<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report: JANUARY 9, 1998
PCD INC.
(Exact name of registrant as specified in its charter)
MASSACHUSETTS 0-27744 04-2604950
(Sate or other jurisdiction (Commission (IRS Employer
of incorporation) file number) Identification
No.)
2 TECHNOLOGY DRIVE, CENTENNIAL PARK, PEABODY, MA 01960-7977
(Address of principal executive offices) (ZIP Code)
Registrant's telephone number, including area code: (978) 532-
8800
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On December 26, 1997, PCD Inc. ("PCD") acquired from
UL America, Inc. all of the outstanding capital stock
of Wells Electronics, Inc. ("Wells") pursuant to a
Share Purchase Agreement dated as of November 17, 1997
(the "Share Purchase Agreement") for an aggregate
purchase price of $130,000,000 (subject to adjustment
as provided in the Share Purchase Agreement). The
sources of funds used for the purchase price were:
(i) $83 million from a loan to PCD under a Loan
Agreement with Fleet National Bank as agent for itself
and certain other financial institutions;
(ii) $25 million from a loan to PCD under a
Subordinated Debenture and Warrant Purchase Agreement
with Emerson Electric Co.; and (iii) $22 million from
PCD's cash reserves.
Wells, a manufacturer of burn-in and test sockets for
the global semi-conductor industry, is headquartered in
South Bend, Indiana and has manufacturing facilities
located in Swatara, Pennsylvania and sales offices in
San Jose, California, Northhampton, England and Seoul,
Korea. Wells also operates two principal subsidiaries
in Yokohama, Japan and Singapore.
In determining the amount of consideration to be paid
for the stock of Wells, PCD considered, among other
things, the following factors with respect to Wells:
historical and projected financial results, the quality
and performance of management, and the projected
financial performance of Wells and PCD on a combined
basis.
Before December 26, 1997, there was no material
relationship between PCD and Wells or any of their
respective officers, directors or stockholders, other
than the Share Purchase Agreement and related
agreements.
ITEM 5. OTHER EVENTS.
On December 26, 1997, PCD entered into a Loan Agreement
(the "Loan Agreement") with Fleet National Bank, as
agent for itself and certain other financial
institutions. The Loan Agreement provides for a
$30,000,000 Secured Term Loan A, a $40,000,000 Secured
Term Loan B and a $20,000,000 Secured Revolving Credit
Loan to PCD. The loans to PCD under the Loan Agreement
are secured by a pledge of all of the assets of PCD,
including the stock and assets of all subsidiaries of
PCD (including Wells and its subsidiaries).
On December 26, 1997, PCD entered into a Subordinated
Debenture and Warrant Purchase Agreement
(the "Purchase Agreement") with Emerson Electric Co.
("Emerson"). Pursuant to the Purchase Agreement, PCD
has issued to Emerson a $25,000,000 Subordinated
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Debenture (the "Debenture") and a Common Stock
Purchase Warrant (the "Warrant") for the purchase of
up to 525,000 shares of common stock of PCD at an
exercise price of $1.00 per share. The unpaid
principal and accrued interest under the Debenture is
convertible into common stock of PCD upon the
occurrence of certain events of default thereunder, at
a conversion price equal to the lesser of $17.00 per
share or 70% of the average daily closing price of PCD common
stock for the 90 days preceding such default as
reported by The Nasdaq Stock Market, Inc. Both the
shares issuable upon such a conversion of the Debenture
and upon exercise of the Warrant are subject to certain
registration rights granted pursuant to a Registration
Rights Agreement of even date with the Purchase
Agreement.
ITEM 7 FINANCIAL STATEMENTS AND EXHIBITS
(a) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED
It is impracticable at this time to provide
the financial statements of Wells for the
periods specified in Rule 3-05(b) of
Regulation S-X. These financial statements
will be filed by amendment hereto within 60
days of the date this Report on Form 8-K is
required to be filed.
(b) PRO FORMA FINANCIAL INFORMATION
It is impracticable at this time to provide
the pro forma information required by Article
11 of Regulation S-X. This pro forma
information will be filed by amendment hereto
within 60 days of the date this Report on
Form 8-K is required to be filed.
(c) EXHIBITS
EXHIBIT NUMBER
2.1 Share Purchase Agreement among UL
America, Inc., Wells Electronics, Inc. and
PCD Inc. dated as of November 17, 1997.
2.2 Undertaking to Furnish Copies of
Omitted Schedules to Share Purchase
Agreement dated as of November 17, 1997.
10.1 Loan Agreement between PCD Inc. and
Fleet National Bank dated as of December 26,
1997.
10.2 Unlimited Guaranty from Wells Electronics,
Inc. to Fleet National Bank dated as of
December 26, 1997.
10.3 Security Agreement between PCD Inc. and
Fleet National Bank dated as of December 26,
1997.
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10.4 Security Agreement between Wells
Electronics, Inc. and Fleet National Bank
dated as of December 26, 1997.
10.5 Stock Pledge Agreement between PCD Inc.
and Fleet National bank dated as of December
26, 1997.
10.6 Stock Pledge Agreement between Wells
Electronics, Inc. and Fleet National Bank
dated as of December 26, 1997.
10.7 Conditional Patent Assignment from PCD
Inc. to Fleet National Bank dated as of
December 26, 1997.
10.8 Conditional Patent Assignment from Wells
Electronics, Inc. to Fleet National
Bank dated as of December 26, 1997.
10.9 Conditional Patent Assignment from
Wells Japan Kabushiki Kaisha to Fleet
National Bank dated as of December 26, 1997.
10.10 Conditional Trademark Collateral Assignment
from PCD Inc. to Fleet National Bank dated
December 26, 1997.
10.11 Conditional Trademark Collateral Assignment
from Wells Electronics, Inc. to Fleet
National Bank dated as of December 26, 1997.
10.12 Collateral Assignment of Contracts, Leases,
Licenses and Permits from PCD Inc. to Fleet
National Bank dated as of December 26, 1997.
10.13 Collateral Assignment of Contracts, Leases,
Licenses and Permits from Wells Electronics,
Inc. to Fleet National Bank dated as of
December 26, 1997.
10.14 Undertaking to Furnish Copies of Omitted
Exhibits and Schedules to Loan Agreement and
Related Documents dated as of December 26,
1997.
10.15 Subordinated Debenture and Warrant Purchase
Agreement between PCD Inc. and Emerson
Electric Co. dated as of December 26, 1997.
10.16 Subordinated Debenture issued to Emerson
Electric Co. dated December 26, 1997.
10.17 Common Stock Purchase Warrant issued to
Emerson Electric Co. dated December 26,
1997.
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10.18 Registration Rights Agreement between PCD
Inc. and Emerson Electric Co. dated as of
December 26, 1997.
10.19 Subordination Agreement among PCD Inc.,
Emerson Electric Co. and Fleet National Bank
dated as of December 26, 1997.
10.20 Undertaking to Furnish Copies of Omitted
Exhibits to Subordinated Debenture and
Warrant Purchase Agreement dated as of
December 26, 1997.
99.1 Press Release of PCD Inc. dated December 29,
1997.
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 hereunto duly
authorized.
PCD INC.
--------
Registrant
DATED: January 9, 1998 By: /s/ John L. Dwight, Jr.
-----------------------
John L. Dwight, Jr.
Chairman of the Board,
President and Chief
Executive Officer
<EXHIBIT> EXHIBIT 2.1
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SHARE PURCHASE AGREEMENT
DATED AS OF NOVEMBER 17, 1997
BY AND AMONG
UL AMERICA, INC.,
WELLS ELECTRONICS, INC.
AND
PCD INC.
<PAGE>
APPENDICES
Appendix A - Certain Definitions
Appendix B - Documents to Be Delivered by Seller at the
Closing
Appendix C - Documents to Be Delivered by Buyer at the
Closing
SCHEDULES
Schedule 3.2(A) - Incorporation, Subsidiaries, Branches
Schedule 3.2(B) - Financial Statements
Schedule 3.2(C) - Undisclosed Liabilities
Schedule 3.2(D) - Taxes
Schedule 3.2(E) - Real Property
Schedule 3.2(F) - Tangible Personal Property
Schedule 3.2(G) - Intellectual Property
Schedule 3.2(H) - Litigation
Schedule 3.2(I) - Contracts
Schedule 3.2(J) - Employees and Employee Benefits
Schedule 3.2(K) - Compliance With Environmental Laws
Schedule 3.2(L) - Compliance With Other Laws
Schedule 3.2(N) - Insurance
Schedule 4.4(J) - Powers of Attorney
<PAGE>
SHARE PURCHASE AGREEMENTS
SHARE PURCHASE AGREEMENT (this "Purchase Agreement"), dated
as of November 17, 1997, by and among UL AMERICA, INC.
("Seller"), a Delaware corporation, Wells Electronics, Inc. (the
"Company"), an Indiana Corporation, and PCD Inc. ("Buyer"), a
Massachusetts corporation.
RECITALS
A. The Company is engaged in the business (the "Business")
of developing, designing, manufacturing, selling, and servicing
burn-in/test sockets and plastic carriers (the "Products") for
the global semiconductor industry;
B. Seller owns all of the issued and outstanding common
stock of the Company (the "Shares");
C. Buyer desires to purchase from Seller, and Seller
desires to sell to Buyer, all of the Shares on and subject to the
terms and conditions contained in this Purchase Agreement; and
D. Siebe PLC has agreed to guaranty the obligations of
Seller and the Company hereunder.
TERMS AND CONDITIONS
In consideration of the matters recited above and for other
good and valuable consideration, and intending to be legally
bound by this Purchase Agreement, Buyer, the Company and Seller
hereby agree as follows:
ARTICLE I
GENERAL PROVISIONS
1.1 DEFINITIONS. Appendix A sets forth the definitions of
certain terms used in this Purchase Agreement. Those terms shall
have the meanings set forth in Appendix A where used in this
Purchase Agreement and identified with initial capital letters.
1.2 OTHER DEFINITIONS AND MEANINGS; INTERPRETATION. For
purposes of this Purchase Agreement, the term "parties" means
Buyer, the Company and Seller (except where the context otherwise
requires); and the term "person" includes any natural person,
firm, association, partnership, corporation, limited liability
company or partnership, governmental agency, or other entity
other than the parties. The Table of Contents and the headings
of the Articles and Sections of this Purchase Agreement have been
included in this Purchase Agreement for convenience of reference
<PAGE>
only and shall not be deemed to affect the meaning of the
operative provisions of this Purchase Agreement. All dollar
amounts referred to in this Purchase Agreement are in United
States Dollars.
ARTICLE II
PURCHASE AND SALE
2.1 TRANSACTION. On and subject to the terms and
conditions of this Purchase Agreement
(A) At the Closing, Buyer will purchase from Seller,
and Seller will sell, transfer, and assign to Buyer, all of
the Shares; and
(B) Buyer will pay Seller the Purchase Price as
provided in Section 2.2.
2.2 PURCHASE PRICE. For the purposes of this purchase
agreement, the term "purchase price" means one hundred and thirty
million dollars ($130,000,000) plus or minus the amount of the
adjustment
2.3 ADJUSTMENT.
(A) Preparation of Closing Balance Sheet. Within 40
days after the Closing Date, Buyer will prepare, in
cooperation with Seller, and deliver to the Seller a draft
consolidated balance sheet (the "Draft Closing Date Balance
Sheet") for the Company as of the close of business on the
Closing Date. The Draft Closing Date Balance Sheet (as well
as the Closing Date Balance Sheet referred to below) will be
prepared (except as specified in Section 2.3(F)) in
accordance with U.K. GAAP applied on a basis consistent with
and subject to those used in the preparation of the
financial statements included in Schedule 3.2(B), it being
understood and agreed that there shall be no significant
changes in the reserves, except for changes occurring in the
ordinary course of business, it being understood and agreed
that the computation of reserves will be on a basis
consistent with the September 30, 1997 balance sheet, a copy
of which is annexed hereto; and it being further understood
that the application of the accounting principles, practices
and procedures specified in the Siebe Financial Controller
Manual, attached hereto as a part of Schedule 3.2(B), shall
not result in any material differences from the results
under U.K. GAAP
(B) Informal Negotiations; Dispute Resolution. If
the Seller believes that the Draft Closing Date Balance
Sheet has not been prepared as required, it will deliver a
detailed statement describing its objections to Buyer within
30 days after receiving the Draft Closing Date Balance
Sheet. Buyer and Seller will use reasonable efforts to
resolve amicably any such objections themselves. If the
parties do not obtain a final resolution within 30 days
after Buyer has received the statement of objections,
however, Buyer and Seller will select an accounting firm
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mutually acceptable to them to resolve any remaining
objections (after excluding their respective regular
outside accounting firms). If the parties are unable
to mutually select such accounting firm within 15 days after
the expiration of the 30 day period specified in the
immediately preceding sentence, the accounting firm shall be
selected by the President of the American Arbitration
Association. The determination of any accounting firm so
selected will be made within 30 days following the selection
of such firm, will be set forth in writing and will be
conclusive and binding upon the parties. Buyer will revise
the Draft Closing Date Balance Sheet as appropriate to
reflect the resolution of any objections thereto pursuant to
this Section 2.3(B). The "Closing Date Balance Sheet" shall
mean the Draft Closing Date Balance Sheet together with any
revisions thereto pursuant to this Section 2.3(B).
(C) Fees and Expenses. In the event the parties
submit any unresolved objections to an accounting firm for
resolution as provided in Section 2.3(B) above, the Buyer
and Seller will share responsibility for the fees and
expenses of the accounting firm as follows:
(1) if the accounting firm resolves
substantially all of the remaining objections in favor
of the Buyer, Seller will be responsible for all of the
fees and expenses of the accounting firm;
(2) if the accounting firm resolves
substantially all of the remaining objections in favor
of Seller, Buyer will be responsible for all of the
fees and expenses of the accounting firm; and
(3) if the accounting firm resolves certain
substantial objections in favor of Buyer and other
substantial objections in favor of Seller, the fees and
expenses of the accounting firm will be borne by the
Buyer and Seller in such proportion as the accounting
firm deems equitable.
(D) Access. Buyer will make the work papers and
back-up materials used in preparing the Draft Closing Date
Balance Sheet, and the books, records, and financial staff
of the Company, available to the Seller and its accountants
and other representatives at reasonable times and upon
reasonable notice at any time during (1) the preparation by
Buyer of the Draft Closing Date Balance Sheet, (2) the
review by the Seller of the Draft Closing Date Balance
Sheet, and (3) the resolution by the parties of any
objections thereto.
(E) Base-Line Net Worth. The "Base-Line Net Worth"
will be an amount equal to Twenty Two Million Fifty Eight
Thousand Dollars ($22,058,000).
(F) Determination of Closing Net Worth. The
"Closing Net Worth" will be an amount equal to the
aggregate book value of the Company's assets minus the
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aggregate book amount of the Company's liabilities as of the
Closing, as shown on the Closing Date Balance Sheet. It is
understood and agreed (i) that the liabilities shown on the
Closing Date Balance Sheet will reflect, based on U.K. GAAP
principles, any unpaid liabilities of the Company or any
Company Subsidiary for bonuses or other incentive payments,
sales commissions, unfunded pension obligations (including
without limitation the Japanese and Korean retirement
allowances) and unfunded disability obligations allocable
with respect to periods ending on or prior to the Closing
Date and (ii) that there shall be no proration or allocation
to periods after the Closing Date with respect to any
bonuses payable, including bonuses payable by reason of the
sale of the Company, to the following six individuals:
Richard J. Mullin, James E. Miner, Bruce B. Myers, Rick
Jones, Charles B. Dodson and James B. Putt. Notwithstanding
the foregoing, the Seller in lieu of recording such
liability on the Closing Date Balance Sheet may retain the
obligation to make payment of such amounts, in which case,
it shall execute an assumption of liability and retainer
agreement in customary form reasonably satisfactory to the
Buyer.
(G) Amount of the Adjustment. If the Closing Net
Worth is equal to the Base-Line Net Worth, then the
Adjustment will equal zero. If the Closing Net Worth is
more than the Base-Line Net Worth, then the Adjustment will
be a positive amount equal to the amount by which the
Closing Net Worth is more than the Base-Line Net Worth. If
the Closing Net Worth is less than the Base-Line Net Worth,
then the Adjustment will be a negative amount equal to the
amount by which the Closing Net Worth is less than the Base-
Line Net Worth, provided that the Seller and its affiliates
will not contribute assets to the Company for the purpose of
causing the Closing Net Worth to exceed the Base-Line Net
Worth (or contribute assets which are not cash or cash
equivalents without the prior written consent of the Buyer
as to the identity and valuation of such assets); and
provided further that except as permitted pursuant to
Section 4.4(J), the Seller will not remove assets used or
held for use in the conduct of the Business. The Purchase
Price will finally be determined on the date the amount of
the Adjustment is finally determined, provided that the
positive amount of such Adjustment will not be greater than
$2,750,000 plus any cash or cash equivalents left in the
Business as of the Closing Date if the Closing occurs on or
before December 31, 1997, and if the Closing occurs after
December 31, 1997, then the positive adjustment will not be
greater than the sum of $2,750,000 (and said cash or cash
equivalents) and any net income of the Business from January
1, 1998 to the date of the Closing.
2.4 PAYMENT OF PURCHASE PRICE. Buyer has paid and will
pay the Purchase Price as follows:
(A) Payment at Closing. At the Closing, Buyer will
pay Seller One Hundred Thirty Million Dollars($130,000,000).
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(B) Payment of the Adjustment. If the Adjustment is
a positive amount, then Buyer will pay Seller the amount of
the Adjustment, together with interest thereon at the Prime
Rate compounded monthly for the period from the Closing Date
through and including the date on which the Adjustment is
paid, within five (5) business days after the final
determination of the Adjustment pursuant to Section 2.3(G).
2.5 REFUND OF THE ADJUSTMENT. If the Adjustment is a
negative amount, then Seller will refund to Buyer the amount of
the Adjustment, together with interest thereon compounded monthly
at the Prime Rate for the period from the Closing Date through
and including the date on which the Adjustment is paid, within
five (5) business days after the final determination of the
Adjustment pursuant to Section 2.3(G).
2.6 METHOD OF PAYMENT. All payments under this Purchase
Agreement shall be made by delivery to the payee as follows:
(A) Directed Payments. If a party which is entitled
to a payment under this Purchase Agreement provides the
other party three (3) days' advance written designation of a
bank and account number into which the payee wishes payment
to be made, then the payer will make such payment by wire
transfer (in immediately available funds) to the designated
account of the payee.
(B) Other Payments. In all other cases, the party
obligated to make a payment under this Purchase Agreement
will do so by making such payment by wire transfer (in
immediately available funds) to the designated account of
the payee.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 SELLER'S GENERAL REPRESENTATIONS AND WARRANTIES.
Seller and the Company, jointly and severally, hereby represent
and warrant to Buyer that the following are true and correct:
(A) Organization and Existence. Seller is a
corporation duly organized, validly existing, and in good
standing under the laws of the State of Delaware. Guarantor
is a corporation duly organized, validly existing, and in good
standing under the laws of the United Kingdom.
(B) Power and Authority. The Seller has all
necessary corporate power and authority to enter into this
Purchase Agreement, to carry out its obligations hereunder
and to consummate the transactions contemplated hereby, and
the Guarantor has all necessary corporate power and
authority to execute, deliver and perform the Guaranty.
This Purchase Agreement constitutes the valid and legally
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binding obligation of Seller, enforceable in accordance with
its terms and conditions, subject to the effect of any
applicable bankruptcy, reorganization, insolvency,
moratorium or similar laws affecting creditor's rights
generally and subject, as to enforceability, to the effect
of general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at
law).
(C) No Conflict. Neither the execution and the
delivery by Seller of this Purchase Agreement or the
Guarantor of the Guaranty, nor the consummation of the
transactions contemplated hereby or thereby, will (i)
violate or conflict with the Certificate of Incorporation or
By-laws (or equivalent constitutional documents) of
Guarantor, the Company or Seller, (b) conflict with or
violate any law or governmental order applicable to
Guarantor, the Company or Seller, or (c) result in any
breach of, or constitute a default (or event which with the
giving of notice or lapse of time, or both, would become a
default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of any agreement to
which the Company is a party, or result in the creation of
any encumbrance on the Shares or on any of the assets or
properties of the Company, except, in the case of clause
(c), as would not, individually or in the aggregate, have a
material adverse effect on the Business Condition or have a
material adverse effect on the ability of Seller to
consummate the transactions contemplated by this Purchase
Agreement.
(D) Capitalization. The entire authorized capital
stock of the Company consists of 13,500 shares of common
stock, of which 7,825 shares are issued and outstanding and
no shares are held in treasury. All of the Shares have been
validly issued, are fully paid, and are nonassessable.
There are no restrictions of any kind on Seller's right,
power, or authority to sell, transfer, and assign all of the
Shares to Buyer as provided in this Purchase Agreement and
no such restrictions will exist before the Closing. Neither
Seller nor the Company has granted to, and there are not
outstanding in favor of, any person any option, warrant, or
other right of any kind to acquire any of the Shares or any
other equity securities of the Company and no such rights
will be granted to or outstanding in favor of any person
before the Closing.
(E) Brokers. With the sole exception of Morgan
Stanley, neither Seller nor the Company has engaged and
neither is directly or indirectly obligated to any person
acting as a broker or finder, or a person acting in a
similar capacity, in connection with the transactions
contemplated by this Purchase Agreement.
3.2 REPRESENTATIONS AND WARRANTIES CONCERNING THE COMPANY.
Seller and the Company, jointly and severally, hereby represent
and warrant to Buyer that, except as set forth in the disclosure
schedules delivered by Seller to Buyer in connection herewith
(the "Disclosure Schedules"), the following are true and correct:
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(A) Incorporation, Subsidiaries, Branches. Attached
at Schedule 3.2(A) is a true and complete copy of the
Company's Articles of Incorporation and Code of By-laws, as
last amended and/or restated, a chart showing all companies
(the "Company Subsidiaries") in which the Company has a
direct or indirect equity ownership interest and the
percentage ownership interest in each such company, and a
chart showing all jurisdictions in which the Company or any
Company Subsidiary operates a branch. The Company is an
Indiana corporation with full corporate power and authority
to own its properties and conduct the Business as the same
has been and is being conducted and is qualified to do
business and is in good standing in each jurisdiction in
which the nature of its activities and/or ownership of
property requires it to be qualified to do business. Only
two of the Company Subsidiaries are actively engaged in the
conduct of the Business, namely, Wells Japan Kabushiki
Kaisha (nee: Wells Japan Co., Ltd.) ("Wells Japan"), a
Japanese limited stock company (kabushiki kaisha), and Wells
Electronics Asia Pte. Limited ("Wells Singapore"), a
Singapore limited liability company. Each of the Company
Subsidiaries has the full corporate power and authority to
own its respective properties and conduct the Business as
the same has been and is being conducted by them. Each of
the Company Subsidiaries is qualified to do business and in
good standing in each jurisdiction in which the nature of
their respective activities and/or ownership of property
requires them to be so qualified, except where failure to be
so qualified and in good standing would not have a material
adverse effect on the Business Condition. Neither Seller,
the Company nor any of the Company Subsidiaries has granted
to, and there are not outstanding in favor of any person,
any option, warrant, or other right of any kind to acquire
any equity securities of the Company Subsidiaries and no
such rights will be granted to or outstanding in favor of
any person before the Closing.
(B) Financial Statements. Attached hereto as
Schedule 3.2(B) are the following financial statements of
the Company and the Company Subsidiaries: consolidated
statements of income and cash flow for the periods from May
29, 1994 to June 3, 1995, from June 4, 1995 to June 1, 1996,
from May 3, 1996 to April 5, 1997, and from April 6, 1997 to
September 30, 1997 and consolidated balance sheets as of
June 3, 1995, June 1, 1996, April 5, 1997 and September 30,
1997. The financial statements contained in Schedule 3.2(B)
have been prepared in accordance with U.K. GAAP applied on a
consistent basis and fairly present, in all material
respects, the financial position and results of operations
of the Company as of the dates and for the periods therein
set forth, subject in the case of the September 30, 1997
financial statements only to normal year-end adjustments
(which are not expected to be material and adverse in the
aggregate), and subject in all cases to the Company's
standard financial accounting principles, practices and
procedures as described in Schedule 3.2(B) (applied on a
consistent basis except as described in any footnotes
thereto); provided, that the application of the principles,
practices and procedures set forth in the Siebe Financial
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<PAGE>
Controller Manual, attached hereto as a part of Schedule
3.2(B), shall not result in any material differences from
the results under U.K. GAAP.
(C) Undisclosed Liabilities. The Company has no
liabilities or obligations of any nature (whether accrued,
absolute or contingent) which are required under U.K. GAAP
to be reflected in the September 30, 1997 financial
statements of the Company except (i) as reflected in
Schedule 3.2(B) and the financial statements attached
thereto and (ii) for liabilities and obligations incurred in
the ordinary course of business since the date of the most
recent balance sheet, none of which, individually or in the
aggregate, shall constitute a Material Event.
(D) Taxes. All federal, state, local and foreign tax
returns required to be filed with respect to the Company and
the Company Subsidiaries have been filed in a timely manner,
and all taxes (whether or not shown thereon) have been paid,
except where the failure to so file or pay, individually or
in the aggregate, would not have a material adverse effect
on the Business Condition. The Company and the Company
Subsidiaries are not currently the beneficiary of any
extension of time within which to file such returns. No
deficiencies for any taxes in respect of the Company or any
of the Company Subsidiaries have been asserted in writing
against the Company or any of the Company Subsidiaries which
remain unpaid and which individually or in the aggregate
have a material adverse effect on the Business Condition.
No waivers of statutes of limitation are in effect in
respect of foreign, federal or state income taxes of the
Company or the Company Subsidiaries. Neither the Company
nor any of the Company Subsidiaries has received from the
Internal Revenue Service or from the tax authorities of any
state, county, local or other jurisdiction (foreign or
domestic) any written notice of underpayment of income taxes
which has not been paid or reflected on the Closing Date
Balance Sheet. No audits relating to taxes are presently
being conducted and neither the Company nor Seller has
received written notice of any such future audits. All
taxes of any kind which are required to be paid by the
Company or the Company Subsidiaries for all periods ending
on or prior to the Closing Date have been paid or will be
provided for in the Closing Date Balance Sheet, except for
taxes due to the actions of Buyer.
(E) Real Property. Schedule 3.2(E) sets forth a list
of real properties owned by the Company, a list of all real
properties leased to the Company by other persons, and a
list of all real properties owned or leased by the Company
that are leased or subleased to other persons by the
Company. The Company or one of the Company Subsidiaries Owns
all of the real properties listed as "owned" on Schedule
3.2(E). The leases under which the real property listed as
"leased" on Schedule 3.2(E) are leased are valid and
subsisting, and neither the Company nor any of the Company
Subsidiaries is in Default under any lease of any such real
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properties in any manner materially adverse to the Business
Condition. The Company has furnished true and complete
copies of each such lease to Buyer.
(F) Tangible Personal Property. Schedule 3.2(F) sets
forth for the Company and each Company Subsidiary (1) a list
as of September 30, 1997, of all machinery and equipment
owned by the Company or such Company Subsidiary having a
book value of more than $30,000; (2) a list as of
September 30, 1997, of all furniture, office equipment, and
similar items owned by the Company or such Company
Subsidiary having a book value of more than $5,000; (3) a
list as of September 30, 1997, of all cars, trucks, and
other vehicles owned by the Company or such Company
Subsidiary having a book value of more than $5,000; and (4)
a list as of September 30, 1997, of all items of tangible
personal property leased by the Company or such Company
Subsidiary having a capitalized book value of more than
$5,000. The Company or one of the Company Subsidiaries Owns
all tangible personal property listed as "owned". The
leases under which the tangible personal property listed as
"leased" on Schedule 3.2(F) are valid and subsisting, and
neither the Company nor any of the Company Subsidiaries is
in Default under any lease of any such tangible property in
any manner materially adverse to the Business Condition.
The Company has furnished to Buyer true and complete copies
of each such lease. Each of the Company and the Company
Subsidiaries currently owns, leases or otherwise is entitled
to use, under valid and subsisting agreements (copies of
which are listed on Schedule 3.2(F) and have been furnished
to Buyer), all assets, real or personal, which are used or
held by the Company or any Company Subsidiary for use in the
operation of the Business; no such agreement will or may be
terminated by any party thereto by reason of the
transaction described in this Purchase Agreement; all such
assets are sufficient to permit the operation of the
Business as currently operated; and no such assets are
owned, leased or otherwise furnished to the Company or any
Company Subsidiary by the Seller, Siebe, or any affiliate of
the Seller or Siebe.
(G) Intellectual Property. The Company Owns or has
valid and subsisting licenses to all Intellectual Property
used or necessary in connection with the Business as
presently conducted or planned to be conducted. Schedule
3.2(G) sets forth a list as of September 30, 1997 of (1) all
patents (domestic and foreign) owned by the Company or any
Company Subsidiary (specifying for each the country of
issuance, expiration date, patent number, inventor, and
title of patent); (2) all pending patent applications
(domestic and foreign) owned by the Company or any Company
Subsidiary (specifying for each the country of application,
application date, application number, inventor, and title of
invention); (3) all trademarks (domestic and foreign) owned
by the Company or any Company Subsidiary (specifying for
each the country of registration, renewal date, registration
number, mark registered, and goods covered); (4) all
trademark applications (domestic and foreign) owned by the
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Company or any Company Subsidiary (specifying for each the
country of application, application date, application
number, mark to which registration relates, and goods
covered); and (5) all material Intellectual Property owned
by other persons which is used in the conduct of the
Business by the Company or any Company Subsidiary under
license, technology, or other similar agreements. The
Company or a Company Subsidiary Owns all of the Intellectual
Property listed as "owned" on Schedule 3.2(G). The license,
technology, or similar agreements to employ the Intellectual
Property listed as "licensed" on Schedule 3.2(G) are valid
and subsisting agreements, and the Company has furnished
true and complete copies of each such agreement to Buyer.
Neither the Company nor any of the Company Subsidiaries is
in Default under any licenses or other agreements listed on
Schedule 3.2(G) in any manner materially adverse to the
Business Condition. Neither the Company nor any of the
Company Subsidiaries has granted any rights or interest to
any person in connection with any of the Intellectual
Property described in Schedule 3.2(G). Except as set forth
on Schedule 3.2(H), there is no pending or, to the Company's
or Seller's Knowledge, threatened litigation by or before
any governmental authority alleging any infringement or
other violation by any other person or entity of the
Intellectual Property; and there is not now, and there has
not been during the past five years, any asserted claim of
infringement or other violation of any other intellectual
property right of any person or entity outside the Company
resulting from the conduct of the Company, and neither the
Company nor Seller has any Knowledge that any such
infringement or violation exists or will be alleged. All of
the individuals set forth on Schedule 3.2(G) have signed the
"Agreement Re: Inventions and Other Confidential Matters,"
the form of which has been previously delivered to Buyer.
(H) Litigation. Schedule 3.2(H) contains a
description of all litigation at law or in equity pending as
of September 30, 1997 against the Company or relating to the
Company's conduct of the Business and a description of all
writs, injunctions, orders, and decrees of courts, agencies,
and other governmental authorities, domestic or foreign, to
which the Company is subject. There exists no litigation,
proceedings, actions, claims, or investigations at law or in
equity pending or to the Company's or Seller's Knowledge
threatened against the Company or a Company Subsidiary that
is, in the Company's or Seller's management's judgment,
likely to be materially adverse to the Business Condition,
and neither the Company nor a Company Subsidiary is subject
to any writ, injunction, order, or decree of any court,
agency, or other governmental authority materially adversely
affecting the Business.
(I) Contracts. Schedule 3.2(I) sets forth (1) a list
as of September 30, 1997 of each outstanding order,
contract, or commitment for the purchase by the Company or
any Company Subsidiary of capital and tooling involving a
financial commitment of $30,000 or more; (2) a list as of
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September 30, 1997 of each outstanding order, contract, or
commitment for the purchase by the Company or any Company
Subsidiary of products, supplies, and services involving a
financial commitment of $30,000 or more; and (3) a list as
of September 30, 1997 of each outstanding order, contract,
or commitment for the sale by the Company or any Company
Subsidiary of products or services involving projected
revenues of $30,000 or more. Each of the contracts,
commitments, and other obligations listed on Schedule 3.2(I)
is a valid and binding obligation of the Company or a
Company Subsidiary and the other party or parties thereto.
True and correct copies of each such order, contract or
commitment have been furnished by the Seller to Buyer.
Neither the Company nor any of the Company Subsidiaries nor
any other party thereto has terminated, canceled, or
substantially modified any contract, commitment, or other
obligation identified in Schedule 3.2(I) in any manner
materially adverse to the Business Condition, and neither
the Company nor any of the Company Subsidiaries is in
Default under any contract, commitment, or other obligation
identified in Schedule 3.2(I) in any manner materially
adverse to the Business Condition; and none of such
contracts for which Seller has not provided Buyer a complete
English translation contains any substantial restriction on
the operations of the Business, or contains a right of
termination, cancellation or modification by reason of the
consummation of this Purchase Agreement which would be
materially adverse to the Business Condition.
(J) Employees and Employee Benefits. Schedule 3.2(J)
sets forth (1) a list of the ten (10) highest paid employees
of the Company and the Company Subsidiaries during the
fiscal year ended March 31, 1997 together with the dollar
amount paid to each such employee during such year; and (2)
a list of the ten (10) highest paid employees of the Company
and the Company Subsidiaries as of September 30, 1997
together with the base salary rate and bonus or other
incentive compensation of each such employee as of that
date. Also attached at Schedule 3.2(J) are true and
complete copies of the summary plan descriptions of all
pension, retirement, profit-sharing, deferred compensation,
employee stock option or stock purchase, bonus, incentive
compensation, and other employee pension plans or
arrangements currently maintained by the Company or the
Company Subsidiaries (collectively, "Benefit Plans"); and
true and complete copies of summary plan descriptions of all
employee health, dental, vision, life insurance, long-term
and short-term disability, vacation, tuition reimbursement,
and severance plans and other employee welfare plans or
arrangements (collectively, "Welfare Plans") currently
maintained by the Company or the Company Subsidiaries.
Except as set forth on Schedule 3.2(J), neither the Company
nor any of the Company Subsidiaries are parties to any
employment, consulting, collective bargaining or severance
agreements or arrangements ("Employment Agreements"),
neither the Company nor any of the Company Subsidiaries have
any Benefit Plans or Welfare Plans relating and applicable
to the Company or any Company Subsidiary, its Business or
its employees. Each such Benefit Plan and Welfare Plan
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which is subject to the Employee Retirement Income Security
Act of 1974, as amended ("ERISA") has been maintained and
operated in substantial compliance with ERISA. None of the
Benefit Plans is a so-called "defined benefit plan" or
"multiemployer plan," as defined in ERISA. True and
complete copies of each Benefit Plan, Welfare Plan and
Employment Agreement have been furnished by the Seller to
Buyer.
(K) Compliance With Environmental, Health and Safety
Laws.
(i) Each of the Company and the Company Subsidiaries
is currently in compliance in all material
respects with all Environmental, Health and
Safety Laws.
(ii) Without limiting the generality of the foregoing,
each of the Company, the Company Subsidiaries and
their respective affiliates currently maintains,
and is in compliance with, all permits, licenses
and other authorizations that are required
pursuant to Environmental, Health and Safety Laws
for the occupation of its facilities and the
operation of its business; a list of all such
permits, licenses and other authorizations is set
forth on the attached Schedule 3.2(K).
(iii) None of the Company or the Company Subsidiaries,
or their respective predecessors or affiliates
has received, to the Knowledge of the Company's
Chief Executive Officer, any written or oral
notice, report or other information regarding any
actual or alleged violation of Environmental,
Health and Safety Laws, or any liabilities or
potential liabilities (whether accrued, absolute,
contingent, unliquidated or otherwise), including
any investigatory, remedial or corrective
obligations, relating to any of them or its
facilities arising under Environmental, Health
and Safety Laws.
(iv) None of the Company, the Company Subsidiaries, or
their respective predecessors or affiliates, has
treated, stored, disposed of, arranged for or
permitted the disposal of, transported, handled,
or released any substance, including without
limitation any hazardous substance, or owned or
operated any property or facility (and no such
property or facility is contaminated by any such
substance) in a manner that has given or would
give rise to liabilities, including any liability
for response costs, corrective action costs,
personal injury, property damage or natural
resources damages, pursuant to the Comprehensive
Environmental Response, Compensation and
Liability Act of 1980, as amended ("CERCLA"),
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the Solid Waste Disposal Act, as amended
("SWDA") or any other Environmental, Health and
Safety Laws.
(v) Neither this Purchase Agreement nor the
consummation of the transaction that is the
subject of this Purchase Agreement would
reasonably be expected to, after consultation
with counsel, result, in any obligations for site
investigation or cleanup, or notification to or
consent of government agencies or third parties,
pursuant to any of the so-called "transaction-
triggered" or "responsible property transfer"
Environmental, Health and Safety Laws.
(vi) None of the Company, the Company Subsidiaries, or
any of their respective predecessors or
affiliates has, has, either expressly or by
operation of law, assumed or undertaken any
liability of any other person under any
Environmental, Health and Safety Laws, including
without limitation any obligation for corrective
or remedial action.
(vii) No facts, events or conditions relating to the
current, or to the knowledge of the Company and
the Company Subsidiaries, former facilities,
properties or operations of the Company, the
Company Subsidiaries, or any of their respective
predecessors or affiliates would reasonably be
expected to, after consultation with counsel,
give rise to any investigatory, remedial or
corrective obligations pursuant to Environmental,
Health and Safety Laws, or would reasonably be
expected to, after consultation with counsel,
give rise to any other liabilities (whether
accrued, absolute, contingent, unliquidated or
otherwise) pursuant to Environmental, Health and
Safety Laws, including without limitation any
obligations or liabilities relating to onsite or
offsite releases or threatened releases of
hazardous materials, substances or wastes,
personal injury, property damage or natural
resources damage.
(L) Compliance With Other Laws. Schedule 3.2(L) sets
forth (1) a list of all material permits, approvals and
qualifications of any government or governmental unit,
agency, board, body, or instrumentality issued to or applied
for by the Company and used by the Company in its conduct of
its Business; (2) a description of all written claims that
the Company has received during the calendar years from 1990
through 1997, inclusive, from any government or governmental
unit, agency, board, body, or instrumentality alleging
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noncompliance by the Company with any laws, rules,
regulations, ordinances, orders or decrees (other than
Environmental Laws) in connection with Company's conduct of
the Business. Insofar as is material to the Business
Condition, the Company and the Company Subsidiaries are in
substantial compliance with all statutes, ordinances,
regulations, and other governmental requirements applicable
to the conduct of the Business.
(M) Absence of Certain Changes or Events Subsidiaries
Since September 30, 1997, the Company and each of the
Company Subsidiaries has operated in the ordinary course of
business and there has not been (i) any material damage,
destruction or other casualty loss with respect to property
owned or leased by the Company or any of the Company
Subsidiaries, whether or not covered by insurance, or any
strike, work stoppage or slowdown or other labor trouble
involving the Company or any of the Company Subsidiaries; or
(ii) any Material Event.
(N) Insurance. Schedule 3.2(N) sets forth the
following information with respect to each insurance policy
(including policies providing property, casualty, liability,
and workers' compensation coverage and bond and surety
arrangements) to which any of the Company and the Company
Subsidiaries has been a party, a named insured, or otherwise
the beneficiary of coverage at any time within the past 1
year:
(i) the name address, and telephone number of the
agent;
(ii) the name of the insurer, the name of the
policyholder, and the name of each covered
insured;
(iii) the policy number and the period of coverage;
(iv) the scope (including an indication of whether the
coverage was on a claims made, occurrence, or
other basis) and amount (including a description
of how deductibles and ceilings are calculated
and operate) of coverage; and
(v) a description of any retroactive premium
adjustments or other loss-sharing arrangements.
With respect to each such insurance policy: (a) the policy is
legal, valid, binding, enforceable, and in full force and effect;
(b) the policy will continue to be legal, valid, binding,
enforceable, and in full force and effect on identical terms
following the consummation and the transactions contemplated
hereby; (c) neither any of the Company and the Company
Subsidiaries nor any other party to the policy is in breach or
default (including with respect to the payment of premiums or the
giving of notices), and no event has occurred which, with notice
or the lapse of time, would constitute such a breach or default,
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or permit termination, modification, or acceleration, under the
policy; and (d) no party to the policy has repudiated any
provision thereof. Schedule 3.2(N) describes any self-insurance
arrangements affecting any of the Company and the Company
Subsidiaries.
3.3 DISCLAIMER. EXCEPT AS SET FORTH IN SECTION 3.1 AND
SECTION 3.2, SELLER AND THE COMPANY AND THEIR AFFILIATES MAKE NO
REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED CONCERNING THE
BUSINESS OR ITS ASSETS (INCLUDING THOSE REFERRED TO IN SECTION 2-
312 OF THE INDIANA UNIFORM COMMERCIAL CODE OR IN ANY STATUTE
APPLICABLE TO REAL PROPERTY).
3.4 BUYER'S REPRESENTATIONS AND WARRANTIES. Buyer hereby
represents and warrants to Seller the following:
(A) Organization and Existence. Buyer is a
corporation duly organized, validly existing, and in good
standing under the laws of the Commonwealth of
Massachusetts.
(B) Power and Authority. Buyer has all necessary
corporate power and authority to enter into this Purchase
Agreement, to carry out its obligations hereunder and to
consummate the transactions contemplated hereby. This
Purchase Agreement constitutes the valid and legally binding
obligation of Buyer, enforceable in accordance with its
terms and conditions, subject to the effect of any
applicable bankruptcy, reorganization, insolvency,
moratorium or similar laws affecting creditors' rights
generally and subject, as to enforceability, to the effect
of general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at
law).
(C) No Conflict. Neither the execution and the
delivery of this Purchase Agreement, nor the consummation of
the transactions contemplated hereby, will (i) violate or
conflict with the Articles of Organization or By-laws of
Buyer, (b) conflict with or violate any law or governmental
order applicable to Buyer, or (c) result in any breach of,
or constitute a default (or event which with the giving of
notice or lapse of time, or both, would become a default)
under, or give to others any rights of termination,
amendment, acceleration or cancellation of any agreement to
which Buyer is a party, or result in the creation of any
encumbrance on any of the assets or properties of Buyer,
except, in the case of clause (c), as would not,
individually or in the aggregate, have a material adverse
effect on the Business Condition or have a material adverse
effect on the ability of Buyer to consummate the
transactions contemplated by this Purchase Agreement.
(D) Brokers. Buyer has not engaged and is not
directly or indirectly obligated to any person acting as a
broker or finder, or a person acting in a similar capacity
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in connection with the transactions contemplated by this
Purchase Agreement.
(E) Buyer's Net Worth. Buyer currently has and will
maintain through Closing a net worth of at least $33 Million
Dollars ($33,000,000) and at Closing will have sufficient
funds to pay the Purchase Price in full.
(F) Purchase for Investment. Buyer is purchasing the
Shares for investment and not with a view to any public
resale or other distribution thereof, except in compliance
with applicable securities laws.
ARTICLE IV
ACTIONS BEFORE CLOSING
4.1 GENERAL. Each of the parties will use its reasonable
best efforts to take all action and to do all things necessary,
proper, or advisable in order to consummate promptly and make
effective the transactions contemplated by this Purchase
Agreement (including satisfaction, but not waiver, of the closing
conditions set forth in Article V below).
4.2 ACCESS TO RECORDS. Seller hereby covenants to Buyer
that the Company will afford duly authorized representatives of
Buyer full access during normal business hours and in a manner so
as not to interfere with the normal business operations of the
Company, to all of the assets, properties, books, and non-
privileged records of the Company and of the Business and will
permit such representatives to make abstracts from, or take
copies of, such books, records, or other documentation, or to
obtain temporary possession of any thereof as may be reasonably
required by Buyer. Buyer will not use any of such information
except in connection with this Purchase Agreement, and, if the
Purchase Agreement is terminated for any reason whatsoever will
return to Seller all tangible embodiments (and all copies) of
such information in its possession and control.
4.3 INTERIM CONDUCT OF THE BUSINESS. Seller and the
Company hereby covenant to Buyer that, from today until the
Closing, the Company will (i) conduct the Business only in the
ordinary and usual course (it being understood and agreed that
the Company and each Company Subsidiary will make reasonable
efforts to ship products in accordance with (and to arrive via
shipping methods normally used by the Company or such Company
Subsidiary no sooner than) reasonably requested customer delivery
dates), subject to Buyer's approval of certain transactions
pursuant to Section 4.4., except as Buyer may otherwise approve
(which approval shall not be unreasonably withheld) or as may
otherwise be required or permitted under this Purchase Agreement,
(ii) use its reasonable efforts to preserve the goodwill of
customers and others having business relations with the Company
or the Company Subsidiaries, (iii) maintain the properties of the
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Company and the Company Subsidiaries in substantially the same
working order and condition as such properties are in as of
today's date, reasonable wear and tear excepted, (iv) keep in
force at no less than their present limits all existing policies
of insurance or comparable replacements thereof insuring the
Company, the Company Subsidiaries and their respective
properties, and (v) promptly advise Buyer in writing of any
matters arising or of which the Company becomes aware after
today's date that, if existing or known on today's date, would be
required to be set forth or described in this Purchase Agreement
or the Schedules hereto.
4.4 BUYER'S APPROVAL OF CERTAIN TRANSACTIONS. Seller and
the Company hereby covenant to Buyer that, except as may
otherwise be required under this Purchase Agreement, from today
until the Closing, the Company will not do, or permit any Company
Subsidiary to do, any of the following without the prior approval
of Buyer, which approval shall not be unreasonably withheld:
(A) Incur or permit the incurrence of any debt for
borrowed money or incur any obligation or other liability,
except in the ordinary course of business;
(B) Purchase or dispose of any real property or real
property interest or, except in the ordinary course of
business, any personal property;
(C) Enter into any lease of real or personal property
or any renewals thereof involving a term of more than one (1)
year or rental obligation exceeding Thirty Thousand
Dollars ($30,000) per annum in any single case;
(D) Permit to be incurred any Encumbrances on any of
the assets or properties of the Company or any Company
Subsidiary, except in the ordinary course of business;
(E) Except for normal merit or cost-of-living
increases in accordance with the Company's past practices,
increase the rate of compensation for any of the employees
of the Company or any Company Subsidiary or otherwise enter
into or alter any employment, consulting, or managerial
services agreement primarily affecting the Company or any
Company Subsidiary;
(F) Commence, enter into, or alter any pension,
retirement, profit-sharing, employee stock option or stock
purchase, bonus, deferred compensation, incentive
compensation, life insurance, health insurance, fringe
benefit, severance, or other employee benefit plan or
arrangement affecting employees of the Company, any Company
Subsidiary or the Business, or grant any option or other
right to acquire any of the capital stock of the Company or
any Company Subsidiary, or issue or retire any shares of
capital stock of the Company or any Company Subsidiary;
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(G) Make any single new commitment or increase any
single previous commitment for capital expenditures in an
amount of more than Thirty Thousand Dollars ($30,000);
(H) Accelerate or delay the sale of Products except
as may be necessary in the ordinary course of business;
(I) Sell, assign, transfer, license, or convey any of
the Intellectual Property; or
(J) Except as specified on Schedule 4.4(J), make any
changes in the banking or similar authorizations of the
Company or any Company Subsidiary; make any payments or
distributions of any property (other than normal sales of
inventory for fair value in the ordinary course of business)
to any affiliate of the Company; or grant any powers of
attorney; except that nothing herein shall restrict the
Company and Seller from continuing their current cash
management policies and distributing the cash, cash
equivalents and, to the extent appropriate to adjust Closing
Net Worth so that it does not exceed the Base Line Net
Worth, accounts receivable of the Company and the Company
Subsidiaries to the Seller and its affiliates; provided that
such distributions shall not cause the Closing Date Balance
Sheet to be materially less than the Base-Line Net Worth or
the cash balances of the Company or any Company Subsidiary
to be insufficient to cover outstanding checks or other
orders for payment drawn on the Company's accounts or those
of any Company Subsidiary; and provided further that if
accounts receivable are so distributed to the Seller and its
affiliates, Seller and its affiliates shall communicate with
the obligors of such accounts receivable after the Closing
only through the Company or any Company subsidiary, as agent
for the Seller.
4.5 CONSENTS TO ASSIGNMENT. Seller hereby covenants to
Buyer that from the date hereof until the Closing, Seller will
use its reasonable efforts to cause the Company to obtain the
consents or approvals (or effective waivers thereof) of all other
persons whose consents or approvals are required for the
continuation of the Company's rights under material contracts,
leases, licenses and permits.
4.6 COORDINATION OF PUBLIC ANNOUNCEMENTS. From today
until the Closing, the parties will cooperate in the planning,
preparation, and publication of any and all public announcements
concerning this Purchase Agreement and the transactions
contemplated by this Purchase Agreement.
4.7 HART-SCOTT-RODINO NOTIFICATION. Seller hereby
covenants to Buyer, and Buyer hereby covenants to Seller, that
the parties each will (i) promptly proceed with the filing of any
required notification and report forms that it may be required to
file with the Federal Trade Commission and the Antitrust Division
of the United States Department of Justice under the Hart-Scott-
Rodino Act, and will make any further filings and take any
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further actions pursuant thereto that may be necessary, proper,
or advisable in connection therewith, and (ii) use its best
efforts to avoid the entry of, and to have vacated, eliminated or
terminated, any decree, order, proceeding, judgment,
investigation or impediment that would restrain, prevent or delay
the Closing.
4.8 OTHER REGULATORY APPROVALS. Seller hereby covenants
to Buyer, and Buyer hereby covenants to Seller, that immediately
after the execution and delivery of this Purchase Agreement the
parties will promptly proceed with the preparation and filing of
any required filings necessary in order to obtain the approval or
authorization of those governmental agencies or instrumentalities
whose approval or authorization is necessary in order to
consummate the transactions contemplated by this Purchase
Agreement.
4.9 SECTION 338 ELECTION BY SELLER. Seller will join with
Buyer in making an election under Section 338(h)(10) of the Code
(and any corresponding elections under state, local, or foreign
tax law) with respect to the purchase and sale of the Shares
hereunder. Seller will pay any tax attributable to the making of
such election and will indemnify Buyer, the Company and the
Company Subsidiaries against any adverse consequences arising out
of any failure to pay such tax. Seller will also pay any state,
local, or foreign tax (and indemnify Buyer, the Company and the
Company Subsidiaries against any adverse consequences arising out
of any failure to pay such tax) attributable to an election under
state, local, or foreign law corresponding to the election
available under Section 338(g) of the Code (or which results from
the making of an election under Section 338(g) of the Code) with
respect to the purchase and sale of the Shares hereunder. The
Purchase Price (and other relevant items) shall be allocated
among the assets of the Company and its Subsidiaries (in
accordance with the regulations under Section 338 of the Code) as
Buyer and Seller shall agree, and the parties shall prepare all
relevant tax returns and reports consistent with such allocation.
4.10 EMPLOYEE AGREEMENTS. The Company will use its best
efforts (but without incurring any additional costs or expenses)
to get the following employees to sign the Agreement re
Inventions and Other Confidential Matters referred to in the last
sentence of Section 3.2(G): Tsutomu Kobayashi; Sales Manager of
Wells Japan; Engineering Manager of Wells Japan; Charles Dodson;
Wells Asia Staff; Wells Europe Staff; James Blossom; John
Hartstein; Paul Schultz; Troy Pavy; Thomas Slone; Patty Snow;
Timothy Corcoran; Tom Lyzinski; Allan Silverman.
ARTICLE V
CONDITIONS
5.1 CONDITIONS TO BUYER'S OBLIGATIONS. The obligation of
Buyer to consummate the transactions contemplated by this
Purchase Agreement is subject to the satisfaction of the
following conditions at or before the Closing:
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(A) The representations and warranties of Seller and
the Company contained in Section 3.1 of this Purchase
Agreement shall be true and correct as of the date of this
Purchase Agreement and as of the Closing Date (except with
respect to the effect of transactions contemplated or
permitted by this Purchase Agreement and except to the
extent that such failure shall not have a material adverse
effect on the Business Condition) and the representations
and warranties of Seller and the Company contained in
Section 3.2 of this Purchase Agreement shall be true and
correct as of the date of this Purchase Agreement and as of
the Closing Date (except with respect to the effect of
transactions contemplated or permitted by this Purchase
Agreement and with respect to the effect of the passage of
time upon dated material set forth in the Schedules (but
only to the extent that such effect upon the Schedules does
not constitute a material adverse effect on the Company or
the Company Subsidiaries) and except to the extent that such
failure shall not have a material adverse effect on the
Business Condition);
(B) Seller and the Company shall have performed and
complied in all material respects with all agreements and
covenants required by this Purchase Agreement to be
performed or satisfied by Seller and/or the Company, and
Seller and the Company shall have delivered to Buyer all
documents, certificates, and instruments required to be
delivered by Seller and/or the Company under the terms of
this Purchase Agreement, including, without limitation, the
documents referred to on Appendix B;
(C) All corporate and other proceedings or actions
required to be taken by Seller or the Company in connection
with the transactions contemplated by this Purchase
Agreement shall have been taken;
(D) All material governmental approvals and
authorizations necessary for consummation of the
transactions contemplated by this Purchase Agreement shall
have been duly issued or granted except for any failure
which would not have a material adverse effect on the
Business Condition, and the waiting period (and any
extensions thereof) under the Hart-Scott-Rodino Act shall
have expired or otherwise been terminated;
(E) There shall not have been issued and in effect
any injunction or similar legal order prohibiting or
restraining consummation of any of the transactions
contemplated in this Purchase Agreement;
(F) Since today's date, there shall not have been any
change or changes in the Business Condition which
individually or in the aggregate constitute a Material
Event;
(G) Buyer shall have received an opinion of counsel
for the Seller and the Company in customary from reasonably
acceptable to Buyer;
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(H) To the extent that any of the financial
statements or information referred to in Section 7.5 is
available on or before the Closing Date, the Seller shall
have delivered the same to Buyer;
(I) Buyer shall have received the resignations of the
directors of the Company; and
(J) To the extent that any of the financial books and
records of the Company or any Company Subsidiary are in the
possession of anyone other than the Company or a Company
Subsidiary, such books and records shall have been delivered
to the Company or such Company Subsidiary.
5.2 CONDITIONS TO SELLER'S OBLIGATIONS. The obligation of
Seller to consummate the transactions contemplated by this
Purchase Agreement is subject to the satisfaction of the
following conditions at or before the Closing:
(A) The representations and warranties of Buyer
contained in Section 3.4 shall be true and correct as of the
date of this Purchase Agreement and as of the Closing Date
(except with respect to the effect of transactions
contemplated or permitted by this Purchase Agreement and
except to the extent that such failure shall not have a
material adverse effect on the Business Condition);
(B) Buyer shall have performed and complied with all
agreements and covenants required by this Purchase Agreement
to be performed or satisfied by Buyer, and Buyer shall have
delivered all documents, certificates, and instruments
required to be delivered by Buyer under the terms of this
Purchase Agreement, including, without limitation, the
documents referred to on Appendix C;
(C) Buyer shall have taken all corporate and other
proceedings to be taken by it in connection with the
transactions contemplated by this Purchase Agreement;
(D) All material governmental approvals and
authorizations necessary for consummation of the
transactions contemplated by this Purchase Agreement shall
have been duly issued or granted except for any failure
which would not have a material adverse effect on the
Business Condition, and the waiting period (and any
extensions thereof) under the Hart-Scott-Rodino Act shall
have expired or otherwise been terminated; and
(E) There shall not have been issued and in effect
any injunction or similar legal order prohibiting or
restraining consummation of any of the transactions
contemplated in this Purchase Agreement.
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ARTICLE VI
CLOSING
6.1 THE CLOSING. For purposes of this Purchase Agreement,
the term "Closing" means the time at which the transactions
contemplated by this Purchase Agreement will be consummated after
satisfaction or waiver of the conditions set forth in Article V
of this Purchase Agreement.
6.2 TIME, DATE, AND PLACE OF CLOSING. The Closing will
occur at 10:00 a.m. (New York City time) on the later of December
26, 1997 or the fifth business day after satisfaction of the
conditions set forth in Section 5.1(D) of this Purchase
Agreement, or such other date as the parties may agree in writing
(the "Closing Date"). The Closing will take place at the New
York office of Fried, Frank, Harris, Shriver & Jacobson, or at
such other place as the parties may agree in writing. The
Closing will be deemed to have occurred as of 11:59 p.m. on the
Closing Date.
6.3 BUYER'S OBLIGATIONS. At the Closing, Buyer will
deliver to Seller the following:
(A) The documents, certificates, and other items
referred to in Section 5.2(B); and
(B) The amount specified in Section 2.4(A).
6.4 SELLER'S OBLIGATIONS. At the Closing, Seller will
deliver to Buyer the following:
(A) The documents, certificates, and other items
referred to in Section 5.1(B); and
(B) Certificates representing the Shares, duly
endorsed in blank, with signature guaranteed.
ARTICLE VII
ACTIONS AFTER CLOSING
7.1 FURTHER CONVEYANCES. After the Closing, Seller will,
without further cost or expense to Buyer, execute and deliver to
Buyer (or cause to be executed and delivered to Buyer), such
additional instruments of conveyance, and Seller will take, and
will cause its attorneys, accountants and other advisers to take,
such other and further actions as Buyer may reasonably request
and which are ordinarily provided by a Seller, more completely to
sell, transfer, and assign to Buyer and vest in Buyer Ownership
of the Shares and to transition the Company to Buyer's attorneys,
accountants and other advisers.
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7.2 ACCESS TO FORMER BUSINESS RECORDS. For a period of
seven (7) years after the Closing, Buyer will afford duly
authorized representatives of Seller free and full access to pre-
Closing books and records of the Company and will permit such
representatives, at Seller's expense, to make abstracts from, or
to take copies of any of such records, or, at reasonable times
and for reasonable periods, to obtain temporary possession of any
thereof as may be reasonably required by Seller. During such
period, Buyer will cooperate with Seller, and cause employees of
the Company to cooperate with Seller, in furnishing information,
evidence, testimony, and other assistance in connection with any
action, proceeding, or investigation relating to the Company's
conduct of the Business before the Closing.
7.3 ACCESS TO FORMER EMPLOYEES. After the Closing, Buyer
will make available to Seller, at reasonable times and for
reasonable periods, employees of the Company whom Seller may
reasonably need in order to defend or prosecute any legal or
administrative action to which Seller is a party. Seller will
pay or reimburse the Company for all reasonable expenses which
may be incurred by such employees in connection therewith,
including, without limitation, all travel, lodging, and meal
expenses, and Seller will compensate the Company for the number
of whole business days spent by each such employee in providing
such services at the rate of one hundred percent (100%) of the
average daily gross pay per business day (excluding the value of
employee benefits) of such employee during the calendar month in
which such services are performed.
7.4 DISPUTE RESOLUTION. If the parties ever have a
dispute involving their respective rights and obligations under
this Purchase Agreement (other than with respect to the final
determination of the amount of the Adjustment), or the breach
thereof, then the parties will resolve such dispute as follows:
(A) Dispute Notice. Either Buyer or Seller may at
any time deliver to the other a written dispute notice
setting forth a brief description of the issues for which
such notice initiates the dispute resolution mechanism set
forth in this Section 7.4. Such dispute notice shall also
specify the provision or provisions of this Purchase
Agreement and the facts or circumstances that are the
subject matter of the dispute.
(B) Informal Negotiations. During the sixty (60) day
period following delivery of a dispute notice described in
Section 7.4(A), the parties will cause their representatives
to meet and seek to resolve the disputed items cordially
through informal negotiations.
(C) Dispute Resolution Proceedings. If
representatives of the parties are unable to resolve
disputed items through the informal negotiations described
in Section 7.4(B), then within thirty (30) days after the
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informal negotiation period the parties will refer the
disputed issues to a dispute resolution panel for final
resolution as follows:
(1) Designation of Representatives. Within
seven (7) days after such informal negotiation period,
Buyer and Seller will each designate one representative
to serve on the dispute resolution panel. (If either
party fails or refuses to designate a representative,
then the other party will be entitled to have a
representative appointed, for such party by the
American Arbitration Association.)
(2) Selection of Neutral. Within thirty (30)
days after they have been designated, the designated
representatives will meet and select a neutral person
(the "Neutral") to serve as the third member of the
dispute resolution panel. If the designated
representatives of parties cannot agree on a Neutral,
then either representative may request the American
Arbitration Association to select the Neutral.
(3) Procedures and Process. At the time the
matter is referred to the dispute resolution panel,
Buyer and Seller will jointly establish the procedures,
including timing, scope of discovery, if any, and
confidentiality of evidence and the proceedings, to be
followed with respect to the presentation of the
parties' respective positions and the process by which
the dispute resolution panel will reach and render its
decision on the disputed issues. Such procedures and
processes will assure that -
(a) Each party will have the right to
submit evidence to the dispute resolution panel,
(b) Each party will have the right to
present a written statement concerning that
party's position with respect to the disputed
item,
(c) Before reaching a decision concerning
the disputed item, the dispute resolution panel
will convene a hearing at which both parties may
be represented, and
(d) The parties and the dispute
resolution panel will use their respective
reasonable best efforts to resolve any dispute
within 90 days following the date of selection
of the Neutral.
If Buyer and Seller cannot agree on such procedures and
processes, then the Neutral will establish such
procedures and process which will, in all events, be
consistent with the foregoing.
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<PAGE>
(4) Decision. The dispute resolution panel will
act by majority vote. The dispute resolution panel
will base its decision on applicable provisions of this
Purchase Agreement or, if the provisions of this
Purchase Agreement do not resolve the matter, on
general principles of substantive Delaware law. (The
dispute resolution panel may, if it so desires, seek
the opinion of an attorney licensed to practice law in
the State of Delaware on any matter of substantive
Delaware law on which the panel desires clarification.)
(D) Equitable Relief. Notwithstanding any other
provision of this Section 7.4, either party may seek from a
court of competent jurisdiction interim injunctive relief in
order to maintain the status quo or protect such party's
rights under this Purchase Agreement pending resolution of a
dispute pursuant to this Section 7.4.
(E) Binding Effect. The decisions of the dispute
resolution panel under this Section 7.4 will be binding on
both Seller and Buyer and will be neither appealable,
contestable, or subject to collateral attack by Seller or
Buyer.
7.5 FINANCIAL STATEMENTS.
(A) As soon as reasonably practicable, but in no event
later than 25 days following the Closing Date, the Seller shall
cause to be prepared by its independent accounting firm, and shall
deliverto Buyer, the following consolidated audited financial
statements for the Company and the Company Subsidiaries: statements
of income and cash flow for the periods from May 29, 1994 to June 3,
1995, from June 4, 1995 to May 2, 1996 and from May 3, 1996 to May 3,
1997 and consolidated balance sheets as of May 2, 1996 and May 3,
1997. Seller shall use its best efforts to cause its independent
accounting firm to permit Buyer's independent accounting firm to
review the work papers and other preparatory materials used in
connection with the preparation of the financial statements
referred to in this Section 7.5(A).
(B) As soon as reasonably practicable, but in no event
later than 40 days following the Closing Date (assuming full
cooperation from the Buyer and the Company), the Seller shall
cause to be prepared by its independent accounting firm, and
shall deliver to Buyer, the following financial statements and
other information for the Company and the Company Subsidiaries:
(i) audited statements of income and cash flow for
the periods from May 4, 1997 through the Closing Date and an
audited balance sheet as of the Closing Date;
(ii) net sales and net income for the years ended May
31, 1993 and May 31, 1994, total assets as of May 31, 1993,
May 31, 1994 and May 31, 1995 and such other selected
financial data as defined in Regulation S-K (or any
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<PAGE>
successor provision or regulation promulgated by the
Securities and Exchange Commission) for such periods as
Buyer shall reasonably request; and
(iii) statement of post-closing adjustments to the
Company's books and records made in connection with the
purchase of Unitech by Siebe plc.
(C) For a period of one year following the Closing Date,
the Seller shall use its best efforts to cause to be prepared by
its independent accounting firm, and shall deliver to Buyer, such
other financial information for the Company and the Company
Subsidiaries as Buyer shall reasonably request. For such period,
Seller shall use its best efforts to cause its independent
accounting firm to cooperate with Buyer and Buyer's independent
accounting firm in the preparation and certification of financial
statements and other information regarding the Company and the
Company Subsidiaries in connection with a public offering of
Buyer's securities, including, without limitation, the provision
of "comfort" letters customarily requested by the underwriters of
such an offering. Buyer shall bear the fees and costs incurred
in connection with the services provided by such accounting firm
pursuant to this Section 7.5(C).
(D) All financial statements and information furnished
pursuant to this Section 7.5 shall be prepared on a consolidated
basis from the books and records of the Company and the Company
Subsidiaries. The financial statements shall be prepared in
accordance with U.S. GAAP and Regulation S-X (or any successor
provision or regulation promulgated by the Securities and
Exchange Commission) applied on a consistent basis throughout the
periods covered thereby and, in the case of the financial
statements referred to in Section 7.5 (A), shall be certified by
such independent accounting firm.
7.6 TAX RETURNS.
Buyer shall cause the Company (and its Subsidiaries) to
consent to join, for all taxable periods of the Company ending on
or before the Closing Date for which the Company (or such
Subsidiary) is eligible to do so, in any consolidated or combined
income tax returns with Seller. Buyer shall, and shall cause the
Company and its Subsidiaries to, cooperate with Seller in the
preparation of the portions of such income tax returns pertaining
to the Company and its Subsidiaries, including, without
limitation, by promptly providing Seller with all information
regarding the Company and its Subsidiaries reasonably requested
by Seller to enable Seller to prepare and file such income tax
returns. All taxes of any kind payable by reason of the
operations or activities of the Company on or prior to the
Closing Date shall be paid by Seller, unless set forth as
liabilities on the Closing Date Balance Sheet, in which case they
shall be paid by Buyer.
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ARTICLE VIII
INDEMNIFICATION
8.1 INDEMNIFICATION OF SELLER. Subject to the limitations
set forth in Section 8.4, Section 8.5 and Section 8.6, Buyer will
indemnify and defend (in the case of third party claims) Seller,
and hold Seller harmless, from and against the actual amount of
any and all liabilities, damages, claims, losses, out of pocket
costs and expenses (including reasonable attorneys' fees) arising
out of or resulting from -
(A) Any misrepresentation or breach of warranty by
Buyer for which notice is given by Seller within the period
specified in Section 8.6; or
(B) Nonperformance by Buyer of any obligations to be
performed on the part of Buyer under this Purchase
Agreement.
8.2 INDEMNIFICATION OF BUYER. Subject to the limitations
set forth in Section 8.4, Section 8.5 and Section 8.6, Seller
will indemnify and defend (in the case of third party claims)
Buyer, and hold Buyer and the Company harmless, from and against
the actual amount of any and all liabilities, damages, claims,
losses, out of pocket costs and expenses (including reasonable
attorneys' fees) arising out of or resulting from -
(A) Any misrepresentation or breach of warranty or
covenant by Seller or the Company for which notice is given
by Buyer within the period specified in Section 8.6; or
(B) Nonperformance by Seller or the Company of any
obligation to be performed on the part of Seller under this
Purchase Agreement.
8.3 CLAIMS. If either party desires to make a claim
against the other under Section 8.1 or 8.2 which does not involve
a claim by any person other than the parties, then such party
shall make such claim by promptly delivering written notice to
the other. If either Buyer or Seller (the "Claimant") desires to
make a claim against the other (the "Indemnitor") under Section
8.1 or 8.2 which involves a claim by a person other than the
parties, then such claim will be made in the following manner and
be subject to the following terms and conditions:
(A) Notice. The Claimant will give prompt notice to
the Indemnitor of any demand, claim, or threat of litigation
or the actual institution of any action, suit, or proceeding
(collectively, a "Claim") at any time served on or
instituted against the Claimant with respect to which the
Claimant believes it would have a right of indemnification
under Section 8.1 or 8.2. In providing such notice, the
Claimant shall only state the existence of such Claim and
shall not admit or deny the validity of the facts or
circumstances out of which such Claim arose. Solely for
purposes of determining whether the Claimant is entitled to
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indemnification under Section 8.1 or 8.2, the alleged facts
or circumstances on which such Claim is based shall be
treated as if they were true pending final resolution of the
facts and circumstances out of which such Claim arose.
(B) Responsibility for Defense. Within thirty (30)
days after receipt of any such notice, but not less than
five (5) working days before the time the Claimant is
required to respond to a Claim, the Indemnitor will, by
giving written notice to the Claimant, have the right to
assume responsibility for the defense of the Claim in the
name of the Claimant or otherwise as the Indemnitor may
elect; provided that the Indemnitor also agrees that it does
or might have responsibility to indemnify the Claimant with
respect to such Claim. Otherwise, the Claimant will have
responsibility for the defense of the Claim. Subject to the
provisions of subsections 8.3(C) and (D) below, the party
having responsibility for defense of a Claim (the "Defending
Party") will have the full authority to defend, cure,
adjust, compromise, or settle such Claim or appeal any
judgment or ruling of a court or other tribunal in
connection with such Claim in its own name and/or in the
name of the other party.
(C) Right to Participate. Notwithstanding a
Defending Party's responsibility for the defense of a Claim,
the other party shall have the right to participate, at its
own expense and with its own counsel, in the defense of a
Claim and the Defending Party will consult with the other
party from time to time on matters relating to the defense
of such Claim. The Defending Party will provide the other
party with copies of all pleadings and material
correspondence relating to such Claim.
(D) Settlement. A Defending Party will provide the
other party with timely written notice of any proposed
adjustment, compromise, or other settlement, including
equitable or injunctive relief, of a Claim which the
Defending Party intends to propose or accept. If the other
party fails to provide the Defending Party with timely
written notice of objection to such settlement, then the
Defending Party shall have the authority to propose or
accept such settlement and enter into any agreement, in its
own name and/or in the name of the other party, giving legal
effect to all aspects of such settlement. If the other
party objects to such settlement, then the Defending Party
may, if it so elects, tender the defense to the other party
by paying to such other party the amount of money proposed
to be paid in settlement of the Claim, in which case the
Defending Party shall have no further liability to the other
party under this Purchase Agreement with respect to such
Claim and the other party shall have full authority for the
future defense of such Claim and full responsibility for any
and all liabilities, obligations, costs, and expenses
resulting therefrom.
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<PAGE>
8.4 DISPUTED RESPONSIBILITY. If, after receiving a
written indemnification notice under Section 8.3(A), the party
receiving such notice disputes -
(A) The fact that such party in fact made a
misrepresentation or breach a warranty under this Purchase
Agreement giving rise to the claim to which the notice
relates or that any such misrepresentation or breach in fact
gave rise to the liabilities, damages, claims, costs, or
expenses for which the other party seeks indemnification
under this Article VIII; or
(B) The fact that such party in fact failed to
perform any obligation to be performed on the part of that
party under this Purchase Agreement giving rise to the claim
to which the notice relates or that any such failure in fact
gave rise to the liabilities, damages, claims, costs, or
expenses for which the other party seeks indemnification
under this Article VIII;
then such party will have the right to initiate the dispute
resolution mechanism set forth in Section 7.4, in which case the
dispute will be finally resolved as provided in Section 7.4. In
such case, however, pending final resolution of the disputed
item, the parties will proceed as if the party receiving the
indemnification notice had in fact made a misrepresentation,
breached a warranty, or failed to perform an obligation to be
performed on the part of that party under this Purchase Agreement
and as if such act or failure in fact gave rise to the
liabilities, damages, claims, costs, or expenses for which the
other party seeks indemnification under this Article VIII. If the
disputed item is resolved in whole or in part in favor of the
party receiving the indemnification notice, then such party will
be entitled to an equitable reimbursement from the other party of
any amounts expended or incurred in carrying out the receiving
party's indemnification obligations under this Article VIII.
8.5 DOLLAR LIMITATION ON INDEMNIFICATION. Notwithstanding
the provisions of Sections 8.1(A) and 8.2(A) but subject to
Section 8.7, neither Seller nor Buyer will be obligated to
indemnify, defend, or hold the other party harmless from or
against any liability, damage, claim, cost, or expense (including
attorneys' fees) arising out of a misrepresentation or breach of
warranty by such party pursuant to Section 8.1(A) or 8.2(A)
unless and to the extent (A) a given claim (or claims, to the
extent such claims relate to the same facts or circumstances)
exceeds $25,000 and (B) the amount by which all claims in excess
of such amount exceeds $2,000,000. In no event will the parties
have liability for consequential or punitive damages. In all
events, in determining the damages for any particular loss
suffered, the amount of the indemnity will be net of any tax
benefits and recoveries from insurance or otherwise received by
the indemnitee.
8.6 TIME LIMITATIONS ON INDEMNIFICATION. Notwithstanding
the provisions of Section 8.1 (A) and 8.2(A) but subject to
Section 8.7, neither party will have any liability to the other
arising out of a breach of any representation or warranty
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contained in Article III of this Purchase Agreement, and any
cause of action based thereupon shall expire and terminate,
unless the party claiming that such breach occurred delivers to
the other party written notice and a reasonably full explanation
of the alleged breach on or before 5:00 p.m. (Eastern Standard
Time) on March 31, 1999, except for claims relating to Section
3.2(D), which shall survive until the relevant statute of
limitations (including any extension thereof by Seller or the
Company) has run, and claims relating to Section 3.2(K), for
which such notice must be given prior to the fourth annual
anniversary of the Closing.
8.7 EXCLUSIVE REMEDY. Seller and Buyer acknowledge and
agree that, absent fraud, the foregoing indemnification
provisions shall be the sole and exclusive remedy of Seller and
Buyer with respect to any inaccuracy or breach of any
representation, warranty or covenant made by Seller or Buyer in
this Purchase Agreement. The parties agree that no indemnity
shall be paid with respect to a liability that is shown on the
Closing Date Balance Sheet.
ARTICLE IX
AMENDMENT, WAIVER,
TERMINATION, AND CANCELLATION
9.1 AMENDMENT. The parties may amend this Purchase
Agreement at any time before the Closing, but only by written
instrument executed by both parties.
9.2 WAIVER. Either party may at any time waive compliance
by the other with any covenants or conditions contained in this
Purchase Agreement but only by written instrument executed by the
party waiving such compliance. No such waiver, however, shall be
deemed to constitute the waiver of any such covenant or condition
in any other circumstance or the waiver of any other covenant or
condition.
9.3 TERMINATION. The parties may terminate this Purchase
Agreement at any time before the Closing, but only by written
instrument signed by both parties. This Purchase Agreement will
terminate automatically, and without further action by any party,
if the Closing has not occurred by January 31, 1998, unless the
parties otherwise extend this Purchase Agreement by a written
instrument executed by the parties. Termination of this Purchase
Agreement pursuant to the preceding sentence will be without
prejudice to any claim either party may have at law or in equity
against the other party for any misrepresentation or breach of
warranty or covenant by under this Purchase Agreement which arose
at or before the termination under such sentence.
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ARTICLE X
MISCELLANEOUS
10.1 COOPERATION. Each of Buyer and Seller will cooperate
with the other party, at the other party's request and expense,
in furnishing information, testimony, and other assistance in
connection with any actions, proceedings, arrangements, and
disputes with other persons or governmental inquiries or
investigations involving Seller's conduct of the Company's
business or the transactions contemplated by this Purchase
Agreement.
10.2 SEVERABILITY. If any provision of this Purchase
Agreement shall finally be determined to be unlawful, then such
provision will be deemed to be severed from this Purchase
Agreement and replaced by a lawful provision which carries out,
as closely as possible, the intention of the parties and
preserves the economic bargain contemplated by this Purchase
Agreement and, in such case, each and every other provision of
this Purchase Agreement will remain in full force and effect.
10.3 COSTS AND EXPENSES. Each party will bear its own
expenses incurred in connection with this Purchase Agreement and
the transactions contemplated by this Purchase Agreement, whether
or not the transactions are consummated, it being understood and
agreed that the expenses of the Seller shall be deemed to include
the expenses of any broker referred to in Section 3.1(E), the
fees and expenses of the attorneys, accountants and other
advisers of the Seller and the Company in connection with the
transactions contemplated by this Purchase Agreement, and the
amount of any severance or similar payments required to be made
by the Company following the Closing Date by reason of
termination of employment at or prior to the Closing Date (and
such payments in respect of employees whom Buyer advises Seller
at or prior to the Closing that Buyer does not wish to retain)
pursuant to severance or similar agreements by which the Company
is bound on the Closing Date.
10.4 NOTICES. All notices, requests and other
communications under this Purchase Agreement shall be in writing
and shall be deemed to have been duly given at the time of
receipt if delivered by hand or communicated by electronic
transmission (with confirmation by mail or courier), or, if sent
by courier, two (2) days after delivery to an international
courier service with guaranteed two-day delivery, addressed or
communicated as follows:
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If to Buyer, to: PCD Inc.
2 Technology Drive
Peabody, Massachusetts 01960-7977
Attention: Chairman of the Board
Telefax: (978) 532-6800
With a copy to: Hill & Barlow,
a Professional Corporation
One International Place
Boston, Massachusetts 02110
Attention: Thomas C. Chase
Telefax: (617) 428-3500
If to Seller, to: UL America, Inc.
c/o Siebe Inc.
33 Commercial Street
Foxboro, Massachusetts 02035
Attention: Vice President Finance
Telefax: (508) 543-2735
With copies to: Siebe plc
Saxon House
2-4 Victoria Street, Windsor
Berkshire SL4 1EN
England
Attention: Secretary
Telefax: 44.1753.622.030
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Fried, Frank, Harris, Shriver &
Jacobson
One New York Plaza
New York, New York 10004
Attention: Sanford Krieger
Telefax: (212) 859-4000
Either party may change its notice address above to a different
address by giving the other party written notice of such change.
10.5 ASSIGNMENT. This Purchase Agreement will be binding
upon and inure to the benefit of the successors of each of the
parties hereto, but shall not be assignable by either party
without the prior written consent of the other.
10.6 NO THIRD PARTIES. Neither this Purchase Agreement
nor any provisions set forth in this Purchase Agreement is
intended to, or shall, create any rights in or confer any
benefits upon any person other than the parties to this Purchase
Agreement and their respective successors and permitted assigns.
10.7 INCORPORATION BY REFERENCE. The Appendices and
Schedules to this Purchase Agreement constitute integral parts of
this Purchase Agreement and are hereby incorporated into this
Purchase Agreement by this reference.
10.8 GOVERNING LAW. This Purchase Agreement will be
governed by and construed in accordance with the internal
substantive laws of the State of Delaware.
10.9 COUNTERPARTS. More than one counterpart of this
Purchase Agreement may be executed by the parties hereto, and
each fully executed counterpart shall be deemed an original
without production of the others.
10.10 COMPLETE AGREEMENT. This Purchase Agreement sets
forth the entire understanding of the parties hereto with respect
to the subject matter of this Purchase Agreement and supersedes
all prior letters of intent, agreements, covenants, arrangements,
communications, representations, or warranties, whether oral or
written, by any officer, employee, or representative of either
party relating thereto.
10.11 POST-CLOSING COVENANTS. For a period of five years
after the Closing Date, neither Seller nor any parent, subsidiary
or other affiliate of Seller, including, without limitation,
Siebe plc, shall:
(A) directly or indirectly engage in any Competitive
Business (as defined below);
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(B) directly or indirectly induce or attempt to
induce any employee, consultant, independent contractor,
supplier, customer, or licensor of the Company or any
Company Subsidiary to terminate his or her employment or
other relationship with the Company or any Company
Subsidiary; or
(C) except as otherwise permitted pursuant to
Sections 7.2 and 7.3 hereof, use for its own benefit or
disclose to or use for the benefit of any person or entity
other than the Buyer or any subsidiary or other affiliate of
Buyer, including without limitation, the Company, any
information not already lawfully available to the public
concerning any Buyer Intellectual Property (as defined
below).
For purposes of this Section 10.11, (i) "Competitive
Business" shall mean any business or activity which is
competitive with the development, design, manufacture, sale, or
servicing of burn-in/test sockets and plastic carriers as such
business is as of the Closing Date conducted or proposed to be
conducted by the Company or the Company Subsidiaries; and (ii)
"Buyer Intellectual Property" shall mean the Company's rights as
of the Closing consisting of, conferred by or otherwise relating
to any of the following: (v) patents and patent applications
(including all renewals, extensions or modifications thereof);
(w) trade secrets (including, without limitation, know-how,
inventions, computerized data and information, computer programs,
business records, files and data, discoveries, formulae,
production outlines, product designs, mask works, manufacturing
information, processes and techniques, testing and quality
control processes and techniques, drawings and customer lists);
(x) trademarks, service marks, and applications therefor;
(y) copyrights; and (z) trade names. Notwithstanding the
foregoing, nothing herein shall be deemed to affect the ability
of the Seller or its affiliates to (a) acquire up to 10% of any
class of securities of any issuer that is traded on a recognized
stock exchange or (b) to acquire securities or assets of any
entity if the revenues derived by such entity from a Competitive
Business constitutes less than 50% of the consolidated revenues
of such entity, and the Seller and its affiliates (i) seek in
good faith to dispose of such Competitive Business for fair value
as promptly as practicable after such acquisition and (ii) do not
disclose any Buyer Intellectual Property to such Competitive
Business.
- 34 -
<PAGE>
IN WITNESS WHEREOF, the duly authorized officers or
representatives of the parties hereto have duly executed this
Purchase Agreement as of the date first written above.
UL AMERICA, INC.
By:/S/ JOSHUA A. HAUSER
Name: Joshua A. Hauser
Title: President
WELLS ELECTRONICS, INC.
By:/S/ RICHARD J. MULLIN
Name: Richard J. Mullin
Title: President
PCD INC.
By:/S/ JOHN L. DWIGHT, JR.
Name: John L. Dwight, Jr.
Title: Chairman of the Board
- 35 -
<PAGE>
GUARANTY
The undersigned hereby (i) joins the representations
and warranties applicable to Guarantor under Section 3.1 of the
foregoing Purchase Agreement, (ii) agrees to be bound by the
provisions of Section 10.11 of the foregoing Purchase Agreement
and (iii) unconditionally guaranties the full and punctual
performance by the Seller and/or the Company of all of the
obligations and liabilities of the Seller and/or the Company
under or in respect of the foregoing Purchase Agreement. The
obligations of the undersigned under this Guaranty are primary,
and no recourse need be had by Buyer against the Seller or the
Company before proceeding against the undersigned. The
undersigned hereby waives presentment, protest, demand or notice
of any kind, and all other suretyship defenses, and consents that
no extension or other indulgence granted to the Seller or the
Company, and no discharge or release of the Seller or the Company
or any other party primarily liable under the Purchase Agreement,
shall discharge or affect the liability of the undersigned. The
undersigned hereby submits to the jurisdiction of the courts of
the Commonwealth of Massachusetts and the United States District
Court for the District of Massachusetts, in each case sitting in
Boston, Massachusetts, in any action or proceeding arising out of
or relating to this Guaranty. The undersigned hereby waives any
objection it may have to venue to any such action or proceeding
and to the defense of an inconvenient forum with respect thereto.
The undersigned consents to service of process in the manner
provided for notices in the foregoing Purchase Agreement.
SIEBE PLC
By:/S/ COLIN P. BONSEY
Name: Colin P. Bonsey
Title: Director of Planning
- 36 -
<PAGE>
APPENDIX A
CERTAIN DEFINITIONS
The following terms have the meanings set forth below where
used in the Purchase Agreement and identified with initial
capital letters.
TERM DEFINITION
Buyer As defined in the Preamble to the
Purchase Agreement.
Adjustment As determined under Section 2.3 of
the Purchase Agreement.
Base-Line Net Worth As defined in Section 2.3(E) of the
Purchase Agreement.
Business As defined in Recital A to the
Purchase Agreement.
Business Condition The financial and operating
condition of the Company and the
Company Subsidiaries taken as a
whole.
Chief Executive Officer Richard J. Mullin
Claim As defined in Section 8.3(A) of the
Purchase Agreement.
Claimant As defined in Section 8.3 of the
Purchase Agreement.
Closing As defined in Section 6.1 of the
Purchase Agreement.
Closing Date As defined in Section 6.2 of the
Purchase Agreement.
Closing Date Balance Sheet As defined in Section 2.3(B) of the
Purchase Agreement.
Closing Net Worth As defined in Section 2.3(F) of the
Purchase Agreement.
Company Wells Electronics, Inc.
Company Subsidiaries As defined in Section 3.2(B) of the
Purchase Agreement.
- 1 -
<PAGE>
APPENDIX A
DOCUMENTS TO BE DELIVERED
BY SELLER AT CLOSING
(continued)
Default An occurrence which constitutes a
breach or default under a contract,
order, or other commitment, after
the expiration of any grace period
provided without cure.
Defending Party As defined in Section 8.3(B) of the
Purchase Agreement.
Draft Closing Date Balance As defined in Section 2.3 of the
Sheet Purchase Agreement.
Encumbrance Any encumbrance or lien, including,
without limitation, any mortgage,
judgment lien, materialman's lien,
mechanic's lien, security interest,
encroachment, easement, or other
restriction, in each case having an
adverse effect on possession, use,
or enjoyment of the thing or right
so encumbered.
Environmental, Health and All applicable federal, state,
Safety Laws local and foreign statutes,
regulations, By-laws rules and
ordinances, judicial and
administrative orders, contractual
obligations and common laws
concerning human health and safety,
or pollution or protection of the
environment, including without
limitation all those relating to
(a) personal injury or property
damage arising from actual, alleged
or potential environmental
contamination, or (b) the presence,
use, production, generation,
handling, transportation,
treatment, storage, disposal,
distribution, labeling, testing,
processing, discharge, release,
threatened release, control, or
cleanup of any Hazardous Materials
each as amended and as in effect as
of the date hereof.
Guarantor Siebe plc
Hart-Scott-Rodino Act The Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as
amended, and the rules and
regulations thereunder, as amended.
- 2 -
<PAGE>
APPENDIX A
DOCUMENTS TO BE DELIVERED
BY SELLER AT CLOSING
(continued)
Hazardous Materials Any material or condition defined as
"hazardous" under an
Environmental, Health and Safety
Law, including without limitation,
the following:
(1) Asbestos;
(2) "[H]azardous substances,"
"pollutants" or
Comprehensive Environmental
Response, Compensation and
Liability Act;
(3) "[H]"azardous air
pollutants" under Section
112(b) of the Clean Air Act;
(4) "[I]mminently hazardous
chemical substances" under
Section 7 of the Toxic
Substances Control Act; and
(5) "[H]"azardous waste" under
Section 1004(5) of the Solid
Waste Disposal Act or under
Section 6003(5) of the
Resource Recovery and
Conservation Act.
Indemnitor As defined in Section 8.3 of the
Purchase Agreement.
Intellectual Property Rights consisting of, conferred by,
or otherwise relating to -
(1) Patents and patent
applications (including all
renewals, extensions, or
modifications thereof);
(2) Trade secrets, including
without limitation, know-how,
inventions, computerized data
and information, computer
programs, business records,
files and data, discoveries,
formulate, production
outlines, product designs,
mask works, manufacturing
information, processes and
techniques, testing and
quality control processes and
techniques, drawings and
customer lists;
- 3 -
<PAGE>
APPENDIX A
DOCUMENTS TO BE DELIVERED
BY SELLER AT CLOSING
(continued)
(3) Trademarks, service marks,
and applications therefor;
(4) Copyrights; and
(5) Trade names.
Knowledge Means actual knowledge, without
independent investigation.
Material Event Any event, condition, circumstance,
or occurrence which has had a
material and adverse effect on the
Company and the company
Subsidiaries, taken as a whole.
Morgan Stanley Morgan Stanley & Co., Incorporated
Neutral As defined in Section 7.4(C)(2) of
the Purchase Agreement.
Owns or Ownership Such ownership as confers upon the
party or person having a good and
marketable title to and control
over the thing or right owned, free
and clear of any and all
Encumbrances except Permitted
encumbrances.
Prime Rate The per annum rate of interest
published as such from time to time
in the Money Rates column of The
Wall Street Journal (Eastern
Edition). For all purposes of this
Purchase Agreement, interest at the
Prime Rate shall be calculated on
the basis of the actual number of
days elapsed in the relevant period
over a year of 365 or 366 days, as
the case may be.
Products As defined in Recital A to the
Purchase Agreement.
Purchase Price As defined in Section 2.2 of the
Purchase Agreement.
Purchase Agreement As defined in the Preamble to the
Purchase Agreement.
Seller As defined in the Preamble to the
Purchase Agreement.
- 4 -
<PAGE>
APPENDIX A
DOCUMENTS TO BE DELIVERED
BY SELLER AT CLOSING
(continued)
Shares As defined in Recital B to the
Purchase Agreement.
U.K. GAAP United Kingdom generally accepted
accounting principles as in effect
on the date hereof.
U.S. GAAP United States generally accepted
accounting principles as in effect
on the date hereof.
Wells Japan As defined in Section 3.2(A) of the
Purchase Agreement.
Wells Singapore As defined in Section 3.2(A) of the
Purchase Agreement.
- 5 -
<PAGE>
APPENDIX B
DOCUMENTS TO BE DELIVERED
BY SELLER AT THE CLOSING
1. Certificate as to the good standing of Seller (as of the
date not earlier than ten (10) days prior to the Closing)
in the State of Delaware.
2. A certificate signed by the Secretary or an Assistant
Secretary of Seller verifying the authorization of the
execution, delivery, and performance of the Purchase
Agreement by Seller and the consummation of the
transactions contemplated by the Purchase Agreement.
3. A certificate signed by the Secretary or an Assistant
Secretary of Seller dated as of the Closing Date as to the
incumbency and signatures of officers of Seller.
4. A certificate signed by the President or any Vice
President and the Secretary or any Assistant Secretary of
Seller dated as of the Closing Date confirming that all of
the representations and warranties of Seller contained in
Sections 3.1 and 3.2 of the Purchase Agreement were true,
accurate, and complete as of the date of the Purchase
Agreement and as of the Closing Date (as if such
representations and warranties had been made anew as of
the Closing except with respect to the effect of
transactions contemplated or permitted by the Purchase
Agreement).
5. A certificate signed by the President or any Vice
President and the Secretary or any Assistant Secretary of
the Company dated as of the Closing Date confirming that
all of the representations and warranties of the Company
contained in Sections 3.1 and 3.2 of the Purchase
Agreement were true, accurate, and complete as of the date
of the Purchase Agreement and as of the Closing Date (as
if such representations and warranties had been made anew
as of the Closing except with respect to the effect of
transactions contemplated or permitted by this Purchase
Agreement and with respect to the effect of the passage of
time and ordinary course conduct of business upon dated
material in the Disclosure Schedules) (but only to the
extent that such effect upon the Schedules do not
constitute a material adverse effect on the Company or the
Company Subsidiaries)).
6. Certificate as to the good standing of the Company (as of
the date not earlier than ten (10) days prior to the
Closing Date) in the State of Indiana.
7. Evidence of Section 338 election.
8. Opinion of counsel.
9. Resignations.
10. Section 7.5 financial statements, if available
- 1 -
<PAGE>
APPENDIX B
DOCUMENTS TO BE DELIVERED
BY SELLER AT THE CLOSING
(continued)
11. Evidence of Section 4.10 Agreements, if obtained.
- 2 -
<PAGE>
APPENDIX C
DOCUMENTS TO BE DELIVERED
BY BUYER AT THE CLOSING
1. Certificate as to the good standing of Buyer (as of the
date not earlier than ten (10) days prior to the Closing)
in the Commonwealth of Massachusetts.
2. A certificate signed by the Clerk or an Assistant Clerk of
Buyer verifying the authorization of the execution,
delivery, and performance of the Purchase Agreement by
Buyer and the consummation of the transactions
contemplated by the Purchase Agreement.
3. A certificate signed by the Clerk or an Assistant Clerk of
Buyer dated as of the Closing Date as to the incumbency
and signatures of officers of Buyer.
4. A certificate signed by the President or any Vice
President and the Clerk or any Assistant Clerk of Buyer
dated as of the Closing Date confirming that all of the
representations and warranties of Buyer contained in
Section 3.3 of the Purchase Agreement were true, accurate,
and complete as of the date of the Purchase Agreement and
as of the Closing Date (as if such representations and
warranties had been made anew as of the Closing Date
except with respect to the effect of transactions
contemplated or permitted by the Purchase Agreement).
- 1 -
<PAGE>
TABLE OF CONTENTS
PREAMBLE. . . . . . . . .. . . . . . . . . . . . . . . . . . .1
RECITALS. . . . . . . . . . . . . . . . . . . . . . . . . . . 1
TERMS AND CONDITIONS. . . . . . . . . . . . . . . . . . . . . 1
ARTICLE I GENERAL PROVISIONS. . . . . . . . . . . . . . . . .1
1.1 Definitions. . . . . . . . . . . . . . . . . . . . .1
1.2 Other Definitions And Meanings; Interpretation. . . 1
ARTICLE II PURCHASE AND SALE. . . . . . . . . . . . . . . . .2
2.1 Transaction. . . . . . . . . . . . . . . . . . . . .2
2.2 Purchase Price. . . . . . . . . . . . . . . . . . . 2
2.3 Adjustment. . . . . . . . . . . . . . . . . . . . . 2
(A) Preparation of Closing Balance Sheet. . . .. 2
(B) Informal Negotiations; Dispute Resolution. . 2
(C) Fees and Expenses. . . . . . . . . . . . . . 3
(D) Access. . . . . . . . . . . . . . . . . . . .3
(E) Base-Line Net Worth. . . . . . . . . . . . . 3
(F) Determination of Closing Net Worth. . . . . .3
(G) Amount of the Adjustment. . . . . . . . . . .4
2.4 Payment of Purchase Price. . . . . . . . . . . . . .4
(A) Payment at Closing. . . . . . . . . . . . . .4
(B) Payment of the Adjustment. . . . . . . . . . 5
2.5 Refund of the Adjustment. . . . . . . . . . . . . . 5
2.6 Method of Payment. . . . . . . . . . . . . . . . . .5
(A) Directed Payments. . . . . . . . . . . . . . 5
(B) Other Payments. . . . . . . . . . . . . . . .5
ARTICLE III REPRESENTATIONS AND WARRANTIES. . . . . . . . . .5
3.1 Seller's General Representations and Warranties. . .5
(A) Organization and Existence. . . . . . . . . .5
(B) Power and Authority. . . . . . . . . . . . . 5
(C) No Conflict. . . . . . . . . . . . . . . . . 6
(D) Capitalization. . . . . . . . . . . . . . . .6
- i -
<PAGE>
(E) Brokers. . . . . . . . . . . . . . . . . . . 6
3.2 Representations and Warranties Concerning
the Company. . . . . . . . . . . . . . . . . . . .6
(A) Incorporation, Subsidiaries, Branches. . . . 7
(B) Financial Statements. . . . . . . . . . . . .7
(C) Undisclosed Liabilities. . . . . . . . . . . 8
(D) Taxes. . . . . . . . . . . . . . . . . . . . 8
(E) Real Property. . . . . . . . . . . . . . . . 8
(F) Tangible Personal Property. . . . . . . . . 9
(G) Intellectual Property. . . . . . . . . . . . 9
(H) Litigation. . . . . . . . . . . . . . . . . 10
(I) Contracts. . . . . . . . . . . . . . . . . .10
(J) Employees and Employee Benefits. . . . . . .11
(K) Compliance With Environmental, Health
and Safety Laws. . . . . . . . . . . . . .12
(L) Compliance With Other Laws. . . . . . . . . 13
(M) Absence of Certain Changes or Events. . . . 14
(N) Insurance. . . . . . . . . . . . . . . . . .14
3.3 Disclaimer. . . . . . . . . . . . . . . . . . . . .15
3.4 Buyer's Representations and Warranties. . . . . . .15
(A) Organization and Existence. . . . . . . . . 15
(B) Power and Authority. . . . . . . . . . . . .15
(C) No Conflict. . . . . . . . . . . . . . . . .15
(D) Brokers. . . . . . . . . . . . . . . . . . .15
(E) Buyer's Net Worth. . . . . . . . . . . . . .16
(F) Purchase for Investment. . . . . . . . . . .16
ARTICLE IV ACTIONS BEFORE CLOSING. . . . . . . . . . . . . .16
4.1 General. . . . . . . . . . . . . . . . . . . . . . 16
4.2 Access to Records. . . . . . . . . . . . . . . . . 16
4.3 Interim Conduct of the Business. . . . . . . . . . 16
4.4 Buyer's Approval of Certain Transactions. . . . . .17
4.5 Consents to Assignment. . . . . . . . . . . . . . .18
4.6 Coordination of Public Announcements. . . . . . . .18
4.7 Hart-Scott-Rodino Notification. . . . . . . . . . .18
4.8 Other Regulatory Approvals. . . . . . . . . . . . .19
4.9 Section 338 Election by Seller. . . . . . . . . . .19
4.10 Employee Agreements. . . . . . . . . . . . . . . . 19
ARTICLE V CONDITIONS. . . . . . . . . . . . . . . . . . . . 19
5.1 Conditions to Buyer's Obligations. . . . . . . . . 19
- ii -
<PAGE>
5.2 Conditions to Seller's Obligations. . . . . . . . .21
ARTICLE VI CLOSING. . . . . . . . . . . . . . . . . . . . . 22
6.1 The Closing. . . . . . . . . . . . . . . . . . . . 22
6.2 Time, Date, and Place Of Closing. . . . . . . . . .22
6.3 Buyer's Obligations. . . . . . . . . . . . . . . . 22
6.4 Seller's Obligations. . . . . . . . . . . . . . . .22
ARTICLE VII ACTIONS AFTER CLOSING. . . . . . . . . . . . . .22
7.1 Further Conveyances. . . . . . . . . . . . . . . . 22
7.2 Access to Former Business Records. . . . . . . . . 23
7.3 Access to Former Employees. . . . . . . . . . . . .23
7.4 Dispute Resolution. . . . . . . . . . . . . . . . .23
(A) Dispute Notice. . . . . . . . . . . . . . . 23
(B) Informal Negotiations. . . . . . . . . . . .23
(C) Dispute Resolution Proceedings. . . . . . . 23
(1) Designation of Representatives. . . .24
(2) Selection of Neutral. . . . . . . . .24
(3) Procedures and Process. . . . . . . .24
(4) Decision. . . . . . . . . . . . . . .25
(D) Equitable Relief. . . . . . . . . . . . . . 25
(E) Binding Effect. . . . . . . . . . . . . . . 25
7.5 Financial Statements. . . . . . . . . . . . . . . .25
7.6 Tax Returns. . . . . . . . . . . . . . . . . . . . 26
ARTICLE VIII INDEMNIFICATION. . . . . . . . . . . . . . . . 27
8.1 Indemnification of Seller. . . . . . . . . . . . . 27
8.2 Indemnification of Buyer. . . . . . . . . . . . . .27
8.3 Claims. . . . . . . . . . . . . . . . . . . . . . .27
(A) Notice. . . . . . . . . . . . . . . . . . . 27
(B) Responsibility for Defense. . . . . . . . . 28
(C) Right to Participate. . . . . . . . . . . . 28
(D) Settlement. . . . . . . . . . . . . . . . . 28
8.4 Disputed Responsibility. . . . . . . . . . . . . . 29
8.5 Dollar Limitation on Indemnification. . . . . . . .29
8.6 Time Limitations on Indemnification. . . . . . . . 29
8.7 Exclusive Remedy. . . . . . . . . . . . . . . . . .30
ARTICLE IX AMENDMENT, WAIVER, TERMINATION, AND
CANCELLATION. . . . . . . . . . . . . . . . . . . . . . 30
- iii -
<PAGE>
9.1 Amendment. . . . . . . . . . . . . . . . . . . . . 30
9.2 Waiver. . . . . . . . . . . . . . . . . . . . . . 30
9.3 Termination. . . . . . . . . . . . . . . . . . . . 30
ARTICLE X MISCELLANEOUS. . . . . . . . . . . . . . . . . . 31
10.1 Cooperation. . . . . . . . . . . . . . . . . . . . 31
10.2 Severability. . . . . . . . . . . . . . . . . . . .31
10.3 Costs and Expenses. . . . . . . . . . . . . . . . .31
10.4 Notices. . . . . . . . . . . . . . . . . . . . . . 31
10.5 Assignment. . . . . . . . . . . . . . . . . . . . .33
10.6 No Third Parties. . . . . . . . . . . . . . . . . .33
10.7 Incorporation By Reference. . . . . . . . . . . . .33
10.8 Governing Law. . . . . . . . . . . . . . . . . . . 33
10.9 Counterparts. . . . . . . . . . . . . . . . . . . .33
10.10 Complete Agreement. . . . . . . . . . . . . . . . .33
10.11 Post-Closing Covenants. . . . . . . . . . . . . . .33
- iv -
<EXHIBIT> EXHIBIT 2.2
Undertaking to Furnish Copies of Omitted Schedules to
Share Purchase Agreement dated as of November 17, 1997.
PCD Inc. (the "Registrant") is not filing as exhibits to its
Current Report on Form 8-K dated January 9, 1998, copies of the
schedules to the Share Purchase Agreement dated as of November
17, 1997 among UL America, Inc., Wells Electronics, Inc. and the
Registrant, which Agreement is filed as Exhibit 2.1 thereto.
The Registrant undertakes to furnish to the Securities and
Exchange Commission, upon request, copies of such omitted
schedules.
Dated: January 9, 1998
PCD INC. (Registrant)
By: /s/ John L. Dwight, Jr.
-------------------------
John L. Dwight, Jr.
Chairman of the Board,
President and Chief
Executive Officer
<EXHIBIT> EXHIBIT 10.1
LOAN AGREEMENT
BY AND AMONG
PCD INC.
AND
FLEET NATIONAL BANK, AS COLLATERAL AGENT,
ADMINISTRATIVE AGENT AND A LENDER
AND
THE OTHER FINANCIAL INSTITUTIONS NOW OR
HEREAFTER PARTIES HERETO
$30,000,000 SECURED TERM LOAN A
AND
$40,000,000 SECURED TERM LOAN B
AND
$20,000,000 SECURED REVOLVING CREDIT LOAN
DECEMBER 26, 1997
<PAGE>
INDEX TO
LOAN AGREEMENT
PAGE
ARTICLE 1. DEFINITIONS AND ACCOUNTING AND OTHER TERMS . . . . . . . . . . . 1
Section 1.1. Certain Defined Terms. . . . . . . . . . . . . . . . . . . . . 1
Section 1.2. Accounting Terms. . . . . . . . . . . . . . . . . . . . . 17
Section 1.3. Other Terms. . . . . . . . . . . . . . . . . . . . . . . .17
ARTICLE 2. AMOUNT AND TERMS OF THE LOANS . . . . . . . . . . . . . . . . . .17
Section 2.1. The Loans. . . . . . . . . . . . . . . . . . . . . . . . .17
Section 2.1.0. The Revolving Credit Loans . . . . . . . . . . . . 17
Section 2.1.1. Term Loan A . . . . . . . . . . . . . . . . . . . .19
Section 2.1.2. Term Loan B . . . . . . . . . . . . . . . . . . . .20
Section 2.2. Interest and Fees on the Loans. . . . . . . . . . . . . . 20
Section 2.2.1. Interest. . . . . . . . . . . . . . . . . . . . . 20
Section 2.2.2. Fees . . . . . . . . . . . . . . . . . . . . . . . 21
Section 2.2.3. Increased Costs - Capital . . . . . . . . . . . . .22
Section 2.3. Notations . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 2.4. Computation of Interest . . . . . . . . . . . . . . . . . 24
Section 2.5. Time of Payments and Prepayments in Immediately
Available Funds . . . . . . . . . . . . . . . . . . . . . . . . . . .24
Section 2.5.1. Time . . . . . . . . . . . . . . . . . . . . . . . 24
Section 2.5.2. Setoff, etc . . . . . . . . . . . . . . . . . . . .25
Section 2.5.3. Unconditional Obligations and No Deductions . . . .25
Section 2.6. Prepayment and Certain Payments . . . . . . . . . . . . .28
Section 2.6.1. Mandatory Payments . . . . . . . . . . . . . . . .28
Section 2.6.2. Voluntary Prepayments . . . . . . . . . . . . . . 29
Section 2.6.3. Prepayment of Libor Loans . . . . . . . . . . . . 30
Section 2.6.4. Permanent Reduction of Commitment . . . . . . . ..30
Section 2.7. Payment on Non-Business Days . . . . . . . . . . . . . . .30
Section 2.8. Use of Proceeds . . . . . . . . . . . . . . . . . . . . . 30
Section 2.9. Special Libor Loan Provisions . . . . . . . . . . . . . . 30
Section 2.9.1. Requests . . . . . . . . . . . . . . . . . . . . . 30
Section 2.9.2. Libor Loans Unavailable . . . . . . . . . . . . . .31
Section 2.9.3. Libor Lending Unlawful . . . . . . . . . . . . . . 32
Section 2.9.4. Additional Costs on Libor Loans . . . . . . . . . .32
Section 2.9.5. Libor Funding Losses . . . . . . . . . . . . . . . 33
Section 2.9.6. Banking Practices . . . . . . . . . . . . . . . . .34
Section 2.9.7. Borrower's Options on Unavailability or Increased
Cost of Libor Loans . . . . . . . . . . . . . . . . . . . . . . 35
Section 2.9.8. Assumptions Concerning Funding of Libor Loans . . .35
Section 2.10. Interest Rate Protection . . . . . . . . . . . . . . . . 36
ARTICLE 3. CONDITIONS OF LENDING . . . . . . . . . . . . . . . . . . . . . .36
Section 3.1. Conditions Precedent to the Commitment and to all Loans . 36
Section 3.1.1. The Commitment and Initial Loans . . . . . . . . . 36
Section 3.1.2. The Commitment and the Loans . . . . . . . . . . . 40
ARTICLE 4. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . 41
Section 4.1. Representations and Warranties of the Borrower . . . . . .41
Section 4.1.1. Organization and Existence . . . . . . . . . . . . 41
Section 4.1.2. Authorization and Absence of Defaults . . . . . . .41
Section 4.1.3. Acquisition of Consents . . . . . . . . . . . . . .41
Section 4.1.4. Validity and Enforceability . . . . . . . . . . . .42
- i -
<PAGE>
Section 4.1.5. Financial Information . . . . . . . . . . . . . . .42
Section 4.1.6. No Litigation . . . . . . . . . . . . . . . . . . .43
Section 4.1.7. Regulation U . . . . . . . . . . . . . . . . . . . 43
Section 4.1.8. Absence of Adverse Agreements . . . . . . . . . . .43
Section 4.1.9. Taxes . . . . . . . . . . . . . . . . . . . . . . .43
Section 4.1.10. ERISA . . . . . . . . . . . . . . . . . . . . . . 44
Section 4.1.11. Ownership of Properties . . . . . . . . . . . . .44
Section 4.1.12. Accuracy of Representations and Warranties . . . .45
Section 4.1.13. No Investment Company . . . . . . . . . . . . . . 45
Section 4.1.14. Solvency, etc . . . . . . . . . . . . . . . . . . 45
Section 4.1.15. Approvals . . . . . . . . . . . . . . . . . . . . 46
Section 4.1.16. Ownership Interests . . . . . . . . . . . . . . . 46
Section 4.1.17. Licenses, Registrations, Compliance with
Laws, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 4.1.18. Principal Place of Business; Books and Records . .46
Section 4.1.19. Subsidiaries . . . . . . . . . . . . . . . . . . .46
Section 4.1.20. Copyright . . . . . . . . . . . . . . . . . . . . 46
Section 4.1.21. Environmental Compliance . . . . . . . . . . . . .47
Section 4.1.22. Material Agreements, etc . . . . . . . . . . . . .47
Section 4.1.23. Patents, Trademarks and Other Property Rights . . 47
Section 4.1.24. Related Transaction Documents . . . . . . . . . . 48
Section 4.1.25. Material Adverse Effect . . . . . . . . . . . . . 48
ARTICLE 5. COVENANTS OF THE BORROWER . . . . . . . . . . . . . . . . . . . .48
Section 5.1. Affirmative Covenants of the Borrower Other than
Reporting Requirements . . . . . . . . . . . . . . . . . . . . . . . 48
Section 5.1.1. Payment of Taxes, etc . . . . . . . . . . . . . . 48
Section 5.1.2. Maintenance of Insurance . . . . . . . . . . .. . .49
Section 5.1.3. Preservation of Existence, etc . . . . . . . .. . .50
Section 5.1.4. Compliance with Laws, etc . . . . . . . . . . . . 50
Section 5.1.5. Visitation Rights . . . . . . . . . . . . . . . . 50
Section 5.1.6. Keeping of Records and Books of Account . . . . . 50
Section 5.1.7. Maintenance of Properties, etc . . . . . . . .. . .50
Section 5.1.8. Post-Closing Items . . . . . . . . . . . . .. . .50
Section 5.1.9. Other Documents, etc . . . . . . . . . . . . .. . .50
Section 5.1.10. Minimum Fixed Charge Coverage Ratio . . . . .. . .51
Section 5.1.11. Minimum Quick Ratio . . . . . . . . . . . . .. . .51
Section 5.1.12. Maximum Ratio of Total Senior Debt to EBITDA . . 52
Section 5.1.12A. Maximum Ratio of Total Indebtedness for
Borrowed Money to EBITDA . . . . . . . . . . . . . . . . .. . .52
Section 5.1.13. Officer's Certificates and Requests . . . . .. . .53
Section 5.1.14. Depository . . . . . . . . . . . . . . . . . . . 53
Section 5.1.15. Chief Executive Officer . . . . . . . . . . .. . .53
Section 5.1.16. Notice of Purchase of Real Estate and Leases . . 53
Section 5.1.17. Additional Assurances . . . . . . . . . . . .. . .54
Section 5.1.18. Appraisals . . . . . . . . . . . . . . . . . . . 54
Section 5.1.19. Environmental Compliance . . . . . . . . . . . . 54
Section 5.1.20. Remediation . . . . . . . . . . . . . . . . .. . .54
Section 5.1.21. Site Assessments . . . . . . . . . . . . . . . . 54
Section 5.1.22. Indemnity . . . . . . . . . . . . . . . . . .. . .55
Section 5.1.23. Trademarks, Copyrights, etc . . . . . . . . .. . .55
Section 5.1.24. Minimum Interest Coverage Ratio . . . . . . .. . .55
Section 5.2. Negative Covenants of the Borrower . . . . . . .. . .56
Section 5.2.1. Liens, etc . . . . . . . . . . . . . . . . . .. . .56
Section 5.2.2. Assumptions, Guaranties, etc. of Indebtedness of
Other Persons . . . . . . . . . . . . . . . . . . . . . . . . .57
Section 5.2.3. Acquisitions, Dissolution, etc . . . . . . . . . .58
Section 5.2.4. Change in Nature of Business . . . . . . . . . . .58
- ii -
<PAGE>
Section 5.2.5. Ownership . . . . . . . . . . . . . . . . . . . . 56
Section 5.2.6. Sale and Leaseback . . . . . . . . . . . . . . . . 57
Section 5.2.7. Sale of Accounts, etc . . . . . . . . . . . . . . .57
Section 5.2.8. Indebtedness . . . . . . . . . . . . . . . . . . . 57
Section 5.2.9. Other Agreements . . . . . . . . . . . . . . . . . 58
Section 5.2.10. Prepayments of Indebtedness . . . . . . . . . . . 58
Section 5.2.11. Dividends, Payments and Distributions . . . . . . 58
Section 5.2.12. Investments in or to Other Persons . . . . . . . .58
Section 5.2.13. Transactions with Affiliates . . . . . . . . . . .59
Section 5.2.14. Change of Fiscal Year, Accounting Policies . . . .59
Section 5.2.15. Subordination of Claims . . . . . . . . . . . . 59
Section 5.2.16. Compliance with ERISA . . . . . . . . . . . . . . 59
Section 5.2.17. Capital Expenditures . . . . . . . . . . . . . . .59
Section 5.2.18. Hazardous Waste . . . . . . . . . . . . . . . . . 60
Section 5.2.19 Other Restrictions on Liens . . . . . . . . . . . 60
Section 5.2.20 Limitation on Creation of Subsidiaries, etc. . . . 60
Section 5.3. Reporting Requirements . . . . . . . . . . . . . . . . . .60
ARTICLE 6. EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . .62
Section 6.1. Events of Default . . . . . . . . . . . . . . . . . . . .62
ARTICLE 7. REMEDIES OF LENDERS . . . . . . . . . . . . . . . . . . . . . . .64
ARTICLE 8. AGENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .65
Section 8.1. Appointment . . . . . . . . . . . . . . . . . . . . . . . 65
Section 8.2. Powers; General Immunity . . . . . . . . . . . . . . . . .65
Section 8.2.1. Duties Specified . . . . . . . . . . . . . . . . . 65
Section 8.2.2. No Responsibility For Certain Matters . . . . . . .66
Section 8.2.3. Exculpatory Provisions . . . . . . . . . . . . . . 66
Section 8.2.4. Agent Entitled to Act as Lender . . . . . . . . . .67
Section 8.3. Representations and Warranties; No Responsibility for
Appraisal of Creditworthiness . . . . . . . . . . . . . . . . . . . .67
Section 8.4. Right to Indemnity . . . . . . . . . . . . . . . . . 67
Section 8.5. Payee of Note Treated as Owner . . . . . . . . . . . 67
Section 8.6. Resignation by Agent . . . . . . . . . . . . . . . . 68
Section 8.7. Successor Agent . . . . . . . . . . . . . . . . . . .68
ARTICLE 9. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . .69
Section 9.1. Consent to Jurisdiction and Service of Process . . . . . .69
Section 9.2. Rights and Remedies Cumulative . . . . . . . . . . . . . .69
Section 9.3. Delay or Omission not Waiver . . . . . . . . . . . . . . .70
Section 9.4. Waiver of Stay or Extension Laws . . . . . . . . . . . . .70
Section 9.5. Amendments, etc . . . . . . . . . . . . . . . . . . . . . 70
Section 9.6. Addresses for Notices, etc . . . . . . . . . . . . . . . .71
Section 9.7. Costs, Expenses and Taxes . . . . . . . . . . . . . . . . 72
Section 9.8. Participations . . . . . . . . . . . . . . . . . . . . . .72
Section 9.9. Binding Effect; Assignment . . . . . . . . . . . . . . . .72
Section 9.10. Actual Knowledge . . . . . . . . . . . . . . . . . . . . 73
Section 9.11. Substitutions and Assignments . . . . . . . . . . . . . .73
Section 9.12. Payments Pro Rata . . . . . . . . . . . . . . . . . . . .75
Section 9.13. Indemnification . . . . . . . . . . . . . . . . . . . . .75
Section 9.14. Governing Law . . . . . . . . . . . . . . . . . . . . . .77
Section 9.15. Severability of Provisions . . . . . . . . . . . . . . . 77
Section 9.16. Headings . . . . . . . . . . . . . . . . . . . . . . . . 77
Section 9.17. Counterparts . . . . . . . . . . . . . . . . . . . . . . 77
- iii -
<PAGE>
SCHEDULE OF EXHIBITS
EXHIBIT 1.1 - EQUITY INVESTMENTS, OWNERSHIP INTERESTS AND SUBSIDIARIES
EXHIBIT 1.2 - RELATED TRANSACTION DOCUMENTS
EXHIBIT 1.4 - FORM OF INTEREST RATE ELECTION
EXHIBIT 1.5 - FORM OF REVOLVING CREDIT NOTE
EXHIBIT 1.6 - FORM OF TERM NOTE - TERM NOTE A
EXHIBIT 1.7 - FORM OF TERM NOTE - TERM NOTE B
EXHIBIT 1.8 - PERMITTED ENCUMBRANCES
EXHIBIT 1.9 - PRO RATA SHARES
EXHIBIT 1.10 - FORM OF REQUEST
EXHIBIT 1.12 - PROJECTIONS
EXHIBIT 3.1.1.8 - PERMITTED INDEBTEDNESS AND CAPITALIZED LEASES
EXHIBIT 3.1.1.10 - FORM OF COMPLIANCE CERTIFICATE
EXHIBIT 4.1.1 - FOREIGN QUALIFICATIONS
EXHIBIT 4.1.2 - AUTHORIZATIONS
EXHIBIT 4.1.3 - CONSENTS
EXHIBIT 4.1.6 - LITIGATION
EXHIBIT 4.1.8 - ADVERSE AGREEMENTS
EXHIBIT 4.1.9 - TAXES
EXHIBIT 4.1.11 - REAL PROPERTY
EXHIBIT 4.1.17 - GOVERNMENTAL PERMITS
EXHIBIT 4.1.20 - COPYRIGHTS
EXHIBIT 4.1.21 - HAZARDOUS WASTE
EXHIBIT 4.1.22 - MATERIAL CONTRACTS
EXHIBIT 4.1.23 - INTELLECTUAL PROPERTY
EXHIBIT 5.2.2 - GUARANTIES
EXHIBIT 5.2.13 - TRANSACTIONS WITH AFFILIATES
EXHIBIT 9.11.1 - FORM OF SUBSTITUTION AGREEMENT
- iv -
<PAGE>
LOAN AGREEMENT
PCD INC., a Massachusetts corporation with a principal place
of business at 2 Technology Drive, Peabody, Massachusetts 01960
(the "Borrower"), FLEET NATIONAL BANK, a national banking
association organized under the laws of the United States and
having an office at One Federal Street, Boston, Massachusetts
02110 (hereinafter sometimes the "Agent" as collateral agent and
administrative agent for itself, sometimes "Fleet" and sometimes
a "Lender") and each of the other Lenders who now and/or
hereafter become parties to this Agreement pursuant to the terms
of SECTION 9.11 hereof, and such Lenders, Fleet State Street Bank
and Trust Company, a Massachusetts trust company, having an
office at 225 Franklin Street, Boston, Massachusetts 02110
(hereinafter "State Street" and sometimes a "Lender"),
Imperial Bank, a California bank corporation, having an office at
2015 Manhattan Beach Boulevard, Redondo Beach, California 90278
(hereinafter "Imperial" and sometimes a "Lender", and Eastern
Bank, a Massachusetts state-chartered savings bank, having an
address at 53 State Street, 13th Floor, Boston, Massachusetts
02109 (hereinafter "Eastern" and sometimes a "Lender") as
Lenders, hereby agree as follows:
ARTICLE 1.
DEFINITIONS AND ACCOUNTING AND OTHER TERMS
SECTION 1.1. CERTAIN DEFINED TERMS. As used in this
Agreement, the following terms shall have the following meanings
(such meanings to be equally applicable to both the singular and
plural forms of the terms defined):
"ADJUSTED LIBOR RATE" means, with respect to any Libor Loan
to be made by the Lenders for the Interest Period applicable to
such Libor Loan, the rate per annum (rounded upward, if
necessary, to the nearest 1/32 of one percent) as determined on
the basis of the offered rates for deposits in Dollars, for a
period of time comparable to such Libor Loan which appears on the
Telerate page 3750 as of 11:00 a.m. London time on the day that
is two Business Days preceding the first day of such Libor Loan;
provided, however, if the rate described above does not appear on
the Telerate System on any applicable Interest Adjustment Date,
the Adjusted Libor Rate shall be the average of four (4) such
rates (rounded upwards as described above, if necessary) for
deposits in Dollars for a period substantially equal to the
Interest Period on the Reuters Page "LIBO" (or such other page as
may replace the LIBO Page on that service for the purpose of
displaying such rates), as of 11:00 a.m. (London Time), on the
day that is two Business Days prior to the beginning of such
Interest Period.
If both the Telerate and Reuters system are unavailable,
then the rate for that date will be determined on the basis of
the offered rates for deposits in Dollars for a period of time
comparable to such Libor Loan Interest Period which are offered
to each Reference Lender by four first-class banks in the London
interbank market at approximately 11:00 a.m. London time, on the
day that is two Business Days preceding the first day of such
Libor Loan as selected by the Lender. The principal London
office of each of the four first-class London banks will be
- 1 -
<PAGE>
requested to provide a quotation of its Dollar deposit offered
rate. If at least two such quotations are provided, the rate for
that date will be the arithmetic mean of the quotations. If
fewer than two quotations are provided as requested, the rate for
that date will be determined on the basis of the rates quoted for
loans in Dollars to leading European banks for a period of time
comparable to such Libor Loan Interest Period offered by major
banks in New York City at approximately 11:00 a.m. New York City
time, on the day that its two Business Days preceding the first
day of such Libor Loan. In the event that the Reference Lenders
are unable to obtain any such quotation as provided above, it
will be deemed that the Adjusted Libor Rate pursuant to a Libor
Loan cannot be determined.
In the event that the Board of Governors of the Federal
Reserve System shall impose a "Reserve Percentage" with respect
to Libor deposits of any Reference Lender then, to the extent
that the rate determined in the foregoing paragraph does not
include a provision for such Reserve Percentage, for any period
during which such Reserve Percentage shall apply, the Adjusted
Libor Rate shall be equal to the amount determined above divided
by an amount equal to 1 minus the Reserve Percentage. If any
Reference Lender fails to provide its offered quotation to the
Agent, the Adjusted Libor Rate shall be determined on the basis
of the offered quotation of the other Reference Lender. The
Adjusted Libor Rate shall be adjusted automatically on and as of
the effective date of any change in the Libor Rate Reserve
Percentage.
"ADVANCE" and "ADVANCES" means the funding by any Lender of
all or a portion of the Loans in accordance with this Agreement.
"AFFILIATE" means singly and collectively, any Person (other
than a Subsidiary) which, directly or indirectly, is in control
of, is controlled by, or is under common control with, the
Borrower. For purposes of this definition, a Person shall be
deemed to be "controlled by" the Borrower if the Borrower
possesses, directly or indirectly, power either to (i) vote 10%
or more of the securities having ordinary voting power for the
election of directors of such Person or (ii) direct or cause the
direction of the management and policies of such Person whether
by contract or otherwise, and the legal representative, successor
or assign of any such Person.
"AGENT" means Fleet or any other Person which is at the time
in question serving as the collateral agent and the
administrative agent under the terms of Article 8 hereof and the
other Financing Documents.
"AGREEMENT" means this loan agreement, as the same may from
time to time be amended.
"A.M." means a time from and including 12 o'clock midnight
to and excluding 12 o'clock noon on any Business Day using
Eastern Standard (Daylight Savings) time.
"APPLICABLE MARGIN" means, with respect to the Revolving
Credit Loan and Term Loan A only, for each Libor Loan, two and
three quarters percent (2.75%) per annum and for each Prime Rate
Loan, one and one half percent (1.50%) per annum, provided,
however, that if, at any time on or after the receipt by the
Agent of the quarterly financial statements for the Borrower's
March 31, 1998 fiscal quarter and each subsequent Borrower fiscal
- 2 -
<PAGE>
quarter provided to the Agent by the Borrower pursuant to SECTION
5.3.3 hereof, the ratio of (a) total Senior Debt on a
consolidated basis as of the last day of the most recently ended
fiscal quarter of the Borrower to (b) EBITDA, is within the
ratios set forth below and if and so long as no Event of Default
or Default exists, the Applicable Margin shall, subject to the
last sentence of this definition, equal the rate set forth below
opposite the applicable ratio:
<TABLE>
<CAPTION>
Applicable Margin Applicable Margin
Ratio Libor Loan Prime Rate Loan
----- ---------- ---------------
<S> <C> <C>
Less than 3.00:1 and greater 2.50% 1.25%
than or equal to 2.75:1
Less than 2.75:1 and greater 2.25% 1.00%
than or equal to 2.50:1
Less than 2.50:1 and greater 2.00% 0.75%
than or equal to 2.00:1
Less than 2.00:1 and greater 1.75% 0.50%
than or equal to 1.50:1
Less than 1.50:1 1.50% 0.25%
</TABLE>
and, with respect to Term Loan B only, for each Libor Loan, three
and one quarter percent (3.25%) per annum, and for each Prime
Rate Loan, two percent (2.00%) per annum, provided, however, that
if, at any time on or after the receipt by the Agent of the
quarterly financial statements for the Borrower's March 31, 1998
fiscal quarter and each subsequent Borrower fiscal quarter
provided to the Agent by the Borrower pursuant to SECTION 5.3.3
hereof, the ratio of (a) total Senior Debt on a consolidated
basis as of the last day of the most recently ended fiscal
quarter of the Borrower to (b) EBITDA, is within the ratios set
forth below and if and so long as no Event of Default or Default
exists, the Applicable Margin shall, subject to the last sentence
of this definition, equal the rate set forth below opposite the
applicable ratio:
<TABLE>
<CAPTION>
Applicable Margin Applicable Margin
Ratio Libor Loan Prime Rate Loan
----- ---------- ---------------
<S> <C> <C>
Less than 3.00:1 and greater 3.00% 1.75%
than or equal to 2.75:1
Less than 2.75:1 and greater 2.75% 1.50%
than or equal to 2.50:1
Less than 2.50:1 and greater 2.50% 1.25%
than or equal to 2.00:1
- 3 -
<PAGE>
Less than 2.00:1 and greater 2.25% 1.00%
than or equal to 1.50:1
Less than 1.50:1 2.00% 0.75%
</TABLE>
Any change in the Applicable Margin required pursuant to the
foregoing shall become effective on the fifth Business Day after
the Agent receives the Borrower's financial statement for the
Borrower's fiscal quarter in question and a request for a rate
reduction if applicable; provided, however, that each of the
above-referenced interest rates shall remain in effect only so
long as Borrower qualifies therefor and provided further,
however, that interest rate reductions shall become final only on
the basis of Borrower's annual audited financial statements and
in the event that such annual audited financial statements
establish that the Borrower was not entitled to a rate reduction
which was previously granted, the Borrower shall, upon written
demand by the Agent, repay to the Agent for the account of each
Lender an amount equal to the excess of interest at the rate
which should have been charged based on such annual audited
financial statements and the rate actually charged on the basis
of Borrower's quarterly financial statement(s) (provided that in
the event of a dispute as to the appropriate fiscal quarter as to
which any adjustment should be allocated, the decision of the
independent accountants of the Borrower shall be made in
accordance with GAAP and shall be binding upon the Agent, the
Lenders and the Borrower absent manifest error); and provided
further, however, that in the event that Borrower fails to
provide any financial statement on a timely basis in accordance
with SECTION 5.3.3, any interest rate increase payable as a
result thereof shall be retroactively effective to the date on
which the financial statement in question should have been
received by the Agent in accordance with SECTION 5.3.3, and the
Borrower shall pay any amount due as a result thereof upon
written demand from the Agent. The Agent shall send the Borrower
written acknowledgment of each change in the Applicable Margin in
accordance with the Agent's customary procedures as in effect
from time to time, but the failure to send such acknowledgment
shall have no effect on the effectiveness or applicability of the
foregoing provisions of this definition or Borrower's obligations
with respect to payment and calculation of interest on Libor
Loans.
"AUTHORIZED REPRESENTATIVE" means such senior personnel of
the Borrower as shall be duly authorized and designated in
writing by the Borrower to execute documents, instruments and
agreements on its behalf and to perform the functions of
Authorized Representative under any of the Financing Documents.
"BORROWED MONEY" means any obligation to repay funded
Indebtedness, any Indebtedness evidenced by notes, bonds,
debentures, guaranties or similar obligations including without
limitation the Loans and any obligation to pay money under a
conditional sale or other title retention agreement, the net
aggregate rentals payable under any Capitalized Lease Obligation,
any reimbursement obligation for any letter of credit and any
obligations in respect of banker's and other acceptances or
similar obligations.
"BORROWER" has the meaning assigned in the first paragraph
of this Agreement.
"BUDGET" has the meaning assigned to such term in
SECTION 5.3.7.
- 4 -
<PAGE>
"BUSINESS CONDITION" means the financial condition,
business, property, assets, liabilities and/or operations of a
Person.
"BUSINESS DAY" means (i) for all purposes other than as
covered by clause (ii) below, any day on which banks in Boston,
Massachusetts or New York, New York are not authorized or
required by applicable law to close; and (ii) with respect to all
notices and determinations in connection with, and payments of
principal and interest on, Libor Loans, any day which is a
Business Day described in clause (i) and which is also a day for
trading by and between banks in Dollar deposits in the London
interbank market.
"CAPITAL EXPENDITURES" means all expenditures paid or
incurred by the Borrower or any Subsidiary in respect of (i) the
acquisition, construction, improvement or replacement of land,
buildings, machinery, equipment, any other fixed assets or
leaseholds and (ii) to the extent related to and not included in
(i) above, materials, contract labor and direct labor, which
expenditures have been or should be, in accordance with GAAP,
capitalized on the books of the Borrower or such Subsidiary.
Where a fixed asset is acquired by a lease which is required to
be capitalized pursuant to Statement of Financial Accounting
Standards number 13 or any successor thereto, the amount required
to be capitalized in accordance therewith shall be considered to
be an expenditure in the year such asset is first leased.
"CAPITALIZED LEASE OBLIGATIONS" means all lease obligations
which have been or should be, in accordance with GAAP,
capitalized on the books of the lessee.
"CASH EQUIVALENT INVESTMENTS" means any Investment in (i)
direct obligations of the United States or any agency, authority
or instrumentality thereof, or obligations guaranteed by the
United States or any agency, authority or instrumentality
thereof, whether or not supported by the full faith and credit
of, a right to borrow from or the ability to be purchased by the
United States; (ii) commercial paper rated in the highest grade
by a nationally recognized statistical rating agency or which, if
not rated, is issued or guaranteed by any issuer with outstanding
long-term debt rated A or better by any nationally recognized
statistical rating agency; (iii) demand and time deposits with,
and certificates of deposit and bankers acceptances issued by,
any office of the Agent, any Lender or any other bank or trust
company which is organized under the laws of the United States or
any state thereof and has capital, surplus and undivided profits
aggregating at least $500,000,000, the outstanding long-term debt
of which or of the holding company of which it is a subsidiary is
rated A or better by any nationally recognized statistical rating
agency; (iv) any short-term note which has a rating of MIG-2 or
better by Moody's Investors Service Inc. or a comparable rating
from any other nationally recognized statistical rating agency;
(v) any municipal bond or other governmental obligation
(including without limitation any industrial revenue bond or
project note) which is rated A or better by any nationally
recognized statistical rating agency; (vi) any other obligation
of any issuer, the outstanding long-term debt of which is rated A
or better by any nationally recognized statistical rating agency;
(vii) any repurchase agreement with any financial institution
described in clause (iii) above, relating to any of the foregoing
instruments and fully collateralized by such instruments; (viii)
shares of any open-end diversified investment company that has
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its assets invested only in investments of the types described in
clause (i) through (vii) above at the time of purchase and which
maintains a constant net asset value per share; and (ix) shares
of any open-end diversified investment company registered under
the Investment Company Act of 1940, as amended, which maintains a
constant net asset value per share in accordance with regulations
of the Securities & Exchange Commission, has aggregate net assets
of not less than $50,000,000 on the date of purchase and either
derives at least 95% of its gross income from interest on or
gains from the sale of investments of the type described in
clauses (i) through (vii), above or has at least 85% of the
weighted average value of its assets invested in investments of
such types; provided that the purchase of any shares in any
particular investment company shall be limited to an aggregate
amount owned at any one time of $500,000. Each Cash Equivalent
Investment shall have a maturity of less than one year at the
time of purchase; provided that the maturity of any repurchase
agreement shall be deemed to be the repurchase date and not the
maturity of the subject security and that the maturity of any
variable or floating rate note subject to prepayment at the
option of the holder shall be the period remaining (including any
notice period remaining) before the holder is entitled to
prepayment.
"CHANGE OF CONTROL" means, at any time;
(i) any change in the ownership of the Borrower such
that the Subordinated Creditor owns less than 15% of the equity
interests in the Borrower on a fully-diluted basis or;
(ii) any "person" or "group" (each as used in Sections
13(d)(3) and 14(d)(2) of the Securities Exchange Act of 1934, as
amended from time to time) either (A) becomes the "beneficial
owner" (as defined in Rule 13d-3 of the Securities Exchange Act
of 1934, as amended from time to time), directly or indirectly,
of voting capital stock of the Borrower (or securities
convertible into or exchangeable for such voting capital stock)
representing 50.1% or more of the combined voting power of all
voting capital stock of the Borrower (on a fully diluted basis)
or (B) otherwise has the ability, directly or indirectly, to
elect a majority of the board of directors of the Borrower; or
(iii) during any period of up to 24 consecutive months,
commencing on the Closing Date, individuals who at the beginning
of such 24-month period were directors of the Borrower shall
cease for any reason (other than (A) the death, disability or
retirement of a director or (B) the death, disability or
retirement of an officer of the Borrower that is serving as a
director at such time so long as another officer of the Borrower
replaces such Person as a director) to constitute a majority of
the board of directors of the Borrower; or
(iv) any Person or two or more Persons acting in concert
shall have acquired by contract or otherwise, or shall have
entered into a contract or arrangement that, upon consummation
thereof, will result in its or their acquisition of the power to
exercise, directly or indirectly, a controlling influence on the
management or policies of the Borrower;
(v) the common stock of the Borrower shall no longer be
available for purchase and sale on a national securities exchange
or on the NASDAQ System or any similar successor organization.
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<PAGE>
"CLOSING DATE" means the date on which all of the conditions
precedent set forth in SECTION 3.1 of this Agreement have been
satisfied and the Loans are funded in accordance with this
Agreement.
"CODE" means the Internal Revenue Code of 1986, as amended
from time to time.
"COMMITMENT" means the Lenders' several commitments to make
or maintain the Loans as set forth IN SECTION 2.1 hereof in the
maximum outstanding amount of each Lender's Pro Rata Share of
$90,000,000 less the reductions set forth in SECTION 2.1 and less
any reductions and prepayments or repayments of the Term Loans as
set forth in SECTION 2.6.
"COMMONLY CONTROLLED ENTITY" means a Person, whether or not
incorporated, which is under common control with the Borrower
within the meaning of section 414(b) or (c) of the Code.
"CURRENT LIABILITIES" means all liabilities of the
Borrower and the Subsidiaries which would, in accordance with
GAAP on a consolidated basis, be classified as current
liabilities of corporations conducting a business the same as or
similar to that of the Borrower and any Subsidiaries, including
without limitation, the capitalized amount of Capitalized Lease
Obligations and fixed prepayments of, and sinking fund payments
and reserves with respect to, Indebtedness, in each case required
to be made within one year from the date of determination.
"DEFAULT" means an event or condition which with the giving
of notice or lapse of time or both would become an Event of
Default.
"DISCHARGED RIGHTS AND OBLIGATIONS" shall have the meaning
assigned to such term in SECTION 9.11.4.
"DOLLARS" and the sign "$" mean lawful money of the United
States of America.
"EBITDA" means, for any fiscal period, Net Income (without
taking into account any non-cash, non-recurring charge taken by
the Borrower on or before December 31, 1997 on account of in-
process research and development) PLUS, to the extent accounted
for in Net Income, Interest Expense, taxes, depreciation and
amortization, for such period determined on an accrual and
consolidated basis in accordance with GAAP. EBITDA shall be
calculated (excluding however, the calculation of EBITDA for the
purpose of determining "Excess Cash Flow", in which case, the
calculation of EBITDA in the definition of "Excess Cash Flow"
shall govern) as follows: for the fiscal quarter of the Borrower
ending on March 31, 1998, EBITDA for the Borrower fiscal quarter
then ending multiplied by four (4), for the fiscal quarter of the
Borrower ending on June 30, 1998, EBITDA for the Borrower fiscal
quarter then ending plus EBITDA for the Borrower fiscal quarter
immediately preceding such quarter, multiplied by two (2), for
the fiscal quarter of the Borrower ending on September 30, 1998,
EBITDA for the Borrower fiscal quarter then ending plus EBITDA
for the two (2) Borrower fiscal quarters immediately preceding
such quarter, multiplied by one and one-third (1.33) and,
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thereafter, for the rolling four Borrower fiscal quarter period
consisting of the Borrower fiscal quarter then ending and the
three immediately preceding Borrower fiscal quarters.
"EFFECTIVE PRIME" means for any Interest Period, the Prime
Rate in effect on the first day of such Interest Period, plus the
Applicable Margin for Prime Rate Loans from time to time in
effect.
"ERISA" means the Employee Retirement Income Security Act of
1974 as amended from time to time.
"EVENTS OF DEFAULT" has the meaning assigned to that term in
SECTION 6.1 of this Agreement.
"EXCESS CASH FLOW" means, for any fiscal year of the
Borrower, the sum of EBITDA for each Borrower fiscal quarter in
such fiscal year, (y) MINUS the sum of (i) an amount equal to the
sum of payments included in Total Debt Service paid during each
fiscal quarter in such fiscal year, (ii) to the extent not
included in Total Debt Service, all Capital Expenditures
permitted under SECTION 5.2.17 and paid during each Borrower
fiscal quarter in such fiscal year, and (iii) taxes payable
during each Borrower fiscal quarter in such fiscal year and (z)
PLUS decreases and MINUS increases in working capital.
"EXHIBIT" means, when followed by a letter, the exhibit
attached to this Agreement bearing that letter and by such
reference fully incorporated in this Agreement.
"EXTRAORDINARY RECEIPTS" means any proceeds that the
Borrower or any Subsidiary receives not in the ordinary course of
their respective businesses, including without limitation, from
(i) subject to SECTION 5.1.2, any casualty insurance policies
maintained by the Borrower and/or any Subsidiary (other than the
proceeds of business interruption insurance to the extent such
proceeds constitute compensation for lost earnings and such
proceeds are less than $3,000,000), (ii) tax refunds, (iii)
pension plan reversions, (iv) condemnation awards (and payments
in lieu thereof), (v) indemnity payments or (vi) any
extraordinary gains realized by the Borrower and/or any
Subsidiary.
"FEDERAL FUNDS RATE" means, for any day, the rate per annum
plus one-half of one percent (.50%) (rounded upward, if
necessary, to the nearest 1/16th of 1%) equal to the weighted
average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds
brokers on such day, as published by the Federal Reserve Bank of
New York, PROVIDED that (i) if such day is not a Business Day,
the Federal Funds Rate for such day shall be such rate on such
transactions on the next succeeding Business Day as so published,
and (ii) if no such rate is so published on such next succeeding
Business Day, the Federal Funds Rate for such day shall be the
average rate quoted to the Agent on such day on such transactions
as determined by the Agent in its discretion exercised in good
faith.
"FEE LETTER" means that certain fee letter dated October 31,
1997 between the Borrower and the Agent regarding certain fees
payable by the Borrower.
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<PAGE>
"FINANCING DOCUMENTS" means, collectively, this Agreement,
each Note, the Security Documents, the Fee Letter, the
Post-Closing Letter, any agreement with any Lender providing any
interest rate protection arrangement and each other agreement,
instrument or document now or hereafter executed in connection
herewith or therewith.
"FIXED CHARGE COVERAGE RATIO" means the ratio of (i) EBITDA
MINUS all Capital Expenditures permitted under SECTION 5.2.17 and
paid during each Borrower fiscal quarter during the period in
question, and taxes payable during each Borrower fiscal quarter
during the period in question to (ii) Total Debt Service.
"FOREIGN SUBSIDIARY" shall mean each Subsidiary of the
Borrower that is incorporated under the laws of any jurisdiction
other than the United States of America or any state thereof.
"GAAP" means generally accepted accounting principles in
effect from time to time in the United States of America.
"HAZARDOUS MATERIAL" shall mean any substance or material
defined or designated as a hazardous or toxic waste, hazardous or
toxic material, hazardous or toxic substance, or other similar
term, by any United States federal, state or local environmental
statute, regulation or ordinance.
"INDEBTEDNESS" means, without duplication for any Person,
(i) all indebtedness or other obligations of said Person for
Borrowed Money or for the deferred purchase price of property or
services, including, without limitation, all reimbursement
obligations of said Person with respect to standby and/or
documentary letters of credit (ii) all indebtedness or other
obligations of any other Person ("Other Person") for Borrowed
Money or for the deferred purchase price of property or services,
the payment or collection of which said Person has guaranteed
(except by reason of endorsement for deposit or collection in the
ordinary course of business) or in respect of which said Person
is liable, contingently or otherwise, including, without
limitation, liable by way of agreement to purchase or lease, to
provide funds for payment, to supply funds to purchase, sell or
lease property or services primarily to assure a creditor of such
Other Person against loss or otherwise to invest in or make a
loan to the Other Person, or otherwise to assure a creditor of
such Other Person against loss, (iii) all indebtedness or other
obligations of any Person for Borrowed Money or for the deferred
purchase price of property or services secured by (or for which
the holder of such indebtedness has an existing right, contingent
or otherwise, to be secured by) any Lien upon or in any property
owned by said Person, whether or not said Person has assumed or
become liable for the payment of such indebtedness or
obligations, (iv) Capitalized Lease Obligations of said Person
and (v) to the extent not included in any of (i) through (iv)
above, obligations of such Person under contracts pursuant to
which such Person has agreed to purchase interest rate protection
or swap interest rate obligations.
"INTEREST ADJUSTMENT DATE" means (i) as to any Prime Rate
Loan to be converted to a Libor Loan the Business Day elected by
the Borrower in its applicable Interest Rate Election, but being
not less than three (3) Business Days after the receipt by the
Agent before 12:00 o'clock P.M. on a Business Day of an Interest
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<PAGE>
Rate Election electing the Libor Rate as the interest rate on
such Loan; and (ii) as to any Libor Loan, the last Business Day
of the Interest Period pertaining to such Libor Loan.
"INTEREST EXPENSE" means, with respect to any fiscal
quarter, the aggregate amount required to be accrued by the
Borrower and any Subsidiaries in such fiscal quarter for
interest, fees, charges and expenses, however characterized, on
its Indebtedness, including, without limitation, all such
interest, fees, charges and expenses required to be accrued with
respect to Indebtedness under the Financing Documents, all
determined in accordance with GAAP.
"INTEREST PERIOD" means:
With respect to each Libor Loan:
(i) initially, the period commencing on the date of
such Libor Loan and ending one, two, three or six months
thereafter as the Borrower may elect in the applicable
Interest Rate Election and subject to SECTION 2.9; and
(ii) thereafter, each period commencing on the last
day of the immediately preceding Interest Period applicable
to such Libor Loan and ending one, two, three or six months
thereafter as the Borrower may elect in the applicable
Interest Rate Election and subject to SECTION 2.9;
PROVIDED THAT clauses (i) and (ii) of this definition are
subject to the following:
(A) any Interest Period (other than an Interest Period
determined pursuant to clause (C) below) which would otherwise
end on a day which is not a Business Day shall be extended to the
next succeeding Business Day unless such Business Day falls in
another calendar month, in which case such Interest Period shall
end on the immediately preceding Business Day;
(B) any Interest Period which begins on the last Business
Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of
such Interest Period) shall, subject to clause (C) below, end on
the last Business Day of a calendar month; and
(C) for Term Loan A, no Interest Period shall end after the
Term Loan A Repayment Date, for Term Loan B, no Interest Period
shall end after the Term Loan B Repayment Date and for the
Revolving Credit Loan, no Interest Period shall end after the
Revolving Credit Repayment Date; and
(D) with respect to all Libor Loans, no more than six (6)
Interest Periods may be in effect at any time.
"INTEREST RATE ELECTION" means the Borrower's irrevocable
telecopied or telephonic notice of election, which shall be
promptly confirmed by a written notice of election that the
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<PAGE>
Effective Prime or the Libor Rate shall apply to all or any
portion of the Loans, which shall, subject to this Agreement, be
effective on the next Interest Adjustment Date, such telecopied
or telephonic notice and written confirmation thereof to be in
the form of EXHIBIT 1.4 and to be received by the Agent prior to
12:00 o'clock P.M. on a Business Day and at least three (3)
Business Days prior to an Interest Adjustment Date in the case of
a Libor Loan, and by 12:00 p.m. on an Interest Adjustment Date in
the case of a Prime Rate Loan (or four (4) Business Days in the
case of an Interest Rate Election as to which the consent of the
Lenders is required), each such Interest Rate Election, subject
to the terms of this Agreement to apply to the Advance or the
Loan referred to in such Interest Rate Election or to effect a
change in the interest rate on the applicable portion of the
Loans then outstanding, as applicable, with respect to which such
Interest Rate Election was made, such change to occur on the
Interest Adjustment Date next succeeding receipt of such Interest
Rate Election by the Agent. Any Interest Rate Election received
by the Agent after 12 o'clock P.M. on a Business Day shall be
deemed, for all purposes of this Agreement to have been received
prior to 12 o'clock P.M. on the next succeeding Business Day.
"INVESTMENT" means any investment in any Person whether by
means of a purchase of capital stock, notes, bonds, debentures or
other evidences of Indebtedness and/or by means of a capital or
partnership contribution, loan, deposit, advance or other means.
"LENDER" means Fleet, State Street, Imperial, Eastern or any
financial institution which hereafter becomes a party hereto
pursuant to the terms of SECTION 9.11, each in their individual
capacity, and "Lenders" means Fleet, State Street, Imperial,
Eastern and each of such financial institutions.
"LETTER OF CREDIT" means an irrevocable stand-by or
commercial letter of credit issued by the Agent for the account
of the Borrower pursuant to a Letter of Credit Agreement subject
to and in accordance with this Agreement.
"LETTER OF CREDIT AGREEMENT" means an application and
agreement for stand-by or commercial letter of credit in such
form as may at any time be customarily required by the Agent for
its issuance of stand-by or commercial letters of credit.
"LIBOR LOAN" means any portion of any Loan bearing interest
at the Libor Rate.
"LIBOR RATE" means, for any Interest Period, the Adjusted
Libor Rate in effect on the first day of such Interest Period
(subject to adjustment as provided in the definition of Adjusted
Libor Rate) plus the Applicable Margin for Libor Loans from time
to time in effect.
"LIEN" means any mortgage, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien (statutory or
other) or other security agreement or preferential arrangement of
any kind or nature whatsoever (including without limitation any
conditional sale or other title retention agreement and any
Capitalized Lease Obligation) having substantially the same
economic effect as any of the foregoing and the filing of any
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<PAGE>
financing statement under the applicable Uniform Commercial Code
or comparable law of any jurisdiction in respect of any of the
foregoing.
"LOANS" and "LOAN" means at any time the outstanding
principal amount of Indebtedness owed to the Lenders or to any
lender, as the context may require pursuant to this Agreement.
"MAJORITY LENDERS" means Lenders holding an aggregate Pro
Rata Share of the outstanding principal balance of the Loans in
an amount equal to or in excess of 50.1% of the total outstanding
principal balance of the Loans and if there is no outstanding
principal balance of the Loans, Lenders having at least 50.1% of
the Commitment.
"MATERIAL ADVERSE EFFECT" means material adverse effect on
(i) the ability of the Borrower or any Subsidiary to fulfill
their obligations under any of the Financing Documents, (ii) the
Business Condition of the Borrower or any Subsidiary or (iii) the
ability of the Borrower to consummate the Related Transactions.
"MATERIAL AGREEMENTS" means (i) any agreements, obligations
or other instruments by which the Borrower or any Subsidiary may
be bound having a face value of $100,000 or more, or creating an
obligation on the part of any party thereto in excess of
$100,000, (ii) any agreements, obligations or other instruments
by which the Borrower or any Subsidiary may be bound which are
reasonably necessary to the conduct of their respective
businesses, except where any of the foregoing could be
substituted for on terms at least as favorable or (iii) any
agreements, obligations or other instruments by which the
Borrower or any Subsidiary may be bound, the absence of which
would be reasonably likely to result in a Material Adverse
Effect.
"MULTIEMPLOYER PLAN" means a multiemployer plan as defined
in Section 4001(a)(3) of ERISA.
"NET INCOME" means, for any fiscal period, the net after tax
income (loss) of the Borrower and any Subsidiaries for such
period determined on an accrual and consolidated basis in
accordance with GAAP.
"NOTE" means any promissory note of the Borrower payable to
the order of a Lender and substantially in the form of EXHIBIT
1.5 or EXHIBIT 1.6 and evidencing all or a portion of the Loan
and "Notes" means all of the Notes, collectively.
"OBLIGATIONS" mean any and all Indebtedness, obligations and
liabilities of the Borrower and/or any Subsidiaries under any of
the Financing Documents to any one or more of the Lenders and/or
the Agent of every kind and description, absolute or contingent,
due or to become due, whether for payment or performance, now
existing or hereafter arising, including, without limitation,
all Loans, interest, taxes, fees, charges, and expenses under the
Financing Documents and attorneys' fees chargeable to the
Borrower and/or any Subsidiaries or incurred by any of the
Lenders and/or the Agent under any of the Financing Documents.
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<PAGE>
"OFFICER'S CERTIFICATE" means a certificate signed by an
Authorized Representative and delivered to the Agent on behalf of
the Lenders.
"PBGC" means the Pension Benefit Guaranty Corporation
established pursuant to subtitle A of Title IV of ERISA.
"P.M." means a time from and including 12 o'clock noon on
any Business Day to the end of such Business Day using Eastern
Standard (Daylight Savings) time.
"PERMITTED ENCUMBRANCES" means each Lien granted pursuant to
any of the Security Documents, those Liens, security interests
and defects in title permitted under SECTION 5.2.1 and those
Liens listed on EXHIBIT 1.8 hereto.
"PERSON" means an individual, corporation, partnership,
limited liability company, joint venture, trust, or
unincorporated organization, or a government or any agency or
political subdivision thereof.
"PLAN" means an employee benefit plan as defined in Section
3(3) of ERISA maintained for employees of the Borrower or any
Commonly Controlled Entity.
"POST-CLOSING LETTER" means that certain letter agreement
between the Borrower and the Agent dated the Closing Date and
listing certain post-closing actions to be completed by the
Borrower.
"PREMISES" has the meaning assigned to such term in SECTION
4.1.21.1.
"PRIME RATE" means the higher of (i) the floating rate of
interest per annum designated from time to time by the Agent as
being its "prime rate" of interest, such interest rate to be
adjusted on the effective date of any change thereof by the
Agent, it being understood that such rate of interest may not be
the lowest rate of interest from time to time charged by the
Agent and (ii) the Federal Funds Rate, such interest rate to be
adjusted on the effective date of any change thereof by the
Federal Reserve Bank of New York.
"PRIME RATE LOAN(S)" means any portion of the Loans bearing
interest at Effective Prime.
"PROJECTIONS" means the Borrower's written projections of
Borrower's 3-year future performance on a consolidated basis
delivered to the Agent prior to the Closing and attached to this
Agreement as EXHIBIT 1.12.
"PRO RATA SHARE" means (i) with respect to the Commitment,
each Lender's percentage share of the Commitment as set forth
immediately opposite such Lender's name on EXHIBIT 1.9, and (ii)
with respect to the Loans, each Lender's percentage share of the
aggregate outstanding principal balance of the Loans and "Pro
Rata Shares" means such percentage shares of the Lenders.
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<PAGE>
"REFERENCE LENDER(S)" means the Agent unless the Agent
resigns said responsibility, at which time and thereafter such
term means one or two Lenders selected by the Agent in its
discretion from time to time as a reference lender for purposes
of determining the Adjusted Libor Rate.
"RELATED TRANSACTIONS" means the purchase by the Borrower of
all of the outstanding capital stock of Wells pursuant to the
Related Transaction Documents and the extension by the
Subordinated Creditor of the Subordinated Debt to the Borrower.
"RELATED TRANSACTION DOCUMENTS" means the documents listed
on EXHIBIT 1.2.
"REPORTABLE EVENT" shall have the meaning assigned to that
term in Section 4043 of ERISA for which the requirement of 30
days' notice to the PBGC has not been waived by the PBGC.
"REQUEST" means a written request for the Loans in the form
of EXHIBIT 1.10, received by the Agent on behalf of the Lenders
from the Borrower in accordance with this Agreement, specifying
the date on which the Borrower desires such Loans and the
disbursement instructions of the Borrower with respect thereto.
"REVOLVING CREDIT LOAN" means the revolving credit loans to
be made by the Lenders to the Borrower from time to time in the
maximum outstanding principal amount of the Revolving Credit Loan
Commitment, all subject and pursuant to SECTION 2.1.0.
"REVOLVING CREDIT LOAN COMMITMENT" means the Lenders'
several commitments to make Revolving Credit Loans to the
Borrower in accordance with SECTION 2.1.0 and this Agreement and
in the maximum outstanding amount of each Lender's Pro Rata Share
of $20,000,000, as such amount may be reduced pursuant to SECTION
2.6.4.
"REVOLVING CREDIT NOTE" means each revolving credit note of
the Borrower, payable to the order of a Lender in the form of
EXHIBIT 1.5 hereto evidencing the Indebtedness of the Borrower to
such Lender with respect to the Revolving Credit Loan.
"REVOLVING CREDIT REPAYMENT DATE" means the earlier to occur
of (i) December 31, 2003 and (ii) such earlier date on which the
Revolving Credit Loan becomes due and payable pursuant to the
terms hereof.
"SECTION" means, when followed by a number, the section or
subsection of this Agreement bearing that number.
"SECURED DOMESTIC SUBSIDIARY" means any Subsidiary
incorporated under the laws of the United States of America or
any state thereof that has provided or granted or caused to be
provided or granted to the Agent a first priority perfected Lien
on its assets, together with its guaranty of the Obligations and
a pledge by its parent entity of 100% of its ownership interests
in such Subsidiary, all in form and substance acceptable to the
Agent.
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"SECURITY DOCUMENTS" means any and all documents,
instruments and agreements now or hereafter providing security
for the Loans and any other Indebtedness of the Borrower or any
Subsidiary to any of the Lenders and/or the Agent, including
without limitation the following documents, instruments and
agreements between the Agent and the Borrower or any Subsidiary:
any mortgages on and collateral assignments of real property
interests (fee, leasehold and easement) of the Borrower and any
Subsidiary granting Liens thereon; landlord lien waivers and
consents as may be reasonably requested by the Agent; security
agreements granting first Liens on all Borrower's and any
Subsidiary's fixtures and tangible and intangible personal
property; collateral assignments of Borrower's and any
Subsidiary's contracts, licenses, permits, easements and leases;
collateral assignments of Borrower's and any Subsidiary's
copyrights; conditional assignments of Borrower's and any
Subsidiary's trademarks; any Subordination Agreement; any
guaranty by a Subsidiary; any pledge of the capital stock of any
Subsidiary; casualty and liability insurance policies providing
coverage to the Agent for the benefit of the Lenders, UCC-1
financing statements or similar filings perfecting the
above-referenced security interests, pledges and assignments, all
as executed, delivered to and accepted by the Agent on or prior
to the Closing Date or subsequent to the Closing Date as may be
required by this Agreement, as any of the foregoing may be
amended in writing by the Agent and any other party or parties
thereto.
"SELLING LENDER" shall have the meaning assigned to such
term in SECTION 9.11.1.
"SENIOR DEBT" means Indebtedness for Borrowed Money of the
Borrower and its Subsidiaries, less the Subordinated Debt.
"SINGLE EMPLOYER PLAN" means any Plan as defined in Section
4001(a)(15) of ERISA.
"SUBORDINATED CREDITOR" means Emerson Electric Co., a
Missouri corporation.
"SUBORDINATED DEBT" means $25,000,000 of Indebtedness owing
to the Subordinated Creditor and subordinated to the Obligations
pursuant to the Subordination Agreement.
"SUBORDINATION AGREEMENT" means that certain agreement
between the Borrower, the Agent and the Subordinated Creditor
providing for subordination of the Subordinated Debt to the
Obligations on terms acceptable to the Agent.
"SUBSIDIARY" means any corporation or entity other than the
Borrower of which more than 50% of the outstanding capital stock
or voting interests or rights having ordinary voting power to
elect a majority of the board of directors or other managers of
such entity (irrespective of whether or not at the time capital
stock or voting interests or rights of any other class or classes
of such Person shall or might have voting power upon the
occurrence of any contingency) is at the time directly or
indirectly owned by the Borrower or by the Borrower and/or one or
more Subsidiaries or the management of which corporation or
entity is under control of the Borrower and/or any other
Subsidiary, directly or indirectly through one or more Persons
and any other Person which, under GAAP, should at any time for
financial reporting purposes be consolidated or combined with the
Borrower and/or any other Subsidiary.
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<PAGE>
"SUBSTITUTED LENDER" has the meaning set forth in
SECTION 9.11 hereof.
"SUBSTITUTION AGREEMENT" has the meaning assigned to such
term in SECTION 9.11.1.
"TERM LOANS" means, collectively, Term Loan A and Term Loan
B.
"TERM LOAN A" means the term loan in the aggregate principal
amount of $30,000,000 to be made or maintained by the Lenders
pursuant to SECTION 2.1.1 hereof.
"TERM LOAN B" means the term loan in the aggregate principal
amount of $40,000,000 to be made or maintained by the Lenders
pursuant to SECTION 2.1.2 hereof.
"TERM NOTE A" means a term note of the Borrower payable to
the order of a Lender in the form of EXHIBIT 1.6 hereto
evidencing the Indebtedness of the Borrower to such Lender with
respect to Term Loan A.
"TERM NOTE B" means a term note of the Borrower payable to
the order of a Lender in the form of EXHIBIT 1.7 hereto
evidencing the Indebtedness of the Borrower to such Lender with
respect to Term Loan B.
"TERM LOAN A REPAYMENT DATE" means the earlier to occur of
(i) December 31, 2003 and (ii) such earlier date on which the
Term Loan A becomes due and payable pursuant to the terms hereof.
"TERM LOAN B REPAYMENT DATE" means the earlier to occur of
(i) December 31, 2004 and (ii) such earlier date on which the
Term Loan B becomes due and payable pursuant to the terms hereof.
"TOTAL DEBT SERVICE" means, at any date of determination,
the sum of (i) Interest Expense and (ii) scheduled and mandatory
principal payments for the fiscal period in question due on
account of any Indebtedness of the Borrower, but excluding any
mandatory payments of principal required pursuant to SECTIONS
2.6.1.2, 2.6.1.3, 2.6.1.4 and 2.6.1.5.
"UNUSED FEES" has the meaning assigned to such term in
SECTION 2.2.2.
"WELLS" means Wells Electronics, Inc., an Indiana
corporation.
"WELLS JAPAN" means Wells Japan Kabushiki Kaisha, a Japanese
limited stock company, having its principal place of business at
Paleana Building 2-2-15, Shin-Yokahama, Kohuku-Ku, Yokahama,
Japan.
"WELLS SINGAPORE" means Wells Electronics Asia Pte. Limited,
a Singapore limited liability company, having its principal place
of business at Blk 2 Joo Chiat #05-1135, Joo Chiat Complex,
Singapore.
- 16 -
<PAGE>
SECTION 1.2. ACCOUNTING TERMS. All accounting terms not
specifically defined herein shall be construed in accordance with
GAAP, calculations of amounts for the purposes of calculating any
financial covenants or ratios hereunder shall be made in
accordance with GAAP applied on a basis consistent with those
used in the Borrower's financial statements referred to in
SECTION 4.1.5 (other than departures therefrom not material in
their impact), and all financial data submitted pursuant to this
Agreement shall be prepared in accordance with GAAP (except, in
the case of unaudited financial statements, the absence of
footnotes and that such statements are subject to changes
resulting from year-end adjustments made in accordance with
GAAP).
SECTION 1.3. OTHER TERMS. References to "Articles",
"Sections", "subsections" and "Exhibits" shall be to Sections,
subsections and Exhibits and of this Agreement unless otherwise
specifically provided. In this Agreement, "hereof," "herein,"
"hereto," "hereunder" and the like mean and refer to this
Agreement as a whole and not merely to the specific section,
paragraph or clause in which the respective word appears; words
importing any gender include the other genders; references to
"writing" include printing, typing, lithography and other means
of reproducing words in a tangible visible form; the words
"including," "includes" and "include" shall be deemed to be
followed by the words "without limitation"; references to
agreements and other contractual instruments shall be deemed to
include subsequent amendments, assignments, and other
modifications thereto, but only to the extent such amendments,
assignments and other modifications are not prohibited by the
terms of this Agreement or any other Financing Document;
references to Persons include their respective permitted
successors and assigns or, in the case of governmental Persons,
Persons succeeding to the relevant functions of such Persons; and
all references to statutes and related regulations shall include
any amendments of same and any successor statutes and
regulations.
ARTICLE 2.
AMOUNT AND TERMS OF THE LOANS
SECTION 2.1. THE LOANS.
SECTION 2.1.0. THE REVOLVING CREDIT LOANS. Each of
the Lenders severally agrees, subject to the terms and conditions
of this Agreement, to make Advances of Revolving Credit Loans to
the Borrower in a minimum aggregate amount of Advances from the
Lenders pursuant to any Request of $500,000 and an integral
multiple of $100,000 thereafter from time to time after receipt
by the Agent from time to time before the Revolving Credit
Repayment Date of, and at the times provided for in, a Request
and an Interest Rate Election from the Borrower in accordance
with this Agreement, during the period commencing on the Closing
Date and ending on the Business Day immediately preceding the
Revolving Credit Repayment Date, in an aggregate principal amount
at any one time outstanding not to exceed the lesser of (i) such
Lender's Pro Rata Share of the Revolving Credit Loan Commitment
less (ii) in each case, such Lender's Pro Rata Share of the
aggregate amount of the outstanding stated amount of any Letter
of Credit or Letter of Credit Agreement, and any unreimbursed
amounts thereunder.
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<PAGE>
Promptly after receipt of a Request and Interest Rate
Election, Agent shall notify each Lender by telephone, telex or
telecopy of the proposed borrowing. Subject to the immediately
preceding paragraph, each Lender agrees that after its receipt of
notification from Agent of Agent's receipt of a Request and
Interest Rate Election, such Lender shall send its Pro Rata Share
(or such portion thereof as may be necessary to provide Agent
with such Pro Rata Share in Dollars and in immediately available
funds, without consideration or use of any contra accounts of any
Lender) of the requested Loan by wire transfer to Agent so that
Agent receives such Pro Rata Share in Dollars and in immediately
available funds not later than 12:00 P.M. (Boston, Massachusetts
time) on the first day of the Interest Period for any such
requested Libor Loan and on the Business Day for such Advance set
forth in Borrower's Request for any such requested Prime Rate
Loan, and Agent shall advance funds to the Borrower by depositing
such funds in Borrower's account with the Agent upon Agent's
receipt of such Pro Rata Shares in the amount of the Pro Rata
Shares of such Loan in Agent's possession. Unless Agent shall
have been notified by any Lender (which notice may be telephonic
if confirmed promptly in writing) prior to the first day of the
Interest Period in respect of any Loan which such Lender is
obligated to make under this Agreement, that such Lender does not
intend to make available to Agent such Lender's Pro Rata Share of
such Loan on such date, Agent may assume that such Lender has
made such amount available to Agent on such date and Agent in its
sole discretion may, but shall not be obligated to, make
available to the Borrower a corresponding amount on such date.
If such corresponding amount is not in fact made available to
Agent by such Lender, Agent shall be entitled to recover such
corresponding amount from such Lender promptly upon demand by
Agent together with interest thereon, for each day from such date
until the date such amount is paid to Agent, at the Federal Funds
Rate for three (3) Business Days and thereafter at the interest
rate on the Loan in question. If such Lender does not pay such
corresponding amount forthwith upon Agent's demand therefor,
Agent shall promptly notify the Borrower and the Borrower shall
promptly pay such corresponding amount to Agent. Nothing
contained in this Section shall be deemed to relieve any Lender
from its obligation to fulfill its obligations hereunder or to
prejudice any rights which the Borrower may have against any
Lender as a result of any default by such Lender hereunder.
Throughout the term of the Revolving Credit Loans,
$5,000,000 of the Revolving Credit Loan Commitment and principal
amount of the Revolving Credit Loans may, in the Agent's
discretion, be made available to the Borrower prior to the
Revolving Credit Repayment Date by issuance of Letters of Credit
having an expiration date prior to the earlier to occur of (a)
the first anniversary date of the date of issuance of any such
Letter of Credit or (b) three (3) Business Days prior to the
Revolving Credit Repayment Date, reasonably promptly after
submission by the Borrower to the Agent of a Letter of Credit
Agreement, duly completed and executed by the Borrower and
otherwise in form and substance satisfactory to the Agent. The
Borrower shall pay upon demand by the Agent such fees and costs
as the Agent may from time to time establish for issuance,
transfer, amendment and negotiation of each Letter of Credit and
shall pay to the Agent for the Lenders' accounts equal to their
respective Pro Rata Shares upon issuance of any Letter of Credit
an annual Letter of Credit fee in an amount equal to the product
of (i) the stated amount of each Letter of Credit multiplied by
(ii) the Applicable Margin then in effect with respect to any
Revolving Credit Loan which is a Libor Loan. In the event that
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<PAGE>
the Borrower shall fail to reimburse the Agent under any Letter
of Credit or Letter of Credit Agreement, and any outstanding
Indebtedness of the Borrower relating thereto, the Agent shall
promptly notify each Lender of the unreimbursed amount together
with accrued interest thereon, and each Lender agrees to
purchase, and it shall be deemed to have purchased, a
participation in such Letter of Credit or Letter of Credit
Agreement and such indebtedness in an amount equal to its Pro
Rata Share of the unpaid amount together with unpaid interest
thereon. Upon one (1) Business Day's notice from the Agent, each
Lender shall deliver to the Agent an amount equal to its
respective participation in same day funds, at the place and on
the date and by the time notified by the Agent. The obligation
of each Lender to deliver to the Agent an amount equal to its
respective participation pursuant to the foregoing sentence shall
be absolute and unconditional and such remittance shall be made
notwithstanding the occurrence or continuation of an Event of
Default or the failure to satisfy any condition set forth in
Article III of this Agreement.
SECTION 2.1.1. TERM LOAN A. On the Closing Date, each
of the Lenders severally agrees, subject to the terms and
conditions of this Agreement, to make the Term Loan A to the
Borrower in the amount of its respective Pro Rata Share of
$30,000,000. Borrower shall pay on the last day of each calendar
quarter ending on or in between the dates set forth below the
amount of the Term Loan A set forth immediately opposite such
dates below:
<TABLE>
<CAPTION>
REPAYMENT QUARTERLY
DATES PAYMENT AMOUNT
===== ==============
<S> <C>
January 1, 1998 through
December 31, 1998 $1,075,000
January 1, 1999 through
December 31, 1999 $1,125,000
January 1, 2000 through
December 31, 2000 $1,200,000
January 1, 2001 through
December 31, 2001 $1,250,000
January 1, 2002 through
December 31, 2002 $1,350,000
January 1, 2003 through
September 30, 2003 $1,500,000
Term Loan A Repayment
Date Then Remaining
Outstanding
Balance of Term Loan A
</TABLE>
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<PAGE>
SECTION 2.1.2. TERM LOAN B. On the Closing Date, each of
the Lenders severally agrees, subject to the terms and conditions
of this Agreement, to make the Term Loan B to the Borrower in the
amount of its respective Pro Rata Share of $40,000,000. Borrower
shall pay on the last day of each calendar quarter ending on or
in between the dates set forth below the amount of the Term Loan
B set forth immediately opposite such dates below:
<TABLE>
<CAPTION>
REPAYMENT QUARTERLY
DATES PAYMENT AMOUNT
===== ==============
<S> <C>
January 1, 1998 through
December 31, 2003 $100,000
January 1, 2004 through
September 30, 2004 $9,400,000
Term Loan B Repayment
Date Then Remaining
Outstanding
Balance of Term Loan B
</TABLE>
SECTION 2.2. INTEREST AND FEES ON THE LOANS.
SECTION 2.2.1. INTEREST. Interest shall accrue and be
paid currently on the Loans at Effective Prime or the Libor Rate
for each of the Loans' Interest Periods in accordance with the
Borrower's Interest Rate Elections for the Loans subject to and
in accordance with the terms and conditions of this Agreement and
the Note(s); provided that if a Default or an Event of Default
exists and is continuing, no Interest Rate Election electing the
Libor Rate shall be effective and any Loan or portion thereof
with respect to which any such Interest Rate Election would
otherwise have been effective shall bear interest at Effective
Prime plus, so long as an Event of Default exists and is
continuing, two percent (2%); all of the foregoing being
applicable until such Default or Event of Default is cured or
waived and an Interest Rate Election electing the Libor Rate for
such Loan or portion thereof which is effective in accordance
with this Agreement is submitted to the Agent; and provided
further that the Borrower shall submit Interest Rate Elections so
that on any date on which under SECTION 2.1.1 a regularly
scheduled payment of principal of the Term Loans is to be made,
at least the amount of the Term Loans to be so repaid is bearing
interest at Effective Prime and/or such payment date is an
Interest Adjustment Date for outstanding Libor Loans in such
amount of the Term Loans. Upon the occurrence and during the
continuance of any Event of Default, each Prime Rate Loan shall
bear interest, payable on demand, at a floating interest rate per
annum equal to two percent (2.0%) above Effective Prime and each
Libor Loan shall bear interest at the Libor Rate plus two percent
(2.0%). The Borrower shall pay such interest to the Agent for
the pro rata account of each Lender in arrears on the Loans
(including without limitation Libor Loans) outstanding from time
to time after the Closing Date, such payments to be made, with
respect to Libor Loans with Interest Periods of three months or
less on each Interest Adjustment Date for such Loans, and with
respect to Libor Loans with Interest Periods of more than three
months and with respect to Prime Rate Loans, quarterly on the
last Business Day of each calendar quarter of each year
commencing December 31, 1997. In the event no Interest Rate
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<PAGE>
Election has been made by the Borrower with respect to any Loan
or Advance (or an Interest Rate Election shall have expired
without an effective substitute Interest Rate Election),
Effective Prime shall be the rate applicable to such Loan or
Advance. All provisions of each Note and any other agreements
between the Borrower and the Lenders are expressly subject to the
condition that in no event, whether by reason of acceleration of
maturity of the Indebtedness evidenced by any Note or otherwise,
shall the amount paid or agreed to be paid to the Lenders which
is deemed interest under applicable law exceed the maximum
permitted rate of interest under applicable law (the "Maximum
Permitted Rate"), which shall mean the law in effect on the date
of this Agreement, except that if there is a change in such law
which results in a higher Maximum Permitted Rate, then each Note
shall be governed by such amended law from and after its
effective date. In the event that fulfillment of any provision
of any Note, or this Agreement or any document, instrument or
agreement providing security for any Note results in the rate of
interest charged under any Note being in excess of the Maximum
Permitted Rate, the obligation to be fulfilled shall
automatically be reduced to eliminate such excess. If,
notwithstanding the foregoing, any Lender receives an amount
which under applicable law would cause the interest rate under
any Note to exceed the Maximum Permitted Rate, the portion
thereof which would be excessive shall automatically be deemed a
prepayment of and be applied to the unpaid principal balance of
such Note to the extent of then outstanding Prime Rate Loans and
not a payment of interest and to the extent said excessive
portion exceeds the outstanding principal amount of Prime Rate
Loans, said excessive portion shall be repaid to the Borrower.
SECTION 2.2.2. FEES. On the last Business Day of each
March, June, September and December commencing December 31, 1997
and continuing through the Revolving Credit Repayment Date, the
Borrower shall pay to the Agent for the pro rata account of each
Lender, a fee in an amount equal to .50% per annum of the amount,
if any, by which the average actual daily amount of the Revolving
Credit Loan Commitment for the quarterly period just ended (or in
the case of the first such payment, the period from the Closing
Date to the date such payment is due) exceeds the sum of (x) the
average of the actual daily (on the basis of a year of 360 days,
for the actual number of days elapsed) outstanding principal
balances of the Revolving Credit Loans PLUS (y) the average of
the actual daily aggregate amount of the outstanding stated
amount of any Letter of Credit or Letter of Credit Agreement, and
any unreimbursed amounts thereunder; provided, however, that if
at any time after the receipt by the Agent of the quarterly
financial statements for the Borrower's March 31, 1998 fiscal
quarter and each subsequent Borrower fiscal quarter provided to
the Agent by the Borrower pursuant to SECTION 5.3.3 hereof, the
ratio of (a) total Senior Debt on a consolidated basis as of the
last day of the most recently ended fiscal quarter of the
Borrower to (b) EBITDA, (i) is less than 2.5:1.0 and greater than
or equal to 2.0:1.0 and if and so long as no Event of Default or
Default exists and is continuing, the Borrower shall pay to the
Agent for the pro rata account of each Lender a fee in an amount
equal to .45% per annum of the amount, if any, by which the
average actual daily amount of the Revolving Credit Loan
Commitment for the quarterly period just ended (or in the case of
the first such payment, the period from the Closing Date to the
date such payment is due) exceeds the sum of (x) the average of
the actual daily (on the basis of a year of 360 days, for the
actual number of days elapsed) outstanding principal balance of
the Revolving Credit Loans PLUS (y) the average of the actual
daily aggregate amount of the outstanding stated amount of any
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<PAGE>
Letter of Credit or Letter of Credit Agreement, and any
unreimbursed amounts thereunder; (ii) is less than 2.0:1.0 and
greater than or equal to 1.5:1.0 and if and so long as no Event
of Default or Default exists and is continuing, the Borrower
shall pay to the Agent for the pro rata account of each Lender a
fee in an amount equal to .40% per annum of the amount, if any,
by which the average actual daily amount of the Revolving Credit
Loan Commitment for the quarterly period just ended (or in the
case of the first such payment, the period from the Closing Date
to the date such payment is due) exceeds the sum of (x) the
average of the actual daily (on the basis of a year of 360 days,
for the actual number of days elapsed) outstanding principal
balance of the Revolving Credit Loans PLUS (y) the average of the
actual daily aggregate amount of the outstanding stated amount of
any Letter of Credit or Letter of Credit Agreement, and any
unreimbursed amounts thereunder or (iii) is less than 1.5:1.0 and
if and so long as no Event of Default or Default exists and is
continuing, the Borrower shall pay to the Agent for the pro rata
account of each Lender a fee in an amount equal to .35% per annum
of the amount, if any, by which the average actual daily amount
of the Revolving Credit Loan Commitment for the quarterly period
just ended (or in the case of the first such payment, the period
from the Closing Date to the date such payment is due) exceeds
the sum of (x) the average of the actual daily (on the basis of a
year of 360 days, for the actual number of days elapsed)
outstanding principal balance of the Revolving Credit Loans PLUS
(y) the aggregate amount of the outstanding stated amount of any
Letter of Credit or Letter of Credit Agreement, and any
unreimbursed amounts thereunder (the "Unused Fees"). In
addition, the Borrower shall pay to the Agent for its own
account certain fees as specified in the Fee Letter.
SECTION 2.2.3. INCREASED COSTS - CAPITAL. If, after
the date hereof, any Lender shall have reasonably determined that
the adoption after the date hereof of any applicable law,
governmental rule, regulation or order regarding capital adequacy
of banks or bank holding companies, 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 such Lender or such Lender's holding company with any policy,
guideline, directive or request regarding capital adequacy
(whether or not having the force of law and whether or not
failure to comply therewith would be unlawful) of any such
authority, central bank or comparable agency, has or would have
the effect of reducing the rate of return on the capital of such
Lender or such Lender's holding company as a consequence of the
obligations hereunder of such Lender to a level below that which
such Lender could have achieved but for such adoption, change or
compliance (taking into consideration the policies of such Lender
or such Lender's holding company with respect to capital adequacy
immediately before such adoption, change or compliance and
assuming that the capital of such Lender or such Lender's holding
company was fully utilized prior to such adoption, change or
compliance) by an amount reasonably deemed by such Lender to be
material, then such Lender shall notify the Agent and the
Borrower thereof and the Borrower shall pay to the Agent for the
account of such Lender from time to time as specified by such
Lender such additional amounts as shall be sufficient to
compensate such Lender for such reduced return, each such payment
to be made by the Borrower within five (5) Business Days after
each demand by such Lender; provided that the liability of the
Borrower to pay such costs shall only accrue with respect to
costs accruing from and after the 180th day prior to the date of
each such demand. A certificate in reasonable detail of one of
the officers of such Lender describing the event giving rise to
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<PAGE>
such reduction and setting forth the amount to be paid to such
Lender hereunder and a computation of such amount shall accompany
any such demand and shall, in the absence of manifest error, be
conclusive. In determining such amount, such Lender shall act
reasonably and will use any reasonable averaging and attribution
methods. If the Borrower shall, as a result of the requirements
of this SECTION 2.2.3 above, be required to pay any Lender the
additional costs referred to above and the Borrower, in its sole
discretion, shall deem such additional amounts to be material,
the Borrower shall have the right to substitute another bank
satisfactory to the Agent for such Lender which has certified the
additional costs to the Borrower, and the Agent shall use
reasonable efforts at no cost to the Agent to assist the Borrower
to locate such substitute bank. Any such substitution shall take
place in accordance with SECTION 9.11 and shall otherwise be on
terms and conditions reasonably satisfactory to the Agent, and
until such time as such substitution shall be consummated, the
Borrower shall continue to pay such additional costs. Upon any
such substitution, the Borrower shall pay or cause to be paid to
the Lender that is being replaced, all principal, interest (to
the date of such substitution) and other amounts owing hereunder
to such Lender and such Lender will be released from liability
hereunder.
SECTION 2.3. NOTATIONS. At the time of (i) the making
of each Advance evidenced by any Note, (ii) each change in the
interest rate under any Note effected as a result of an Interest
Rate Election; and (iii) each payment or prepayment of any Note,
each Lender may enter upon its records an appropriate notation
evidencing (a) such Lender's Pro Rata Share of the Loans and (b)
the interest rate and Interest Adjustment Date applicable thereto
or (c) such payment or prepayment (voluntary or involuntary) of
principal and (d) in the case of payments or prepayments
(voluntary or involuntary) of principal, the portion of the
applicable Loan which was paid or prepaid. No failure to make
any such notation shall affect the Borrower's unconditional
obligations to repay the Loans and all interest, fees and other
sums due in connection with this Agreement and/or any Note in
full, nor shall any such failure, standing alone, constitute
grounds for disproving a payment of principal by the Borrower.
However, in the absence of manifest error, such notations and
each Lender's records containing such notations shall constitute
presumptive evidence of the facts stated therein, including,
without limitation, the outstanding amount of such Lender's Pro
Rata Share of the Loans and all amounts due and owing to such
Lender at any time. Any such notations and such Lender's records
containing such notations may be introduced in evidence in any
judicial or administrative proceeding relating to this Agreement,
the Loans or any Note.
SECTION 2.4. COMPUTATION OF INTEREST. Interest due
under this Agreement and any Note shall be computed on the basis
of a year of 360 days for the actual number of days elapsed.
SECTION 2.5. TIME OF PAYMENTS AND PREPAYMENTS IN
IMMEDIATELY AVAILABLE FUNDS.
SECTION 2.5.1. TIME. All payments and prepayments of
principal, fees, interest and any other amounts owed from time to
time under this Agreement and/or under each Note shall be made to
the Agent for the pro rata account of each Lender at the address
referred to in SECTION 9.6 in Dollars and in immediately
available funds prior to 12:00 o'clock P.M. on the Business Day
that such payment is due, provided that the Borrower hereby
authorizes and instructs the Agent to charge against the
Borrower's accounts with the Agent on each date on which a
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<PAGE>
payment is due hereunder and/or under any Note and on any
subsequent date if and to the extent any such payment is not made
when due an amount up to the principal, interest and fees due and
payable to the Lenders, the Agent or any Lender hereunder and/or
under any Note and such charge shall be deemed payment hereunder
and under the Note(s) in question to the extent that immediately
available funds are then in such accounts. The Agent shall use
reasonable efforts in accordance with the Agent's customary
procedures to give subsequent notice of any such charge to the
Borrower, but the failure to give such notice shall not affect
the validity of any such charge. To the extent that immediately
available funds are then in such accounts, the failure of the
Agent to charge any such account or the failure of the Agent to
charge any such account prior to 12 o'clock P.M. shall not be
basis for an Event of Default under SECTION 6.1.1 and any amount
due on the Loans on such date shall be deemed paid; provided that
the Agent shall have the right to charge any such account on any
subsequent date for such unpaid payment and an Event of Default
shall exist if sufficient immediately available funds are not in
such accounts on the date the Agent so charges such account after
the expiration of any applicable cure period. In the event of
any charge against the Borrower's accounts by the Agent pursuant
to the immediately preceding sentence, the Agent shall use
reasonable efforts to provide notice to the Borrower of such
charge in accordance with the Agent's customary procedures, but
the failure to provide such notice shall not in any way be a
basis for any liability of the Agent nor shall such failure
adversely affect the validity and effectiveness of any such
action by the Agent. Any such payment or prepayment which is
received by the Agent in Dollars and in immediately available
funds after 12 o'clock P.M. on a Business Day shall be deemed
received for all purposes of this Agreement on the next
succeeding Business Day unless the failure by Agent to receive
such funds prior to 12 o'clock P.M. is due to Agent's failure to
charge the account of Borrower prior to 12 o'clock P.M., except
that solely for the purpose of determining whether a Default or
Event of Default has occurred under SECTION 6.1.1, any such
payment or prepayment, if received by the Agent prior to the
close of the Agent's business on a Business Day, shall be deemed
received on such Business Day. All payments of principal,
interest, fees and any other amounts which are owing to any or
all of the Lenders or the Agent hereunder and/or under any of the
Notes that are received by the Agent in immediately available
Dollars prior to 12:00 o'clock P.M. on any Business Day shall, to
the extent owing to the Lenders other than the Agent, be sent by
wire transfer by the Agent to any such other Lenders (in each
case, without deduction for any claim, defense or offset of any
type) before 3:00 o'clock P.M. on the same Business Day. Each
such wire transfer shall be addressed to each Lender in
accordance with the wire instructions set forth in EXHIBIT 1.9
hereto. The amount of each payment wired by the Agent to each
such Lender shall be such amount as shall be necessary to provide
such Lender with its Pro Rata Share of such payment (without
consideration or use of any contra accounts of any Lender), or
with such other amount as may be owing to such Lender in
accordance with this Agreement (in each case, without deduction
for any claim, defense or offset of any type). Each such wire
transfer shall be sent by the Agent only after the Agent has
received immediately available Dollars from or on behalf of the
Borrower and each such wire transfer shall provide each Lender
receiving same with immediately available Dollars on receipt by
such Lender. Any such payments of immediately available Dollars
received by the Agent after 12:00 o'clock P.M. and before 3:00
o'clock P.M. on any Business Day shall be forwarded in the same
manner by the Agent to such Lender(s) as soon as practicable on
said Business Day, and if any such payments of immediately
available Dollars are received by the Agent after 3:00 o'clock
P.M. on a Business Day, the Agent shall so forward same to such
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<PAGE>
Lender(s) before 10:00 o'clock A.M. on the immediately succeeding
Business Day.
SECTION 2.5.2. SETOFF, ETC. Regardless of the
adequacy of any collateral for any of the Obligations, upon the
occurrence and during the continuance of any Event of Default,
each Lender is hereby authorized at any time and from time to
time, without notice to the Borrower (any such notice being
expressly waived by the Borrower), to set off and apply any and
all deposits (general or special, time or demand, provisional or
final) at any time held and any other Indebtedness at any time
owing by such Lender to or for the credit or the account of the
Borrower against any and all of the Obligations of the Borrower
irrespective of whether or not such Lender shall have made any
demand under this Agreement or any Note and although such
obligations may be unmatured. Each such Lender agrees to
promptly notify the Borrower and the Agent after any such setoff
and application; provided that the failure to give such notice
shall not affect the validity of such setoff and application.
Promptly following any notice of setoff received by the Agent
from a Lender pursuant to the foregoing, the Agent shall notify
each other Lender thereof. The rights of each Lender under this
SECTION 2.5.2 are in addition to all other rights and remedies
(including, without limitation, other rights of setoff) which
such Lender may have and are subject to SECTION 9.12.
SECTION 2.5.3. UNCONDITIONAL OBLIGATIONS AND NO
DEDUCTIONS.
SECTION 2.5.3.1. The Borrower's obligation to
make all payments provided for in this Agreement and the other
Financing Documents shall be unconditional. Each such payment
shall be made without deduction for any claim, defense or offset
of any type and regardless of whether any claims, defenses or
offsets of any type exist.
SECTION 2.5.3.2. (a) Any and all payments by the
Borrower to or for the account of any Lender or the Agent
hereunder or under any other Financing Document shall be made
free and clear of and without deduction for any and all present
or future taxes, duties, levies, imposts, deductions, charges or
withholdings, and all liabilities with respect thereto,
excluding, in the case of each Lender and the Agent, taxes
imposed on its income, and franchise taxes imposed on it, by the
jurisdiction under the laws of which such Lender (or its
applicable lending office) or the Agent (as the case may be) is
organized or any political subdivision thereof, other than to the
extent such income or franchise tax is imposed solely as a result
of the activities of the Agent or a Lender pursuant to or in
respect of this Agreement or any of the other Financing Documents
(all such non-excluded taxes, duties, levies, imposts,
deductions, charges, withholdings, and liabilities being
hereinafter referred to as "Taxes"). If the Borrower shall be
required by law to deduct any Taxes from or in respect of any sum
payable under this Agreement or any other Financing Document to
any Lender or the Agent,(i) the sum payable shall be increased as
necessary so that after making all required deductions (including
deductions applicable to additional sums payable under this
SECTION 2.5.3.2) such Lender or the Agent receives an amount
equal to the sum it would have received had no such deductions
been made, (ii) the Borrower shall make such deductions, (iii)
the Borrower shall pay the full amount deducted to the relevant
taxation authority or other authority in accordance with
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applicable law, and (iv) the Borrower shall furnish to the Agent,
at its address referred to in SECTION 9.6 hereof, the original or
a certified copy of a receipt evidencing payment thereof.
(b) In addition, the Borrower agrees to pay any and all
present or future stamp or documentary taxes and any other excise
or property taxes or charges or similar levies which arise from
any payment made under this Agreement or any other Financing
Document or from the execution or delivery of, or otherwise with
respect to, this Agreement or any other Loan Document
(hereinafter referred to as "Other Taxes").
(c) The Borrower agrees to indemnify each Lender and the
Agent for the full amount of Taxes and Other Taxes (including,
without limitation, any Taxes or Other Taxes imposed or asserted
by any jurisdiction on amounts payable under this SECTION
2.5.3.2) paid by such Lender or the Agent (as the case may be)
and any liability (including penalties, interest, and expenses)
arising therefrom or with respect thereto.
(d) Each Lender organized under the laws of a jurisdiction
outside the United States, on or prior to the date of its
execution and delivery of this Agreement in the case of each
Lender listed on the signature pages hereof and on or prior to
the date on which it becomes a Lender in the case of each other
Lender, and from time to time thereafter if requested in writing
by the Borrower or the Agent (but only so long as such Lender
remains lawfully able to do so), shall provide the Borrower and
the Agent with (i) a properly completed Internal Revenue Service
Form 1001 or 4224, as appropriate, or any successor form
prescribed by the Internal Revenue Service, certifying that such
Lender is entitled to benefits under an income tax treaty to
which the United States is a party which reduces the rate of
withholding tax on payments of interest or certifying that the
income receivable pursuant to this Agreement is effectively
connected with the conduct of a trade or business in the United
States, (ii) a properly completed Internal Revenue Service Form
W-8 or W-9, as appropriate, or any successor form prescribed by
the Internal Revenue Service, certifying that such Lender is
exempt from United States backup withholding, and (iii) any other
form or certificate required by any taxing authority (including
any certificate required by Sections 871(h) and 881(c) of the
Internal Revenue Code), certifying that such Lender is entitled
to an exemption from or a reduced rate of tax on payments
pursuant to this Agreement or any of the other Financing
Documents.
(e) For any period with respect to which a Lender has
failed to provide the Borrower and the Agent with the appropriate
form pursuant to SECTION 2.5.3.2(d) hereof (unless such failure
is due to a change in treaty, law, or regulation occurring
subsequent to the date on which a form originally was required to
be provided), such Lender shall not be entitled to
indemnification under SECTION 2.5.3.2(A) OR 2.5.3.2(B) hereof
with respect to Taxes imposed by the United States; provided,
however, that should a Lender, which is otherwise exempt from or
subject to a reduced rate of withholding tax, become subject to
Taxes because of its failure to deliver a form required
hereunder, the Borrower shall take such steps as such Lender
shall reasonably request and at such Lender's cost to assist such
Lender to recover such Taxes.
(f) If the Borrower is required to pay additional amounts
to or for the account of any Lender pursuant to this SECTION
2.5.3.2, then such Lender will agree to use reasonable efforts to
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change the jurisdiction of its applicable lending office so as to
eliminate or reduce any such additional payment which may
thereafter accrue if such change, in the judgment of such Lender,
is not otherwise disadvantageous to such Lender. Alternatively,
in the event of such an additional cost, the Borrower shall have
the right to substitute another bank satisfactory to the Agent,
and the Agent and such Lender shall use reasonable efforts at no
cost to the Agent and such Lender to assist the Borrower to
locate and effect the substitution in favor of such substitute
bank. Any such substitution shall take place in accordance with
SECTION 9.11 and shall otherwise be on terms and conditions
reasonably satisfactory to the Agent, and until such time as such
substitution shall be consummated, the Borrower shall continue to
pay such additional costs. Upon any such substitution, the
Borrower shall pay or cause to be paid to the Lender that is
being replaced, all principal, interest (to the date of such
substitution) and other amounts owing hereunder to such Lender
and such Lender will be released from liability hereunder.
(g) Within thirty (30) days after the date of any payment
of Taxes, the Borrower shall furnish to the Agent the original or
a certified copy of a receipt evidencing such payment.
(h) Without prejudice to the survival of any other
agreement of the Borrower hereunder, the agreements and
obligations of the Borrower contained in this SECTION 2.5.3.2
shall survive until the first anniversary of the Repayment Date.
(i) If the Borrower makes any additional payment to any
Lender pursuant to this SECTION 2.5.3.2 in respect of any Taxes,
and such Lender determines that it has received (i) a refund of
such Taxes, or (ii) a credit against, relief or remission for, or
a reduction in the amount of, any tax or other governmental
charge as a result of any deduction or credit for any Taxes with
respect to which it has received payments under this SECTION
2.5.3.2, such Lender shall, to the extent that it can do so
without prejudice to the retention of such refund, credit,
relief, remission or reduction, pay to the Borrower such amount
as shall be reasonably determined by such Lender to be solely
attributable to the deduction or withholding of such Taxes. If
such Lender later determines that it was not entitled to such
refund, credit, relief, remission or reduction to the full extent
of any payment made pursuant to the first sentence of this
SECTION 2.5.3.2(i), the Borrower shall upon demand of such Lender
promptly repay the amount of such overpayment. Nothing in this
SECTION 2.5.3.2(i) shall be construed as requiring such Lender to
conduct its business or to arrange or alter in any respect its
tax or financial affairs so that it is entitled to receive such a
refund, credit or reduction or as allowing any Person to inspect
any records, including tax returns, of such Lender.
SECTION 2.6. PREPAYMENT AND CERTAIN PAYMENTS.
SECTION 2.6.1. MANDATORY PAYMENTS.
SECTION 2.6.1.1. In addition to each other
principal payment required hereunder, the outstanding principal
balances of Term Loan A shall be repaid on the Term Loan A
Repayment Date, the outstanding principal balances of Term Loan B
shall be repaid on the Term Loan B Repayment Date and the
outstanding principal balances of the Revolving Credit Loans
shall be repaid on the Revolving Credit Repayment Date.
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SECTION 2.6.1.2. On or before the 90th day after
the end of each fiscal year of the Borrower commencing with the
fiscal year ending December 31, 1998, the Borrower shall prepay
to the Agent for the accounts of the Lenders in accordance with
their Pro Rata Shares an amount of the outstanding principal
balances of the Term Loans equal to (i) 75% of the amount, if
any, of Excess Cash Flow for such fiscal year (provided that such
amount shall be reduced to 50% of the amount, if any, of Excess
Cash Flow for such fiscal year if, based upon the financial
statements for the Borrower's fiscal year end delivered to the
Agent pursuant to SECTION 5.3.2, the ratio of (a) total Senior
Debt on a consolidated basis as of the last day of the most
recently ended fiscal quarter of the Borrower to (b) EBITDA, is
less than 2.25:1.0) LESS (ii) voluntary prepayments of the Term
Loans made during such fiscal year. Such prepayments shall be in
addition to any and all other mandatory and voluntary prepayments
required or permitted hereunder and shall be applied to the
principal installments of the Term Loans in accordance with
SECTION 2.6.1.6.
SECTION 2.6.1.3. In the event that the Borrower
or any Subsidiary is entitled to receive any Extraordinary
Receipts, the Borrower upon receipt of such proceeds shall make a
prepayment of the Term Loans for the accounts of the Lenders in
accordance with their Pro Rata Shares. All such payments shall
be applied to the principal installments of the Term Loans in
accordance with SECTION 2.6.1.6.
SECTION 2.6.1.4. In the event that the Borrower
and/or any Subsidiary sells, assigns or otherwise transfers title
to any asset other than in the ordinary course of its business
for net cash proceeds in the aggregate since the Closing Date in
excess of $500,000, the Borrower and/or such Subsidiary shall
remit 100% of the net cash proceeds of such sale, assignment or
other transfer to the Agent for the accounts of the Lenders in
accordance with their Pro Rata Shares to be applied to the
principal installments of the Term Loans in accordance with
SECTION 2.6.1.6 within 10 Business Days of the date of Borrower's
or any Subsidiary's receipt of such net cash proceeds; provided,
however, that Borrower may sell any of its equipment which is
obsolete, worn-out or no longer used or useful in Borrower's or
any Subsidiary's business and Borrower or any Subsidiaries may
use the proceeds of such sale to purchase other equipment which
is useful or necessary in the operation of Borrower's or any
Subsidiary's business and that Borrower or any Subsidiaries may
also sell inventory in the ordinary course of its business.
SECTION 2.6.1.5. In the event that the Borrower
and/or any Subsidiary sells or issues any class of the Borrower's
or any Subsidiary's equity securities, the Borrower and/or such
Subsidiary upon receipt of the net aggregate cash consideration
from the sale or issuance of any such equity shall prepay the
amount of such net cash proceeds to the Agent for the accounts of
the Lenders in accordance with their Pro Rata Shares to be
applied to the principal installments of the Term Loans in
accordance with SECTION 2.6.1.6 within 10 Business Days of the
date of Borrower's or any Subsidiary's receipt of such net cash
proceeds. Notwithstanding the foregoing, at any time after the
Closing Date, and if and so long as no Event of Default or
Default exists and is continuing, the Borrower may apply any net
cash proceeds from the sale or issuance of any class of the
Borrower's or any Subsidiary's equity securities to reduce the
then-outstanding balance of the Subordinated Debt.
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SECTION 2.6.1.6. Any amounts repaid by the
Borrower and/or any Subsidiary under this SECTION 2.6.1 shall be
applied to the principal installments of the Term Loans under
SECTIONS 2.1.1 and 2.1.2 in accordance with the following: pro-
rata between Term Loan A and Term Loan B, such amounts then to be
applied on a pro-rata basis to the respective amounts of the
remaining payments to reduce the remaining quarterly payments
thereof; provided, however, that so long as any amounts of Term
Loan A remain outstanding, any Lender of Term Loan B may elect to
refuse its pro-rata share of such amounts allocable to Term Loan
B and its share shall then be applied on a pro-rata basis to the
respective amounts of the remaining quarterly payments of Term
Loan A. In the event that any payment or prepayment of a Libor
Loan under this SECTION 2.6.1 is received on a date other than
the last day of an Interest Period, such payment or prepayment
shall be held by the Agent in a separate, interest bearing
account (as reasonably selected by the Agent and which amounts
may bear interest in an amount less than the Interest Rate then
applicable to such amounts) and be pledged to the Agent as
collateral for the Obligations of the Borrower arising in
connection with the Financing Documents until the last day of the
then current Interest Period, at which time the Agent shall apply
such payment or prepayment, for the account of the Lenders in
accordance with their Pro Rata Shares, to the outstanding Libor
Loans, for which such day is an Interest Adjustment Date.
SECTION 2.6.2. VOLUNTARY PREPAYMENTS. All or any
portion of the unpaid principal balance of the Loans (other than
portions of any Loans constituting Libor Loans) may be prepaid at
any time, without premium or penalty, by giving the Agent at
least 3 days' prior written notice of such prepayment and by a
payment to the Agent for the accounts of the Lenders in
accordance with their Pro Rata Shares of such prepayment in
immediately available Dollars by the Borrower; provided that each
such partial payment or prepayment of principal of the Loans
shall be in a principal amount of at least $500,000 or an
integral multiple of $100,000 in excess thereof and provided
further that each such prepayment of the Term Loans shall be
applied to the principal installments of the Term Loans in the
manner set forth in SECTION 2.6.1.6.
SECTION 2.6.3. PREPAYMENT OF LIBOR LOANS.
Notwithstanding anything to the contrary contained in any Note or
in any other agreement executed in connection herewith or
therewith, the Borrower shall be permitted to prepay any portion
of the Loans constituting Libor Loans only in accordance with
SECTION 2.9 hereof.
SECTION 2.6.4. PERMANENT REDUCTION OF COMMITMENT. At
the Borrower's option the Commitment and the Revolving Credit
Loan Commitment may be permanently and irrevocably reduced in
whole or in part by an amount of at least $500,000 and to the
extent in excess thereof in integral multiples of $100,000 at any
time; provided that (i) the Borrower gives the Agent written
notice of the exercise of such option at least three (3) Business
Days prior to the effective date thereof, (ii) the aggregate
outstanding balance of the Loans, if any, does not exceed the
Commitment and the aggregate outstanding balance of the Revolving
Credit Loans together with the aggregate amount of the
outstanding stated amount of any Letter of Credit or Letter of
Credit Agreement, and any unreimbursed amounts thereunder, if
any, does not exceed the Revolving Credit Loan Commitment, both
as so reduced in any such case on the effective date of such
reduction and (iii) the Borrower is not, and after giving effect
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to such reduction, would not be in violation of SECTION 2.6.3.
Any such reduction shall concurrently reduce the Dollar amount of
each Lender's Pro Rata Share of the Commitment and the Revolving
Credit Loan Commitment.
SECTION 2.7. PAYMENT ON NON-BUSINESS DAYS. Whenever any
payment to be made hereunder or under any Note shall be stated to
be due on a day other than a Business Day, such payment may be
made on the next succeeding Business Day, and such extension of
time shall in such case be included in the computation of payment
of fees, if any, and interest under this Agreement and under such
Note.
SECTION 2.8. USE OF PROCEEDS. The Borrower shall use
the proceeds of the Term Loans to purchase all of the outstanding
capital stock of Wells and to pay costs incurred by the Borrower
in connection with the closing of the Loans, including without
limitation, the costs incurred in connection with the Related
Transactions and shall use the proceeds of the Revolving Credit
Loans to purchase such capital stock, pay such costs, for
Borrower's working capital needs and for Investments permitted by
SECTION 5.2.12.
SECTION 2.9. SPECIAL LIBOR LOAN PROVISIONS. The Libor
Loans shall be subject to and governed by the following terms and
conditions:
SECTION 2.9.1. REQUESTS. Each Request accompanied by
an Interest Rate Election selecting the Libor Rate must be
received by the Agent in accordance with the definition of
Interest Rate Election.
SECTION 2.9.2. LIBOR LOANS UNAVAILABLE.
Notwithstanding any other provision of this Agreement, if, prior
to or on the date on which all or any portion of the Loans is to
be made as or converted into a Libor Loan, any of the Lenders (or
the Agent with respect to (ii) below) shall reasonably determine
(which determination shall be conclusive and binding on the
Borrower), that
(i) Dollar deposits in the relevant amounts and for
the relevant Interest Period are not offered to such Lender in
the London interbank market,
(ii) by reason of circumstances affecting the London
interbank market, adequate and reasonable means do not exist
for ascertaining the Adjusted Libor Rate, or
(iii) the Adjusted Libor Rate shall no longer
represent the effective cost to such Lender for Dollar
deposits in the London interbank market for reasons other
than the fact, standing alone, that the Adjusted Libor Rate
is based on an averaging of rates determined by the Agent
and that such Lender's rate may exceed such average,
such Lender may elect not to accept any Interest Rate Election
electing a Libor Loan and such Lender shall notify the Agent by
telephone or telex thereof, stating the reasons therefor, not
later than the close of business on the second Business Day prior
to the date on which such Libor Loan is to be made. The Agent
shall promptly give notice of such determination and the reason
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therefor to the Borrower, and all or such portion of the Loans,
as the case may be, which are subject to any of SECTION 2.9.2
(i), (ii) through (iii) as a result of such Lender's
determination shall be made as or converted into, as the case may
be, Prime Rate Loans and such Lender shall have no further
obligation to make Libor Loans, until further written notice to
the contrary is given by the Agent to the Borrower. If such
circumstances subsequently change so that such Lender shall no
longer be so affected, such Lender's obligation to make or
maintain its Pro Rata Share of all or any portion of the Loans as
Libor Loans shall be reinstated when such Lender obtains actual
knowledge of such change of circumstances and promptly after
obtaining such actual knowledge such Lender shall forward written
notice thereof to the Agent. After receipt of such notice, the
Agent shall promptly forward written notice thereof to the
Borrower. Upon or after receipt by the Borrower of such written
notice, the Borrower may submit an Interest Rate Election in
accordance with this Agreement electing an Interest Period ending
no later than the Interest Adjustment Date for the then current
Interest Period for the other Lenders' Pro Rata Shares of Libor
Loans and electing the Libor Rate for such Lenders' or Lender's
Pro Rata Share(s) of the Loans as to which such Lender's or
Lenders' obligation(s) to make or maintain its or their Pro Rata
Share(s) of the Loans as Libor Loans was suspended and such Pro
Rata Share(s) shall be converted to Libor Loans in accordance
with this Agreement. During any period throughout which any of
the Lenders has or have no obligation to make or maintain its or
their Pro Rata Share(s) of the Loans as Libor Loans, no Interest
Rate Elections electing the Libor Rate shall be effective with
regard to the Loans to the extent of the Pro Rata Share(s) of
such Lender(s), but shall be effective as to the other Lenders.
SECTION 2.9.3. LIBOR LENDING UNLAWFUL. In the event
that any change in applicable laws or regulations (including the
introduction of any new applicable law or regulation) or in the
interpretation thereof (whether or not having the force of law)
by any governmental or other regulatory authority charged with
the administration thereof, shall make it unlawful for any of the
Lenders to make or continue to maintain its Pro Rata Share of all
or any portion of the Loans as Libor Loans, each such Lender
shall promptly notify the Agent by telephone or telex thereof,
and of the reasons therefor, and the obligation of such Lender to
make or maintain its Pro Rata Share of the Loans or such portion
thereof as Libor Loans shall, upon the happening of such event,
terminate and the Agent shall, by telephonic notice to the
Borrower, declare that such obligation has so terminated with
respect to such Lender, and such Pro Rata Share of the Loans or
any portion thereof to the extent then maintained as Libor Loans,
shall, on the last day on which such Lender can lawfully continue
to maintain such Pro Rata Share of the Loans or any portion
thereof as Libor Loans, automatically convert into Prime Rate
Loans without additional cost to the Borrower. If circumstances
subsequently change so that such Lender shall no longer be so
affected, such Lender's obligation to make or maintain its Pro
Rata Share of all or any portion of the Loans as Libor Loans
shall be reinstated when such Lender obtains actual knowledge of
such change of circumstances, and promptly after obtaining such
actual knowledge such Lender shall forward written notice thereof
to the Agent. After receipt of such notice, the Agent shall
promptly forward written notice thereof the Borrower. Upon or
after receipt by the Borrower of such written notice, the
Borrower may submit an Interest Rate Election in accordance with
this Agreement electing an Interest Period ending no later than
the Interest Adjustment Date for the then current Interest Period
for the other Lenders' Pro Rata Shares of Libor Loans and
electing the Libor Rate for such Lenders' or Lender's Pro Rata
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Share(s) of the Loans as to which such Lender's or Lenders'
obligation(s) to make or maintain its or their Pro Rata Share(s)
of the Loans as Libor Loans was suspended and such Pro Rata
Share(s) shall be converted to Libor Loans in accordance with
this Agreement. During any period throughout which any of the
Lenders has or have no obligation to make or maintain its or
their Pro Rata Share(s) of the Loans as Libor Loans, no Interest
Rate Elections electing the Libor Rate shall be effective with
regard to the Loans to the extent of the Pro Rata Share(s) of
such Lender(s), but shall be effective as to the other Lenders.
SECTION 2.9.4. ADDITIONAL COSTS ON LIBOR LOANS. The
Borrower further agrees to pay to the Agent for the account of
the applicable Lender or Lenders such amounts as will compensate
any of the Lenders for any increase in the cost to such Lender of
making or maintaining (or of its obligation to make or maintain)
all or any portion of its Pro Rata Share of the Loans as Libor
Loans and for any reduction in the amount of any sum receivable
by such Lender under this Agreement in respect of making or
maintaining all or any portion of such Lender's Pro Rata Share of
the Loans as Libor Loans, in either case, from time to time by
reason of:
(i) any reserve, special deposit or similar
requirement against assets of, deposits with or for the
account of, or credit extended by, such Lender, under or
pursuant to any law, treaty, rule, regulation (including,
without limitation, any Regulations of the Board of
Governors of the Federal Reserve System) or requirement in
effect on or after the date hereof, any interpretation
thereof by any governmental authority charged with
administration thereof or by any central bank or other
fiscal or monetary authority or other authority, or any
requirement imposed by any central bank or such other
authority whether or not having the force of law; or
(ii) any change in (including the introduction of any
new) applicable law, treaty, rule, regulation or requirement
or in the interpretation thereof by any official authority,
or the imposition of any requirement of any central bank,
whether or not having the force of law, which shall subject
such Lender to any tax (other than taxes on net income
imposed on such Lender), levy, impost, charge, fee, duty,
deduction or withholding of any kind whatsoever or change
the taxation of such Lender with respect to making or
maintaining all or any portion of its Pro Rata Share of the
Loans as Libor Loans and the interest thereon (other than
any change which affects, and to the extent that it affects,
the taxation of net income of such Lender); provided, that
with respect to any withholding the foregoing shall not
apply to any withholding tax described in sections 1441,
1442 or 3406 of the Code, or any succeeding provision of any
legislation that amends, supplements or replaces any such
section, or to any tax, levy, impost, duty, charge, fee,
deduction or withholding that results from any noncompliance
by a Lender with any federal, state or foreign law or from
any failure by a Lender to file or furnish any report,
return, statement or form the filing or furnishing of which
would not have an adverse effect on such Lender and would
eliminate such tax, impost, duty, deduction or withholding;
In any such event, such Lender shall promptly notify the Agent
thereof, and of the reasons therefor, and the Agent shall
promptly notify the Borrower thereof in writing stating the
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reasons provided to the Agent by such Lender therefor and the
additional amounts required to fully compensate such Lender for
such increased or new cost or reduced amount as reasonably
determined by such Lender. Such additional amounts shall be
payable on each date on which interest is to be paid hereunder
or, if there is no outstanding principal amount under any of the
Notes, within 10 Business Days after the Borrower's receipt of
said notice. Such Lender's certificate as to any such increased
or new cost or reduced amount (including calculations, in
reasonable detail, showing how such Lender computed such cost or
reduction) shall be submitted by the Agent to the Borrower and
shall, in the absence of manifest error, be conclusive. In
determining any such amount, the Lender(s) may use any reasonable
averaging and attribution methods. Notwithstanding anything to
the contrary set forth above, the Borrower shall not be obligated
to pay any amounts pursuant to this SECTION 2.9.4 as a result of
any requirement or change referenced above with respect to any
period prior to the one hundred and eightieth (180th) day prior
to the date on which the Borrower is first notified thereof
(other than any amounts which relate to any such requirement or
change which is adopted with retroactive effect in which case the
Borrower shall be obligated to pay all such amounts accrued from
the date as of which such requirement or change is retroactively
effective) unless the failure to give such notice within such one
hundred and eighty (180) day period resulted from reasonable
circumstances beyond such Lender's reasonable control.
SECTION 2.9.5. LIBOR FUNDING LOSSES. In the event
that any payment or prepayment of a Libor Loan is received on a
date other than the last day of an Interest Period, such payment
or prepayment shall be held by the Agent in a separate account
and be pledged to the Agent as collateral for the obligations of
the Borrower arising in connection with this Agreement, the Notes
and the other Financing Documents until the end of the then
current Interest Period, at which time the Agent shall apply such
payment or prepayment, for the accounts of the Lenders in
accordance with their Pro Rata Shares, to the outstanding Libor
Loans. Notwithstanding the foregoing, in the event any of the
Lenders shall incur any loss or expense (including, without
limitation, any loss or expense incurred by reason of the
liquidation or reemployment of deposits or other funds acquired
by such Lender to fund or maintain all or any portion of the
Loans as Libor Loans) as a result of:
(i) payment or prepayment by the Borrower of all or
any portion of any Libor Loan on a date other than the
Interest Adjustment Date for such Libor Loan, for any
reason; provided, however that this clause shall not be
deemed to grant the Borrower any right to convert a Libor
Loan to a Prime Rate Loan prior to the end of any Interest
Period or to imply such right;
(ii) conversion of all or any portion of any Libor
Loan on a day other than the last day of an Interest Period
applicable to such Loan to a Prime Rate Loan for any reason
including, without limitation, acceleration of the Loans
upon or after an Event of Default, any Interest Rate
Election or any other cause whether voluntary or involuntary
and whether or not referred to or described in this
Agreement, other than any such conversion resulting solely
from application of SECTIONS 2.9.2 or 2.9.3 by any Lender;
or
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(iii) any failure by the Borrower to borrow the Loans
as Libor Loans on the date specified in any Interest Rate
Election selecting the Libor Rate, other than any such
failure resulting solely from application of SECTIONS 2.9.2
or 2.9.3 by any Lender;
such Lender shall promptly notify the Agent thereof, and of the
reasons therefor. Upon the request of the Agent, the Borrower
shall pay directly to the Agent for the account of such Lender
such amount as will (in the reasonable determination of such
Lender, which shall be correct in the absence of manifest error)
reimburse such Lender for such loss or expense. Each Lender
shall furnish to the Borrower, upon written request from the
Borrower received by the Agent, a written statement setting forth
the computation of any such amounts payable to such Lender under
this SECTION 2.9.5.
SECTION 2.9.6. BANKING PRACTICES. Each Lender agrees
that upon the occurrence of any of the events described in
SECTIONS 2.2.3 and/or 2.9.2, 2.9.4 or 2.9.5, such Lender will
exercise all reasonable efforts to take such reasonable actions
at no expense to such Lender (other than reasonable expenses
which are covered by the Borrower's advance deposit of funds with
such Lender for such purpose, or if such Lender agrees, which the
Borrower has agreed to pay or reimburse to such Lender in full
upon demand), in accordance with such Lender's usual banking
practices in such situations and subject to any statutory or
regulatory requirements applicable to such Lender, as such Lender
may take without the consent or participation of any other Person
to, in the case of an event described in SECTIONS 2.2.3 and/or
2.9.4 or 2.9.5, mitigate the cost of such events to the Borrower
and, in the case of an event described in SECTIONS 2.9.2(i), (ii)
or (iii), to seek Dollar deposits in any other interbank Libor
market in which such Lender regularly participates and in which
the applicable determination(s) described in SECTIONS 2.9.2(i),
(ii) or (iii), as the case may be, does not apply.
SECTION 2.9.7. BORROWER'S OPTIONS ON UNAVAILABILITY OR
INCREASED COST OF LIBOR LOANS. In the event of any conversion of
all or any portion of any Lender's Pro Rata Share of any Libor
Loans to a Prime Rate Loan for reasons beyond the Borrower's
control or in the event that any Lender's Pro Rata Share of all
or any portion of the Libor Loans becomes subject, under SECTIONS
2.9.4 or 2.9.5, to additional costs, the Borrower shall have the
option, subject to the other terms and conditions of this
Agreement, to convert such Lender's Pro Rata Share to a Prime
Rate Loan by making Interest Rate Elections for Interest Periods
which (i) end on the Interest Adjustment Date for such Libor Loan
or (ii) end on Business Days occurring prior to such Interest
Adjustment Date, in which case, at the end of the last of such
Interest Periods any such Libor Rate Loan shall automatically
convert to a Prime Rate Loan and the Borrower shall have no
further right to make an Interest Rate Election with respect to
such Prime Rate Loan other than an Interest Rate Election which
is effective on the Interest Adjustment Date for such Libor Loan.
The Borrower's options set forth in this SECTION 2.9.7 may be
exercised, if and only if the Borrower pays, concurrently with
delivery to the Agent of each such Interest Rate Election and
thereafter in accordance with SECTIONS 2.9.4, 2.9.5 and 2.9.6 all
amounts provided for therein to the Agent in accordance with this
Agreement.
If the Borrower shall, as a result of the requirements
of SECTION 2.9.4 above, be required to pay any Lender the
additional costs referred to therein, but not be required to pay
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such additional costs to the other Lender or Lenders and the
Borrower, in its sole discretion, shall deem such additional
amounts to be material or in the event that Libor Loans from a
Lender are unavailable to the Borrower as a result solely of the
provisions of SECTIONS 2.9.2, 2.9.3 or 2.9.4, but are available
from the other Lender or Lenders, the Borrower shall have the
right to substitute another bank satisfactory to the Agent for
such Lender which is entitled to such additional costs or which
is relieved from making Libor Loans and the Agent shall use
reasonable efforts (with all reasonable costs of such efforts by
the Agent to be borne by the Borrower) to assist the Borrower to
locate such substitute bank. Any such substitution shall take
place in accordance with SECTION 9.11 and otherwise be on terms
and conditions reasonably satisfactory to the Agent, and until
such time as such substitution shall be consummated, the Borrower
shall continue to pay such additional costs and comply with the
above-referenced Sections. Upon any such substitution, the
Borrower shall pay or cause to be paid to the Lender that is
being replaced, all principal, interest (to the date of such
substitution) and other amounts owing hereunder to such Lender
and such Lender will be released from liability hereunder.
SECTION 2.9.8. ASSUMPTIONS CONCERNING FUNDING OF LIBOR
LOANS. The calculation of all amounts payable to the Lenders
under this SECTION 2.9 shall be made as though each Lender
actually funded its relevant Libor Loans through the purchase of
a deposit in the London interbank market bearing interest at the
Libor Rate in an amount equal to that Libor Loan and having a
maturity comparable to the relevant Interest Period and through
the transfer of such deposit from an offshore office of such
Lender to a domestic office of such Lender in the United States
of America; provided, however, that each Lender may fund each of
its Libor Loans in any manner it sees fit and the foregoing
assumption shall be utilized solely for the calculation of
amounts payable under this SECTION 2.9.
SECTION 2.10. INTEREST RATE PROTECTION. On or before
March 31, 1998, the Borrower shall enter into an interest rate
protection arrangement covering not less than the sum of (y) one
half of the then outstanding total Indebtedness for Borrowed
Money (including, without limitation, the Subordinated Debt)
MINUS (z) the then outstanding Subordinated Debt. Such interest
rate protection arrangement may consist of any one or a
combination of the following: (i) the purchase of an interest
rate swap arrangement from a financial institution reasonably
acceptable to the Majority Lenders covering such Loans
effectively converting the Borrower's interest payment
obligations with respect to such portion of the Term Loans to a
fixed rate per annum then prevailing in the market, for a term
expiring not earlier than March 31, 2001 or (ii) the purchase of
an interest rate cap from a financial institution reasonably
acceptable to the Majority Lenders covering such Loans at a cap
rate per annum equal to the highest Libor Rate then in effect for
the Loans, plus one and one-half percent (1.5%) for a term
expiring not earlier than March 31, 2001. The other terms and
conditions of any such interest rate swap or interest rate cap
shall be reasonably satisfactory to the Majority Lenders.
ARTICLE 3.
CONDITIONS OF LENDING
SECTION 3.1. CONDITIONS PRECEDENT TO THE COMMITMENT AND
TO ALL LOANS.
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SECTION 3.1.1. THE COMMITMENT AND INITIAL LOANS. The
Commitment and the obligation of the Lenders to make the initial
Advances of the Loans and/or to issue any Letter of Credit or
Letter of Credit Agreement are subject to performance by the
Borrower of all of its obligations under this Agreement and to
the satisfaction of the conditions precedent that all legal
matters incident to the transactions contemplated hereby or
incidental to the Loans shall be reasonably satisfactory to
counsel for the Agent and that the Lenders shall have received on
or before the Closing Date all of the following, each dated the
Closing Date or another date acceptable to the Lenders and each
to be in form and substance reasonably satisfactory to the Agent
or if any of the following is not a deliverable, the satisfaction
of such condition in form and substance reasonably satisfactory
to the Agent:
SECTION 3.1.1.1. The Financing Documents,
including, without limitation, those hereinafter set forth and
the Borrower's and any Subsidiary's certificate of incorporation
or other organizational documents, bylaws and each agreement or
instrument relating thereto, which such materials shall be
reasonably satisfactory to the Lenders.
SECTION 3.1.1.2. Certificate of the secretary,
clerk or similar officer, as applicable of the Borrower and each
Subsidiary certifying as to the resolutions of the shareholders
or board of directors of the Borrower and each Subsidiary
authorizing and approving each of the Financing Documents to
which the Borrower and each Subsidiary is a party and other
matters contemplated hereby and certifying as to the names and
signatures of the Authorized Representative(s) of the Borrower
and each Subsidiary authorized to sign each Financing Document to
be executed and delivered by or on behalf of the Borrower and
each Subsidiary. The Agent and the Lenders may conclusively rely
on each such certificate until the Agent shall receive a further
certificate canceling or amending the prior certificate and
submitting the signatures of the Authorized Representative(s)
named in such further certificate.
SECTION 3.1.1.3. Favorable opinions of Hill &
Barlow, counsel for the Borrower, Brown & Bain, Baker & Daniels,
Stone, LaFaver & Stone and Blakemore & Mitsuki, special local
counsel for the Borrower, all in form and substance reasonably
satisfactory to the Agent.
SECTION 3.1.1.4. An Officer's Certificate stating
that:
SECTION 3.1.1.4.1. The representations and
warranties contained in SECTION 4.1 and/or contained in any of
the other Financing Documents are correct on and as of the
Closing Date as though made on and as of such date; and
SECTION 3.1.1.4.2. No Default or Event of
Default has occurred and is continuing, or would result from the
making of the Loans.
SECTION 3.1.1.5. Certificates of good standing or
legal existence of the secretaries of state (or equivalent
officials) of the states (or jurisdictions) of organization and
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qualification of and covering the Borrower and any Subsidiaries
dated reasonably near the Closing Date.
SECTION 3.1.1.6. Evidence that (i) the ownership
interests in the Borrower and the Subsidiaries are as set forth
in EXHIBIT 1.1 and that such equity interests are owned free of
any Liens or charge, other than the Permitted Encumbrances and
(ii) that except for receipt and application of certain proceeds
of the Loans, the Related Transactions have been completed in
accordance with the Related Transaction Documents, without any
waiver or amendment of any term or condition contained therein
without the prior written approval of the Lenders, and in
compliance with any applicable laws and necessary governmental
authority approvals.
SECTION 3.1.1.7. A Request and an Interest Rate
Election.
SECTION 3.1.1.8. All documents, instruments and
agreements necessary to terminate, cancel and discharge the
documents, instruments and agreements evidencing or securing any
and all existing Indebtedness of the Borrower and any Subsidiary
and Liens securing such Indebtedness other than those listed in
EXHIBIT 3.1.1.8.
SECTION 3.1.1.9. Payment to the Agent and the
Lenders of the fees specified in this Agreement or in the Fee
Letter as being payable on the Closing Date and all reasonable
out-of-pocket costs and expenses incurred by the Agent and Fleet
in connection with the transactions contemplated hereby,
including, but not limited to, reasonable outside legal expenses
and any accounting fees, auditing fees, appraisal fees, and other
fees associated with any independent analyses of the Borrower and
any Subsidiary and evidence that all other reasonable fees and
costs payable by the Borrower in connection with the transactions
contemplated by the Financing Documents and completed on the
Closing Date have been paid in full.
SECTION 3.1.1.10. An Officer's Certificate in the
form of EXHIBIT 3.1.1.10, duly completed and reflecting, INTER
ALIA, compliance by the Borrower as of the opening of business on
the first Business Day after the Closing Date but based on the
Borrower's financial information as of the last day of the
Borrower's most recent fiscal quarter, adjusted to give effect to
the Loans made on the Closing Date and completion of the Related
Transactions to be completed on or prior to the Closing Date,
with the financial covenants provided for herein.
SECTION 3.1.1.11. Such other information about
the Borrower and/or its Business Condition as the Lenders may
reasonably request.
SECTION 3.1.1.12. True copies of, and/or true
copies of any revisions to, the financial statements, the
Projections, the pro forma Closing Date financial statements
giving effect to the Loans, the Subordinated Debt to be received
on or prior to the Closing Date and completion of the other
Related Transactions to be completed on or prior to the Closing
Date, and other information provided pursuant to SECTION 4.1.5
and certification by the Borrower of the Projections.
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SECTION 3.1.1.13. Certificates of fire, business
interruption, liability and extended coverage insurance policies,
each such policy to name the Agent as mortgagee and loss payee
and, on all liability policies, as additional insured.
SECTION 3.1.1.14. True descriptions of any
pending or threatened litigation against or by Borrower or any
Subsidiary.
SECTION 3.1.1.15. Evidence that all necessary
material third party consents to the Related Transactions and the
Loans have been obtained and remain in effect without the
imposition of any conditions or terms not reasonably acceptable
to the Lenders, all required filings with any governmental
authority have been duly completed and any applicable waiting
periods shall have expired without any adverse action being taken
by any competent authority, including, without limitation,
filings with the Federal Trade Commission and waiting periods
under the Clayton Act and Section 803.10(b) of the pre-merger
notification requirements under the Hart Scott Rodino Anti-Trust
Improvements Act of 1976.
SECTION 3.1.1.16. The financial statements
described in SECTION 4.1.5 together with the Borrower's pro forma
Closing Date balance sheet. Such financial statements shall be
accompanied by an Officer's Certificate of the chief financial
officer of the Borrower to the effect that (i) the
representations of the Borrower set forth in SECTION 4.1.14 are
accurate as of the Closing Date and (ii) that no Material Adverse
Effect has occurred since the date of the Borrower's most recent
audited financial statements delivered to the Lenders except as
set forth or reflected in the financial statements described in
SECTION 4.1.5 or otherwise disclosed in writing and acceptable to
the Agent.
SECTION 3.1.1.17. True copies of the Related
Transaction Documents and all documents, instruments and
agreements relating to the Borrower's capital structure.
SECTION 3.1.1.18. The fact that the
representations and warranties of the Borrower contained in
Article 4, INFRA, and in each of the other Financing Documents
are true and correct in all material respects on and as of the
Closing Date except as altered hereafter by actions not
prohibited hereunder. The Borrower's delivery of each Note to
the Lenders and of each Request to the Agent shall be deemed to
be a representation and warranty by the Borrower as of the date
thereof to such effect.
SECTION 3.1.1.19. That there has been no
enactment of any law or regulation by any governmental authority
which would make it (i) unlawful, (ii) prevent, (iii) restrain or
(iv) impose conditions which the Lenders determine to be adverse,
in any respect as to the foregoing, to the making of the Loans
and/or the completion of the Related Transactions.
SECTION 3.1.1.20. The Security Documents, after
the completion of any required filings or recordations, will
grant to the Agent perfected, first priority security interests
or mortgages, as the case may be, with respect to the collateral
identified therein and the Agent shall received the favorable
opinions of counsel referred to in SECTION 3.1.1.3 above with
respect to such perfection. The Agent shall also have received
such searches, landlord consents, access agreements and/or title
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insurance commitments as reasonably requested by the Agent, all
in form and substance reasonably satisfactory to the Agent and/or
its counsel. Without limiting the generality of the foregoing,
the Agent shall be reasonably satisfied with the terms and
conditions of all real property leases in which the Borrower and
any Subsidiary has a leasehold interest, including the terms of
such leaseholds and the assumability of the lessee's obligations
thereunder upon the transfer of or foreclosure upon of the
Borrower's or any Subsidiary's leasehold interest.
SECTION 3.1.1.21. No Material Adverse Effect has
occurred and there shall exist no action, suit, investigation,
litigation or proceeding pending or threatened in any court or
before any arbitrator or governmental or regulatory agency or
authority that could reasonably be expected to result in a
Material Adverse Effect.
SECTION 3.1.1.22. All information and materials
supplied to the Agent prior to the date hereof shall be true and
correct in all material aspects; and no additional information
shall have come to the attention of the Agent or the Lenders that
is inconsistent in any material respect with the information and
materials supplied to the Agent prior to the date hereof or that
could reasonably be expected to have a Material Adverse Effect.
SECTION 3.1.1.23. The Agent shall be satisfied
with the results of its discussions with selected customers and
suppliers of Wells.
SECTION 3.1.1.24. The Agent shall be satisfied
with the results of its due diligence examination of Wells,
including without limitation, discussions with Wells' management,
visits to Wells' facilities and review of other business and
financial information about Wells as may be requested from time
to time by the Agent.
SECTION 3.1.1.25. The Agent shall have received
an environmental assessment report, in form and substance
satisfactory to the Agent, from an environmental consulting firm
acceptable to the Agent, which report shall identify existing and
potential environmental concerns, and shall quantify related
costs and liabilities, associated with any manufacturing
facilities of the Borrower and any of the Subsidiaries, and the
Agent shall be satisfied with the nature and amount of any such
matters and with the Borrower's plans with respect thereto.
SECTION 3.1.2. THE COMMITMENT AND THE LOANS The
Commitment and the obligation of each Lender to make or maintain
its Pro Rata Share of any Advance or Loan and/or to issue any
Letter of Credit or Letter of Credit Agreement are subject to
performance by the Borrower of all its obligations under this
Agreement and to the satisfaction of the following further
conditions precedent:
(a) The fact that, immediately prior to and upon the
making of each Loan, no Event of Default or Default shall have
occurred and be continuing;
(b) The fact that the representations and warranties
of the Borrower contained in Article 4, INFRA and in each of the
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other Financing Documents, are true and correct in all material
respects on and as of the date of each Advance or Loan except as
altered hereafter by actions consented to or not prohibited
hereunder. The Borrower's delivery of the Notes to the Lenders
and of each Request to the Agent shall be deemed to be a
representation and warranty by the Borrower as of the date of
such Advance or Loan as to the facts specified in SECTIONS
3.1.2(a) and (b);
(c) Receipt by Agent on or prior to the Business Day
specified in the definition of Interest Rate Election of a
written Request stating the amount requested for the Loan or
Advance in question and an Interest Rate Election for such Loan
or Advance, all signed by a duly authorized officer of the
Borrower on behalf of the Borrower;
(d) That there exists no law or regulation by any
governmental authority having jurisdiction over the Agent or any
of the Lenders which would make it unlawful in any respect for
such Lender to make its Pro Rata Share of the Loan or Advance,
including, without limitation, Regulations U, T, G and X of the
Board of Governors of the Federal Reserve System; and
(e) No Material Adverse Effect has occurred.
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES
SECTION 4.1. REPRESENTATIONS AND WARRANTIES OF THE
BORROWER. The Borrower represents and warrants to the Agent and
the Lenders that, after giving effect to the Loans and the
application of the proceeds thereof (which representations and
warranties shall survive the making of the Loans) as follows:
SECTION 4.1.1. ORGANIZATION AND EXISTENCE. The
Borrower and any Subsidiary is a corporation, duly organized,
validly existing and in good standing under the laws of the state
(or applicable jurisdiction) of its incorporation or organization
and is duly qualified to do business in all jurisdictions in
which such qualification is required, all as noted on EXHIBIT
4.1.1, except where failure to so qualify would not have a
Material Adverse Effect, and has all requisite power and
authority to conduct its business, to own its properties and to
execute and deliver, and to perform all of its obligations under
the Financing Documents.
SECTION 4.1.2. AUTHORIZATION AND ABSENCE OF DEFAULTS.
Except as described on EXHIBIT 4.1.2, the execution, delivery to
the Agent and/or the Lenders and performance by the Borrower and
any Subsidiary of the Financing Documents and Related Transaction
Documents have been duly authorized by all necessary corporate
and governmental action and do not and will not (i) require any
consent or approval of the shareholders or board of directors of
the Borrower or any Subsidiary which has not been obtained, (ii)
violate any provision of any law, rule, regulation (including,
without limitation, Regulations U and X of the board of governors
of the federal reserve system), order, writ, judgment,
injunction, decree, determination or award presently in effect
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having applicability to the Borrower and/or any Subsidiary and/or
the articles of organization or by-laws, as applicable, of the
Borrower and/or any Subsidiary, (iii) result in a material breach
of or constitute a material default under any indenture or loan
or credit agreement or any other agreement, lease or instrument
to which the Borrower and/or any Subsidiary is or are a party or
parties or by which it or they or its or their properties may be
bound or affected; or (iv) result in, or require, the creation or
imposition of any Lien on any of the Borrower's and/or any
Subsidiary's respective properties or revenues other than Liens
granted to the Agent by any of the Financing Documents securing
the Obligations. The Borrower and any Subsidiary are in
compliance with any such applicable law, rule, regulation, order,
writ, judgment, injunction, decree, determination or award or any
such indenture, other agreement, lease or instrument, except
where the failure to be in compliance does not have a Material
Adverse Effect.
SECTION 4.1.3. ACQUISITION OF CONSENTS. Except as
noted on EXHIBIT 4.1.3, no authorization, consent, approval,
license, exemption of or filing or registration with any court or
governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, other than those which have
been obtained, is or will be necessary to the valid execution and
delivery to the Agent and/or the Lenders or performance by the
Borrower or any Subsidiary of any Financing Documents and each of
the foregoing which has been obtained is in full force and
effect.
SECTION 4.1.4. VALIDITY AND ENFORCEABILITY. Each of
the Financing Documents when delivered hereunder will constitute
the legal, valid and binding obligations of each of the Borrower
and any Subsidiary which is or are a party thereto enforceable
against the Borrower, and any Subsidiary which is or are a party
thereto in accordance with their respective terms except as the
enforceability thereof may be limited by the effect of general
principles of equity and bankruptcy and similar laws affecting
the rights and remedies of creditors generally.
SECTION 4.1.5. FINANCIAL INFORMATION. The following
information with respect to the Borrower and its Subsidiaries has
heretofore been furnished to the Agent:
SECTION 4.1.5.1. Audited annual financial
statements of the Borrower for the periods ended December 31,
1995 and December 31, 1996 and the following consolidated
financial statements of Wells and Subsidiaries of Wells:
consolidated statements of income and cash flow for the periods
from May 29, 1994 to June 3, 1995, from June 4, 1995 to June 1,
1996, from May 3, 1996 to April 5, 1997, and from April 6, 1997
to September 30,1997 and consolidated balance sheets as of June
3,1995, June 1, 1996, April 5, 1997 and September 30, 1997;
SECTION 4.1.5.2. Interim, consolidated balance
sheets of the Borrower and any Subsidiaries (excluding, however,
Wells and its Subsidiaries) as of the end of the most recent
fiscal quarter prior to the Closing for which such statements are
available and the related statements of income and cash flows and
shareholders' equity, such balance sheets and statements to be
prepared and certified by an Authorized Representative in an
Officer's Certificate as having been prepared in accordance with
GAAP except for footnotes and year-end adjustments, and to be in
form reasonably satisfactory to the Agent;
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SECTION 4.1.5.3. The Projections; and
SECTION 4.1.5.4. The pro forma financial
statements of the Borrower as of the Closing Date provided
pursuant to SECTION 3.1.1.12.
Each of the financial statements referred to above
in SECTION 4.1.5.1 was prepared in accordance with GAAP (subject,
in the case of interim statements, to the absence of footnotes
and normal year-end adjustments) applied on a consistent basis,
except as stated therein. To the best of the Borrower's
knowledge, each of the financial statements referred to above in
SECTIONS 4.1.5.1 and 4.1.5.4 fairly presents the financial
condition or pro forma financial condition, as the case may be,
of the Person being reported on at such dates and is complete and
correct in all material respects and no Material Adverse Effect
has occurred since the date thereof. The Projections were
prepared by the Borrower in good faith and are based on
reasonable assumptions, it being recognized that projections as
to future results are not assertions of fact and that actual
results for the periods cited therein may differ from the results
projected therein.
SECTION 4.1.6. NO LITIGATION. There are no actions,
suits or proceedings pending or, to the knowledge of the
Borrower, threatened against or affecting the Borrower and/or any
Subsidiary or any of their properties before any court or
governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, which if determined
adversely to the Borrower and/or any Subsidiary would draw into
question the legal existence of the Borrower and/or any such
Subsidiary and/or the validity, authorization and/or
enforceability of any of the Financing Documents and/or any
provision thereof and/or could have a Material Adverse Effect
except those matters, if any, described on EXHIBIT 4.1.6 none of
which, in Borrower's good faith opinion, will (i) have such
Material Adverse Effect or (ii) draw into question (a) the legal
existence of the Borrower and/or any such Subsidiary or (b) the
validity, authorization and/or enforceability of any of the
Financing Documents and/or any provision thereof.
SECTION 4.1.7. REGULATION U. The Borrower is not
engaged in the business of extending credit for the purpose of
purchasing or carrying "margin stock" within the meaning of
Regulation U of the Board of Governors of the Federal Reserve
System (12 CFR Part 221), does not own and has no present
intention of acquiring any such margin stock or a "margin
security" within the meaning of Regulation G of the Board of
Governors of the Federal Reserve System (12 CFR, Part 207). None
of the proceeds of the Loans will be used directly or indirectly
by the Borrower for the purpose of purchasing or carrying, or for
the purpose of reducing or retiring any Indebtedness which was
originally incurred to purchase or carry, any such margin
security or margin stock or for any other purpose which might
constitute the transaction contemplated hereby a "purpose credit"
within the meaning of said Regulation G or Regulation U, or cause
this Agreement to violate any other regulation of the Board of
Governors of the Federal Reserve System or the Securities and
Exchange Act of 1934, as amended, or any rules or regulations
promulgated under either said statute.
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SECTION 4.1.8. ABSENCE OF ADVERSE AGREEMENTS. Neither
the Borrower nor any Subsidiary is a party to any indenture, loan
or credit agreement or any lease or other agreement or instrument
or subject to any corporate or partnership restriction which
would have a Material Adverse Effect.
SECTION 4.1.9. TAXES. The Borrower and each
Subsidiary has filed all tax returns (federal, state and local)
required to be filed and paid all taxes shown thereon to be due,
including interest and penalties, except for those taxes, if any,
which are being contested in good faith and by appropriate
proceedings, and for which proper reserve or other provision has
been made in accordance with GAAP and except where any failure to
file or pay would not have a Material Adverse Effect on the
Borrower or any Subsidiary and except as described in EXHIBIT
4.1.9.
SECTION 4.1.10. ERISA. Borrower and any Commonly
Controlled Entity do not maintain or contribute to any Plan which
is not in substantial compliance with ERISA, or any Single
Employer Plan which has incurred any accumulated funding
deficiency within the meaning of sections 412 and 418 of the Code
or which has applied for or obtained a waiver from the Internal
Revenue Service of any minimum funding requirement under section
412 of the Code. Borrower and any Commonly Controlled Entity
have not incurred any liability to the PBGC in connection with
any Plan covering any employees of Borrower or any Commonly
Controlled Entity in amount exceeding Fifty Thousand Dollars
($50,000) in the aggregate or ceased operations at any facility
or withdrawn from any Plan in a manner which could subject any of
them to liability under sections 4062(e), 4063 or 4064 of ERISA
in amount exceeding Fifty Thousand Dollars ($50,000) in the
aggregate, and know of no facts or circumstance which might give
rise to any liability of Borrower or any Commonly Controlled
Entity to the PBGC under Title IV of ERISA in amount exceeding
Fifty Thousand Dollars ($50,000) in the aggregate. Borrower and
any Commonly Controlled Entity have not incurred any withdrawal
liability in amount exceeding Fifty Thousand Dollars ($50,000) in
the aggregate (including but not limited to any contingent or
secondary withdrawal liability) within the meaning of sections
4201 and 4202 of ERISA, to any Multiemployer Plan, and no event
has occurred, and there exists no condition or set of
circumstances known to the Borrower, which presents a risk of the
occurrence of any withdrawal from or the partition, termination,
reorganization or insolvency of any Multiemployer Plan which
could result in any liability to a Multiemployer Plan in amount
exceeding Fifty Thousand Dollars ($50,000) in the aggregate.
Except for payments for which the minimum funding
requirement has been waived under section 412 of the Code, full
payment has been made of all amounts which Borrower and any
Commonly Controlled Entity are required to have paid as
contributions to any Plan under applicable law or under any plan
or any agreement relating to any Plan to which Borrower or any
Commonly Controlled Entity is a party. Borrower and each
Commonly Controlled Entity have made adequate provision for
reserves to meet contributions that have not been made because
they are not yet due under the terms of any Plan or related
agreements.
Neither Borrower nor any Commonly Controlled Entity has
any knowledge, nor do any of them have any reason to believe,
that any Reportable Event which could result in a liability or
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<PAGE>
liabilities of Fifty Thousand Dollars ($50,000) or more in the
aggregate has occurred with respect to any Plan.
SECTION 4.1.11. OWNERSHIP OF PROPERTIES.
SECTION 4.1.11.1. Except for Permitted
Encumbrances, Borrower and any Subsidiary has good title to all
of its properties and assets free and clear of all restrictions
and Liens of any kind other than those which could not have a
Material Adverse Effect or a material adverse effect on the
validity, authorization and/or enforceability of the Financing
Documents and/or any provision thereof.
SECTION 4.1.11.2. EXHIBIT 4.1.11 accurately and
completely lists the location of all real property owned or
leased by Borrower or any Subsidiary. Borrower and each
Subsidiary enjoys quiet possession under all material leases of
real property to which it is a party as a lessee, and all of such
leases are valid, subsisting and, to Borrower's knowledge, in
full force and effect.
SECTION 4.1.11.3. To Borrower's knowledge, except
as specified in EXHIBIT 4.1.11, none of the real property
occupied by Borrower or any Subsidiary is located within any
federal, state or municipal flood plain zone.
SECTION 4.1.11.4. Except as set forth in EXHIBIT
4.1.11, all of the material properties used in the conduct of the
Borrower's and each Subsidiary's business (i) are in good repair,
working order and condition (reasonable wear and tear excepted)
and reasonably suitable for use in the operation of Borrower's,
and each Subsidiary's business; and (ii) to Borrower's knowledge
are currently operated and maintained, in all material respects,
in accordance with the requirements of applicable governmental
authorities.
SECTION 4.1.12. ACCURACY OF REPRESENTATIONS AND
WARRANTIES. None of Borrower's representations or warranties set
forth in this Agreement or in any document or certificate
furnished pursuant to this Agreement or in connection with the
transactions contemplated hereby contains any untrue statement of
a material fact or omits to state a material fact necessary to
make any statement of fact contained herein or therein, in light
of the circumstances under which it was made, not misleading;
except that unless provided otherwise any such document or
certificate which is dated speaks as of the date stated and not
the present.
SECTION 4.1.13. NO INVESTMENT COMPANY. Neither the
Borrower nor any Subsidiary is an "investment company" or a
company "controlled" by an "investment company" as such terms are
defined in the Investment Company Act of 1940, as amended, which
is required to register thereunder.
SECTION 4.1.14. SOLVENCY, ETC. After giving effect to
the consummation of each Loan outstanding and to be made under
this Agreement as of the time this representation and warranty is
given, the Borrower (a) will be able to pay its debts as they
become due, (b) will have funds and capital sufficient to carry
on its business and all businesses in which it is about to
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<PAGE>
engage, and (c) will own property in the aggregate having a value
both at fair valuation and at fair saleable value in the ordinary
course of the Borrower's business greater than the amount
required to pay its Indebtedness, including for this purpose
unliquidated and disputed claims. The Borrower will not be
rendered insolvent by the execution and delivery of this
Agreement and the consummation of any transactions contemplated
herein.
SECTION 4.1.15. APPROVALS. Except as set forth in
EXHIBIT 4.1.3, all approvals required from all Persons including
without limitation all governmental authorities with respect to
the Financing Documents have been obtained.
SECTION 4.1.16. OWNERSHIP INTERESTS. The schedule of
ownership interests in the Borrower and any Subsidiaries set
forth in EXHIBIT 1.1 is true, accurate and complete and the
Investments to be made for all ownership interests disclosed
therein have in fact been fully paid in immediately available
Dollars after giving effect to the closing of the Related
Transactions.
SECTION 4.1.17. LICENSES, REGISTRATIONS, COMPLIANCE
WITH LAWS, ETC. Except as set forth on EXHIBIT 4.1.17, the
Borrower and each Subsidiary maintains in full force and effect
all permits, governmental licenses, registrations and approvals,
material to carrying out of Borrower's and each of the
Subsidiaries' businesses as presently conducted and as required
by law or the rules and regulations of any federal, foreign
governmental, state, county or local association, corporation or
governmental agency, body, instrumentality or commission having
jurisdiction over the Borrower or any of the Subsidiaries,
including but not limited to the United States Environmental
Protection Agency, the United States Department of Labor, the
United States Occupational Safety and Health Administration, the
United States Equal Employment Opportunity Commission, the
Federal Trade Commission and the United States Department of
Justice and analogous and related state and foreign agencies.
All existing authorizations, licenses and permits are in full
force and effect, are duly issued in the name of, or validly
assigned to the Borrower or a Subsidiary and the Borrower or a
Subsidiary has full power and authority to operate thereunder.
There is no material violation or material failure of compliance
or, to Borrower's knowledge, allegation of such violation or
failure of compliance on the part of the Borrower or any
Subsidiary with any of the foregoing permits, licenses,
registrations, approvals, rules or regulations and there is no
action, proceeding or investigation pending or to the knowledge
of the Borrower threatened nor has the Borrower or any Subsidiary
received any notice of such which might result in the
termination or suspension of any such permit, license,
registration or approval which in any case could have a Material
Adverse Effect.
SECTION 4.1.18. PRINCIPAL PLACE OF BUSINESS; BOOKS AND
RECORDS. The Borrower's chief executive offices are located at
Borrower's addresses set forth in SECTION 9.6. All of the
Borrower's books and records are kept at one or more of its
addresses set forth in SECTION 9.6.
SECTION 4.1.19. SUBSIDIARIES. The Borrower has only
the Subsidiaries identified on EXHIBIT 1.1.
SECTION 4.1.20. COPYRIGHT. Except as set forth in
EXHIBIT 4.1.20 the Borrower has not violated any of the
provisions of the Copyright Revision Act of 1976, 17 U.S.C. 101,
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<PAGE>
ET SEQ. The Borrower has taken all actions reasonably necessary
to assert and protect its ownership interest in any copyrights
used by the Borrower and any Subsidiary in the conduct of their
respective business(es). EXHIBIT 4.1.20 accurately and
completely sets forth all copyrights held by the Borrower or any
of the Subsidiaries and contains exceptions to the
representations contained in this SECTION 4.1.20. No inquiries
regarding any such filings have been received by the Copyright
Office. The Borrower has not allocated revenues in any manner
inconsistent with the rules and regulations of the Copyright
Office.
SECTION 4.1.21. ENVIRONMENTAL COMPLIANCE. Neither the
Borrower nor, to the knowledge of the Borrower, any other Person:
SECTION 4.1.21.1. other than as disclosed on
EXHIBIT 4.1.21, or in respect of Hazardous Material used or
disposed of in compliance with law, has ever caused, permitted,
or suffered to exist any Hazardous Material to be spilled,
placed, held, located or disposed of on, under, or about, any of
the facilities owned, leased or used by the Borrower (the
"Premises"), or from the Premises into the atmosphere, any body
of water, any wetlands, or on any other real property, nor to
Borrower's knowledge does any Hazardous Material exist on, under
or about the Premises;
SECTION 4.1.21.2. has any knowledge that any of
the Premises has ever been used (whether by the Borrower or, to
the knowledge of the Borrower, by any other Person) as a
treatment, storage or disposal (whether permanent or temporary)
site for any Hazardous Waste as defined in 42 U.S.C.A. 6901, ET
SEQ. (the Resource Recovery and Conservation Act); and
SECTION 4.1.21.3. has any knowledge of any notice
of violation, Lien or other notice issued by any governmental
agency with respect to the environmental condition of the
Premises or any other property occupied by the Borrower, or any
other property which was included in the property description of
the Premises or such other real property within the preceding
three years except as disclosed to the Agent.
SECTION 4.1.22. MATERIAL AGREEMENTS, ETC.
EXHIBIT 4.1.22 attached hereto accurately and completely lists
all Material Agreements to which the Borrower or any of the
Subsidiaries are a party including without limitation all
software licenses, and all material construction, engineering,
consulting, employment, management, operating and related
agreements, if any, which are presently in effect. All of the
Material Agreements to which Borrower or any Subsidiary is a
party, are legally valid, binding, and, to Borrower's knowledge,
in full force and effect and neither the Borrower, any of the
Subsidiaries nor, to Borrower's knowledge, any other parties
thereto are in material default thereunder.
SECTION 4.1.23. PATENTS, TRADEMARKS AND OTHER PROPERTY
RIGHTS. EXHIBIT 4.1.23 attached hereto contains a complete and
accurate schedule of all registered trademarks, registered
copyrights and patents of the Borrower and/or any of the
Subsidiaries, and pending applications therefor, and all other
intellectual property in which the Borrower and/or any of the
Subsidiaries has any rights other than "off-the shelf" software
which is generally available to the general public at retail.
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<PAGE>
Except as set forth in EXHIBIT 4.1.23, the Borrower and any
Subsidiaries own, possess, or have licenses to use all the
patents, trademarks, service marks, trade names, copyrights and
non-governmental licenses, and all rights with respect to the
foregoing, necessary for the conduct of their respective
businesses as now conducted, without, to the Borrower's knowledge
any conflict with the rights of others with respect thereto.
SECTION 4.1.24. RELATED TRANSACTION DOCUMENTS. The
Borrower has, prior to the date hereof, delivered to the Lenders
true copies of the Related Transaction Documents, and each and
every amendment or modification thereto and, except for receipt
and application of certain proceeds of the Loans, the Related
Transactions have been completed in accordance with the Related
Transaction Documents, without any waiver or amendment of any
term or condition contained therein without the prior written
approval of the Lenders, and in compliance with any applicable
laws and necessary governmental authority approvals.
.
SECTION 4.1.25. MATERIAL ADVERSE EFFECT. No Material
Adverse Effect has occurred and there exists no action, suit,
investigation, litigation or proceeding pending or threatened in
any court or before any arbitrator or governmental or regulatory
agency or authority that could reasonably be expected to result
in a Material Adverse Effect.
SECTION 4.1.26. TRANSACTIONS WITH AFFILIATES. Except
as set forth on EXHIBIT 5.2(3), or except as contemplated by the
Related Transaction Documents and this Agreement, the Borrower
and each Subsidiary have not engaged in any transaction or
entered into any agreement with an Affiliate, except transactions
which are in the ordinary course upon fair and reasonable terms
and no less favorable to the Borrower or the Subsidiary than 5.1.10
could be obtained on an arm's length basis.
ARTICLE 5.
COVENANTS OF THE BORROWER
SECTION 5.1. AFFIRMATIVE COVENANTS OF THE BORROWER OTHER
THAN REPORTING REQUIREMENTS. From the date hereof and thereafter
for so long as there is Indebtedness of the Borrower to any
Lender and/or the Agent under any of the Financing Documents or
any part of the Commitment is in effect, the Borrower will, with
respect to itself and, unless noted otherwise below, with respect
to each of its Subsidiaries, ensure that each Subsidiary will,
unless the Majority Lenders shall otherwise consent in writing:
SECTION 5.1.1. PAYMENT OF TAXES, ETC. Pay and
discharge all taxes and 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 for the same which, if
unpaid, might become a Lien upon any of its properties, provided
that (unless and until foreclosure, restraint, sale or any
similar proceeding is pending and is not stayed, discharged or
bonded within 30 days after commencement) the Borrower shall not
be required to pay any such tax, assessment, charge, levy or
claim which is being contested in good faith and by proper
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<PAGE>
proceedings and for which proper reserve or other provision has
been made in accordance with GAAP, unless failure to pay could
result in a Material Adverse Effect.
SECTION 5.1.2. MAINTENANCE OF INSURANCE. Maintain
insurance in accordance with the Security Documents including,
without limitation, casualty, liability and business interruption
insurance reasonably acceptable to the Majority Lenders and, to
the extent not covered by any of the Security Documents, with
responsible and reputable insurance companies or associations in
such amounts and covering such risks as is usually carried by
companies engaged in similar businesses and owning similar
properties and in accordance with the requirements of any
governmental agency having jurisdiction over the Borrower and/or
any Subsidiary. The Borrower shall provide the Lenders with such
evidence as the Agent may request from time to time as to the
maintenance of all such insurance. In the event that the
Borrower or any Subsidiary shall be entitled to receive any
proceeds from any casualty insurance policies maintained by any
of them on account of any interest of the Borrower and/or any
Subsidiary in any property, which proceeds are in an aggregate
amount in excess of $250,000 with respect to any occurrence or
related series of occurrences in any 12-month period, such
proceeds shall be received by the Agent and, to the extent that
such proceeds result from a casualty to property of the Borrower
and/or any Subsidiary, so long as no Default or Event of Default
exists and is continuing and the Borrower elects to repair,
replace or restore such property, such proceeds shall be released
to the Borrower subject to reasonable procedures and conditions
established by the Agent to the extent necessary to so repair,
replace or restore such property within 3 months (or as soon as
reasonably practicable if such restoration, replacement or repair
is not susceptible to being completed within 3 months) from the
date of receipt of such proceeds by the Agent and failing such
application of said proceeds to so repair, replace or restore
such property as provided above, such amounts shall be
Extraordinary Receipts. Furthermore, with respect to all such
amounts referenced in the immediately preceding sentence, the
Agent shall have the right and is hereby constituted and
appointed the true and lawful attorney irrevocable of the
Borrower and each Subsidiary, in the name and stead of Borrower
and each Subsidiary, but in the uncontrolled discretion of said
attorney, (i) to adjust, sue for, compromise and collect any
amounts due under such insurance policies in the event of loss
and (ii) to give releases for any and all amounts received in
settlement of losses under such policies; and the same shall,
subject to SECTION 2.6.1.3 of this Agreement, at the option of
the Agent, be applied, after first deducting the costs of
collection, on account of any Indebtedness the payment of which
is secured by any of the Financing Documents, whether or not then
due, or, notwithstanding the claims of any subsequent lienor, be
used or paid over to the Borrower in accordance with reasonable
procedures established by the Agent for use in repairing or
replacing any damaged or destroyed collateral under any of the
Security Documents.
SECTION 5.1.3. PRESERVATION OF EXISTENCE, ETC.
Preserve and maintain in full force and effect its legal
existence, and all material rights, franchises and privileges in
the jurisdiction of its organization, preserve and maintain all
material licenses, governmental approvals, trademarks, patents,
trade secrets, copyrights and trade names owned or possessed by
it and which are necessary or, in the reasonable business
judgment of the Borrower, desirable in view of its business and
operations or the ownership of its properties and qualify or
remain qualified as a foreign corporation in each jurisdiction in
which such qualification is necessary or, in its reasonable
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<PAGE>
business judgment, desirable in view of its business and
operations and ownership of its properties except where the
failure to so qualify will not have a Material Adverse Effect.
SECTION 5.1.4. COMPLIANCE WITH LAWS, ETC. Comply with
the requirements of all present and future applicable laws,
rules, regulations and orders of any governmental authority
having jurisdiction over it and/or its business including,
without limitation, regulations of the United States Copyright
Office, except where the failure to comply would not have a
Material Adverse Effect.
SECTION 5.1.5. VISITATION RIGHTS. Permit, during
normal business hours and upon the giving of reasonable notice,
the Agent, the Lenders and any agents or representatives thereof,
to examine and make copies of (at Borrower's cost and expense)
and abstracts from the records and books of account of, and visit
the properties of the Borrower and any Subsidiary to discuss the
affairs, finances and accounts of the Borrower or any Subsidiary
with any of their partners, officers or management level
employees and/or any independent certified public accountant of
the Borrower and/or any Subsidiary.
SECTION 5.1.6. KEEPING OF RECORDS AND BOOKS OF
ACCOUNT. Keep adequate records and books of account, in which
complete entries will be made in accordance with GAAP and with
applicable requirements of any governmental authority having
jurisdiction over the Borrower and/or any Subsidiary in question,
reflecting all financial transactions.
SECTION 5.1.7. MAINTENANCE OF PROPERTIES, ETC.
Maintain and preserve all of its properties necessary or useful
in the proper conduct of its business, in good working order and
condition, ordinary wear and tear excepted, and in accordance
with each of the Security Documents.
SECTION 5.1.8. POST-CLOSING ITEMS. Complete in a
timely fashion all actions required in the Post-Closing Letter.
SECTION 5.1.9. OTHER DOCUMENTS, ETC. Except as
otherwise required by this Agreement, pay, perform and fulfill
all of its obligations and covenants under each material
document, instrument or agreement to which it is a party
including, without limitation, the Related Transaction Documents;
provided that so long as the Borrower or any Subsidiary is
contesting any claimed default by it or them under any of the
foregoing by proper proceedings conducted in good faith and for
which any proper reserve or other provision in accordance with
and to the extent required by GAAP has been made, such default
shall not be deemed a violation of this covenant.
SECTION 5.1.10. MINIMUM FIXED CHARGE COVERAGE RATIO.
Maintain at the end of each fiscal quarter of the Borrower in
each period set forth below a Fixed Charge Coverage Ratio of not
less than the ratio set forth below opposite such period, such
ratio to be measured (i) at each Borrower fiscal quarter end on
or prior to December 31, 1998 for the period commencing as of
January 1, 1998 and ending on such fiscal quarter end and (ii) at
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each Borrower fiscal quarter end thereafter for the rolling four
Borrower fiscal quarter period consisting of the Borrower fiscal
quarter then ending and the three immediately preceding Borrower
fiscal quarters:
<TABLE>
<CAPTION>
BORROWER FISCAL QUARTER(S) ENDING RATIO
================================= =====
<S> <C>
March 31, 1998 1.05:1.00
June 30, 1998 1.05:1.00
September 30, 1998 1.10:1.00
December 31, 1998 1.15:1.00
March 31, 1999 1.15:1.00
June 30, 1999 1.15:1.00
September 30, 1999 1.20:1.00
December 31, 1999 1.20:1.00
March 31, 2000 1.20:1.00
June 30, 2000 1.20:1.00
September 30, 2000 1.20:1.00
December 31, 2000 and thereafter 1.25:1.00
</TABLE>
SECTION 5.1.11. MINIMUM QUICK RATIO. Maintain at the
end of each fiscal quarter of the Borrower in each period set
forth below a ratio of (i) the sum of (w) cash on hand or on
deposit in any bank or trust company which has not suspended
business, (x) Cash Equivalent Investments (without duplication
with (w)), (y) net outstanding amount of accounts receivable,
less allowances for doubtful accounts and (z) unused borrowing
availability under the Revolving Credit Loan to (ii) the sum of
(x) Current Liabilities minus (y) the outstanding amount of the
Revolving Credit Loan (only to the extent included in Current
Liabilities) minus (z) current maturities of Indebtedness of not
less than the ratio set forth below opposite such period:
<TABLE>
<CAPTION>
BORROWER FISCAL QUARTER(S) ENDING RATIO
================================= =====
<S> <C>
March 31, 1998 through December 31, 1998 1.35:1.00
March 31, 1999 through December 31, 1999 1.50:1.00
March 31, 2000 through December 31, 2000 1.75:1.00
March 31, 2001 and thereafter 2.00:1.00
</TABLE>
Each item described in clauses (i) and (ii) of this SECTION
5.1.11 shall be calculated as of the last day of the Borrower
fiscal quarter and include only the item(s) in question of the
Borrower and its Subsidiaries on a consolidated basis.
SECTION 5.1.12. MAXIMUM RATIO OF TOTAL SENIOR DEBT TO
EBITDA. Maintain at the end of each fiscal quarter of the
Borrower in each period set forth below a ratio of (i) total
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<PAGE>
Senior Debt on a consolidated basis as of the last day of such
fiscal quarter to (ii) EBITDA, of not greater than the ratio set
forth below opposite such period:
<TABLE>
<CAPTION>
BORROWER FISCAL QUARTER(S) ENDING RATIO
================================= =====
<S> <C>
March 31, 1998 3.50:1.00
June 30, 1998 3.50:1.00
September 30, 1998 3.25:1.00
December 31, 1998 3.00:1.00
March 31, 1999 2.75:1.00
June 30, 1999 2.50:1.00
September 30, 1999 2.25:1.00
December 31, 1999 2.00:1.00
March 31, 2000 2.00:1.00
June 30, 2000 1.75:1.00
September 30, 2000 1.75:1.00
December 31, 2000 1.50:1.00
March 31, 2001 1.50:1.00
June 30, 2001 1.50:1.00
September 30, 2001 1.50:1.00
December 31, 2001 and thereafter 1.00:1.00
</TABLE>
SECTION 5.1.12A. MAXIMUM RATIO OF TOTAL INDEBTEDNESS
FOR BORROWED MONEY TO EBITDA. Maintain at the end of each fiscal
quarter of the Borrower in each period set forth below a ratio of
(i) total Indebtedness for Borrowed Money of the Borrower and its
Subsidiaries on a consolidated basis as of the last day of such
fiscal quarter to (ii) EBITDA, of not greater than the ratio set
forth below opposite such period:
<TABLE>
<CAPTION>
BORROWER FISCAL QUARTER(S) ENDING RATIO
================================= =====
<S> <C>
March 31, 1998 4.50:1.00
June 30, 1998 4.25:1.00
September 30, 1998 4.00:1.00
December 31, 1998 3.75:1.00
March 31, 1999 3.50:1.00
June 30, 1999 3.25:1.00
September 30, 1999 3.00:1.00
December 31, 1999 2.75:1.00
March 31, 2000 2.75:1.00
June 30, 2000 2.75:1.00
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<PAGE>
September 30, 2000 2.75:1.00
December 31, 2000 2.50:1.00
March 31, 2001 2.50:1.00
June 30, 2001 2.50:1.00
September 30, 2001 2.50:1.00
December 31, 2001 and thereafter 2.00:1.00
</TABLE>
PROVIDED, HOWEVER, that notwithstanding the above, from and after
the repayment by the Borrower of any of the Subordinated Debt,
the above ratios shall be deleted and the ratios set forth in
SECTION 5.1.12 above shall be substituted therefore and shall
thereafter be the ratios of the Total Indebtedness for Borrowed
Money to EBITDA required for compliance with this SECTION
5.1.12A.
SECTION 5.1.13. OFFICER'S CERTIFICATES AND REQUESTS.
Provide each Officer's Certificate required under this Agreement
and each Request so that the statements contained therein are
accurate and complete in all material respects.
SECTION 5.1.14. DEPOSITORY. Use the Agent as a
principal depository of Borrower's funds.
SECTION 5.1.15. CHIEF EXECUTIVE OFFICER. Maintain
John L. Dwight, Jr. as chief executive officer of the Borrower
and as the Person with principal executive, operating and
management responsibility for the Borrower's business or obtain a
replacement of comparable experience and training in the
Borrower's industry reasonably satisfactory to the Majority
Lenders within 120 days of his ceasing to act in such capacity.
SECTION 5.1.16. NOTICE OF PURCHASE OF REAL ESTATE AND
LEASES. Promptly notify the Agent in the event that the Borrower
shall purchase any real estate or enter into any lease of real
estate or of equipment material to the operation of the
Borrower's business, supply the Agent with a copy of the related
purchase agreement or of such lease, as the case may be, and if
requested by the Agent, execute and deliver, or cause to be
executed and delivered, to the Agent for the benefit of the
Lenders a deed of trust, mortgage, assignment or other document,
together with landlord consents, in the case of leased property,
reasonably satisfactory in form and substance to the Agent,
granting a valid first Lien (subject to any Liens permitted under
SECTION 5.2.1 hereof) on such real property or leasehold as
security for the Financing Documents, all subject to the
limitations of SECTION 5.2.17.
SECTION 5.1.17. ADDITIONAL ASSURANCES. From time to
time hereafter, execute and deliver or cause to be executed and
delivered, such additional instruments, certificates and
documents, and take all such actions, as the Agent shall
reasonably request for the purpose of implementing or
effectuating the provisions of the Financing Documents, and upon
the exercise by the Agent of any power, right, privilege or
remedy pursuant to the Financing Documents which requires any
consent, approval, registration, qualification or authorization
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of any governmental authority or instrumentality, exercise and
deliver all applications, certifications, instruments and other
documents and papers that the Agent may be so required to obtain.
SECTION 5.1.18. APPRAISALS. Permit the Agent and its
agents, at any time and in the sole discretion of the Agent or at
the request of the Majority Lenders, to conduct appraisals of the
Borrower's business, the cost of which shall be borne by the
Borrower. Prior to the occurrence of a Default or an Event of
Default, Agent agrees to limit any such examinations to no more
than one (1) such examination in any calendar year.
SECTION 5.1.19. ENVIRONMENTAL COMPLIANCE. Comply
strictly and in all material respects with the requirements of
all federal, state, and local environmental laws; notify the
Lenders promptly in the event of any spill of Hazardous Material
materially affecting the Premises occupied by the Borrower from
time to time; forward to the Lenders promptly any written notices
relating to such matters received from any governmental agency;
and pay promptly when due any uncontested fine or assessment
against the Premises.
SECTION 5.1.20. REMEDIATION. Immediately contain and
remove any Hazardous Material found on the Premises in compliance
with applicable laws and at the Borrower's expense, subject
however, to the right of the Agent, at the Agent's option but at
the Borrower's expense, to have an environmental engineer or
other representative review the work being done.
SECTION 5.1.21. SITE ASSESSMENTS. Promptly upon the
request of the Agent, based upon the Agent's reasonable belief
that a material Hazardous Waste or other environmental problem
exists with respect to any Premises, provide the Agent with a
Phase I environmental site assessment report and, if Agent finds
a reasonable basis for further assessment in such Phase I
assessment, a Phase II environmental site assessment report, or
an update of any existing report, all in scope, form and content
and performed by such company as may be reasonably satisfactory
to the Agent.
SECTION 5.1.22. INDEMNITY. Indemnify, defend, and
hold the Agent and the Lenders, their agents or employees and
each Person, if any, who controls any of the Agent or the Lenders
within the meaning of Section 15 of the Securities Act of 1933,
as amended, and each and all and any of them (the "Indemnified
Parties") harmless from and against any claim, cost, damage
(including without limitation consequential damages), expense
(including without limitation reasonable attorneys' fees and
expenses), loss, liability, or judgment now or hereafter arising
as a result of any claim for environmental cleanup costs, any
resulting damage to the environment and any other environmental
claims against the Borrower, any Subsidiary, and/or the
Indemnified Parties transactions contemplated by this Agreement,
or any of the Premises. The provisions of this Section shall
continue in effect and shall survive (among other events), until
the applicable statute of limitations has expired, any
termination of this Agreement, foreclosure, a deed in lieu
transaction, payment and satisfaction of the Obligations of
Borrower, and release of any collateral for the Loans.
SECTION 5.1.23. TRADEMARKS, COPYRIGHTS, ETC.
Concurrently with the acquisition of any trademark, tradename,
copyright, patent or service mark collaterally assign and grant a
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first priority perfected Lien thereon to the Agent pursuant to
documents in form and substance reasonably satisfactory to the
Agent.
SECTION 5.1.24. MINIMUM INTEREST COVERAGE RATIO.
Maintain at the end of each fiscal quarter of the Borrower in
each period set forth below a ratio of (i) EBITDA to (ii)
Interest Expense of not less than the ratio set forth below
opposite such period such ratio to be measured (i) at each
Borrower fiscal quarter end on or prior to December 31, 1998 for
the period commencing as of January 1, 1998 and ending on such
fiscal quarter end and (ii) at each Borrower fiscal quarter end
thereafter for the rolling four Borrower fiscal quarter period
consisting of the Borrower fiscal quarter then ending and the
three immediately preceding Borrower fiscal quarters:
<TABLE>
<CAPTION>
BORROWER FISCAL QUARTER(S) ENDING RATIO
================================= =====
<S> <C>
March 31, 1998 2.00:1.00
June 30, 1998 2.25:1.00
September 30, 1998 2.50:1.00
December 31, 1998 2.75:1.00
March 31, 1999 3.00:1.00
June 30, 1999 3.00:1.00
September 30, 1999 3.00:1.00
December 31, 1999 3.00:1.00
March 31, 2000 3.00:1.00
June 30, 2000 3.00:1.00
September 30, 2000 3.00:1.00
December 31, 2000 3.25:1.00
March 31, 2001 3.25:1.00
June 30, 2001 3.25:1.00
September 30, 2001 3.25:1.00
December 31, 2001 3.50:1.00
March 31, 2002 3.50:1.00
June 30, 2002 3.50:1.00
September 30, 2002 3.50:1.00
December 31, 2002 3.75:1.00
March 31, 2003 3.75:1.00
June 30, 2003 3.75:1.00
September 30, 2003 3.75:1.00
December 31, 2003 4.00:1.00
March 31, 2004 4.00:1.00
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<PAGE>
June 30, 2004 4.00:1.00
September 30, 2004 4.00:1.00
December 31, 2004 4.25:1.00
</TABLE>
SECTION 5.2. NEGATIVE COVENANTS OF THE BORROWER. From
the date hereof and thereafter for so long as there is
Indebtedness of the Borrower to any Lender and/or the Agent under
any of the Financing Documents or any part of the Commitment is
in effect, the Borrower will not, with respect to itself and,
unless noted otherwise below, with respect to each of the
Subsidiaries, will ensure that each such Subsidiary will not,
without the prior written consent of the Majority Lenders:
SECTION 5.2.1. LIENS, ETC. Create, incur, assume or
suffer to exist any Lien of any nature, upon or with respect to
any of its properties, now owned or hereafter acquired, or assign
as collateral or otherwise convey as collateral, any right to
receive income, except that the foregoing restrictions shall not
apply to any Liens:
SECTION 5.2.1.1. For taxes, assessments or
governmental charges or levies on property if the same shall not
at the time be delinquent or thereafter can be paid without
penalty or interest, or (if foreclosure, distraint, sale or other
similar proceedings shall not have been commenced or if commenced
not stayed, bonded or discharged within 30 days after
commencement) are being contested in good faith and by
appropriate proceedings diligently conducted and for which proper
reserve or other provision has been made in accordance with and
to the extent required by GAAP;
SECTION 5.2.1.2. Imposed by law, such as
landlords', carriers', warehousemen's and mechanics' liens,
bankers' set off rights and other similar Liens arising in the
ordinary course of business for sums not yet due or being
contested in good faith and by appropriate proceedings diligently
conducted and for which proper reserve or other provision has
been made in accordance with and to the extent required by GAAP;
SECTION 5.2.1.3. Arising in the ordinary course
of business out of pledges or deposits under worker's
compensation laws, unemployment insurance, old age pensions, or
other social security or retirement benefits, or similar
legislation;
SECTION 5.2.1.4. Arising from or upon any
judgment or award, provided that such judgment or award is being
contested in good faith by proper appeal proceedings and only so
long as execution thereon shall be stayed;
SECTION 5.2.1.5. Those set forth on EXHIBIT 1.8;
SECTION 5.2.1.6. Those now or hereafter granted
pursuant to the Security Documents or otherwise now or hereafter
granted to the Agent for the benefit of the Lenders as collateral
for the Loans and/or Borrower's other Obligations arising in
connection with or under any of the Financing Documents;
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SECTION 5.2.1.7. Deposits to secure the
performance of bids, trade contracts (other than for Borrowed
Money), leases, statutory obligations, surety bonds, performance
bonds and other obligations of a like nature incurred in the
ordinary course of the Borrower's or any Subsidiary's business;
SECTION 5.2.1.8. Easements, rights of way,
restrictions and other similar encumbrances incurred in the
ordinary course of business which, in the aggregate, are not
substantial in amount, and which do not in any case materially
detract from the value of the property subject thereto or
materially interfere with the ordinary conduct of business by any
Borrower or any Subsidiary;
SECTION 5.2.1.9. Liens securing Indebtedness
permitted to exist under SECTION 5.2.8.3; provided that the Lien
securing any such Indebtedness is limited to the item of property
purchased or leased in each case;
SECTION 5.2.1.10. UCC-1 financing statements
filed solely for notice or precautionary purposes by lessors
under operating leases which do not secure Indebtedness and which
are limited to the items of equipment leased pursuant to the
lease in question; and
SECTION 5.2.2. ASSUMPTIONS, GUARANTIES, ETC. OF
INDEBTEDNESS OF OTHER PERSONS. Assume, guarantee, endorse or
otherwise become directly or contingently liable in connection
with any obligation or Indebtedness of any other Person, except:
SECTION 5.2.2.1. Guaranties by endorsement of
negotiable instruments for deposit or collection or similar
transactions in the ordinary course of business;
SECTION 5.2.2.2. Assumptions, guaranties,
endorsements and contingent liabilities within the definition of
Indebtedness and permitted by SECTION 5.2.8; and
SECTION 5.2.2.3. Those set forth on EXHIBIT
5.2.2.
SECTION 5.2.3. ACQUISITIONS, DISSOLUTION, ETC.
Acquire, in one or a series of transactions, all or any
substantial portion of the assets or ownership interests in
another Person, or dissolve, liquidate, wind up, merge or
consolidate or combine with another Person or sell, assign, lease
or otherwise dispose of (whether in one transaction or in a
series of transactions) any material assets, whether now owned or
hereafter acquired, or any of the Borrower's or any Subsidiary's
interests in real property other than assets which are replaced
within 30 days of any asset sale, assignment, lease or
disposition with assets of like kind, usefulness and value.
SECTION 5.2.4. CHANGE IN NATURE OF BUSINESS. Make any
material change in the nature of its business.
SECTION 5.2.5. OWNERSHIP. Cause or permit the
occurrence of any Change of Control.
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<PAGE>
SECTION 5.2.6. SALE AND LEASEBACK. Enter into any
sale and leaseback arrangement with any lender or investor, or
enter into any leases except in the normal course of business at
reasonable rents comparable to those paid for similar leasehold
interests in the area.
SECTION 5.2.7. SALE OF ACCOUNTS, ETC. Sell, assign,
discount or dispose in any way of any accounts receivable,
promissory notes or trade acceptances held by the Borrower or any
Subsidiary, with or without recourse, except in the ordinary
course of the Borrower's or any Subsidiary's business.
SECTION 5.2.8. INDEBTEDNESS. Incur, create, become or
be liable directly or indirectly in any manner with respect to or
permit to exist any Indebtedness except:
SECTION 5.2.8.1. Indebtedness under the Financing
Documents;
SECTION 5.2.8.2. Indebtedness with respect to
trade payable obligations and other normal accruals and customer
deposits in the ordinary course of business not yet due and
payable in accordance with customary trade terms or with respect
to which the Borrower or any Subsidiary is contesting in good
faith the amount or validity thereof by appropriate proceedings
and then only to the extent such person has set aside on its
books adequate reserves therefor in accordance with and to the
extent required by GAAP;
SECTION 5.2.8.3. Indebtedness with respect to
Capitalized Lease Obligations and purchase money Indebtedness
with respect to real or personal property in an aggregate amount
outstanding at any time not to exceed $1,000,000; provided that
the amount of any purchase money Indebtedness does not exceed 90%
of the lesser of the cost or fair market value of the asset
purchased with the proceeds of such Indebtedness;
SECTION 5.2.8.4. Unsecured Indebtedness in an
aggregate amount outstanding at any time not to exceed $250,000;
SECTION 5.2.8.5. Indebtedness listed on EXHIBIT
3.1.1.8;
SECTION 5.2.8.6. Indebtedness owing by the
Borrower to any Subsidiary or by any Secured Domestic Subsidiary
to the Borrower or any other Secured Domestic Subsidiary;
provided, however, that any Indebtedness owing by the Borrower to
any Affiliate shall only be permitted upon subordination terms
and conditions reasonably acceptable to the Agent.
SECTION 5.2.8.7. Indebtedness permitted by
SECTION 5.2.2.
SECTION 5.2.8.8. Indebtedness outstanding as a
refinancing of Indebtedness permitted under another clause of
this SECTION 5.2.8 other than SECTIONS 5.2.8.2 or 5.2.8.8;
provided that such Indebtedness as refinanced continues to
qualify as permitted Indebtedness under the clause of this
SECTION 5.2.8 under which the refinanced Indebtedness was
permitted under this SECTION 5.2.8.
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<PAGE>
SECTION 5.2.8.9. The Subordinated Debt.
SECTION 5.2.8.10. Indebtedness owing by Wells
Japan to the Borrower or any Subsidiary not to exceed $1,500,000
in the aggregate outstanding at any one time (after taking into
account and reduced by the amount of any Investments in Wells
Japan under SECTION 5.2.12(VI) hereof.
SECTION 5.2.8.11. Indebtedness owing by Wells
Singapore to the Borrower or any Subsidiary not to exceed
$500,000 in the aggregate outstanding at any one time (after
taking into account and reduced by the amount of any Investments
in Wells Singapore under SECTION 5.2.12(VII) hereof
SECTION 5.2.9. OTHER AGREEMENTS. In a manner
materially adverse to the Agent or any of the Lenders, amend any
of the terms or conditions of any of the Related Transaction
Documents, its certificate of incorporation or bylaws (or
comparable applicable charter and governance document), the
Subordination Agreement or any subordination agreement or any
indenture, agreement, document, note or other instrument
evidencing, securing or relating to any other Indebtedness
permitted under SECTION 5.2.8.
SECTION 5.2.10. PREPAYMENTS OF INDEBTEDNESS. Except as
provided in SECTION 2.6.1.5 hereof, make (or give any notice in
respect thereof) any voluntary or optional payment or prepayment
or redemption or acquisition for value of or exchange of any
Indebtedness other than the Loans.
SECTION 5.2.11. DIVIDENDS, PAYMENTS AND DISTRIBUTIONS.
Other than dividends or distributions declared or paid by any
Subsidiary to the Borrower, declare or pay any dividends,
management fees or like fees or make any other distribution of
cash or property or both (other than compensation for services
rendered to the Borrower and/or any Subsidiary) or use any of its
assets for payment, purchase, conversion, redemption, retention,
acquisition or retirement of any beneficial interest in the
Borrower or set aside or reserve assets for sinking or like funds
for any of the foregoing purposes, make any other distribution by
reduction of capital or otherwise in respect of any beneficial
interest in the Borrower or permit any Subsidiary which is not a
wholly-owned Subsidiary so to do.
SECTION 5.2.12. INVESTMENTS IN OR TO OTHER PERSONS.
Make or commit to make any Investment in or to any other Person
(including, without limitation, any Subsidiary) other than (i)
advances to employees for business expenses not to exceed $50,000
in the aggregate outstanding for any one employee and not to
exceed $250,000 in the aggregate outstanding at any one time to
all such employees, (ii) other employee loans not to exceed
$100,000 in the aggregate outstanding at any one time to all such
employees, (iii) Cash Equivalent Investments, (iv) Investments in
accounts, contract rights and chattel paper (as defined in the
Uniform Commercial Code) and notes receivable, arising or
acquired in the ordinary course of business, (v) Investments in
Secured Domestic Subsidiaries, (vi) Investments in Wells Japan
not to exceed $1,500,000 in the aggregate outstanding at any one
time, (vii) Investments in Wells Singapore not to exceed $500,000
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<PAGE>
in the aggregate outstanding at any one time, and (viii)
Investments described on EXHIBIT 5.2.2.
SECTION 5.2.13. TRANSACTIONS WITH AFFILIATES. Except
as contemplated by the Related Transaction Documents and this
Agreement, engage in any transaction or enter into any agreement
with an Affiliate, or in the case of Affiliates or Subsidiaries,
with the Borrower or another Affiliate or Subsidiary, except
transactions which are in the ordinary course, upon fair and
reasonable terms and no less favorable to the Borrower than could
be obtained on an arm's length basis except as set forth on
EXHIBIT 5.2.13.
SECTION 5.2.14. CHANGE OF FISCAL YEAR; ACCOUNTING
POLICIES. Change its accounting policies, reporting practices or
its fiscal year from that which was in effect on the Closing
Date.
SECTION 5.2.15. SUBORDINATION OF CLAIMS. Subordinate
any present or future claim against or obligation of another
Person, except as ordered in a bankruptcy or similar creditors'
remedy proceeding of such other Person.
SECTION 5.2.16. COMPLIANCE WITH ERISA. With respect
to Borrower and any Commonly Controlled Entity (a) withdraw from
or cease to have an obligation to contribute to, any
Multiemployer Plan, (b) engage in any "prohibited transaction"
(as defined in Section 4975 of the Code) involving any Plan, (c)
except for any deficiency caused by a waiver of the minimum
funding requirement under sections 412 and/or 418 of the Code, as
described above, incur or suffer to exist any material
"accumulated funding deficiency" (as defined in section 302 of
ERISA and section 412 of the Code) of the Borrower or any
Commonly Controlled Entity, whether or not waived, involving any
Single Employer Plan, (d) incur or suffer to exist any Reportable
Event or the appointment of a trustee or institution of
proceedings for appointment of a trustee for any Single Employer
Plan if, in the case of a Reportable Event, such event continues
unremedied for ten (10) days after notice of such Reportable
Event pursuant to sections 4043(a), (c) or (d) of ERISA is given,
if in the reasonable opinion of the Majority Lenders any of the
foregoing is likely to result in a material liability of the
Borrower or any Commonly Controlled Entity, (e) permit the assets
held under any Plan to be insufficient to protect all accrued
benefits, (f) allow or suffer to exist any event or condition,
which presents a material risk of incurring a material liability
of the Borrower or any Commonly Controlled Entity to PBGC by
reason of termination of any such Plan or (g) cause or permit any
Plan maintained by Borrower and/or any Commonly Controlled Entity
to be out of compliance with ERISA. For purposes of this SECTION
5.2.16 "material liability" shall be deemed to mean any liability
of Fifty Thousand Dollars ($50,000) or more in the aggregate.
SECTION 5.2.17. CAPITAL EXPENDITURES. Incur Capital
Expenditures (i) during 1998 in excess of $8,700,000, (ii) during
1999 in excess of $9,500,000, (iii) during 2000 in excess of
$9,500,000, (iv) during 2001 in excess of $11,000,000, (v) during
2002 in excess of $12,000,000, (vi) during 2003 in excess of
$13,000,000, and (vii) during 2004 in excess of $14,000,000.
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<PAGE>
Subject to the foregoing, the Borrower shall make its
Capital Expenditures substantially in accordance with and for the
purposes outlined in the Budget for the Borrower fiscal year in
question.
SECTION 5.2.18. HAZARDOUS WASTE. Become involved, or
permit, to the extent reasonably possible after the exercise by
the Borrower of reasonable due diligence and preventive efforts,
any tenant of its real property to become involved, in any
operations at such real property generating, storing, disposing,
or handling Hazardous Material or any other activity that could
lead to the imposition on the Borrower or the Agent or any
Lender, or any such real property of any material liability or
Lien under any environmental laws.
SECTION 5.2.19. OTHER RESTRICTIONS ON LIENS. Enter
into any agreement or otherwise agree to or grant any restriction
substantially similar to the provisions of SECTION 5.2.1 hereof
or which would otherwise have the effect of prohibiting,
restricting, impeding or interfering with the creation subsequent
to the Closing Date of Liens to secure the Obligations.
SECTION 5.2.20. LIMITATION ON CREATION OF
SUBSIDIARIES, ETC. Establish, create or acquire any Subsidiary
or become the general partner in any general partnership, except
for (i) any such Subsidiary which becomes a Secured Domestic
Subsidiary or (ii) any Subsidiaries which do not become Secured
Domestic Subsidiaries so long as the assets owned or held by any
such Subsidiaries in the aggregate do not exceed five percent
(5%) of the total assets of the Borrower.
SECTION 5.3. REPORTING REQUIREMENTS. From the date
hereof and thereafter for so long as the Borrower is indebted to
any Lender and/or the Agent under any of the Financing Documents,
the Borrower will, unless the Majority Lenders shall otherwise
consent in writing, furnish or cause to be furnished to the Agent
for distribution to the Lenders:
SECTION 5.3.1. As soon as possible and in any event
upon acquiring knowledge of an Event of Default or Default,
continuing on the date of such statement, the written statement
of an Authorized Representative setting forth details of such
Event of Default or Default and the actions which the Borrower
has taken and proposes to take with respect thereto;
SECTION 5.3.2. As soon as practicable after the end of
each Borrower fiscal year and in any event within 90 days after
the end of each such fiscal year, consolidated and consolidating
balance sheets of the Borrower and any Subsidiaries as at the end
of such year, and the related statements of income and cash flows
or shareholders' equity of the Borrower and any Subsidiaries
setting forth in each case the corresponding figures for the
preceding fiscal year, such statements to be certified by a firm
of independent certified public accountants selected by Borrower
and reasonably acceptable to the Majority Lenders, to be
accompanied by a true copy of said auditors' management letter,
if one was provided to the Borrower, and to contain a statement
to the effect that such accountants have examined SECTIONS 5.1.10
through 5.1.13 and 5.2.17 and that no Default or Event of Default
exists on account of Borrower's failure to have been in
compliance therewith on the date of such statement;
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SECTION 5.3.3. As soon as is practicable after the end
of each fiscal quarter of each Borrower fiscal year and in any
event within 45 days thereafter, consolidated balance sheets of
the Borrower and any Subsidiaries as of the end of such period
and the related statements of income and cash flows and
shareholders' equity of the Borrower and any Subsidiaries,
subject to changes resulting from year-end adjustments, together,
subject to SECTION 5.3.7, with a comparison to the Budget for the
applicable period, such balance sheets and statements to be
prepared and certified by an Authorized Representative in an
Officer's Certificate as having been prepared in accordance with
GAAP except for footnotes and year-end adjustments, and to be in
form reasonably satisfactory to the Agent;
SECTION 5.3.4. Simultaneously with the furnishing of
each of the year-end consolidated and consolidating financial
statements of the Borrower and any Subsidiaries to be delivered
pursuant to SECTION 5.3.2 and each of the consolidated quarterly
statements of the Borrower and the Subsidiaries to be delivered
pursuant to SECTION 5.3.3 an Officer's Certificate of an
Authorized Representative which shall contain a statement in the
form of EXHIBIT 3.1.1.10 to the effect that no Event of Default
or Default has occurred, without having been waived in writing,
or if there shall have been an Event of Default not previously
waived in writing pursuant to the provisions hereof, or a
Default, such Officer's Certificate shall disclose the nature
thereof and the actions the Borrower has taken and prepare to
take with respect thereto. Each such Officer's Certificate shall
also contain a calculation of and certify to the accuracy of the
amounts required to be calculated in the financial covenants of
the Borrower contained in this Agreement and described in EXHIBIT
3.1.1.10;
SECTION 5.3.5. Promptly after the commencement
thereof, notice of all material actions, suits and proceedings
before any court or governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, affecting
the Borrower and/or any Subsidiary;
SECTION 5.3.6. As soon as is practicable after the
Closing Date, (i) and in any event within 35 days thereafter, the
following consolidated financial statements of Wells and
Subsidiaries of Wells: statements of income and cash flow for the
periods from May 29, 1994 to June 3, 1995, from June 4, 1995 to
May 2, 1996, and from May 3, 1996 to May 3, 1997 and consolidated
balance sheets as of May 2, 1996 and May 3, 1997; and (ii) in any
event within 50 days thereafter, the following consolidated
financial statements of Wells and Subsidiaries of Wells: audited
statements of income and cash flow for the periods from May 4,
1997 through the Closing Date and an audited balance sheet as of
the Closing Date, net sales and net income for the years ended
May 31, 1993 and May 31, 1994, total assets as of May 31, 1993,
May 31, 1994 and May 31, 1995 and such other selected financial
data as defined in Regulation S-K (or any successor provision or
regulation promulgated by the Securities and Exchange Commission)
for such periods as the Borrower shall have reasonably requested.
SECTION 5.3.7. On or before February 15 of each year,
an updated proposed budget, prepared on a quarterly basis, and
updated financial projections for the Borrower and any
Subsidiaries on a consolidated basis (together, the "Budget") for
such fiscal year, setting forth in detail reasonably satisfactory
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to the Agent the projected results of operations of the Borrower
and any Subsidiaries on a consolidated quarterly basis, detailed
Capital Expenditures plan and stating underlying assumptions and
accompanied by a written statement of an Authorized
Representative certifying as to the approval of such Budget by
Borrower's board of directors.
SECTION 5.3.8. Such other information respecting the
Business Condition of the Borrower or any Subsidiaries as the
Agent or any Lender may from time to time reasonably request;
SECTION 5.3.9. Written notice of the fact and of the
details of any filing with the Securities and Exchange Commission
of a Schedule 13(d) disclosure statement, given promptly after
the Borrower acquires knowledge thereof; provided, however, that
this clause shall not be deemed to constitute or imply any
consent to any such sale or transfer;
SECTION 5.3.10. Prompt written notice of loss of any
key personnel or any Material Adverse Effect and an explanation
thereof and of the actions the Borrower and/or such Subsidiary
propose to take with respect thereto; and
SECTION 5.3.11. Written notice of the following
events, as soon as possible and in any event within 15 days after
the Borrower knows or has reason to know thereof: (i) the
occurrence or expected occurrence of any Reportable Event with
respect to any Plan, or (ii) the institution of proceedings or
the taking or expected taking of any other action by PBGC or the
Borrower or any Commonly Controlled Entity to terminate, withdraw
or partially withdraw from any Plan and, with respect to any
Multiemployer Plan, the Reorganization (as defined in Section
4241 of ERISA) or Insolvency (as defined in Section 4245 of
ERISA) of such Multiemployer Plan and in addition to such notice,
deliver to the Agent whichever of the following may be
applicable: (a) an Officer's Certificate setting forth details
as to such Reportable Event and the action that the Borrower or
Commonly Controlled Entity proposes to take with respect thereto,
together with a copy of any notice of such Reportable Event that
may be required to be filed with PBGC, or b) any notice delivered
by PBGC evidencing its intent to institute such proceedings or
any notice to PBGC that such Plan is to be terminated, as the
case may be.
ARTICLE 6.
EVENTS OF DEFAULT
SECTION 6.1. EVENTS OF DEFAULT. The Borrower shall be
in default under each of the Financing Documents, upon the
occurrence of any one or more of the following events ("Events of
Default"):
SECTION 6.1.1. If the Borrower shall fail to make due
and punctual payment of any principal, fees, interest and/or
other amounts payable under this Agreement as provided in any
Note and/or in this Agreement when the same is due and payable
except that it shall not be an Event of Default if any interest,
fees and/or other amounts (excluding principal) is paid within 5
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Business Days after it is due and payable, whether at the due
date thereof or at a date fixed for prepayment or if the Borrower
shall fail to make any such payment of fees, interest, principal
and/or any other amount under this Agreement and/or under any
Note on the date when such payment becomes due and payable by
acceleration;
SECTION 6.1.2. If the Borrower or any Subsidiary shall
make an assignment for the benefit of creditors, or shall fail
generally to pay its debts as they become due, or shall admit in
writing its inability to pay its debts as they become due or
shall file a voluntary petition in bankruptcy, or shall file any
petition or answer seeking any reorganization, arrangement,
composition, adjustment, liquidation, dissolution or similar
relief under the present or any future federal bankruptcy laws or
other applicable federal, state or other statute, law or
regulation, or shall seek or consent to or acquiesce in the
appointment of any trustee, receiver or liquidator of it or of
all or any substantial part of its properties, or if partnership
or corporate action shall be taken for the purpose of effecting
any of the foregoing; or
SECTION 6.1.3. To the extent not described in
SECTION 6.1.2, (i) if the Borrower or any Subsidiary shall be the
subject of a bankruptcy proceeding, or (ii) if any proceeding
against any of them seeking any reorganization, arrangement,
composition, adjustment, liquidation, dissolution, or similar
relief under the present or any future federal bankruptcy law or
other applicable federal, foreign, state or other statute, law or
regulation shall be commenced, or (iii) if any trustee, receiver
or liquidator of any of them or of all or any substantial part of
any or all of their properties shall be appointed without their
consent or acquiescence; provided that in any of the cases
described above in this SECTION 6.1.3, such proceeding or
appointment shall not be an Event of Default if the Borrower or
the Subsidiary in question shall cause such proceeding or
appointment to be discharged, vacated, dismissed or stayed within
sixty (60) days after commencement thereof; or
SECTION 6.1.4. If final judgment or judgments
aggregating more than $500,000 shall be rendered against the
Borrower or any Subsidiary and shall remain undischarged,
unstayed or unpaid for an aggregate of thirty (30) days (whether
or not consecutive) after entry thereof; or
SECTION 6.1.5. If the Borrower or any Subsidiary shall
default (after giving effect to any applicable grace period) in
the due and punctual payment of the principal of or interest on
any Indebtedness exceeding in the aggregate $500,000 (other than
the Loans), or if any default shall have occurred and be
continuing after any applicable grace period under any mortgage,
note or other agreement evidencing, securing or providing for the
creation of such Indebtedness, which results in the acceleration
of such Indebtedness or which permits, or with the giving of
notice would permit, any holder or holders of any such
Indebtedness to accelerate the stated maturity thereof; or
SECTION 6.1.6. If there shall be a default in the
performance of the Borrower's obligations under SECTION 5.1.3
(insofar as such Section requires the preservation of the
corporate existence of the Borrower or any Subsidiary), any of
SECTIONS 5.1.2, 5.1.10 through 5.1.13 or SECTION 5.2 of this
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Agreement or under any covenant, representation or warranty
contained in any of the Security Documents for which no cure
period is provided in such Security Document; or
SECTION 6.1.7. If there shall be any Default in the
performance of any covenant or condition contained in this
Agreement or in any of the other Financing Documents to be
observed or performed pursuant to the terms hereof or any
Financing Document, as the case may be, or to the extent such
Default would have a Material Adverse Effect, by the Borrower
under any of the Related Transaction Documents, other than a
covenant or condition referred to in any other subsection of this
SECTION 6.1 and such Default shall continue unremedied or
unwaived, (i) in the case of any covenant or condition contained
in SECTION 5.3, for fifteen (15) Business Days, or (ii) in the
case of any other covenant or condition for which no other grace
period is provided, for thirty (30) days, or (iii) in the case of
any other covenant or condition for which another grace period is
provided, for such grace period, or (iv) if any of the
representations and warranties made or deemed made by the
Borrower to the Agent and/or any Lender pursuant to any of the
Financing Documents proves to have been false or misleading in
any material respect when made and such falseness or misleading
representation or warranty would be reasonably likely to have a
material adverse effect on the Agent or any Lender or their
rights and remedies or a Material Adverse Effect; or
SECTION 6.1.8. If there shall be any attachment of any
deposits or other property of the Borrower and/or any Subsidiary
in the possession of any Lender or any attachment of any other
property of the Borrower and/or any Subsidiary in an amount
exceeding $500,000, which shall not be discharged, vacated or
stayed within thirty (30) days of the date of such attachment; or
SECTION 6.1.9. Any certification of the financial
statements, furnished to the Agent pursuant to SECTION 5.3.2,
shall contain any qualification; provided, however, that such
qualifications will not be deemed an Event of Default if in each
case (i) such certification shall state that the examination of
the financial statements covered thereby was conducted in
accordance with generally accepted auditing standards, including
but not limited to all such tests of the accounting records as
are considered necessary in the circumstances by the independent
certified public accountants preparing such statements, (ii) such
financial statements were prepared in accordance with GAAP and
(iii) such qualification does not involve the "going concern"
status of the entity being reported upon.
ARTICLE 7.
REMEDIES OF LENDERS
Upon the occurrence and during the continuance of any one or
more of the Events of Default, the Agent, at the request of the
Majority Lenders, shall, by written notice to the Borrower,
declare the obligation of the Lenders to make or maintain the
Loans to be terminated, whereupon the same and the Commitment
shall forthwith terminate, and the Agent, at the request of the
Majority Lenders, shall, by notice to the Borrower, declare the
entire unpaid principal amount of each Note and all fees and
interest accrued and unpaid thereon and/or under this Agreement,
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and/or any of the other Financing Documents and any and all other
Indebtedness under this Agreement, each Note and/or any of the
other Financing Documents to the Agent and/or any of the Lenders
and/or to any holder of all or any portion of each Note to be
forthwith due and payable, whereupon each Note, and all such
accrued fees and interest and other such Indebtedness shall
become and be forthwith due and payable, without presentment,
demand, protest or further notice of any kind, all of which are
hereby expressly waived by the Borrower; provided, however, that
upon the occurrence of an Event of Default under SECTIONS 6.1.2
or 6.1.3, all of the unpaid principal amount of each Note, all
fees and interest accrued and unpaid thereon and/or under this
Agreement and/or under any of the other Financing Documents and
any and all other such Indebtedness of the Borrower to any of the
Lenders and/or to any such holder shall thereupon be due and
payable in full without any need for the Agent and/or any Lender
to make any such declaration or take any action and the Lenders'
obligations to make the Loans shall simultaneously terminate.
The Agent shall, in accordance with the votes of the Majority
Lenders, exercise all remedies on behalf of and for the account
of each Lender and on behalf of its respective Pro Rata Share of
the Loans, its Note and Indebtedness of the Borrower owing to it
or any of the foregoing, including, without limitation, all
remedies available under or as a result of this Agreement, the
Notes or any of the other Financing Documents or any other
document, instrument or agreement now or hereafter securing any
Note without any such exercise being deemed to modify in any way
the fact that each Lender shall be deemed a separate creditor of
the Borrower to the extent of its Note and Pro Rata Share of the
Loans and any other amounts payable to such Lender under this
Agreement and/or any of the other Financing Documents and the
Agent shall be deemed a separate creditor of the Borrower to the
extent of any amounts owed by the Borrower to the Agent.
ARTICLE 8.
AGENT
SECTION 8.1. APPOINTMENT. The Agent is hereby appointed
as administrative and collateral agent hereunder and each Lender
hereby authorizes the Agent to act under the Financing Documents
as its Agent hereunder and thereunder, respectively. The Agent
agrees to act as such upon the express conditions and the Lenders
contained in this Article 8. The provisions of this Article 8
are solely for the benefit of the Agent, and, except as expressly
provided in SECTION 8.6, neither the Borrower nor any third party
shall have any rights as a third party beneficiary of any of the
provisions hereof. In performing its functions and duties under
this Agreement and the other Financing Documents to which the
Agent is a party, the Agent shall act solely as Agent of the
Lenders and does not assume nor shall the Agent be deemed to have
assumed any obligation towards or relationship of agency or trust
with or for the Borrower, any Affiliate or any Subsidiary.
SECTION 8.2. POWERS; GENERAL IMMUNITY.
SECTION 8.2.1. DUTIES SPECIFIED. Each Lender
irrevocably authorizes the Agent to take such action on such
Lender's behalf, including, without limitation, to execute and
deliver the Financing Documents to which the Agent is a party and
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to exercise such powers hereunder and under the Financing
Documents and other instruments and agreements referred to herein
as are specifically delegated to the Agent by the terms hereof
and thereof, together with such powers as are reasonably
incidental thereto. The Agent shall have only those duties and
responsibilities which are expressly specified in this Agreement
or in any of the Financing Documents and may perform such duties
by or through its agents or employees. The duties of the Agent
shall be mechanical and administrative in nature; and the Agent
shall not have by reason of this Agreement or any of the
Financing Documents a fiduciary relationship in respect of any
Lender; and nothing in this Agreement or any of the Security
Documents, expressed or implied, is intended to or shall be so
construed as to impose upon the Agent any obligations in respect
of this Agreement or any of the Financing Documents or the other
instruments and agreements referred to herein except as expressly
set forth herein or therein. Without limiting any of the other
provisions of this Article 8, the Agent agrees to exercise the
same degree of care hereunder in its capacity as Agent for the
Lenders as the Agent does to protect its own interest as a
Lender.
SECTION 8.2.2. NO RESPONSIBILITY FOR CERTAIN MATTERS.
The Agent shall not be responsible to any Lender for the
execution, effectiveness, genuineness, validity, enforceability,
collectibility or sufficiency of any of the Financing Documents
or any other document, instrument or agreement now or hereafter
executed in connection herewith or therewith, 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 by or
on behalf of the Borrower, and/or any Subsidiary to the 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.
SECTION 8.2.3. EXCULPATORY PROVISIONS. Neither the
Agent nor any of its officers, directors, employees or agents
shall be liable to any Lender for any action taken or omitted
hereunder or under any of the Financing Documents, or in
connection herewith or therewith unless caused by its or their
gross negligence or willful misconduct. If the Agent shall
request instructions from Lenders with respect to any action
(including the failure to take an action) in connection with any
of the Financing Documents, the Agent shall be entitled to
refrain from taking such action unless and until the Agent, shall
have received instructions from the Majority Lenders (or all of
the Lenders if the action requires their consent). Without
prejudice to the generality of the foregoing, (i) the Agent shall
be entitled to rely, and shall be fully protected in relying,
upon any communication, instrument or document believed by it to
be genuine and correct and to have been signed or sent by the
proper person or persons, and shall be entitled to rely and shall
be protected in relying on opinions and judgments of attorneys
(who may be attorneys for the Borrower and/or any Subsidiary),
accountants, experts and other professional advisors selected by
it; and (ii) no Lender shall have any right of action whatsoever
against the Agent as a result of the Agent acting or (where so
instructed) refraining from acting under any of the Financing
Documents or the other instruments and agreements referred to
herein in accordance with the instructions of the Majority
Lenders (or all of the Lenders if the action requires their
consent). The Agent shall be entitled to refrain from exercising
any power, discretion or authority vested in it under any of the
Financing Documents or the other instruments and agreements
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referred to herein unless and until it has obtained the
instructions of the Majority Lenders (or all of the Lenders if
the action requires their consent).
SECTION 8.2.4. AGENT ENTITLED TO ACT AS LENDER. The
agency hereby created shall in no way impair or affect any of the
rights and powers of, or impose any duties or obligations upon,
Fleet in its individual capacity as a Lender hereunder. With
respect to its participation in the Loans and the Commitment,
Fleet shall have the same rights and powers hereunder as any
other Lender and may exercise the same as though it were not
performing the duties and functions delegated to it hereunder,
and the term "Lender" or "Lenders" or any similar term shall,
unless the context clearly otherwise indicates, include Fleet in
its individual capacity. The Agent and its affiliates may accept
deposits from, lend money to and generally engage in any kind of
banking, trust, financial advisory or other business with the
Borrower, or any Affiliate or Subsidiary as if it were not
performing the duties specified herein, and may accept fees and
other consideration from the Borrower and/or any of such other
Persons for services in connection with this Agreement and
otherwise without having to account for the same to Lenders.
SECTION 8.3. REPRESENTATIONS AND WARRANTIES; NO
RESPONSIBILITY FOR APPRAISAL OF CREDITWORTHINESS. Each Lender
represents and warrants that it has made its own independent
investigation of the financial condition and affairs of the
Borrower and any Subsidiaries of any of them in connection with
the making of the Loans hereunder and has made and shall continue
to make its own appraisal of the creditworthiness of the Borrower
and the Subsidiaries. The Agent shall not have any duty or
responsibility, either initially or on a continuing basis, to
make any such investigation or any such appraisal on behalf of
Lenders or to provide any Lender with any credit or other
information with respect thereto whether coming into its
possession before the making of any Loan or any time or times
thereafter (except for information received by the Agent under
SECTION 5.3 hereof which the Agent will promptly forward to the
Lenders), and the Agent shall further not have any responsibility
with respect to the accuracy of or the completeness of the
information provided to any of the Lenders.
SECTION 8.4. RIGHT TO INDEMNITY. Each Lender severally
agrees to indemnify the Agent proportionately to its Pro Rata
Share of the Loans, to the extent the Agent shall not have been
reimbursed by or on behalf of the Borrower, for and against any
and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses (including, without
limitation, counsel fees and disbursements) or disbursements of
any kind or nature whatsoever which may be imposed on, incurred
by or asserted against the Agent in performing its duties
hereunder or in any way relating to or arising out of this
Agreement and/or any of the other Financing Documents; PROVIDED
that no Lender shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from
the Agent's gross negligence or willful misconduct. If any
indemnity furnished to the Agent for any purpose shall, in the
opinion of the Agent, be insufficient or become impaired, the
Agent may call for additional indemnity and cease, or not
commence, to do the acts indemnified against until such
additional indemnity is furnished.
SECTION 8.5. PAYEE OF NOTE TREATED AS OWNER. The Agent
may deem and treat the payee of any Note as the owner thereof for
all purposes hereof unless and until a written notice of the
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assignment or transfer thereof shall have been filed with the
Agent. Any request, authority or consent of any person or entity
who, at the time of making such request or giving such authority
or consent, is the holder of any Note shall be conclusive and
binding on any subsequent holder, transferee or assignee of that
Note or of any Note or Notes issued in exchange for such Note.
SECTION 8.6. RESIGNATION BY AGENT.
SECTION 8.6.1. The Agent may resign from the
performance of all its functions and duties under the Financing
Documents at any time by giving 30 days' prior written notice to
the Borrower and each of the Lenders. Such resignation shall
take effect upon the acceptance by a successor Agent, of
appointment pursuant to SECTIONS 8.6.2 and 8.6.3 below or as
otherwise provided below.
SECTION 8.6.2. Upon any such notice of resignation,
the Majority Lenders shall appoint a successor Agent, who shall
be a Lender and, so long as no Default or Event of Default exists
and is continuing, who shall be reasonably satisfactory to the
Borrower and in any event shall be an incorporated bank or trust
company with a combined surplus and undivided capital of at least
Five Hundred Million Dollars ($500,000,000).
SECTION 8.6.3. If a successor Agent shall not have
been so appointed within said 30 day period, the resigning Agent,
with the consent of the Borrower, which shall not be unreasonably
withheld or delayed, shall then appoint a successor Agent, who
shall be a Lender and who shall serve as the Agent, until such
time, if any, as the Majority Lenders, and so long as no Default
or Event of Default exists and is continuing, with the consent of
the Borrower, which shall not be unreasonably withheld or
delayed, appoint a successor Agent as provided above.
SECTION 8.6.4. If no successor Agent has been
appointed pursuant to SECTIONS 8.6.2 or 8.6.3 by the 40th day
after the date such notice of resignation was given by the
resigning Agent, the resigning Agent's resignation shall become
effective and the Majority Lenders shall thereafter perform all
the duties of the resigning Agent under the Financing Documents
including without limitation directing the Borrower on how to
submit Requests and Interest Rate Elections and otherwise on
administration of the Agent's duties under the Financing
Documents and the Borrower shall comply therewith so long as such
directions do not have a Material Adverse Effect on the Borrower
or any Subsidiary until such time, if any, as the Majority
Lenders, and so long as no Default or Event of Default exists and
is continuing, with the consent of the Borrower, which shall not
be unreasonably withheld or delayed, appoint a successor Agent,
as provided above.
SECTION 8.7. SUCCESSOR AGENT. Upon the acceptance of any
appointment as the Agent hereunder by a successor Agent, that
successor Agent shall thereupon succeed to and become vested with
all the rights, powers, privileges and duties of the retiring
Agent and the retiring Agent, shall be discharged from its duties
and obligations as the Agent under the Financing Documents.
After any retiring Agent's resignation hereunder as the Agent the
provisions of this Article 8 shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was the Agent
under the Financing Documents.
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ARTICLE 9.
MISCELLANEOUS
SECTION 9.1. CONSENT TO JURISDICTION AND SERVICE OF
PROCESS.
SECTION 9.1.1. Except to the extent prohibited by
applicable law, the Borrower irrevocably:
SECTION 9.1.1.1. agrees that any suit, action, or
other legal proceeding arising out of any of the Financing
Documents or any of the Loans may be brought in the courts of
record of The Commonwealth of Massachusetts or any other state(s)
in which any of the Borrower's assets are located or the courts
of the United States located in The Commonwealth of Massachusetts
or any other state(s) in which any of the Borrower's assets are
located;
SECTION 9.1.1.2. consents to the jurisdiction of
each such court in any such suit, action or proceeding; and
SECTION 9.1.1.3. waives any objection which it
may have to the laying of venue of such suit, action or
proceeding in any of such courts.
For such time as any of the Indebtedness of the Borrower to
any Lender and/or the Agent shall be unpaid in whole or in part
and/or the Commitment is in effect, the Borrower irrevocably
designates the registered agent or agent for service of process
of the Borrower as reflected in the records of the Secretary of
State of The Commonwealth of Massachusetts as its registered
agent, and, in the absence thereof, the Secretary of State of The
Commonwealth of Massachusetts as its agent to accept and
acknowledge on its behalf service of any and all process in any
such suit, action or proceeding brought in any such court and
agrees and consents that any such service of process upon such
agent and written notice of such service to the Borrower by
registered or certified mail shall be taken and held to be valid
personal service upon the Borrower regardless of where the
Borrower shall then be doing business and that any such service
of process shall be of the same force and validity as if service
were made upon it according to the laws governing the validity
and requirements of such service in each such state and waives
any claim of lack of personal service or other error by reason of
any such service. Any notice, process, pleadings or other
papers served upon the aforesaid designated agent shall, within
three (3) Business Days after such service, be sent by the method
provided therefor under SECTION 9.6 to the Borrower at its
address set forth in this Agreement. EACH OF THE PARTIES HERETO
HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY IN THE EVENT OF ANY
DISPUTE BETWEEN THE BORROWER AND THE AGENT AND/OR THE LENDERS
WITH RESPECT TO THE FINANCING DOCUMENTS AND/OR ANY OF THE
TRANSACTIONS CONTEMPLATED THEREBY.
SECTION 9.2. RIGHTS AND REMEDIES CUMULATIVE. No right
or remedy conferred upon or reserved to the Agent and/or the
Lenders in any of the Financing Documents is intended to be
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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 under any of
the Financing Documents or now or hereafter existing at law or in
equity or otherwise. The assertion or employment of any right or
remedy under any of the Financing Documents, or otherwise, shall
not prevent the concurrent assertion or employment of any other
appropriate right or remedy.
SECTION 9.3. DELAY OR OMISSION NOT WAIVER. No delay in
exercising or failure to exercise by the Agent and/or the Lenders
of any right or remedy accruing upon any Default or Event of
Default shall impair any such right or remedy or constitute a
waiver of any such Default or Event of Default or an acquiescence
therein. Every right and remedy given by any of the Financing
Documents or by law to the Agent and/or any of the Lenders may
be exercised from time to time, and as often as may be deemed
expedient, by the Agent and/or any of the Lenders.
SECTION 9.4. WAIVER OF STAY OR EXTENSION LAWS. The
Borrower 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 wherever enacted, now or at any time
hereafter in force, which may affect the covenants or the
performance of any of the Financing Documents; and the Borrower
(to the extent that it may lawfully do so) hereby expressly
waives all benefit and advantage of any such law and covenants
that it will not hinder, delay or impede the execution of any
power herein granted to the Agent and/or any of the Lenders, but
will suffer and permit the execution of every such power as
though no such law had been enacted, except to the extent the
Agent or any Lender is guilty of willful misconduct or gross
negligence.
SECTION 9.5. AMENDMENTS, ETC. No amendment,
modification, termination, or waiver of any provision of any of
the Financing Documents nor consent to any departure by the
Borrower therefrom shall in any event be effective unless the
same shall be in a written notice given to the Borrower by the
Agent and consented to in writing by the Majority Lenders (or by
the Agent acting alone if any specific provision of this
Agreement provides that the Agent, acting alone, may grant such
amendment, modification, termination, waiver or departure) and
the Agent shall give any such notice if the Majority Lenders so
consent or direct the Agent to do so; provided, however, that any
such amendment, modification, termination, waiver or consent
shall require a written notice given to the Borrower by the Agent
and consented to in writing by all of the Lenders if the effect
thereof is to (i) change any of the provisions affecting the
interest rate on the Loans, (ii) extend or modify the Commitment,
(iii) discharge or release the Borrower from its obligation to
repay all principal due under the Loans or release any collateral
or guaranty for the Loans, (iv) change any Lender's Pro Rata
Share of the Commitment or the Loans, (v) modify this SECTION
9.5, (vi) change the definition of Majority Lenders, (vii) extend
any scheduled due date for payment of principal, interest or fees
or (viii) permit the Borrower to assign any of its rights under
or interest in this Agreement, and then such waiver or consent
shall be effective only in the specific instance and for the
specific purpose for which given. Any amendment or modification
of this Agreement must be signed by the Borrower, the Agent and
at least all of the Lenders consenting thereto who shall then
hold the Pro Rata Shares of the Loans required for such amendment
or modification under this SECTION 9.5 and the Agent shall sign
any such amendment if such Lenders so consent or direct the Agent
to do so provided that any Lender dissenting therefrom shall be
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given an opportunity to sign any such amendment or modification.
Any amendment of any of the Security Documents must be signed by
each of the parties thereto. No notice to or demand on the
Borrower and no consent, waiver or departure from the terms of
this Agreement granted by the Agent and/or the Lenders in any
case shall entitle the Borrower to any other or further notice or
demand in similar or other circumstances.
SECTION 9.6. ADDRESSES FOR NOTICES, ETC. All notices,
requests, demands and other communications provided for hereunder
(other than those which, under the terms of this Agreement, may
be given by telephone, which shall be effective when received
verbally) shall be in writing (including telecopied
communication) and mailed (provided that in the case of items
referred to in the next-to-last sentence of SECTION 9.1 and the
items set forth below as requiring a copy to legal counsel for
the Borrower, the Agent or a Lender, such items shall be mailed
by overnight courier for delivery the next Business Day),
telecopied or delivered to the applicable party at the addresses
indicated below:
If to the Borrower:
PCD Inc.
2 Technology Drive
Peabody, Massachusetts 01960-7977
Attention: John L. Dwight, Jr.
Telecopy: (978) 532-6800
With a copy to (if given pursuant to any of SECTIONS 5.3.1,
5.3.5, 5.3.9, 5.3.10 and 5.3.11):
Hill & Barlow
One International Place
Boston, Massachusetts 02110-2607
Attention: Thomas C. Chase, Esquire
Telecopy: (617) 428-3500
If to Fleet National Bank as the Agent and/or a Lender:
Fleet National Bank
Mailstop: MA/OF/D07
One Federal Street
Boston, Massachusetts 02110
Attention: Thomas W. Davies, Senior Vice President
Telecopy: (617) 346-1633
With a copy to (if given pursuant to any of SECTIONS 5.3.1,
5.3.5, 5.3.9, 5.3.10 and 5.3.11)
Hinckley, Allen & Snyder
28 State Street
Boston, Massachusetts 02109
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Attention: Malcolm Farmer III, Esquire
Telecopy: (617) 345-9020
If to any other Lender, to the address set forth on
EXHIBIT 1.9.
or, as to each party, at such other address as shall be
designated by such party in a written notice to each other party
complying as to the delivery with the terms of this Section. All
such notices, requests, demands and other communications shall be
effective when received. Requests, certificates, other items
provided pursuant to SECTION 5.3 and other routine mailings or
notices need not be accompanied by a copy to legal counsel for
the Lenders or the Borrower.
SECTION 9.7. COSTS, EXPENSES AND TAXES. The Borrower
agrees to pay on demand the reasonable fees and out-of-pocket
expenses of Messrs. Hinckley, Allen & Snyder, counsel for the
Agent and of any local counsel retained by the Agent in
connection with the preparation, execution, delivery and
administration (excluding expenses of any Lender's sale of a
participation in or sale or assignment of all or a portion of
such Lender's Commitment or Loans other than any such sale
pursuant to SECTIONS 2.2.3 or 2.9.7) of the Financing Documents
and the Loans. The Borrower agrees to pay on demand all
reasonable costs and expenses (including without limitation
reasonable attorneys' fees) incurred by the Agent and/or any
Lender, upon or after the occurrence and during the continuance
of any Default or Event of Default, if any, in connection with
the enforcement of any of the Financing Documents and any
amendments, waivers, or consents with respect thereto. In
addition, the Borrower shall pay on demand any and all stamp and
other taxes and fees payable or determined to be payable in
connection with the execution and delivery of the Financing
Documents, and agrees to save the Lenders and the Agent harmless
from and against any and all liabilities with respect to or
resulting from any delay in paying or omission to pay such taxes
or fees, except those resulting from the Lenders' or Agent's
gross negligence or willful misconduct.
SECTION 9.8. PARTICIPATIONS. Subject to compliance with
the proviso in the first sentence of SECTION 9.11, any Lender may
sell participations in all or part of the Loans made by it and/or
its Pro Rata Share of the Commitment or any other interest herein
to a financial institution having at least $500,000,000 of
assets, in which event the participant shall not have any rights
under any of the Financing Documents (the participant's rights
against such Lender in respect of that participation to be those
set forth in the Agreement executed by such Lender in favor of
the participant relating thereto) and all amounts payable by the
Borrower hereunder or thereunder shall be determined as if such
Lender had not sold such participation. Such Lender may furnish
any information concerning the Borrower and any Subsidiary in the
possession of such Lender from time to time to participants
(including prospective participants); provided that such Lender
and any participant comply with the proviso in SECTION 9.11.7 as
if any such participant was a Substituted Lender.
SECTION 9.9. BINDING EFFECT; ASSIGNMENT. This Agreement
shall be binding upon and inure to the benefit of the Borrower,
the Agent and the Lenders and their respective successors and
assigns, except that the Borrower shall not have the right to
assign its rights hereunder or any interest herein without the
prior written consent of the Agent and the Lenders. This
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Agreement and all covenants, representations and warranties made
herein and/or in any of the other Financing Documents shall
survive the making of the Loans, the execution and delivery of
the Financing Documents and shall continue in effect so long as
any amounts payable under or in connection with any of the
Financing Documents or any other Indebtedness of the Borrower to
the Agent and/or any Lender remains unpaid or the Commitment
remains outstanding; provided, however, that SECTIONS 2.2.3 and
9.7 shall, except to the extent agreed to in a pay-off letter by
the Agent and the Lenders in their complete discretion, survive
and remain in full force and effect for 90 days following
repayment in full of all amounts payable under or in connection
with all of the Financing Documents and any other such
Indebtedness.
SECTION 9.10. ACTUAL KNOWLEDGE. For purposes of this
Agreement, neither the Agent nor any Lender shall be deemed to
have actual knowledge of any fact or state of facts unless the
senior loan officer or any other officer responsible for the
Borrower's account established pursuant to this Agreement at the
Agent or such Lender, shall, in fact, have actual knowledge of
such fact or state of facts or unless written notice of such fact
shall have been received by the Agent or such Lender in
accordance with SECTION 9.6.
SECTION 9.11. SUBSTITUTIONS AND ASSIGNMENTS. Upon the
request of any Lender, the Agent and such Lender may assign all
or any portion of its Pro Rata Share of the Commitment and the
Loans, without the prior consent of the Borrower, to (i) a
Federal Reserve Bank, (ii) an Affiliate and (iii) another Lender,
and in all other instances only with the prior consent of the
Borrower, which consent shall not be unreasonably withheld,
conditioned or delayed, and may, subject to the terms and
conditions hereinafter set forth, take the actions set forth
below to substitute one or more financial institutions having at
least $500,000,000 in assets (a "Substituted Lender") as a Lender
or Lenders hereunder having an amount of the Loans as specified
in the relevant Substitution Agreement executed in connection
therewith; provided that no Lender, Selling Lender or Substituted
Lender shall have a Pro Rata Share of the Commitment and the
Loans in the aggregate of less than $5,000,000 and Fleet and/or
its Affiliates shall retain for their own account at least 15% of
the Commitment.
SECTION 9.11.1. In connection with any such
substitution the Substituted Lender and the Agent shall enter
into a Substitution Agreement in the form of EXHIBIT 9.11.1
hereto (a "Substitution Agreement") pursuant to which such
Substituted Lender shall be substituted for the Lender requesting
the substitution in question (any such Lender being hereinafter
referred to as a "Selling Lender") to the extent of the reduction
in the Selling Lender's portion of the Loans specified therein.
In addition, such Substituted Lender shall assume such of the
obligations of each Selling Lender under the Financing Documents
as may be specified in such Substitution Agreement and this
Agreement shall be amended by execution and delivery of each
Substitution Agreement to include such Substituted Lender as a
Lender for all purposes under the Financing Documents and to
substitute for the then existing EXHIBIT 1.9 to this Agreement a
new EXHIBIT 1.9 in the form of Schedule A to such Substitution
Agreement setting forth the portion of the Loans belonging to
each Lender following execution thereof. Each Lender and the
Borrower shall countersign and accept delivery of each
Substitution Agreement. Each Lender shall be responsible for the
payment of its legal fees, if any, in connection with any such
substitution and assignment.
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SECTION 9.11.2. Without prejudice to any other
provision of this Agreement, each Substituted Lender shall, by
its execution of a Substitution Agreement, agree that neither the
Agent nor any Lender is any way responsible for or makes any
representation or warranty as to: (a) the accuracy and/or
completeness of any information supplied to such Substituted
Lender in connection therewith, (b) the financial condition,
creditworthiness, affairs, status or nature of the Borrower
and/or any of the Subsidiaries or the observance by the Borrower,
or any other party of any of its obligations under this Agreement
or any of the other Financing Documents or (c) the legality,
validity, effectiveness, adequacy or enforceability of any of the
Financing Documents.
SECTION 9.11.3. The Agent shall be entitled to rely on
any Substitution Agreement delivered to it pursuant to this
SECTION 9.11 which is complete and regular on its face as to its
contents and appears to be signed on behalf of the Substituted
Lender which is a party thereto, and the Agent shall have no
liability or responsibility to any party as a consequence of
relying thereon and acting in accordance with and countersigning
any such Substitution Agreement. The effective date of each
Substitution Agreement shall be the date specified as such
therein and each Lender prior to such effective date shall, for
all purposes hereunder, be deemed to have and possess all of
their respective rights and obligations hereunder up to 12:00
o'clock Noon on the effective date thereof.
SECTION 9.11.4. Upon delivery to the Agent of any
Substitution Agreement pursuant to and in accordance with this
SECTION 9.11 and acceptance thereof by the Agent (which delivery
shall be evidenced and accepted exclusively and conclusively by
the Agent's countersignature thereon pursuant to the terms hereof
without which such Substitution Agreement shall be ineffective):
(i) except as provided hereunder and in SECTION 9.11.5, the
respective rights of each Selling Lender and the Borrower against
each other under the Financing Documents with respect to the
portion of the Loans being assigned or delegated shall be
terminated and each Selling Lender and the Borrower shall each be
released from all further obligations to the other hereunder with
respect thereto (all such rights and obligations to be so
terminated or released being referred to in this SECTION 9.11 as
"Discharged Rights and Obligations"); and (ii) the Borrower and
the Substituted Lender shall each acquire rights against each
other and assume obligations towards each other which differ from
the Discharged Rights and Obligations only in so far as the
Borrower and the Substituted Lender have assumed and/or acquired
the same in place of the Selling Lender in question; and (iii)
the Agent, the Substituted Lender and the other Lenders shall
acquire the same rights and assume the same obligations between
themselves as they would have acquired and assumed had such
Substituted Lender been an original party to this Agreement as a
Lender possessing the Discharged Rights and Obligations acquired
and/or assumed by it in consequence of the delivery of such
Substitution Agreement to the Agent.
SECTION 9.11.5. Discharged Rights and Obligations
shall not include, and there shall be no termination or release
pursuant to this SECTION 9.11 of (i) any rights or obligations
arising pursuant to any of the Financing Documents in respect of
the period or in respect of payments hereunder made during the
period prior to the effective date of the relevant Substitution
Agreement or, (ii) any rights or obligations relating to the
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<PAGE>
payment of any amount which has fallen due and not been paid
hereunder prior to such effective date or rights or obligations
for the payment of interest, damages or other amounts becoming
due hereunder as a result of such nonpayment.
SECTION 9.11.6. With respect to any substitution of a
Substituted Lender taking place after the Closing Date, the
Borrower shall issue to such Substituted Lender and to such
Selling Lender, new Notes reflecting the inclusion of such
Substituted Lender as a Lender and the reduction in the
respective Loans of such Selling Lender, such new Notes to be
issued against receipt by the Borrower of the existing Notes of
such Lender. The Selling Lender or the Substituted Lender shall
pay to the Agent for its own account an assignment fee in the
amount of $2,500 for each assignment hereunder, which shall be
payable at or before the effective date of the assignment.
SECTION 9.11.7. Each Lender may furnish to any
financial institution having at least $500,000,000 in assets
which such Lender proposes to make a Substituted Lender or to a
Substituted Lender any information concerning such Lender, the
Borrower and any Subsidiary in the possession of that Lender from
time to time; provided that any Lender providing any confidential
information about the Borrower and/or any Subsidiary to any such
financial institution shall first obtain such financial
institution's agreement to keep confidential any such
confidential information.
SECTION 9.12. PAYMENTS PRO RATA. The Agent agrees that
promptly after its receipt of each payment from or on behalf of
the Borrower in respect of any obligations of the Borrower
hereunder it shall distribute such payment to the Lenders pro
rata based upon their respective Pro Rata Shares, if any, of the
obligations with respect to which such payment was received.
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 under SECTION
2.5.2 or otherwise or banker's lien, by counterclaim or cross
action, by the enforcement of any right under the Financing
Documents, or otherwise), which is applicable to the payment of
the Obligations of a sum which with respect to the related sum or
sums received by other Lenders is in a greater proportion than
the total amount of such Obligation then owed and due to such
Lender bears to the total amount of such Obligation then owed and
due to all of the Lenders immediately prior to such receipt,
except for any amounts received pursuant to SECTION 2.2.3, then
such Lender receiving such excess payment shall purchase for cash
without recourse or warranty from the other Lenders an interest
in the Obligations of the Borrower to such Lenders in such amount
as shall result in a proportional participation by all the
Lenders in such amount; provided further, however, 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.
SECTION 9.13. INDEMNIFICATION. The Borrower irrevocably
agrees to and does hereby indemnify and hold harmless Agent and
each of the Lenders, their agents or employees and each Person,
if any, who controls any of the Agent and the Lenders within the
meaning of Section 15 of the Securities Act of 1933, as amended,
and each and all and any of them (the "Indemnified Parties"),
against any and all losses, claims, actions, causes of action,
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damages or liabilities (including any amount paid in settlement
of any action, commenced or threatened and any amount described
in SECTION 8.4) (collectively, the "Damages"), joint or several,
to which they, or any of them, may become subject under statutory
law or at common law, and to reimburse the Indemnified Parties
for any legal or other out-of-pocket expenses reasonably incurred
by it or them in connection with investigating, preparing for or
defending against any of the Indemnified Parties, insofar as such
losses, claims, damages, liabilities or actions arise out of or
are related to any act or omission of the Borrower and/or any
Subsidiary with respect to (i) the Related Transaction, as it may
be modified from time to time by any of the parties thereto, (ii)
this Agreement, any of the Notes, any of the Financing Documents,
any of the Loans and/or any use made or proposed to be made with
the proceeds of said Loans, (iii) any acquisition or proposed
acquisition or any other similar business combination or
proposed business combination by the Borrower and/or any of its
Subsidiaries and/or its Affiliates (whether by acquisition or
exchange of capital stock or other securities or by acquisition
of all or substantially all of the assets of any Person), (iv)
any offering of securities by the Borrower and/or any Subsidiary
after the date hereof and/or in connection with the Securities
and Exchange Act of 1933 or (v) any failure to comply with any
applicable federal, state or foreign governmental law, rule,
regulation, order or decree, including without limitation, any
Damages which arise out of or are based upon any untrue statement
or alleged untrue statement of a material fact with respect to
matters relative to any of the foregoing contained in any
document distributed in connection therewith, or the omission or
alleged omission to state in any of the foregoing a material fact
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, but
excluding any Damages to the extent arising from or due to, as
determined in a final nonappealable judgment by a court of
competent jurisdiction, the gross negligence or willful
misconduct of any of the Indemnified Parties; provided, however,
that notwithstanding the foregoing, no Indemnified Party shall
have any liability (whether direct or indirect, in contract or
tort of otherwise) to the Borrower or any Subsidiaries or to
their respective security holders or creditors except for direct
(as opposed to consequential damages) determined in a final
nonappealable judgment by a court of competent jurisdiction to
have resulted from such Indemnified Party's gross negligence or
willful misconduct. In the case of an investigation, litigation
or proceeding to which the indemnity described in this paragraph
applies, such indemnity shall be effective whether or not such
investigation, litigation or proceeding is brought by the
Borrower or any Subsidiaries or to their respective security
holders or creditors or an Indemnified Party or an Indemnified
Party is otherwise a party thereto and whether or not the Related
Transaction and the transactions contemplated by the Financing
Documents are consummated.
Promptly upon receipt of notice of the commencement of any
action, or information as to any threatened action against any of
the Indemnified Parties in respect of which indemnity or
reimbursement may be sought from the Borrower on account of the
agreement contained in this SECTION 9.13, notice shall be given
to the Borrower in writing of the commencement or threatening
thereof, together with a copy of all papers served, but the
omission so to notify the Borrower of any such action shall not
release the Borrower from any liability which it may have to such
Indemnified Parties unless, and only to the extent that, such
omission materially prejudiced Borrower's ability to defend
against such action.
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<PAGE>
In case any such action shall be brought against any of the
Indemnified Parties, the Borrower shall be entitled to
participate in (and, to the extent that it shall wish, to select
counsel and to direct) the defense thereof at its own expense.
Any of the Indemnified Parties shall have the right to employ its
or their own counsel in any case, but the fees and expenses of
such counsel shall be at the expense of such Indemnified Party
unless the employment of such counsel shall have been authorized
in writing by the Borrower in connection with the defense of such
action or the Borrower shall not have employed counsel to have
charge of the defense of such action or such Indemnified Party
shall have received an opinion from an independent counsel that
there may be defenses available to it which are different from or
additional to those available to the Borrower (in which case the
Borrower shall not have the right to direct the defense of such
action on behalf of such Indemnified Party), in any of which
events the same shall be borne by the Borrower. If any
Indemnified Party settles any claim or action with respect to
which the Borrower has agreed to indemnify such Indemnified Party
pursuant to the terms hereof, the Borrower shall have no
liability pursuant to this SECTION 9.13 to such Indemnified Party
with respect to such claim or action unless the Borrower shall
have consented in writing to the terms of such settlement.
The provisions of SECTION 9.13 shall be effective only to
the fullest extent permitted by law. The provisions of this
SECTION 9.13 shall continue in effect and shall survive (among
other events), until the applicable statute of limitations has
expired, any termination of this Agreement, foreclosure, a deed
in lieu transaction, payment and satisfaction of the Obligations
of Borrower, and release of any collateral for the Loans.
SECTION 9.14. GOVERNING LAW. This Agreement and each
Note shall be governed by, and construed in accordance with, the
laws of The Commonwealth of Massachusetts without regard to such
state's conflict of laws rules.
SECTION 9.15. SEVERABILITY OF PROVISIONS. Any provision
of this Agreement which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to
the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof or affecting the
validity or enforceability of such provision in any other
jurisdiction.
SECTION 9.16. HEADINGS. Article and Section headings in
this Agreement are included herein for convenience of reference
only and shall not constitute a part of this Agreement for any
other purpose.
SECTION 9.17. COUNTERPARTS. This Agreement may be
executed and delivered in any number of counterparts each of
which shall be deemed an original, and this Agreement shall be
effective when at least one counterpart hereof has been executed
by each of the parties hereto.
[SIGNATURES APPEAR ON NEXT PAGE]
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as a sealed instrument by their
respective officers thereunto duly authorized, as of December 26,
1997.
In the presence of: PCD INC.
/s/ Dennis Townley By: /s/ John L. Dwight, Jr.
- --------------------- ------------------------
Dennis Townley John L. Dwight, Jr.
Chairman of the Board
In the presence of: FLEET NATIONAL BANK, as Agent for
the Lenders and as a Lender
/s/ Laurie C. Wilkins By: /s/ Thomas W. Davies
- ---------------------- ------------------------
Laurie C. Wilkins Thomas W. Davies
Senior Vice President
STATE STREET BANK AND TRUST
COMPANY, as a Lender
By: /s/ Bruce S. Daniels
------------------------
Bruce S. Daniels
Vice President
IMPERIAL BANK, as
a Lender
By: /s/ Roy Liu
------------------------
Roy Liu
FVP
EASTERN BANK, as a Lender
By: /s/ John P. Farmer
------------------------
John P. Farmer
Vice President
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<EXHIBIT> EXHIBIT 10.2
UNLIMITED GUARANTY
THIS UNLIMITED GUARANTY, dated as of December 26, 1997 by
WELLS ELECTRONICS, INC., an Indiana corporation having its
principal place of business at 52940 Olive Road, South Bend,
Indiana (the "Guarantor"), in favor of FLEET NATIONAL BANK, a
national banking association organized under the laws of the
United States having an office at One Federal Street, Boston,
Massachusetts 02110 ("Agent"), as Agent for itself and each of
the other Lenders who now are or hereafter become parties to the
hereinafter defined Loan Agreement. Capitalized terms used but
not otherwise defined herein shall have the meanings assigned
thereto in the Loan Agreement (as such term is defined below).
RECITALS
WHEREAS, Agent, the other Lenders, and PCD INC., a
Massachusetts corporation, having a principal place of business
at 2 Technology Drive, Peabody, Massachusetts 01960-7977 ( the
"Principal Debtor") have this day entered into that certain Loan
Agreement (as the same may be amended from time to time, the
"Loan Agreement") pursuant to the terms of which the Lenders have
agreed to make Loans to Principal Debtor up to a maximum
aggregate principal amount of $90,000,000.00; and
WHEREAS, Principal Debtor owns 100% of the issued and
outstanding capital stock of the Guarantor and the Guarantor
deems it to the Guarantor's financial advantage and benefit to
execute this Guaranty.
NOW THEREFORE, in consideration of the foregoing and for
other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Guarantor agrees
as follows:
1. GUARANTY OF PAYMENT AND PERFORMANCE. The Guarantor
hereby guarantees to the Lenders and Agent the full and punctual
payment when due (whether at maturity, by acceleration or
otherwise) and the performance of all liabilities, agreements and
other obligations of Principal Debtor to the Lenders and/or
Agent, whether direct or indirect, absolute or contingent, due or
to become due, secured or unsecured, now existing or hereafter
arising or acquired (whether by way of discount, letter of
credit, lease, loan, overdraft or otherwise), (collectively, the
"Obligations"). This Unlimited Guaranty is an absolute,
unconditional and continuing guaranty of the full and punctual
payment and performance of the Obligations and not of their
collectibility only and is in no way conditioned upon any
requirement that the Lenders and/or Agent first attempt to
collect any of the Obligations from Principal Debtor or resort to
any security or other means of obtaining their payment. Should
Principal Debtor default in the payment or performance of any of
the Obligations, or in the event that Principal Debtor, any of
the Guarantors or any one or more of any other guarantors of any
of the Obligations shall (a) apply for or consent to the
appointment of a receiver, trustee or liquidator of its or any of
its or their property, (b) admit in writing its or their
inability to pay or fail generally to pay its or their debts as
they mature, (c) make a general assignment for the benefit of
<PAGE>
creditors, (d) be adjudicated a bankrupt or (e) file a voluntary
petition in bankruptcy or a petition or an answer seeking
reorganization or an arrangement with creditors or to take
advantage of any bankruptcy, reorganization, arrangement,
insolvency, readjustment of debts, dissolution or liquidation
statute, or an answer admitting the material allegations of a
petition filed against it or any of them in a proceeding under
any such law (collectively, a "Bankruptcy Event"), the
obligations of the Guarantor hereunder shall become immediately
due and payable to the Agent and/or the Lenders, without demand
or notice of any nature, all of which are expressly waived by the
Guarantor. Payments by the Guarantor hereunder may be required
by Agent and/or the Lenders on any number of occasions.
2. GUARANTOR AGREEMENT TO PAY. The Guarantor further
agrees, as the principal obligor and not as a guarantor only, to
pay to Agent, for the benefit of the Lenders, on demand, all
costs and expenses (including court costs and reasonable legal
fees and expenses) incurred or expended by the Lenders and/or
Agent in connection with the Obligations, this Unlimited Guaranty
and the enforcement thereof, together with interest on amounts
recoverable under this Unlimited Guaranty from the time such
amounts become due until payment, at the rate per annum equal to
Effective Prime plus two percent (2%), provided that if such
interest exceeds the maximum amount permitted to be paid under
applicable law, then such interest shall be reduced to such
maximum permitted amount.
3. UNLIMITED GUARANTY. The liability of the Guarantor
hereunder shall be unlimited.
4. WAIVERS BY GUARANTOR; AGENT'S AND/OR LENDERS' FREEDOM TO
ACT. The Guarantor agrees that the Obligations shall be paid and
performed strictly in accordance with their respective terms
regardless of any law, regulation or order now or hereafter in
effect in any jurisdiction affecting any of such terms or the
rights of the Lenders and/or Agent with respect thereto. The
Guarantor waives presentment, demand, protest, notice of
acceptance, notice of Obligations incurred and all other notices
of any kind, all defenses which may be available by virtue of any
valuation, stay, moratorium law or other similar law now or
hereafter in effect, any right to require the marshaling of
assets of Principal Debtor, and all suretyship defenses
generally. Without limiting the generality of the foregoing, the
Guarantor agrees to the provisions of any instrument evidencing,
securing or otherwise executed in connection with any Obligation
and agrees that the obligations of the Guarantor hereunder shall
not be released or discharged, in whole or in part, or otherwise
affected by the following: (a) the failure of the Lenders and/or
Agent to assert any claim or demand or to enforce any right or
remedy against Principal Debtor; (b) any extensions or renewals
of any Obligation; (c) any rescissions, waivers, amendments or
modifications of any of the terms or provisions of any agreement
evidencing, securing or otherwise executed in connection with any
Obligation; (d) the substitution or release of any entity
primarily or secondarily liable for any Obligation; (e) the
adequacy of any rights the Lenders and/or Agent may have against
any collateral or other means of obtaining repayment of the
Obligations; (f) the impairment of any collateral securing the
Obligations, including without limitation the failure to perfect
or preserve any rights the Lenders and/or Agent might have in
such collateral or the substitution, exchange, surrender,
release, loss or destruction of any such collateral; or (g) any
other act or omission which might in any manner or to any extent
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<PAGE>
vary the risk of the Guarantor or otherwise operate as a release
or discharge of the Guarantor, all of which may be done without
notice to the Guarantor.
5. UNENFORCEABILITY OF OBLIGATIONS, GAINS TO PRINCIPAL
DEBTOR. If for any reason Principal Debtor has no legal
existence or is under no legal obligation to discharge any of the
Obligations, or if any of the Obligations have become
irrecoverable from Principal Debtor by operation of law or for
any other reason, this Unlimited Guaranty shall nevertheless be
binding on the Guarantor to the same extent as if the Guarantor
at all times had been the principal obligor on all such
Obligations. In the event that acceleration of the time for
payment of the Obligations is stayed upon the occurrence of a
Bankruptcy Event, or for any other reason, all such amounts
otherwise subject to acceleration under the terms of any
agreement, document or instrument evidencing, securing or
otherwise executed in connection with any Obligation shall be
immediately due and payable by the Guarantor.
6. SUBROGATION AND SUBORDINATION. Until the payment and
performance in full of all Obligations and any and all
obligations of Principal Debtor to any affiliate of the Lenders
and/or Agent (and the expiration of any applicable preference
periods under the Federal Bankruptcy Code without there having
occurred any reorganization of Principal Debtor in connection
with a Bankruptcy Event), the Guarantor shall not exercise any
rights against Principal Debtor arising as a result of payment by
the Guarantor hereunder, by way of subrogation or otherwise, and
shall not prove any claim in competition with the Agent and/or
the Lenders or their respective affiliates in respect of any
payment hereunder in bankruptcy or insolvency proceedings of any
nature; the Guarantor shall not claim any set-off or counterclaim
against Principal Debtor in respect of any liability of the
Guarantor to Principal Debtor; and the Guarantor waives any
benefit of and any right to participate in any collateral which
may be held by the Lenders, Agent and/or any affiliate thereof.
The payment of any amounts due with respect to any indebtedness
of Principal Debtor now or hereafter held by the Guarantor is
hereby subordinated to the prior payment in full of the
Obligations and may be payable only in accordance with the Loan
Agreement. The Guarantor agrees that after the occurrence of any
default, including without limitation an Event of Default or a
Guaranty Event of Default (as such term is defined in Section 11
below), in the payment or performance of the Obligations, the
Guarantor shall not demand, sue for or otherwise attempt to
collect any such indebtedness of Principal Debtor to the
Guarantor until the Obligations shall have been paid in full.
If, notwithstanding the foregoing sentence, the Guarantor shall
collect, enforce or receive any amounts in respect of such
indebtedness, such amounts shall be collected, enforced and
received by the Guarantor as trustee for Agent, and be paid over
to Agent for the benefit of the Lenders, on account of the
Obligations without affecting in any manner the liability of the
Guarantor under the other provisions of this Unlimited Guaranty.
In the event the Guarantor is or becomes an "insider" (as defined
from time to time in Section 101 of the Federal Bankruptcy Code)
with respect to Principal Debtor, any and all rights of the
Guarantor (a) of reimbursement, indemnification, and exoneration
against Principal Debtor, (b) of contribution against Principal
Debtor (if the Unlimited Guaranty is secured) and/or any other
guarantor and (c) of subrogation to the rights of the Lenders
and/or Agent or any similar rights under any of the Financing
Documents, whether such rights arise under an express or implied
contract or operation of law, are hereby expressly waived, it
being the intention of the parties hereto that the Guarantor
shall not be deemed a "creditor" (as defined in Section 101 of
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<PAGE>
the Federal Bankruptcy Code) of Principal Debtor by reason of the
existence of this Unlimited Guaranty, this waiver being given to
induce the Agent and the Lenders to enter into the Loan
Agreement.
7. SECURITY; SET-OFF. The Guarantor grants to Agent, for
the benefit of the Lenders, as security for the full and punctual
payment and performance of the Guarantor's obligations hereunder,
a continuing lien on and security interest in all securities or
other property belonging to the Guarantor now or hereafter held
by Agent and in all deposits, general or special time or demand,
provisional or final and other sums credited by or due from the
Lenders and/or Agent to the Guarantor, regardless of the adequacy
of any collateral or their means of obtaining repayment of the
Obligations. Agent, for the benefit of the Lenders, is hereby
authorized at any time and from time to time after an Event of
Default or a Guaranty Event of Default has occurred and is
continuing, without notice to the Guarantor (any such notice
being expressly waived by the Guarantor and to the fullest extent
permitted by law), to set off and apply such deposits and other
sums against the obligations of the Guarantor under this
Unlimited Guaranty whether or not Agent has made any demand under
this Unlimited Guaranty and although such obligations may be
contingent or unmatured.
8. FINANCIAL RECORDS - INSPECTION. The Guarantor shall (a)
maintain or cause to be maintained full, complete, accurate and
adequate records and books of account; (b) permit Agent and its
duly authorized agents, attorneys and accountants to inspect,
examine and copy its records and books of account at all
reasonable times and, prior to the occurrence of an Event of
Default, prior notice; (c) provide to Agent within ninety (90)
days after each calendar or fiscal year end, as the case may be,
the Guarantor's financial statements certified by a firm of
independent certified public accountants selected by the
Guarantor and reasonably acceptable to Agent to be true and
correct, in such form and detail as may be reasonably requested
by Agent; and (d) promptly deliver to Agent such other
information with respect to the financial statements of the
Guarantor as Agent may from time to time reasonably require.
9. FURTHER ASSURANCES. The Guarantor agrees that it shall,
from time to time at the request of Agent, provide to Agent a
true, accurate and current financial statement in a form
reasonably requested by Agent, and shall provide such other
information relating to the business and affairs of the Guarantor
as Agent may reasonably request. The Guarantor covenants and
agrees with Agent that during such time as this Unlimited
Guaranty is in effect, the Guarantor shall not make or permit any
substantial diminution in its net worth and shall not sell,
mortgage or pledge any material portion of its real or personal
property (except transfers to Principal Debtor, mortgages and
pledges to Agent as security for this Unlimited Guaranty, except
for sales and mortgages which are not fraudulent conveyances
under applicable state law and except for sales and mortgages in
the ordinary course of Guarantor's business) without having first
obtained Agent's written consent therefor. In the event of any
breach of said covenants and agreements, all Obligations,
regardless of their terms, shall at Agent's election be deemed
for the purposes of this Unlimited Guaranty to have become
matured, and, at Agent's election, the Guarantor shall promptly
pay to Agent, for the benefit of the Lenders, the entire amount
of the Obligations, and Agent may take any action deemed
necessary or advisable to enforce this Unlimited Guaranty. The
Guarantor also agrees, upon demand after any change in the
condition of affairs (financial or otherwise) of the Guarantor
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<PAGE>
deemed by Agent to be adverse and material, to secure the payment
and performance of its obligations hereunder by delivering,
assigning or transferring to Agent or granting Agent a security
interest in additional collateral of a value and character
satisfactory to Agent, and authorizes Agent to file any financing
statement deemed by Agent to be necessary or desirable to perfect
any security interest granted by the Guarantor to Agent, and as
agent for the Guarantor, to sign the name of the Guarantor
thereto. The Guarantor also agrees to do all such things and
execute all such documents, including financing statements, as
Agent may consider necessary or desirable to give full effect to
this Unlimited Guaranty and to perfect and preserve the rights
and powers of Agent hereunder.
10. TERMINATION. This Unlimited Guaranty shall remain in
full force and effect until the repayment and performance in full
of all of the Obligations (and the expiration of any applicable
preference periods under the Federal Bankruptcy Code without
there having occurred any Bankruptcy Event) and the expiration or
termination of any obligations of the Lenders and/or the Agent to
advance funds to Principal Debtor.
11. DEFAULTS. The occurrence of any one or more of the
following events shall constitute a "Guaranty Event of Default"
under the provisions of this Unlimited Guaranty (individually, a
"Guaranty Event of Default" and collectively, the "Guaranty
Events of Default"):
(a) The failure of the Guarantor to pay any of the
Obligations as and when due and payable in accordance with the
provisions of this Unlimited Guaranty.
(b) Any representation or warranty made in this
Unlimited Guaranty or in any report, statement, schedule,
certificate, opinion (including any opinion of counsel for the
Guarantor), financial statement or other document furnished in
connection with this Unlimited Guaranty, shall prove to have been
false or misleading when made (or, if applicable, when
reaffirmed) in any material respect.
(c) The failure of the Guarantor to perform, observe or
comply with any covenant, condition or agreement contained in
this Unlimited Guaranty, which default shall remain unremedied
for thirty 30) days after written notice thereof to the Guarantor
by Agent.
(d) A default shall occur under any of the other
Financing Documents and such default is not cured within any
applicable grace period provided therein.
(e) The Guarantor shall cause or suffer a Bankruptcy
Event to occur to the Guarantor.
(f) The Guarantor shall fail to cause the dismissal or
discharge of any Bankruptcy event brought against the Guarantor
within forty five (45) days of the origination of such Bankruptcy
Event.
(g) Unless adequately insured in the opinion of Agent,
the entry of a final judgment for the payment of money involving
more than $100,000 against the Guarantor, and the failure by the
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Guarantor to discharge the same, or cause it to be discharged,
within thirty (30) days from the date of the order, decree or
process under which or pursuant to which such judgment was
entered, or to secure a stay of execution pending appeal of such
judgment.
(h) If Agent in its sole discretion determines in good
faith that a material adverse change has occurred in the
financial condition of the Guarantor.
(i) The dissolution, liquidation or termination of
existence of the Guarantor, or the sale of assets of the
Guarantor out of the ordinary course of its business.
(j) If the Guarantor transfers any of the Guarantor's
material assets, and/or a material portion of its assets, without
Agent's prior written consent.
(k) Any execution or attachment shall be levied against
any collateral for this Unlimited Guaranty, or any part thereof,
and such execution or attachment shall not be set aside,
discharged or stayed within thirty (30) days after the same shall
have been levied.
12. NET WORTH REQUIREMENT. Notwithstanding any provision
contained in this Unlimited Guaranty or any security agreement,
mortgage or other agreement securing this Unlimited Guaranty
(collectively, the "Guaranty Documents") to the contrary, in the
event of any Bankruptcy Event involving either the Guarantor or
Principal Debtor or in the event of any challenge to the full
enforceability of all or any of the Guaranty Documents or the
Financing Documents by any creditor of the Guarantor or Principal
Debtor, respectively, or a trustee, receiver or debtor-in-
possession of, for or in respect of the Guarantor or Principal
Debtor, respectively, the liability of the Guarantor under the
Guaranty Documents shall be limited to the lesser of the
following amounts minus, in either case, One Dollar ($1):
(a) the lowest amount which would render Guarantor's
undertakings under the Guaranty Documents a fraudulent conveyance
under the laws of The Commonwealth of Massachusetts or other
similar or analogous law or statute of the state having
jurisdiction over the subject matter; or
(b) the lowest amount which would render Guarantor's
undertakings under the Guaranty Documents a fraudulent transfer
under Section 548 of the Bankruptcy Code of 1978, as amended.
This provision shall control every other provision of the
Guaranty Documents except, however, this provision shall not be
construed to prohibit a valuation of the assets securing this
Unlimited Guaranty for an amount exceeding (i) or (ii) above,
minus One Dollar ($1), at a date subsequent to the date hereof,
with the amount of this Unlimited Guaranty under such
circumstances to increase with the value of such assets. In no
event shall this Section 12 be construed to increase Guarantor's
liability beyond the liability set forth in Sections 1 and 2
hereof.
13. SUCCESSORS AND ASSIGNS. This Unlimited Guaranty shall
be binding upon the Guarantor, its successors and assigns, and
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<PAGE>
shall inure to the benefit of and be enforceable by Agent, its
successors, transferees and assigns. Without limiting the
generality of the foregoing sentence, the Lenders and/or Agent or
any of them may assign or otherwise transfer any agreement or any
note held by them evidencing, securing or otherwise executed in
connection with the Obligations, or sell participations in any
interest therein, to any other person or entity, and such other
person or entity shall thereupon become vested, to the extent set
forth in the agreement evidencing such assignment, transfer or
participation, with all the rights in respect thereof granted to
selling party herein.
14. NEGATIVE COVENANTS OF THE GUARANTOR. Except where any
of the following could have a Material Adverse Effect or except
as otherwise permitted under the Loan Agreement, the Guarantor
shall not (i) amend its articles of organization or by-laws or
change its officers or directors, (ii) issue any additional
capital stock or other securities of the Guarantor or grant
warrants, options or rights to purchase or acquire any capital
stock of other securities of the Guarantor or change in any
manner the equity ownership of the Guarantor, or (iii) merge or
consolidate with any other corporation or acquire all or
substantially all of the stock, business or assets of any other
Person of sell, assign or transfer substantially all of the
Guarantor's assets to any Person, or enter into any agreement to
take any of the actions described in clauses (i) through (iii)
above. The Guarantor shall not create, incur, assume or suffer to
exist any Lien of any nature, upon or with respect to any of its
properties, now owned or hereafter acquired, or assign as
collateral or otherwise convey as collateral, any right to
receive income, except that the foregoing restrictions shall not
apply to any Liens (i) reflected as Permitted Encumbrances as of
the date hereof, (ii) for the security interests granted or to be
granted to Agent under the Loan Agreement dated December 26,
1997, (iii) for liens for current taxes not yet delinquent, (iv)
imposed by law and incurred in the ordinary course of business
for obligations not past due to carriers, warehousemen, laborers,
materialmen and the like, (v) in respect of pledges for deposits
under workers' compensation laws or similar legislation or (vi)
for minor defects in title, none of which, individually or in the
aggregate, materially interferes with the use of such property,
the Guarantor has good and marketable title to its property and
assets free and clear of all mortgages, liens, claims, and
encumbrances. With respect to the property and assets it leases,
the Guarantor is in compliance with such leases and holds a valid
leasehold interest free of any liens, claims, or encumbrances,
subject to clauses (i)-(vi) above.
15. AMENDMENTS AND WAIVERS. No amendment or waiver of any
provision of this Unlimited Guaranty nor consent to any departure
by the Guarantor therefrom shall be effective unless the same
shall be in writing and signed by Agent. No failure on the part
of Agent to exercise, and no delay in exercising, any right
hereunder shall operate as a waiver thereof; nor shall any single
or partial exercise of any right hereunder preclude any other or
further exercise thereof or the exercise of any other right.
16. NOTICES. Any notice or other communication required or
permitted hereunder will be in writing and will be given (i) by
delivery in person, (ii) by certified mail, return receipt
requested, (iii) by commercial overnight courier, or (iv) by
facsimile transmission (telecopy) (with telephone confirmation of
receipt), as follows:
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<PAGE>
(a) If to the Agent and a Lender, to -
Fleet National Bank
One Federal Street
Boston, Massachusetts 02110
Attn: Thomas W. Davies, Senior Vice President
Telecopy: (617) 346-1633
with a copy to -
Hinckley, Allen & Snyder
28 State Street
Boston, Massachusetts 02109-1775
Attn: Malcolm Farmer III, Esq.
Telecopy: (617) 345-9020
(b) If to the Guarantor, to -
Wells Electronics, Inc.
52940 Olive Road
South Bend, Indiana 46628
Attn: Richard J. Mullin, President
Telecopy:
with a copy to -
Hill & Barlow
One International Place
Boston, Massachusetts 02110-2607
Attn: Dennis W. Townley, Esq.
Telecopy: (617) 428-3500
Any such notice or other communication will be considered to have
been given (i) on the date of delivery in person, (ii) on the
fifth day after mailing by certified mail, provided that receipt
of delivery is confirmed in writing, (iii) on the first Business
Day following delivery to a commercial overnight courier, or (iv)
on the day of facsimile transmission (telecopy) provided that the
giver of the notice obtains telephone confirmation of receipt.
17. GOVERNING LAW; CONSENT TO JURISDICTION. This Unlimited
Guaranty is intended to take effect as a sealed instrument and
shall be governed by, and construed in accordance with, the laws
of The Commonwealth of Massachusetts. The Guarantor agrees that
any suit for the enforcement of this Unlimited Guaranty may be
brought in the courts of The Commonwealth of Massachusetts or any
Federal Court sitting therein and consents to the non-exclusive
jurisdiction of such court and to service of process in any such
suit being made upon the Guarantor by mail at the address
specified in Section 16 hereof. The Guarantor hereby waives any
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<PAGE>
objection that it may now or hereafter have to the venue of any
such suit or any such court or that such suit was brought in an
inconvenient court. EACH OF AGENT AND THE GUARANTOR HEREBY
WAIVES ITS RIGHT TO A JURY TRIAL WITH RESPECT TO ANY ACTION OR
CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS
GUARANTY, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THE PERFORMANCE
OF SUCH RIGHTS AND OBLIGATIONS. EXCEPT AS PROHIBITED BY LAW,
AGENT AND THE GUARANTOR EACH HEREBY WAIVES ANY RIGHT WHICH IT MAY
HAVE TO CLAIM OR RECOVER IN ANY LITIGATION REFERRED TO IN THE
PRECEDING SENTENCE ANY SPECIAL, EXEMPLARY, PUNITIVE OR
CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION
TO, ACTUAL DAMAGES. AGENT AND THE GUARANTOR EACH (A) CERTIFIES
THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF THE OTHER HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH PARTY WOULD NOT,
IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS
AND (B) ACKNOWLEDGES THAT SUCH PARTY HAS BEEN INDUCED TO ENTER
INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE WAIVERS AND
CERTIFICATIONS CONTAINED HEREIN.
18. MISCELLANEOUS. This Unlimited Guaranty constitutes the
entire agreement of the Guarantor with respect to the matters set
forth herein. The rights and remedies herein provided are
cumulative and not exclusive of any remedies provided by law or
any other agreement, and this Unlimited Guaranty shall be in
addition to any other guaranty of the Obligations. The
invalidity or unenforceability of any one or more sections of
this Unlimited Guaranty shall not affect the validity or
enforceability of its remaining provisions. Captions are for the
ease of reference only and shall not affect the meaning of the
relevant provisions. The meanings of all defined terms used in
this Unlimited Guaranty shall be equally applicable to the
singular and plural forms of the terms defined.
[SIGNATURES APPEAR ON NEXT PAGE]
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<PAGE>
IN WITNESS WHEREOF, the Guarantor has caused this Unlimited
Guaranty to be executed and delivered as of the date appearing on
page one.
WELLS ELECTRONICS, INC.
By: /s/ Mary L. Mandarino
-------------------------
Mary L. Mandarino
Treasurer
<EXHIBIT> EXHIBIT 10.3
SECURITY AGREEMENT
THIS AGREEMENT made as of December 26, 1997, by and between
PCD INC., a Massachusetts corporation, having its principal place
of business at 2 Technology Drive, Centennial Park, Peabody,
Massachusetts 01960-7977 ("Debtor") and FLEET NATIONAL BANK, a
national banking association organized under the laws of the
United States having an office at One Federal Street, Boston,
Massachusetts 02110 ("Secured Party"), as Agent for itself and
each of the other Lenders who are now or hereafter become parties
to the hereinafter defined Loan Agreement. Capitalized terms used
but not expressly defined herein shall have the meanings assigned
thereto in said Loan Agreement.
SECTION 1. RECITALS.
(a) Secured Party and Debtor have this day entered into
that certain Loan Agreement (as the same may be amended from time
to time, the "Loan Agreement") pursuant to the terms of which
Secured Party has agreed to make loans to Debtor as set forth
therein.
SECTION 2. THE SECURITY INTERESTS. (a) In order to
secure (i) payment and performance of all of the obligations of
Debtor under the Loan Agreement and under the Notes, (ii) the
performance of all of the obligations of Debtor to Secured Party
contained herein, and (iii) the payment of all other future
advances and other obligations of Debtor to Secured Party and/or
the Lenders, including, without limitation, any future loans and
advances made to Debtor by Secured Party and/or the Lenders prior
to, during or following any (a) application by Debtor for or
consent by Debtor to the appointment of a receiver, trustee or
liquidator of Debtor's property, (b) admission by Debtor in
writing of its inability to pay or failure generally to pay its
respective debts as they mature, (c) general assignment by Debtor
for the benefit of creditors, (d) adjudication of Debtor as
bankrupt or (e) filing by Debtor of a voluntary petition in
bankruptcy or a petition or an answer seeking reorganization or
an arrangement with creditors or to take advantage of any
bankruptcy, reorganization, arrangement, insolvency, readjustment
of debts, dissolution or liquidation statute, or an answer
admitting the material allegations of a petition filed against it
in a proceeding under any such law (any of the foregoing shall
hereinafter be referred to as a "Bankruptcy Event"), any interest
accruing under the Notes and/or the Loan Agreement after the
commencement of a Bankruptcy Event to the extent permitted by
applicable law, and any and all other indebtedness, liabilities
and obligations of Debtor to Secured Party and/or the Lenders of
every kind and description, direct, indirect or contingent, now
or hereafter existing, due or to become due (all of the foregoing
being hereinafter called the "Obligations"), Debtor hereby grants
to Secured Party for its benefit a continuing security interest
in the following described fixtures and personal property
(hereinafter collectively called the "Collateral"):
All fixtures and all tangible and intangible personal
property of Debtor, whether now owned or hereafter acquired by
Debtor, or in which Debtor may now have or hereafter acquire an
interest, including, without limitation, (a) all equipment
(including all machinery, tools and furniture), inventory and
goods (each as defined in the Uniform Commercial Code, if so
<PAGE>
defined therein); (b) all accounts, accounts receivable, other
receivables, contract rights, chattel paper, and general
intangibles (including, without limitation, trademarks, trademark
registrations, trademark registration applications, servicemarks,
servicemark registrations, servicemark registration applications,
goodwill, tradenames, trade secrets, patents, patent
applications, leases, licenses, permits, copyrights, copyright
registrations, copyright registration applications, moral rights,
any other proprietary rights, exclusionary rights or intellectual
property and any renewals and extensions associated with any of
the foregoing, as each of the foregoing may be secured under the
laws now or hereafter in force and effect in the United States of
America or any other jurisdiction) of Debtor (each as defined in
the Uniform Commercial Code, if so defined therein); (c) all
instruments, documents of title, policies and certificates of
insurance, securities, bank deposits, deposit accounts, checking
accounts and cash of Debtor; (d) all accessions, additions or
improvements to, all replacements, substitutions and parts for,
and all proceeds and products of, all of the foregoing and (e)
all books, records and documents relating to any of the
foregoing.
(b) All Collateral consisting of accounts receivable,
contract rights, instruments, chattel paper and general
intangibles (each as defined in the Uniform Commercial Code) of
Debtor arising from the sale, delivery or provision of goods
and/or services, including, without limitation, all documents,
notes, drafts and acceptances, now owned by Debtor as well as any
and all thereof that may be hereafter acquired by Debtor and in
and to all returned or repossessed goods arising from or relating
to any contract rights, accounts or other proceeds of any sale or
other disposition of inventory, are sometimes hereinafter
collectively called the "Customer Receivables".
(c) The security interests granted pursuant to this SECTION
2 (the "Security Interests") are granted as security only and
shall not subject Secured Party to, or transfer or in any way
affect or modify, any obligation or liability of Debtor under any
of the Collateral or any transaction which gave rise thereto.
SECTION 3. DELIVERY OF PLEDGED SECURITIES, CHATTEL PAPER
AND DATABASE. All securities including, without limitation,
shares of stock and negotiable promissory notes, of Debtor,
whether now owned or hereafter acquired by Debtor, shall be
delivered to Secured Party by Debtor simultaneously with the
delivery hereof or, with respect to after acquired securities,
promptly after the same have been acquired by Debtor (which
securities are hereinafter called the "Pledged Securities") shall
be in suitable form for transfer by delivery, or shall be
accompanied by duly executed undated instruments of transfer or
assignments in blank, all in form and substance satisfactory to
Secured Party. EXHIBIT A attached hereto and made a part hereof
sets forth a complete description of all securities owned by
Debtor on the date hereof. Secured Party may at any time or from
time to time, at its sole discretion, require Debtor to cause any
chattel paper included in the Customer Receivables to be
delivered to Secured Party or any successor agent or
representative designated by it for the purpose of causing a
legend referring to the Security Interests to be placed on such
chattel paper and upon any ledgers or other records concerning
the Customer Receivables.
SECTION 4. FILING; FURTHER ASSURANCES. Debtor will, at
its expense, execute, deliver, file and record (in such manner
and form as Secured Party may reasonably require), or permit
2
<PAGE>
Secured Party to file and record, any financing statements, any
carbon, photographic or other reproduction of a financing
statement or this Security Agreement (which shall be sufficient
as a financing statement hereunder), any specific assignments or
other paper that may be reasonably necessary or desirable, or
that Secured Party may reasonably request, in order to create,
preserve, perfect or validate any Security Interest or to enable
Secured Party to exercise and enforce its rights hereunder with
respect to any of the Collateral. Debtor hereby irrevocably
appoints Secured Party as Debtor's attorney-in-fact to execute in
the name and behalf of Debtor such additional financing
statements as Secured Party may reasonably request.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF DEBTOR.
Debtor hereby represents and warrants to Secured Party that (a)
Debtor is, or to the extent that certain of the Collateral is to
be acquired after the date hereof, will be, the owner of the
Collateral free from any adverse Lien except as permitted under
the Loan Agreement; (b) except for such financing statements
identified on EXHIBIT C hereto and such financing statements
relating to Liens against Debtor specifically described in and
permitted by the Loan Agreement, no financing statement covering
the Collateral is on file in any public office, other than the
financing statements filed pursuant to this Security Agreement;
(c) all additional information, representations and warranties
contained in EXHIBIT B attached hereto and made a part hereof are
true, accurate and complete in all material respects on the date
hereof; and (d) there are no restrictions upon the voting rights
or the transfer of all or any of the Pledged Securities (other
than as may appear on the face of any certificate evidencing any
of the Pledged Securities or as may be imposed by any state or
local agency or government) and Debtor has the right to vote,
pledge, grant the Security Interest in and otherwise transfer the
Pledged Securities free of any encumbrances (other than
applicable restrictions imposed by any state or local agency or
government or Federal or state securities laws or regulations).
SECTION 6. COVENANTS OF DEBTOR. Debtor hereby covenants
and agrees with Secured Party that Debtor (a) will defend the
Collateral against all claims and demands of all persons at any
time claiming any interest therein other than that of Secured
Party; (b) will provide Secured Party with prompt written notice
of (i) any change in the office where Debtor maintains its books
and records pertaining to the Customer Receivables, and (ii) the
movement or location of Collateral to or at any address other
than as set forth in EXHIBIT B attached hereto; (c) will promptly
pay any and all taxes, assessments and governmental charges upon
the Collateral prior to the date penalties attach thereto except
to the extent permitted under the Loan Agreement; (d) will
immediately notify Secured Party of any event causing a
substantial loss or diminution in the value of all or any
material part of the Collateral and the amount or an estimate of
the amount of such loss or diminution; (e) will have and maintain
insurance at all times in accordance with the provisions of the
Loan Agreement; (f) except in the ordinary course of business or
as otherwise permitted under the Loan Agreement, will not sell or
offer to sell or otherwise assign, transfer or dispose of the
Collateral or any interest therein, without the prior written
consent of Secured Party; (g) will keep the Collateral free from
any adverse Lien (other than Liens permitted under the Loan
Agreement) and in good order and repair, reasonable wear and tear
excepted, and will not waste or destroy the Collateral or any
part thereof; and (h) will not use the Collateral in violation of
the Loan Agreement or this Agreement.
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<PAGE>
SECTION 7. RECORDS RELATING TO COLLATERAL. Debtor will
keep its records concerning the Collateral, including the
Customer Receivables and all chattel paper included in the
Customer Receivables, at the location(s) set forth in EXHIBIT B
attached hereto or at such other place or places of business of
which Secured Party shall have been notified in writing no less
than ten (10) days in advance. Debtor will hold and preserve
such records and chattel paper and will, to the extent provided
in the Loan Agreement, (a) permit representatives of Secured
Party at any time during normal business hours to examine and
inspect the Collateral and to make abstracts from such records
and chattel paper, and (b) furnish to Secured Party such
information and reports regarding the Collateral as Secured Party
may from time to time reasonably request.
SECTION 8. RECORD OWNERSHIP OF PLEDGED SECURITIES. Debtor
will promptly give to Secured Party copies of any notices or
other communications received by Debtor with respect to Pledged
Securities registered in the name of Debtor. Upon the occurrence
of an Event of Default, Secured Party may cause any or all of the
Pledged Securities to be transferred of record into the name of
Secured Party (or a designee of Secured Party).
SECTION 9. RIGHT TO RECEIVE DISTRIBUTIONS ON PLEDGED
SECURITIES. Unless an Event of Default shall have occurred and
be continuing, Debtor shall be entitled, from time to time, to
collect and receive for its own use all dividends, interest and
other payments and distributions made upon or with respect to the
Pledged Securities, except:
(i) dividends of stock;
(ii) dividends payable in securities or other property
(except cash dividends);
(iii) other securities issued with respect to or in
lieu of the Pledged Securities (whether upon conversion of
the convertible securities included therein or through stock
split, spin-off, split-off, reclassification, merger,
consolidation, sale of assets, combination of shares or
otherwise).
All of the foregoing, together with all new, substituted or
additional shares of capital stock, warrants, options or other
rights, or other securities issued in addition to or in respect
of all or any of the Pledged Securities shall be delivered to
Secured Party hereunder as required by SECTION 3 hereof, to be
held as Collateral pursuant to the terms hereof in the same
manner as the Pledged Securities delivered to Secured Party on
the date hereof.
SECTION 10. RIGHT TO VOTE PLEDGED SECURITIES. Unless an
Event of Default shall have occurred and be continuing, Debtor
shall have the right, from time to time, to vote and to give
consents, ratifications and waivers with respect to the Pledged
Securities and to exercise conversion rights with respect to the
convertible securities included therein, and Secured Party shall,
upon receiving a written request from Debtor accompanied by a
certificate signed by Debtor's principal financial officer
stating that no Event of Default has occurred, deliver to Debtor
or as specified in such request such proxies, powers of attorney,
consents, ratifications and waivers in respect of any Pledged
Securities which are registered in Secured Party's name, and make
4
<PAGE>
such arrangements with respect to the conversion of convertible
securities as shall be specified in Debtor's request, such
arrangements to be in form and substance reasonably satisfactory
to Secured Party.
If an Event of Default shall have occurred and be
continuing, and provided Secured Party elects to exercise the
rights hereinafter set forth by notice to Debtor of such
election, Secured Party shall have the right, to the extent
permitted by law, and Debtor shall take all such action as may be
necessary or reasonably appropriate to give effect to such right,
to vote and to give consents, ratifications and waivers and take
any other action with respect to all the Pledged Securities with
the same force and effect as if Secured Party were the absolute
and sole owner thereof.
SECTION 11. GENERAL AUTHORITY. Debtor hereby irrevocably
appoints Secured Party Debtor's lawful attorney (which
appointment shall be deemed a power coupled with an interest)
with full power of substitution, in the name of Debtor, for the
sole use and benefit of Secured Party, its successors and
assigns, but at Debtor's expense, to exercise, all or any of the
following powers with respect to all or any of the Collateral
during the existence and continuance of any Event of Default:
(i) to demand, sue for, collect, receive and give
acquittance for any and all monies due or to become due;
(ii) to receive, take, endorse, assign and deliver all
checks, notes, drafts, securities, documents and other negotiable
and non-negotiable instruments and chattel paper taken or
received by Secured Party;
(iii) to settle, compromise, compound, prosecute or defend
any action or proceeding with respect thereto;
(iv) to sell, transfer, assign or otherwise deal in or
with the same or the proceeds or avails thereof or the related
goods securing the Customer Receivables, as fully and effectually
as if Secured Party were the absolute owner thereof;
(v) to extend the time of payment of any or all thereof
and to make any allowance and other adjustments with reference
thereto;
(vi) to discharge any taxes or Liens at any time placed
thereon; and
(vii) to execute any document or form, in the name of
Debtor, which may be necessary or desirable in connection with
any sale of Pledged Securities by Secured Party, including
without limitation Form 144 promulgated by the Securities and
Exchange Commission;
5
<PAGE>
provided, that Secured Party shall give Debtor not less than ten
(10) days' prior written notice of the time and place of any sale
or other intended disposition of any of the Collateral.
SECTION 12. EVENTS OF DEFAULT. Debtor shall be in default
under this Security Agreement upon the occurrence of any Event of
Default under the Loan Agreement.
SECTION 13. REMEDIES UPON EVENT OF DEFAULT. If any Event
of Default shall have occurred and be continuing, Secured Party
may exercise all the rights and remedies of a secured party under
the Uniform Commercial Code. Secured Party may require Debtor to
assemble all or any part of the Collateral and make it available
to Secured Party at a place to be designated by Secured Party
which is reasonably convenient. Secured Party shall give Debtor
ten (10) days' written notice of its intention to make any public
or private sale or sale at a broker's board or on a securities
exchange of the Collateral. At any such sale the Collateral may
be sold in one lot as an entirety or in separate parcels, as
Secured Party may determine. Secured Party shall not be
obligated to make any such sale pursuant to any such notice. To
the extent permitted by law, Secured Party may, without notice or
publication, adjourn any public or private sale or cause the same
to be adjourned from time to time by announcement at the time and
place fixed for the sale, and such sale may be made at any time
or place to which the same may be adjourned. Secured Party,
instead of exercising the power of sale herein conferred upon it,
may proceed by a suit or suits at law or in equity to foreclose
the Security Interests and sell the Collateral, or any portion
thereof, under a judgment or decree of a court or courts of
competent jurisdiction.
SECTION 14. APPLICATION OF COLLATERAL AND PROCEEDS. The
proceeds of any sale of, or other realization upon, all or any
part of the Collateral shall be applied in the following order of
priorities: (a) first, to pay the expenses of such sale or other
realization, including reasonable attorneys' fees, and all
expenses, liabilities and advances incurred or made by Secured
Party in connection therewith, and any other unreimbursed
expenses for which Secured Party may be reimbursed pursuant to
SECTION 15; (b) second, to the payment of the Obligations in such
order of priority as Secured Party, in its sole discretion, shall
determine; and (c) finally, to pay to Debtor, or its successors
or assigns, or as a court of competent jurisdiction may direct,
any surplus then remaining from such proceeds.
SECTION 15. EXPENSES; SECURED PARTY'S LIEN. Debtor will
forthwith upon demand pay to Secured Party: (a) the amount of any
taxes which Secured Party may have been required to pay by reason
of the Security Interests (including any applicable transfer and
personal property taxes but excluding taxes in respect of Secured
Party's income and profits) or to free any of the Collateral from
any Lien thereon and (b) the amount of any and all reasonable
costs and expenses, including the reasonable fees and
disbursements of its counsel and of any agents not regularly in
its employ, which Secured Party may incur in connection with (i)
the collection or other disposition of any of the Collateral,
(ii) the exercise by Secured Party of any of the powers conferred
upon it hereunder, (iii) any default on Debtor's part hereunder
or (iv) any Bankruptcy Event.
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SECTION 16. TERMINATION OF SECURITY INTERESTS; RELEASE OF
COLLATERAL. Upon the repayment and performance in full of all
the Obligations and the expiration or termination of any
obligations of Secured Party to advance funds to Debtor, or upon
the sale of any Collateral which is permitted under the Loan
Agreement or as otherwise consented to in writing by Secured
Party, the Security Interests on such sold Collateral shall
terminate and all rights to the Collateral shall revert to Debtor
or such other party as may be entitled thereto. Upon any such
termination of the Security Interests or release of Collateral,
Secured Party will execute and deliver to Debtor such documents
as Debtor shall reasonably request to evidence the termination of
the Security Interests or the release of such Collateral, as the
case may be. Notwithstanding the foregoing, this Security
Agreement shall be reinstated if at any time any payment made or
value received with respect to an Obligation is rescinded,
invalidated, declared to be fraudulent or preferential, or set
aside or is required to be repaid to a trustee, receiver or any
other party under any case or proceeding, voluntary or
involuntary, for the distribution, division or application of all
or part of the assets of Debtor or the proceeds thereof, whether
such case or proceeding be for the liquidation, dissolution or
winding up of Debtor or their respective businesses, a
receivership, insolvency or bankruptcy case or proceeding, an
assignment for the benefit of creditors or a proceeding by or
against Debtor for relief under the federal Bankruptcy Code or
any other bankruptcy, reorganization or insolvency law or any
other law relating to the relief of debtors, readjustment of
indebtedness, reorganization, arrangement, composition or
extension or marshalling of assets or otherwise, all as though
such payment had not been made or value received.
SECTION 17. NOTICES. All notices, requests, demands and
other communications provided for hereunder shall be in writing
and mailed or telefaxed or delivered to the applicable party in
the manner set forth in SECTION 9.6 of the Loan Agreement.
SECTION 18. MISCELLANEOUS. (a) No failure on the part of
Secured Party to exercise, and no delay in exercising, and no
course of dealing with respect to, any right, power or remedy
under this Security Agreement shall operate as a waiver thereof;
nor shall any single or partial exercise by Secured Party of any
right, power or remedy under this Security Agreement preclude any
other right, power or remedy. The remedies in this Security
Agreement are cumulative and are not exclusive of any other
remedies provided by law. Neither this Security Agreement nor
any provision hereof may be changed, waived, discharged or
terminated orally but only by a statement in writing signed by
the party against which enforcement of the change, waiver,
discharge or termination is sought.
(b) This Security Agreement shall be construed in accordance
with and governed by the laws of The Commonwealth of
Massachusetts, except as otherwise required by mandatory
provisions of law.
(c) This Security Agreement may be executed in several
counterparts, each of which shall be an original and all of which
shall constitute but one and the same Security Agreement.
SECTION 19. CONSENT TO JURISDICTION AND SERVICE OF PROCESS.
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(a) Except to the extent prohibited by applicable law,
Debtor irrevocably:
(i) agrees that any suit, action, or other legal
proceeding arising out of this Security Agreement or any of
the Loans may be brought in the courts of record of The
Commonwealth of Massachusetts or any other state(s) in which
any of the Collateral is located or the courts of the United
States located in The Commonwealth of Massachusetts or any
other state(s) in which any of the Collateral is located;
(ii) consents to the jurisdiction of each such court
in any such suit, action or proceeding; and
(iii) waives any objection which it may have to the
laying of venue of such suit, action or proceeding in any of
such courts.
For such time as any of the Obligations of Debtor to Secured
Party shall be unpaid in whole or in part and/or the Commitment
is in effect, Debtor irrevocably designates the registered agent
or agent for service of process of the Debtor as reflected on the
records of the Secretary of State of The Commonwealth of
Massachusetts as its registered agent, and, in the absence
thereof, the Secretary of State of The Commonwealth of
Massachusetts, as its agent to accept and acknowledge on its
behalf service of any and all process in any such suit, action or
proceeding brought in any such court and agrees and consents that
any such service of process upon such agent and written notice of
such service to Debtor by registered or certified mail shall be
taken and held to be valid personal service upon Debtor
regardless of where Debtor shall then be doing business and that
any such service of process shall be of the same force and
validity as if service were made upon it according to the laws
governing the validity and requirements of such service in each
such state and waives any claim of lack of personal service or
other error by reason of any such service. Any notice, process,
pleadings or other papers served upon the aforesaid designated
agent shall, within three (3) Business Days after such service,
be sent by the method provided therefor under SECTION 9.6 of the
Loan Agreement to the Debtor at its address set forth in the Loan
Agreement. EACH OF THE PARTIES HERETO HEREBY WAIVES ANY RIGHT TO
TRIAL BY JURY IN THE EVENT OF ANY DISPUTE BETWEEN THE DEBTOR AND
SECURED PARTY WITH RESPECT TO THE FINANCING DOCUMENTS AND/OR ANY
OF THE TRANSACTIONS CONTEMPLATED THEREBY.
SECTION 20. SEPARABILITY. If any provision hereof is
invalid or unenforceable in any jurisdiction, the other
provisions hereof shall remain in full force and effect in such
jurisdiction and shall be liberally construed in favor of Secured
Party.
[SIGNATURES APPEAR ON NEXT PAGE]
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IN WITNESS WHEREOF, this Security Agreement has been
executed by the parties hereto all as of the day and year first
above written.
PCD INC.
By: /S/ John L. Dwight, Jr.
--------------------------
John L. Dwight, Jr.
Chairman of the Board
FLEET NATIONAL BANK, as Agent for
itself and the other Lenders
By: /S/ Thomas W. Davies
--------------------------
Thomas W. Davies
Senior Vice President
9
<EXHIBIT> EXHIBIT 10.4
SECURITY AGREEMENT
THIS AGREEMENT made as of December 26, 1997, by and between
WELLS ELECTRONICS, INC., an Indiana corporation, with a principal
place of business at 52940 Olive Road, South Bend, Indiana
("Debtor") and FLEET NATIONAL BANK, a national banking
association organized under the laws of the United States having
an office at One Federal Street, Boston, Massachusetts 02110
("Secured Party"), as Agent for itself and each of the other
Lenders who are now or hereafter become parties to the
hereinafter defined Loan Agreement. Capitalized terms used but
not expressly defined herein shall have the meanings assigned
thereto in said Loan Agreement.
SECTION 1. RECITALS.
(a) Pursuant to the terms of that certain Loan Agreement
dated as of the date hereof between PCD Inc., a Massachusetts
corporation (the "Principal Debtor"), Secured Party and the
Lenders (as the same may be amended from time to time, the "Loan
Agreement"), Secured Party and the Lenders have agreed to make
loans to Principal Debtor in an aggregate principal amount not to
exceed $90,000,000.00, as evidenced by that certain Term Note A,
Term Note B and Revolving Credit Note of Principal Debtor dated
as of the date hereof; and
(b) Principal Debtor owns 100% of the issued and outstanding
capital stock of Debtor; and
(c) Debtor has, as of the date hereof, executed and
delivered to Secured Party that certain Unlimited Guaranty
pursuant to which Debtor has guaranteed payment and performance
of all of the Obligations of Principal Debtor (as such term is
defined in the Loan Agreement) (the "Guaranty"); and
(d) Debtor has concurrently granted to Secured Party a
security interest in all of Debtor's assets to secure its
obligations to Secured Party and/or the Lenders under the
Guaranty.
SECTION 2. THE SECURITY INTERESTS. (a) In order to
secure (i) payment and performance of all of the obligations of
Principal Debtor under the Loan Agreement and under the Notes,
(ii) the performance of all of the obligations of Debtor to
Secured Party contained herein, and (iii) the payment of all
other future advances and other obligations of Principal Debtor
or Debtor to Secured Party and/or the Lenders, including, without
limitation, any future loans and advances made to Principal
Debtor or Debtor by Secured Party and/or the Lenders prior to,
during or following any (a) application by Principal Debtor or
Debtor for or consent by Principal Debtor or Debtor to the
appointment of a receiver, trustee or liquidator of Principal
Debtor's or Debtor's property, (b) admission by Principal Debtor
or Debtor in writing of its inability to pay or failure generally
to pay its respective debts as they mature, (c) general
assignment by Principal Debtor or Debtor for the benefit of
creditors, (d) adjudication of Principal Debtor or Debtor as
bankrupt or (e) filing by Principal Debtor or Debtor of a
voluntary petition in bankruptcy or a petition or an answer
<PAGE>
seeking reorganization or an arrangement with creditors or to
take advantage of any bankruptcy, reorganization, arrangement,
insolvency, readjustment of debts, dissolution or liquidation
statute, or an answer admitting the material allegations of a
petition filed against it in a proceeding under any such law (any
of the foregoing shall hereinafter be referred to as a
"Bankruptcy Event"), any interest accruing under the Notes and/or
the Loan Agreement after the commencement of a Bankruptcy Event
to the extent permitted by applicable law, and any and all other
indebtedness, liabilities and obligations of Principal Debtor or
Debtor to Secured Party and/or the Lenders of every kind and
description, direct, indirect or contingent, now or hereafter
existing, due or to become due (all of the foregoing being
hereinafter called the "Obligations"), Debtor hereby grants to
Secured Party for its benefit a continuing security interest in
the following described fixtures and personal property
(hereinafter collectively called the "Collateral"):
All fixtures and all tangible and intangible personal
property of Debtor, whether now owned or hereafter acquired by
Debtor, or in which Debtor may now have or hereafter acquire an
interest, including, without limitation, (a) all equipment
(including all machinery, tools and furniture), inventory and
goods (each as defined in the Uniform Commercial Code, if so
defined therein); (b) all accounts, accounts receivable, other
receivables, contract rights, chattel paper, and general
intangibles (including, without limitation, trademarks, trademark
registrations, trademark registration applications, servicemarks,
servicemark registrations, servicemark registration applications,
goodwill, tradenames, trade secrets, patents, patent
applications, leases, licenses, permits, copyrights, copyright
registrations, copyright registration applications, moral rights,
any other proprietary rights, exclusionary rights or intellectual
property and any renewals and extensions associated with any of
the foregoing, as each of the foregoing may be secured under the
laws now or hereafter in force and effect in the United States of
America or any other jurisdiction) of Debtor (each as defined in
the Uniform Commercial Code, if so defined therein); (c) all
instruments, documents of title, policies and certificates of
insurance, securities, bank deposits, deposit accounts, checking
accounts and cash of Debtor; (d) all accessions, additions or
improvements to, all replacements, substitutions and parts for,
and all proceeds and products of, all of the foregoing and (e)
all books, records and documents relating to any of the
foregoing.
(b) All Collateral consisting of accounts receivable,
contract rights, instruments, chattel paper and general
intangibles (each as defined in the Uniform Commercial Code) of
Debtor arising from the sale, delivery or provision of goods
and/or services, including, without limitation, all documents,
notes, drafts and acceptances, now owned by Debtor as well as any
and all thereof that may be hereafter acquired by Debtor and in
and to all returned or repossessed goods arising from or relating
to any contract rights, accounts or other proceeds of any sale or
other disposition of inventory, are sometimes hereinafter
collectively called the "Customer Receivables".
(c) The security interests granted pursuant to this SECTION
2 (the "Security Interests") are granted as security only and
shall not subject Secured Party to, or transfer or in any way
affect or modify, any obligation or liability of Debtor under any
of the Collateral or any transaction which gave rise thereto.
2
<PAGE>
SECTION 3. DELIVERY OF PLEDGED SECURITIES, CHATTEL PAPER
AND DATABASE. All securities including, without limitation,
shares of stock and negotiable promissory notes, of Debtor,
whether now owned or hereafter acquired by Debtor, shall be
delivered to Secured Party by Debtor simultaneously with the
delivery hereof or, with respect to after acquired securities,
promptly after the same have been acquired by Debtor (which
securities are hereinafter called the "Pledged Securities") shall
be in suitable form for transfer by delivery, or shall be
accompanied by duly executed undated instruments of transfer or
assignments in blank, all in form and substance satisfactory to
Secured Party. EXHIBIT A attached hereto and made a part hereof
sets forth a complete description of all securities owned by
Debtor on the date hereof. Secured Party may at any time or from
time to time, at its sole discretion, require Debtor to cause any
chattel paper included in the Customer Receivables to be
delivered to Secured Party or any successor agent or
representative designated by it for the purpose of causing a
legend referring to the Security Interests to be placed on such
chattel paper and upon any ledgers or other records concerning
the Customer Receivables.
SECTION 4. FILING; FURTHER ASSURANCES. Debtor will, at
its expense, execute, deliver, file and record (in such manner
and form as Secured Party may reasonably require), or permit
Secured Party to file and record, any financing statements, any
carbon, photographic or other reproduction of a financing
statement or this Security Agreement (which shall be sufficient
as a financing statement hereunder), any specific assignments or
other paper that may be reasonably necessary or desirable, or
that Secured Party may reasonably request, in order to create,
preserve, perfect or validate any Security Interest or to enable
Secured Party to exercise and enforce its rights hereunder with
respect to any of the Collateral. Debtor hereby irrevocably
appoints Secured Party as Debtor's attorney-in-fact to execute in
the name and behalf of Debtor such additional financing
statements as Secured Party may reasonably request.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF DEBTOR.
Debtor hereby represents and warrants to Secured Party that (a)
Debtor is, or to the extent that certain of the Collateral is to
be acquired after the date hereof, will be, the owner of the
Collateral free from any adverse Lien except as permitted under
the Loan Agreement; (b) except for such financing statements
identified on EXHIBIT C hereto and such financing statements
relating to Liens against Debtor specifically described in and
permitted by the Loan Agreement, no financing statement covering
the Collateral is on file in any public office, other than the
financing statements filed pursuant to this Security Agreement;
(c) all additional information, representations and warranties
contained in EXHIBIT B attached hereto and made a part hereof are
true, accurate and complete in all material respects on the date
hereof; and (d) there are no restrictions upon the voting rights
or the transfer of all or any of the Pledged Securities (other
than as may appear on the face of any certificate evidencing any
of the Pledged Securities or as may be imposed by any state or
local agency or government) and Debtor has the right to vote,
pledge, grant the Security Interest in and otherwise transfer the
Pledged Securities free of any encumbrances (other than
applicable restrictions imposed by any state or local agency or
government or Federal or state securities laws or regulations).
SECTION 6. COVENANTS OF DEBTOR. Debtor hereby covenants
and agrees with Secured Party that Debtor (a) will defend the
Collateral against all claims and demands of all persons at any
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<PAGE>
time claiming any interest therein other than that of Secured
Party; (b) will provide Secured Party with prompt written notice
of (i) any change in the office where Debtor maintains its books
and records pertaining to the Customer Receivables, and (ii) the
movement or location of Collateral to or at any address other
than as set forth in EXHIBIT B attached hereto; (c) will promptly
pay any and all taxes, assessments and governmental charges upon
the Collateral prior to the date penalties attach thereto except
to the extent permitted under the Loan Agreement; (d) will
immediately notify Secured Party of any event causing a
substantial loss or diminution in the value of all or any
material part of the Collateral and the amount or an estimate of
the amount of such loss or diminution; (e) will have and maintain
insurance at all times in accordance with the provisions of the
Loan Agreement; (f) except in the ordinary course of business or
as otherwise permitted under the Loan Agreement, will not sell or
offer to sell or otherwise assign, transfer or dispose of the
Collateral or any interest therein, without the prior written
consent of Secured Party; (g) will keep the Collateral free from
any adverse Lien (other than Liens permitted under the Loan
Agreement) and in good order and repair, reasonable wear and tear
excepted, and will not waste or destroy the Collateral or any
part thereof; and (h) will not use the Collateral in violation of
the Loan Agreement or this Agreement.
SECTION 7. RECORDS RELATING TO COLLATERAL. Debtor will
keep its records concerning the Collateral, including the
Customer Receivables and all chattel paper included in the
Customer Receivables, at the location(s) set forth in EXHIBIT B
attached hereto or at such other place or places of business of
which Secured Party shall have been notified in writing no less
than ten (10) days in advance. Debtor will hold and preserve
such records and chattel paper and will, to the extent provided
in the Loan Agreement, (a) permit representatives of Secured
Party at any time during normal business hours to examine and
inspect the Collateral and to make abstracts from such records
and chattel paper, and (b) furnish to Secured Party such
information and reports regarding the Collateral as Secured Party
may from time to time reasonably request.
SECTION 8. RECORD OWNERSHIP OF PLEDGED SECURITIES. Debtor
will promptly give to Secured Party copies of any notices or
other communications received by Debtor with respect to Pledged
Securities registered in the name of Debtor. Upon the occurrence
of an Event of Default, Secured Party may cause any or all of the
Pledged Securities to be transferred of record into the name of
Secured Party (or a designee of Secured Party).
SECTION 9. RIGHT TO RECEIVE DISTRIBUTIONS ON PLEDGED
SECURITIES. Unless an Event of Default shall have occurred and
be continuing, Debtor shall be entitled, from time to time, to
collect and receive for its own use all dividends, interest and
other payments and distributions made upon or with respect to the
Pledged Securities, except:
(i) dividends of stock;
(ii) dividends payable in securities or other property
(except cash dividends);
(iii) other securities issued with respect to or in lieu of
the Pledged Securities (whether upon conversion of the
convertible securities included therein or through stock
4
<PAGE>
split, spin-off, split-off, reclassification, merger,
consolidation, sale of assets, combination of shares or
otherwise).
All of the foregoing, together with all new, substituted or
additional shares of capital stock, warrants, options or other
rights, or other securities issued in addition to or in respect
of all or any of the Pledged Securities shall be delivered to
Secured Party hereunder as required by SECTION 3 hereof, to be
held as Collateral pursuant to the terms hereof in the same
manner as the Pledged Securities delivered to Secured Party on
the date hereof.
SECTION 10. RIGHT TO VOTE PLEDGED SECURITIES. Unless an
Event of Default shall have occurred and be continuing, Debtor
shall have the right, from time to time, to vote and to give
consents, ratifications and waivers with respect to the Pledged
Securities and to exercise conversion rights with respect to the
convertible securities included therein, and Secured Party shall,
upon receiving a written request from Debtor accompanied by a
certificate signed by Debtor's principal financial officer
stating that no Event of Default has occurred, deliver to Debtor
or as specified in such request such proxies, powers of attorney,
consents, ratifications and waivers in respect of any Pledged
Securities which are registered in Secured Party's name, and make
such arrangements with respect to the conversion of convertible
securities as shall be specified in Debtor's request, such
arrangements to be in form and substance reasonably satisfactory
to Secured Party.
If an Event of Default shall have occurred and be
continuing, and provided Secured Party elects to exercise the
rights hereinafter set forth by notice to Debtor of such
election, Secured Party shall have the right, to the extent
permitted by law, and Debtor shall take all such action as may be
necessary or reasonably appropriate to give effect to such right,
to vote and to give consents, ratifications and waivers and take
any other action with respect to all the Pledged Securities with
the same force and effect as if Secured Party were the absolute
and sole owner thereof.
SECTION 11. GENERAL AUTHORITY. Debtor hereby irrevocably
appoints Secured Party Debtor's lawful attorney (which
appointment shall be deemed a power coupled with an interest)
with full power of substitution, in the name of Debtor, for the
sole use and benefit of Secured Party, its successors and
assigns, but at Debtor's expense, to exercise, all or any of the
following powers with respect to all or any of the Collateral
during the existence and continuance of any Event of Default:
(i) to demand, sue for, collect, receive and give
acquittance for any and all monies due or to become due;
(ii) to receive, take, endorse, assign and deliver all
checks, notes, drafts, securities, documents and other
negotiable and non-negotiable instruments and chattel paper
taken or received by Secured Party;
5
<PAGE>
(iii) to settle, compromise, compound, prosecute or
defend any action or proceeding with respect thereto;
(iv) to sell, transfer, assign or otherwise deal in or
with the same or the proceeds or avails thereof or the
related goods securing the Customer Receivables, as fully
and effectually as if Secured Party were the absolute owner
thereof;
(v) to extend the time of payment of any or all thereof
and to make any allowance and other adjustments with
reference thereto;
(vi) to discharge any taxes or Liens at any time placed
thereon; and
(vii) to execute any document or form, in the name of
Debtor, which may be necessary or desirable in connection
with any sale of Pledged Securities by Secured Party,
including without limitation Form 144 promulgated by the
Securities and Exchange Commission;
provided, that Secured Party shall give Debtor not less than ten
(10) days' prior written notice of the time and place of any sale
or other intended disposition of any of the Collateral.
SECTION 12. EVENTS OF DEFAULT. Debtor shall be in default
under this Security Agreement upon the occurrence of any Event of
Default under the Loan Agreement.
SECTION 13. REMEDIES UPON EVENT OF DEFAULT. If any Event
of Default shall have occurred and be continuing, Secured Party
may exercise all the rights and remedies of a secured party under
the Uniform Commercial Code. Secured Party may require Debtor to
assemble all or any part of the Collateral and make it available
to Secured Party at a place to be designated by Secured Party
which is reasonably convenient. Secured Party shall give Debtor
ten (10) days' written notice of its intention to make any public
or private sale or sale at a broker's board or on a securities
exchange of the Collateral. At any such sale the Collateral may
be sold in one lot as an entirety or in separate parcels, as
Secured Party may determine. Secured Party shall not be
obligated to make any such sale pursuant to any such notice. To
the extent permitted by law, Secured Party may, without notice or
publication, adjourn any public or private sale or cause the same
to be adjourned from time to time by announcement at the time and
place fixed for the sale, and such sale may be made at any time
or place to which the same may be adjourned. Secured Party,
instead of exercising the power of sale herein conferred upon it,
may proceed by a suit or suits at law or in equity to foreclose
the Security Interests and sell the Collateral, or any portion
thereof, under a judgment or decree of a court or courts of
competent jurisdiction.
SECTION 14. APPLICATION OF COLLATERAL AND PROCEEDS. The
proceeds of any sale of, or other realization upon, all or any
part of the Collateral shall be applied in the following order of
priorities: (a) first, to pay the expenses of such sale or other
realization, including reasonable attorneys' fees, and all
expenses, liabilities and advances incurred or made by Secured
Party in connection therewith, and any other unreimbursed
expenses for which Secured Party may be reimbursed pursuant to
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<PAGE>
SECTION 15; (b) second, to the payment of the Obligations in such
order of priority as Secured Party, in its sole discretion, shall
determine; and (c) finally, to pay to Debtor, or its successors
or assigns, or as a court of competent jurisdiction may direct,
any surplus then remaining from such proceeds.
SECTION 15. EXPENSES; SECURED PARTY'S LIEN. Debtor will
forthwith upon demand pay to Secured Party: (a) the amount of any
taxes which Secured Party may have been required to pay by reason
of the Security Interests (including any applicable transfer and
personal property taxes but excluding taxes in respect of Secured
Party's income and profits) or to free any of the Collateral from
any Lien thereon and (b) the amount of any and all reasonable
costs and expenses, including the reasonable fees and
disbursements of its counsel and of any agents not regularly in
its employ, which Secured Party may incur in connection with (i)
the collection or other disposition of any of the Collateral,
(ii) the exercise by Secured Party of any of the powers conferred
upon it hereunder, (iii) any default on Debtor's part hereunder
or (iv) any Bankruptcy Event.
SECTION 16. TERMINATION OF SECURITY INTERESTS; RELEASE OF
COLLATERAL. Upon the repayment and performance in full of all
the Obligations and the expiration or termination of any
obligations of Secured Party to advance funds to Debtor, or upon
the sale of any Collateral which is permitted under the Loan
Agreement or as otherwise consented to in writing by Secured
Party, the Security Interests on such sold Collateral shall
terminate and all rights to the Collateral shall revert to Debtor
or such other party as may be entitled thereto. Upon any such
termination of the Security Interests or release of Collateral,
Secured Party will execute and deliver to Debtor such documents
as Debtor shall reasonably request to evidence the termination of
the Security Interests or the release of such Collateral, as the
case may be. Notwithstanding the foregoing, this Security
Agreement shall be reinstated if at any time any payment made or
value received with respect to an Obligation is rescinded,
invalidated, declared to be fraudulent or preferential, or set
aside or is required to be repaid to a trustee, receiver or any
other party under any case or proceeding, voluntary or
involuntary, for the distribution, division or application of all
or part of the assets of Debtor or the proceeds thereof, whether
such case or proceeding be for the liquidation, dissolution or
winding up of Debtor or their respective businesses, a
receivership, insolvency or bankruptcy case or proceeding, an
assignment for the benefit of creditors or a proceeding by or
against Debtor for relief under the federal Bankruptcy Code or
any other bankruptcy, reorganization or insolvency law or any
other law relating to the relief of debtors, readjustment of
indebtedness, reorganization, arrangement, composition or
extension or marshalling of assets or otherwise, all as though
such payment had not been made or value received.
SECTION 17. NOTICES. All notices, requests, demands and
other communications provided for hereunder shall be in writing
and mailed or telefaxed or delivered to the applicable party in
the manner set forth in SECTION 9.6 of the Loan Agreement.
SECTION 18. MISCELLANEOUS. (a) No failure on the part of
Secured Party to exercise, and no delay in exercising, and no
course of dealing with respect to, any right, power or remedy
under this Security Agreement shall operate as a waiver thereof;
nor shall any single or partial exercise by Secured Party of any
7
<PAGE>
right, power or remedy under this Security Agreement preclude any
other right, power or remedy. The remedies in this Security
Agreement are cumulative and are not exclusive of any other
remedies provided by law. Neither this Security Agreement nor
any provision hereof may be changed, waived, discharged or
terminated orally but only by a statement in writing signed by
the party against which enforcement of the change, waiver,
discharge or termination is sought.
(b) This Security Agreement shall be construed in
accordance with and governed by the laws of The Commonwealth of
Massachusetts, except as otherwise required by mandatory
provisions of law.
(c) This Security Agreement may be executed in several
counterparts, each of which shall be an original and all of which
shall constitute but one and the same Security Agreement.
SECTION 19. CONSENT TO JURISDICTION AND SERVICE OF PROCESS.
(a) Except to the extent prohibited by applicable law,
Debtor irrevocably:
(i) agrees that any suit, action, or other legal proceeding
arising out of this Security Agreement or any of the Loans
may be brought in the courts of record of The Commonwealth
of Massachusetts or any other state(s) in which any of the
Collateral is located or the courts of the United States
located in The Commonwealth of Massachusetts or any other
state(s) in which any of the Collateral is located;
(ii) consents to the jurisdiction of each such court in any
such suit, action or proceeding; and
(iii) waives any objection which it may have to the laying
of venue of such suit, action or proceeding in any of such
courts.
For such time as any of the Obligations of Debtor to Secured
Party shall be unpaid in whole or in part and/or the Commitment
is in effect, Debtor irrevocably designates the registered agent
or agent for service of process of the Debtor as reflected on the
records of the Secretary of State of The Commonwealth of
Massachusetts as its registered agent, and, in the absence
thereof, the Secretary of State of The Commonwealth of
Massachusetts, as its agent to accept and acknowledge on its
behalf service of any and all process in any such suit, action or
proceeding brought in any such court and agrees and consents that
any such service of process upon such agent and written notice of
such service to Debtor by registered or certified mail shall be
taken and held to be valid personal service upon Debtor
regardless of where Debtor shall then be doing business and that
any such service of process shall be of the same force and
validity as if service were made upon it according to the laws
governing the validity and requirements of such service in each
such state and waives any claim of lack of personal service or
other error by reason of any such service. Any notice, process,
pleadings or other papers served upon the aforesaid designated
agent shall, within three (3) Business Days after such service,
be sent by the method provided therefor under SECTION 9.6 of the
8
<PAGE>
Loan Agreement to the Debtor at its address set forth in the Loan
Agreement. EACH OF THE PARTIES HERETO HEREBY WAIVES ANY RIGHT TO
TRIAL BY JURY IN THE EVENT OF ANY DISPUTE BETWEEN THE DEBTOR AND
SECURED PARTY WITH RESPECT TO THE FINANCING DOCUMENTS AND/OR ANY
OF THE TRANSACTIONS CONTEMPLATED THEREBY.
SECTION 20. SEPARABILITY. If any provision hereof is
invalid or unenforceable in any jurisdiction, the other
provisions hereof shall remain in full force and effect in such
jurisdiction and shall be liberally construed in favor of Secured
Party.
[SIGNATURES APPEAR ON NEXT PAGE]
<PAGE>
IN WITNESS WHEREOF, this Security Agreement has been
executed by the parties hereto all as of the day and year first
above written.
WELLS ELECTRONICS, INC.
By: /S/ Mary L. Mandarino
------------------------
Mary L. Mandarino
Treasurer
FLEET NATIONAL BANK, as Agent for
itself and the other Lenders
By: /S/ Thomas W. Davies
------------------------
Thomas W. Davies
Senior Vice President
9
<EXHIBIT> EXHIBIT 10.5
STOCK PLEDGE AGREEMENT
THIS STOCK PLEDGE AGREEMENT IS BETWEEN:
(1) PCD INC., a Massachusetts corporation having its
principal place of business at 2 Technology Drive, Centennial
Park, Peabody, Massachusetts 01960-7977 ("Pledgor"); and
(2) FLEET NATIONAL BANK, a national banking
association organized under the laws of the United States having
an office at One Federal Street, Boston, Massachusetts 02110
("Agent"), as Agent for itself and each of the other Lenders who
now are or hereafter become parties to the hereinafter defined
Loan Agreement.
WHEREAS:
(A) Pursuant to the terms of that certain Loan
Agreement dated as of the date hereof between Pledgor, Agent and
the Lenders (as the same may be amended from time to time, the
"Loan Agreement"), Agent and the Lenders have agreed to make
loans to Pledgor in an aggregate principal amount not to exceed
$90,000,000.00, as evidenced by that certain Term Note A, Term
Note B and Revolving Credit Note of Pledgor dated as of the date
hereof (the "Notes");
(B) Pledgor legally and beneficially owns, the shares
of issued and outstanding stock described on EXHIBIT A attached
hereto and incorporated herein as reference; and
(C) As a condition precedent to Agent and the Lenders
entering into the Loan Agreement and in order to secure the
payment and performance in full of all of the Obligations of
Pledgor to Agent and the Lenders , Pledgor agrees to pledge to
Agent, upon the terms contained in this Agreement: (1) the
Initial Pledged Shares (as hereinafter defined); and (2) all (if
any) shares of any class of the capital stock of the Pledged
Companies (as hereinafter defined) acquired by Pledgor at any
time after the date hereof.
NOW, THEREFORE, in consideration of these premises, the
promises, mutual covenants and agreements herein contained, the
parties hereto hereby agree as follows:
ARTICLE I
INTERPRETATION
Section 1.01. PROVISIONS PERTAINING TO DEFINITIONS. For
all purposes of this Agreement (except where such interpretations
would be inconsistent with the context or the subject matter):
(a) the terms specifically defined in SECTION 1.02 of
this Agreement shall have the meanings therein assigned to them;
<PAGE>
(b) the expression "this Agreement" shall mean this
Stock Pledge Agreement, as originally executed, or, if varied or
supplemented from time to time, as so varied or supplemented; and
(c) capitalized terms used in this Agreement and
defined in the Loan Agreement and not otherwise defined herein
shall have the same meanings herein as in the Loan Agreement.
Section 1.02. TERMS DEFINED. Subject to the provisions of
Section 1.01 of this Agreement, the following terms shall have
the respective meanings set forth below:
(a) "Collateral" means, collectively, all of the
Pledged Shares, all of the Pledged Share Dividends, and all of
the other property, assets, accounts and moneys, and all of the
income, proceeds and products of any thereof, in, to, under or in
respect of which Agent or any of the nominees, agents or
representatives of Agent, by this Agreement or by any agreement
or agreements supplemental hereto, shall acquire any rights or
interests as security for the payment or performance of all or
any part of the Obligations.
(b) "Initial Pledged Shares" for (i) Wells, CTI, PCD
Control, PCD USVI, respectively, (as hereinafter defined) means,
collectively, all of the issued and outstanding shares of every
class of the capital stock of Wells, CTI, PCD Control and PCD
USVI which are beneficially owned by Pledgor on the date of this
Agreement as more particularly described on said EXHIBIT A, the
stock certificates for which shall be delivered by Pledgor to
Agent in pledge upon the terms contained in this Agreement.
(c) "Obligations" means (i) the due and punctual
payment in full of the principal, interest and other sums due and
to become due from Pledgor to Agent and/or the Lenders, whether
now existing or hereafter arising pursuant to the Loan Agreement,
the Notes and/or the other Financing Documents, as the same may
be amended from time to time; (ii) the due and punctual payment
in full at maturity of the principal, interest and any other sums
due and to become due from Pledgor to Agent and/or the Lenders at
any time and from time to time on account of any and all
obligations, indebtedness and liability of Pledgor to Agent
and/or the Lenders, whether now existing or hereafter arising,
whether direct, indirect, absolute or contingent, whether
otherwise guaranteed or secured and whether on open account or
evidenced by a note, draft, check, loan agreement, letter of
credit application, acceptance agreement, or other instrument or
documents; and (iii) the due and punctual performance of and/or
compliance with all of the terms, conditions and covenants
contained herein and in the Financing Documents to be performed
or complied with by Pledgor and the accuracy of Pledgor's
representations and warranties contained herein and in the
Financing Documents.
(d) "Pledged Companies" means collectively Wells
Electronics, Inc., an Indiana corporation ("Wells"), CTi
Technologies, Inc., a Massachusetts corporation ("CTI"), PCD
USVI, Inc., a U.S. Virgin Islands corporation ("PCD USVI"), and
PCD Control Systems, Inc., a Massachusetts corporation ("PCD
Control").
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<PAGE>
(e) "Pledged Share Dividends" means, collectively, (i)
all dividends of every kind whatever which shall become and be
due and payable or distributable on or in respect of all or any
of the Pledged Shares, (ii) all payments of every kind whatever
which shall become and be due and payable or distributable on
account of the purchase, redemption, repurchase or other
retirement of all or any of the Pledged Shares, and (iii) all
other distributions of every kind whatsoever (including, without
limitation, all capital distributions) which shall become and be
due and payable or distributable on or in respect of all or any
of the Pledged Shares; and "Pledged Share Dividend" means any one
of the Pledged Share Dividends.
(f) "Pledged Shares" means, collectively, (i) all of
the Initial Pledged Shares, and (ii) all other shares of any
class of the capital stock of any of the Pledged Companies (A)
which shall be issued or distributed (by way of stock dividends
or otherwise) or sold by any of the Pledged Companies to Pledgor
at any time or times after the date of this Agreement, or (B)
which shall be purchased or otherwise acquired by or on behalf of
Pledgor from any of the Pledged Companies or from any other
person or persons at any time or times after the date of this
Agreement; and "Pledged Share" means any one of the Pledged
Shares.
(g) "Loan Documents" means the Financing Documents as
the term is defined in the Loan Agreement.
ARTICLE II
PLEDGE AND ASSIGNMENT BY PLEDGOR
Section 2.01. PLEDGE AND ASSIGNMENT. In order to secure
the payment and performance in full of all of the Obligations
(whether existing on the date of this Agreement or arising at any
time or times thereafter), Pledgor, as beneficial owner, hereby
pledges, hypothecates and assigns to Agent and hereby grants to
Agent, a continuing security interest in, the following: (a)
each of the Initial Pledged Shares and all of the stock
certificates representing the Initial Pledged Shares; (b) all of
the Pledged Shares which shall be issued or distributed or sold
to or purchased or otherwise acquired by Pledgor at any time or
times after the date of this Agreement and all of the stock
certificates representing such Pledged Shares; (c) all of the
Pledged Share Dividends; and (d) all of Pledgor's rights, title,
interests, claims and remedies and all other benefits whatever
now existing or hereafter arising in, to, under or in respect of
all of the Initial Pledged Shares, all of the other Pledged
Shares, all of the Pledged Share Dividends (subject to SECTION
2.04 of this Agreement) and all of the income and proceeds of any
thereof.
TO HAVE AND TO HOLD all of the foregoing unto Agent,
absolutely and forever, SUBJECT, HOWEVER, to the terms and
conditions set forth in this Agreement.
Section 2.02. DELIVERY OF STOCK CERTIFICATES REPRESENTING
PLEDGED SHARES.
(a) All of the stock certificates representing the
Initial Pledged Shares have been delivered by Pledgor to Agent in
pledge on the date of this Agreement. Each of such stock
certificates names Pledgor as the owner of record of the Initial
Pledged Shares represented thereby. Each of the Initial Pledged
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<PAGE>
Shares has been duly transferred by Pledgor to Agent in pledge
pursuant to instruments of transfer which have been duly executed
in blank (with signatures guaranteed, if applicable) and
delivered to Agent by Pledgor.
(b) If (and on each occasion that) any additional
Pledged Shares shall, at any time after the date of this
Agreement, be issued or distributed or sold to or purchased or
otherwise acquired by Pledgor, Pledgor will within seven Business
Days of such issuance, distribution, sale, purchase or
acquisition (i) cause all of the stock certificates representing
such additional Pledged Shares to be delivered to Agent, and (ii)
execute in blank (with guarantee of signatures) and deliver to
Agent undated instruments of transfer, satisfactory to Agent in
form and substance, by which each of such additional Pledged
Shares shall be duly transferred by Pledgor to Agent in pledge.
Each of such stock certificates will name Pledgor as the owner of
record of the additional Pledged Shares represented thereby.
Section 2.03. VOTING POWER.
(a) Until the occurrence of an Event of Default,
Pledgor will be permitted to exercise all voting powers
pertaining to any Pledged Shares for any purpose not inconsistent
with the terms of this Agreement or any of the other Loan
Documents.
(b) Pledgor acknowledges and agrees with Agent that,
unless Agent otherwise consents, Pledgor shall have no rights
whatever to exercise any voting powers pertaining to any Pledged
Shares at any time after the occurrence and during the
continuance of an Event of Default.
Section 2.04. CASH DIVIDENDS. Prior to the occurrence of
an Event of Default, Pledgor shall have no right to receive,
collect or recover any Pledged Share Dividends except as
permitted by the Loan Agreement. Following the occurrence and
during the continuance of an Event of Default, Pledgor
acknowledges and agrees that Pledgor shall have no right whatever
to receive, collect or recover any dividends of any kind at any
time.
ARTICLE III
REPRESENTATIONS
Pledgor hereby represents and warrants to Agent as follows:
Section 3.01. BENEFICIAL OWNERSHIP OF INITIAL PLEDGED
SHARES. Pledgor is the sole beneficial owner of each of the
Initial Pledged Shares. None of the Initial Pledged Shares is
subject to any Liens except that created by this Agreement. None
of the Initial Pledged Shares is subject to any shareholder
agreements, voting agreements, voting trusts, trust deeds,
irrevocable proxies or any other similar agreements or
instruments, except this Agreement.
Section 3.02. BINDING EFFECT OF AGREEMENT. This Agreement
has been duly executed and delivered to Agent by Pledgor and is
in full force and effect. All of the agreements and obligations
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<PAGE>
of Pledgor contained in this Agreement constitute legal, valid
and binding obligations of Pledgor enforceable against Pledgor in
accordance with their respective terms.
ARTICLE IV
COVENANTS
Section 4.01. DEFENSE OF AGENT'S TITLE AND RIGHTS. Pledgor
hereby covenants with Agent that Pledgor will defend Agent's
right, title and special property in and to all of the Initial
Pledged Shares and all of the other Pledged Shares. Pledgor will
not sell, assign or otherwise transfer or dispose of any of the
Pledged Shares, and it will not create, assume, incur or permit
to exist any mortgage, lien, pledge, charge, security interest or
other encumbrance of any kind in respect of any of the Pledged
Shares; EXCLUDING, HOWEVER, any Liens created on or after the
date of this Agreement by Pledgor and securing the payment or
performance of all or any part of the Obligations or any
indebtedness of Pledgor to Agent, whether existing on the date of
this Agreement or arising from time to time hereafter.
Section 4.02. LIMITATION ON VOTING POWERS. Pledgor hereby
covenants with Agent that Pledgor will not at any time or times
cast any vote in respect of any of the Pledged Shares or give any
consents, waivers or ratifications in respect of any of the
Pledged Shares which would violate or contravene, or which would
cause or otherwise authorize Pledgor to violate or contravene any
provision of this Agreement or any of the other Loan Documents.
ARTICLE V
POWER OF ATTORNEY
Pledgor hereby absolutely and irrevocably constitutes and
appoints Agent Pledgor's true and lawful agent and attorney-in-
fact, with full power of substitution, in the name of Pledgor or
in the name of Agent or in the name of any of Agent's agents or
attorneys, following the occurrence and during the continuance of
any Default or Event of Default (a) to execute and do all such
assurances, acts and things which Pledgor ought to do under the
covenants and provisions contained in this Agreement; (b) to take
any and all such action as Agent or any of its agents or
attorneys may, in its or their sole and absolute discretion,
determine to be necessary or advisable for the purpose of
maintaining, preserving or protecting the security constituted by
this Agreement or any of the rights, remedies, powers or
privileges of Agent under this Agreement; and (c) generally, in
the name of Pledgor or in the name of Agent or in the name of any
of Agent' agents or attorneys, to exercise all or any of the
powers, authorities and discretions conferred on or reserved to
Agent by or pursuant to this Agreement, and (without prejudice to
the generality of any of the foregoing) to seal and deliver or
otherwise perfect any deed, assurance, agreement, instrument or
act which Agent or any of Agent's agents or attorneys may deem
proper in or for the purpose of exercising any of such powers,
authorities or discretions. Pledgor hereby ratifies and
confirms, and hereby agrees to ratify and confirm, whatever Agent
or any of Agent's agents or attorneys shall do or purport to do
in the exercise of the power of attorney granted to Agent
pursuant to this Article V, which power of attorney, being given
for security, is irrevocable.
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<PAGE>
ARTICLE VI
TERMS OF THE SECURITY HELD AND RELEASE OF SECURITY
Section 6.01. CONTINUING SECURITY. The security created by
this Agreement shall be held by Agent, as a continuing security
for the payment and performance of all of the Obligations
(whether existing on the date of this Agreement or arising from
time to time thereafter). This Agreement, all of the rights,
remedies, powers and privileges of Agent hereunder and the
security created hereby shall be in addition to, and shall not in
any way be prejudiced or affected by, any other collateral or any
other security now or at any time or times hereafter held by
Agent for all or any part of the Obligations. Each and every
right, remedy, power and privilege conferred on or reserved to
Agent hereunder shall be cumulative and in addition to, and not
in limitation of, each and every other right, remedy, power or
privilege conferred on or reserved to Agent under this Agreement
or under the Loan Documents. All of the rights, remedies, powers
and privileges vested in Agent hereunder may be exercised at such
time or times and in such order and manner as Agent may, in its
sole and absolute discretion, deem expedient.
Section 6.02. WAIVERS OF NOTICE; ASSENT. The agreements
and obligations of Pledgor to Agent hereunder and the security
constituted hereby shall not be, to any extent or in any way or
manner whatsoever, satisfied, discharged, impaired, diminished,
released or otherwise affected by any of the following, whether
or not Pledgor shall have had any notice or knowledge of any
thereof: (a) the absorption, consolidation, merger or
amalgamation of, or the effectuation of any other change
whatsoever in the name, membership, constitution or place of
formation of, Pledgor or any of their subsidiaries or Agent; (b)
any increase or reduction in the amount of the Notes, the
termination of the Notes, or the making of the Loans by Agent or
any of the Lenders; (c) any extension or postponement of the time
for the payment or performance of all or any part of the
Obligations, the acceptance of any partial payment on all or any
part of the Obligations, any and all other indulgences whatsoever
by Agent or any of the Lenders in respect of all or any part of
the Obligations, the taking, addition, substitution or release,
in whole or in part, of any security for all or any part of the
Obligations, or the addition, substitution or release, in whole
or in part, of any person or persons primarily or secondarily
liable in respect of all or any part of the Obligations; (d) any
action or delay in acting or failure to act on the part of Agent
or any of the Lenders under this Agreement, the Loan Documents,
or in respect of all or any part of the Obligations, or in
respect of all or any collateral other than the Collateral; or
(e) any modification or amendment of, or any supplement or
addition to, any of the Loan Documents. Pledgor hereby
absolutely and irrevocably assents to and waives notice of any
and all events, conditions, matters and things hereinbefore
specified in clauses (a) to (e), inclusive, of the foregoing
sentence of this SECTION 6.02.
Section 6.03. NO IMPLIED WAIVERS. No course of dealing
between Pledgor and Agent and/or any of the Lenders, and no delay
on the part of Agent in exercising any right, remedy, power or
privilege hereunder or provided by statute or by law or in equity
or otherwise, shall impair, prejudice or constitute a waiver of
any such right, remedy, power or privilege or be construed as a
waiver of any default or as an acquiescence therein; and any
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<PAGE>
single or partial exercise of any such right, remedy, power or
privilege shall not preclude any other or further exercise
thereof or the exercise of any other rights, remedies, powers or
privileges.
ARTICLE VII
ENFORCEMENT OF THE SECURITY
Section 7.01. CONDITIONS OF ENFORCEABILITY OF THE SECURITY.
If any Default or Event of Default shall at any time occur, the
security constituted by this Agreement shall become immediately
enforceable by Agent, without any presentment, demand, protest or
other notice of any kind, all of which are hereby expressly and
irrevocably waived by Pledgor.
Section 7.02. EVIDENCE OF OBLIGATIONS. In any legal
proceedings against Pledgor for enforcing any agreements or
obligations of Pledgor under this Agreement, a certificate of
Agent as to the aggregate amount of all of the Obligations shall
be Prima Facie evidence thereof.
Section 7.03. MANNER OF ENFORCEMENT OF SECURITY. Agent
shall have, in any jurisdiction where enforcement is sought, all
of the rights, remedies, powers and privileges conferred on
Agent, as secured party, under the Uniform Commercial Code of The
Commonwealth of Massachusetts, and, without limiting the
generality of the foregoing, Agent shall have the full right and
power in respect of the Collateral or any part thereof in Agent's
sole and complete discretion to do all and any of the following
things:
(a) to take possession of the Collateral or any part
thereof, wherever the same may be, without legal process and
without compliance with any other condition precedent imposed by
statute, rule of law or otherwise (all of which Pledgor hereby
expressly and irrevocably waives), and to call in, collect,
convert into money or otherwise deal with the Collateral or any
part thereof with full power to sell (including the power to
postpone such sale) the Collateral or any part thereof, either
together or in lots, and either by public auction or private
contract, and either for a lump sum or for a sum payable by
installments or for a sum on account and a mortgage or charge or
pledge for the balance, and with full power upon every sale to
make any special or other stipulation as to title or evidence
thereof or otherwise which Agent shall deem proper, and with full
power to buy in or rescind or vary any contract for sale of the
Collateral or any part thereof and to resell the same without
being responsible for any loss which may be occasioned thereby,
and with full power to compromise and effect compositions, and,
for the purposes aforesaid or any of them, to execute and do all
such assurances and things as Agent may deem appropriate;
(b) to settle, adjust, compromise and arrange all
accounts, reckonings, controversies, questions, claims and
demands whatsoever in relation to all or any part of the
Collateral;
(c) to cause all or any of the Pledged Shares and all
or any other Collateral to be sold, assigned or transferred to
Agent or to any other person or persons and to be recorded or
registered in the name of Agent or any other person or persons
and to exercise or permit the exercise of any powers or rights
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<PAGE>
incident to all or any part of the Collateral in such manner as
Agent shall deem appropriate, and, in respect of all or any of
the Pledged Shares, to exercise or permit the exercise of all
rights and powers conferred by statute or otherwise upon a
registered holder or owner of record thereof, including, without
limitation, the calling or causing to be called of meetings, and
proposing or causing to be proposed of resolutions (whether
ordinary or special resolutions), including resolutions for
winding up and voting at meetings;
(d) to execute and do all such contracts, agreements,
deeds, documents and things, and to bring, defend and abandon all
such actions, suits and proceedings in relation to all or any
part of the Collateral as Agent shall deem expedient;
(e) to appoint managers, agents, officers and servants
for any of the purposes mentioned in the foregoing provisions of
this SECTION 7.03 for such periods as Agent shall deem
appropriate and to dismiss the same; and
(f) generally, to do all such other acts and things as
may be considered incidental or conducive to any of the matters
or powers mentioned in the foregoing provisions of this SECTION
7.03 and which Agent may or can do lawfully and to use the name
of Pledgor for the purposes aforesaid and in any proceedings
arising therefrom.
Section 7.04. COOPERATION OF PLEDGOR. Pledgor recognizes
that the Pledged Shares are not readily marketable and may not be
marketable at all if any default in the payment or performance of
any of the Obligations shall occur and be continuing. In order,
therefore, to enable Agent to use such means as Agent and the
Lenders may determine necessary or advisable to realize upon the
Collateral from time to time, and in order to induce Agent to
make the Loans to Pledgor in reliance upon the Collateral,
Pledgor hereby absolutely and irrevocably consents that Agent may
use whatever means Agent may reasonably consider necessary or
advisable to sell any or all of the Collateral at any time or
times after the security constituted by this Agreement shall have
become enforceable, including, without limitation, the giving of
options to purchase any or all of the Collateral and the giving
of credit to any purchaser of the Collateral. Because there is
no established market for the Collateral and because it may be
unlikely that any person will become or be interested in
purchasing the Collateral as a result of the giving of any notice
of public sale, Pledgor agrees that any sale of the Collateral
may be private and without competitive bidding.
Section 7.05. NOTICE OF SALE. Agent will give Pledgor at
least five (5) days' prior written notice of the time and place
of any public or private sale of all or any part of the
Collateral or of the time after which any private sale or any
other intended disposition of all or any part of the Collateral
is to be made. Pledgor hereby absolutely and irrevocably agrees
with Agent that any notice of any public or private sale or other
disposition given by Agent to Pledgor in accordance with the
preceding sentence of this SECTION 7.05 shall be, and shall for
all purposes be deemed to be, reasonable notice.
Section 7.06. PROTECTION OF PERSONS DEALING WITH AGENT. No
purchaser, mortgagor, mortgagee, Agent, Lender, debtor or other
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<PAGE>
person dealing with Agent or with any attorney or agent of Agent
shall be concerned to enquire (a) whether the security
constituted by this Agreement has become enforceable, (b) whether
any power exercised or purported to be exercised hereunder has
become exercisable, (c) whether any moneys remain due upon the
security of this Agreement, (d) as to the propriety, regularity
or purpose of the exercise of any power hereunder, or (e) as to
the application of any moneys paid to Agent or to any such
attorney or agent.
Section 7.07. PROTECTION OF SECURITY. In addition to the
rights and powers herein above given, Agent may, whether or not
any Default or Event of Default shall have occurred and whether
or not the security constituted by this Agreement shall have
become enforceable, enter into possession of and hold any part of
the Collateral which may at any time appear to Agent in danger of
being taken under any process of law by any creditor of Pledgor
or to be in jeopardy or otherwise endangered.
ARTICLE VIII
APPLICATION OF MONEYS IN COLLATERAL
All moneys realized by Agent after the security constituted
by this Agreement shall have become enforceable as well as all
moneys then held or at any time or times thereafter received by
Agent as realizations of all or any part of the Collateral shall
be held by Agent to apply the same as follows;
FIRST: in or towards the payment and discharge of all (if
any) debts, damages and liabilities, the payment of which shall
be secured by any Liens having priority over the rights of Agent
in and to such moneys;
SECOND: in or towards the payment of, or (as the case may
be) the reimbursement of Agent for or in respect of, all costs,
expenses, disbursements and losses which shall have been incurred
or sustained by Agent in or about or incidental to the collection
of such moneys by Agent or the exercise, protection or
enforcement by Agent of all or any of the rights, remedies,
powers and privileges of Agent under this Agreement or in respect
of the Collateral and in or towards the provision of adequate
indemnity to Agent against all taxes or liens which by law shall
have, or may have, priority over the rights of Agent in and to
such moneys;
THIRD: in or towards the payment of all of the Obligations
in accordance with the Loan Documents and this Agreement; and
FOURTH; to the payment of the surplus (if any) to Pledgor
or to such other person or persons as shall be entitled to
receive such surplus.
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ARTICLE IX
PROVISIONS OF GENERAL APPLICATION
Section 9.01. NOTICES. All notices, requests, demands and
other communications provided for hereunder shall be in writing
and mailed or telefaxed or delivered to the applicable party in
the manner set forth in SECTION 9.6 of the Loan Agreement.
Section 9.02. INDEMNIFICATION. Without prejudice to any of
the other provisions of this Agreement, Pledgor will pay to
Agent, on demand by Agent at any time and as often as the
occasion therefor may require, any and all reasonable costs,
charges, expenses and other sums expended, paid or debited in
account by Agent and/or the Lenders, whether by itself or through
any attorney, substitute or agent, for any of the purposes
referred to in this Agreement or otherwise howsoever in relation
to the security over the Collateral or any part thereof created
by this Agreement, including (without prejudice to the generality
of the foregoing) the reasonable remuneration of any such
attorney, substitute or agent and of any other servants or agents
employed by Agent for any such purposes and any and all other
reasonable costs, charges and expenses (whether in respect of
litigation or not) incurred in the maintenance, preservation,
protection, realization or enforcement of, or the collection and
recovery of any moneys from time to time arising under, such
security (or any security collateral or supplemental thereto), or
in realizing or exercising any other power, authority or
discretion in relation to the Collateral or any part thereof, or
otherwise incurred under any provision of this Agreement, to the
intent that Agent and/or the Lenders shall be afforded a full and
unlimited indemnity in respect thereof, and, until so repaid,
such costs, charges expenses and other sums shall be charged on
the Collateral (but without prejudice to any other remedy, lien
or security available to Agent and/or the Lenders).
Section 9.03. FURTHER ASSURANCES. Pledgor hereby further
agrees with Agent to execute, acknowledge and deliver any and all
such further assurances and other deeds, agreements or
instruments, and to take or cause to be taken all such other
action, as shall be reasonably requested by Agent from time to
time in order to give full effect to this Agreement and to
maintain, preserve, safeguard and continue at all times all or
any of the rights, remedies, powers and privileges of Agent under
this Agreement, all without any cost or expense to Agent.
Section 9.04. BINDING EFFECT. This Agreement shall be
binding upon Pledgor and its successors and assigns and shall
inure to the benefit of Agent and its successors in title and
assigns.
Section 9.05. SEVERABILITY. In the event that any one or
more of the provisions contained in this Agreement shall be
invalid, illegal or unenforceable in any respect under any law
applicable thereto, the validity, legality and enforceability of
the remaining provisions contained herein shall not in any way be
affected or impaired thereby, and Pledgor hereby agrees with
Agent to execute any new agreement, deed or other instrument
which is necessary to remedy such invalidity, illegality or
unenforceability or to preserve the security constituted by the
Collateral.
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Section 9.06. CONSENT TO JURISDICTION AND SERVICE OF
PROCESS.
(a) Except to the extent prohibited by applicable law,
Pledgor irrevocably:
(i) agrees that any suit, action, or other legal
proceeding arising out of this Stock Pledge Agreement may be
brought in the courts of record of The Commonwealth of
Massachusetts or any other state(s) in which any of the
Collateral is located or in the courts of the United States
located in The Commonwealth of Massachusetts or any other
state(s) in which any of the Collateral is located;
(ii) consents to the jurisdiction of each such court
in any such suit, action or proceeding; and
(iii) waives any objection which it may have to the
laying of venue of such suit, action or proceeding in any
of such courts.
For such time as any of the Obligations of Pledgor to Agent
shall be unpaid in whole or in part and or the Commitment in
effect, Pledgor irrevocably designates the registered agent or
agent for service of process of the Pledgor as reflected on the
records of the Secretary of State of The Commonwealth of
Massachusetts as its registered agent, and, in the absence
thereof, the Secretary of State of The Commonwealth of
Massachusetts, as its agent to accept and acknowledge on its
behalf service of any and all process in any such suit, action
or proceeding brought in any such court and agrees and consents
that any such service of process upon such agent and written
notice of such service to Pledgor by registered or certified
mail shall be taken and held to be valid personal service upon
Pledgor regardless of where Pledgor shall then be doing business
and that any such service of process shall be of the same force
and validity as if service were made upon it according to the
laws governing the validity and requirements of such service in
each such state and waives any claim of lack of personal service
or other error by reason of any such service. Any notice,
process, pleadings or other papers served upon the aforesaid
designated agent shall, within three (3) Business Days after
such service, be sent by the method provided for in SECTION 9.6
of the Loan Agreement to Pledgor at its address set forth in the
Loan Agreement. EACH OF THE PARTIES HERETO HEREBY WAIVES ANY
RIGHT TO TRIAL BY JURY IN THE EVENT OF ANY DISPUTE BETWEEN
PLEDGOR AND AGENT WITH RESPECT TO THE FINANCING DOCUMENTS AND/OR
ANY OF THE TRANSACTIONS CONTEMPLATED THEREBY.
Section 9.07. SPECIFIC PERFORMANCE, ETC. The rights
granted to Agent under this Agreement are of a special, unique,
unusual and extraordinary character. The loss of any of such
rights cannot reasonably or adequately be compensated by way of
damages in any action at law, and any material breach by Pledgor
of any of Pledgor's covenants, agreements or obligations under
this Agreement will cause Agent irreparable injury and damage.
In the event of any such breach, Agent shall be entitled, as a
matter of right, to injunctive relief or other equitable relief
in any court of competent jurisdiction to prevent the violation
or contravention of any of the provisions of this Agreement or to
compel compliance with the terms of this Agreement by the
Pledgor. Agent is absolutely and irrevocably authorized and
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<PAGE>
empowered by Pledgor to demand specific performance of each of
the covenants and agreements of Pledgor in this Agreement.
Pledgor hereby irrevocably waives any defense based on the
adequacy of any remedy at law which might otherwise be asserted
by Pledgor as a bar to the remedy of specific performance in any
action brought by Agent against Pledgor to enforce any of the
covenants or agreements of Pledgor in this Agreement.
Section 9.08. GOVERNING LAW. This Agreement is intended to
take effect as a sealed instrument. This Agreement will be
governed by the laws of The Commonwealth of Massachusetts without
reference to its conflicts of laws rules.
Section 9.09. TITLES. The title of this Agreement and the
titles of sections and subsections, and of exhibits, are for
convenience of reference only and will not be considered in the
construction or interpretation hereof.
Section 9.10. COUNTERPARTS. This Agreement may be executed
in any number of counterparts, each of which will be deemed to be
an original but all of which together will constitute one and the
same instrument.
[SIGNATURES APPEAR ON NEXT PAGE]
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IN WITNESS WHEREOF, this STOCK PLEDGE AGREEMENT has been
duly executed by or on behalf of each of the parties hereto as of
December 26, 1997.
PCD INC.
By: /s/ John L. Dwight Jr.
----------------------
John L. Dwight Jr.
Chairman of the Board
FLEET NATIONAL BANK, as Agent
for itself and the other
Lenders
By: /s/ Thomas W. Davies
-------------------------
Thomas W. Davies
Senior Vice President
<EXHIBIT> EXHIBIT 10.6
STOCK PLEDGE AGREEMENT
THIS STOCK PLEDGE AGREEMENT IS BETWEEN:
(1) WELLS ELECTRONICS, INC., an Indiana corporation
having its principal place of business at 52940 Olive Road, South
Bend, Indiana ("Pledgor"); and
(2) FLEET NATIONAL BANK, a national banking
association organized under the laws of the United States having
an office at One Federal Street, Boston, Massachusetts 02110
("Agent"), as Agent for itself and each of the other Lenders who
now are or hereafter become parties to the hereinafter defined
Loan Agreement.
WHEREAS:
(A) Pursuant to the terms of that certain Loan
Agreement dated as of the date hereof between PCD Inc., a
Massachusetts corporation (the "Principal Debtor"), Agent and the
Lenders (as the same may be amended from time to time, the "Loan
Agreement"), Agent and the Lenders have agreed to make loans to
Principal Debtor in an aggregate principal amount not to exceed
$90,000,000.00, as evidenced by that certain Term Note A, Term
Note B and Revolving Credit Note of Principal Debtor dated as of
the date hereof (the "Notes"); and
(B) Principal Debtor owns 100% of the issued and
outstanding capital stock of Pledgor; and
(C) Pledgor has, as of the date hereof, executed and
delivered to Agent that certain Unlimited Guaranty pursuant to
which Pledgor has guaranteed payment and performance of all of
the Obligations of Principal Debtor (as such term is defined in
the Loan Agreement) (the "Guaranty"); and
(D) Pledgor legally and beneficially owns, the shares
of issued and outstanding stock described on EXHIBIT A attached
hereto and incorporated herein as reference; and
(E) As a condition precedent to Agent and the Lenders
entering into the Loan Agreement and in order to secure the
payment and performance in full of all of the Obligations of
Principal Debtor to Agent and the Lenders, Pledgor agrees to
pledge to Agent, upon the terms contained in this Agreement: (1)
the Initial Pledged Shares (as hereinafter defined); and (2) all
(if any) shares of any class of the capital stock of the Pledged
Companies (as hereinafter defined) acquired by Pledgor at any
time after the date hereof.
NOW, THEREFORE, in consideration of these premises, the
promises, mutual covenants and agreements herein contained, the
parties hereto hereby agree as follows:
<PAGE>
ARTICLE I
INTERPRETATION
Section 1.01. PROVISIONS PERTAINING TO DEFINITIONS. For
all purposes of this Agreement (except where such interpretations
would be inconsistent with the context or the subject matter):
(a) the terms specifically defined in SECTION 1.02 of
this Agreement shall have the meanings therein assigned to them;
(b) the expression "this Agreement" shall mean this
Stock Pledge Agreement, as originally executed, or, if varied or
supplemented from time to time, as so varied or supplemented; and
(c) capitalized terms used in this Agreement and
defined in the Loan Agreement and not otherwise defined herein
shall have the same meanings herein as in the Loan Agreement.
Section 1.02. TERMS DEFINED. Subject to the provisions of
Section 1.01 of this Agreement, the following terms shall have
the respective meanings set forth below:
(a) "Collateral" means, collectively, all of the
Pledged Shares, all of the Pledged Share Dividends, and all of
the other property, assets, accounts and moneys, and all of the
income, proceeds and products of any thereof, in, to, under or in
respect of which Agent or any of the nominees, agents or
representatives of Agent, by this Agreement or by any agreement
or agreements supplemental hereto, shall acquire any rights or
interests as security for the payment or performance of all or
any part of the Obligations.
(b) "Initial Pledged Shares" for (i) Wells
International, Robinson Nugent and Bowmar (as hereinafter
defined) means, collectively, all of the issued and outstanding
shares of every class of the capital stock of Wells
International, Robinson Nugent and Bowmar, respectively, which
are beneficially owned by Pledgor on the date of this Agreement
as more particularly described on EXHIBIT A, and (ii) Wells Japan
(as hereinafter defined) means, collectively, the LESSER of (1)
all of the issued and outstanding shares of every class of the
capital stock of Wells Japan which are beneficially owned by
Pledgor on the date of this Agreement, and (2) 66% of all of the
issued and outstanding shares of every class of the capital stock
of Wells Japan which are beneficially owned by Pledgor on the
date of this Agreement as more particularly described on EXHIBIT
A, the stock certificates for which shall be delivered by Pledgor
to Agent in pledge upon the terms contained in this Agreement.
(c) "Loan Documents" means the Financing Documents as
the term is defined in the Loan Agreement.
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<PAGE>
(d) "Obligations" means (i) the due and punctual
payment in full of the principal, interest and other sums due and
to become due from Principal Debtor to Agent and/or the Lenders,
whether now existing or hereafter arising pursuant to the Loan
Agreement, the Notes and/or the other Financing Documents, as the
same may be amended from time to time; (ii) the due and punctual
payment in full at maturity of the principal, interest and any
other sums due and to become due from Principal Debtor to Agent
and/or the Lenders at any time and from time to time on account
of any and all obligations, indebtedness and liability of
Principal Debtor to Agent and/or the Lenders, whether now
existing or hereafter arising, whether direct, indirect, absolute
or contingent, whether otherwise guaranteed or secured and
whether on open account or evidenced by a note, draft, check,
loan agreement, letter of credit application, acceptance
agreement, or other instrument or documents; and (iii) the due
and punctual performance of and/or compliance with all of the
terms, conditions and covenants contained herein to be performed
or complied with by Pledgor and the accuracy of Pledgor's
representations and warranties contained herein and in the
Financing Documents.
(e) "Pledged Companies" means collectively Wells
International Corporation Inc., an Indiana corporation ("Wells
International"), Robinson Nugent, Inc. ("Robinson Nugent"),
Bowmar Instrument Corp. ("Bowmar") and Wells Japan Kabushiki
Kaisha , a Japanese limited stock company ("Wells Japan").
(f) "Pledged Share Dividends" means, collectively, (i)
all dividends of every kind whatever which shall become and be
due and payable or distributable on or in respect of all or any
of the Pledged Shares, (ii) all payments of every kind whatever
which shall become and be due and payable or distributable on
account of the purchase, redemption, repurchase or other
retirement of all or any of the Pledged Shares, and (iii) all
other distributions of every kind whatsoever (including, without
limitation, all capital distributions) which shall become and be
due and payable or distributable on or in respect of all or any
of the Pledged Shares; and "Pledged Share Dividend" means any one
of the Pledged Share Dividends.
(g) "Pledged Shares" means, collectively, (i) all of
the Initial Pledged Shares, and (ii) all other shares of any
class of the capital stock of any of the Pledged Companies (A)
which shall be issued or distributed (by way of stock dividends
or otherwise) or sold by any of the Pledged Companies to Pledgor
at any time or times after the date of this Agreement, or (B)
which shall be purchased or otherwise acquired by or on behalf of
Pledgor from any of the Pledged Companies or from any other
person or persons at any time or times after the date of this
Agreement; and "Pledged Share" means any one of the Pledged
Shares.
ARTICLE II
PLEDGE AND ASSIGNMENT BY PLEDGOR
Section 2.01. PLEDGE AND ASSIGNMENT. In order to secure
the payment and performance in full of all of the Obligations
(whether existing on the date of this Agreement or arising at any
time or times thereafter), Pledgor, as beneficial owner, hereby
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<PAGE>
pledges, hypothecates and assigns to Agent and hereby grants to
Agent, a continuing security interest in, the following: (a)
each of the Initial Pledged Shares and all of the stock
certificates representing the Initial Pledged Shares; (b) all of
the Pledged Shares which shall be issued or distributed or sold
to or purchased or otherwise acquired by Pledgor at any time or
times after the date of this Agreement and all of the stock
certificates representing such Pledged Shares; (c) all of the
Pledged Share Dividends; and (d) all of Pledgor's rights, title,
interests, claims and remedies and all other benefits whatever
now existing or hereafter arising in, to, under or in respect of
all of the Initial Pledged Shares, all of the other Pledged
Shares, all of the Pledged Share Dividends (subject to SECTION
2.04 of this Agreement) and all of the income and proceeds of any
thereof, PROVIDED, HOWEVER, that in no event will Pledgor be
required to pledge to Agent, pursuant to the terms hereof, more
than 66% of the issued and outstanding capital stock of Wells
Singapore and Wells Japan, respectively.
TO HAVE AND TO HOLD all of the foregoing unto Agent,
absolutely and forever, SUBJECT, HOWEVER, to the terms and
conditions set forth in this Agreement.
Section 2.02. DELIVERY OF STOCK CERTIFICATES REPRESENTING
PLEDGED SHARES.
(a) All of the stock certificates representing the
Initial Pledged Shares have been delivered by Pledgor to Agent in
pledge on the date of this Agreement. Each of such stock
certificates names Pledgor as the owner of record of the Initial
Pledged Shares represented thereby. Each of the Initial Pledged
Shares has been duly transferred by Pledgor to Agent in pledge
pursuant to instruments of transfer which have been duly executed
in blank (with signatures guaranteed, if applicable) and
delivered to Agent by Pledgor.
(b) If (and on each occasion that) any additional
Pledged Shares shall, at any time after the date of this
Agreement, be issued or distributed or sold to or purchased or
otherwise acquired by Pledgor, Pledgor will within seven Business
Days of such issuance, distribution, sale, purchase or
acquisition (i) cause all of the stock certificates representing
such additional Pledged Shares to be delivered to Agent, and (ii)
execute in blank (with guarantee of signatures) and deliver to
Agent undated instruments of transfer, satisfactory to Agent in
form and substance, by which each of such additional Pledged
Shares shall be duly transferred by Pledgor to Agent in pledge.
Each of such stock certificates will name Pledgor as the owner of
record of the additional Pledged Shares represented thereby.
Section 2.03. VOTING POWER.
(a) Until the occurrence of an Event of Default,
Pledgor will be permitted to exercise all voting powers
pertaining to any Pledged Shares for any purpose not inconsistent
with the terms of this Agreement or any of the other Loan
Documents.
(b) Pledgor acknowledges and agrees with Agent that,
unless Agent otherwise consents, Pledgor shall have no rights
whatever to exercise any voting powers pertaining to any Pledged
Shares at any time after the occurrence and during the
continuance of an Event of Default.
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<PAGE>
Section 2.04. CASH DIVIDENDS. Prior to the occurrence of
an Event of Default, Pledgor shall have no right to receive,
collect or recover any Pledged Share Dividends except as
permitted by the Loan Agreement. Following the occurrence or
during the continuance of an Event of Default, Pledgor
acknowledges and agrees that Pledgor shall have no right whatever
to receive, collect or recover any dividends of any kind at any
time.
ARTICLE III
REPRESENTATIONS
Pledgor hereby represents and warrants to Agent as follows:
Section 3.01. BENEFICIAL OWNERSHIP OF INITIAL PLEDGED
SHARES. Pledgor is the sole beneficial owner of each of the
Initial Pledged Shares. None of the Initial Pledged Shares is
subject to any Liens except that created by this Agreement. None
of the Initial Pledged Shares is subject to any shareholder
agreements, voting agreements, voting trusts, trust deeds,
irrevocable proxies or any other similar agreements or
instruments, except this Agreement.
Section 3.02. BINDING EFFECT OF AGREEMENT. This Agreement
has been duly executed and delivered to Agent by Pledgor and is
in full force and effect. All of the agreements and obligations
of Pledgor contained in this Agreement constitute legal, valid
and binding obligations of Pledgor enforceable against Pledgor in
accordance with their respective terms.
ARTICLE IV
COVENANTS
Section 4.01. DEFENSE OF AGENT'S TITLE AND RIGHTS. Pledgor
hereby covenants with Agent that Pledgor will defend Agent's
right, title and special property in and to all of the Initial
Pledged Shares and all of the other Pledged Shares. Pledgor will
not sell, assign or otherwise transfer or dispose of any of the
Pledged Shares, and it will not create, assume, incur or permit
to exist any Liens of any kind in respect of any of the Pledged
Shares; EXCLUDING, HOWEVER, any mortgages, liens, pledges,
charges, security interests and other encumbrances created on or
after the date of this Agreement by Pledgor and securing the
payment or performance of all or any part of the Obligations or
any indebtedness of Pledgor to Agent, whether existing on the
date of this Agreement or arising from time to time hereafter.
Section 4.02. LIMITATION ON VOTING POWERS. Pledgor hereby
covenants with Agent that Pledgor will not at any time or times
cast any vote in respect of any of the Pledged Shares or give any
consents, waivers or ratifications in respect of any of the
Pledged Shares which would violate or contravene, or which would
cause or otherwise authorize Pledgor to violate or contravene any
provision of this Agreement or any of the other Loan Documents.
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<PAGE>
ARTICLE V
POWER OF ATTORNEY
Pledgor hereby absolutely and irrevocably constitutes and
appoints Agent Pledgor's true and lawful agent and attorney-in-
fact, with full power of substitution, in the name of Pledgor or
in the name of Agent or in the name of any of Agent's agents or
attorneys, following the occurrence and during the continuance of
any Default or Event of Default (a) to execute and do all such
assurances, acts and things which Pledgor ought to do under the
covenants and provisions contained in this Agreement; (b) to take
any and all such action as Agent or any of its agents or
attorneys may, in its or their sole and absolute discretion,
determine to be necessary or advisable for the purpose of
maintaining, preserving or protecting the security constituted by
this Agreement or any of the rights, remedies, powers or
privileges of Agent under this Agreement; and (c) generally, in
the name of Pledgor or in the name of Agent or in the name of any
of Agent' agents or attorneys, to exercise all or any of the
powers, authorities and discretions conferred on or reserved to
Agent by or pursuant to this Agreement, and (without prejudice to
the generality of any of the foregoing) to seal and deliver or
otherwise perfect any deed, assurance, agreement, instrument or
act which Agent or any of Agent's agents or attorneys may deem
proper in or for the purpose of exercising any of such powers,
authorities or discretions. Pledgor hereby ratifies and
confirms, and hereby agrees to ratify and confirm, whatever Agent
or any of Agent's agents or attorneys shall do or purport to do
in the exercise of the power of attorney granted to Agent
pursuant to this Article V, which power of attorney, being given
for security, is irrevocable.
ARTICLE VI
TERMS OF THE SECURITY HELD AND RELEASE OF SECURITY
Section 6.01. CONTINUING SECURITY. The security created by
this Agreement shall be held by Agent, as a continuing security
for the payment and performance of all of the Obligations
(whether existing on the date of this Agreement or arising from
time to time thereafter). This Agreement, all of the rights,
remedies, powers and privileges of Agent hereunder and the
security created hereby shall be in addition to, and shall not in
any way be prejudiced or affected by, any other collateral or any
other security now or at any time or times hereafter held by
Agent for all or any part of the Obligations. Each and every
right, remedy, power and privilege conferred on or reserved to
Agent hereunder shall be cumulative and in addition to, and not
in limitation of, each and every other right, remedy, power or
privilege conferred on or reserved to Agent under this Agreement
or under the Loan Documents. All of the rights, remedies, powers
and privileges vested in Agent hereunder may be exercised at such
time or times and in such order and manner as Agent may, in its
sole and absolute discretion, deem expedient.
Section 6.02. WAIVERS OF NOTICE; ASSENT. The agreements
and obligations of Pledgor to Agent hereunder and the security
constituted hereby shall not be, to any extent or in any way or
manner whatsoever, satisfied, discharged, impaired, diminished,
released or otherwise affected by any of the following, whether
or not Pledgor shall have had any notice or knowledge of any
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<PAGE>
thereof: (a) the absorption, consolidation, merger or
amalgamation of, or the effectuation of any other change
whatsoever in the name, membership, constitution or place of
formation of, Pledgor or any of their subsidiaries or Agent; (b)
any increase or reduction in the amount of the Notes, the
termination of the Notes, or the making of the Loans by Agent or
any of the Lenders; (c) any extension or postponement of the time
for the payment or performance of all or any part of the
Obligations, the acceptance of any partial payment on all or any
part of the Obligations, any and all other indulgences whatsoever
by Agent or any of the Lenders in respect of all or any part of
the Obligations, the taking, addition, substitution or release,
in whole or in part, of any security for all or any part of the
Obligations, or the addition, substitution or release, in whole
or in part, of any person or persons primarily or secondarily
liable in respect of all or any part of the Obligations; (d) any
action or delay in acting or failure to act on the part of Agent
or any of the Lenders under this Agreement, the Loan Documents,
or in respect of all or any part of the Obligations, or in
respect of all or any collateral other than the Collateral; or
(e) any modification or amendment of, or any supplement or
addition to, any of the Loan Documents. Pledgor hereby
absolutely and irrevocably assents to and waives notice of any
and all events, conditions, matters and things hereinbefore
specified in clauses (a) to (e), inclusive, of the foregoing
sentence of this SECTION 6.02.
Section 6.03. NO IMPLIED WAIVERS. No course of dealing
between Pledgor and Agent and/or any of the Lenders, and no delay
on the part of Agent in exercising any right, remedy, power or
privilege hereunder or provided by statute or by law or in equity
or otherwise, shall impair, prejudice or constitute a waiver of
any such right, remedy, power or privilege or be construed as a
waiver of any default or as an acquiescence therein; and any
single or partial exercise of any such right, remedy, power or
privilege shall not preclude any other or further exercise
thereof or the exercise of any other rights, remedies, powers or
privileges.
ARTICLE VII
ENFORCEMENT OF THE SECURITY
Section 7.01. CONDITIONS OF ENFORCEABILITY OF THE SECURITY.
If any Default or Event of Default shall at any time occur, the
security constituted by this Agreement shall become immediately
enforceable by Agent, without any presentment, demand, protest or
other notice of any kind, all of which are hereby expressly and
irrevocably waived by Pledgor.
Section 7.02. EVIDENCE OF OBLIGATIONS. In any legal
proceedings against Pledgor for enforcing any agreements or
obligations of Pledgor under this Agreement, a certificate of
Agent as to the aggregate amount of all of the Obligations shall
be PRIMA FACIE evidence thereof.
Section 7.03. MANNER OF ENFORCEMENT OF SECURITY. Agent
shall have, in any jurisdiction where enforcement is sought, all
of the rights, remedies, powers and privileges conferred on
Agent, as secured party, under the Uniform Commercial Code of The
Commonwealth of Massachusetts, and, without limiting the
generality of the foregoing, Agent shall have the full right and
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power in respect of the Collateral or any part thereof in Agent's
sole and complete discretion to do all and any of the following
things:
(a) to take possession of the Collateral or any part
thereof, wherever the same may be, without legal process and
without compliance with any other condition precedent imposed by
statute, rule of law or otherwise (all of which Pledgor hereby
expressly and irrevocably waives), and to call in, collect,
convert into money or otherwise deal with the Collateral or any
part thereof with full power to sell (including the power to
postpone such sale) the Collateral or any part thereof, either
together or in lots, and either by public auction or private
contract, and either for a lump sum or for a sum payable by
installments or for a sum on account and a mortgage or charge or
pledge for the balance, and with full power upon every sale to
make any special or other stipulation as to title or evidence
thereof or otherwise which Agent shall deem proper, and with full
power to buy in or rescind or vary any contract for sale of the
Collateral or any part thereof and to resell the same without
being responsible for any loss which may be occasioned thereby,
and with full power to compromise and effect compositions, and,
for the purposes aforesaid or any of them, to execute and do all
such assurances and things as Agent may deem appropriate;
(b) to settle, adjust, compromise and arrange all
accounts, reckonings, controversies, questions, claims and
demands whatsoever in relation to all or any part of the
Collateral;
(c) to cause all or any of the Pledged Shares and all
or any other Collateral to be sold, assigned or transferred to
Agent or to any other person or persons and to be recorded or
registered in the name of Agent or any other person or persons
and to exercise or permit the exercise of any powers or rights
incident to all or any part of the Collateral in such manner as
Agent shall deem appropriate, and, in respect of all or any of
the Pledged Shares, to exercise or permit the exercise of all
rights and powers conferred by statute or otherwise upon a
registered holder or owner of record thereof, including, without
limitation, the calling or causing to be called of meetings, and
proposing or causing to be proposed of resolutions (whether
ordinary or special resolutions), including resolutions for
winding up and voting at meetings;
(d) to execute and do all such contracts, agreements,
deeds, documents and things, and to bring, defend and abandon all
such actions, suits and proceedings in relation to all or any
part of the Collateral as Agent shall deem expedient;
(e) to appoint managers, agents, officers and servants
for any of the purposes mentioned in the foregoing provisions of
this SECTION 7.03 for such periods as Agent shall deem
appropriate and to dismiss the same; and
(f) generally, to do all such other acts and things as
may be considered incidental or conducive to any of the matters
or powers mentioned in the foregoing provisions of this SECTION
7.03 and which Agent may or can do lawfully and to use the name
of Pledgor for the purposes aforesaid and in any proceedings
arising therefrom.
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<PAGE>
Section 7.04. COOPERATION OF PLEDGOR. Pledgor recognizes
that the Pledged Shares are not readily marketable and may not be
marketable at all if any default in the payment or performance of
any of the Obligations shall occur and be continuing. In order,
therefore, to enable Agent to use such means as Agent may
determine necessary or advisable to realize upon the Collateral
from time to time, and in order to induce Agent and the Lenders
to make the Loans to Principal Debtor in reliance upon the
Collateral, Pledgor hereby absolutely and irrevocably consents
that Agent may use whatever means Agent may reasonably consider
necessary or advisable to sell any or all of the Collateral at
any time or times after the security constituted by this
Agreement shall have become enforceable, including, without
limitation, the giving of options to purchase any or all of the
Collateral and the giving of credit to any purchaser of the
Collateral. Because there is no established market for the
Collateral and because it may be unlikely that any person will
become or be interested in purchasing the Collateral as a result
of the giving of any notice of public sale, Pledgor agrees that
any sale of the Collateral may be private and without competitive
bidding.
Section 7.05. NOTICE OF SALE. Agent will give Pledgor at
least five (5) days' prior written notice of the time and place
of any public or private sale of all or any part of the
Collateral or of the time after which any private sale or any
other intended disposition of all or any part of the Collateral
is to be made. Pledgor hereby absolutely and irrevocably agrees
with Agent that any notice of any public or private sale or other
disposition given by Agent to Pledgor in accordance with the
preceding sentence of this SECTION 7.05 shall be, and shall for
all purposes be deemed to be, reasonable notice.
Section 7.06. PROTECTION OF PERSONS DEALING WITH AGENT. No
purchaser, mortgagor, mortgagee, Agent, Lender, debtor or other
person dealing with Agent or with any attorney or agent of Agent
shall be concerned to enquire (a) whether the security
constituted by this Agreement has become enforceable, (b) whether
any power exercised or purported to be exercised hereunder has
become exercisable, (c) whether any moneys remain due upon the
security of this Agreement, (d) as to the propriety, regularity
or purpose of the exercise of any power hereunder, or (e) as to
the application of any moneys paid to Agent or to any such
attorney or agent.
Section 7.07. PROTECTION OF SECURITY. In addition to the
rights and powers hereinabove given, Agent may, whether or not
any Default or Event of Default shall have occurred and whether
or not the security constituted by this Agreement shall have
become enforceable, enter into possession of and hold any part of
the Collateral which may at any time appear to Agent in danger of
being taken under any process of law by any creditor of Pledgor
or to be in jeopardy or otherwise endangered.
- 9 -
<PAGE>
ARTICLE VIII
APPLICATION OF MONEYS IN COLLATERAL
All moneys realized by Agent after the security constituted
by this Agreement shall have become enforceable as well as all
moneys then held or at any time or times thereafter received by
Agent as realizations of all or any part of the Collateral shall
be held by Agent to apply the same as follows;
FIRST: in or towards the payment and discharge of all (if
any) debts, damages and liabilities, the payment of which shall
be secured by any Liens having priority over the rights of Agent
in and to such moneys;
SECOND: in or towards the payment of, or (as the case may
be) the reimbursement of Agent for or in respect of, all costs,
expenses, disbursements and losses which shall have been incurred
or sustained by Agent in or about or incidental to the collection
of such moneys by Agent or the exercise, protection or
enforcement by Agent of all or any of the rights, remedies,
powers and privileges of Agent under this Agreement or in respect
of the Collateral and in or towards the provision of adequate
indemnity to Agent against all taxes or liens which by law shall
have, or may have, priority over the rights of Agent in and to
such moneys;
THIRD: in or towards the payment of all of the Obligations
in accordance with the Loan Documents and this Agreement; and
FOURTH; to the payment of the surplus (if any) to Pledgor
or to such other person or persons as shall be entitled to
receive such surplus.
ARTICLE IX
PROVISIONS OF GENERAL APPLICATION
Section 9.01. NOTICES. All notices, requests, demands and
other communications provided for hereunder shall be in writing
and mailed or telefaxed or delivered to the applicable party in
the manner set forth in SECTION 9.6 of the Loan Agreement.
Section 9.02. INDEMNIFICATION. Without prejudice to any of
the other provisions of this Agreement, Pledgor will pay to
Agent, on demand by Agent at any time and as often as the
occasion therefor may require, any and all reasonable costs,
charges, expenses and other sums expended, paid or debited in
account by Agent and/or the Lenders, whether by itself or through
any attorney, substitute or agent, for any of the purposes
referred to in this Agreement or otherwise howsoever in relation
to the security over the Collateral or any part thereof created
by this Agreement, including (without prejudice to the generality
of the foregoing) the reasonable remuneration of any such
attorney, substitute or agent and of any other servants or agents
employed by Agent for any such purposes and any and all other
- 10 -
<PAGE>
reasonable costs, charges and expenses (whether in respect of
litigation or not) incurred in the maintenance, preservation,
protection, realization or enforcement of, or the collection and
recovery of any moneys from time to time arising under, such
security (or any security collateral or supplemental thereto), or
in realizing or exercising any other power, authority or
discretion in relation to the Collateral or any part thereof, or
otherwise incurred under any provision of this Agreement, to the
intent that Agent and/or the Lenders shall be afforded a full and
unlimited indemnity in respect thereof, and, until so repaid,
such costs, charges expenses and other sums shall be charged on
the Collateral (but without prejudice to any other remedy, lien
or security available to Agent and/or the Lenders).
Section 9.03. FURTHER ASSURANCES. Pledgor hereby further
agrees with Agent to execute, acknowledge and deliver any and all
such further assurances and other deeds, agreements or
instruments, and to take or cause to be taken all such other
action, as shall be reasonably requested by Agent from time to
time in order to give full effect to this Agreement and to
maintain, preserve, safeguard and continue at all times all or
any of the rights, remedies, powers and privileges of Agent under
this Agreement, all without any cost or expense to Agent.
Section 9.04. BINDING EFFECT. This Agreement shall be
binding upon Pledgor and its successors and assigns and shall
inure to the benefit of Agent and its successors in title and
assigns.
Section 9.05. SEVERABILITY. In the event that any one or
more of the provisions contained in this Agreement shall be
invalid, illegal or unenforceable in any respect under any law
applicable thereto, the validity, legality and enforceability of
the remaining provisions contained herein shall not in any way be
affected or impaired thereby, and Pledgor hereby agrees with
Agent to execute any new agreement, deed or other instrument
which is necessary to remedy such invalidity, illegality or
unenforceability or to preserve the security constituted by the
Collateral.
Section 9.06. CONSENT TO JURISDICTION AND SERVICE OF
PROCESS.
(a) Except to the extent prohibited by applicable law,
Pledgor irrevocably:
(i) agrees that any suit, action, or other legal
proceeding arising out of this Stock Pledge Agreement may
be brought in the courts of record of The Commonwealth of
Massachusetts or any other state(s) in which any of the
Collateral is located or in the courts of the United States
located in The Commonwealth of Massachusetts or any other
state(s) in which any of the Collateral is located;
(ii) consents to the jurisdiction of each such court
in any such suit, action or proceeding; and
(iii) waives any objection which it may have to the
laying of venue of such suit, action or proceeding in any
of such courts.
- 11 -
<PAGE>
For such time as any of the Obligations of Pledgor to Agent
shall be unpaid in whole or in part and or the Commitment in
effect, Pledgor irrevocably designates the registered agent or
agent for service of process of the Pledgor as reflected on the
records of the Secretary of State of the State of Indiana as its
registered agent, and, in the absence thereof, the Secretary of
State of the State of the State of Indiana, as its agent to
accept and acknowledge on its behalf service of any and all
process in any such suit, action or proceeding brought in any
such court and agrees and consents that any such service of
process upon such agent and written notice of such service to
Pledgor by registered or certified mail shall be taken and held
to be valid personal service upon Pledgor regardless of where
Pledgor shall then be doing business and that any such service
of process shall be of the same force and validity as if service
were made upon it according to the laws governing the validity
and requirements of such service in each such state and waives
any claim of lack of personal service or other error by reason
of any such service. Any notice, process, pleadings or other
papers served upon the aforesaid designated agent shall, within
three (3) Business Days after such service, be sent by the
method provided for in SECTION 9.6 of the Loan Agreement to
Pledgor at its address set forth in the Loan Agreement. EACH OF
THE PARTIES HERETO HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY IN
THE EVENT OF ANY DISPUTE BETWEEN PLEDGOR AND AGENT WITH RESPECT
TO THE FINANCING DOCUMENTS AND/OR ANY OF THE TRANSACTIONS
CONTEMPLATED THEREBY.
Section 9.07. SPECIFIC PERFORMANCE, ETC. The rights
granted to Agent under this Agreement are of a special, unique,
unusual and extraordinary character. The loss of any of such
rights cannot reasonably or adequately be compensated by way of
damages in any action at law, and any material breach by Pledgor
of any of Pledgor's covenants, agreements or obligations under
this Agreement will cause Agent irreparable injury and damage.
In the event of any such breach, Agent shall be entitled, as a
matter of right, to injunctive relief or other equitable relief
in any court of competent jurisdiction to prevent the violation
or contravention of any of the provisions of this Agreement or to
compel compliance with the terms of this Agreement by the
Pledgor. Agent is absolutely and irrevocably authorized and
empowered by Pledgor to demand specific performance of each of
the covenants and agreements of Pledgor in this Agreement.
Pledgor hereby irrevocably waives any defense based on the
adequacy of any remedy at law which might otherwise be asserted
by Pledgor as a bar to the remedy of specific performance in any
action brought by Agent against Pledgor to enforce any of the
covenants or agreements of Pledgor in this Agreement.
Section 9.08. GOVERNING LAW. This Agreement is intended to
take effect as a sealed instrument. This Agreement will be
governed by the laws of The Commonwealth of Massachusetts without
reference to its conflicts of laws rules.
Section 9.09. TITLES. The title of this Agreement and the
titles of sections and subsections, and of exhibits, are for
convenience of reference only and will not be considered in the
construction or interpretation hereof.
- 12 -
<PAGE>
Section 9.10. COUNTERPARTS. This Agreement may be executed
in any number of counterparts, each of which will be deemed to be
an original but all of which together will constitute one and the
same instrument.
[SIGNATURES APPEAR ON NEXT PAGE]
- 13 -
<PAGE>
IN WITNESS WHEREOF, this STOCK PLEDGE AGREEMENT has been
duly executed by or on behalf of each of the parties hereto as of
December 26, 1997.
WELLS ELECTRONICS, INC.
By: /s/ Mary L. Mandarino
------------------------
Mary L. Mandarino
Treasurer
FLEET NATIONAL BANK, as Agent
for itself and the other
Lenders
By: /s/ Thomas W. Davies
------------------------
Thomas W. Davies
Senior Vice President
- 14 -
<PAGE>
EXHIBIT A
Stock Ownership
NUMBER OF SHARES
NAME OF COMPANY DESCRIPTION OF STOCK OWNED BY PLEDGOR
Wells International Common 8,000
Corporation Inc.
Wells Japan Kabushiki Kaisha 5,100
Robinson Nugent, Inc. Common 406
Bowmar Instrument Corp. Common 59
- 15 -
<EXHIBIT> EXHIBIT 10.7
CONDITIONAL PATENT ASSIGNMENT
THIS CONDITIONAL PATENT ASSIGNMENT dated as of December 26,
1997, by and between PCD INC., a Massachusetts corporation, with
a principal place of business at 2 Technology Drive, Centennial
Park, Peabody, Massachusetts 01960-7977 ("Assignor") and FLEET
NATIONAL BANK, a national banking association organized under the
laws of the United States having an office at One Federal Street,
Boston, Massachusetts 02110 ("Assignee"), as Agent for itself
and each of the other Lenders who are now or hereafter become
parties to the hereinafter defined Loan Agreement.
WHEREAS, Assignee and Assignor, as Agent for itself and each of
the other Lenders who are now or hereafter become parties to the Loan
Agreement (as hereinafter defined) have this day entered into a
certain Loan Agreement (as the same may be amended from time to time,
the "Loan Agreement") pursuant to which Assignee has agreed to make
certain loans to Assignor; and
WHEREAS, capitalized terms used herein and not otherwise
defined herein shall have the meanings set forth in the Loan
Agreement; and
WHEREAS, pursuant to the terms of a Security Agreement of
even date herewith by and between Assignor and Assignee (as
amended from time to time, the "Security Agreement"), Assignor
has concurrently granted to Assignee a security interest in all
of Assignor's assets to secure, INTER ALIA, the payment and
performance of the Obligations of Assignor to Assignee and/or the
Lenders under the Loan Agreement; and
WHEREAS, to evidence and perfect the rights of Assignee as
grantee of a security interest that has attached in certain of
said assets as described below, Assignor has executed and
delivered to Assignee this Conditional Patent Assignment.
NOW THEREFORE, FOR GOOD AND VALUABLE CONSIDERATION, THE
RECEIPT OF WHICH IS HEREBY ACKNOWLEDGED, AND SUBJECT TO THE
CONDITIONS SET FORTH HEREIN, Assignor does hereby conditionally
assign, sell, transfer and grant unto Assignee all of Assignor's
right, title and interest in, to and under the following, whether
presently existing or hereafter arising or acquired:
(i) each patent and each registration thereof, and each
patent registration application owned by Assignor, including,
without limitation, each such patent and patent registration
application set forth on SCHEDULE A, attached hereto and
incorporated herein by reference; and
(ii) all products and proceeds of the foregoing, including,
without limitation, any claim or causes of action of Assignor
against any third parties for past, present or future
infringement of any of the foregoing, with the right to sue and
recover the same in the Assignee's own name and for its own use
and behoove, including all rights corresponding thereto
throughout the world and all re-issues, divisions, continuations,
renewals, extensions and continuations-in-part thereof;
<PAGE>
(all of the foregoing, individually and collectively, the
"Patents").
PROVIDED, HOWEVER, THAT ASSIGNOR'S RIGHTS IN THE PATENTS
SHALL CONTINUE UNTIL, AND ASSIGNEE SHALL HAVE NO OBLIGATIONS WITH
RESPECT TO THE PATENTS UNTIL, AND ASSIGNEE SHALL BE ENTITLED TO
EXERCISE ITS RIGHTS AND REMEDIES HEREUNDER IN AND WITH RESPECT TO
THE PATENTS ONLY UPON, SATISFACTION OF THE FOLLOWING CONDITIONS
SUBSEQUENT:
(a) The occurrence and continuation of an Event of Default
as defined in the Loan Agreement; or
(b) The exercise by Assignee of any or all of its rights or
remedies under the Security Agreement in respect of the Patents.
1. Assignor does hereby acknowledge, affirm and represent
that:
(i) the rights and remedies of Assignee with respect
to its interest in the Patents are more fully set forth in the
Security Agreement, the terms and provisions of which are
incorporated by reference herein as if fully set forth herein.
(ii) that nothing in this Conditional Patent Assignment
shall be in derogation of the rights and remedies of Assignee in
and to the Patents as set forth in the Security Agreement and as
shall be available at law or in equity.
(iii) SCHEDULE A contains a true and complete record
of (a) all patents in which Assignor has any interest and (b) all
applications pending for registration of patents in which
Assignor has any interest.
(iv) the Patents are subsisting and have not been
adjudged invalid or unenforceable, in whole or in part.
(v) each of the Patents is valid and enforceable.
(vi) Assignor is the sole and exclusive owner of the
entire and unencumbered right, title and interest in and to each
of the Patents, free and clear of any Liens, including, without
limitation, licenses, shop rights and covenants by Assignor not
to sue third persons.
(vii) Assignor has the unqualified right to enter into
this Agreement and perform its terms.
2. Assignor covenants that, until all of the Obligations
shall have been satisfied in full, it will not enter into any
agreement (for example, a license agreement) which is
inconsistent with Assignor's obligations under this Assignment,
without the Assignee's prior written consent.
2
<PAGE>
3. Assignor covenants that if, before the Obligations shall
have been satisfied in full, Assignor shall obtain rights to any
new patentable inventions or additional registered patents, or
additional patent applications or patent for any reissue,
division, continuation, renewal, extension, or continuation-in-
part of any Patent or any improvement on any Patent, or become
entitled to the benefit of any registration applications for
patents, the provisions of this Assignment shall automatically
apply thereto and Assignor shall give to the Assignee prompt
notice thereof in writing.
4. Assignor shall indemnify, defend and hold Assignee, its
affiliates and their respective directors, officers, employees
and agents ("Assignee's Indemnified Parties") harmless from and
against all damages, losses or expenses suffered or paid as a
result of any and all claims, demands, suits, causes of action,
proceedings, judgments and liabilities, including reasonable
attorneys' fees incurred in litigation or otherwise assessed,
incurred or sustained by or against Assignee's Indemnified
Parties or any of them with respect to or arising out of or in
any way connected with this Assignment.
5. The Assignee shall have the right but shall in no way be
obligated to bring suit in its name to enforce the Patents and
any license thereunder, in which event Assignor shall at the
request of the Assignee do any and all lawful acts and execute
any and all proper documents required by the Assignee in aid of
such enforcement and Assignor shall promptly, upon demand,
reimburse and indemnify the Assignee for all costs and expenses
incurred by the Assignee in the exercise of its rights under this
section.
6. Assignor authorizes the Assignee to modify this
Assignment by amending SCHEDULE A to include any future patents
or patent applications in which Assignor may acquire an interest.
7. At such time as Assignor shall completely and finally
satisfy all of the Obligations, the Assignee shall execute and
deliver to Assignor all deeds, assignments and other instruments
as may be necessary or proper to re-vest in Assignor full title
to the Patents, subject to any disposition thereof which may have
been made by the Assignee pursuant to the Security Agreement.
[SIGNATURES APPEAR ON NEXT PAGE]
3
<PAGE>
IN WITNESS WHEREOF, Assignor has caused this Conditional
Patent Assignment to be duly executed by its duly authorized
officer as of the date first set forth above.
PCD INC.
By: /S/ John L. Dwight, Jr.
--------------------------
John L. Dwight, Jr.
Chairman of the Board
FLEET NATIONAL BANK
as Agent for itself and
the other Lenders
By: /S/ Thomas W. Davies
--------------------------
Thomas W. Davies
Senior Vice President
4
<EXHIBIT> EXHIBIT 10.8
CONDITIONAL PATENT ASSIGNMENT
THIS CONDITIONAL PATENT ASSIGNMENT dated as of December 26,
1997, by and between WELLS ELECTRONICS, INC., an Indiana
corporation, with a principal place of business at 52940 Olive
Road, South Bend, Indiana ("Assignor") and FLEET NATIONAL BANK, a
national banking association organized under the laws of the
United States having an office at One Federal Street, Boston,
Massachusetts 02110 ("Assignee"), as Agent for itself and each
of the other Lenders who are now or hereafter become parties to
the hereinafter defined Loan Agreement.
WHEREAS, pursuant to the terms of that certain Loan
Agreement dated as of the date hereof between PCD Inc., a
Massachusetts corporation (the "Principal Debtor"), Assignee
and the Lenders (as the same may be amended from time to time,
the "Loan Agreement"), Assignee and the Lenders have agreed to
make loans to Principal Debtor in an aggregate principal amount
not to exceed $90,000,000.00, as evidenced by that certain Term
Note A, Term Note B and Revolving Credit Note of Principal Debtor
dated as of the date hereof; and
WHEREAS, capitalized terms used herein and not otherwise
defined herein shall have the meanings set forth in the Loan
Agreement; and
WHEREAS, Principal Debtor owns 100% of the issued and
outstanding capital stock of Assignor; and
WHEREAS, Assignor has, as of the date hereof, executed and
delivered to Assignee that certain Unlimited Guaranty pursuant to
which Assignor has guaranteed payment and performance of all of
the Obligations of Principal Debtor (as such term is defined in
the Loan Agreement) (the "Guaranty"); and
WHEREAS, pursuant to the terms of a Security Agreement of
even date herewith by and between Assignor and Assignee (as
amended from time to time, the "Security Agreement"), Assignor
has concurrently granted to Assignee a security interest in all
of Assignor's assets to secure its obligations to Assignee and/or
the Lenders under the Guaranty; and
WHEREAS, to evidence and perfect the rights of Assignee as
grantee of a security interest that has attached in certain of
said assets as described below, Assignor has executed and
delivered to Assignee this Conditional Patent Assignment.
NOW THEREFORE, FOR GOOD AND VALUABLE CONSIDERATION, THE
RECEIPT OF WHICH IS HEREBY ACKNOWLEDGED, AND SUBJECT TO THE
CONDITIONS SET FORTH HEREIN, Assignor does hereby conditionally
assign, sell, transfer and grant unto Assignee all of Assignor's
right, title and interest in, to and under the following, whether
presently existing or hereafter arising or acquired:
<PAGE>
(i) each patent and each registration thereof, and each
patent registration application owned by Assignor, including,
without limitation, each such patent and patent registration
application set forth on SCHEDULE A, attached hereto and
incorporated herein by reference; and
(ii) all products and proceeds of the foregoing, including,
without limitation, any claim or causes of action of Assignor
against any third parties for past, present or future
infringement of any of the foregoing, with the right to sue and
recover the same in the Assignee's own name and for its own use
and behoove, including all rights corresponding thereto
throughout the world and all re-issues, divisions, continuations,
renewals, extensions and continuations-in-part thereof;
(all of the foregoing, individually and collectively, the
"Patents").
PROVIDED, HOWEVER, THAT ASSIGNOR'S RIGHTS IN THE PATENTS
SHALL CONTINUE UNTIL, AND ASSIGNEE SHALL HAVE NO OBLIGATIONS WITH
RESPECT TO THE PATENTS UNTIL, AND ASSIGNEE SHALL BE ENTITLED TO
EXERCISE ITS RIGHTS AND REMEDIES HEREUNDER IN AND WITH RESPECT TO
THE PATENTS ONLY UPON, SATISFACTION OF THE FOLLOWING CONDITIONS
SUBSEQUENT:
(a) The occurrence and continuation of an Event of Default
as defined in the Loan Agreement; or
(b) The exercise by Assignee of any or all of its rights or
remedies under the Security Agreement in respect of the Patents.
1. Assignor does hereby acknowledge, affirm and represent
that:
(i) the rights and remedies of Assignee with respect
to its interest in the Patents are more fully set forth in the
Security Agreement, the terms and provisions of which are
incorporated by reference herein as if fully set forth herein.
(ii) that nothing in this Conditional Patent Assignment
shall be in derogation of the rights and remedies of Assignee in
and to the Patents as set forth in the Security Agreement and as
shall be available at law or in equity.
(iii) SCHEDULE A contains a true and complete record
of (a) all patents in which Assignor has any interest and (b) all
applications pending for registration of patents in which
Assignor has any interest.
(iv) the Patents are subsisting and have not been
adjudged invalid or unenforceable, in whole or in part.
(v) each of the Patents is valid and enforceable.
2
<PAGE>
(vi) Assignor is the sole and exclusive owner of the
entire and unencumbered right, title and interest in and to each
of the Patents, free and clear of any Liens, including, without
limitation, licenses, shop rights and covenants by Assignor not
to sue third persons.
(vii) Assignor has the unqualified right to enter into
this Agreement and perform its terms.
2. Assignor covenants that, until all of the Obligations
shall have been satisfied in full, it will not enter into any
agreement (for example, a license agreement) which is
inconsistent with Assignor's obligations under this Assignment,
without the Assignee's prior written consent.
3. Assignor covenants that if, before the Obligations shall
have been satisfied in full, Assignor shall obtain rights to any
new patentable inventions or additional registered patents, or
additional patent applications or patent for any reissue,
division, continuation, renewal, extension, or continuation-in-
part of any Patent or any improvement on any Patent, or become
entitled to the benefit of any registration applications for
patents, the provisions of this Assignment shall automatically
apply thereto and Assignor shall give to the Assignee prompt
notice thereof in writing.
4. Assignor shall indemnify, defend and hold Assignee, its
affiliates and their respective directors, officers, employees
and agents ("Assignee's Indemnified Parties") harmless from and
against all damages, losses or expenses suffered or paid as a
result of any and all claims, demands, suits, causes of action,
proceedings, judgments and liabilities, including reasonable
attorneys' fees incurred in litigation or otherwise assessed,
incurred or sustained by or against Assignee's Indemnified
Parties or any of them with respect to or arising out of or in
any way connected with this Assignment.
5. The Assignee shall have the right but shall in no way be
obligated to bring suit in its name to enforce the Patents and
any license thereunder, in which event Assignor shall at the
request of the Assignee do any and all lawful acts and execute
any and all proper documents required by the Assignee in aid of
such enforcement and Assignor shall promptly, upon demand,
reimburse and indemnify the Assignee for all costs and expenses
incurred by the Assignee in the exercise of its rights under this
section.
6. Assignor authorizes the Assignee to modify this
Assignment by amending SCHEDULE A to include any future patents
or patent applications in which Assignor may acquire an interest.
7. At such time as Assignor shall completely and finally
satisfy all of the Obligations, the Assignee shall execute and
deliver to Assignor all deeds, assignments and other instruments
as may be necessary or proper to re-vest in Assignor full title
to the Patents, subject to any disposition thereof which may have
been made by the Assignee pursuant to the Security Agreement.
[SIGNATURES APPEAR ON NEXT PAGE]
3
<PAGE>
IN WITNESS WHEREOF, Assignor has caused this Conditional
Patent Assignment to be duly executed by its duly authorized
officer as of the date first set forth above.
WELLS ELECTRONICS, INC.
By: /S/ Mary L. Mandarino
--------------------------
Mary L. Mandarino
Treasurer
FLEET NATIONAL BANK
as Agent for itself and
the other Lenders
By: /S/ Thomas W. Davies
--------------------------
Thomas W. Davies
Senior Vice President
4
<EXHIBIT> EXHIBIT 10.9
CONDITIONAL PATENT ASSIGNMENT
THIS CONDITIONAL PATENT ASSIGNMENT dated as of December 26,
1997, by and between WELLS JAPAN KABUSHIKI KAISHA, a Japanese
limited stock company, having its principal place of business at
Paleana Building 2-2-15, Shin-Yokahama, Kohuku-Ku, Yokahama,
Japan ("Assignor") and FLEET NATIONAL BANK, a national banking
association organized under the laws of the United States having
an office at One Federal Street, Boston, Massachusetts 02110
("Assignee"), as Agent for itself and each of the other Lenders
who are now or hereafter become parties to the hereinafter
defined Loan Agreement.
WHEREAS, pursuant to the terms of that certain Loan
Agreement dated as of the date hereof between PCD Inc., a
Massachusetts corporation (the "Principal Debtor"), Assignee
and the Lenders (as the same may be amended from time to time,
the "Loan Agreement"), Assignee and the Lenders have agreed to
make loans to Principal Debtor in an aggregate principal amount
not to exceed $90,000,000.00, as evidenced by that certain Term
Note A, Term Note B and Revolving Credit Note of Principal Debtor
dated as of the date hereof; and
WHEREAS, capitalized terms used herein and not otherwise
defined herein shall have the meanings set forth in the Loan
Agreement; and
WHEREAS, Principal Debtor indirectly owns 98.1% of the
issued and outstanding capital stock of Assignor; and
WHEREAS, Assignor has, as of the date hereof, executed and
delivered to Assignee that certain Unlimited Guaranty pursuant to
which Assignor has guaranteed payment and performance of all of
the Obligations of Principal Debtor (as such term is defined in
the Loan Agreement) (the "Guaranty"); and
WHEREAS, pursuant to the terms of a Security Agreement of
even date herewith by and between Assignor and Assignee (as
amended from time to time, the "Security Agreement"), Assignor
has concurrently granted to Assignee a security interest in all
of Assignor's assets to secure its obligations to Assignee and/or
the Lenders under the Guaranty; and
WHEREAS, to evidence and perfect the rights of Assignee as
grantee of a security interest that has attached in certain of
said assets as described below, Assignor has executed and
delivered to Assignee this Conditional Patent Assignment.
NOW THEREFORE, FOR GOOD AND VALUABLE CONSIDERATION, THE
RECEIPT OF WHICH IS HEREBY ACKNOWLEDGED, AND SUBJECT TO THE
CONDITIONS SET FORTH HEREIN, Assignor does hereby conditionally
assign, sell, transfer and grant unto Assignee all of Assignor's
right, title and interest in, to and under the following, whether
presently existing or hereafter arising or acquired:
<PAGE>
(i) each patent and each registration thereof, and each
patent registration application owned by Assignor, including,
without limitation, each such patent and patent registration
application set forth on SCHEDULE A, attached hereto and
incorporated herein by reference; and
(ii) all products and proceeds of the foregoing, including,
without limitation, any claim or causes of action of Assignor
against any third parties for past, present or future
infringement of any of the foregoing, with the right to sue and
recover the same in the Assignee's own name and for its own use
and behoove, including all rights corresponding thereto
throughout the world and all re-issues, divisions, continuations,
renewals, extensions and continuations-in-part thereof;
(all of the foregoing, individually and collectively, the
"Patents").
PROVIDED, HOWEVER, THAT ASSIGNOR'S RIGHTS IN THE PATENTS
SHALL CONTINUE UNTIL, AND ASSIGNEE SHALL HAVE NO OBLIGATIONS WITH
RESPECT TO THE PATENTS UNTIL, AND ASSIGNEE SHALL BE ENTITLED TO
EXERCISE ITS RIGHTS AND REMEDIES HEREUNDER IN AND WITH RESPECT TO
THE PATENTS ONLY UPON, SATISFACTION OF THE FOLLOWING CONDITIONS
SUBSEQUENT:
(a) The occurrence and continuation of an Event of Default
as defined in the Loan Agreement; or
(b) The exercise by Assignee of any or all of its rights or
remedies under the Security Agreement in respect of the Patents.
1. Assignor does hereby acknowledge, affirm and represent
that:
(i) the rights and remedies of Assignee with respect
to its interest in the Patents are more fully set forth in the
Security Agreement, the terms and provisions of which are
incorporated by reference herein as if fully set forth herein.
(ii) that nothing in this Conditional Patent Assignment
shall be in derogation of the rights and remedies of Assignee in
and to the Patents as set forth in the Security Agreement and as
shall be available at law or in equity.
(iii) SCHEDULE A contains a true and complete record
of (a) all patents in which Assignor has any interest and (b) all
applications pending for registration of patents in which
Assignor has any interest.
(iv) the Patents are subsisting and have not been
adjudged invalid or unenforceable, in whole or in part.
(v) each of the Patents is valid and enforceable.
2
<PAGE>
(vi) Assignor is the sole and exclusive owner of the
entire and unencumbered right, title and interest in and to each
of the Patents, free and clear of any Liens, including, without
limitation, licenses, shop rights and covenants by Assignor not
to sue third persons.
(vii) Assignor has the unqualified right to enter into
this Agreement and perform its terms.
2. Assignor covenants that, until all of the Obligations
shall have been satisfied in full, it will not enter into any
agreement (for example, a license agreement) which is
inconsistent with Assignor's obligations under this Assignment,
without the Assignee's prior written consent.
3. Assignor covenants that if, before the Obligations shall
have been satisfied in full, Assignor shall obtain rights to any
new patentable inventions or additional registered patents, or
additional patent applications or patent for any reissue,
division, continuation, renewal, extension, or continuation-in-
part of any Patent or any improvement on any Patent, or become
entitled to the benefit of any registration applications for
patents, the provisions of this Assignment shall automatically
apply thereto and Assignor shall give to the Assignee prompt
notice thereof in writing.
4. Assignor shall indemnify, defend and hold Assignee, its
affiliates and their respective directors, officers, employees
and agents ("Assignee's Indemnified Parties") harmless from and
against all damages, losses or expenses suffered or paid as a
result of any and all claims, demands, suits, causes of action,
proceedings, judgments and liabilities, including reasonable
attorneys' fees incurred in litigation or otherwise assessed,
incurred or sustained by or against Assignee's Indemnified
Parties or any of them with respect to or arising out of or in
any way connected with this Assignment.
5. The Assignee shall have the right but shall in no way be
obligated to bring suit in its name to enforce the Patents and
any license thereunder, in which event Assignor shall at the
request of the Assignee do any and all lawful acts and execute
any and all proper documents required by the Assignee in aid of
such enforcement and Assignor shall promptly, upon demand,
reimburse and indemnify the Assignee for all costs and expenses
incurred by the Assignee in the exercise of its rights under this
section.
6. Assignor authorizes the Assignee to modify this
Assignment by amending SCHEDULE A to include any future patents
or patent applications in which Assignor may acquire an interest.
7. At such time as Assignor shall completely and finally
satisfy all of the Obligations, the Assignee shall execute and
deliver to Assignor all deeds, assignments and other instruments
as may be necessary or proper to re-vest in Assignor full title
to the Patents, subject to any disposition thereof which may have
been made by the Assignee pursuant to the Security Agreement.
IN WITNESS WHEREOF, Assignor has caused this Conditional
Patent Assignment to be duly executed by its duly authorized
officer as of the date first set forth above.
3
<PAGE>
WELLS JAPAN KABUSHIKI
KAISHA
By: /S/ Tsutomu Kobayashi
--------------------------
Tsutomu Kobayashi
President
FLEET NATIONAL BANK
as Agent for itself and
the other Lenders
By: /S/ Thomas W. Davies
--------------------------
Thomas W. Davies
Senior Vice President
4
<EXHIBIT> EXHIBIT 10.10
CONDITIONAL TRADEMARK COLLATERAL ASSIGNMENT
THIS CONDITIONAL TRADEMARK COLLATERAL ASSIGNMENT dated as of
December 26, 1997, by and between PCD INC., a Massachusetts
corporation, with a principal place of business at 2 Technology
Drive, Centennial Park, Peabody, Massachusetts 01960-7977
("Assignor") and FLEET NATIONAL BANK, a national banking
association organized under the laws of the United States having
an office at One Federal Street, Boston, Massachusetts 02110
("Assignee"), as Agent for itself and each of the other Lenders
who are now or hereafter become parties to the hereinafter
defined Loan Agreement.
WHEREAS, Assignee and Assignor, as Agent for itself and each of
the other Lenders who are now or hereafter become parties to the Loan
Agreement (as hereinafter defined) have this day entered into a
certain Loan Agreement (as the same may be amended from time to time,
the "Loan Agreement") pursuant to which Assignee has agreed to make
certain loans to Assignor; and
WHEREAS, capitalized terms used herein and not otherwise
defined herein shall have the meanings set forth in the Loan
Agreement; and
WHEREAS, pursuant to the terms of a Security Agreement of
even date herewith by and between Assignor and Assignee (as
amended from time to time, the "Security Agreement"), Assignor
has concurrently granted to Assignee a security interest in all
of Assignor's assets to secure, INTER ALIA, the payment and
performance of the Obligations of Assignor to Assignee and/or the
Lenders under the Loan Agreement; and
WHEREAS, to evidence and perfect the rights of Assignee as
grantee of a security interest that has attached in certain of
said assets as described below, Assignor has executed and
delivered to Assignee this Conditional Trademark Collateral
Assignment.
NOW THEREFORE, FOR GOOD AND VALUABLE CONSIDERATION, THE
RECEIPT OF WHICH IS HEREBY ACKNOWLEDGED, AND SUBJECT TO THE
CONDITIONS SET FORTH HEREIN, Assignor does hereby conditionally
collaterally assign and grant unto Assignee all of Assignor's
right, title and interest in, to and under the following, whether
presently existing or hereafter arising or acquired:
(i) each trademark and servicemark (whether registered or
unregistered), and each registration thereof, and each trademark
and servicemark registration application (whether federal or
state, and whether foreign or domestic) owned by Assignor,
including, without limitation, each such trademark, servicemark
or trademark or servicemark registration application set forth on
SCHEDULE A, attached hereto and incorporated herein by reference;
(ii) all products and proceeds of the foregoing, including,
without limitation, any claim or causes of action of Assignor
against any third parties for past, present or future
infringement of any of the foregoing, with the right to sue and
recover the same in the Assignee's own name and for its own use
and behoove; and
<PAGE>
(iii) the goodwill of Assignor's business symbolized by
each of the foregoing;
(all of the foregoing, individually and collectively, the
"Trademarks").
PROVIDED, HOWEVER, THAT ASSIGNOR'S RIGHTS IN THE TRADEMARKS
SHALL CONTINUE UNTIL, AND ASSIGNEE SHALL HAVE NO OBLIGATIONS OR
RIGHTS WITH RESPECT TO THE TRADEMARKS UNTIL, AND ASSIGNEE SHALL
BE ENTITLED TO EXERCISE ITS RIGHTS AND REMEDIES HEREUNDER IN AND
WITH RESPECT TO THE TRADEMARKS ONLY UPON, SATISFACTION OF THE
FOLLOWING CONDITIONS SUBSEQUENT:
(a) The occurrence and continuation of an Event of Default
as defined in the Loan Agreement; or
(b) The exercise by Assignee of any or all of its rights or
remedies under the Security Agreement in respect of the
Trademarks.
1. Assignor does hereby acknowledge, affirm and represent
that:
(i) the rights and remedies of Assignee with respect
to its interest in the Trademarks are more fully set forth in the
Security Agreement, the terms and provisions of which are
incorporated by reference herein as if fully set forth herein.
(ii) that nothing in this Conditional Trademark
Collateral Assignment shall be in derogation of the rights and
remedies of Assignee in and to the Trademarks as set forth in the
Security Agreement and as shall be available at law or in equity.
(iii) SCHEDULE A contains a true and complete record
of (a) all registered (state, federal and international)
trademarks and servicemarks in which Assignor has any interest
and (b) all applications pending in the U.S. Patent and Trademark
Office or other like office for registration of trademarks and
servicemarks in which Assignor has any interest.
(iv) the Trademarks are subsisting and have not been
adjudged invalid or unenforceable, in whole or in part by a court
of competent jurisdiction.
(v) each of the registered Trademarks is valid and
enforceable.
(vi) Assignor is the sole and exclusive owner of the
entire and unencumbered right, title and interest in and to each
of the registered Trademarks, free and clear of any Liens,
including, without limitation, licenses and covenants by Assignor
not to sue third persons, except as permitted under the Loan
Agreement.
2
<PAGE>
2. Assignor covenants that, until all of the Obligations
shall have been satisfied in full, it will not enter into any
agreement (for example, a license agreement) which is
inconsistent with Assignor's obligations under this Assignment,
without the Assignee's prior written consent.
3. Assignor covenants that if, before the Obligations shall
have been satisfied in full, Assignor shall obtain rights to any
additional registered trademarks or servicemarks, or become
entitled to the benefit of any registration applications for
trademarks or servicemarks, the provisions of this Assignment
shall automatically apply thereto and Assignor shall give to the
Assignee prompt notice thereof in writing.
4. Assignor shall indemnify, defend and hold Assignee, its
affiliates and their respective directors, officers, employees
and agents ("Assignee's Indemnified Parties") harmless from and
against all damages, losses or expenses suffered or paid as a
result of any and all claims, demands, suits, causes of action,
proceedings, judgments and liabilities, including reasonable
attorneys' fees incurred in litigation or otherwise assessed,
incurred or sustained by or against Assignee's Indemnified
Parties or any of them with respect to or arising out of or in
any way connected with this Assignment.
5. Assignor authorizes the Assignee to modify this
Assignment by amending SCHEDULE A to include any future
registered trademarks, servicemarks, or trademark or servicemark
applications in which Assignor may acquire an interest.
6. At such time as Assignor shall completely and finally
satisfy all of the Obligations, the Assignee shall execute and
deliver to Assignor all deeds, assignments and other instruments
as may be necessary or proper to re-vest in Assignor full title
to the Trademarks, subject to any disposition thereof which may
have been made by the Assignee pursuant to the Security
Agreement.
[SIGNATURES APPEAR ON NEXT PAGE]
3
<PAGE>
IN WITNESS WHEREOF, Assignor has caused this Conditional
Trademark Collateral Assignment to be duly executed by its duly
authorized officer as of the date first set forth above.
PCD INC.
By: /S/ John L. Dwight, Jr.
--------------------------
John L. Dwight, Jr.
Chairman of the Board
FLEET NATIONAL BANK
as Agent for itself and
the other Lenders
By: /S/ Thomas W. Davies
--------------------------
Thomas W. Davies
Senior Vice President
<EXHIBIT> EXHIBIT 10.11
CONDITIONAL TRADEMARK COLLATERAL ASSIGNMENT
THIS CONDITIONAL TRADEMARK COLLATERAL ASSIGNMENT dated as of
December 26, 1997, by and between WELLS ELECTRONICS, INC., an
Indiana corporation, with a principal place of business at 52940
Olive Road, South Bend, Indiana ("Assignor") and FLEET NATIONAL
BANK, a national banking association organized under the laws of
the United States having an office at One Federal Street, Boston,
Massachusetts 02110 ("Assignee"), as Agent for itself and each
of the other Lenders who are now or hereafter become parties to
the hereinafter defined Loan Agreement.
WHEREAS, pursuant to the terms of that certain Loan
Agreement dated as of the date hereof between PCD Inc., a
Massachusetts corporation (the "Principal Debtor"), Assignee
and the Lenders (as the same may be amended from time to time,
the "Loan Agreement"), Assignee and the Lenders have agreed to
make loans to Principal Debtor in an aggregate principal amount
not to exceed $90,000,000.00, as evidenced by that certain Term
Note A, Term Note B and Revolving Credit Note of Principal Debtor
dated as of the date hereof; and
WHEREAS, capitalized terms used herein and not otherwise
defined herein shall have the meanings set forth in the Loan
Agreement; and
WHEREAS, Principal Debtor owns 100% of the issued and
outstanding capital stock of Assignor; and
WHEREAS, Assignor has, as of the date hereof, executed and
delivered to Assignee that certain Unlimited Guaranty pursuant to
which Assignor has guaranteed payment and performance of all of
the Obligations of Principal Debtor (as such term is defined in
the Loan Agreement) (the "Guaranty"); and
WHEREAS, pursuant to the terms of a Security Agreement of
even date herewith by and between Assignor and Assignee (as
amended from time to time, the "Security Agreement"), Assignor
has concurrently granted to Assignee a security interest in all
of Assignor's assets to secure its obligations to Assignee and/or
the Lenders under the Guaranty; and
WHEREAS, to evidence and perfect the rights of Assignee as
grantee of a security interest that has attached in certain of
said assets as described below, Assignor has executed and
delivered to Assignee this Conditional Trademark Collateral
Assignment.
NOW THEREFORE, FOR GOOD AND VALUABLE CONSIDERATION, THE
RECEIPT OF WHICH IS HEREBY ACKNOWLEDGED, AND SUBJECT TO THE
CONDITIONS SET FORTH HEREIN, Assignor does hereby conditionally
collaterally assign and grant unto Assignee all of Assignor's
right, title and interest in, to and under the following, whether
presently existing or hereafter arising or acquired:
<PAGE>
(i) each trademark and servicemark (whether registered or
unregistered), and each registration thereof, and each trademark
and servicemark registration application (whether federal or
state, and whether foreign or domestic) owned by Assignor,
including, without limitation, each such trademark, servicemark
or trademark or servicemark registration application set forth on
SCHEDULE A, attached hereto and incorporated herein by reference;
(ii) all products and proceeds of the foregoing, including,
without limitation, any claim or causes of action of Assignor
against any third parties for past, present or future
infringement of any of the foregoing, with the right to sue and
recover the same in the Assignee's own name and for its own use
and behoove; and
(iii) the goodwill of Assignor's business symbolized by
each of the foregoing;
(all of the foregoing, individually and collectively, the
"Trademarks").
PROVIDED, HOWEVER, THAT ASSIGNOR'S RIGHTS IN THE TRADEMARKS
SHALL CONTINUE UNTIL, AND ASSIGNEE SHALL HAVE NO OBLIGATIONS OR
RIGHTS WITH RESPECT TO THE TRADEMARKS UNTIL, AND ASSIGNEE SHALL
BE ENTITLED TO EXERCISE ITS RIGHTS AND REMEDIES HEREUNDER IN AND
WITH RESPECT TO THE TRADEMARKS ONLY UPON, SATISFACTION OF THE
FOLLOWING CONDITIONS SUBSEQUENT:
(a) The occurrence and continuation of an Event of Default
as defined in the Loan Agreement; or
(b) The exercise by Assignee of any or all of its rights or
remedies under the Security Agreement in respect of the
Trademarks.
1. Assignor does hereby acknowledge, affirm and represent
that:
(i) the rights and remedies of Assignee with respect
to its interest in the Trademarks are more fully set forth in the
Security Agreement, the terms and provisions of which are
incorporated by reference herein as if fully set forth herein.
(ii) that nothing in this Conditional Trademark
Collateral Assignment shall be in derogation of the rights and
remedies of Assignee in and to the Trademarks as set forth in the
Security Agreement and as shall be available at law or in equity.
(iii) SCHEDULE A contains a true and complete record
of (a) all registered (state, federal and international)
trademarks and servicemarks in which Assignor has any interest
and (b) all applications pending in the U.S. Patent and Trademark
Office or other like office for registration of trademarks and
servicemarks in which Assignor has any interest.
(iv) the Trademarks are subsisting and have not been
adjudged invalid or unenforceable, in whole or in part by a court
of competent jurisdiction.
2
<PAGE>
(v) each of the registered Trademarks is valid and
enforceable.
(vi) Assignor is the sole and exclusive owner of the
entire and unencumbered right, title and interest in and to each
of the registered Trademarks, free and clear of any Liens,
including, without limitation, licenses and covenants by Assignor
not to sue third persons, except as permitted under the Loan
Agreement.
2. Assignor covenants that, until all of the Obligations
shall have been satisfied in full, it will not enter into any
agreement (for example, a license agreement) which is
inconsistent with Assignor's obligations under this Assignment,
without the Assignee's prior written consent.
3. Assignor covenants that if, before the Obligations shall
have been satisfied in full, Assignor shall obtain rights to any
additional registered trademarks or servicemarks, or become
entitled to the benefit of any registration applications for
trademarks or servicemarks, the provisions of this Assignment
shall automatically apply thereto and Assignor shall give to the
Assignee prompt notice thereof in writing.
4. Assignor shall indemnify, defend and hold Assignee, its
affiliates and their respective directors, officers, employees
and agents ("Assignee's Indemnified Parties") harmless from and
against all damages, losses or expenses suffered or paid as a
result of any and all claims, demands, suits, causes of action,
proceedings, judgments and liabilities, including reasonable
attorneys' fees incurred in litigation or otherwise assessed,
incurred or sustained by or against Assignee's Indemnified
Parties or any of them with respect to or arising out of or in
any way connected with this Assignment.
5. Assignor authorizes the Assignee to modify this
Assignment by amending SCHEDULE A to include any future
registered trademarks, servicemarks, or trademark or servicemark
applications in which Assignor may acquire an interest.
6. At such time as Assignor shall completely and finally
satisfy all of the Obligations, the Assignee shall execute and
deliver to Assignor all deeds, assignments and other instruments
as may be necessary or proper to re-vest in Assignor full title
to the Trademarks, subject to any disposition thereof which may
have been made by the Assignee pursuant to the Security
Agreement.
[SIGNATURES APPEAR ON NEXT PAGE]
3
<PAGE>
IN WITNESS WHEREOF, Assignor has caused this Conditional
Trademark Collateral Assignment to be duly executed by its duly
authorized officer as of the date first set forth above.
WELLS ELECTRONICS, INC.
By: /S/ Mary L. Mandarino
--------------------------
Mary L. Mandarino
Treasurer
FLEET NATIONAL BANK
as Agent for itself and
the other Lenders
By: /S/ Thomas W. Davies
--------------------------
Thomas W. Davies
Senior Vice President
4
<EXHIBIT> EXHIBIT 10.12
COLLATERAL ASSIGNMENT OF
CONTRACTS, LEASES, LICENSES AND PERMITS
THIS COLLATERAL ASSIGNMENT OF CONTRACTS, LEASES, LICENSES AND
PERMITS made as of December 26, 1997, by and between PCD INC., a
Massachusetts corporation, with a principal place of business at 2
Technology Drive, Centennial Park, Peabody, Massachusetts 01960-
7977 ("Assignor") and FLEET NATIONAL BANK, a national banking
association organized under the laws of the United States having
an office at One Federal Street, Boston, Massachusetts 02110
("Assignee"), as Agent for itself and each of the other Lenders
who are now or hereafter become parties to the hereinafter defined
Loan Agreement.
WITNESSETH:
1. DEFINITIONS. Each reference in this Assignment to the
following capitalized terms shall be deemed to have the following
meanings and all other references to a capitalized term shall have
the meaning assigned thereto in the Loan Agreement.
(a) CONTRACTS, LEASES, LICENSES AND PERMITS: All
contracts, leases, licenses and permits of Assignor together with
all extensions, renewals, replacements and substitutions therefor.
(b) LOAN AGREEMENT: That certain Loan Agreement of
even date herewith, by and among Assignor, Assignee and each of
the other Lenders who are now or hereafter become parties to the
Loan Agreement (as the same may be amended from time to time, the
"Loan Agreement") pursuant to which the Lenders have agreed,
subject to the terms and conditions thereof, to make loans and
credit facilities available to Assignor as more fully described in
the Loan Agreement and Assignor has agreed, INTER ALIA, to execute
and deliver this Assignment as partial security for such loans.
(c) OBLIGATIONS: Payment and performance of all of the
Obligations of Assignor under the Loan Agreement and under the
Notes, (ii) the performance of all of the obligations of Assignor
to Assignee contained herein, and (iii) the payment of all other
future advances and other obligations of Assignor to Assignee
and/or the other Lenders, including, without limitation, any
future loans and advances made to Assignor by Assignee and/or the
other Lenders prior to, during or following any bankruptcy,
reorganization or insolvency of Assignor (a "Reorganization"), any
interest accruing under the Notes and/or the Loan Agreement after
the commencement of a Reorganization, and any and all other
indebtedness, liabilities and obligations of Assignor to Assignee
and/or the other Lenders of every kind and description, direct,
indirect or contingent, now or hereafter existing, due or to
become due.
NOW, THEREFORE, in consideration of the Loan Agreement, the
Loans pursuant thereto and other valuable consideration, the
receipt of which is hereby acknowledged and as further security
for payment and performance of the Obligations, Assignor hereby
grants, conveys, transfers, assigns and sets over to Assignee for
the benefit of Assignee all of Assignor's rights, title and
<PAGE>
benefits (but none of its obligations or liabilities) under, in
and to each Contract, Lease, License and Permit which may be so
granted, conveyed, transferred, assigned or set over without a
violation of the terms thereof.
TO HAVE AND TO HOLD the same with all of the rights,
privileges and appurtenances thereunto belonging unto Assignee
(but none of its obligations or liabilities), its successors and
assigns until such time as the Obligations have been paid and
satisfied in full for the purpose of further and collaterally
securing same.
Assignor and Assignee agree that the following terms and
conditions shall govern this Assignment:
2. ASSIGNOR'S REPRESENTATIONS AND COVENANTS. Assignor, for
itself and for its successors and assigns, covenants and warrants
as follows:
(a) that each existing Contract, Lease, License and
Permit is in full force and effect and that there is, to the
knowledge of Assignor, no default on the part of any party thereto
or grantor thereof;
(b) that Assignor is the sole owner of the Contracts,
Leases, Licenses and Permits; that each Contract, Lease, License
and Permit is free from all Liens other than those created under
the Security Documents and those permitted under the Loan
Agreement; that Assignor has full power and authority to assign
each such Contract, Lease, License Permit in accordance herewith;
that Assignor will warrant and defend each such Contract, Lease,
License and Permit to Assignee against the lawful claims and
demands of all persons, and that Assignor has not sold, assigned,
transferred, mortgaged or pledged any such Contract, Lease,
License or Permit or any interest therein, to any person, firm or
corporation other than Assignee;
(c) that Assignor will not assign, pledge or otherwise
encumber any such Contract, Lease, License or Permit without the
prior written consent of Assignee in each instance and then only
subject to and in accordance with any conditions set forth in such
written consent;
(d) that Assignor will not, without the prior written
consent of Assignee in each instance, directly or indirectly
amend, modify, cancel, terminate or permit any surrender of any
Contract, Lease, License or Permit;
(e) that Assignor will not in any way knowingly violate
or permit a violation of Assignor's license granted in SECTION 3
hereof;
(f) that Assignor will fulfill or cause to be fulfilled
in all material respects all of the material terms, covenants and
conditions on Assignor's part to be fulfilled under each Contract,
Lease, License or Permit;
(g) that Assignor will, upon written request by
Assignee, while this Assignment remains in force and effect,
execute and deliver all such powers of attorney, instruments of
2
<PAGE>
pledge or assignment, and such other instruments or documents as
Assignee may reasonably request at any time for the purpose of
further securing Assignee's rights hereunder;
(h) that Assignor will use its best efforts to provide
Assignee with written notice of any extension, renewal, amendment
or modification of any Contract, Lease, License or Permit within
thirty (30) days thereof, and that Assignor will similarly furnish
to Assignee, on demand, true copies of all agreements or letters
effecting same.
3. LICENSE UNTIL DEFAULT. So long as no Event of Default is
continuing, Assignor shall have a license to enjoy each Contract,
Lease, License and Permit pursuant to the terms thereof and, to
exercise Assignor's rights thereunder.
4. ASSIGNEE'S RIGHTS IN EVENT OF DEFAULT.
4.1 Immediately upon the occurrence of an Event of
Default, the license to Assignor under SECTION 3 hereof shall, at
the option of Assignee, terminate and in such event Assignee is
hereby expressly and irrevocably authorized to assume any or all
of Assignor's rights (but none of its obligations or liabilities)
with respect to each Contract, Lease, License and Permit by notice
in accordance with SECTION 10 hereof to Assignor without further
authorization, notice or demand and without the commencement of
any action to foreclose any of the Security Documents or to
exercise its power of sale and other remedies thereunder.
4.2 Assignor hereby constitutes and appoints Assignee
irrevocably, and with full power of substitution and revocation,
the true and lawful attorney, for and in the name, place and stead
of Assignor, to exercise any and all rights and remedies of
Assignor under each Contract, Lease, License and Permit and to
perform any of the actions and rights provided by any of the
Security Documents upon the occurrence of an Event of Default.
Assignor hereby grants unto said attorney full power and authority
following the occurrence of an Event of Default to do and perform
each and every act whatsoever requisite to be done with respect to
any Contract, Lease, License or Permit, as fully to all intents
and purposes as Assignor could do if personally present, hereby
ratifying and confirming all that said attorney shall lawfully and
reasonably do or cause to be done by virtue hereof; PROVIDED,
HOWEVER, that any acts or omissions by Assignee after an Event of
Default shall be at Assignee's discretion and shall not be or
become the basis for any liability of Assignee to any Person.
4.3 Acceptance of this Assignment shall not constitute
a satisfaction of all or any part of the Obligations except to the
extent of funds actually received and applied by Assignee on
account of the same.
4.4 The rights and powers of Assignee hereunder shall
continue and remain in full force and effect until all
Obligations, including any deficiency resulting from exercise of
Assignee's remedies under any of the Security Documents, are paid
or satisfied in full. Assignee shall not be liable to Assignor or
anyone claiming under or through Assignor by reason of any act or
omission by Assignee hereunder.
3
<PAGE>
4.5 An Event of Default shall be cured only when
Assignor shall have paid and satisfied in full all Obligations and
other sums owing and past due and shall have performed all other
terms, covenants and conditions, the failure of performance of
which terminated the license herein above mentioned, or shall have
received a written waiver from Assignee of such Event of Default.
5. INDEMNIFICATION.
5.1 Assignor agrees to indemnify and hold harmless
Assignee from and against any and all liability, loss, damage and
expense, including reasonable attorneys' fees which Assignee may
or shall incur under or in connection with any Contract, Lease,
License or Permit or by reason of any of the Obligations or
actions taken or omitted by Assignee under any of the Obligations,
including, without limitation, any action or omission which
Assignee in its discretion may take to protect its interest in any
Contract, Lease, License or Permit and from and against any and
all claims and demands whatsoever which may be asserted against
Assignor and/or Assignee by reason of any of the terms and
conditions of any Contract, Lease, License or Permit.
5.2 If Assignee incurs any such actual liability, loss,
damage or expense, the amount thereof, plus interest thereon from
and after demand by Assignee for payment thereof by Assignor at
the rate equal to the lower of (a) 2% in excess of Effective
Prime, or (b) the highest rate allowable by law, shall be paid by
Assignor to Assignee within three (3) business days after demand
therefor.
5.3 Nothing contained herein shall operate or be
construed to obligate Assignee to perform any of the terms,
covenants or conditions contained in any Contract, Lease, License
or Permit, or to take any action to collect any payments or to
impose any obligation on Assignee relating to any Contract, Lease,
License or Permit.
6. EXERCISE OF REMEDIES. The rights and remedies of
Assignee under this Assignment are cumulative and in addition to
any other rights and remedies which Assignee shall have under or
as a result of any other of the Obligations and may be exercised
as often as Assignee deems such exercise to be desirable. Failure
of Assignee to avail itself of any of the terms, covenants and
conditions of this Assignment for any period of time, or at any
time or times, shall not constitute a waiver of any of its rights
hereunder.
7. ASSIGNMENT BY ASSIGNEE. Assignee shall have the right to
assign Assignor's rights, title and interest in any Contract,
Lease, License or Permit, subject to any transfer restrictions
contained therein, to any subsequent agent with respect to the
Loan Agreement and the Obligations thereunder.
8. TERMINATION. Upon final payment and satisfaction in full
of the Obligations, as evidenced by recorded satisfactions or
releases of the recorded Security Documents or otherwise as
satisfactory to the Assignee, and of any sums which may be payable
hereunder, or under any present or future agreement between
Assignor Assignee or each of the Lenders, this Assignment shall be
of no further force and effect and, in that event, upon Assignor's
request and expense, Assignee agrees to execute and deliver to
Assignor instruments evidencing the termination of this
Assignment.
4
<PAGE>
9. APPROVALS. Notwithstanding anything to the contrary
contained herein, Assignee will not take any action pursuant to
this Assignment which would constitute or result in any assignment
of any Contract, Lease, License or Permit if such assignment would
require, pursuant to the terms of such Contract, Lease, License or
Permit the prior approval of the other party to such Contract,
Lease, License or Permit, without first obtaining such approval.
During the continuance of an Event of Default, Assignor agrees to
take any action which Assignee may reasonably request in order to
obtain and enjoy the full rights and benefits granted to Assignee
and the Lenders by this Assignment and each other agreement,
instrument and document delivered to Assignee or any of the
Lenders in connection herewith or in any document evidencing or
securing the Collateral, including specifically, at Assignee's own
cost and expense, the use of its best efforts to assist in
obtaining approval of the other party to such Contract, Lease,
License or Permit for any action or transaction contemplated by
this Assignment which is then required by such Contract, Lease,
License or Permit.
10. NOTICES. All notices, requests, demands and other
communications provided for hereunder shall be in writing and
mailed or telefaxed or delivered to the applicable party in the
manner set forth in SECTION 9.6 of the Loan Agreement.
11. MISCELLANEOUS.
11.1 This Assignment, except as set forth in SECTION
11.2, below, shall be construed and enforced in accordance with
and governed by the laws of The Commonwealth of Massachusetts.
11.2 Notwithstanding the foregoing choice of law
provision, the procedures governing the enforcement by Assignee of
its foreclosure and other remedies against Assignor under any of
the Contracts, Leases, Licenses and Permits may, at Assignee's
election, be governed by the laws of the state in which the
Contracts, Leases, Licenses and Permits in question are located.
11.3 The Assignor irrevocably:
(i) agrees that any suit, action, or other legal
proceeding arising out of this Assignment may be brought in the
courts of record of The Commonwealth of Massachusetts or any other
State(s) in which the Contracts, Leases, Licenses and Permits are
located or the courts of the United States located in The
Commonwealth of Massachusetts or any other State(s) in which any
of the Contracts, Leases, Licenses and Permits are located.
(ii) consents to the jurisdiction of each such court in
any such suit, action or proceeding; and
(iii) waives any objection which it may have to the
laying of venue of such suit, action or proceeding in any of such
courts.
For such time as the Obligations shall be unpaid in
whole or in part, Assignor irrevocably designates the registered
agent or agent for service of process of Assignor as reflected in
5
<PAGE>
the records of the Secretary of State of The Commonwealth of
Massachusetts as its registered agent, and in the absence thereof,
the Secretary of State of The Commonwealth of Massachusetts, as
its agent to accept and acknowledge on its behalf service of any
and all process in any such suit, action or proceeding brought in
any such court and agrees and consents that any such service of
process upon such agent and written notice of such service to
Assignor by registered or certified mail shall be taken and held
to be valid personal service upon Assignor regardless of where
Assignor shall then be doing business and that any such service of
process shall be of the same force and validity as if service were
made upon it according to the laws governing the validity and
requirements of such service in such state and waives any claim of
lack of personal seizure or other error by reason of any such
service. Any notice, process, pleadings or other papers served
upon the aforesaid designated agent shall, within three (3)
Business Days after such service, be sent by the method provided
for in SECTION 9.6 of the Loan Agreement to Assignor at its
address set forth in the Loan Agreement. EACH OF THE PARTIES
HERETO HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY IN THE EVENT OF
ANY DISPUTE BETWEEN ASSIGNOR AND ASSIGNEE WITH RESPECT TO THE
FINANCING DOCUMENTS AND/OR ANY OF THE TRANSACTIONS CONTEMPLATED
THEREBY.
11.3 No amendment, cancellation or discharge of this
Assignment shall be valid unless Assignee shall have consented
thereto in writing.
11.4 In case any one or more of the provisions
contained in this document shall for any reason be held to be
invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not effect any other
provision hereof, and this document shall be construed as if such
invalid, illegal or unenforceable provision had never been
included.
11.5 The terms, covenants, and conditions contained
herein shall inure to the benefit of and shall be binding upon
Assignee and Assignor and their respective successors and assigns.
11.6 The relative rights of Assignee and the Lenders
are set forth in the Loan Agreement.
6
<PAGE>
IN WITNESS WHEREOF, Assignor and Assignee, jointly and
severally, have caused this Assignment to be duly executed on
their behalf by their respective duly authorized officers on the
date first set forth above.
PCD INC.
By: /S/ John L. Dwight, Jr.
------------------------
John L. Dwight, Jr.
Chairman of the Board
FLEET NATIONAL BANK,
as Agent for itself and
the other Lenders
By: /S/ Thomas W. Davies
------------------------
Thomas W. Davies
Senior Vice President
7
<EXHIBIT> EXHIBIT 10.13
COLLATERAL ASSIGNMENT OF
CONTRACTS, LEASES, LICENSES AND PERMITS
THIS COLLATERAL ASSIGNMENT OF CONTRACTS, LEASES, LICENSES AND
PERMITS made as of December 26, 1997, by and between WELLS
ELECTRONICS, INC., an Indiana corporation having its principal
place of business at 52940 Olive Road, South Bend, Indiana
("Assignor") and FLEET NATIONAL BANK, a national banking
association organized under the laws of the United States having
an office at One Federal Street, Boston, Massachusetts 02110
("Assignee"), as Agent for itself and each of the other Lenders
who are now or hereafter become parties to the hereinafter defined
Loan Agreement.
WITNESSETH:
1. DEFINITIONS. Each reference in this Assignment to the
following capitalized terms shall be deemed to have the following
meanings and all other references to a capitalized term shall have
the meaning assigned thereto in the Loan Agreement.
(a) CONTRACTS, LEASES, LICENSES AND PERMITS: All
contracts, leases, licenses and permits of Assignor together with
all extensions, renewals, replacements and substitutions therefor.
(b) LOAN AGREEMENT: That certain Loan Agreement dated
as of the date hereof between PCD Inc., a Massachusetts
corporation (the "Principal Debtor"), Assignee and the Lenders
(as the same may be amended from time to time, the "Loan
Agreement"), pursuant to which Assignee and the Lenders have
agreed to make loans to Principal Debtor in an aggregate principal
amount not to exceed $90,000,000.00, as evidenced by that certain
Term Note A, Term Note B and Revolving Credit Note of Principal
Debtor dated as of the date hereof.
(c) GUARANTY: That certain Unlimited Guaranty of
Assignor dated as of the date hereof in favor of Assignee pursuant
to which Assignor has guaranteed the payment and performance of
all of the Obligations of Principal Debtor.
(d) SECURITY AGREEMENT: That certain Security
Agreement dated as of the date hereof by and between Assignor and
Assignee, Assignor has concurrently granted to Assignee a security
interest in all of Assignor's assets to secure its obligations to
Assignee and/or the Lenders under the Guaranty.
(e) OBLIGATIONS: Payment and performance of all of the
Obligations of Principal Debtor under the Loan Agreement and under
the Notes, (ii) the performance of all of the obligations of
Assignor to Assignee contained herein, and (iii) the payment of
all other future advances and other obligations of Principal
Debtor or Assignor to Assignee and/or the other Lenders,
including, without limitation, any future loans and advances made
to Principal Debtor or Assignor by Assignee and/or the other
Lenders prior to, during or following any bankruptcy,
reorganization or insolvency of Principal Debtor or Assignor (a
"Reorganization"), any interest accruing under the Notes and/or
<PAGE>
the Loan Agreement after the commencement of a Reorganization, and
any and all other indebtedness, liabilities and obligations of
Principal Debtor or Assignor to Assignee and/or the other Lenders
of every kind and description, direct, indirect or contingent, now
or hereafter existing, due or to become due.
NOW, THEREFORE, in consideration of the Loan Agreement, the
Loans pursuant thereto and other valuable consideration, the
receipt of which is hereby acknowledged and as further security
for payment and performance of the Obligations, Assignor hereby
grants, conveys, transfers, assigns and sets over to Assignee for
the benefit of Assignee all of Assignor's rights, title and
benefits (but none of its obligations or liabilities) under, in
and to each Contract, Lease, License and Permit which may be so
granted, conveyed, transferred, assigned or set over without a
violation of the terms thereof.
TO HAVE AND TO HOLD the same with all of the rights,
privileges and appurtenances thereunto belonging unto Assignee
(but none of its obligations or liabilities), its successors and
assigns until such time as the Obligations have been paid and
satisfied in full for the purpose of further and collaterally
securing same.
Assignor and Assignee agree that the following terms and
conditions shall govern this Assignment:
2. ASSIGNOR'S REPRESENTATIONS AND COVENANTS. Assignor, for
itself and for its successors and assigns, covenants and warrants
as follows:
(a) that each existing Contract, Lease, License and
Permit is in full force and effect and that there is, to the
knowledge of Assignor, no default on the part of any party thereto
or grantor thereof;
(b) that Assignor is the sole owner of the Contracts,
Leases, Licenses and Permits; that each Contract, Lease, License
and Permit is free from all Liens other than those created under
the Security Documents and those permitted under the Loan
Agreement; that Assignor has full power and authority to assign
each such Contract, Lease, License Permit in accordance herewith;
that Assignor will warrant and defend each such Contract, Lease,
License and Permit to Assignee against the lawful claims and
demands of all persons, and that Assignor has not sold, assigned,
transferred, mortgaged or pledged any such Contract, Lease,
License or Permit or any interest therein, to any person, firm or
corporation other than Assignee;
(c) that Assignor will not assign, pledge or otherwise
encumber any such Contract, Lease, License or Permit without the
prior written consent of Assignee in each instance and then only
subject to and in accordance with any conditions set forth in such
written consent;
(d) that Assignor will not, without the prior written
consent of Assignee in each instance, directly or indirectly
amend, modify, cancel, terminate or permit any surrender of any
Contract, Lease, License or Permit;
2
<PAGE>
(e) that Assignor will not in any way knowingly violate
or permit a violation of Assignor's license granted in SECTION 3
hereof;
(f) that Assignor will fulfill or cause to be fulfilled
in all material respects all of the material terms, covenants and
conditions on Assignor's part to be fulfilled under each Contract,
Lease, License or Permit;
(g) that Assignor will, upon written request by
Assignee, while this Assignment remains in force and effect,
execute and deliver all such powers of attorney, instruments of
pledge or assignment, and such other instruments or documents as
Assignee may reasonably request at any time for the purpose of
further securing Assignee's rights hereunder;
(h) that Assignor will use its best efforts to provide
Assignee with written notice of any extension, renewal, amendment
or modification of any Contract, Lease, License or Permit within
thirty (30) days thereof, and that Assignor will similarly furnish
to Assignee, on demand, true copies of all agreements or letters
effecting same.
3. LICENSE UNTIL DEFAULT. So long as no Event of Default is
continuing, Assignor shall have a license to enjoy each Contract,
Lease, License and Permit pursuant to the terms thereof and, to
exercise Assignor's rights thereunder.
4. ASSIGNEE'S RIGHTS IN EVENT OF DEFAULT.
4.1 Immediately upon the occurrence of an Event of
Default, the license to Assignor under SECTION 3 hereof shall, at
the option of Assignee, terminate and in such event Assignee is
hereby expressly and irrevocably authorized to assume any or all
of Assignor's rights (but none of its obligations or liabilities)
with respect to each Contract, Lease, License and Permit by notice
in accordance with SECTION 10 hereof to Assignor without further
authorization, notice or demand and without the commencement of
any action to foreclose any of the Security Documents or to
exercise its power of sale and other remedies thereunder.
4.2 Assignor hereby constitutes and appoints Assignee
irrevocably, and with full power of substitution and revocation,
the true and lawful attorney, for and in the name, place and stead
of Assignor, to exercise any and all rights and remedies of
Assignor under each Contract, Lease, License and Permit and to
perform any of the actions and rights provided by any of the
Security Documents upon the occurrence of an Event of Default.
Assignor hereby grants unto said attorney full power and authority
following the occurrence of an Event of Default to do and perform
each and every act whatsoever requisite to be done with respect to
any Contract, Lease, License or Permit, as fully to all intents
and purposes as Assignor could do if personally present, hereby
ratifying and confirming all that said attorney shall lawfully and
reasonably do or cause to be done by virtue hereof; PROVIDED,
HOWEVER, that any acts or omissions by Assignee after an Event of
Default shall be at Assignee's discretion and shall not be or
become the basis for any liability of Assignee to any Person.
3
<PAGE>
4.3 Acceptance of this Assignment shall not constitute
a satisfaction of all or any part of the Obligations except to the
extent of funds actually received and applied by Assignee on
account of the same.
4.4 The rights and powers of Assignee hereunder shall
continue and remain in full force and effect until all
Obligations, including any deficiency resulting from exercise of
Assignee's remedies under any of the Security Documents, are paid
or satisfied in full. Assignee shall not be liable to Assignor or
anyone claiming under or through Assignor by reason of any act or
omission by Assignee hereunder.
4.5 An Event of Default shall be cured only when
Assignor shall have paid and satisfied in full all Obligations and
other sums owing and past due and shall have performed all other
terms, covenants and conditions, the failure of performance of
which terminated the license herein above mentioned, or shall have
received a written waiver from Assignee of such Event of Default.
5. INDEMNIFICATION.
5.1 Assignor agrees to indemnify and hold harmless
Assignee from and against any and all liability, loss, damage and
expense, including reasonable attorneys' fees which Assignee may
or shall incur under or in connection with any Contract, Lease,
License or Permit or by reason of any of the Obligations or
actions taken or omitted by Assignee under any of the Obligations,
including, without limitation, any action or omission which
Assignee in its discretion may take to protect its interest in any
Contract, Lease, License or Permit and from and against any and
all claims and demands whatsoever which may be asserted against
Assignor and/or Assignee by reason of any of the terms and
conditions of any Contract, Lease, License or Permit.
5.2 If Assignee incurs any such actual liability, loss,
damage or expense, the amount thereof, plus interest thereon from
and after demand by Assignee for payment thereof by Assignor at
the rate equal to the lower of (a) 2% in excess of Effective
Prime, or (b) the highest rate allowable by law, shall be paid by
Assignor to Assignee within three (3) business days after demand
therefor.
5.3 Nothing contained herein shall operate or be
construed to obligate Assignee to perform any of the terms,
covenants or conditions contained in any Contract, Lease, License
or Permit, or to take any action to collect any payments or to
impose any obligation on Assignee relating to any Contract, Lease,
License or Permit.
6. EXERCISE OF REMEDIES. The rights and remedies of
Assignee under this Assignment are cumulative and in addition to
any other rights and remedies which Assignee shall have under or
as a result of any other of the Obligations and may be exercised
as often as Assignee deems such exercise to be desirable. Failure
of Assignee to avail itself of any of the terms, covenants and
conditions of this Assignment for any period of time, or at any
time or times, shall not constitute a waiver of any of its rights
hereunder.
4
<PAGE>
7. ASSIGNMENT BY ASSIGNEE. Assignee shall have the right to
assign Assignor's rights, title and interest in any Contract,
Lease, License or Permit, subject to any transfer restrictions
contained therein, to any subsequent agent with respect to the
Loan Agreement and the Obligations thereunder.
8. TERMINATION. Upon final payment and satisfaction in full
of the Obligations, as evidenced by recorded satisfactions or
releases of the recorded Security Documents or otherwise as
satisfactory to the Assignee, and of any sums which may be payable
hereunder, or under any present or future agreement between
Assignor Assignee or each of the Lenders, this Assignment shall be
of no further force and effect and, in that event, upon Assignor's
request and expense, Assignee agrees to execute and deliver to
Assignor instruments evidencing the termination of this
Assignment.
9. APPROVALS. Notwithstanding anything to the contrary
contained herein, Assignee will not take any action pursuant to
this Assignment which would constitute or result in any assignment
of any Contract, Lease, License or Permit if such assignment would
require, pursuant to the terms of such Contract, Lease, License or
Permit the prior approval of the other party to such Contract,
Lease, License or Permit, without first obtaining such approval.
During the continuance of an Event of Default, Assignor agrees to
take any action which Assignee may reasonably request in order to
obtain and enjoy the full rights and benefits granted to Assignee
and the Lenders by this Assignment and each other agreement,
instrument and document delivered to Assignee or any of the
Lenders in connection herewith or in any document evidencing or
securing the Collateral, including specifically, at Assignee's own
cost and expense, the use of its best efforts to assist in
obtaining approval of the other party to such Contract, Lease,
License or Permit for any action or transaction contemplated by
this Assignment which is then required by such Contract, Lease,
License or Permit.
10. NOTICES. All notices, requests, demands and other
communications provided for hereunder shall be in writing and
mailed or telefaxed or delivered to the applicable party in the
manner set forth in SECTION 9.6 of the Loan Agreement.
11. MISCELLANEOUS.
11.1 This Assignment, except as set forth in SECTION
11.2, below, shall be construed and enforced in accordance with
and governed by the laws of The Commonwealth of Massachusetts.
11.2 Notwithstanding the foregoing choice of law
provision, the procedures governing the enforcement by Assignee of
its foreclosure and other remedies against Assignor under any of
the Contracts, Leases, Licenses and Permits may, at Assignee's
election, be governed by the laws of the state in which the
Contracts, Leases, Licenses and Permits in question are located.
11.3 The Assignor irrevocably:
(i) agrees that any suit, action, or other legal
proceeding arising out of this Assignment may be brought in the
courts of record of The Commonwealth of Massachusetts or any other
State(s) in which the Contracts, Leases, Licenses and Permits are
5
<PAGE>
located or the courts of the United States located in The
Commonwealth of Massachusetts or any other State(s) in which any
of the Contracts, Leases, Licenses and Permits are located.
(ii) consents to the jurisdiction of each such court in
any such suit, action or proceeding; and
(iii) waives any objection which it may have to the
laying of venue of such suit, action or proceeding in any of such
courts.
For such time as the Obligations shall be unpaid in
whole or in part, Assignor irrevocably designates the registered
agent or agent for service of process of Assignor as reflected in
the records of the Secretary of State of The Commonwealth of
Massachusetts as its registered agent, and in the absence thereof,
the Secretary of State of The Commonwealth of Massachusetts, as
its agent to accept and acknowledge on its behalf service of any
and all process in any such suit, action or proceeding brought in
any such court and agrees and consents that any such service of
process upon such agent and written notice of such service to
Assignor by registered or certified mail shall be taken and held
to be valid personal service upon Assignor regardless of where
Assignor shall then be doing business and that any such service of
process shall be of the same force and validity as if service were
made upon it according to the laws governing the validity and
requirements of such service in such state and waives any claim of
lack of personal seizure or other error by reason of any such
service. Any notice, process, pleadings or other papers served
upon the aforesaid designated agent shall, within three (3)
Business Days after such service, be sent by the method provided
for in SECTION 9.6 of the Loan Agreement to Assignor at its
address set forth in the Loan Agreement. EACH OF THE PARTIES
HERETO HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY IN THE EVENT OF
ANY DISPUTE BETWEEN ASSIGNOR AND ASSIGNEE WITH RESPECT TO THE
FINANCING DOCUMENTS AND/OR ANY OF THE TRANSACTIONS CONTEMPLATED
THEREBY.
11.3 No amendment, cancellation or discharge of this
Assignment shall be valid unless Assignee shall have consented
thereto in writing.
11.4 In case any one or more of the provisions
contained in this document shall for any reason be held to be
invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not effect any other
provision hereof, and this document shall be construed as if such
invalid, illegal or unenforceable provision had never been
included.
11.5 The terms, covenants, and conditions contained
herein shall inure to the benefit of and shall be binding upon
Assignee and Assignor and their respective successors and assigns.
11.6 The relative rights of Assignee and the Lenders
are set forth in the Loan Agreement.
[THIS SPACE INTENTIONALLY LEFT BLANK]
6
<PAGE>
IN WITNESS WHEREOF, Assignor and Assignee, jointly and
severally, have caused this Assignment to be duly executed on
their behalf by their respective duly authorized officers on the
date first set forth above.
WELLS ELECTRONICS, INC.
By: /S/ Mary L. Mandarino
---------------------------
Mary L. Mandarino
Treasurer
FLEET NATIONAL BANK,
as Agent for itself and
the other Lenders
By: /S/ Thomas W. Davies
---------------------------
Thomas W. Davies
Senior Vice President
7
<EXHIBIT> EXHIBIT 10.14
Undertaking to Furnish Copies of Omitted Exhibits and Schedules
to Loan Agreement and Related Documents dated as of
December 26, 1997.
PCD Inc. (the "Registrant") is not filing as exhibits to its
Current Report on Form 8-K dated January 9, 1998, copies of the
exhibits and schedules to the Loan Agreement between the
Registrant and Fleet National Bank dated as of December 26, 1997,
which Agreement is filed as Exhibit 10.1 thereto, and the related
documents dated as of December 26, 1997, which documents are
filed as Exhibits 10.2 through 10.13 thereto.
The Registrant undertakes to furnish to the Securities and
Exchange Commission, upon request, copies of such omitted
exhibits and schedules.
Dated: January 9, 1998
PCD INC. (Registrant)
By: /s/ John L. Dwight, Jr.
-----------------------
John L. Dwight, Jr.
Chairman of the Board,
President and Chief
Executive Officer
<EXHIBIT> EXHIBIT 10.15
PCD INC.
SUBORDINATED DEBENTURE AND WARRANT
PURCHASE AGREEMENT
<PAGE>
TABLE OF CONTENTS
1. PURCHASE AND SALE OF SUBORDINATED DEENTURE AND WARRANT . . .1
1.1 Sale and Issuance of Subordinated Debenture . . . . . .1
1.2 Sale and Issuance of Warrant . . . . . . . . . . . . . 1
1.3 Purchase Price . . . . . . . . . . . . . . . . . . . . 1
1.4 Closing . . . . . . . . . . . . . . . . . . . . . . . .2
1.5 Nasdaq Limitation . . . . . . . . . . . . . . . . . . .2
1.6 HSR Limitation . . . . . . . . . . . . . . . . . . . . 2
2. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY . .2
2.1 Organization; Good Standing, Qualification . . . . . . 2
2.2 Authorization . . . . . . . . . . . . . . . . . . . . .3
2.3 Valid Issuance of Debenture, Warrant and Common Stock .3
2.4 Governmental Consents . . . . . . . . . . . . . . . . .3
2.5 Capitalization and Voting Rights . . . . . . . . . . . 4
2.6 Subsidiaries . . . . . . . . . . . . . . . . . . . . .5
2.7 Contracts and Other Commitments . . . . . . . . . . . .5
2.8 Related-Party Transactions . . . . . . . . . . . . . . 5
2.9 Permits . . . . . . . . . . . . . . . . . . . . . . . .6
2.10 Compliance With Other Instruments . . . . . . . . . . .6
2.11 Litigation . . . . . . . . . . . . . . . . . . . . . . 6
2.12 Offering . . . . . . . . . . . . . . . . . . . . . . . 6
2.13 Title to Property and Assets; Leases . . . . . . . . . 7
2.14 Financial Statements . . . . . . . . . . . . . . . . . 7
2.15 Changes . . . . . . . . . . . . . . . . . . . . . . . .7
- i -
<PAGE>
2.16 Proprietary Rights . . . . . . . . . . . . . . . . . . 9
2.17 Employees; Employee Compensation . . . . . . . . . . . 9
2.18 Tax Returns, Payments, and Elections . . . . . . . . .10
2.19 Insurance . . . . . . . . . . . . . . . . . . . . . . 10
2.20 Environmental, Health and Safety Laws . . . . . . . . 10
2.21 SEC Information . . . . . . . . . . . . . . . . . . .10
2.22 Massachusetts Statutes . . . . . . . . . . . . . . . .11
3. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER . . . . . .11
3.1 Authorization . . . . . . . . . . . . . . . . . . . . 11
3.2 Purchase Entirely for Own Account . . . . . . . . . . 11
3.3 Reliance Upon Purchaser's Representations . . . . . . 11
3.4 Receipt of Information . . . . . . . . . . . . . . . .12
3.5 Investment Experience; Accredited Investor . . . . . .12
3.6 Restricted Securities . . . . . . . . . . . . . . . . 12
3.7 Legends . . . . . . . . . . . . . . . . . . . . . . . 13
3.8 Public Sale . . . . . . . . . . . . . . . . . . . . . 13
4. CONDITIONS OF PURCHASER'S OBLIGATIONS AT CLOSING . . . . . 13
4.1 Representations and Warranties . . . . . . . . . . . .13
4.2 Performance . . . . . . . . . . . . . . . . . . . . . 13
4.3 Compliance Certificate . . . . . . . . . . . . . . . .14
4.4 Qualifications . . . . . . . . . . . . . . . . . . . .14
4.5 Proceedings and Documents . . . . . . . . . . . . . . 14
4.6 Nasdaq Letter . . . . . . . . . . . . . . . . . . . .15
4.7 Voting Agreement and Power of Attorney . . . . . . . .15
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4.8 Opinion of Company Counsel . . . . . . . . . . . . . .15
4.9 Registration Rights Agreement . . . . . . . . . . . . 17
5. CONDITIONS OF THE COMPANY'S OBLIGATIONS AT CLOSING . . . . 17
5.1 Representations and Warranties . . . . . . . . . . . .17
5.2 Qualifications . . . . . . . . . . . . . . . . . . . .17
6. REGISTRATION RIGHTS . . . . . . . . . . . . . . . . . . . .18
7. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . .18
7.1 Survival OF Warranties . . . . . . . . . . . . . . . .18
7.2 Successors and Assigns . . . . . . . . . . . . . . . .18
7.3 Governing Law . . . . . . . . . . . . . . . . . . . . 18
7.4 Counterparts . . . . . . . . . . . . . . . . . . . . .18
7.5 Headings and Subheadings . . . . . . . . . . . . . . .18
7.6 Notices . . . . . . . . . . . . . . . . . . . . . . . 19
7.7 Amendments and Waivers . . . . . . . . . . . . . . . .19
7.8 Severability . . . . . . . . . . . . . . . . . . . . .19
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<PAGE>
PCD INC.
SUBORDINATED DEBENTURE AND WARRANT
PURCHASE AGREEMENT
This Subordinated Debenture and Warrant Purchase Agreement
(this "Agreement") is made as of the 26th day of December,
1997, by and between PCD Inc., a Massachusetts corporation (the
"Company"), and Emerson Electric Co., a Missouri corporation
(the "Purchaser").
The parties hereby agree as follows:
1. PURCHASE AND SALE OF SUBORDINATED DEBENTURE AND WARRANT.
1.1 Sale and Issuance of Subordinated Debenture.
Subject to the terms and conditions of this Agreement, the
Purchaser agrees to purchase at the Closing and the Company
agrees to sell and issue to the Purchaser at the Closing a
subordinated debenture due December 31, 2000 in the original
principal amount of Twenty-Five Million Dollars ($25,000,000)
(the "Debenture"). The Debenture shall be substantially in the
form set forth in EXHIBIT A hereto.
1.2 Sale and Issuance of Warrant.
Subject to the terms and conditions of this Agreement, the
Purchaser agrees to purchase at the Closing and the Company
agrees to sell and issue to the Purchaser at the Closing a common
stock purchase warrant (the "Warrant") exercisable for 525,000
shares of common stock of the Company, $0.01 par value ("Common
Stock"), only as follows: (i) on and after the date hereof, the
Warrant shall be exercisable to the extent of 150,000 shares of
Common Stock; (ii) if the principal of and accrued interest and
costs and expenses under the Debenture have not been paid in full
at the close of business on December 31, 1998, the Warrant shall
be exercisable to the extent of an additional 225,000 shares of
Common Stock; and (iii) if the principal of and accrued interest
and costs and expenses under the Debenture have not been paid in
full at the close of business on December 31, 1999, the Warrant
shall be exercisable to the extent of an additional 150,000
shares of Common Stock. The Warrant shall be substantially in
the form set forth in EXHIBIT B hereto.
1.3 Purchase Price.
The purchase price for the Debenture shall be $25,000,000.
The purchase price for the Warrant shall be $5,250.
<PAGE>
1.4 Closing.
(a) The purchase and sale of the Debenture and the Warrant
shall take place at 10:00 a.m. eastern time on December 26, 1997,
or at such other time as the Company and the Purchaser shall
mutually agree, either orally or in writing (which time is
designated as (the "Closing").
(b) At the Closing, the Company shall deliver to the
Purchaser the Debenture and the Warrant against payment of the
total purchase price therefor by certified check or wire transfer
to the account of the Company.
1.5 Nasdaq Limitation.
Notwithstanding any other provision of this Agreement or
any provision of the Debenture or the Warrant, until the Company
has obtained approval of its stockholders pursuant to the rules
of the Nasdaq Stock Market, Inc. ("Nasdaq"), or has obtained a
waiver in respect of such rules, the Purchaser and any subsequent
holder of either the Debenture or the Warrant shall be permitted
to convert into Common Stock an amount of principal or accrued
unpaid interest and costs and expenses under the Debenture, or
exercise a portion of the Warrant, only to the extent that all
such conversions and exercises together result in the issuance of
up to and no more than 4.99% of the Common Stock outstanding as
of the Closing.
1.6 HSR Limitation.
Notwithstanding any other provision of this Agreement, the
Purchaser and any subsequent holder of either the Debenture or
the Warrant shall be permitted to convert into Common Stock an
amount of principal or accrued unpaid interest or costs and
expenses under the Debenture, or exercise a portion of the
Warrant, only to the extent that the Purchaser and the Company
have obtained any required consent, authorization, order,
approval, exemption or waiver under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended ("HSR").
2. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY.
Subject to and except as set forth on a Schedule of
Exceptions furnished to the Purchaser, the Company hereby
represents and warrants to the Purchaser that:
2.1 Organization; Good Standing, Qualification.
The Company is a corporation duly organized, validly
existing and in good standing under the laws of the Commonwealth
of Massachusetts, has all requisite corporate power and authority
to own and operate its properties and assets and to carry on its
business as now conducted, to execute and deliver this Agreement,
the Debenture and the Warrant, to issue and sell the Debenture,
the Warrant and the Common Stock issuable upon conversion or
exercise thereof, and to carry out the provisions of this
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Agreement. The Company is duly qualified and is authorized to
transact business and is in good standing as a foreign
corporation in each jurisdiction in which the failure so to
qualify would have a material adverse effect on its business,
properties or financial condition.
2.2 Authorization.
Except to the extent that stockholder approval is required
pursuant to paragraph 1.5 above, all corporate action on the part
of the Company, its officers, directors and stockholders
necessary for the authorization, execution and delivery of this
Agreement, the Debenture and the Warrant, the performance of all
obligations of the Company hereunder and thereunder at the
Closing and the authorization, reservation for issuance,
issuance, sale, and delivery of the Debenture and the Warrant
being sold hereunder and the Common Stock issuable upon
conversion or exercise thereof has been taken or will be taken
before the Closing, and this Agreement, the Debenture and the
Warrant, when executed and delivered, will constitute valid and
legally binding obligations of the Company, enforceable in
accordance with their respective terms except (i) as limited by
applicable bankruptcy, insolvency, reorganization, moratorium,
and other laws of general application affecting enforcement of
creditors' rights generally, and (ii) as limited by laws relating
to the availability of specific performance, injunctive relief,
or other equitable remedies. The Company covenants to use its
best efforts to obtain, on or before June 30, 1998, any
stockholder approval of the Debenture and the Warrant required
under Nasdaq rules to permit the full conversion or exercise
thereof.
2.3 Valid Issuance of Debenture, Warrant and Common Stock.
The Debenture and the Warrant being purchased by the
Purchaser hereunder, when issued, sold, and delivered in
accordance with the terms of this Agreement, will be duly and
validly issued. The Common Stock issuable upon conversion of the
Debenture and upon exercise of the Warrant has been duly and
validly reserved for issuance and, upon issuance in accordance
with the terms of the Company's Restated Articles of Organization
(the "Restated Articles") will be duly and validly issued,
fully paid and nonassessable and will be free of restrictions on
transfer other than restrictions on transfer under this Agreement
and under applicable state and federal securities laws.
2.4 Governmental Consents.
No consent, approval, qualification, order or authorization
of, or filing with, any local, state, or federal governmental
authority is required on the part of the Company in connection
with the Company's valid execution, delivery, or performance of
this Agreement, the offer, sale or issuance of the Debenture, the
Warrant or the Common Stock issuable upon conversion or exercise
thereof, except as may be required under applicable state and
federal securities laws and under HSR.
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<PAGE>
The Company shall use its best efforts to obtain (and to
cooperate with the Purchaser to obtain) any consent,
authorization, order or approval of, or any exemption by, any
governmental entity and/or any private third party which is
required to be obtained or made by such entity or party in
connection with this Agreement or the transactions contemplated
by this Agreement. The Company specifically agrees to take all
actions necessary for the preparation and filing of Notification
and Report Forms under HSR, if and when such forms are required
under applicable law to be filed with respect to this Agreement
or the transactions contemplated by this Agreement. The Company
will furnish to the Purchaser such information and assistance as
the Purchaser may reasonably request in connection with the
preparation of any HSR filings and will provide the Purchaser
with copies of all correspondence, filings and communications (or
memoranda setting forth the substance thereof) between the
Company and any governmental agency or its staff with respect to
this Agreement and the transactions contemplated by this
Agreement.
2.5 Capitalization and Voting Rights.
The authorized capital of the Company consists of:
(a) Common Stock. 25,000,000 shares of common stock, par
value $0.01 per share ("Common Stock"), of which 6,020,182
shares are issued and outstanding.
(b) Preferred Stock. 1,000,000 shares of preferred stock,
par value $0.10 per share ("Preferred Stock"), of which no
shares are issued and outstanding.
The outstanding shares of Common Stock have been duly
authorized and validly issued, are fully paid and nonassessable,
and were issued in accordance with the registration or
qualification provisions of the Securities Act of 1933, as
amended (the "Securities Act") and any relevant state
securities laws or pursuant to valid exemptions therefrom.
Except for currently outstanding options to purchase
674,100 shares of Common Stock granted to employees, directors
and consultants pursuant to the Company's 1992 Stock Option Plan,
1996 Stock Plan and 1996 Eligible Directors Stock Plan
(collectively, the "Stock Plans"), there are not outstanding
any options, warrants, rights (including conversion or preemptive
rights and rights of first refusal), proxy or stockholder
agreements or agreements of any kind for the purchase or
acquisition from the Company of any of its securities. In
addition to the aforementioned options, the Company has reserved
an additional 321,000 shares of its Common Stock for purchase
upon exercise of options to be granted in the future under the
Stock Plans. The Company is not a party or subject to any
agreement or understanding, and, to the best of the Company's
knowledge, there is no agreement or understanding between any
persons that affects or relates to the voting or giving of
written consents with respect to any security or the voting by a
director of the Company. Except as provided in Section 9 of the
Company's Stock Purchase Agreement dated April 2, 1985 and as
contemplated under Section 6 of this Agreement, the Company is
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<PAGE>
presently not under any obligation and has not granted any rights
to register under the Securities Act any of its presently
outstanding securities or any of its securities that may
subsequently be issued.
2.6 Subsidiaries.
The Company does not own or control, directly or
indirectly, any interest in any other corporation, partnership,
limited liability company, association, or other business entity,
except for the following majority or wholly-owned subsidiaries:
CTi Technologies, Inc., a Massachusetts corporation; PCD Control
Systems, Inc., a Massachusetts corporation; PCD Securities Corp.,
a Massachusetts corporation; and PCD USVI, Inc., a U.S. Virgin
Islands corporation. On November 17, 1997, the Company entered
into an agreement (the "Wells Agreement") to acquire all of the
outstanding capital stock of Wells Electronics, Inc., an Indiana
corporation ("Wells"). The Company is not a participant in any
joint venture, partnership, or similar arrangement.
2.7 Contracts and Other Commitments.
The Company does not have and is not bound by any contract,
agreement, lease, commitment, or proposed transaction, judgment,
order, writ or decree, written or oral, absolute or contingent,
other than contracts that were entered into in the ordinary
course of business and that are not individually (or, if part of
a series of related contracts, when all such contracts are viewed
as a whole) material to the conduct of the Company's business.
2.8 Related-Party Transactions.
No employee, officer or director of the Company or member
of his or her immediate family is indebted to the Company, nor is
the Company indebted (or committed to make loans or extend or
guarantee credit) to any of them, other than (i) for payment of
salary for services rendered, (ii) reimbursement for reasonable
expenses incurred on behalf of the Company, and (iii) for other
standard employee benefits made generally available to all
employees (including stock option agreements outstanding under
any stock plan approved by the Board of Directors of the
Company). None of such persons has any direct or indirect
ownership interest in any firm or corporation with which the
Company is affiliated or with which the Company has a business
relationship, or any firm or corporation that competes with the
Company, except that employees, officers or directors of the
Company and members of their immediate families may own stock in
publicly traded companies that may compete with the Company. No
officer or director, or any member of their immediate families
is, directly or indirectly, interested in any material contract
with the Company (other than such contracts as relate to any such
person's ownership of capital stock or other securities of the
Company).
- 5 -
<PAGE>
2.9 Permits.
The Company has all franchises, permits, licenses, and any
similar authority necessary for the conduct of its business as
now being conducted by it, the lack of which could materially and
adversely affect the business, properties or financial condition
of the Company, and believes it can obtain, without undue burden
or expense, any similar authority for the conduct of its business
as presently planned to be conducted. The Company is not in
default in any material respect under any of such franchises,
permits, licenses or other similar authority.
2.10 Compliance With Other Instruments.
The Company is not in violation or default of any provision
of its Restated Articles or Bylaws or any provision of any
mortgage, indenture, agreement, instrument, or contract to which
it is a party or by which it is bound or of any federal or state
judgment, order, writ, decree, statute, rule, regulation or
restriction applicable to the Company. The execution, delivery,
and performance by the Company of this Agreement, the Debenture
and the Warrant, and the consummation of the transactions
contemplated hereby and thereby, will not result in any such
violation or be in conflict with or constitute, with or without
the passage of time or giving of notice, either a default under
any such provision or an event that results in the creation of
any lien, charge, or encumbrance upon any assets of the Company
or the suspension, revocation, impairment, forfeiture, or
nonrenewal of any permit, license, authorization, or approval
applicable to the Company, its business or operations, or any of
its assets or properties.
2.11 Litigation.
There is no action, suit, proceeding, or investigation
pending or, to the best of the Company's knowledge, currently
threatened against the Company, nor, to the best of the Company's
knowledge, are there any grounds therefor, that (i) questions the
validity of this Agreement, the Debenture, the Warrant, or the
right of the Company to enter into such agreements, or to
consummate the transactions contemplated hereby or thereby, or
(ii) could reasonably be expected to have, either individually or
in the aggregate, an adverse effect on the assets, business,
properties, or financial condition of the Company, or to cause
any change in the current equity ownership of the Company. The
Company is not a party to or named in or subject to any order,
writ, injunction, judgment, or decree of any court, government
agency or instrumentality.
2.12 Offering.
Subject in part to the accuracy and completeness of the
Purchaser's representations set forth in this Agreement, the
offer, sale and issuance of the Debenture and the Warrant as
contemplated by this Agreement are exempt from the registration
requirements of the Securities Act, and neither the Company nor
any authorized agent acting on its behalf will take any action
hereafter that would cause the loss of such exemption.
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<PAGE>
2.13 Title to Property and Assets; Leases.
Except (i) as reflected in the Financial Statements
(defined in paragraph 2.14), (ii) for the security interests
granted or to be granted to Fleet National Bank under the
Company's loan agreement dated December 26, 1997 (the "Fleet
Agreement"), (iii) for liens for current taxes not yet
delinquent, (iv) for liens imposed by law and incurred in the
ordinary course of business for obligations not past due to
carriers, warehousemen, laborers, materialmen and the like, (v)
for liens in respect of pledges or deposits under workers'
compensation laws or similar legislation or (vi) for minor
defects in title, none of which, individually or in the
aggregate, materially interferes with the use of such property,
the Company has good and marketable title to its property and
assets free and clear of all mortgages, liens, claims, and
encumbrances. With respect to the property and assets it leases,
the Company is in compliance with such leases and holds a valid
leasehold interest free of any liens, claims, or encumbrances,
subject to clauses (i)-(vi) above.
2.14 Financial Statements.
The Company has delivered to the Purchaser its audited
consolidated financial statements (balance sheets, statements of
income and statements of cash flows, including notes thereto) at
December 31, 1996 and for the fiscal year then ended and its
unaudited financial statements (balance sheets, statements of
income and statements of cash flows, including notes thereto) as
at, and for the three and nine-month periods ended September 27,
1997 (the "Financial Statements"). The Financial Statements
have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis throughout
the periods indicated and with each other, except that unaudited
Financial Statements may not contain all footnotes required by
generally accepted accounting principles. The Financial
Statements fairly present the financial condition and operating
results of the Company as of the dates, and for the periods,
indicated therein, subject in the case of the unaudited Financial
Statements to normal year-end audit adjustments. Except as set
forth in the Financial Statements, the Company has no
liabilities, contingent or otherwise, other than (i) liabilities
incurred in the ordinary course of business after September 27,
1997 and (ii) obligations under contracts and commitments
incurred in the ordinary course of business and not required
under generally accepted accounting principles to be reflected in
the Financial Statements, which, in both cases, individually or
in the aggregate, are not material to the financial condition or
operating results of the Company. Except as disclosed in the
Financial Statements, the Company is not a guarantor or
indemnitor of any indebtedness of any other person, firm, or
corporation.
2.15 Changes.
To the best of the Company's knowledge, since September 27,
1997, except for the execution of the Wells Agreement and the
Fleet Agreement and the consummation of the transactions
contemplated thereby, there has not been:
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<PAGE>
(a) any change in the assets, liabilities, financial
condition, or operating results of the Company from that
reflected in the Financial Statements, except changes in the
ordinary course of business that have not been, in the aggregate,
materially adverse;
(b) any damage, destruction or loss, whether or not
covered by insurance, materially and adversely affecting the
business, properties, prospects or financial condition of the
Company (as such business is presently conducted and as it is
presently proposed to be conducted);
(c) any waiver or compromise by the Company of a valuable
right or of a material debt owed to it;
(d) any satisfaction or discharge of any lien, claim, or
encumbrance or payment of any obligation by the Company, except
in the ordinary course of business and that is not material to
the business, properties, prospects or financial condition of the
Company (as such business is presently conducted and as it is
presently proposed to be conducted);
(e) any material change to a material contract or
arrangement by which the Company or any of its assets is bound or
subject;
(f) any material change in any compensation arrangement or
agreement with any employee, officer, director or stockholder;
(g) any sale, assignment, or transfer of any patents,
trademarks, copyrights, trade secrets or other intangible assets;
(h) any resignation or termination of employment of any
key officer of the Company; and the Company, to the best of its
knowledge, does not know of the impending resignation or
termination of employment of any such officer;
(i) any mortgage, pledge, transfer of a security interest
in, or lien, created by the Company, with respect to any of its
material properties or assets, except liens for taxes not yet due
or payable;
(j) any loans or guarantees made by the Company to or for
the benefit of its employees, stockholders, officers, or
directors, or any members of their immediate families, other than
travel advances and other advances made in the ordinary course of
its business;
(k) any declaration, setting aside, or payment of any
dividend or other distribution of the Company's assets in respect
of any of the Company's capital stock, or any direct or indirect
redemption, purchase or other acquisition of any of such stock by
the Company;
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<PAGE>
(l) any other event or condition of any character that
might materially and adversely affect the business, properties or
financial condition of the Company; or
(m) any agreement or commitment by the Company to do any
of the things described in this paragraph 2.15.
2.16 Proprietary Rights.
The Company owns or possesses all legal rights to all
patents, trademarks, service marks, trade names, copyrights,
trade secrets, licenses, information, and proprietary rights and
processes (collectively, "Intellectual Property") necessary for
its business as now conducted and as proposed to be conducted
without any conflict with, or infringement of the rights of,
others. Except for agreements with its own employees or
consultants and license agreements with customers or
distributors, there are no outstanding options, licenses, or
agreements of any kind relating to the foregoing, nor is the
Company bound by or a party to any options, licenses, or
agreements of any kind with respect to the Intellectual Property
of any other person or entity. Except with respect to the Pfaff
litigation described in the Financial Statements, the Company has
not received any communications alleging that the Company has
violated or, by conducting its business as proposed, would
violate any of the Intellectual Property of any other person or
entity. The Company does not believe it is or will be necessary
to use any inventions of any of its employees (or persons it
currently intends to hire) made before their employment by the
Company.
2.17 Employees; Employee Compensation.
There is no strike, labor dispute or union organization
activities pending or threatened between it and its employees.
None of the Company's employees (excluding employees of Wells)
belongs to any union or collective bargaining unit. The Company
has complied in all material respects with all applicable state
and federal equal opportunity and other laws related to
employment.
The Company is not aware that any of its employees is
obligated under any contract (including licenses, covenants, or
commitments of any nature) or other agreement, or subject to any
judgment, decree, or order of any court or administrative agency,
that would interfere with the use of such employee's best efforts
to promote the interests of the Company or that would conflict
with the Company's business as proposed to be conducted. Neither
the execution nor delivery of this Agreement, the Debenture or
the Warrant, nor the carrying on of the Company's business by the
employees of the Company, will, conflict with or result in a
breach of the terms, conditions, or provisions of, or constitute
a default under, any contract, covenant, or instrument under
which any of such employees is now obligated.
- 9 -
<PAGE>
2.18 Tax Returns, Payments, and Elections.
The Company has timely filed all tax returns and reports
(federal, state and local) as required by law. These returns and
reports are true and correct in all material respects. The
Company has paid all taxes and other assessments due, except
those contested by it in good faith. The provision for taxes of
the Company as shown in the Financial Statements is adequate for
taxes due or accrued as of the date thereof. The Company has
never had any tax deficiency proposed or assessed against it and
has not executed any waiver of any statute of limitations on the
assessment or collection of any tax or governmental charge. Since
the date of the Financial Statements, the Company has made
adequate provisions on its books of account for all taxes,
assessments, and governmental charges with respect to its
business, properties, and operations for such period. The
Company has withheld or collected from each payment made to each
of its employees, the amount of all taxes, including, but not
limited to, federal income taxes, Federal Insurance Contribution
Act taxes and Federal Unemployment Tax Act taxes required to be
withheld or collected therefrom and has paid the same to the
proper tax receiving officers or authorized depositaries.
2.19 Insurance.
The Company has in full force and effect fire and casualty
insurance policies, with extended coverage, sufficient in amount
(subject to reasonable deductibles) to allow it to replace any of
its properties that might be damaged or destroyed. The Company
has in full force and effect products liability and errors and
omissions insurance in amounts customary for companies similarly
situated.
2.20 Environmental, Health and Safety Laws.
The Company is not in violation of any applicable statute,
law, or regulation relating to the environment or occupational
health and safety, and to the best of its knowledge, no material
expenditures are or will be required in order to comply with any
such existing statute, law or regulation.
2.21 SEC Information.
The Company has made available to the Purchaser its Annual
Report on Form 10-K and Proxy Statement for the year ended
December 31, 1996 and its Quarterly Reports on Form 10-Q for the
quarters ended March 29, June 28 and September 27, 1997, in each
case as filed with the Securities and Exchange Commission (the
"SEC"). Such filings, taken together with information
previously furnished by the Company to the Purchaser, did not
contain any untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to
make the statements made therein, in light of the circumstances
in which they were made, not misleading. As used in this
paragraph 2.21, "material" means material to the financial
condition, business, properties, prospects, rights or operations
of the Company together with its subsidiaries, taken as a whole.
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<PAGE>
2.22 Massachusetts Statutes.
Chapter 110D of the General Laws of the Commonwealth of
Massachusetts does not apply to the Company and the Company will
not hereafter take any action which would make such Chapter
applicable to the Company. Chapter 110F of the General Laws of
the Commonwealth of Massachusetts does not apply to either the
acquisition of the Debenture or the Warrant or the acquisition by
the Purchaser of the Common Stock issuable upon conversion of the
Debenture or the exercise of the Warrant.
3. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER.
The Purchaser hereby represents and warrants to the Company
that:
3.1 Authorization.
The Purchaser has full power and authority to enter into
this Agreement, and that this Agreement, when executed and
delivered, will constitute a valid and legally binding obligation
of the Purchaser.
3.2 Purchase Entirely for Own Account.
This Agreement is made with the Purchaser in reliance upon
the Purchaser's representation to the Company, which by the
Purchaser's execution of this Agreement the Purchaser hereby
confirms, that the Debenture and the Warrant and the Common Stock
issuable upon conversion or exercise thereof (collectively, the
"Securities") will be acquired for investment for the
Purchaser's own account, not as a nominee or agent, and not with
a view to the resale or distribution of any part thereof, and
that the Purchaser has no present intention of selling, granting
any participation in, or otherwise distributing the same. By
executing this Agreement, the Purchaser further represents that
such Purchaser does not have any contract, undertaking, agreement
or arrangement with any person to sell, transfer or grant
participations to such person or to any third person, with
respect to any of the Securities.
3.3 Reliance Upon Purchaser's Representations.
The Purchaser understands that the Debenture is not, and
any Common Stock acquired on conversion thereof at the time of
issuance will not be, registered under the Securities Act on the
ground that the sale provided for in this Agreement and the
issuance of securities hereunder is exempt from registration
under the Securities Act pursuant to Section 4(2) thereof, and
that the Company's reliance on such exemption is predicated on
the Purchaser's representations set forth herein. The Purchaser
realizes that the basis for the exemption may not be present if,
notwithstanding such representations, the Purchaser contemplates
acquiring shares of the Debenture for a fixed or determinable
period in the future, or for a market rise, or for sale if the
market does not rise. The Purchaser has no such intention.
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<PAGE>
3.4 Receipt of Information.
The Purchaser believes the Purchaser has received all the
information the Purchaser considers necessary or appropriate for
deciding whether to purchase the Debenture and the Warrant. The
Purchaser further represents that the Purchaser has had an
opportunity to ask questions and receive answers from the Company
regarding the terms and conditions of the offering of the
Debenture and the Warrant and the business, properties and
financial condition of the Company and to obtain additional
information (to the extent the Company possessed such information
or could acquire it without unreasonable effort or expense)
necessary to verify the accuracy of any information furnished to
the Purchaser or to which the Purchaser had access. The
foregoing, however, does not limit or modify the representations
and warranties of the Company in Section 2 of this Agreement or
the right of the Purchaser to rely thereon.
3.5 Investment Experience; Accredited Investor.
The Purchaser represents that such Purchaser is experienced
in evaluating and investing in private placement transactions of
securities of companies in a similar stage of development and
acknowledges that the Purchaser is able to fend for itself, can
bear the economic risk of the Purchaser's investment, and has
such knowledge and experience in financial and business matters
that the Purchaser is capable of evaluating the merits and risks
of the investment in the Debenture.
The Purchaser further represents that such Purchaser is a
corporation not formed for the specific purpose of acquiring the
Debenture and has total assets in excess of Five Million Dollars
($5,000,000).
3.6 Restricted Securities.
The Purchaser understands that the Debenture and the
Warrant (and any Common Stock issued on conversion or exercise
thereof) may not be sold, transferred, or otherwise disposed of
without registration under the Securities Act or an exemption
therefrom, and that in the absence of an effective registration
statement covering the Debenture or the Warrant (or the Common
Stock issued on conversion or exercise thereof) or an available
exemption from registration under the Securities Act, the
Debenture and the Warrant (and any Common Stock issued on
conversion or exercise thereof) must be held indefinitely. In
particular, the Purchaser is aware that the Debenture and the
Warrant (and any Common Stock issued on conversion or exercise
thereof) may not be sold pursuant to Rule 144 promulgated under
the Securities Act unless all of the conditions of that Rule are
met. Among the conditions for use of Rule 144 is the
availability of current information to the public about the
Company.
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<PAGE>
3.7 Legends.
To the extent applicable, each document evidencing the
Debenture or the Warrant, or any Common Stock issued upon
conversion or exercise thereof, shall be endorsed with the
legends substantially in the form set forth below:
(a) The following legend under the Securities Act:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE
STATE SECURITIES LAWS. IT MAY NOT BE SOLD, TRANSFERRED,
ASSIGNED, PLEDGED, OR HYPOTHECATED UNLESS AND UNTIL
REGISTERED UNDER SUCH ACT AND APPLICABLE LAWS, OR UNLESS
THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL OR OTHER
EVIDENCE, SATISFACTORY TO THE COMPANY AND ITS COUNSEL,
THAT SUCH REGISTRATION IS NOT REQUIRED."
(b) Any legend imposed or required by applicable state
securities laws.
3.8 Public Sale.
The Purchaser agrees not to make any public offering or
sale of the Debenture or the Warrant. The Purchaser agrees not to
make any public offering or sale of any Common Stock issued upon
the conversion or exercise of the Debenture or the Warrant,
except in compliance with the Securities Act and the Rules and
Regulations promulgated by the Securities and Exchange Commission
thereunder.
4. CONDITIONS OF PURCHASER'S OBLIGATIONS AT CLOSING.
The obligations of the Purchaser under Section 1 of this
Agreement are subject to the fulfillment on or before the Closing
of each of the following conditions:
4.1 Representations and Warranties.
The representations and warranties of the Company contained
in Section 2 shall be true on and as of the Closing with the same
effect as though such representations and warranties had been
made on and as of the date of the Closing.
4.2 Performance.
The Company shall have performed and complied with all
agreements, obligations, and conditions contained in this
Agreement that are required to be performed or complied with by
it on or before the Closing.
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<PAGE>
4.3 Compliance Certificate.
The Chairman of the Board of the Company shall deliver to
the Purchaser at the Closing a certificate certifying that the
conditions specified in paragraphs 4.1, 4.2, 4.4, and 4.5 have
been fulfilled.
4.4 Qualifications.
All authorizations, approvals, or permits, if any, of any
governmental authority or regulatory body of the United States or
of any state that are required in advance of the lawful issuance
and sale of the Debenture and the Warrant pursuant to this
Agreement shall be duly obtained and effective as of the Closing.
4.5 Proceedings and Documents.
All corporate and other proceedings in connection with the
transactions contemplated at the Closing and all documents
incident thereto shall be reasonably satisfactory in form and
substance to the Purchaser, which shall have received all such
counterpart original and certified or other copies of such
documents as it may reasonably request.
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<PAGE>
4.6 Nasdaq Letter.
In response to the Company's letter to Nasdaq dated
December 18, 1997, a copy of which has been furnished to the
Purchaser, the Company shall have obtained from Nasdaq a letter
confirming that, if the transactions are structured as described
in the Company's letter, (i) neither the National Association of
Securities Dealers, Inc. (the "NASD") nor Nasdaq would impose
any requirement that such transactions be approved by the
Company's stockholders before the closing of such transactions,
and (ii) if stockholder approval of the transactions is required
at any time, none of the Company's stockholders (including
without limitation the Purchaser) would be disqualified by the
NASD or Nasdaq from voting to approve the transactions as a whole
or any portion thereof, except that in any such vote neither the
Purchaser nor any of the Purchaser's affiliates would be
permitted to vote any shares of Common Stock acquired upon
conversion of principal or interest under the Debenture or upon
exercise of the Warrant.
4.7 Voting Agreement and Power of Attorney.
The Purchaser shall have received from shareholders owning
1,042,860 or more shares of the Common Stock of the Company
issued and outstanding as of the Closing a Voting Agreement and
Power of Attorney in the form set forth in EXHIBIT C hereto, and
any other related documentation reasonably required by Purchaser,
giving the Purchaser the right to vote all of such shareholders'
shares in any shareholder vote relating to approval of this
Agreement or the transactions contemplated in this Agreement as
referred to in Sections 1.5 and 2.2 hereof.
4.8 Opinion of Company Counsel.
The Purchaser shall have received from Hill & Barlow,
counsel for the Company, an opinion, dated the date of the
Closing, in form and substance satisfactory to the Purchaser, to
the effect that:
(a) The Company is a corporation duly organized, legally
existing and in corporate good standing under the laws of the
Commonwealth of Massachusetts and has the requisite corporate
power to own its property and assets and to conduct its business
as it is currently being conducted.
(b) (i) Except to the extent that stockholder approval is
required pursuant to paragraph 2.2 above, each of this Agreement,
the Debenture set forth in EXHIBIT A, the Warrant set forth in
EXHIBIT B and the Registration Rights Agreement set forth in
EXHIBIT D has been duly and validly authorized, executed and
delivered by the Company, each constitutes a valid and binding
agreement of the Company and each is enforceable against the
Company in accordance with its terms. (ii) The Voting Agreement
and Power of Attorney set forth in EXHIBIT C has been duly and
validly executed and delivered by each of the shareholders who
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<PAGE>
are parties thereto and constitutes a valid and binding agreement
of each of such shareholders enforceable against each of such
shareholders in accordance with its terms.
(c) The capital stock of the Company is as follows:
(i) Preferred Stock. 1,000,000 shares of Preferred
Stock authorized, of which no shares are issued and outstanding.
(ii) Common Stock. 25,000,000 shares of Common Stock
authorized, of which 6,020,362 shares have been validly issued
and are outstanding, fully paid and nonassessable.
(d) The Common Stock issuable upon the conversion of the
Debenture and upon exercise of the Warrant purchased under this
Agreement has been duly and validly reserved for issuance and,
when issued in accordance with the Company's Restated Articles,
will be validly issued, fully paid and nonassessable.
Except for currently outstanding options to purchase
shares of the Common Stock granted to employees, consultants and
directors pursuant to the Company's Stock Plans, to the best of
counsel's knowledge, there are no preemptive rights or options,
warrants, conversion privileges, or other rights (or agreements
for any such rights) outstanding to purchase or otherwise obtain
any of the Company's securities.
(e) The execution, delivery and performance of this
Agreement by the Company on or before the Closing and the
issuance of the Debenture and the Warrant pursuant thereto do not
violate any provision of the Company's Restated Articles or
Bylaws, and do not constitute a default under the provisions of
any material agreement known to such counsel to which the Company
is a party or by which it is bound, and do not violate or
contravene (i) any governmental statute, rule or regulation
applicable to the Company or (ii) any order, writ, judgment,
injunction, decree, determination or award which has been entered
against the Company and of which such counsel is aware, the
violation or contravention of which would materially and
adversely affect the Company, its assets, financial condition or
operations.
(f) To the best of such counsel's knowledge, after due
inquiry, there is no action, proceeding or investigation pending
or threatened against the Company before any court or
administrative agency that questions the validity of this
Agreement, the Debenture or the Warrant or might result, either
individually or in the aggregate, in any material adverse change
in the assets, financial condition or operations of the Company.
(g) All consents, approvals, authorizations, or orders of,
and filings, registrations and qualifications with any federal,
Massachusetts state or Massachusetts local regulatory authority
or governmental body required for the consummation by the Company
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<PAGE>
of the transactions contemplated by the Agreement, have been made
or obtained.
(h) The offer and sale of the Debenture and the Warrant
are, and the issuance of the Common Stock upon conversion or
exercise thereof would be, exempt from the registration
requirements of the Securities Act.
(i) The Voting Agreement and Power of Attorney delivered to
the Purchaser pursuant to paragraph 4.7 of this Agreement is
legal, valid, binding and sufficient under Massachusetts law to
confer upon the Purchaser the right to vote the number of shares
of the Common Stock of the Company covered thereby in any
shareholder vote relating to approval of this Agreement or the
transactions contemplated in this Agreement and complies with all
applicable federal and Massachusetts securities laws.
(j) Chapter 110D of the General Laws of the Commonwealth of
Massachusetts does not apply to the Company. Chapter 110F of the
General Laws of the Commonwealth of Massachusetts does not apply
to either the acquisition of the Debenture or the Warrant or the
acquisition by the Purchaser of Common Stock issuable upon
conversion of the Debenture or exercise of the Warrant.
4.9 Registration Rights Agreement.
The Company and the Purchaser shall have entered into at or
prior to the Closing a Registration Rights Agreement in
substantially the form set forth in Exhibit D.
5. CONDITIONS OF THE COMPANY'S OBLIGATIONS AT CLOSING
The obligations of the Company to the Purchaser under this
Agreement are subject to the fulfillment on or before the Closing
of each of the following conditions by the Purchaser.
5.1 Representations and Warranties.
The representations and warranties of the Purchaser
contained in Section 3 hereof shall be true on and as of the
Closing with the same effect as though such representations and
warranties had been made on and as of the date of the Closing.
5.2 Qualifications.
All authorizations, approvals, or permits, if any, of any
governmental authority or regulatory body of the United States or
of any state that are required in connection with the lawful
issuance and sale of the Debenture pursuant to this Agreement
shall be duly obtained and effective as of the Closing.
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<PAGE>
6. REGISTRATION RIGHTS.
The Purchaser shall have the registration rights set forth
in EXHIBIT D.
7. MISCELLANEOUS.
7.1 Survival of Warranties.
The warranties, representations, and covenants of the
Company and the Purchaser contained in or made pursuant to this
Agreement shall survive the execution and delivery of this
Agreement and the Closing for a period of thirty-six (36) months
after the Closing.
7.2 Successors and Assigns.
The Purchaser's rights pursuant to this Agreement may be
transferred or assigned by the Purchaser to any of the
Purchaser's affiliates to whom the Debenture or the Warrant is
transferred as permitted by the terms thereof. Except as
otherwise provided herein, the terms and conditions of this
Agreement shall inure to the benefit of and be binding upon the
respective successors and assigns of the parties (including
permitted transferees of the Debenture and the Warrant sold
hereunder or any Common Stock issued upon conversion or exercise
thereof). Nothing in this Agreement, express or implied, is
intended to confer upon any party other than the parties hereto
or their respective successors and assigns any rights, remedies,
obligations or liabilities under or by reason of this Agreement,
except as expressly provided in this Agreement.
7.3 Governing Law.
This Agreement shall be governed by and construed under the
laws of The Commonwealth of Massachusetts as applied to
agreements among Massachusetts residents entered into and to be
performed entirely within Massachusetts.
7.4 Counterparts.
This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
7.5 Headings and Subheadings
The headings and subheadings used in this Agreement are
used for convenience only and are not to be considered in
construing or interpreting this Agreement.
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<PAGE>
7.6 Notices.
Unless otherwise provided, all notices and other
communications required or permitted under this Agreement shall
be in writing and shall be mailed by United States first-class
mail, postage prepaid, sent by facsimile or delivered personally
by hand or by a nationally recognized courier addressed to the
party to be notified at the address or facsimile number indicated
for such person on the signature page hereof, or at such other
address or facsimile number as such party may designate by ten
(10) days' advance written notice to the other parties hereto.
All such notices and other written communications shall be
effective on the date of mailing, confirmed facsimile transfer or
delivery.
7.7 Amendments and Waivers.
Any term of this Agreement may be amended and the
observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and
the Purchaser. Any amendment or waiver effected in accordance
with this paragraph shall be binding upon the holder of any
securities purchased under this Agreement at the time outstanding
(including securities into which such securities have been
converted), each future holder of all such securities, and the
Company.
7.8 Severability.
If one or more provisions of this Agreement are held to be
unenforceable under applicable law, such provision shall be
excluded from this Agreement and the balance of the Agreement
shall be interpreted as if such provision were so excluded and
shall be enforceable in accordance with its terms.
{REMAINDER OF PAGE INTENTIONALLY LEFT BLANK}
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<PAGE>
IN WITNESS WHEREOF, the parties have executed this
Agreement under seal as of the date first above written.
COMPANY:
PCD INC.
By: /S/ John L. Dwight, Jr.
-----------------------------
John L. Dwight Jr.
Chairman of the Board
Address: 2 Technology Drive
Peabody, Massachusetts 01960
PURCHASER:
EMERSON ELECTRIC CO.
By: /S/ J.D. Switzer
-----------------------------
J.D. Switzer
Senior Vice President - Development
Address: 8000 West Florissant
P.O. Box 4100
St. Louis, Missouri 63136
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<EXHIBIT> EXHIBIT 10.16
EXHIBIT A
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE
SECURITIES LAWS. IT MAY NOT BE SOLD, TRANSFERRED,
ASSIGNED, PLEDGED, OR HYPOTHECATED UNLESS AND UNTIL
REGISTERED UNDER SUCH ACT AND APPLICABLE LAWS, OR UNLESS
THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL OR OTHER
EVIDENCE, SATISFACTORY TO THE COMPANY AND ITS COUNSEL,
THAT SUCH REGISTRATION IS NOT REQUIRED.
TRANSFER OF THIS DEBENTURE IS NOT VALID EXCEPT TO THE EXTENT
THAT SUCH TRANSFER HAS BEEN MADE IN COMPLIANCE WITH THE
PROVISIONS REGARDING TRANSFER CONTAINED HEREIN.
THIS SUBORDINATED DEBENTURE IS SUBJECT TO A SUBORDINATION
AGREEMENT DATED AS OF DECEMBER 26, 1997 BY AND AMONG
PCD INC., EMERSON ELECTRIC CO. AND FLEET NATIONAL BANK,
AS AGENT FOR ITSELF AND THE OTHER LENDERS
PCD INC.
SUBORDINATED DEBENTURE
$25,000,000 Peabody, Massachusetts
December 26, 1997
PCD Inc., a Massachusetts corporation (the "Company"),
the principal office of which is located at 2 Technology
Drive, Peabody, Massachusetts, for value received hereby
promises to pay to Emerson Electric Co., a Missouri
corporation, or its permitted assigns, the sum of Twenty-
Five Million Dollars ($25,000,000), or such lesser amount as
shall then equal the outstanding principal amount hereof and
any unpaid accrued interest and Costs and Expenses (as
defined below) hereon, as set forth below, on the earlier to
occur of (i) December 31, 2000, or (ii) subject to
Section 6.5 hereof, when declared due and payable by the
Holder (as defined below) upon the occurrence of an Event of
Default (as defined below). Payment for all amounts due
hereunder shall be made by mail or by wire transfer to the
registered address or account of the Holder. This Debenture
is issued in connection with the Subordinated Debenture and
Warrant Purchase Agreement between the Company and the
Holder dated as of December 26, 1997, as the same may from
time to time be amended, modified or supplemented (the
"Purchase Agreement"). The Holder of this Debenture is
subject to certain restrictions set forth in the Purchase
Agreement and shall be entitled to certain rights and
privileges set forth in the Purchase Agreement. This
Debenture is the Debenture referred to as the "Debenture" in
the Purchase Agreement.
<PAGE>
The following is a statement of the rights of the
Holder of this Debenture and the conditions to which this
Debenture is subject, and to which the Holder hereof, by the
acceptance of this Debenture, agrees:
1. DEFINITIONS. As used in this Debenture, the
following terms, unless the context otherwise requires, have
the following meanings:
(i) "Company" includes any corporation which
shall succeed to or assume the obligations of the Company
under this Debenture with the prior written consent of the
Holder.
(ii) "Holder," when the context refers to a
holder of this Debenture, shall mean any person who shall at
the time be the registered holder of this Debenture.
(iii) "Insolvency Proceeding" means any case or
proceeding (x) under the United States Bankruptcy Code, 11
U.S.C. 101, et seq., or (y) under any other federal law,
or under state law, to reorganize, liquidate, appoint a
trustee for, a receiver for or an assignee for the benefit
of creditors of, the Company, or all or substantially all of
the assets of the Company, whether voluntary or involuntary.
2. INTEREST. The Debenture shall bear interest at
the rate of ten percent (10%) per annum (the "Interest
Rate") on the principal of this Debenture outstanding during
the period beginning on the date of issuance of this
Debenture and ending on the date when the principal amount
of this Debenture has been paid in full or when the
Debenture has been fully converted pursuant to Section 6
hereof, whichever is later. Interest shall be paid
quarterly in arrears, beginning on March 31, 1998, on the
last business day of March, June, September and December of
each year during which the Debenture is outstanding, or on
such earlier date that the Debenture is paid in full or
fully converted pursuant to Section 6 hereof.
3. EVENTS OF DEFAULT. If any of the events
specified in this Section 3 shall occur (herein individually
referred to as an "Event of Default"), the Holder of the
Debenture may, so long as such condition exists and subject
to Section 4 and Section 6.5 hereof, declare the entire
principal and unpaid accrued interest hereon immediately due
and payable, by notice in writing to the Company:
(i) The institution by the Company of an
Insolvency Proceeding, or the consent by it to the
institution of an Insolvency Proceeding or the filing by it
of a petition or answer or consent seeking an Insolvency
Proceeding, or the taking of corporate action by the Company
in furtherance of any such action; or
(ii) If, within sixty (60) days after the
commencement of an action against the Company (and service
of process in connection therewith on the Company) seeking
an Insolvency Proceeding, such action shall not have been
resolved in favor of the Company or all orders or
proceedings thereunder affecting the operations or the
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<PAGE>
business of the Company stayed, or if the stay of any such
order or proceeding shall thereafter be set aside, or if,
within sixty (60) days after the appointment without the
consent or acquiescence of the Company of any trustee,
receiver or liquidator of the Company or of all or any
substantial part of the properties of the Company, such
appointment shall not have been vacated; or
(iii) Any default of the Company declared in
writing under any Senior Indebtedness (as defined below)
that gives the holder thereof the right to accelerate such
Senior Indebtedness; or
(iv) Any declaration in writing that the
Company is insolvent, inadequately capitalized, or is unable
to pay its debts as they fall due; or
(v) Any default in the payment of the
principal or interest of this Debenture when due and
payable, whether at maturity, by acceleration or otherwise,
and such default is not cured by the Company within ten (10)
business days; or
(vi) Any breach by the Company of any
representations or warranties, or failure to comply with any
agreement or covenant contained herein or in the Purchase
Agreement or the Registration Rights Agreement between the
Company and Emerson Electric Co. (the "Registration Rights
Agreement") dated as of the date of the Purchase Agreement
and (a) such breach (to the extent curable) or failure is
not cured by the Company within thirty (30) days after the
Holder has given the Company written notice of such breach
or failure and (b) such breach or failure has a material
adverse effect on the Company's business, properties or
financial condition; or
(vii) The rendering of a final judgment or
judgments (not subject to appeal) against the Company or any
of its subsidiaries in an amount in excess of $1 million
which remains undischarged or unstayed for a period of 60
(sixty) days after the date on which the right to appeal has
expired.
4. SUBORDINATION. The indebtedness evidenced by
this Debenture is hereby expressly subordinated, to the
extent and in the manner set forth under the terms of a
contemporaneous Subordination Agreement among the Company,
Emerson Electric Co. and Fleet National Bank as Agent for
itself and each of the other Lenders named therein (the
"Subordination Agreement"), in right of payment to the prior
payment in full of all the Company's Senior Indebtedness, as
defined in the Subordination Agreement. By its acceptance
of this Debenture, the Holder of this Debenture agrees to be
bound by terms of the Subordination Agreement as if such
Holder were a party to such Agreement and agrees to execute
and deliver such documents as may be reasonably requested
from time to time by the Company or the holder of any Senior
Indebtedness in order to implement the provisions of this
Section 4 or the Subordination Agreement.
5. PREPAYMENT. The Company may at any time prepay
in whole or in part the principal sum, plus accrued
interest, and Costs and Expenses to date of payment, of this
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<PAGE>
Debenture, subject to the following premiums which shall be
due and payable (in addition to such principal and interest,
Costs and Expenses) at the time of such prepayment:
(i) for the period beginning on the date
hereof and ending June 30, 1998, an amount equal to 3.25% of
the principal sum prepaid;
(ii) for the period beginning July 1, 1998 and
ending September 30, 1998, an amount equal to 6.5% of the
principal sum prepaid;
(iii) for the period beginning October 1, 1998
and ending December 31, 1998, an amount equal to 9.75% of
the principal sum prepaid; and
(iv) for the period beginning January 1, 1999 and
thereafter, an amount equal to 0.00% of the principal sum
prepaid.
6. CONVERSION.
6.1 CONVERSION UPON EVENT OF DEFAULT. If an Event
of Default occurs, the Holder of this Debenture shall have
the option, as the Holder's sole and exclusive remedy for
any such default while the Senior Indebtedness remains
outstanding, at any time before payment in full of the
principal balance of this Debenture, to convert some or all
of the outstanding principal balance of this Debenture, plus
unpaid accrued interest and Costs and Expenses, in
accordance with the provisions of Section 6.2 hereof, into
fully paid and nonassessable shares of the common stock of
the Company, $0.01 par value ("Common Stock"). The number
of shares of Common Stock into which this Debenture may be
converted shall be determined by dividing the aggregate
outstanding principal amount to be converted, together with
all accrued but unpaid interest and Costs and Expenses to
the date of conversion, by the Conversion Price (as defined
below) in effect at the time of such conversion. The
Conversion Price shall be equal to the lesser of (a) $17.00
per share, subject to adjustment as hereinafter provided,
and (b) 70% of the average daily closing price of the Common
Stock (as reported by Nasdaq or, if the Common Stock is not
then traded on Nasdaq, such other stock exchange on which
the Common Stock is traded) for the 90 calendar day period
preceding the date of payment default which gives rise to
the conversion right under this Section 6.1.
6.2 CONVERSION PROCEDURE. Before the Holder shall
be entitled to convert this Debenture into shares of Common
Stock, it shall surrender this Debenture, duly endorsed, at
the office of the Company together with written notice
pursuant to the Notice of Conversion attached to this
Debenture of the election to convert all or some of the same
pursuant to Section 6.1, and shall state therein the name or
names in which the certificate or certificates for shares of
Common Stock is to be issued. At its expense, the Company
shall, as soon as practicable thereafter, issue and deliver
to such Holder a certificate or certificates for the number
of shares of such Common Stock to which the Holder shall be
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<PAGE>
entitled upon such conversion (bearing such legends as are
required by the Purchase Agreement and applicable state and
federal securities laws in the opinion of counsel to the
Company), together with any other securities and property to
which the Holder is entitled upon such conversion under the
terms of this Debenture, including a check payable to the
Holder for any cash amounts payable for fractional shares,
as described in Section 6.3 below. In addition, if the
Holder has converted only part of the Debenture, the Company
will issue to the Holder a new debenture for the amount not
converted with the same terms as the Debenture. In the
event of any conversion of this Debenture into Common Stock
pursuant to Section 6.1, such conversion shall be deemed to
have been made immediately before the close of business on
the date of such surrender of the Debenture to be converted.
On and after such deemed conversion date, the Holder
entitled to receive the shares of such Common Stock issuable
upon such conversion shall be treated for all purposes as
the record holder of such shares and shall be bound by the
terms of the Purchase Agreement.
If the Company is the subject of any of the proceedings
described in paragraphs (i) or (ii) of Section 3 of this
Debenture, no stay, injunction, restraining order or similar
law, rule or order shall be effective as against the Holder
for purposes of this Section 6; PROVIDED that if any such
stay, injunction, restraining order or similar law, rule or
order is effective against the Holder, the Company expressly
agrees to waive, modify or release such stay, injunction,
restraining order or similar law, rule or order to permit
the Holder to effect the conversion provided in this
Section 6, and to execute and prosecute all pleadings,
memoranda, affidavits, certificates, instruments and other
documents necessary or appropriate in the discretion of the
Holder to effect such waiver, modification, or release.
6.3 NO FRACTIONAL SHARES. No fractional shares of
Common Stock shall be issued upon conversion of all of the
outstanding principal balance of this Debenture into Common
Stock. In lieu of the Company issuing any fractional shares
to the Holder upon the conversion of this Debenture into
Common Stock, the Company shall pay to the Holder the amount
of outstanding principal that is not so converted, such
payment to be in the form as provided above.
6.4 NO FURTHER OBLIGATIONS. Upon conversion of all
of the outstanding principal balance of this Debenture, the
Company shall be forever released from all its obligations
and liabilities under this Debenture.
6.5 REMEDIES. The remedy contained in Section 6.1
of this Debenture shall be the Holder's sole and exclusive
remedy for any Event of Default or other default under this
Debenture while the Senior Indebtedness remains outstanding,
and the Holder hereof expressly acknowledges and agrees that
it shall have no right to commence any suit, action,
proceeding, or case, including an Insolvency Proceeding, in
any court or administrative or arbitral body for any relief
or remedy except to enforce the Holder's rights under
Section 6.1 while the Senior Indebtedness remains
outstanding; PROVIDED, HOWEVER, nothing in this Debenture
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<PAGE>
shall preclude the Holder before conversion as provided in
Section 6.1 from filing and prosecuting a proof of claim in
a Bankruptcy Proceeding consistent with Section 7 of the
Subordination Agreement.
Upon the occurrence of an Event of Default, if no
Senior Indebtedness remains outstanding, the Holder may, so
long as such condition exists, declare the entire principal
and interest hereon immediately due and payable and, in
addition, may pursue any and all other rights and remedies
available to it.
6.6 NASDAQ LIMITATION ON CONVERSION.
Notwithstanding any other provision of this Debenture, until
the Company has obtained approval of its stockholders
pursuant to the rules of the Nasdaq Stock Market, Inc., or
has obtained a waiver in respect of such rules, as
contemplated in Sections 1.5 and 2.2 of the Purchase
Agreement, the Holder and any subsequent holder of this
Debenture shall be permitted to convert into Common Stock an
amount of principal or accrued unpaid interest under the
Debenture, or exercise a portion of the warrant issued
pursuant to the Purchase Agreement (the "Warrant"), only to
the extent that all such conversions and exercises together
result in the issuance of up to and no more than 4.99% of
the Common Stock outstanding as of the Closing.
6.7 HSR LIMITATION ON CONVERSION. Notwithstanding
any other provision of this Debenture, the Holder and any
subsequent holder of this Debenture shall be permitted to
convert into Common Stock an amount of principal or accrued
unpaid interest under the Debenture only to the extent that
the Purchaser and the Company have obtained any required
consent, authorization, order, approval, exemption or waiver
under the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended ("HSR").
7. CONVERSION PRICE ADJUSTMENTS.
7.1 RECLASSIFICATION, MERGER, SALE OF ASSETS, ETC.
In case of any reclassification, capital reorganization, or
change of the outstanding Common Stock of the Company (other
than as a result of a subdivision, combination or stock
dividend), or in case of any consolidation of the Company
with, or merger of the Company into, another corporation or
other business organization (other than a consolidation or
merger in which the holders of the outstanding voting stock
of the Company immediately before the consummation of such
transaction shall, immediately after such transaction, hold,
as a group, at least a majority of the voting securities of
the surviving or successor entity), or in case of any sale
or conveyance to another corporation or other business
organization of the property of the Company, as an entirety
or substantially as an entirety, at any time before the
payment or conversion in full ("Full Payment") of the
principal and interest under this Debenture, then, as a
condition of such reclassification, reorganization, change,
consolidation, merger, sale or conveyance, lawful provision
shall be made and duly executed documents evidencing the
same from the Company or its successor shall be delivered to
the Holder of this Debenture, so that the Holder of this
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<PAGE>
Debenture shall have the right before Full Payment to
convert pursuant to Section 6.1 the outstanding principal
and unpaid accrued interest under this Debenture into the
kind and amount of shares of stock and other securities and
property receivable upon such reclassification,
reorganization, change, consolidation, merger, sale or
conveyance by a holder of the number of shares of Common
Stock of the Company which might have been acquired by the
Holder of this Debenture upon full conversion of such
principal and interest immediately before such
reclassification, reorganization, change, consolidation,
merger, sale or conveyance, and in any such case appropriate
provisions shall be made with respect to the rights and
interest of the Holder of this Debenture to the end that the
provisions hereof shall thereafter be applicable in relation
to any shares of stock, and other securities and property
thereafter deliverable upon conversion pursuant to
Section 6.1 of outstanding principal and unpaid accrued
interest hereunder.
7.2 SPLIT, SUBDIVISION OR COMBINATION OF SHARES. If
the Company shall at any time before Full Payment of this
Debenture subdivide its outstanding Common Stock, by split-
up or otherwise, or combine its outstanding Common Stock, or
issue additional shares of its capital stock in payment of a
stock dividend in respect of its Common Stock, the number of
shares issuable on the conversion pursuant to Section 6.1 of
the outstanding principal and unpaid accrued interest under
this Debenture shall forthwith be proportionately increased
in the case of a subdivision or stock dividend, or
proportionately decreased in the case of a combination, and
the Conversion Price (as set forth in clause (a) of the last
sentence of Section 6.1) then applicable to shares covered
by the outstanding principal and unpaid accrued interest of
this Debenture shall forthwith be proportionately decreased
in the case of a subdivision or stock dividend, or
proportionately increased in the case of a combination.
7.3 ADJUSTMENTS FOR DIVIDENDS IN STOCK OR OTHER
SECURITIES OR PROPERTY. If before Full Payment of this
Debenture, the holders of the securities as to which
conversion rights under this Debenture exist at the time
shall receive, or, on or after the record date fixed for the
determination of eligible stockholders, shall have become
entitled to receive, without payment therefor, other or
additional stock or other securities or property (other than
cash) of the Company by way of dividend, then and in each
case, this Debenture shall represent the right to acquire
upon conversion pursuant to Section 6.1 of outstanding
principal or unpaid accrued interest, in addition to the
number of shares of the security receivable upon full
conversion of such principal and interest, and without
payment of any additional consideration therefor, the amount
of such other or additional stock or other securities or
property (other than cash) of the Company that such holder
would hold on the date of such conversion had it been the
holder of record of the security receivable upon full
conversion of outstanding principal or unpaid accrued
interest under this Debenture on the record date of such
dividend, giving effect to all adjustments called for during
such period by the provisions of this Section 7.
- 7 -
<PAGE>
7.4 NO IMPAIRMENT. The Company will not, by
amendment of its Articles of Organization or through any
reorganization, transfer of assets, consolidation, merger,
dissolution, issuance or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or
performance of the terms to be observed or performed
hereunder by the Company, but will at all times in good
faith assist in the carrying out of all the provisions of
this Section 7 and in the taking of all such action as may
be necessary or appropriate in order to protect the rights
of the Holder against impairment.
7.5 NOTICES OF RECORD DATE, ETC. In the event of:
(i) Any taking by the Company of a record of
the holders of any class of securities of the Company for
the purpose of determining the holders thereof who are
entitled to receive any dividend (other than a cash dividend
payable out of earned surplus at the same rate as that of
the last such cash dividend theretofore paid) or other
distribution, or any right to subscribe for, purchase or
otherwise acquire any shares of stock of any class or any
other securities or property, or to receive any other right;
or
(ii) Any capital reorganization of the
Company, any reclassification or recapitalization of the
capital stock of the Company or any transfer of all or
substantially all of the assets of the Company to any other
person or any consolidation or merger involving the Company;
or
(iii) Any voluntary or involuntary dissolution,
liquidation or winding up of the Company;
the Company will mail to the Holder at least twenty (20)
days before the earliest date specified therein, a notice
specifying: (a) the date on which any such record is to be
taken for the purpose of such dividend, distribution or
right, and the amount and character of such dividend,
distribution or right; and (b) the date on which any such
reorganization, reclassification, transfer, consolidation,
merger, dissolution, liquidation or winding up is expected
to become effective and the record date for determining
stockholders entitled to vote thereon.
7.6 RESERVATION OF STOCK ISSUABLE UPON CONVERSION.
The Company shall at all times reserve and keep available
out of its authorized but unissued or treasury shares of
Common Stock solely for the purpose of effecting the
conversion of the Debenture such number of its shares of
Common Stock as shall from time to time be sufficient to
effect the conversion of the Debenture; and if at any time
the number of authorized but unissued shares of Common Stock
shall not be sufficient to effect the conversion of the
entire outstanding principal amount, in addition to such
other remedies as shall be available to the Holder of this
Debenture, the Company will use its best efforts to take
such corporate action as may, in the opinion of its counsel,
be necessary to increase its authorized but unissued shares
of Common Stock to such number of shares as shall be
sufficient for such purposes.
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<PAGE>
8. COVENANT TO PREPAY. Subject to the provisions
of the Fleet Agreement and any agreement with respect to the
modification, deferral, renewal, refinancing or extension of
any Senior Indebtedness, the Company covenants that if it
sells Common Stock or any other form of its equity in an
amount which results in aggregate net proceeds to the
Company equal to or greater than $30 million, the Company
shall repay in full the Debenture within thirty (30) days
after its receipt of the proceeds from such sale.
9. ASSIGNMENT. Subject to the restrictions on
transfer described in Section 11 below, the rights and
obligations of the Company and the Holder of this Debenture
shall be binding upon and benefit the successors, assigns,
heirs, administrators and transferees of the parties;
provided however, that, except in connection with a sale of
all or substantially all of the Company's assets and a
related assumption of the Company's liabilities, the Company
will not assign this Debenture without the prior written
consent of the Holder, which consent shall not be
unreasonably withheld.
10. WAIVER AND AMENDMENT. Any provision of this
Debenture may be amended, waived or modified upon the
written consent of the Company and the Holder of the
Debenture.
11. TRANSFER OF THIS DEBENTURE OR SECURITIES
ISSUABLE ON CONVERSION HEREOF. The Holder may not offer,
sell or otherwise dispose of this Debenture without the
prior written consent of the Company, which consent shall
not be unreasonably withheld, except to an affiliate of the
Holder (as that term is defined in the Securities Act of
1933, as amended (the "Securities Act")). With respect to
any offer, sale or other disposition of this Debenture or
Common Stock into which such Debenture may be converted, the
Holder will give prior written notice to the Company
thereto, describing briefly the manner thereof, together
with a written opinion of such Holder's counsel, to the
effect that such offer, sale or other distribution may be
effected without registration or qualification (under any
federal or state law then in effect). Such opinion shall be
reasonably satisfactory in form and substance to the Company
and the Company's counsel. Promptly upon receiving such
notice and opinion, and provided that the Company has
determined to consent to such sale or other disposition with
respect to the Debenture, the Company, as promptly as
practicable, shall notify such Holder that such Holder may
sell or otherwise dispose of this Debenture or such Common
Stock, all in accordance with the terms of the notice
delivered to the Company. If a determination has been made
pursuant to this Section 11 that the opinion of counsel for
the Holder is not reasonably satisfactory to the Company or
the Company's counsel or that the Company will not consent
to such sale or other disposition with respect to the
Debenture, the Company shall so notify the Holder promptly
after such determination has been made. Each Debenture thus
transferred and each certificate representing the Common
Stock thus transferred shall bear a legend as to the
applicable restrictions on transferability in order to
ensure compliance with the Securities Act, unless in the
opinion of counsel for the Company such legend is not
required in order to ensure compliance with the Securities
- 9 -
<PAGE>
Act. The Company may issue stop transfer instructions to
its transfer agent in connection with such restrictions.
12. NOTICES. Unless otherwise provided, all notices
and other communications required or permitted under this
Debenture shall be in writing and shall be mailed by United
States first-class mail, postage prepaid, sent by facsimile
or delivered personally by hand or by a nationally
recognized courier addressed to the party to be notified at
the address or facsimile number indicated for such person on
the signature page hereof, or at such other address or
facsimile number as such party may designate by ten (10)
days' advance written notice to the other parties hereto.
All such notices and other written communications shall be
effective on the date of mailing, confirmed facsimile
transfer or delivery.
13. NO STOCKHOLDER RIGHTS. Nothing contained in
this Debenture shall be construed as conferring upon the
Holder or any other person the right to vote or to consent
or to receive notice as a stockholder in respect of meetings
of stockholders for the election of directors of the Company
or any other matters or any rights whatsoever as a
stockholder of the Company, and no dividends or interest
shall be payable or accrued in respect of this Debenture or
the interest represented hereby or the Common Stock
obtainable hereunder until, and only to the extent that,
this Debenture shall have been converted.
14. GOVERNING LAW. This Debenture shall be governed
by and construed in accordance with the laws of The
Commonwealth of Massachusetts, excluding that body of law
relating to conflict of laws.
15. HEADINGS; REFERENCES. All headings used herein
are used for convenience only and shall not be used to
construe or interpret this Debenture. Except where
otherwise indicated, all references herein to Sections refer
to Sections hereof.
16. COSTS AND EXPENSES. If an Event of Default
occurs, the Company agrees to pay (in addition to the
outstanding principal amount hereof and unpaid accrued
interest hereon) the reasonable costs and expenses of
collection and representation, including reasonable
attorneys' fees and expenses ("Costs and Expenses").
17. REGISTRATION RIGHTS AGREEMENT. The Holder, upon
conversion of this Debenture, will be entitled to the
benefits of the Registration Rights Agreement.
{REMAINDER OF PAGE INTENTIONALLY LEFT BLANK}
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<PAGE>
IN WITNESS WHEREOF, the Company has caused this
Debenture to be executed under seal this 26th day of
December, 1997.
PCD INC.
By: /S/ John L. Dwight, Jr.
---------------------------
John L. Dwight, Jr.
Chairman of the Board
Address: 2 Technology Drive
Peabody, Massachusetts 01960
Name of Holder: Emerson Electric Co.
Address: 8000 West Florissant
P.O. Box 4100
St. Louis, Missouri 63136
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<PAGE>
NOTICE OF CONVERSION
(To Be Signed Only Upon Conversion of Debenture Following
Payment Default)
PCD Inc.
2 Technology Drive
Peabody, Massachusetts 01960
Attn: Chairman of the Board
The undersigned, the Holder of the foregoing Debenture,
hereby surrenders such Debenture for conversion into shares
of Common Stock of PCD Inc. equivalent in amount of $______
principal amount of such Debenture plus all unpaid accrued
interest and Costs and Expenses through the date of such
conversion, and requests that the certificates for such
shares be issued in the name of, and delivered to
__________________________, whose address is
__________________________________. If the principal amount
requested for conversion is less than the full outstanding
principal amount of the Debenture, the Holder requests that
the Company issue to the Holder a new debenture for the
amount not converted with the same terms as the Debenture.
Dated:__________________________
EMERSON ELECTRIC CO.
By: _______________________________
Name: ____________________________
Title: _____________________________
Address: 8000 West Florissant
P.O. Box 4100
St. Louis, Missouri 63136
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<EXHIBIT> EXHIBIT 10.17
EXHIBIT B
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS.
IT MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED, OR
HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER SUCH ACT AND
APPLICABLE LAWS, OR UNLESS THE COMPANY HAS RECEIVED AN
OPINION OF COUNSEL OR OTHER EVIDENCE, SATISFACTORY TO THE COMPANY
AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED.
TRANSFER OF THIS WARRANT IS NOT VALID EXCEPT TO THE EXTENT
THAT SUCH TRANSFER HAS BEEN MADE IN COMPLIANCE WITH THE
PROVISIONS REGARDING TRANSFER CONTAINED HEREIN.
PCD INC.
COMMON STOCK PURCHASE WARRANT
Warrant Number 1 Maximum Number of Shares: 525,000
This Warrant is issued to Emerson Electric Co., a Missouri
corporation (the "Holder") by PCD Inc., a Massachusetts
corporation (the "Company").
For value received and subject to the terms and conditions
(a) contained in the Subordinated Debenture and Warrant Purchase
Agreement dated as of December 26, 1997 (the "Purchase
Agreement"), between the Company and the Holder, pursuant to
which this Warrant is issued, and (b) hereinafter set forth, the
Holder of this Warrant is entitled upon surrender hereof, with
the Notice of Exercise in the form annexed hereto duly executed,
at the office of the Company, 2 Technology Drive, Peabody,
Massachusetts 01960, or such other office as the Company shall
notify to the Holder hereof in writing, to purchase from the
Company at an exercise price of One Dollar ($1.00) per share
(subject to adjustment as provided below, the "Exercise
Price"), up to 525,000 fully paid and non-assessable shares
(subject to adjustment as provided below) of common stock, $0.01
par value (the "Common Stock"), of the Company, exercisable as
follows: (i) on and after the date hereof, this Warrant shall be
exercisable to the extent of 150,000 shares of Common Stock;
(ii) if the principal of and accrued interest under the debenture
(the "Debenture") issued pursuant to the Purchase Agreement
have not been paid in full at the close of business on
December 31, 1998, this Warrant shall be exercisable to the
extent of an additional 225,000 shares of Common Stock; and
(iii) if the principal of and accrued interest under the
Debenture have not been paid in full at the close of business on
December 31, 1999, this Warrant shall be exercisable to the
extent of an additional 150,000 shares of Common Stock.
<PAGE>
1. TERM OF WARRANT. Subject to the provisions of
Section 13 hereof, this Warrant shall expire at the close of
business on the later of (a) December 31, 2000 and (b) thirty
(30) days after the date when that certain Subordinated Debenture
dated December 26, 1997 issued by the Company to the Holder
pursuant to the Purchase Agreement shall have been paid in full
or converted in full into Common Stock pursuant to the terms
thereof. This Warrant shall be void thereafter.
2. EXERCISE OF WARRANT.
(a) The purchase rights represented by this Warrant
are exercisable by the Holder in whole or in part, but not for
less than 50,000 shares at a time (or such lesser number of
shares which may then constitute the maximum number purchasable;
such number being subject to adjustment as provided in Section 4
below), at any time, or from time to time, during the term hereof
as described in Section 1 above, by the surrender of this Warrant
and the Notice of Exercise annexed hereto duly completed and
executed on behalf of the Holder, at the office of the Company
(or such other office or agency of the Company as it may
designate by notice in writing to the Holder at the address of
the Holder appearing on the books of the Company), accompanied by
payment (in the form specified in the Notice of Exercise) of the
purchase price of the shares to be purchased (i) by cash, money
order, certified or bank cashier's check, or wire transfer, (ii)
by cancellation by the Holder of indebtedness or other
obligations of the Company to the Holder, (iii) by surrender to
the Company of shares of Common Stock of the Company having an
aggregate Fair Market Value equal to the aggregate purchase
price, (iv) by reducing the number of shares of Common Stock
issuable upon exercise by the number of shares having an
aggregate Fair Market Value equal to the aggregate purchase
price, or (v) by a combination of (i) through (iv) above. For
the purposes of this provision, the "Fair Market Value" of one
share of Common Stock shall mean the closing price of the Common
Stock as reported on the Nasdaq National Market for the relevant
date as provided in paragraph 2(b) below (or, if such date is not
a trading date or if no trades took place on such date, then such
closing price for the last previous trading date or the last
previous date on which a trade occurred, as the case may be);
provided that if the Common Stock is no longer traded on the
Nasdaq National Market on the relevant date, then the Fair Market
Value as of such date shall be such closing price as reported on
such other stock exchange on which the Common Stock is traded;
provided further that if the Common Stock is no longer traded on
the Nasdaq National Market or other stock exchange on the
relevant date, then the Fair Market Value as of such date shall
be determined by an appraiser mutually agreed upon by the Holder
and the Company.
(b) This Warrant shall be deemed to have been
exercised immediately before the close of business on the date of
its surrender for exercise as provided above, and the person
entitled to receive the shares of Common Stock issuable upon such
exercise shall be treated for all purposes as the holder of
record of such shares as of the close of business on such date.
As promptly as practicable on or after such date and in any event
- 2 -
<PAGE>
within ten (10) business days thereafter, the Company at its
expense shall issue and deliver to the person or persons entitled
to receive the same a certificate or certificates for the number
of shares issuable upon such exercise. In the event that this
Warrant is exercised in part, the Company at its expense will
execute and deliver a new Warrant of like tenor exercisable for
the remaining number of shares for which this Warrant may then be
exercised.
(c) Notwithstanding any other provision of this
Warrant, until the Company has obtained the approval of its
stockholders pursuant to the rules of the Nasdaq Stock Market,
Inc., or has obtained a waiver in respect of such rules, as
contemplated under the Purchase Agreement, the Holder and any
subsequent holder of this Warrant shall be permitted to convert
into Common Stock an amount of principal and accrued interest
under the Debenture, or exercise a portion of this Warrant, only
to the extent that all such conversions and exercises together
result in the issuance of up to and no more than 4.99% of the
Common Stock outstanding as of the Closing.
(d) Notwithstanding any other provision of this
Warrant, in accordance with Section 1.6 of the Purchase
Agreement, the Holder and any subsequent holder of this Warrant
shall be permitted to exercise a portion of this Warrant only to
the extent that the Purchaser and the Company have obtained any
required consent, authorization, order, approval, exemption or
waiver under the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.
3. RESERVATION OF STOCK. The Company covenants that it
will at all times reserve and keep available a number of its
authorized but unissued or treasury shares of its Common Stock,
free from all preemptive rights therein, which will be sufficient
to permit the exercise of this Warrant. The Company further
covenants that such Common Stock as may be issued pursuant to the
exercise of this Warrant will, upon issuance, be duly and validly
issued, fully paid and non-assessable and free from all taxes,
liens and charges with respect to the issue thereof.
4. ADJUSTMENTS.
(a) RECLASSIFICATION, MERGER, SALE OF ASSETS, ETC.
Subject to the provisions of Section 13 hereof, in case of any
reclassification, capital reorganization, or change of the
outstanding Common Stock of the Company (other than as a result
of a subdivision, combination or stock dividend), or in case of
any consolidation of the Company with, or merger of the Company
into, another corporation or other business organization (other
than a consolidation or merger in which the holders of the
outstanding voting stock of the Company immediately before the
consummation of such transaction shall, immediately after such
transaction, hold, as a group, at least a majority of the voting
securities of the surviving or successor entity), or in case of
any sale or conveyance to another corporation or other business
organization of the property of the Company, as an entirety or
substantially as an entirety, at any time before the expiration
of this Warrant, then, as a condition of such reclassification,
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<PAGE>
reorganization, change, consolidation, merger, sale or
conveyance, lawful provision shall be made and duly executed
documents evidencing the same from the Company or its successor
shall be delivered to the Holder of this Warrant, so that the
Holder of this Warrant shall have the right before the expiration
of this Warrant to purchase, at a total price not to exceed that
payable upon the exercise of the unexercised portion of this
Warrant, the kind and amount of shares of stock and other
securities and property receivable upon such reclassification,
reorganization, change, consolidation, merger, sale or conveyance
by a holder of the number of shares of Common Stock of the
Company which might have been purchased by the Holder of this
Warrant immediately before such reclassification, reorganization,
change, consolidation, merger, sale or conveyance, and in any
such case appropriate provisions shall be made with respect to
the rights and interest of the Holder of this Warrant to the end
that the provisions hereof shall thereafter be applicable in
relation to any shares of stock, and other securities and
property thereafter deliverable upon exercise hereof.
(b) SPLIT, SUBDIVISION OR COMBINATION OF SHARES. If
the Company shall at any time before the expiration of this
Warrant subdivide its outstanding Common Stock, by split-up or
otherwise, or combine its outstanding Common Stock, or issue
additional shares of its capital stock in payment of a stock
dividend in respect of its Common Stock, the number of shares
issuable on the exercise of the unexercised portion of this
Warrant shall forthwith be proportionately increased in the case
of a subdivision or stock dividend, or proportionately decreased
in the case of a combination, and the Exercise Price then
applicable to shares covered by the unexercised portion of this
Warrant shall forthwith be proportionately decreased in the case
of a subdivision or stock dividend, or proportionately increased
in the case of a combination.
(c) ADJUSTMENTS FOR DIVIDENDS IN STOCK OR OTHER
SECURITIES OR PROPERTY. If while this Warrant, or any portion
thereof, remains outstanding and unexpired, the holders of the
securities as to which purchase rights under this Warrant exist
at the time shall receive, or, on or after the record date fixed
for the determination of eligible stockholders, shall have become
entitled to receive, without payment therefor, other or
additional stock or other securities or property (other than
cash) of the Company by way of dividend, then and in each case,
this Warrant shall represent the right to acquire, in addition to
the number of shares of the security receivable upon exercise of
this Warrant, and without payment of any additional consideration
therefor, the amount of such other or additional stock or other
securities or property (other than cash) of the Company that such
holder would hold on the date of such exercise had it been the
holder of record of the security receivable upon exercise of this
Warrant on the record date of such dividend, giving effect to all
adjustments called for during such period by the provisions of
this Section 4.
(d) NO IMPAIRMENT. The Company will not, by
amendment of its Articles of Organization or through any
reorganization, transfer of assets, consolidation, merger,
dissolution, issuance or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or
- 4 -
<PAGE>
performance of the terms to be observed or performed hereunder by
the Company, but will at all times in good faith assist in the
carrying out of all the provisions of this Section 4 and in the
taking of all such action as may be necessary or appropriate in
order to protect the rights of the Holder against impairment.
5. NO FRACTIONAL SHARES. In no event shall any
fractional share of Common Stock of the Company be issued upon
any exercise of the warrant granted hereunder. If, upon exercise
of this Warrant as an entirety, the Holder would, except as
provided in this Section 5, be entitled to receive a fractional
share of Common Stock, then the Company shall issue a full share
with respect to such fractional share.
6. REPLACEMENT OF WARRANT. In case this Warrant shall be
mutilated, lost, stolen, or destroyed, the Company may issue a
new warrant of like tenor and denomination and deliver the same
(a) in exchange and substitution for and upon surrender and
cancellation of any mutilated Warrant, or (b) in lieu of any
Warrant lost, stolen, or destroyed, upon receipt of evidence
satisfactory to the Company of the loss, theft or destruction of
such Warrant (including a reasonably detailed affidavit with
respect to the circumstances of any loss, theft, or destruction)
and of indemnity satisfactory to the Company.
7. RIGHTS OF STOCKHOLDERS. Except as provided in
Section 4 above, this Warrant shall not entitle its Holder to any
of the rights of a stockholder of the Company.
8. TRANSFER OF WARRANT.
(a) WARRANT REGISTER. The Company will maintain a
register (the "Warrant Register") containing the name and
address of the Holder of this Warrant. The Holder of this Warrant
may change its address as shown on the Warrant Register by
written notice to the Company requesting such change. Any notice
or written communication required or permitted to be given to the
Holder may be given by registered mail, or delivered to such
Holder at its address as shown on the Warrant Register.
(b) WARRANT AGENT. The Company may, by written
notice to the Holder, appoint an agent for the purpose of
maintaining the Warrant Register referred to in Section 8(a)
above, issuing the Common Stock issuable upon the exercise of
this Warrant, exchanging this Warrant, replacing this Warrant, or
any or all of the foregoing. Thereafter, any such registration,
issuance, exchange or replacement, as the case may be, shall be
made at the office of such agent.
(c) TRANSFERABILITY OF WARRANT. This Warrant may be
transferred or assigned in whole or in part by the Holder either
to an affiliate (as that term is defined in the Securities Act of
1933, as amended (the "Securities Act") of the Holder or if the
Holder has complied with the terms and conditions of (i) the
Purchase Agreement, (ii) this Warrant and (iii) all applicable
- 5 -
<PAGE>
federal and state securities laws. Such compliance shall
include, without limitation, the delivery of investment
representation letters and legal opinions reasonably satisfactory
to the Company. Subject to the provisions of this Warrant with
respect to compliance with the Securities Act, title to this
Warrant may be transferred by endorsement (by the Holder
executing the Form of Assignment annexed hereto) and delivery in
the same manner as a negotiable instrument transferable by
endorsement and delivery.
(d) EXCHANGE OF WARRANT UPON A TRANSFER. On
surrender of this Warrant for exchange, properly endorsed on the
Form of Assignment and subject to the provisions of this Warrant
with respect to compliance with the Act and with the limitations
on assignments and transfers contained in this Section 8, the
Company at its expense shall issue to or on the order of the
Holder a new warrant or warrants of like tenor, in the name of
the Holder or as the Holder (on payment by the Holder of any
applicable transfer taxes) may direct, for the number of shares
issuable upon exercise hereof.
(e) COMPLIANCE WITH SECURITIES LAWS.
(i) The Holder of this Warrant, by acceptance
hereof, acknowledges that this Warrant and the shares of Common
Stock to be issued upon exercise hereof are being acquired solely
for the Holder's own account and not as a nominee for any other
party, and for investment, and that the Holder will not offer,
sell or otherwise dispose of this Warrant or any shares of Common
Stock to be issued upon exercise hereof except under
circumstances that will not result in a violation of the Act or
any state securities laws. Upon exercise of this Warrant, the
Holder shall, if requested by the Company, confirm in writing, in
a form satisfactory to the Company, that the shares of Common
Stock so purchased are being acquired solely for the Holder's own
account and not as a nominee for any other party, for investment,
and not with a view toward distribution or resale.
(ii) This Warrant and all shares of Common
Stock issued upon exercise hereof shall be stamped or imprinted
with a legend in substantially the following form (in addition to
any legend required by state securities laws):
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS. IT
MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED, OR HYPOTHECATED
UNLESS AND UNTIL REGISTERED UNDER SUCH ACT AND APPLICABLE LAWS,
OR UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL OR
OTHER EVIDENCE, SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT
SUCH REGISTRATION IS NOT REQUIRED.
- 6 -
<PAGE>
9. CERTIFICATE OF ADJUSTMENT OF WARRANT PRICE. Whenever
the Warrant price is adjusted, as herein provided, the Company
shall promptly deliver to the Holder of this Warrant a
certificate setting forth the Warrant price after such adjustment
and setting forth a brief statement of the facts requiring such
adjustment, as certified by the Company's independent public
accountants.
10. NOTICE OF DIVIDEND OR DISTRIBUTION. If at any time
before the expiration or exercise of this Warrant, the Company
shall propose to pay any dividend or make any distribution upon
its Common Stock or make any subdivision or combination of, or
other change in its Common Stock, the Company shall cause notice
thereof to be mailed, first class, postage prepaid, to the Holder
of this Warrant at least twenty (20) days before the date as of
which holders of Common Stock who shall participate in such
dividend or distribution are to be determined. Failure to give
such notice, or any defect therein, shall not affect the legality
or validity of any dividend or distribution.
11. "MARKET STAND OFF" AGREEMENT. The Holder, if
requested by the Company or any managing underwriter of the
Company's securities, shall agree not to sell or otherwise
transfer or dispose of any Common Stock of the Company held by
the Holder during the period up to 180 days, as requested by the
Company or such underwriter, following the effective date of a
registration statement of the Company filed under the Securities
Act (except for any Company securities held by the Holder sold
pursuant to such registration statement). Such agreement shall
be in writing in form satisfactory to the Company and such
underwriter. The Company may impose stop-transfer instructions
with respect to such Common Stock subject to the foregoing
restriction until the end of such period.
12. REGISTRATION RIGHTS AGREEMENT. The Holder, upon
exercise of the Warrant, will be entitled to the benefits of the
Registration Rights Agreement dated as of the date of the
Purchase Agreement, by and between the Company and the Holder.
13. TERMINATION UPON CONSOLIDATION OR MERGER.
Notwithstanding any other provision of this Warrant, if the
Company is to be consolidated with or acquired by another entity
in a merger or other reorganization in which the holders of the
outstanding voting stock of the Company immediately before the
consummation of such transaction shall immediately after such
transaction hold, as a group, less than a majority of the voting
securities of the surviving or successor entity, or in the event
of a sale of all or substantially all of the Company's assets or
otherwise, the Company may upon notice to the Holder provide that
this Warrant must be exercised within a specified number of days
of the date of such notice, at the end of which period this
Warrant shall terminate.
14. GOVERNING LAW. The provisions and terms of this
Warrant shall be construed in accordance with the laws of the
Commonwealth of Massachusetts.
{REMAINDER OF PAGE INTENTIONALLY LEFT BLANK}
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<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant to
be executed under seal this 26th day of December, 1997.
PCD INC.
By: /S/ John L. Dwight, Jr.
---------------------------
John L. Dwight, Jr.
Chairman of the Board
Address: 2 Technology Drive
Peabody, Massachusetts 01960
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<PAGE>
NOTICE OF WARRANT EXERCISE
Date _____________________
PCD Inc.
2 Technology Drive
Peabody, Massachusetts 01960
(1) The undersigned hereby elects to purchase __________
shares of Common Stock of PCD Inc., pursuant to the provisions of
Section 2 of the attached Warrant, and tenders herewith payment
of the Exercise Price for such shares in accordance with
Section 2(a) of such Warrant, as follows:
_____________________
_________________________________________________________________
______________.
(2) In exercising this Warrant, the undersigned hereby
confirms and acknowledges that the shares of Common Stock are
being acquired solely for the account of the undersigned and not
as a nominee for any other party (other than affiliates as
permitted under Section 8(c) of the attached Warrant), and for
investment, and that the undersigned will not offer, sell or
otherwise dispose of any such shares of Common Stock except under
circumstances that will not result in a violation of the
Securities Act of 1933, as amended or any applicable state
securities laws.
(3) Please issue a certificate or certificates
representing said shares of Common Stock in the name of the
undersigned or in such other name as is specified below:
__________________________________
Certificate Name
(4) Please issue a new Warrant for the unexercised
portion of the attached Warrant in the name of the undersigned or
in such other name as is specified below.
- 9
<PAGE>
EMERSON ELECTRIC CO.
By:____________________________________
Name:__________________________________
Title:_________________________________
Address: 8000 West Florissant
P.O. Box 4100
St. Louis, Missouri 63136
- 10 -
<PAGE>
FORM OF ASSIGNMENT
For value received Emerson Electric Co. hereby sells, assigns and
transfers unto
_________________________________________________________________
_________________________________________________________________
(Please print or typewrite name and address of Assignee)
warrants to purchase _________________________ (___________)
shares of the Common Stock of PCD Inc., represented by the within
Warrant, and does hereby irrevocably constitute and appoint
________________________________________ Attorney to transfer
the within Warrant on the books of the PCD Inc. with full power
of substitution on the premises.
Dated:_________________________
EMERSON ELECTRIC CO.
By:____________________________
Name:__________________________
Title:_________________________
Address: 8000 West Florissant
P.O. Box 4100
St. Louis, Missouri 63136
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<EXHIBIT> EXHIBIT 10.18
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement"),
dated as of December 26, 1997, is made and entered into by and
between PCD Inc., a Massachusetts corporation (the "Company"),
and EMERSON ELECTRIC CO., a Missouri corporation ("Emerson"
and, together with its permitted assigns under Section 11 hereof,
"Holders").
RECITALS
A. Emerson is the beneficial owner of 1,918,080
shares of common stock of the Company.
B. Concurrently with the execution of this Agreement,
the Company and Emerson have entered into the Subordinated
Debenture and Warrant Purchase Agreement dated December 26, 1997
(the "Purchase Agreement"), pursuant to which the Company has
issued to Emerson (i) the PCD Inc. Subordinated Debenture dated
December 26, 1997 (the "Debenture"), which is convertible into
a number of additional shares of common stock of the Company
determined on the basis of the conversion price thereof, which
will be fixed as of the date of conversion, and (ii) the Common
Stock Purchase Warrant dated December 26, 1997 (the "Warrant")
for the purchase of up to 525,000 additional shares of common
stock of the Company. The Warrant is initially exercisable for
up to 150,000 shares of common stock of the Company. If the
Debenture has not been paid in full on December 31, 1998 and
December 31, 1999, the Warrant will become exercisable for up to
an additional 225,000 and 150,000 shares of common stock of the
Company, respectively.
C. The Holder may desire, in the future, to sell to
the public some or all of such shares of common stock.
D. The Company and Emerson therefore deem it to be in
their respective best interests to set forth the rights of the
Holder in connection with public offerings and sales of such
shares.
NOW, THEREFORE, in consideration of the premises and
mutual covenants and obligations hereinafter set forth, and
intending to be legally bound hereby, the Company and Emerson
hereby agree as follows:
1. DEFINITIONS. For purposes of this Agreement:
(a) "Common Stock" shall mean the common stock,
par value $0.01 per share, of the Company and any other
securities into which or for which such common stock has
<PAGE>
been converted or exchanged pursuant to a plan of
recapitalization, reorganization, merger, sale of assets, or
otherwise.
(b) "Exchange Act" shall mean the Securities
Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder.
(c) "Form S-3" means such form of registration
statement under the Securities Act on the date hereof or any
similar registration form under the Securities Act
subsequently adopted by the SEC that permits the inclusion
or incorporation of substantial information by reference to
other documents filed by the Company with the SEC.
(d) "Prior Purchase Agreement" means that
certain agreement of the Company, dated as of April 2, 1985,
entitled "Stock Purchase Agreement and Amended Stock
Purchase Agreement Dated March 31, 1983."
(e) "Registration Rights Owners" means all
beneficiaries, other than the Holders hereunder, of
registration rights under Section 9 of the Prior Purchase
Agreement and all permitted assigns thereunder.
(f) The terms "register," "registered," and
"registration," refer to a registration effected by the
preparation and filing of a Registration Statement in
compliance with the Securities Act, and the declaration or
ordering of effectiveness of such Registration Statement by
the SEC.
(g) "Registrable Securities" shall mean (i)
all shares of Common Stock owned by Emerson, whether
presently owned or subsequently acquired upon conversion of
the Debenture, exercise of the Warrants or otherwise, (ii)
all shares of Common Stock owned by a subsequent Holder that
were acquired (by Emerson or a subsequent Holder) upon
conversion of the Debenture or exercise of the Warrants, and
(iii) all shares of Common Stock issued as (or issuable upon
the conversion or exercise of any warrant, right or other
security which is issued as) a dividend or other
distribution with respect to, in exchange for, or in
replacement of the shares of Common Stock referred to in (i)
and (ii) above. The term "Registrable Securities"
excludes, however, any security (i) the sale of which had
been effectively registered under the Securities Act and
which had been disposed of in accordance with a Registration
Statement, (ii) that has been sold by a Holder in a
transaction exempt from the registration and prospectus
delivery requirements of the Securities Act under Section
4(1) thereof (including, without limitation, transactions
pursuant to Rules 144 and 144A) such that the further
disposition of such securities by the transferee or assignee
is not restricted under the Securities Act, (iii) that have
been sold by a Holder in a transaction in which such
Holder's rights under this Agreement are not, or cannot be,
assigned, or (iv) for which the registration rights provided
under this Agreement have expired pursuant to Section 16 of
this Agreement.
(h) "Registration Expenses" shall mean (i)
registration, qualification and filing fees; (ii) fees and
expenses of compliance with state securities or blue sky
- 2 -
<PAGE>
laws (including reasonable fees and disbursements of counsel
in connection with blue sky qualification of any Registrable
Securities being registered); (iii) printing expenses; (iv)
internal expenses (including, without limitation, all
salaries and expenses of officers and employees performing
legal or accounting duties); (v) fees and disbursements of
counsel for the Company and customary fees and expenses for
independent certified public accountants retained by the
Company (including the expenses of any comfort letters or
costs associated with the delivery by independent certified
public accountants of comfort letters customarily requested
by underwriters); (vi) fees and expenses of listing any
Registrable Securities on any securities exchange on which
the Common Stock is then listed; and (vii) fees and
disbursements of underwriters customarily paid by issuers or
sellers of securities, but excluding any underwriting fees,
discounts or commissions attributable to the sale of any
Registrable Securities and any fees and expenses of
underwriters' counsel (other than as provided in clause (ii)
above).
(i) "Registration Statement" shall mean any
registration statement or similar document that covers any
of the Registrable Securities pursuant to the provisions of
this Agreement, including the prospectus or preliminary
prospectus included therein, all amendments and supplements
to such Registration Statement, including post-effective
amendments, all exhibits to such Registration Statement, and
all material incorporated by reference in such Registration
Statement.
(j) "Rule 144" shall mean Rule 144 promulgated
under the Securities Act or any successor rule thereto.
(k) "Rule 144A" shall mean Rule 144A
promulgated under the Securities Act or any successor rule
thereto.
(l) "SEC" shall mean the Securities and
Exchange Commission.
(m) "Securities Act" shall mean the Securities
Act of 1933, as amended, and the rules and regulations
promulgated thereunder.
2. DEMAND REGISTRATION.
(a) If the Company shall receive at any time a
written request, in the manner provided in Section 17, from
the Holders of Registrable Securities representing at least
ten percent (10%) of all Common Stock then outstanding that
the Company file a registration statement under the
Securities Act covering the registration of any or all of
such Holders' Registrable Securities, then the Company shall
(i) within 10 days of the receipt thereof, give written
notice, in the manner provided in Section 17, of such
request to all Holders of outstanding Registrable Securities
known to the Company, and (ii) subject to the limitations
contained in this Section 2, use its reasonable best efforts
to effect, as soon as practicable and in any event within
120 days of the receipt of such request, the registration
under the Securities Act, pursuant to the provisions of
Section 4 hereof, of all Registrable Securities for which
the Company receives a request from the Holders thereof in
the manner provided in Section 17 within 20 days of the
mailing of such
- 3 -
<PAGE>
notice by the Company. The Company, however, shall not be
required to effect a registration pursuant to this Section 2
unless the aggregate number of shares requested to be
registered represents at least ten percent (10%) of the
Common Stock then outstanding.
(b) If the Holder(s) initiating the registration
request hereunder (collectively, the "Initiating Holder")
intends to distribute the Registrable Securities covered by
its request by means of an underwriting, it shall so advise
the Company as a part of its request made pursuant to
Section 2(a) and the Company shall include such information
in the written notice to the Holders referred to in Section
2(a). In such event, the right of any Holder to include its
Registrable Securities in such registration shall be
conditioned upon such Holder's participation in such
underwriting and the inclusion of such Holder's Registrable
Securities in the underwriting to the extent provided
herein. All Holders proposing to sell securities through
such underwriting (together with the Company as provided in
Section 5(g) of this Agreement and any other holder of
shares of Common Stock permitted to participate in such
registration pursuant to this Section 2(b)) shall enter into
an underwriting agreement in customary form with the
underwriter or underwriters selected for such underwriting
by the Company (provided the same are underwriters of
recognized national standing reasonably acceptable to the
Initiating Holder), upon the terms and conditions agreed
upon between the Company and such underwriter(s).
Notwithstanding any other provisions of this Section 2, if
the underwriter(s) advise the Initiating Holder in writing
that marketing or other factors require a limitation of the
number of Registrable Securities to be underwritten, then
the Company shall so advise Holders of Registrable
Securities that would otherwise be underwritten pursuant
hereto, and the number of Registrable Securities that may be
included in the underwriting shall be allocated among all
Holders thereof, including the Initiating Holder, in
proportion (as nearly as practicable) to the number of
Registrable Securities which each Holder requested be
included in such registration. If the number of Registrable
Securities to be underwritten has not been so limited, the
Company may include shares of Common Stock for its own
account (or for the account of other shareholders) in such
registration if the underwriter(s) so agree and to the
extent that, in the opinion of such underwriter(s), the
inclusion of such additional shares will not adversely
affect the offering of the Registrable Securities included
in such registration.
(c) The Company shall not be obligated to effect
a total of more than two registrations pursuant to this
Section 2 and shall not be obligated to effect more than one
registration in any twelve-month period pursuant to this
Section 2.
3. INCIDENTAL REGISTRATION.
(a) If (but without any obligation to do so) the
Company proposes to register (excluding a registration
effected by the Company for shareholders other than the
Holders, except this exclusion shall not apply in the case
of a firm commitment underwriting) any shares of Common
Stock under the Securities Act in connection with the public
offering of such shares solely for cash on any form of
Registration Statement in which the inclusion
- 4 -
<PAGE>
of Registrable Securities is appropriate (excluding a
registration (i) relating solely to the sale of securities
to participants in a Company stock plan, (ii) pursuant to a
Registration Statement on Form S-4 or Form S-8 (or any
successor forms) or any form that does not include
substantially the same information, other than information
relating to the selling shareholders or their plan of
distribution, as would be required to be included in a
registration statement covering the sale of Registrable
Securities, (iii) in connection with any dividend
reinvestment or similar plan, or (iv) for the sole purpose
of offering securities to another entity or its security
holders in connection with the acquisition of assets or
securities of such entity or any similar transaction), the
Company shall promptly give each Holder written notice of
such registration in the manner provided in Section 17 at
least 20 days before the anticipated filing date of any such
Registration Statement. The Company may also give notice to
any Registration Rights Owners if required by the Prior
Purchase Agreement. Upon the written request of any Holder
given in the manner provided in Section 17 within 10 days
after the mailing of such notice by the Company, the Company
shall, pursuant to the provisions of Section 4 hereof, cause
to be registered under the Securities Act all of the
Registrable Securities that such Holder has so requested to
be registered. The Company shall not be required to proceed
with, or maintain the effectiveness of, any registration of
its securities after giving the notice herein provided, and
the right of any Holder to have Registrable Securities
included in such Registration Statement shall be conditioned
upon participation in any underwriting to the extent
provided herein. The Company shall not be required to
include any Registrable Securities in such underwriting
unless the Holders thereof enter into an underwriting
agreement in customary form, and upon terms and conditions
agreed upon between the Company and the underwriter(s)
(except as to monetary obligations of the Holders not
contemplated by Section 9 of this Agreement), with the
underwriter(s) selected by the Company. In the event that
the underwriter(s) shall advise the Company that marketing
or other factors require a limitation of the number of
shares to be underwritten, then the Company shall so advise
all Holders of Registrable Securities (and all Registration
Rights Owners who have given the above-stated notice, if
any) that would otherwise be underwritten pursuant hereto.
The underwriter(s) may exclude some or all of the
Registrable Securities and some or all of the securities
owned by Registration Rights Owners from such underwriting
and the number of Registrable Securities and securities
owned by Registration Rights Owners, if any, that may be
included in the underwriting shall be allocated among all
Holders and Registration Rights Owners in proportion (as
nearly as practicable) to the total number of securities
which each Holder requested be included in such
registration. Nothing in this Section 3 is intended to
diminish the number of securities to be included by the
Company in such underwriting. The Company and the
underwriter(s) selected by the Company shall make all
determinations with respect to the timing, pricing, and
other matters related to the offering.
4. REGISTRATION PROCEDURE. Whenever required under
this Agreement to effect the registration of any Registrable
Securities, the Company shall, as expeditiously as
reasonable practicable:
- 5 -
<PAGE>
(a) Prepare and file with the SEC a new
Registration Statement with respect to such Registrable
Securities and use its best efforts to cause such
registration statement to become effective, and keep such
Registration Statement effective for up to 90 days or such
shorter period as shall be required to sell all of the
Registrable Securities covered by such Registration
Statement (except as provided in Section 3); provided,
however, that if such Registration Statement is on Form S-3
and related to a distribution by the Holders on a delayed or
continuous basis other than by means of an underwriting, the
Company shall keep such Registration Statement effective for
one year following the initial date of effectiveness
thereof; provided further that no Registration Statement
need remain in effect after all Registrable Securities
covered thereby have been sold.
(b) Prepare and file with the SEC such
amendments and supplements to such Registration Statement
and the prospectus used in connection with such Registration
Statement as may be necessary to comply with the provisions
of the Securities Act with respect to the disposition of all
securities covered by such Registration Statement.
(c) Furnish to the Holders of Registrable
Securities to be registered, without charge, such number of
copies of a prospectus, including a preliminary prospectus,
and any amendment or supplement thereto as they may
reasonably request and a reasonable number of copies of the
then-effective Registration Statement and any post-
effective amendment thereto, including financial statements
and schedules, all documents incorporated therein by
reference and all exhibits (including those incorporated by
reference).
(d) Promptly after the filing of any document
that is to be incorporated by reference into a Registration
Statement or prospectus, provide copies of such document to
the Holders of Registrable Securities covered thereby and
any underwriter.
(e) Use its reasonable best efforts to register
and qualify the securities covered by such Registration
Statement under such other securities or blue sky laws of
such jurisdictions as shall be reasonably requested by the
Holders; provided, however, that the Company shall not be
required to qualify to do business or to file a general
consent to service of process in any such states or
jurisdictions where it would not otherwise be required to so
qualify to do business or consent to service of process or
subject itself to taxation in any such jurisdiction.
(f) Cooperate with the Holders of Registrable
Securities and each underwriter participating in the
disposition of such Registrable Securities and their
respective counsel in connection with any filings required
to be made with the National Association of Securities
Dealers, Inc. or any other exchange or automated quotation
system on which the Company's Common Stock may be listed.
(g) In the event of any underwritten public
offering, enter into and perform its obligations under an
underwriting agreement, in usual and customary form, with
the underwriter(s) of such offering, with such terms and
conditions as the Company
- 6 -
<PAGE>
and the underwriter(s) may agree. Each Holder participating
in such underwriting shall also enter into and perform its
obligations under such an agreement.
(h) Notify each Holder of Registrable Securities
covered by such Registration Statement, at any time when a
prospectus relating thereto is required to be delivered
under the Securities Act, of the happening of any event as a
result of which the prospectus included in such Registration
Statement, as then in effect, includes an untrue statement
of a material fact or omits to state a material fact
required to be stated therein or necessary to make the
statements therein not misleading in the light of the
circumstances then existing.
(i) Cause all Registrable Securities covered by
the Registration Statement to be listed on each securities
exchange or automated quotation system on which shares of
the Company's Common Stock are then listed. If any of such
shares are not so listed, the Company shall cause such
shares to be listed on such securities exchange or automated
quotation system as may be reasonably requested by the
Holders of a majority of the Registrable Securities being
registered.
(j) In the case of an underwritten public
offering, furnish to the underwriters, at the request of a
majority of the Holders requesting registration pursuant to
this Agreement, on the date that such Registrable Securities
are delivered to the underwriters for sale in connection
with a registration pursuant to this Agreement, (A) an
opinion of counsel representing the Company for the purposes
of such registration, and (B) a letter from independent
certified public accountants of the Company, in each case to
be dated such date and to be in form and substance as is
customarily given by counsel or independent certified public
accountants, as the case may be, to underwriters in an
underwritten public offering, addressed to the underwriters.
(k) Permit a representative of any Holder of
Registrable Securities, any underwriter participating in any
disposition pursuant to such registration, and any attorney
or accountant retained by such Holder or underwriter, to
participate, at each such person's own expense, in the
preparation of the Registration Statement, and cause the
Company's officers, directors and employees to supply all
information reasonably requested by any such representative,
underwriter, attorney or accountant in connection with such
registration; provided, however, that, if requested by the
Company, such representatives, underwriters, attorneys or
accountants enter into a confidentiality agreement, in form
and substance reasonably satisfactory to the Company, prior
to the release or disclosure of any such information.
Notwithstanding the foregoing, the Company may delay,
suspend or withdraw any registration or qualification of
Registrable Securities required pursuant to this Agreement for a
period not exceeding 180 days if the Company shall in good faith
determine that any such registration would adversely affect a
public or private offering or contemplated offering of any
securities of the Company or any other anticipated or
contemplated material corporate event. In addition, the Company
shall not be required to register Registrable Securities within
- 7 -
<PAGE>
twelve months after the effective date of a Registration
Statement referred to in Section 3 pursuant to which the Holders
were afforded the opportunity to register Registrable Securities.
5. HOLDER'S OBLIGATION TO FURNISH INFORMATION. It
shall be a condition precedent to the obligations of the Company
to take any action pursuant to this Agreement with respect to any
Registrable Securities that the Holder of such securities furnish
to the Company such information regarding itself, the Registrable
Securities held by it, and the intended method of disposition of
such securities as shall be required to effect the registration
of such Holder's Registrable Securities.
Each Holder agrees that, upon receipt of any notice from the
Company requesting that the Holder forthwith discontinue
disposition of Registrable Securities pursuant to the then
current prospectus, the Holder will discontinue such disposition
until (i) such Holder is advised in writing by the Company that a
new Registration Statement covering the reoffer of Registrable
Securities has become effective under the Securities Act, (ii)
such Holder receives copies of a supplemental or amended
prospectus contemplated by Section 4 hereof, or (iii) until such
Holder is advised in writing by the Company that the use of the
prospectus may be resumed. The Company shall use its reasonable
best efforts to limit the duration of any discontinuance of
disposition of Registrable Securities pursuant to this paragraph.
6. REGISTRATION EXPENSES.
(a) In the case of the first demand registration
requested pursuant to Section 2, the Company shall pay all
Registration Expenses; provided, however, that the Company
shall not be required to pay for any expenses of any
registration proceeding begun pursuant to Section 2 if the
registration request is subsequently withdrawn at the
request of the Holders of a majority of the Registrable
Securities to be registered (in which case all participating
Holders shall bear such expenses), unless the Holders of a
majority of Registrable Securities to be registered agree to
forfeit their right to one demand registration pursuant to
Section 2, as the case may be; provided further, however,
that if at the time of such withdrawal, the Holders have
learned of a material adverse change in the condition,
business, or prospects of the Company from that known to the
Holders at the time of their request, then the Holders shall
not be required to pay any of such expenses and shall retain
their rights pursuant to Section 2. In the case of the
second demand registration requested pursuant to Section 2,
the Initiating Holder shall pay all Registration Expenses;
provided, however, that the Initiating Holder shall not be
required to pay for any expenses of any registration
proceeding begun pursuant to Section 2 if the registration
request is subsequently withdrawn expressly because of a
material adverse change in the condition, business, or
prospects of the Company that was not known to the
Initiating Holder at the time of its request (in which case
the Company shall bear all such expenses).
(b) In the case of any incidental registration
pursuant to Section 3, the requesting Holders shall bear any
incremental Registration Expenses, including, without
limitation, incremental registration and qualification fees
- 8 -
<PAGE>
and expenses (including underwriter's fees, discounts and
commissions), and any incremental costs and disbursements
(including legal fees and expenses) that result from the
inclusion of the Registrable Securities included in such
registration, with such incremental expenses being borne by
the requesting Holders on a pro rata basis.
7. EFFECTIVENESS OF REGISTRATION. A registration
requested pursuant to Section 2 will not be deemed to have been
effected if (i) the registration statement has not been kept
effective for the period required under Section 4(a) of this
Agreement, (ii) the offering of Registrable Securities pursuant
to such registration is interfered with by any stop order,
injunction or other order or requirement of the SEC or other
governmental agency or court, or (iii) the conditions to the
closing of any such registration that is underwritten are not
satisfied.
8. DELAY OF REGISTRATION. No Holder shall have any
right to obtain or seek an injunction restraining or otherwise
delaying any registration of the Company's securities as the
result of any controversy that might arise with respect to the
interpretation or implementation of this Agreement.
9. INDEMNIFICATION AND CONTRIBUTION. In the event
any Registrable Securities are included in a Registration
Statement pursuant to this Agreement:
(a) The Company will indemnify and hold harmless
each Holder, its directors, officers and employees and each
person, if any, who "controls" such Holder (within the
meaning of the Securities Act) against all losses, claims,
damages, or liabilities, joint or several, or actions in
respect thereof to which such Holder or other person
entitled to indemnification hereunder may become subject
under the Securities Act or otherwise, insofar as such loss,
claims, damages, liabilities or actions in respect thereof
arise out of, or are based upon, any untrue statement or
alleged untrue statement of any material fact contained in
such Registration Statement, any related preliminary
prospectus, or any related prospectus or any amendment or
supplement thereto, or arise out of, or are based upon, the
omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the
statements therein not misleading, and will reimburse such
Holder or other person entitled to indemnification hereunder
for any legal or other expenses reasonably incurred by it in
connection with investigating or defending any such loss,
claim, damage, liability or action; provided, however, that
the Company will not be so liable to the extent that any
such loss, claim, damage, liability or action arises out of,
or is based upon, an untrue statement or alleged untrue
statement of a material fact or an omission or alleged
omission to state a material fact in such Registration
Statement, such preliminary prospectus, or such prospectus,
or any such amendment or supplement thereto in reliance
upon, and in conformity with, written information furnished
to the Company by or on behalf of a Holder or an underwriter
specifically for use therein; and provided further that the
Company will not be liable, and this indemnification
agreement shall not apply, in any such case to the extent
that any such loss, claim, damage, liability or action is
solely attributable to the failure of such Holder (or
underwriter or agent acting on its behalf) to deliver a
final prospectus (or amendment or supplement thereto)
furnished by the Company that corrects a material
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misstatement or omission contained in the preliminary
prospectus (or final prospectus). The Company will also
indemnify underwriters, selling brokers, dealer managers and
similar securities industry professionals participating in
the distribution, their officers and directors and each
person who "controls" such persons (within the meaning of
the Securities Act) to the same extent as provided above
with respect to the indemnification of the Holders, if so
requested, except with respect to information furnished in
writing specifically for use in any prospectus or
Registration Statement by any selling Holders or any such
underwriters.
(b) With respect to written information
furnished to the Company by or on behalf of a Holder
specifically for use in a Registration Statement, any
related preliminary prospectus, or any related prospectus or
any supplement or amendment thereto, such Holder will
severally indemnify and hold harmless the Company, and its
directors, officers and employees and each person, if any,
who "controls" the Company (within the meaning of the
Securities Act) against any losses, claims, damages or
liabilities, joint or several, or actions in respect
thereof, to which the Company or such other person entitled
to indemnification hereunder may become subject under the
Securities Act, or otherwise, insofar as such losses,
claims, damages, liabilities or actions in respect thereof
arise out of, or are based upon, any untrue statement or
alleged untrue statement in such information furnished by or
on behalf of such Holder of any material fact contained in
such Registration Statement, such preliminary prospectus, or
such prospectus, or any such amendment or supplement
thereto, or arise out of, or are based upon, the omission or
alleged omission in such information furnished by or on
behalf of such Holder to state therein a material fact
required to be stated therein or necessary to make the
statements therein not misleading; and such Holder will
reimburse the Company and such other persons for any legal
or other expenses reasonably incurred by them in connection
with investigating or defending any such loss, claim,
damage, liability or action, in each case to the extent, but
only to the extent, that the same arises out of, or is based
upon, an untrue statement or alleged untrue statement in
such information furnished by or on behalf of such Holder of
a material fact or an omission or alleged omission to state
a material fact in such Registration Statement, such
preliminary prospectus, or such prospectus or any such
amendment or supplement thereto in reliance upon, and in
conformity with, such written information; provided,
however, that the liability of any Holder hereunder shall be
limited to the amount received by such Holder upon the sale
of its Registrable Securities pursuant to such Registration
Statement, such preliminary prospectus, or such prospectus
or any such amendment or supplement thereto. The Company
shall be entitled to receive indemnities from underwriters,
selling brokers, dealer managers and similar securities
industry professionals participating in the distribution, to
the same extent as provided above with respect to the
information so furnished in writing by such persons
specifically for inclusion in any prospectus or Registration
Statement. Such Holder will also indemnify underwriters,
selling brokers, dealer managers and similar securities
industry professionals participating in the distribution,
their officers and directors and each person who
"controls" such persons (within the meaning of the
Securities Act) to the same extent as provided above with
respect to the indemnification of the Company, if so
requested.
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<PAGE>
(c) Promptly after receipt by an indemnified
party of notice of any claim or the commencement of any
action, the indemnified party will, if a claim in respect
thereof is to be made against the indemnifying party, notify
the indemnifying party in writing of the claim or the
commencement of that action; provided, however, that the
failure to notify the indemnifying party will not relieve it
from any liability that it may have to the indemnified party
except to the extent it was actually damaged or suffered any
loss or incurred any additional expense as a result thereof.
If any such claim or action is brought against an
indemnified party, and it notified the indemnifying party
thereof, the indemnifying party will be entitled to assume
the defense thereof with counsel selected by the
indemnifying party and reasonably satisfactory to the
indemnified party. After notice from the indemnifying party
to the indemnified party of its election to assume the
defense of such claim or action, (i) the indemnifying party
will not be liable to the indemnified party for any legal or
other expense subsequently incurred by the indemnified party
in connection with the defense thereof, (ii) the
indemnifying party will not be liable for the costs and
expenses of any settlement of such claim or action unless
such settlement was effected with the written consent of the
indemnifying party or the indemnified party waived any
rights to indemnification hereunder in writing, in which
case the indemnified party may effect a settlement without
such consent, and (iii) the indemnified party will be
obligated to cooperate with the indemnifying party in the
investigation of such claim or action; provided, however,
that the Holders and their respective controlling persons
who may be subject to liability arising out of any claim in
respect of which indemnity may be sought by such Holders
against the Company may employ their own counsel if they
have been advised by counsel in writing that, in the
reasonable judgment of such counsel, it is advisable for
such Holders and their controlling persons to be represented
by separate counsel due to the presence or reasonable
probability of conflicts of interest, and in that event the
fees and expenses of such separate counsel will also be paid
by the Company; provided that the Company shall not be
liable for the reasonable fees and expenses of more than one
separate counsel at any time for all such indemnified
parties. An indemnifying party shall not, without the prior
written consent of the indemnified parties, settle,
compromise or consent to the entry of any judgment with
respect to any pending or threatened claim, action, suit or
proceeding in respect of which indemnification or
contribution may be sought hereunder (whether or not the
indemnified parties are actual or potential parties to such
claim or action) unless such settlement, compromise or
consent includes a release of such indemnified party
reasonably acceptable to such indemnified party from all
liability arising out of such claim, action, suit or
proceeding or unless the indemnifying party shall confirm in
a written agreement reasonably acceptable to such
indemnified party, that notwithstanding any federal, state
or common law, such settlement, compromise or consent shall
not adversely affect the right of any indemnified party to
indemnification or contribution as provided in this
Agreement.
(d) If for any reason the indemnification
provided for in Sections 9(a) or (b) is unavailable to an
indemnified party or is insufficient to hold it harmless as
contemplated therein, then the indemnifying party shall
contribute to the amount paid or payable by the indemnified
party as a result of such loss, claim, damage or liability
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<PAGE>
in such proportion as is appropriate to reflect not only the
relative benefits received by the indemnifying and the
indemnified party, but also the relative fault of the
indemnifying party and the indemnified party, as well as any
other relevant equitable considerations. No person guilty
of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such
fraudulent misrepresentation.
(e) The obligations under this Section 9 shall
survive the completion of any offering of Registrable
Securities in a Registration Statement pursuant to this
Agreement, and otherwise.
10. REPORTS UNDER EXCHANGE ACT. With a view to
making available to the Holders the benefits of Rule 144 and any
other rule or regulation of the SEC that may at any time permit a
Holder to sell securities of the Company to the public without
registration or pursuant to registration, the Company agrees to:
(a) Make and keep public information available,
as those terms are understood and defined under Rule 144, at
all times;
(b) Take such action as is necessary to enable
the Holders to utilize Form S-3 for the sale of their
Registrable Securities;
(c) File with the SEC in a timely manner all
reports and other documents required of the Company under
the Securities Act and the Exchange Act; and
(d) Furnish to any Holder, so long as the Holder
owns any Registrable Securities, upon request (i) a written
statement by the Company as to its compliance with the
reporting requirements of Rule 144, the Securities Act and
the Exchange Act, or as to its qualification as a registrant
whose securities may be resold pursuant to Form S-3, (ii) a
copy of the most recent annual or quarterly report of the
Company and such other reports and documents so filed by the
Company, and (iii) such other information as may be
reasonably requested in availing any Holder of any rule or
regulation of the SEC which permits the selling of any such
securities without registration or pursuant to such form.
11. ASSIGNMENT OF REGISTRATION RIGHTS.
(a) Emerson's rights pursuant to this Agreement
may be transferred or assigned by Emerson to (a) any
affiliate of Emerson, or (b) any other entity in connection
with the transfer to such entity of not less than 120,000
shares of Common Stock ((a) and (b) together, "Permitted
Assigns"); provided, however, that (i) the Company is,
promptly upon such transfer, furnished with written notice
of the name and address of such transferee or assignee and
the securities with respect to which such registration
rights are being assigned, (ii) the transfer of such
securities may be effected in accordance with all applicable
securities laws, (iii) immediately following such transfer
the further disposition of such securities by the transferee
or assignee is restricted under the Securities Act, and
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(iv) the transferee executes and agrees to be bound by this
Agreement, an executed counterpart of which shall be
furnished to the Company.
(b) Except in connection with a transfer
permitted under Section 11(a) above, in no event may the
rights of Holders hereunder be transferred or assigned, it
being intended that the rights of Emerson under this
Agreement may be exercised only by Emerson or a Permitted
Assign, subject to the provisions and restrictions of
Section 11(a) above.
12. LIMITATIONS ON SUBSEQUENT REGISTRATION RIGHTS.
From and after the date of this Agreement, the Company may enter
into any agreement with any holder or prospective holder of any
securities of the Company which would allow such holder or
prospective holder to require the Company to effect a
registration or to include such securities in any registration
filed under Section 2 or 3 hereof; provided, however, that (i)
the terms of such agreement shall provide that any such holder or
prospective holder may include such securities in any such
registration filed under Section 2 hereof only to the extent that
the inclusion of such holder's securities will not reduce the
amount of the Registrable Securities included in such
registration and (ii) such agreement includes the equivalent of
Section 14 as a term.
13. AMENDMENT OF REGISTRATION RIGHTS. Any provision
of this Agreement may be amended or the observance thereof may be
waived (either generally or in a particular instance and either
retroactively or prospectively) only with the written consent of
the Company and the holders of seventy-five percent (75%) of the
Registrable Securities then outstanding. Any amendment or waiver
effected in accordance with this Section shall be binding upon
each Holder of any Registrable Securities, each future Holder of
such securities and the Company.
14. "MARKET STAND-OFF" AGREEMENT. Any Holder, if
requested by the Company or an underwriter of an underwritten
public offering, agrees not to sell, make any short sale of,
loan, grant any option for the purchase of, or otherwise transfer
or dispose of any Common Stock held by such Holder (other than
Registrable Securities included in the registration) without the
prior written consent of the Company or such underwriter(s), as
the case may be, during a period of up to seven days prior to and
180 days following the effective date of any underwritten
registration of the Company's securities effected pursuant to
Section 2 or 3 hereof. Such agreement shall be in writing in
form satisfactory to the Company and such underwriter, and may be
included in the underwriting agreement. The Company may impose
stop-transfer instructions with respect to the securities subject
to the foregoing restriction until the end of the required stand-
off period.
15. TERMINATION OF REGISTRATION RIGHTS. If the number
of shares of Registrable Securities owned by a Holder represents
less than one percent (1%) of the total number of shares of
Common Stock then outstanding, then such Holder's registration
rights under this Agreement relating to such Registrable
Securities shall terminate on the date such Holder is able to
dispose of all of its shares of Registrable Securities in any 90-
day period pursuant of Rule 144. All registration rights (except
for rights previously exercised in connection with an
underwritten public offering pursuant to Section 3) of a Holder
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<PAGE>
under this Agreement shall terminate on the date on which all of
such Holder's shares of Registrable Securities can be sold
pursuant to Rule 144(k) or similar successor rule. The
provisions of Sections 2, 3, 4, 11 and 12 of this Agreement shall
expire on March 26, 2006.
16. INFORMATION CONFIDENTIAL. No Holder may use any
confidential information received by it pursuant to this
Agreement in violation of the Exchange Act or reproduce,
disclose, or disseminate such information to any other person
(other than its employees or agents having a need to know the
contents of such information and its attorneys), except to the
extent reasonably related to the exercise of rights under this
Agreement, unless such information has been made available to the
public generally (other than by such recipient in violation of
this Section 16) or such recipient is required to disclose such
information by a governmental body or regulatory agency or by law
in connection with a transaction that is not otherwise prohibited
hereby.
17. NOTICES. All notices and other communications
provided for or permitted hereunder shall be made in writing by
hand-delivery, registered first-class mail, or air-courier
guaranteeing overnight delivery:
(a) If to a Holder of Registrable Securities,
initially at Emerson Electric Co., 8000 West Florissant, St.
Louis, MO 63136, Attention: H. M. Smith (facsimile: (314)
553-3713), and thereafter at such other address as may be
designated from time to time by notice given in the manner
provided in this Section 17.
(b) If to the Company, initially at PCD Inc., 2
Technology Drive, Peabody, MA 01960, Attention: Chairman
(facsimile: 978-532-6800), and thereafter at such other
address as may be designated from time to time by notice
given in the manner provided in this Section 17.
(c) All such notices and other communications
shall be deemed to have been delivered and received (i) in
the case of personal delivery, telex, telecopier or
telegram, on the date of such delivery, (ii) in the case of
air courier, on the business day after the date when sent,
and (iii) in the case of mailing, on the third business day
following such mailing.
(d) From time to time as the Company may
request, each Holder shall provide to the Company such
evidence or documentation reasonably satisfactory to the
Company, in its sole discretion, certified by an appropriate
officer of such Holder, regarding the number of shares of
Common Stock beneficially owned by such Holder and its
status as an "affiliate" under the Securities Act.
18. SUCCESSORS AND ASSIGNS. Subject to the provisions
of Section 11 hereof, this Agreement shall inure to the benefit
of and be binding upon the successors and permitted assigns of
each of the parties.
19. COUNTERPARTS. This Agreement may be executed in
any number of counterparts and by the parties hereto in separate
counterparts, each of which when so executed shall be deemed to
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<PAGE>
be an original and all of which taken together shall constitute
one and the same agreement.
20. HEADINGS. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise
affect the meaning hereof.
21. GOVERNING LAW. This Agreement shall be governed
by and constructed in accordance with the laws of the
Commonwealth of Massachusetts, without regard for its choice of
law rules.
22. SEVERABILITY. In the event that any one or more
of the provisions contained herein, or the application thereof in
any circumstance, is held invalid, illegal or unenforceable, the
validity, legality and enforceability of any such provision in
every other respect and of the remaining provisions contained
herein shall not be affected or impaired thereby.
23. ENTIRE AGREEMENT. This Agreement is intended by
the parties as a final expression of their agreement and intended
to be a complete and exclusive statement of the agreement and
understanding of the parties hereto in respect of the subject
matter contained herein. This Agreement supersedes all prior
agreements and understandings between the parties with respect to
such subject matter, including, without limitation, the Prior
Purchase Agreement.
IN WITNESS WHEREOF, the parties hereto have executed
this Registration Rights Agreement as of the date first written
above.
PCD INC.
By: /S/ John L. Dwight, Jr.
-------------------------------
John L. Dwight, Jr.
Chairman of the Board
EMERSON ELECTRIC CO.
By: /S/ J.D. Switzer
-------------------------------
J.D. Switzer
Senior Vice President - Development
15
<EXHIBIT> EXHIBIT 10.19
SUBORDINATION AGREEMENT
THIS SUBORDINATION AGREEMENT (this "Agreement"), dated as of
December 26, 1997, is by and among PCD INC., a Massachusetts
corporation with a principal place of business at 2 Technology
Drive, Centennial Park, Peabody, Massachusetts 01960 (the
"Borrower"); EMERSON ELECTRIC CO., a Missouri corporation with a
principal place of business at 8000 West Florissant, P.O. Box
4100, St. Louis, Missouri 63136 (the "Subordinated Creditor");
and FLEET NATIONAL BANK, a national banking association organized
under the laws of the United States and having an office at One
Federal Street, Boston, Massachusetts 02110 (hereinafter the
"Agent") as Agent for itself and each of the other Lenders
(collectively, with the Agent in its role as a Lender, the
"Lenders", and individually, a "Lender") who now and/or hereafter
become parties to the hereinafter defined Loan Agreement.
RECITALS.
On December 26, 1997, the Lenders, pursuant to that certain
Loan Agreement dated as of December 26, 1997 by and among the
Borrower, the Agent and the Lenders (as amended and in effect
from time to time, including any replacement agreement therefor,
the "Loan Agreement") agreed, upon the terms and subject to the
conditions contained therein, to make loans and otherwise extend
credit to the Borrower in an aggregate principal amount of up to
$90,000,000.
On December 26, 1997, the Subordinated Creditor, pursuant to
(i) that certain Subordinated Debenture (as amended and in effect
from time to time, including any replacement agreement therefor,
the "Subordinated Debenture") and (ii) that certain Subordinated
Debenture and Warrant Purchase Agreement (as amended and in
effect from time to time, including any replacement agreement
therefor, the "Subordinated Debenture Purchase Agreement")
agreed, upon the terms and subject to the conditions contained
therein, to make loans to the Borrower in an aggregate principal
amount of $25,000,000.
It is a condition precedent to the Lenders' willingness to
make the Loans and otherwise extend credit to the Borrower
pursuant to the Loan Agreement and the Notes that the Borrower
and the Subordinated Creditor enter into this Agreement with the
Agent, and, in order to induce the Lenders to make the Loans and
otherwise extend credit to the Borrower pursuant to the Loan
Agreement and the Notes, the Borrower and the Subordinated
Creditor have agreed to enter into this Agreement with the Agent.
NOW, THEREFORE, in consideration of the foregoing, the
mutual agreements herein contained and other good and valuable
consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto, intending to be legally bound,
hereby agree as follows:
1. DEFINITIONS. Terms not otherwise defined herein have
the same respective meanings given to them in the Loan Agreement.
In addition, the following terms shall have the following
meanings:
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AFFILIATE. Singly and collectively, any Person who,
directly or indirectly, is in control of, is controlled by, or is
under common control with, any party hereto. For purposes of
this definition, a Person shall be deemed to be "controlled by" a
party hereto if such party, or any Person with an ownership
interest in such party, possesses, directly or indirectly, power
either to (i) vote 66.67% or more of the securities having
ordinary voting power for the election of directors of such
Person or (ii) direct or cause the direction of the management
and policies of such Person whether by contract or otherwise. A
charitable trust established by a party hereto (or by an
Affiliate of a party hereto) shall be deemed to be an "Affiliate"
as used herein.
SENIOR DOCUMENTS. Collectively, the Loan Agreement, the
Notes, the Security Documents, the other Financing Documents and
any and all guaranties, documents granting security interests,
mortgages and other Liens directly or indirectly guarantying or
securing any of the Senior Indebtedness, and any and all other
documents or instruments evidencing or further guarantying or
securing directly or indirectly any of the Senior Indebtedness,
whether now existing or hereafter created, as each may be amended
(subject to the limitations set forth herein) from time to time.
SENIOR INDEBTEDNESS. All Indebtedness and other Obligations
of the Borrower to the Agent and/or any of the Lenders from time
to time outstanding arising in connection with the Senior
Documents.
SUBORDINATED DOCUMENTS. The Subordinated Debenture, the
Subordinated Debenture Purchase Agreement and any other
promissory note and any other agreement, instrument or document
executed by the Borrower in favor of the Subordinated Creditor
evidencing Indebtedness of the Borrower to the Subordinated
Creditor, and any and all guaranties and documents granting
security interests, mortgages and other Liens, if any, directly
or indirectly guarantying or securing any of the Subordinated
Indebtedness, and any and all other documents or instruments, if
any, evidencing or further guarantying or securing directly or
indirectly any of the Subordinated Indebtedness, whether now
existing or hereafter created.
SUBORDINATED INDEBTEDNESS. All Indebtedness and other
obligations, whether for principal, interest, premium, fees,
costs, expenses and other amounts in respect of the Subordinated
Documents or any other obligations owing by the Borrower to the
Subordinated Creditor, in each case, whether direct or indirect,
absolute or contingent, due or to become due, now existing or
hereafter arising.
2. GENERAL. The Subordinated Indebtedness and any and all
of the Subordinated Documents shall be and hereby are
subordinated to, and the payment thereof is deferred, until the
full and final payment in cash of the Senior Indebtedness in the
maximum principal amount of $90,000,000 (plus an additional
amount of principal of up to $10,000,000), the interest thereon
and all fees, expenses, indemnification reimbursements,
indemnitees and other charges in connection therewith owing under
any of the Financing Documents (including, without limitation,
any and all interest accruing or out of pocket costs or expenses
incurred after the date of any filing by or against the Borrower
or any guarantor of the Senior Indebtedness ("Guarantor")
pursuant to a Bankruptcy Proceeding (as such term is defined in
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<PAGE>
Section 7(a) hereof) regardless of whether the Agent's or any
Lender's claim therefor is allowed or allowable in the case or
proceeding relating thereto), whether now or hereafter incurred
or owed by the Borrower and/or any Guarantor, and any obligation
of the Lenders to advance funds to the Borrower pursuant to the
terms of the Senior Documents has terminated. Notwithstanding
the immediately preceding sentence, the Borrower shall be
permitted to pay, and the Subordinated Creditor shall be
permitted to receive, regularly scheduled payments of interest
(and regularly scheduled payments of principal only as provided
in subsection (ii) below) on the Subordinated Indebtedness so
long as:
(i) such payments of regularly scheduled interest
are made not more frequently than once in any calendar quarter;
(ii) the Borrower may apply any net cash proceeds
from the sale or issuance of any class of the Borrower's or any
Subsidiary's equity securities to reduce the then-outstanding
balance of the Subordinated Indebtedness (including any
prepayment premiums in connection therewith as provided in the
Subordinated Documents);
(iii) such payments are made only after the
payment by the Borrower to the Agent, for the benefit of the
Lenders, of any amounts then due and payable pursuant to the
terms of the Senior Documents;
(iv) at the time of each such payment, no Event of
Default of any nature shall have occurred and be continuing with
respect to the Senior Indebtedness, or under any of the Senior
Documents and no Event of Default shall occur or be created as a
result of such payment.
3. LEGEND. The Subordinated Creditor covenants, represents
and warrants to the Agent: (a) that the Subordinated
Indebtedness is represented by the Subordinated Documents which
shall bear a legend reading "This Subordinated Debenture is
subject to a Subordination Agreement dated as of December 26,
1997 by and among PCD Inc., Emerson Electric Co. and Fleet
National Bank, as Agent for itself and the other Lenders"; (b)
that at no time hereafter will any part of the Subordinated
Indebtedness be represented by any negotiable instruments or
other writing, except such as comply with the provisions of (a)
herein; (c) that it has not made any prior transfer, encumbrance
or assignment of any part of the Subordinated Indebtedness; and
(d) that it will not further subordinate any part of the
Subordinated Indebtedness except to or in favor of the Agent.
4. ENFORCEMENT. The Subordinated Creditor will not take or
omit to take any action or assert any claim with respect to the
Subordinated Indebtedness or otherwise which is contrary to the
provisions of this Agreement. Without limiting the foregoing,
the Subordinated Creditor will not, until the Senior Indebtedness
has been finally paid in full in cash, assert, collect or enforce
the Subordinated Indebtedness or any part thereof, initiate,
commence or join any Bankruptcy Proceeding or take any action to
foreclose or realize upon the Subordinated Indebtedness or any
part thereof or enforce any of the Subordinated Documents;
PROVIDED, HOWEVER, that the Subordinated Creditor shall be
permitted to obtain equity securities in the Borrower by the
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<PAGE>
exercise of its so-called "conversion" rights as set forth in
Section 6 of the Subordinated Debenture (the "Conversion").
Until the Senior Indebtedness has been finally paid in full in
cash, the Subordinated Creditor shall have no right of
subrogation, reimbursement or indemnity whatsoever from any
assets of the Borrower or any guarantor of or provider of
collateral security for the Senior Indebtedness.
5. PAYMENTS HELD IN TRUST. In the event that any payment
or distribution, in the form of cash, collateral or otherwise
(except for the equity securities in the Borrower received by the
Subordinated Creditor pursuant to the Conversion), with respect
to the Subordinated Indebtedness is received by the Subordinated
Creditor, or the Subordinated Creditor obtains any cash or other
assets of the Borrower or any Guarantor as a result of any
administrative, legal or equitable actions, in any such case
contrary to the terms of this Agreement, the Subordinated
Creditor will hold in trust and immediately pay over to the
Agent, in the same form as received, such payment or
distribution, with appropriate endorsements, for application to
the Senior Indebtedness and any such other assets or collateral
for the Senior Indebtedness until the Senior Indebtedness has
been finally paid in full.
6. DEFENSE TO ENFORCEMENT. If the Subordinated Creditor in
contravention of the terms of this Agreement, shall commence,
prosecute or participate in any suit, action or proceeding
against the Borrower or any Guarantor, then the Borrower or any
Guarantor may interpose as a defense or plea the making of this
Agreement, and the Agent may intervene and interpose such defense
or plea in its name or in the name of the Borrower or any
Guarantor. If the Subordinated Creditor, in contravention of the
terms of this Agreement, shall attempt to collect any of the
Subordinated Indebtedness or enforce any of the Subordinated
Documents (other than the Conversion), then the Agent or the
Borrower may, by virtue of this Agreement, restrain the
enforcement thereof in the name of the Agent or in the name of
the Borrower or any Guarantor.
7. BANKRUPTCY, ETC.
(a) At any meeting of creditors of the Borrower or any
Guarantor or in the event of any case or proceeding, voluntary or
involuntary, for the distribution, division or application of all
or part of the assets of the Borrower or any Guarantor or the
proceeds thereof, whether such case or proceeding be for the
liquidation, dissolution or winding up of the Borrower or any
Guarantor or its business, a receivership, insolvency or
bankruptcy case or proceeding, an assignment for the benefit of
creditors or a proceeding by or against the Borrower or any
Guarantor for relief under the federal Bankruptcy Code or any
other bankruptcy, reorganization or insolvency law or any other
law relating to the relief of debtors, readjustment of
indebtedness, reorganization, arrangement, composition or
extension or marshalling of assets or otherwise (each of the
foregoing being herein called a "Bankruptcy Proceeding"), the
Agent is hereby irrevocably authorized at any such meeting or in
any such proceeding to receive or collect any cash or other
assets of the Borrower or such Guarantor distributed, divided or
applied by way of dividend or payment, or any securities issued
on account of any Subordinated Indebtedness (other than equity
securities of the Borrower received by the Subordinated Creditor
pursuant to the Conversion), and apply such cash to or to hold
such other assets or securities as collateral for the Senior
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<PAGE>
Indebtedness, and to apply to the Senior Indebtedness any cash
proceeds of any realization upon such other assets or securities
that the Agent in its discretion elects to effect, until all of
the Senior Indebtedness shall have been finally paid in full in
cash, rendering to the Subordinated Creditor any surplus to which
the Subordinated Creditor is then entitled; provided, however,
that the Agent shall provide the Subordinated Creditor with a
reasonably detailed written accounting of such cash or other
assets received or collected on account of the Subordinated
Indebtedness by the Agent and the application by the Agent
thereof.
(b) The Subordinated Creditor covenants and agrees
with the Agent that the Subordinated Creditor shall not, to the
extent prohibited by Section 4 hereof, commence or join with any
other creditor or creditors of the Borrower or any Guarantor in
commencing any Bankruptcy Proceeding against the Borrower or any
Guarantor. At any Bankruptcy Proceeding, if all Senior
Indebtedness has not been finally paid in full at the time, the
Agent, in addition to all other rights set forth in this
Agreement, is hereby authorized, which authorization shall be
irrevocable except upon the express written waiver of the Agent,
at any such meeting or any such proceeding: (i) to evidence
claims comprising the Subordinated Indebtedness either in its own
name, the name of the Subordinated Creditor, by proof of debt,
proof of claim, suit or otherwise, following notice from the
Agent to the Subordinated Creditor of a requirement to evidence
any such claim and the failure on the part of the Subordinated
Creditor to take any required action within 10 Business Days
following such notice or any shorter period as may be necessary
to protect such claim (ii) to vote claims comprising the
Subordinated Indebtedness to accept or reject any plan of partial
or complete liquidation, reorganization, arrangement, composition
or extension; and (iii) to collect any assets or securities or
distributed securities (other than equity securities of the
Borrower received by the Subordinated Creditor pursuant to the
Conversion) issued on account of the Subordinated Indebtedness
until such time as the Senior Indebtedness has been paid in full.
(c) If the Borrower or any Guarantor shall become
subject to a proceeding under the Bankruptcy Code and if the
Agent desires (i) to permit the Borrower or any Guarantor, under
either Section 363 or Section 364 of the Bankruptcy Code, to use
cash collateral in the ordinary course of its business, including
without limitation, to make any permitted payments on the Senior
Indebtedness and/or (ii) to provide financing to the Borrower or
any Guarantor to be used in the ordinary course of its business,
the Subordinated Creditor agrees as follows: (A) adequate notice
to the Subordinated Creditor shall be deemed to have been given
to Subordinated Creditor if the Subordinated Creditor receives
notice two (2) Business Days prior to the entry of the order
approving such financing, and (B) no objection will be raised by
the Subordinated Creditor to any such financing on the ground of
a failure to provide "adequate protection" for the Subordinated
Creditor' junior Lien on the security provided the Subordinated
Creditor retains a Lien on and security interest in the post-
petition security to the extent and with the same priority as
existed prior to the commencement of the Bankruptcy Proceeding.
Notwithstanding anything to the contrary contained herein, the
Subordinated Creditor shall be entitled to assert a claim
pursuant to Section 507(b) of the Bankruptcy Code. For purposes
of this Section, notice of a proposed financing or use of cash
collateral shall be deemed given when given, in the manner
prescribed by this Agreement, to the Subordinated Creditor or its
counsel.
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<PAGE>
8. LIENS PROHIBITED.
The Subordinated Indebtedness shall at all times during
the term hereof remain unsecured.
In furtherance of the foregoing, the Subordinated
Creditor agrees that, within five (5) Business Days following the
Agent's written request therefor, the Subordinated Creditor will
execute, deliver and file any and all termination statements,
mortgage discharges, Lien releases and other agreements and
instruments as the Agent reasonably deems necessary or
appropriate. Furthermore, the Subordinated Creditor hereby
irrevocably appoints each of the Agent, and its respective
successors and assigns, and its respective officers, with full
power of substitution, the true and lawful attorney(s) of the
Subordinated Creditor for the purpose of effecting any such
executions, deliveries and filings if and to the extent that the
Subordinated Creditor shall have failed to perform such
obligations pursuant to the foregoing provisions within such five
(5) Business Day period, which power of attorney shall be deemed
to be coupled with an interest.
9. AGENT'S FREEDOM OF DEALING. Without affecting the
rights of the Agent hereunder, and except as otherwise set forth
herein, the Subordinated Creditor agrees and consents: (a) to
waive, and does hereby waive, any and all notice of the receipt
and acceptance by the Agent of this Agreement or of the creation,
renewal, extension or accrual of any of the Senior Indebtedness,
present or future, in whole or in part, by any of the Lenders or
of the reliance by the Agent and/or the Lenders on this Agreement
at any time; and (b) with respect to the Senior Indebtedness and
any and all collateral therefor or guaranties thereof, that the
Borrower, the Agent and the Lenders may agree to increase the
amount of the Senior Indebtedness (subject, however, to the
limitation on Senior Indebtedness set forth in the first sentence
of Section 2 hereof) or otherwise modify the terms of any of the
Senior Indebtedness, and the Agent may grant extensions of the
time of payment or performance to and make compromises, including
releases of collateral or guaranties, and settlements with the
Borrower and all other Persons, in each case without the consent
of the Subordinated Creditor or the Borrower and without
affecting the agreements of the Subordinated Creditor or the
Borrower contained in this Agreement; and (c) to waive, and does
hereby waive, all presentment for payment, protest and notice of
nonpayment and protest of negotiable or other instruments to
which the Subordinated Creditor may be a party.
10. MODIFICATION OR SALE OF THE SUBORDINATED
INDEBTEDNESS. The Subordinated Creditor will not, without the
prior written consent of the Agent, at any time while this
Agreement is in effect, modify in any material respect any of the
terms of the Subordinated Debenture or the Subordinated Debenture
Purchase Agreement; provided that the following amendments or
modifications shall be deemed to be per se material modifications
and to require the prior written consent of the Agent.
(i) any increase in the principal amount of the
Subordinated Indebtedness;
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<PAGE>
(ii) any shortening of the maturity of the Subordinated
Indebtedness (including by way of acceleration) or any change in
any of the payment provisions, if any, or any other alteration of
the repayment provisions of the Subordinated Indebtedness in any
respect;
(iii) any increase in the interest rate, fees or premium
applicable to the Subordinated Indebtedness;
(iv) any change in any of the subordination provisions,
including, without limitation, any further subordination of the
Subordinated Indebtedness to any other indebtedness;
(v) the requirement of any lien or other security for, or
guaranty of, the Subordinated Indebtedness;
(vi) any change in any Subordinated Document which could
materially increase the Subordinated Creditor's rights or could
adversely affect the Agent or the Borrower or the rights and
remedies of the Agent against the Borrower.
The Subordinated Creditor shall not sell, transfer, pledge,
assign, hypothecate or otherwise dispose of any or all of the
Subordinated Indebtedness to any Person, PROVIDED, HOWEVER that
assignments of the Subordinated Indebtedness to an Affiliate of
the Subordinated Creditor shall be permitted so long as such
Affiliate of the Subordinated Creditor has in a writing,
satisfactory in form and substance to the Agent, become a party
hereto and succeeded to the rights and is bound by all of the
obligations of the Subordinated Creditor hereunder (and in the
event the Affiliate shall be a charitable trust, evidence
reasonably satisfactory to the Agent that the charitable trust
may become a party hereto without contravening the terms of said
charitable trust). In the case of any such disposition by the
Subordinated Creditor, the Subordinated Creditor will notify the
Agent at least 10 days prior to the date of any of such intended
disposition.
11. BORROWER'S OBLIGATIONS ABSOLUTE. Nothing contained in
this Agreement shall impair, as between the Borrower and the
Subordinated Creditor, the obligation of the Borrower to pay to
the Subordinated Creditor all amounts payable in respect of the
Subordinated Indebtedness as and when the same shall become due
and payable in accordance with the terms thereof, or prevent the
Subordinated Creditor (except as expressly otherwise provided in
this Agreement) from exercising all rights, powers and remedies
otherwise permitted by the Subordinated Documents and by
applicable law upon a default in the payment of the Subordinated
Indebtedness or under any Subordinated Document, all, however,
subject to the rights of the Agent as set forth in this
Agreement.
12. SUBROGATION. Subject to the final payment in full of
all Senior Indebtedness, the Subordinated Creditor shall be
subrogated to the rights of the Agent and holders of the Senior
Indebtedness to receive payments or distributions of assets of
the Borrower made on account of the Senior Indebtedness until the
Subordinated Indebtedness shall be paid in full. For the
purposes of such subrogation, no payments or distributions to the
Agent or the holders of the Senior Indebtedness of any cash,
property or securities to which the Subordinated Creditor would
- 7 -
<PAGE>
be entitled except for the provisions of this Agreement, and no
payment over pursuant to the provisions of this Agreement to the
Agent or the holders of the Senior Indebtedness by the
Subordinated Creditor, shall as between the Borrower and the
creditors of the Borrower, other than the Agent and the holders
of the Senior Indebtedness and the Subordinated Creditor, be
deemed to be a payment by the Borrower to or on account of Senior
indebtedness.
13. MARSHALLING. Neither the Agent nor the Lenders shall
be under any obligation to marshall any assets in payment of any
or all of the Senior Indebtedness. The Subordinated Creditor
further waives any and all rights with respect to marshaling.
14. TERMINATION OF SUBORDINATION. This Agreement shall
continue in full force and effect, and the obligations and
agreements of the Subordinated Creditor and the Borrower
hereunder shall continue to be fully operative, until all of the
Senior Indebtedness shall have been paid and satisfied in full in
cash and such full payment and satisfaction shall be final and
not avoidable. To the extent that the Borrower or any Guarantor
or provider of collateral for the Senior Indebtedness makes any
payment on the Senior Indebtedness that is subsequently
invalidated, declared to be fraudulent (except on account of
actual fraud) or preferential or set aside or is required to be
repaid to a trustee, receiver or any other party under any
Bankruptcy Proceeding (such payment being hereinafter referred to
as a "Voided Payment"), then to the extent of such Voided
Payment, that portion of the Senior Indebtedness that had been
previously satisfied by such Voided Payment shall be revived and
continue in full force and effect as if such Voided Payment had
never been made. In the event that a Voided Payment is recovered
from the Agent or any Lender, an Event of Default shall be deemed
to have existed and to be continuing under the Loan Agreement
from the date of the Agent's or such Lender's initial receipt of
such Voided Payment until the full amount of such Voided Payment
is restored to the Agent and/or such Lender. During any
continuance of any such Event of Default, this Agreement shall be
in full force and effect with respect to the Subordinated
Indebtedness. To the extent that the Subordinated Creditor has
received any payments with respect to the Subordinated
Indebtedness subsequent to the date of the Agent's or such
Lender's initial receipt of such Voided Payment and such payments
have not been invalidated, declared to be fraudulent or
preferential or set aside or required to be repaid to a trustee,
receiver, or any other party under any bankruptcy act, state or
federal law, common law or equitable cause, the Subordinated
Creditor shall be obligated and hereby agrees that any such
payment so made or received (other than equity securities of the
Borrower received by the Subordinated Creditor pursuant to the
Conversion) shall be deemed to have been received in trust for
the benefit of the Agent and/or such Lender to the same extent as
is provided under Section 5 hereof, and the Subordinated Creditor
hereby agrees to pay to the Agent, upon demand, the full amount
so received by the Subordinated Creditor during such period of
time to the extent necessary fully to restore to the Agent and/or
such Lender the amount of such Voided Payment. Upon the payment
and satisfaction in full in cash of all of the Senior
Indebtedness, which payment shall be final and not avoidable,
this Agreement will automatically terminate without any
additional action by any party hereto.
15. NOTICES. All notices and other communications which
are required and may be given pursuant to the terms of this
Agreement shall be in writing and shall be sufficient and
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<PAGE>
effective in all respects if given in writing or telecopied,
delivered or mailed by registered or certified mail, postage
prepaid, as follows:
(a) If to the Agent:
Fleet National Bank
One Federal Street
Boston, Massachusetts 02109
Attention: Thomas W. Davies, Senior Vice
President
Telecopy: 617) 346-1633
With a copy to:
Hinckley, Allen & Snyder
28 State Street
Boston, Massachusetts 02109
Attention: Malcolm Farmer III, Esquire
Telecopy: (617) 345-9020
(b) If to the Subordinated Creditor:
Emerson Electric Co.
8000 West Florissant
P.O. Box 4100
St. Louis, Missouri 63136
Attention: H.M. Smith
Telecopy: (314) 553-3713
With a copy to:
Bryan Cave, LLP
One Metropolitan Square
211 North Broadway, Suite 3600
St. Louis, Missouri 63102
Attention: James L. Nouss, Jr., Esquire
Telecopy: (314) 259-2020
(c) If to the Borrower:
PCD Inc.
2 Technology Drive
Peabody, Massachusetts 01960-7977
Attention: President
Telecopy: (978) 532-6800
- 9 -
<PAGE>
With a copy to:
Hill & Barlow
One International Place
Boston, Massachusetts 02110-2607
Attention: Thomas C. Chase, Esquire
Telecopy: (617) 428-3500
or such other address or addresses as any party hereto shall have
designated by written notice to the other parties hereto. Notices
shall be deemed given and effective upon the earlier to occur of
(i) the third day following deposit thereof in the U.S. mail or
(ii) receipt by the party to whom such notice is directed.
16. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE COMMONWEALTH OF
MASSACHUSETTS AND SHALL BE A SEALED INSTRUMENT UNDER SUCH LAWS.
17. WAIVER OF JURY TRIAL. THE SUBORDINATED CREDITOR, THE
AGENT, AND THE BORROWER HEREBY WAIVES ITS RIGHT TO A JURY TRIAL
WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN
CONNECTION WITH THIS AGREEMENT, ANY RIGHTS OR OBLIGATIONS
HEREUNDER OR THE PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS.
EXCEPT AS PROHIBITED BY LAW, THE AGENT, THE SUBORDINATED CREDITOR
AND THE BORROWER HEREBY WAIVES ANY RIGHT WHICH IT MAY HAVE TO
CLAIM OR RECOVER IN ANY LITIGATION REFERRED TO IN THE PRECEDING
SENTENCE ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL
DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL
DAMAGES. THE SUBORDINATED CREDITOR, THE AGENT AND THE BORROWER
(A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF THE
OTHER HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH PARTY
WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVERS AND (B) ACKNOWLEDGES THAT SUCH PARTY HAS BEEN
INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE
WAIVERS AND CERTIFICATIONS CONTAINED HEREIN.
18. WAIVER. Except as otherwise provided herein, no
waiver shall be deemed to have been made by the Subordinated
Creditor or the Agent of any of its respective rights hereunder
unless the same shall be in writing and duly signed by its duly
authorized officers and each waiver, if any, shall be a waiver
only with respect to the specific instance involved and shall in
no way impair the rights of the Subordinated Creditor or the
Agent in any other respect at any time. No executory agreement
shall be effective to change or modify or to discharge, in whole
or in part, this Agreement, unless such executory agreement is in
writing and duly signed by the duly authorized officers of the
Agent, or the Subordinated Creditor, as the case may be.
- 10 -
<PAGE>
19. SPECIFIC PERFORMANCE. The Subordinated Creditor and
the Agent agree that each shall be authorized to demand specific
performance of the provisions set forth in this Agreement,
whether or not the Borrower shall have complied with the
provisions hereof applicable to it, at any time when the other
shall have failed to comply with any such provision hereof
applicable to it. Each of the Agent and the Subordinated
Creditor hereby irrevocably waives any defense based on the
adequacy of a remedy at law which might be asserted as a bar to
the remedy of specific performance brought in any action relating
hereto. The Subordinated Creditor further waives all demands and
notices (except any such demand or notice required to be given by
the terms of this Agreement) in connection with the exercise of
the Agent's rights hereunder and assents (except as may be
otherwise provided herein) to any renewal, extension or
postponement of the time of payment of Senior Indebtedness or any
indulgence with respect thereto, any substitution, exchange or
release of collateral for or any guaranty of the Senior
Indebtedness and to the addition or release of any Person
primarily or secondarily liable thereon; and agrees to the
provisions of any instrument, security or other writing,
evidencing Senior Indebtedness.
20. COSTS AND EXPENSES. The Borrower agrees to pay to the
Agent on demand all expenses of every kind, including reasonable
attorneys' fees, which the Agent or any Lender may incur in
enforcing or endeavoring to enforce any of its rights hereunder.
21. SUCCESSORS AND ASSIGNS. This Agreement shall be
binding upon, and shall inure to the benefit of, the parties
hereto and their respective successors and assigns.
22. MISCELLANEOUS. This Agreement may be executed in
several counterparts and by each party on a separate counterpart,
each of which when so executed and delivered shall be an
original, and all of which together shall constitute one
instrument. In proving this Agreement, it shall not be necessary
to produce or account for more than one such counterpart signed
by the party against which enforcement is sought. The Agent may,
in its sole and absolute discretion, waive any provisions of this
Agreement benefiting the Agent; provided, however, that such
waiver shall be effective only if in writing and signed by the
Agent and shall be limited to the specific provision or
provisions expressly so waived. This Agreement shall be binding
upon the successors and assigns of the Agent, the Subordinated
Creditor and the Borrower and shall inure to the benefit of the
Agent, the Agent's successors and assigns, any lender or lenders
refunding or refinancing any of the Senior Indebtedness and their
respective successors and assigns, but shall not otherwise create
any rights or benefits for any third party. In the event that
any lender or lenders refund or refinance any of the Senior
Indebtedness, such refunding or refinancing shall be
substantially on the same terms and conditions as provided in the
Financing Documents, (as the same are permitted to be modified by
the terms of Section 9 hereof), and this Agreement shall be
amended to the extent necessary to reflect the agreements and
instruments in favor of such lender or lenders and to the related
definitions contained therein.
(Signatures appear on the next page)
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
Witness: PCD Inc.
/s/ David Horne By: /s/ John L. Dwight Jr.
- ------------------- ---------------------
David Horne John L. Dwight Jr.
Chairman of the Board,
President and Chief
Executive Officer
Witness: Emerson Electric Co.
By: /s/ J. D. Switzer
- ------------------- --------------------
J. D. Switzer
Senior Vice President - Development
Witness: Fleet National Bank, as Agent for
itself and the other Lenders
/s/ Christopher Nelson By: /s/ Thomas W. Davies
- ----------------------- ---------------------
Christopher Nelson Thomas W. Davies
Senior Vice President
- 12 -
<EXHIBIT> EXHIBIT 10.20
Undertaking to Furnish Copies of Omitted Exhibits to
Subordinated Debenture and Warrant Purchase Agreement
dated as of December 26, 1997.
PCD Inc. (the "Registrant") is not filing as exhibits to its
Current Report on Form 8-K dated January 9, 1998, copies of the
exhibits to the Subordinated Debenture and Warrant Purchase
Agreement dated as of December 26, 1997 between the Registrant
and Emerson Electric Co., which Agreement is filed as Exhibit
10.15 thereto.
The Registrant undertakes to furnish to the Securities and
Exchange Commission, upon request, copies of such omitted
exhibits.
Dated: January 9, 1998
PCD INC. (Registrant)
By: /s/ John L. Dwight, Jr.
-----------------------
John L. Dwight, Jr.
Chairman of the Board,
President and Chief
Executive Officer
<EXHIBIT> EXHIBIT 99.1
FOR IMMEDIATE RELEASE
Contact:
John L. Dwight, Jr. James R. Buckley
Chief Executive Officer Senior Consultant
PCD Inc. Sharon Merrill Associates, Inc.
978/532-8800 617/542-5300
PCD INC. COMPLETES ACQUISITION OF WELLS ELECTRONICS, INC.
With Transaction, PCD Becomes Leading U.S. Provider of Test and
Burn-in Sockets
PEABODY, Mass., December 29, 1997 -- PCD Inc. (NASDAQ:PCDI),
a manufacturer of electronic connectors, today announced that it
has completed its acquisition of Wells Electronics, Inc., a
manufacturer of burn-in and test sockets for the global
semiconductor industry. The acquisition was an all cash
transaction valued at approximately $130 million. Prior to the
transaction, Wells was owned by UL America, Inc., an indirect
wholly owned subsidiary of Siebe plc.
Richard Mullin, Wells Electronics' chief executive officer,
has been named president of the combined operations of Wells and
PCD's wholly owned subsidiary, CTi Technologies, Inc.
"The acquisition of Wells Electronics provides us with an
increased global presence," stated John L. Dwight, Jr., PCD's
Chairman, President and Chief Executive Officer. "Plans for the
integration of Wells and CTi are well underway. We anticipate
benefiting from synergies created by this combination,
particularly within the test and burn-in product areas. Also,
Wells has an impressive senior management team with extensive
industry experience."
"The addition of Wells Electronics positions PCD as the
primary U.S. supplier of test and burn-in sockets, as well as the
third largest supplier worldwide in the rapidly growing burn-in
market," Dwight continued. "Going forward, our increased global
distribution channels and broad-based product line will provide
us with the leverage necessary to further capitalize on market
opportunities. We anticipate that the burn-in segment of our
business will be a strong performer next year."
Statements in this press release concerning the future
revenues, profitability, financial resources, product mix, market
demand, product development and other statements in this press
release concerning the future results of operations, financial
condition and business of PCD Inc. are "forward-looking"
statements as defined in the Securities Act of 1933 and
Securities Exchange Act of 1934. Investors are cautioned that
the Company's actual results in the future may differ materially
from those projected in the forward-looking statements due to
risks and uncertainties that exist in the Company's operations
and business environment, including the Company's dependence on
the integrated circuit package industry, the Company's dependence
on its principal customers and independent distributors,
fluctuations in demand for the Company's products, patent
litigation involving the Company, rapid technological evolution
in the electronics industry, and the like. The Company's filings
with the Securities and Exchange Commission, including its 1996
Form 10-K, contain additional information concerning such risk
factors, and copies of these filings are available from the
Company upon request and without charge.
In addition, the Company may experience unanticipated costs
or other difficulties in connection with the acquisition and
integration of a new business such as Wells.
PCD Inc. designs, manufactures and markets electronic
connectors to defined niche markets in the semiconductor,
industrial equipment and avionic industries worldwide.
Headquartered in Peabody, Massachusetts, PCD focuses on four
distinct product categories: industrial terminal blocks, avionic
control connectors, burn-in sockets and production/IC sockets.
The Company employs a carefully targeted approach to product
development and marketing, focusing on the key segments of each
market that meet its growth and profit objectives.
