAIVER ....................................... 58
ARTICLE SEVEN
TRUSTEE
SECTION 7.01. GENERAL ............................................................ 59
SECTION 7.02. CERTAIN RIGHTS OF TRUSTEE .......................................... 59
SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE ....................................... 60
SECTION 7.04. TRUSTEE'S DISCLAIMER ............................................... 60
SECTION 7.05. NOTICE OF DEFAULT .................................................. 60
SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS ...................................... 61
SECTION 7.07. COMPENSATION AND INDEMNITY ......................................... 61
SECTION 7.08. REPLACEMENT OF TRUSTEE ............................................. 62
SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER, ETC. .................................. 63
SECTION 7.10. ELIGIBILITY ........................................................ 63
SECTION 7.11. MONEY HELD IN TRUST ................................................ 63
ARTICLE EIGHT
DISCHARGE OF INDENTURE
SECTION 8.01. TERMINATION OF COMPANY'S OBLIGATIONS ............................... 63
</TABLE>
<PAGE> 6
iv
<TABLE>
<S> <C> <C>
SECTION 8.02. DEFEASANCE AND DISCHARGE OF INDENTURE .............................. 64
SECTION 8.03. DEFEASANCE OF CERTAIN OBLIGATIONS .................................. 66
SECTION 8.04. APPLICATION OF TRUST MONEY; MISCELLANEOUS .......................... 68
SECTION 8.05. REPAYMENT TO COMPANY ............................................... 68
SECTION 8.06. REINSTATEMENT ...................................................... 69
ARTICLE NINE
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.01. WITHOUT CONSENT OF HOLDERS ......................................... 69
SECTION 9.02. WITH CONSENT OF HOLDERS ............................................ 70
SECTION 9.03. REVOCATION AND EFFECT OF CONSENT ................................... 71
SECTION 9.04. NOTATION ON OR EXCHANGE OF NOTES ................................... 72
SECTION 9.05. TRUSTEE TO SIGN AMENDMENTS, ETC. ................................... 72
SECTION 9.06. CONFORMITY WITH TRUST INDENTURE ACT ................................ 72
ARTICLE TEN
MISCELLANEOUS
SECTION 10.01. TRUST INDENTURE ACT OF 1939 ....................................... 72
SECTION 10.02. NOTICES ........................................................... 72
SECTION 10.03. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT ................ 74
SECTION 10.04. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION ..................... 74
SECTION 10.05. RULES BY TRUSTEE, PAYING AGENT OR REGISTRAR ....................... 75
SECTION 10.06. PAYMENT DATE OTHER THAN A BUSINESS DAY ............................ 75
SECTION 10.07. GOVERNING LAW ..................................................... 75
SECTION 10.08. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS ..................... 75
SECTION 10.09. NO RECOURSE AGAINST OTHERS ........................................ 75
SECTION 10.10. SUCCESSORS ........................................................ 75
SECTION 10.11. DUPLICATE ORIGINALS ............................................... 76
SECTION 10.12. SEPARABILITY ...................................................... 76
SECTION 10.13. TABLE OF CONTENTS, HEADINGS, ETC. ................................. 76
EXHIBIT A Form of Note ........................................................ A-1
EXHIBIT B Form of Certificate to Be Delivered in Connection
with Legended Offshore Global Notes or
Offshore Physical Notes .................................... B-1
EXHIBIT C Form of Certificate to Be Delivered in Connection with
Transfers Pursuant to Non-QIB Accredited Investors ......... C-1
</TABLE>
<PAGE> 7
v
<TABLE>
<S> <C> <C>
EXHIBIT D Form of Certificate to Be Delivered in Connection with
Transfers Pursuant to Regulation S ......................... D-1
</TABLE>
<PAGE> 8
INDENTURE, dated as of March 18, 1998, between ADVANCED LIGHTING
TECHNOLOGIES, INC., an Ohio corporation (the "COMPANY"), and THE BANK OF NEW
YORK, a New York banking corporation, trustee (the "TRUSTEE").
RECITALS
The Company has duly authorized the execution and delivery of this
Indenture to provide for the issuance initially of up to $100,000,000 aggregate
principal amount of the Company's 8% Senior Notes due 2008 (the "Notes")
issuable as provided in this Indenture. All things necessary to make this
Indenture a valid agreement of the Company, in accordance with its terms, have
been done, and the Company has done all things necessary to make the Notes, when
executed by the Company and authenticated and delivered by the Trustee hereunder
and duly issued by the Company, valid obligations of the Company as hereinafter
provided.
This Indenture is subject to, and shall be governed by, the provisions
of the Trust Indenture Act of 1939, as amended, that are required to be a part
of and to govern indentures qualified under the Trust Indenture Act of 1939, as
amended.
AND THIS INDENTURE FURTHER WITNESSETH
For and in consideration of the premises and the purchase of the Notes
by the Holders thereof, it is mutually covenanted and agreed, for the equal and
proportionate benefit of all Holders, as follows.
ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. Definitions.
------------
"Acquired Indebtedness" means Indebtedness of a Person existing at the
time such Person becomes a Restricted Subsidiary or assumed in connection with
an Asset Acquisition by a Restricted Subsidiary and not Incurred in connection
with, or in anticipation of, such Person becoming a Restricted Subsidiary or
such Asset Acquisition; provided that Indebtedness of such Person which is
redeemed, defeased, retired or otherwise repaid at the time of or immediately
upon consummation of the transactions by which such Person becomes a Restricted
Subsidiary or such Asset Acquisition shall not be Acquired Indebtedness.
"Adjusted Consolidated Net Income" means, for any period, the aggregate
net income (or loss) of the Company and its Restricted Subsidiaries for such
period determined in conformity with GAAP; provided that the following items
shall be excluded in computing Adjusted Consolidated Net Income (without
duplication): (i) the net income of any Person that is not a Restricted
<PAGE> 9
2
Subsidiary, except to the extent of the amount of dividends or other
distributions actually paid to the Company or any of its Restricted Subsidiaries
by such Person during such period; (ii) solely for the purposes of calculating
the amount of Restricted Payments that may be made pursuant to clause (C) of the
first paragraph of Section 4.04 (and in such case, except to the extent
includable pursuant to clause (i) above), the net income (or loss) of any Person
accrued prior to the date it becomes a Restricted Subsidiary or is merged into
or consolidated with the Company or any of its Restricted Subsidiaries or all or
substantially all of the property and assets of such Person are acquired by the
Company or any of its Restricted Subsidiaries; (iii) the net income of any
Restricted Subsidiary to the extent that the declaration or payment of dividends
or similar distributions by such Restricted Subsidiary of such net income is not
at the time permitted by the operation of the terms of its charter or any
agreement, instrument, judgment, decree, order, statute, rule or governmental
regulation applicable to such Restricted Subsidiary; (iv) any gains or losses
(on an after-tax basis) attributable to Asset Sales; (v) except for purposes of
calculating the amount of Restricted Payments that may be made pursuant to
clause (C) of the first paragraph of Section 4.04, any amount paid or accrued as
dividends on Preferred Stock of the Company or any Restricted Subsidiary owned
by Persons other than the Company and any of its Restricted Subsidiaries; and
(vi) all extraordinary gains and extraordinary losses (on an after-tax basis).
"Adjusted Consolidated Net Tangible Assets" means the total amount of
assets of the Company and its Restricted Subsidiaries (less applicable
depreciation, amortization and other valuation reserves), except to the extent
resulting from write-ups of capital assets (excluding write-ups in connection
with accounting for acquisitions in conformity with GAAP), after deducting
therefrom (i) all current liabilities of the Company and its Restricted
Subsidiaries (excluding intercompany items) and (ii) all goodwill, trade names,
trademarks, patents, unamortized debt discount and expense and other like
intangibles, all as set forth on the most recent quarterly or annual
consolidated balance sheet of the Company and its Restricted Subsidiaries,
prepared in conformity with GAAP and filed with the Commission or provided to
the Trustee pursuant to Section 4.18.
"Affiliate" means, as applied to any Person, any other Person directly
or indirectly controlling, controlled by, or under direct or indirect common
control with, such Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as applied to any Person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities, by contract or otherwise.
"Agent" means any Registrar, Co-Registrar, Paying Agent or
authenticating agent.
"Agent Members" has the meaning provided in Section 2.07(a).
<PAGE> 10
3
"Asset Acquisition" means (i) an investment by the Company or any of
its Restricted Subsidiaries in any other Person pursuant to which such Person
shall become a Restricted Subsidiary or shall be merged into or consolidated
with the Company or any of its Restricted Subsidiaries; provided that such
Person's primary business is related, ancillary or complementary to the
businesses of the Company and its Restricted Subsidiaries on the date of such
investment or (ii) an acquisition by the Company or any of its Restricted
Subsidiaries of the property and assets of any Person other than the Company or
any of its Restricted Subsidiaries that constitute substantially all of a
division or line of business of such Person; provided that the property and
assets acquired are related, ancillary or complementary to the businesses of the
Company and its Restricted Subsidiaries on the date of such acquisition.
"Asset Disposition" means the sale or other disposition by the Company
or any of its Restricted Subsidiaries (other than to the Company or another
Restricted Subsidiary) of (i) all or substantially all of the Capital Stock of
any Restricted Subsidiary or (ii) all or substantially all of the assets that
constitute a division or line of business of the Company or any of its
Restricted Subsidiaries.
"Asset Sale" means any sale, transfer or other disposition (including
by way of merger, consolidation or sale-leaseback transaction) in one
transaction or a series of related transactions by the Company or any of its
Restricted Subsidiaries to any Person other than the Company or any of its
Restricted Subsidiaries of (i) all or any of the Capital Stock of any Restricted
Subsidiary, (ii) all or substantially all of the property and assets of an
operating unit or business of the Company or any of its Restricted Subsidiaries
or (iii) any other property and assets (other than the Capital Stock or other
Investment in an Unrestricted Subsidiary) of the Company or any of its
Restricted Subsidiaries outside the ordinary course of business of the Company
or such Restricted Subsidiary and, in each case, that is not governed by Article
Five; provided that "Asset Sale" shall not include (a) sales or other
dispositions of inventory, receivables and other current assets, (b) sales,
transfers or other dispositions of assets constituting a Restricted Payment
permitted to be made under Section 4.04, or (c) sales or other dispositions of
assets for consideration at least equal to the fair market value of the assets
sold or disposed of, to the extent that the consideration received would satisfy
clause (B) of Section 4.11.
"Average Life" means, at any date of determination with respect to any
debt security, the quotient obtained by dividing (i) the sum of the products of
(a) the number of years from such date of determination to the dates of each
successive scheduled principal payment of such debt security and (b) the amount
of such principal payment by (ii) the sum of all such principal payments.
"Board of Directors" means the Board of Directors of the Company or any
committee of such Board of Directors duly authorized to act under this
Indenture.
<PAGE> 11
4
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly adopted by
the Board of Directors and to be in full force and effect on the date of such
certification, and delivered to the Trustee.
"Business Day" means any day except a Saturday, Sunday or other day on
which commercial banks in The City of New York, or in the city of the Corporate
Trust Office of the Trustee, are authorized by law to close.
"Capital Stock" means, with respect to any Person, any and all shares,
interests, participations or other equivalents (however designated, whether
voting or non-voting) in equity of such Person, whether outstanding on the
Closing Date or issued thereafter, including, without limitation, all Common
Stock and Preferred Stock.
"Capitalized Lease" means, as applied to any Person, any lease of any
property (whether real, personal or mixed) of which the discounted present value
of the rental obligations of such Person as lessee, in conformity with GAAP, is
required to be capitalized on the balance sheet of such Person.
"Capitalized Lease Obligations" means the discounted present value of
the rental obligations under a Capitalized Lease.
"Change of Control" means such time as (i) (a) a "person" or "group"
(within the meaning of Sections 13(d) and 14(d)(2) of the Exchange Act) becomes
the ultimate "beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act) of more than 35% of the total voting power of the Voting Stock of the
Company on a fully diluted basis and (b) such ownership represents a greater
percentage of the total voting power of the Voting Stock of the Company, on a
fully diluted basis, than may then be voted by the Existing Stockholders on such
date; or (ii) individuals who on the Closing Date constitute the Board of
Directors (together with any new or successor directors whose election by the
Board of Directors or whose nomination by the Board of Directors for election by
the Company's stockholders was approved by a vote of at least two-thirds of the
members of the Board of Directors on the date of their election or nomination)
cease for any reason to constitute a majority of the members of the Board of
Directors then in office.
"Closing Date" means the date on which the Notes are originally issued
under this Indenture.
"Commission" means the Securities and Exchange Commission, as from time
to time constituted, created under the Exchange Act or, if at any time after the
execution of this instrument such Commission is not existing and performing the
duties now assigned to it under the TIA, then the body performing such duties at
such time.
<PAGE> 12
5
"Common Stock" means, with respect to any Person, any and all shares,
interests, participations or other equivalents (however designated, whether
voting or non-voting) of such Person's equity, other than Preferred Stock of
such Person, whether outstanding on the Closing Date or issued thereafter,
including, without limitation, all series and classes of such common stock.
"Company" means the party named as such in the first paragraph of this
Indenture until a successor replaces it pursuant to Article Five of this
Indenture and thereafter means the successor.
"Company Order" means a written request or order signed in the name of
the Company (i) by its Chairman, a Vice Chairman, its President, Executive Vice
President, Senior Vice President or a Vice President and (ii) by its Treasurer,
an Assistant Treasurer, its Secretary or an Assistant Secretary and delivered to
the Trustee; provided, however, that such written request or order may be signed
by any two of the officers or directors listed in clause (i) above in lieu of
being signed by one of such officers or directors listed in such clause (i) and
one of the officers listed in clause (ii) above.
"Consolidated EBITDA" means, for any period, Adjusted Consolidated Net
Income for such period plus, to the extent such amount was deducted in
calculating such Adjusted Consolidated Net Income, (i) Consolidated Interest
Expense, (ii) income taxes (other than income taxes (either positive or
negative) attributable to extraordinary gains or losses or Asset Sales or Asset
Dispositions), (iii) depreciation expense, (iv) amortization expense and (v) all
other non-cash items reducing Adjusted Consolidated Net Income (other than items
that will require cash payments and for which an accrual or reserve is, or is
required by GAAP to be, made), less all non-cash items increasing Adjusted
Consolidated Net Income, all as determined on a consolidated basis for the
Company and its Restricted Subsidiaries in conformity with GAAP; provided that,
if any Restricted Subsidiary is not a Wholly Owned Restricted Subsidiary,
Consolidated EBITDA shall be reduced (to the extent not otherwise reduced in
accordance with GAAP) by an amount equal to (A) the amount of the Adjusted
Consolidated Net Income attributable to such Restricted Subsidiary multiplied by
(B) the percentage ownership interest in the income of such Restricted
Subsidiary not owned on the last day of such period by the Company or any of its
Restricted Subsidiaries.
"Consolidated Interest Expense" means, for any period, the aggregate
amount of interest in respect of Indebtedness (including, without limitation,
amortization of original issue discount on any Indebtedness and the interest
portion of any deferred payment obligation, calculated in accordance with the
effective interest method of accounting; all commissions, discounts and other
fees and charges owed with respect to letters of credit and bankers' acceptance
financing; the net costs associated with Interest Rate Agreements; and
Indebtedness that is Guaranteed or secured by the Company or any of its
Restricted Subsidiaries) and all but the principal component of
<PAGE> 13
6
rentals in respect of Capitalized Lease Obligations paid, accrued or scheduled
to be paid or to be accrued by the Company and its Restricted Subsidiaries
during such period; excluding, however, (i) any amount of such interest of any
Restricted Subsidiary if the net income of such Restricted Subsidiary is
excluded in the calculation of Adjusted Consolidated Net Income pursuant to
clause (iii) of the definition thereof (but only in the same proportion as the
net income of such Restricted Subsidiary is excluded from the calculation of
Adjusted Consolidated Net Income pursuant to clause (iii) of the definition
thereof) and (ii) any premiums, fees and expenses (and any amortization thereof)
payable in connection with the offering of the Notes, all as determined on a
consolidated basis (without taking into account Unrestricted Subsidiaries) in
conformity with GAAP.
"Consolidated Net Worth" means, at any date of determination,
stockholders' equity as set forth on the most recently available quarterly or
annual consolidated balance sheet of the Company and its Restricted Subsidiaries
(which shall be as of a date not more than 90 days prior to the date of such
computation and which shall not take into account Unrestricted Subsidiaries),
less any amounts attributable to Disqualified Stock or any equity security
convertible into or exchangeable for Indebtedness, the cost of treasury stock
and the principal amount of any promissory notes receivable from the sale of the
Capital Stock of the Company or any of its Restricted Subsidiaries, each item to
be determined in conformity with GAAP (excluding the effects of foreign currency
exchange adjustments under Financial Accounting Standards Board Statement of
Financial Accounting Standards No. 52).
"Corporate Trust Office" means the office of the Trustee at which the
corporate trust business of the Trustee shall, at any particular time, be
principally administered, which office is, at the date of this Indenture,
located at 101 Barclay Street, Floor 21 West, New York, New York 10286;
Attention: Corporate Trust Trustee Administration.
"Credit Facility" means the Credit Facility dated as of January 2,
1998, as amended on February 26, 1998, and effective on the Closing Date, among
the Company and the lenders party thereto and any other lenders or borrowers
from time to time party thereto, collateral documents, instruments and
agreements executed in connection therewith and any amendments, supplements,
substitutions, modifications, extensions, renewals, restatements, replacement,
refinancings or refundings thereof.
"Currency Agreement" means any foreign exchange contract, currency swap
agreement or other similar agreement or arrangement.
"Default" means any event that is, or after notice or the passage of
time or both would be, an Event of Default.
<PAGE> 14
7
"Depositary" means The Depository Trust Company, its nominees, and
their respective successors.
"Disqualified Stock" means any class or series of Capital Stock of any
Person that by its terms or otherwise is (i) required to be redeemed prior to
the Stated Maturity of the Notes, (ii) redeemable at the option of the holder of
such class or series of Capital Stock at any time prior to the Stated Maturity
of the Notes or (iii) convertible into or exchangeable for Capital Stock
referred to in clause (i) or (ii) above or Indebtedness having a scheduled
maturity prior to the Stated Maturity of the Notes; provided that any Capital
Stock that would not constitute Disqualified Stock but for provisions thereof
giving holders thereof the right to require such Person to repurchase or redeem
such Capital Stock upon the occurrence of an "asset sale" or "change of control"
occurring prior to the Stated Maturity of the Notes shall not constitute
Disqualified Stock if the "asset sale" or "change of control" provisions
applicable to such Capital Stock are no more favorable to the holders of such
Capital Stock than the provisions contained in Section 4.11 and Section 4.12 and
such Capital Stock specifically provides that such Person will not repurchase or
redeem any such stock pursuant to such provision prior to the Company's
repurchase of such Notes as are required to be repurchased pursuant to Section
4.11 and Section 4.12.
"Eligible Accounts Receivable" means at the time of reference thereto
accounts receivable as set forth on the most recent consolidated balance sheet
filed pursuant to Section 4.18, less accounts receivable of Unrestricted
Subsidiaries as of the date of such balance sheet.
"Eligible Inventory" means at the time of reference thereto inventory
as set forth on the most recent consolidated balance sheet filed pursuant to
Section 4.18, less inventory of Unrestricted Subsidiaries as of the date of such
balance sheet.
"Event of Default" has the meaning provided in Section 6.01.
"Excess Proceeds" has the meaning provided in Section 4.11.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Notes" means any securities of the Company containing terms
identical to the Notes (except that such Exchange Notes shall be registered
under the Securities Act) that are issued and exchanged for the Notes pursuant
to the Registration Rights Agreement and this Indenture.
"Existing Stockholders" means (i) Mr. Wayne R. Hellman, (ii) any trust
to the extent that any member of Wayne R. Hellman's family has "beneficial" (as
defined in Rule 13d-3 under the Exchange Act) ownership of the res thereof and
(iii) any "group" (within the meaning of
<PAGE> 15
8
Sections 13(d) and 14(d)(2) of the Exchange Act) that includes parties specified
in clauses (i) or (ii) above if such parties "beneficially own" (within the
meaning of Rule 13d-3 under the Exchange Act) Voting Stock representing a
majority of the voting power of the Voting Stock owned by such group.
"fair market value" means the price that would be paid in an
arm's-length transaction between an informed and willing seller under no
compulsion to sell and an informed and willing buyer under no compulsion to buy,
as determined in good faith by the Board of Directors, whose determination shall
be conclusive if evidenced by a Board Resolution.
"Foreign Subsidiaries" means Ballastronix Inc., Parry Power Systems
Ltd. and any other Subsidiary of the Company incorporated or organized, as the
case may be, outside of the United States of America.
"GAAP" means generally accepted accounting principles in the United
States of America as in effect as of the Closing Date, including, without
limitation, those set forth in the opinions and pronouncements of the Accounting
Principles Board of the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards Board or in
such other statements by such other entity as approved by a significant segment
of the accounting profession. All ratios and computations contained or referred
to in this Indenture shall be computed in conformity with GAAP applied on a
consistent basis, except that calculations made for purposes of determining
compliance with the terms of the covenants and with other provisions of this
Indenture shall be made without giving effect to (i) the amortization of any
expenses incurred in connection with the offering of the Notes and (ii) except
as otherwise provided, the amortization of any amounts required or permitted to
be amortized by Accounting Principles Board Opinion Nos. 16 and 17, as
subsequently modified or amended, or the write-off of such amounts.
"Global Notes" has the meaning provided in Section 2.01.
"Guarantee" means any obligation, contingent or otherwise, of any
Person directly or indirectly guaranteeing any Indebtedness of any other Person
and, without limiting the generality of the foregoing, any obligation, direct or
indirect, contingent or otherwise, of such Person (i) to purchase or pay (or
advance or supply funds for the purchase or payment of) such Indebtedness of
such other Person (whether arising by virtue of partnership arrangements, or by
agreements to keep well, to purchase assets, goods, securities or services
(unless such purchase arrangements are on arm's-length terms and are entered
into in the ordinary course of business), to take-or-pay, or to maintain
financial statement conditions or otherwise) or (ii) entered into for purposes
of assuring in any other manner the obligee of such Indebtedness of the payment
thereof or to protect such obligee against loss in respect thereof (in whole or
in part); provided that the term "Guarantee" shall not include endorsements for
collection or deposit in the ordinary course of business. The term "Guarantee"
used as a verb has a corresponding meaning.
<PAGE> 16
9
"Guaranteed Indebtedness" has the meaning provided in Section 4.07.
"Holder" means the registered holder of any Note.
"Incur" means, with respect to any Indebtedness, to incur, create,
issue, assume, Guarantee or otherwise become liable for or with respect to, or
become responsible for, the payment of, contingently or otherwise, such
Indebtedness, including an "Incurrence" of Acquired Indebtedness; provided that
neither the accrual of interest nor the accretion of original issue discount
shall be considered an Incurrence of Indebtedness.
"Indebtedness" means, with respect to any Person at any date of
determination (without duplication), (i) all indebtedness of such Person for
borrowed money, (ii) all obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments, (iii) all obligations of such
Person in respect of letters of credit or other similar instruments (including
reimbursement obligations with respect thereto, but excluding obligations with
respect to letters of credit (including trade letters of credit) securing
obligations (other than obligations described in (i) or (ii) above or (v), (vi)
or (vii) below) entered into in the ordinary course of business of such Person
to the extent such letters of credit are not drawn upon or, if drawn upon, to
the extent such drawing is reimbursed no later than the third Business Day
following receipt by such Person of a demand for reimbursement), (iv) all
obligations of such Person to pay the deferred and unpaid purchase price of
property or services, which purchase price is due more than six months after the
date of placing such property in service or taking delivery and title thereto or
the completion of such services, except Trade Payables, (v) all Capitalized
Lease Obligations, (vi) all Indebtedness of other Persons secured by a Lien on
any asset of such Person, whether or not such Indebtedness is assumed by such
Person; provided that the amount of such Indebtedness shall be the lesser of (A)
the fair market value of such asset at such date of determination and (B) the
amount of such Indebtedness, (vii) all Indebtedness of other Persons Guaranteed
by such Person to the extent such Indebtedness is Guaranteed by such Person and
(viii) to the extent not otherwise included in this definition, obligations
under Currency Agreements and Interest Rate Agreements. The amount of
Indebtedness of any Person at any date shall be the outstanding balance at such
date of all unconditional obligations as described above and, with respect to
contingent obligations, the maximum liability upon the occurrence of the
contingency giving rise to the obligation, provided (A) that the amount
outstanding at any time of any Indebtedness issued with original issue discount
is the face amount of such Indebtedness less the remaining unamortized portion
of the original issue discount of such Indebtedness at such time as determined
in conformity with GAAP, (B) that money borrowed and set aside at the time of
the Incurrence of any Indebtedness in order to prefund the payment of the
interest on such Indebtedness shall not be deemed to be "Indebtedness" and (C)
that Indebtedness shall not include any liability for federal, state, local or
other taxes.
<PAGE> 17
10
"Indenture" means this Indenture as originally executed or as it may be
amended or supplemented from time to time by one or more indentures supplemental
to this Indenture entered into pursuant to the applicable provisions of this
Indenture.
"Institutional Accredited Investor" means an institution that is an
"accredited investor" as that term is defined in Rule 501(a)(1), (2), (3) or (7)
under the Securities Act.
"Interest Coverage Ratio" means, on any Transaction Date, the ratio of
(i) the aggregate amount of Consolidated EBITDA for the then most recent four
fiscal quarters prior to such Transaction Date for which reports have been filed
with the Commission pursuant to Section 4.18 (the "FOUR QUARTER PERIOD") to (ii)
the aggregate Consolidated Interest Expense during such Four Quarter Period. In
making the foregoing calculation, (A) pro forma effect shall be given to any
Indebtedness Incurred or repaid during the period (the "REFERENCE PERIOD")
commencing on the first day of the Four Quarter Period and ending on the
Transaction Date (other than Indebtedness Incurred or repaid under a revolving
credit or similar arrangement to the extent of the commitment thereunder (or
under any predecessor revolving credit or similar arrangement) in effect on the
last day of such Four Quarter Period unless any portion of such Indebtedness is
projected, in the reasonable judgment of the senior management of the Company,
to remain outstanding for a period in excess of 12 months from the date of the
Incurrence thereof), in each case as if such Indebtedness had been Incurred or
repaid on the first day of such Reference Period; (B) Consolidated Interest
Expense attributable to interest on any Indebtedness (whether existing or being
Incurred) computed on a pro forma basis and bearing a floating interest rate
shall be computed as if the rate in effect on the Transaction Date (taking into
account any Interest Rate Agreement applicable to such Indebtedness if such
Interest Rate Agreement has a remaining term in excess of 12 months or, if
shorter, at least equal to the remaining term of such Indebtedness) had been the
applicable rate for the entire period; (C) pro forma effect shall be given to
Asset Dispositions and Asset Acquisitions (including giving pro forma effect to
the application of proceeds of any Asset Disposition) that occur during such
Reference Period as if they had occurred and such proceeds had been applied on
the first day of such Reference Period; and (D) pro forma effect shall be given
to asset dispositions and asset acquisitions (including giving pro forma effect
to the application of proceeds of any asset disposition) that have been made by
any Person that has become a Restricted Subsidiary or has been merged with or
into the Company or any Restricted Subsidiary during such Reference Period and
that would have constituted Asset Dispositions or Asset Acquisitions had such
transactions occurred when such Person was a Restricted Subsidiary as if such
asset dispositions or asset acquisitions were Asset Dispositions or Asset
Acquisitions that occurred on the first day of such Reference Period; provided
that to the extent that clause (C) or (D) of this sentence requires that pro
forma effect be given to an Asset Acquisition or Asset Disposition, such pro
forma calculation shall be based upon the four full fiscal quarters immediately
preceding the Transaction Date of the Person, or division or line of business of
the Person, that is acquired or disposed for which financial information is
available, as determined by the Company.
<PAGE> 18
11
"Interest Payment Date" means each semiannual interest payment date on
March 15 and September 15 of each year, commencing September 15, 1998 for so
long as any Note remains Outstanding.
"Interest Rate Agreement" means any interest rate protection agreement,
interest rate future agreement, interest rate option agreement, interest rate
swap agreement, interest rate cap agreement, interest rate collar agreement,
interest rate hedge agreement, option or future contract or other similar
agreement or arrangement.
"Investment" in any Person means any direct or indirect advance, loan
or other extension of credit (including, without limitation, by way of Guarantee
or similar arrangement; but excluding advances to customers in the ordinary
course of business that are, in conformity with GAAP, recorded as accounts
receivable on the balance sheet of the Company or its Restricted Subsidiaries)
or capital contribution to (by means of any transfer of cash or other property
to others or any payment for property or services for the account or use of
others), or any purchase or acquisition of Capital Stock, bonds, notes,
debentures or other similar instruments issued by, such Person and shall include
(i) the designation of a Restricted Subsidiary as an Unrestricted Subsidiary and
(ii) the fair market value of the Capital Stock (or any other Investment), held
by the Company or any of its Restricted Subsidiaries, of (or in) any Person that
has ceased to be a Restricted Subsidiary, including without limitation, by
reason of any transaction permitted by clause (iii) of Section 4.06; provided
that the fair market value of the Investment remaining in any Person that has
ceased to be a Restricted Subsidiary shall be deemed not to exceed the aggregate
amount of Investments previously made in such Person valued at the time such
Investments were made less the net reduction of such Investments. For purposes
of the definition of "Unrestricted Subsidiary" and Section 4.04, (i)
"Investment" shall include the fair market value of the assets (net of
liabilities (other than liabilities to the Company or any of its Restricted
Subsidiaries)) of any Restricted Subsidiary at the time that such Restricted
Subsidiary is designated an Unrestricted Subsidiary, (ii) the fair market value
of the assets (net of liabilities (other than liabilities to the Company or any
of its Restricted Subsidiaries)) of any Unrestricted Subsidiary at the time that
such Unrestricted Subsidiary is designated a Restricted Subsidiary shall be
considered a reduction in outstanding Investments and (iii) any property
transferred to or from an Unrestricted Subsidiary shall be valued at its fair
market value at the time of such transfer.
"Investment Grade Securities" means debt securities or debt instruments
with (A) a final maturity no later than one year after date of acquisition
thereof and (B) a rating of BBB+ or higher by S&P or Baa1 or higher by Moody's
or the equivalent of such rating by such rating organization, or, if no rating
of S&P or Moody's then exists, the equivalent of such rating by any other
nationally recognized statistical rating organization (as defined in Rule 436
under the Securities Act) designated by the Company, but excluding any debt
securities or instruments constituting loans or advances among the Company and
its Subsidiaries.
<PAGE> 19
12
"Lien" means any mortgage, pledge, security interest, encumbrance, lien
or charge of any kind (including, without limitation, any conditional sale or
other title retention agreement or lease in the nature thereof or any agreement
to give any security interest).
"Maturity", with respect to any Note, means the date on which the
principal of such Note or an installment of principal becomes due and payable as
provided in or pursuant to this Indenture, whether at the Stated Maturity or by
declaration of acceleration, notice of redemption or repurchase, notice of
option to elect repayment or otherwise, and includes any Redemption Date and
Payment Date.
"MicroSun" means Microsun Technologies, Inc., an Ohio corporation.
"Moody's" means Moody's Investors Service, Inc. and its successors.
"Net Cash Proceeds" means, (a) with respect to any Asset Sale, the
proceeds of such Asset Sale in the form of cash or cash equivalents, including
payments in respect of deferred payment obligations (to the extent corresponding
to the principal, but not interest, component thereof) when received in the form
of cash or cash equivalents (except to the extent such obligations have recourse
to the Company or any Restricted Subsidiary) and proceeds from the conversion of
other property received when converted to cash or cash equivalents, net of (i)
brokerage commissions and other fees and expenses (including fees and expenses
of counsel and investment bankers) related to such Asset Sale, (ii) provisions
for all taxes (whether or not such taxes will actually be paid or are payable)
as a result of such Asset Sale without regard to the consolidated results of
operations of the Company and its Restricted Subsidiaries, taken as a whole,
(iii) payments made to repay Indebtedness or any other obligation outstanding at
the time of such Asset Sale that either (A) is secured by a Lien on the property
or assets sold or (B) is required to be paid as a result of such sale and (iv)
appropriate amounts to be provided by the Company or any Restricted Subsidiary
as a reserve against any liabilities associated with such Asset Sale, including,
without limitation, pension and other post-employment benefit liabilities,
liabilities related to environmental matters and liabilities under any
indemnification obligations associated with such Asset Sale, all as determined
in conformity with GAAP and (b) with respect to any issuance or sale of Capital
Stock, the proceeds of such issuance or sale in the form of cash or cash
equivalents, including payments in respect of deferred payment obligations (to
the extent corresponding to the principal, but not interest, component thereof)
when received in the form of cash or cash equivalents (except to the extent such
obligations have recourse to the Company or any Restricted Subsidiary) and
proceeds from the conversion of other property received when converted to cash
or cash equivalents, net of attorney's fees, accountants' fees, underwriters' or
placement agents' fees, discounts or commissions and brokerage, consultant and
other fees incurred in connection with such issuance or sale and net of taxes
paid or payable as a result thereof.
<PAGE> 20
13
"Non-U.S. Person" means a person who is not a "U.S. person" (as defined
in Regulation S).
"Notes" means any of the securities, as defined in the first paragraph
of the recitals hereof, that are authenticated and delivered under this
Indenture. For all purposes of this Indenture, the term "Notes" shall include
the Notes initially issued on the Closing Date, any Exchange Notes to be issued
and exchanged for any Notes pursuant to the Registration Rights Agreement and
this Indenture and any other Notes issued after the Closing Date under this
Indenture. For purposes of this Indenture, all Notes shall vote together as one
series of Notes under this Indenture.
"Offer to Purchase" means an offer to purchase Notes by the Company
from the Holders commenced by mailing a notice to the Trustee for delivery to
each Holder stating: (i) the covenant pursuant to which the offer is being made
and that all Notes validly tendered will be accepted for payment on a pro rata
basis; (ii) the purchase price and the date of purchase (which shall be a
Business Day no earlier than 30 days nor later than 60 days from the date such
notice is mailed) (the "PAYMENT DATE"); (iii) that any Note not tendered will
continue to accrue interest pursuant to its terms; (iv) that, unless the Company
defaults in the payment of the purchase price, any Note accepted for payment
pursuant to the Offer to Purchase shall cease to accrue interest on and after
the Payment Date; (v) that Holders electing to have a Note purchased pursuant to
the Offer to Purchase will be required to surrender the Note, together with the
form entitled "Option of the Holder to Elect Purchase" on the reverse side of
the Note completed, to the Paying Agent at the address specified in the notice
prior to the close of business on the Business Day immediately preceding the
Payment Date; (vi) that Holders will be entitled to withdraw their election if
the Paying Agent receives, not later than the close of business on the third
Business Day immediately preceding the Payment Date, a facsimile transmission or
letter setting forth the name of such Holder, the principal amount of Notes
delivered for purchase and a statement that such Holder is withdrawing his
election to have such Notes purchased; and (vii) that Holders whose Notes are
being purchased only in part will be issued new Notes equal in principal amount
to the unpurchased portion of the Notes surrendered; provided that each Note
purchased and each new Note issued shall be in a principal amount of $1,000 or
integral multiples thereof. On the Payment Date, the Company shall (i) accept
for payment on a pro rata basis (with any rounding determined by the Company to
be reasonable) Notes or portions thereof tendered pursuant to an Offer to
Purchase; (ii) deposit with the Paying Agent money sufficient to pay the
purchase price of all Notes or portions thereof so accepted; and (iii) deliver,
or cause to be delivered, to the Trustee all Notes or portions thereof so
accepted together with an Officers' Certificate specifying the Notes or portions
thereof accepted for payment by the Company. The Paying Agent shall promptly
mail to the Holders of Notes so accepted payment in an amount equal to the
purchase price, and the Trustee shall promptly authenticate and mail to such
Holders a new Note equal in principal amount to any unpurchased portion of the
Note surrendered; provided that each Note purchased and each new Note issued
shall be in a principal amount of $1,000 or integral multiples thereof (with any
rounding determined by the Company to be reasonable). The Company shall publicly
<PAGE> 21
14
announce the results of an Offer to Purchase as soon as practicable after the
Payment Date. The Trustee shall act as the Paying Agent for an Offer to
Purchase. The Company shall comply with Rule 14e-1 under the Exchange Act and
any other securities laws and regulations thereunder to the extent such laws and
regulations are applicable, in the event that the Company is required to
repurchase Notes pursuant to an Offer to Purchase.
"Officer" means, with respect to the Company, (i) the Chairman of the
Board, the Vice Chairman of the Board, the Chief Executive Officer, the
President, the Executive Vice President, the Senior Vice President, any Vice
President or the Chief Financial Officer, and (ii) the Treasurer or any
Assistant Treasurer, or the Secretary or any Assistant Secretary.
"Officers' Certificate" means a certificate signed by one Officer
listed in clause (i) of the definition thereof and one Officer listed in clause
(ii) of the definition thereof or two officers listed in clause (i) of the
definition thereof. Each Officers' Certificate (other than certificates provided
pursuant to TIA Section 314(a)(4)) shall include the statements provided for in
TIA Section 314(e).
"Offshore Global Note" has the meaning provided in Section 2.01.
"Offshore Physical Notes" has the meaning provided in Section 2.01.
"Opinion of Counsel" means a written opinion signed by legal counsel,
who may be an employee of or counsel to the Company, that meets the requirements
of Section 10.04 hereof. Each such Opinion of Counsel shall include the
statements provided for in TIA Section 314(e).
"Outstanding", when used with respect to any Note, means, as of the
date of determination, all such Notes theretofore authenticated and delivered
under this Indenture, except:
(a) any such Note theretofore cancelled by the Trustee or
delivered to the Trustee for cancellation;
(b) any such Note for whose payment at the Maturity thereof
money in the necessary amount has been theretofore deposited pursuant
hereto (other than pursuant to Section 8.02 and 8.03) with the Trustee
or any Paying Agent (other than the Company) in trust or set aside and
segregated and in trust by the Company (if the Company shall act as its
own Paying Agent) for the Holders of such Notes, provided that, if such
Notes are to be redeemed, notice of such redemption has been duly given
pursuant to this Indenture or provision therefor satisfactory to the
Trustee has been made;
(c) any such Note with respect to which the Company has
effected defeasance pursuant to the terms hereof, except to the extent
provided in Article Eight; and
<PAGE> 22
15
(d) any such Note which has been paid pursuant to Section 2.09
or in exchange for or in lieu of which other Notes have been
authenticated and delivered pursuant to this Indenture, unless there
shall have been presented to the Trustee proof satisfactory to it that
such Note is held by a bona fide purchaser in whose hands such Note is
a valid obligation of the Company;
provided, however, that in determining whether the Holders of the requisite
principal amount of Outstanding Notes have given any request, demand,
authorization, direction, notice, consent or waiver hereunder or are present at
a meeting of Holders of Notes for quorum purposes or for purposes of making
calculations required by TIA Section 313, Notes owned by the Company or any
other obligor upon the Notes or any Affiliate of the Company or such other
obligor, shall be disregarded and deemed not to be Outstanding, except that, in
determining whether the Trustee shall be protected in making any such
determination or relying upon any such request, demand, authorization,
direction, notice, consent or waiver, only Notes which a Responsible Officer of
the Trustee actually knows to be so owned shall be so disregarded. Notes so
owned which shall have been pledged in good faith may be regarded as Outstanding
if the pledgee establishes to the satisfaction of the Trustee (A) the pledgee's
right so to act with respect to such Notes and (B) that the pledgee is not the
Company or any other obligor upon the Notes or an Affiliate of the Company or
such other obligor.
"Paying Agent" has the meaning provided in Section 2.04, except that,
for the purposes of Article Eight, the Paying Agent shall not be the Company or
a Subsidiary of the Company or an Affiliate of any of them. The term "Paying
Agent" includes any additional Paying Agent.
"Permitted Investment" means (i) an Investment in the Company or a
Restricted Subsidiary or a Person which will, upon the making of such
Investment, become a Restricted Subsidiary or be merged or consolidated with or
into or transfer or convey all or substantially all its assets to, the Company
or a Restricted Subsidiary; provided that such person's primary business is
related, ancillary or complementary to the businesses of the Company and its
Restricted Subsidiaries on the date of such Investment; (ii) Temporary Cash
Investments; (iii) payroll, travel and similar advances to cover matters that
are expected at the time of such advances ultimately to be treated as expenses
in accordance with GAAP; (iv) stock, obligations or securities received in
satisfaction of judgments; (v) an Investment in any Person consisting solely of
the transfer to such Person of an Investment in another Person that is not a
Restricted Subsidiary; (vi) Investment Grade Securities; (vii) Interest Rate
Agreements and Currency Agreements designed solely to protect the Company or its
Restricted Subsidiaries against fluctuations in interest rates or foreign
currency exchange rates; (viii) Investments, not to exceed $30 million at any
one time outstanding (and for purposes of this clause (viii) an Investment shall
be deemed to be outstanding in the amount of the excess (but not, in any event,
less than zero) of the amount of such Investment on the date or dates made, less
the return of capital to the Company and its Restricted Subsidiaries with
respect to such Investment); and (ix) Investments, to the extent the
consideration therefor consists of Capital Stock
<PAGE> 23
16
(other than Disqualified Stock) of the Company or net cash proceeds from the
sale of such Capital Stock, if such Capital Stock was issued or sold within 90
days of the making of such Investment.
"Permitted Liens" means (i) Liens for taxes, assessments, governmental
charges or claims that are being contested in good faith by appropriate legal
proceedings promptly instituted and diligently conducted and for which a reserve
or other appropriate provision, if any, as shall be required in conformity with
GAAP shall have been made; (ii) statutory and common law Liens of landlords and
carriers, warehousemen, mechanics, suppliers, materialmen, repairmen or other
similar Liens arising in the ordinary course of business and with respect to
amounts not yet delinquent or being contested in good faith by appropriate legal
proceedings promptly instituted and diligently conducted and for which a reserve
or other appropriate provision, if any, as shall be required in conformity with
GAAP shall have been made; (iii) Liens incurred or deposits made in the ordinary
course of business in connection with workers' compensation, unemployment
insurance and other types of social security; (iv) Liens incurred or deposits
made to secure the performance of tenders, bids, leases, statutory or regulatory
obligations, bankers' acceptances, surety and appeal bonds, government
contracts, performance and return-of-money bonds and other obligations of a
similar nature incurred in the ordinary course of business (exclusive of
obligations for the payment of borrowed money); (v) easements, rights-of-way,
municipal and zoning ordinances and similar charges, encumbrances, title defects
or other irregularities that do not materially interfere with the ordinary
course of business of the Company or any of its Restricted Subsidiaries; (vi)
Liens (including extensions and renewals thereof) upon real or personal property
acquired after the Closing Date; provided that (a) such Lien is created solely
for the purpose of securing Indebtedness Incurred, in accordance with Section
4.03, to finance the cost (including the cost of improvement or construction) of
the item of property or assets subject thereto and such Lien is created prior
to, at the time of or within six months after the later of the acquisition, the
completion of construction or the commencement of full operation of such
property or to refinance Indebtedness previously so secured, (b) the principal
amount of the Indebtedness secured by such Lien does not exceed 100% of such
cost and (c) any such Lien shall not extend to or cover any property or assets
other than such item of property or assets and any improvements on such item;
(vii) leases or subleases granted to others that do not materially interfere
with the ordinary course of business of the Company and its Restricted
Subsidiaries, taken as a whole; (viii) Liens encumbering property or assets
under construction arising from progress or partial payments by a customer of
the Company or its Restricted Subsidiaries relating to such property or assets;
(ix) any interest or title of a lessor in the property subject to any
Capitalized Lease or operating lease; (x) Liens arising from filing Uniform
Commercial Code financing statements regarding leases; (xi) Liens on property
of, or on shares of Capital Stock or Indebtedness of, any Person existing at the
time such Person becomes, or becomes a part of, any Restricted Subsidiary;
provided that such Liens do not extend to or cover any property or assets of the
Company or any Restricted Subsidiary other than the property or assets acquired;
(xii) Liens in favor of the Company or any Restricted Subsidiary; (xiii) Liens
arising from the rendering of a final judgment or order against the Company or
any Restricted Subsidiary that does not give rise to an Event of
<PAGE> 24
17
Default; (xiv) Liens securing reimbursement obligations with respect to letters
of credit that encumber documents and other property relating to such letters of
credit and the products and proceeds thereof; (xv) Liens in favor of customs and
revenue authorities arising as a matter of law to secure payment of customs
duties in connection with the importation of goods; (xvi) Liens encumbering
customary initial deposits and margin deposits, and other Liens that are within
the general parameters customary in the industry and incurred in the ordinary
course of business, in each case, securing Indebtedness under Interest Rate
Agreements and Currency Agreements and forward contracts, options, future
contracts, futures options or similar agreements or arrangements designed solely
to protect the Company or any of its Restricted Subsidiaries from fluctuations
in interest rates, currencies or the price of commodities; (xvii) Liens arising
out of conditional sale, title retention, consignment or similar arrangements
for the sale of goods entered into by the Company or any of its Restricted
Subsidiaries in the ordinary course of business in accordance with the past
practices of the Company and its Restricted Subsidiaries prior to the Closing
Date; and (xviii) Liens on or sales of receivables.
"Person" means an individual, a corporation, a partnership, a limited
liability company, an association, a trust or any other entity or organization,
including a government or political subdivision or an agency or instrumentality
thereof.
"Physical Notes" has the meaning provided in Section 2.01.
"Preferred Stock" means, with respect to any Person, any and all
shares, interests, participations or other equivalents (however designated,
whether voting or non-voting) of such Person's preferred or preference equity,
whether outstanding on the Closing Date or issued thereafter, including, without
limitation, all series and classes of such preferred or preference stock.
"principal" of a debt security, including the Notes, means the
principal amount due on the Stated Maturity as shown on such debt security.
"Private Placement Legend" means the legend initially set forth on the
Notes in the form set forth in Section 2.02.
"Public Equity Offering" means an underwritten public offering of
Common Stock by the Company pursuant to an effective registration statement
under the Securities Act.
"QIB" means a "qualified institutional buyer" as defined in Rule 144A.
"Redemption Date" means, when used with respect to any Note to be
redeemed, the date fixed for such redemption by or pursuant to this Indenture.
<PAGE> 25
18
"Redemption Price" means, when used with respect to any Note to be
redeemed, the price at which such Note is to be redeemed pursuant to this
Indenture.
"Registrar" has the meaning provided in Section 2.04.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated March 13, 1998 between the Company and Morgan Stanley & Co.
Incorporated and certain permitted assigns specified therein.
"Registration Statement" means the Registration Statement as defined
and described in the Registration Rights Agreement.
"Regular Record Date" for the interest payable on any Interest Payment
Date means the March 1 or September 1 (whether or not a Business Day), as the
case may be, next preceding the related Interest Payment Date.
"Regulation S" means Regulation S under the Securities Act.
"Responsible Officer", when used with respect to the Trustee, means any
vice president, any assistant vice president, any assistant secretary, any
assistant treasurer, any trust officer or assistant trust officer, or any other
officer of the Trustee in its Corporate Trust Department customarily performing
functions similar to those performed by any of the above-designated officers and
in each case having direct responsibility for the administration of this
Indenture and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of his or her
knowledge of and familiarity with the particular subject.
"Restricted Payments" has the meaning provided in Section 4.04.
"Restricted Subsidiary" means any Subsidiary of the Company other than
an Unrestricted Subsidiary.
"Rule 144A" means Rule 144A under the Securities Act.
"Securities Act" means the Securities Act of 1933, as amended.
"Security Register" has the meaning provided in Section 2.04.
"Significant Subsidiary" means, at any date of determination, any
Restricted Subsidiary that, together with its Subsidiaries, (i) for the most
recent fiscal year of the Company, accounted for more than 10% of the
consolidated revenues of the Company and its Restricted Subsidiaries or (ii) as
of the end of such fiscal year, was the owner of more than 10% of the
consolidated assets
<PAGE> 26
19
of the Company and its Restricted Subsidiaries, all as set forth on the most
recently available consolidated financial statements of the Company for such
fiscal year, as determined by the Company.
"S&P" means Standard & Poor's Ratings Service and its successors.
"Stated Maturity" means, (i) with respect to any debt security, the
date specified in such debt security as the fixed date on which the final
installment of principal of such debt security is due and payable and (ii) with
respect to any scheduled installment of principal of or interest on any debt
security, the date specified in such debt security as the fixed date on which
such installment is due and payable.
"Subsidiary" means, with respect to any Person, any corporation,
association or other business entity of which more than 50% of the voting power
of the outstanding Voting Stock is owned, directly or indirectly, by such Person
and one or more other Subsidiaries of such Person.
"Subsidiary Guarantee" has the meaning provided in Section 4.07.
"Temporary Cash Investment" means any of the following: (i) direct
obligations of the United States of America or any agency thereof or obligations
fully and unconditionally guaranteed by the United States of America or any
agency thereof, (ii) time deposit accounts, certificates of deposit and money
market deposits maturing within one year of the date of acquisition thereof
issued by a bank or trust company which is organized under the laws of the
United States of America, any state thereof or any foreign country recognized by
the United States of America, and which bank or trust company has capital,
surplus and undivided profits aggregating in excess of $50 million (or the
foreign currency equivalent thereof) and has outstanding debt which is rated "A"
(or such similar equivalent rating) or higher by at least one nationally
recognized statistical rating organization (as defined in Rule 436 under the
Securities Act) or any money-market fund sponsored by a registered broker dealer
or mutual fund distributor, (iii) repurchase obligations with a term of not more
than 30 days for underlying securities of the types described in clause (i)
above entered into with a bank meeting the qualifications described in clause
(ii) above, (iv) commercial paper, maturing not more than 270 days after the
date of acquisition, issued by a corporation (other than an Affiliate of the
Company) organized and in existence under the laws of the United States of
America, any state thereof or any foreign country recognized by the United
States of America with a rating at the time as of which any investment therein
is made of "P-1" (or higher) according to Moody's or "A-1" (or higher) according
to S&P, (v) securities with maturities of one year or less from the date of
acquisition issued or fully and unconditionally guaranteed by any state,
commonwealth or territory of the United States of America, or by any political
subdivision or taxing authority thereof, and rated at least BBB+ by S&P or Baa1
by Moody's and (vi) time deposit accounts, certificates of deposits and money
market deposits aggregating no more than $10 million at any one time
outstanding, issued by one of the five largest
<PAGE> 27
20
(based on assets on the most recent December 31 for which data is available)
banks organized under the laws of the country in which the Foreign Subsidiary
marking the deposit referred to above is organized, if such bank is not under
material government intervention.
"TIA" or "Trust Indenture Act" means the Trust Indenture Act of 1939
(15 U.S. Code Sec. 77aaa-77bbbb), as in effect on the date this Indenture was
executed, except as provided in Section 9.06; provided that in the event the
Trust Indenture Act of 1939 is amended after the Closing Date, "TIA" or "Trust
Indenture Act" means, to the extent required by any such amendment, the Trust
Indenture Act of 1939, as so amended.
"Trade Payables" means, with respect to any Person, any accounts
payable or any other indebtedness or monetary obligation to trade creditors
created, assumed or Guaranteed by such Person or any of its Subsidiaries arising
in the ordinary course of business in connection with the acquisition of goods
or services, in each case required to be paid within one year.
"Transaction Date" means, with respect to the Incurrence of any
Indebtedness by the Company or any of its Restricted Subsidiaries, the date such
Indebtedness is to be Incurred and, with respect to any Restricted Payment, the
date such Restricted Payment is to be made.
"Trustee" means the party named as such in the first paragraph of this
Indenture until a successor replaces it in accordance with the provisions of
Article Seven of this Indenture and thereafter means such successor.
"United States Bankruptcy Code" means the Bankruptcy Reform Act of
1978, as amended and as codified in Title 11 of the United States Code, as
amended from time to time hereafter, or any successor federal bankruptcy law.
"Unrestricted Subsidiary" means (i) any Subsidiary of the Company that
at the time of determination shall be designated an Unrestricted Subsidiary by
the Board of Directors in the manner provided below; and (ii) any Subsidiary of
an Unrestricted Subsidiary. The Board of Directors may designate any Restricted
Subsidiary (including any newly acquired or newly formed Subsidiary of the
Company) to be an Unrestricted Subsidiary unless such Subsidiary owns any
Capital Stock of, or owns or holds any Lien on any property of, the Company or
any Restricted Subsidiary; provided that (A) any Guarantee by the Company or any
Restricted Subsidiary of any Indebtedness of the Subsidiary being so designated
shall be deemed an "Incurrence" of such Indebtedness and an "Investment" by the
Company or such Restricted Subsidiary (or both, if applicable) at the time of
such designation, (B) either (I) the Subsidiary to be so designated has total
assets of $1,000 or less or (II) if such Subsidiary has assets greater than
$1,000, such designation would be permitted under Section 4.04 and (C) if
applicable, the Incurrence of Indebtedness and the Investment referred to in
clause (A) of this proviso would be permitted under Section 4.03 and Section
4.04. The Board of Directors may designate any Unrestricted Subsidiary
<PAGE> 28
21
to be a Restricted Subsidiary; provided that (x) no Default or Event of Default
shall have occurred and be continuing at the time of or after giving effect to
such designation and (y) all Liens and Indebtedness of such Unrestricted
Subsidiary outstanding immediately after such designation would, if Incurred at
such time, have been permitted to be Incurred (and shall be deemed to have been
Incurred) for all purposes of this Indenture. Any such designation by the Board
of Directors shall be evidenced to the Trustee by promptly filing with the
Trustee a copy of the Board Resolution giving effect to such designation and an
Officers' Certificate certifying that such designation complied with the
foregoing provisions.
"U.S. Global Notes" has the meaning provided in Section 2.01.
"U.S. Government Obligations" means securities that are (i) direct
obligations of the United States of America for the payment of which its full
faith and credit is pledged or (ii) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States of
America the payment of which is unconditionally guaranteed as a full faith and
credit obligation by the United States of America, which, in either case, are
not callable or redeemable at the option of the issuer thereof at any time prior
to the Stated Maturity of the Notes, and shall also include a depository receipt
issued by a bank or trust company as custodian with respect to any such U.S.
Government Obligation or a specific payment of interest on or principal of any
such U.S. Government Obligation held by such custodian for the account of the
holder of a depository receipt; provided that (except as required by law) such
custodian is not authorized to make any deduction from the amount payable to the
holder of such depository receipt from any amount received by the custodian in
respect of the U.S. Government Obligation or the specific payment of interest on
or principal of the U.S. Government Obligation evidenced by such depository
receipt.
"U.S. Physical Notes" has the meaning provided in Section 2.01.
"Voting Stock" means with respect to any Person, Capital Stock of any
class or kind having the power to vote for the election of directors, managers
or other voting members of the governing body of such Person (not including,
however, any Capital Stock having such right to vote only upon the happening of
certain events or under limited circumstances).
"Wholly Owned" means, with respect to any Subsidiary of any Person, the
ownership of all of the outstanding Capital Stock of such Subsidiary (other than
any director's qualifying shares or Investments by foreign nationals mandated by
applicable law) by such Person or one or more Wholly Owned Subsidiaries of such
Person.
SECTION 1.02. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT.
Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made
<PAGE> 29
22
a part of this Indenture. The following TIA terms used in this Indenture have
the following meanings:
"indenture securities" means the Notes;
"indenture security holder" means a Holder or a Noteholder;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the
Trustee; and
"obligor" on the indenture securities means the Company or any
other obligor on the Notes.
All other TIA terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by a rule of the
Commission and not otherwise defined herein have the meanings assigned to them
therein.
SECTION 1.03. RULES OF CONSTRUCTION. Unless the context otherwise
requires:
(i) a term has the meaning assigned to it;
(ii) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP as defined in Section 1.01;
(iii) "or" is not exclusive;
(iv) words in the singular include the plural, and words in
the plural include the singular;
(v) provisions apply to successive events and transactions;
(vi) "herein," "hereof" and other words of similar import
refer to this Indenture as a whole and not to any particular Article,
Section or other subdivision;
(vii) all ratios and computations based on GAAP contained in
this Indenture shall be computed in accordance with the definition of
GAAP set forth in Section 1.01; and
(viii) all references to Sections or Articles refer to
Sections or Articles of this Indenture unless otherwise indicated.
<PAGE> 30
23
ARTICLE TWO
THE NOTES
SECTION 2.01. FORM AND DATING. The Notes and the Trustee's certificate
of authentication shall be substantially in the form annexed hereto as Exhibit A
with such appropriate insertions, omissions, substitutions and other variations
as are required or permitted by this Indenture. The Notes may have notations,
legends or endorsements required by law, stock exchange agreements to which the
Company is subject or usage. The Company shall approve the form of the Notes and
any notation, legend or endorsement on the Notes. Each Note shall be dated the
date of its authentication.
The terms and provisions contained in the form of the Notes annexed
hereto as Exhibit A shall constitute, and are hereby expressly made, a part of
this Indenture. To the extent applicable, the Company and the Trustee, by their
execution and delivery of this Indenture, expressly agree to such terms and
provisions and to be bound thereby.
Notes offered and sold in reliance on Rule 144A shall be issued
initially in the form of one or more permanent global Notes in registered form,
without interest coupons, substantially in the form set forth in Exhibit A (the
"U.S. GLOBAL NOTES"), registered in the name of the nominee of the Depositary,
deposited with the Trustee, as custodian for the Depositary, duly executed by
the Company and authenticated by the Trustee as hereinafter provided. The
aggregate principal amount of the U.S. Global Notes may from time to time be
increased or decreased by adjustments made on the records of the Trustee, as
custodian for the Depositary or its nominee, in accordance with the instructions
given by the Holder thereof, as hereinafter provided.
Notes offered and sold in offshore transactions in reliance on
Regulation S shall be issued initially in the form of one or more permanent
global Notes in registered form, without interest coupons, substantially in the
form set forth in Exhibit A (the "OFFSHORE GLOBAL NOTES"), registered in the
name of the nominee of the Depositary, deposited with the Trustee, as custodian
for the Depositary, duly executed by the Company and authenticated by the
Trustee as hereinafter provided. The aggregate principal amount of the Offshore
Global Notes may from time to time be increased or decreased by adjustments made
on the records of the Trustee, as custodian for the Depositary or its nominee,
as hereinafter provided.
Notes (i) offered and sold to Institutional Accredited Investors who
are not QIBs or (ii) issued pursuant to Section 2.07 in exchange for interests
in U.S. Global Notes shall be issued in the form of permanent certificated Notes
in registered form in substantially the form set forth in Exhibit A (the "U.S.
PHYSICAL Notes").
<PAGE> 31
24
Notes issued pursuant to Section 2.07 in exchange for interests in the
Offshore Global Notes shall be in the form of permanent certificated Notes in
registered form substantially in the form set forth in Exhibit A (the "OFFSHORE
PHYSICAL NOTES").
The Offshore Physical Notes and U.S. Physical Notes are sometimes
collectively herein referred to as the "PHYSICAL NOTES." The U.S. Global Notes
and the Offshore Global Notes are sometimes referred to herein as the "GLOBAL
NOTES."
The definitive Notes shall be typed, printed, lithographed or engraved
or produced by any combination of these methods or may be produced in any other
manner permitted by the rules of any securities depositary or of any securities
exchange on which the Notes may be listed, all as determined by the Officers
executing such Notes, as evidenced by their execution of such Notes.
SECTION 2.02. RESTRICTIVE LEGENDS. Unless and until a Note is
exchanged for an Exchange Note in connection with, or a Note is resold pursuant
to, an effective Registration Statement pursuant to the Registration Rights
Agreement, (i) each U.S. Global Note and U.S. Physical Note shall bear the
legend set forth below on the face thereof unless removed in accordance with
Section 2.08(e) hereof and (ii) each Offshore Physical Note and each Offshore
Global Note shall bear the legend set forth below on the face thereof until at
least the 41st day after the Closing Date and receipt by the Company and the
Trustee of a certificate substantially in the form of Exhibit B hereto:
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), AND ACCORDINGLY, MAY NOT BE
OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR
BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE.
BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A
"QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT) OR (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS
DEFINED IN RULE 501(a)(1), (2), (3) OR (7) OF REGULATION D UNDER THE
SECURITIES ACT) (AN "INSTITUTIONAL ACCREDITED INVESTOR") OR (C) IT IS
NOT A U.S. PERSON AND IS ACQUIRING THIS NOTE IN AN OFFSHORE TRANSACTION
IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT, (2) AGREES
THAT IT WILL NOT, WITHIN THE TIME PERIOD REFERRED TO UNDER RULE 144(k)
UNDER THE SECURITIES ACT AS IN EFFECT ON THE DATE OF TRANSFER OF THIS
NOTE, RESELL OR OTHERWISE TRANSFER THIS NOTE EXCEPT (A) TO THE COMPANY
OR ANY SUBSIDIARY THEREOF, (B) TO A QUALIFIED INSTITUTIONAL BUYER IN
COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (C) INSIDE THE
UNITED STATES TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO
SUCH TRANSFER,
<PAGE> 32
25
FURNISHES TO THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER
OF THIS NOTE (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE
TRUSTEE), AND, IF SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL
AMOUNT OF LESS THAN $100,000, AN OPINION OF COUNSEL ACCEPTABLE TO THE
COMPANY THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT,
(D) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE
WITH RULE 904 UNDER THE SECURITIES ACT, (E) PURSUANT TO THE EXEMPTION
FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF
AVAILABLE) OR (F) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE SECURITIES ACT AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON
TO WHOM THIS NOTE IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT
OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THIS NOTE WITHIN THE
TIME PERIOD REFERRED TO ABOVE, THE HOLDER MUST CHECK THE APPROPRIATE
BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER OF SUCH
TRANSFER AND SUBMIT THIS CERTIFICATE TO THE TRUSTEE. IF THE PROPOSED
TRANSFEREE IS AN INSTITUTIONAL ACCREDITED INVESTOR, THE HOLDER MUST,
PRIOR TO SUCH TRANSFER, FURNISH TO THE TRUSTEE AND THE COMPANY SUCH
CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS EITHER OF THEM
MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE
PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. AS USED HEREIN, THE
TERMS "OFFSHORE TRANSACTION", "UNITED STATES" AND "U.S. PERSON" HAVE
THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT.
THE INDENTURE CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO
REGISTER ANY TRANSFER OF THIS NOTE IN VIOLATION OF THE FOREGOING
RESTRICTIONS.
Each Global Note, whether or not an Exchange Note, shall also bear the
following legend on the face thereof:
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, TO THE COMPANY OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER ENTITY
AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER
<PAGE> 33
26
ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS IN WHOLE,
BUT NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR THEREOF OR
SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL NOTE
SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS
SET FORTH IN SECTION 2.08 OF THE INDENTURE.
SECTION 2.03. EXECUTION, AUTHENTICATION AND DENOMINATIONS. Subject to
Article Four and applicable law, the aggregate principal amount of Notes which
may be authenticated and delivered under this Indenture is unlimited. The Notes
shall be executed by two Officers of the Company. The signature of these
Officers on the Notes may be by facsimile or manual signature in the name and on
behalf of the Company.
If an Officer whose signature is on a Note no longer holds that office
at the time the Trustee or authenticating agent authenticates the Note, the Note
shall be valid nevertheless.
A Note shall not be valid until the Trustee or authenticating agent
manually signs the certificate of authentication on the Note. The signature
shall be conclusive evidence that the Note has been authenticated under this
Indenture.
At any time and from time to time after the execution of this
Indenture, the Trustee or an authenticating agent shall upon receipt of a
Company Order authenticate for original issue Notes in the aggregate principal
amount specified in such Company Order; provided that the Trustee shall be
entitled to receive an Officers' Certificate and an Opinion of Counsel of the
Company in connection with such authentication of Notes. Such Company Order
shall specify the amount of Notes to be authenticated and the date on which the
original issue of Notes is to be authenticated and, in case of an issuance of
Notes pursuant to Section 2.15, shall certify that such issuance is in
compliance with Article Four.
The Trustee may appoint an authenticating agent to authenticate Notes.
An authenticating agent may authenticate Notes whenever the Trustee may do so.
Each reference in this Indenture to authentication by the Trustee includes
authentication by such authenticating agent. An authenticating agent has the
same rights as an Agent to deal with the Company or an Affiliate of the Company.
<PAGE> 34
27
The Notes shall be issuable only in registered form without coupons and
only in denominations of $1,000 in principal amount and any integral multiple of
$1,000 in excess thereof.
SECTION 2.04. REGISTRAR AND PAYING AGENT. The Company shall maintain
an office or agency where Notes may be presented for registration of transfer or
for exchange (the "REGISTRAR"), an office or agency where Notes may be presented
for payment (the "PAYING AGENT") and an office or agency where notices and
demands to or upon the Company in respect of the Notes and this Indenture may be
served, which shall be in the Borough of Manhattan, The City of New York. The
Company shall cause the Registrar to keep a register of the Notes and of their
transfer and exchange (the "SECURITY REGISTER"). The Security Register shall be
in written form or any other form capable of being converted into written form
within a reasonable time. The Company may have one or more co-Registrars and one
or more additional Paying Agents.
The Company shall enter into an appropriate agency agreement with any
Agent not a party to this Indenture. The agreement shall implement the
provisions of this Indenture that relate to such Agent. The Company shall give
prompt written notice to the Trustee of the name and address of any such Agent
and any change in the address of such Agent. If the Company fails to maintain a
Registrar, Paying Agent and/or agent for service of notices and demands, the
Trustee shall act as such Registrar, Paying Agent and/or agent for service of
notices and demands. The Company may remove any Agent upon written notice to
such Agent and the Trustee; provided that no such removal shall become effective
until (i) the acceptance of an appointment by a successor Agent to such Agent as
evidenced by an appropriate agency agreement entered into by the Company and
such successor Agent and delivered to the Trustee or (ii) notification to the
Trustee that the Trustee shall serve as such Agent until the appointment of a
successor Agent in accordance with clause (i) of this proviso. The Company, any
Subsidiary of the Company, or any Affiliate of any of them may act as Paying
Agent, Registrar or co-Registrar, and/or agent for service of notice and
demands.
The Company initially appoints the Trustee as Registrar, Paying Agent,
authenticating agent and agent for service of notice and demands. The Trustee
shall preserve in as current a form as is reasonably practicable the most recent
list available to it of the names and addresses of Holders and shall otherwise
comply with TIA Sec. 312(a). If the Trustee is not the Registrar, the Company
shall furnish to the Trustee as of each Regular Record Date and at such other
times as the Trustee may reasonably request the names and addresses of Holders
as they appear in the Security Register, including the aggregate principal
amount of Notes held by each Holder.
<PAGE> 35
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SECTION 2.05. PAYING AGENT TO HOLD MONEY IN TRUST. Not later than
10:00 a.m. (New York City time) each due date of the principal, premium, if any,
and interest on any Notes, the Company shall deposit with the Paying Agent money
in immediately available funds sufficient to pay such principal, premium, if
any, and interest so becoming due. The Company shall require each Paying Agent
other than the Trustee to agree in writing that such Paying Agent shall hold in
trust for the benefit of the Holders or the Trustee all money held by the Paying
Agent for the payment of principal of, premium, if any, and interest on the
Notes (whether such money has been paid to it by the Company or any other
obligor on the Notes), and such Paying Agent shall promptly notify the Trustee
of any default by the Company (or any other obligor on the Notes) in making any
such payment. The Company at any time may require a Paying Agent to pay all
money held by it to the Trustee and account for any funds disbursed, and the
Trustee may at any time during the continuance of any payment default, upon
written request to a Paying Agent, require such Paying Agent to pay all money
held by it to the Trustee and to account for any funds disbursed. Upon doing so,
the Paying Agent shall have no further liability for the money so paid over to
the Trustee. If the Company or any Subsidiary of the Company or any Affiliate of
any of them acts as Paying Agent, it will, on or before each due date of any
principal of, premium, if any, or interest on the Notes, segregate and hold in a
separate trust fund for the benefit of the Holders a sum of money sufficient to
pay such principal, premium, if any, or interest so becoming due until such sum
of money shall be paid to such Holders or otherwise disposed of as provided in
this Indenture, and will promptly notify the Trustee of its action or failure to
act.
SECTION 2.06. TRANSFER AND EXCHANGE. The Notes are issuable only in
registered form. A Holder may transfer a Note only by written application to the
Registrar stating the name of the proposed transferee and otherwise complying
with the terms of this Indenture. No such transfer shall be effected until, and
such transferee shall succeed to the rights of a Holder only upon, final
acceptance and registration of the transfer by the Registrar in the Security
Register. Prior to the registration of any transfer by a Holder as provided
herein, the Company, the Trustee, and any agent of the Company shall treat the
person in whose name the Note is registered as the owner thereof for all
purposes whether or not the Note shall be overdue, and neither the Company, the
Trustee, nor any such agent shall be affected by notice to the contrary.
Furthermore, any Holder of a Global Note shall, by acceptance of such Global
Note, agree that transfers of beneficial interests in such Global Note may be
effected only through a book entry system maintained by the Holder of such
Global Note (or its agent) and that ownership of a beneficial interest in the
Note shall be required to be reflected in a book entry. When Notes are presented
to the Registrar or a co-Registrar with a request to register the transfer or to
exchange them for an equal principal amount of Notes of other authorized
denominations (including an exchange of Notes for Exchange Notes), the Registrar
shall register the transfer or make the exchange as requested if its
requirements for such transactions are met (including that such Notes are duly
endorsed or accompanied by a written instrument of transfer in form satisfactory
to the Trustee and Registrar duly executed by the Holder thereof or by an
attorney who is authorized in writing to act on behalf of the Holder); provided
that no exchanges of Notes for Exchange Notes shall occur until a
<PAGE> 36
29
Registration Statement shall have been declared effective by the Commission and
that any Notes that are exchanged for Exchange Notes shall be canceled by the
Trustee. To permit registrations of transfers and exchanges, the Company shall
execute and the Trustee shall authenticate Notes at the Registrar's request. No
service charge shall be made for any registration of transfer or exchange or
redemption of the Notes, but the Company may require payment of a sum sufficient
to cover any transfer tax or similar governmental charge payable in connection
therewith (other than any such transfer taxes or other similar governmental
charge payable upon exchanges pursuant to Section 2.11, 3.08 or 9.04).
The Registrar shall not be required (i) to issue, register the transfer
of or exchange any Note during a period beginning at the opening of business 15
days before the day of the mailing of a notice of redemption of Notes selected
for redemption under Section 3.03 and ending at the close of business on the day
of such mailing, or (ii) to register the transfer of or exchange any Note so
selected for redemption in whole or in part, except the unredeemed portion of
any Note being redeemed in part.
SECTION 2.07. BOOK-ENTRY PROVISIONS FOR GLOBAL NOTES. (a) The U.S.
Global Notes and Offshore Global Notes initially shall (i) be registered in the
name of the Depositary for such Global Notes or the nominee of such Depositary,
(ii) be delivered to the Trustee as custodian for such Depositary and (iii) bear
legends as set forth in Section 2.02.
Members of, or participants in, the Depositary ("AGENT MEMBERS") shall
have no rights under this Indenture with respect to any Global Note held on
their behalf by the Depositary, or the Trustee as its custodian, or under such
Global Note, and the Depositary may be treated by the Company, the Trustee and
any agent of the Company or the Trustee as the absolute owner of such Global
Note for all purposes whatsoever. Notwithstanding the foregoing, nothing herein
shall prevent the Company, the Trustee or any agent of the Company or the
Trustee, from giving effect to any written certification, proxy or other
authorization furnished by the Depositary or impair, as between the Depositary
and its Agent Members, the operation of customary practices governing the
exercise of the rights of a holder of any Note.
(b) Transfers of a Global Note shall be limited to transfers of such
Global Note in whole, but not in part, to the Depositary, its successors or
their respective nominees. Interests of beneficial owners in Global Notes may be
transferred in accordance with the rules and procedures of the Depositary and
the provisions of Section 2.08. In addition, U.S. Physical Notes and Offshore
Physical Notes, if any, shall be transferred to all beneficial owners in
exchange for their beneficial interests in the U.S. Global Notes or the Offshore
Global Notes, as the case may be, if (i) the Depositary notifies the Company
that it is unwilling or unable to continue as Depositary for the U.S. Global
Notes or the Offshore Global Notes, as the case may be, and a successor
depositary is not appointed by the Company within 90 days of such notice, (ii)
an Event of Default
<PAGE> 37
30
has occurred and is continuing and the Registrar has received a request from the
Depositary or (iii) in accordance with the rules and procedures of the
Depositary and the provisions of Section 2.08.
(c) Any beneficial interest in one of the Global Notes that is
transferred to a person who takes delivery in the form of an interest in another
Global Note will, upon transfer, cease to be an interest in such Global Note and
become an interest in such other Global Note and, accordingly, will thereafter
be subject to all transfer restrictions, if any, and other procedures applicable
to beneficial interests in such other Global Note for as long as it remains such
an interest.
(d) In connection with any transfer of a portion of the beneficial
interests in a Global Note to beneficial owners pursuant to paragraph (b) of
this Section 2.07, the Registrar shall reflect on its books and records the date
and a decrease in the principal amount of such Global Note in an amount equal to
the principal amount of the beneficial interest in such Global Note to be
transferred, and the Company shall execute, and the Trustee shall authenticate
and deliver, one or more U.S. Physical Notes or Offshore Physical Notes, as the
case may be, of like tenor and amount.
(e) In connection with the transfer of the U.S. Global Notes or the
Offshore Global Notes, in whole, to beneficial owners pursuant to paragraph (b)
of this Section 2.07, the U.S. Global Notes or Offshore Global Notes, as the
case may be, shall be deemed to be surrendered to the Trustee for cancellation,
and the Company shall execute, and the Trustee shall authenticate and deliver,
to each beneficial owner identified by the Depositary in exchange for its
beneficial interest in the U.S. Global Notes or Offshore Global Notes, as the
case may be, an equal aggregate principal amount of U.S. Physical Notes or
Offshore Physical Notes, as the case may be, of authorized denominations.
(f) Any U.S. Physical Note delivered in exchange for an interest in the
U.S. Global Notes pursuant to paragraph (b), (d) or (e) of this Section 2.07
shall, except as otherwise provided by paragraph (e) of Section 2.08, bear the
legend regarding transfer restrictions applicable to the U.S. Physical Note set
forth in Section 2.02.
(g) Any Offshore Physical Note delivered in exchange for an interest in
the Offshore Global Notes pursuant to paragraph (b), (d) or (e) of this Section
2.07 shall, except as otherwise provided by paragraph (e) of Section 2.08, bear
the legend regarding transfer restrictions applicable to the Offshore Physical
Note set forth in Section 2.02.
(h) The registered holder of a Global Note may grant proxies and
otherwise authorize any person, including Agent Members and persons that may
hold interests through Agent Members, to take any action which a Holder is
entitled to take under this Indenture or the Notes.
<PAGE> 38
31
SECTION 2.08. SPECIAL TRANSFER PROVISIONS. Unless and until a Note is
exchanged for an Exchange Note in connection with, or a Note is resold pursuant
to, an effective Registration Statement pursuant to the Registration Rights
Agreement, the following provisions shall apply:
(a) TRANSFERS TO NON-QIB INSTITUTIONAL ACCREDITED INVESTORS. The
following provisions shall apply with respect to the registration of any
proposed transfer of a Note to any Institutional Accredited Investor which is
not a QIB (excluding Non-U.S. Persons):
(i) The Registrar shall register the transfer of any Note,
whether or not such Note bears the Private Placement Legend, if (x) the
requested transfer is after the time period referred to in Rule 144(k)
under the Securities Act or (y) the proposed transferee has delivered
to the Registrar (A) a certificate substantially in the form of Exhibit
C hereto and (B) if the aggregate principal amount of the Notes being
transferred is less than $100,000, an opinion of counsel acceptable to
the Company that such transfer is in compliance with the Securities
Act.
(ii) If the proposed transferor is an Agent Member holding a
beneficial interest in the U.S. Global Notes, upon receipt by the
Registrar of (x) the documents, if any, required by paragraph (i) above
and (y) instructions given in accordance with the Depositary's and the
Registrar's procedures, the Registrar shall reflect on its books and
records the date and a decrease in the principal amount of the U.S.
Global Notes in an amount equal to the principal amount of the
beneficial interest in the U.S. Global Notes to be transferred, and the
Company shall execute, and the Trustee shall authenticate and deliver,
one or more U.S. Physical Notes of like tenor and amount.
(b) TRANSFERS TO QIBS. The following provisions shall apply with
respect to the registration of any proposed transfer of a Note to a QIB
(excluding Non-U.S. Persons):
(i) If the Note to be transferred consists of (x) either
Offshore Physical Notes prior to the removal of the Private Placement
Legend or U.S. Physical Notes, the Registrar shall register the
transfer if such transfer is being made by a proposed transferor who
has checked the box provided for on the form of Note stating, or has
otherwise advised the Company and the Registrar in writing, that the
sale has been made in compliance with the provisions of Rule 144A to a
transferee who has signed the certification provided for on the form of
Note stating, or has otherwise advised the Company and the Registrar in
writing, that it is purchasing the Note for its own account or an
account with respect to which it exercises sole investment discretion
and that it and any such account is a QIB within the meaning of Rule
144A and is aware that the sale to it is being made in reliance on Rule
144A and acknowledges that it has received such information regarding
the Company as it has requested pursuant to Rule 144A or has determined
not to request such information and that it is aware that the
transferor is relying upon its foregoing
<PAGE> 39
32
representations in order to claim the exemption from registration
provided by Rule 144A or (y) either an interest in Offshore Global
Notes prior to the removal of the Private Placement Legend or an
interest in the U.S. Global Notes, the transfer of such interest may be
effected only through the book entry system maintained by the
Depositary.
(ii) If the proposed transferee is an Agent Member, and the
Note to be transferred consists of U.S. Physical Notes, upon receipt by
the Registrar of the documents referred to in paragraph (i) above and
instructions given in accordance with the Depositary's and the
Registrar's procedures, the Registrar shall reflect on its books and
records the date and an increase in the principal amount of U.S. Global
Notes in an amount equal to the principal amount of the U.S. Physical
Notes to be transferred, and the Trustee shall cancel the U.S. Physical
Notes so transferred.
(c) TRANSFERS OF INTERESTS IN THE OFFSHORE GLOBAL NOTES OR OFFSHORE
PHYSICAL NOTES. The following provisions shall apply with respect to any
transfer of interests in Offshore Global Notes or Offshore Physical Notes:
(i) prior to the removal of the Private Placement Legend from
the Offshore Global Notes or Offshore Physical Notes pursuant to
Section 2.02, the Registrar shall refuse to register such transfer
unless such transfer complies with Section 2.08(b) or Section 2.08(d),
as the case may be, and
(ii) after such removal, the Registrar shall register the
transfer of any such Note without requiring any additional
certification.
(d) TRANSFERS TO NON-U.S. PERSONS AT ANY TIME. The following provisions
shall apply with respect to any transfer of a Note to a Non-U.S. Person:
(i) The Registrar shall register any proposed transfer to any
Non-U.S. Person if the Note to be transferred is a U.S. Physical Note
or an interest in U.S. Global Notes, upon receipt of a certificate
substantially in the form of Exhibit D hereto from the proposed
transferor.
(ii) (a) If the proposed transferor is an Agent Member holding
a beneficial interest in the U.S. Global Notes, upon receipt by the
Registrar of (x) the documents, if any, required by paragraph (ii) and
(y) instructions in accordance with the Depositary's and the
Registrar's procedures, the Registrar shall reflect on its books and
records the date and a decrease in the principal amount of the U.S.
Global Notes in an amount equal to the principal amount of the
beneficial interest in the U.S. Global Notes to be transferred, and (b)
if the proposed transferee is an Agent Member, upon receipt by the
Registrar of instructions given in accordance with the Depositary's and
the Registrar's procedures, the
<PAGE> 40
33
Registrar shall reflect on its books and records the date and an
increase in the principal amount of the Offshore Global Notes in an
amount equal to the principal amount of the U.S. Physical Notes or the
U.S. Global Notes, as the case may be, to be transferred, and the
Trustee shall cancel the Physical Note, if any, so transferred or
decrease the amount of the U.S. Global Notes.
(e) PRIVATE PLACEMENT LEGEND. Upon the transfer, exchange or
replacement of Notes not bearing the Private Placement Legend, the Registrar
shall deliver Notes that do not bear the Private Placement Legend. Upon the
transfer, exchange or replacement of Notes bearing the Private Placement Legend,
the Registrar shall deliver only Notes that bear the Private Placement Legend
unless either (i) the circumstances contemplated by paragraph (a)(i)(x) or
(c)(ii) of this Section 2.08 exist or (ii) there is delivered to the Registrar
an Opinion of Counsel reasonably satisfactory to the Company and the Trustee to
the effect that neither such legend nor the related restrictions on transfer are
required in order to maintain compliance with the provisions of the Securities
Act.
(f) GENERAL. By its acceptance of any Note bearing the Private
Placement Legend, each Holder of such a Note acknowledges the restrictions on
transfer of such Note set forth in this Indenture and in the Private Placement
Legend and agrees that it will transfer such Note only as provided in this
Indenture. The Registrar shall not register a transfer of any Note unless such
transfer complies with the restrictions on transfer of such Note set forth in
this Indenture. In connection with any transfer of Notes, each Holder agrees by
its acceptance of the Notes to furnish the Registrar or the Company such
certifications, legal opinions or other information as either of them may
reasonably require to confirm that such transfer is being made pursuant to an
exemption from, or a transaction not subject to, the registration requirements
of the Securities Act; provided that the Registrar shall not be required to
determine (but may rely on a determination made by the Company with respect to)
the sufficiency of any such certifications, legal opinions or other information.
Without in any way limiting the Trustee's responsibilities hereunder
with respect to transfers, the Trustee shall have no additional obligation or
duty to monitor, determine or inquire as to compliance with applicable law with
respect to any transfer of any interest in any Security.
The Registrar shall retain copies of all letters, notices and other
written communications received pursuant to Section 2.07 or this Section 2.08.
The Company shall have the right to inspect and make copies of all such letters,
notices or other written communications at any reasonable time upon the giving
of reasonable written notice to the Registrar.
SECTION 2.09. REPLACEMENT NOTES. If a mutilated Note is surrendered to
the Trustee or if the Holder claims that the Note has been lost, destroyed or
wrongfully taken, then, in the absence of notice to the Company or the Trustee
that such Note has been acquired by a bona fide
<PAGE> 41
34
purchaser, the Company shall issue and the Trustee shall authenticate a
replacement Note of like tenor and principal amount and bearing a number not
contemporaneously outstanding; provided that the requirements of this paragraph
and the second paragraph of Section 2.10 are met. An indemnity bond must be
furnished that is sufficient in the judgment of both the Trustee and the Company
to protect the Company, the Trustee or any Agent from any loss that any of them
may suffer if a Note is replaced. The Company may charge such Holder for its
expenses and the expenses of the Trustee in replacing a Note. In case any such
mutilated, lost, destroyed or wrongfully taken Note has become or is about to
become due and payable, the Company in its discretion may pay such Note instead
of issuing a new Note in replacement thereof.
Every replacement Note is an additional obligation of the Company and
shall be entitled to the benefits of this Indenture.
SECTION 2.10. OUTSTANDING NOTES. Notes Outstanding at any time are all
Notes that have been authenticated by the Trustee except for those canceled by
it, those delivered to it for cancellation and those described in this Section
2.10 as not outstanding.
If a Note is replaced or paid pursuant to Section 2.09, it ceases to be
Outstanding unless and until the Trustee and the Company receive proof
satisfactory to them that the replaced or paid Note is held by a bona fide
purchaser.
If the Paying Agent (other than the Company or an Affiliate of the
Company) holds at the Maturity thereof money sufficient to pay Notes payable on
that date, then on and after that date such Notes cease to be Outstanding and
interest on them shall cease to accrue.
SECTION 2.11. TEMPORARY NOTES. Until definitive Notes are ready for
delivery, the Company may prepare and execute and the Trustee shall authenticate
temporary Notes. Temporary Notes shall be substantially in the form of
definitive Notes but may have insertions, substitutions, omissions and other
variations determined to be appropriate by the Officers executing the temporary
Notes, as evidenced by their execution of such temporary Notes. If temporary
Notes are issued, the Company will cause definitive Notes to be prepared without
unreasonable delay. After the preparation of definitive Notes, the temporary
Notes shall be exchangeable for definitive Notes upon surrender of the temporary
Notes at the office or agency of the Company designated for such purpose
pursuant to Section 4.02, without charge to the Holder. Upon surrender for
cancellation of any one or more temporary Notes the Company shall execute and
the Trustee shall authenticate and deliver in exchange therefor a like principal
amount of definitive Notes of authorized denominations. Until so exchanged, the
temporary Notes shall be entitled to the same benefits under this Indenture as
definitive Notes.
SECTION 2.12. CANCELLATION. The Company at any time may deliver to the
Trustee for cancellation any Notes previously authenticated and delivered
hereunder which the Company may
<PAGE> 42
35
have acquired in any manner whatsoever, and may deliver to the Trustee for
cancellation any Notes previously authenticated hereunder which the Company has
not issued and sold. The Registrar and the Paying Agent shall forward to the
Trustee any Notes surrendered to them for transfer, exchange or payment. The
Trustee shall cancel all Notes surrendered for transfer, exchange, payment or
cancellation and shall dispose of them in accordance with its normal procedure.
Except as expressly permitted by this Indenture, the Company may not issue new
Notes to replace Notes it has paid in full or delivered to the Trustee for
cancellation.
SECTION 2.13. CUSIP NUMBERS. The Company in issuing the Notes may use
"CUSIP", "CINS" or "ISIN" numbers (if then generally in use), and the Trustee
shall use CUSIP, CINS or ISIN numbers, as the case may be, in notices of
redemption or exchange as a convenience to Holders; provided that any such
notice shall state that no representation is made as to the correctness of such
numbers either as printed on the Notes or as contained in any notice of
redemption or exchange and that reliance may be placed only on the other
identification numbers printed on the Notes. The Company will promptly notify
the Trustee of any change in "CUSIP", "CINS" or "ISIN" numbers for the Notes.
SECTION 2.14. DEFAULTED INTEREST. If the Company defaults in a payment
of interest on the Notes, it shall pay, or shall deposit with the Paying Agent
money in immediately available funds sufficient to pay, the defaulted interest,
plus (to the extent lawful) any interest payable on the defaulted interest, to
the Persons who are Holders on a subsequent special record date. A special
record date, as used in this Section 2.14 with respect to the payment of any
defaulted interest, shall mean the 15th day next preceding the date fixed by the
Company for the payment of defaulted interest, whether or not such day is a
Business Day. At least 15 days before the subsequent special record date, the
Company shall mail to each Holder and to the Trustee a notice that states the
subsequent special record date, the payment date and the amount of defaulted
interest to be paid.
SECTION 2.15. ISSUANCE OF ADDITIONAL NOTES. The Company may, subject
to Article Four of this Indenture and applicable law, issue additional Notes
under this Indenture. The Notes issued on the Closing Date and any additional
Notes subsequently issued shall be treated as a single class for all purposes
under this Indenture.
ARTICLE THREE
REDEMPTION
SECTION 3.01. RIGHT OF REDEMPTION. (a) The Notes shall be redeemable,
at the Company's option, in whole or in part, at any time or from time to time,
on or after March 15, 2003 and prior to Maturity, upon not less than 30 nor more
than 60 days' prior notice mailed by first-class mail to each Holder's last
address, as it appears in the Security Register, at the
<PAGE> 43
36
following Redemption Prices (expressed in percentages of principal amount), plus
accrued and unpaid interest, if any, to the Redemption Date (subject to the
right of Holders of record on the relevant Regular Record Date that is prior to
the Redemption Date to receive interest due on an Interest Payment Date), if
redeemed during the 12-month period commencing March 15 of the years set forth
below:
<TABLE>
<CAPTION>
Redemption
Year Price
---- ----------
<S> <C>
2003............................... 104.000%
2004............................... 102.667
2005............................... 101.333
2006 and thereafter................ 100.000
</TABLE>
(b) At any time and from time to time prior to March 15, 2001, the
Company may redeem up to 35% of the principal amount of the Notes with the
proceeds of one or more Public Equity Offerings, at any time or from time to
time in part, at a Redemption Price (expressed as a percentage of principal
amount) of 108%, plus accrued and unpaid interest to the Redemption Date
(subject to the rights of Holders of record on the relevant Regular Record Date
that is prior to the Redemption Date to receive interest due on an Interest
Payment Date); provided that after any such redemption Notes representing at
least 65% of the Notes originally issued remain Outstanding and that notice of
such redemption is mailed within 60 days of the relevant Public Equity Offering.
SECTION 3.02. NOTICES TO TRUSTEE. If the Company elects to redeem
Notes pursuant to Section 3.01, it shall notify the Trustee in writing of the
Redemption Date and the principal amount of Notes to be redeemed and the clause
of this Indenture pursuant to which redemption shall occur.
SECTION 3.03. SELECTION OF NOTES TO BE REDEEMED. If less than all of
the Notes are to be redeemed at any time, the Trustee shall select the Notes to
be redeemed in compliance with the requirements, as certified to it by the
Company, of the principal national securities exchange or automated quotation
system, if any, on which the Notes are listed or, if the Notes are not listed on
a national securities exchange or automated quotation system, by lot or by such
other method as the Trustee in its sole discretion shall deem fair and
appropriate; provided that no Note of $1,000 in principal amount or less shall
be redeemed in part.
The Trustee shall make the selection from the Notes outstanding and not
previously called for redemption. Notes in denominations of $1,000 in principal
amount may only be redeemed in whole. The Trustee may select for redemption
portions (equal to $1,000 in principal amount or any integral multiple thereof)
of Notes that have denominations larger than $1,000 in principal amount.
Provisions of this Indenture that apply to Notes called for redemption also
apply to
<PAGE> 44
37
portions of Notes called for redemption. The Trustee shall notify the Company
and the Registrar promptly in writing of the Notes or portions of Notes to be
called for redemption.
SECTION 3.04. NOTICE OF REDEMPTION. With respect to any redemption of
Notes pursuant to Section 3.01, at least 30 days but not more than 60 days
before a Redemption Date, the Company shall mail a notice of redemption by
first-class mail to each Holder whose Notes are to be redeemed.
The notice shall identify the Notes (including CUSIP, CINS or ISIN
number(s), as applicable) to be redeemed and shall state:
(i) the Redemption Date;
(ii) the Redemption Price;
(iii) the name and address of the Paying Agent;
(iv) that Notes called for redemption must be surrendered to
the Paying Agent in order to collect the Redemption Price;
(v) that, unless the Company defaults in making the redemption
payment, interest on Notes called for redemption ceases to accrue on
and after the Redemption Date and the only remaining right of the
Holders is to receive payment of the Redemption Price plus accrued
interest to the Redemption Date upon surrender of the Notes to the
Paying Agent;
(vi) that, if any Note is being redeemed in part, the portion
of the principal amount (equal to $1,000 in principal amount or any
integral multiple thereof) of such Note to be redeemed and that, on and
after the Redemption Date, upon surrender of such Note, a new Note or
Notes in principal amount equal to the unredeemed portion thereof will
be reissued; and
(vii) that, if any Note contains a CUSIP, CINS or ISIN number
as provided in Section 2.13, no representation is being made as to the
correctness of the CUSIP, CINS or ISIN number either as printed on the
Notes or as contained in the notice of redemption and that reliance may
be placed only on the other identification numbers printed on the
Notes.
At the Company's request (which request may be revoked by the Company
at any time prior to the time at which the Trustee shall have given such notice
to the Holders), made in writing to the Trustee at least 45 days (or such
shorter period as shall be satisfactory to the Trustee) before
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38
a Redemption Date, the Trustee shall give the notice of redemption pursuant to
Section 3.01 in the name and at the expense of the Company. If, however, the
Company gives such notice to the Holders, the Company shall concurrently deliver
to the Trustee an Officers' Certificate stating that such notice has been given.
SECTION 3.05. EFFECT OF NOTICE OF REDEMPTION. Once notice of
redemption is mailed, Notes called for redemption become due and payable on the
Redemption Date and at the Redemption Price. Upon surrender of any Notes to the
Paying Agent, such Notes shall be paid at the Redemption Price, plus accrued
interest, if any, to the Redemption Date.
Notice of redemption shall be deemed to be given when mailed, whether
or not the Holder receives the notice. In any event, failure to give such
notice, or any defect therein, shall not affect the validity of the proceedings
for the redemption of Notes held by Holders to whom such notice was properly
given.
SECTION 3.06. DEPOSIT OF REDEMPTION PRICE. On or prior to 10:00 a.m.,
New York City time, any Redemption Date, the Company shall deposit with the
Paying Agent (or, if the Company is acting as its own Paying Agent, shall
segregate and hold in trust as provided in Section 2.05) money sufficient to pay
the Redemption Price of and accrued interest on all Notes to be redeemed on that
date other than Notes or portions thereof called for redemption on that date
that have been delivered by the Company to the Trustee for cancellation.
SECTION 3.07. PAYMENT OF NOTES CALLED FOR REDEMPTION. If notice of
redemption has been given in the manner provided above, the Notes or portion of
Notes specified in such notice to be redeemed shall become due and payable on
the Redemption Date at the Redemption Price stated therein, together with
accrued interest to such Redemption Date, and on and after such date (unless the
Company shall default in the payment of such Notes at the Redemption Price and
accrued interest to the Redemption Date, in which case the principal, until
paid, shall bear interest from the Redemption Date at the rate prescribed in the
Notes), such Notes shall cease to accrue interest. Upon surrender of any Note
for redemption in accordance with a notice of redemption, such Note shall be
paid and redeemed by the Company at the Redemption Price, together with accrued
interest, if any, to the Redemption Date; provided that installments of interest
whose Stated Maturity is on or prior to the Redemption Date shall be payable to
the Holders registered as such at the close of business on the relevant Regular
Record Date.
SECTION 3.08. NOTES REDEEMED IN PART. Upon surrender of any Note that
is redeemed in part, the Company shall execute and the Trustee shall
authenticate and deliver to the Holder a new Note equal in principal amount to
the unredeemed portion of such surrendered Note.
<PAGE> 46
39
ARTICLE FOUR
COVENANTS
SECTION 4.01. PAYMENT OF NOTES. The Company shall pay the principal
of, premium, if any, and interest on the Notes on the dates and in the manner
provided in the Notes and this Indenture. An installment of principal, premium,
if any, or interest shall be considered paid on the date due if the Trustee or
Paying Agent (other than the Company, a Subsidiary of the Company, or any
Affiliate of any of them) holds on that date money designated for and sufficient
to pay the installment. If the Company or any Subsidiary of the Company or any
Affiliate of any of them acts as Paying Agent, an installment of principal,
premium, if any, or interest shall be considered paid on the due date if the
entity acting as Paying Agent complies with the last sentence of Section 2.05.
As provided in Section 6.09, upon any bankruptcy or reorganization procedure
relative to the Company, the Trustee shall serve as the Paying Agent for the
Notes.
The Company shall pay interest on overdue principal and premium, if
any, to the extent lawful, at the rate per annum specified in the Notes.
SECTION 4.02. MAINTENANCE OF OFFICE OR AGENCY. The Company will
maintain in the Borough of Manhattan, The City of New York, an office or agency
where Notes may be surrendered for registration of transfer or exchange or for
presentation for payment and where notices and demands to or upon the Company in
respect of the Notes and this Indenture may be served. The Company will give
prompt written notice to the Trustee of the location, and any change in the
location, of such office or agency. If at any time the Company shall fail to
maintain any such required office or agency or shall fail to furnish the Trustee
with the address thereof, such presentations, surrenders, notices and demands
may be made or served at the address of the Trustee set forth in Section 10.02.
The Company may also from time to time designate one or more other
offices or agencies where the Notes may be presented or surrendered for any or
all such purposes and may from time to time rescind such designations; provided
that no such designation or rescission shall in any manner relieve the Company
of its obligation to maintain an office or agency in the Borough of Manhattan,
The City of New York for such purposes. The Company will give prompt written
notice to the Trustee of any such designation or rescission and of any change in
the location of any such other office or agency.
The Company hereby initially designates the Corporate Trust Office of
the Trustee as such office of the Company in accordance with Section 2.04.
SECTION 4.03. LIMITATION ON INDEBTEDNESS. (a) The Company will not,
and will not permit any of its Restricted Subsidiaries to, Incur any
Indebtedness (other than the Notes and Indebtedness existing on the Closing
Date); provided that the Company may Incur Indebtedness
<PAGE> 47
40
if, after giving effect to the Incurrence of such Indebtedness and the receipt
and application of the proceeds therefrom, the Interest Coverage Ratio would be
greater than 2.5:1.
Notwithstanding the foregoing, the Company and any Restricted
Subsidiary (except as specified below) may Incur each and all of the following:
(i) Indebtedness of the Company under the Credit Facility or any other agreement
in an aggregate principal amount outstanding at any time not to exceed $100
million, less any amount of such Indebtedness permanently repaid as provided
under Section 4.11; (ii) Indebtedness owed (A) to the Company evidenced by an
unsubordinated promissory note or (B) to any Restricted Subsidiary; provided
that any event which results in any such Restricted Subsidiary ceasing to be a
Restricted Subsidiary or any subsequent transfer of such Indebtedness (other
than to the Company or another Restricted Subsidiary) shall be deemed, in each
case, to constitute an Incurrence of such Indebtedness not permitted by this
clause (ii); (iii) Indebtedness issued in exchange for, or the net proceeds of
which are used to refinance or refund, then outstanding Indebtedness (other than
Indebtedness Incurred under clause (i), (ii), (iv), (vi), (vii), (viii), (ix),
(x) or (xii) of this paragraph) and any refinancings thereof in an amount not to
exceed the amount so refinanced or refunded (plus premiums, accrued interest,
fees and expenses); provided that Indebtedness the proceeds of which are used to
refinance or refund the Notes or Indebtedness that is pari passu with, or
subordinated in right of payment to, the Notes shall only be permitted under
this clause (iii) if (A) in case the Notes are refinanced in part or the
Indebtedness to be refinanced is pari passu with the Notes, such new
Indebtedness, by its terms or by the terms of any agreement or instrument
pursuant to which such new Indebtedness is outstanding, is expressly made pari
passu with, or subordinate in right of payment to, the remaining Notes, (B) in
case the Indebtedness to be refinanced is subordinated in right of payment to
the Notes, such new Indebtedness, by its terms or by the terms of any agreement
or instrument pursuant to which such new Indebtedness is issued or remains
outstanding, is expressly made subordinate in right of payment to the Notes at
least to the extent that the Indebtedness to be refinanced is subordinated to
the Notes and (C) such new Indebtedness, determined as of the date of Incurrence
of such new Indebtedness, does not mature prior to the Stated Maturity of the
Indebtedness to be refinanced or refunded, and the Average Life of such new
Indebtedness is at least equal to the remaining Average Life of the Indebtedness
to be refinanced or refunded; and provided further that in no event may
Indebtedness of the Company be refinanced by means of any Indebtedness of any
Restricted Subsidiary pursuant to this clause (iii); (iv) Indebtedness (A) in
respect of performance, surety or appeal bonds provided in the ordinary course
of business, (B) under Currency Agreements and Interest Rate Agreements;
provided that such agreements (x) are designed solely to protect the Company or
its Restricted Subsidiaries against fluctuations in foreign currency exchange
rates or interest rates and (y) do not increase the Indebtedness of the obligor
outstanding at any time other than as a result of fluctuations in foreign
currency exchange rates or interest rates or by reason of fees, indemnities and
compensation payable thereunder; and (C) arising from agreements providing for
indemnification, adjustment of purchase price or similar obligations, or from
Guarantees or letters of credit, surety bonds or performance bonds securing any
obligations of the Company or any of its Restricted Subsidiaries pursuant to
such agreements,
<PAGE> 48
41
in any case Incurred in connection with the disposition of any business, assets
or Restricted Subsidiary (other than Guarantees of Indebtedness Incurred by any
Person acquiring all or any portion of such business, assets or Restricted
Subsidiary for the purpose of financing such acquisition), in a principal amount
not to exceed the gross proceeds actually received by the Company or any
Restricted Subsidiary in connection with such disposition; (v) Indebtedness of
the Company, to the extent the net proceeds thereof are promptly (A) used to
purchase Notes tendered in an Offer to Purchase made as a result of a Change in
Control or (B) deposited to defease the Notes in accordance with Article Eight;
(vi) Guarantees of the Notes and Guarantees of Indebtedness of the Company by
any Restricted Subsidiary provided the Guarantee of such Indebtedness is
permitted by and made in accordance with Section 4.07; (vii) Indebtedness of the
Company, not to exceed $15 million in any fiscal year of the Company, Incurred
to finance capital expenditures; (viii) Indebtedness of the Company in an
aggregate principal amount outstanding at any time not to exceed the sum of 80%
of Eligible Accounts Receivable and 60% of Eligible Inventory; (ix) Indebtedness
of Foreign Subsidiaries in an aggregate principal amount outstanding at any time
not to exceed the greater of (A) $20 million and (B) one-third of Consolidated
EBITDA for the then most recent four fiscal quarters covered by filings made
pursuant to Section 4.18; (x) Indebtedness of Restricted Subsidiaries, not to
exceed $10.5 million, secured by real property of such Restricted Subsidiaries;
(xi) Acquired Indebtedness, provided that, pro forma for the transactions in
which such Acquired Indebtedness is Incurred, the Interest Coverage Ratio would
be no less than 2.5:1; and (xi) Indebtedness of the Company (in addition to
Indebtedness permitted under clauses (i) through (xi) above) in an aggregate
principal amount outstanding at any time not to exceed $70 million, less any
amount of such Indebtedness permanently repaid as provided under Section 4.11.
(b) Notwithstanding any other provision of this Section 4.03, the
maximum amount of Indebtedness that the Company or a Restricted Subsidiary may
Incur pursuant to this Section 4.03 shall not be deemed to be exceeded, with
respect to any outstanding Indebtedness due solely to the result of fluctuations
in the exchange rates of currencies.
(c) For purposes of determining any particular amount of Indebtedness
under this Section 4.03, (i) Indebtedness Incurred under the Credit Facility on
or prior to the Closing Date shall be treated as Incurred pursuant to clause (i)
of the second paragraph of this Section 4.03, (ii) Guarantees, Liens or
obligations with respect to letters of credit supporting Indebtedness otherwise
included in the determination of such particular amount shall not be included
and (iii) any Liens granted pursuant to the equal and ratable provisions
referred to in Section 4.09 shall not be treated as Indebtedness. For purposes
of determining compliance with this Section 4.03, in the event that an item of
Indebtedness meets the criteria of more than one of the types of Indebtedness
described in the above clauses (other than Indebtedness referred to in clause
(i) of the preceding sentence), the Company, in its sole discretion, shall
classify, and from time to time may reclassify, such item of Indebtedness and
only be required to include the amount and type of such Indebtedness in one of
such clauses.
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SECTION 4.04. LIMITATION ON RESTRICTED PAYMENTS. (a) The Company will
not, and will not permit any Restricted Subsidiary to, directly or indirectly,
(i) declare or pay any dividend or make any distribution on or with respect to
its Capital Stock (other than (x) dividends or distributions payable solely in
shares of its Capital Stock (other than Disqualified Stock) or in options,
warrants or other rights to acquire shares of such Capital Stock and (y) pro
rata dividends or distributions on Common Stock of Restricted Subsidiaries held
by minority stockholders) held by Persons other than the Company or any of its
Restricted Subsidiaries, (ii) purchase, redeem, retire or otherwise acquire for
value any shares of Capital Stock of (A) the Company or an Unrestricted
Subsidiary (including options, warrants or other rights to acquire such shares
of Capital Stock) held by any Person or (B) a Restricted Subsidiary (including
options, warrants or other rights to acquire such shares of Capital Stock) held
by any Affiliate of the Company (other than a Wholly Owned Restricted
Subsidiary) or any holder (or any Affiliate of such holder) of 5% or more of the
Capital Stock of the Company, (iii) make any voluntary or optional principal
payment, or voluntary or optional redemption, repurchase, defeasance, or other
acquisition or retirement for value, of Indebtedness of the Company that is
subordinated in right of payment to the Notes or (iv) make any Investment, other
than a Permitted Investment, in any Person (such payments or any other actions
described in clauses (i) through (iv) above being collectively "RESTRICTED
PAYMENTS") if, at the time of, and after giving effect to, the proposed
Restricted Payment: (A) a Default or Event of Default shall have occurred and be
continuing, (B) except in the case of an Investment, the Company could not Incur
at least $1.00 of Indebtedness under the first paragraph of Section 4.03 or (C)
the aggregate amount of all Restricted Payments (the amount, if other than in
cash, to be determined in good faith by the Board of Directors, whose
determination shall be conclusive and evidenced by a Board Resolution; provided
that Restricted Payments, to the extent made solely in Capital Stock other than
Disqualified Stock, shall for purposes of this clause (C) be deemed to be in an
amount equal to zero) made after the Closing Date shall exceed the sum of (1)
50% of the aggregate amount of the Adjusted Consolidated Net Income (or, if the
Adjusted Consolidated Net Income is a loss, minus 100% of the amount of such
loss) (determined by excluding income resulting from transfers of assets by the
Company or a Restricted Subsidiary to an Unrestricted Subsidiary) accrued on a
cumulative basis during the period (taken as one accounting period) beginning on
the first day of the fiscal quarter immediately following the Closing Date and
ending on the last day of the last fiscal quarter preceding the Transaction Date
for which reports have been filed with the Commission or provided to the Trustee
pursuant to Section 4.18 plus (2) the aggregate Net Cash Proceeds received by
the Company after the Closing Date from the issuance and sale permitted by this
Indenture of its Capital Stock (other than Disqualified Stock) to a Person who
is not a Subsidiary of the Company, including an issuance or sale permitted by
this Indenture of Indebtedness of the Company for cash subsequent to the Closing
Date upon the conversion of such Indebtedness into Capital Stock (other than
Disqualified Stock) of the Company, or from the issuance to a Person who is not
a Subsidiary of the Company of any options, warrants or other rights to acquire
Capital Stock of the Company (in each case, exclusive of any Disqualified Stock
or any options, warrants or other rights that are redeemable at the option of
the holder, or are required to be redeemed, prior to the Stated
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Maturity of the Notes) plus (3) an amount equal to the net reduction in
outstanding Investments (other than reductions in outstanding Permitted
Investments) in any Person resulting from payments of interest on Indebtedness,
dividends, repayments of loans or advances, or other transfers of assets, in
each case to the Company or any Restricted Subsidiary or from the Net Cash
Proceeds from the sale of any such Investment (except, in each case, to the
extent any such payment or proceeds are included in the calculation of Adjusted
Consolidated Net Income), or from redesignations of Unrestricted Subsidiaries as
Restricted Subsidiaries (valued in each case as provided in the definition of
"Investments"), not to exceed, in each case, the amount of Investments
previously made by the Company or any Restricted Subsidiary in such Person or
Unrestricted Subsidiary. The amount of any Investment "outstanding" at any time
shall be deemed to be equal to the amount of such Investment on the date made,
less the return of capital to the Company and its Restricted Subsidiaries with
respect to such Investment (up to the amount of such Investment on the date
made). Notwithstanding anything herein to the contrary, Investments made through
the transfer of equipment shall be valued at the book value at the time of
Investment with respect to such equipment.
(b) The foregoing provision shall not be violated by reason of: (i) the
payment of any dividend within 60 days after the date of declaration thereof if,
at said date of declaration, such payment would comply with the foregoing
paragraph; (ii) the redemption, repurchase, defeasance or other acquisition or
retirement for value of Indebtedness that is subordinated in right of payment to
the Notes including premium, if any, and accrued and unpaid interest, with the
proceeds of, or in exchange for, Indebtedness Incurred under clause (iii) of the
second paragraph of Section 4.03(a); (iii) the repurchase, redemption or other
acquisition of Capital Stock of the Company or an Unrestricted Subsidiary (or
options, warrants or other rights to acquire such Capital Stock) in exchange
for, or out of the proceeds of a substantially concurrent offering of, shares of
Capital Stock (other than Disqualified Stock) of the Company (or options,
warrants or other rights to acquire such Capital Stock); (iv) the making of any
principal payment or the repurchase, redemption, retirement, defeasance or other
acquisition for value of Indebtedness of the Company which is subordinated in
right of payment to the Notes in exchange for, or out of the proceeds of, a
substantially concurrent offering of, shares of the Capital Stock (other than
Disqualified Stock) of the Company (or options, warrants or other rights to
acquire such Capital Stock); (v) payments or distributions, to dissenting
stockholders pursuant to applicable law, pursuant to or in connection with a
consolidation, merger or transfer of assets that complies with the provisions of
Article Five; or (vi) dividends consisting of rights to purchase Common Stock,
or consisting of Common Stock, of MicroSun; provided that the balance sheet
value of MicroSun's assets, net of intangible assets, does not exceed $10
million as of the date of such dividend; provided that, except in the case of
clauses (i) and (iii), no Default or Event of Default shall have occurred and be
continuing or occur as a consequence of the actions or payments set forth
therein.
(c) Each Restricted Payment permitted pursuant to paragraph (b) of this
Section 4.04 (other than the Restricted Payment referred to in clause (ii)
thereof, an exchange of Capital Stock
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for Capital Stock or Indebtedness referred to in clause (iii) or (iv) thereof
and an Investment referred to in clause (vi) thereof), and the Net Cash Proceeds
from any issuance of Capital Stock referred to in clauses (iii) and (iv)
thereof, shall be included in calculating whether the conditions of clause (C)
of the first paragraph of this Section 4.04 have been met with respect to any
subsequent Restricted Payments. In the event the proceeds of an issuance of
Capital Stock of the Company are used for the redemption, repurchase or other
acquisition of the Notes, or Indebtedness that is pari passu with the Notes,
then the Net Cash Proceeds of such issuance shall be included in clause (C) of
the first paragraph of this Section 4.04 only to the extent such proceeds are
not used for such redemption, repurchase or other acquisition of Indebtedness.
SECTION 4.05. LIMITATION ON DIVIDEND AND OTHER PAYMENT RESTRICTIONS
AFFECTING RESTRICTED SUBSIDIARIES. The Company will not, and will not permit
any Restricted Subsidiary to, create or otherwise cause or suffer to exist or
become effective any consensual encumbrance or restriction of any kind on the
ability of any Restricted Subsidiary to (i) pay dividends or make any other
distributions permitted by applicable law on any Capital Stock of such
Restricted Subsidiary owned by the Company or any other Restricted Subsidiary,
(ii) pay any Indebtedness owed to the Company or any other Restricted
Subsidiary, (iii) make loans or advances to the Company or any other Restricted
Subsidiary or (iv) transfer any of its property or assets to the Company or any
other Restricted Subsidiary.
The foregoing provisions shall not restrict any encumbrances or
restrictions: (i) existing on the Closing Date in the Credit Facility, this
Indenture or any other agreements in effect on the Closing Date, and any
extensions, refinancings, renewals or replacements of such agreements; provided
that the encumbrances and restrictions in any such extensions, refinancings,
renewals or replacements are no less favorable in any material respect to the
Holders than those encumbrances or restrictions that are then in effect and that
are being extended, refinanced, renewed or replaced; (ii) existing under or by
reason of applicable law; (iii) with respect to any Person or the property or
assets of such Person acquired by the Company or any Restricted Subsidiary,
existing at the time of such acquisition and not incurred in contemplation
thereof, which encumbrances or restrictions are not applicable to any Person or
the property or assets of any Person other than such Person or the property or
assets of such Person so acquired; (iv) in the case of clause (iv) of the first
paragraph of this Section 4.05, (A) that restrict in a customary manner the
subletting, assignment or transfer of any property or asset that is a lease,
license, conveyance or contract or similar property or asset, (B) existing by
virtue of any transfer of, agreement to transfer, option or right with respect
to, or Lien on, any property or assets of the Company or any Restricted
Subsidiary not otherwise prohibited by this Indenture or (C) arising or agreed
to in the ordinary course of business, not relating to any Indebtedness, and
that do not, individually or in the aggregate, detract from the value of
property or assets of the Company or any Restricted Subsidiary in any manner
material to the Company or any Restricted Subsidiary; (v) with respect to a
Restricted Subsidiary and imposed pursuant to an agreement that has been entered
into for the sale or disposition of all or substantially all of the Capital
Stock of, or property and assets of, such
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Restricted Subsidiary; or (vi) encumbrances or restrictions relating solely to
Foreign Subsidiaries that support Indebtedness Incurred under clause (ix) of the
second paragraph of paragraph (a) of Section 4.03. Nothing contained in this
Section 4.05 shall prevent the Company or any Restricted Subsidiary from (1)
creating, incurring, assuming or suffering to exist any Liens otherwise
permitted under Section 4.09 or (2) restricting the sale or other disposition of
property or assets of the Company or any of its Restricted Subsidiaries that
secure Indebtedness of the Company or any of its Restricted Subsidiaries.
SECTION 4.06. LIMITATION ON THE ISSUANCE AND SALE OF CAPITAL STOCK OF
RESTRICTED SUBSIDIARIES. The Company will not sell, and will not permit any
Restricted Subsidiary, directly or indirectly, to issue or sell, any shares of
Capital Stock of a Restricted Subsidiary (including options, warrants or other
rights to purchase shares of such Capital Stock) except (i) to the Company or a
Wholly Owned Restricted Subsidiary; (ii) issuances of director's qualifying
shares or sales to foreign nationals of shares of Capital Stock of foreign
Restricted Subsidiaries, to the extent required by applicable law; (iii) if,
immediately after giving effect to such issuance or sale, such Restricted
Subsidiary would no longer constitute a Restricted Subsidiary and any Investment
in such Person remaining after giving effect to such issuance or sale would have
been permitted to be made under Section 4.04 if made on the date of such
issuance or sale; (iv) and the issuance or sale of Common Stock of any
Restricted Subsidiaries if the proceeds thereof are applied in accordance with
Section 4.11.
SECTION 4.07. LIMITATION ON ISSUANCES OF GUARANTEES BY RESTRICTED
SUBSIDIARIES. The Company will not permit any Restricted Subsidiary, directly
or indirectly, to Guarantee any Indebtedness of the Company which is pari passu
with or subordinate in right of payment to the Notes ("GUARANTEED
INDEBTEDNESS"), unless (i) such Restricted Subsidiary simultaneously executes
and delivers a supplemental indenture to this Indenture providing for a
Guarantee (a "SUBSIDIARY GUARANTEE") of payment of the Notes by such Restricted
Subsidiary and (ii) such Restricted Subsidiary waives and will not in any manner
whatsoever claim or take the benefit or advantage of, any rights of
reimbursement, indemnity or subrogation or any other rights against the Company
or any other Restricted Subsidiary as a result of any payment by such Restricted
Subsidiary under its Subsidiary Guarantee; provided that this paragraph shall
not be applicable to any Guarantee of any Restricted Subsidiary (x) that existed
at the time such Person became a Restricted Subsidiary and was not Incurred in
connection with, or in contemplation of, such Person becoming a Restricted
Subsidiary or (y) of the Indebtedness Incurred under the Credit Facility. If the
Guaranteed Indebtedness is (A) pari passu with the Notes, then the Guarantee of
such Guaranteed Indebtedness shall be pari passu with, or subordinated to, the
Subsidiary Guarantee or (B) subordinated to the Notes, then the Guarantee of
such Guaranteed Indebtedness shall be subordinated to the Subsidiary Guarantee
at least to the extent that the Guaranteed Indebtedness is subordinated to the
Notes.
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Notwithstanding the foregoing, any Subsidiary Guarantee by a Restricted
Subsidiary may provide by its terms that it shall be automatically and
unconditionally released and discharged upon (i) any sale, exchange or transfer,
to any Person not an Affiliate of the Company, of all of the Company's and each
other Restricted Subsidiary's Capital Stock in, or all or substantially all the
assets of, such Restricted Subsidiary (which sale, exchange or transfer is not
prohibited by this Indenture) or (ii) the release or discharge of the Guarantee
which resulted in the creation of such Subsidiary Guarantee, except a discharge
or release by or as a result of payment under such Guarantee.
SECTION 4.08. LIMITATION ON TRANSACTIONS WITH SHAREHOLDERS AND
AFFILIATES. The Company will not, and will not permit any Restricted Subsidiary
to, directly or indirectly, enter into, renew or extend any transaction
(including, without limitation, the purchase, sale, lease or exchange of
property or assets, or the rendering of any service) with any holder (or any
Affiliate of such holder other than an entity that is an Affiliate solely by
reason of being a Subsidiary of the Company) of 5% or more of any class of
Capital Stock of the Company or with any Affiliate of the Company or any
Restricted Subsidiary, except upon fair and reasonable terms no less favorable
to the Company or such Restricted Subsidiary than could be obtained, at the time
of such transaction or, if such transaction is pursuant to a written agreement,
at the time of the execution of the agreement providing therefor, in a
comparable arm's-length transaction with a Person that is not such a holder or
an Affiliate.
The foregoing limitation does not limit, and shall not apply to (i)
transactions (A) approved by a majority of the disinterested members of the
Board of Directors or (B) for which the Company or a Restricted Subsidiary
delivers to the Trustee a written opinion of a nationally recognized firm having
expertise in the specific area which is the subject of such determination
stating that the transaction is fair to the Company or such Restricted
Subsidiary from a financial point of view; (ii) any transaction solely between
the Company and any of its Wholly Owned Restricted Subsidiaries or solely
between Wholly Owned Restricted Subsidiaries; (iii) the payment of reasonable
and customary regular fees to directors of the Company who are not employees of
the Company; (iv) any payments or other transactions pursuant to any tax-sharing
agreement between the Company and any other Person with which the Company files
a consolidated tax return or with which the Company is part of a consolidated
group for tax purposes; (v) any Restricted Payments not prohibited under Section
4.04 or (vi) any issuance of securities or other payments, awards or grants in
cash, securities or otherwise pursuant to, or the funding of, employment
arrangements, stock options and stock ownership plans or incentive plans
approved by the Board of Directors. Notwithstanding the foregoing, any
transaction or series of related transactions covered by the first paragraph of
this Section 4.08 and not covered by clauses (ii) through (v) of this paragraph,
the aggregate amount of which (until after the Stated Maturity of the Notes)
exceeds $1 million in value, must be approved or determined to be fair in the
manner provided for in clause (i)(A) or (B) above.
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SECTION 4.09. LIMITATION ON LIENS. The Company will not, and will not
permit any Restricted Subsidiary to, create, incur, assume or suffer to exist
any Lien on any of its assets or properties of any character, or any shares of
Capital Stock or Indebtedness of any Restricted Subsidiary, without making
effective provision for all of the Notes and all other amounts due under this
Indenture to be directly secured equally and ratably with (or, if the obligation
or liability to be secured by such Lien is subordinated in right of payment to
the Notes, prior to) the obligation or liability secured by such Lien.
The foregoing limitation does not apply to (i) Liens existing on the
Closing Date, including Liens securing obligations under the Credit Facility;
(ii) Liens granted after the Closing Date on any assets or Capital Stock of the
Company or its Restricted Subsidiaries created in favor of the Holders; (iii)
Liens with respect to the assets of a Restricted Subsidiary granted by such
Restricted Subsidiary to the Company or a Wholly Owned Restricted Subsidiary to
secure Indebtedness owing to the Company or such other Restricted Subsidiary;
(iv) Liens securing Indebtedness which is Incurred to refinance secured
Indebtedness which is permitted to be Incurred under the second paragraph of
Section 4.03; provided that such Liens do not extend to or cover any property or
assets of the Company or any Restricted Subsidiary other than the property or
assets securing the Indebtedness being refinanced; (v) Liens on any property or
assets of a Restricted Subsidiary securing Indebtedness of such Restricted
Subsidiary permitted under Section 4.03; (vi) Liens with respect to real
property to secure Indebtedness Incurred pursuant to clause (x) of the second
paragraph of Section 4.03(a) or (vii) Permitted Liens.
SECTION 4.10. LIMITATION ON SALE-LEASEBACK TRANSACTIONS. The Company
will not, and will not permit any Restricted Subsidiary to, enter into any
sale-leaseback transaction involving any of its assets or properties whether now
owned or hereafter acquired, whereby the Company or a Restricted Subsidiary
sells or transfers such assets or properties and then or thereafter leases such
assets or properties or any part thereof or any other assets or properties which
the Company or such Restricted Subsidiary, as the case may be, intends to use
for substantially the same purpose or purposes as the assets or properties sold
or transferred.
The foregoing restriction does not apply to any sale-leaseback
transaction if (i) the lease is for a period, including renewal rights, of not
in excess of three years; (ii) the lease secures or relates to industrial
revenue or pollution control bonds; (iii) the transaction is solely between the
Company and any Wholly Owned Restricted Subsidiary or solely between Wholly
Owned Restricted Subsidiaries; or (iv) the Company or such Restricted
Subsidiary, within 12 months after the sale or transfer of any assets or
properties is completed, applies an amount not less than the net proceeds
received from such sale in accordance with clause (A) or (B) of the first
paragraph of Section 4.11.
SECTION 4.11. LIMITATION ON ASSET SALES. The Company will not, and
will not permit any Restricted Subsidiary to, consummate any Asset Sale, unless
(i) the consideration received by
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the Company or such Restricted Subsidiary is at least equal to the fair market
value of the assets sold or disposed of and (ii) at least 75% of the
consideration received consists of cash or Temporary Cash Investments. In the
event and to the extent that the Net Cash Proceeds received by the Company or
any of its Restricted Subsidiaries from one or more Asset Sales occurring on or
after the Closing Date in any period of 12 consecutive months exceed 10% of
Adjusted Consolidated Net Tangible Assets (determined as of the date closest to
the commencement of such 12-month period for which a consolidated balance sheet
of the Company and its Subsidiaries has been filed with the Commission pursuant
to Section 4.18), then the Company shall or shall cause the relevant Restricted
Subsidiary to (i) within twelve months after the date Net Cash Proceeds so
received exceed 10% of Adjusted Consolidated Net Tangible Assets (A) apply an
amount equal to such excess Net Cash Proceeds to permanently repay
unsubordinated Indebtedness of the Company, or any Restricted Subsidiary
providing a Subsidiary Guarantee pursuant to Section 4.07 or Indebtedness of any
other Restricted Subsidiary, in each case owing to a Person other than the
Company or any of its Restricted Subsidiaries or (B) invest an equal amount, or
the amount not so applied pursuant to clause (A) (or enter into a definitive
agreement committing to so invest within 12 months after the date of such
agreement), in property or assets (other than current assets) of a nature or
type or that are used in a business (or in a company having property and assets
of a nature or type, or engaged in a business) similar or related to the nature
or type of the property and assets of, or the business of, the Company and its
Restricted Subsidiaries existing on the date of such investment and (ii) apply
(no later than the end of the 12-month period referred to in clause (i)) such
excess Net Cash Proceeds (to the extent not applied pursuant to clause (i)) as
provided in the following paragraph of this Section 4.11. The amount of such
excess Net Cash Proceeds required to be applied (or to be committed to be
applied) during such 12-month period as set forth in clause (i) of the preceding
sentence and not applied as so required by the end of such period shall
constitute "Excess Proceeds."
Notwithstanding the foregoing, to the extent that any or all of the Net
Cash Proceeds of any Asset Sale of assets based outside the United States are
prohibited or delayed by applicable local law from being repatriated to the
United States and such Net Cash Proceeds are not actually applied in accordance
with the foregoing paragraphs, the Company shall not be required to apply the
portion of such Net Cash Proceeds so affected but may permit the applicable
Restricted Subsidiaries to retain such portion of the Net Cash Proceeds so long,
but only so long, as the applicable local law will not permit repatriation to
the United States (the Company hereby agreeing to cause the applicable
Restricted Subsidiary to promptly take all actions required by the applicable
local law to permit such repatriation) and once such repatriation of any such
affected Net Cash Proceeds is permitted under the applicable local law, such
repatriation will be immediately effected and such repatriated Net Cash Proceeds
will be applied in the manner set forth in this covenant as if the Asset Sale
had occurred on such date; provided that to the extent that the Company has
determined in good faith that repatriation of any or all of the Net Cash
Proceeds of such Asset Sale would have a material adverse tax cost consequence,
the Net Cash Proceeds so affective may be
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retained by the applicable Restricted Subsidiary for so long as such material
adverse tax cost event would continue.
If, as of the first day of any calendar month, the aggregate amount of
Excess Proceeds not theretofore subject to an Offer to Purchase pursuant to this
Section 4.11 totals at least $20 million, the Company shall commence, not later
than the fifteenth Business Day of such month, and consummate an Offer to
Purchase from the Holders on a pro rata basis an aggregate principal amount of
Notes equal to the Excess Proceeds on such date, at a purchase price equal to
100% of the principal amount of the Notes, plus, in each case, accrued interest
(if any) to the Payment Date.
SECTION 4.12. REPURCHASE OF NOTES UPON A CHANGE OF CONTROL. The
Company shall commence, within 30 days after the occurrence of a Change of
Control, and consummate an Offer to Purchase for all Notes then outstanding, at
a purchase price equal to 101% of the principal amount thereof, plus accrued
interest, if any, to the Payment Date.
SECTION 4.13. EXISTENCE. Subject to Article Five of this Indenture,
the Company will do or cause to be done all things necessary to preserve and
keep in full force and effect its existence and the existence of each of its
Restricted Subsidiaries in accordance with the respective organizational
documents of the Company and each such Restricted Subsidiary and the rights
(whether pursuant to charter, partnership certificate, agreement, statute or
otherwise), licenses and franchises of the Company and each such Restricted
Subsidiary; provided that the Company shall not be required to preserve any such
right, license or franchise, or the existence of any Restricted Subsidiary, if
the maintenance or preservation thereof is no longer desirable in the conduct of
the business of the Company and its Restricted Subsidiaries taken as a whole.
SECTION 4.14. PAYMENT OF TAXES AND OTHER CLAIMS. The Company will pay
or discharge and shall cause each of its Restricted Subsidiaries to pay or
discharge, or cause to be paid or discharged, before the same shall become
delinquent (i) all material taxes, assessments and governmental charges levied
or imposed upon (a) the Company or any such Restricted Subsidiary, (b) the
income or profits of any such Restricted Subsidiary which is a corporation or
(c) the property of the Company or any such Restricted Subsidiary and (ii) all
material lawful claims for labor, materials and supplies that, if unpaid, might
by law become a lien upon the property of the Company or any such Restricted
Subsidiary; provided that the Company shall not be required to pay or discharge,
or cause to be paid or discharged, any such tax, assessment, charge or claim the
amount, applicability or validity of which is being contested in good faith by
appropriate proceedings and for which adequate reserves have been established.
SECTION 4.15. MAINTENANCE OF PROPERTIES AND INSURANCE. The Company
will cause all properties used or useful in the conduct of its business or the
business of any of its Restricted Subsidiaries to be maintained and kept in good
condition, repair and working order and supplied
<PAGE> 57
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with all necessary equipment and will cause to be made all necessary repairs,
renewals, replacements, betterments and improvements thereof, all as in the
judgment of the Company may be necessary so that the business carried on in
connection therewith may be properly and advantageously conducted at all times;
provided that nothing in this Section 4.15 shall prevent the Company or any such
Restricted Subsidiary from discontinuing the use, operation or maintenance of
any of such properties or disposing of any of them, if such discontinuance or
disposal is, in the judgment of the Company, desirable in the conduct of the
business of the Company or such Subsidiary.
The Company will provide or cause to be provided, for itself and its
Restricted Subsidiaries, insurance (including appropriate self-insurance)
against loss or damage of the kinds customarily insured against by corporations
similarly situated and owning like properties, including, but not limited to,
products liability insurance and public liability insurance, with reputable
insurers or with the government of the United States of America, or an agency or
instrumentality thereof, in such amounts, with such deductibles and by such
methods as shall be customary for corporations similarly situated in the
industry in which the Company or any such Restricted Subsidiary, as the case may
be, is then conducting business.
SECTION 4.16. NOTICE OF DEFAULTS. In the event that any Officer
becomes aware of any Default or Event of Default, the Company, promptly after it
becomes aware thereof, will give written notice thereof to the Trustee.
SECTION 4.17. COMPLIANCE CERTIFICATES. (a) The Company shall deliver
to the Trustee, within 45 days after the end of each fiscal quarter (90 days
after the end of the last fiscal quarter of each year), an Officers' Certificate
stating whether or not the signers know of any Default or Event of Default that
occurred during such fiscal quarter. In the case of the Officers' Certificate
delivered within 90 days after the end of the Company's fiscal year, such
certificate shall contain a certification from the principal executive officer,
principal financial officer or principal accounting officer of the Company that
a review has been conducted of the activities of the Company and its Restricted
Subsidiaries and the Company's and its Restricted Subsidiaries' performance
under this Indenture and that the Company has complied with all conditions and
covenants under this Indenture. For purposes of this Section 4.17, such
compliance shall be determined without regard to any period of grace or
requirement of notice provided under this Indenture. If any of the officers of
the Company signing such certificate has knowledge of such a Default or Event of
Default, the certificate shall describe any such Default or Event of Default and
its status. The first certificate to be delivered pursuant to this Section
4.17(a) shall be for the first fiscal quarter beginning after the execution of
this Indenture.
(b) The Company shall deliver to the Trustee, within 90 days after the
end of each fiscal year, beginning with the fiscal year in which this Indenture
was executed, a certificate signed by the Company's independent certified public
accountants stating (i) that their audit examination
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has included a review of the terms of this Indenture and the Notes as they
relate to accounting matters, (ii) that they have read the most recent Officers'
Certificate delivered to the Trustee pursuant to paragraph (a) of this Section
4.17 and (iii) whether, in connection with their audit examination, anything
came to their attention that caused them to believe that the Company was not in
compliance with any of the terms, covenants, provisions or conditions of Article
Four and Section 5.01 of this Indenture as they pertain to accounting matters
and, if any Default or Event of Default has come to their attention, specifying
the nature and period of existence thereof; provided that such independent
certified public accountants shall not be liable in respect of such statement by
reason of any failure to obtain knowledge of any such Default or Event of
Default that would not be disclosed in the course of an audit examination
conducted in accordance with generally accepted auditing standards in effect at
the date of such examination.
SECTION 4.18. COMMISSION REPORTS AND REPORTS TO HOLDERS. Whether or
not the Company is required to file reports with the Commission, the Company
shall file with the Commission all such reports and other information as it
would be required to file with the Commission by Section 13(a) or 15(d) under
the Exchange Act if it were subject thereto. The Company shall supply the
Trustee and each Holder or shall supply to the Trustee for forwarding to each
such Holder, without cost to such Holder, copies of such reports and information
within 15 days after the date it files such reports and information with the
Commission or after the date it would have been required to file such reports
and information with the Commission had it been subject to such sections of the
Exchange Act; provided, however, that the copies of such reports and information
mailed to Holders may omit exhibits, which the Company will supply to any Holder
at such Holder's request.
Delivery of such reports, information and documents to the Trustee is
for informational purposes only and the Trustee's receipt of such shall not
constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Company's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates).
SECTION 4.19. WAIVER OF STAY, EXTENSION OR USURY LAWS. The Company
covenants (to the extent that it may lawfully do so) that it will not at any
time insist upon, or plead, or in any manner whatsoever claim or take the
benefit or advantage of, any stay or extension law or any usury law or other law
that would prohibit or forgive the Company from paying all or any portion of the
principal of, premium, if any, or interest on the Notes as contemplated herein,
wherever enacted, now or at any time hereafter in force, or that may affect the
covenants or the performance of this Indenture; and (to the extent that it may
lawfully do so) the Company hereby expressly waives all benefit or advantage of
any such law and covenants that it will not hinder, delay or impede the
execution of any power herein granted to the Trustee, but will suffer and permit
the execution of every such power as though no such law had been enacted.
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ARTICLE FIVE
SUCCESSOR CORPORATION
SECTION 5.01. WHEN COMPANY MAY MERGE, ETC. The Company shall not
consolidate with, merge with or into, or sell, convey, transfer, lease or
otherwise dispose of all or substantially all of its property and assets (as an
entirety or substantially an entirety in one transaction or a series of related
transactions) to, any Person or permit any Person to merge with or into the
Company unless: (i) the Company shall be the continuing Person, or the Person
(if other than the Company) formed by such consolidation or into which the
Company is merged or that acquired or leased such property and assets of the
Company shall be a corporation organized and validly existing under the laws of
the United States of America or any jurisdiction thereof and shall expressly
assume, by a supplemental indenture, executed and delivered to the Trustee, all
of the obligations of the Company on all of the Notes and under this Indenture;
(ii) immediately after giving effect to such transaction, no Default or Event of
Default shall have occurred and be continuing; (iii) immediately after giving
effect to such transaction on a pro forma basis, the Company or any Person
becoming the successor obligor of the Notes shall have a Consolidated Net Worth
equal to or greater than the Consolidated Net Worth of the Company immediately
prior to such transaction; (iv) immediately after giving effect to such
transaction on a pro forma basis the Company, or any Person becoming the
successor obligor of the Notes, as the case may be, could Incur at least $1.00
of Indebtedness under the first paragraph of Section 4.03; provided that this
clause (iv) shall not apply to a consolidation, merger or sale of all (but not
less than all) of the assets of the Company if all Liens and Indebtedness of the
Company or any Person becoming the successor obligor on the Notes, as the case
may be, and its Restricted Subsidiaries outstanding immediately after such
transaction would, if Incurred at such time, have been permitted to be Incurred
(and all such Liens and Indebtedness, other than Liens and Indebtedness of the
Company and its Restricted Subsidiaries outstanding immediately prior to the
transaction, shall be deemed to have been Incurred) for all purposes of this
Indenture; and (v) the Company delivers to the Trustee an Officers' Certificate
(attaching the arithmetic computations to demonstrate compliance with clauses
(iii) and (iv)) and Opinion of Counsel, in each case stating that such
consolidation, merger or transfer and such supplemental indenture comply with
this provision and that all conditions precedent provided for herein relating to
such transaction have been complied with; provided, however, that clauses (iii)
and (iv) above do not apply if, in the good faith determination of the Board of
Directors of the Company, whose determination shall be evidenced by a Board
Resolution, the principal purpose of such transaction is to change the state of
incorporation of the Company; and provided further that any such transaction
shall not have as one of its purposes the evasion of the foregoing limitations.
SECTION 5.02. SUCCESSOR SUBSTITUTED. Upon any consolidation or merger,
or any sale, conveyance, transfer, lease or other disposition of all or
substantially all of the property and assets of the Company in accordance with
Section 5.01 of this Indenture, the successor Person formed by such
consolidation or into which the Company is merged or to which such sale,
conveyance,
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transfer, lease or other disposition is made shall succeed to, and be
substituted for, and may exercise every right and power of, the Company under
this Indenture with the same effect as if such successor Person had been named
as the Company herein; provided that the Company shall not be released from its
obligation to pay the principal of, premium, if any, or interest on the Notes in
the case of a lease of all or substantially all of its property and assets.
ARTICLE SIX
DEFAULT AND REMEDIES
SECTION 6.01. EVENTS OF DEFAULT. Any of the following events shall
constitute an "EVENT OF DEFAULT" hereunder:
(a) the Company defaults in the payment of the principal of
(or premium, if any, on) any Note when the same becomes due and payable
at its Maturity;
(b) the Company defaults in the payment of interest on any
Note when the same becomes due and payable, and such default continues
for a period of 30 days;
(c) the Company defaults in the performance of, or breaches
the provisions of, Article Five or fails to make or consummate an Offer
to Purchase in accordance with Section 4.11 or 4.12;
(d) the Company defaults in the performance of or breaches any
covenant or agreement of the Company in this Indenture or under the
Notes (other than a default specified in clause (a), (b) or (c) above),
and such default or breach continues for a period of 30 consecutive
days after written notice by the Trustee or the Holders of 25% or more
in aggregate principal amount of the Notes then Outstanding;
(e) there occurs with respect to any issue or issues of
Indebtedness of the Company or any Significant Subsidiary having an
outstanding principal amount of $10 million or more in the aggregate
for all such issues of all such Persons, whether such Indebtedness
exists on the Closing Date or shall hereafter be created, (I) an event
of default that has caused the holder thereof to declare such
Indebtedness to be due and payable prior to its Stated Maturity and
such Indebtedness has not been discharged in full or such acceleration
has not been rescinded or annulled within 30 days of such acceleration
and/or (II) the failure to make a principal payment at the final (but
not any interim) fixed maturity and such defaulted payment shall not
have been made, waived or extended within 30 days of such payment
default;
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(f) any final judgment or order (not covered by insurance) for
the payment of money in excess of $10 million in the aggregate for all
such final judgments or orders against all such Persons (treating any
deductibles, self-insurance or retention as not so covered) shall be
rendered against the Company or any Significant Subsidiary and shall
not be paid or discharged, and there shall be any period of 30
consecutive days following entry of the final judgment or order that
causes the aggregate amount for all such final judgments or orders
outstanding and not paid or discharged against all such Persons to
exceed $10 million during which a stay of enforcement of such final
judgment or order, by reason of a pending appeal or otherwise, shall
not be in effect;
(g) a court having jurisdiction in the premises enters a
decree or order for (A) relief in respect of the Company or any
Significant Subsidiary in an involuntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect,
(B) appointment of a receiver, liquidator, assignee, custodian,
trustee, sequestrator or similar official of the Company or any
Significant Subsidiary or for all or substantially all of the property
and assets of the Company or any Significant Subsidiary or (C) the
winding up or liquidation of the affairs of the Company or any
Significant Subsidiary and, in each case, such decree or order shall
remain unstayed and in effect for a period of 60 consecutive days; or
(h) the Company or any Significant Subsidiary (A) commences a
voluntary case under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, or consents to the entry of an
order for relief in an involuntary case under any such law, (B)
consents to the appointment of or taking possession by a receiver,
liquidator, assignee, custodian, trustee, sequestrator or similar
official of the Company or any Significant Subsidiary or for all or
substantially all of the property and assets of the Company or any
Significant Subsidiary or (C) effects any general assignment for the
benefit of creditors.
SECTION 6.02. ACCELERATION. If an Event of Default (other than an
Event of Default specified in clause (g) or (h) of Section 6.01 that occurs with
respect to the Company) occurs and is continuing under this Indenture, the
Trustee or the Holders of at least 25% in aggregate principal amount of the
Notes then Outstanding, by written notice to the Company (and to the Trustee if
such notice is given by the Holders), may, and the Trustee at the request of
such Holders shall, declare the principal of, premium, if any, and accrued
interest on the Notes to be immediately due and payable. Upon a declaration of
acceleration, such principal, premium, if any, and accrued interest shall be
immediately due and payable. In the event of a declaration of acceleration
because an Event of Default set forth in clause (e) of Section 6.01 has occurred
and is continuing, such declaration of acceleration shall be automatically
rescinded and annulled if the event of default triggering such Event of Default
pursuant to clause (e) shall be remedied or cured by the Company or the relevant
Significant Subsidiary or waived by the holders of the relevant
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Indebtedness within 60 days after the declaration of acceleration with respect
thereto. If an Event of Default specified in clause (g) or (h) of Section 6.01
occurs with respect to the Company, the principal of, premium, if any, and
accrued interest on the Notes then Outstanding shall ipso facto become and be
immediately due and payable without any declaration or other act on the part of
the Trustee or any Holder.
The Holders of at least a majority in principal amount of the
Outstanding Notes by written notice to the Company and to the Trustee, may waive
all past defaults and rescind and annul a declaration of acceleration and its
consequences if (i) all existing Events of Default, other than the nonpayment of
the principal of, premium, if any, and interest on the Notes that have become
due solely by such declaration of acceleration, have been cured or waived and
(ii) the rescission would not conflict with any judgment or decree of a court of
competent jurisdiction.
SECTION 6.03. OTHER REMEDIES. If an Event of Default occurs and is
continuing, the Trustee may, and at the direction of the Holders of at least a
majority in principal amount of the Outstanding Notes shall, pursue any
available remedy by proceeding at law or in equity to collect the payment of
principal of, premium, if any, or interest on the Notes or to enforce the
performance of any provision of the Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any
of the Notes or does not produce any of them in the proceeding.
SECTION 6.04. WAIVER OF PAST DEFAULTS. Subject to Sections 6.02, 6.07
and 9.02, the Holders of at least a majority in principal amount of the
Outstanding Notes, by notice to the Trustee, may waive an existing Default or
Event of Default and its consequences, except a Default in the payment of
principal of, premium, if any, or interest on any Note as specified in clause
(a) or (b) of Section 6.01 or in respect of a covenant or provision of this
Indenture which cannot be modified or amended without the consent of the Holder
of each Outstanding Note affected. Upon any such waiver, such Default shall
cease to exist, and any Event of Default arising therefrom shall be deemed to
have been cured, for every purpose of this Indenture; but no such waiver shall
extend to any subsequent or other Default or Event of Default or impair any
right consequent thereto.
SECTION 6.05. CONTROL BY MAJORITY. The Holders of at least a majority
in aggregate principal amount of the Outstanding Notes may direct the time,
method and place of conducting any proceeding for any remedy available to the
Trustee or exercising any trust or power conferred on the Trustee. However, the
Trustee may refuse to follow any direction that conflicts with law or this
Indenture, that may involve the Trustee in personal liability, or that the
Trustee determines in good faith may be unduly prejudicial to the rights of
Holders of Notes not joining in the giving of such direction and may take any
other action it deems proper that is not inconsistent with any such direction
received from Holders of Notes.
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SECTION 6.06. LIMITATION ON SUITS. A Holder may not institute any
proceeding, judicial or otherwise, with respect to this Indenture or the Notes,
or for the appointment of a receiver or trustee, or for any other remedy
hereunder, unless:
(i) the Holder gives the Trustee written notice of a
continuing Event of Default;
(ii) the Holders of at least 25% in aggregate principal amount
of Outstanding Notes make a written request to the Trustee to pursue
the remedy;
(iii) such Holder or Holders offer (and if requested provide)
the Trustee indemnity satisfactory to the Trustee against any costs,
liability or expense;
(iv) the Trustee does not comply with the request within 60
days after receipt of the request and the offer of indemnity; and
(v) during such 60-day period, the Holders of a majority in
aggregate principal amount of the Outstanding Notes do not give the
Trustee a direction that is inconsistent with the request.
For purposes of Section 6.05 of this Indenture and this Section 6.06,
the Trustee shall comply with TIA Section 316(a) in making any determination of
whether the Holders of the required aggregate principal amount of Outstanding
Notes have concurred in any request or direction of the Trustee to pursue any
remedy available to the Trustee or the Holders with respect to this Indenture or
the Notes or otherwise under the law.
A Holder may not use this Indenture to prejudice the rights of another
Holder or to obtain a preference or priority over such other Holder.
SECTION 6.07. RIGHTS OF HOLDERS TO RECEIVE PAYMENT. Notwithstanding
any other provision of this Indenture, the right of any Holder of a Note to
receive payment of the principal of, premium, if any, or interest on, such Note
or to bring suit for the enforcement of any such payment, on or after the due
date expressed in the Notes, shall not be impaired or affected without the
consent of such Holder.
SECTION 6.08. COLLECTION SUIT BY TRUSTEE. If an Event of Default in
payment of principal, premium or interest specified in clause (a), (b) or (c),
of Section 6.01 occurs and is continuing, the Trustee may recover judgment in
its own name and as trustee of an express trust against the Company or any other
obligor of the Notes for the whole amount of principal, premium, if any, and
accrued interest remaining unpaid, together with interest on overdue principal,
premium, if any, and, to the extent that payment of such interest is lawful,
interest on overdue installments of interest, in each case at the rate specified
in the Notes, and such further
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amount as shall be sufficient to cover the costs and expenses of collection,
including the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel.
SECTION 6.09. TRUSTEE MAY FILE PROOFS OF CLAIM. The Trustee may file
such proofs of claim and other papers or documents as may be necessary or
advisable in order to have the claims of the Trustee (including any claim for
the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 7.07) and the Holders allowed in any judicial proceedings relative to
the Company (or any other obligor of the Notes), its creditors or its property
and shall be entitled and empowered to collect and receive any monies,
securities or other property payable or deliverable upon conversion or exchange
of the Notes or upon any such claims and to distribute the same, and any
custodian, receiver, assignee, trustee, liquidator, sequestrator or other
similar official in any such judicial proceeding is hereby authorized by each
Holder to make such payments to the Trustee and, in the event that the Trustee
shall consent to the making of such payments directly to the Holders, to pay to
the Trustee any amount due to it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 7.07. Nothing herein contained shall be
deemed to empower the Trustee to authorize or consent to, or accept or adopt on
behalf of any Holder, any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Holder thereof, or to
authorize the Trustee to vote in respect of the claim of any Holder in any such
proceeding.
SECTION 6.10. PRIORITIES. If the Trustee collects any money pursuant
to this Article Six, it shall pay out the money in the following order:
First: to the Trustee for all amounts due under Section 7.07;
Second: to Holders for amounts then due and unpaid for
principal of, premium, if any, and interest on the Notes in respect of
which or for the benefit of which such money has been collected,
ratably, without preference or priority of any kind, according to the
amounts due and payable on such Notes for principal, premium, if any,
and interest, respectively; and
Third: to the Company or any other obligors of the Notes, as
their interests may appear, or as a court of competent jurisdiction may
direct.
The Trustee, upon prior written notice to the Company, may fix a record
date and payment date for any payment to Holders pursuant to this Section 6.10.
SECTION 6.11. UNDERTAKING FOR COSTS. In any suit for the enforcement
of any right or remedy under this Indenture or in any suit against the Trustee
for any action taken or omitted by it as Trustee, a court may require any party
litigant in such suit to file an undertaking to pay the
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costs of the suit, and the court may assess reasonable costs, including
reasonable attorneys' fees and expenses, against any party litigant in the suit
having due regard to the merits and good faith of the claims or defenses made by
the party litigant. This Section 6.11 does not apply to a suit by the Trustee, a
suit by a Holder pursuant to Section 6.07, or a suit by Holders of more than 10%
in principal amount of the Outstanding Notes.
SECTION 6.12. RESTORATION OF RIGHTS AND REMEDIES. If the Trustee or
any Holder has instituted any proceeding to enforce any right or remedy under
this Indenture and such proceeding has been discontinued or abandoned for any
reason, or has been determined adversely to the Trustee or to such Holder, then,
and in every such case, subject to any determination in such proceeding, the
Company, the Trustee and the Holders shall be restored severally and
respectively to their former positions hereunder and thereafter all rights and
remedies of the Company, Trustee and the Holders shall continue as though no
such proceeding had been instituted.
SECTION 6.13. RIGHTS AND REMEDIES CUMULATIVE. Except as otherwise
provided with respect to the replacement or payment of mutilated, destroyed,
lost or wrongfully taken Notes in Section 2.09, no right or remedy herein
conferred upon or reserved to the Trustee or to the Holders is intended to be
exclusive of any other right or remedy, and every right and remedy shall, to the
extent permitted by law, be cumulative and in addition to every other right and
remedy given hereunder or now or hereafter existing at law or in equity or
otherwise. The assertion or employment of any right or remedy hereunder, or
otherwise, shall not prevent the concurrent assertion or employment of any other
appropriate right or remedy.
SECTION 6.14. DELAY OR OMISSION NOT WAIVER. No delay or omission of
the Trustee or of any Holder to exercise any right or remedy accruing upon any
Event of Default shall impair any such right or remedy or constitute a waiver of
any such Event of Default or an acquiescence therein. Every right and remedy
given by this Article Six or by law to the Trustee or to the Holders may be
exercised from time to time, and as often as may be deemed expedient, by the
Trustee or by the Holders, as the case may be.
ARTICLE SEVEN
TRUSTEE
SECTION 7.01. GENERAL. The duties and responsibilities of the Trustee
shall be as provided by the TIA and as set forth herein. Notwithstanding the
foregoing, no provision of this Indenture shall require the Trustee to expend or
risk its own funds or otherwise incur any financial liability in the performance
of any of its duties hereunder, or in the exercise of any of its rights or
powers, if it shall have reasonable grounds for believing that repayment of such
funds or adequate indemnity against such risk or liability is not reasonably
assured to it. Whether or not herein expressly so provided, every provision of
this Indenture relating to the conduct or affecting
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the liability of or affording protection to the Trustee shall be subject to the
provisions of this Article Seven.
SECTION 7.02. CERTAIN RIGHTS OF TRUSTEE. Subject to TIA Sections 315(a)
through (d):
(i) the Trustee may rely, and shall be protected in acting or
refraining from acting, upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent,
order, bond, debenture, note, other evidence of indebtedness or other
paper or document believed by it to be genuine and to have been signed
or presented by the proper person;
(ii) before the Trustee acts or refrains from acting, it may
require an Officers' Certificate or an Opinion of Counsel, which shall
conform to Section 10.04. The Trustee shall not be liable for any
action it takes or omits to take in good faith in reliance on such
certificate or opinion;
(iii) the Trustee may act through its attorneys and agents and
shall not be responsible for the misconduct or negligence of any
attorney or agent appointed with due care by it hereunder;
(iv) the Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Indenture at the request
or direction of any of the Holders, unless such Holders shall have
offered to the Trustee reasonable security or indemnity against the
costs, expenses and liabilities that might be incurred by it in
compliance with such request or direction;
(v) the Trustee shall not be liable for any action it takes or
omits to take in good faith that it believes to be authorized or within
its rights or powers, provided that the Trustee's conduct does not
constitute negligence or bad faith;
(vi) whenever in the administration of this Indenture the
Trustee shall deem it desirable that a matter be proved or established
prior to taking, suffering or omitting any action hereunder, the
Trustee (unless other evidence be herein specifically prescribed) may,
in the absence of bad faith on its part, rely upon an Officers'
Certificate;
(vii) the Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture, note, other evidence of indebtedness
or other paper or document, but the Trustee, in its discretion, may
make such further inquiry or investigation into such facts or matters
as it may see fit, and, if the Trustee shall
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determine to make such further inquiry or investigation, it shall be
entitled to examine the books, records and premises of the Company
personally or by agent or attorney;
(viii) the Trustee may consult with counsel of its selection
and the advice of such counsel or any Opinion of Counsel shall be full
and complete authorization and protection in respect of any action
taken, suffered or omitted by it hereunder in good faith and in
reliance thereon; and
(ix) the Trustee shall not be deemed to have notice of any
Default or Event of Default unless a Responsible Officer of the Trustee
has actual knowledge thereof or unless written notice of any event
which is in fact such a Default is received by the Trustee at the
Corporate Trust Office of the Trustee, and such notice references the
Notes and this Indenture.
SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE. The Trustee, in its
individual or any other capacity, may become the owner or pledgee of Notes and
may otherwise deal with the Company or its Affiliates with the same rights it
would have if it were not the Trustee. Any Agent may do the same with like
rights. However, the Trustee is subject to TIA Sections 310(b) and 311.
SECTION 7.04. TRUSTEE'S DISCLAIMER. The Trustee (i) makes no
representation as to the validity or adequacy of this Indenture or the Notes,
except that the Trustee represents that it is duly authorized to execute and
deliver this Indenture, authenticate the Notes and perform its obligations
hereunder, (ii) shall not be accountable for the Company's use or application of
the proceeds from the Notes and (iii) shall not be responsible for any statement
in the Notes other than its certificate of authentication.
SECTION 7.05. NOTICE OF DEFAULT. If any Default or any Event of
Default occurs and is continuing and if such Default or Event of Default is
known to the Trustee shall mail to each Holder in the manner and to the extent
provided in TIA Section 313(c) notice of the Default or Event of Default within
45 days after it occurs, unless such Default or Event of Default has been cured;
provided, however, that, except in the case of a default in the payment of the
principal of, premium, if any, or interest on any Note, the Trustee shall be
protected in withholding such notice if and so long as the board of directors,
the executive committee or a trust committee of directors and/or Responsible
Officers of the Trustee in good faith determine that the withholding of such
notice is in the interest of the Holders.
SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS. Within 60 days after each
March 15, beginning with March 15, 1999, the Trustee shall mail to each Holder
as provided in TIA Section 313(c) a brief report dated as of such March 15, if
required by TIA Section 313(a).
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A copy of each report at the time of its mailing to the Holders of
Securities shall be mailed to the Company and filed with the Commission and each
stock exchange on which the Securities are listed in accordance with TIA Section
313(d). The Company shall promptly notify the Trustee when the Securities are
listed on any stock exchange or of any delisting thereof.
SECTION 7.07. COMPENSATION AND INDEMNITY. The Company shall pay to the
Trustee such compensation as shall be agreed upon in writing for its services
hereunder. The compensation of the Trustee shall not be limited by any law on
compensation of a trustee of an express trust. The Company shall reimburse the
Trustee upon request for all reasonable disbursements, expenses and advances
incurred or made by the Trustee without negligence or bad faith on its part.
Such expenses shall include the reasonable compensation and expenses of the
Trustee's agents and counsel.
The Company shall indemnify the Trustee for, and hold it harmless
against, any and all loss, damage, claim or liability or expense, including
taxes (other than taxes based on the income of the Trustee) incurred by it
without negligence or bad faith on its part in connection with the acceptance or
administration of this Indenture and its duties under this Indenture and the
Notes, including the costs and expenses of defending itself against any claim or
liability and of complying with any process served upon it or any of its
officers in connection with the exercise or performance of any of its powers or
duties under this Indenture and the Notes. The Trustee shall notify the Company
promptly of any claim for which it may seek indemnity. Failure by the Trustee to
so notify the Company shall not relieve the Company of its obligations
hereunder, unless the Company is materially prejudiced thereby. The Company
shall defend the claim and the Trustee shall cooperate in the defense. Unless
otherwise set forth herein, the Trustee may have separate counsel and the
Company shall pay the reasonable fees and expenses of such counsel. The Company
need not pay for any settlement made without its consent, which consent shall
not be unreasonably withheld.
To secure the Company's payment obligations in this Section 7.07, the
Trustee shall have a lien prior to the Notes on all money or property held or
collected by the Trustee, in its capacity as Trustee, except money or property
held in trust to pay principal of, premium, if any, and interest on particular
Notes.
If the Trustee incurs expenses or renders services after the occurrence
of an Event of Default specified in clause (g) or (h) of Section 6.01, the
expenses and the compensation for the services will be intended to constitute
expenses of administration under Title 11 of the United States Bankruptcy Code
or any applicable federal or state law for the relief of debtors.
The provisions of this Section 7.07 shall survive the termination of
this Indenture.
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The Trustee shall comply with the provisions of TIA Section 313(b)(2)
to the extent applicable.
SECTION 7.08. REPLACEMENT OF TRUSTEE. A resignation or removal of the
Trustee and appointment of a successor Trustee shall become effective only upon
the successor Trustee's acceptance of appointment as provided in this Section
7.08.
The Trustee may resign at any time by so notifying the Company in
writing at least 30 days prior to the date of the proposed resignation. The
Holders of a majority in principal amount of the Outstanding Notes may remove
the Trustee by so notifying the Trustee in writing and may appoint a successor
Trustee with the consent of the Company. The Company may remove the Trustee if:
(i) the Trustee is no longer eligible under Section 7.10; (ii) the Trustee is
adjudged a bankrupt or an insolvent; (iii) a receiver or other public officer
takes charge of the Trustee or its property; or (iv) the Trustee becomes
incapable of acting.
If the Trustee resigns or is removed, or if a vacancy exists in the
office of Trustee for any reason, the Company shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holders
of a majority in principal amount of the Outstanding Notes may appoint a
successor Trustee to replace the successor Trustee appointed by the Company. If
the successor Trustee does not deliver its written acceptance required by the
next succeeding paragraph of this Section 7.08 within 30 days after the retiring
Trustee resigns or is removed, the retiring Trustee, the Company or the Holders
of a majority in principal amount of the Outstanding Notes may petition, at the
expense of the Company, any court of competent jurisdiction for the appointment
of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Immediately after the
delivery of such written acceptance, subject to the lien provided in Section
7.07, (i) the retiring Trustee shall transfer all property held by it as Trustee
to the successor Trustee, (ii) the resignation or removal of the retiring
Trustee shall become effective and (iii) the successor Trustee shall have all
the rights, powers and duties of the Trustee under this Indenture. A successor
Trustee shall mail notice of its succession to each Holder. No successor Trustee
shall accept its appointment unless at the time of such acceptance such
successor Trustee shall be qualified and eligible under this Article.
If the Trustee is no longer eligible under Section 7.10 or shall fail
to comply with TIA Section 310(b), any Holder who satisfies the requirements of
TIA Section 310(b) may petition any court of competent jurisdiction for the
removal of the Trustee and the appointment of a successor Trustee.
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The Company shall give notice of any resignation and any removal of the
Trustee and each appointment of a successor Trustee to all Holders. Each notice
shall include the name of the successor Trustee and the address of its Corporate
Trust Office.
Notwithstanding replacement of the Trustee pursuant to this Section
7.08, the Company's obligation under Section 7.07 shall continue for the benefit
of the retiring Trustee.
SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER, ETC. If the Trustee
consolidates with, merges or converts into, or transfers all or substantially
all of its corporate trust business to, another corporation or national banking
association, the resulting, surviving or transferee corporation or national
banking association without any further act shall be the successor Trustee with
the same effect as if the successor Trustee had been named as the Trustee
herein, provided such corporation shall be otherwise qualified and eligible
under this Article.
SECTION 7.10. ELIGIBILITY. This Indenture shall always have a Trustee
who satisfies the requirements of TIA Section 310(a)(1). The Trustee shall have
a combined capital and surplus of at least $25 million as set forth in its most
recent published annual report of condition that is subject to supervision or
examination by federal or state authority. If at any time the Trustee shall
cease to be eligible in accordance with the provisions of this Section 7.10, the
Trustee shall resign immediately in the manner and with the effect specified in
this Article.
SECTION 7.11. MONEY HELD IN TRUST. The Trustee shall not be liable for
interest on any money received by it except as the Trustee may agree in writing
with the Company. Money held in trust by the Trustee need not be segregated from
other funds except to the extent required by law and except for money held in
trust under Article Eight of this Indenture.
ARTICLE EIGHT
DISCHARGE OF INDENTURE
SECTION 8.01. TERMINATION OF COMPANY'S OBLIGATIONS. Except as
otherwise provided in this Section 8.01, the Company may terminate its
obligations under the Notes and this Indenture if:
(i) all Notes previously authenticated and delivered (other
than destroyed, lost or stolen Notes that have been replaced or Notes
that are paid pursuant to Section 4.01 or Notes for whose payment money
or securities have theretofore been held in trust and thereafter repaid
to the Company, as provided in Section 8.05) have been delivered to the
Trustee for cancellation and the Company has paid all sums payable by
it hereunder; or
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(ii) (A) the Notes mature within one year or all of them are
to be called for redemption within one year under arrangements
satisfactory to the Trustee for giving the notice of redemption, (B)
the Company irrevocably deposits in trust with the Trustee during such
one-year period, under the terms of an irrevocable trust agreement in
form and substance satisfactory to the Trustee, as trust funds solely
for the benefit of the Holders for that purpose, money or U.S.
Government Obligations sufficient (in the opinion of a nationally
recognized firm of independent public accountants expressed in a
written certification thereof delivered to the Trustee), without
consideration of any reinvestment of any interest thereon, to pay
principal, premium, if, any, and interest on the Notes to maturity or
redemption, as the case may be, and to pay all other sums payable by it
hereunder, (C) no Default or Event of Default with respect to the Notes
shall have occurred and be continuing on the date of such deposit, (D)
such deposit will not result in a breach or violation of, or constitute
a default under, this Indenture or any other agreement or instrument to
which the Company is a party or by which it is bound and (E) the
Company has delivered to the Trustee an Officers' Certificate and an
Opinion of Counsel, in each case stating that all conditions precedent
provided for herein relating to the satisfaction and discharge of this
Indenture have been complied with.
With respect to the foregoing clause (i), the Company's obligations
under Section 7.07 shall survive. With respect to the foregoing clause (ii), the
Company's obligations in Sections 2.02, 2.03, 2.04, 2.05, 2.06, 2.07, 2.08,
2.09, 2.14, 4.01, 4.02, 7.07, 7.08, 8.04, 8.05 and 8.06 shall survive until the
Notes are no longer Outstanding. Thereafter, only the Company's obligations in
Sections 7.07, 8.05 and 8.06 shall survive. After any such irrevocable deposit,
the Trustee upon request shall acknowledge in writing the discharge of the
Company's obligations under the Notes and this Indenture except for those
surviving obligations specified above.
SECTION 8.02. DEFEASANCE AND DISCHARGE OF INDENTURE. The Company will
be deemed to have paid and will be discharged from any and all obligations in
respect of the Notes on the 123rd day after the date of the deposit referred to
in clause (A) of this Section 8.02, and the provisions of this Indenture will no
longer be in effect with respect to the Notes, and the Trustee, at the expense
of the Company, shall execute proper instruments acknowledging the same if:
(A) with reference to this Section 8.02, the Company has
irrevocably deposited or caused to be irrevocably deposited with the
Trustee (or another trustee satisfying the requirements of Section
7.10) and conveyed all right, title and interest to the Trustee for the
benefit of the Holders, under the terms of an irrevocable trust
agreement in form and substance satisfactory to the Trustee as trust
funds in trust, specifically pledged to the Trustee for the benefit of
the Holders as security for payment of the principal of, premium, if
any, and interest, if any, on the Notes, and dedicated solely to, the
benefit of the Holders, in and to (1) money in an amount, (2) U.S.
Government Obligations that, through the payment of interest, premium,
if any, and principal in respect thereof in accordance
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with their terms, will provide, not later than one day before the due
date of any payment referred to in this clause (A), money in an amount
or (3) a combination thereof in an amount sufficient, in the opinion of
a nationally recognized firm of independent public accountants
expressed in a written certification thereof delivered to the Trustee,
to pay and discharge, without consideration of the reinvestment of such
interest and after payment of all federal, state and local taxes or
other charges and assessments in respect thereof payable by the
Trustee, the principal of, premium, if any, and accrued interest on the
outstanding Notes on the Stated Maturity of such principal or interest;
provided that the Trustee shall have been irrevocably instructed to
apply such money or the proceeds of such U.S. Government Obligations to
the payment of such principal, premium, if any, and interest with
respect to the Notes;
(B) the Company has delivered to the Trustee (1) either (x) an
Opinion of Counsel to the effect that Holders will not recognize
income, gain or loss for federal income tax purposes as a result of the
Company's exercise of its option under this Section 8.02 and will be
subject to federal income tax on the same amount and in the same manner
and at the same times as would have been the case if such deposit,
defeasance and discharge had not occurred which Opinion of Counsel
shall be based upon (and accompanied by a copy of) a ruling of the
Internal Revenue Service to the same effect unless there has been a
change in applicable federal income tax law after the Closing Date such
that a ruling is no longer required or (y) a ruling directed to the
Trustee received from the Internal Revenue Service to the same effect
as the aforementioned Opinion of Counsel and (2) an Opinion of Counsel
to the effect that the creation of the defeasance trust does not
violate the Investment Company Act of 1940 and that after the passage
of 123 days following the deposit (except, with respect to any trust
funds for the account of any Holder who may be deemed to be an
"insider" for purposes of the United States Bankruptcy Code, after one
year following the deposit), the trust funds will not be subject to the
effect of Section 547 of the United States Bankruptcy Code or Section
15 of the New York Debtor and Creditor Law in a case commenced by or
against the Company under either such statute, and either (I) the trust
funds will no longer remain the property of the Company (and therefore
will not be subject to the effect of any applicable bankruptcy,
insolvency, reorganization or similar laws affecting creditors' rights
generally) or (II) if a court were to rule under any such law in any
case or proceeding that the trust funds remained property of the
Company, (a) assuming such trust funds remained in the possession of
the Trustee prior to such court ruling to the extent not paid to the
Holders, the Trustee will hold, for the benefit of the Holders, a valid
and perfected security interest in such trust funds that is not
avoidable in bankruptcy or otherwise except for the effect of Section
552(b) of the United States Bankruptcy Code on interest on the trust
funds accruing after the commencement of a case under such statute and
(b) the Holders will be entitled to receive adequate protection of
their interests in such trust funds if such trust funds are used in
such case or proceeding;
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(C) immediately after giving effect to such deposit on a pro
forma basis, no Default or Event of Default shall have occurred and be
continuing on the date of such deposit or during the period ending on
the 123rd day after such date of such deposit, and such deposit shall
not result in a breach or violation of, or constitute a default under,
this Indenture or any other agreement or instrument to which the
Company or any of its Subsidiaries is a party or by which the Company
or any of its Subsidiaries is bound;
(D) if the Notes are then listed on a national securities
exchange, the Company has delivered to the Trustee an Opinion of
Counsel to the effect that the Notes will not be delisted as a result
of such deposit, defeasance and discharge; and
(E) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, in each case stating that all
conditions precedent provided for herein relating to the defeasance
contemplated by this Section 8.02 have been complied with.
Notwithstanding the foregoing, prior to the end of the 123-day (or one
year) period referred to in clause (B)(2) of this Section 8.02, none of the
Company's obligations under this Indenture shall be discharged. Subsequent to
the end of such 123-day (or one year) period with respect to this Section 8.02,
the Company's obligations in Sections 2.02, 2.03, 2.04, 2.05, 2.06, 2.07, 2.08,
2.09, 2.14, 4.01, 4.02, 7.07, 7.08, 8.04, 8.05 and 8.06 shall survive until the
Notes are no longer Outstanding. Thereafter, only the Company's obligations in
Sections 7.07, 8.05 and 8.06 shall survive. If and when a ruling from the
Internal Revenue Service or an Opinion of Counsel referred to in clause (B)(1)
of this Section 8.02 is able to be provided specifically without regard to, and
not in reliance upon, the continuance of the Company's obligations under Section
4.01, then the Company's obligations under such Section 4.01 shall cease upon
delivery to the Trustee of such ruling or Opinion of Counsel and compliance with
the other conditions precedent provided for herein relating to the defeasance
contemplated by this Section 8.02.
After any such irrevocable deposit, the Trustee upon request shall
acknowledge in writing the discharge of the Company's obligations under the
Notes and this Indenture except for those surviving obligations in the
immediately preceding paragraph.
SECTION 8.03. DEFEASANCE OF CERTAIN OBLIGATIONS. The Company may omit
to comply with any term, provision or condition set forth in clauses (iii) and
(iv) of Section 5.01 and Sections 4.03 through 4.11 and clause (c) of Section
6.01 with respect to clauses (iii) and (iv) of Section 5.01, clause (d) of
Section 6.01 with respect to Sections 4.01, 4.02 and 4.12 through 4.19 and
clauses (e) and (f) of Section 6.01 shall be deemed not to be Events of Default,
in each case with respect to the Outstanding Notes if:
(i) with reference to this Section 8.03, the Company has
irrevocably deposited or caused to be irrevocably deposited with the
Trustee (or another trustee satisfying the
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requirements of Section 7.10) and conveyed all right, title and
interest to the Trustee for the benefit of the Holders, under the terms
of an irrevocable trust agreement in form and substance satisfactory to
the Trustee as trust funds in trust, specifically pledged to the
Trustee for the benefit of the Holders as security for payment of the
principal of, premium, if any, and interest, if any, on the Notes, and
dedicated solely to, the benefit of the Holders, in and to (A) money in
an amount, (B) U.S. Government Obligations that, through the payment of
interest, premium, if any, and principal in respect thereof in
accordance with their terms, will provide, not later than one day
before the due date of any payment referred to in this clause (i),
money in an amount or (C) a combination thereof in an amount
sufficient, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification
thereof delivered to the Trustee, to pay and discharge, without
consideration of the reinvestment of such interest and after payment of
all federal, state and local taxes or other charges and assessments in
respect thereof payable by the Trustee, the principal of, premium, if
any, and interest on the Outstanding Notes on the Stated Maturity of
such principal or interest; provided that the Trustee shall have been
irrevocably instructed to apply such money or the proceeds of such U.S.
Government Obligations to the payment of such principal, premium, if
any, and interest with respect to the Notes;
(ii) the Company has delivered to the Trustee an Opinion of
Counsel to the effect that (A) the creation of the defeasance trust
does not violate the Investment Company Act of 1940, (B) after the
passage of 123 days following the deposit (except, with respect to any
trust funds for the account of any Holder who may be deemed to be an
"insider" for purposes of the United States Bankruptcy Code, after one
year following the deposit), the trust funds will not be subject to the
effect of Section 547 of the United States Bankruptcy Code or Section
15 of the New York Debtor and Creditor Law in a case commenced by or
against the Company under either such statute, and either (1) the trust
funds will no longer remain the property of the Company (and therefore
will not be subject to the effect of any applicable bankruptcy,
insolvency, reorganization or similar laws affecting creditors' rights
generally) or (2) if a court were to rule under any such law in any
case or proceeding that the trust funds remained property of the
Company, (x) assuming such trust funds remained in the possession of
the Trustee prior to such court ruling to the extent not paid to the
Holders, the Trustee will hold, for the benefit of the Holders, a valid
and perfected security interest in such trust funds that is not
avoidable in bankruptcy or otherwise (except for the effect of Section
552(b) of the United States Bankruptcy Code on interest on the trust
funds accruing after the commencement of a case under such statute) and
(y) the Holders will be entitled to receive adequate protection of
their interests in such trust funds if such trust funds are used in
such case or proceeding, (C) the Holders will not recognize income,
gain or loss for federal income tax purposes as a result of such
deposit and defeasance of certain covenants and Events of Default and
will be subject to federal income tax on the same amount and in the
same manner and at the same times as would
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have been the case if such deposit and defeasance had not occurred and
(D) the Trustee, for the benefit of the Holders, has a valid
first-priority security interest in the trust funds;
(iii) immediately after giving effect to such deposit on a pro
forma basis, no Default or Event of Default shall have occurred and be
continuing on the date of such deposit or during the period ending on
the 123rd day after such date of such deposit, and such deposit shall
not result in a breach or violation of, or constitute a default under,
this Indenture or any other agreement or instrument to which the
Company or any of its Subsidiaries is a party or by which the Company
or any of its Subsidiaries is bound;
(iv) if the Notes are then listed on a national securities
exchange, the Company has delivered to the Trustee an Opinion of
Counsel to the effect that the Notes will not be delisted as a result
of such deposit, defeasance and discharge; and
(v) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, in each case stating that all
conditions precedent provided for herein relating to the defeasance
contemplated by this Section 8.03 have been complied with.
SECTION 8.04. APPLICATION OF TRUST MONEY; MISCELLANEOUS. Subject to
Section 8.06, the Trustee or Paying Agent shall hold in trust money or U.S.
Government Obligations deposited with it pursuant to Section 8.01, 8.02 or 8.03,
as the case may be, and shall apply the deposited money and the money from U.S.
Government Obligations in accordance with the Notes and this Indenture to the
payment of principal of, premium, if any, and interest on the Notes; but such
money need not be segregated from other funds except to the extent required by
law.
The Company shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the U.S. Government Obligations
deposited pursuant to Section 8.01, 8.02 or 8.03 or the principal and interest
received in respect thereof other than any such tax, fee or other charge which
by law is for the account of the Holders of Outstanding Notes.
SECTION 8.05. REPAYMENT TO COMPANY. Subject to Sections 7.07, 8.01,
8.02 and 8.03, the Trustee and the Paying Agent shall promptly pay to the
Company upon request set forth in an Officers' Certificate any excess money held
by them at any time and thereupon shall be relieved from all liability with
respect to such money. The Trustee and the Paying Agent shall pay to the Company
upon written request any money held by them for the payment of principal,
premium, if any, or interest that remains unclaimed for two years; PROVIDED that
the Trustee or Paying Agent before being required to make any payment may cause
to be published at the expense of the Company once in a newspaper of general
circulation in The City of New York and, or mail to each Holder entitled to such
money at such Holder's address (as set forth in the Security Register) notice
that such money remains unclaimed and that after a date specified therein (which
shall be at least 30 days from the date of such publication or mailing) any
unclaimed balance of such
<PAGE> 76
69
money then remaining will be repaid to the Company. After payment to the
Company, Holders entitled to such money must look to the Company for payment as
general creditors unless an applicable law designates another Person, and all
liability of the Trustee and such Paying Agent with respect to such money shall
cease.
SECTION 8.06. REINSTATEMENT. If the Trustee or Paying Agent is unable
to apply any money or U.S. Government Obligations in accordance with Section
8.01, 8.02 or 8.03, as the case may be, by reason of any legal proceeding or by
reason of any order or judgment of any court or governmental authority
enjoining, restraining or otherwise prohibiting such application, the Company's
obligations under this Indenture and the Notes shall be revived and reinstated
as though no deposit had occurred pursuant to Section 8.01, 8.02 or 8.03, as the
case may be, until such time as the Trustee or Paying Agent is permitted to
apply all such money or U.S. Government Obligations in accordance with Section
8.01, 8.02 or 8.03, as the case may be; provided that, if the Company has made
any payment of principal of, premium, if any, or interest on any Notes because
of the reinstatement of its obligations, the Company shall be subrogated to the
rights of the Holders of such Notes to receive such payment from the money or
U.S. Government Obligations held by the Trustee or Paying Agent.
ARTICLE NINE
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.01. WITHOUT CONSENT OF HOLDERS. The Company, when authorized
by a resolution of its Board of Directors (as evidenced by a Board Resolution
delivered to the Trustee), and the Trustee may amend or supplement this
Indenture or the Notes without notice to or the consent of any Holder:
(1) to cure any ambiguity, defect or inconsistency in this
Indenture; provided that such amendments or supplements shall not, in
the good faith opinion of the Board of Directors as evidenced by a
Board Resolution, adversely affect the interests of the Holders in any
material respect;
(2) to comply with Article Five;
(3) to comply with any requirements of the Commission in
connection with the qualification of this Indenture under the TIA;
(4) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee; or
<PAGE> 77
70
(5) to make any change that, in the good faith opinion of the
Board of Directors as evidenced by a Board Resolution, does not
materially and adversely affect the rights of any Holder.
SECTION 9.02. WITH CONSENT OF HOLDERS. Subject to Sections 6.04 and
6.07 and without prior notice to the Holders, the Company, when authorized by
its Board of Directors (as evidenced by a Board Resolution delivered to the
Trustee), and the Trustee may amend this Indenture and the Notes with the
written consent of the Holders of a majority in principal amount of the Notes
then outstanding, and the Holders of a majority in principal amount of the Notes
then Outstanding by written notice to the Trustee may waive future compliance by
the Company with any provision of this Indenture and the Notes.
Notwithstanding the provisions of this Section 9.02, without the
consent of each Holder affected, an amendment or waiver, including a waiver
pursuant to Section 6.04, may not:
(i) change the Stated Maturity of the principal of, or any
installment of interest on, any Note;
(ii) reduce the principal amount of, premium, if any, or
interest on any Note;
(iii) change any place or currency of payment of principal of,
premium, if any, or interest on, any Note;
(iv) impair the right to institute suit for the enforcement of
any payment on or after the Stated Maturity (or, in the case of
redemption, on or after the Redemption Date) on any Note;
(v) reduce the percentage or principal amount of Outstanding
Notes the consent of whose Holders is necessary to modify or amend this
Indenture or to waive compliance with certain provisions of or certain
Defaults under this Indenture;
(vi) waive a default in the payment of principal of, premium,
if any, or interest on, any Note; or
(vii) modify any of the provisions of this Section 9.02,
except to increase any such percentage or to provide that certain other
provisions of this Indenture cannot be modified or waived without the
consent of the Holder of each Outstanding Note affected thereby.
<PAGE> 78
71
It shall not be necessary for the consent of the Holders under this
Section 9.02 to approve the particular form of any proposed amendment,
supplement or waiver, but it shall be sufficient if such consent approves the
substance thereof.
After an amendment, supplement or waiver under this Section 9.02
becomes effective, the Company shall mail to the Holders affected thereby a
notice briefly describing the amendment, supplement or waiver. The Company will
mail supplemental indentures to Holders upon request. Any failure of the Company
to mail such notice, or any defect therein, shall not, however, in any way
impair or affect the validity of any such supplemental indenture or waiver.
SECTION 9.03. REVOCATION AND EFFECT OF CONSENT. Until an amendment or
waiver becomes effective, a consent to it by a Holder is a continuing consent by
the Holder and every subsequent Holder of a Note or portion of a Note that
evidences the same debt as the Note of the consenting Holder, even if notation
of the consent is not made on any Note. However, any such Holder or subsequent
Holder may revoke the consent as to its Note or portion of its Note. Such
revocation shall be effective only if the Trustee receives the notice of
revocation before the date the amendment, supplement or waiver becomes
effective. An amendment, supplement or waiver shall become effective on receipt
by the Trustee of written consents from the Holders of the requisite percentage
in principal amount of the Outstanding Notes.
The Company may, but shall not be obligated to, fix a record date for
the purpose of determining the Holders entitled to consent to any amendment,
supplement or waiver. If a record date is fixed, then, notwithstanding the last
two sentences of the immediately preceding paragraph, those persons who were
Holders at such record date (or their duly designated proxies) and only those
persons shall be entitled to consent to such amendment, supplement or waiver or
to revoke any consent previously given, whether or not such persons continue to
be Holders after such record date. No such consent shall be valid or effective
for more than 90 days after such record date.
After an amendment, supplement or waiver becomes effective, it shall
bind every Holder unless it is of the type described in the second paragraph of
Section 9.02. In case of an amendment or waiver of the type described in the
second paragraph of Section 9.02, the amendment or waiver shall bind each Holder
who has consented to it and every subsequent Holder of a Note that evidences the
same indebtedness as the Note of the consenting Holder.
SECTION 9.04. NOTATION ON OR EXCHANGE OF NOTES. If an amendment,
supplement or waiver changes the terms of a Note, the Trustee may require the
Holder to deliver such Note to the Trustee. At the Company's expense, the
Trustee may place an appropriate notation on the Note about the changed terms
and return it to the Holder and the Trustee may place an appropriate notation on
any Note thereafter authenticated. Alternatively, if the Company or the Trustee
so determines, the Company in exchange for the Note shall issue and the Trustee
shall authenticate
<PAGE> 79
72
a new Note that reflects the changed terms. Failure to make the appropriate
notation, or issue a new Note, shall not affect the validity and effect of such
amendment, supplement or waiver.
SECTION 9.05. TRUSTEE TO SIGN AMENDMENTS, ETC. The Trustee shall be
entitled to receive, and shall be fully protected in relying upon, an Opinion of
Counsel stating that the execution of any amendment, supplement or waiver
authorized pursuant to this Article Nine is authorized or permitted by this
Indenture and that it will be valid and binding upon the Company. Subject to the
preceding sentence, the Trustee shall sign such amendment, supplement or waiver
if the same does not adversely affect the rights, duties, liabilities or
immunities of the Trustee. The Trustee may, but shall not be obligated to,
execute any such amendment, supplement or waiver that affects the Trustee's own
rights, duties or immunities under this Indenture or otherwise.
SECTION 9.06. CONFORMITY WITH TRUST INDENTURE ACT. Every supplemental
indenture executed pursuant to this Article Nine shall conform to the
requirements of the TIA as then in effect.
ARTICLE TEN
MISCELLANEOUS
SECTION 10.01. TRUST INDENTURE ACT OF 1939. Prior to the effectiveness
of the Registration Statement, this Indenture shall incorporate and be governed
by the provisions of the TIA that are required to be part of and to govern
indentures qualified under the TIA. After the effectiveness of the Registration
Statement, this Indenture shall be subject to the provisions of the TIA that are
required to be a part of this Indenture and shall, to the extent applicable, be
governed by such provisions.
SECTION 10.02. NOTICES. Any notice or communication shall be
sufficiently given if in writing and delivered in person, mailed by first-class
mail or sent by telecopier transmission addressed as follows:
if to the Company:
------------------
Advanced Lighting Technologies, Inc.
2307 East Aurora Road
Suite One
Twinsburg, OH 44087
Telecopier No.: (330) 405-1335
Attention: Chief Financial Officer
<PAGE> 80
73
if to the Trustee:
------------------
The Bank of New York
101 Barclay Street, Floor 21 West
New York, NY 10286
Telecopier No.: (212) 815-5915
Attention: Corporate Trust Trustee Administration
The Company or the Trustee by notice to the other may designate
additional or different addresses for subsequent notices or communications.
Any notice or communication mailed to a Holder shall be mailed to it at
its address as it appears on the Security Register by first-class mail and shall
be sufficiently given to him if so mailed within the time prescribed. Any notice
or communication shall also be so mailed to any Person described in TIA Section
313(c), to the extent required by the TIA. Copies of any such communication or
notice to a Holder shall also be mailed to the Trustee and each Agent at the
same time.
Failure to transmit a notice or communication to a Holder as provided
herein or any defect in any such notice or communication shall not affect its
sufficiency with respect to other Holders. Except for a notice to the Trustee,
which is deemed given only when received, and except as otherwise provided in
this Indenture, if a notice or communication is mailed in the manner provided in
this Section 10.02, it is duly given, whether or not the addressee receives it.
Where this Indenture provides for notice in any manner, such notice may
be waived in writing by the Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Holders shall be filed with the Trustee, but such
filing shall not be a condition precedent to the validity of any action taken in
reliance upon such waiver.
In case by reason of the suspension of regular mail service or by
reason of any other cause it shall be impracticable to give such notice by mail,
then such notification as shall be made with the approval of the Trustee shall
constitute a sufficient notification for every purpose hereunder.
Holders may communicate pursuant to TIA Section 312(b) with other
Holders with respect to their rights under this Indenture or the Notes. The
Company, the Trustee, the Registrar and anyone else shall have the protection of
TIA Section 312(c).
SECTION 10.03. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.
Upon any request or application by the Company to the Trustee to take any action
under this Indenture, the Company shall furnish to the Trustee:
<PAGE> 81
74
(i) an Officers' Certificate stating that, in the opinion of
the signers, all conditions precedent, if any, provided for in this
Indenture relating to the proposed action have been complied with; and
(ii) an Opinion of Counsel stating that, in the opinion of
such Counsel, all such conditions precedent have been complied with.
SECTION 10.04. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION. Each
certificate or opinion with respect to compliance with a condition or covenant
provided for in this Indenture shall include:
(i) a statement that each person signing such certificate or
opinion has read such covenant or condition and the definitions herein
relating thereto;
(ii) a brief statement as to the nature and scope of the
examination or investigation upon which the statement or opinion
contained in such certificate or opinion is based;
(iii) a statement that, in the opinion of each such person, he
has made such examination or investigation as is necessary to enable
him to express an informed opinion as to whether or not such covenant
or condition has been complied with; and
(iv) a statement as to whether or not, in the opinion of each
such person, such condition or covenant has been complied with;
provided, however, that, with respect to matters of fact, an Opinion of
Counsel may rely on an Officers' Certificate or certificates of public
officials.
SECTION 10.05. RULES BY TRUSTEE, PAYING AGENT OR REGISTRAR. The
Trustee may make reasonable rules for action by or at a meeting of Holders. The
Paying Agent or Registrar may make reasonable rules for its functions.
SECTION 10.06. PAYMENT DATE OTHER THAN A BUSINESS DAY. If an Interest
Payment Date, Redemption Date, Payment Date, Stated Maturity or date of Maturity
of any Note shall not be a Business Day, then payment of principal of, premium,
if any, or interest on such Note, as the case may be, need not be made on such
date, but may be made on the next succeeding Business Day with the same force
and effect as if made on such Interest Payment Date, Redemption Date, Payment
Date, Stated Maturity or date of Maturity of such Note; provided that no
interest shall accrue for the period from and after such Interest Payment Date,
Redemption Date, Payment Date, Stated Maturity or date of Maturity, as the case
may be.
<PAGE> 82
75
SECTION 10.07. GOVERNING LAW. This Indenture and the Notes shall be
governed by the laws of the State of New York excluding (to the greatest extent
permissible by law) any rule of law that would cause the application of the laws
of any jurisdiction other than the State of New York.
SECTION 10.08. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS. This
Indenture may not be used to interpret another indenture, loan or debt agreement
of the Company or any Subsidiary of the Company. Any such indenture, loan or
debt agreement may not be used to interpret this Indenture.
SECTION 10.09. NO RECOURSE AGAINST OTHERS. No recourse for the payment
of the principal of, premium, if any, or interest on any of the Notes, or for
any claim based thereon or otherwise in respect thereof, and no recourse under
or upon any obligation, covenant or agreement of the Company contained in this
Indenture or in any of the Notes, or because of the creation of any Indebtedness
represented thereby, shall be had against any incorporator or against any past,
present or future partner, stockholder, other equityholder, officer, director,
employee or controlling person, as such, of the Company or of any successor
Person, either directly or through the Company or any successor Person, whether
by virtue of any constitution, statute or rule of law, or by the enforcement of
any assessment or penalty or otherwise; it being expressly understood that all
such liability is hereby expressly waived and released as a condition of, and as
a consideration for, the execution of this Indenture and the issue of the Notes.
SECTION 10.10. SUCCESSORS. All agreements of the Company in this
Indenture and the Notes shall bind its successors. All agreements of the Trustee
in this Indenture shall bind its successor.
SECTION 10.11. DUPLICATE ORIGINALS. The parties may sign any number of
copies of this Indenture. Each signed copy shall be an original, but all of them
together represent the same agreement.
SECTION 10.12. SEPARABILITY. In case any provision in this Indenture
or in the Notes shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
SECTION 10.13. TABLE OF CONTENTS, HEADINGS, ETC. The Table of Contents,
Cross-Reference Table and headings of the Articles and Sections of this
Indenture have been inserted for convenience of reference only, are not to be
considered a part hereof and shall in no way modify or restrict any of the terms
and provisions hereof.
<PAGE> 83
SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, all as of the date first written above.
ADVANCED LIGHTING TECHNOLOGIES, INC.
By: /s/ Wayne R. Hellman
-----------------------------------
Name: Wayne R. Hellman
Title: CEO and President
THE BANK OF NEW YORK, Trustee
By: /s/ Mary Jane Morrissey
-----------------------------------
Name: Mary Jane Morrissey
Title: Vice President
<PAGE> 84
EXHIBIT A
[APPLICABLE LEGENDS]
[FACE OF NOTE]
ADVANCED LIGHTING TECHNOLOGIES, INC.
8% Senior Notes due 2008
[CUSIP] [CINS] [ISIN] [__________]
No. ____ $_________
ADVANCED LIGHTING TECHNOLOGIES, INC., an Ohio corporation (the
"Company", which term includes any successor under the Indenture hereinafter
referred to), for value received, promises to pay to _____________, or its
registered assigns, the principal sum of ____________ ($____) on March 15, 2008.
Interest Payment Dates: March 15 and September 15, commencing September
15, 1998.
Regular Record Dates: March 1 and September 1.
Reference is hereby made to the further provisions of this Note set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
<PAGE> 85
IN WITNESS WHEREOF, the Company has caused this Note to be signed
manually or by facsimile by its duly authorized officers.
ADVANCED LIGHTING TECHNOLOGIES,
INC.
By:
------------------------------
Name:
Title:
By:
------------------------------
Name:
Title:
(Trustee's Certificate of Authentication)
This is one of the 8% Senior Notes due 2008 described in the within-mentioned
Indenture.
Date: March 18, 1998 THE BANK OF NEW YORK
as Trustee
By:
-----------------------------
Authorized Signatory
<PAGE> 86
A-3
[REVERSE SIDE OF NOTE]
ADVANCED LIGHTING TECHNOLOGIES, INC.
8% Senior Note due 2008
1. Principal and Interest.
-----------------------
The Company will pay the principal of this Note on March 15, 2008.
The Company promises to pay interest on the principal amount of this
Note on each Interest Payment Date, as set forth below, at the rate per annum
shown above.
If an exchange offer (the "Exchange Offer") registered under the
Securities Act is not consummated and a shelf registration statement (the "Shelf
Registration Statement") under the Securities Act with respect to resales of the
Notes is not declared effective by the Commission, on or before 180 days after
March 18, 1998 in accordance with the terms of the Registration Rights Agreement
dated March 13, 1998 between the Company and Morgan Stanley & Co. Incorporated,
the annual interest rate borne by the Notes shall be increased by 0.5% from the
rate shown above accruing from 180 days after March 18, 1998, payable in cash
semiannually, in arrears, on each Interest Payment Date, commencing September
15, 1998 until the Exchange Offer is consummated or the Shelf Registration
Statement is declared effective; provided that in the case of a Shelf
Registration Statement, if the Company is unable to cause such Shelf
Registration Statement to become effective because Holders of Notes have not
provided information with respect to themselves required by law to be included
therein pursuant to the Company's request in accordance with the Registration
Rights Agreement, such 0.5% increase in the interest rate shall be payable only
to Holders that have furnished such information required by law to be included
therein to the Company pursuant to its request in accordance with Registration
Rights Agreement from but excluding the date such information is provided to the
Company to but excluding the date the Shelf Registration Statement is declared
effective by the Commission. The Holder of this Note is entitled to the benefits
of such Registration Rights Agreement.
Interest on the Notes will accrue from the most recent date to which
interest has been paid or, if no interest has been paid, from March 18, 1998.
Interest will be computed on the basis of a 360-day year of twelve 30-day months
and, in the case of an incomplete month, the number of days elapsed based on a
30-day month.
<PAGE> 87
A-4
The Company shall pay interest on overdue principal and premium, if
any, to the extent lawful, at a rate per annum that is 2% in excess of the rate
otherwise payable.
2. Method of Payment.
------------------
The Company will pay interest (except defaulted interest) on the
principal amount of this Note as provided above on each March 15 and September
15, commencing September 15, 1998 to the persons who are Holders (as reflected
in the Security Register at the close of business on the March 1 or September 1
in each case whether or not a Business Day, immediately preceding the related
Interest Payment Date), in each case, even if the Note is canceled on
registration of transfer or registration of exchange after such record date;
provided that, with respect to the payment of principal, the Company will make
payment to the Holder that surrenders this Note to a Paying Agent on or after
the Maturity hereof.
The Company will pay principal, premium, if any, and as provided above,
interest in money of the United States that at the time of payment is legal
tender for payment of public and private debts. However, the Company may pay
principal, premium, if any, and interest by its check payable in such money. It
may mail an interest check to a Holder's registered address (as reflected in the
Security Register). If a payment date is a date other than a Business Day at a
place of payment, payment may be made at that place on the next succeeding day
that is a Business Day and no interest shall accrue for the intervening period.
3. Paying Agent and Registrar.
---------------------------
Initially, the Trustee will act as authenticating agent, Paying Agent
and Registrar. The Company may change any authenticating agent, Paying Agent or
Registrar without notice. The Company, any Subsidiary or any Affiliate of any of
them may act as Paying Agent, Registrar or co-Registrar.
4. Indenture; Limitations.
-----------------------
The Company issued the Notes under an Indenture dated as of March 18,
1998 (the "Indenture"), between the Company and The Bank of New York, trustee
(the "Trustee"). Capitalized terms herein are used as defined in the Indenture
unless otherwise indicated. The terms of the Notes include those stated in the
Indenture and those made part of the Indenture by reference to the Trust
Indenture Act. The Notes are subject to all such terms, and Holders are referred
to the Indenture and the Trust Indenture Act for a statement of all such terms.
To the extent permitted by applicable law, in the event of any inconsistency
between the terms of this Note and the terms of the Indenture, the terms of the
Indenture shall control.
The Notes are general unsecured obligations of the Company.
<PAGE> 88
A-5
The Company may, subject to Article Four of the Indenture and
applicable law, issue additional Notes under the Indenture.
5. Optional Redemption.
--------------------
The Notes are redeemable, at the Company's option, in whole or in part,
at any time or from time to time, on or after March 15, 2003 and prior to
Maturity, upon not less than 30 nor more than 60 days' prior notice mailed by
first class mail to each Holder's last address, as it appears in the Security
Register, at the following Redemption Prices (expressed in percentages of
principal amount), plus accrued and unpaid interest, if any, to the Redemption
Date (subject to the right of Holders of record on the relevant Regular Record
Date that is prior to the Redemption Date to receive interest due on an Interest
Payment Date), if redeemed during the 12-month period commencing March 15 of the
years set forth below:
<TABLE>
<CAPTION>
Year Redemption Price
---- ----------------
<S> <C>
2003 104.000%
2004 102.667
2005 101.333
2006 and thereafter 100.000
</TABLE>
At any time and from time to time prior to March 15, 2001, the Company
may redeem up to 35% of the principal amount of the Notes with the proceeds of
one or more Public Equity Offerings, at any time or from time to time in part,
at a Redemption Price (expressed as a percentage of principal amount) of 108%,
plus accrued and unpaid interest to the Redemption Date (subject to the rights
of Holders of record on the relevant Regular Record Date that is prior to the
Redemption Date to receive interest due on an Interest Payment Date); provided
that after any such redemption Notes representing at least 65% of the Notes
originally issued remain Outstanding and that notice of such redemption is
mailed within 60 days of the relevant Public Equity Offering.
Notes in original denominations larger than $1,000 may be redeemed in
part. On and after the Redemption Date, interest ceases to accrue on Notes or
portions of Notes called for redemption, unless the Company defaults in the
payment of the Redemption Price.
6. Repurchase upon Change of Control.
----------------------------------
Upon the occurrence of any Change of Control, each Holder shall have
the right to require the repurchase of its Notes by the Company in cash pursuant
to the offer described in the Indenture at a purchase price equal to 101% of the
principal amount thereof plus accrued and unpaid interest, if any, to the date
of purchase (the "Payment Date").
<PAGE> 89
A-6
A notice of such Change of Control will be mailed within 30 days after
any Change of Control occurs to each Holder at its last address as it appears in
the Security Register. Notes in original denominations larger than $1,000 may be
sold to the Company in part. On and after the Payment Date, interest ceases to
accrue on Notes or portions of Notes surrendered for purchase by the Company,
unless the Company defaults in the payment of the purchase price.
7. Denominations; Transfer; Exchange.
----------------------------------
The Notes are in registered form without coupons in denominations of
$1,000 of principal amount and multiples of $1,000 in excess thereof. A Holder
may register the transfer or exchange of Notes in accordance with the Indenture.
The Registrar may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents and to pay any taxes and fees required by
law or permitted by the Indenture. The Registrar need not register the transfer
or exchange of any Notes selected for redemption. Also, it need not register the
transfer or exchange of any Notes for a period of 15 days before the day of
mailing of a notice of redemption of Notes selected for redemption.
8. Persons Deemed Owners.
----------------------
A Holder shall be treated as the owner of a Note for all purposes.
9. Unclaimed Money.
----------------
If money for the payment of principal, premium, if any, or interest
remains unclaimed for two years, the Trustee and the Paying Agent will pay the
money back to the Company at its written request. After that, Holders entitled
to the money must look to the Company for payment, unless an abandoned property
law designates another Person, and all liability of the Trustee and such Paying
Agent with respect to such money shall cease.
10. Discharge Prior to Maturity.
----------------------------
If the Company deposits with the Trustee money or U.S. Government
Obligations sufficient to pay the then outstanding principal of, premium, if
any, and accrued interest on the Notes (a) to Maturity, the Company will be
discharged from the Indenture and the Notes, except in certain circumstances for
certain provisions thereof, and (b) to the Stated Maturity, the Company will be
discharged from certain covenants set forth in the Indenture.
11. Amendment; Supplement; Waiver.
------------------------------
Subject to certain exceptions, the Indenture or the Notes may be
amended or supplemented with the consent of the Holders of at least a majority
in principal amount of the Notes then
<PAGE> 90
A-7
Outstanding, and any existing default or compliance with any provision may be
waived with the consent of the Holders of at least a majority in principal
amount of the Notes then Outstanding. Without notice to or the consent of any
Holder, the parties thereto may amend or supplement the Indenture or the Notes
to, among other things, cure any ambiguity, defect or inconsistency and make any
change that does not materially and adversely affect the rights of any Holder.
12. Restrictive Covenants.
----------------------
The Indenture imposes certain limitations on the ability of the Company
and its Restricted Subsidiaries, among other things, to Incur additional
Indebtedness, make Restricted Payments, suffer to exist restrictions on the
ability of Restricted Subsidiaries to make certain payments to the Company,
issue Capital Stock of Restricted Subsidiaries, Guarantee Indebtedness of the
Company, engage in transactions with Affiliates, suffer to exist or incur Liens,
enter into sale-leaseback transactions, use the proceeds from Asset Sales, or
merge, consolidate or transfer substantially all of its assets. Within 45 days
after the end of each fiscal quarter (90 days after the end of the last fiscal
quarter of each year), the Company shall deliver to the Trustee an Officers'
Certificate stating whether or not the signers thereof know of any Default or
Event of Default under such restrictive covenants.
13. Successor Persons.
------------------
When a successor person or other entity assumes all the obligations of
its predecessor under the Notes and the Indenture, the predecessor person will
be released from those obligations.
14. Defaults and Remedies.
----------------------
Any of the following events constitutes an "Event of Default" under the
Indenture: (a) default in the payment of principal of (or premium, if any, on)
any Note when the same becomes due and payable at maturity, upon acceleration,
redemption or otherwise; (b) default in the payment of interest on any Note when
the same becomes due and payable, and such default continues for a period of 30
days; (c) default in the performance or breach of Article Five of the Indenture
or the failure to make or consummate an Offer to Purchase in accordance with
Section 4.11 or 4.12 of the Indenture; (d) default in the performance of or
breach of any covenant or agreement of the Company in the Indenture or under the
Notes (other than a default specified in clause (a), (b) or (c) above), and such
default or breach continues for a period of 30 consecutive days after written
notice by the Trustee or the Holders of at least 25% in aggregate principal
amount of the Notes then Outstanding; (e) there occurs with respect to any issue
or issues of Indebtedness of the Company or any Significant Subsidiary having an
outstanding principal amount of $10 million or more in the aggregate for all
such issues of all such Persons, whether such Indebtedness exists on the Closing
Date or shall hereafter be created, (I) an event of default that has caused the
holder thereof to declare such Indebtedness to be due and payable prior to its
Stated
<PAGE> 91
A-8
Maturity and such Indebtedness has not been discharged in full or such
acceleration has not been rescinded or annulled within 30 days of such
acceleration and/or (II) the failure to make a principal payment at the final
(but not any interim) fixed maturity and such defaulted payment shall not have
been made, waived or extended within 30 days of such payment default; (f) any
final judgment or order (not covered by insurance) for the payment of money in
excess of $10 million in the aggregate for all such final judgments or orders
against all such Persons (treating any deductibles, self-insurance or retention
as not so covered) shall be rendered against the Company or any Significant
Subsidiary and shall not be paid or discharged, and there shall be any period of
30 consecutive days following entry of the final judgment or order that causes
the aggregate amount for all such final judgments or orders outstanding and not
paid or discharged against all such Persons to exceed $10 million during which a
stay of enforcement of such final judgment or order, by reason of a pending
appeal or otherwise, shall not be in effect; (g) a court having jurisdiction in
the premises enters a decree or order for (A) relief in respect of the Company
or any Significant Subsidiary in an involuntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect, (B)
appointment of a receiver, liquidator, assignee, custodian, trustee,
sequestrator or similar official of the Company or any Significant Subsidiary or
for all or substantially all of the property and assets of the Company or any
Significant Subsidiary or (C) the winding up or liquidation of the affairs of
the Company or any Significant Subsidiary and, in each case, such decree or
order shall remain unstayed and in effect for a period of 60 consecutive days;
or (h) the Company or any Significant Subsidiary (A) commences a voluntary case
under any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, or consents to the entry of an order for relief in an
involuntary case under any such law, (B) consents to the appointment of or
taking possession by a receiver, liquidator, assignee, custodian, trustee,
sequestrator or similar official of the Company or any Significant Subsidiary or
for all or substantially all of the property and assets of the Company or any
Significant Subsidiary or (C) effects any general assignment for the benefit of
creditors.
If an Event of Default, as defined in the Indenture, occurs and is
continuing, the Trustee may, and at the direction of the Holders of at least 25%
in aggregate principal amount of the Notes then Outstanding shall, declare all
the Notes to be due and payable. If a bankruptcy or insolvency default with
respect to the Company occurs and is continuing, the Notes automatically become
due and payable. Holders may not enforce the Indenture or the Notes except as
provided in the Indenture. The Trustee may require indemnity satisfactory to it
before it enforces the Indenture or the Notes. Subject to certain limitations,
Holders of at least a majority in principal amount of the Notes then Outstanding
may direct the Trustee in its exercise of any trust or power.
15. Trustee Dealings with the Company.
----------------------------------
The Trustee under the Indenture, in its individual or any other
capacity, may make loans to, accept deposits from and perform services for the
Company or its Affiliates and may otherwise deal with the Company or its
Affiliates as if it were not the Trustee.
<PAGE> 92
A-9
16. No Recourse Against Others.
---------------------------
No incorporator or any past, present or future partner, stockholder,
other equityholder, officer, director, employee or controlling person, as such,
of the Company or of any successor Person shall have any liability for any
obligations of the Company under the Notes or the Indenture or for any claim
based on, in respect of or by reason of, such obligations or their creation.
Each Holder by accepting a Note waives and releases all such liability. The
waiver and release are part of the consideration for the issuance of the Notes.
17. Authentication.
---------------
This Note shall not be valid until the Trustee or authenticating agent
signs the certificate of authentication on the other side of this Note.
18. Abbreviations.
--------------
Customary abbreviations may be used in the name of a Holder or an
assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the
entireties), JT TEN (= joint tenants with right of survivorship and not as
tenants in common), CUST (= Custodian) and U/G/M/A (= Uniform Gifts to Minors
Act).
The Company will furnish a copy of the Indenture to any Holder upon
written request and without charge. Requests may be made to Advanced Lighting
Technologies, Inc., 2307 East Aurora Road, Suite One, Twinsburg, OH 44087;
Attention: Nicholas R. Sucic.
19. Governing Law.
--------------
The Indenture and this Note shall be governed by the laws of the State
of New York excluding (to the greatest extent permissible by law) any rule of
law that would cause the application of the laws of any jurisdiction other than
the State of New York.
<PAGE> 93
A-10
[FORM OF TRANSFER NOTICE]
FOR VALUE RECEIVED the undersigned registered holder hereby sell(s),
assign(s) and transfer(s) unto
Insert Taxpayer Identification No.
- ----------------------------------
- ---------------------------------------------------------------------------
Please print or typewrite name and address including zip code of assignee
- ---------------------------------------------------------------------------
the within Note and all rights thereunder, hereby irrevocably constituting and
appointing
----------------------------------------------------------------------
attorney to transfer said Note on the books of the Company with full power of
substitution in the premises.
[THE FOLLOWING PROVISION TO BE INCLUDED ON
ALL NOTES OTHER THAN EXCHANGE NOTES, NOTES
RESOLD PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT, UNLEGENDED OFFSHORE GLOBAL NOTES
AND UNLEGENDED OFFSHORE PHYSICAL NOTES]
In connection with any transfer of this Note occurring prior to the
date which is the earlier of (i) the date the Shelf Registration Statement is
declared effective or (ii) the end of the period referred to in Rule 144(k)
under the Securities Act, the undersigned confirms that without utilizing any
general solicitation or general advertising that:
[Check One]
---------
[ ] (a) this Note is being transferred in compliance with the exemption from
registration under the Securities Act of 1933 provided by Rule 144A
thereunder.
or
--
[ ] (b) this Note is being transferred other than in accordance with (a)
above and documents are being furnished which comply with the
conditions of transfer set forth in this Note and the Indenture.
<PAGE> 94
A-11
If none of the foregoing boxes is checked, the Trustee or other Registrar shall
not be obligated to register this Note in the name of any Person other than the
Holder hereof unless and until the conditions to any such transfer of
registration set forth herein and in Section 2.08 of the Indenture shall have
been satisfied.
Date:
-------------- ------------------------------------
NOTICE: The signature to this
assignment must correspond with the
name as written upon the face of the
within-mentioned instrument in every
particular, without alteration or
any change whatsoever.
TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing this Note
for its own account or an account with respect to which it exercises sole
investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act of
1933 and is aware that the sale to it is being made in reliance on Rule 144A and
acknowledges that it has received such information regarding the Company as the
undersigned has requested pursuant to Rule 144A or has determined not to request
such information and that it is aware that the transferor is relying upon the
undersigned's foregoing representations in order to claim the exemption from
registration provided by Rule 144A.
Dated:
-------------- ------------------------------
NOTICE: To be executed by an
executive officer
<PAGE> 95
A-12
OPTION OF HOLDER TO ELECT PURCHASE
If you wish to have this Note purchased by the Company pursuant to
Section 4.11 or 4.12 of the Indenture, check the Box: / /
If you wish to have a portion of this Note purchased by the Company
pursuant to Section 4.11 or 4.12 of the Indenture, state the amount:
$___________________.
Date:
-----------
Your Signature:
------------------------------------------------------------------
(Sign exactly as your name appears on the other side of this Note)
Signature Guarantee:
------------------------------
<PAGE> 96
EXHIBIT B
---------
Form of Certificate to be
-------------------------
Delivered in Connection with
----------------------------
Legended Offshore Global Notes or Offshore Physical Notes
---------------------------------------------------------
_______,____
The Bank of New York
101 Barclay Street
New York, New York 10286
Attention: Corporate Trust Trustee Administration
Re: Advanced Lighting Technologies, Inc. (the "Company")
[__]% Senior Notes due 2008 (the "Notes")
-----------------------------------------
Dear Sirs:
This letter relates to U.S. $ principal amount of Notes
represented by a Note (the "Legended Note") which bears a legend outlining
restrictions upon transfer of such Legended Note. Pursuant to Section 2.02 of
the Indenture dated as of March [ __ ],1998 (the "Indenture") relating to the
Notes, we hereby certify that we are (or we will hold such securities on behalf
of) a person outside the United States to whom the Notes could be transferred
in accordance with Rule 904 of Regulation S promulgated under the U.S.
Securities Act of 1933. Accordingly, you are hereby requested to exchange the
legended certificate for an unlegended certificate representing an identical
principal amount of Notes, all in the manner provided for in the Indenture.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby. Terms used in this certificate have the
meanings set forth in Regulation S.
Very truly yours,
[Name of Holder]
By:
----------------------------------
Authorized Signature
<PAGE> 97
EXHIBIT C
Form of Certificate to Be
Delivered in Connection with
Transfers to Non-QIB Accredited Investors
-----------------------------------------
_______,___
The Bank of New York
101 Barclay Street
New York, New York 10286
Attention: Corporate Trust Trustee Administration
Re: Advanced Lighting Technologies, Inc. (the "Company")
[__]% Senior Notes due 2008 (the "Notes")
-----------------------------------------
Dear Sirs:
In connection with our proposed purchase of $_______________ aggregate
principal amount of the Notes, we confirm that:
1. We understand that any subsequent transfer of the Notes is subject to
certain restrictions and conditions set forth in the Indenture dated as of March
[__], 1998 (the "Indenture") relating to the Notes and the undersigned agrees to
be bound by, and not to resell, pledge or otherwise transfer the Notes except in
compliance with such restrictions and conditions and the Securities Act of 1933,
amended (the "Securities Act").
2. We understand that the offer and sale of the Notes have not been
registered under the Securities Act, and that the Notes may not be offered or
sold except as permitted in the following sentence. We agree, on our own behalf
and on behalf of any accounts for which we are acting as hereinafter stated,
that if we should sell any Notes within the time period referred to in Rule
144(k) of the Securities Act, we will do so only (A) to the Company or any
subsidiary thereof, (B) in accordance with Rule 144A under the Securities Act to
a "qualified institutional buyer" (as defined therein), (C) to an institutional
"accredited investor" (as defined below) that, prior to such transfer, furnishes
(or has furnished on its behalf by a U.S. broker-dealer) to you and to the
Company a signed letter substantially in the form of this letter and, if such
transfer is in respect of an aggregate principal amount of less than $100,000,
an opinion of counsel acceptable to the Company that such transfer is in
compliance with the Securities Act, (D) outside the United States in accordance
with Rule 904 of Regulation S under the Securities Act, (E) pursuant to the
exemption from registration provided by Rule 144 under the Securities Act (if
available) or (F) pursuant to an effective registration statement under the
Securities Act, and we further agree to provide to any person purchasing any of
the Notes from us a notice advising such purchaser that resales of the Notes are
restricted as stated herein.
<PAGE> 98
C-2
3. We understand that, on any proposed resale of any Notes, we will be
required to furnish to you and the Company such certifications, legal opinions
and other information as you and the Company may reasonably require to confirm
that the proposed sale complies with the foregoing restrictions. We further
understand that the Notes purchased by us will bear a legend to the foregoing
effect.
4. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and have
such knowledge and experience in financial and business matters as to be capable
of evaluating the merits and risks of our investment in the Notes, and we and
any accounts for which we are acting are each able to bear the economic risk of
our or its investment.
5. We are acquiring the Notes purchased by us for our own account or for
one or more accounts (each of which is an institutional "accredited investor")
as to each of which we exercise sole investment discretion.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby.
Very truly yours,
[Name of Transferee]
By:
----------------------------
Authorized Signature
<PAGE> 99
EXHIBIT D
---------
Form of Certificate to Be Delivered in
Connection with Transfers Pursuant to Regulation S
--------------------------------------------------
_______,___
The Bank of New York
101 Barclay Street
New York, New York 10286
Attention: Corporate Trust Trustee Administration
Re: Advanced Lighting Technologies, Inc. (the "Company")
[__]% Senior Notes due 2008 (the "Notes")
-----------------------------------------
Dear Sirs:
In connection with our proposed sale of U.S.$_________ aggregate
principal amount of the Notes, we confirm that such sale has been effected
pursuant to and in accordance with Regulation S under the Securities Act of 1933
and, accordingly, we represent that:
(1) the offer of the Notes was not made to a person in the United
States;
(2) at the time the buy order was originated, the transferee was outside
the United States or we and any person acting on our behalf reasonably believed
that the transferee was outside the United States;
(3) no directed selling efforts have been made by us in the United
States in contravention of the requirements of Rule 903(b) or Rule 904(b) of
Regulation S, as applicable; and
(4) the transaction is not part of a plan or scheme to evade the
registration requirements of the U.S. Securities Act of 1933.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby. Terms used in this certificate have the
meanings set forth in Regulation S.
Very truly yours,
[Name of Transferor]
By:
------------------------
Authorized Signature
<PAGE> 1
ADVANCED LIGHTING TECHNOLOGIES, INC.
EXHIBIT 11 -- STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE
(in thousands except per share dollar amount.)
<TABLE>
<CAPTION>
Three Months Ended March 31,
----------------------------------------------------------
1998 1997
----------------------------------------------------------
Shares Amount EPS Shares Amount EPS
----------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Income (loss) from continuing operations before
extraordinary charge $(27,953) $1,970
Loss from discontinued operations (6,753) (88)
Extraordinary charge, net of tax benefits (604) --
-------- -------
NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS $(35,310) $ 1,882
======== =======
Weighted average shares:
Basic:
Outstanding at beginning of period 16,478 13,297
Issued pursuant to public offering -- --
Issued in acquisitions 3,387 70
Issued for exercise of stock options 17 36
Issuable in connection with an acquisition 35 35
------- --------
BASIC WEIGHTED AVERAGE SHARES 19,917 13,348
======= =======
Diluted:
Basic from above 19,917 13,438
Effect of options -- 364
------- -------
DILUTED WEIGHTED AVERAGE SHARES 19,917 13,802
======= ========
Earnings (loss) per share:
Basic:
Income (loss) from continuing operations
before extraordinary charge $(1.40) $ 0.15
Loss from discontinued operations (0.34) (0.01)
Extraordinary charge, net of tax benefits (0.03) --
------ ------
BASIC EARNINGS PER SHARE $(1.77) $ 0.14
====== ======
Diluted
Income (loss) from continuing operations
before extraordinary charge $(1.40) $ 0.14
Loss from discontinued operations (0.34) --
Extraordinary charge, net of tax benefits (0.03) --
------ ------
DILUTED EARNINGS PER SHARE $(1.77) $ 0.14
====== ======
</TABLE>
<TABLE>
<CAPTION>
Nine Months Ended March 31,
----------------------------------------------------------
1998 1997
----------------------------------------------------------
Shares Amount EPS Shares Amount EPS
----------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Income (loss) from continuing operations before
extraordinary charge $(22,132) $4,743
Loss from discontinued operations (7,292) (241)
Extraordinary charge, net of tax benefits (604) --
-------- -------
NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS $(30,028) $ 4,502
======== =======
Weighted average shares:
Basic:
Outstanding at beginning of period 13,435 10,845
Issued pursuant to public offering 2,924 2,285
Issued in acquisitions 1,112 25
Issued for exercise of stock options 34 15
Issuable in connection with an acquisition 35 35
------- --------
BASIC WEIGHTED AVERAGE SHARES 17,540 13,205
======= =======
Diluted:
Basic from above 17,540 13,205
Effect of options -- 298
------- -------
DILUTED WEIGHTED AVERAGE SHARES 17,540 13,503
======= ========
Earnings (loss) per share:
Basic:
Income (loss) from continuing operations
before extraordinary charge $(1.26) $ 0.36
Loss from discontinued operations (0.42) (0.02)
Extraordinary charge, net of tax benefits (0.03) --
------ ------
BASIC EARNINGS PER SHARE $(1.71) $ 0.34
====== ======
Diluted
Income (loss) from continuing operations
before extraordinary charge $(1.26) $ 0.35
Loss from discontinued operations (0.42) (0.02)
Extraordinary charge, net of tax benefits (0.03) --
------ ------
DILUTED EARNINGS PER SHARE $(1.71) $ 0.33
====== ======
</TABLE>
27
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ADVANCED
LIGHTING TECHNOLOGIES, INC. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE
NINE MONTHS ENDED MARCH 31, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-START> JUL-1-1997
<PERIOD-END> MAR-31-1998
<CASH> 30,621
<SECURITIES> 4,075
<RECEIVABLES> 42,449
<ALLOWANCES> 397
<INVENTORY> 41,461
<CURRENT-ASSETS> 124,690
<PP&E> 92,666
<DEPRECIATION> 10,869
<TOTAL-ASSETS> 308,699
<CURRENT-LIABILITIES> 37,044
<BONDS> 117,520
0
0
<COMMON> 20
<OTHER-SE> 148,758
<TOTAL-LIABILITY-AND-EQUITY> 308,699
<SALES> 110,891
<TOTAL-REVENUES> 110,891
<CGS> 66,241
<TOTAL-COSTS> 96,471
<OTHER-EXPENSES> 35,062
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,649
<INCOME-PRETAX> (21,214)
<INCOME-TAX> 918
<INCOME-CONTINUING> (22,132)
<DISCONTINUED> (7,292)
<EXTRAORDINARY> (604)
<CHANGES> 0
<NET-INCOME> (30,028)
<EPS-PRIMARY> (1.71)
<EPS-DILUTED> (1.71)
</TABLE>
