<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 25, 1997
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
PRECISE TECHNOLOGY, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 25-1205268
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification Number)
</TABLE>
and subsidiary guarantors
PRECISE TECHNOLOGY OF DELAWARE, INC.
PRECISE TECHNOLOGY OF ILLINOIS, INC.
PRECISE TMP, INC.
PRECISE POLESTAR, INC.
MASSIE TOOL, MOLD & DIE, INC.
(Exact name of registrants as specified in their respective charters)
<TABLE>
<S> <C>
DELAWARE 51-0351451
DELAWARE 36-4068725
VIRGINIA 54-1253743
VIRGINIA 54-1675114
FLORIDA 54-1683716
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
</TABLE>
3089
(PRIMARY STANDARD INDUSTRIAL CLASSIFICATION CODE NUMBER)
------------------------
<TABLE>
<S> <C>
JOHN R. WEEKS
PRESIDENT AND CHIEF EXECUTIVE OFFICER
PRECISE TECHNOLOGY, INC.
501 MOSSIDE BLVD. 501 MOSSIDE BLVD.
NORTH VERSAILLES, PENNSYLVANIA 15137-2553 NORTH VERSAILLES, PENNSYLVANIA 15137-2553
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, (412) 823-2100
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL (NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE
EXECUTIVE OFFICE) NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE)
<CAPTION>
COPY TO:
ROBERT W. ERICSON
WINSTON & STRAWN
200 PARK AVENUE
NEW YORK, NEW YORK 10166
(212) 294-6741
------------------------
</TABLE>
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If the Securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. / /
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED PROPOSED
AMOUNT MAXIMUM MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF TO BE OFFERING PRICE AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED PER UNIT(1) OFFERING PRICE(1) FEE
<S> <C> <C> <C> <C>
Series B 11 1/8% Senior Subordinated Notes due
2007............................................. $75,000,000 100% $75,000,000 $22,728
Guarantees of Series B 11 1/8% Senior Subordinated
Notes due 2007................................... $75,000,000 (2) (2) (2)
Total.............................................. $75,000,000 100%
$75,000,000 $22,728
</TABLE>
(1) In accordance with Rule 457(f)(2), the registration fee is calculated based
on the book value, which has been computed as of June 30, 1997, of the
outstanding 11 1/8% Senior Subordinated Notes due 2007 of Precise
Technology, Inc.
(2) Pursuant to Rule 457(n) under the Securities Act of 1933, no separate fee is
payable for the Guarantees.
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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<PAGE>
PRECISE TECHNOLOGY, INC.
CROSS-REFERENCE SHEET
PURSUANT TO ITEM 501(B) OF REGULATION S-K
<TABLE>
<CAPTION>
ITEM
NUMBER ITEM LOCATION IN PROSPECTUS
- ------ ---- ----------------------
<S> <C> <C>
1. Forepart of Registration Statement and
Outside Front Cover Page of
Prospectus.............................. Outside Front Cover Page
2. Inside Front and Outside Back Cover
Pages of Prospectus..................... Inside Front Cover Page; Outside Back
Cover Page
3. Risk Factors, Ratio of Earnings to Fixed
Charges and Other
Information............................. Summary; Risk Factors; Selected Financial Data; Pro Forma
Financial Data
4. Terms of the Transaction.................. Outside Front Cover Page; Summary; Description of Notes; The
Exchange Offer; Certain U.S. Federal Income Tax
Considerations
5. Pro Forma Financial Information........... Pro Forma Financial Data
6. Material Contracts with the Company Being
Acquired................................ Inapplicable
7. Additional Information Required........... Inapplicable
8. Interests of Named Experts and
Counsel................................. Legal Matters; Experts
9. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities............................. Inapplicable
10. Information with Respect to S-3
Registrants............................. Inapplicable
11. Incorporation of Certain Information by
Reference............................... Inapplicable
12. Information with Respect to S-3 or S-2
Registrants............................. Inapplicable
13. Incorporation of Certain Information by
Reference............................... Inapplicable
14. Information with Respect to Registrants
other than S-3 or S-2 Registrants....... Outside Front Cover Page; Summary; Risk Factors;
Capitalization; Pro Forma Financial Data; Selected Financial
Data; Management's Discussion and Analysis of Financial
Condition and Results of Operations; Business; Management;
Certain Transactions; Principal Stockholders; Description of
Certain Indebtedness; Description of Notes
15. Information with Respect to S-3
Companies............................... Inapplicable
16. Information with Respect to S-3 or S-2
Companies............................... Inapplicable
17. Information with Respect to Companies
Other than S-3 or S-2 Companies......... Inapplicable
18. Information if Proxies, Consents or
Authorizations are to be Solicited...... Inapplicable
19. Information if Proxies, Consents or
Authorizations are not to be Solicited
or in an Exchange Offer................. Management; Principal Stockholders; Certain Transactions
</TABLE>
<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to the registration or qualification under the securities laws of any such
State.
SUBJECT TO COMPLETION, DATED JULY 25, 1997
PROSPECTUS
PRECISE TECHNOLOGY, INC.
OFFER TO EXCHANGE $1,000 IN PRINCIPAL AMOUNT OF ITS
SERIES B 11 1/8% SENIOR SUBORDINATED NOTES DUE 2007
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT FOR
EACH $1,000 IN PRINCIPAL AMOUNT OF ITS OUTSTANDING
11 1/8% SENIOR SUBORDINATED NOTES DUE 2007,
OF WHICH $75,000,000 PRINCIPAL AMOUNT IS OUTSTANDING
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME,
ON , 1997, UNLESS EXTENDED.
------------------------
Precise Technology, Inc., a Delaware corporation ('Precise,' and together
with its direct and indirect subsidiaries, the 'Company,' unless the context
otherwise requires), hereby offers (the 'Exchange Offer'), upon the terms and
conditions set forth in this Prospectus (the 'Prospectus') and the accompanying
Letter of Transmittal (the 'Letter of Transmittal'), to exchange $1,000
principal amount of its Series B 11 1/8% Senior Subordinated Notes due 2007 (the
'New Notes'), registered under the Securities Act of 1933, as amended (the
'Securities Act'), pursuant to a Registration Statement of which this Prospectus
is a part, for each $1,000 principal amount of its outstanding 11 1/8% Senior
Subordinated Notes due 2007 (the 'Old Notes'), of which $75,000,000 principal
amount is outstanding. The form and terms of the New Notes are the same as the
form and terms of the Old Notes (which they replace), except that the New Notes
will bear a Series B designation and will have been registered under the
Securities Act and, therefore, will not bear legends restricting their transfer
and will not contain certain provisions relating to the payment of Liquidated
Damages (as defined herein) which were included in the terms of the Old Notes in
certain circumstances relating to the timing of the Exchange Offer. The New
Notes will evidence the same debt as the Old Notes (which they replace) and will
be issued under and be entitled to the benefits of the Indenture, dated as of
June 13, 1997 (the 'Indenture'), among Precise, the Guarantors (as defined
herein) and Marine Midland Bank, as trustee (the 'Trustee'). The Old Notes and
the New Notes are sometimes referred to herein collectively as the 'Notes.' See
'The Exchange Offer' and 'Description of Notes.'
(Continued on Next Page)
------------------------
SEE 'RISK FACTORS' BEGINNING ON PAGE 16 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY HOLDERS WHO TENDER THEIR OLD NOTES IN THE EXCHANGE
OFFER.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
------------------------
THE DATE OF THIS PROSPECTUS IS , 1997.
<PAGE>
(Continued from Cover Page)
Interest on the Notes will be paid in cash semi-annually on June 15 and
December 15 of each year, commencing on December 15, 1997. The Notes will mature
on June 15, 2007 and are not subject to any sinking fund requirement. The Notes
are redeemable at the option of Precise, in whole or in part, at any time on or
after June 15, 2002, at the redemption prices set forth herein, plus accrued and
unpaid interest and Liquidated Damages, if any, thereon to the date of
redemption. Notwithstanding the foregoing, Precise, at its option, may redeem in
the aggregate up to 33 1/3% of the original principal amount of the Notes at any
time and from time to time prior to June 15, 2000 at 111.125% of the aggregate
principal amount so redeemed, plus accrued and unpaid interest and Liquidated
Damages, if any, thereon to the redemption date, with the Net Proceeds (as
defined herein) of one or more Public Equity Offerings (as defined herein),
provided that at least 66 2/3% of the aggregate principal amount of the Notes
originally issued remain outstanding immediately after the occurrence of any
such redemption and that any such redemption occurs within 90 days following the
closing of any such Public Equity Offering. In addition, at any time prior to
June 15, 2002, Precise may, at its option, redeem the Notes, in whole or in
part, at a redemption price equal to 100% of the principal amount thereof plus
the applicable Make-Whole Premium (as defined herein). See 'Description of
Notes--Optional Redemption.'
Upon a Change of Control (as defined herein), each holder of the Notes will
be entitled to require Precise to repurchase such holder's Notes at 101% of the
principal amount thereof plus accrued and unpaid interest to the repurchase
date. See 'Description of Notes--Repurchase at the Option of Holders--Change of
Control.' In addition, Precise is obligated in certain instances to make an
offer to repurchase the Notes at a purchase price in cash equal to 100% of the
principal amount thereof plus accrued and unpaid interest to the date of
repurchase with the net cash proceeds of certain asset sales. See 'Description
of Notes--Certain Covenants--Merger, Consolidation or Sale of Assets.'
The New Notes will be general unsecured obligations of Precise,
subordinated in right of payment to all existing and future Senior Debt (as
defined herein) of the Company, including all obligations of the Company under
the New Credit Agreement (as defined herein), and senior to or pari passu with
all existing and future subordinated indebtedness of the Company. Precise's
payment obligations under the New Notes will be jointly and severally
guaranteed, on a senior subordinated basis, by all of Precise's existing
Subsidiaries (as defined herein) and certain future Restricted Subsidiaries (as
defined herein) of the Company (the 'Guarantors'). As of March 31, 1997, after
giving pro forma effect to the Refinancing Transactions (as defined herein),
Precise and the Guarantors would have had outstanding approximately $16.4
million of consolidated Senior Debt. See 'Description of Notes--Subordination'
and 'Capitalization.' The Indenture (as defined herein) pursuant to which the
New Notes will be issued permits Precise and the Guarantors to incur additional
indebtedness, including Senior Debt, subject to certain limitations. See
'Description of Notes--Certain Covenants.'
Precise will accept for exchange any and all Old Notes validly tendered and
not withdrawn prior to 5:00 p.m., New York City time on , 1997,
unless extended by Precise in its sole discretion (the 'Expiration Date').
Tenders of Old Notes may be withdrawn at any time prior to 5:00 p.m. on the
Expiration Date. The Exchange Offer is subject to certain customary conditions.
The Old Notes were sold in an aggregate principal amount of $75.0 million
by Precise on June 13, 1997 to Bear, Stearns & Co. Inc. and Merrill Lynch,
Pierce, Fenner & Smith Incorporated (the 'Initial Purchasers') in a transaction
not registered under the Securities Act in reliance upon an exemption under the
Securities Act (the 'Initial Offering'). The Initial Purchasers subsequently
placed the Old Notes with qualified institutional buyers in reliance upon Rule
144A under the Securities Act. Accordingly, the Old Notes may not be reoffered,
resold or otherwise transferred in the United States unless registered under the
Securities Act or unless an applicable exemption from the registration
requirements of the Securities Act is available. The New Notes are being offered
hereunder in order to satisfy the obligations of Precise and the Guarantors
under the Registration Rights Agreement (as defined herein) entered into by
Precise and the Guarantors in connection with the Initial Offering. See 'The
Exchange Offer.'
Based on no-action letters issued by the staff of the Securities and
Exchange Commission (the 'Commission') to third parties, Precise believes the
New Notes issued pursuant to the Exchange Offer may be offered for resale,
resold and otherwise transferred by any holder thereof (other than any such
holder that is an 'affiliate' of Precise within the meaning of Rule 405 under
the Securities Act) without compliance with the
2
<PAGE>
registration and prospectus delivery provisions of the Securities Act, provided
that such New Notes are acquired in the ordinary course of such holder's
business and such holder has no arrangement or understanding with any person to
participate in the distribution of such New Notes. See 'The Exchange
Offer--Resale of the New Notes.' Each broker-dealer (a 'Participating
Broker-Dealer') that receives New Notes for its own account pursuant to the
Exchange Offer must acknowledge that it will deliver a prospectus in connection
with any resale of such New Notes. The Letter of Transmittal states that by so
acknowledging and by delivering a prospectus, a Participating Broker-Dealer will
not be deemed to admit that it is an 'underwriter' within the meaning of the
Securities Act. This Prospectus, as it may be amended or supplemented from time
to time, may be used by a Participating Broker-Dealer in connection with resales
of New Notes received in exchange for Old Notes where such Old Notes were
acquired by such Participating Broker-Dealer as a result of marketmaking
activities or other trading activities. The Company has agreed that, for a
period of one year after the Exchange Offer Effectiveness Date (as defined), it
will make this Prospectus available to any Participating Broker-Dealer for use
in connection with any such resale. See 'Plan of Distribution.'
Holders of Old Notes not tendered and accepted in the Exchange Offer will
continue to hold such Old Notes and will be entitled to all the rights and
benefits and will be subject to the limitations applicable thereto under the
Indenture and with respect to transfer under the Securities Act. Precise will
pay all the expenses incurred by it incident to the Exchange Offer. See 'The
Exchange Offer.'
There has not previously been any public market for the Old Notes or the
New Notes. Precise does not intend to list the New Notes on any securities
exchange or to seek approval for quotation through any automated quotation
system. There can be no assurance that an active market for the New Notes will
develop. See 'Risk Factors--Absence of a Public Market.' Moreover, to the extent
that Old Notes are tendered and accepted in the Exchange Offer, the trading
market for untendered and tendered but unaccepted Old Notes could be adversely
affected.
The New Notes will be available initially only in book-entry form and
Precise expects that the New Notes issued pursuant to the Exchange Offer will be
issued in the form of a Global Note (as defined herein), which will be deposited
with, or on behalf of, The Depository Trust Company ('DTC') and registered in
its name or in the name of Cede & Co., its nominee. Beneficial interests in the
Global Note representing the New Notes will be shown on, and transfers thereof
will be effected through, records maintained by DTC and its participants. After
the initial issuance of the Global Note, New Notes in certificated form will be
issued in exchange for the Global Note only under the limited circumstances set
forth in the Indenture. See 'Description of Notes--Book-Entry, Delivery and
Form.'
3
<PAGE>
AVAILABLE INFORMATION
Precise and the Guarantors have filed with the Commission a Registration
Statement on Form S-4 (the 'Exchange Offer Registration Statement,' which term
shall encompass all amendments, exhibits, annexes and schedules thereto)
pursuant to the Securities Act, and the rules and regulations promulgated
thereunder, covering the New Notes being offered hereby. This Prospectus does
not contain all the information set forth in the Exchange Offer Registration
Statement. For further information with respect to the Company and the Exchange
Offer, reference is made to the Exchange Offer Registration Statement.
Statements made in this Prospectus as to the contents of any contract, agreement
or other document referred to are not necessarily complete. With respect to each
such contract, agreement or other document filed as an exhibit to the Exchange
Offer Registration Statement, reference is made to the exhibit for a more
complete description of the document or matter involved, and each such statement
shall be deemed qualified in its entirety by such reference. The Exchange Offer
Registration Statement, including the exhibits thereto, can be inspected and
copied at the public reference facilities maintained by the Commission at Room
1024, 450 Fifth Street, N.W., Washington, D.C. 20549, at the Regional Offices of
the Commission at 7 World Trade Center, 13th Floor, New York, New York 10048 and
at Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661. Copies of such materials can be obtained from the Public Reference
Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates. The Commission maintains a World Wide Web site that contains
reports, proxy and information statements and other information regarding
registrants that file electronically with the Commission. The address of such
site is http://www.sec.gov.
As a result of the filing of the Exchange Offer Registration Statement with
the Commission, Precise and the Guarantors will become subject to the
informational requirements of the Securities Exchange Act of 1934, as amended
(the 'Exchange Act'), and in accordance therewith will be required to file
periodic reports and other information with the Commission. The obligation of
Precise and the Guarantors to file periodic reports and other information with
the Commission will be suspended if the Notes are held of record by fewer than
300 holders as of the beginning of any fiscal year of Precise and the Guarantors
other than the fiscal year in which the Exchange Offer Registration Statement is
declared effective. Precise has agreed that, whether or not it is required to do
so by the rules and regulations of the Commission, for so long as any of the
Notes remain outstanding, it will furnish to the holders of the Notes and file
with the Commission (unless the Commission will not accept such a filing) (i)
all quarterly and annual financial information that would be required to be
contained in a filing with the Commission on Forms 10-Q and 10-K if Precise were
required to file such forms, including a 'Management's Discussion and Analysis
of Financial Condition and Results of Operations' and, with respect to the
annual information only, a report thereon by Precise's independent auditors and
(ii) all current reports that would be required to be filed with the Commission
on Form 8-K if Precise were required to file such reports.
FORWARD LOOKING STATEMENTS
THIS PROSPECTUS CONTAINS CERTAIN 'FORWARD-LOOKING STATEMENTS' CONCERNING
THE COMPANY'S OPERATIONS, OPERATING PERFORMANCE AND FINANCIAL CONDITION, WHICH
ARE SUBJECT TO INHERENT UNCERTAINTIES AND RISKS, INCLUDING THIS IDENTIFIED UNDER
'RISK FACTORS.' ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE ANTICIPATED IN
THIS PROSPECTUS. WHEN USED IN THIS PROSPECTUS, THE WORDS 'ESTIMATE,' 'PROJECT,'
'ANTICIPATE,' 'EXPECT,' 'INTEND,' 'BELIEVE' AND SIMILAR EXPRESSIONS ARE INTENDED
TO IDENTIFY FORWARD-LOOKING STATEMENTS.
4
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and consolidated financial statements, including the notes thereto,
appearing elsewhere in this Prospectus. As used in this Prospectus, 'Precise'
refers to Precise Technology, Inc. and the 'Company' refers to Precise and its
direct and indirect subsidiaries, unless the context otherwise requires. The
Company acquired Unity Mold Corporation (the 'Unity Acquisition') and Tredegar
Molded Products Company (the 'Tredegar Acquisition') in January and March of
1996, respectively. All references to 'Tredegar' in this Prospectus are to
Tredegar Molded Products Company. Unless otherwise specified, pro forma
information contained in this Prospectus gives effect to (i) the Unity
Acquisition and the Tredegar Acquisition as if such acquisitions (the
'Acquisitions') had occurred on January 1, 1996, (ii) the Initial Offering and
the application of the net proceeds therefrom and (iii) the consummation of the
New Credit Agreement and the incurrence of $9.5 million of indebtedness
thereunder to partially fund the transactions described under 'Use of Proceeds.'
The Initial Offering, the application of the net proceeds therefrom, the
consummation of the New Credit Agreement and the incurrence of $9.5 million of
indebtedness thereunder upon the closing of the Initial Offering are referred to
collectively herein as the 'Refinancing Transactions.' Combined financial data
for 1995 included in this Prospectus reflects the combined operations of the
Company, Unity Mold Corporation and Tredegar Molded Products Company for the
entire period, without giving effect to pro forma acquisition adjustments.
THE COMPANY
The Company is a leading full-service, custom injection molder of precision
plastic products, focusing on three broad markets: healthcare, packaging and
consumer/industrial products. These markets are characterized by high volume
requirements, long product life cycles, limited vulnerability to recessionary
trends and relatively low susceptibility to off-shore competition. The Company
differentiates itself by providing total project management, including
value-added services, for the manufacture of highly engineered, close tolerance
products, such as disposable medical devices, thin-wall consumer product
containers and electrical connectors. The Company currently serves a diverse
base of original equipment manufacturers ('OEMs'), including Fortune 500
companies such as Abbott Laboratories ('Abbott Labs'), The Gillette Company
('Gillette') and The Procter & Gamble Company ('Procter & Gamble'). The Company
is the sole or primary source supplier of the products that it manufactures for
many of its customers. On a pro forma basis, after giving effect to the
Acquisitions, the Company generated net sales and EBITDA (as defined) of $110.5
million and $17.3 million, respectively, in the twelve months ended March 31,
1997.
The Company operates approximately 185 molding machines in nine
strategically located facilities throughout the eastern and midwestern United
States, three of which have advanced mold making capabilities. The Company is
capable of providing its customers with comprehensive custom manufacturing
services, including extensive product design and prototype development, mold
design and manufacturing, close tolerance injection molding and value-added
finishing services such as packaging, assembly and decoration. The Company's
technologically advanced, computer-aided manufacturing facilities and equipment
enable it to engineer custom solutions to technically demanding customer
requirements, which are generally characterized by close tolerances and high
speed, volume and durability parameters. The high level of automation in many of
the Company's manufacturing facilities minimizes both direct labor input and
scrap loss. The Company believes that its leading technical capabilities and
reputation for high quality products, on-time deliveries and reliability have
enabled it to both obtain new customers and further penetrate existing
customers.
Precise was acquired in 1990 by an entity managed by Mentmore Holdings
Corporation ('Mentmore'), a privately-held investment and management company.
Mentmore recruited an experienced management team beginning in 1990 to implement
several key strategic initiatives aimed at improving the Company's competitive
standing and profitability, as well as promoting internal and external growth.
As a result of these initiatives, the Company's net sales and EBITDA increased
from $22.8 million and $(129,000), respectively, in 1991 to $33.5 million and
$4.5 million, respectively, in 1995 (prior to the Acquisitions). In addition,
during the same period, the Company's EBITDA margin improved from (0.6)% to
13.3%.
In 1996, the Company acquired Tredegar Molded Products Company
('Tredegar'), a full-service plastics injection molder supplying OEMs primarily
in the healthcare, packaging and consumer/industrial markets, and Unity Mold
Corporation ('Unity'), a plastics injection molder specializing in medical
diagnostic products and precision valves. The Acquisitions more than tripled the
Company's net sales on a pro forma basis, making it one
5
<PAGE>
of the larger custom injection molders in the United States. Management believes
that the Acquisitions also significantly enhanced the Company's prospects for
future growth by expanding its manufacturing and technological capabilities,
enlarging its customer base, strengthening its relationships with certain
existing customers and broadening its geographic presence. In addition, the
Acquisitions provided the Company with significant opportunities for economies
of scale in raw material purchasing and reductions in manufacturing and
administrative costs. As a result of operating improvements implemented by the
Company since the Acquisitions were completed, the Company's EBITDA and EBITDA
margin increased from $12.7 million and 9.8%, respectively, on a combined basis
in 1995 to $17.3 million and 15.6%, respectively, on a pro forma basis in the
twelve months ended March 31, 1997.
Injection molding is one of the most widely used plastic processing methods
in the world. According to The Freedonia Group, Inc. ('The Freedonia Group'), an
independent market research firm, annual shipments of injection molded plastic
products have increased from approximately 7 billion pounds in 1985 to over 11
billion pounds in 1996, and are expected to exceed 13 billion pounds by the year
2000. This growth is driven by the relative design and production versatility
offered by injection molding versus other manufacturing processes and the
continued substitution of plastic for materials such as metal, glass and paper.
The Company believes that this substitution is primarily the result of plastic's
unique physical product attributes such as recyclability, durability, cosmetic
appeal, flexibility of form and cost and weight advantages.
The United States plastics injection molding industry is comprised of over
7,000 molders, the substantial majority of which are small operators or captive
divisions of larger companies. Management believes that larger injection molders
such as the Company will benefit from continued industry consolidation and the
trend by OEMs to outsource their injection molding needs to larger, full-service
independent molders that are able to provide total project management. High
volume OEMs are increasingly implementing rigorous programs for evaluating and
rating suppliers, which encompass quality, cost control, reliability, new
technology implementation and overall management. Management believes that a
limited number of injection molders are capable of providing the breadth of
services increasingly being demanded by high volume OEMs. As a result,
management believes that full-service, multiple plant suppliers, such as the
Company, are becoming increasingly important to large OEMs who are looking to
form long-term alliances with key suppliers.
COMPETITIVE STRENGTHS
Management believes that the Company is well positioned to capitalize on
the favorable trends in the plastics injection molding industry and to enhance
its position in its target markets. The following are, in management's view, the
Company's principal competitive strengths:
FULL-SERVICE CAPABILITIES. The Company offers comprehensive services
ranging from product design, product development and mold making through
molding, decorating and assembly. As one of a limited number of injection
molders in the United States capable of offering such comprehensive services,
management believes that the Company is well positioned to benefit from the
consolidation currently taking place in the injection molding industry and the
trend among high volume OEMs to increasingly rely upon custom injection molders
for total project management.
ADVANCED MANUFACTURING CAPABILITIES. The Company uses state-of-the-art
computer-aided design/computer-aided manufacturing ('CAD/CAM') technology in the
design and manufacture of its molds and subjects each mold to extensive testing
to ensure that it meets high quality standards. The Company has also made
substantial investments in advanced high speed molding machines and
significantly expanded its use of automation and robotics in its manufacturing
and assembly operations. As a result of its efforts, the Company has received
numerous quality awards, including Gillette's OmniMark Award, the Lexmark
International Prestige Supplier Award and the bioMerieux Vitek World Class
Supplier Award. In addition, the Company has achieved 'ship-to-stock' status
with many of its customers. Management believes that the Company's mold making
capabilities and the high quality of its molding have been integral in the
Company's strategy of focusing on highly engineered products.
LOW COST PRODUCTION. The Company has been successful in reducing costs by
improving manufacturing efficiency, introducing advanced molding technology and
realigning facilities and production to increase facility utilization. In
addition, as one of the largest manufacturers in the plastics injection molding
industry, the Company is able to realize significant economies of scale in raw
material purchasing. Management believes that
6
<PAGE>
by being one of the industry's low cost producers, the Company enjoys a
significant advantage over many of its competitors in obtaining new business.
MULTIPLE PLANT LOCATIONS. Management believes that the Company's nine
plants, located throughout the eastern and midwestern United States, provide it
with the opportunity to effectively compete for new product contracts that
require large volume runs and multiple distribution points. The Company's
multiple plant locations enable it to allocate production to the facility best
suited for a job in view of its relative capabilities and proximity to the
customer. As a result, the Company provides its customers with a broad range of
injection molding capabilities and better service through improved
responsiveness, timely delivery and reduced freight costs. In addition, by
operating numerous plants, the Company can mitigate customer sourcing risks
associated with single facility production.
EXPERIENCED MANAGEMENT. The six members of the Company's senior management
team have, on average, approximately 19 years of experience in the plastics
injection molding industry. The members of the management team, most of whom
were recruited by Mentmore in 1990 and 1991 from other leading plastics
companies, are largely responsible for the substantial growth and improved
operating performance that the Company has experienced over the past five years.
BUSINESS STRATEGY
The Company's objective is to become the leading supplier of plastic molded
products to leading OEMs in the healthcare, packaging and consumer/industrial
markets. The key elements of the Company's business strategy to achieve this
objective are as follows:
FOCUS ON TARGET MARKETS. The Company focuses its marketing efforts on high
margin accounts in the healthcare, packaging and consumer/industrial markets.
These markets are characterized by high volume requirements, long product life
cycles, limited vulnerability to recessionary trends and relatively low
susceptibility to off-shore competition. By focusing on high volume, long run
manufacturing for products in these markets, management believes that the
Company will be able to maximize its profitability and best utilize its
resources.
FURTHER PENETRATE EXISTING CUSTOMER BASE. As OEMs continue to reduce their
supplier base and outsource their injection molding needs, the Company has the
opportunity to increase sales to its existing customers and participate in their
domestic and international growth. The Company seeks to capitalize on these
favorable industry trends and growth opportunities by expanding its sales force,
emphasizing its full-service capabilities and developing close working
relationships with its customers.
INVEST IN TECHNOLOGY AND QUALITY IMPROVEMENTS. The Company continues to
improve productivity through an on-going program of upgrading equipment and
facilities and investing in automation, robotics and other technological
improvements. Management believes that these initiatives, as well as a focus on
quality in all aspects of manufacturing and customer service, will further
enable the Company to increase sales to its existing customers, develop new
customer relationships and improve its profit margins through increased
efficiencies.
REDUCE COSTS AND INCREASE PRODUCTIVITY. The Company focuses on
simultaneously reducing costs while meeting the high quality standards of its
customers. Through aggressive asset management, the use of total quality
management techniques and extensive employee training and incentive programs,
the Company strives to reduce costs and increase productivity. As a result, the
Company's net sales per employee increased from $87,000 in 1991 to $127,000, on
a pro forma basis, in 1996, and the Company's EBITDA margin improved from (0.6)%
to 15.8% during the same period. The Company intends to continue to implement
measures that minimize costs, increase margins and result in competitive prices
for its customers.
DEVELOP PARTNERSHIPS WITH KEY CUSTOMERS. In response to customers'
increasing focus on outsourcing non-core activities such as injection molding,
management continues to pursue customer partnerships that involve sole or
primary source production and total project management under long-term
contracts. For example, the Company's 51,000 square foot, state-of-the-art
Customer-Aligned-Production ('CAP') facility in Newark, Delaware (the 'Delaware
CAP Facility') is specifically designed to serve the needs of Procter & Gamble
and other customers in the thin-wall packaging market segment. Through this
facility, the Company currently is the sole source manufacturer of polypropylene
containers for Baby Fresh(Trademark) baby wipes for Procter & Gamble and
Softkins(Trademark) moist tissues for Kimberly-Clark Corporation
('Kimberly-Clark'), producing approximately 18 million units in 1996. Because of
its highly automated manufacturing process, the Delaware CAP Facility's
7
<PAGE>
direct labor costs as a percentage of net sales in 1996 were 1.9%, compared to
what management believes to be an industry average of approximately 10.0%. The
Company intends to continue to pursue CAP facilities and similar partnerships
with other customers.
SELECTIVELY PURSUE ACQUISITION OPPORTUNITIES. Strategic acquisitions have
been, and management believes will continue to be, an important element in the
Company's growth and in its efforts to capitalize on favorable industry trends.
The Company's recent acquisitions have expanded its customer base, complemented
its existing technological and manufacturing capabilities, presented substantial
cost savings opportunities and provided significant growth opportunities. The
Company will consider future acquisition opportunities that are attractively
priced and that it believes will strengthen its customer base, broaden its
geographic presence, enhance its production capabilities and/or provide
significant operating synergies.
------------------------
The Company's principal executive offices are located at 501 Mosside
Boulevard, North Versailles, Pennsylvania 15137. Its telephone number at that
location is (412) 823-2100. Precise was incorporated in Delaware on August 14,
1969.
THE INITIAL OFFERING
Notes
Pursuant to a Purchase Agreement dated as of June 10, 1997 (the 'Purchase
Agreement'), Precise sold Old Notes in an aggregate principal amount of $75.0
million to the Initial Purchasers on June 13, 1997. The Initial Purchasers
subsequently resold the Old Notes purchased from Precise to qualified
institutional buyers pursuant to Rule 144A under the Securities Act. A
substantial portion of the net proceeds from the Initial Offering, estimated to
have been approximately $70.3 million after deducting discounts and commissions
to the Initial Purchasers and estimated expenses relating to the consummation of
the Refinancing Transactions, together with initial borrowings under the New
Credit Agreement, were used to refinance indebtedness and redeem preferred stock
issued in connection with the Tredegar Acquisition. Specifically, the Company
used the net proceeds from the Initial Offering to (i) repay indebtedness under
the Existing Credit Agreement (as defined), (ii) redeem the Existing Notes (as
defined), (iii) redeem the Redeemable Preferred Stock (as defined), (iv)
repurchase certain shares of common stock of Precise from Parent, the proceeds
of which were used by Parent to redeem the Parent Preferred Stock (as defined)
and (v) make a distribution to Parent on or after the consummation of the
Initial Offering. See 'Capitalization.'
Registration Rights Agreement
Pursuant to the Purchase Agreement, Precise, the Guarantors and the Initial
Purchasers entered into a Registration Rights Agreement, dated as of June 13,
1997 (the 'Registration Rights Agreement'), which grants the holders of the Old
Notes certain exchange and registration rights. The Exchange Offer is intended
to satisfy such exchange rights which terminate upon the consummation of the
Exchange Offer.
THE EXCHANGE OFFER
<TABLE>
<S> <C>
Securities Offered........................ $75,000,000 aggregate principal amount of 11 1/8% Senior Subordinated
Notes due 2007 of Precise.
The Exchange Offer........................ $1,000 principal amount of New Notes in exchange for each $1,000
principal amount of Old Notes. As of the date hereof, $75,000,000
aggregate principal amount of Old Notes are outstanding. Precise will
issue the New Notes to holders on or promptly after the Expiration
Date.
Based on an interpretation by the staff of the Commission set forth
in no-action letters issued to third parties, Precise believes that
New Notes issued pursuant to the Exchange Offer in exchange for Old
Notes may be offered for resale, resold and otherwise transferred by
any holder thereof (other than any such holder which is an
'affiliate' of the Company within the meaning of Rule 405 under the
Securities Act) without compliance with the registration and
prospectus delivery provisions of the Securities Act, provided that
such New Notes are acquired in the ordinary course of such holder's
business and that such holder does not intend to participate and has
</TABLE>
8
<PAGE>
<TABLE>
<S> <C>
no arrangement or understanding with any person to participate in the
distribution of such New Notes. Each holder accepting the Exchange
Offer is required to represent to Precise in the Letter of
Transmittal that, among other things, the New Notes will be acquired
by the holder in the ordinary course of business and the holder does
not intend to participate and has no arrangement or understanding
with any person to participate in the distribution of such New Notes.
Any Participating Broker-Dealer that acquired Old Notes for its own
account as a result of market-making activities or other trading
activities may be a statutory underwriter. Each Participating Broker-
Dealer that receives New Notes for its own account pursuant to the
Exchange Offer must acknowledge that it will deliver a prospectus in
connection with any resale of such New Notes. The Letter of
Transmittal states that by so acknowledging and by delivering a
prospectus, a Participating Broker-Dealer will not be deemed to admit
that it is an 'underwriter' within the meaning of the Securities Act.
This Prospectus, as it may be amended or supplemented from time to
time, may be used by a Participating Broker-Dealer in connection with
resale of New Notes received in exchange for Old Notes where such Old
Notes were acquired by such Participating Broker-Dealer as a result
of market-making activities or other trading activities. The Company
has agreed that, for a period of one year after the Exchange Offer
Effectiveness Date, it will make this Prospectus available to any
Participating Broker-Dealer for use in connection with any such
resale. See 'Plan of Distribution.'
Any holder who tenders in the Exchange Offer with the intention to
participate, or for the purpose of participating, in a distribution
of the New Notes will not be able to rely on the position of the
staff of the Commission enunciated in no-action letters and, in the
absence of an exemption therefrom, must comply with the registration
and prospectus delivery requirements of the Securities Act in
connection with any resale transaction. Failure to comply with such
requirements in such instance may result in such holder incurring
liability under the Securities Act for which the holder is not
indemnified by the Company.
Minimum Condition......................... The Exchange Offer is not conditioned upon any minimum aggregate
principal amount of Old Notes being tendered or accepted for
exchange.
Expiration Date........................... 5:00 p.m., New York City time, on , 1997 unless the
Exchange Offer is extended, in which case the term 'Expiration Date'
means the latest date and time to which the Exchange Offer is
extended.
Accrued Interest on the New Notes and the
Old Notes............................... Each New Note will bear interest from its issuance date. Holders of
Old Notes that are accepted for exchange will receive, in cash,
accrued interest thereon to, but not including, the issuance date of
the New Notes. Such interest will be paid with the first interest
payment on the New Notes. Interest on the Old Notes accepted for
exchange will cease to accrue upon issuance of the New Notes.
Conditions to the Exchange Offer.......... The Exchange Offer is subject to certain customary conditions, which
may be waived by Precise. See 'The Exchange Offer--
</TABLE>
9
<PAGE>
<TABLE>
<S> <C>
Conditions.' Precise reserves the right to terminate or amend the
Exchange Offer at any time prior to the Expiration Date upon the
occurrence of any such condition.
Procedures for Tendering Old Notes........ Each holder of Old Notes wishing to accept the Exchange Offer must
complete, sign and date the accompanying Letter of Transmittal, or a
facsimile thereof, in accordance with the instructions contained
herein and therein, and mail or otherwise deliver such Letter of
Transmittal, or such facsimile, or an Agent's Message (as defined) in
connection with a book-entry transfer, together with the Old Notes
and other required documentation to the Exchange Agent (as defined)
at the address set forth herein. By executing the Letter of
Transmittal, each holder will represent to Precise that, among other
things, the New Notes acquired pursuant to the Exchange Offer are
being obtained in the ordinary course of business of the person
receiving such New Notes, whether or not such person is the holder,
that neither the holder nor any such other person (i) has any
arrangement or understanding with any person to participate in the
distribution of such New Notes, (ii) is engaging or intends to engage
in the distribution of such New Notes, or (iii) is an 'affiliate,' as
defined under Rule 405 of the Securities Act, of Precise. See 'The
Exchange Offer--Purpose and Effect of the Exchange Offer' and 'The
Exchange Offer--Procedures for Tendering.'
Untendered Old Notes...................... Following the consummation of the Exchange Offer, holders of Old
Notes eligible to participate but who do not tender their Old Notes
will not have any further exchange rights and such Old Notes will
continue to be subject to certain restrictions on transfer.
Accordingly, the liquidity of the market for such Old Notes could be
adversely affected.
Consequences of Failure to Exchange....... The Old Notes that are not exchanged pursuant to the Exchange Offer
will remain restricted securities. Accordingly, such Old Notes may be
resold only (i) to Precise, (ii) pursuant to Rule 144A or Rule 144
under the Securities Act or pursuant to some other exemption under
the Securities Act, (iii) outside the United States to a non-U.S.
person pursuant to the requirements of Rule 904 under the Securities
Act, or (iv) pursuant to an effective registration statement under
the Securities Act. See 'The Exchange Offer-- Consequences of Failure
to Exchange.'
Shelf Registration Statement.............. If (i) Precise and the Guarantors are not required to file the
Exchange Offer Registration Statement or permitted to consummate the
Exchange Offer because the Exchange Offer is not permitted by
applicable law or Commission policy or (ii) any Holder of Transfer
Restricted Securities (as defined) notifies Precise prior to the 20th
day following consummation of the Exchange Offer that (A) it is
prohibited by law or Commission policy from participating in the
Exchange Offer or (B) that it may not resell the New Notes acquired
by it in the Exchange Offer to the public without delivering a
prospectus and the prospectus contained in the Exchange Offer
Registration Statement is not appropriate or available for such
resales or (C) that it is a broker-dealer and owns Notes acquired
directly from Precise or an affilaite of Precise, Precise and the
Guarantors will file with the Commission a Shelf Registration
Statement (the 'Shelf Registration Statement') to cover resales of
</TABLE>
10
<PAGE>
<TABLE>
<S> <C>
the Notes by the Holders thereof who satisfy certain conditions
relating to the provision of information in connection with the Shelf
Registration Statement. Precise and the Guarantors will use their
best efforts to cause the applicable registration statement to be
declared effective as promptly as possible by the Commission. A
holder of the Old Notes that sells such Old Notes pursuant to the
Shelf Registration Statement generally would be required to be named
as a selling security holder in the related prospectus and to deliver
a prospectus to purchasers, will be subject to certain of the civil
liability provisions under the Securities Act in connection with such
sales and will be bound by the provisions of the Registration Rights
Agreement which are applicable to such a holder (including certain
indemnification obligations).
Special Procedures for Beneficial
Owners.................................. Any beneficial owner whose Old Notes are registered in the name of a
broker, dealer, commercial bank, trust company or other nominee and
who wishes to tender should contact such registered holder promptly
and instruct such registered holder to tender on such beneficial
owner's behalf. If such beneficial owner wishes to tender on such
owner's own behalf, such owner must, prior to completing and
executing the Letter of Transmittal and delivering its Old Notes,
either make appropriate arrangements to register ownership of the Old
Notes in such owner's name or obtain a properly completed bond power
from the registered holder. The transfer of registered ownership may
take considerable time. Precise will keep the Exchange Offer open for
not less than twenty business days in order to provide for the
transfer of registered ownership.
Guaranteed Delivery Procedures............ Holders of Old Notes who wish to tender their Old Notes and whose Old
Notes are not immediately available or who cannot deliver their Old
Notes, the Letter of Transmittal or any other documents required by
the Letter of Transmittal to the Exchange Agent (or comply with the
procedures for book-entry transfer) prior to the Expiration Date must
tender their Old Notes according to the guaranteed delivery
procedures set forth in 'The Exchange Offer-- Guaranteed Delivery
Procedures.'
Withdrawal Rights......................... Tenders may be withdrawn at any time prior to 5:00 p.m., New York
City time, on the Expiration Date.
Acceptance of Old Notes and Delivery of
New Notes............................... Precise will accept for exchange any and all Old Notes which are
properly tendered in the Exchange Offer prior to 5:00 p.m., New York
City time, on the Expiration Date. The New Notes issued pursuant to
the Exchange Offer will be delivered promptly following the
Expiration Date. See 'The Exchange Offer--Terms of the Exchange
Offer.'
Federal Income Tax Consequences........... The exchange of Old Notes for New Notes by tendering holders will not
be a taxable exchange for federal income tax purposes, and such
holders should not recognize any taxable gain or loss or any interest
income as a result of such exchange.
Use of Proceeds........................... There will be no cash proceeds to Precise from the exchange pursuant
to the Exchange Offer.
Exchange Agent............................ Marine Midland Bank.
</TABLE>
11
<PAGE>
THE NEW NOTES
<TABLE>
<S> <C>
GENERAL............................... The form and terms of the New Notes are the same as the form and terms of
the Old Notes (which they replace) except that (i) the New Notes bear a
Series B designation, (ii) the New Notes have been registered under the
Securities Act and, therefore, will not bear legends restricting the
transfer thereof, and (iii) the holders of New Notes will not be entitled
to certain rights under the Registration Rights Agreement, including the
provisions providing for the payment of Liquidated Damages in certain
circumstances relating to the timing of the Exchange Offer, which rights
will terminate when the Exchange Offer is consummated. See 'The Exchange
Offer--Purpose and Effect of the Exchange Offer.' The New Notes will
evidence the same debt as the Old Notes and will be entitled to the
benefits of the Indenture. See 'Description of the Notes.' The Old Notes
and the New Notes are referred to collectively herein as the 'Notes.'
ISSUER................................ Precise Technology, Inc.
SECURITIES OFFERED.................... $75.0 million in aggregate principal amount of Series B 11 1/8% Senior
Subordinated Notes due 2007.
MATURITY.............................. June 15, 2007.
INTEREST.............................. Interest on the New Notes will accrue at the rate of 11 1/8% per annum
from the date of issuance (the 'Issue Date') and will be payable semi-
annually in arrears on June 15 and December 15 of each year, commencing
December 15, 1997.
GUARANTEES............................ Precise's payment obligations under the New Notes will be jointly and
severally guaranteed (the 'Subsidiary Guarantees'), on a senior
subordinated basis, by the Guarantors. The Subsidiary Guarantee of each
Guarantor will be subordinated to the prior payment in full of all Senior
Debt of such Guarantor. See 'Description of Notes--Subsidiary Guarantees.'
RANKING............................... The New Notes will be general unsecured obligations of Precise,
subordinated in right of payment to all existing and future Senior Debt of
the Company, including all obligations of the Company under the New Credit
Agreement, and senior to or pari passu with all existing and future
subordinated indebtedness of the Company. As of March 31, 1997, after
giving pro forma effect to the Refinancing Transactions, Precise and the
Guarantors would have had outstanding approximately $16.4 million of
consolidated Senior Debt. See 'Capitalization' and 'Description of
Notes--Subordination.'
OPTIONAL REDEMPTION................... The Notes will be redeemable at the option of Precise, in whole or in
part, at any time on or after June 15, 2002, at the redemption prices set
forth herein, plus accrued and unpaid interest and Liquidated Damages, if
any, thereon to the date of redemption. Notwithstanding the foregoing, on
or prior to June 15, 2000, Precise may redeem at any time or from time to
time up to 33 1/3% of the aggregate principal amount of the Notes issued
at a redemption price of 111.125% of the principal amount thereof, plus
accrued and unpaid interest and Liquidated Damages, if any, thereon to the
date of redemption, with the net cash proceeds of one of more Public
Equity Offerings; provided, however, that at least 66 2/3% of the
aggregate principal amount of the Notes originally issued remain
outstanding immediately after
</TABLE>
12
<PAGE>
<TABLE>
<S> <C>
the occurrence of such redemption and that any such redemption occurs
within 90 days following the closing of any such Public Equity Offering.
In addition, at any time prior to June 15, 2002, Precise may, at its
option, redeem the Notes, in whole or in part, at a redemption price equal
to 100% of the principal amount thereof plus the applicable Make-Whole
Premium. See 'Description of Notes--Optional Redemption.'
CHANGE OF CONTROL..................... Upon the occurrence of a Change of Control, Precise will be required to
make an offer to repurchase all or any part of the Notes at a price in
cash equal to 101% of the aggregate principal amount thereof, plus accrued
and unpaid interest and Liquidated Damages, if any, thereon to the date of
repurchase. See 'Description of Notes--Repurchase at the Option of
Holders--Change of Control.'
CERTAIN COVENANTS..................... The Indenture contains covenants, including covenants with respect to the
following matters: (i) limitations on the incurrence of indebtedness and
the issuance of preferred stock; (ii) limitations on certain payments,
including dividends, repurchases of Precise's capital stock, repurchases
of subordinated obligations, and the making of certain investments; (iii)
limitations on liens; (iv) limitations on dividend and other payment
restrictions affecting Restricted Subsidiaries; (v) limitations on
mergers, consolidations, or the sale of substantially all assets; (vi)
limitations on transactions with affiliates; (vii) limitations on
issuances and sales of capital stock of wholly owned Restricted
Subsidiaries; (viii) limitations on layering debt; and (ix) limitations on
asset sales. See 'Description of Notes--Certain Covenants.'
REGISTRATION RIGHTS................... Pursuant to a registration rights agreement (the 'Registration Rights
Agreement') between Precise, the Guarantors and the Initial Purchasers,
Precise and the Guarantors agreed to file a registration statement (the
'Exchange Offer Registration Statement') with respect to an offer to
exchange the Old Notes for New Notes of Precise having substantially
identical terms. If (i) the Exchange Offer is not permitted by applicable
law or (ii) any holder of Transfer Restricted Securities notifies Precise
that (a) it is prohibited by law or Commission policy from participating
in the Exchange Offer, (b) it may not resell a New Note acquired by it in
an Exchange Offer to the public without delivering a prospectus and that
the prospectus contained in the Exchange Offer Registration Statement is
not appropriate or available for such resale or (c) it is a broker-dealer
and holds Notes acquired directly from Precise or an affiliate of Precise,
Precise and the Guarantors will be required to file a shelf registration
statement (the 'Shelf Registration Statement') to cover resales of the
Notes by the holders thereof. If Precise and the Guarantors fail to
satisfy these or certain other registration obligations, Precise and the
Guarantors will be required to pay Liquidated Damages to the holders of
the Notes under certain circumstances. See 'The Exchange Offer.'
</TABLE>
RISK FACTORS
Before tendering their Old Notes for the New Notes offered hereby, holders
of the Old Notes should consider carefully the information set forth under the
caption 'Risk Factors,' and all other information set forth in this Prospectus.
13
<PAGE>
SUMMARY FINANCIAL DATA
The following table sets forth (i) summary historical consolidated
financial data of the Company for the five-year period ended December 31, 1996
and for the three months ended March 31, 1996 and 1997, (ii) pro forma
consolidated statement of income and other financial data of the Company for the
year ended December 31, 1996 and the three and twelve months ended March 31,
1997 which give effect to the Acquisitions and the Refinancing Transactions, as
if such events had occurred on January 1, 1996 and (iii) summary historical
balance sheet data of the Company as adjusted to give effect to the Refinancing
Transactions as if such events had occurred on March 31, 1997. The summary
historical consolidated financial data for the five-year period ended December
31, 1996 were derived from audited consolidated financial statements of the
Company. The audited consolidated financial statements of the Company for each
of the years in the three-year period ended December 31, 1996 are included
elsewhere in this Prospectus together with the reports of Ernst & Young, LLP,
independent accountants, for the years ended December 31, 1996 and 1995, and
Grant Thornton, LLP, independent accountants, for the year ended December 31,
1994. The summary historical consolidated financial data for the years ended
December 31, 1993 and 1992 were derived from audited consolidated financial
statements of the Company that are not included herein. The summary historical
consolidated financial data for the three months ended March 31, 1996 and 1997
and the pro forma twelve months ended March 31, 1997 were derived from unaudited
financial statements of the Company, which, in the opinion of management,
include all adjustments (consisting of only normal recurring adjustments)
necessary for a fair presentation of the information set forth therein. The
results of operations for the three months ended March 31, 1997 are not
necessarily indicative of the results that may be expected for the full year.
The pro forma financial data and the adjusted balance sheet data are provided
for informational purposes only, are unaudited and are not necessarily
indicative of future results or what the operating results or financial
condition of the Company would have been had the Refinancing Transactions and
the Acquisitions actually been consummated on the dates assumed. The following
table should be read in conjunction with 'Capitalization,' 'Selected Financial
Data,' 'Pro Forma Financial Data,' 'Management's Discussion and Analysis of
Financial Condition and Results of Operations' and the historical financial
statements of the Company and Tredegar, and the accompanying notes thereto,
included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
UNAUDITED PRO FORMA(2)
UNAUDITED ------------------------
THREE MONTHS ENDED THREE
MONTHS
YEAR ENDED DECEMBER 31, MARCH 31, YEAR ENDED ENDED
---------------------------------------------------- ------------------- DECEMBER 31, MARCH 31,
1992 1993 1994 1995 1996(1) 1996 1997 1996 1997
-------- -------- -------- -------- -------- -------- -------- ------------ ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Net sales.................... $ 27,673 $ 24,161 $ 33,157 $ 33,542 $ 93,289 $ 9,089 $ 26,325 $114,658 $ 26,325
Cost of sales................ 22,908 19,536 26,807 25,877 76,477 7,156 21,613 94,199 21,613
-------- -------- -------- -------- -------- -------- -------- ------------ ---------
Gross profit................. 4,765 4,625 6,350 7,665 16,812 1,933 4,712 20,459 4,712
Selling, general and
administrative............. 3,390 3,373 3,916 4,454 7,262 1,100 2,139 8,003 2,139
Plant closure costs.......... -- -- -- -- 671 -- -- 671 --
Amortization of intangible
assets..................... 219 -- 26 37 1,614 42 433 1,758 402
-------- -------- -------- -------- -------- -------- -------- ------------ ---------
Operating income............. 1,156 1,252 2,408 3,174 7,265 791 2,140 10,027 2,171
Interest expense............. 703 706 956 810 5,559 261 1,690 9,897 2,463
Other (income) expense....... 44 59 (72) 148 (25) (2) (4) (25)(3) (4)
-------- -------- -------- -------- -------- -------- -------- ---------- --------
Income (loss) before income
taxes...................... 409 487 1,524 2,216 1,731 532 454 155 (288)
Provision (benefit) for
income taxes (4)........... -- 66 574 941 1,265 245 304 578 4
-------- -------- -------- -------- -------- -------- -------- ---------- --------
Net income (loss)............ $ 409 $ 421 $ 950 $ 1,275 $ 466 $ 287 $ 150 $ (423)(5) $ (292)
-------- -------- -------- -------- -------- -------- -------- ---------- ---------
-------- -------- -------- -------- -------- -------- -------- ---------- ---------
CASH FLOW DATA:
Net cash provided by
operating activities....... $ 1,167 $ 1,463 $ 1,327 $ 3,170 $ 9,602 $ 908 $ 703 -- --
Net cash used in investing
activities (excluding
Acquisitions) (6).......... (383) (309) (1,968) (998) (1,829) (302) (805) -- --
Net cash provided by (used
in) financing activities... (893) (1,161) 650 (2,202) 57,313 63,826 (684) -- --
<CAPTION>
TWELVE
MONTHS
ENDED
MARCH 31,
1997
---------
<S> <C>
STATEMENT OF INCOME DATA:
Net sales.................... $110,525
Cost of sales................ 90,847
---------
Gross profit................. 19,678
Selling, general and
administrative............. 8,301
Plant closure costs.......... 671
Amortization of intangible
assets..................... 1,783
--------
Operating income............. 8,923
Interest expense............. 9,886
Other (income) expense....... (27)
--------
Income (loss) before income
taxes...................... (936)
Provision (benefit) for
income taxes (4)........... 109
--------
Net income (loss)............ $ (1,045)
--------
--------
CASH FLOW DATA:
Net cash provided by
operating activities....... --
Net cash used in investing
activities (excluding
Acquisitions) (6).......... --
Net cash provided by (used
in) financing activities... --
</TABLE>
14
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<TABLE>
<CAPTION>
UNAUDITED PRO FORMA(2)
UNAUDITED ------------------------
THREE MONTHS ENDED THREE
ENDED MONTHS
YEAR ENDED DECEMBER 31, MARCH 31, YEAR ENDED ENDED
---------------------------------------------------- ------------------- DECEMBER 31, MARCH 31,
1992 1993 1994 1995 1996(1) 1996 1997 1996 1997
-------- -------- -------- -------- -------- -------- -------- ------------ ---------
(DOLLARS IN THOUSANDS)
OTHER FINANCIAL DATA:
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
EBITDA (7)................... $ 2,043 $ 1,837 $ 3,542 $ 4,472 $ 14,518 $ 1,254 $ 3,906 $ 18,165 $ 3,906
EBITDA margin (7)............ 7.4% 7.6% 10.7% 13.3% 15.6% 13.8% 14.8% 15.8% 14.8%
Depreciation and
amortization............... $ 931 $ 644 $ 1,062 $ 1,446 $ 5,925 $ 461 $ 1,762 $ 6,740 $ 1,731
Capital expenditures (8)..... 412 2,445 4,403 1,582 6,376 2,089 1,330 7,604 1,330
Ratio of earnings to fixed
charges (9)................ 1.5x 1.6x 2.4x 3.4x 1.3x 2.6x 1.3x 1.0x --
Pro forma ratio of EBITDA to
interest expense........... -- -- -- -- -- -- -- 1.8x 1.6x
Pro forma ratio of total debt
to EBITDA.................. -- -- -- -- -- -- -- 5.0x --
<CAPTION>
TWELVE
MONTHS
ENDED
MARCH 31,
1997
---------
OTHER FINANCIAL DATA:
<S> <C>
EBITDA (7)................... $ 17,257
EBITDA margin (7)............ 15.6%
Depreciation and
amortization............... $ 7,004
Capital expenditures (8)..... 5,617
Ratio of earnings to fixed
charges (9)................ --
Pro forma ratio of EBITDA to
interest expense........... 1.7x
Pro forma ratio of total debt
to EBITDA.................. 5.3x
</TABLE>
<TABLE>
<CAPTION>
UNAUDITED
AS OF MARCH 31, 1997
------------------------------
ACTUAL AS ADJUSTED(10)
----------- ---------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
BALANCE SHEET DATA:
Total assets.................................................................................... $ 97,215 $ 97,435
Long-term debt, including current maturities.................................................... 64,577 91,391
Redeemable preferred stock...................................................................... 8,250 --
Total stockholder's equity (deficit)............................................................ 6,898 (7,681)
</TABLE>
- ------------------------------
(1) The statement of income data, cash flow data and other financial data for
1996 reflect the results of operations of Unity and Tredegar since they
were acquired by the Company on January 25, 1996 and March 29, 1996,
respectively.
(2) The unaudited pro forma statement of income data and other financial data
of the Company give effect to the Acquisitions and the Refinancing
Transactions as if they had occurred on January 1, 1996.
(3) Excludes a non-recurring charge of $500,000 representing financial advisory
fees paid to Mentmore in connection with the Refinancing Transactions.
(4) The provision for income taxes for the unaudited pro forma statement of
income data for 1996, for the three months ended March 31, 1997 and for the
twelve months ended March 31, 1997, is computed by applying the statutory
rate of 43%, excluding the impact of non-deductible goodwill amortization.
(5) Excludes an extraordinary loss on the early extinguishment of indebtedness,
net of tax effect, of $4,538,000.
(6) Net cash used in the Unity Acquisition was $3,308,000 and net cash used in
the Tredegar Acquisition was $60,493,000.
(7) 'EBITDA' represents net income plus income taxes, interest expense,
depreciation and amortization and certain non-recurring charges and
non-cash charges. Non-recurring charges and non-cash charges for the year
ended December 31, 1996 and for the pro forma twelve months ended March 31,
1997 include operating losses (excluding depreciation expense) related to
the Company's Graham, North Carolina facility which was closed in September
1996 ($510,000), plant closure costs ($671,000) and the elimination of
pension costs associated with a terminated defined benefit plan ($122,000).
Non-recurring charges and non-cash charges for the pro forma year ended
December 31, 1996 include operating losses (excluding depreciation expense)
related to the Company's Graham, North Carolina facility which was closed
in September 1996 ($580,000), plant closure costs ($671,000) and the
elimination of pension costs associated with a terminated defined benefit
plan ($122,000). 'EBITDA margin' is defined as EBITDA divided by net sales.
EBITDA is presented because it is a widely accepted financial indicator of
a company's ability to service indebtedness. However, EBITDA should not be
considered an alternative to operating income or cash flows from operating
activities (as determined in accordance with generally accepted accounting
principles) and should not be construed as an indication of a company's
operating performance or as a measure of liquidity.
(8) Includes capital expenditures financed through capital leases of $0 in
1992, $1,896,000 in 1993, $2,328,000 in 1994, $536,000 in 1995 and
$4,201,000 in 1996 and $1,732,000 and $506,000 in the three months ended
March 31, 1996 and 1997, respectively. Also includes capital expenditures
financed through capital leases of $4,201,000, $506,000, and $2,975,000 for
the pro forma year ended December 31, 1996, the pro forma three months
ended March 31, 1997 and the pro forma twelve months ended March 31, 1997,
respectively.
(9) In calculating the ratio of earnings to fixed charges, earnings consist of
income before taxes plus fixed charges. Fixed charges consist of interest
expense and amortization of deferred financing costs, whether expensed or
capitalized, plus the portion of operating lease expense attributable to
interest. For the three months and twelve months ended March 31, 1997, the
Company's pro forma earnings were inadequate to cover fixed charges by
$288,000 and $936,000, respectively. Adjusted to eliminate non-cash charges
of depreciation and amortization of $1,731,000 and $7,004,000 for the pro
forma three months and twelve months ended March 31, 1997, respectively,
such earnings would have exceeded fixed charges by $1,443,000 and
$6,068,000, respectively.
(10) The as adjusted balance sheet data give effect to the Refinancing
Transactions as if such transactions had occurred on March 31, 1997.
15
<PAGE>
RISK FACTORS
In addition to the other information contained in this Prospectus, before
tendering their Old Notes for the New Notes offered hereby, holders of the Old
Notes should consider carefully the following factors, which may be generally
applicable to the Old Notes as well as the New Notes.
SUBSTANTIAL LEVERAGE
The Company is highly leveraged. At March 31, 1997, after giving pro forma
effect to the Refinancing Transactions, the Company's total consolidated
indebtedness would have been $91.4 million, and the Company would have had an
additional $20.5 million of undrawn commitments under the New Credit Agreement.
The Company would have had a stockholder's deficit on such date of $7.7 million.
In addition, subject to certain restrictions set forth in the New Credit
Agreement and the Indenture, the Company may incur additional indebtedness,
including Senior Debt, in the future for acquisitions, capital expenditures,
working capital and other corporate purposes. For the three months and twelve
months ended March 31, 1997, the Company's pro forma earnings were inadequate to
cover fixed charges by $288,000 and $936,000, respectively.
The Company's ability to make scheduled payments of the principal of, or
interest on, or to refinance its indebtedness (including the Notes) depends on
its future operating performance, which to a certain extent is subject to
economic, financial, competitive and other factors beyond its control. The
Company believes that, based on its current level of operations and anticipated
growth, its cash flow from operations, together with borrowings under the New
Credit Agreement, will be adequate to meet its anticipated requirements for
working capital, capital expenditures, interest payments and scheduled principal
payments over the next several years. The Company's anticipated cash flow from
operations in 1997 is expected to be insufficient to cover the Company's cash
requirements during such period. See 'Management's Discussion and Analysis of
Financial Condition and Results of Operations--Liquidity and Capital Resources.'
The Company, however, intends to continue to enter into capital leases to fund a
portion of its capital expenditures. There can be no assurance that any such
lease financings will be available on commercially reasonable terms or at all.
In addition, there can be no assurance that the Company's business will generate
cash flow at or above expected levels. If the Company is unable to generate
sufficient cash flow from operations in the future to service its indebtedness
and make necessary capital expenditures, or if its future earnings are
insufficient to make all required principal payments out of internally generated
funds, the Company may be required to refinance all or a portion of its existing
indebtedness, sell assets or obtain additional financing. There can be no
assurance that any such refinancing or asset sales would be possible or that any
additional financing could be obtained on terms acceptable to the Company or at
all, particularly in view of the Company's high level of indebtedness.
The Company's high level of indebtedness will have several important
effects on its future operations, including the following: (a) the Company will
have significant cash requirements to service indebtedness, reducing funds
available for working capital, acquisitions, capital expenditures and other
corporate purposes and increasing the Company's vulnerability to adverse general
economic and industry conditions and (b) the financial covenants and other
restrictions contained in the New Credit Agreement, the Indenture and other
agreements relating to the Company's indebtedness require the Company to meet
certain financial tests, restrict its ability to borrow additional funds and
impose limitations on the disposition of assets. In addition, although
management believes that capital expenditures above maintenance levels can be
deferred to address cash flow or other constraints, such initiatives cannot be
deferred for extended periods without adverse effects on the Company's business,
results of operations and financial position. The Company's continued growth
depends, in part, on its ability to maintain its facilities, and, therefore, to
the extent it is unable to do so with internally generated cash, its inability
to finance capital expenditures through borrowed funds could have a material
adverse effect on the Company's future operations.
SUBORDINATION OF THE NOTES AND SUBSIDIARY GUARANTEES; UNSECURED STATUS OF THE
NOTES
Subordination
The payment of principal of, premium and interest on, and any other amounts
owing in respect of, the Notes is subordinated to the prior payment in full of
all existing and future Senior Debt of Precise, including indebtedness under the
New Credit Agreement. Similarly, the Subsidiary Guarantees of the Guarantors
will be
16
<PAGE>
subordinated in right of payment to all Senior Debt of the respective
Guarantors. At March 31, 1997, after giving pro forma effect to the Refinancing
Transactions, Precise and the Guarantors would have had an aggregate of
approximately $16.4 million of consolidated Senior Debt outstanding and $20.5
million of undrawn commitments under the New Credit Agreement. The Indenture
limits, but does not prohibit, the incurrence by the Company of additional
indebtedness which may constitute Senior Debt. In the event of the bankruptcy,
liquidation, dissolution, reorganization or other winding up of Precise, the
assets of Precise and the Guarantors will be available to pay obligations on the
Notes only after all Senior Debt has been paid in full in cash, and there may
not be sufficient assets remaining to pay amounts due on any or all of the
Notes. In addition, under certain circumstances, the Company may not pay
principal of, premium or interest on, or any other amounts owing in respect of,
the Notes, or purchase, redeem or otherwise retire the Notes, if a payment
default or a non-payment default exists with respect to certain Senior Debt,
and, in the case of a non-payment default, a payment blockage notice has been
received by the Trustee (as defined). See 'Description of Notes--Subordination.'
Unsecured Status of the Notes and Subsidiary Guarantees
The Notes and Subsidiary Guarantees are unsecured obligations of Precise
and the Guarantors, respectively. The Indenture permits the Company to incur
certain secured indebtedness, including indebtedness under the New Credit
Agreement, which is secured by a lien on substantially all of the assets of
Precise and the Guarantors. The holders of any secured indebtedness will have a
claim prior to the holders of the Notes with respect to any assets pledged by
the Company as security for such indebtedness. Upon an event of default under
the New Credit Agreement, the lenders thereunder would be entitled to foreclose
on the assets of Precise and the Guarantors. In such event, the assets of
Precise and the Guarantors remaining after repayment of such secured
indebtedness may be insufficient to satisfy the obligations of Precise and the
Guarantors with respect to the Notes. See 'Description of Certain
Indebtedness--New Credit Agreement.'
RESTRICTIONS UNDER DEBT AGREEMENTS
The Indenture contains covenants that, among other things, limit the
ability of Precise and its Restricted Subsidiaries to incur additional
indebtedness, incur liens, pay dividends and make certain other restricted
payments, make investments, consummate certain asset sales, enter into certain
transactions with affiliates, issue subsidiary stock, consolidate or merge with
any other person or transfer all or substantially all of the assets of the
Company. In addition, the New Credit Agreement contains restrictive covenants
which, generally, are more restrictive than those contained in the Indenture,
and limit, among other things, the Company's ability to prepay its subordinated
indebtedness (including the Notes) and capital expenditures. The New Credit
Agreement also requires the Company to maintain specified consolidated financial
ratios, such as senior and total funded indebtedness to consolidated EBITDA
ratios, a fixed charge coverage ratio and an interest coverage ratio, and
satisfy certain consolidated financial tests. The Company's ability to meet
those financial ratios and financial tests can be affected by events beyond its
control, and there can be no assurance that the Company will meet those ratios
and tests. A breach of any of the covenants under the New Credit Agreement or
the Indenture could result in a default under the New Credit Agreement and/or
the Indenture. If an event of default occurs under the New Credit Agreement, the
lenders could elect to declare all amounts outstanding thereunder, together with
accrued and unpaid interest, to be immediately due and payable. If the Company
is unable to repay those amounts, the lenders could proceed against the
collateral granted to them to secure that indebtedness. See 'Description of
Notes' and 'Description of Certain Indebtedness--New Credit Agreement.'
HOLDING COMPANY STRUCTURE; EFFECTS OF ASSET ENCUMBRANCES
A substantial portion of Precise's consolidated operating income will be
generated by its subsidiaries. As a result, Precise will depend significantly on
the earnings and cash flow of, and dividends and distributions or advances from,
its subsidiaries to provide the funds necessary to meet its debt service
obligations, including the payment of principal of and interest on the Notes.
There can be no assurance that Precise's subsidiaries will generate sufficient
cash flow to dividend, distribute or advance funds to Precise. Should Precise
fail to satisfy any payment obligation under the Notes, the holders thereof
would have a direct claim therefor against the Guarantors pursuant to the
Subsidiary Guarantees. However, substantially all of the assets of the
Guarantors are pledged to secure the obligations of Precise and such
subsidiaries under the New Credit Agreement and other secured obligations. The
Indenture limits, but does not prohibit, the ability of Precise and its
Restricted Subsidiaries to
17
<PAGE>
incur additional secured indebtedness. In the event of a default under the New
Credit Agreement (or any other secured indebtedness), the lenders thereunder
would be entitled to a claim on the assets securing such indebtedness which is
prior to any claim of the holders of the Notes. Accordingly, there may be
insufficient assets remaining after payment of prior secured claims (including
claims of lenders under the New Credit Agreement) to pay amounts due on the
Notes. See '--Substantial Leverage' and '--Subordination of the Notes and
Subsidiary Guarantees; Unsecured Status of the Notes.'
RELIANCE ON KEY CUSTOMERS AND SUPPLY AGREEMENTS
The Company's business is substantially dependent on a limited number of
customers. In 1996, the Company's ten largest customers accounted for
approximately 57.3% of its pro forma net sales. The Company's largest customers
are Procter & Gamble, Gillette, AMP Incorporated ('AMP') and Lexmark
International Group, Inc. ('Lexmark'), which represented approximately 12.3%,
10.7%, 5.2% and 5.1%, respectively, of the Company's pro forma net sales in
1996. The loss of a substantial customer, or a significant reduction in sales
generated from a substantial customer, could have a material adverse effect on
the Company's business, financial condition and results of operations. Sales to
each of the Company's customers are dependent on the Company's ability to
manufacture products of acceptable quality, at acceptable prices, that meet the
customer's specifications and to deliver such products on a timely basis.
Approximately 25% of the Company's pro forma net sales in 1996 were made
pursuant to multiple year supply agreements. Generally, these agreements are
terminable by the customer at any time upon notice. While the Company has no
reason to believe that any of its existing supply agreements will be cancelled
by a customer and anticipates that, upon expiration, it will be able to extend
or renew its existing supply agreements with its customers on terms no less
favorable to the Company, no assurance can be given in this regard. See
'Business--Customers.'
VOLATILITY OF CUSTOMER DEMAND
The demand for the Company's services and products is subject to
substantial volatility and other factors beyond its control. Several of the
Company's largest customers, including Gillette and AMP, have significant
plastics injection molding capabilities and may periodically insource a portion
of production being manufactured by the Company as a result of underutilization
of their own facilities. Such insourcing could result in a material loss of
sales to the Company during particular fiscal periods. In December 1996, for
example, AMP began to insource a portion of its electrical connector production
that was formerly manufactured by the Company. As a result, the Company has
experienced a significant loss of sales to AMP, and management believes the
Company may suffer further losses of sales to AMP in the future. Demand for the
Company's products is also dependent upon the demand for its customers'
products. Disappointing market acceptance or obsolescence of a customer's
product can have a material adverse effect on the Company's sales to such
customer. Additionally, a customer may move the location at which a product is
being manufactured, which may cause the Company to no longer be able to supply
such customer efficiently and result in a loss of sales. Finally, the making of
particular molds is non-recurring in nature, and, therefore, the Company's mold
making sales are volatile. Although management does not expect the Company to
lose or suffer a significant reduction in business in the foreseeable future,
there can be no assurance that the factors described above, or other competitive
factors affecting the Company's business, will not result in a significant loss
or reduction of sales in future periods.
EXPOSURE TO FLUCTUATIONS IN RESIN COST AND SUPPLY
The Company uses various plastic resins in the manufacture of its products.
In 1996, on a pro forma basis, the aggregate cost for plastic resins was $34.2
million, or 36.3% of the Company's total cost of goods sold. Pursuant to the
terms of multiple-year supply agreements and purchase orders, the Company
historically has had the ability to pass on a significant portion of increases
in resin prices (as well as decreases in resin prices) to its customers through
price adjustments. Because plastic resins are the principal components in the
Company's products, the Company's financial performance is materially dependent
on its ability to pass resin price increases on to its customers through
contractual arrangements or otherwise. Plastic resin prices are subject to
fluctuations due, in part, to industry capacity, consumption levels, supply
shortages and changes in the prices of natural gas, crude oil and other
petrochemical intermediates from which plastic resins are produced. For example,
during the past four years, the resin market has been volatile due to increased
demand and irregular producer capacity. Although the Company will continue to
have the benefit of resin price pass-through provisions under its existing
18
<PAGE>
customer agreements for so long as such agreements remain in effect, there can
be no assurance that it will continue to be able to effect such a pass-through
under contractual agreements or otherwise in the future. In addition, there can
be no assurance that a significant increase in resin prices would not negatively
impact the Company's existing business or future business opportunities,
including those relating to the potential conversion from glass, metal and
composite containers to rigid plastic, and thereby have a material adverse
effect on the Company's business, financial condition and results of operations.
See 'Business--Raw Materials and Suppliers.'
During 1996, the Company purchased, on a pro forma basis, approximately
26.2% and 17.3% of its total plastic resin requirements (in dollars) from
Huntsman Chemical Corporation ('Huntsman') and the General Polymers Division of
Ashland Chemical Company ('General Polymers'), respectively, pursuant to
purchase orders delivered from time to time by the Company. The Company has
long-standing relationships with Huntsman and General Polymers, and has worked
closely with them to develop plastic resins which yield maximum performance from
the Company's equipment. Although the Company believes its relationships with
Huntsman and General Polymers are mutually beneficial, no assurance can be given
that Huntsman and General Polymers will continue to be suppliers to the Company
in the future.
The Company believes that alternative sources are available for its plastic
resin requirements. However, should any of the Company's resin suppliers fail to
deliver under their arrangements, the Company would be forced to purchase resins
in the open market, and no assurance can be given that it would be able to make
such purchases at prices which would allow it to remain competitive.
COMPANY GROWTH AND RISKS RELATED TO FUTURE ACQUISITIONS
The Company's ability to increase net sales and operating cash flow over
time depends, in part, on its success in consummating future acquisitions upon
satisfactory terms and successfully integrating the acquired companies or assets
into the Company's operations. There can be no assurance that acquisition
opportunities will continue to be available or that if available, such
acquisitions could be consummated on terms acceptable to the Company, or that
the Company would be able to obtain financing on terms that it deems acceptable
to consummate any potential acquisition. In addition, future acquisitions would
place increasing demands on the Company's management and operational resources.
The Company's future performance will depend, in part, on its ability to manage
expanding operations and to adapt its operational systems to such expansions.
The failure of the Company to effectively manage its growth or successfully
integrate acquired companies or assets into the Company's operations could have
a material adverse effect on the Company's business, financial condition and
results of operations.
COMPETITION
Most of the Company's products are sold in highly competitive markets in
the United States. In addition, the markets for certain of the Company's
products are characterized by low costs of entry and competition based primarily
on price. The Company competes with a significant number of companies of varying
sizes, including divisions or subsidiaries of larger companies, on the basis of
price, service, quality and the ability to supply products to customers in a
timely manner. A number of the Company's competitors have financial and other
resources that are substantially greater than those of the Company. Competitive
pressures or other factors could cause the Company to lose existing business or
opportunities to generate new business or could result in significant price
erosion, all of which would have a material adverse effect on the Company's
business, financial condition and results of operations. See
'Business--Competition.'
CONTROLLING STOCKHOLDER
Precise is a wholly-owned subsidiary of Precise Holding Corporation
('Parent'). Sunderland Industrial Holdings Corporation ('Sunderland') held
approximately 80.4% of the outstanding shares of Common Stock of Parent ('Parent
Common Stock'), on a fully-diluted basis, as of March 31, 1997. The outstanding
capital stock of Sunderland is owned by trusts established for the benefit of
certain relatives of Richard L. Kramer and William L. Remley. Messrs. Kramer and
Remley are executive officers and directors of Sunderland, Mentmore, Parent and
Precise. The interests of Sunderland, Mentmore and their affiliates may differ
from the interests of holders of the Notes.
19
<PAGE>
DEPENDENCE ON KEY PERSONNEL
The continued success of the Company is largely dependent on the personal
efforts and abilities of senior management. The loss of services of key
personnel could have a material adverse effect on the Company. The Company has
no long-term employment agreements with, or key-man life insurance for, any of
its executive officers or key employees.
ENVIRONMENTAL MATTERS
Federal, state and local governments or regulatory agencies could enact
laws or regulations concerning environmental matters that increase the cost of
producing, or otherwise adversely affect the demand for, plastic products. The
Company is aware that certain local governments have adopted ordinances
prohibiting or restricting the use or disposal of certain plastic products that
are among the types of products manufactured by the Company. If widely adopted,
such regulatory and environmental measures or a decline in consumer preference
for plastic products due to environmental considerations could have a material
adverse effect upon the Company's business, financial condition and results of
operations. In addition, the past and present operations of the Company and the
past and present ownership and operations of real property by the Company are
subject to extensive and changing federal, state and local environmental laws
and regulations pertaining to the discharge of materials into the environment,
the treatment, storage and disposal of solid and hazardous wastes or otherwise
relating to the protection of the environment. While the Company has not been
required historically to make significant capital expenditures in order to
comply with applicable environmental laws and regulations, in the future the
Company may have to make capital expenditures in excess of current estimates
because of continually changing compliance standards and environmental
technology. Furthermore, unknown contamination of sites currently or formerly
owned or operated by the Company (including contamination caused by prior owners
and operators of such sites) and off-site disposal of hazardous substances may
give rise to unanticipated remediation and compliance costs. The Company does
not currently have specific insurance coverage for environmental liabilities and
does not anticipate obtaining such coverage in the future. See 'Management's
Discussion and Analysis of Financial Condition and Results of
Operations--Environmental Matters' and 'Business--Regulation and Legislation.'
CHANGE OF CONTROL OFFER
Upon a Change of Control, Precise will be required to offer to repurchase
all of the outstanding Notes at 101% of the principal amount thereof, plus
accrued and unpaid interest and Liquidated Damages, if any, thereon to the date
of repurchase. There can be no assurance that Precise will have sufficient funds
available or will be permitted by its other debt agreements to repurchase the
Notes upon the occurrence of a Change of Control. The New Credit Agreement
currently prohibits the Company from repurchasing any Notes and also provides
that certain change of control events with respect to the Company would
constitute a default thereunder. Any future credit agreements or other
agreements relating to Senior Debt to which the Company becomes a party may
contain similar restrictions and provisions. In the event a Change of Control
occurs at a time when the Company is prohibited from repurchasing Notes, the
Company could seek the consent of its lenders to the repurchase of Notes or
could attempt to refinance or repay the borrowings that contain such
prohibition. If the Company does not obtain such a consent or repay such
borrowings, the Company will remain prohibited from repurchasing Notes. In such
case, the Company's failure to make a Change of Control Offer (as defined) or
repurchase tendered Notes would constitute an Event of Default (as defined)
under the Indenture which would, in turn, constitute a default under the New
Credit Agreement. In such circumstances, the subordination provisions in the
Indenture would likely restrict payments to the holders of the Notes. See
'Description of Notes--Subordination' and 'Description of Notes--Repurchase at
the Option of Holders--Change of Control.'
FRAUDULENT CONVEYANCE
The incurrence by Precise of indebtedness such as the Notes may be subject
to review under relevant state and federal fraudulent conveyance laws if a
bankruptcy case or lawsuit is commenced by or on behalf of unpaid creditors of
Precise. Under these laws, if a court were to find that, after giving effect to
the sale of the Notes and the application of the net proceeds therefrom, either
(a) Precise incurred such indebtedness with the intent of hindering, delaying or
defrauding creditors or contemplated insolvency with a design to prefer one or
more creditors to the exclusion in whole or in part of others or (b) Precise
received less than reasonably equivalent
20
<PAGE>
value or consideration for incurring such indebtedness and (i) was insolvent or
rendered insolvent by reason of such transaction, (ii) was engaged in a business
or transaction for which the assets remaining with Precise constituted
unreasonably small capital or (iii) intended to incur, or believed that it would
incur, debts beyond its ability to pay such debts as they matured, such court
may subordinate such indebtedness to presently existing and future indebtedness
of Precise, avoid the issuance of such indebtedness and direct the repayment of
any amounts paid thereunder to Precise's creditors or take other action
detrimental to the holders of such indebtedness.
Precise's obligations under the Notes are guaranteed by the Guarantors. The
incurrence by a Guarantor of a Subsidiary Guarantee may be subject to review
under relevant state and federal fraudulent conveyance laws if a bankruptcy case
or lawsuit is commenced by or on behalf of unpaid creditors of such Guarantor.
Under these laws, if a court were to find that either (a) a Subsidiary Guarantee
was incurred by a Guarantor with the intent of hindering, delaying or defrauding
creditors or such Guarantor contemplated insolvency with a design to prefer one
or more creditors to the exclusion in whole or in part of others or (b) such
Guarantor received less than reasonably equivalent value or consideration for
incurring such Subsidiary Guarantee and (i) was insolvent or rendered insolvent
by reason of such transaction, (ii) was engaged in a business or transaction for
which the assets remaining with such Guarantor constituted unreasonably small
capital or (iii) intended to incur, or believed that it would incur, debts
beyond its ability to pay such debts as they matured, such court may subordinate
such Subsidiary Guarantee to presently existing and future indebtedness of such
Guarantor, avoid the issuance of such Subsidiary Guarantee and direct the
repayment of any amounts paid thereunder to such Guarantor's creditors or take
other action detrimental to the holders of such Subsidiary Guarantee. A legal
challenge of a Subsidiary Guarantee on fraudulent conveyance grounds, may, among
other things, focus on the benefits, if any, realized by the Guarantor as a
result of the issuance by Precise of the Notes.
To the extent any Subsidiary Guarantee was avoided as a fraudulent
conveyance or held unenforceable for any other reason, holders of the Notes
would cease to have any claim in respect of such Guarantor and would be
creditors solely of Precise and any Guarantor whose Subsidiary Guarantee was not
avoided or held unenforceable. In such event, the claims of the holders of the
applicable Notes against the issuer of an invalid Subsidiary Guarantee would be
subject to the prior payment of all liabilities and preferred stock claims of
such Guarantor. There can be no assurance that, after providing for all prior
claims and preferred stock interests, if any, there would be sufficient assets
to satisfy the claims of the holders of the applicable Notes relating to any
voided portions of any of the Subsidiary Guarantees.
The measure of insolvency for purposes of determining whether a transfer is
avoidable as a fraudulent transfer varies depending upon the law of the
jurisdiction which is being applied. Generally, however, a debtor would be
considered insolvent if the sum of all its liabilities, including contingent
liabilities, were greater than the value of all its property at a fair
valuation, or if the present fair saleable value of the debtor's assets were
less than the amount required to repay its probable liabilities on its debts,
including contingent liabilities, as they become absolute and matured.
Based upon financial and other information currently available to it,
management believes that the indebtedness retired with the proceeds of the
Initial Offering and the indebtedness evidenced by the Notes and the Subsidiary
Guarantees was incurred for proper purposes and in good faith and that at the
time the Company incurred the indebtedness retired with the proceeds of the
Initial Offering and Precise and the Guarantors incurred the indebtedness
evidenced by the Notes and the Subsidiary Guarantees, Precise and each
Guarantor, as the case may be, was, (i) neither insolvent nor rendered insolvent
thereby, (ii) in possession of sufficient capital to run its business
effectively and (iii) incurring debts within its ability to pay as the same
mature or become due. See 'Management's Discussions and Analysis of Financial
Condition and Results of Operations--Liquidity and Capital Resources.' In
reaching these conclusions, the Company has relied upon various valuations and
estimates of future cash flow that necessarily involve a number of assumptions
and choices of methodology. No assurance can be given, however, that the
assumptions and methodologies chosen by the Company would be adopted by a court
or that a court would concur with the Company's conclusions.
ABSENCE OF PUBLIC MARKET; RESTRICTIONS ON TRANSFER
The Old Notes were issued to, and the Company believes are currently owned
by, a relatively small number of beneficial owners. Prior to the Exchange Offer,
there has not been any public market for the Old Notes. The Old Notes have not
been registered under the Securities Act and will be subject to restrictions on
transferability to the extent that they are not exchanged for New Notes by
holders who are entitled to participate in the
21
<PAGE>
Exchange Offer. The holders of Old Notes (other than any such holder that is an
'affiliate' of the Company within the meaning of Rule 405 under the Securities
Act) who are not eligible to participate in the Exchange Offer are entitled to
certain registration rights, and the Company and the Guarantors are required to
file a Shelf Registration Statement with respect to such Old Notes. The New
Notes will constitute a new issue of securities with no established trading
market. The Company does not intend to list the New Notes on any national
securities exchange or seek the admission thereof to trading in the National
Association of Securities Dealers Automated Quotation System. The Initial
Purchasers have advised the Company that they currently intend to make a market
in the New Notes, but they are not obligated to do so and may discontinue such
market making at any time. In addition, such market making activity will be
subject to the limits imposed by the Securities Act and the Exchange Act and may
be limited during the Exchange Offer and the pendency of the Shelf Registration
Statement. Accordingly, no assurance can be given that an active public or other
market will develop for the New Notes or as to the liquidity of the trading
market for the New Notes. If a trading market does not develop or is not
maintained, holders of the New Notes may experience difficulty in reselling the
New Notes or may be unable to sell them at all. If a market for the New Notes
develops, any such market may be discontinued at any time.
If a public trading market develops for the New Notes, future trading
prices of such securities will depend on many factors including, among other
things, prevailing interest rates, the Company's results of operations and the
market for similar securities. Depending on prevailing interest rates, the
market for similar securities and other factors, including the financial
condition of the Company, the New Notes may trade at a discount from their
principal amount.
CONSEQUENCES OF FAILURE TO EXCHANGE OLD NOTES
Holders of the Old Notes who do not exchange their Old Notes for New Notes
pursuant to the Exchange Offer will continue to be subject to the restrictions
on transfer of such Old Notes, as set forth in the legend thereon, as a
consequence of the issuance of the Old Notes pursuant to exemptions from, or in
transactions not subject to, the registration requirements of the Securities Act
and applicable state securities laws. In general, the Old Notes may not be
offered or sold, unless registered under the Securities Act and applicable state
securities laws, or pursuant to an exemption therefrom. Except under certain
limited circumstances, the Company does not intend to register the Old Notes
under the Securities Act. In addition, any holder of Old Notes who tenders in
the Exchange Offer for the purpose of participating in a distribution of the New
Notes may be deemed to have received restricted securities and, if so, will be
required to comply with the registration and prospectus delivery requirements of
the Securities Act in connection with any resale transaction. To the extent Old
Notes are tendered and accepted in the Exchange Offer, the trading market, if
any, for the Old Notes not so tendered could be adversely affected. See 'The
Exchange Offer.'
22
<PAGE>
CAPITALIZATION
The following table sets forth the cash and cash equivalents and the
capitalization of the Company at March 31, 1997, and as adjusted to give effect
to the Refinancing Transactions. The historical and as adjusted data should be
read in conjunction with 'Selected Financial Data,' 'Pro Forma Financial Data,'
'Management's Discussion and Analysis of Financial Condition and Results of
Operations,' and the Company's consolidated financial statements and the
accompanying notes thereto, which information is included elsewhere in this
Prospectus.
<TABLE>
<CAPTION>
UNAUDITED
AS OF MARCH 31, 1997
--------------------------
HISTORICAL AS ADJUSTED
----------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Cash and cash equivalents.............................................................. $ 525 $ 525
----------- -----------
----------- -----------
Long-term debt, including current maturities (1):
Existing Credit Agreement............................................................ $39,450 $ --(2)
New Credit Agreement (3)............................................................. -- 9,500
Existing Notes....................................................................... 18,236 --(4)
11 1/8% Senior Subordinated Notes due 2007........................................... -- 75,000
Other debt........................................................................... 498 498
Capital lease obligations............................................................ 6,393 6,393
----------- -----------
Total long-term debt, including current maturities.............................. 64,577 91,391
Redeemable Preferred Stock:
Series A Cumulative Exchangeable Preferred Stock..................................... 5,750 --(5)
Series B Cumulative Redeemable Preferred Stock....................................... 2,500 --(6)
----------- -----------
Total Redeemable Preferred Stock................................................ 8,250 --
Stockholder's equity:
Common Stock, no par value, 1,000 shares authorized and 125 shares and 1 share issued
and outstanding as of March 31, 1997 and as adjusted, respectively................. 3,316 1(7)
Additional paid-in capital........................................................... 3,555 3,555
Retained earnings (deficit).......................................................... 27 (11,237)(8)
----------- -----------
Total stockholder's equity (deficit)............................................ 6,898 (7,681)
----------- -----------
Total capitalization........................................................ $79,725 $83,710
----------- -----------
----------- -----------
</TABLE>
- ------------------------------
(1) For a description of the Company's long-term debt, see Note 7 to the audited
consolidated financial statements of the Company included elsewhere in this
Prospectus.
(2) Reflects the repayment of $39,450,000 of principal and $166,000 of accrued
interest outstanding as of March 31, 1997 under that certain Credit
Agreement dated as of March 28, 1996 (the 'Existing Credit Agreement') among
Parent, Precise and the lenders named therein. Substantially all of these
borrowings were incurred to finance the Tredegar Acquisition. Borrowings
under the Existing Credit Agreement bore interest at an average rate of
8.56% per annum as of March 31, 1997.
(3) In connection with the consummation of the Initial Offering, Precise entered
into the New Credit Agreement, which provides for borrowings in an
outstanding principal amount of up to $30,000,000.
(4) Reflects the repayment of $20,000,000 of principal (including $1,764,000 of
unamortized original issue discount) and a $2,178,000 prepayment premium as
of March 31, 1997 under the Company's 12.25% Senior Subordinated Notes due
2006 (the 'Existing Notes'), which were issued in connection with the
Tredegar Acquisition. See 'Certain Transactions--Tredegar Financing
Transactions.' Indebtedness under the Existing Notes bore interest at a rate
of 12.25% per annum on the aggregate principal thereof.
(5) Reflects the redemption of 575 shares of Exchangeable Preferred Stock (as
defined) with a liquidation preference of $10,000 per share that were issued
by Precise in connection with the Tredegar Acquisition. See 'Certain
Transactions--Tredegar Financing Transactions' and Note 2 to the audited
consolidated financial statements of the Company included elsewhere in this
Prospectus.
(6) Reflects the redemption of 250 shares of Seller Preferred Stock (as defined)
with a stated value of $10,000 per share that were issued by Precise in
connection with the Tredegar Acquisition. See 'Certain
Transactions--Tredegar Financing Transactions' and Note 2 to the audited
consolidated financial statements of the Company included elsewhere in this
Prospectus.
(7) Reflects the repurchase of 124 shares of Common Stock of Precise ('Common
Stock') from Parent for $3,315,000, the proceeds of which were used to
redeem 331.46 shares of Parent's 9.5% Preferred Stock (the 'Parent Preferred
Stock') held by Hamilton Holdings Ltd. Corporation, an entity whose
principal officers are Richard L. Kramer and William L. Remley, executive
officers and directors of Precise. See 'Certain Transactions--Tredegar
Financing Transactions.' The Common Stock which was redeemed was issued to
Parent at the time the Parent Preferred Stock was issued in exchange for
certain preferred stock of Precise. See Note 13 to the audited consolidated
financial statements of the Company included elsewhere in this Prospectus.
(8) As adjusted retained earnings (deficit) reflects a non-recurring charge
incurred in connection with the Refinancing Transactions, net of tax effect,
of $285,000 for advisory fees paid to Mentmore, an extraordinary loss on the
early extinguishment of indebtedness, net of tax effect, of $4,538,000, as
well as a distribution of $6,441,000 to Parent.
23
<PAGE>
SELECTED FINANCIAL DATA
The following table sets forth (i) selected historical consolidated
financial data of the Company for the five-year period ended December 31, 1996
and for the three months ended March 31, 1996 and 1997 and (ii) selected
historical balance sheet data of the Company as adjusted to give effect to the
Refinancing Transactions as if such events had occurred on March 31, 1997. The
selected historical consolidated financial data for the five-year period ended
December 31, 1996 were derived from audited consolidated financial statements of
the Company. The audited consolidated financial statements of the Company for
each of the years in the three-year period ended December 31, 1996 are included
elsewhere in this Prospectus together with the reports of Ernst & Young, LLP,
independent accountants, for the years ended December 31, 1996 and 1995, and
Grant Thornton, LLP, independent accountants, for the year ended December 31,
1994. The selected historical consolidated financial data for the years ended
December 31, 1993 and 1992 were derived from audited consolidated financial
statements of the Company that are not included herein. The selected historical
consolidated financial data for the three months ended March 31, 1996 and 1997
were derived from unaudited financial statements of the Company, which, in the
opinion of management, include all adjustments (consisting of only normal
recurring adjustments) necessary for a fair presentation of the information set
forth therein. The results of operations for the three months ended March 31,
1997 are not necessarily indicative of the results that may be expected for the
full year. The adjusted balance sheet data are provided for informational
purposes only, are unaudited and are not necessarily indicative of future
results or what the operating results or financial condition of the Company
would have been had the Refinancing Transactions and the Acquisitions actually
been consummated on the dates assumed. The following table should be read in
conjunction with 'Capitalization,' 'Management's Discussion and Analysis of
Financial Condition and Results of Operations' and the historical financial
statements of the Company and Tredegar, and the accompanying notes thereto,
included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
UNAUDITED
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
--------------------------------------------------- ------------------
1992 1993 1994 1995 1996(1) 1996 1997
------- ------- ------- ------- ------- ------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Net sales....................................... $27,673 $24,161 $33,157 $33,542 $93,289 $ 9,089 $26,325
Cost of sales................................... 22,908 19,536 26,807 25,877 76,477 7,156 21,613
------- ------- ------- ------- ------- ------- -------
Gross profit.................................... 4,765 4,625 6,350 7,665 16,812 1,933 4,712
Selling, general and administrative............. 3,390 3,373 3,916 4,454 7,262 1,100 2,139
Plant closure costs............................. -- -- -- -- 671 -- --
Amortization of intangible assets............... 219 -- 26 37 1,614 42 433
------- ------- ------- ------- ------- ------- -------
Operating income................................ 1,156 1,252 2,408 3,174 7,265 791 2,140
Interest expense................................ 703 706 956 810 5,559 261 1,690
Other (income) expense.......................... 44 59 (72) 148 (25) (2) (4)
------- ------- ------- ------- ------- ------- -------
Income (loss) before income taxes............... 409 487 1,524 2,216 1,731 532 454
Provision (benefit) for income taxes............ -- 66 574 941 1,265 245 304
------- ------- ------- ------- ------- ------- -------
Net income (loss)............................... $ 409 $ 421 $ 950 $ 1,275 $ 466 $ 287 $ 150
------- ------- ------- ------- ------- ------- -------
------- ------- ------- ------- ------- ------- -------
CASH FLOW DATA:
Net cash provided by operating activities....... $ 1,167 $ 1,463 $ 1,327 $ 3,170 $ 9,602 $ 908 $ 703
Net cash used in investing activities (excluding
Acquisitions) (2)............................. (383) (309) (1,968) (998) (1,829) (302) (805)
Net cash provided by (used in) financing
activities.................................... (893) (1,161) 650 (2,202) 57,313 63,826 (684)
OTHER FINANCIAL DATA:
EBITDA (3)...................................... $ 2,043 $ 1,837 $ 3,542 $ 4,472 $14,518 $ 1,254 $ 3,906
EBITDA margin (3)............................... 7.4% 7.6% 10.7% 13.3% 15.6% 13.8% 14.8%
Depreciation and amortization................... $ 931 $ 644 $ 1,062 $ 1,446 $ 5,925 $ 461 $ 1,762
Capital expenditures (4)........................ 412 2,445 4,403 1,582 6,376 2,089 1,330
Ratio of earnings to fixed charges (5).......... 1.5x 1.6x 2.4x 3.4x 1.3x 2.6x 1.3x
</TABLE>
24
<PAGE>
<TABLE>
<CAPTION>
UNAUDITED
AS OF DECEMBER 31, AS OF MARCH 31, 1997
--------------------------------------------------- --------------------------
1992 1993 1994 1995 1996 ACTUAL AS ADJUSTED(6)
------- ------- ------- ------- ------- ------- ---------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Total assets.................................. $13,283 $15,412 $20,358 $18,863 $99,059 $97,215 $97,435
Long-term debt, including current
maturities.................................. 8,245 9,277 9,164 7,538 64,512 64,577 91,391
Redeemable preferred stock.................... -- -- -- -- 8,250 8,250 --
Total stockholder's equity (deficit).......... 70 295 4,395 5,400 6,953 6,898 (7,681)
</TABLE>
- ------------------------------
(1) The statement of income data, cash flow data and other financial data for
1996 reflect the results of operations of Unity and Tredegar since they
were acquired by the Company on January 25, 1996 and March 29, 1996,
respectively.
(2) Net cash used in the Unity Acquisition was $3,308,000 and net cash used in
the Tredegar Acquisition was $60,493,000.
(3) 'EBITDA' represents net income plus income taxes, interest expense,
depreciation and amortization and certain non-recurring charges and
non-cash charges. Non-recurring charges and non-cash charges for the year
ended December 31, 1996 include operating losses (excluding depreciation
expense) related to the Company's Graham, North Carolina facility which was
closed in September 1996 ($510,000), plant closure costs ($671,000) and the
elimination of pension costs associated with a terminated defined benefit
plan ($122,000). 'EBITDA margin' is defined as EBITDA divided by net sales.
EBITDA is presented because it is a widely accepted financial indicator of
a company's ability to service indebtedness. However, EBITDA should not be
considered an alternative to operating income or cash flows from operating
activities (as determined in accordance with generally accepted accounting
principles) and should not be construed as an indication of a company's
operating performance or as a measure of liquidity.
(4) Includes capital expenditures financed through capital leases of $0 in
1992, $1,896,000 in 1993, $2,328,000 in 1994, $536,000 in 1995 and
$4,201,000 in 1996 and $1,732,000 and $506,000 in the three months ended
March 31, 1996 and 1997, respectively.
(5) In calculating the ratio of earnings to fixed charges, earnings consist of
income before taxes plus fixed charges. Fixed charges consist of interest
expense and amortization of deferred financing costs, whether expensed or
capitalized, plus the portion of operating lease expense attributable to
interest.
(6) The as adjusted balance sheet data give effect to the Refinancing
Transactions as if such transactions had occurred on March 31, 1997.
25
<PAGE>
PRO FORMA FINANCIAL DATA
The following pro forma financial data have been derived by the application
of pro forma adjustments to the historical consolidated financial statements of
the Company for its fiscal year ended December 31, 1996 and for the three and
twelve months ended March 31, 1997 and those of Tredegar for the period from
January 1, 1996 to March 28, 1996 and Unity for the period from January 1, 1996
to January 24, 1996. The pro forma financial data presented below give effect to
the Acquisitions and the Refinancing Transactions as if such events had occurred
on January 1, 1996. The adjustments relating to the Acquisitions and the
Refinancing Transactions are described in the accompanying notes. The pro forma
financial data presented below should not be considered indicative of actual
results that would have been achieved had the Acquisitions and the Refinancing
Transactions been consummated on the date assumed and do not purport to indicate
results of operations as of any future date or for any future period. The pro
forma financial data presented below should be read in conjunction with the
Company's consolidated financial statements and the accompanying notes thereto,
'Summary Financial Data,' 'Capitalization,' 'Selected Financial Data' and
'Management's Discussion and Analysis of Financial Condition and Results of
Operations,' which information is included elsewhere in this Prospectus.
26
<PAGE>
UNAUDITED PRO FORMA CONSOLIDATED
STATEMENT OF INCOME AND OPERATING DATA
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
TREDEGAR UNITY REFINANCING
PRECISE HISTORICAL HISTORICAL ACQUISITIONS PRO FORMA TRANSACTIONS
HISTORICAL 1/1/96-3/28/96 1/1/96-1/24/96 ADJUSTMENTS FOR ACQUISITIONS ADJUSTMENTS
---------- -------------- -------------- ----------- ---------------- ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Net sales......................... $ 93,289 $ 20,921 $448 $ -- $114,658 $ --
Cost of sales..................... 76,477 18,221 391 (890)(1) 94,199 --
---------- ------- ----- ----------- -------- ------------
Gross profit...................... 16,812 2,700 57 890 20,459 --
Selling, general and
administrative.................. 7,262 993 17 (269)(2) 8,003 --
Plant closure costs............... 671 -- -- -- 671 --
Amortization of intangible
assets.......................... 1,614 59 -- 335(3) 2,008 (250)(6)
---------- ------- ----- ----------- -------- ------------
Operating income.................. 7,265 1,648 40 824 9,777 250
Interest expense.................. 5,559 -- 5 1,432(4) 6,996 2,901(7)
Other (income) expense............ (25) -- -- -- (25) --
---------- ------- ----- ----------- -------- ------------
Income loss before income taxes... 1,731 1,648 35 (608) 2,806 (2,651)
Provision (benefit) for income
taxes........................... 1,265 649 4 (200)(5) 1,718 (1,140)(5)
---------- ------- ----- ----------- -------- ------------
Net income (loss)................. $ 466 $ 999 $ 31 $ (408) $ 1,088 $ (1,511)
---------- ------- ----- ----------- -------- ------------
---------- ------- ----- ----------- -------- ------------
OTHER FINANCIAL DATA:
EBITDA (10).......................
Depreciation and amortization.....
Ratio of earnings to fixed charges
(11)............................
Ratio of EBITDA to interest
expense.........................
Ratio of total debt to EBITDA.....
<CAPTION>
COMPANY
PRO FORMA
---------
<S> <C>
STATEMENT OF INCOME DATA:
Net sales......................... $114,658
Cost of sales..................... 94,199
---------
Gross profit...................... 20,459
Selling, general and
administrative.................. 8,003
Plant closure costs............... 671
Amortization of intangible
assets.......................... 1,758
---------
Operating income.................. 10,027
Interest expense.................. 9,897
Other (income) expense............ (25 )(8)
---------
Income loss before income taxes... 155
Provision (benefit) for income
taxes........................... 578
---------
Net income (loss)................. $ (423 )(9)
---------
---------
OTHER FINANCIAL DATA:
EBITDA (10)....................... $ 18,165
Depreciation and amortization..... 6,740
Ratio of earnings to fixed charges
(11)............................ 1.0x
Ratio of EBITDA to interest
expense......................... 1.8x
Ratio of total debt to EBITDA..... 5.0x
</TABLE>
FOR THE THREE MONTHS ENDED MARCH 31, 1997
<TABLE>
<CAPTION>
REFINANCING
PRECISE TRANSACTIONS COMPANY
HISTORICAL ADJUSTMENTS PRO FORMA
---------- ------------ ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
STATEMENT OF INCOME DATA:
Net sales............................................................................... $ 26,325 $ -- $26,325
Cost of sales........................................................................... 21,613 -- 21,613
---------- ----- ---------
Gross profit............................................................................ 4,712 4,712
Selling, general and administrative..................................................... 2,139 -- 2,139
Amortization of intangible assets....................................................... 433 (31)(6) 402
---------- ----- ---------
Operating income........................................................................ 2,140 31 2,171
Interest expense........................................................................ 1,690 773(7) 2,463
Other (income) expense.................................................................. (4) -- (4)
---------- ----- ---------
Income before income taxes.............................................................. 454 (742) (288)
Provision (benefit) for income taxes.................................................... 304 (300)(5) 4
---------- ----- ---------
Net income (loss)....................................................................... $ 150 $ (442) $ (292)
---------- ----- ---------
---------- ----- ---------
OTHER FINANCIAL DATA:
EBITDA (10)............................................................................. $ 3,906
Depreciation and amortization........................................................... 1,731
Ratio of earnings to fixed charges (11)................................................. --
Ratio of EBITDA to interest expense..................................................... 1.6x
</TABLE>
See accompanying notes to Unaudited Pro Forma Consolidated Statement of Income
and Operating Data.
27
<PAGE>
UNAUDITED PRO FORMA CONSOLIDATED
STATEMENT OF INCOME AND OPERATING DATA
FOR THE TWELVE MONTHS ENDED MARCH 31, 1997
<TABLE>
<CAPTION>
REFINANCING
TWELVE MONTHS ENDED ACQUISITIONS PRO FORMA TRANSACTIONS COMPANY
MARCH 31, 1997 ADJUSTMENTS FOR ACQUISITIONS ADJUSTMENTS PRO FORMA
------------------- ----------- ---------------- ------------ ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Net sales......................... $ 110,525 $ -- $110,525 $ -- $110,525
Cost of sales..................... 90,934 (87)(1) 90,847 -- 90,847
-------- ----- -------- ------------ ---------
Gross profit...................... 19,591 87 19,678 -- 19,678
Selling, general and
administrative.................. 8,301 -- 8,301 -- 8,301
Plant closure costs............... 671 -- 671 -- 671
Amortization of intangible
assets.......................... 2,005 -- 2,005 (222)(6) 1,783
-------- ----- -------- ------------ ---------
Operating income.................. 8,614 87 8,701 222 8,923
Interest expense.................. 6,988 -- 6,988 2,898(7) 9,886
Other (income) expense............ (27) -- (27) -- (27 )
-------- ----- -------- ------------ ---------
Income (loss) before income
taxes........................... 1,653 87 1,740 (2,676) (936 )
Provision (benefit) for income
taxes........................... 1,222 37(5) 1,259 (1,150)(5) 109
-------- ----- -------- ------------ ---------
Net income (loss)................. $ 431 $ 50 $ 481 $ (1,526) $ (1,045 )
-------- ----- -------- ------------ ---------
-------- ----- -------- ------------ ---------
OTHER FINANCIAL DATA:
EBITDA (10)....................... $ 17,257
Depreciation and amortization..... 7,004
Ratio of earnings to fixed
charges (11).................... --
Ratio of EBITDA to interest
expense......................... 1.7 x
Ratio of total debt to EBITDA..... 5.3 x
</TABLE>
See accompanying notes to Unaudited Pro Forma Consolidated Statement of Income
and Operating Data.
28
<PAGE>
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME AND OPERATING DATA
(1) Reflects the following adjustments:
<TABLE>
<CAPTION>
YEAR THREE MONTHS TWELVE MONTHS
ENDED ENDED ENDED
DECEMBER 31, 1996 MARCH 31, 1997 MARCH 31, 1997
----------------- -------------- --------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Reduction for quantity discounts on material
purchases at Tredegar facilities for the period
prior to the acquisition date..................... $ (67) $ -- $ --
Elimination of certain positions at Tredegar
facilities in April and May of 1996, resulting in
a decrease in compensation and benefit expense for
the periods prior thereto......................... (625) -- (107)
Increase in incremental benefit expense related to
Tredegar and Unity employees for the periods prior
to the respective acquisition dates............... 50 -- 20
Reflects the elimination of historical depreciation
for the periods prior to the respective
acquisition dates and the addition of pro forma
depreciation in connection with the Acquisitions
as follows:
Pro forma depreciation............................ 769 -- --
Historical depreciation........................... (1,017) -- --
-------- ------ ------
Acquisitions adjustment............................. $ (890) $ -- $ 87
-------- ------ ------
-------- ------ ------
</TABLE>
(2) Reflects the elimination of certain administrative staff positions at
Tredegar resulting in a reduction in compensation expense aggregating
$269,000 for the period prior to the acquisition date.
(3) Reflects the elimination of historical amortization and the addition of pro
forma amortization based on the amortization of noncompete agreements,
deferred financing fees and goodwill over useful lives ranging from 3 to 25
years as follows:
<TABLE>
<CAPTION>
YEAR THREE MONTHS TWELVE MONTHS
ENDED ENDED ENDED
DECEMBER 31, 1996 MARCH 31, 1997 MARCH 31, 1997
----------------- -------------- --------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Pro forma amortization.............................. $ 2,008 $ -- $ --
Historical amortization............................. (1,673) -- --
-------- ------ ------
Acquisitions adjustment............................. $ 335 $ -- $ --
-------- ------ ------
-------- ------ ------
</TABLE>
(4) Reflects the elimination of historical interest expense and the addition of
pro forma interest expense based on indebtedness incurred in connection
with the financing of the Acquisitions as follows:
<TABLE>
<CAPTION>
YEAR THREE MONTHS TWELVE MONTHS
ENDED ENDED ENDED
DECEMBER 31, 1996 MARCH 31, 1997 MARCH 31, 1997
----------------- -------------- --------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Interest on Existing Credit Agreement............... $ 3,810 $ -- $ --
Interest on Existing Notes.......................... 2,578 -- --
Interest on other debt.............................. 35 -- --
Interest on capital lease obligations............... 573 -- --
Historical interest................................. (5,564) -- --
-------- ------ ------
Acquisitions adjustment............................. $ 1,432 $ -- $ --
-------- ------ ------
-------- ------ ------
</TABLE>
(5) The provision for income taxes is computed by applying the Company's
statutory rate of 43%, excluding the impact of non-deductible goodwill
amortization.
29
<PAGE>
(6) Reflects the elimination of pro forma amortization of deferred financing
costs based on indebtedness incurred in connection with the Acquisitions
and the addition of pro forma amortization of deferred financing costs
after giving effect to the Refinancing Transactions as follows:
<TABLE>
<CAPTION>
YEAR THREE MONTHS TWELVE MONTHS
ENDED ENDED ENDED
DECEMBER 31, 1996 MARCH 31, 1997 MARCH 31, 1997
----------------- -------------- --------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Amortization of deferred financing costs pro forma
for the Refinancing Transactions.................. $ 508 $ 127 $ 508
Amortization of deferred financing costs pro forma
for the Acquisitions.............................. (758) (158) (730)
-------- ------ ------
Refinancing Transactions adjustment................. $ (250) $ (31) $ (222)
-------- ------ ------
-------- ------ ------
</TABLE>
(7) Reflects the elimination of pro forma interest expense based on
indebtedness incurred in connection with the Acquisitions and the addition
of pro forma interest expense after giving effect to the Refinancing
Transactions as follows:
<TABLE>
<CAPTION>
YEAR THREE MONTHS TWELVE MONTHS
ENDED ENDED ENDED
DECEMBER 31, 1996 MARCH 31, 1997 MARCH 31, 1997
----------------- -------------- --------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Interest on New Credit Agreement.................... $ 886 $ 222 $ 886
Interest on the Notes............................... 8,344 2,086 8,344
Interest on Existing Credit Agreement............... (3,751) (891) (3,754)
Interest on Existing Notes.......................... (2,578) (644) (2,578)
-------- -------------- --------------
Refinancing Transactions adjustment................. $ 2,901 $ 773 $ 2,898
-------- -------------- --------------
-------- -------------- --------------
</TABLE>
(8) Excludes a non-recurring charge of $500,000 representing financial advisory
fees paid to Mentmore in connection with the Refinancing Transactions. See
'Certain Transactions--Management Agreement with Mentmore.'
(9) Excludes an extraordinary loss from the early extinguishment of
indebtedness, net of tax benefit, of $4,538,000, resulting from the
repayment of the Existing Notes and the termination of the Existing Credit
Agreement in connection with the Refinancing Transactions.
(10) 'EBITDA' represents net income plus income taxes, interest expense,
depreciation and amortization and certain non-recurring charges and
non-cash charges. Non-recurring charges and non-cash charges for the pro
forma year ended December 31, 1996 include operating losses (excluding
depreciation expense) related to the Company's Graham, North Carolina
facility which was closed in September 1996 ($580,000), plant closure costs
($671,000) and the elimination of pension costs associated with a
terminated defined benefit plan ($122,000). Non-recurring charges and
non-cash charges for the twelve months ended March 31, 1997 include
operating losses (excluding depreciation expense) related to the Company's
Graham, North Carolina facility which was closed in September 1996
($510,000), plant closure costs ($671,000) and the elimination of pension
costs associated with a terminated defined benefit plan ($122,000). 'EBITDA
margin' is defined as EBITDA divided by net sales. EBITDA is presented
because it is a widely accepted financial indicator of a company's ability
to service indebtedness. However, EBITDA should not be considered an
alternative to operating income or cash flows from operating activities (as
determined in accordance with generally accepted accounting principles) and
should not be construed as an indication of a company's operating
performance or as a measure of liquidity.
(11) In calculating the ratio of earnings to fixed charges, earnings consist of
income before taxes plus fixed charges. Fixed charges consist of interest
expense and amortization of deferred financing costs, whether expensed or
capitalized, plus the portion of operating lease expense attributable to
interest. For the three months and twelve months ended March 31, 1997, the
Company's pro forma earnings were inadequate to cover fixed charges by
$288,000 and $936,000, respectively. Adjusted to eliminate non-cash charges
of depreciation and amortization of $1,731,000 and $7,004,000 for the pro
forma three months and twelve months ended March 31, 1997, respectively,
such earnings would have exceeded fixed charges by $1,443,000 and
$6,068,000, respectively.
30
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
The Company is a leading full-service, custom injection molder of precision
plastic products, focusing on three broad markets: healthcare, packaging and
consumer/industrial products. The Company is capable of providing its customers
with comprehensive custom manufacturing services, including extensive product
design and prototype development, mold design and manufacturing, close tolerance
injection molding and value-added finishing services such as packaging, assembly
and decoration.
Precise was acquired in 1990 by an entity managed by Mentmore, a
privately-held investment management company. Mentmore recruited an experienced
management team to implement several key strategic initiatives aimed at
improving the Company's competitive standing and profitability and promoting
internal and external growth. In January and March of 1996, the Company
completed the acquisitions of Unity and Tredegar, respectively, more than
tripling the Company's net sales on a pro forma basis. Management believes that
the Acquisitions significantly enhanced the Company's prospects for future
growth by expanding its manufacturing and technological capabilities, enlarging
its customer base, strengthening its relationships with certain existing
customers and broadening its geographic presence.
Since the consummation of the Tredegar Acquisition, management has
implemented several strategic initiatives designed to improve Tredegar's
operating performance and integrate Tredegar's operations with those of the
Company. These initiatives have included improved raw material purchasing,
reductions in plant labor and administrative costs and the closure of Tredegar's
Graham, North Carolina facility. More specifically, following the Tredegar
Acquisition, the Company (i) eliminated 31 direct and indirect labor positions
and reduced payroll rates for certain Tredegar employees, resulting in an
annualized cost savings, based on actual costs incurred in 1996, of
approximately $2.0 million; (ii) consolidated Tredegar's corporate sales and
administrative functions with those of the Company, resulting in a net
annualized reduction in selling, general and administrative expenses, based on
actual expenses incurred in 1996, of approximately $1.0 million and (iii)
renegotiated Tredegar's resin supply agreements, which resulted in annualized
cost savings, based on actual costs incurred in 1996, of approximately $268,000
based on the volume of resin purchased in 1996 following the Tredegar
Acquisition. In addition, in September 1996 the Company closed the Graham
facility, which had pro forma operating losses (excluding depreciation expense)
of $580,000 in 1996, and transferred its equipment and business to other
facilities, primarily the Company's facility in St. Petersburg, Florida.
Management believes that these initiatives have significantly improved
Tredegar's operating profitability since its acquisition by the Company and that
further improvements are possible at the former Tredegar and Unity facilities.
Tredegar's gross margin increased from approximately 12.0% in 1995 to
approximately 15.0% in 1996. Management believes that it will be able to achieve
additional cost savings as a result of further improvements in operating
processes and material purchasing and reductions in selling, general and
administrative expenses.
The Company experienced a decrease in net sales and operating income during
the first quarter of 1997 compared to the pro forma combined results of
operations for the first quarter of 1996. The 13.6% decrease in net sales to
$26.3 million for the three months ended March 31, 1997 from $30.5 million for
the pro forma combined three months ended March 31, 1996 was primarily caused by
delays in certain molding and mold making programs, lower than anticipated
volume requirements of certain customers' end-product lines due to an
unsuccessful consumer product launch and product line maturity, customer
insourcing, the loss of a molding program to a competitor with a closer customer
'ship-to' point and the discontinuance of a low margin, proprietary
manufacturing process. Management believes that although certain of the losses
described above are temporary and that most program delays are expected to be
remedied, the Company's net sales will continue to be negatively impacted in the
near term. In response to the lower level of expected net sales, the Company
laid off 25 employees during April 1997, resulting in an annualized cost
savings, based on current compensation levels, of approximately $1.2 million
(excluding severance costs estimated to be $161,000). Management believes that
the prolonged and well publicized sale of Tredegar created customer uncertainty
in the period prior to the Tredegar Acquisition resulting in fewer new program
awards in late 1995 and throughout 1996. Since the Tredegar Acquisition, the
Company's management has focused on reorganizing and strengthening its sales and
marketing efforts to obtain new business. The Company expects to begin to
realize the benefit of these efforts in the latter part of 1997.
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<PAGE>
Operating income for the three months ended March 31, 1997 decreased from
$3.3 million to $2.2 million, or 33.7%, compared to the pro forma combined
operating income for the same period in the prior year. This decrease resulted
primarily from the overall decrease in net sales coupled with additional
compensation expense associated with the expansion of the Company's sales force.
The Company's operating data for fiscal years ended December 31, 1994, 1995
and 1996 and the three months ended March 31, 1996 and 1997 are set forth below
as percentages of net sales:
<TABLE>
<CAPTION>
UNAUDITED
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
---------------------------- ---------------------------
1994 1995 1996 1996 1997
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net sales................................ 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of sales............................ 80.8 77.1 82.0 78.7 82.1
----- ----- ----- ----- -----
Gross profit............................. 19.2 22.9 18.0 21.3 17.9
Selling, general and administrative...... 11.8 13.3 7.8 12.1 8.1
Plant closure costs...................... 0.0 0.0 0.7 0.0 0.0
Amortization of intangible assets........ 0.1 0.1 1.7 0.5 1.7
----- ----- ----- ----- -----
Operating income......................... 7.3 9.5 7.8 8.7 8.1
Interest expense......................... 2.9 2.5 6.0 2.9 6.4
Other (income) expense................... (0.2) 0.4 0.0 0.0 0.0
----- ----- ----- ----- -----
Income before income taxes............... 4.6 6.6 1.9 5.8 1.7
Provision for income taxes............... 1.7 2.8 1.4 1.9 1.1
----- ----- ----- ----- -----
Net income............................... 2.9% 3.8% 0.5% 3.9% 0.6%
----- ----- ----- ----- -----
----- ----- ----- ----- -----
EBITDA margin............................ 10.7% 13.3% 15.6% 13.8% 14.8%
</TABLE>
RESULTS OF OPERATIONS
Three Months Ended March 31, 1997 compared to Three Months Ended March 31,
1996
Net sales. The Company's net sales increased to $26.3 million for the
three months ended March 31, 1997, an increase of $17.2 million, or 189.6%, over
the comparable period in the prior year. The increase in net sales was primarily
attributable to the Tredegar Acquisition. Excluding net sales of $17.3 million
during the three months ended March 31, 1997 related to the former Tredegar
operations, the Company's net sales were approximately $9.0 million, a decrease
of $0.1 million from the comparable period in the prior year.
Gross profit. The Company's gross profit increased to $4.7 million in the
three months ended March 31, 1997, an increase of $2.8 million, or 143.8%, over
the comparable period in the prior year. The increase in gross profit was
primarily attributable to higher net sales volume resulting from the Tredegar
Acquisition. Gross profit margin declined to 17.9% for the three months ended
March 31, 1997 from 21.3% in the comparable period in the prior year. The
decrease in gross profit margin was primarily attributable to the Tredegar
Acquisition, as Tredegar had historically generated lower gross profit margins
than the Company.
Selling, general and administrative. Selling, general and administrative
expenses increased to $2.1 million in the three months ended March 31, 1997, an
increase of $1.0 million, or 94.4%, over the comparable period in the prior
year. The increase in selling, general and administrative expenses was primarily
attributable to incremental expenses related to the Tredegar Acquisition and to
the subsequent hiring of an additional six sales persons. Selling, general and
administrative expense expressed as a percentage of net sales decreased to 8.1%
for the three months ended March 31, 1997 from 12.1% in the comparable period in
the prior year. This improvement was primarily attributable to the consolidation
of Tredegar's accounting, purchasing and other administrative functions with
those of the Company.
Amortization. The Company's amortization of intangible assets increased to
$433,000 for the three months ended March 31, 1997 from $42,000 in the
comparable period in the prior year due primarily to the amortization of
goodwill, non-compete agreements and deferred financing costs associated with
the Tredegar Acquisition.
Operating income. Operating income increased to $2.1 million for the three
months ended March 31, 1997, an increase of $1.3 million, or 170.5%, over the
comparable period in the prior year. Operating income as a percentage of net
sales declined to 8.1% for the three months ended March 31, 1997 from 8.7% in
the comparable
32
<PAGE>
period in the prior year due primarily to the lower gross profit margin and the
increase in amortization of intangible assets associated with the Tredegar
Acquisition.
Interest expense. Interest expense increased to $1.7 million for the three
months ended March 31, 1997 from $261,000 in the comparable period in the prior
year due primarily to interest expense on indebtedness incurred to finance the
Tredegar Acquisition.
Provision for income taxes. The Company's provision for income taxes
increased to $304,000 for the three months ended March 31, 1997 from $245,000 in
the comparable period in the prior year, representing effective tax rates on
reported taxable income of 67.0% and 46.1% in each of the two periods,
respectively. The higher effective tax rate in 1997 is due primarily to
non-deductible goodwill amortization resulting from the Tredegar Acquisition.
Year Ended December 31, 1996 compared to Year Ended December 31, 1995
Net sales. The Company's net sales increased to $93.3 million in 1996, an
increase of $59.8 million, or 178.1%, over 1995. The increase in net sales was
primarily attributable to the Company's January 25, 1996 acquisition of Unity
and March 29, 1996 acquisition of Tredegar. Unity and Tredegar generated net
sales of approximately $4.9 million and $58.5 million, respectively, after they
were acquired by the Company. Excluding the net sales of Unity and Tredegar, the
Company's net sales totaled approximately $29.9 million, a decrease of $3.6
million from 1995. This decrease was primarily attributable to lower net sales
of thin-wall consumer product containers for Baby Fresh(Trademark) baby wipes
resulting from marketing discontinuities caused by the merger of Scott Paper
Company with Kimberly-Clark and the subsequent sale by Kimberly-Clark of the
Baby Fresh(Trademark) product line to Procter & Gamble. Also contributing to the
decline in net sales was a reduction in net sales to a customer which moved its
injection molding to another molder located near its largest distribution
center.
Gross profit. The Company's gross profit increased to $16.8 million in
1996, an increase of $9.1 million, or 119.3%, over fiscal year 1995. The
increase in gross profit was attributable to higher net sales volume resulting
from the Acquisitions. Gross profit margin declined to 18.0% in 1996 from 22.9%
in the prior year. The decrease in gross profit margin was primarily
attributable to the Acquisitions, as Unity and Tredegar had historically
generated lower gross profit margins than the Company.
Selling, general and administrative. Selling, general and administrative
expenses increased to $7.3 million in 1996, an increase of $2.8 million, or
63.0%, from 1995. The increase in selling, general and administrative expense
was due primarily to incremental selling, general and administrative expenses
related to the Acquisitions and an increase in management fees. Selling, general
and administrative expense as a percentage of net sales decreased to 7.8% in
1996 from 13.3% in 1995. This improvement was primarily attributable to the
consolidation of accounting, purchasing and other administrative functions
related to the Acquisitions.
Plant closure costs. In September 1996, the Company closed its Graham,
North Carolina manufacturing facility, which was acquired in the Tredegar
Acquisition. In December 1996, the Company decided to close its Rochester, New
York manufacturing facility, which was sold in May 1997. The Company recorded
plant closing costs in 1996 of $671,000. These costs include $110,000 of
expenses associated with the relocation of machinery and equipment from the
Graham facility to the Company's other facilities, $260,000 of expenses
associated with employee termination benefits which were accrued in connection
with the decision to close the Rochester facility, and an impairment loss of
$301,000 which represents the difference between the net book value of the
assets to be sold at the Rochester facility and the offer price for those assets
of $900,000.
Amortization. The Company's amortization of intangible assets increased to
$1.6 million in 1996 from $37,000 in 1995 due primarily to the amortization of
goodwill, non-compete agreements and deferred financing costs associated with
the Acquisitions.
Operating income. Operating income increased to $7.3 million in 1996, an
increase of $4.1 million, or 128.9%, over 1995. Operating income as a percentage
of net sales declined to 7.8% in 1996 from 9.5% in the prior year due primarily
to the lower gross profit margin, the increase in amortization of intangible
assets associated with the Acquisitions and expenses associated with the closure
of the Graham and the decision to close the Rochester manufacturing facilities.
Interest expense. Interest expense increased to $5.6 million in 1996 from
$810,000 in 1995 due primarily to interest expense on indebtedness incurred to
finance the Acquisitions.
33
<PAGE>
Provision for income taxes. The Company's provision for income taxes
increased to $1.3 million in 1996 from $941,000 in 1995, representing effective
tax rates on reported taxable income of 73.0% and 42.5% in each of the two
years, respectively. The higher effective tax rate in 1996 is due primarily to
non-deductible goodwill amortization resulting from the Acquisitions.
Year Ended December 31, 1995 compared to Year Ended December 31, 1994
Net sales. The Company's net sales increased to $33.5 million in 1995, an
increase of $385,000, or 1.2%, over 1994. The increase in net sales was
attributable to a full year of operations at the Delaware CAP Facility, which
contributed additional net sales of approximately $6.0 million in 1995, as well
as increased sales to existing customers of approximately $2.2 million. This
increase was partially offset by a decrease in mold making sales resulting from
the completion of a large mold making program ($3.9 million) as well as from a
reduction in net sales to certain of the Company's existing customers ($4.2
million).
Gross profit. The Company's gross profit increased to $7.7 million in
1995, an increase of $1.3 million, or 20.7%, over fiscal year 1994. Gross profit
margin improved to 22.9% in 1995 from 19.2% in the prior year. Efficiencies
realized at the Delaware CAP Facility as operations at that facility
transitioned from a start-up phase in 1994 contributed to increases in both
gross profit and gross margin. The improvement in gross margin was also the
result of a reduction in 1995 of the Company's mold making sales, which
typically generate lower gross profit margins than the Company's molding sales.
Selling, general and administrative. Selling, general and administrative
expenses increased to $4.5 million in 1995, an increase of $539,000, or 13.8%,
from 1994, due primarily to increased incentive-based compensation expense,
travel expenses resulting from the transition of the Delaware CAP Facility from
a start-up phase and management fees. Selling, general and administrative
expense as a percentage of net sales increased to 13.3% in 1995 from 11.8% in
1994.
Amortization. The Company's amortization of intangible assets increased to
$37,000 in 1995 from $26,000 in 1994 due primarily to a full year's amortization
of deferred financing costs associated with the financing of the construction of
the Delaware CAP Facility.
Operating income. Operating income increased to $3.2 million in 1995, an
increase of $766,000, or 31.8%, over 1994. Operating income as a percentage of
net sales increased to 9.5% in 1995 from 7.3% in the prior year due primarily to
the improvement in gross profit margins resulting from the transition of the
Delaware CAP Facility from a start-up phase. This improvement was partially
offset by increased selling, general and administrative expenses.
Interest expense. Interest expense decreased to $810,000 in 1995 from
$956,000 in 1994 due primarily to the net repayment of approximately $1.7
million of long-term debt.
Provision for income taxes. The Company's provision for income taxes
increased to $941,000 in 1995 from $574,000 in 1994, representing effective tax
rates on reported taxable income of 42.5% and 37.7% in each of the two years,
respectively. The higher effective tax rate in 1995 was primarily due to higher
state income taxes.
LIQUIDITY AND CAPITAL RESOURCES
The Company completed a significant refinancing in March 1996 in connection
with the Tredegar Acquisition. The purchase price for Tredegar, along with the
refinancing of certain existing debt and related transaction costs, was financed
through (i) the incurrence of approximately $44.0 million of indebtedness under
the Existing Credit Agreement, of which $39.5 million was outstanding as of
March 31, 1997, (ii) the issuance of the Existing Notes in an aggregate
principal amount of $20.0 million (including $1.9 million of original issue
discount), (iii) the issuance of $8.3 million of Redeemable Preferred Stock (as
defined) and (iv) a capital contribution of $0.8 million from Parent. The
Company permanently repaid all indebtedness outstanding under the Existing
Credit Agreement and the Existing Notes and redeemed the Redeemable Preferred
Stock in connection with the Refinancing Transactions. See 'Capitalization.'
The Company generated cash flows from operations totaling $1.3 million,
$3.2 million and $9.6 million in 1994, 1995 and 1996, respectively, and $0.9
million and $0.7 million in the three months ended March 31, 1996 and 1997,
respectively. The progressive increase in annual cash flows from operations over
the three-year period was driven primarily by the increased profitability of the
Company's existing business and an increase in net
34
<PAGE>
sales resulting from the Acquisitions. Cash flows from operations were
negatively impacted during 1996 as a result of costs associated with the closure
of the Company's plant in Graham, North Carolina. During 1996, $0.5 million was
expended to satisfy the cash requirements for employee termination benefits,
noncancellable operating lease accruals, equipment relocation costs and other
costs associated with the closure of this facility. As of March 31, 1997, the
balance of costs associated with plant closures, including the scheduled closure
of the Company's Rochester, New York plant (which occurred in May 1997), are
expected to require cash payouts of approximately $1.2 million through March
2000. The decrease in cash flows from operations during the three months ended
March 31, 1997 compared to the same period in the prior year resulted primarily
from taking advantage of payment term discount opportunities on raw material
purchases.
The Company's cash flows used in investing activities totaled $2.0 million,
$1.0 million and $65.6 million, excluding capital lease agreements for equipment
totaling $2.3 million, $0.5 million and $4.2 million in 1994, 1995 and 1996,
respectively. The Company's cash flows used in investing activities totaled
$64.1 million and $0.8 million, excluding capital lease agreements for equipment
totaling $1.7 million and $0.5 million, for the three months ended March 31,
1996 and 1997, respectively. During 1994, the Company completed leasehold
improvements totaling $0.8 million and the purchase and lease of several molding
machines and related equipment totaling $3.2 million for the Delaware CAP
Facility. During 1996, the Company effected a replacement program for molding
machines in its Pittsburgh plant which involved capital lease agreements for 17
machines totaling $2.8 million. Additionally, $63.8 million was attributed to
the net cash used in the Acquisitions during the first quarter of 1996.
The Company's cash flows provided by (used in) financing activities totaled
$0.6 million, $(2.2) million and $57.3 million in 1994, 1995 and 1996,
respectively, and $63.8 million and $(0.7) million in the three months ended
March 31, 1996 and 1997, respectively. During 1994, debt repayments were offset
mainly by the incurrence of a $1.3 million term loan to finance the purchase of
equipment for the Delaware CAP Facility. During 1995, cash flows were used to
repay indebtedness. During 1996, cash financing activities for the Tredegar
Acquisition, as described above, contributed significantly to resulting cash
provided. During the three months ended March 31, 1997 net borrowings under the
revolving line of credit were more than offset by repayment of long-term debt
and dividends to preferred shareholders.
In May 1997, the Company sold its Rochester, New York manufacturing
facility and realized net proceeds of approximately $1.3 million, which proceeds
were subsequently used to repay indebtedness outstanding under the Existing
Credit Agreement.
Since the consummation of the Refinancing Transactions, the Company's
liquidity requirements consist primarily of capital expenditures, required debt
service under the Notes, the New Credit Agreement and various capital lease
obligations and working capital needs. The Company estimates that its capital
expenditures during 1997 will total $10.2 million, of which approximately $6.6
million is expected to be in the form of capital leases. Included in the amount
of total projected capital expenditures for 1997 is $3.9 million of expenditures
for building improvements, molding presses and ancillary equipment for a
significant new program expected to begin production by the end of the year.
Equipment refurbishment programs for 1997, which mainly relate to Tredegar
plants, are expected to cost $4.0 million. The Company is in a capital intensive
business and will have significant ongoing requirements for capital which
management believes will be satisfied through cash flow from operations,
borrowings under the New Credit Agreement and capital leases. Management
believes that due to the significance of capital expenditures anticipated for
1997, the Company will be required to incur additional indebtedness under the
New Credit Agreement or through capital leases. However, certain equipment
refurbishment programs could be delayed, if necessary. The New Credit Agreement
and the Indenture place significant restrictions on the Company's ability to,
among other things, incur additional indebtedness, grant liens or sell assets.
See 'Description of Notes--Certain Covenants,' 'Risk Factors--Substantial
Leverage' and 'Risk Factors--Restrictions under Debt Agreements.'
The New Credit Agreement provides for revolving loans to, and the issuance
of letters of credit on behalf of Precise, in an aggregate amount not to exceed
$30.0 million, of which approximately $9.5 million would have been outstanding
if the Refinancing Transactions had been consummated on March 31, 1997. See
'Capitalization.' The New Credit Agreement matures in 2002, and contains certain
covenants customary for a financing of this nature. The New Credit Agreement
requires prepayments and concurrent reductions of the total commitments
thereunder in the amount of certain portions of the net proceeds from certain
asset sales, capital
35
<PAGE>
contributions or issuances of debt or equity. See 'Description of Certain
Indebtedness--New Credit Agreement.'
Capital leases are used extensively by the Company to finance new molding
presses and certain ancillary equipment. Capital lease obligations totaled $6.4
million as of March 31, 1997, and current maturities relating to these
obligations totaled $2.0 million.
Management believes that the Company has sufficient liquidity necessary to
fund capital improvements, service indebtedness and meet working capital
requirements for the Company's existing operations. However, the Company's
anticipated cash flow from operations in 1997 is expected to be insufficient to
cover the Company's cash requirements during such period. In addition, the
Company is highly leveraged and, as a result, funds available for working
capital, capital expenditures, acquisitions and general corporate purposes may
be limited or unavailable in the event the Company does not generate cash flow
at or above expected levels. See 'Risk Factors--Substantial Leverage.'
INFLATION AND CHANGING PRICES
The Company's sales and costs are subject to inflation and price
fluctuations. However, because a significant portion of changes in the cost of
plastic resins, the Company's principal raw materials, are passed through to
customers, such changes historically have not, and in the future are not
expected to have, a material effect on the Company's results of operations.
ENVIRONMENTAL MATTERS
The Company's operations are subject to a range of environmental
requirements in the various jurisdictions in which it operates. These
environmental requirements relate to, among other things, air emissions,
wastewater discharges and waste management. The Company can be expected to incur
capital and operating expenses to maintain compliance with applicable
environmental requirements and to meet new regulatory requirements. Based upon
the underlying facts giving rise to its environmental regulatory obligations and
technical reports prepared on the Company's facilities, the Company does not
anticipate that any such capital and operating expenses will have a material
adverse effect on the Company's results of operations. There can be no
assurance, however, that unanticipated, future regulatory programs or previously
unidentified environmental conditions will not impose material capital operating
expenses. See 'Risk Factors--Environmental Matters' and 'Business--Regulation
and Legislation.'
The Company has been identified as one of the several hundred Potentially
Responsible Parties ('PRPs') in connection with the shipment of hazardous wastes
to the Envirotek II Superfund site in Tonawanda, New York. The Company has
records of having shipped 20 drums of waste to this site, which, according to
presently available records, would appear to represent a small percentage of the
total waste sent to the site. Accordingly, the Company has entered into an
Administrative Order on Consent with the United States Environmental Protection
Agency (the 'EPA') as a de minimis contributor to the site. The final remedy for
this site has not yet been decided, and thus the Company's potential liability,
while de minimis compared to other PRPs at the site, cannot be fully quantified
at this time. Because of the Company's status as a PRP at the Envirotek II site,
the New York State Department of Environmental Conservation (the 'NYSDEC') has
identified the Company as a PRP for the Roblin Steel Complex, a New York State
cleanup site, which surrounds the Envirotek II site. The Company's potential
liability in connection with the Roblin Steel site is, therefore, based upon a
small percentage of the total waste sent to Envirotek II, and the Company shall
similarly be regarded by the NYSDEC as a de minimis contributor to Roblin Steel.
Because the Company is recognized by the EPA as a de minimis contributor at
Envirotek II, and because the Company's involvement at Roblin Steel is limited
to its involvement at Envirotek II, management believes that the Company's
potential liability with respect to these sites will not have a material adverse
effect on the Company's results of operations, cash flows or financial
condition.
36
<PAGE>
BUSINESS
OVERVIEW
The Company is a leading full-service, custom injection molder of precision
plastic products, focusing on three broad markets: healthcare, packaging and
consumer/industrial products. These markets are characterized by high volume
requirements, long product life cycles, limited vulnerability to recessionary
trends and relatively low susceptibility to off-shore competition. The Company
differentiates itself by providing total project management, including
value-added services, for the manufacture of highly engineered, close tolerance
products, such as disposable medical devices, thin-wall consumer product
containers and electrical connectors. The Company currently serves a diverse
base of OEMs, including Fortune 500 companies such as Abbott Labs, Gillette and
Procter & Gamble. The Company is the sole or primary source supplier of the
products that it manufactures for many of its customers. On a pro forma basis,
after giving effect to the Acquisitions, the Company generated net sales and
EBITDA of $110.5 million and $17.3 million, respectively, in the twelve months
ended March 31, 1997.
The Company operates approximately 185 molding machines in nine
strategically located facilities throughout the eastern and midwestern United
States, three of which have advanced mold making capabilities. The Company is
capable of providing its customers with comprehensive custom manufacturing
services, including extensive product design and prototype development, mold
design and manufacturing, close tolerance injection molding and value-added
finishing services such as packaging, assembly and decoration. The Company's
technologically advanced, computer-aided manufacturing facilities and equipment
enable it to engineer custom solutions to technically demanding customer
requirements, which are generally characterized by close tolerances and high
speed, volume and durability parameters. The high level of automation in many of
the Company's manufacturing facilities minimizes both direct labor input and
scrap loss. The Company believes that its leading technical capabilities and
reputation for high quality products, on-time deliveries and reliability have
enabled it to both obtain new customers and further penetrate existing
customers.
Precise was acquired in 1990 by an entity managed by Mentmore, a
privately-held investment and management company. Mentmore recruited an
experienced management team beginning in 1990 to implement several key strategic
initiatives aimed at improving the Company's competitive standing and
profitability, as well as promoting internal and external growth. As a result of
these initiatives, the Company's net sales and EBITDA increased from $22.8
million and $(129,000), respectively, in 1991 to $33.5 million and $4.5 million,
respectively, in 1995 (prior to the Acquisitions). In addition, during the same
period, the Company's EBITDA margin improved from (0.6)% to 13.3%.
In 1996, the Company acquired Tredegar Molded Products Company
('Tredegar'), a full-service plastics injection molder supplying OEMs primarily
in the healthcare, packaging and consumer/industrial markets, and Unity, a
plastics injection molder specializing in medical diagnostic products and
precision valves. The Acquisitions more than tripled the Company's net sales on
a pro forma basis, making it one of the larger custom injection molders in the
United States. Management believes that the Acquisitions also significantly
enhanced the Company's prospects for future growth by expanding its
manufacturing and technological capabilities, enlarging its customer base,
strengthening relationships with certain existing customers and broadening its
geographic presence. In addition, the Acquisitions provided the Company with
significant opportunities for economies of scale in raw material purchasing and
reductions in manufacturing and administrative costs. As a result of operating
improvements implemented by the Company since the Acquisitions were completed,
the Company's EBITDA and EBITDA margin increased from $12.7 million and 9.8%,
respectively, on a combined basis in 1995 to $17.3 million and 15.6%,
respectively, on a pro forma basis in the twelve months ended March 31, 1997.
COMPETITIVE STRENGTHS
Management believes that the Company is well positioned to capitalize on
the favorable trends in the plastics injection molding industry and to enhance
its position in its target markets. The following are, in management's view, the
Company's principal competitive strengths:
FULL-SERVICE CAPABILITIES. The Company offers comprehensive services
ranging from product design, product development and mold making through
molding, decorating and assembly. As one of a limited number of injection
molders in the United States capable of offering such comprehensive services,
management believes
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that the Company is well positioned to benefit from the consolidation currently
taking place in the injection molding industry and the trend among high volume
OEMs to increasingly rely upon custom injection molders for total project
management.
ADVANCED MANUFACTURING CAPABILITIES. The Company uses state-of-the-art
CAD/CAM technology in the design and manufacture of its molds and subjects each
mold to extensive testing to ensure that it meets high quality standards. The
Company has also made substantial investments in advanced high speed molding
machines and significantly expanded its use of automation and robotics in its
manufacturing and assembly operations. As a result of its efforts, the Company
has received numerous quality awards, including Gillette's OmniMark Award, the
Lexmark International Prestige Supplier Award and the bioMerieux Vitek World
Class Supplier Award. In addition, the Company has achieved 'ship-to-stock'
status with many of its customers. Management believes that the Company's mold
making capabilities and the high quality of its molding have been integral in
the Company's strategy of focusing on highly engineered products.
LOW COST PRODUCTION. The Company has been successful in reducing costs by
improving manufacturing efficiency, introducing advanced molding technology and
realigning facilities and production to increase facility utilization. In
addition, as one of the largest manufacturers in the plastics injection molding
industry, the Company is able to realize significant economies of scale in raw
material purchasing. Management believes that by being one of the industry's low
cost producers, the Company enjoys a significant advantage over many of its
competitors in obtaining new business.
MULTIPLE PLANT LOCATIONS. Management believes that the Company's nine
plants, located throughout the eastern and midwestern United States, provide it
with the opportunity to effectively compete for new product contracts that
require large volume runs and multiple distribution points. The Company's
multiple plant locations enable it to allocate production to the facility best
suited for a job in view of its relative capabilities and proximity to the
customer. As a result, the Company provides its customers with a broad range of
injection molding capabilities and better service through improved
responsiveness, timely delivery and reduced freight costs. In addition, by
operating numerous plants, the Company can mitigate customer sourcing risks
associated with single facility production.
EXPERIENCED MANAGEMENT. The six members of the Company's senior management
team have, on average, approximately 19 years of experience in the plastics
injection molding industry. The members of the management team, most of whom
were recruited by Mentmore in 1990 and 1991 from other leading plastics
companies, are largely responsible for the substantial growth and improved
operating performance that the Company has experienced over the past five years.
BUSINESS STRATEGY
The Company's objective is to become the leading supplier of plastic molded
products to leading OEMs in the healthcare, packaging and consumer/industrial
markets. The key elements of the Company's business strategy to achieve this
objective are as follows:
FOCUS ON TARGET MARKETS. The Company focuses its marketing efforts on high
margin accounts in the healthcare, packaging and consumer/industrial markets.
These markets are characterized by high volume requirements, long product life
cycles, limited vulnerability to recessionary trends, and relatively low
susceptibility to off-shore molding competition. By focusing on high volume,
long run manufacturing for products in these markets, management believes that
the Company will be able to maximize its profitability and best utilize its
resources.
FURTHER PENETRATE EXISTING CUSTOMER BASE. Substantially all of the
Company's sales are to major consumer product and healthcare companies. In most
cases, the Company manufactures plastic products for specific applications
required by one or more divisions of a single customer. The trend by OEMs to
reduce their supplier base and outsource their injection molding needs provides
the Company with the opportunity to increase sales to its existing customers and
participate in their domestic and international growth. The Company seeks to
capitalize on these favorable industry trends and growth opportunities by
expanding its sales force, emphasizing its full-service capabilities and
developing close working relationships with its customers by improving
communication and coordination between the Company's marketing, product design
and production personnel and its customers' counterpart employees. The Company
has increased the size of its sales force from nine sales
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persons as of August 31, 1996 to 16 sales persons as of May 31, 1997. In
addition, the Company plans to designate key account specialists for each of its
largest customers whose sole responsibility will be to serve the diverse
injection molding needs of that customer. By pursuing these and other
strategies, management believes that the Company can capitalize on its
full-service capabilities and customer relationships.
INVEST IN TECHNOLOGY AND QUALITY IMPROVEMENTS. The Company continues to
improve productivity through an on-going program of upgrading equipment and
facilities and investing in automation, robotics and other technological
improvements. Since 1991, the Company has made substantial investments in new
mold making equipment and injection molding machines which have led to improved
cycle times, lower operating expenses and higher quality products. In addition,
four of the Company's facilities are currently ISO 9000 registered, and the
Company is actively pursuing ISO certification of all of its remaining
facilities. Management believes that less than 10% of all molders in the United
States are ISO 9000 registered. Management also believes that by continuing to
invest in new technology and focusing on quality, the Company is well positioned
to increase sales to existing customers, develop new customer relationships and
improve its profit margins through increased operating efficiencies.
REDUCE COSTS AND INCREASE PRODUCTIVITY. The Company focuses on
simultaneously reducing costs while meeting the high quality standards of its
customers. Each of the Company's facilities utilizes total quality management
techniques, including the use of statistical process control and extensive
employee involvement. The Company's employees receive in excess of 30 hours of
training each year, designed to increase productivity, safety and manufacturing
quality and to foster the concept of 'continuous improvement.' Through an
innovative Performance Sharing Program, the Company's employees focus on cost of
goods sold and receive incentives to maximize gross margins by minimizing costs.
Management also continues to improve asset utilization and increase
manufacturing productivity by consolidating underperforming facilities and
streamlining the Company's workforce. These initiatives have resulted in an
increase in the Company's net sales per employee from $87,000 in 1991 to
$127,000, on a pro forma basis, in 1996. During the same period, the Company's
EBITDA margin improved from (0.6)% to 15.8%. The Company intends to continue to
implement measures that minimize costs, increase margins and result in
competitive prices for its customers.
DEVELOP PARTNERSHIPS WITH KEY CUSTOMERS. In response to customers'
increasing focus on outsourcing non-core activities such as injection molding,
management continues to pursue customer partnerships that involve sole or
primary source production and total project management under long-term
contracts. Management believes that these partnerships enable suppliers and OEMs
to focus on long-term strategy and often result in faster product development,
design flexibility, lower costs and improved product quality. For example, the
Company's 51,000 square foot, state-of-the-art Delaware CAP Facility is
specifically designed to serve the needs of Procter & Gamble and other customers
in the thin-wall packaging market segment. At this facility, using
state-of-the-art molding machines, highly engineered stack molds and high speed
automation, the Company currently is the sole source manufacturer of
polypropylene containers for Baby Fresh(Trademark) baby wipes for Procter &
Gamble and Softkins(Trademark) moist tissues for Kimberly-Clark, producing
approximately 18 million units in 1996. Because of its highly automated
manufacturing process, the Delaware CAP Facility's direct labor costs as a
percentage of net sales in 1996 were 1.9%, compared to what management believes
to be an industry average of approximately 10.0%. The Company intends to
continue to pursue CAP facilities and similar partnerships with other customers.
SELECTIVELY PURSUE ACQUISITION OPPORTUNITIES. Strategic acquisitions have
been, and management believes will continue to be, an important element in the
Company's growth and in its efforts to capitalize on favorable industry trends.
The Company's recent acquisitions have expanded its OEM customer base,
complemented its existing technological and manufacturing capabilities,
presented substantial cost savings opportunities and provided significant growth
opportunities. The Company will consider future acquisition opportunities that
are attractively priced and that it believes will strengthen its customer base,
broaden its geographic presence, enhance its production capabilities and/or
provide significant operating synergies.
INTEGRATION OF TREDEGAR AND UNITY
In 1996, the Company completed the acquisitions of Tredegar and Unity,
which significantly increased the size and geographic scope of the Company's
operations and, in management's view, enhanced the Company's prospects for
future growth.
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Tredegar
Precise acquired all of the issued and outstanding common stock of Tredegar
in March 1996 for an aggregate purchase price of $60.0 million (plus $5.2
million of fees and expenses incurred in connection with the acquisition). At
the time of the acquisition, Tredegar was a full-service supplier to OEMs
primarily in the healthcare, packaging and consumer/industrial markets. It had
143 injection molding machines in six facilities, including a state-of-the-art
mold manufacturing facility in St. Petersburg, Florida. Tredegar generated net
sales and EBITDA of $90.7 million and $10.0 million, respectively, during the
year ended December 31, 1995.
In addition to making the Company one of the larger custom plastic
injection molders in the United States, the Tredegar Acquisition expanded the
Company's manufacturing and technological capabilities, enlarged its customer
base, strengthened its relationships with certain existing customers and
broadened its geographic presence. By more than tripling the Company's net sales
on a pro forma basis, Tredegar also provided the Company with opportunities for
economies of scale in raw material purchasing and reductions in manufacturing
and administrative costs.
Since the consummation of the Tredegar Acquisition, management has
implemented several strategic initiatives designed to improve Tredegar's
operating performance and integrate Tredegar's operations with those of the
Company. These initiatives have included improved raw material purchasing,
reductions in plant labor and administrative costs and the closure of Tredegar's
Graham, North Carolina facility and the transfer of its equipment and business
to the Company's St. Petersburg, Florida facility. More specifically, following
the Tredegar Acquisition, the Company (i) eliminated 31 direct and indirect
labor positions and reduced payroll rates for certain Tredegar employees,
resulting in annualized cost savings, based on actual costs incurred in 1996, of
approximately $2.0 million; (ii) consolidated Tredegar's corporate sales and
administrative functions with those of the Company, resulting in a net an
annualized reduction in selling, general and administrative expenses, based on
actual expenses incurred in 1996, of approximately $1.0 million; and (iii)
renegotiated Tredegar's resin supply agreements, which resulted in annualized
cost savings, based on actual costs incurred in 1996, of approximately $268,000
based on the volume of resin purchased in 1996 following the Tredegar
Acquistion. In addition, in September 1996, the Company closed Tredegar's
Graham, North Carolina manufacturing facility, which had pro forma operating
losses (excluding depreciation expense) of $580,000 in 1996, and transferred its
equipment and business to other facilities, primarily the Company's facility in
St. Petersburg, Florida. Management believes that these initiatives and other
operating improvements at Tredegar, many of which were successfully implemented
at Precise following its acquisition by Sunderland, have significantly improved
Tredegar's operating profitability since its acquisition by the Company and that
further improvements are possible. Tredegar's gross margin increased from
approximately 12.0% in 1995 to approximately 15.0% in 1996. Management believes
that it will be able to achieve additional cost savings at the former Tredegar
and Unity facilities as a result of further improvements in operating processes
and material purchasing and reductions in selling, general and administrative
expenses.
Unity
The Company acquired all of the issued and outstanding common stock of
Unity in January 1996 for an aggregate purchase price of $3.6 million (plus
$125,000 of fees and expenses incurred in connection with the acquisition).
Unity expanded the Company's presence in the Midwest and in the healthcare
market by fostering the Company's relationship with Abbott Labs, Unity's largest
customer. Unity also possessed a mold manufacturing facility which specialized
in close tolerance molds for producing medical diagnostic products, including
diagnostic disposables and intravenous components.
INDUSTRY
Injection molding is one of the most widely used plastic processing methods
in the world due to the high-quality properties of the finished product and its
cost effectiveness. According to The Freedonia Group, annual shipments of
injection molded plastic products, which have increased from approximately 7
billion pounds in 1985 to over 11 billion pounds in 1996, are expected to exceed
13 billion pounds by the year 2000. Despite the increased demand for plastic
injection molded products, the United States injection molding industry remains
highly fragmented. The United States injection molding industry is currently
comprised of over 7,000 molders, a
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substantial majority of which are small operators or captive divisions of larger
companies. The capabilities of these molders vary widely, as do their end
markets.
In recent years, plastic injection molders have benefited from technology
improvements that have enabled plastic to replace other materials (most notably
metal, glass and paper) in a variety of applications. Plastic has been
substituted for these materials primarily because of its disposability, ease of
manufacture, durability, aesthetic appeal, flexibility of form and weight.
Additionally, plastic often provides significant cost savings over other
materials due to design and fabrication advantages. By successfully substituting
plastic for other materials, manufacturers can significantly reduce the amount
of necessary parts, manufacturing steps, labor costs, energy costs and
transportation expenses associated with producing their products. As a result,
management believes that substantial growth potential exists for plastics
through further materials substitution.
In addition to the growth projected for the plastics industry as a whole,
growth for larger injection molders such as the Company is driven by industry
consolidation and the trend among OEMs to outsource their injection molding
needs. Management believes that the consolidation of the highly fragmented
plastics injection molding industry has accelerated in recent years as a result
of customer preferences toward larger, full-service independent molders that are
able to provide total project management. As OEMs place increasing emphasis on
minimizing the 'time to market' for their new products and ensuring that their
requirements for production, quality and timely delivery are satisfied, they are
increasingly relying on one full-service supplier for each new product launch.
In many cases, the combination of increasingly complex applications for plastic
molded parts, the limited number of qualified molders and the desire of OEMs to
reduce sourcing costs has resulted in the creation of partnerships between OEMs
and molders who have proven their ability to provide effective total project
management, high quality products and timely delivery. These partnerships enable
OEMs and molders to focus on long-range strategy and often result in faster
product development, greater design flexibility, lower costs and improved
product quality. Given that molders in these partnerships are involved in many
decisions that affect cost and prevent complications in production, they are
better able to preserve attractive margins.
The industry-wide trend toward OEM consolidation of suppliers has created
significant opportunities for injection molders such as the Company who possess
full-service capabilities. Given the capital investment required to successfully
compete as a full-service injection molder, management believes that an
increasingly limited number of injection molders will be capable of providing
the breadth of services increasingly being demanded by high volume OEMs.
Furthermore, management believes that the trend among OEMs to develop closer
relationships with full-service injection molders mitigates the potential threat
of foreign competition. Inconsistent product quality, weak tooling capabilities
and significant distance from customers' manufacturing locations have
traditionally hindered foreign competitors from competing effectively for
projects that require full-service capabilities, outstanding quality and quick
response time.
MARKETS AND PRODUCTS
The Company is a leading supplier of plastic injection molded products for
the healthcare, packaging and consumer/industrial markets. The Company is also
one of the largest mold makers in the United States producing a wide variety of
products. The following is a description of the principal markets served by the
Company as well as the products the Company produces for those markets.
Healthcare
Plastic molded components for healthcare applications represented
approximately 19.7% of the Company's pro forma net sales in 1996. The Company's
primary healthcare products in 1996 included disposable diagnostic cards,
syringes, sample systems and surgical components. During 1996, the Company's
four largest healthcare market customers were Abbott Labs, bioMerieux Vitek,
Dade and Ethicon Endo-Surgery, a division of Johnson & Johnson ('Ethicon'), with
bioMerieux Vitek and Dade having entered into sole or primary source supply
agreements with the Company.
Demand for plastic injection molded components within the healthcare market
is driven by both the aging population and the overall demand for new medical
products. In addition, heightened cost consciousness on the part of the United
States government and private insurers has increased demand for medical devices
and supplies that can reduce labor costs, improve productivity and/or facilitate
patient care in a more cost-effective manner. Plastics are being used more
widely in medical devices as customers increasingly recognize the value of
reduced
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breakage, the ability to manufacture consistent parts in a cost-effective manner
and the infection control benefits of disposable products. According to The
Freedonia Group, annual demand in the United States for injection molded
healthcare products is expected to increase by approximately 3.8% per year
through 2000, reaching over 430 million pounds.
Packaging
Plastic molded components for packaging applications represented
approximately 30.4% of the Company's pro forma net sales in 1996. The Company's
primary packaging products in 1996 included moist tissue containers, caps and
cap liners, closures and packaging for shaving cream, deodorant and feminine
products. During 1996, the Company's four largest packaging market customers
were Carter Wallace, Inc., Chesebrough-Pond's USA Co., a division of Unilever
United States, Inc. ('Chesebrough-Pond's'), Gillette and Kimberly-Clark.
The Company's packaging sales are primarily related to personal care and
household products. Given the intense competition among consumer products
companies, consumer goods marketers are increasingly focusing on packaging as a
relatively inexpensive method of creating brand differentiation. According to
The Freedonia Group, annual demand in the United States for injection molded
packaging is expected to increase by approximately 3.8% per year through 2000,
reaching nearly 3.6 billion pounds. As a result of the continuing substitution
of plastic for alternative materials, such as metal, glass and paper, plastic
packaging has been the fastest growing sector within the packaging industry. See
'--Industry.'
In connection with the Tredegar Acquisition, the Company acquired
Tredegar's existing line of proprietary packaging products for the private label
market, which includes lip balm assemblies and dropper caps. The Company
believes that the private label market offers attractive growth opportunities
and will consider developing additional proprietary products in the future.
Consumer/Industrial
Plastic molded components for consumer/industrial applications represented
approximately 38.9% of the Company's pro forma net sales in 1996. The Company's
primary consumer/industrial products in 1996 included printer components,
electrical connectors and air freshener components. During 1996, the Company's
four largest consumer/industrial market customers were AMP, The Dial Corporation
('Dial'), Lexmark and Procter & Gamble. The Company has entered into sole or
primary source supply agreements with Procter & Gamble and Dial.
The consumer/industrial markets the Company serves primarily include
consumer containers and audio/electronics components. The consumer containers
market segment has been growing rapidly due in part to the conversion of many
products from metal, glass and paper to plastic. Plastic is the preferred
material for many applications due to its low cost, functional performance,
reusability and recyclability. Demand for plastic audio/electronic components is
driven by both the overall demand for audio/electronic products and the
percentage of those products composed of plastic. Strong projected growth for
increased use of plastics is fueled by long product life cycles and consumer
demand for more durable, lightweight and low-cost products. Based on information
contained in a recent report by The Freedonia Group, annual demand in the United
States for injection molded consumer/industrial products is expected to increase
approximately 2.7% per year through 2000, reaching nearly 4.0 billion pounds.
Annual demand in the United States for injection molded electrical components is
expected to increase by approximately 3.4% per year through 2000.
Mold Making
Mold making operations represented approximately 11.0% of the Company's pro
forma net sales in 1996. Products produced with the molds manufactured by the
Company in 1996 included deodorant dispensers, personal care products, medical
disposables and containers. The Company performs, or expects to perform, the
injection molding for a majority of the products for which it make molds.
Plastic products for which the Company built the mold but which are not
injection molded by the Company are typically molded in-house by the customer.
During 1996, the Company's four largest mold making customers were Spalding and
Evenflo Companies, Inc., Gillette, Abbott Labs and Rubbermaid Incorporated.
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The Company operates three facilities with mold making capabilities,
including one of the largest facilities in the United States. These facilities
offer a full range of services, including conceptual part and mold design,
building and testing. Management views the Company's mold designing and building
operations not simply as supportive of its manufacturing business, but as an
independent profit center.
CUSTOMERS
Substantially all of the Company's sales are made to major OEMs in the
healthcare, packaging and consumer/industrial markets. During 1996, the Company
produced a wide variety of products for over 100 customers, with the Company's
ten largest customers accounting for approximately 57.3% of its pro forma net
sales. The Company's largest customers are Procter & Gamble, Gillette, AMP and
Lexmark, which represented approximately 12.3%, 10.7%, 5.2% and 5.1%,
respectively, of the Company's pro forma net sales in 1996.
Approximately 25% of the Company's pro forma net sales in 1996 were made
pursuant to multiple year supply agreements, including sales to Procter &
Gamble, bioMerieux Vitek and Dade. The Company is the sole or primary source
supplier of the products that it manufacturers for many of its customers. The
Company may have individual contracts for specific products or, in certain
instances, separate contracts with one or more operating divisions of a single
customer. These contracts typically have resin price pass-through provisions and
range in term from three to five years. See 'Risk Factors--Reliance on Key
Customers and Supply Agreements.'
As one of a limited number of full-service injection molders increasingly
relied upon by OEMs to provide total project management, the Company seeks to
develop lasting relationships with its customers by working closely with them in
the early stages of product design and development. Management believes that the
Company's use of state-of-the-art CAD/CAM technology and robotics in mold making
and molding and its advanced facilities and equipment are integral to its
ability to meet customer requirements. While OEMs are generally reluctant to
change suppliers due to the high switching costs associated with reengineering,
requalifying and restarting production, the plastic injection molding industry
is highly competitive. Management believes that the Company's strong customer
base will provide it with the opportunity to anticipate and generate business
opportunities in the future.
SALES AND MARKETING
Substantially all of the Company's sales are made through the Company's
direct sales force, which consists of 16 employees located throughout the
regions in which the Company operates. The Company's sales and marketing team is
organized according to the Company's target markets: healthcare, packaging and
consumer/industrial. Management believes that organizing its sales and marketing
team by market segment is the most efficient and effective way to develop and
maintain customer relationships, stay abreast of technical and other
developments that may result in changing customer or consumer preferences and
take advantage of new business opportunities. Sales and marketing personnel
emphasize the Company's full-service injection molding capabilities to customers
and focus on improving communication and coordination between the Company's
marketing, production and product design personnel and customers' counterpart
employees to develop customized products that enhance customer product
differentiation and improve functional performance. The Company has added seven
sales representatives since August 31, 1996. The Company has also established
new business sales teams which are organized by geographic region and are
responsible solely for developing new business opportunities in the Company's
target markets. In addition, the Company plans to designate key account
specialists to serve its largest customers. By providing dedicated support, the
Company believes it can better serve these customers, who, in many cases, have a
variety of different product applications or production requirements in multiple
locations. The Company's marketing approach will continue to remain focused on
meeting the integrated needs of OEMs that require full-service injection molding
capabilities.
Customer service is also a critical component of the Company's marketing
efforts. The Company's customers operate high speed, high volume production
lines. In order to operate their production lines efficiently and avoid costly
line stoppages, customers rely on the Company's ability to provide reliable,
on-time delivery of high quality products. Customer service representatives are
located at each of the Company's facilities. Management believes that this
decentralized approach, which provides primary support closer to the customer
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and the production process, is efficient and best suited to serve customer
needs. In addition, a small staff of customer service personnel is located at
Company headquarters to provide additional support.
MANUFACTURING AND OPERATIONS
The Company differentiates itself in the marketplace by being a
full-service injection molder capable of meeting the integrated needs of leading
OEMs from product design, development and mold making through molding,
decorating and assembly. As one of a limited number of companies in the United
States capable of offering such comprehensive services, management believes that
the Company is well positioned to benefit from the consolidation currently
taking place in the injection molding industry. Large, high volume OEMs are
increasingly relying on custom injection molders for total project management to
reduce costs, streamline production processes and to ensure timely completion of
their new product launches.
Mold Making and Technical Capabilities
The Company's three facilities with mold making capabilities, which include
one of the largest facilities in the United States, offer a full range of
services, including conceptual part and mold design, building and testing. In
addition, the Company's mold manufacturing facilities provide mold and technical
consulting for troubleshooting, repair and preproduction evaluation of parts or
drawings. The Company's target markets, selected for their relatively long
product life cycles, demand durable molds which can be produced only with the
highest-quality mold making equipment. The Company's mold making and technical
operations serve this demand by combining craftsmanship with technologically
advanced computer-aided design and Computer Numerical Control ('CNC') machining.
As a result, the Company consistently delivers molds that are produced to the
proper specifications and delivered on-time. Management views the Company's mold
designing and building operations not simply as supportive of its manufacturing
business, but as an independent profit center.
The mold making process is generally initiated with the Company's engineers
analyzing a customer's production requirements. Based on that analysis, a design
is created or optimized for the part in question. This design is downloaded into
the Company's computer database and serves as the foundation for the mold that
will be built utilizing state-of-the-art CAD/CAM technology. The Company's mold
design database is linked via a data communications network to the production
floor, which allows for CNC machining of mold bases and components directly from
the original design. The use of CNC technology and constant in-process
monitoring enhances the Company's ability to create high-tolerance molds and
deliver its molds on time. Moreover, after final assembly each of the Company's
molds is tested for performance.
The Company's St. Petersburg, Florida mold manufacturing facility is one of
the largest and most technologically advanced in the injection molding industry.
The facility comprises 55,000 square feet and employs approximately 60 mold
makers with extensive experience in designing and manufacturing high cavitation
production molds and stack molds. The facility contains advanced mold testing
and design centers and has five injection molding presses to provide
qualification and testing of new molds. The Company's two other mold
manufacturing facilities, one of which is located at Company headquarters near
Pittsburgh, Pennsylvania and the other of which is located outside Chicago,
Illinois, are smaller than the St. Petersburg facility and specialize in molds
for smaller, close tolerance plastic parts. Each facility employs approximately
20 mold makers and has product design and testing capabilities.
Injection Molding
The Company manufactures its products using the plastic injection molding
process. The molding operation processes are comparable at each of the Company's
facilities. Raw material arrives at each facility where it is inventoried in
silos or boxes in the plant (depending upon the volume requirements). In
conventional and clean room molding, raw material in the form of pellets is
blended to ensure a homogenous mix, dried when necessary, and conveyed through a
pneumatically controlled material handling system to the molding presses. The
raw material enters the heating chamber where it is melted to a fluid state.
Coloring agents are added as appropriate and a reciprocating screw pushes the
fluid raw material at high pressure through a nozzle into a closed
temperature-controlled mold. At the end of each molding cycle (five to eighteen
seconds), the mold opens and the finished parts are ejected from the mold into
automated handling systems from which they are packaged for further processing
or shipment.
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The Company operates approximately 185 conventional injection molding
presses ranging in capacity from 44 to 750 tons. These presses are located in
nine strategically located plants, allowing production to be allocated so that
the customer's needs are met in a cost-effective and timely manner. The Company
also operates ten proprietary closure presses and five presses used in the
qualification and testing of new molds. The Company's molding operations also
include white room and Class 100,000 clean room environments that offer a
controlled manufacturing atmosphere for the molding of components used in
medical devices. The Company's molds and molding machines are continuously
monitored through process and manufacturing systems, which include a
preventative maintenance program. Molds in need of repair or scheduled for
maintenance are sent to the plant tool shop for cleaning and repairs. If
significant repairs are required, the molds are sent to one of the Company's
three mold making facilities.
In order to produce high quality products while containing costs, the
Company utilizes the most advanced molding capabilities available in the
industry. For example, the Company operates two-by-two 'stack' molds, which
allow twice the molding capacity of conventional molding systems. For customer
specific projects, the Company has developed engineering and automation systems
resulting in improved manufacturing efficiencies and lower costs. In addition to
its molding capabilities, the Company has significant experience with commodity
and engineered thermoplastic polymers.
Each of the Company's plants is managed by a local plant manager and is
treated as a profit center. The Company seeks to be a low-cost producer by using
high speed molding machines, modern multi-cavity hot runner, cold runner and
insulated runner molds and extensive material handling automation. Many of the
Company's products are packaged and delivered to OEMs in a manner which allows
them to be integrated directly into the production process, minimizing
inventories and fixed costs for both the Company and the customer. Each of the
Company's injection molding plants has complete tool maintenance capability to
support molding operations. As of March 31, 1997, the Company had invested
approximately $15.4 million, since 1991 on a pro forma basis, in new injection
molding machines and related plant and equipment improvements to further its
growth objectives, improve productivity and maintain competitive advantages.
The Company's 51,000 square foot, state-of-the-art facility in Newark,
Delaware demonstrates its injection molding capabilities as well as its
commitment to developing strategic partnerships with key customers. This
facility was specifically designed to produce Baby Fresh(Trademark)
polypropylene containers for Procter & Gamble and serve other customers in the
thin-wall packaging market. Using state-of-the-art molding machines, highly
engineered stack molds and high-speed automation, this facility produced
approximately 18 million units in 1996 and is able to maintain short cycle times
seven days a week. This type of production demands high levels of accuracy and
repeatability. To maintain this level of shot-to-shot consistency, the Company
uses in-line process control software to monitor critical molding parameters.
The success of the Delaware CAP Facility is enhanced through computerization and
close customer communication. A bar-coding system automatically tracks
inventories and shipments and provides product traceability. The Company's
investment in highly automated equipment enables the entire facility to be
operated by only 22 employees, keeping labor costs to a minimum. Because of its
highly automated manufacturing process, the Delaware CAP Facility's direct labor
costs as a percentage of net sales in 1996 were 1.9%, as compared to what
management believes to be an industry average of 10.0%.
Secondary Processes
The Company further differentiates itself in the market by offering a
variety of secondary processes at most plant facilities. These secondary
processes typically include assembly and the lining of caps, as well as other
services, including various decorating techniques, such as hot stamping, pad
printing and labeling. Additional complementary services are performed by
outside vendors on an as needed basis when a special application is required by
the customer, including screen printing, metalizing and offset printing.
Quality Assurance Programs
A commitment to consistently producing high-quality products is critical to
the success of custom injection molders serving the Company's target markets.
With packaging playing an ever-increasing role in the functionality and
aesthetics of new product launches within the consumer products industry, OEMs
demand high
45
<PAGE>
quality products from their injection molding suppliers. Similarly, given the
applications for which their products are used, healthcare companies demand the
highest quality products from their suppliers.
In recognition of these customer demands, the Company has centered its
manufacturing philosophy on being the highest quality custom injection molder in
its targeted end markets. Each of the Company's facilities utilizes total
quality management techniques, including the use of statistical process control
and the extensive involvement of employees to increase productivity. As a
result, the Company is consistently recognized as a leading supplier of quality
injection molded parts to the majority of its key customers. The Company has
received numerous quality awards, including Gillette's OmniMark Award, the
Lexmark International Prestige Supplier Award and the bioMerieux Vitek World
Class Supplier Award. 'Ship-to-stock' status has been achieved with many
customers, including Ethicon, Warner Lambert, Swisher and Outer Circle Products.
In addition, four of the Company's facilities are ISO 9000 registered, and the
Company is actively pursuing ISO certification in all of its remaining
facilities. ISO 9000-series certification certifies compliance by a company with
a set of shipping, trading and technology standards promulgated by the
International Standardization Organization.
COMPETITION
The Company faces intense competition throughout its product lines from
numerous competitors, a number of whom have greater financial resources than the
Company. In addition, the markets for certain of the Company's products are
characterized by low costs of entry or competition based primarily on price.
Other important competitive factors include product quality, service and the
ability to supply products to customers in a timely manner. The Company faces
competition from well-established independent molders operating nationally,
smaller independent molders operating regionally and captive divisions of larger
companies. In most instances, small regional competitors lack the production and
technological capabilities to service national consumer product and healthcare
companies.
The plastic injection molding industry is highly fragmented. In all three
of its target markets the Company competes with Nypro, Inc., which is
headquartered in Clinton, Massachusetts, and The Tech Group, Inc. ('The Tech
Group'), which is headquartered in Scottsdale, Arizona. The Company competes
with Erie Plastics Corp. in both the consumer/industrial and the packaging
markets. In addition, in the healthcare market, the Company competes with Tenax
Corporation, a primary supplier of surgical devices, and Courtesy Corporation,
one of four major suppliers to Abbott Labs. In the packaging market, the Company
also competes with The West Company, Inc., which recently announced it was being
acquired by Owens-Illinois, Inc., and Plastek Industries Incorporated.
RAW MATERIALS AND SUPPLIERS
The principal raw materials utilized by the Company's molding processes are
commodity and engineered thermo-plastic polymers, primarily polypropylene,
polyethylene and polycarbonate. The selection of raw material is developed
between the customer and the Company and specified to provide optimum
processing, efficient handling, dimensional stability, end use and pricing
requirements. Raw materials are purchased either from distributors or directly
from polymer producers. Larger volumes are generally acquired from producers
while smaller volumes are secured from large distributors that carry a wide
variety of raw material types and manufacturers.
The Company's purchasing strategy is to deal with high quality, dependable
suppliers. With the acquisition of Tredegar, the Company has been able to
achieve larger volume discounts, rebates and overall better resin pricing
because of larger purchase quantities. The Company's largest resin suppliers in
1996 were Huntsman and General Polymers, two of the largest plastic resin
manufacturers in North America. In an effort to improve quality and reduce
costs, the Company has recently implemented a 'preferred supplier' program which
requires the Company's suppliers to adhere to strict performance criteria,
including satisfaction of high quality standards, commitment to continuous
improvement and participation in the Company's quality assurance and cost
improvement initiatives. The 'preferred supplier' program also requires supply
agreements to incorporate transactional reduction initiatives and include
extended and/or discounted payment terms, performance rebates and price
protection provisions with respect to commodities that can be effected by
changing market conditions. The Company has agreements in place with its primary
suppliers pursuant to the program and will generally require that its other
suppliers achieve 'preferred supplier' status as a condition to future orders.
46
<PAGE>
The Company does not anticipate having any material difficulties obtaining
raw materials in the foreseeable future. However, over the past four years, the
raw material market has been volatile due to increased demand and irregular
producer capacity. With respect to raw material pricing, the Company has
experienced price escalation comparable to industry trends over the last 18
months. Pursuant to the terms of multi-year supply agreements and purchase
orders, the Company historically has had the ability to pass through resin price
increases. The Company does not otherwise hedge its exposure to increases in raw
material prices. See 'Risk Factors--Exposure to Fluctuations in Resin Cost and
Supply.'
REGULATION AND LEGISLATION
The past and present operations of the Company, including its past and
present ownership of real property, are subject to extensive and changing
federal, state and local environmental laws and regulations pertaining to the
discharge of materials into the environment, the handling and disposition of
wastes or otherwise relating to the protection of the environment. The Company
believes that it is in substantial compliance with applicable environmental laws
and regulations. However, the Company cannot predict with any certainty that it
will not in the future incur liability under environmental statutes and
regulations with respect to contamination of sites formerly or currently owned
or operated by the Company (including contamination caused by prior owners and
operators of such sites) and the off-site disposal of hazardous substances. See
'Risk Factors--Environmental Matters.'
Sampling in 1995 at Tredegar's South Grafton, Massachusetts facility
revealed the presence of contaminants in the soil and groundwater at the
facility. The concentration of certain substances in the soil exceeded minimum
reportable concentrations under Massachusetts environmental regulations; none of
the substances detected in groundwater exceeded minimum reportable
concentrations. In connection with the Tredegar Acquisition, the seller agreed,
at its cost, to determine the extent of the onsite and off-site contamination
resulting from these reportable releases and to perform the clean-up activities
necessary to achieve a permanent remediation under the applicable Massachusetts
regulations. In December 1996, the seller's consultant issued its final report,
which concluded that a condition of 'no significant risk' to safety, health,
public welfare or the environment had been achieved by remediation activities at
the site and stated that no further response actions were recommended for the
site. Remediation of the South Grafton site in accordance with the Massachusetts
program, however, will not necessarily ensure that the Company might not be
subject to further state or federal cleanup orders with respect to the site or
claims by adjacent landowners and/or other third parties allegedly impacted by
releases at the site, and no assurance can be given that the Company will not
incur or elect to assume any liabilities for such remediation as a result of
subsequent negotiations, by operation of law or otherwise.
The operations at the Company's facilities require permits and approvals
from certain federal, state and local authorities. In addition, the Company's
operations are heavily dependent upon its continued ability, under applicable
laws, regulations, policies, permits, licenses or contractual arrangements, to
operate its facilities, and otherwise to conduct its operations. The Company
believes it has all permits, licenses and approvals from governmental
authorities material to the operation of the facilities as currently configured.
In addition, the Company has not received any notice of material non-compliance
with permits, licenses or approvals necessary for the operation of its
properties. However, there can be no assurance that new applications of existing
laws, regulations and policies, or changes in such laws, regulations and
policies will not occur in a manner that could have such an effect, or that
important permits, licenses or agreements will not be canceled, non-renewed, or
renewed on terms materially less favorable to the Company. Although the Company
has no reason to believe that it will not be successful in implementing its
operations and development plans, no assurance can be given that necessary
permits and approvals will be obtained.
The plastics industry in general, and the Company in particular, is also
subject to existing and potential federal, state, local and foreign legislation
designed to reduce solid wastes by requiring, among other things, plastics to be
degradable in landfills, minimum levels of recycled content, various recycling
requirements, disposal fees and limits on the use of plastic products. In
addition, various consumer and special interest groups have lobbied from time to
time for the implementation of these and other similar measures. The principal
resin used in the Company's products, HDPE, is recyclable, and, accordingly, the
legislation promulgated to date and such consumer interest group initiatives to
date have not had a material adverse effect on the Company. There
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<PAGE>
can be no assurance that any such future legislative or regulatory efforts or
future initiatives would not have a material adverse effect on the Company.
EMPLOYEES
As of June 30, 1997, the Company employed 875 individuals, of which 208
were salaried and 667 were hourly. Approximately 40 employees at the Company's
Pittsburgh, Pennsylvania facility are members of a union and are covered by a
collective bargaining agreement which expires in February 1998. The Company
believes that its relationship with its employees is generally good.
The Company's employees are given extensive training, in excess of 30 hours
each year, which is designed to increase productivity, safety and manufacturing
quality and to foster the concept of 'continuous improvement.' Through an
innovative Performance Sharing Program, the Company's employees focus on cost of
goods sold and are given incentives to maximize gross margins by minimizing
costs. Operational performance by plant is posted each month and quarterly
meetings are held with all employees to discuss performance outcomes. Plants
which exceed the budgeted gross margins receive a bonus based on hours of pay.
Rewards under the Performance Sharing Program are also dependent upon
attendance. Management believes that the Performance Sharing Program has been
successful in motivating employees to reduce costs and increase productivity.
PROPERTIES
The Company operates nine facilities located in the eastern and midwestern
United States. Management believes that these facilities are adequate for its
present needs. A summary of the Company's facilities is presented in the chart
below.
<TABLE>
<CAPTION>
APPROXIMATE
LOCATION SQUARE FOOTAGE OWNERSHIP MARKETS SERVED
- ------------------------------------------- -------------- --------- ------------------------
<S> <C> <C> <C>
North Versailles
(Pittsburgh), PA
(Headquarters)........................... 70,000 Owned Mold making, Healthcare,
Packaging
West Lafayette, IN......................... 35,000 Owned Healthcare,
Consumer/Industrial
Newark, DE................................. 51,000 Leased Packaging
Des Plaines, IL............................ 30,000 * Mold making, Healthcare,
Consumer/Industrial
St. Petersburg, FL......................... 136,000 Owned Mold making, Packaging,
Consumer/Industrial
South Grafton, MA.......................... 127,000 * Packaging,
Consumer/Industrial
Excelsior Springs, MO...................... 70,000 Owned Packaging,
Consumer/Industrial
State College, PA.......................... 31,000 Leased Healthcare,
Consumer/Industrial
Phillipsburg, PA........................... 32,000 Leased Healthcare,
Consumer/Industrial
</TABLE>
- ------------------------------
* This facility is partially owned and partially leased by the Company.
LEGAL PROCEEDINGS
The Company does not believe that it or any of its facilities are involved
in any litigation that will, individually or in the aggregate, have a material
adverse effect on its financial condition or future results of operations. The
Company maintains liability insurance that the Company considers adequate to
insure claims related to usual and customary risks associated with the operation
of its facilities.
48
<PAGE>
MANAGEMENT
DIRECTORS, EXECUTIVE OFFICERS AND KEY EMPLOYEES
The following table sets forth information with respect to the directors,
executive officers and other key employees of the Company.
<TABLE>
<CAPTION>
YEARS IN
NAME AGE POSITION INDUSTRY
- ------------------------------------------- --- ---------------------------------------------------- --------
<S> <C> <C> <C>
Richard L. Kramer.......................... 48 Chairman, Secretary and Director 7
William L. Remley.......................... 46 Vice Chairman, Treasurer and Director 7
John R. Weeks.............................. 51 President and Chief Executive Officer 29
Michael M. Farrell......................... 42 Vice President, Marketing & Sales 15
Ronald A. Seegers.......................... 50 Vice President, Engineering 27
Clarence E. Stevens, Jr.................... 48 Vice President, Manufacturing 10
Michael D. Bornak.......................... 35 Controller 5
Raymond J. Veno............................ 46 Director of Continuous Improvement and Product 25
Development
Richard C. Hoffman......................... 49 Director 1
Elaine E. Healy............................ 35 Director --
</TABLE>
RICHARD L. KRAMER became the Chairman of the Board and a director of the
Company in April 1990 and Secretary of the Company in August 1991. Mr. Kramer is
also Chairman and a director of Mentmore Holdings Corporation, Texfi Industries
Inc., a textile and apparel manufacturing firm, CPT Holdings, Inc., a
manufacturer of specialty structural steel profiles, Weldotron Corporation, a
packaging equipment manufacturer, Orion Acquisition Corp. II, an investment
company, MC Equities, Inc., an insurance holding company, and Republic
Properties Corporation. Mr. Kramer is a director of J&L Structural, Inc.,
Precise Holding Corporation and Sunderland Industrial Holdings Corporation.
WILLIAM L. REMLEY became the Vice Chairman of the Board and a director of
the Company in April 1990 and Treasurer of the Company in August 1991. Mr.
Remley is also President, Chief Executive Officer and a director of Mentmore
Holdings Corporation and Weldotron Corporation, Vice-Chairman, Chief Executive
Officer and a director of Texfi Industries Inc., and President and a director of
CPT Holdings, Inc. Mr. Remley is a director of J&L Structural, Inc., MC
Equities, Inc., Orion Acquisition Corp. II, Republic Properties Corporation,
Precise Holding Corporation and Sunderland Industrial Holdings Corporation.
JOHN R. WEEKS became President and Chief Executive Officer of the Company
in August 1990. Prior to joining Precise, from 1986 to 1990 Mr. Weeks was
employed as a Vice President of Corporate Development for The Tech Group, a
custom molder for the medical, electronic, packaging and consumer product
markets. Previously, from 1977 to 1986 Mr. Weeks was Vice President of Sales
with Nypro Inc. Mr. Weeks began his career with Arco Polymers in 1968.
MICHAEL M. FARRELL became Vice President, Marketing & Sales of the Company
in 1991. Prior to joining Precise, from 1987 to 1991 Mr. Farrell was employed as
the Director of Sales for Medical Products for The Tech Group. Mr. Farrell began
his career at Nypro Inc. in 1984.
RONALD A. SEEGERS became Vice President, Engineering of the Company in
1993. Prior to joining Precise, from 1984 to 1993, Mr. Seegers was employed as
Director of New Business with The Tech Group. Prior to joining The Tech Group,
Mr. Seegers worked for 16 years at Major Tools in Chicago.
CLARENCE E. STEVENS, JR. became Vice President, Manufacturing of the
Company in 1994. Prior thereto, he served as Director of Continuous Improvement
of Precise since 1991. Prior to joining Precise, from 1988 to 1991, Mr. Stevens
was employed as Manager of Process Improvement for The Tech Group. Prior to
joining The Tech Group, Mr. Stevens worked at Carlisle Syntec, a synthetic
roofing company, as a plant manager for 10 years.
MICHAEL D. BORNAK became Controller of the Company in May 1992. Prior to
joining Precise, from 1986 to 1992 Mr. Bornak was employed in the accounting and
treasury departments of National Steel Corp. Prior to joining National Steel,
Mr. Bornak was a Senior Auditor with Ernst & Young. Mr. Bornak is a certified
public accountant.
49
<PAGE>
RAYMOND J. VENO became the Company's Director of Continuous Improvement and
Product Development in September 1996. Prior to joining Precise, from June 1986
to February 1995 Mr. Veno was employed as Manager of Plastics Technology and
Development Group for Digital Equipment Corporation. Prior to joining Digital
Equipment Corporation, Mr. Veno was employed at Nypro, Inc. as Business Manager
for seven years.
RICHARD C. HOFFMAN became a director of the Company in January 1996. Mr.
Hoffman has been President and Principal of Richard C. Hoffman, P.C., a law firm
with offices in Greenwich, Connecticut, since 1988. From January 1995 to March
1997, Mr. Hoffman served as Vice President and General Counsel of Mentmore
Holdings Corporation. From 1985 to 1992 Mr. Hoffman was a partner at Freytag,
LaForce, Rubinstein & Teofan, a law firm in Dallas, Texas. Mr. Hoffman is a
director of MC Equities, Inc., Orion Acquisition Corp. II, Texfi Industries,
Inc., Precise Holding Corporation and Weldotron Corporation.
ELAINE E. HEALY is currently a director of Precise Holding Corporation and
became a director of Precise upon consummation of the Refinancing Transactions.
Ms. Healy has been a Vice President of Pecks Management Partners Ltd., an
investment management firm, since May 1993. Prior to joining Pecks Management
Partners Ltd., Ms. Healy was a General Partner of Quantum Partners, Ltd., a
venture capital partnership with which she was associated for eight years.
During that time Ms. Healy also served as Vice President of The Revere Fund,
Inc., a public closed-end investment company. Ms. Healy is also a director of
Dolan Media Company, Inc.
EXECUTIVE COMPENSATION
The following table sets forth information regarding the compensation paid
during the Company's last completed fiscal year to the Chief Executive Officer
of the Company and each of the other four most highly compensated executive
officers of the Company as of December 31, 1996 (collectively, the 'Named
Executive Officers').
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
-------------------------------------------- ---------------------
OTHER ANNUAL SECURITIES UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) COMPENSATION ($)(A) OPTIONS/SARS ($) COMPENSATION ($)
- ------------------------------- ---- ---------- --------- ------------------- --------------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
John R. Weeks.................. 1996 $ 239,400 $72,500 -- -- $ 18,580(b)
President and Chief Executive
Officer
Michael M. Farrell............. 1996 123,200 32,400 -- -- 10,120(c)
Vice President, Marketing &
Sales
Ronald A. Seegers.............. 1996 112,800 28,900 -- -- 9,220(d)
Vice President, Engineering
Clarence E. Stevens, Jr........ 1996 96,800 25,600 -- -- 7,920(e)
Vice President, Manufacturing
Michael D. Bornak.............. 1996 75,700 39,500 -- -- 6,220(f)
Controller
</TABLE>
- ------------------------------
(a) Below amounts which would require disclosure under Commission rules and
regulations.
(b) Included in such amount is $12,300 representing an employer matching
contribution under the 401(k) Plan (as defined), $1,200 in net premiums for
a life insurance policy on behalf of Mr. Weeks and $5,080 representing a
profit sharing bonus.
(c) Included in such amount is $7,400 representing an employer matching
contribution under the 401(k) Plan and $2,720 representing a profit sharing
bonus.
(d) Included in such amount is $6,800 representing an employer matching
contribution under the 401(k) Plan and $2,420 representing a profit sharing
bonus.
(e) Included in such amount is $5,800 representing an employer matching
contribution under the 401(k) Plan and $2,120 representing a profit sharing
bonus.
(f) Included in such amount is $4,500 representing an employer matching
contribution under the 401(k) Plan and $1,720 representing a profit sharing
bonus.
50
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company's compensation policies are determined and executive officer
compensation decisions are made by the Board of Directors. No member of the
Board of Directors received director fees in 1996.
401(K) PENSION PLAN
Precise sponsors a defined contribution savings plan (the '401(k) Plan')
whereby eligible employees of Precise or its subsidiaries may (under current
administrative rules) elect to defer a portion of their compensation each year
and may also make after-tax contributions to the 401(k) Plan. Employee and
Company contributions are paid by the Company to the trustee under the 401(k)
Plan. The Company has a policy of (i) making an annual discretionary
contribution on behalf of each eligible employee in an amount equal to 3.5% of
such employee's total annual compensation, regardless of such employee's actual
contribution to the 401(k) Plan, and (ii) making matching contributions equal to
50% of the first 5% of compensation deferred by employees. The Company's
contributions are subject to vesting and forfeiture. The Company's contributions
to the accounts of the Named Executive Officers during 1996 are included in the
Summary Compensation Table.
1997 STOCK OPTION PLAN
In April 1997, Sunderland established the Sunderland Industrial Holdings
Corporation 1997 Key Employee Nonqualified Stock Option Plan (the '1997 Stock
Option Plan') to provide incentives to, encourage stock ownership by and retain
the services of certain of, its key employees and those of its subsidiaries. The
Board of Directors of Sunderland (the 'Sunderland Board') administers the 1997
Stock Option Plan, which provides for the grant of options with respect to a
maximum of 15% of the issued and outstanding shares of common stock, par value
$0.01 per share, of Sunderland ('Sunderland Common Stock'). Each option granted
under the 1997 Stock Option Plan will be evidenced by a written option agreement
between the optionee and Sunderland, which agreement may contain additional
terms not inconsistent with the 1997 Stock Option Plan and as the Sunderland
Board may deem appropriate.
Under Nonqualified Stock Option Agreements (the 'Option Agreements')
entered into in April 1997 pursuant to the 1997 Stock Option Plan, John R.
Weeks, President and Chief Executive Officer of Precise, and Michael M. Farrell,
Vice President, Marketing & Sales of Precise, received options to purchase 1,200
and 400 shares of Sunderland Common Stock, respectively (the 'First Options'),
and additional options to purchase 225 and 75 shares of Sunderland Common Stock,
respectively (the 'Second Options,' and together with the First Options, the
'Options'). The Options are exercisable at a price of $1,500 per share of
Sunderland Common Stock. The First Options will become exercisable over a
three-year period following the grant date. The Second Options will become
exercisable in 25% increments upon the 90th day following each successful annual
determination by the Sunderland Board that Sunderland's EBITDA (as defined in
the Option Agreements) for the years ended December 31, 1997 through 2000
exceeded certain annual targets. In addition, the Options may be exercised
during the one year period following the optionee's retirement at or above age
65, or upon his or her death or disability, and all of the First Options and the
then exercisable portions of the Second Options may be exercised during the ten
business day period following notice of a Change of Control (as defined in the
Option Agreements). Once exercisable, the Options may be exercised at any time,
in whole or in part, prior to the earlier of (i) the termination of the
optionee's employment with Sunderland or any of its subsidiaries or (ii) January
31, 2005. It is intended that the Options shall not constitute 'incentive stock
options,' as that term is used in Section 422 of the Internal Revenue Code of
1986, as amended.
Pursuant to the Option Agreements, Sunderland has the right to repurchase
Sunderland Common Stock purchased pursuant to the Options upon the occurrence of
a Call Event (as defined in the Option Agreements) at a repurchase price of
either 75% or 100% of the Fair Market Value (as defined in the Option
Agreements) of such stock depending on the reason underlying the Call Event,
subject to adjustment under certain specified circumstances. In addition,
pursuant to the Option Agreements, Sunderland has a right of first refusal prior
to the sale to any third party of any Sunderland Common Stock purchased pursuant
to the Options.
51
<PAGE>
CERTAIN TRANSACTIONS
TREDEGAR FINANCING TRANSACTIONS
In connection with the Tredegar Acquisition, (i) the Company and Parent
entered into a Securities Purchase Agreement dated March 29, 1996 (as amended,
the 'Securities Purchase Agreement') with Delaware State Employees' Retirement
Fund, Declaration of Trust for Defined Benefit Plans of Zeneca Holdings Inc. and
Declaration of Trust for Defined Benefit Plans of ICI American Holdings Inc.
(each advised by Pecks Management Partners Ltd. and collectively referred to
herein as the 'Pecks Funds') pursuant to which the Pecks Funds purchased (a) 575
shares of the Company's Cumulative Exchangeable Preferred Stock having an
aggregate liquidation preference equal to $5,750,000 (the 'Exchangeable
Preferred Stock') for an aggregate consideration of $5,750,000 and (b) 250
shares of Parent Common Stock for an aggregate consideration of $750,000; (ii)
the Company entered into a Note Purchase Agreement dated March 29, 1996 (the
'Note Purchase Agreement') with John Hancock Mutual Life Insurance Company
('John Hancock') and Rice Partners II, L.P. ('Rice') pursuant to which John
Hancock and Rice purchased $20.0 million aggregate principal amount of the
Company's 12.25% Senior Subordinated Notes due 2006 (the 'Existing Notes');
(iii) Parent entered into a Warrant Purchase Agreement dated March 29, 1996 (as
amended, the 'Warrant Purchase Agreement') with Rice, John Hancock and the Pecks
Funds pursuant to which, in connection with their purchase of the Existing
Notes, Rice and John Hancock each acquired warrants ('Warrants') to purchase 570
shares of Parent Common Stock and, in connection with its purchase of the
Exchangeable Preferred Stock, the Pecks Funds acquired Warrants to purchase 575
shares of Parent Common Stock; and (iv) Parent entered into a Shareholder
Agreement dated March 29, 1996 (as amended, the 'Shareholder Agreement') with
Sunderland, Hamilton Holdings Ltd. Corporation ('Hamilton Holdings'), the Pecks
Funds, Rice and John Hancock. In addition, Precise and Parent entered into the
Existing Credit Agreement, under which Precise incurred approximately $44.0
million of indebtedness to finance the Tredegar Acquisition, and Precise issued
250 shares of its Series B Cumulative Redeemable Preferred Stock (the 'Seller
Preferred Stock' and, together with the Exchangeable Preferred Stock, the
'Redeemable Preferred Stock'), having a liquidation preference of $10,000 per
share, to the former owners of Tredegar. In connection with the consummation of
the Refinancing Transactions, the Company entered into certain consents and
amendments to the Securities Purchase Agreement, the Warrant Purchase Agreement
and the Shareholder Agreement to, among other things, approve the terms of the
Refinancing Transactions and to modify certain covenants contained therein.
The Warrants are exercisable, in whole or in part, at a per share price of
$0.01 at any time prior to March 29, 2006. The Warrant Purchase Agreement
contains customary anti-dilution protection, restrictions on the transfer of
Warrants and shares of Parent Common Stock issuable thereunder ('Warrant
Shares') and provisions requiring that Warrants and Warrant Shares be offered to
Parent prior to any sale to a third party. In addition, the Warrant Purchase
Agreement contains certain covenants pertaining to Parent and its subsidiaries
which, among other things, give the holders of Warrants the right to consent to
certain corporate actions, including certain sales of assets, acquisitions,
issuances of capital stock, amendments to corporate organizational documents,
affiliate transactions and investments. The Warrant Purchase Agreement also
provides Hancock and Rice with Parent Board of Director observation rights and
the Pecks Funds with the right to designate one member of the Board of Directors
of each of Parent and Precise.
Precise used a portion of the net proceeds from the Initial Offering to (i)
redeem the Exchangeable Preferred Stock and the Seller Preferred Stock and (ii)
repay the indebtedness outstanding under the Existing Credit Agreement and the
Existing Notes. In addition, Precise used a portion of the net proceeds from the
Initial Offering to repurchase 124 shares of Common Stock of Precise from
Parent, the proceeds of which were used to redeem shares of Parent Preferred
Stock held by Hamilton Holdings. Richard L. Kramer and William L. Remley are
executive officers and directors of Hamilton Holdings, and the holders of record
of the capital stock of Hamilton Holdings are trusts established for the benefit
of certain relatives of Messrs. Kramer and Remley.
SHAREHOLDER AGREEMENT
In connection with the Tredegar Acquisition, Parent, Sunderland, Parent's
other shareholders (collectively, the 'Shareholders') and the holders of the
Warrants (collectively, the 'Warrantholders') entered into the Shareholder
Agreement. Pursuant to the Shareholder Agreement, the Warrantholders have the
right to require Parent to purchase (a 'Put Option') their Warrant Shares and
certain other shares of capital stock of Parent held by the Shareholders
(collectively, the 'Put Shares'), in whole or in part, at any time after March
29, 2001. In addition, the Warrantholders are entitled to sell their Put Shares
to Parent at any time prior to the occurrence of an Initial Public Offering (as
defined in the Shareholder Agreement) in the event of (i) a change in control
(as
52
<PAGE>
defined in the Shareholder Agreement) of Parent, (ii) a merger, consolidation,
share exchange or similar transaction involving Parent, (iii) a sale in one or
more related transactions of all or a majority of the assets, business or
revenue or income generating operations of Parent or (iv) any substantial change
in the type of business conducted by Parent. The Shareholder Agreement also
provides Parent with an option to purchase (the 'Call Option') all outstanding
Warrants and Warrant Shares at any time on or after April 1, 2002 and prior to
an Initial Public Offering. The price to be paid to the Warrantholders upon the
exercise of the Put Option or the Call Option is to be determined in accordance
with a formula and procedures set forth in the Shareholder Agreement. In the
event Parent is unable to pay the purchase price for the Put Shares in cash
after exercise of the Put Option, it may be required to execute and deliver a
promissory note or notes to the Warrantholders in satisfaction of all or part of
its purchase price obligation. Such promissory notes would mature on April 1,
2006 and bear interest at rates ranging from 14% to 18% during the term of the
notes.
The Shareholder Agreement further provides, under certain circumstances,
John Hancock, Rice and the Pecks Funds with certain co-sale rights upon the sale
or other transfer of capital stock of Parent by the Shareholders. In addition,
subject to certain conditions, if prior to an Initial Public Offering holders of
at least 66 2/3% of the issued and outstanding shares of Parent Common Stock and
Common Stock Equivalents (as defined in the Shareholder Agreement) elect to sell
their shares to a bona fide third party (other than in connection with a
registered offering under the Securities Act), then all holders shall be
obligated to sell any shares of Parent Common Stock and Common Stock Equivalents
then owned by such holders in such sale.
Pursuant to the Shareholder Agreement, John Hancock, Rice and the Pecks
Funds also have certain demand registration rights, which become effective after
the date Parent has consummated an Initial Public Offering, and incidental
registration rights. These rights are subject to customary cut-back provisions.
MANAGEMENT AGREEMENT WITH MENTMORE
Mentmore provides management services to Precise and its subsidiaries
pursuant to the Management Agreement dated March 15, 1996, as amended (the
'Management Agreement'), between Precise and Mentmore. Pursuant to the
Management Agreement, Mentmore provides the Company with general management,
advisory and consulting services with respect to Precise's business and with
respect to such other matters as Precise may reasonably request from time to
time, including, without limitation, strategic planning, financial planning,
business acquisition and general business development services. Under the terms
of the Management Agreement, the Company provides customary indemnification,
reimburses certain costs and pays Mentmore an annual management fee of $300,000
(subject to adjustment), which is payable monthly after the consummation of the
Offering. In addition, pursuant to the Management Agreement, Mentmore is
entitled to customary investment banking fees for services rendered in
connection with the Company's financing transactions and acquisitions. The
Management Agreement had an original term of ten years and is automatically
extended for one additional year on each April 1 during the term of the
agreement unless either party shall have previously notified the other in
writing of its desire not to further extend the term. In addition, Mentmore may
terminate the Management Agreement at any time upon 90 days prior written notice
to Precise, and Precise may terminate the Management Agreement 'for cause' (as
defined in the Management Agreement). The sole executive officers and directors
of Mentmore are Richard L. Kramer and William L. Remley. Payments under the
Management Agreement are subject to the restrictions set forth under
'Description of Notes--Certain Covenants--Transactions with Affiliates' as well
as certain limitations set forth in the Warrant Purchase Agreement.
The Company has paid Mentmore fees of $0, $450,000, $300,000 and $150,000
in the three months ended March 31, 1997 and in 1996, 1995 and 1994,
respectively, for management and other advisory services and has reimbursed
Mentmore for certain expenses incurred in connection with the rendering of such
services. Mentmore received total fees of $500,000 and the reimbursement of
certain expenses in connection with financial advisory and other services
rendered to the Company in connection with the Refinancing Transactions.
FEES PAID TO RICHARD C. HOFFMAN
The Company paid the law firm of Richard C. Hoffman, P.C., whose principal
is a director of Precise, a total of approximately $257,500 in legal fees in
1996 and $5,000 in legal fees in the three months ended March 31, 1997. During
this period, Mr. Hoffman served as Vice President and General Counsel of
Mentmore.
FEES PAID TO MICHAEL D. SCHENKER
The Company paid the law firm of Michael D. Schenker Co. L.P.A., whose
principal is an officer of Mentmore, a total of approximately $300,000 in legal
fees in connection with the Refinancing Transactions.
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PRINCIPAL STOCKHOLDERS
Precise is a wholly owned subsidiary of Precise Holding Corporation. The
following table sets forth information concerning the beneficial ownership of
Parent Common Stock as of March 31, 1997 and after giving effect to the
Refinancing Transactions by (i) each person known to the Company to own
beneficially more than 5% of the outstanding Parent Common Stock, (ii) by each
Named Executive Officer and (iii) all directors and executive officers of the
Company as a group. All shares are owned with sole voting and investment power,
unless otherwise indicated.
<TABLE>
<CAPTION>
PARENT COMMON
STOCK BENEFICIALLY
OWNED
------------------
BENEFICIAL OWNER SHARES %
- ---------------------------------------------------------------------------------- -------- ----
<S> <C> <C>
Sunderland Industrial Holdings Corporation (1).................................... 8,035.00 97.0
John Hancock Mutual Life Insurance Company........................................ 570.00(2) 6.4
Rice Partners II, L.P............................................................. 570.00(2) 6.4
Delaware State Employees' Retirement Fund (3)..................................... 552.67(4) 6.4
Declaration of Trust for Defined Benefit Plans of Zeneca Holdings Inc.(3)......... 110.33(5) 1.4
Declaration of Trust for Defined Benefit Plans of
ICI American Holdings Inc. (3).................................................. 162.00(6) 2.0
Pecks Management Partners, Ltd. (3)............................................... 825.00(7) 9.3
Total Executive Officers and Directors as a Group (nine persons).................. -- --
</TABLE>
- ------------------------------
(1) According to information supplied to the Company by Sunderland, Biscayne
Trust, The Sunderland I Trust and The Remley 1990 Trust own beneficially
72%, 18% and 10%, respectively, of the outstanding shares of common stock of
Sunderland. The beneficiaries of these trusts are certain relatives of
Richard L. Kramer and William L. Remley. The trustees of Biscayne Trust and
The Sunderland I Trust are Lewis H. Ferguson III and Gary R. Siegel. All
powers with respect to investment or voting of securities owned by Biscayne
Trust and The Sunderland I Trust are exercisable by Messrs. Ferguson and
Siegel jointly. The trustee of The Remley 1990 Trust is F. Richard Remley,
who exercises all voting and investment power with respect to securities
held by such trust. The business address of Sunderland, Biscayne Trust, The
Sunderland I Trust, The Remley 1990 Trust, Lewis H. Ferguson III, Gary R.
Siegel and F. Richard Remley is c/o Mentmore Holdings Corporation, 1430
Broadway, 13th Floor, New York, New York 10018-3308. Richard L. Kramer,
Chairman of the Board of Directors of the Company, and William L. Remley,
Vice Chairman of the Board of Directors of the Company, are directors and
executive officers of Parent and Sunderland. F. Richard Remley, the trustee
of The Remley 1990 Trust, is the brother of William L. Remley. Mentmore
provides management services to the Company. Messrs. Kramer and William L.
Remley are the sole executive officers and directors of Mentmore.
(2) Comprised of Warrants to purchase 570 shares of Parent Common Stock held by
each of John Hancock Mutual Life Insurance Company ('John Hancock') and Rice
Partners II, L.P. ('Rice'). The business address of John Hancock is John
Hancock Place, 200 Clarendon Street, Boston, Massachusetts 02117. The
business address of Rice is c/o Rice Capital Management, 5847 San Felipe,
Suite 4350, Houston, Texas 77057.
(3) Pecks Management Partners, Ltd. serves as the investment advisor to The
Delaware State Employees' Retirement Fund, the Declaration of Trust for
Defined Benefit Plans of Zeneca Holdings Inc. and the Declaration of Trust
for Defined Benefit Plans of ICI American Holdings Inc. (collectively, the
'Pecks Funds') and, in such capacity, exercises voting and investment
control with respect to the Parent Common Stock beneficially owned by the
Pecks Funds. The business address of Pecks Management Partners, Ltd. and the
Pecks Funds is One Rockefeller Plaza, New York, New York 10020.
(4) Comprised of 167.67 shares of Parent Common Stock and Warrants to purchase
385 shares of Parent Common Stock.
(5) Comprised of 33.33 shares of Parent Common Stock and Warrants to purchase 77
shares of Parent Common Stock.
(6) Comprised of 49 shares of Parent Common Stock and Warrants to purchase 113
shares of Parent Common Stock.
(7) Comprised of 250 shares of Parent Common Stock and Warrants to purchase 575
shares of Parent Common Stock held of record by the Pecks Funds. Pecks
Management Partners, Ltd. disclaims beneficial ownership of the Parent
Common Stock and Warrants held of record by the Pecks Funds.
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DESCRIPTION OF CERTAIN INDEBTEDNESS
NEW CREDIT AGREEMENT
Upon consummation of the Initial Offering, the Company entered into a
revolving credit facility (the 'New Credit Agreement') with Fleet National Bank,
as administrative agent (the 'Agent'), for a syndicate of financial
institutions. The following is a summary of the material terms of the New Credit
Agreement. The following summary does not purport to be complete and is subject
to, and qualified in its entirety by reference to, all of the provisions of the
New Credit Agreement, including all of the definitions therein of terms not
defined in this Prospectus.
General. The New Credit Agreement provides for borrowings in a principal
amount of up to $30.0 million at any one time outstanding. Borrowings may be
used by the Company to fund the Company's working capital requirements, finance
certain permitted acquisitions and general corporate requirements of the Company
and pay related fees and expenses of the foregoing. Prior to making any advance
under the New Credit Agreement to fund an acquisition, the Company will be
required to be in compliance, on a pro forma basis after giving effect to such
acquisition, with the financial covenants described below. Up to $2.0 million of
the total commitment will be available for the issuance of standby letters of
credit. Borrowings under the New Credit Agreement are collectively referred to
herein as the 'Advances.' See 'Capitalization' and 'Management's Discussion and
Analysis of Financial Condition and Results of Operations.'
Interest. For purposes of calculating interest, the Advances can be, at
the election of the Company, Base Rate Advances or Eurodollar Rate Advances or a
combination thereof. Subsequent to the Offering, Base Rate Advances will bear
interest at Fleet National Bank's base rate plus 1.5%, and Eurodollar Rate
Advances will bear interest at the Eurodollar Rate (adjusted for reserve
requirements) plus 2.5%.
Repayment. Subject to the provisions of the New Credit Agreement, the
Company may, from time to time, borrow, repay and reborrow under the New Credit
Agreement. The New Credit Agreement requires prepayments and concurrent
reductions of the total commitment in the amount of 100% of net proceeds from
certain asset sales, equity issuances and Extraordinary Receipts (as defined in
the New Credit Agreement) and 50% of the net proceeds from certain debt
issuances. The entire unpaid balance under the New Credit Agreement is payable
in 2002.
Guarantees. Precise's payment obligations under the New Credit Agreement
are jointly and severally guaranteed, on a senior secured basis, by Parent and
each of Precise's direct and indirect subsidiaries.
Security. Borrowings under the New Credit Agreement are secured by (i) a
first priority pledge to the Agent for the ratable benefit of the financial
institutions party to the New Credit Agreement of the Common Stock of Precise
owned by Parent and all of the notes and capital stock owned by Precise and its
direct and indirect subsidiaries and (ii) a grant of a first priority perfected
security interest in substantially all of the consolidated assets of Precise and
its direct and indirect subsidiaries.
Covenants. The New Credit Agreement contains financial covenants relating
to the maintenance of (i) ratios of (a) consolidated funded indebtedness to
consolidated EBITDA (as defined in the New Credit Agreement), (b) consolidated
funded senior indebtedness to consolidated EBITDA, (c) consolidated EBITDA to
consolidated fixed charges and (d) consolidated EBITDA to consolidated interest
expense and (ii) minimum consolidated net worth. The New Credit Agreement also
contains covenants pertaining to the management and operation of Precise and its
subsidiaries. These covenants include, among others, requirements that the
Company comply with applicable laws, including environmental laws, and maintain
adequate insurance coverage with respect to its properties. The New Credit
Agreement also places significant limitations on indebtedness, guarantees,
mergers, acquisitions, fundamental corporate changes, capital expenditures,
asset sales, leases, investments, loans and advances, liens, dividends and other
stock payments, transactions with affiliates, optional payments and modification
of debt instruments and issuances of stock. In addition, the New Credit
Agreement contains restrictive covenants pertaining to the management and
operation of Parent, including, among others, significant limitations on liens
and mergers and reorganizations.
Events of Default. The New Credit Agreement provides for events of default
customary in facilities of this type, including: (i) failure to make payments
when due; (ii) breach of covenants; (iii) breach of representations or
warranties in any material respect when made; (iv) default by Precise or any
Guarantor under any material
55
<PAGE>
agreement relating to debt for borrowed money or for the lease or license of
property; (v) bankruptcy defaults; (vi) environmental defaults; and (vii) a
Change of Control (as defined in the New Credit Agreement).
THE EXCHANGE OFFER
PURPOSE AND EFFECT OF THE EXCHANGE OFFER
The Old Notes were originally sold by the Company to the Initial Purchasers
pursuant to the Purchase Agreement. The Initial Purchasers subsequently resold
the Old Notes to qualified institutional buyers in reliance on Rule 144A under
the Securities Act. As a condition to the Purchase Agreement, the Company and
the Guarantors entered into the Registration Rights Agreement with the Initial
Purchasers pursuant to which the Company and the Guarantors have agreed, for the
benefit of the holders of the Old Notes, at the Company's cost, to (i) file the
Exchange Offer Registration Statement within 45 days after the date of the
original issue of the Old Notes with the Commission with respect to the Exchange
Offer for the New Notes; (ii) use their best efforts to cause the Exchange Offer
Registration Statement to be declared effective under the Securities Act within
150 days after the date of the original issuance of the Old Notes and (iii)
unless the Exchange Offer would not be permitted by applicable law or Commission
policy, commence the Exchange Offer and use their best efforts to issue on or
prior to 30 days after the date on which the Exchange Offer Registration
Statement was declared effective by the Commission (the 'Exchange Offer
Effectiveness Date') New Notes in exchange for all Old Notes tendered prior
thereto in the Exchange Offer. Upon the Exchange Offer Registration Statement
being declared effective, the Company will offer the New Notes in exchange for
surrender of the Old Notes. The Company will keep the Exchange Offer open for
not less than 20 business days (or longer if required by applicable law) after
the date on which notice of the Exchange Offer is mailed to the holders of the
Old Notes. For each Old Note surrendered to the Company pursuant to the Exchange
Offer, the holder of such Old Note will receive a New Note having a principal
amount equal to that of the surrendered Old Note. Each New Note will bear
interest from its issuance date. Holders of Old Notes that are accepted for
exchange will receive, in cash, accrued interest thereon to, but not including,
the issuance date of the New Notes. Such interest will be paid with the first
interest payment on the New Notes. Interest on the Old Notes accepted for
exchange will cease to accrue upon issuance of the New Notes.
Under existing interpretations of the staff of the Commission contained in
several no-action letters to third parties, the New Notes will in general be
freely tradeable after the Exchange Offer without further registration under the
Securities Act. However, any purchaser of Old Notes who is an 'affiliate' of the
Company or who intends to participate in the Exchange Offer for the purpose of
distributing the New Notes (i) will not be able to rely on the interpretation of
the staff of the Commission, (ii) will not be able to tender its Old Notes in
the Exchange Offer and (iii) must comply with the registration and prospectus
delivery requirements of the Securities Act in connection with any sale or
transfer of the Old Notes, unless such sale or transfer is made pursuant to an
exemption from such requirements.
As contemplated by these no-action letters and the Registration Rights
Agreement, each holder accepting the Exchange Offer is required to represent to
the Company in the Letter of Transmittal that (i) the New Notes are to be
acquired by the holder or the person receiving such New Notes, whether or not
such person is the holder, in the ordinary course of business, (ii) the holder
or any such other person (other than a broker-dealer referred to in the next
sentence) is not engaging, and does not intend to engage, in distribution of the
New Notes, (iii) the holder or any such other person has no arrangement or
understanding with any person to participate in the distribution of the New
Notes, (iv) neither the holder nor any such other person is an 'affiliate' of
the Company within the meaning of Rule 405 under the Securities Act, and (v) the
holder or any such other person acknowledges that if such holder or any other
person participates in the Exchange Offer for the purpose of distributing the
New Notes it must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with any resale of the New
Notes and cannot rely on those no-action letters. As indicated above, each
Participating Broker-Dealer that receives New Notes for its own account in
exchange for Old Notes must acknowledge that it (i) acquired the Old Notes for
its own account as a result of market-making activities or other trading
activities, (ii) has not entered into any arrangement or understanding with the
Company or any 'affiliate' of the Company (within the meaning of Rule 405 under
the Securities Act) to distribute the New Notes to be received in the Exchange
Offer and (iii) will deliver a prospectus meeting the requirements of
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<PAGE>
the Securities Act in connection with any resale of such New Notes. For a
description of the procedures for resales by Participating Broker-Dealers, see
'Plan of Distribution.'
Upon the effectiveness of the Exchange Offer Registration Statement, the
Company will offer to the Holders of Transfer Restricted Securities who are able
to make certain representations the opportunity pursuant to the Exchange Offer
to exchange their Transfer Restricted Securities for New Notes. If (i) the
Company is not required to file the Exchange Offer Registration Statement or
permitted to consummate the Exchange Offer because the Exchange Offer is not
permitted by applicable law or Commission policy or (ii) any Holder of Transfer
Restricted Securities notifies the Company prior to the 20th day following
consummation of the Exchange Offer that (A) it is prohibited by law or
Commission policy from participating in the Exchange Offer or (B) that it may
not resell the New Notes acquired by it in the Exchange Offer to the public
without delivering a prospectus and the prospectus contained in the Exchange
Offer Registration Statement is not appropriate or available for such resales
for (C) that it is a broker-dealer and owns Notes acquired directly from the
Company or an affiliate of the Company, the Company will file with the
Commission a Shelf Registration Statement to cover resales of the Notes by the
Holders thereof who satisfy certain conditions relating to the provision of
information in connection with the Shelf Registration Statement. The Company
will use its best efforts to cause the applicable registration statement to be
declared effective as promptly as possible by the Commission. For purposes of
the foregoing, 'Transfer Restricted Securities' means each Note until (i) the
date on which such Note has been exchanged by a person other than a
broker-dealer for a New Note in the Exchange Offer, (ii) following the exchange
by a broker-dealer in the Exchange Offer of a Note for a New Note, the date on
which such New Note is sold to a purchaser who receives from such broker-dealer
on or prior to the date of such sale a copy of the prospectus contained in the
Exchange Offer Registration Statement, (iii) the date on which such Note has
been effectively registered under the Securities Act and disposed of in
accordance with the Shelf Registration Statement or (iv) the date on which such
Note is distributed to the public pursuant to Rule 144 under the Act.
The Company will, in the event of the filing of the Shelf Registration
Statement, provide to each holder of the Old Notes copies of the prospectus
which is a part of the Shelf Registration Statement, notify each such holder
when the Shelf Registration Statement has become effective and take certain
other actions as are required to permit unrestricted resale of the Old Notes. A
holder of the Old Notes that sells such Old Notes pursuant to the Shelf
Registration Statement generally would be required to be named as a selling
security holder in the related prospectus and to deliver a prospectus to
purchasers, will be subject to certain of the civil liability provisions under
the Securities Act in connection with such sales and will be bound by the
provisions of the Registration Rights Agreement which are applicable to such a
holder (including certain indemnification obligations).
The Registration Rights Agreement provides that (i) the Company will file
an Exchange Offer Registration Statement with the Commission on or prior to 45
days after the Closing Date, (ii) the Company will use its best efforts to have
the Exchange Offer Regsitration Statement declared effective by the Commission
on or prior to 150 days after the Closing Date, (iii) unless the Exchange Offer
would not be permitted by applicable law or Commission policy, the Company will
commence the Exchange Offer and use its best efforts to issue on or prior to 30
business days after the date on which the Exchange Offer Registration Statement
was declared effective by the Commission, New Notes in exchange for all Notes
tendered prior thereto in the Exchange Offer and (iv) if obligated to file the
Shelf Registration Statement, the Company will use its best efforts to file the
Shelf Registration Statement with the Commission on or prior to 30 days after
such filing obligation arises and to cause the Shelf Registration Statement to
be declared effective by the Commission on or prior to 90 days after such
obligation arises. If (a) the Company fails to file any of the Registration
Statements required by the Registration Rights Agreement on or before the date
specified for such filing, (b) any of such Registration Statements is not
declared effective by the Commission on or prior to the date specified for such
effectiveness (the 'Effectiveness Target Date'), (c) the Company fails to
consummate the Exchange Offer within 30 business days of the Effectiveness
Target Date with respect to the Exchange Offer Registration Statement, or (d)
the Shelf Registration Statement or the Exchange Offer Registration Statement is
declared effective but thereafter ceases to be effective or usable in connection
with resales of Transfer Restricted Securities during the periods specified in
the Registration Rights Agreement (each such event referred to in clauses (a)
through (d) above a 'Registration Default'), then the Company will pay
liquidated damages ('Liquidated Damages') to each Holder of Notes, with respect
to the first 90-day period immediately following the occurrence of the first
Registration Default in an amount equal to $.05 per week per $1,000 principal
amount of Notes held by such Holder. The amount of the Liquidated Damages will
increase by an additional $.05 per week per $1,000 principal amount of Notes
with
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respect to each subsequent 90-day period until all Registration Defaults have
been cured, up to a maximum amount of Liquidated Damages of $.50 per week per
$1,000 principal amount of Notes. All accrued Liquidated Damages will be paid by
the Company on each Damages Payment Date to the Global Note Holder by wire
transfer of immediately available funds or by federal funds check and to Holders
of Certificated Securities by wire transfer to the accounts specified by them or
by mailing checks to their registered addresses if no such accounts have been
specified. Following the cure of all Registration Defaults, the accrual of
Liquidated Damages will cease. Notwithstanding the foregoing, the Company may
issue a notice that the Shelf Registration Statement is unusable pending the
announcement of a material corporate transaction and may issue any notice
suspending the use of the Shelf Registration Statement required under applicable
securities laws to be issued and, in the event that the aggregate number of days
in any consecutive twelve-month period for which all such notices are issued and
effective does not exceed 45 days in the aggregate, then Liquidated Damages will
not be payable as described above as a result of such suspension.
Holders of Old Notes will be required to make certain representations (as
described in the Registration Rights Agreement) in order to participate in the
Exchange Offer and will be required to deliver information to be used in
connection with the Shelf Registration Statement within the time periods set
forth in the Registration Rights Agreement in order to have their Old Notes
included in the Shelf Registration Statement and benefit from the provisions
regarding Liquidated Damages set forth above.
The summary herein of certain provisions of the Registration Rights
Agreement does not purport to be complete and is subject to, and is qualified in
its entirety by, all the provisions of the Registration Rights Agreement, a copy
of which is filed as an exhibit to the Exchange Offer Registration Statement of
which this Prospectus is a part.
Following the consummation of the Exchange Offer, holders of the Old Notes
who were eligible to participate in the Exchange Offer but who did not tender
their Old Notes will not have any further registration rights and such Old Notes
will continue to be subject to certain restrictions on transfer. Accordingly,
the liquidity of the market for such Old Notes could be adversely affected.
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in this Prospectus
and in the Letter of Transmittal, the Company will accept any and all Old Notes
validly tendered and not withdrawn prior to 5:00 p.m., New York City time, on
the Expiration Date. The Company will issue $1,000 principal amount of New Notes
in exchange for each $1,000 principal amount of Old Notes accepted in the
Exchange Offer. Holders may tender some or all of their Old Notes pursuant to
the Exchange Offer. However, Old Notes may be tendered only in integral
multiples of $1,000.
The form and terms of the New Notes are the same as the form and terms of
the Old Notes except that (i) the New Notes bear a Series B designation and a
different CUSIP number from the Old Notes, (ii) the New Notes have been
registered under the Securities Act and hence will not bear legends restricting
the transfer thereof and (iii) the holders of the New Notes will not be entitled
to certain rights under the Registration Rights Agreement, including the
provisions providing for the payment of Liquidated Damages in certain
circumstances relating to the timing of the Exchange Offer, all of which rights
will terminate when the Exchange Offer is terminated. The New Notes will
evidence the same debt as the Old Notes and will be entitled to the benefits of
the Indenture.
As of the date of this Prospectus, $75,000,000 aggregate principal amount
of Old Notes were outstanding. The Company has fixed the close of business on
, 1997 as the record date for the Exchange Offer for purposes of
determining the persons to whom this Prospectus and the Letter of Transmittal
will be mailed initially.
Holders of Old Notes do not have any appraisal or dissenters' rights under
the General Corporation Law of Delaware or the Indenture in connection with the
Exchange Offer. The Company intends to conduct the Exchange Offer in accordance
with the applicable requirements of the Exchange Act and the rules and
regulations of the Commission thereunder.
The Company shall be deemed to have accepted validly tendered Old Notes
when, as and if the Company has given oral or written notice thereof to the
Exchange Agent. The Exchange Agent will act as agent for the tendering holders
for the purpose of receiving the New Notes from the Company.
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If any tendered Old Notes are not accepted for exchange because of an
invalid tender, the occurrence of certain other events set forth herein or
otherwise, the certificates for any such unaccepted Old Notes will be returned,
without expense, to the tendering holder thereof as promptly as practicable
after the Expiration Date.
Holders who tender Old Notes in the Exchange Offer will not be required to
pay brokerage commissions or fees or, subject to the instructions in the Letter
of Transmittal, transfer taxes with respect to the exchange of Old Notes
pursuant to the Exchange Offer. The Company will pay all charges and expenses,
other than transfer taxes in certain circumstances, in connection with the
Exchange Offer. See '--Fees and Expenses.'
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term 'Expiration Date' shall mean 5:00 p.m., New York City time, on
, 1997, unless the Company in its sole discretion extends the
Exchange Offer, in which case the term 'Expiration Date' shall mean the latest
date and time to which the Exchange Offer is extended.
In order to extend the Exchange Offer, the Company will notify the Exchange
Agent of any extension by oral or written notice and will mail to the registered
holders an announcement thereof, each prior to 9:00 a.m., New York City time, on
the next business day after the previously scheduled expiration date.
The Company reserves the right, in its sole discretion, prior to the
Expiration Date (i) to delay accepting any Old Notes, to extend the Exchange
Offer or to terminate the Exchange Offer if any of the conditions set forth
below under 'Conditions' shall not have been satisfied, by giving oral or
written notice of such delay, extension or termination to the Exchange Agent or
(ii) to amend the terms of the Exchange Offer in any manner. Any such delay in
acceptance, extension, termination or amendment will be followed as promptly as
practicable by oral or written notice thereof to the registered holders.
INTEREST ON THE NEW NOTES
The New Notes will bear interest from their date of issuance. Holders of
Old Notes that are accepted for exchange will receive, in cash, accrued interest
thereon to, but not including, the date of issuance of the New Notes. Such
interest will be paid with the first interest payment on the New Notes on
December 15, 1997. Interest on the Old Notes accepted for exchange will cease to
accrue upon issuance of the New Notes.
Interest on the New Notes is payable semi-annually on each June 15 and
December 15, commencing on December 15, 1997.
PROCEDURES FOR TENDERING
Only a holder of Old Notes may tender such Old Notes in the Exchange Offer.
To tender in the Exchange Offer, a holder must complete, sign and date the
Letter of Transmittal, or a facsimile thereof, have the signatures thereon
guaranteed if required by the Letter of Transmittal, and mail or otherwise
deliver such Letter of Transmittal or such facsimile, together with the Old
Notes and any other required documents, to the Exchange Agent prior to 5:00
p.m., New York City time, on the Expiration Date. To be tendered effectively,
the Old Notes, Letter of Transmittal or an Agent's Message in connection with a
book-entry transfer and other required documents must be completed and received
by the Exchange Agent at the address set forth below under 'Exchange Agent'
prior to 5:00 p.m., New York City time, on the Expiration Date. Delivery of the
Old Notes may be made by book-entry transfer in accordance with the procedures
described below. Confirmation of such book-entry transfer must be received by
the Exchange Agent prior to the Expiration Date.
The term 'Agent's Message' means a message, transmitted by a book-entry
transfer facility to, and received by, the Exchange Agent forming a part of a
confirmation of a book-entry transfer, which states that such book-entry
transfer facility has received an express acknowledgment from the participant in
such book-entry transfer facility tendering the Notes that such participant has
received and agrees to be bound by the terms of the Letter of Transmittal and
that the Company may enforce such agreement against such participant.
By executing the Letter of Transmittal, each holder will make the
representations set forth above in the third paragraph under the heading
'--Purpose and Effect of the Exchange Offer.'
The tender by a holder and the acceptance thereof by the Company will
constitute agreement between such holder and the Company in accordance with the
terms and subject to the conditions set forth herein and in the Letter of
Transmittal.
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THE METHOD OF DELIVERY OF OLD NOTES AND THE LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND SOLE RISK
OF THE HOLDER. AS AN ALTERNATIVE TO DELIVERY BY MAIL, HOLDERS MAY WISH TO
CONSIDER OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL CASES, SUFFICIENT TIME
SHOULD BE ALLOWED TO ASSURE DELIVERY TO THE EXCHANGE AGENT BEFORE THE EXPIRATION
DATE. NO LETTER OF TRANSMITTAL OR OLD NOTES SHOULD BE SENT TO THE COMPANY.
HOLDERS MAY REQUEST THEIR RESPECTIVE BROKERS, DEALER, COMMERCIAL BANKS, TRUST
COMPANIES OR NOMINEES TO EFFECT THE ABOVE TRANSACTIONS.
Any beneficial owner whose Old Notes are registered in the name of a
broker, dealer, commercial bank, trust company or other nominee and who wishes
to tender should contact the registered holder promptly and instruct such
registered holder to tender on such beneficial owner's behalf. See 'Instructions
to Registered Holder and/or Book-Entry Transfer Facility Participant from
Beneficial Owner' included with the Letter of Transmittal.
Signatures on a Letter of Transmittal or a notice of withdrawal, as the
case may be, must be guaranteed by an Eligible Institution (as defined) unless
the Old Notes tendered pursuant thereto are tendered (i) by a registered holder
who has not completed the box entitled 'Special Registration Instructions' or
'Special Delivery Instructions' on the Letter of Transmittal or (ii) for the
account of an Eligible Institution. In the event that signatures on a Letter of
Transmittal or a notice of withdrawal, as the case may be, are required to be
guaranteed, such guarantee must be by a member firm of the Medallion System (an
'Eligible Institution').
If the Letter of Transmittal is signed by a person other than the
registered holder of any Old Notes listed therein, such Old Notes must be
endorsed or accompanied by a properly completed bond power, signed by such
registered holder as such registered holder's name appears on such Old Notes
with the signature thereon guaranteed by an Eligible Institution.
If the Letter of Transmittal or any Old Notes or bond powers are signed by
trustees, executors, administrators, guardians, attorneys-in-fact, offices of
corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and evidence satisfactory to the
Company of their authority to so act must be submitted with the Letter of
Transmittal.
The Company understands that the Exchange Agent will make a request
promptly after the date of this Prospectus to establish accounts with respect to
the Old Notes at DTC for the purpose of facilitating the Exchange Offer, and
subject to the establishment thereof, any financial institution that is a
participant in DTC's system may make book-entry delivery of Old Notes by causing
DTC to transfer such Old Notes into the Exchange Agent's account with respect to
the Old Notes in accordance with DTC's procedures for such transfer. Although
delivery of the Old Notes may be effected through book-entry transfer into the
Exchange Agent's account at DTC, an appropriate Letter of Transmittal properly
completed and duly executed with any required signature guarantee and all other
required documents must in each case be transmitted to and received or confirmed
by the Exchange Agent at its address set forth below on or prior to the
Expiration Date, or, if the guaranteed delivery procedures described below are
complied with, within the time period provided under such procedures. Delivery
of documents to DTC does not constitute delivery to the Exchange Agent.
All questions as to the validity, form eligibility (including time of
receipt), acceptance of tendered Old Notes and withdrawal of tendered Old Notes
will be determined by the Company in its sole discretion, which determination
will be final and binding. The Company reserves the absolute right to reject any
and all Old Notes not properly tendered or any Old Notes the Company's
acceptance of which would, in the opinion of counsel for the Company, be
unlawful. The Company also reserves the right in its sole discretion to waive
any defects, irregularities or conditions of tender as to particular Old Notes.
The Company's interpretation of the terms and conditions of the Exchange Offer
(including the instructions in the Letter of Transmittal) will be final and
binding on all parties. Unless waived, any defects or irregularities in
connection with tenders of Old Notes must be cured within such time as the
Company shall determine. Although the Company intends to notify holders of
defects or irregularities with respect to tenders of Old Notes, neither the
Company, the Exchange Agent nor any other person shall incur any liability for
failure to give such notification. Tenders of Old Notes will not be deemed to
have been made until such defects or irregularities have been cured or waived.
Any Old Notes received by the Exchange Agent that are not properly tendered and
as to which the defects or irregularities have not been cured or
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waived will be returned by the Exchange Agent to the tendering holders, unless
otherwise provided in the Letter of Transmittal, as soon as practicable
following the Expiration Date.
GUARANTEED DELIVERY PROCEDURES
Holders who wish to tender their Old Notes and (i) whose Old Notes are not
immediately available, (ii) who cannot deliver their Old Notes, the Letter of
Transmittal or any other required documents to the Exchange Agent or (iii) who
cannot complete the procedures for book-entry transfer, prior to the Expiration
Date, may effect a tender if:
(a) the tender is made through an Eligible Institution,
(b) prior to the Expiration Date, the Exchange Agent receives from
such Eligible Institution a properly completed and duly executed Notice of
Guaranteed Delivery (by facsimile transmission, mail or hand delivery)
setting forth the name and address of the holder, the certificate number(s)
of such Old Notes and the principal amount of Old Notes tendered, stating
that the tender is being made thereby and guaranteeing that, within three
New York Stock Exchange trading days after the Expiration Date, the Letter
of Transmittal (or facsimile thereof) together with the certificate(s)
representing the Old Notes (or a confirmation of book-entry transfer of
such Notes into the Exchange Agent's account at DTC), and any other
documents required by the Letter of Transmittal will be deposited by the
Eligible Institution with the Exchange Agent; and
(c) such properly completed and executed Letter of Transmittal (or
facsimile thereof), as well as the certificate(s) representing all tendered
Old Notes in proper form for transfer (or a confirmation of book-entry
transfer of such Old Notes into the Exchange Agent's account at DTC), and
all other documents required by the Letter of Transmittal are received by
the Exchange Agent upon three New York Stock Exchange trading days after
the Expiration Date.
Upon request to the Exchange Agent, a Notice of Guaranteed Delivery will be
sent to holders who wish to tender their Old Notes according to the guaranteed
delivery procedures set forth above.
WITHDRAWAL OF TENDERS
Except as otherwise provided herein, tenders of Old Notes may be withdrawn
at any time prior to 5:00 p.m., New York City time, on the Expiration Date.
To withdraw a tender of Old Notes in the Exchange Offer, a telegram, telex,
letter or facsimile transmission notice of withdrawal must be received by the
Exchange Agent at its address set forth herein prior to 5:00 p.m., New York City
time, on the Expiration Date. Any such notice of withdrawal must (i) specify the
name of the person having deposited the Old Notes to be withdrawn (the
'Depositor'); (ii) identify the Old Notes to be withdrawn (including the
certificate number(s) and principal amount of such Old Notes, or, in the case of
Old Notes transferred by book-entry transfer, the name and number of the account
at the DTC to be credited); (iii) be signed by the holder in the same manner as
the original signature on the Letter of Transmittal by which such Old Notes were
tendered (including any required signature guarantees) or be accompanied by
documents of transfer sufficient to have the Trustee with respect to the Old
Notes register the transfer of such Old Notes into the name of the person
withdrawing the tender and (iv) specify the name in which any such Old Notes are
to be registered, if different from that of the Depositor. All questions as to
the validity, form and eligibility (including time of receipt) of such notices
will be determined by the Company, whose determination shall be final and
binding on all parties. Any Old Notes so withdrawn will be deemed not to have
been validly tendered for purposes of the Exchange Offer and no New Notes will
be issued with respect thereto unless the Old Notes so withdrawn are validly
retendered. Any Old Notes which have been tendered but which are not accepted
for exchange will be returned to the holder thereof without cost to such holder
as soon as practicable after withdrawal, rejection of tender or termination of
the Exchange Offer. Properly withdrawn Old Notes may be retendered by following
one of the procedures described above under '--Procedures for Tendering' at any
time prior to the Expiration Date.
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CONDITIONS
Notwithstanding any other term of the Exchange Offer, the Company shall not
be required to accept for exchange, or exchange New Notes for, any Old Notes,
and may terminate or amend the Exchange Offer as provided herein prior to the
Expiration Date, if:
(a) any action or proceeding is instituted or threatened in any court
or by or before any governmental agency with respect to the Exchange Offer
which, in the reasonable judgment of the Company, might materially impair
the ability of the Company to proceed with the Exchange Offer or any
material adverse development has occurred in any existing action or
proceeding with respect to the Company or any of its subsidiaries; or
(b) any law, statute, rule, regulation or interpretation by the staff
of the Commission is proposed, adopted or enacted, which, in the reasonable
judgment of the Company, might materially impair the ability of the Company
to proceed with the Exchange Offer or materially impair the contemplated
benefits of the Exchange Offer to the Company; or
(c) any govemmental approval has not been obtained, which approval the
Company shall, in its reasonable discretion, deem necessary for the
consummation of the Exchange Offer as contemplated hereby.
If the Company determines in its reasonable discretion that any of the
above conditions are not satisfied, the Company may (i) refuse to accept any Old
Notes and retum all tendered Old Notes to the tendering holders, (ii) extend the
Exchange Offer and retain all Old Notes tendered prior to the expiration of the
Exchange Offer, subject, however, to the rights of holders to withdraw such Old
Notes (see '--Withdrawal of Tenders') or (iii) waive such unsatisfied conditions
with respect to the Exchange Offer and accept all properly tendered Old Notes
which have not been withdrawn.
EXCHANGE AGENT
Marine Midland Bank has been appointed as Exchange Agent for the Exchange
Offer. Questions and requests for assistance, requests for additional copies of
this Prospectus or of the Letter of Transmittal and requests for Notice of
Guaranteed Delivery should be directed to the Exchange Agent addressed as
follows:
<TABLE>
<S> <C>
By Mail: By Overnight Courier:
MARINE MIDLAND BANK MARINE MIDLAND BANK
140 Broadway--Level A 140 Broadway--Level A
New York, New York 10005-1180 New York, New York 10005-1180
Attention: Corporate Trust Services Attention: Corporate Trust Services
(registered or certified mail recommended)
By Hand: Facsimile Transmission:
MARINE MIDLAND BANK (212) 658-2292
140 Broadway--Level A Confirm by Telephone:
New York, New York 10005-1180 (212) 658-5931
Attention: Corporate Trust Services
</TABLE>
DELIVERY TO AN ADDRESS OTHER THAN SET FORTH ABOVE WILL NOT CONSTITUTE A
VALID DELIVERY.
FEES AND EXPENSES
The expenses of soliciting tenders will be borne by the Company. The
principal solicitation is being made by mail; however, additional solicitation
may be made by telegraph, telecopy, telephone or in person by officers and
regular employees of the Company and its affiliates.
The Company has not retained any dealer-manager in connection with the
Exchange Offer and will not make any payments to brokers, dealers, or others
soliciting acceptances of the Exchange Offer. The Company, however, will pay the
Exchange Agent reasonable and customary fees for its services and will reimburse
it for its reasonable out-of-pocket expenses in connection therewith.
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The cash expenses to be incurred in connection with the Exchange Offer will
be paid by the Company. Such expenses include fees and expenses of the Exchange
Agent and Trustee, accounting and legal fees and printing costs, among others.
ACCOUNTING TREATMENT
The New Notes will be recorded at the same carrying value as the Old Notes,
which is face value, as reflected in the Company's accounting records on the
date of exchange. Accordingly, no gain or loss for accounting purposes will be
recognized by the Company. The expenses of the Exchange Offer will be expensed
over the term of the New Notes.
CONSEQUENCES OF FAILURE TO EXCHANGE
The Old Notes that are not exchanged for New Notes pursuant to the Exchange
Offer will remain restricted securities. Accordingly, such Old Notes may be
resold only (i) to the Company (upon redemption thereof or otherwise), (ii) so
long as the Old Notes are eligible for resale pursuant to Rule 144A, to a person
inside the United States whom the seller reasonably believes is a qualified
institutional buyer within the meaning of Rule 144A under the Securities Act in
a transaction meeting the requirements of Rule 144A, (iii) in accordance with
Rule 144 under the Securities Act, or pursuant to another exemption from the
registration requirements of the Securities Act (and based upon an opinion of
counsel reasonably acceptable to the Company), (iv) outside the United States to
a foreign person in a transaction meeting the requirements of Rule 904 under the
Securities Act, or (v) pursuant to an effective registration under the
Securities Act, in each case in accordance with any applicable securities laws
of any state of the United States.
RESALE OF THE NEW NOTES
With respect to resales of New Notes, based on interpretations by the staff
of the Commission set forth in no-action letters issued to third parties, the
Company believes that a holder or other person who receives New Notes, whether
or not such person is the holder (other than a person that is an 'affiliate' of
the Company within the meaning of Rule 405 under the Securities Act) who
receives New Notes in exchange for Old Notes in the ordinary course of business
and who is not participating, does not intend to participate, and has no
arrangement or understanding with any person to participate, in the distribution
of the New Notes, will be allowed to resell the New Notes to the public without
further registration under the Securities Act and without delivering to the
purchasers of the New Notes a prospectus that satisfies the requirements of
Section 10 of the Securities Act. However, if any holder acquires New Notes in
the Exchange Offer for the purpose of distributing or participating in a
distribution of the New Notes, such holder cannot rely on the position of the
staff of the Commission enunciated in such no-action letters or any similar
interpretive letters, and must comply with the registration and prospectus
delivery requirements of the Securities Act in connection with any resale
transaction, unless an exemption from registration is otherwise available.
Further, each Participating Broker-Dealer that receives New Notes for its own
account in exchange for Old Notes, where such Old Notes were acquired by such
Participating Broker-Dealer as a result of market-making activities or other
trading activities, must acknowledge that it will deliver a prospectus in
connection with any resale of such New Notes.
As contemplated by these no-action letters and the Registration Rights
Agreement, each holder accepting the Exchange Offer is required to represent to
the Company in the Letter of Transmittal that (i) the New Notes are to be
acquired by the holder or the person receiving such New Notes, whether or not
such person is the holder, in the ordinary course of business, (ii) the holder
or any such other person (other than a broker-dealer referred to in the next
sentence) is not engaging, and does not intend to engage, in the distribution of
the New Notes, (iii) the holder of any such other person has no arrangement or
understanding with any person to participate in the distribution of the New
Notes, (iv) neither the holder nor any such other person is an 'affiliate' of
the Company within the meaning of Rule 405 under the Securities Act, and (v) the
holder of any such other person acknowledges that if such holder or other person
participates in the Exchange Offer for the purpose of distributing the New Notes
it most comply with the registration and prospectus delivery requirements of the
Securities Act in connection with any resale of the New Notes and cannot rely on
those no-action letters. As indicated above, each Participating Broker-Dealer
that receives a New Note for its own account in exchange for Old Notes must
acknowledge that it will deliver a prospectus in connection with any resale of
such New Notes. For a description of the procedures for such resales by
Participating Broker-Dealers, see 'Plan of Distribution.'
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DESCRIPTION OF NOTES
GENERAL
The New Notes will be issued pursuant to an Indenture (the 'Indenture'),
dated as of June 13, 1997, between the Company, the Guarantors and Marine
Midland Bank, as trustee (the 'Trustee'). The terms of the New Notes include
those stated in the Indenture and those made part of the Indenture by reference
to the Trust Indenture Act of 1939 (the 'Trust Indenture Act') as in effect on
the date of the Indenture. The form and terms of the New Notes are the same as
the form and terms of the Old Notes (which they replace) except that (i) the New
Notes bear a Series B designation, (ii) the New Notes have been registered under
the Securities Act and, therefore, will not bear legends restricting the
transfer thereof, and (iii) the holders of New Notes will not be entitled to
certain rights under the Registration Rights Agreement, including the provisions
providing for the payment of Liquidated Damages in certain circumstances
relating to the timing of the Exchange Offer, which rights will terminate when
the Exchange Offer is consummated. The New Notes are subject to all such terms,
and holders of the New Notes are referred to the Indenture and the Trust
Indenture Act for a statement of them. The following is a summary of the
material terms and provisions of the New Notes. This summary does not purport to
be a complete description of the New Notes and is subject to the detailed
provisions of, and qualified in its entirety by reference to, the New Notes and
the Indenture (including the definitions contained therein). A copy of the form
of Indenture has been filed as an exhibit to the Exchange Offer Registration
Statement of which this Prospectus is a part. See 'Available Information.'
Definitions relating to certain capitalized terms are set forth under '--Certain
Definitions' and throughout this description. Capitalized terms that are used
but not otherwise defined herein have the meanings assigned to them in the
Indenture and such definitions are incorporated herein by reference. The Old
Notes and the New Notes are sometimes referred to herein collectively as the
'Notes.' For purposes of this summary, the term 'Company' refers only to Precise
Technology, Inc. and not to any of its Subsidiaries.
The Notes will be general unsecured obligations of the Company and will be
subordinated in right of payment to all existing and future Senior Debt. As of
March 31, 1997, after giving pro forma effect to the Refinancing Transactions,
the Company and the Guarantors would have had consolidated Senior Debt of
approximately $16.4 million outstanding. The Indenture, subject to certain
limitations, permits the incurrence of additional Senior Debt in the future. As
of the Issue Date, all of the Company's Subsidiaries will be Restricted
Subsidiaries. However, under certain circumstances, the Company will be able to
designate current or future Subsidiaries as Unrestricted Subsidiaries.
Unrestricted Subsidiaries will not be subject to many of the restrictive
covenants set forth in the Indenture.
A significant portion of the operations of the Company are conducted
through its Subsidiaries and, therefore, the Company is dependent upon the cash
flow of its Subsidiaries to meet its obligations, including its obligations
under the Notes. The Notes will be effectively subordinated to all Indebtedness
and other liabilities and commitments (including trade payables and lease
obligations) of the Company's Subsidiaries. Any right of the Company to receive
assets of any of its Subsidiaries upon the latter's liquidation or
reorganization (and the consequent right of the Holders of the Notes to
participate in those assets) will be effectively subordinated to the claims of
that Subsidiary's creditors, except to the extent that the Company is itself
recognized as a creditor of such Subsidiary, in which case the claims of the
Company would still be subordinate to any security in the assets of such
Subsidiary and any indebtedness of such Subsidiary senior to that held by the
Company. As of March 31, 1997, the Company's Subsidiaries would have had
approximately $2.6 million of Indebtedness (exclusive of the guarantees of the
Credit Agreement and the Subsidiary Guarantees) and $6.6 million of trade
payables and other liabilities outstanding after giving pro forma effect to the
Refinancing Transactions and the application of the proceeds therefrom. See
'Risk Factors--Holding Company Structure; Effects of Asset Encumbrances.'
PRINCIPAL, MATURITY AND INTEREST
The Notes will be limited in aggregate principal amount to $200.0 million,
of which $75.0 million in aggregate principal amount were issued in the Initial
Offering. Additional amounts may be issued in one or more series from time to
time subject to the limitations set forth under '--Incurrence of Indebtedness
and Issuance of Preferred Stock' and restrictions contained in the Credit
Agreement. The Notes will mature on June 15, 2007. Interest on the Notes will
accrue at the rate of 11 1/8% per annum and will be payable semi-annually in
arrears on June 15 and December 15, commencing on December 15, 1997, to Holders
of record on the immediately preceding June 1 and December 1. Interest on the
Notes will accrue from the most recent date to which interest
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has been paid or, if no interest has been paid, from the date of original
issuance. Interest will be computed on the basis of a 360-day year comprised of
twelve 30-day months. Principal, premium, if any, and interest and Liquidated
Damages, if any, on the Notes will be payable at the office or agency of the
Company maintained for such purpose within the City and State of New York or, at
the option of the Company, payment of interest and Liquidated Damages, if any,
may be made by check mailed to the Holders of the Notes at their respective
addresses set forth in the register of Holders of Notes; provided that all
payments of principal, premium, interest and Liquidated Damages, if any, with
respect to Notes the Holders of which have given wire transfer instructions to
the Company will be required to be made by wire transfer of immediately
available funds to the accounts specified by the Holders thereof. Until
otherwise designated by the Company, the Company's office or agency in New York
will be the office of the Trustee maintained for such purpose.
SUBORDINATION
The payment (by set-off or otherwise) of principal of, premium, if any, and
interest and Liquidated Damages, if any, on the Notes (including with respect to
any repurchases of the Notes) will be subordinated in right of payment, as set
forth in the Indenture, to the prior payment in full in cash, or at the option
of the holders of Senior Debt, in Cash Equivalents, of all Obligations in
respect of Senior Debt, whether outstanding on the date of the Indenture or
thereafter incurred.
Upon any distribution to creditors of the Company upon any total or partial
liquidation, dissolution or winding up of the Company or in a bankruptcy,
reorganization, insolvency, receivership or similar proceeding relating to the
Company or its property, whether voluntary or involuntary, an assignment for the
benefit of creditors or any marshalling of the Company's assets and liabilities,
the holders of Senior Debt will be entitled to receive payment in full in cash,
or at the option of the holders of Senior Debt, in Cash Equivalents, of all
Obligations due or to become due in respect of such Senior Debt (including
interest after the commencement of any such proceeding at the rate specified in
the applicable Senior Debt) before the Holders of Notes will be entitled to
receive any payment of any kind or character with respect to the Notes, and
until all Obligations with respect to Senior Debt are paid in full in cash, or
at the option of the holders of Senior Debt, in Cash Equivalents, any
distribution of any kind or character to which the Holders of Notes would be
entitled shall be made to the holders of Senior Debt (except that Holders of
Notes may receive Permitted Junior Securities and payments made from the trust
described under '--Legal Defeasance and Covenant Defeasance').
The Company also shall not make, directly or indirectly, (x) any payment
upon or in respect of the Notes (except in Permitted Junior Securities or from
the trust described under '--Legal Defeasance and Covenant Defeasance') or (y)
acquire any of the Notes for cash or property or otherwise or make any other
distribution with respect to the Notes if (i) any default occurs and is
continuing (beyond any applicable grace period) in the payment when due, whether
at maturity, upon any redemption, by declaration or otherwise, of any principal
of, interest on, unpaid drawings for letters of credit issued in respect of, or
regularly accruing fees with respect to, any Designated Senior Debt or (ii) any
other default occurs and is continuing with respect to Designated Senior Debt
that permits holders of the Designated Senior Debt as to which such default
relates to accelerate its maturity and the Trustee receives a notice of such
default (a 'Payment Blockage Notice') from the Company or the holders of any
Designated Senior Debt. Payments on the Notes may and shall be resumed (a) in
the case of a payment default, upon the date on which such default is cured or
waived and (b) in case of a nonpayment default, the earlier of the date on which
such nonpayment default is cured or waived or 179 days after the date on which
the applicable Payment Blockage Notice is received, unless the maturity of any
Designated Senior Debt has been accelerated. No new period of payment blockage
may be commenced unless and until (i) 360 days have elapsed since the
effectiveness of the immediately prior Payment Blockage Notice and (ii) all
scheduled payments of principal, premium, if any, and interest and Liquidated
Damages, if any, on the Notes that have come due have been paid in full in cash.
No nonpayment default that existed or was continuing on the date of delivery of
any Payment Blockage Notice to the Trustee shall be, or be made, the basis for a
subsequent Payment Blockage Notice unless such nonpayment default shall have
been waived for a period of not less than 90 days (it being acknowledged that
any subsequent action, or any breach of any financial covenants for a period
commencing after the date of delivery of any Payment Blockage Notice which, in
either case, would give rise to a default pursuant to any provision under which
a default previously existed or was continuing shall constitute a new default
for this purpose). Each Holder by his acceptance of a Note irrevocably agrees
that if any payment or payments shall be made pursuant to the Indenture and the
amount or total amount of such payment or payments
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exceeds the amount, if any, that such Holder would be entitled to receive upon
the proper application of the subordination provisions of the Indenture, the
payment of such excess amount shall be deemed null and void, and the Holder
agrees that it will be obliged to return the amount of the excess payment to the
Company, as instructed in a written notice of such excess payment, within ten
days of receiving such notice.
The Indenture further requires that the Company promptly notify holders of
Senior Debt if payment of the Notes is accelerated because of an Event of
Default.
As a result of the subordination provisions described above, in the event
of a liquidation or insolvency, Holders of Notes may recover less ratably than
creditors of the Company who are holders of Senior Debt. On a pro forma basis,
after giving effect to the Refinancing Transactions, the principal amount of
consolidated Senior Debt outstanding at March 31, 1997 would have been
approximately $16.4 million. The Indenture limits, through certain financial
tests, the amount of additional Indebtedness, including Senior Debt, that the
Company and its subsidiaries can incur. See '--Certain Covenants--Incurrence of
Indebtedness and Issuance of Preferred Stock.'
'Designated Senior Debt' means (i) any Indebtedness outstanding under the
Credit Agreement and (ii) any other Senior Debt, the principal amount of which
is $5.0 million or more and that has been designated by the Company as
'Designated Senior Debt.'
'Permitted Junior Securities' means Equity Interests in the Company or debt
securities that are subordinated to all Senior Debt (and any debt securities
issued in exchange for Senior Debt) to substantially the same extent as, or to a
greater extent than, the Notes are subordinated to Senior Debt.
'Senior Debt' of any Person means (i) all Indebtedness of such Person under
the Credit Agreement, including, without limitation, obligations to pay
principal and interest (including any interest accruing subsequent to the filing
of a petition of bankruptcy at the rate provided for in the documentation with
respect thereto, whether or not such interest is an allowed claim under
applicable law), reimbursement obligations under letters of credit, fees,
expenses and indemnities, and all Hedging Obligations with respect thereto,
whether outstanding on the date of the Indenture or thereafter incurred, (ii)
the principal of, premium, if any, and interest (including any interest accruing
subsequent to the filing of a petition of bankruptcy at the rate provided for in
the documentation with respect thereto, whether or not such interest is an
allowed claim under applicable law) on, and all other Obligations with respect
to, any other Indebtedness of such Person permitted to be incurred by such
Person under the terms of the Indenture, whether outstanding on the date of the
Indenture or thereafter incurred, unless the instrument under which such
Indebtedness is incurred expressly provides that it is on a parity with or
subordinated in right of payment to the Notes and (iii) all Obligations of such
Person with respect to the foregoing. Notwithstanding anything to the contrary
in the foregoing, Senior Debt will not include (w) any liability for federal,
state, local or other taxes owed or owing by such Person, (x) any Indebtedness
of such Person to any of its Subsidiaries or other Affiliates, (y) any trade
payables or (z) any Indebtedness that is incurred in violation of the Indenture.
SUBSIDIARY GUARANTEES
The Company's payment obligations under the Notes are jointly and severally
guaranteed (the 'Subsidiary Guarantees') by the Guarantors. The Subsidiary
Guarantee of each Guarantor is subordinated in right of payment, as set forth in
the Indenture, to the prior payment in full in cash or, at the option of holders
of Senior Debt, in Cash Equivalents, of all Senior Debt of such Guarantor, which
would include the amounts for which the Guarantors are liable under the
guarantees issued from time to time with respect to Senior Debt. The obligations
of each Guarantor under its Subsidiary Guarantee are limited so as not to
constitute a fraudulent conveyance under applicable law.
The Indenture provides that no Guarantor may consolidate with or merge with
or into (whether or not such Guarantor is the surviving Person), another
corporation, Person or entity whether or not affiliated with such Guarantor
unless (i) subject to the provisions of the following paragraph, the Person
formed by or surviving any such consolidation or merger (if other than such
Guarantor) is a corporation organized and existing under the laws of the United
States of America, any state thereof, or the District of Columbia and expressly
assumes all the obligations of such Guarantor pursuant to a supplemental
indenture in form and substance reasonably satisfactory to the Trustee, under
the Notes and the Indenture; (ii) immediately after giving effect to such
transaction, no Default or Event of Default exists; and (iii) the Company would
be permitted by virtue of the Company's pro forma Fixed Charge Coverage Ratio,
immediately after giving effect to such transaction (on a pro forma basis), to
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incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge
Coverage Ratio test set forth in the covenant described below under the caption
'--Incurrence of Indebtedness and Issuance of Preferred Stock.'
The Indenture provides that in the event of a sale or other disposition of
all of the assets of any Guarantor, by way of merger, consolidation or
otherwise, or a sale or other disposition of all of the Capital Stock of any
Guarantor, then such Guarantor (in the event of a sale or other disposition, by
way of such a merger, consolidation or otherwise, of all of the Capital Stock of
such Guarantor) or the corporation acquiring the property (in the event of a
sale or other disposition of all of the assets of such Guarantor) will be
released and relieved of any obligations under its Subsidiary Guarantee;
provided that the Net Proceeds of such sale or other disposition are applied in
accordance with the applicable provisions of the Indenture. See 'Repurchase at
the Option of Holders--Asset Sales.'
'Guarantors' means each of (i) the Company's existing and future Restricted
Subsidiaries (having either assets or stockholder's equity in excess of $50,000)
and (ii) any other subsidiary that executes a Subsidiary Guarantee in accordance
with the provisions of the Indenture, and their respective successors and
assigns.
OPTIONAL REDEMPTION
Except as described below, the Notes will not be redeemable at the
Company's option prior to June 15, 2002. Thereafter, the Notes will be subject
to redemption at any time at the option of the Company, in whole or in part,
upon not less than 30 nor more than 60 days' notice, at the redemption prices
(expressed as percentages of principal amount) set forth below plus accrued and
unpaid interest and Liquidated Damages, if any, thereon to the applicable
redemption date, if redeemed during the twelve-month period beginning on June 15
of the years indicated below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
- -------------------------------------------------------------- ----------
<S> <C>
2002.......................................................... 105.563%
2003.......................................................... 103.708%
2004.......................................................... 101.854%
2005 and thereafter........................................... 100.000%
</TABLE>
Notwithstanding the foregoing, on or prior to June 15, 2000, the Company
may on any one or more occasions redeem up to 33 1/3% of the aggregate principal
amount of Notes originally issued (including, for this purpose, one or more
series of notes issued under the Indenture after the date of the Indenture) at a
redemption price of 111.125% of the principal amount thereof, plus accrued and
unpaid interest and Liquidated Damages, if any, thereon, to the redemption date,
with the net cash proceeds of one or more Public Equity Offerings; provided that
at least 66 2/3% of the aggregate principal amount of Notes originally issued
(including, for this purpose, one or more series of notes issued under the
Indenture after the date of the Indenture) remain outstanding immediately after
the occurrence of such redemption; and provided, further, that such redemption
shall occur within 60 days of the date of the closing of any such Public Equity
Offering.
In addition, at any time prior to June 15, 2002, the Company may, at its
option, redeem the Notes, in whole or in part, at a redemption price equal to
100% of the principal amount thereof plus the applicable Make-Whole Premium.
SELECTION AND NOTICE
If less than all of the Notes are to be redeemed at any time, selection of
Notes for redemption will be made by the Trustee in compliance with the
requirements of the principal national securities exchange, if any, on which the
Notes are listed, or, if the Notes are not so listed, on a pro rata basis, by
lot or by such method as the Trustee shall deem fair and appropriate; provided
that no Notes of $1,000 or less shall be redeemed in part. Notices of redemption
shall be mailed by first class mail at least 30 but not more than 60 days before
the redemption date to each Holder of Notes to be redeemed at its registered
address. Notices of redemption may not be conditional. If any Note is to be
redeemed in part only, the notice of redemption that relates to such Note shall
state the portion of the principal amount thereof to be redeemed. A new Note in
principal amount equal to the unredeemed portion thereof will be issued in the
name of the Holder thereof upon cancellation of the original Note. Notes called
for redemption become due on the date fixed for redemption. On and after the
redemption date, interest ceases to accrue on Notes or portions of them called
for redemption.
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MANDATORY REDEMPTION
Except as set forth below under 'Repurchase at the Option of Holders,' the
Company is not required to make mandatory redemption or sinking fund payments
with respect to the Notes.
REPURCHASE AT THE OPTION OF HOLDERS
Change of Control
Upon the occurrence of a Change of Control, each Holder of Notes will have
the right to require the Company to repurchase all or any part (equal to $1,000
or an integral multiple thereof) of such Holder's Notes pursuant to the offer
described below (the 'Change of Control Offer') at an offer price in cash equal
to 101% of the aggregate principal amount thereof plus accrued and unpaid
interest and Liquidated Damages, if any, thereon, to the date of purchase (the
'Change of Control Payment'). Prior to the mailing of the notice referred to
below, but in any event within 30 days following any Change of Control, the
Company covenants to (i) repay in full in cash all Indebtedness under the Credit
Agreement (and terminate all commitments thereunder) and all other Senior Debt
the terms of which require repayment upon a Change of Control or offer to repay
in full in cash all Indebtedness under the Credit Agreement (and terminate all
commitments thereunder) and all such other Senior Debt and to repay the
Indebtedness owed to (and terminate the commitments of) each lender which has
accepted such offer or (ii) obtain the requisite consents under the Credit
Agreement and all such other Senior Debt to permit the repurchase of the Notes
as provided below. The Company shall first comply with the covenant in the
immediately preceding sentence before it shall be required to repurchase Notes
pursuant to the provisions described below. Within 30 days following any Change
of Control, the Company will mail a notice to each Holder describing the
transaction or transactions that constitute the Change of Control and offering
to repurchase Notes on the date specified in such notice, which date shall be no
earlier than 30 days and no later than 60 days from the date such notice is
mailed (the 'Change of Control Payment Date'), pursuant to the procedures
required by the Indenture and described in such notice. The Company will comply
with the requirements of Rule 14e-1 under the Exchange Act and any other
securities laws and regulations thereunder to the extent such laws and
regulations are applicable in connection with the repurchase of the Notes as a
result of a Change of Control.
On the Change of Control Payment Date, the Company will, to the extent
lawful, (1) accept for payment all Notes or portions thereof properly tendered
pursuant to the Change of Control Offer, (2) deposit with the Paying Agent an
amount equal to the Change of Control Payment in respect of all Notes or
portions thereof so tendered and (3) deliver or cause to be delivered to the
Trustee the Notes so accepted together with an Officers' Certificate stating the
aggregate principal amount of Notes or portions thereof being purchased by the
Company. The Paying Agent will promptly mail to each Holder of Notes so tendered
the Change of Control Payment for such Notes, and the Trustee will promptly
authenticate and mail (or cause to be transferred by book entry) to each Holder
a new Note equal in principal amount to any unpurchased portion of the Notes
surrendered, if any; provided that each such new Note will be in a principal
amount of $1,000 or an integral multiple thereof. The Company will publicly
announce the results of the Change of Control Offer on or as soon as practicable
after the Change of Control Payment Date.
The Change of Control provisions described above will be applicable whether
or not any other provisions of the Indenture are applicable. Except as described
above with respect to a Change of Control, the Indenture does not contain
provisions that permit the Holders of the Notes to require that the Company
repurchase or redeem the Notes in the event of a takeover, recapitalization or
similar transaction.
The Credit Agreement currently prohibits the Company from repurchasing any
Notes and also provides that certain change of control events with respect to
the Company would constitute a default thereunder. Any future credit agreements
or other agreements relating to Senior Debt to which the Company becomes a party
may contain similar restrictions and provisions. In the event a Change of
Control occurs at a time when the Company is prohibited from repurchasing Notes,
the Company could seek the consent of its lenders to the repurchase of Notes or
could attempt to refinance or repay the borrowings that contain such
prohibition. If the Company does not obtain such a consent or repay such
borrowings, the Company will remain prohibited from repurchasing Notes. In such
case, the Company's failure to repurchase tendered Notes would constitute an
Event of Default under the Indenture which would, in turn, constitute a default
under the Credit Agreement. In such circumstances, the subordination provisions
in the Indenture would likely restrict payments to the Holders of Notes.
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The Company will not be required to make a Change of Control Offer upon a
Change of Control if a third party makes the Change of Control Offer in the
manner, at the times and otherwise in compliance with the requirements set forth
in the Indenture applicable to a Change of Control Offer made by the Company and
purchases all Notes validly tendered and not withdrawn under such Change of
Control Offer.
'Change of Control' means the occurrence of any of the following: (i) the
sale, lease, transfer, conveyance or other disposition (other than by way of
merger or consolidation), in one or a series of related transactions, of all or
substantially all of the assets of the Company and its Restricted Subsidiaries
taken as a whole to any 'person' (as such term is used in Section 13(d)(3) of
the Exchange Act) other than the Principals or their Related Parties (as defined
below), (ii) the adoption of a plan relating to the liquidation or dissolution
of the Company, (iii) the consummation of any transaction (including, without
limitation, any merger or consolidation) the result of which is that any
'person' (as defined above), other than the Principals and their Related
Parties, becomes the 'beneficial owner' (as such term is defined in Rule 13d-3
and Rule 13d-5 under the Exchange Act, except that a person shall be deemed to
have 'beneficial ownership' of all securities that such person has the right to
acquire, whether such right is currently exercisable or is exercisable only upon
the occurrence of a subsequent condition), directly or indirectly, of more than
50% of the Voting Stock of the Company (measured by voting power rather than
number of shares) or (iv) the first day on which a majority of the members of
the Board of Directors of the Company are not Continuing Directors.
The definition of Change of Control includes a phrase relating to the sale,
lease, transfer, conveyance or other disposition of 'all or substantially all'
of the assets of the Company and its Restricted Subsidiaries taken as a whole.
Although there is a developing body of case law interpreting the phrase
'substantially all,' there is no precise established definition of the phrase
under applicable law. Accordingly, the ability of a Holder of Notes to require
the Company to repurchase such Notes as a result of a sale, lease, transfer,
conveyance or other disposition of less than all of the assets of the Company
and its Subsidiaries taken as a whole to another Person or group may be
uncertain.
'Continuing Directors' means, as of any date of determination, any member
of the Board of Directors of the Company who (i) was a member of such Board of
Directors on the date of the Indenture or (ii) was nominated by the Principals
or a Related Party to serve on such Board of Directors.
'Principals' means Richard L. Kramer and/or William L. Remley.
'Related Parties' with respect to any Principal means (A) any spouse or
immediate family member of such Principal and any child or spouse of any spouse
or immediate family member of such Principal, (B) a trust, corporation,
partnership or other entity, the beneficiaries, stockholders, partners, owners
or Persons beneficially holding, directly or indirectly, a controlling interest
of which consist of any of such Principal and/or such other Persons referred to
in the immediately preceding clause (A) or (C) the trustees of any trust
referred to in clause (B).
Asset Sales
The Indenture provides that the Company will not, and will not permit any
of its Restricted Subsidiaries to, consummate an Asset Sale unless (i) the
Company (or the Restricted Subsidiary, as the case may be) receives
consideration at the time of such Asset Sale at least equal to the fair market
value (evidenced by a resolution of the Board of Directors and as set forth in
an Officers' Certificate delivered to the Trustee) of the assets or Equity
Interests issued or sold or otherwise disposed of and (ii) at least 75% of the
consideration therefor received by the Company or such Restricted Subsidiary is
in the form of cash; provided that the amount of (x) any liabilities (as shown
on the Company's or such Restricted Subsidiary's most recent balance sheet), of
the Company or any Restricted Subsidiary (other than contingent liabilities and
liabilities that are by their terms subordinated to the Notes or any guarantee
thereof) that are assumed by the transferee of any such assets pursuant to a
customary novation agreement that releases the Company or such Restricted
Subsidiary from further liability and (y) any securities, notes or other
obligations received by the Company or any such Restricted Subsidiary from such
transferee that are immediately converted by the Company or such Restricted
Subsidiary into cash (to the extent of the cash received), shall be deemed to be
cash for purposes of this provision.
Within 360 days after the receipt of any Net Proceeds from an Asset Sale,
the Company may apply such Net Proceeds, at its option, (a) to permanently
reduce (or, in the case of letters of credit or Eurodollar loans under the
Credit Agreement, cash collateralize) any Senior Debt (and to correspondingly
reduce commitments with respect thereto in the case of revolving borrowings), or
(b) to the acquisition of a controlling interest in another business, the making
of a capital expenditure or the acquisition of other long-term assets, in each
case, in the same line of
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business as the Company was engaged in on the date of the Indenture. Pending the
final application of any such Net Proceeds, the Company may invest such Net
Proceeds in any manner that is not prohibited by the Indenture. Any Net Proceeds
from Asset Sales that are not applied or invested as provided in the first
sentence of this paragraph will be deemed to constitute 'Excess Proceeds.' When
the aggregate amount of Excess Proceeds exceeds $5.0 million, the Company will
be required to make an offer to all Holders of Notes (an 'Asset Sale Offer') to
purchase the maximum principal amount of Notes that may be purchased out of the
Excess Proceeds, at an offer price in cash in an amount equal to 100% of the
principal amount thereof plus accrued and unpaid interest and Liquidated
Damages, if any, thereon, to the date of purchase, in accordance with the
procedures set forth in the Indenture. To the extent that the aggregate amount
of Notes tendered pursuant to an Asset Sale Offer is less than the Excess
Proceeds, the Company may use any remaining Excess Proceeds for general
corporate purposes. If the aggregate principal amount of Notes surrendered by
Holders thereof exceeds the amount of Excess Proceeds, the Trustee shall select
the Notes to be purchased on a pro rata basis. Upon completion of such offer to
purchase, the amount of Excess Proceeds shall be reset at zero.
CERTAIN COVENANTS
Restricted Payments
The Indenture provides that the Company will not, and will not permit any
of its Restricted Subsidiaries to, directly or indirectly: (i) declare or pay
any dividend or make any other payment or distribution on account of the
Company's Equity Interests (including, without limitation, any payment in
connection with any merger or consolidation involving the Company) or to the
direct or indirect holders of the Company's or any of its Restricted
Subsidiaries' Equity Interests in their capacity as such (other than dividends
or distributions payable in Equity Interests (other than Disqualified Stock) of
the Company or dividends or distributions payable to the Company or any
Restricted Subsidiary of the Company); (ii) purchase, redeem or otherwise
acquire or retire for value (including without limitation, in connection with
any merger or consolidation involving the Company) any Equity Interests of the
Company or any direct or indirect parent of the Company or other Affiliate of
the Company (other than any such Equity Interests owned by the Company or any
Wholly Owned Subsidiary of the Company); (iii) make any payment on or with
respect to, or purchase, redeem, defease or otherwise acquire or retire for
value any Indebtedness that is subordinated to the Notes more than six months
prior to any scheduled maturity, mandatory redemption, scheduled principal
repayment or sinking fund payment date (other than regularly scheduled payments
of interest); or (iv) make any Restricted Investment (all such payments and
other actions set forth in clauses (i) through (iv) above being collectively
referred to as 'Restricted Payments'), unless, at the time of and after giving
effect to such Restricted Payment:
(a) no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof; and
(b) the Company would, at the time of such Restricted Payment and
after giving pro forma effect thereto as if such Restricted Payment had
been made at the beginning of the applicable four-quarter period, have been
permitted to incur at least $1.00 of additional Indebtedness pursuant to
the Fixed Charge Coverage Ratio test set forth in the first paragraph of
the covenant described above under caption '--Incurrence of Indebtedness
and Issuance of Preferred Stock;' and
(c) such Restricted Payment, together with the aggregate amount of all
other Restricted Payments made by the Company and its Restricted
Subsidiaries after the date of the Indenture (excluding Restricted Payments
permitted by clauses (ii), (iii), (iv), (v), (vii) and (viii) of the next
succeeding paragraph), is less than the sum of (i) 50% of the Consolidated
Net Income of the Company for the period (taken as one accounting period)
from the beginning of the first fiscal quarter commencing after the date of
the Indenture to the end of the Company's most recently ended fiscal
quarter for which internal financial statements are available at the time
of such Restricted Payment (or, if such Consolidated Net Income for such
period is a deficit, less 100% of such deficit), plus (ii) 100% of the
aggregate net cash proceeds received by the Company from the issue or sale
since the date of the Indenture of Equity Interests of the Company (other
than Disqualified Stock) or of Disqualified Stock or debt securities of the
Company that have been converted into such Equity Interests (other than
Equity Interests (or Disqualified Stock or convertible debt securities)
sold to a Subsidiary of the Company and other than Disqualified Stock or
convertible debt securities that have been converted into Disqualified
Stock), plus (iii) to the extent that any Restricted Investment that was
made after the date of the Indenture is sold for cash or otherwise
liquidated or repaid for
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cash, the lesser of (A) the cash return of capital with respect to such
Restricted Investment (less the cost of disposition, if any) (but only to
the extent not included in subclause (i) of this clause (c)), and (B) the
initial amount of such Restricted Investment, plus (iv) $5.0 million.
The foregoing provisions will not prohibit (i) the payment of any dividend
within 60 days after the date of declaration thereof, if at said date of
declaration such payment would have complied with the provisions of the
Indenture; (ii) the redemption, repurchase, retirement, defeasance or other
acquisition of any subordinated Indebtedness or Equity Interests of the Company
in exchange for, or out of the net cash proceeds of the substantially concurrent
sale (other than to a Subsidiary of the Company) of, other Equity Interests of
the Company (other than any Disqualified Stock); provided that the amount of any
such net cash proceeds that are utilized for any such redemption, repurchase,
retirement, defeasance or other acquisition shall be excluded from clause (c)
(ii) of the preceding paragraph; (iii) the defeasance, redemption, repurchase or
other acquisition of subordinated Indebtedness with the net cash proceeds from
an incurrence of Permitted Refinancing Indebtedness; (iv) the payment of
scheduled dividends on or the redemption, repurchase, retirement, defeasance or
other acquisition of, any Disqualified Stock issued after the date hereof in
compliance with the provisions of the Indenture; (v) after March 29, 2001, the
Permitted Warrant Put Payment; (vi) payments made with respect to the
repurchase, redemption or other acquisition or retirement for value of any
Equity Interests of the Company, the Parent, Sunderland or any Subsidiary of the
Company held by any member of the Company's (or any of its Restricted
Subsidiaries'), Parent's or Sunderland's management pursuant to any management
equity subscription agreement or stock option agreement in effect as of the date
of the Indenture (provided that the aggregate price paid for all such
repurchased, redeemed, acquired or retired Equity Interests shall not exceed
$1.0 million in any twelve-month period); (vii) distributions to Parent in order
to enable Parent to pay franchise taxes and other ordinary course operating
expenses in an amount not to exceed $25,000 in any twelve-month period; and
(viii) the application of the proceeds of the Offering in the manner
contemplated in 'Use of Proceeds' above; provided, however, that at the time of,
and after giving effect to, any Restricted Payment permitted under clauses (i)
through (vii) no Default or Event of Default shall have occurred and be
continuing. In addition, payments and transactions permitted pursuant to clauses
(r) through (y) under '--Transactions with Affiliates' below shall not be deemed
to be Restricted Payments.
The Board of Directors may designate any Restricted Subsidiary to be an
Unrestricted Subsidiary if such designation would not cause a Default. For
purposes of making such determination, all outstanding Investments by the
Company and its Restricted Subsidiaries (except to the extent repaid in cash) in
the Subsidiary so designated will be deemed to be Restricted Payments at the
time of such designation and will reduce the amount available for Restricted
Payments under the first paragraph of this covenant. All such outstanding
Investments will be deemed to constitute Investments in an amount equal to the
greatest of (x) the net book value of such Investments at the time of such
designation and (y) the fair market value of such Investments at the time of
such designation. Such designation will only be permitted if such Restricted
Payment would be permitted at such time and if such Restricted Subsidiary
otherwise meets the definition of an Unrestricted Subsidiary.
The amount of all Restricted Payments (other than cash) shall be the fair
market value on the date of the Restricted Payment of the asset(s) or securities
proposed to be transferred or issued by the Company or such Subsidiary, as the
case may be, pursuant to the Restricted Payment. Not later than the date of
making any Restricted Payment, the Company shall deliver to the Trustee an
Officers' Certificate stating that such Restricted Payment is permitted and
setting forth the basis upon which the calculations required by the covenant
'Restricted Payments' were computed, together with a copy of any fairness
opinion or appraisal required by the Indenture.
Incurrence of Indebtedness and Issuance of Preferred Stock
The Indenture provides that the Company will not, and will not permit any
of its Subsidiaries to, directly or indirectly, create, incur, issue, assume,
guarantee or otherwise become directly or indirectly liable, contingently or
otherwise, with respect to (collectively, 'incur') any Indebtedness (including
Acquired Debt) and that the Company will not issue any Disqualified Stock and
will not permit any of its Subsidiaries to issue any shares of preferred stock
(other than to the Company or a Restricted Subsidiary of the Company); provided,
however, that the Company may incur Indebtedness (including Acquired Debt) or
issue shares of Disqualified Stock if:
(i) the Fixed Charge Coverage Ratio for the Company's most recently
ended four full fiscal quarters for which internal financial statements are
available immediately preceding the date on which such additional
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Indebtedness is incurred or such Disqualified Stock is issued would have
been at least 2.0 to 1, determined on a pro forma basis (including a pro
forma application of the net proceeds therefrom), as if the additional
Indebtedness had been incurred, or the Disqualified Stock had been issued,
as the case may be, at the beginning of such four-quarter period; and
(ii) no Default or Event of Default shall have occurred and be
continuing at the time of, or would occur after giving effect on a pro
forma basis to, such incurrence or issuance.
The provisions of the first paragraph of this covenant will not apply to
the incurrence of any of the following items of Indebtedness or the issuance of
preferred stock or Disqualified Stock (collectively, 'Permitted Debt'):
(i) the incurrence by the Company and its Subsidiaries of Indebtedness
arising under or in connection with the Credit Agreement; provided that the
aggregate principal amount of all Indebtedness (with letters of credit
being deemed to have a principal amount equal to the maximum potential
liability of the Company and its Restricted Subsidiaries thereunder)
outstanding under the Credit Agreement after giving effect to such
incurrence, including all Permitted Refinancing Indebtedness incurred to
refund, refinance or replace any other Indebtedness incurred pursuant to
this clause (i), does not exceed an amount equal to the greater of $50.0
million or $30.0 million plus the Borrowing Base, in each case less the
aggregate amount of all Indebtedness permanently repaid with the Net
Proceeds of any Asset Sale;
(ii) the incurrence by the Company and its Subsidiaries of the
Existing Indebtedness;
(iii) the incurrence by the Company or any of its Restricted
Subsidiaries of Indebtedness represented by Capital Lease Obligations,
mortgage financings or purchase money obligations, in each case incurred
for the purpose of financing all or any part of the purchase price or cost
of construction or improvement of property, plant or equipment used in the
business of the Company or such Restricted Subsidiary, in an aggregate
principal amount not to exceed the principal amount of such Capital Lease
Obligations outstanding on the date hereof plus $15.0 million at any time
outstanding;
(iv) the incurrence by the Company or any of its Restricted
Subsidiaries of Acquired Debt in connection with the acquisition of assets
or a new Restricted Subsidiary; provided that such Acquired Debt was
incurred by the prior owner of such assets or such Restricted Subsidiary
prior to such acquisition by the Company or one of its Restricted
Subsidiaries and was not incurred in connection with, or in contemplation
of, such acquisition by the Company or one of its Restricted Subsidiaries;
and provided further that the aggregate principal amount, accreted value or
liquidation preference, as applicable, of such Acquired Debt, together with
any other outstanding Indebtedness or preferred stock incurred pursuant to
this clause (iv), does not exceed $5.0 million;
(v) the incurrence by the Company or any of its Restricted
Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the
net proceeds of which are used to refund, refinance or replace Indebtedness
that was permitted by the Indenture to be incurred;
(vi) the incurrence by the Company or any of its Restricted
Subsidiaries of intercompany Indebtedness between or among the Company and
any of its Wholly Owned Restricted Subsidiaries; provided, however, that
(A) any subsequent issuance or transfer of Equity Interests that results in
any such Indebtedness being held by a Person other than the Company or a
Wholly Owned Restricted Subsidiary and (B) any sale or other transfer of
any such Indebtedness to a Person that is not either the Company or a
Wholly Owned Restricted Subsidiary (other than any pledge of such
Indebtedness to the lenders under the Credit Agreement) shall be deemed, in
each case, to constitute an incurrence of such Indebtedness by the Company
or such Restricted Subsidiary, as the case may be;
(vii) the incurrence by the Company or any of its Restricted
Subsidiaries of Hedging Obligations that are incurred for the purpose of
fixing or hedging interest rate risk with respect to any floating rate
Indebtedness that is permitted by the terms of this Indenture to be
outstanding, provided that the notional principal amount of any Hedging
Obligations does not significantly exceed the principal amount of
Indebtedness to which such agreement relates, or for the purpose of hedging
against fluctuations in currency values;
(viii) the Guarantee by the Company or any of the Restricted
Subsidiaries of Indebtedness of the Company or a Restricted Subsidiary of
the Company that was permitted to be incurred by another provision of this
covenant;
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(ix) the issuance by the Company's Unrestricted Subsidiaries of
preferred stock or the incurrence by the Company's Unrestricted
Subsidiaries of Non-Recourse Debt, provided, however, that if any such
Indebtedness ceases to be Non-Recourse Debt of an Unrestricted Subsidiary,
such event shall be deemed to constitute an incurrence of Indebtedness by a
Restricted Subsidiary of the Company;
(x) the incurrence by the Company and its Restricted Subsidiaries of
Indebtedness represented by the Notes and the Subsidiary Guarantees as
described under '--Subsidiary Guarantees' and the Indenture; and
(xi) the incurrence by the Company or any of its Restricted
Subsidiaries of additional Indebtedness in an aggregate principal amount
(or accreted value, as applicable) or the issuance of preferred stock with
an aggregate liquidation preference at any time outstanding, including all
Permitted Refinancing Indebtedness incurred to refund, refinance or replace
any other Indebtedness incurred pursuant to this clause (xi), not to exceed
$10.0 million.
For purposes of determining compliance with this covenant, in the event
that an item of Indebtedness meets the criteria of more than one of the
categories of Permitted Debt described in clauses (i) through (xi) above or is
entitled to be incurred pursuant to the first paragraph of this covenant, the
Company shall, in its sole discretion, classify or reclassify such item of
Indebtedness in any manner that complies with this covenant and such item of
Indebtedness will be treated as having been incurred pursuant to only one of
such clauses or pursuant to the first paragraph hereof. Accrual of interest, the
accretion of accreted value and the payment of interest in the form of
additional Indebtedness will not be deemed to be an incurrence of Indebtedness
for purposes of this covenant.
Liens
The Indenture provides that the Company will not, and will not permit any
of its Restricted Subsidiaries to, directly or indirectly, create, incur, assume
or suffer to exist any Lien securing Indebtedness or trade payables on any asset
now owned or hereafter acquired, or any income or profits therefrom or assign or
convey any right to receive income therefrom, except Permitted Liens.
Dividend and Other Payment Restrictions Affecting Subsidiaries
The Indenture provides that the Company will not, and will not permit any
of its Restricted Subsidiaries to, directly or indirectly, create or otherwise
cause or suffer to exist or become effective any encumbrance or restriction on
the ability of any Restricted Subsidiary to (i)(a) pay dividends or make any
other distributions to the Company or any of its Restricted Subsidiaries (1) on
its Capital Stock or (2) with respect to any other interest or participation in,
or measured by, its profits, or (b) pay any Indebtedness owed to the Company or
any of its Restricted Subsidiaries, (ii) make loans or advances to the Company
or any of its Restricted Subsidiaries or (iii) transfer any of its properties or
assets to the Company or any of its Restricted Subsidiaries, except for such
encumbrances or restrictions existing under or by reason of (a) Existing
Indebtedness as in effect on the date of the Indenture, (b) the Credit Agreement
as in effect as of the date of the Indenture, and any amendments, modifications,
restatements, renewals, increases, supplements, refundings, replacements or
refinancings thereof, provided that such amendments, modifications,
restatements, renewals, increases, supplements, refundings, replacement or
refinancings are no more restrictive on a whole with respect to such dividend
and other payment restrictions than those contained in the Credit Agreement as
in effect on the date of the Indenture, (c) the Indenture and the Notes, (d)
applicable law, (e) any instrument governing Indebtedness or Capital Stock of a
Person acquired by the Company or any of its Restricted Subsidiaries as in
effect at the time of such acquisition (except to the extent such Indebtedness
was incurred in connection with or in contemplation of such acquisition), which
encumbrance or restriction is not applicable to any Person, or the properties or
assets of any Person, other than the Person, or the property or assets of the
Person (including any Subsidiary of the Person), so acquired, provided that, in
the case of Indebtedness, such Indebtedness was permitted by the terms of the
Indenture to be incurred, (f) by reason of customary non-assignment and net
worth provisions in leases or other agreements entered into in the ordinary
course of business and consistent with past practices, (g) purchase money
obligations for property acquired in the ordinary course of business that impose
restrictions of the nature described in clause (iii) above on the property so
acquired, (h) Permitted Refinancing Indebtedness, provided that the restrictions
contained in the agreements governing such Permitted Refinancing Indebtedness
are no more restrictive than those contained in the agreements governing the
Indebtedness being refinanced, (i) customary restrictions in Capital Lease
Obligations, security agreements or mortgages securing Indebtedness of the
Company or a Restricted Subsidiary to the extent such restrictions restrict the
transfer of the property subject to such Capital
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Lease Obligations, security agreements or mortgages, (j) customary restrictions
with respect to an agreement that has been entered into for the sale or
disposition of assets or Capital Stock held by the Company or any Restricted
Subsidiary, (k) customary restrictions contained in any agreements or
documentation governing Indebtedness or preferred stock issued pursuant to
clause (xi) of the covenant described above under the caption '--Incurrence of
Indebtedness and Issuance of Preferred Stock' and (l) the Warrant Agreement and
the Shareholders Agreement.
Merger, Consolidation or Sale of Assets
The Indenture provides that the Company may not consolidate or merge with
or into (whether or not the Company is the surviving corporation), or sell,
assign, transfer, lease, convey or otherwise dispose of all or substantially all
of its properties or assets in one or more related transactions, to another
corporation, Person or entity unless (i) the Company is the surviving
corporation or the entity or the Person formed by or surviving any such
consolidation or merger (if other than the Company) or to which such sale,
assignment, transfer, lease, conveyance or other disposition shall have been
made is a corporation organized or existing under the laws of the United States,
any state thereof or the District of Columbia; (ii) the entity or Person formed
by or surviving any such consolidation or merger (if other than the Company) or
the entity or Person to which such sale, assignment, transfer, lease, conveyance
or other disposition shall have been made assumes all the obligations of the
Company under the Notes and the Indenture pursuant to a supplemental indenture
in a form reasonably satisfactory to the Trustee; (iii) immediately after giving
effect to such transaction no Default or Event of Default exists; and (iv)
except in the case of a merger of the Company with or into a Wholly Owned
Subsidiary of the Company, the Company or the entity or Person formed by or
surviving any such consolidation or merger (if other than the Company), or to
which such sale, assignment, transfer, lease, conveyance or other disposition
shall have been made (A) will have Consolidated Net Worth immediately after the
transaction equal to or greater than the Consolidated Net Worth of the Company
immediately preceding the transaction and (B) will, at the time of such
transaction and after giving pro forma effect thereto as if such transaction had
occurred at the beginning of the applicable four-quarter period, be permitted to
incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge
Coverage Ratio test set forth in the first paragraph of the covenant described
above under the caption '--Incurrence of Indebtedness and Issuance of Preferred
Stock.'
Transactions with Affiliates
The Indenture provides that the Company will not, and will not permit any
of its Restricted Subsidiaries to, make any payment to, or sell, lease, transfer
or otherwise dispose of any of its properties or assets to, or purchase any
property or assets from, or enter into or make or amend any transaction,
contract, agreement, understanding, loan, advance or guarantee with, or for the
benefit of, any Affiliate (each of the foregoing, an 'Affiliate Transaction'),
unless (i) such Affiliate Transaction is on terms that are no less favorable to
the Company or the relevant Restricted Subsidiary than those that would have
been obtained in a comparable transaction by the Company or such Restricted
Subsidiary with an unrelated Person and (ii) the Company delivers to the Trustee
(a) with respect to any Affiliate Transaction or series of related Affiliate
Transactions involving aggregate consideration in excess of $1.0 million, a
resolution of the Board of Directors set forth in an Officers' Certificate
certifying that such Affiliate Transaction complies with clause (i) above and
that such Affiliate Transaction has been approved by a majority of the Board of
Directors and (b) with respect to any Affiliate Transaction or series of related
Affiliate Transactions involving aggregate consideration in excess of $5.0
million, an opinion as to the fairness to the Holders of such Affiliate
Transaction from a financial point of view issued by an accounting, appraisal or
investment banking firm of national standing; provided that (r) the application
of the proceeds of the Initial Offering and the transactions entered into in
connection therewith in the manner described in 'Certain Transactions' above,
(s) capital contributions, advances, loans or other investments made by Parent
to the Company or any of its Restricted Subsidiaries, (t) (I) payments under the
Management Agreement in an amount not to exceed $300,000 in any twelve-month
period and (II) after the first anniversary of the original issuance of the
Notes, additional payments under the Management Agreement in an amount not to
exceed $700,000 in any twelve-month period provided that the Company's Fixed
Charge Coverage Ratio for the Company's most recently ended four full fiscal
quarters for which internal financial statements are available immediately
preceding the date on which such payment under the Management Agreement is made,
after giving pro forma effect to such payment, is equal to or greater than 2.25
to 1 (in each case, plus reasonable expenses incurred in connection with and
reimbursable under the Management Agreement), (u) payments by the Company or any
of its Restricted Subsidiaries to Mentmore and/or its Affiliates made for any
financial advisory, financing,
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underwriting or placement services or in respect of other investment banking
activities, including, without limitation, in connection with acquisitions or
divestitures, which payments are approved by a majority of the Board of
Directors of the Company in good faith, (v) payments under tax sharing
agreements to the extent such payments do not otherwise exceed the tax liability
the Company would have had were it not part of a consolidated group, (w) any
employment agreement, compensation agreement or employee benefit arrangement
entered into by the Company or any of its Restricted Subsidiaries in the
ordinary course of business, (x) transactions between or among Parent, the
Company and/or its Restricted Subsidiaries, (y) any other payment or
reimbursement of reasonable and customary fees and expenses incurred by an
Affiliate for services rendered to the Company or any of its Subsidiaries not to
exceed $100,000 in any twelve-month period (without duplication for any amounts
paid pursuant to any other clause of this covenant) and (z) Restricted Payments
that are permitted by the provisions of the Indenture described above under the
caption '--Restricted Payments,' in each case, shall not be deemed Affiliate
Transactions.
Limitation on Issuances and Sales of Capital Stock of Wholly Owned Restricted
Subsidiaries
The Indenture provides that the Company (i) will not, and will not permit
any Wholly Owned Restricted Subsidiary of the Company to, issue, transfer,
convey, sell, lease or otherwise dispose of any Capital Stock of any Wholly
Owned Restricted Subsidiary of the Company to any Person (other than the Company
or a Wholly Owned Restricted Subsidiary of the Company), unless (a) such
issuance, transfer, conveyance, sale, lease or other disposition is of all the
Capital Stock of such Wholly Owned Restricted Subsidiary and (b) the Net
Proceeds from such transfer, conveyance, sale, lease or other disposition are
applied in accordance with the covenant described above under the caption
'--Asset Sales,' and (ii) will not permit any Wholly Owned Restricted Subsidiary
of the Company to issue any of its Equity Interests (other than, if necessary,
shares of its Capital Stock constituting directors' qualifying shares) to any
Person other than to the Company or a Wholly Owned Restricted Subsidiary of the
Company.
Limitation on Layering Debt
The Indenture provides that (A) the Company will not incur, create, issue,
assume, Guarantee or otherwise become liable for any Indebtedness that is by its
terms subordinate or junior in right of payment to any Senior Debt and senior in
any respect in right of payment to the Notes and (B) the Guarantors will not
incur, create, issue, assume, Guarantee or otherwise become liable for any
Indebtedness that is by its terms subordinate or junior in right of payment to
any Senior Debt and senior in any respect in right of payment to the Subsidiary
Guarantees.
Additional Subsidiary Guarantees
The Indenture provides that if the Company or any of its Subsidiaries shall
acquire or create another Subsidiary after the date of the Indenture, then such
newly acquired or created Subsidiary (at any time such Subsidiary has net assets
or stockholder's equity in excess of $50,000) shall execute a Subsidiary
Guarantee and deliver an opinion of counsel, in accordance with the terms of the
Indenture; provided, however, that all Subsidiaries that have been properly
designated as Unrestricted Subsidiaries in accordance with the Indenture shall
not be subject to the preceding clause for so long as they continue to
constitute Unrestricted Subsidiaries.
Payments for Consent
The Indenture provides that neither the Company nor any of its Subsidiaries
will, directly or indirectly, pay or cause to be paid any consideration, whether
by way of interest, fee or otherwise, to any Holder of any Notes for or as an
inducement to any consent, waiver or amendment of any of the terms or provisions
of the Indenture or the Notes unless such consideration is offered to be paid or
is paid to all Holders of the Notes that consent, waive or agree to amend in the
time frame set forth in the solicitation documents relating to such consent,
waiver or agreement.
Reports
The Indenture provides that, whether or not required by the rules and
regulations of the Securities and Exchange Commission (the 'Commission'), so
long as any Notes are outstanding, the Company will furnish to the Holders of
Notes (i) all quarterly and annual financial information that would be required
to be contained in a filing with the Commission on Forms 10-Q and 10-K if the
Company were required to file such Forms, including
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a 'Management's Discussion and Analysis of Financial Condition and Results of
Operations' that describes the financial condition and results of operations of
the Company and its consolidated Subsidiaries (showing in reasonable detail,
either on the face of the financial statements or in the footnotes thereto and
in Management's Discussion and Analysis of Financial Condition and Results of
Operations, the financial condition and results of operations of the Company and
its Restricted Subsidiaries separate from the financial condition and results of
operations of the Unrestricted Subsidiaries of the Company) and, with respect to
the annual information only, a report thereon by the Company's certified
independent accountants and (ii) all current reports that would be required to
be filed with the Commission on Form 8-K if the Company were required to file
such reports; provided, however, that the Company shall not be required to make
any such filings on or prior to the date on which the Company's quarterly report
on Form 10-Q for the fiscal quarter ended June 30, 1997 would have been required
to be filed if, at the time such filings would have been required to be made
with the Commission, either (i) the Company shall have provided to each Holder
the information that would have been required to be filed or (ii) the Exchange
Offer Registration Statement has been filed with the Commission but has not yet
been declared effective and copies of the Exchange Offer Registration Statement
and any amendments thereto (to the extent such registration statement and/or
amendments contain additional information not disclosed in the Offering
Memorandum that would have been the subject of a filing required to be made
under Section 13 or 15(d) of the Exchange Act) have been provided to each
Holder, provided that any exhibits to the Exchange Offer Registration Statement
(or any amendments thereto) need not be delivered to any Holder of the Notes,
but sufficient copies thereto shall be furnished to the Trustee as reasonably
requested to permit the Trustee to deliver any such exhibits to any Holder upon
request. In addition, whether or not required by the rules and regulations of
the Commission, the Company will file a copy of all such information and reports
with the Commission for public availability (unless the Commission will not
accept such a filing) and make such information available to securities analysts
and prospective investors upon request. In addition, the Company and the
Guarantors have agreed that, for so long as any Notes remain outstanding, they
will furnish to the Holders and to securities analysts and prospective
investors, upon their request, the information required to be delivered pursuant
to Rule 144A(d)(4) under the Securities Act.
EVENTS OF DEFAULT AND REMEDIES
The Indenture provides that each of the following constitutes an Event of
Default: (i) default for 30 days in the payment when due of interest on, or
Liquidated Damages, if any, with respect to, the Notes (whether or not
prohibited by the subordination provisions of the Indenture); (ii) default in
payment when due (whether payable at maturity, upon redemption or otherwise) of
the principal of or premium, if any, on the Notes (whether or not prohibited by
the subordination provisions of the Indenture); (iii) failure by the Company to
comply with the provisions described under the captions '--Change of Control,'
'--Asset Sales' or '--Merger, Sale or Consolidation of Assets'; (iv) failure by
the Company for 30 days after written notice to comply with any of its other
agreements in the Indenture or the Notes; (v) default under any mortgage,
indenture or instrument under which there may be issued or by which there may be
secured or evidenced any Indebtedness for money borrowed by the Company or any
of its Restricted Subsidiaries (or the payment of which is guaranteed by the
Company or any of its Restricted Subsidiaries) whether such Indebtedness or
guarantee now exists, or is created after the date of the Indenture, which
default (a) is caused by a failure to pay principal of or premium, if any, or
interest on such Indebtedness prior to the expiration of the grace period
provided in such Indebtedness on the date of such default (a 'Payment Default')
or (b) results in the acceleration of such Indebtedness prior to its express
maturity and, in each case, the principal amount of any such Indebtedness,
together with the principal amount of any other such Indebtedness under which
there has been a Payment Default or the maturity of which has been so
accelerated, aggregates $5.0 million or more; (vi) failure by the Company or any
of its Restricted Subsidiaries to pay final and non-appealable judgments
aggregating in excess of $5.0 million, which judgments are not paid, discharged
or stayed for a period of 60 days; (vii) except as permitted by the Indenture,
any Subsidiary Guarantee shall be held in any judicial proceeding to be
unenforceable or invalid and such judgment has become final or non-appealable or
shall cease for any other reason to be in full force and effect or any
Guarantor, or any Person acting on behalf of any Guarantor, shall deny or
disaffirm its obligations under its Subsidiary Guarantee; and (viii) certain
events of bankruptcy or insolvency with respect to the Company or any of its
Significant Subsidiaries that are Restricted Subsidiaries.
If any Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount of the then outstanding Notes may
declare all the Notes to be due and payable immediately by notice in
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writing to the Company and the Trustee; provided, that so long as any
Indebtedness permitted to be incurred pursuant to the Credit Agreement shall be
outstanding, such acceleration shall not be effective until the earlier of (i)
an acceleration of any such Indebtedness under the Credit Agreement or (ii) five
business days after receipt by the Company and the Agent of written notice of
such acceleration. Notwithstanding the foregoing, in the case of an Event of
Default arising from certain events of bankruptcy or insolvency, with respect to
the Company, any Significant Subsidiary that is a Restricted Subsidiary or any
group of Restricted Subsidiaries that, taken together, would constitute a
Significant Subsidiary, all outstanding Notes will become due and payable
without further action or notice. Holders of the Notes may not enforce the
Indenture or the Notes except as provided in the Indenture. Subject to certain
limitations, Holders of a majority in principal amount of the then outstanding
Notes may direct the Trustee in its exercise of any trust or power. The Trustee
may withhold from Holders of the Notes notice of any continuing Default or Event
of Default (except a Default or Event of Default relating to the payment of
principal or interest) if it determines that withholding notice is in their
interest.
In the case of any Event of Default occurring by reason of any willful
action (or inaction) taken (or not taken) by or on behalf of the Company with
the intention of avoiding payment of the premium that the Company would have had
to pay if the Company then had elected to redeem the Notes pursuant to the
optional redemption provisions of the Indenture, an equivalent premium shall
also become and be immediately due and payable to the extent permitted by law
upon the acceleration of the Notes.
The Holders of a majority in aggregate principal amount of the Notes then
outstanding by notice to the Trustee may on behalf of the Holders of all of the
Notes waive any existing Default or Event of Default and its consequences under
the Indenture except a continuing Default or Event of Default in the payment of
interest on, or the principal of, the Notes.
The Company is required to deliver to the Trustee annually a statement
regarding compliance with the Indenture, and the Company is required upon
becoming aware of any Default or Event of Default, to deliver to the Trustee a
statement specifying such Default or Event of Default.
NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS
No director, officer, employee, incorporator or stockholder of the Company,
as such, shall have any liability for any obligations of the Company under the
Notes, the Indenture or for any claim based on, in respect of, or by reason of,
such obligations or their creation. Each Holder of Notes by accepting a Note
waives and releases all such liability. The waiver and release are part of the
consideration for issuance of the Notes. Such waiver may not be effective to
waive liabilities under the federal securities laws and it is the view of the
Commission that such a waiver is against public policy.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
The Company may, at its option and at any time, elect to have all of its
obligations discharged with respect to the outstanding Notes ('Legal
Defeasance') except for (i) the rights of Holders of outstanding Notes to
receive payments in respect of the principal of, premium, if any, and interest
and Liquidated Damages, if any, on such Notes when such payments are due from
the trust referred to below, (ii) the Company's obligations with respect to the
Notes concerning issuing temporary Notes, registration of Notes, mutilated,
destroyed, lost or stolen Notes and the maintenance of an office or agency for
payment and money for security payments held in trust, (iii) the rights, powers,
trusts, duties and immunities of the Trustee, and the Company's obligations in
connection therewith and (iv) the Legal Defeasance provisions of the Indenture.
In addition, the Company may, at its option and at any time, elect to have the
obligations of the Company released with respect to certain covenants that are
described in the Indenture ('Covenant Defeasance') and thereafter any omission
to comply with such obligations shall not constitute a Default or Event of
Default with respect to the Notes. In the event Covenant Defeasance occurs,
certain events (not including non-payment, bankruptcy, receivership,
rehabilitation and insolvency events) described under 'Events of Default' will
no longer constitute an Event of Default with respect to the Notes.
In order to exercise either Legal Defeasance or Covenant Defeasance, (i)
the Company must irrevocably deposit with the Trustee, in trust, for the benefit
of the Holders of the Notes, cash in U.S. dollars, non-callable Government
Securities, or a combination thereof, in such amounts as will be sufficient, in
the opinion of a nationally recognized firm of independent public accountants,
to pay the principal of, premium, if any, and interest and Liquidated Damages,
if any, on the outstanding Notes on the stated maturity or on the applicable
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redemption date, as the case may be, and the Company must specify whether the
Notes are being defeased to maturity or to a particular redemption date; (ii) in
the case of Legal Defeasance, the Company shall have delivered to the Trustee an
opinion of counsel in the United States reasonably acceptable to the Trustee
confirming that (A) the Company has received from, or there has been published
by, the Internal Revenue Service a ruling or (B) since the date of the
Indenture, there has been a change in the applicable federal income tax law, in
either case to the effect that, and based thereon such opinion of counsel shall
confirm that, the Holders of the outstanding Notes will not recognize income,
gain or loss for federal income tax purposes as a result of such Legal
Defeasance and will be subject to federal income tax on the same amounts, in the
same manner and at the same times as would have been the case if such Legal
Defeasance had not occurred; (iii) in the case of Covenant Defeasance, the
Company shall have delivered to the Trustee an opinion of counsel in the United
States reasonably acceptable to the Trustee confirming that the Holders of the
outstanding Notes will not recognize income, gain or loss for federal income tax
purposes as a result of such Covenant Defeasance and will be subject to federal
income tax on the same amounts, in the same manner and at the same times as
would have been the case if such Covenant Defeasance had not occurred; (iv) no
Default or Event of Default shall have occurred and be continuing on the date of
such deposit (other than a Default or Event of Default resulting from the
borrowing of funds to be applied to such deposit) or insofar as Events of
Default from bankruptcy or insolvency events are concerned, at any time in the
period ending on the 91st day after the date of deposit; (v) such Legal
Defeasance or Covenant Defeasance will not result in a breach or violation of,
or constitute a default under any material agreement or instrument (other than
the Indenture) to which the Company or any of its Subsidiaries is a party or by
which the Company or any of its Subsidiaries is bound; (vi) the Company must
have delivered to the Trustee an opinion of counsel to the effect that after the
91st day following the deposit, the trust funds will not be subject to the
effect of any applicable bankruptcy, insolvency, reorganization or similar laws
affecting creditors' rights generally; (vii) the Company must deliver to the
Trustee an Officers' Certificate stating that the deposit was not made by the
Company with the intent of preferring the Holders of Notes over the other
creditors of the Company or with the intent of defeating, hindering, delaying or
defrauding creditors of the Company or others; and (viii) the Company must
deliver to the Trustee an Officers' Certificate and an opinion of counsel, each
stating that all conditions precedent provided for relating to the Legal
Defeasance or the Covenant Defeasance have been complied with.
TRANSFER AND EXCHANGE
A Holder may transfer or exchange Notes in accordance with the Indenture.
The Registrar and the Trustee may require a Holder, among other things, to
furnish appropriate endorsements and transfer documents and the Company may
require a Holder to pay any taxes and fees required by law or permitted by the
Indenture. The Company is not required to transfer or exchange any Note selected
for redemption. Also, the Company is not required to transfer or exchange any
Note for a period of 15 days before a selection of Notes to be redeemed.
The registered Holder of a Note will be treated as the owner of it for all
purposes.
AMENDMENT, SUPPLEMENT AND WAIVER
Except as provided in the next two succeeding paragraphs, the Indenture or
the Notes may be amended or supplemented with the consent of the Holders of at
least a majority in principal amount of the Notes then outstanding (including,
without limitation, consents obtained in connection with a purchase of, or
tender offer or exchange offer for, Notes), and any existing default or
compliance with any provision of the Indenture or the Notes may be waived with
the consent of the Holders of a majority in principal amount of the then
outstanding Notes (including consents obtained in connection with a tender offer
or exchange offer for Notes).
Without the consent of each Holder affected, an amendment or waiver may not
(with respect to any Notes held by a non-consenting Holder): (i) reduce the
principal amount of Notes whose Holders must consent to an amendment, supplement
or waiver, (ii) reduce the principal of or change the fixed maturity of any Note
or alter the provisions with respect to the redemption of the Notes (other than
provisions relating to the covenants described above under the caption
'--Repurchase at the Option of Holders'), (iii) reduce the rate of or change the
time for payment of interest on any Note, (iv) waive a Default or Event of
Default in the payment of principal of or premium, if any, or interest on the
Notes (except a rescission of acceleration of the Notes by the Holders of at
least a majority in aggregate principal amount of the Notes and a waiver of the
payment default that resulted from such acceleration), (v) make any Note payable
in money other than that stated in the Notes, (vi) make any change in the
provisions of the Indenture relating to waivers of past Defaults or the rights
of Holders of Notes to
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receive payments of principal of or premium, if any, or interest on the Notes,
(vii) waive a redemption payment with respect to any Note (other than a payment
required by one of the covenants described above under the caption '--Repurchase
at the Option of Holders') or (viii) make any change in the foregoing amendment
and waiver provisions.
Notwithstanding the foregoing, without the consent of any Holder of Notes,
the Company and the Trustee may amend or supplement the Indenture or the Notes
to cure any ambiguity, defect or inconsistency, to provide for uncertificated
Notes in addition to or in place of certificated Notes, to provide for the
assumption of the Company's obligations to Holders of Notes in the case of a
merger or consolidation, to make any change that would provide any additional
rights or benefits to the Holders of Notes or that does not adversely affect the
legal rights under the Indenture of any such Holder, or to comply with
requirements of the Commission in order to effect or maintain the qualification
of the Indenture under the Trust Indenture Act.
CONCERNING THE TRUSTEE
The Indenture contains certain limitations on the rights of the Trustee,
should it become a creditor of the Company, to obtain payment of claims in
certain cases, or to realize on certain property received in respect of any such
claim as security or otherwise. The Trustee will be permitted to engage in other
transactions; however, if it acquires any conflicting interest it must eliminate
such conflict within 90 days, apply to the Commission for permission to continue
or resign.
The Holders of a majority in principal amount of the then outstanding Notes
will have the right to direct the time, method and place of conducting any
proceeding for exercising any remedy available to the Trustee, subject to
certain exceptions. The Indenture provides that in case an Event of Default
shall occur (which shall not be cured), the Trustee will be required, in the
exercise of its power, to use the degree of care of a prudent man in the conduct
of his own affairs. Subject to such provisions, the Trustee will be under no
obligation to exercise any of its rights or powers under the Indenture at the
request of any Holder of Notes, unless such Holder shall have offered to the
Trustee security and indemnity satisfactory to it against any loss, liability or
expense.
BOOK-ENTRY, DELIVERY AND FORM
Except as set forth in the next paragraph, the New Notes will initially be
issued in the form of one Global Note (the 'Global Note'). The Global Note will
be deposited upon issuance with, or on behalf of, The Depository Trust Company
(the 'Depositary') and registered in the name of Cede & Co., as nominee of the
Depositary (such nominee being referred to herein as the 'Global Note Holder').
Notes that are issued as described below under '--Certificated Securities'
will be issued in the form of registered definitive certificates (the
'Certificated Securities'). Upon the transfer of Certificated Securities, such
Certificated Securities may, unless the Global Note has previously been
exchanged for Certificated Securities, be exchanged for an interest in the
Global Note representing the principal amount of Notes being transferred.
The Depositary is a limited-purpose trust company that was created to hold
securities for its participating organizations (collectively, the 'Participants'
or the 'Depositary's Participants') and to facilitate the clearance and
settlement of transactions in such securities between Participants through
electronic book-entry changes in accounts of its Participants. The Depositary's
Participants include securities brokers and dealers (including the Initial
Purchasers), banks and trust companies, clearing corporations and certain other
organizations. Access to the Depositary's system is also available to other
entities such as banks, brokers, dealers and trust companies (collectively, the
'Indirect Participants' or the 'Depositary's Indirect Participants') that clear
through or maintain a custodial relationship with a Participant, either directly
or indirectly. Persons who are not Participants may beneficially own securities
held by or on behalf of the Depositary only thorough the Depositary's
Participants or the Depositary's Indirect Participants.
The Company expects that pursuant to procedures established by the
Depositary (i) upon deposit of the Global Note, the Depositary will credit the
accounts of Participants designated by the Exchange Agent with portions of the
principal amount of the Global Note and (ii) ownership of the Notes evidenced by
the Global Note will be shown on, and the transfer of ownership thereof will be
effected only through, records maintained by the Depositary (with respect to the
interests of the Depositary's Participants), the Depositary's Participants and
the Depositary's Indirect Participants. Some states require that certain persons
take physical delivery in definitive form of securities that they own.
Consequently, the ability to transfer Notes evidenced by the Global Note will be
limited to such extent.
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So long as the Global Note Holder is the registered owner of any Notes, the
Global Note Holder will be considered the sole Holder under the Indenture of any
Notes evidenced by the Global Note. Beneficial owners of Notes evidenced by the
Global Note will not be considered the owners or Holders thereof under the
Indenture for any purpose, including with respect to the giving of any
directions, instructions or approvals to the Trustee thereunder. Neither the
Company nor the Trustee will have any responsibility or liability for any aspect
of the records of the Depositary or for maintaining, supervising or reviewing
any records of the Depositary relating to the Notes.
Payments in respect of the principal of, premium, if any, interest and
Liquidated Damages, if any, on any Notes registered in the name of the Global
Note Holder on the applicable record date will be payable by the Trustee to or
at the direction of the Global Note Holder in its capacity as the registered
Holder under the Indenture. Under the terms of the Indenture, the Company and
the Trustee may treat the persons in whose names Notes, including the Global
Note, are registered as the owners thereof for the purpose of receiving such
payments. Consequently, neither the Company nor the Trustee has or will have any
responsibility or liability for the payment of such amounts to beneficial owners
of Notes. The Company believes, however, that it is currently the policy of the
Depositary to immediately credit the accounts of the relevant Participants with
such payments, in amounts proportionate to their respective holdings of
beneficial interests in the relevant security as shown on the records of the
Depositary. Payments by the Depositary's Participants and the Depositary's
Indirect Participants to the beneficial owners of Notes will be governed by
standing instructions and customary practice and will be the responsibility of
the Depositary's Participants or the Depositary's Indirect Participants.
Certificated Securities
Subject to certain conditions, any person having a beneficial interest in
the Global Note may, upon request to the Trustee, exchange such beneficial
interest for Notes in the form of Certificated Securities. Upon any such
issuance, the Trustee is required to register such Certificated Securities in
the name of, and cause the same to be delivered to, such person or persons (or
the nominee of any thereof). In addition, if (i) the Company notifies the
Trustee in writing that the Depositary is no longer willing or able to act as a
depositary and the Company is unable to locate a qualified successor within 90
days or (ii) the Company, at its option, notifies the Trustee in writing that it
elects to cause the issuance of Notes in the form of Certificated Securities
under the Indenture, then, upon surrender by the Global Note Holder of its
Global Note, Notes in such form will be issued to each person that the Global
Note Holder and the Depositary identify as being the beneficial owner of the
related Notes.
Neither the Company nor the Trustee will be liable for any delay by the
Global Note Holder or the Depositary in identifying the beneficial owners of
Notes and the Company and the Trustee may conclusively rely on, and will be
protected in relying on, instructions from the Global Note Holder or the
Depositary for all purposes.
Settlement and Payment
The Indenture will require that payments in respect of the Notes
represented by the Global Note (including principal, premium, if any, interest
and Liquidated Damages, if any) be made by wire transfer of immediately
available funds to the accounts specified by the Global Note Holder. With
respect to Certificated Securities, the Company will make all payments of
principal, premium, if any, interest and Liquidated Damages, if any, by wire
transfer of immediately available funds to the accounts specified by the Holders
thereof or, if no such account is specified, by mailing a check to each such
Holder's registered address. The Company expects that secondary trading in the
Certificated Securities will also be settled in immediately available funds.
CERTAIN DEFINITIONS
Set forth below are certain defined terms used in the Indenture. Reference
is made to the Indenture for a full disclosure of all such terms, as well as any
other capitalized terms used herein for which no definition is provided.
'Acquired Debt' means, with respect to any specified Person, (i)
Indebtedness or preferred stock of any other Person existing at the time such
other Person is merged with or into or became a Subsidiary of such specified
Person, including, without limitation, Indebtedness or preferred stock incurred
in connection with, or in contemplation of, such other Person merging with or
into or becoming a Subsidiary of such specified Person, and (ii) Indebtedness
secured by a Lien encumbering any asset acquired by such specified Person.
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'Affiliate' of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, 'control'
(including, with correlative meanings, the terms 'controlling,' 'controlled by'
and 'under common control with'), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise; provided that
beneficial ownership of 10% or more of the voting securities of a Person shall
be deemed to be control.
'Asset Sale' means (i) the sale, lease, conveyance or other disposition of
any assets or rights (including, without limitation, by way of a sale and
leaseback) other than sales of inventory in the ordinary course of business
consistent with past practices (provided that the sale, lease, conveyance or
other disposition of all or substantially all of the assets of the Company and
its Subsidiaries taken as a whole will be governed by the provisions of the
Indenture described above under the caption '--Change of Control' and/or the
provisions described above under the caption '--Merger, Consolidation or Sale of
Assets' and not by the provisions of the Asset Sale covenant), and (ii) the
issuance of Equity Interests in any Restricted Subsidiary or the sale of Equity
Interests in any of the Company's Restricted Subsidiaries, in the case of either
clause (i) or (ii), whether in a single transaction or a series of related
transactions (a) that have a fair market value in excess of $1.0 million or (b)
for net proceeds in excess of $1.0 million. Notwithstanding the foregoing: (i) a
transfer of assets or Equity Interests by the Company to a Wholly Owned
Restricted Subsidiary or by a Wholly Owned Restricted Subsidiary to the Company
or to another Wholly Owned Restricted Subsidiary, (ii) an issuance of Equity
Interests by a Wholly Owned Restricted Subsidiary to the Company or to another
Wholly Owned Restricted Subsidiary, (iii) the disposal of obsolete equipment and
machinery in the ordinary course of business and (iv) a Restricted Payment that
is permitted by the covenant described above under the caption '--Restricted
Payments' will not be deemed to be Asset Sales.
'Borrowing Base' means, as of any date, an amount equal to the sum of (a)
85% of the face amount of all trade receivables owned by the Company and its
Restricted Subsidiaries as of such date that are not more than 90 days past due,
less the allowance for doubtful accounts, each of the foregoing determined in
accordance with GAAP, and (b) 50% of the book value of all inventory owned by
the Company and its Restricted Subsidiaries as of such date, less any applicable
reserves, each of the foregoing determined in accordance with GAAP. To the
extent that information is not available as to the amount of trade receivables
or inventory as of a specific date, the Company may utilize the most recent
available information for purposes of calculating the Borrowing Base.
'Capital Lease Obligation' means, at the time any determination thereof is
to be made, the amount of the liability in respect of a capital lease that would
at such time be required to be capitalized on a balance sheet in accordance with
GAAP.
'Capital Stock' means (i) in the case of a corporation, corporate stock,
(ii) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
corporate stock, (iii) in the case of a partnership or limited liability
company, partnership or membership interests (whether general or limited) and
(iv) any other interest or participation that confers on a Person the right to
receive a share of the profits and losses of, or distributions of assets of, the
issuing Person.
'Cash Equivalents' means (i) United States dollars, (ii) securities issued
or directly and fully guaranteed or insured by the United States government or
any agency or instrumentality thereof having maturities of not more than one
year from the date of acquisition, (iii) certificates of deposit and eurodollar
time deposits with maturities of one year or less from the date of acquisition,
bankers' acceptances with maturities not exceeding six months and overnight bank
deposits, in each case with any lender party to the Credit Agreement or with any
domestic commercial bank having capital and surplus in excess of $500 million,
(iv) repurchase obligations with a term of not more than seven days for
underlying securities of the types described in clauses (ii) and (iii) above
entered into with any financial institution meeting the qualifications specified
in clause (iii) above, (v) commercial paper rated at least P-1 by Moody's
Investors Service, Inc. or A-1 by Standard & Poor's Corporation and in each case
maturing within six months after the date of acquisition and (vi) investment
funds with total assets in excess of $500 million that invest at least 95% of
their assets in securities of the types described in clauses (i) through (v)
above.
'Consolidated Cash Flow' means, with respect to any Person for any period,
the Consolidated Net Income of such Person for such period plus (i) an amount
equal to any extraordinary, non-recurring or unusual loss plus any net loss
realized in connection with an asset sale (to the extent such losses were
deducted or otherwise
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excluded in computing such Consolidated Net Income), plus (ii) provision for
taxes based on income or profits of such Person and its Subsidiaries for such
period, to the extent that such provision for taxes was included in computing
such Consolidated Net Income, plus (iii) consolidated interest expense of such
Person and its Subsidiaries for such period, whether paid or accrued and whether
or not capitalized (including, without limitation, amortization of debt issuance
costs and original issue discount, non-cash interest payments, the interest
component of any deferred payment obligations, the interest component of all
payments associated with Capital Lease Obligations, commissions, discounts and
other fees and charges incurred in respect of letter of credit or bankers'
acceptance financings, and net payments (if any) pursuant to Hedging
Obligations), to the extent that any such expense was deducted in computing such
Consolidated Net Income, plus (iv) depreciation, amortization (including
amortization of goodwill and other intangibles but excluding amortization of
prepaid cash expenses that were paid in a prior period) and other non-cash
expenses (excluding any such non-cash expense to the extent that it represents
an accrual of or reserve for cash expenses in any future period or amortization
of a prepaid cash expense that was paid in a prior period) of such Person and
its Subsidiaries for such period to the extent that such depreciation,
amortization and other non-cash expenses were deducted in computing such
Consolidated Net Income, plus (v) an amount equal to all premiums on prepayments
of debt, minus (vi) non-cash items increasing such Consolidated Net Income for
such period, in each case, on a consolidated basis and determined in accordance
with GAAP. Notwithstanding the foregoing, the provision for taxes on the income
or profits of, and the depreciation and amortization and other non-cash charges
of, a Subsidiary of the referent Person shall be added to Consolidated Net
Income to compute Consolidated Cash Flow only to the extent that a corresponding
amount would be permitted at the date of determination to be dividended to the
Company by such Subsidiary without prior approval (that has not been obtained),
and without direct or indirect restriction pursuant to the terms of its charter
and all agreements, instruments, judgments, decrees, orders, statutes, rules and
governmental regulations applicable to that Subsidiary or its stockholders.
'Consolidated Net Income' means, with respect to any Person for any period,
the aggregate of the Net Income of such Person and its Restricted Subsidiaries
for such period, on a consolidated basis, determined in accordance with GAAP;
provided that (i) the Net Income (but not loss) of any Person that is not a
Restricted Subsidiary or that is accounted for by the equity method of
accounting shall be included only to the extent of the amount of dividends or
distributions paid in cash to the referent Person or a Wholly Owned Restricted
Subsidiary thereof that is a Guarantor and, for purposes of determining
Consolidated Cash Flow only, shall not exceed the consolidated net income of
such Person for such period, (ii) the Net Income of any Restricted Subsidiary
shall be excluded to the extent that the declaration or payment of dividends or
similar distributions by that Restricted Subsidiary of that Net Income is not at
the date of determination permitted without any prior governmental approval
(that has not been obtained) or, directly or indirectly, by operation of the
terms of its charter or any agreement, instrument, judgment, decree, order,
statute, rule or governmental regulation applicable to that Restricted
Subsidiary or its stockholders, (iii) the Net Income of any Person acquired in a
pooling of interests transaction for any period prior to the date of such
acquisition shall be excluded, (iv) the cumulative effect of a change in
accounting principles shall be excluded and (v) the Net Income of any Person
that is an Unrestricted Subsidiary shall be included only to the extent of the
amount of cash dividends or cash distributions paid to such Person or a
Restricted Subsidiary thereof.
'Consolidated Net Worth' means, with respect to any Person as of any date,
the sum of (i) the consolidated equity of the common stockholders of such Person
and its consolidated Subsidiaries as of such date plus (ii) the respective
amounts reported on such Person's balance sheet as of such date with respect to
any series of preferred stock (other than Disqualified Stock) that by its terms
is not entitled to the payment of dividends unless such dividends may be
declared and paid only out of net earnings in respect of the year of such
declaration and payment, but only to the extent of any cash received by such
Person upon issuance of such preferred stock, less (x) all write-ups (other than
write-ups resulting from foreign currency translations and write-ups of tangible
assets of a going concern business made within 12 months after the acquisition
of such business) subsequent to the date of the Indenture in the book value of
any asset owned by such Person or a consolidated Subsidiary of such Person, (y)
all investments as of such date in unconsolidated Restricted Subsidiaries and in
Persons that are not Subsidiaries (except, in each case, Permitted Investments),
and (z) all unamortized debt discount and expense and unamortized deferred
charges as of such date, all of the foregoing determined in accordance with
GAAP.
'Credit Agreement' means that certain Credit Agreement, dated as of June
13, 1997, by and among Parent, the Company and each Subsidiary of the Company
and Fleet National Bank, as Agent, providing for up to $30.0
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million of revolving credit borrowings, including any related notes, guarantees,
collateral documents, instruments and agreements executed in connection
therewith, and in each case as amended, modified (including any agreement
extending the maturity of, increasing the total commitment under or otherwise
restructuring all or any portion of the Indebtedness under such agreement or any
successor or replacement agreement), renewed, refunded, replaced, restated,
supplemented or refinanced from time to time.
'Default' means any event that is or with the passage of time or the giving
of notice or both would be an Event of Default.
'Disqualified Stock' means any Capital Stock that, by its terms (or by the
terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at
the option of the Holder thereof, in whole or in part, on or prior to the date
that is 91 days after the date on which the Notes mature.
'Equity Interests' means Capital Stock and all warrants, options or other
rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
'Existing Indebtedness' means up to $6.8 million in aggregate principal
amount of Indebtedness of the Company and its Subsidiaries (other than
Indebtedness under the Credit Agreement) in existence on the date of the
Indenture and set forth on a schedule thereto (including any refinancings
thereof), until such amounts are permanently repaid.
'Fixed Charges' means, with respect to any Person and its Restricted
Subsidiaries for any period, the sum, without duplication, of (i) the
consolidated interest expense of such Person and its Restricted Subsidiaries for
such period, whether paid or accrued (including, without limitation,
amortization of debt issuance costs and original issue discount, non-cash
interest payments, the interest component of any deferred payment obligations,
the interest component of all payments associated with Capital Lease
Obligations, commissions, discounts and other fees and charges incurred in
respect of letter of credit or bankers' acceptance financings, and net payments
(if any) pursuant to Hedging Obligations) and (ii) the consolidated interest
expense of such Person and its Restricted Subsidiaries that was capitalized
during such period, and (iii) any interest expense on Indebtedness of another
Person that is Guaranteed by such Person or one of its Restricted Subsidiaries
or secured by a Lien on assets of such Person or one of its Restricted
Subsidiaries (whether or not such Guarantee or Lien is called upon) and (iv) all
dividend payments (including all dividend payments within 60 days of the
measurement date for any period), whether or not in cash, on any series of (A)
Disqualified Stock of such Person and (B) preferred stock of any Subsidiary of
such Person, other than dividend payments on Equity Interests payable solely in
Equity Interests of the Company and other than payments to such Person and its
Restricted Subsidiaries, in each case, on a consolidated basis and in accordance
with GAAP.
'Fixed Charge Coverage Ratio' means with respect to any Person and its
Restricted Subsidiaries for any period, the ratio of the Consolidated Cash Flow
of such Person and its Restricted Subsidiaries for such period to the Fixed
Charges of such Person and its Restricted Subsidiaries for such period. In the
event that the Company or any of its Restricted Subsidiaries incurs, assumes,
Guarantees or redeems any Indebtedness (other than revolving credit borrowings)
or issues or redeems preferred stock subsequent to the commencement of the
period for which the Fixed Charge Coverage Ratio is being calculated but prior
to the date on which the event for which the calculation of the Fixed Charge
Coverage Ratio is made (the 'Calculation Date'), then the Fixed Charge Coverage
Ratio shall be calculated giving pro forma effect to such incurrence,
assumption, Guarantee or redemption of Indebtedness, or such issuance or
redemption of preferred stock, and the application of the net proceeds thereof,
as if the same had occurred at the beginning of the applicable four-quarter
reference period. In addition, for purposes of making the computation referred
to above, (i) acquisitions that have been made by the Company or any of its
Restricted Subsidiaries, including through mergers or consolidations and
including any related financing transactions, during the four-quarter reference
period or subsequent to such reference period and on or prior to the Calculation
Date shall be deemed to have occurred on the first day of the four-quarter
reference period and Consolidated Cash Flow for such reference period shall be
calculated without giving effect to clause (iii) of the proviso set forth in the
definition of Consolidated Net Income, and (ii) the Consolidated Cash Flow
attributable to discontinued operations, as determined in accordance with GAAP,
and operations or businesses disposed of prior to the Calculation Date, shall be
excluded, and (iii) the Fixed Charges attributable to discontinued operations,
as determined in accordance with GAAP, and operations or businesses disposed of
prior to the Calculation Date, shall be excluded, but only to the extent that
the obligations giving rise to such Fixed
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Charges will not be obligations of the referent Person or any of its Restricted
Subsidiaries following the Calculation Date.
'GAAP' means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession, which are in effect from time to time.
'Guarantee' means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters of credit and
reimbursement agreements in respect thereof), of all or any part of any
Indebtedness.
'Hedging Obligations' means, with respect to any Person, the obligations of
such Person under (i) interest rate swap agreements, currency rate swap
agreements, interest rate cap agreements and interest rate collar agreements and
(ii) other agreements or arrangements designed to protect such Person against
fluctuations in interest rates or currency values.
'Indebtedness' means, with respect to any Person, any indebtedness of such
Person, whether or not contingent, in respect of borrowed money or evidenced by
bonds, notes, debentures or similar instruments or letters of credit (or
reimbursement agreements in respect thereof) or banker's acceptances or
representing Capital Lease Obligations or the balance deferred and unpaid of the
purchase price of any property or representing any Hedging Obligations, except
any such balance that constitutes an accrued expense or trade payable, if and to
the extent any of the foregoing indebtedness (other than letters of credit and
Hedging Obligations) would appear as a liability upon a balance sheet of such
Person prepared in accordance with GAAP, as well as all indebtedness of others
secured by a Lien on any asset of such Person (but only to the extent of the
fair market value of the assets subject to such Lien) (whether or not such
indebtedness is assumed by such Person) and, to the extent not otherwise
included, the Guarantee by such Person of any indebtedness of any other Person.
The amount of any Indebtedness outstanding as of any date shall be (i) the
accreted value thereof, in the case of any Indebtedness that does not require
current payments of interest, and (ii) the principal amount thereof, together
with any interest thereon that is more than 30 days past due, in the case of any
other Indebtedness.
'Investments' means, with respect to any Person, all investments by such
Person in other Persons (including Affiliates) in the forms of direct or
indirect loans (including guarantees of Indebtedness or other obligations),
advances or capital contributions (excluding commission, travel and similar
advances to officers and employees made in the ordinary course of business),
purchases or other acquisitions for consideration of Indebtedness, Equity
Interests or other securities, together with all items that are or would be
classified as investments on a balance sheet prepared in accordance with GAAP;
provided, however, that if the sole consideration for any such investment is
Capital Stock of the Company or a Subsidiary that is not Disqualified Stock,
then such investment shall not be deemed an Investment for purposes of the
Indenture. If the Company or any Restricted Subsidiary of the Company sells or
otherwise disposes of any Equity Interests of any direct or indirect Subsidiary
of the Company such that, after giving effect to any such sale or disposition,
such Person is no longer a Restricted Subsidiary of the Company, the Company
shall be deemed to have made an Investment on the date of any such sale or
disposition equal to the fair market value of the Equity Interests of such
Restricted Subsidiary not sold or disposed of in an amount determined as
provided in the final paragraph of the covenant described above under the
caption '--Restricted Payments.'
'Lien' means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction).
'Make-Whole Premium' means, with respect to a Note, an amount equal to the
greater of (i) 5.563% of the outstanding principal amount of such Note and (ii)
the excess of (a) the present value of the remaining interest, premium and
principal payments due on such Note as if such Note were redeemed on June 15,
2002, computed using a discount rate equal to the Treasury Rate plus 75 basis
points, over (b) the outstanding principal amount of such Note.
'Management Agreement' means the agreement, dated as of March 15, 1996,
between the Company and Mentmore, as amended from time to time.
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'Net Income' means, with respect to any Person for any period, the net
income (loss) of such Person, determined in accordance with GAAP and before any
reduction in respect of preferred stock dividends, excluding, however, (i) any
gain (but not loss), together with any related provision for taxes on such gain
(but not loss), realized in connection with (a) any asset sale (including,
without limitation, dispositions pursuant to sale and leaseback transactions) or
(b) the disposition of any securities by such Person or any of its Restricted
Subsidiaries or the extinguishment of any Indebtedness of such Person or any of
its Restricted Subsidiaries and (ii) any extraordinary or nonrecurring gain (but
not loss), together with any related provision for taxes on such extraordinary
or nonrecurring gain (but not loss).
'Net Proceeds' means the aggregate cash proceeds received by the Company or
any of its Restricted Subsidiaries in respect of any Asset Sale (including,
without limitation, any cash received upon the sale or other disposition of any
non-cash consideration received in any Asset Sale), net of the direct costs
relating to such Asset Sale (including, without limitation, legal, accounting
and investment banking fees, and sales commissions) and any relocation expenses
incurred as a result thereof, taxes paid or payable as a result thereof (after
taking into account any available tax credits or deductions and any tax sharing
arrangements), amounts required to be applied to the repayment of Indebtedness
secured by a Lien on the asset or assets that were the subject of such Asset
Sale, any provision for permitted minority interests in any Restricted
Subsidiary as a result of such Asset Sale and any reserve established in
accordance with GAAP against any liabilities associated with the assets sold or
disposed of in such Asset Sale, including, without limitation, sales price
adjustments, pension and other post-employment benefit liabilities and
liabilities related to environmental matters or against any indemnification
obligations associated with the assets sold or disposed of in such Asset Sale or
provision for minority interest holders in any Restricted Subsidiary as a result
of such Asset Sale.
'Non-Recourse Debt' means Indebtedness (i) as to which neither the Company
nor any of its Restricted Subsidiaries (a) provides credit support of any kind
(including any undertaking, agreement or instrument that would constitute
Indebtedness), (b) is directly or indirectly liable (as a guarantor or
otherwise), or (c) constitutes the lender; and (ii) no default with respect to
which (including any rights that the holders thereof may have to take
enforcement action against an Unrestricted Subsidiary) would permit (upon
notice, lapse of time or both) any holder of any other Indebtedness of the
Company or any of its Restricted Subsidiaries in excess of $5.0 million to
declare a default on such other Indebtedness or cause the payment thereof to be
accelerated or payable prior to its stated maturity; and (iii) as to which the
lenders have been notified in writing that they will not have any recourse to
the stock or assets of the Company or any of its Restricted Subsidiaries.
'Obligations' means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
'Parent' means Precise Holding Corporation, a Delaware corporation.
'Permitted Investments' means (a) any Investment in the Company or in a
Wholly Owned Restricted Subsidiary of the Company; (b) any Investment in Cash
Equivalents; (c) any Investment by the Company or any Restricted Subsidiary of
the Company in a Person, if as a result of such Investment (i) such Person
becomes a Wholly Owned Restricted Subsidiary of the Company and a Guarantor or
(ii) such Person is merged, consolidated or amalgamated with or into, or
transfers or conveys substantially all of its assets to, or is liquidated into,
the Company or a Wholly Owned Restricted Subsidiary of the Company; (d) any
Restricted Investment made as a result of the receipt of non-cash consideration
from an Asset Sale that was made pursuant to and in compliance with the covenant
described above under the caption '--Repurchase at the Option of Holders-- Asset
Sales;' (e) any acquisition of assets solely in exchange for the issuance of
Equity Interests (other than Disqualified Stock) of the Company; (f) reasonable
and customary loans and advances made to employees in connection with their
relocation (including related travel expenses) not to exceed $250,000 in the
aggregate at any one time outstanding; (g) any Investment existing on the date
of the Indenture; (h) any Investment acquired by the Company or any of its
Restricted Subsidiaries (x) in exchange for any other Investment or accounts
receivable held by the Company or any such Restricted Subsidiary in connection
with or as a result of a bankruptcy, workout, reorganization or recapitalization
of the issuer of such Investment or accounts receivable or (y) as the result of
a foreclosure by the Company or any of its Restricted Subsidiaries with respect
to any secured Investment or other transfer of title with respect to any secured
Investment in default; and (i) other Investments in any Person having an
aggregate fair market value (measured on the date each such Investment was made
and without giving effect to subsequent changes in value), when taken together
with all other Investments made pursuant to this clause (i) that are at the time
outstanding, not to exceed $5.0 million.
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'Permitted Liens' means (i) Liens securing Senior Debt that was permitted
by the terms of the Indenture to be incurred; (ii) Liens in favor of the Company
or any Restricted Subsidiary; (iii) Liens on property of a Person existing at
the time such Person is merged into or consolidated with the Company or any
Subsidiary of the Company; provided that such Liens were in existence prior to
the contemplation of such merger or consolidation and do not extend to any
assets other than those of the Person merged into or consolidated with the
Company; (iv) Liens on property existing at the time of acquisition thereof by
the Company or any Subsidiary of the Company, provided that such Liens were in
existence prior to the contemplation of such acquisition; (v) Liens to secure
the performance of statutory obligations, surety or appeal bonds, performance
bonds or other obligations of a like nature incurred in the ordinary course of
business; (v) Liens to secure Indebtedness (including Capital Lease Obligations)
permitted by clause (iii) of the second paragraph of the covenant entitled
'--Incurrence of Indebtedness and Issuance of Preferred Stock' covering only the
assets acquired with such Indebtedness; (vi) Liens existing on the date of the
Indenture; (vii) Liens for taxes, assessments or governmental charges or claims
that are not yet delinquent or that are being contested in good faith by
appropriate proceedings promptly instituted and diligently concluded, provided
that any reserve or other appropriate provision as shall be required in
conformity with GAAP shall have been made therefor; (viii) Liens on assets of
Unrestricted Subsidiaries that secure Non-Recourse Debt of Unrestricted
Subsidiaries; (ix) statutory Liens or landlords', carriers', warehousemens',
mechanics', suppliers' or similar Liens incurred in the ordinary course of
business of the Company or any Subsidiary of the Company; (x) easements, minor
title defects, irregularities in title or other charges or encumbrances on
property not interfering in any material respect with the use of such property
by the Company or a Subsidiary of the Company; (xi) Liens incurred or deposits
made in the ordinary course of business in connection with workers'
compensation, unemployment insurance and other types of social security; (xii)
liens securing industrial revenue bonds or other tax-favored financing; (xiii)
deposit arrangements entered into in connection with acquisitions or in the
ordinary course of business; (xiv) other Liens securing obligations incurred in
the ordinary course of business which obligations do not exceed $5.0 million at
any one time outstanding; and (xv) any extensions, substitutions, replacements
or renewals of the foregoing.
'Permitted Refinancing Indebtedness' means any Indebtedness of the Company
or any of its Restricted Subsidiaries issued in exchange for, or the net
proceeds of which are used to extend, refinance, renew, replace, defease or
refund other Indebtedness of the Company or any of its Restricted Subsidiaries;
provided that: (i) the principal amount (or accreted value, if applicable) of
such Permitted Refinancing Indebtedness does not exceed the principal amount of
(or accreted value, if applicable), plus accrued interest on, the Indebtedness
so extended, refinanced, renewed, replaced, defeased or refunded (plus the
amount of reasonable expenses and prepayment premiums incurred in connection
therewith) (except to the extent such increase is a result of a simultaneous
incurrence of additional Indebtedness permitted to be incurred under the
Indenture); (ii) such Permitted Refinancing Indebtedness has a final maturity
date later than the final maturity date of, and has a Weighted Average Life to
Maturity equal to or greater than the Weighted Average Life to Maturity of, the
Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded; (iii) if the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded is subordinated in right of payment to the Notes,
such Permitted Refinancing Indebtedness has a final maturity date later than the
final maturity date of, and is subordinated in right of payment to, the Notes on
terms at least as favorable to the Holders of Notes as those contained in the
documentation governing the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded; and (iv) such Indebtedness is incurred either by
the Company or by the Restricted Subsidiary who is the obligor on the
Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded.
'Permitted Warrant Put Payment' means any payment or distribution (whether
in cash or securities of the Company) made after March 29, 2001 and in
accordance with the following sentence, by the Company or any of its Restricted
Subsidiaries to Parent in order to enable Parent to satisfy Parent's obligations
under the Warrant Agreement and/or the Shareholders Agreement to repurchase the
Put Shares (as defined in the Warrant Agreement) or to repay indebtedness
incurred by Parent to satisfy such obligations. If, after giving pro forma
effect to any Permitted Warrant Put Payment by the Company, the Fixed Charge
Coverage Ratio for the Company's most recently ended four full fiscal quarters
for which internal financial statements are available immediately preceding the
date on which such Permitted Warrant Put Payment is made is (i) greater than
2.50 to 1 and less than 2.75 to 1, then the Company will be permitted to make a
Permitted Warrant Put Payment in an amount not to exceed $5.0 million, (ii)
greater than or equal to 2.75 to 1 and less than 3.00 to 1, then the
86
<PAGE>
Company will be permitted to make a Permitted Warrant Put Payment in an amount
not to exceed $10.0 million and (iii) greater than or equal to 3.00 to 1, then
the Company will be permitted to make a Permitted Warrant Put Payment in an
amount not to exceed $15.0 million.
'Public Equity Offering' means a bona fide underwritten sale to the public
of common stock of Parent or the Company pursuant to a registration statement
(other than on Form S-8 or any other form relating to securities issuable under
any benefit plan of Parent or the Company) that is declared effective by the
Commission and results in aggregate gross equity proceeds to the Company of at
least $20.0 million.
'Restricted Investment' means an Investment other than a Permitted
Investment.
'Restricted Subsidiary' of a Person means any Subsidiary of the referent
Person that is not an Unrestricted Subsidiary.
'Shareholders Agreement' means the shareholders agreement, dated as of
March 29, 1996, as amended, among Parent, Sunderland, Hamilton Holdings Ltd.
Corporation, Delaware State Employees' Retirement Fund, Declaration of Trust for
Defined Benefit Plans of Zeneca Holdings Inc., Declaration of Trust for Defined
Benefit Plans of ICI American Holdings Inc., Rice Partners II, L.P. and John
Hancock Mutual Life Insurance Company, with respect to certain securities of
Parent.
'Significant Subsidiary' means any Subsidiary that would be a 'significant
subsidiary' as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated
pursuant to the Act, as such Regulation is in effect on the date hereof.
'Stated Maturity' means, with respect to any installment of interest or
principal on any series of Indebtedness, the date on which such payment of
interest or principal was scheduled to be paid in the original documentation
governing such Indebtedness, and shall not include any contingent obligations to
repay, redeem or repurchase any such interest or principal prior to the date
originally scheduled for the payment thereof.
'Subsidiary' means, with respect to any Person, (i) any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of Capital Stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by such
Person or one or more of the other Subsidiaries of that Person (or a combination
thereof) and (ii) any partnership (a) the sole general partner or the managing
general partner of which is such Person or a Subsidiary of such Person or (b)
the only general partners of which are such Person or of one or more
Subsidiaries of such Person (or any combination thereof).
'Sunderland' means Sunderland Industrial Holdings Corporation, a Delaware
corporation.
'Treasury Rate' means the yield to maturity at the time of the computation
of United States Treasury securities with a constant maturity (as compiled by
and published in the most recent Federal Reserve Statistical Release H.15(519)),
which has become publicly available at least two business days prior to the date
fixed for prepayment (or, if such Statistical Release is no longer published,
any publicly available source of similar market data) most nearly equal to the
then remaining average life to the first date on which the Notes are subject to
optional redemption by the Company; provided, however, that if the average life
of such Note is not equal to the constant maturity of the United States Treasury
security for which weekly average yield is given, the Treasury Rate shall be
obtained by linear interpolation (calculated to the nearest one-twelfth of a
year) from the weekly average yields of United States Treasury securities for
which such yields are given, except that if the average life of such Notes is
less than one year, the weekly average yield on actually traded United States
Treasury securities adjusted to a constant maturity of one year shall be used.
'Unrestricted Subsidiary' means (i) any Subsidiary that is designated by
the Board of Directors as an Unrestricted Subsidiary pursuant to a Board
Resolution; but only to the extent that such Subsidiary: (a) has no Indebtedness
other than Non-Recourse Debt; (b) is not party to any agreement, contract,
arrangement or understanding with the Company or any Restricted Subsidiary of
the Company unless the terms of any such agreement, contract, arrangement or
understanding are no less favorable to the Company or such Restricted Subsidiary
than those that might be obtained at the time from Persons who are not
Affiliates of the Company; (c) is a Person with respect to which neither the
Company nor any of its Restricted Subsidiaries has any direct or indirect
obligation (x) to subscribe for additional Equity Interests or (y) to maintain
or preserve such Person's financial condition or to cause such Person to achieve
any specified levels of operating results; and (d) has not guaranteed or
otherwise directly or indirectly provided credit support for any Indebtedness of
the Company or
87
<PAGE>
any of its Restricted Subsidiaries. Any such designation by the Board of
Directors shall be evidenced to the Trustee by filing with the Trustee a
certified copy of the Board Resolution giving effect to such designation and an
Officers' Certificate certifying that such designation complied with the
foregoing conditions and was permitted by the covenant described above under the
caption '--Restricted Payments.' If, at any time, any Unrestricted Subsidiary
would fail to meet the foregoing requirements as an Unrestricted Subsidiary, it
shall thereafter cease to be an Unrestricted Subsidiary for purposes of the
Indenture and any Indebtedness of such Subsidiary shall be deemed to be incurred
by a Restricted Subsidiary of the Company as of such date (and, if such
Indebtedness is not permitted to be incurred as of such date under the covenant
described under the caption '--Incurrence of Indebtedness and Issuance of
Preferred Stock,' the Company shall be in default of such covenant). The Board
of Directors of the Company may at any time designate any Unrestricted
Subsidiary to be a Restricted Subsidiary; provided that such designation shall
be deemed to be an incurrence of Indebtedness by a Restricted Subsidiary of the
Company of any outstanding Indebtedness of such Unrestricted Subsidiary and such
designation shall only be permitted if (i) such Indebtedness is permitted under
the covenant described under the caption '--Incurrence of Indebtedness and
Issuance of Preferred Stock,' calculated on a pro forma basis as if such
designation had occurred at the beginning of the four-quarter reference period,
and (ii) no Default or Event of Default would be in existence following such
designation.
'Voting Stock' of any Person as of any date means the Capital Stock of such
Person that is at the time entitled to vote in the election of the Board of
Directors of such Person.
'Warrant Agreement' means the warrant agreement, dated as of March 29,
1996, as amended, among Parent, Rice Partners II, L.P., John Hancock Mutual Life
Insurance Company, Delaware State Employees' Retirement Fund, Declaration of
Trust for Defined Benefit Plans of Zeneca Holdings Inc. and Declaration of Trust
for Defined Benefit Plans of ICI American Holdings Inc., with respect to certain
warrants of Parent.
'Weighted Average Life to Maturity' means, when applied to any Indebtedness
at any date, the number of years obtained by dividing (i) the sum of the
products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (b) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment, by (ii) the then outstanding principal
amount of such Indebtedness.
'Wholly Owned Restricted Subsidiary' of any Person means a Restricted
Subsidiary of such Person all of the outstanding Capital Stock or other
ownership interests of which (other than directors' qualifying shares) shall at
the time be owned by such Person or by one or more Wholly Owned Restricted
Subsidiaries of such Person and one or more Wholly Owned Restricted Subsidiaries
of such Person.
88
<PAGE>
CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS
The following discussion is based upon current provisions of the Internal
Revenue Code of 1986, as amended, applicable Treasury regulations, judical
authority and administrative rulings and practice. There can be no assurance
that the Internal Revenue Service (the 'IRS') will not take a contrary view, and
no ruling from the IRS has been or will be sought. Legislative, judical or
administrative changes or interpretations may be forthcoming that could alter or
modify the statements and conditions set forth herein. Any such changes or
interpretations may or may not be retroactive and could affect the tax
consequences to holders. Certain holders (including insurance companies,
tax-exempt organizations, financial institutions, broker-dealers, foreign
corporations and persons who are not citizens or residents of the United States)
may be subject to special rules not discussed below. The Company recommends that
each holder consult such holder's own tax adviser as to the particular tax
consequences of exchanging such holder's Old Notes for New Notes, including the
applicability and effect of any state, local or foreign tax laws.
The Company believes that the exchange of Old Notes for New Notes pursuant
to the Exchange Offer will not be treated as an 'exchange' for federal income
tax purposes because the New Notes will not be considered to differ materially
in kind or extent from the Old Notes. Rather, the New Notes received by a holder
will be treated as a continuation of the Old Notes in the hands of such holder.
As a result, there will be no federal income tax consequences to holders
exchanging Old Notes for New Notes pursuant to the Exchange Offer.
PLAN OF DISTRIBUTION
Each Participating Broker-Dealer that receives New Notes for its own
account pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such New Notes. This Prospectus, as
it may be amended or supplemented from time to time, may be used by a
Participating Broker-Dealer in connection with resales of New Notes received in
exchange for Old Notes where such Old Notes were acquired as a result of
market-making activities or other trading activities. The Company has agreed
that for a period of one year after the Exchange Offer Effectiveness Date, it
will make this Prospectus, as amended or supplemented, available to any
Participating Broker-Dealer for use in connection with any such resale. In
addition, until , 1997 (90 days after the commencement of the Exchange
Offer), all dealers effecting transactions in the New Notes, whether or not
participating in this distribution, may be required to deliver a prospectus.
The Company will not receive any proceeds from any sales of the New Notes
by Participating Broker-Dealers. New Notes received by Participating
Broker-Dealers for their own account pursuant to the Exchange Offer may be sold
from time to time in one or more transactions in the over-the-counter market, in
negotiated transactions, through the writing of options on the New Notes or a
combination of such methods of resale, at market prices prevailing at the time
of resale, at prices related to such prevailing market prices or negotiated
prices. Any such resale may be made directly to purchasers or to or through
brokers or dealers who may receive compensation in the form of commissions or
concessions from any such Participating Broker-Dealer and/or the purchasers of
any such New Notes. Any Participating Broker-Dealer that resells the New Notes
that were received by it for its own account pursuant to the Exchange Offer and
any broker or dealer that participates in a distribution of such New Notes may
be deemed to be an 'underwriter' within the meaning of the Securities Act and
any profit on any such resale of New Notes and any commissions or concessions
received by any such persons may be deemed to be underwriting compensation under
the Securities Act. The Letter of Transmittal states that by acknowledging that
it will deliver and by delivering a prospectus, a Participating Broker-Dealer
will not be deemed to admit that it is an 'underwriter' within the meaning of
the Securities Act.
89
<PAGE>
LEGAL MATTERS
The validity of the issuance of the New Notes being offered hereby will be
passed upon for Precise and the Guarantors by Winston & Strawn, New York, New
York.
EXPERTS
The consolidated financial statements of the Company at December 31, 1996
and 1995 and for each of the two years in the period ended December 31, 1996
appearing in this Prospectus have been audited by Ernst & Young LLP, independent
auditors, and the information under the captions 'Summary Financial Data' and
'Selected Financial Data' for each of the two years in the period ended December
31, 1996 appearing in this Prospectus have been derived from consolidated
financial statements audited by Ernst & Young LLP, as set forth in their report
thereon appearing elsewhere herein. Such consolidated financial statements,
summary financial data and selected financial data are included in reliance upon
such report given upon the authority of such firm as experts in accounting and
auditing.
The financial statements of the Company for the year ended December 31,
1994 included in this Prospectus have been audited by Grant Thornton, LLP,
independent auditors, as stated in their report appearing herein.
The financial statements of Tredegar Molded Products Company (adjusted for
certain allocations and assets retained and liabilities assumed by Tredegar
Industries, Inc.) as of December 31, 1995 and 1994 and for each of the two years
in the period ended December 31, 1995 included in this Prospectus have been
audited by Coopers & Lybrand, LLP, independent auditors, as stated in their
report appearing herein.
90
<PAGE>
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<S> <C>
PRECISE TECHNOLOGY, INC.
Report of Independent Auditors............................................................................ F-2
Report of Independent Certified Public Accountants........................................................ F-3
Consolidated Balance Sheets as of March 31, 1997 (unaudited) and
December 31, 1996 and 1995.............................................................................. F-4
Consolidated Statements of Income for the three months ended March 31, 1997
and 1996 (unaudited) and for the years ended December 31, 1996, 1995, and 1994.......................... F-5
Consolidated Statements of Stockholder's Equity for the three months ended March 31, 1997 (unaudited) and
for the years ended December 31, 1996, 1995, and 1994................................................... F-6
Consolidated Statements of Cash Flows for the three months ended March 31, 1997 and 1996 (unaudited) and
for the years ended December 31, 1996, 1995, and 1994................................................... F-7
Notes to the Consolidated Financial Statements............................................................ F-9
TREDEGAR MOLDED PRODUCTS COMPANY AND SUBSIDIARY
Report of Independent Accountants......................................................................... F-21
Consolidated Statements of Operations and Changes in Accumulated Deficit
for the years ended December 31, 1995 and 1994.......................................................... F-22
Consolidated Balance Sheets as of December 31, 1995, 1994 and 1993........................................ F-23
Consolidated Statements of Cash Flows for the years ended December 31,
1995 and 1994........................................................................................... F-24
Notes to Consolidated Financial Statements................................................................ F-25
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Board of Directors
Precise Technology, Inc.
We have audited the accompanying consolidated balance sheets of Precise
Technology, Inc. (a wholly owned subsidiary of Precise Holding Corporation) as
of December 31, 1996 and 1995, and the related consolidated statements of
income, stockholder's equity and cash flows for the years then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Precise
Technology, Inc. as of December 31, 1996 and 1995, and the consolidated results
of their operations and their cash flows for the years then ended in conformity
with generally accepted accounting principles.
ERNST & YOUNG LLP
March 14, 1997,
except for Note 16,
as to which date is
April 14, 1997
F-2
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors
Precise Technology, Inc.
We have audited the accompanying consolidated statements of income,
stockholder's equity and cash flows of Precise Technology, Inc. and Subsidiaries
for the year ended December 31, 1994. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated results of operations and cash flows of
Precise Technology, Inc. and Subsidiaries for the year ended December 31, 1994,
in conformity with generally accepted accounting principles.
GRANT THORNTON LLP
Pittsburgh, Pennsylvania
February 10, 1995
F-3
<PAGE>
PRECISE TECHNOLOGY, INC.
(A WHOLLY OWNED SUBSIDIARY OF
PRECISE HOLDING CORPORATION)
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------
1996 1995
MARCH 31, ----------- -----------
1997
-----------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents......................................... $ 525,027 $ 1,310,564 $ 25,676
Accounts receivable, net.......................................... 13,070,878 13,121,818 4,589,531
Inventories....................................................... 9,369,339 9,856,257 2,205,035
Prepaid expenses and other........................................ 165,580 440,356 113,574
Deferred income taxes............................................. 1,496,164 1,496,164 165,578
Assets held for sale.............................................. 900,000 900,000 --
----------- ----------- -----------
TOTAL CURRENT ASSETS........................................... 25,526,988 27,125,159 7,099,394
Property, plant, and equipment, net................................. 42,003,541 42,063,423 11,567,762
Intangible and other assets, net.................................... 29,684,887 29,870,714 195,931
----------- ----------- -----------
TOTAL ASSETS................................................... $97,215,416 $99,059,296 $18,863,087
----------- ----------- -----------
----------- ----------- -----------
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES:
Line of credit.................................................... $ 700,000 $ 300,000 $ 2,284,247
Current maturities of long-term debt.............................. 8,216,408 7,641,105 1,083,410
Accounts payable.................................................. 5,909,850 6,896,159 2,900,023
Accrued liabilities............................................... 3,672,971 4,865,381 794,960
Tooling deposits.................................................. 2,389,078 2,063,833 631,899
----------- ----------- -----------
TOTAL CURRENT LIABILITIES...................................... 20,888,307 21,766,478 7,694,539
Long-term debt, less current maturities............................. 55,660,211 56,570,692 4,170,676
Deferred income taxes............................................... 5,189,259 5,189,259 1,388,059
Payable to Sunderland............................................... 330,000 330,000 210,000
COMMITMENTS AND CONTINGENCIES....................................... -- -- --
Redeemable preferred stock.......................................... 8,250,000 8,250,000 --
STOCKHOLDER'S EQUITY:
9- 1/2% preferred stock, $10,000 stated value;
500 shares authorized, 331.46 shares issued and
outstanding (retired March 29, 1996)........................... -- -- 3,314,617
Common stock, no par value; 1,000 shares authorized,
and 125 shares issued and outstanding.......................... 3,315,617 3,315,617 1,000
Additional paid-in capital........................................ 3,554,711 3,554,711 1,649,000
Minimum pension liability......................................... -- -- (119,744)
Retained earnings................................................. 27,311 82,539 554,940
----------- ----------- -----------
TOTAL STOCKHOLDER'S EQUITY..................................... 6,897,639 6,952,867 5,399,813
----------- ----------- -----------
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY..................... $97,215,416 $99,059,296 $18,863,087
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
See accompanying notes
F-4
<PAGE>
PRECISE TECHNOLOGY, INC.
(A WHOLLY OWNED SUBSIDIARY OF
PRECISE HOLDING CORPORATION)
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH
31, YEAR ENDED DECEMBER 31,
------------------------- -----------------------------------------
1997 1996 1996 1995 1994
----------- ---------- ----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Net sales............................. $26,324,663 $9,089,477 $93,289,323 $33,542,305 $33,156,938
Cost of sales......................... 21,612,984 7,156,139 76,477,016 25,876,623 26,807,339
----------- ---------- ----------- ----------- -----------
Gross profit.......................... 4,711,679 1,933,338 16,812,307 7,665,682 6,349,599
Selling, general, and administrative.. 2,138,345 1,100,000 7,262,187 4,454,271 3,915,469
Plant closure costs................... -- -- 670,600 -- --
Amortization of intangible assets..... 432,882 42,501 1,614,533 37,013 26,073
----------- ---------- ----------- ----------- -----------
Operating income...................... 2,140,452 790,837 7,264,987 3,174,398 2,408,057
Other expense (income):
Interest expense.................... 1,690,444 261,060 5,559,234 810,174 956,160
Other............................... (3,839) (2,393) (25,423) 147,866 (71,896)
----------- ---------- ----------- ----------- -----------
Income before income taxes............ 453,847 532,170 1,731,176 2,216,358 1,523,793
Provision for income taxes............ 304,206 244,958 1,264,854 941,426 573,778
----------- ---------- ----------- ----------- -----------
Net income............................ $ 149,641 $ 287,212 $ 466,322 $ 1,274,932 $ 950,015
----------- ---------- ----------- ----------- -----------
----------- ---------- ----------- ----------- -----------
</TABLE>
See accompanying notes
F-5
<PAGE>
PRECISE TECHNOLOGY, INC.
(A WHOLLY OWNED SUBSIDIARY OF
PRECISE HOLDING CORPORATION)
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY
<TABLE>
<CAPTION>
PREFERRED STOCK
9 1/2% COMMON STOCK ADDITIONAL MINIMUM RETAINED
--------------------- -------------------- PAID-IN PENSION EARNINGS
SHARES AMOUNT SHARES AMOUNTS CAPITAL LIABILITY (DEFICIT)
------ ----------- ------ ---------- ---------- --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31,
1993........................ -- $ -- 1 $ 1,000 $1,649,000 $ -- $(1,355,118)
Issuance of preferred
stock..................... 331 3,314,617 -- -- -- -- --
Minimum pension liability... -- -- -- -- -- (164,570 ) --
Net income.................. -- -- -- -- -- -- 950,015
------ ----------- ------ ---------- ---------- --------- -----------
Balance at December 31,
1994........................ 331 3,314,617 1 1,000 1,649,000 (164,570 ) (405,103)
Dividends declared.......... -- -- -- -- -- -- (314,889)
Minimum pension liability... -- -- -- -- -- 44,826 --
Net income.................. -- -- -- -- -- -- 1,274,932
------ ----------- ------ ---------- ---------- --------- -----------
Balance at December 31,
1995........................ 331 3,314,617 1 1,000 1,649,000 (119,744 ) 554,940
Capital contribution........ -- -- -- -- 750,000 -- --
Exchange of stock........... (331) (3,314,617) 124 3,314,617 -- -- --
Dividends declared.......... -- -- -- -- -- -- (938,723)
Minimum pension liability... -- -- -- -- -- 119,744 --
Discounts related to
warrants,
net of tax................ -- -- -- -- 1,155,711 -- --
Net income.................. -- -- -- -- -- -- 466,322
------ ----------- ------ ---------- ---------- --------- -----------
Balance at December 31,
1996........................ -- -- 125 3,315,617 3,554,711 -- 82,539
Dividends declared
(unaudited)................. -- -- -- -- -- -- (204,869)
Net income (unaudited)........ -- -- -- -- -- -- 149,641
------ ----------- ------ ---------- ---------- --------- -----------
Balance at March 31, 1997
(unaudited)................. -- $ -- 125 $3,315,617 $3,554,711 $ -- $ 27,311
------ ----------- ------ ---------- ---------- --------- -----------
------ ----------- ------ ---------- ---------- --------- -----------
<CAPTION>
TOTAL
----------
<S> <C>
Balance at December 31,
1993........................ $ 294,882
Issuance of preferred
stock..................... 3,314,617
Minimum pension liability... (164,570)
Net income.................. 950,015
----------
Balance at December 31,
1994........................ 4,394,944
Dividends declared.......... (314,889)
Minimum pension liability... 44,826
Net income.................. 1,274,932
----------
Balance at December 31,
1995........................ 5,399,813
Capital contribution........ 750,000
Exchange of stock........... --
Dividends declared.......... (938,723)
Minimum pension liability... 119,744
Discounts related to
warrants,
net of tax................ 1,155,711
Net income.................. 466,322
----------
Balance at December 31,
1996........................ 6,952,867
Dividends declared
(unaudited)................. (204,869)
Net income (unaudited)........ 149,641
----------
Balance at March 31, 1997
(unaudited)................. $6,897,639
----------
----------
</TABLE>
See accompanying notes
F-6
<PAGE>
PRECISE TECHNOLOGY, INC.
(A WHOLLY OWNED SUBSIDIARY OF
PRECISE HOLDING CORPORATION)
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH
31, YEAR ENDED DECEMBER 31,
--------------------------- -------------------------------------------
1997 1996 1996 1995 1994
----------- ------------ ----------- ------------ ------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net income............................... $ 149,641 $ 287,212 $ 466,322 $ 1,274,932 $ 950,015
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation and amortization........ 1,761,960 461,439 5,925,253 1,445,953 1,061,628
Amortization of original issue
discount........................... 37,788 -- 97,945 -- --
Loss (gain) on sale of equipment..... 43,364 (5,171) (36,628) 140,637 (61,809)
Provision for loss on sale of
Rochester plant.................... -- -- 301,000 -- --
Deferred income taxes................ -- 113,574 348,388 527,426 368,061
Changes in assets and liabilities:
Accounts receivable................ 50,940 (197,699) 3,021,575 800,300 (1,785,531)
Inventories........................ 486,918 (565,930) (418,504) (79,888) 373,748
Other assets....................... 26,150 (279,521) 367,405 265,428 (60,694)
Accounts payable................... (986,309) 204,674 (808,771) (460,851) 1,570,383
Tooling deposits................... 325,245 475,568 350,107 (213,853) (1,032,249)
Accrued liabilities................ (1,192,410) 413,432 (11,997) (530,181) (56,120)
----------- ------------ ----------- ------------ ------------
Net cash provided by operating
activities............................. 703,287 907,578 9,602,095 3,169,903 1,327,432
INVESTING ACTIVITIES
Net cash used in business acquisitions... -- (63,801,356) (63,801,356) -- --
Capital expenditures..................... (823,812) (356,465) (2,175,425) (1,045,756) (2,075,197)
Proceeds from sale of fixed assets....... 19,000 54,500 346,481 47,758 106,872
----------- ------------ ----------- ------------ ------------
Net cash used in investing activities.... (804,812) (64,103,321) (65,630,300) (997,998) (1,968,325)
FINANCING ACTIVITIES
Borrowings on revolving line of credit... 700,000 4,600,276 25,941,687 34,981,655 32,563,998
Payments on revolving line of credit..... (300,000) (2,884,523) (27,925,934) (35,166,657) (31,919,296)
Repayment of long-term debt.............. (879,143) (5,731,058) (7,605,189) (1,902,301) (1,226,699)
Proceeds from senior term notes.......... -- 40,000,000 40,000,000 -- --
Proceeds from senior subordinated notes.. -- 20,000,000 20,000,000 -- --
Proceeds from issuance of preferred
stock.................................. -- 8,250,000 8,250,000 -- --
Proceeds from term note.................. -- 3,585,000 3,585,000 200,000 1,300,000
Capital contribution..................... -- 750,000 750,000 -- --
Payment of financing costs............... -- (4,743,748) (4,743,748) -- (68,149)
Dividends paid on common and preferred
stock.................................. (204,869) -- (938,723) (314,889) --
----------- ------------ ----------- ------------ ------------
Net cash provided by (used in) financing
activities............................. (684,012) 63,825,947 57,313,093 (2,202,192) 649,854
----------- ------------ ----------- ------------ ------------
Net increase (decrease) in cash.......... (785,537) 630,204 1,284,888 (30,287) 8,961
Cash at beginning of period.............. 1,310,564 25,676 25,676 55,963 47,002
----------- ------------ ----------- ------------ ------------
Cash at end of period.................... $ 525,027 $ 655,880 $ 1,310,564 $ 25,676 $ 55,963
----------- ------------ ----------- ------------ ------------
----------- ------------ ----------- ------------ ------------
</TABLE>
See accompanying notes
F-7
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH
31, YEAR ENDED DECEMBER 31,
------------------------ -----------------------------------------
1997 1996 1996 1995 1994
---------- ----------- ----------- ------------ ------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
Cash paid during the period for:
Interest.................................. $1,692,308 $ 223,622 $ 5,197,957 $ 828,857 $ 796,379
---------- ----------- ----------- ------------ ------------
---------- ----------- ----------- ------------ ------------
Income taxes.............................. $ 416,276 $ 155,930 $ 773,528 $ 293,582 $ 41,016
---------- ----------- ----------- ------------ ------------
---------- ----------- ----------- ------------ ------------
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING
AND FINANCING ACTIVITIES
Capital lease agreements for equipment.... $ 506,176 $ 1,732,100 $ 4,200,501 $ 535,812 $ 2,328,455
---------- ----------- ----------- ------------ ------------
---------- ----------- ----------- ------------ ------------
Assets acquired and liabilities assumed in
connection with acquisitions
Fair value of assets acquired.......... $ -- $81,200,112 $81,200,112 $ -- $ --
Liabilities assumed.................... -- 12,248,954 12,248,954 -- --
---------- ----------- ----------- ------------ ------------
Cash paid.............................. -- 68,951,158 68,951,158 -- --
Less fees and expenses................. -- (4,743,748) (4,743,748) -- --
Less cash acquired..................... -- (406,054) (406,054) -- --
---------- ----------- ----------- ------------ ------------
Net cash paid for acquisitions......... $ -- $63,801,356 $63,801,356 $ -- $ --
---------- ----------- ----------- ------------ ------------
---------- ----------- ----------- ------------ ------------
Issuance of preferred stock for cancellation
of debt
Note reduction............................ $ -- $ -- $ -- $ -- $ 2,862,500
Accrued interest reduction................ -- -- -- -- 452,117
---------- ----------- ----------- ------------ ------------
Preferred stock issued.................... $ -- $ -- $ -- $ -- $ 3,314,617
---------- ----------- ----------- ------------ ------------
---------- ----------- ----------- ------------ ------------
</TABLE>
See accompanying notes
F-8
<PAGE>
PRECISE TECHNOLOGY, INC.
(A WHOLLY OWNED SUBSIDIARY OF
PRECISE HOLDING CORPORATION)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1995
1. ORGANIZATION AND SUMMARY OF ACCOUNTING POLICIES
ORGANIZATION AND ACTIVITIES
The accompanying consolidated financial statements include the accounts of
Precise Technology, Inc. (Company) and its wholly owned subsidiaries.
Significant intercompany transactions have been eliminated.
The Company is a wholly owned subsidiary of Precise Holding Corporation (Precise
Holding) which is a majority-owned subsidiary of Sunderland Industrial Holdings
Corporation (Sunderland).
The Company is a full-service custom injection molder of highly engineered,
close tolerance, precision plastic products. The Company also has extensive mold
manufacturing capabilities. The Company's marketing focus is to service a
diverse base of original equipment manufacturers in the health care, packaging,
and consumer/industrial markets. The Company has nine facilities located
throughout the Eastern and Midwestern United States.
INTERIM FINANCIAL STATEMENTS
The financial statements of the Company for the three months ended March 31,
1997 and 1996 and the related footnote information are unaudited but, in the
opinion of management, include all adjustments (consisting only of normal
recurring adjustments and accruals) which the Company considers necessary for a
fair presentation of the information set forth therein. Results of operations
for interim periods are not necessarily indicative of the results that may be
expected for the entire year.
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid investments with a maturity of 90 days
or less at the time of original purchase to be cash equivalents.
INVENTORIES
Inventories are valued at the lower of cost or market. Cost is determined on the
first-in, first-out (FIFO) method. Market is net realizable value.
REVENUE RECOGNITION
Finished Products--Revenue from product sales is recognized at the time products
are shipped.
Tooling and Dies--Cost of tooling and dies purchased or produced are included in
inventory. Tooling deposits represent progress billings related to the
manufacture of tools and dies for customers. Income from contracts for the
manufacture of customer tooling is accounted for under the completed-contract
method of accounting, which recognizes revenue upon completion of contracts.
PROPERTY, PLANT, AND EQUIPMENT
Property, plant and equipment is stated at cost less accumulated depreciation
and amortization. Depreciation is provided on the straight-line method based on
estimated useful lives, as follows:
<TABLE>
<S> <C>
Building and improvements 5-40 years
Machinery and equipment 3-10 years
</TABLE>
F-9
<PAGE>
PRECISE TECHNOLOGY, INC.
(A WHOLLY OWNED SUBSIDIARY OF
PRECISE HOLDING CORPORATION)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
1. ORGANIZATION AND SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
Leasehold improvements are amortized over the shorter of the useful life of the
asset or the term of the lease. Expenses for repairs, maintenance and renewals
are charged to operations as incurred. Expenditures which improve an asset or
extend its useful life are capitalized.
INTANGIBLES
Goodwill--Goodwill represents the excess of amounts paid and liabilities assumed
over the fair value of identifiable tangible and intangible assets acquired.
This amount is amortized using the straight-line method over a period of 25
years. The Company evaluates the carrying value of goodwill for potential
impairment on an ongoing basis. Such evaluations compare operating income before
amortization of goodwill to the amortization recorded for the operations to
which the goodwill relates. The Company also considers projected future
operating results, trends and other circumstances in making such estimates and
evaluations.
Deferred Financing Cost--Deferred financing costs relate to the costs of
obtaining financing. These costs are being amortized over the period the related
loans are outstanding.
Noncompete Agreements--Noncompete agreements relate to contracts executed in
conjunction with the acquisitions. Such agreements are being amortized over the
life of the contracts.
INCOME TAXES
The Company is a member of a controlled group of companies. As such, annual
elections are made to share credits and exemptions as allowed under federal
income tax laws. Deferred taxes are provided for the tax consequences of
temporary differences between financial statement carrying amounts and the tax
bases of assets and liabilities. The effect on deferred taxes of a change in tax
rates is recognized in income in the period that includes the enactment date.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes.
Actual results could differ from those estimates.
The Company adjusted their estimate for accrued workers' compensation expense as
of March 31, 1997 due to recent favorable claims experience. The adjustment
increased net income, by approximately $419,000 for the three months ended March
31, 1997.
RECLASSIFICATION
Certain reclassifications have been made to the 1995 and 1994 financial
statements to conform to the 1996 presentation.
2. ACQUISITIONS
(A) UNITY MOLD CORPORATION (UNITY)
On January 25, 1996, the Company acquired all of the outstanding common stock of
Unity for $3,710,000 including transaction costs of approximately $125,000.
Unity operates in the same lines of business as the Company. The results of
operations for Unity are included in the consolidated statement of income from
the date of acquisition. The purchase price and transaction costs were primarily
funded through the issuance of a
F-10
<PAGE>
PRECISE TECHNOLOGY, INC.
(A WHOLLY OWNED SUBSIDIARY OF
PRECISE HOLDING CORPORATION)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2. ACQUISITIONS (CONTINUED)
$3,585,000 term note. The acquisition was accounted for using the purchase
method of accounting and accordingly, the purchase price and transaction costs
were allocated to the assets acquired and liabilities assumed based upon their
relative fair values. The Company recorded goodwill of approximately $1,610,000,
in connection with the acquisition which is being amortized on a straight-line
basis over 25 years.
(B) TREDEGAR MOLDED PRODUCTS (TREDEGAR)
On March 29, 1996, the Company purchased all of the issued and outstanding
common stock of Tredegar and its wholly owned subsidiary, Polestar Plastics
Manufacturing Co., for $65,241,000 including transaction costs of approximately
$5,241,000. The results of operations for Tredegar are included in the
consolidated statement of income from the date of acquisition. The purchase
price and transaction costs were funded through the issuance of two senior term
notes of $22,500,000 and $17,500,000, $20,000,000 in senior subordinated notes,
$5,750,000 in Series A cumulative exchangeable preferred stock, $2,500,000 in
Series B cumulative redeemable preferred stock, and a $750,000 capital
contribution from Precise Holding. The acquisition was accounted for using the
purchase method of accounting and, accordingly, the purchase price and
transaction costs were allocated to the assets acquired and liabilities assumed
based upon their relative fair values. The Company recorded goodwill of
approximately $24,400,000 in connection with the acquisition, which is being
amortized on a straight-line basis over 25 years.
The following table sets forth the pro forma unaudited results of operations for
each period in which acquisitions occurred and for the immediately preceding
period as if the above acquisitions were consummated at the beginning of the
immediately preceding period.
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------
1996 1995
------------ ------------
<S> <C> <C>
Net sales.......................................... $114,652,000 $129,692,000
Net income......................................... $ 1,405,000 $ (661,000)
</TABLE>
3. ACCOUNTS RECEIVABLE AND SIGNIFICANT CUSTOMERS
Accounts receivable are presented net of allowance for doubtful accounts of
$223,000, $60,000 and $100,000 as of March 31, 1997, December 31, 1996 and 1995,
respectively. For the three months ended March 31, 1997 and for the years ending
December 31, 1996, 1995 and 1994, approximately 41%, 38%, 67% and 60% of the
Company's sales were to five customers, respectively. At March 31, 1997,
December 31, 1996 and 1995, the accounts receivable due from these customers was
approximately $5,859,000, $5,027,000 and $2,907,000, respectively. The Company
does not generally require collateral for its trade accounts receivable and
maintains an allowance for doubtful accounts.
4. INVENTORIES
The major components of inventories were as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
MARCH 31, --------------------------
1997 1996 1995
----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Finished products............................... $ 2,909,919 $ 2,971,774 $ 742,462
Raw materials................................... 3,874,352 4,208,211 773,149
Tooling and dies................................ 2,585,068 2,676,272 689,424
----------- ----------- -----------
$ 9,369,339 $ 9,856,257 $ 2,205,035
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
F-11
<PAGE>
PRECISE TECHNOLOGY, INC.
(A WHOLLY OWNED SUBSIDIARY OF
PRECISE HOLDING CORPORATION)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
5. PROPERTY, PLANT, AND EQUIPMENT
<TABLE>
<CAPTION>
DECEMBER 31,
MARCH 31, --------------------------
1997 1996 1995
----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Land............................................ $ 2,193,750 $ 2,193,750 $ 686,609
Buildings and leasehold improvements............ 11,040,832 10,229,961 5,214,301
Machinery and equipment......................... 37,930,361 37,503,277 9,866,999
----------- ----------- -----------
51,164,943 49,926,988 15,767,909
Accumulated depreciation and amortization....... (9,161,402) (7,863,565) (4,200,147)
----------- ----------- -----------
Net property, plant, and equipment.............. $42,003,541 $42,063,423 $11,567,762
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
Depreciation and amortization expense on property, plant, and equipment was
approximately $1,329,000, $4,213,000, $1,154,000, and $1,013,000 for the three
months ended March 31, 1997 and for the years ended 1996, 1995, and 1994,
respectively.
6. INTANGIBLE AND OTHER ASSETS
Intangible and other assets consisted of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
MARCH 31, --------------------------
1997 1996 1995
----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Goodwill........................................ $26,010,395 $26,010,395 $ --
Deferred financing costs........................ 4,743,748 4,743,748 68,148
Noncompete agreements........................... 556,666 556,666 --
Intangible pension asset and other.............. 394,288 147,235 161,528
----------- ----------- -----------
Total........................................... 31,705,097 31,458,044 229,676
Accumulated amortization........................ (2,020,210) (1,587,330) (33,745)
----------- ----------- -----------
Intangible and other assets, net................ $29,684,887 $29,870,714 $ 195,931
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
7. LONG-TERM DEBT
Long-term debt consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
MARCH 31, --------------------------
1997 1996 1995
----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Existing Credit Agreement (a):
Term Note A.................................... $21,250,000 $21,562,500 $ --
Term Note B.................................... 17,500,000 17,500,000 --
Existing Notes (b) 20,000,000 20,000,000 --
Other notes (c).................................. 498,325 585,261 1,803,936
Capitalized lease obligations (Note 11).......... 6,392,561 6,366,091 3,450,150
----------- ----------- ----------
65,640,886 66,013,852 5,254,086
Less:
Current maturities............................. (8,216,408) (7,641,105) (1,083,410)
Unamortized discount on Existing Notes......... (1,764,267) (1,802,055) --
----------- ----------- ----------
$55,660,211 $56,570,692 $4,170,676
----------- ----------- ----------
----------- ----------- ----------
</TABLE>
F-12
<PAGE>
PRECISE TECHNOLOGY, INC.
(A WHOLLY OWNED SUBSIDIARY OF
PRECISE HOLDING CORPORATION)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
7. LONG-TERM DEBT (CONTINUED)
(A) EXISTING CREDIT AGREEMENT (ECA)
On March 28, 1996, the Company entered into a $53,000,000 Credit Agreement with
a financial institution that is comprised of a $13,000,000 revolving line of
credit and two term notes (A and B) of $22,500,000 and $17,500,000,
respectively. The revolving line of credit expires March 31, 2002.
The revolving line of credit provides for borrowings of up to $13,000,000 and
accrues interest at the financial institution's prime rate (8.5% at March 31,
1997) plus 1.50%. The Company has the option to change its method of accruing
interest to LIBOR plus 2.75% to 3.25% on a monthly, quarterly or semi-annual
basis. Advances can be in an amount up to 85% of the outstanding eligible
accounts receivable plus 50% of the aggregate value of eligible inventory. The
outstanding balance under the revolving line of credit was $700,000 at March 31,
1997.
Term Note A is payable in 24 consecutive quarterly installments (payments
escalate from $312,500 to $1,312,500) beginning June 30, 1996 through March 31,
2002. Monthly interest payments are currently at 8.19% on $21,000,000 of the
outstanding note and prime plus 1.5% or 10% on $250,000 of the outstanding note
at March 31, 1997. The Company has the option to change its method of accruing
interest to LIBOR plus 2.75% on a monthly, quarterly or a semi-annual basis.
Term Note B is payable in 24 consecutive quarterly installments (payments
escalate from $125,000 to $3,750,000) beginning June 30, 1997 through March 31,
2003. Monthly interest payments are currently at 8.69% on $17,000,000 of the
outstanding note and prime plus 2.0% or 10.5% on $500,000 of the outstanding
note at March 31, 1997. The Company has the option to change its method of
accruing interest to LIBOR plus 3.25% on a monthly, quarterly or a semi-annual
basis.
The ECA is guaranteed on a senior basis by all of the Company's subsidiaries and
is collateralized by substantially all of the Company's and its subsidiaries'
assets. The Agreement contains certain covenants, as defined in the ECA, which
require the Company to maintain minimum levels of equity and cash flow from
operations, a fixed charge coverage ratio, a ratio of total debt to cash flow
from operations, an interest coverage ratio, and a minimum net worth
calculation. The ECA further limits capital expenditures, declaration of
dividends and additional indebtedness. The ECA also restricts the transferring
of assets and transferring or encumbering the Company's stock.
Term Notes A and B are subject to mandatory prepayment terms if the Company
experiences Excess Cash Flows as defined in the ECA. A prepayment of
approximately $3,293,000 is required as of March 31, 1997 and is included with
current maturities.
(B) EXISTING NOTE AGREEMENT (ENA)
On March 29, 1996, the Company issued two $10,000,000 subordinated notes under
the ENA. The subordinated notes accrue interest at 12.25% and are payable in
three installments of $6,666,667 on March 31, 2004, 2005, and 2006. The ENA
provides for certain prepayment penalties.
The subordinated note holders also entered into a Warrant Purchase Agreement
pursuant to which, in connection with their purchase of the subordinated notes,
each note holder acquired warrants to purchase 570 shares of Precise Holding
common stock. The warrants can be exercised at any time up to March 29, 2006 for
an exercise price of $.01 per share. The value ascribed to the warrants to
purchase the Precise Holding common stock resulted in a discount to the
subordinated notes and an addition to paid-in capital of approximately
$1,900,000. The discount is being amortized over the life of the subordinated
notes using the interest method yielding an effective interest rate of 14.12%.
The addition to paid-in capital is net of tax of approximately $744,000.
F-13
<PAGE>
PRECISE TECHNOLOGY, INC.
(A WHOLLY OWNED SUBSIDIARY OF
PRECISE HOLDING CORPORATION)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
7. LONG-TERM DEBT (CONTINUED)
(C) OTHER NOTES
The Company has various other notes of approximately $498,000 at March 31, 1997.
The notes are payable in monthly installments ranging from $3,756 to $7,697
commencing March 1, 1995 through March 2, 2000. The notes accrue interest at
rates varying from 4.8% to 8.15%.
Five-year maturities of long-term debt are as follows:
<TABLE>
<CAPTION>
DEBT OBLIGATIONS
----------------
<S> <C>
Nine months ended December 31, 1997...................... $ 6,771,747
1998..................................................... 6,125,908
1999..................................................... 6,518,443
2000..................................................... 5,809,494
2001..................................................... 5,365,966
2002..................................................... 10,415,181
Thereafter............................................... 24,634,147
----------------
$ 65,640,886
----------------
----------------
</TABLE>
8. FAIR VALUES OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used by the Company in estimating its
fair value disclosures for financial instruments:
Cash and cash equivalents--The carrying amount reported in the balance sheet for
cash and cash equivalents approximates its fair value.
Long-term debt--The carrying amounts of the Company's borrowings under its
short-term revolving credit agreements approximate their fair value. The fair
values of the Company's long-term debt are estimated using discounted cash flow
analysis, based on the Company's current incremental borrowing rates for similar
types of borrowing arrangements.
The carrying amounts and fair values of the Company's financial instruments at
March 31, 1997, December 31, 1996 and 1995 are as follows:
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1997 ----------------------------------------------------
------------------------- 1996 1995
(UNAUDITED) ------------------------- -----------------------
CARRYING FAIR CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE AMOUNT VALUE
----------- ----------- ----------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Cash and cash equivalents..... $ 525,027 $ 525,027 $ 1,310,564 $ 1,310,564 $ 25,676 $ 25,676
Line of credit................ $ 700,000 $ 700,000 $ 300,000 $ 300,000 $2,284,247 $2,284,247
Long-term debt................ $63,876,619 $63,876,619 $64,211,797 $64,211,797 $5,254,086 $5,254,086
</TABLE>
9. EMPLOYEE BENEFIT PLANS
Prior to October 31, 1995, the Company sponsored two noncontributory defined
benefit pension plans covering substantially all union and tool shop employees.
Benefits were generally based on years of service and benefit rates stated in
the related plan agreements. The Company made annual contributions to these
plans of at least the minimum funding required by the Employee Retirement Income
Security Act of 1974. Pension costs were determined by an independent actuary
using the projected unit credit cost method. Effective October 31, 1995, the
Company amended the defined benefit pension plan covering tool shop employees to
curtail the plan. Each participant had the option of receiving either a lump-sum
distribution, or a direct distribution to another qualified
F-14
<PAGE>
PRECISE TECHNOLOGY, INC.
(A WHOLLY OWNED SUBSIDIARY OF
PRECISE HOLDING CORPORATION)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
9. EMPLOYEE BENEFIT PLANS (CONTINUED)
plan. No gain or loss occurred as a result of the curtailment. As of December
31, 1996, all plan assets have been distributed to the tool shop employees. The
union plan continues to accrue benefits and has not been amended.
The plan's assets are held by independent trustees and are invested primarily in
guaranteed fixed income insurance contracts. The weighted average discount rate
used in determining the actuarial present value of the projected benefit
obligation was 8.1% and 8%, respectively, at December 31, 1996 and 1995. The
expected long-term rate of return on plan assets was 8.5% for both 1996 and
1995.
The Company's pension expense for its defined benefit pension plan consists of
the following components for the three months ended March 31, 1997 and for the
years ended December 31, 1996, 1995 and 1994:
<TABLE>
<CAPTION>
DECEMBER 31,
MARCH 31, ---------------------------------
1997 1996 1995 1994
------------ -------- --------- --------
(UNAUDITED)
<S> <C> <C> <C> <C>
Service cost for benefits earned during the year................ $ 8,116 $ 34,515 $ 48,665 $ 52,850
Interest cost on projected benefit obligation................... 22,073 82,964 112,397 103,587
Actual return on plan assets.................................... (23,938) (88,642) (126,099) (77,375)
Net amortization and deferral................................... 3,530 15,266 14,527 (18,567)
----------- -------- --------- --------
Net periodic pension cost $ 9,781 $ 44,103 $ 49,490 $ 60,495
----------- -------- --------- --------
----------- -------- --------- --------
</TABLE>
The following sets forth the funded status of the Company's defined benefit plan
and amounts recognized in the accompanying balance sheets as of December 31:
<TABLE>
<CAPTION>
1996 1995
-------------- --------------
<S> <C> <C>
Vested benefit obligation......................................................... $1,056,958 $1,413,493
-------------- --------------
-------------- --------------
Accumulated benefit obligation (ABO).............................................. $1,113,079 $1,488,393
Plan assets at estimated fair value............................................... 1,119,555 1,524,796
-------------- --------------
Plan assets in excess of ABO...................................................... 6,476 36,403
Unrecognized net loss............................................................. 196,344 237,309
Unrecognized prior service cost................................................... 97,795 105,755
Minimum liability adjustment...................................................... -- (313,920)
-------------- --------------
Prepaid pension asset............................................................. $ 300,615 $ 65,547
-------------- --------------
-------------- --------------
</TABLE>
In addition, the Company sponsors a defined contribution 401(k) plan which
covers substantially all non-union employees at the Tredegar and Unity
facilities. Under the terms of the 401(k) plan, the Company matches 25% of
employees' contributions up to 6% of employees' salaries. Contributions made by
the Company to the defined contribution 401(k) plan were approximately $38,000
and $69,000 for the three months ended March 31, 1997 and for the year ended
December 31, 1996, respectively.
The Company also sponsors a defined contribution 401(k) plan which covers
substantially all non-union employees at the other Company facilities. Under the
terms of the 401(k) plan, the Company matches 50% of employees' contributions up
to 5% of employee salary, and provides a discretionary contribution of 3.5% of
eligible employees' salaries to the plan, for a combined total of up to 6% of
eligible employees' earnings. Contributions made by the Company to the defined
contribution 401(k) plan were approximately $90,000, $329,000, $257,000 and
$138,000 for the three months ended March 31, 1997 and for the years ended
December 31, 1996, 1995 and 1994, respectively.
F-15
<PAGE>
PRECISE TECHNOLOGY, INC.
(A WHOLLY OWNED SUBSIDIARY OF
PRECISE HOLDING CORPORATION)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
10. INCOME TAXES
Income tax expense consisted of the following for the years ended December 31:
<TABLE>
<CAPTION>
1996 1995 1994
---------- -------- --------
<S> <C> <C> <C>
Current:
Federal........................................................ $ 586,466 $275,000 $145,297
State.......................................................... 330,000 139,000 60,420
---------- -------- --------
916,466 414,000 205,717
Deferred:
Federal........................................................ 412,388 472,569 315,015
State.......................................................... (64,000) 54,857 53,046
---------- -------- --------
348,388 527,426 368,061
---------- -------- --------
Total income taxes $1,264,854 $941,426 $573,778
---------- -------- --------
---------- -------- --------
</TABLE>
A reconciliation of U.S. income tax computed at the statutory rate and actual
expense is as follows for the years ending December 31:
<TABLE>
<CAPTION>
1996 1995 1994
---------- -------- --------
<S> <C> <C> <C>
Amount computed at statutory rate................................ $ 589,000 $754,000 $518,000
State and local taxes less applicable federal income tax......... 156,000 212,000 91,000
Amortization of goodwill......................................... 367,000 -- --
Other............................................................ 152,854 (24,574) (35,222)
---------- -------- --------
$1,264,854 $941,426 $573,778
---------- -------- --------
---------- -------- --------
</TABLE>
The components of the net deferred tax asset and liability at December 31 are as
follows:
<TABLE>
<CAPTION>
1996 1995
---------- ----------
<S> <C> <C>
Deferred tax assets:
Receivables............................................................... $ 111,271 $ 49,746
Inventory................................................................. 257,345 65,406
Accrued expenses.......................................................... 1,529,244 103,589
Plant closing costs....................................................... 643,006 --
State net operating losses................................................ 191,969 145,089
Pension................................................................... 142,519 100,896
AMT credit carryforward................................................... 33,433 56,109
---------- ----------
Total deferred tax assets................................................... 2,908,787 520,835
Deferred tax liabilities:
Inventory................................................................. 124,021 --
Property, plant, and equipment............................................ 5,741,059 1,628,480
Pension................................................................... -- 114,836
Debt discount............................................................. 736,802 --
---------- ----------
Total deferred tax liabilities.............................................. 6,601,882 1,743,316
---------- ----------
Net deferred tax liabilities................................................ $3,693,095 $1,222,481
---------- ----------
---------- ----------
</TABLE>
The Company had net operating losses for state income tax purposes at December
31, 1996 and 1995 of approximately $3,711,000 and $1,557,000, respectively. The
state net operating losses can be carried forward and used to offset the
Company's taxable income in certain states. The state loss carryforwards are
subject to
F-16
<PAGE>
PRECISE TECHNOLOGY, INC.
(A WHOLLY OWNED SUBSIDIARY OF
PRECISE HOLDING CORPORATION)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
10. INCOME TAXES (CONTINUED)
limitations as to the amount and timing of their use. For financial reporting
purposes, a valuation allowance has not been recognized to offset the deferred
tax assets relating to those carryforwards at December 31, 1996 and 1995. The
state net operating loss carryforwards will expire beginning in 1997 and ending
in 2008.
The Company had minimum tax credit carryforwards for federal tax purposes at
December 31, 1996 and 1995 of approximately $33,000 and $56,000, respectively.
The minimum tax credits can be carried forward indefinitely.
The Company is included in the consolidated federal income tax return of
Sunderland. For financial statement purposes, the Company calculates and reports
its current and deferred income taxes as if a separate return was filed by the
Company. The Company's federal taxable income can be offset by Sunderland's
federal net operating losses. The Company reimburses Sunderland for the tax
benefit it receives from Sunderland's net operating losses. The payable to
Sunderland for the utilization of such tax benefit was $330,000 and $210,000 as
of December 31, 1996 and 1995, respectively.
11. COMMITMENTS AND CONTINGENCIES
(A) LEASE COMMITMENTS
The Company leases certain production and office equipment and vehicles. These
leases are subject to renewal options for varying periods. Future minimum
payments under capital leases and noncancelable operating leases with initial or
remaining terms of one year or more consisted of the following as of March 31,
1997:
<TABLE>
<CAPTION>
CAPITAL OPERATING
LEASES LEASES
----------- ----------
<S> <C> <C>
Nine months ended December 31, 1997........................................ $ 1,998,583 $1,091,966
1998....................................................................... 2,624,023 1,109,496
1999....................................................................... 1,694,616 1,022,261
2000....................................................................... 836,827 819,761
2001....................................................................... 188,394 293,340
2002....................................................................... -- 175,440
Thereafter................................................................. -- --
----------- ----------
Total minimum lease payments $ 7,342,443 $4,512,264
----------
----------
Less amounts representing interest......................................... (949,882)
-----------
Present value of net minimum lease payments................................ 6,392,561
Less current maturities of capital lease obligations....................... (2,207,514)
-----------
Capital lease obligations.................................................. $ 4,185,047
-----------
-----------
</TABLE>
The Company has two leasing lines of credit in the amounts of $3,200,000 and
$5,000,000. These leasing lines of credit are available to support the Company's
capital expenditures for certain machinery and equipment. As of March 31, 1997,
the Company had approximately $1,463,000 of borrowings outstanding under the
lease lines. The lessors' commitments to lease additional equipment to the
Company under these lines expire on June 30, 1997 and November 1, 1997,
respectively.
Operating lease expense under such arrangements was $336,000, $1,219,600,
$412,700 and $497,300 for the three months ended March 31, 1997 and for the
years ended December 31, 1996, 1995 and 1994, respectively.
F-17
<PAGE>
PRECISE TECHNOLOGY, INC.
(A WHOLLY OWNED SUBSIDIARY OF
PRECISE HOLDING CORPORATION)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
11. COMMITMENTS AND CONTINGENCIES (CONTINUED)
(A) LEASE COMMITMENTS
Capitalized leases are as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
MARCH 31, ------------------------------
1997 1996 1995
------------------ --------------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Machinery and equipment............... $ 8,444,000 $ 8,656,000 $ 4,541,000
Leasehold improvements................ 799,000 799,000 799,000
------------------ --------------- -----------
9,243,000 9,455,000 5,340,000
Accumulated amortization.............. (1,788,000) (1,547,000) (1,010,000)
------------------ --------------- -----------
$ 7,455,000 $ 7,908,000 $ 4,330,000
------------------ --------------- -----------
------------------ --------------- -----------
</TABLE>
Amortization expense related to capitalized leases was approximately $241,000,
$749,000, $576,000, and $383,000 for the three months ended March 31, 1997 and
for the years ended December 31, 1996, 1995, and 1994, respectively.
(B) LITIGATION
The Company is involved from time to time in lawsuits that arise in the normal
course of business. The Company actively and vigorously defends all lawsuits.
Management believes that there are no lawsuits that will have a material affect
on the Company's financial position.
(C) COLLECTIVE BARGAINING AGREEMENT
Approximately 4% of the Company's employees are covered under a collective
bargaining agreement which expires in February 1998.
12. REDEEMABLE PREFERRED STOCK
Redeemable Preferred Stock consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
MARCH 31, --------------------------
1997 1996 1995
----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Series A cumulative exchangeable preferred stock, no par value; 575
shares authorized, issued and outstanding $ 5,750,000 $ 5,750,000 $ --
Series B cumulative redeemable preferred stock, $10,000 stated value;
250 shares authorized, issued and outstanding 2,500,000 2,500,000 --
----------- ----------- -----------
$ 8,250,000 $ 8,250,000 $ --
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
Effective March 29, 1996 in connection with the Tredegar acquisition, the
Company authorized and issued 575 shares of Series A cumulative exchangeable
preferred stock without par value (Series A preferred stock) for consideration
of $5,750,000 (liquidation preference $10,000 per share). Dividends are
cumulative, paid in arrears, on a quarterly basis at an annual rate of 11.25% of
the liquidation preference. The Series A preferred stock ranks senior to all
classifications of stock. The Series A preferred stock is optionally redeemable
at any time, and manditorily redeemable on April 1, 2006, upon not less than 30
days notice at a redemption price equal to the liquidation preference thereof
plus accrued and unpaid dividends to the redemption date. In connection with
their purchase of Series A preferred stock, the stockholders also purchased 250
shares of Precise Holding common stock and $.01 per share warrants to acquire
575 shares of common stock for an aggregate consideration of $750,000. The
warrants can be exercised at any time through March 29, 2006. The $750,000 was
subsequently contributed to the Company as a capital contribution by Precise
Holding.
F-18
<PAGE>
PRECISE TECHNOLOGY, INC.
(A WHOLLY OWNED SUBSIDIARY OF
PRECISE HOLDING CORPORATION)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
12. REDEEMABLE PREFERRED STOCK (CONTINUED)
Effective March 29, 1996 in connection with the Tredegar acquisition, the
Company authorized and issued 250 shares of Series B cumulative redeemable
preferred stock (Series B stock) for consideration of $2,500,000 with a stated
value of $10,000 per share (liquidation preference) under a securities purchase
agreement. Dividends are cumulative, paid in arrears, on a quarterly basis at an
annual rate of 7% of the stated value. The Series B preferred stock ranks junior
to Series A preferred stock and is mandatorily redeemable based upon the
occurrence of certain events, as defined in the securities purchase agreement,
or no later than April 1, 2007.
13. PREFERRED STOCK
On March 29, 1996, 331.46 shares of 9-1/2% preferred stock ('9-1/2% Preferred
Stock') in the Company was exchanged by its holder for like-kind preferred stock
in Precise Holding. Precise Holding simultaneously surrendered and retired the
9-1/2% Preferred Stock in the Company in exchange for an additional 124 shares
of common stock in the Company.
14. PLANT CLOSING COSTS
(A) GRAHAM, NORTH CAROLINA
In connection with the acquisition of Tredegar, the Company decided to close its
Graham, North Carolina plant and relocate the activities to other Company
facilities. The Company incurred approximately $1,400,000 of costs related to
the Graham closing for employee termination benefits, noncancellable operating
lease accruals, and certain other costs. The closing costs were allocated to the
acquisition purchase price. Approximately $424,000 of such closing costs have
been paid as of March 31, 1997.
Additionally, costs to relocate machinery and equipment from the Graham Plant to
the Company's other facilities of $109,600 were expensed during 1996 and are
included with the plant closure costs in the consolidated statement of income
for the fiscal year ended December 31, 1996.
(B) ROCHESTER, NEW YORK
During 1996, the Company decided to sell its Rochester facility. Presently, the
Company has a signed agreement from a buyer to purchase the land, buildings, and
certain equipment for $900,000. In accordance with Statement of Financial
Accounting Standards No. 121, Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to be Disposed of, the Company recorded an impairment
loss of $301,000 which represents the difference between the net book value of
the assets to be sold and the offer price of $900,000. Additionally, the Company
has accrued approximately $260,000 of employee termination benefits related to
the Rochester Facility sale. The impairment loss of $301,000 and the employee
termination expense of $260,000 are included with the plant closure costs in the
consolidated statement of income for the fiscal year ended December 31, 1996.
15. RELATED PARTY TRANSACTION
The sole executive officers and directors of Mentmore are Richard L. Kramer and
William L. Remley who are also directors of the Company. Mentmore provides
management services to Precise and its subsidiaries pursuant to the Management
Agreement dated March 15, 1996, as amended (the 'Management Agreement'), between
Precise and Mentmore. Pursuant to the Mangement Agreement, Mentmore provides the
Company with general management, advisory and consulting services with respect
to the Company's business and with respect to such other matters as the Company
may reasonably request from time to time, including, without limitation,
strategic planning, financial planning, business acquisition and general
business development services. The Company paid Mentmore fees of $0, $450,000,
$300,000 and $150,000 in the three months of 1997 and for the 12 months in
F-19
<PAGE>
PRECISE TECHNOLOGY, INC.
(A WHOLLY OWNED SUBSIDIARY OF
PRECISE HOLDING CORPORATION)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
15. RELATED PARTY TRANSACTION (CONTINUED)
1996, 1995 and 1994, respectively, for management and other advisory services
and reimbursed Mentmore for certain expenses incurred in connection with the
rendering of such services.
The Company paid the law firm of Richard C. Hoffman, P.C., whose principal is a
director of the Company, approximately $5,000 and $257,500 in legal fees for the
three months ended March 31, 1997 and for the year ended December 31, 1996.
During this period, Mr. Hoffman served as Vice President and General Counsel of
Mentmore.
16. SUBSEQUENT EVENT
At March 31, 1997, the Company was not in compliance with certain financial
covenants contained in the Existing Credit Agreement. The Company obtained
waivers for such covenant violations as of March 31, 1997 through the next
compliance measurement date, June 30, 1997. As a result of the escalating nature
of these covenants, the Company does not expect to be in compliance with these
provisions at any of the future quarterly measurement dates during 1997 and a
waiver or an amendment would be required. However, the Company currently intends
to complete an offering of senior subordinated notes, a portion of the proceeds
of which is expected to be used to refinance the Existing Credit Agreement, and
as such compliance with the existing debt provisions will no longer be required.
F-20
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To Mr. John R. Weeks, President & Chief Executive Officer of Precise Technology,
Inc.:
We have audited the accompanying consolidated balance sheets of Tredegar Molded
Products Company and Subsidiary ('TMP') (a wholly-owned subsidiary of Tredegar
Industries, Inc. ('Tredegar')) as of December 31, 1995 and 1994 and the related
consolidated statements of operations and changes in accumulated deficit and
cash flows for each of the two years in the period ended December 31, 1995
(adjusted for certain allocations and assets to be retained and liabilities to
be assumed by Tredegar (Note 1)). These financial statements are the
responsibility of TMP's management. Our responsibility is to express an opinion
on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of TMP as of December
31, 1995 and 1994 and the consolidated results of their operations and cash
flows for each of the two years in the period ended December 31, 1995, in
conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Richmond, Virginia
February 26, 1996
F-21
<PAGE>
TREDEGAR MOLDED PRODUCTS COMPANY AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS AND
CHANGES IN ACCUMULATED DEFICIT
(ADJUSTED FOR CERTAIN ALLOCATIONS (NOTE 1))
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------
1995 1994
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Net sales:
Plastics.............................................................................. $ 74,151 $ 66,931
Tooling............................................................................... 16,515 14,627
-------- --------
Total.............................................................................. 90,666 81,558
-------- --------
Costs and expenses:
Cost of goods sold--Plastics.......................................................... 65,164 62,472
Cost of goods sold--Tooling........................................................... 14,709 13,065
Selling, general and administrative................................................... 5,612 6,577
Amortization of goodwill and other intangibles........................................ 237 584
Unusual charges, net.................................................................. 1,799 8,042
-------- --------
Total.............................................................................. 87,521 90,740
-------- --------
Income (loss) before income taxes....................................................... 3,145 (9,182)
Income taxes............................................................................ 1,239 (3,345)
-------- --------
Net income (loss)....................................................................... 1,906 (5,837)
Accumulated deficit, beginning of year.................................................. (18,465) (12,628)
-------- --------
Accumulated deficit, end of year........................................................ $(16,559) $(18,465)
-------- --------
-------- --------
</TABLE>
See accompanying notes
F-22
<PAGE>
TREDEGAR MOLDED PRODUCTS COMPANY AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(ADJUSTED FOR CERTAIN ALLOCATIONS AND ASSETS TO BE RETAINED
AND LIABILITIES TO BE ASSUMED BY TREDEGAR (NOTE 1))
(IN THOUSANDS EXCEPT PAR VALUE AND SHARE AMOUNTS)
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1995 1994
-------- --------
<S> <C> <C>
ASSETS
Current assets:
Accounts and notes receivable, net....................................................... $ 7,763 $ 7,516
Tooling contracts receivable............................................................. 1,590 3,264
Costs in excess of billings on uncompleted tooling contracts............................. 800 2,769
Inventories.............................................................................. 5,396 5,178
Deferred income taxes.................................................................... 1,315 1,640
Prepaid expenses and other............................................................... 56 128
-------- --------
Total current assets....................................................................... 16,920 20,495
Property, plant, and equipment, at cost.................................................... 64,643 62,701
Less accumulated depreciation.............................................................. 39,021 38,689
-------- --------
Net property, plant, and equipment......................................................... 25,622 24,012
Other assets and deferred charges.......................................................... - 18
Goodwill and other intangibles............................................................. 688 925
-------- --------
Total Assets........................................................................ $ 43,230 $ 45,450
-------- --------
-------- --------
LIABILITIES AND SHAREHOLDER'S EQUITY AND INTERCOMPANY ACCOUNT
Current liabilities:
Accounts payable......................................................................... $ 2,547 $ 2,127
Accrued expenses......................................................................... 2,239 2,540
Billings in excess of costs on uncompleted tooling contracts............................. 458 3,074
Workers compensation, health care, and certain other employee
benefit liabilities allocated from Tredegar Industries, Inc........................... 1,570 1,819
-------- --------
Total current liabilities.................................................................. 6,814 9,560
Deferred income taxes...................................................................... 1,724 1,874
Other noncurrent liabilities............................................................... 460 735
-------- --------
Total Liabilities................................................................... 8,998 12,169
Shareholder's equity and intercompany account:
Due from Tredegar Industries, Inc. and affiliates........................................ (3,488) (2,533)
Common stock ($1 par value, 2,000 shares authorized
and 1,000 shares issued and outstanding............................................... 1 1
Additional paid-in capital............................................................... 54,278 54,278
Accumulated deficit...................................................................... (16,559) (18,465)
-------- --------
Total shareholder's equity and intercompany account........................................ 34,232 33,281
-------- --------
Total liabilities and shareholder's equity and intercompany account........................ $ 43,230 $ 45,450
-------- --------
-------- --------
</TABLE>
See accompanying notes
F-23
<PAGE>
TREDEGAR MOLDED PRODUCTS COMPANY AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(ADJUSTED FOR CERTAIN ALLOCATIONS AND ASSETS TO BE RETAINED
AND LIABILITIES TO BE ASSUMED BY TREDEGAR (NOTE 1))
<TABLE>
<CAPTION>
DECEMBER 31,
------------------
1995 1994
------- -------
(IN THOUSANDS)
<S> <C> <C>
Cash flows from operating activities:
Net income (loss).......................................................................... $ 1,906 $(5,837)
Depreciation............................................................................... 4,819 5,373
Amortization of goodwill and other intangibles............................................. 237 584
Write-off of intangibles................................................................... - 4,873
Deferred income taxes...................................................................... 175 (2,612)
Loss on property, plant, and equipment:
Disposals............................................................................... 170 88
Transfers to Tredegar Industries, Inc. and affiliates................................... - 700
(Increase) decrease in:
Accounts and notes receivable, net...................................................... (247) (497)
Tooling contracts receivable............................................................ 1,674 (38)
Costs in excess of billings on uncompleted tooling contracts............................ 1,969 (1,317)
Inventories............................................................................. (218) (1,177)
Prepaid expenses and other.............................................................. 72 (59)
Other assets and deferred charges....................................................... 18 8
Increase (decrease) in:
Accounts payable........................................................................ 420 301
Accrued expenses........................................................................ (301) (18)
Billings in excess of costs on uncompleted tooling contracts............................ (2,616) 1,717
Workers compensation, health care, and certain other employee benefit accruals allocated
from Tredegar Industries, Inc.......................................................... (249) 274
Other noncurrent liabilities............................................................ (275) (536)
------- -------
Net cash provided by operating activities.................................................. 7,554 1,827
------- -------
Cash flows from investing activities:
Capital expenditures.................................................................... (6,553) (2,988)
Disposal of assets used in ongoing operations........................................... 73 75
Transfer of Alsip, Illinois and Anvil St. (St. Petersburg, FL) property, plant, and
equipment to Tredegar Industries, Inc. at estimated net realizable value............... - 1,022
Miscellaneous transfers of property, plant, and equipment with Tredegar Industries, Inc.
and affiliates, net.................................................................... (119) -
Other - 77
------- -------
Net cash used in investing activities...................................................... (6,599) (1,814)
------- -------
Cash flows from financing activities:
Increase in due from Tredegar Industries, Inc. and affiliates........................... (955) (13)
------- -------
Net cash used in financing activities...................................................... (955) (13)
------- -------
Increase (decrease) in cash................................................................ - -
Cash at beginning of year.................................................................. - -
------- -------
Cash at end of year........................................................................ $ - $ -
------- -------
------- -------
</TABLE>
See accompanying notes
F-24
<PAGE>
TREDEGAR MOLDED PRODUCTS COMPANY AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. ORGANIZATION, BASIS OF PRESENTATION, AND RELATIONSHIP WITH TREDEGAR
INDUSTRIES, INC.
Tredegar Molded Products Company and its wholly owned subsidiary, Polestar
Plastics Manufacturing Company ('Polestar') (collectively referred to as 'TMP'),
manufactures injection-molded parts for packaging, industrial, medical, and
electronics products and produces injection molding tools for internal use and
for sale to other custom and captive molders. TMP has six molding plants
(including a new facility in Graham, North Carolina and excluding a plant in the
process of being closed in Alsip, Illinois), one mold-making plant, and 735
employees, all located in the United States.
TMP is an indirect, wholly owned subsidiary of Tredegar Industries, Inc.
('Tredegar'), a diversified manufacturer of plastics and metal products.
Tredegar, which was spun off from Ethyl Corporation on July 10, 1989, is a
public company listed on the New York Stock Exchange.
The consolidated financial statements include the accounts and operations of TMP
adjusted to reflect the immediate settlement of amounts due from or payable to
Tredegar and its affiliates (the 'Intercompany Account'). The Intercompany
Account has been adjusted to reflect: (i) the estimated realizable value of
assets held for sale (net of associated deferred income taxes), (ii) cash and
cash equivalents, (iii) net current income taxes payable or recoverable, and
(iv) an allocation of estimated workers compensation, health care, and certain
other employee benefit liabilities related to TMP's ongoing operations (net of
associated deferred income taxes). Items (i), (ii), and (iii) are expected to be
transferred to Tredegar, and the Intercompany Account is expected to be settled
immediately prior to any sale of TMP. Item (iv) is management's allocation from
Tredegar of estimated ongoing liabilities that TMP would have reflected in its
balance sheet on a stand-alone basis. Charges related to the liabilities
described in Item (iv) are included in TMP's results of operations in the year
incurred, and Tredegar would expect to retain such liabilities to the extent
they were incurred prior to the date of any sale.
The preparation of financial statements requires management to make estimates
and assumptions that affect the reported amounts of revenues, expenses, assets
and liabilities, and disclosure of contingent assets and liabilities at the date
of the financial statements. Actual results could differ from those estimates.
Except for Polestar, most of TMP's salaried and nonunion hourly employees
participate in Tredegar's Retirement Income Plan (the 'RIP'), and its salaried
employees also participate in Tredegar's postretirement health care and life
insurance plans. In addition, Tredegar sponsors a defined contribution plan (the
'Savings Plan') covering most employees at TMP except for Polestar, which
sponsors a separate plan for its participating employees.
Tredegar allocates the costs of the RIP and Tredegar's postretirement health
care and life insurance plans to each of its divisions. The total costs,
computed in accordance with Statement of Financial Accounting Standards ('SFAS')
No. 87, Employers' Accounting for Pensions, and SFAS No. 106, Employers'
Accounting for Postretirement Benefits Other Than Pensions, which are allocable
to TMP, are not considered material.
Historically, separate pension plans provided defined benefits to TMP's union
employees. As union facilities were shut down, these plans were merged (or will
be merged in the case of the Alsip, Illinois defined benefit pension plan) into
Tredegar's RIP. Net periodic pension cost for the Alsip plan (the only remaining
union plan in 1995 and 1994), computed in accordance with SFAS No. 87, was
approximately $81,000 in 1995 and $124,000 in 1994, and was included in TMP's
results of operations up through the date of shut-down.
The Savings Plan allows eligible employees to voluntarily contribute up to 10%
of their compensation with Tredegar matching 50% of such contributions (25% for
TMP's employees effective January 1, 1995) with shares of Tredegar's common
stock. Effective January 1, 1995, the matching contributions associated with
TMP's employees are limited to 1.5% of compensation. Matching contributions
charged to TMP for its employees were approximately $180,000 in 1995 and
$470,000 in 1994.
Polestar has a 401(k) profit sharing plan that allows eligible employees to
voluntarily contribute up to 15% of their compensation on a pretax basis.
Polestar matches 25% of such contributions up to a maximum of 1.5% of
F-25
<PAGE>
TREDEGAR MOLDED PRODUCTS COMPANY AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
1. ORGANIZATION, BASIS OF PRESENTATION, AND RELATIONSHIP WITH TREDEGAR
INDUSTRIES, INC. (CONTINUED)
compensation. Matching contributions by Polestar were approximately $12,000 in
1995 and $12,000 in 1994. Optional contributions by Polestar were approximately
$94,000 in 1995 and $100,000 in 1994.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
TOOLING PROFIT RECOGNITION
Profit from the sale of injection molding tools is generally recognized under
the completed contract method whereby the contract is considered complete upon
acceptance of the tool by the customer.
INVENTORIES
Inventories are stated at the lower of cost or market, with cost principally
(approximately 84% and 93% at December 31, 1995 and 1994, respectively)
determined on the last-in, first-out ('LIFO') basis. Cost elements included in
work-in-process and finished goods inventories are raw materials, direct labor,
and manufacturing overhead.
PROPERTY, PLANT, AND EQUIPMENT
Accounts include costs of assets constructed or purchased, related delivery and
installation costs and interest incurred on significant capital projects during
their construction periods. Expenditures for renewals and betterments also are
capitalized, but expenditures for repairs and maintenance are expensed as
incurred. The cost and accumulated depreciation applicable to assets retired or
sold are removed from the respective accounts, and gains or losses thereon are
included in income. Depreciation is computed primarily by the straight-line
method based on the estimated useful lives of the assets.
INCOME TAXES
TMP joins with Tredegar in filing a consolidated federal income tax return.
Income tax expense for TMP is calculated and recognized on a separate return
basis consistent with SFAS No. 109, 'Accounting for Income Taxes.' Deferred
income taxes arise from temporary differences between financial and income tax
reporting of various items, principally depreciation, certain goodwill and other
intangibles, inventories, and accruals for employee benefits.
Because TMP is included in Tredegar's consolidated federal income tax return,
its net operating losses were utilized by Tredegar; accordingly, TMP has no
reportable net operating loss or tax credit carryforwards on a separate company
basis.
GOODWILL AND OTHER INTANGIBLES
In connection with the Polestar acquisition, noncompetition intangibles of
$1,150,000 and goodwill of $194,000 were recognized and are being amortized for
accounting purposes over 5 years ($230,000 annually) and 15 years (approximately
$7,000 annually), respectively (each deductible for income tax purposes on a
straight-line basis over 15 years). In addition, incremental depreciation
expense in 1995 and 1994 of $660,000 and $786,000, respectively, was recognized
for the excess of the estimated fair value of property, plant, and equipment
acquired over its predecessor basis.
F-26
<PAGE>
TREDEGAR MOLDED PRODUCTS COMPANY AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
3. UNUSUAL ITEMS
The following unusual items (events or transactions that are unusual in nature
or occur infrequently and affect comparability of operating results between
years) were recognized during 1995 and 1994:
<TABLE>
<CAPTION>
1995 1994
------- -------
(IN THOUSANDS)
<S> <C> <C>
Start-up losses (negative gross profit) associated with new Graham, North Carolina
facility......................................................................... $(1,971) $ -
Inventory adjustment related to prior year......................................... 155 -
Reversal of prior year accrued losses on equipment used in operations that was
expected to be disposed of....................................................... 145 -
Severance accrual.................................................................. (128) -
Write-off of goodwill associated with operating losses in certain lines of
business......................................................................... - (4,873)
Accrued loss and divestiture costs for Alsip, Illinois plant shut-down............. - (2,213)
Accrued losses on the expected disposal of equipment............................... - (656)
Accrued loss on disposal of technical facility in St. Petersburg, Florida.......... - (300)
------- -------
Total unusual charges, net......................................................... $(1,799) $(8,042)
------- -------
------- -------
</TABLE>
4. ACCOUNTS RECEIVABLE
Accounts and notes receivable consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------
1995 1994
------ ------
(IN THOUSANDS)
<S> <C> <C>
Accounts and notes receivable........................................................ $7,949 $7,727
Allowance for doubtful accounts...................................................... (186) (211)
------ ------
Accounts and notes receivable, net................................................... $7,763 $7,516
------ ------
------ ------
</TABLE>
F-27
<PAGE>
TREDEGAR MOLDED PRODUCTS COMPANY AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
5. TOOLING CONTRACT RECEIVABLES AND COSTS AND BILLINGS ON UNCOMPLETED TOOLING
CONTRACTS
Tooling contract receivables and costs and billings on uncompleted contracts are
as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------
1995 1994
------ ------
(IN THOUSANDS)
<S> <C> <C>
Tooling contracts receivable......................................................... $1,590 $3,264
------ ------
------ ------
Costs incurred on uncompleted contracts.............................................. $2,484 $5,114
Billings on uncompleted contracts.................................................... 2,142 5,419
------ ------
Net.................................................................................. $ 342 $ (305)
------ ------
------ ------
Costs and billings on uncompleted contracts included in the balance sheets:
Cost in excess of billings on uncompleted contracts.................................. $ 800 $2,769
Billings in excess of costs on uncompleted contracts................................. 458 3,074
------ ------
Net.................................................................................. $ 342 $ (305)
------ ------
------ ------
</TABLE>
6. INVENTORIES
Inventories consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------
1995 1994
------ ------
(IN THOUSANDS)
<S> <C> <C>
Inventories at FIFO cost:
Finished goods..................................................................... $2,229 $2,139
Work-in-process.................................................................... 626 596
Raw materials...................................................................... 3,563 3,404
Allowance for inventories carried on a LIFO basis.................................... (939) (906)
Allowance for inventory obsolescence................................................. (83) (55)
------ ------
Inventories, net..................................................................... $5,396 $5,178
------ ------
------ ------
</TABLE>
7. ACCRUED EXPENSES
Accrued expenses consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------
1995 1994
------ ------
(IN THOUSANDS)
<S> <C> <C>
Payrolls, related taxes, vested vacation and other benefits.......................... $1,699 $1,730
Accrued losses for excess equipment and severance.................................... - 293
Current portion of noncompetition payable (see Note 2)............................... 230 230
Customer prepayments................................................................. 90 129
PPI acquisition contingent consideration (see Note 2)................................ - -
Other................................................................................ 220 158
------ ------
Total................................................................................ $2,239 $2,540
------ ------
------ ------
</TABLE>
F-28
<PAGE>
TREDEGAR MOLDED PRODUCTS COMPANY AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
8. PROPERTY, PLANT AND EQUIPMENT
Property, plant, and equipment cost components and accumulated depreciation at
December 31, 1995 and 1994 are as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------
1995 1994
------- -------
(IN THOUSANDS)
<S> <C> <C>
Land and land improvements........................................................ $ 667 $ 667
Buildings......................................................................... 12,738 12,102
Machinery and equipment........................................................... 51,238 49,932
------- -------
Total property, plant, and equipment, at cost..................................... 64,643 62,701
Less accumulated depreciation..................................................... 39,021 38,689
------- -------
Net property, plant, and equipment................................................ $25,622 $24,012
------- -------
------- -------
</TABLE>
9. GOODWILL AND OTHER INTANGIBLES
Activity for goodwill and other intangibles for the two years ended December 31,
1995 is presented below:
<TABLE>
<CAPTION>
TOTAL
GOODWILL
NON- AND
COMPETITION OTHER
GOODWILL INTANGIBLES INTANGIBLES
-------- ----------- -----------
(IN THOUSANDS)
<S> <C> <C> <C>
Balance December 31, 1994.......................................... $ 101 $ 824 $ 925
Amortization....................................................... (7) (230) (237)
-------- ----------- -----------
Balance December 31, 1995.......................................... $ 94 $ 594 $ 688
-------- ----------- -----------
-------- ----------- -----------
</TABLE>
F-29
<PAGE>
TREDEGAR MOLDED PRODUCTS COMPANY AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
10. INCOME TAXES
Income before income taxes and income taxes are as follows:
<TABLE>
<CAPTION>
1995 1994
------ -------
<S> <C> <C>
(IN THOUSANDS)
Income (loss) before income taxes................................................... $3,145 $(9,182)
------ -------
------ -------
Current income tax (benefit):
Federal........................................................................... $ 896 $ (791)
State............................................................................. 168 58
------ -------
1,064 (733)
------ -------
Deferred income tax (benefit):
Federal........................................................................... 159 (2,179)
State............................................................................. 16 (433)
------ -------
175 (2,612)
------ -------
Total income tax (benefit)........................................................ $1,239 $(3,345)
------ -------
------ -------
</TABLE>
The provision for income taxes at the effective tax rate differed from the
provision for income taxes at the statutory rate as follows:
<TABLE>
<CAPTION>
1995 1994
------ -------
<S> <C> <C>
(IN THOUSANDS)
Income tax (benefit) at federal statutory rate...................................... $1,101 $(3,214)
State income taxes, net of federal benefit.......................................... 120 (244)
Write-off of nondeductible goodwill................................................. - 88
Other............................................................................... 18 25
------ -------
Total income tax (benefit).......................................................... $1,239 $(3,345)
------ -------
------ -------
</TABLE>
Deferred tax liabilities and deferred tax assets as of December 31, 1995 and
1994 are as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------
1995 1994
------ ------
<S> <C> <C>
(IN THOUSANDS)
Deferred tax liabilities:
Property, plant, and equipment cost and accumulated depreciation................... $1,868 $2,040
Goodwill........................................................................... - -
Other.............................................................................. - 9
------ ------
Total deferred tax liabilities..................................................... 1,868 2,049
------ ------
------ ------
Deferred tax assets:
Vested vacation pay................................................................ 299 353
Inventories........................................................................ 227 200
Goodwill and other intangibles..................................................... 144 -
Workers compensation, health care, and certain other employee benefit liabilities
allocated from Tredegar......................................................... 601 709
Other.............................................................................. 188 553
------ ------
Total deferred tax assets.......................................................... 1,459 1,815
------ ------
Net deferred tax liability........................................................... $ 409 $ 234
------ ------
------ ------
Included in the balance sheet:
Noncurrent deferred tax liabilities in excess of assets............................ $1,724 $1,874
Current deferred tax assets in excess of liabilities............................... 1,315 1,640
------ ------
Net deferred tax liability $ 409 $ 234
------ ------
------ ------
</TABLE>
F-30
<PAGE>
TREDEGAR MOLDED PRODUCTS COMPANY AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
11. RENTAL EXPENSE AND CONTRACTUAL COMMITMENTS
Rental expense was $837,000 in 1995 and $648,000 in 1994. Rental commitments
under all noncancelable operating leases as of December 31, 1995, are as
follows:
<TABLE>
<CAPTION>
(IN THOUSANDS)
<S> <C>
1996.......................................................................... $ 819
1997.......................................................................... 703
1998.......................................................................... 491
1999.......................................................................... 479
2000.......................................................................... 484
Remainder..................................................................... 1,836
-------
$4,812
-------
-------
</TABLE>
Contractual obligations for plant construction and purchases of real property
and equipment amounted to approximately $1.1 million at December 31, 1995.
12. CONTINGENCIES
Management is not aware of any potential unrecorded liabilities at December 31,
1995 and 1994 that would have a material adverse effect on TMP's operations or
financial condition.
F-31
<PAGE>
[LOGO IS FOR INSIDE BACK COVER]
PRECISE
[ LOGO ]
TECHNOLOGY
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO DEALER, SALESPERSON, OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
REPRESENTATIONS IN CONNECTION WITH THE OFFER CONTAINED HEREIN OTHER THAN THOSE
CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF ANY OFFER TO BUY ANY SECURITY OTHER THAN THOSE TO WHICH IT
RELATES, NOR DOES IT CONSTITUTE AN OFFER TO SELL, OR THE SOLICITATION OF AN
OFFER TO BUY, TO ANY PERSON IN ANY JURISDICTION IN WHICH SUCH OFFER OR
SOLICITATION IS NOT AUTHORIZED, OR IN WHICH THE PERSON MAKING SUCH OFFER OR
SOLICITATION IS NOT QUALIFIED TO DO SO, OR TO ANY PERSON TO WHOM IT IS UNLAWFUL
TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR
ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION
THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE
HEREOF OR THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO THE DATE HEREOF.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information......................... 4
Prospectus Summary............................ 5
Risk Factors.................................. 16
Capitalization................................ 23
Selected Financial Data....................... 24
Pro Forma Financial Data...................... 26
Management's Discussion and Analysis of
Financial Condition and Results of
Operations.................................. 31
Business...................................... 37
Management.................................... 49
Certain Transactions.......................... 52
Principal Stockholders........................ 54
Description of Certain Indebtedness........... 55
The Exchange Offer............................ 56
Description of Notes.......................... 64
Certain U.S. Federal Income Tax
Considerations.............................. 89
Plan of Distribution.......................... 89
Legal Matters................................. 90
Experts....................................... 90
Index to Consolidated Financial Statements.... F-1
</TABLE>
UNTIL , 1997 (90 DAYS AFTER THE COMMENCEMENT OF THE
EXCHANGE OFFER), ALL DEALERS EFFECTING TRANSACTIONS IN THE REGISTERED
SECURITIES, WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REGISTERED
TO DELIVER A PROSPECTUS. THIS DELIVERY REQUIREMENT IS IN ADDITION TO THE
OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND
WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
$75,000,000
[ LOGO ]
PRECISE TECHNOLOGY, INC.
OFFER TO EXCHANGE $1,000
IN PRINCIPAL AMOUNT OF ITS
SERIES B 11 1/8% SENIOR SUBORDINATED
NOTES DUE 2007
WHICH HAVE BEEN REGISTERED UNDER THE
SECURITIES ACT FOR EACH $1,000
IN PRINCIPAL AMOUNT OF ITS OUTSTANDING
11 1/8% SENIOR SUBORDINATED
NOTES DUE 2007
THE EXCHANGE AGENT FOR THE EXCHANGE OFFER IS:
MARINE MIDLAND BANK
BY FACSIMILE:
(212) 658-2292
CONFIRMATION BY TELEPHONE:
(212) 658-5931
BY MAIL, OVERNIGHT COURIER OR HAND DELIVERY:
140 BROADWAY--LEVEL A
NEW YORK, NEW YORK 10005-1180
ATTENTION: CORPORATE TRUST SERVICES
---------------------------------------------
PROSPECTUS
---------------------------------------------
, 1997
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Capitalized terms used but not defined in Part II have the meanings
ascribed to them in the Prospectus contained in this Registration Statement.
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Precise Technology, Inc. and its subsidiaries, Precise Technology of
Delaware, Inc. and Precise Technology of Illinois, Inc. (collectively, the
'Delaware Subsidiaries'), are Delaware corporations. Section 145 ('Section 145')
of the General Corporation Law of the State of Delaware (the 'DGCL') provides
that a Delaware corporation may indemnify any persons who were, are or are
threatened to be made, parties to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of such corporation), by reason of the
fact that such person is or was an officer, director, employee or agent of such
corporation, or is or was serving at the request of such corporation as a
director, officer, employee or agent of another corporation or enterprise. The
indemnity may include expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by such person in
connection with such action, suit or proceeding provided such person acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
corporation's best interests and, with respect to any criminal action or
proceeding, had no reasonable cause to believe that his conduct was illegal. A
Delaware corporation may indemnify any persons who are, were or are threatened
to be made, a party to any threatened, pending or completed action or suit by or
in the right of the corporation by reasons of the fact that such person was a
director, officer, employee or agent of such corporation, or is or was serving
at the request of such corporation as a director, officer, employee or agent of
another corporation or enterprise. The indemnity may include expenses (including
attorneys' fees) actually and reasonably incurred by such person in connection
with the defense or settlement of such action or suit, provided such person
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the corporation's best interests, provided that no indemnification is
permitted without judicial approval if the officer, director, employee or agent
is adjudged to be liable to the corporation. Where an officer, director,
employee or agent is successful on the merits or otherwise in the defense of any
action referred to above, the corporation must indemnify him against the
expenses which such officer or director has actually and reasonably incurred.
The Certificate of Incorporation and/or Bylaws of each of Precise and the
Delaware Subsidiaries provide for the indemnification of persons under the
circumstances described in Section 145 of the DGCL.
Precise TMP, Inc. and Precise Polestar, Inc. are Virginia corporations.
Article 10 ('Article 10') of the Virginia Stock Corporation Act (Virginia Code
sections 13.1-601 et seq.) (the 'VSCA') allows, in general, for indemnification,
in certain circumstances, by a corporation of any person threatened with or made
a party to any action, suit or proceeding by reason of the fact that he or she
is, or was, a director, officer, employee or agent of such corporation.
Indemnification is also authorized under Article 10 with respect to a criminal
action or proceeding where the person had no reasonable cause to believe that
his conduct was unlawful. Article 9 ('Article 9') of the VSCA provides
limitations on damages payable by officers and directors, except in cases of
willful misconduct or knowing violation of criminal law or any federal or state
securities law. The Articles of Incorporation of each of Precise TMP, Inc. and
Precise Polestar, Inc. provide for the indemnification of persons under the
circumstances described in Article 10 of the VSCA.
Massie Tool, Mold & Die, Inc. is a Florida corporation. Section 607.0831
('Section 607.0831') of the Florida Business Corporation Act (the 'FBCA')
provides that a corporation's articles of incorporation may contain a provision
eliminating or limiting the personal liability of a director to the corporation
or its shareholders for monetary damages for breach of duty of care or other
duty as a director. Section 607.0831 also provides, however, that such a
provision shall not eliminate or limit the liability of a director (i) for any
appropriation, in violation of his duties, of any business opportunity of the
corporation, (ii) for acts or omissions involving intentional misconduct or a
knowing violation of law, (iii) for certain other types of liability set forth
in the FBCA and (iv) for transactions from which the director derived an
improper personal benefit. In addition, Section 607.0850 ('Section 607.0850') of
the FBCA provides for indemnification of directors and officers of a corporation
for liability and expenses reasonably incurred by them in connection with any
civil, criminal,
II-1
<PAGE>
administrative or investigative action, suit or proceeding in which they may
become involved by reason of being a director or officer of the corporation.
Indemnification under Section 607.0850 is permitted if the director or officer
acted in a manner which he believed in good faith to be in or not opposed to the
best interests of the corporation and, with respect to any criminal actions, if
he had no reasonable cause to believe his conduct to be unlawful. The Articles
of Incorporation of Massie Tool, Mold & Die, Inc. provide for the
indemnification of persons under the circumstances described in Section 607.0831
and Section 607.0850 of the FBCA.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits:
<TABLE>
<S> <C> <C>
3.1 -- Amended and Restated Certificate of Incorporation of Precise Technology, Inc.
3.2 -- Bylaws of Precise Technology, Inc.
3.3 -- Certificate of Incorporation of Precise Technology of Delaware, Inc.
3.4 -- Bylaws of Precise Technology of Delaware, Inc.
3.5 -- Certificate of Incorporation of Precise Technology of Illinois, Inc.
3.6 -- Bylaws of Precise Technology of Illinois, Inc.
3.7 -- Articles of Incorporation of Precise TMP, Inc.
3.8 -- Amended and Restated Bylaws of Precise TMP, Inc.
3.9 -- Certificate of Incorporation of Precise Polestar, Inc.
3.10 -- Bylaws of Precise Polestar, Inc.
3.11 -- Articles of Incorporation of Massie Tool, Mold & Die, Inc.
3.12 -- Bylaws of Massie Tool, Mold & Die, Inc.
4.1 -- Indenture dated as of March 18, 1997 by and among Precise Technology, Inc., as Issuer, Precise
Technology of Delaware, Inc., Precise Technology of Illinois, Inc., Precise TMP, Inc., Precise
Polestar, Inc. and Massie Tool, Mold & Die, Inc., as Subsidiary Guarantors, and Marine Midland Bank,
as trustee (including the form of 11 1/8% Senior Subordinated Note due 2007 and the form of
Subsidiary Guarantee).
4.2 -- Registration Rights Agreement, dated as of June 13, 1997, by and among Precise Technology, Inc.,
Precise TMP, Inc., Massie Tool, Mold & Die, Inc., Precise Polestar, Inc., Precise Technology of
Delaware, Inc., Precise Technology of Illinois, Inc., Bear, Stearns & Co. Inc. and Merrill Lynch,
Pierce, Fenner & Smith Incorporated.
4.3 -- Purchase Agreement dated June 10, 1997, by and among Precise Technology, Inc., Precise TMP, Inc.,
Massie Tool, Mold & Die, Inc., Precise Polestar, Inc., Precise Technology of Delaware, Inc., Precise
Technology of Illinois, Inc., Bear, Stearns & Co. Inc. and Merrill Lynch, Pierce, Fenner & Smith
Incorporated.
*5.1 -- Opinion of Winston & Strawn.
10.1 -- Credit Agreement dated as of June 13, 1997, among Precise Holding Corporation, Precise Technology,
Inc., the subsidiary guarantors party thereto, the lenders party thereto and Fleet National Bank, as
Agent and Issuing Bank.
10.2 -- Consent Agreement dated as of June 9, 1997 among Precise Technology, Inc., Precise Holding
Corporation, Sunderland Industrial Holdings Corporation, Hamilton Holdings Ltd. Corporation, John
Hancock Mutual Life Insurance Company, Rice Partners II, L.P., Delaware State Employees' Retirement
Fund, Declaration of Trust for Defined Benefit Plans of Zeneca Holdings Inc., and Declaration of
Trust for Defined Benefit Plans of ICI American Holdings Inc.
</TABLE>
II-2
<PAGE>
<TABLE>
<S> <C> <C>
10.3 -- Securities Purchase Agreement dated March 29, 1996, among Precise Holding Corporation, Precise
Technology, Inc., Delaware State Employees' Retirement Fund, Declaration of Trust for Defined Benefit
Plans of Zeneca Holdings Inc., and Declaration of Trust for Defined Benefit Plans of ICI American
Holdings Inc.
10.4 -- Note Purchase Agreement dated as of March 29, 1996, among Precise Technology, Inc., John Hancock
Mutual Life Insurance Company and Rice Partners II, L.P.
10.5 -- Warrant Purchase Agreement dated as of March 29, 1996, among Precise Holding Corporation, Rice
Partners II, L.P., John Hancock Mutual Life Insurance Company, Delaware State Employees' Retirement
Fund, Declaration of Trust for Defined Benefit Plans of Zeneca Holdings Inc., and Declaration of
Trust for Defined Benefit Plans of ICI American Holdings Inc.
10.6 -- First Amendment to Warrant Purchase Agreement dated as of June 13, 1997, among Precise Holding
Corporation, Rice Partners II, L.P., John Hancock Mutual Life Insurance Company, Delaware State
Employees' Retirement Fund, Declaration of Trust for Defined Benefit Plans of Zeneca Holdings Inc.,
and Declaration of Trust for Defined Benefit Plans of ICI American Holdings Inc.
10.7 -- Shareholder Agreement dated as of March 29, 1996 among Precise Holding Corporation, Sunderland
Industrial Holdings Corporation, Hamilton Holdings Ltd. Corporation, Delaware State Employees'
Retirement Fund, Declaration of Trust for Defined Benefit Plans of Zeneca Holdings Inc., Declaration
of Trust for Defined Benefit Plans of ICI American Holdings Inc., John Hancock Mutual Life Insurance
Company and Rice Partners II, L.P.
10.8 -- First Amendment to Shareholder Agreement dated as of June 13, 1997 among Precise Holding Corporation,
Sunderland Industrial Holding Corporation, Hamilton Holdings Ltd. Corporation, Delaware State
Employees' Retirement Fund, Declaration of Trust for Defined Benefit Plans of Zeneca Holdings Inc.,
Declaration of Trust for Defined Benefit Plans of ICI American Holdings Inc., Rice Partners II, L.P.
and John Hancock Mutual Life Insurance Company.
10.9 -- Tax Allocation and Indemnity Agreement dated as of June 11, 1997 by and among Sunderland Industrial
Holdings Corporation, Precise Holding Corporation, and Precise Technology, Inc. and its direct and
indirect subsidiaries.
10.10 -- Amended and Restated Management Agreement, dated as of June 13, 1997 between Precise Technology, Inc.
and Mentmore Holdings Corporation.
10.11 -- Sunderland Industrial Holdings Corporation 1997 Key Employee Nonqualified Stock Option Plan dated as
of April 24, 1997.
10.12 -- Nonqualified Stock Option Agreement dated as of April 24, 1997 between Sunderland Industrial Holdings
Corporation and John R. Weeks.
10.13 -- Nonqualified Stock Option Agreement dated as of April 24, 1997 between Sunderland Industrial Holdings
Corporation and Michael M. Farrell.
+10.14 -- Memorandum of Agreement dated August 8, 1995 between The Procter & Gamble Manufacturing Company and
Tredegar Molded Products Company.
12.1 -- Statement Regarding Computation of Ratio of Earnings to Fixed Charges.
21.1 -- Subsidiaries of the Registrants.
23.1 -- Consent of Ernst & Young LLP.
23.2 -- Consent of Grant Thornton LLP.
23.3 -- Consent of Coopers & Lybrand L.L.P.
23.4 -- Consent of Winston & Strawn (included in Exhibit 5.1).
24.1 -- Powers of Attorney (included on signature pages hereto).
25.1 -- Statement of Eligibility of Trustee.
</TABLE>
II-3
<PAGE>
<TABLE>
<S> <C> <C>
27.1 -- Financial Data Schedule.
99.1 -- Form of Letter of Transmittal.
99.2 -- Form of Notice of Guaranteed Delivery.
99.3 -- Form of Tender Instructions.
</TABLE>
- ------------------
* To be filed by amendment.
+ Confidential treatment requested for a portion of this exhibit filed herewith.
(b) Financial Statement Schedules:
None.
ITEM 22. UNDERTAKINGS.
Each undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement;
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or
the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the registration
statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed
that which was registered) and any deviation from the low or
high end of the estimated maximum offering range may be
reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in
volume and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the
'Calculation of Registration Fee' table in the effective
registration statement;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall
be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities
at the time shall be deemed to be the initial bona fide offering
thereof;
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering;
(4) Each undersigned registrant hereby undertakes as follows: that
prior to any public reoffering of the securities registered
hereunder through use of a prospectus which is a part of this
registration statement, by any person or party who is deemed to
be an underwriter within the meaning of Rule 145(c), the
registrant undertakes that such reoffering prospectus will
contain the information called for by the applicable registration
form with respect to reofferings by persons who may be deemed
underwriters, in addition to the information called for by the
other items of the applicable form;
(5) Each registrant undertakes that every prospectus: (i) that is
filed pursuant to paragraph (1) immediately preceding, or (ii)
that purports to meet the requirements of Section 10(a)(3) of the
Act and is used in connection with an offering of securities
subject to Rule 415, will be filed as a part of an amendment to
the registration statement and will not be used until such
amendment is effective, and that, for purposes of determining any
liability under the Securities Act of 1933, each such
post-effective amendment shall be deemed to be a new registration
statement relating to
II-4
<PAGE>
the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona
fide offering thereof;
(6) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers
and controlling persons of the registrants pursuant to the
provisions described under Item 20 or otherwise, the registrants
have been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy
as expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities
(other than the payment by the registrant of expenses incurred or
paid by a director, officer or controlling person of the
registrants in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, each
registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in
the Act and will be governed by the final adjudication of such
issue;
(7) For purposes of determining any liability under the Securities
Act of 1933, the information omitted from the form of prospectus
filed as part of this registration statement in reliance upon
Rule 430A and contained in a form of prospectus filed by the
registrants pursuant to Rule 424(b)(1) or (4) or 497(h) under the
Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective;
(8) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form
of prospectus shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial
bona fide offering thereof;
(9) Each undersigned registrant hereby undertakes to respond to
requests for information that is incorporated by reference into
the prospectus pursuant to Item 4, 10(b), 11 or 13 of this form,
within one business day of receipt of such request, and to send
the incorporated documents by first class mail or other equally
prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration
statement through the date of responding to the request; and
(10) Each undersigned registrant hereby undertakes to supply by means
of a post-effective amendment all information concerning a
transaction, and the company being acquired involved therein,
that was not the subject of and included in the registration
statement when it became effective.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of North
Versailles, State of Pennsylvania, as of July 25, 1997.
PRECISE TECHNOLOGY, INC.
By: /s/ JOHN R. WEEKS
----------------------------------
John R. Weeks
President and Chief Executive
Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints William L. Remley and Richard C. Hoffman, and
each of them, as true and lawful attorneys-in-fact and agents with full power of
substitution and resubstitution for him and in his name, place and stead, in any
and all capacities to sign any and all amendments (including pre-effective and
post-effective amendments) to this Registration Statement, and to file the same
with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, or any of them, or their or his substitute or substitutes may lawfully
do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and as of the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------ ------------------------------------------------- --------------
<S> <C> <C>
/s/ RICHARD L. KRAMER Chairman of the Board of Directors July 25, 1997
- ------------------------------------------
Richard L. Kramer
/s/ WILLIAM L. REMLEY Vice Chairman, Vice President and Treasurer July 25, 1997
- ------------------------------------------
William L. Remley
/s/ RICHARD C. HOFFMAN Director July 25, 1997
- ------------------------------------------
Richard C. Hoffman
/s/ JOHN R. WEEKS President and Chief Executive Officer July 25, 1997
- ------------------------------------------
John R. Weeks
/s/ MICHAEL D. BORNAK Controller July 25, 1997
- ------------------------------------------ (principal financial and accounting officer)
Michael D. Bornak
</TABLE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of North
Versailles, State of Pennsylvania, as of July 25, 1997.
PRECISE TECHNOLOGY OF DELAWARE, INC.
By: /s/ JOHN R. WEEKS
----------------------------------
John R. Weeks
President and Chief Executive
Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints William L. Remley and Richard C. Hoffman, and
each of them, as true and lawful attorneys-in-fact and agents with full power of
substitution and resubstitution for him and in his name, place and stead, in any
and all capacities to sign any and all amendments (including pre-effective and
post-effective amendments) to this Registration Statement, and to file the same
with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, or any of them, or their or his substitute or substitutes may lawfully
do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and as of the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------ ------------------------------------------------- --------------
<S> <C> <C>
/s/ RICHARD L. KRAMER Chairman of the Board of Directors July 25, 1997
- ------------------------------------------
Richard L. Kramer
/s/ WILLIAM L. REMLEY Vice Chairman, Vice President and Treasurer July 25, 1997
- ------------------------------------------
William L. Remley
/s/ RICHARD C. HOFFMAN Director July 25, 1997
- ------------------------------------------
Richard C. Hoffman
/s/ JOHN R. WEEKS President and Chief Executive Officer July 25, 1997
- ------------------------------------------
John R. Weeks
/s/ MICHAEL D. BORNAK Controller July 25, 1997
- ------------------------------------------ (principal financial and accounting officer)
Michael D. Bornak
</TABLE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of North
Versailles, State of Pennsylvania, as of July 25, 1997.
PRECISE TECHNOLOGY OF ILLINOIS, INC.
By: /s/ JOHN R. WEEKS
----------------------------------
John R. Weeks
President and Chief Executive
Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints William L. Remley and Richard C. Hoffman, and
each of them, as true and lawful attorneys-in-fact and agents with full power of
substitution and resubstitution for him and in his name, place and stead, in any
and all capacities to sign any and all amendments (including pre-effective and
post-effective amendments) to this Registration Statement, and to file the same
with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, or any of them, or their or his substitute or substitutes may lawfully
do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and as of the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------ ------------------------------------------------- --------------
<S> <C> <C>
/s/ RICHARD L. KRAMER Chairman of the Board of Directors July 25, 1997
- ------------------------------------------
Richard L. Kramer
/s/ WILLIAM L. REMLEY Vice Chairman, Vice President and Treasurer July 25, 1997
- ------------------------------------------
William L. Remley
/s/ RICHARD C. HOFFMAN Director July 25, 1997
- ------------------------------------------
Richard C. Hoffman
/s/ JOHN R. WEEKS President and Chief Executive Officer July 25, 1997
- ------------------------------------------
John R. Weeks
/s/ MICHAEL D. BORNAK Controller July 25, 1997
- ------------------------------------------ (principal financial and accounting officer)
Michael D. Bornak
</TABLE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of North
Versailles, State of Pennsylvania, as of July 25, 1997.
PRECISE TMP, INC.
By: /s/ JOHN R. WEEKS
-----------------------------------
John R. Weeks
President and Chief Executive
Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints William L. Remley and Richard C. Hoffman, and
each of them, as true and lawful attorneys-in-fact and agents with full power of
substitution and resubstitution for him and in his name, place and stead, in any
and all capacities to sign any and all amendments (including pre-effective and
post-effective amendments) to this Registration Statement, and to file the same
with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, or any of them, or their or his substitute or substitutes may lawfully
do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and as of the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------ ------------------------------------------------- --------------
<S> <C> <C>
/s/ RICHARD L. KRAMER Chairman of the Board of Directors July 25, 1997
- ------------------------------------------
Richard L. Kramer
/s/ WILLIAM L. REMLEY Vice Chairman, Vice President and Treasurer July 25, 1997
- ------------------------------------------
William L. Remley
/s/ RICHARD C. HOFFMAN Director July 25, 1997
- ------------------------------------------
Richard C. Hoffman
/s/ JOHN R. WEEKS President and Chief Executive Officer July 25, 1997
- ------------------------------------------
John R. Weeks
/s/ MICHAEL D. BORNAK Controller July 25, 1997
- ------------------------------------------ (principal financial and accounting officer)
Michael D. Bornak
</TABLE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of North
Versailles, State of Pennsylvania, as of July 25, 1997.
PRECISE POLESTAR, INC.
By: /s/ JOHN R. WEEKS
----------------------------------
John R. Weeks
President and Chief Executive
Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints William L. Remley and Richard C. Hoffman, and
each of them, as true and lawful attorneys-in-fact and agents with full power of
substitution and resubstitution for him and in his name, place and stead, in any
and all capacities to sign any and all amendments (including pre-effective and
post-effective amendments) to this Registration Statement, and to file the same
with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, or any of them, or their or his substitute or substitutes may lawfully
do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and as of the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------ ------------------------------------------------- --------------
<S> <C> <C>
/s/ RICHARD L. KRAMER Chairman of the Board of Directors July 25, 1997
- ------------------------------------------
Richard L. Kramer
/s/ WILLIAM L. REMLEY Vice Chairman, Vice President and Treasurer July 25, 1997
- ------------------------------------------
William L. Remley
/s/ RICHARD C. HOFFMAN Director July 25, 1997
- ------------------------------------------
Richard C. Hoffman
/s/ JOHN R. WEEKS President and Chief Executive Officer July 25, 1997
- ------------------------------------------
John R. Weeks
/s/ MICHAEL D. BORNAK Controller July 25, 1997
- ------------------------------------------ (principal financial and accounting officer)
Michael D. Bornak
</TABLE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of North
Versailles, State of Pennsylvania, as of July 25, 1997.
MASSIE TOOL, MOLD & DIE, INC.
By: /s/ JOHN R. WEEKS
-----------------------------------
John R. Weeks
President and Chief Executive
Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints William L. Remley and Richard C. Hoffman, and
each of them, as true and lawful attorneys-in-fact and agents with full power of
substitution and resubstitution for him and in his name, place and stead, in any
and all capacities to sign any and all amendments (including pre-effective and
post-effective amendments) to this Registration Statement, and to file the same
with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, or any of them, or their or his substitute or substitutes may lawfully
do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and as of the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------ ------------------------------------------------- --------------
<S> <C> <C>
/s/ RICHARD L. KRAMER Chairman of the Board of Directors July 25, 1997
- ------------------------------------------
Richard L. Kramer
/s/ WILLIAM L. REMLEY Vice Chairman, Vice President and Treasurer July 25, 1997
- ------------------------------------------
William L. Remley
/s/ RICHARD C. HOFFMAN Director July 25, 1997
- ------------------------------------------
Richard C. Hoffman
/s/ JOHN R. WEEKS President and Chief Executive Officer July 25, 1997
- ------------------------------------------
John R. Weeks
/s/ MICHAEL D. BORNAK Controller July 25, 1997
- ------------------------------------------ (principal financial and accounting officer)
Michael D. Bornak
</TABLE>
<PAGE>
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
PRECISE TECHNOLOGY, INC.
(Originally incorporated under the name KDI Auto-Trol Corporation)
Precise Technology, Inc., a corporation organized and existing under the
laws of the State of Delaware, hereby certifies as follows:
1. The original Certificate of Incorporation of the Corporation was filed
with the Secretary of State of the State of Delaware on August 14, 1969.
Certificates of Amendment of the Certificate of Incorporation of the Corporation
were filed with the Secretary of State of the State of Delaware on April 10,
1970, June 22, 1987, February 16, 1988, November 5, 1992 and July 25, 1994.
Certificates of Ownership & Merger were filed with the Secretary of State of the
State of Delaware on April 19, 1983, January 24, 1986 and April 19, 1990.
2. Immediately prior to this amendment of the Certificate of Incorporation
of the Corporation, as hereinbelow set forth, the Corporation had authority to
issue an aggregate of one thousand five hundred (1,500) shares, of which one
thousand (1,000) shares, without par value, were designated "Common Stock," and
five hundred (500) shares, without par value, were designated "9-1/2% Preferred
Stock," having a stated value of Ten Thousand Dollars ($10,000) per share.
3. This Amended and Restated Certificate of Incorporation restates and
integrates and further amends the Certificate of Incorporation of this
Corporation by:
a. Authorizing the issuance and designating the terms of an aggregate
of 2,000 shares, of which 1,000 shares, with no par value, shall be
designated "Common Stock" and 1,000 shares, with no par value but with a
stated value of Ten Thousand Dollars ($10,000) per share shall be
designated "Serial Preferred Stock," in Article FOURTH;
b. Changing the address of the registered agent in Article SECOND;
<PAGE>
c. Deleting Article FIFTH, which contained the name of the sole
incorporator, and conforming the remaining Articles accordingly; and
d. Adding Article TENTH pertaining to the action required on matters
on which stockholders are entitled to vote.
4. The text of the Certificate of Incorporation is amended and restated
hereby to read as herein set forth in full:
FIRST.The name of the Corporation is PRECISE TECHNOLOGY, INC.
SECOND. The address of its registered office in the State of Delaware is
Corporation Trust Center, 1209 Orange Street, in the City of Wilmington, County
of New Castle. The name of its registered agent at such address is The
Corporation Trust Company.
THIRD.The nature of the business or purposes to be conducted or promoted
is:
To manufacture, compound, produce, purchase or otherwise acquire; to
own, hold, use, develop and otherwise deal in and with; to sell at
wholesale and retail, mortgage, pledge, lease, license the use of and
otherwise dispose of metals, alloys, and by-products, materials commonly
known as plastics, including but without limitation thereto, bitumens,
casein, cellulose and natural and synthetic resins, and all other similar
materials, products and by-products, and all articles composed in whole or
in part of plastic or natural materials and the machinery, equipment,
supplies, molds and appliances used or useful in the manufacture,
processing, production, packaging and marketing of any of the foregoing.
To engage in the business of advisors, consultants, and managers in
all branches of business, and to contract for, acquire, plan, maintain,
manage, cooperate with, and assist in the maintenance and operation of
business enterprises of any and every kind, and to own, manage, assist,
finance, supervise and otherwise deal with corporations, associations,
businesses, financial and other enterprises of all kinds.
To buy, sell, mind, manage, operate, hold and deal in and with real
and personal property of every kind and description.
To engage in any lawful act or activity for which corporations may be
organized under the General Corporation Law of Delaware.
-2-
<PAGE>
To manufacture, purchase or otherwise acquire, invest in, own,
mortgage, pledge, sell, assign and transfer or otherwise dispose of, trade,
deal in and deal with goods, wares and merchandise and personal property of
every class and description.
To acquire, and pay for in cash, stock or bonds of this Corporation or
otherwise, the good will, rights, assets and property, and to undertake or
assume the whole or any part of the obligations or liabilities of any
person, firm, association or corporation.
To acquire, hold, use, sell, assign, lease, grant licenses in respect
of, mortgage or otherwise dispose of letters patent of the United States or
any foreign country, patent rights, licenses and privileges, inventions,
improvements and processes, copyrights, trademarks and trade names,
relating to or useful in connection with any business of this Corporation.
To acquire by purchase, subscription or otherwise, and to receive,
hold, own, guarantee, sell, assign, exchange, transfer, mortgage, pledge or
otherwise dispose of or deal in and with any of the shares of the capital
stock, or any voting trust certificates in respect of the shares of capital
stock, scrip, warrants, rights, bonds, debentures, notes, trust receipts,
and other securities, obligations, choses in action and evidences of
indebtedness or interests issued or created by any corporations, joint
stock companies, syndicates, associations, firms, trusts or persons, public
or private, or by the government of the United States of America, or by any
foreign government, or by any state, territory, province, municipality or
other political subdivision or by any governmental agency, and as owner
thereof to possess and exercise all the rights, powers and privileges of
ownership, including the right to execute consents and vote thereon, and to
do any and all acts and things necessary or advisable for the preservation,
protection, improvement and enhancement in value thereof.
To borrow or raise moneys for any of the purposes of the Corporation
and, from time to time without limit as to amount, to draw, make, accept,
enforce, execute and issue promissory notes, drafts, bills of exchange,
warrants, bonds, debentures and other negotiable or non-negotiable
instruments and evidences of indebtedness, and to secure the payment of any
thereof and of the interest thereon by mortgage upon or pledge, conveyance
or assignment in trust of the whole or any part of the property of the
Corporation, whether at the time owned or thereafter acquired, and to sell,
pledge or otherwise dispose of such bonds or other obligations of the
Corporation for its corporate purposes.
To purchase, receive, take by grant, gift, devise, bequest or
otherwise, lease, or otherwise acquire, own, hold, improve, employ, use and
otherwise deal in and with real or personal property, or any interest
therein, wherever situated, and to sell, convey, lease, exchange, transfer
or otherwise dispose of, or mortgage or pledge, all or any of the
Corporation's property and assets, or any interest therein, wherever
situated.
In general, to possess and exercise all the powers and privileges
granted by the General Corporation Law of Delaware or by any other law of
Delaware or by this Certificate of
-3-
<PAGE>
Incorporation together with any powers incidental thereto, so far as such
powers and privileges are necessary or convenient to the conduct, promotion
or attainment of the business or purposes of the Corporation.
The business and purposes specified in the foregoing clauses shall,
except where otherwise expressed, be in no way limited or restricted by
reference to, or inference from the terms of any other clause in this
Certificate of Incorporation, but the business and purposes specified in
each of the foregoing clauses of this article shall be regarded as
independent business and purposes.
FOURTH. The Corporation shall have authority to issue 1,000 shares of
Common Stock, without par value, and 1,000 shares of Serial Preferred Stock,
without par value but with a stated value of Ten Thousand Dollars ($10,000) per
share.
A. Serial Preferred Stock
The Board of Directors is hereby empowered to cause the Serial Preferred
Stock of the Corporation to be issued in series with such of the variations
permitted by clauses (1)-(8) of this paragraph A as shall have been fixed and
determined by the Board of Directors with respect to any series prior to the
issue of any shares of such series.
The shares of the Serial Preferred Stock of different series may vary as
to:
(1) the number of shares constituting such series and the designation of
such series, which shall be such as to distinguish the shares thereof from the
shares of all other series and classes;
(2) the rate of dividend, the time of payment and, if cumulative, the dates
from which dividends shall be cumulative, the extent of participation rights, if
any, and the priority in payment of dividends;
(3) any right to vote with holders of shares of any other series or class
and any right to vote as a class, either generally or as a condition to
specified corporate acts;
(4) the price at and the terms and conditions on which shares may be
redeemed;
-4-
<PAGE>
(5) the amount payable upon shares and the priority of payment in event of
involuntary liquidation;
(6) the amount payable upon shares and the priority of payment in event of
voluntary liquidation;
(7) any sinking fund provisions for the redemption or purchase of shares;
and
(8) the terms and conditions on which shares may be converted, if the
shares of any series are issued with the privilege of conversion.
The shares of all series of Serial Preferred Stock shall be identical
except as, within the limitations set forth above in this Section A, shall have
been fixed and determined by the Board of Directors prior to the issuance
thereof. Except as specifically set forth in any Certificate of Serial
Designation filed with the Secretary of State of the State of Delaware or as
required by the Delaware General Corporation Law, none of the shares of any
series of Serial Preferred Stock shall have any right to vote on any matters.
B. Common Stock.
(1) Dividends. The holders of the Common Stock shall be entitled to
receive, out of funds legally available therefor, cash dividends and dividends
payable in property other than securities of the Corporation only at such time
as all dividends on the Serial Preferred Stock through the record date of any
such Common Stock dividend have been paid in full.
(2) Liquidation. In the event of the voluntary or involuntary liquidation,
dissolution, distribution of assets or winding-up of the Corporation, after
distribution in full to the holders of Serial Preferred Stock of their preferred
liquidation payments, the holders of Common Stock shall be entitled to receive
the remaining assets of the Corporation.
-5-
<PAGE>
(3) Voting Rights. Except as may be otherwise required by law or the
Certificate of Incorporation of the Corporation, as amended, each share of
Common Stock shall have one (1) vote on all matters voted upon by the
stockholders.
FIFTH.The Corporation is to have perpetual existence.
SIXTH.In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors is expressly authorized:
To make, alter or repeal the by-laws of the Corporation.
To authorize and cause to be executed mortgages and liens upon the real and
personal property of the Corporation.
To set apart out of any of the funds of the Corporation available for
dividends a reserve or reserves for any proper purpose and to abolish any such
reserve in the manner in which it was created.
By a majority of the whole Board, to designate one or more committees, each
committee to consist of two or more of the Directors of the Corporation. The
Board may designate one or more Directors as alternate members of any committee,
who may replace any absent or disqualified member at any meeting of the
committee. Any such committee, to the extent provided in the resolution or in
the by-laws of the Corporation, shall have and may exercise the powers of the
Board of Directors in the management of the business and affairs of the
Corporation, and may authorize the seal of the Corporation to be affixed to all
papers which may require it; provided, however, the by-laws may provide that in
the absence or disqualification of any member of such committee or committees,
the member or members thereof present at any meeting and not disqualified from
voting, whether or not he or they constitute a quorum, may unanimously appoint
another member of the Board of Directors to act at the meeting in the place of
any such absent or disqualified member.
-6-
<PAGE>
When and as authorized by the affirmative vote of the holders of a majority
of stock issued and outstanding having voting power given at a stockholders'
meeting duly called upon such notice as is required by statute, or when
authorized by the written consent of the holders of a majority of the voting
stock issued and outstanding, to sell, lease or exchange all or substantially
all of the property and assets of the Corporation, including its goodwill and
its corporate franchises, upon such terms and conditions and for such
consideration, which may consist in whole or in part of money or property
including shares of stock in, and/or other securities of, any other corporation
or corporations, as its Board of Directors shall deem expedient and for the best
interests of the Corporation.
SEVENTH. Whenever a compromise or arrangement is proposed between this
Corporation and its creditors or any class of them and/or between this
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this Corporation or of any creditor or stockholder thereof, or on the
application of any creditor or stockholder thereof, or on the application of any
receiver or receivers appointed for this Corporation under the provisions of
section 291 of Title 8 of the Delaware Code or on the application of trustees in
dissolution or of any receiver or receivers appointed for this Corporation under
the provisions of section 279 of Title 8 of the Delaware Code to order a meeting
of the creditors or class of creditors, and/or of the stockholders or class of
stockholders of this Corporation, as the case may be, to be summoned in such
manner as the said court directs. If a majority in number representing
three-fourths in value of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of this Corporation, as the case may be,
agree to any compromise or arrangement and to any reorganization of this
Corporation as consequence of such compromise or arrangement, the said
compromise or arrangement and the said reorganization shall, if sanctioned by
the court to which the said application has been made, be binding on all the
-7-
<PAGE>
creditors or class of creditors, and/or on all the stockholders or class of
stockholders, of this Corporation, as the case may be, and also on this
Corporation.
EIGHTH. Meetings of stockholders may be held within or without the State of
Delaware, as the by-laws may provide. The books of the Corporation may be kept
(subject to any provisions contained in the sutures) outside the State of
Delaware at such place or places as may be designated from time to time by the
Board of Directors or in the by-laws of the Corporation. Elections of Directors
need not be by written ballot unless the by-laws of the Corporation shall so
provide.
NINTH. The Corporation reserves the right to amend, alter, change or repeal
any provisions contained in this Certificate of Incorporation, in the manner now
or hereafter prescribed by statute, and all fights conferred upon stockholders
herein are granted subject to this reservation.
TENTH. Notwithstanding any provision of the General Corporation Law of the
State of Delaware now or later in force that requires for any purpose the
affirmative vote or consent of more than a majority of the holders of shares of
the Corporation or of any class, such action, unless otherwise expressly
required by statute, may be taken by the vote or consent of the holders of the
shares that entitle them to exercise the majority of the voting power of the
Corporation or, if required by law, any class.
5. This Amended and Restated Certificate of Incorporation was duly adopted
by unanimous written consent of the stockholder in accordance with the
applicable provisions of Sections 228, 242 and 245 of the General Corporation
Law of the State of Delaware.
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IN WITNESS WHEREOF, said Corporation has caused this Amended and Restated
Certificate of Incorporation to be signed by John R. Weeks, its President, and
Richard C. Hoffman, its Assistant Secretary, this 29th day of March, 1996.
/s/ John R. Weeks
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John R. Weeks, President
/s/ Richard C. Hoffman
---------------------------------------
Richard C. Hoffman, Assistant Secretary
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<PAGE>
PRECISE PLASTIC PRODUCTS, INC.
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(a Delaware corporation)
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BYLAWS
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As adopted by the Board of Directors on July 31, 1991.
<PAGE>
TABLE OF CONTENTS
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Page
OFFICES......................................................................1
Section 1. Registered Office..........................................1
Section 2. Additional Offices.........................................1
MEETINGS OF STOCKHOLDERS.....................................................1
Section 1. Time and Place.............................................1
Section 2. Annual Meeting.............................................1
Section 3. Notice of Annual Meeting...................................1
Section 4. Special Meetings...........................................1
Section 5. Notice of Special Meeting..................................2
Section 6. List of Stockholders.......................................2
Section 7. Presiding Officer; Order of Business.......................2
Section 8. Quorum; Adjournments.......................................3
Section 9. Voting.....................................................4
Section 10. Action by Consent..........................................4
DIRECTORS....................................................................4
Section 1. General Powers; Number; Tenure.............................4
Section 2. Vacancies..................................................5
Section 3. Removal; Resignation.......................................5
Section 4. Place of Meetings..........................................5
Section 5. Annual Meeting.............................................5
Section 6. Regular Meetings...........................................5
Section 7. Special Meetings...........................................5
Section 8. Quorum; Adjournments.......................................6
Section 9. Compensation...............................................6
Section 10. Action by Consent..........................................6
Section 11. Meetings by Telephone or Similar Communications............6
COMMITTEES...................................................................6
Section 1. Executive Committee........................................6
Section 2. Powers.....................................................7
Section 3. Procedure; Meetings........................................7
Section 4. Quorum.....................................................7
Section 5. Other Committees...........................................7
Section 6. Vacancies; Changes; Discharge..............................7
Section 7. Compensation...............................................7
Section 8. Action by Consent..........................................8
Section 9. Meetings by Telephone or Similar Communications............8
NOTICES......................................................................8
Section 1. Form; Delivery.............................................8
Section 2. Waiver.....................................................8
<PAGE>
OFFICERS.....................................................................9
Section 1. Designations...............................................9
Section 2. Term of Office; Removal....................................9
Section 3. Compensation...............................................9
Section 4. The Chairman of the Board..................................9
Section 5. The Vice Chairman of the Board.............................9
Section 6. The President.............................................10
Section 7. The Vice Presidents.......................................10
Section 8. The Secretary.............................................10
Section 9. The Assistant Secretary...................................11
Section 10. The Treasurer.............................................11
Section 11. The Assistant Treasurer...................................11
INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES
AND AGENTS..................................................................11
AFFILIATED TRANSACTIONS AND INTERESTED DIRECTORS............................12
Section 1. Affiliated Transactions...................................12
Section 2. Determining Quorum........................................13
STOCK CERTIFICATES..........................................................13
Section 1. Form; Signatures..........................................13
Section 2. Registration of Transfer..................................13
Section 3. Registered Stockholders...................................14
Section 4. Record Date...............................................14
Section 5. Lost, Stolen or Destroyed Certificates....................14
GENERAL PROVISIONS..........................................................15
Section 1. Dividends.................................................15
Section 2. Reserves..................................................15
Section 3. Fiscal Year...............................................15
Section 4. Seal......................................................15
AMENDMENTS..................................................................15
SECRETARY'S CERTIFICATE.....................................................16
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<PAGE>
BYLAWS
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ARTICLE I
OFFICES
Section 1. Registered Office. The registered office of the Corporation
shall be at 32 Loockerman Square, in the City of Dover, County of Kent, State of
Delaware.
Section 2. Additional Offices. The Corporation may also have offices at
such other places, both within and without the State of Delaware, as the Board
of Directors may from time to time determine or as the business of the
Corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. Time and Place. A meeting of stockholders for any purpose may be
held at such time and place, within or without the State of Delaware, as the
Board of Directors may fix from time to time and as shall be stated in the
notice of the meeting or in a duly executed waiver of notice thereof.
Section 2. Annual Meeting. Annual meetings of stockholders, commencing with
the year 1993, shall be held on January 15, if not a legal holiday, or, if a
legal holiday, then on the next secular day following, at 2 P.M., or at such
other date and time as shall, from time to time, be designated by the Board of
Directors and stated in the notice of the meeting. At such annual meeting, the
stockholders shall elect a Board of Directors and transact such other business
as may properly be brought before the meeting.
Section 3. Notice of Annual Meeting. Written notice of the annual meeting,
stating the place, date ind time thereof, shall be given to each stockholder
entitled to vote at such meeting not less than 10 (unless a longer period is
required by law) nor more than 60 days prior to the meeting.
Section 4. Special Meetings. special meetings of the stockholders, for any
purpose or purposes, unless otherwise prescribed by statute or by the
Certificate of Incorporation, may be called by the Chairman of the Board, if
any, or the President and shall be called by the President or Secretary at the
request in writing of a majority of the Board of Directors, or at the request
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in writing of the stockholders owning a majority of the shares of capital stock
of the Corporation issued and outstanding and entitled to vote. Such request
shall state the purpose or purposes of the proposed meeting.
Section 5. Notice of Special Meeting. Written notice of a special meeting,
stating the place, date and time thereof and the purpose or purposes for which
the meeting is called, shall be given to each stockholder entitled to vote at
such meeting not less than 10 (unless a longer period is required by law) nor
more than 60 days prior to the meeting.
Section 6. List of Stockholders. The officer in charge of the stock ledger
of the Corporation or the transfer agent shall prepare and make, at least 10
days before every meeting of stockholders, a complete list of the stockholders
entitled to vote at the meeting, arranged in alphabetical order, and showing the
address of each stockholder and the number of shares registered in the name of
each stockholder. Such list shall be open to the examination of any stockholder,
for any purpose germane to the meeting, during ordinary business hours, for a
period of at least 10 days prior to the meeting, at a place within the city
where the meeting is to be held, which place, if other than the place of the
meeting, shall be specified in the notice of the meeting. The list shall also be
produced and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any stockholder who is present in person
thereat.
Section 7. Presiding Officer; Order of Business.
(a) Meetings of stockholders shall be presided over by the Chairman of the
Board, if any, or, if he is not present (or, if there is none), by the
President, or, if he is not present, by a Vice President, or, if he is not
present, by such person who may have been chosen by the Board of Directors, or,
if none of such persons is present, by a chairman to be chosen by the
stockholders owning a majority of the shares of capital stock of the Corporation
issued and outstanding and entitled to vote at the meeting and who are present
in person or represented by proxy. The Secretary of the Corporation, or, if he
is not present, an Assistant Secretary, or, if he is not present, such person as
may be chosen by the Board of Directors, shall act as secretary of meetings of
stockholders, or, if none of such persons is present, the stockholders owning a
majority of the shares of capital stock of the Corporation issued and
outstanding and entitled to vote at the meeting and who are present in person or
represented by proxy shall choose any person present to act as secretary of the
meeting.
(b) The following order of business, unless otherwise ordered at the
meeting, shall be observed as far as practicable and consistent with the
purposes of the meeting:
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1. Call of the meeting to order.
2. Presentation of proof of mailing of the notice of the meeting
and, if the meeting is a special meeting, the call thereof.
3. Presentation of proxies.
4. Announcement that a quorum is present.
5. Reading and approval of the minutes of the previous meeting.
6. Reports, if any, of officers.
7. Election of directors, if the meeting is an annual meeting or a
meeting called for that purpose.
8. Consideration of the specific purpose or purposes for which the
meeting has been called (other than the election of directors),
if the meeting is a special meeting.
9. Transaction of such other business as may properly come before
the meeting.
10. Adjournment.
Section 8. Quorum; Adjournments. The holders of a majority of the shares of
capital stock of the Corporation issued and outstanding and entitled to vote
thereat, present in person or represented by proxy, shall be necessary to, and
shall constitute a quorum for, the transaction of business at all meetings of
the stockholders, except as otherwise provided by statute or by the Certificate
of Incorporation. If, however, a quorum shall not be present or represented at
any meeting of the stockholders, the stockholders entitled to vote thereat,
present in person or represented by proxy, shall have the power to adjourn the
meeting from time to time, without notice of the adjourned meeting if the time
and place thereof are announced at the meeting at which the adjournment is
taken, until a quorum shall be present or represented. Even if a quorum shall be
present or represented at any meeting of the stockholders, the stockholders
entitled to vote thereat, present in person or represented by proxy, shall have
the power to adjourn the meeting from time to time for good cause, without
notice of the adjourned meeting if the time and place thereof are announced at
the meeting at which the adjournment is taken, until a date which is not more
than 30 days after the date of the original meeting. At any such adjourned
meeting,
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at which a quorum shall be present in person or represented by proxy, any
business may be transacted which might have been transacted at the meeting as
originally called. If the adjournment is for more than 30 days, or if after the
adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each stockholder of record entitled to
vote thereat.
Section 9. Voting.
(a) At any meeting of stockholders, every stockholder having the right to
vote shall be entitled to vote in person or by proxy. Except as otherwise
provided by law or the Certificate of Incorporation, each stockholder of record
shall be entitled to one vote for each share of capital stock registered in his
name on the books of the Corporation.
(b) All elections shall be determined by a plurality vote, and, except as
otherwise provided by law or the Certificate of Incorporation, all other matters
shall be determined by a vote of a majority of the shares present in person or
represented by proxy and voting on such other matters.
Section 10. Action by Consent. Any action required or permitted by law or
the Certificate of Incorporation to be taken at any meeting of stockholders may
be taken without a meeting, without prior notice and without a vote, if a
written consent, setting forth the action so taken, shall be signed by the
holders of outstanding stock having not less than the minimum number of votes
that would be necessary to authorize or take such action at a meeting at which
all shares entitled to vote thereon were present or represented by proxy and
voted. Such written consent shall be filed with the minutes of meetings of
stockholders. Prompt notice of the taking of the corporate action without a
meeting by less than unanimous written consent shall be given to those
stockholders who have not so consented in writing thereto.
ARTICLE III
DIRECTORS
Section 1. General Powers; Number; Tenure. The business of the Corporation
shall be managed by its Board of Directors, which may exercise all powers of the
Corporation and perform all lawful acts and things which are not by law, the
Certificate of Incorporation or these Bylaws directed or required to be
exercised or performed by the stockholders. Within the limits specified in this
Section 1, the number of directors shall be 2. The directors shall be elected at
the annual meeting of the stockholders,
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except as provided in Section 2 of this Article, and each director elected shall
hold office until his successor is elected and shall qualify. Directors need not
be stockholders.
Section 2. Vacancies. If any vacancies occur in the Board of Directors, or
if any new directorships are created, they may be filled by vote of a majority
of the directors then in office, although less than a quorum, or by a sole
remaining director. Each director so chosen shall hold office until the next
annual meeting of stockholders and until his successor is duly elected and shall
qualify. If there are no directors in office, any officer or stockholder may
call a special meeting of stockholders in accordance with the provisions of the
Certificate of Incorporation or these Bylaws, at which meeting such vacancies
shall be filled.
Section 3. Removal; Resignation.
(a) Except as otherwise provided by law or the Certificate of
Incorporation, any director, directors or the entire Board of Directors may be
removed, with or without cause, by the holders of a majority of the shares then
entitled to vote at an election of directors.
(b) Any director may resign at any time by giving written notice to the
Board of Directors, the Chairman of the Board, the President or the Secretary of
the Corporation. Unless otherwise specified in such written notice, a
resignation shall take effect upon delivery thereof to the Board of Directors or
the designated officer. It shall not be necessary for a resignation to be
accepted before it becomes effective.
Section 4. Place of Meetings. The Board of Directors may hold meetings,
both regular and special, either within or without the State of Delaware.
Section 5. Annual Meeting. The annual meeting of each newly elected Board
of Directors shall be held immediately following the annual meeting of
stockholders, and no notice of such meeting shall be necessary to the newly
elected directors in order legally to constitute the meeting, provided a quorum
shall be present.
Section 6. Regular Meetings. Additional regular meetings of the Board of
Directors may be held without notice, at such time and place as may from time to
time be determined by the Board of Directors.
Section 7. Special Meetings. Special meetings of the Board of Directors may
be called by the Chairman of the Board, the President or by 2 or more directors
on at least 2 days' notice to
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each director, if such notice is delivered personally or sent by telegram, or on
at least 3 days' notice if sent by mail. Special meetings shall be called by the
Chairman of the Board, President, Secretary or 2 or more directors in like
manner and on like notice on the written request of one-half or more of the
number of directors then in office. Any such notice need not state the purpose
or purposes of such meeting except as provided in Article XI.
Section 8. Quorum; Adjournments. At all meetings of the Board of Directors,
a majority of the directors then in office shall constitute a quorum for the
transaction of business, and the act of a majority of the directors present at
any meeting at which there is a quorum shall be the act of the Board of
Directors, except as may be otherwise specifically provided by law or the
Certificate of Incorporation. If a quorum is not present at any meeting of the
Board of Directors, the directors present may adjourn the meeting, from time to
time, without notice other than announcement at the meeting, until a quorum
shall be present.
Section 9. Compensation. Directors shall be entitled to such compensation
for their services as directors and to such reimbursement for any reasonable
expenses incurred in attending directors' meetings as may from time to time be
fixed by the Board of Directors. The compensation of directors may be on such
basis as is determined by the Board of Directors. Any director may waive
compensation for any meeting. Any director receiving compensation under these
provisions shall not be barred from serving the Corporation in any other
capacity and receiving compensation and reimbursement for reasonable expenses
for such other services.
Section 10. Action by Consent. Any action required or permitted to be taken
at any meeting of the Board of Directors may be taken without a meeting if a
written consent to such action is signed by all members of the Board of
Directors and such written consent is filed with the minutes of its proceedings.
Section 11. Meetings by Telephone or Similar Communications. The Board of
Directors may participate in a meeting by means of conference telephone or
similar communications equipment by means of which all directors participating
in the meeting can hear each other, and participation in such meeting shall
constitute presence in person by such director at such meeting.
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ARTICLE IV
COMMITTEES
Section 1. Executive Committee. The Board of Directors, by resolution
adopted by a majority of the whole Board, may appoint an Executive Committee
consisting of not more than 5 directors, one of whom shall be designated as
Chairman of the Executive Committee. Each member of the Executive Committee
shall continue as a member thereof until the expiration of his term as a
director, or his earlier resignation, unless sooner removed as a member or as a
director.
Section 2. Powers. Unless circumscribed by resolution of the Board
appointing the Executive Committee or except as otherwise provided by law, the
Executive Committee shall have and may exercise all of the powers and authority
of the Board of Directors in the management of the business and affairs of the
Corporation including, without limitation, the power and authority to declare a
dividend in cash, property or its own shares and to authorize the issuance of
any shares of capital stock of the Corporation of any class now or hereafter
authorized, and any options or warrants for, and rights to subscribe to, such
shares, and any securities convertible into or exchangeable for such shares; and
may authorize the seal of the Corporation to be affixed to all papers which may
require it.
Section 3. Procedure; Meetings. The Executive Committee shall fix its own
rules of procedure and shall meet at such times and at such place or places as
may be provided by such rules or as the members of the Executive Committee shall
provide. The Executive Committee shall keep regular minutes of its meetings and
deliver such minutes to the Board of Directors.
The Chairman of the Executive Committee, or, in his absence, a member of
the Executive Committee chosen by a majority of the members present, shall
preside at meetings of the Executive Committee, and another member thereof
chosen by the Executive Committee shall act as Secretary of the Executive
Committee.
Section 4. Quorum. A majority of the Executive Committee shall constitute a
quorum for the transaction of business, and the affirmative vote of a majority
of the members of the Executive Committee shall be required for any action of
the Executive Committee; provided, however, that when an Executive Committee of
one member is authorized under the provisions of Section 1 of this Article, such
one member shall constitute a quorum.
Section 5. Other Committees. The Board of Directors, by resolutions adopted
by a majority of the whole Board, may appoint
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such other committee or committees as it shall deem advisable and with such
functions and duties as the Board of Directors shall prescribe.
Section 6. Vacancies; Changes; Discharge. The Board of Directors shall have
the power at any time to fill vacancies in, to change the membership of, and to
discharge any committee.
Section 7. Compensation. Members of any committee shall be entitled to such
compensation for their services as members of any such committee and to such
reimbursement for any reasonable expenses incurred in attending committee
meetings as may from time to time be fixed by the Board of Directors. Any member
may waive compensation for any meeting. Any committee member receiving
compensation under these provisions shall not be barred from serving the
Corporation in any other capacity and from receiving compensation and
reimbursement of reasonable expenses for such other services.
Section 8. Action by Consent. Any action required or permitted to be taken
at any meeting of any committee of the Board of Directors may be taken without a
meeting if a written consent to such action is signed by all members of the
committee and such written consent is filed with the minutes of its proceedings.
Section 9. Meetings by Telephone or Similar Communications. The members of
any committee designated by the Board of Directors may participate in a meeting
of such committee by means of a conference telephone or similar communications
equipment by means of which all persons participating in such meeting can hear
each other and participation in such meeting shall constitute presence in person
at such meeting.
ARTICLE V
NOTICES
Section 1. Form; Delivery. Whenever, under the provisions of law, the
Certificate of Incorporation or these Bylaws, notice is required to be given to
any director or stockholder, it shall not be construed to mean personal notice
unless otherwise specifically provided, but such notice may be given in writing,
by mail, addressed to such director or stockholder, at his address as it appears
on the records of the Corporation, with postage thereon prepaid. Such notices
shall be deemed to be given at the time they are deposited in the United States
mail. Notice to a director may also be given personally or by telegraph sent to
his address as it appears on the records of the Corporation.
Section 2. Waiver. Whenever any notice is required to be given under the
provisions of law, the Certificate of Incorporation
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or these Bylaws, a written waiver thereof, signed by the person or persons
entitled to said notice, whether before or after the time stated therein, shall
be deemed to be equivalent to such notice. In addition, any stockholder who
attends a meeting of stockholders in person, or is represented at such meeting
by proxy, without protesting at the commencement of the meeting the lack of
notice thereof to him, or any director who attends a meeting of the Board of
Directors without protesting, at the commencement of the meeting, such lack of
notice, shall be conclusively deemed to have waived notice of such meeting.
ARTICLE VI
OFFICERS
Section 1. Designations. The officers of the Corporation shall be chosen by
the Board of Directors. The Board of Directors may choose a Chairman of the
Board, a Vice Chairman of the Board or Vice Chairmen, a President, a Vice
President or Vice Presidents, a Secretary, a Treasurer, one or more Assistant
Secretaries and/or Assistant Treasurers and other officers and agents as it
shall deem necessary or appropriate. All officers of the Corporation shall
exercise such powers and perform such duties as shall from time to time be
determined by the Board of Directors. Any number of offices may be held by the
same person, unless the Certificate of Incorporation or these Bylaws otherwise
provide.
Section 2. Term of Office; Removal. The Board of Directors at its annual
meeting after each annual meeting of stockholders shall choose a President, a
Secretary and a Treasurer. The Board of Directors may also choose a Chairman of
the Board, a Vice President or Vice Presidents, one or more Assistant
Secretaries and/or Assistant Treasurers, and such other officers and agents as
it shall deem necessary or appropriate. Each officer of the Corporation shall
hold office until his successor is chosen and shall qualify. Any officer elected
or appointed by the Board of Directors may be removed, with or without cause, at
any time by the affirmative vote of a majority of the directors then in office.
Such removal shall not prejudice the contract rights, if any, of the person so
removed. Any vacancy occurring in any office of the Corporation may be filled
for the unexpired portion of the term by the Board of Directors.
Section 3. Compensation. The salaries of all officers of the Corporation
shall be fixed from time to time by the Board of Directors and no officer shall
be prevented from receiving such salary by reason of the fact that he is also a
director of the Corporation.
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Section 4. The Chairman of the Board. The Chairman of the Board, if any,
shall be an officer of the Corporation and, subject to the direction of the
Board of Directors, shall perform such executive, supervisory and management
functions and duties as may be assigned to him from time to time by the Board of
Directors. He shall, if present, preside at all meetings of stockholders and of
the Board of Directors.
Section 5. The Vice Chairman of the Board. The Vice Chairman of the Board,
if any (or in the event there be more than one, the Vice Chairmen in the order
designated, or in the absence of any designation, in the order of their
election), shall, in the absence of the Chairman of the Board or in the event of
his disability, perform the duties and exercise the powers of the Chairman of
the Board and shall generally assist the Chairman of the Board and perform such
other duties and have such other powers as may from time to time be prescribed
by the Board of Directors.
Section 6. The President.
(a) The President shall be the chief executive officer of the Corporation
and, subject to the direction of the Board of Directors, shall have general
charge of the business, affairs and property of the Corporation and general
supervision over its other officers and agents. In general, he shall perform all
duties incident to the office of President and shall see that all orders and
resolutions of the Board of Directors are carried into effect. In addition to
and not in limitation of the foregoing, the President shall be empowered to
authorize any change of the registered office or registered agent (or both) of
the Corporation in the State of Delaware.
(b) Unless otherwise prescribed by the Board of Directors, the President
shall have full power and authority on behalf of the Corporation to attend, act
and vote at any meeting of security holders of other corporations in which the
Corporation may hold securities. At such meeting the President shall possess and
may exercise any and all rights and powers incident to the ownership of such
securities which the Corporation might have possessed and exercised if it had
been present. The Board of Directors may from time to time confer like powers
upon any other person or persons.
Section 7. The Vice Presidents. The Vice President, if any (or in the event
there be more than one, the Vice Presidents in the order designated, or in the
absence of any designation, in the order of their election), shall, in the
absence of the President or in the event of his disability, perform the duties
and exercise the powers of the President and shall generally assist the
President and perform such other duties and have such other
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powers as may from time to time be prescribed by the Board of Directors.
Section 8. The Secretary. The Secretary shall attend all meetings of the
Board of Directors and all meetings of stockholders and record all votes and the
proceedings of the meetings in a book to be kept for that purpose and shall
perform like duties for the Executive Committee or other committees, if
required. He shall give, or cause to be given, notice of all meetings of
stockholders and special meetings of the Board of Directors, and shall perform
such other duties as may from time to time be prescribed by the Board of
Directors, the Chairman of the Board or the President, under whose supervision
he shall act. He shall have custody of the seal of the Corporation, and he, or
an Assistant Secretary, shall have authority to affix the same to any instrument
requiring it, and, when so affixed, the seal may be attested by his signature or
by the signature of such Assist4nt Secretary. The Board of Directors may give
general authority to any other officer to affix the seal of the Corporation and
to attest the affixing thereof by his signature.
Section 9. The Assistant Secretary. The Assistant Secretary, if any (or in
the event there be more than one, the Assistant Secretaries in the order
designated, or in the absence of any designation, in the order of their
election), shall, in the absence of the Secretary or in the event of his
disability, perform the duties and exercise the powers of the Secretary and
shall perform such other duties and have such other powers as may from time to
time be prescribed by the Board of Directors.
Section 10. The Treasurer. The Treasurer shall have the custody of the
corporate funds and other valuable effects, including securities, and shall keep
full and accurate accounts of receipts and disbursements in books belonging to
the Corporation and shall deposit all moneys and other valuable effects in the
name and to the credit of the Corporation in such depositories as may from time
to time be designated by the Board of Directors. He shall disburse the funds of
the Corporation as may be ordered by the Board of Directors, taking proper
vouchers for such disbursements, and shall render to the Chairman of the Board,
the President and the Board of Directors, at regular meetings of the Board, or
whenever they may require it, an account of all his transactions as Treasurer
and of the financial condition of the Corporation.
Section 11. The Assistant Treasurer. The Assistant Treasurer, if any (or in
the event there shall be more than one, the Assistant Treasurers in the order
designated, or in the absence of any designation, in the order of their
election), shall, in the absence of the Treasurer or in the event of his
disability, perform the duties and exercise the powers of the Treasurer and
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shall perform such other duties and have such other powers as may from time to
time be prescribed by the Board of Directors.
ARTICLE VII
INDEMNIFICATION OF
DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS
Reference is made to Section 145 (and any other relevant provisions) of the
General Corporation Law of the State of Delaware. Particular reference is made
to the class of persons (hereinafter called "Indemnitees") who may be
indemnified by a Delaware corporation pursuant to the provisions of such section
145, namely, any person (or the heirs, executors or administrators of such
person) who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of the fact that such
person is or was a director, officer, employee or agent of such corporation, or
is or was serving at the request of such corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise. The Corporation shall (and is hereby obligated to) indemnify
the Indemnitees, and each of them, in each and every situation where the
Corporation is obligated to make such indemnification pursuant to the aforesaid
statutory provisions. The Corporation shall indemnify the Indemnitees, and each
of them, in each and every situation where, under the aforesaid statutory
provisions, the Corporation is not obligated, but is nevertheless permitted or
empowered, to make such indemnification, it being understood, that, before
making such indemnification with respect to any situation covered under this
sentence, the Corporation shall promptly make or cause to be made, by any of the
methods referred to in subsection (d) of such Section 145, a determination as to
whether each Indemnitee acted in good faith and in a manner such Indemnitee
reasonably believed to be in or not opposed to the best interests of the
Corporation, and, in the case of any criminal action or proceeding, had no
reasonable cause to believe that such Indemnitee's conduct was unlawful. No such
indemnification shall be made (where not required by statute) unless it is
determined that such Indemnitee acted in good faith and in a manner such
Indemnitee reasonably believed to be in or not opposed to the best interests of
the Corporation', and, in the case of any criminal action or proceeding, had no
reasonable cause to believe that such Indemnitee's conduct was unlawful.
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ARTICLE VIII
AFFILIATED TRANSACTIONS AND INTERESTED DIRECTORS
Section 1. Affiliated Transactions. No contract or transaction between the
Corporation and one or more of its directors or officers, or between the
Corporation and any other corporation, partnership, association or other
organization in which one or more of its directors or officers are directors or
officers, or have a financial interest, shall be void or voidable solely for
this reason, or solely because the director or officer is present at or
participates in the meeting of the Board of Directors or committee thereof which
authorizes the contract or transaction or solely because his or their votes are
counted for such purpose, if:
(a) The material facts as to his relationship or interest and as to the
contract or transaction are disclosed or are known to the Board of Directors or
the committee, and the Board of Directors or committee in good faith authorizes
the contract or transaction by the affirmative vote of a majority of the
disinterested directors, even though the disinterested directors be less than a
quorum; or
(b) The material facts as to his relationship or interest and as to the
contract or transaction are disclosed or are known to the stockholders entitled
to vote thereon, and the contract or transaction is specifically approved in
good faith by vote of the stockholders; or
(c) The contract or transaction is fair as to the Corporation as of the
time it is authorized, approved or ratified by the Board of Directors, a
committee thereof, or the stockholders.
Section 2. Determining Quorum. Common or interested directors may be
counted in determining the presence of a quorum at a meeting of the Board of
Directors or of a committee thereof which authorizes the contract or
transaction.
ARTICLE IX
STOCK CERTIFICATES
Section 1. Form; Signatures.
(a) Every holder of stock in the Corporation shall be entitled to have a
certificate, signed by the Chairman of the Board or the President and the
Treasurer or an Assistant Treasurer or the Secretary or an Assistant Secretary
of the Corporation, exhibiting the number and class (and series, if any) of
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shares owned by him, and bearing the seal of the Corporation. Such signatures
and seal may be facsimile. A certificate may be manually signed by a transfer
agent or registrar other than the corporation or its employee but may be a
facsimile. In case any officer who has signed, or whose facsimile signature was
placed on, a certificate shall have ceased to be such officer before such
certificate is issued, it may nevertheless be issued by the Corporation with the
same effect as if he were such officer at the date of its issue.
(b) All stock certificates representing shares of capital stock which are
subject to restrictions on transfer or to other restrictions may have imprinted
thereon such notation to such effect as may be determined by the Board of
Directors.
Section 2. Registration of Transfer. Upon surrender to the Corporation or
any transfer agent of the Corporation of a certificate for shares duly endorsed
or accompanied by proper evidence of succession, assignment or authority to
transfer, it shall be the duty of the Corporation or its transfer agent to issue
a new certificate to the person entitled thereto, to cancel the old certificate
and to record the transaction upon its books.
Section 3. Registered Stockholders.
(a) Except as otherwise provided by law, the Corporation shall be entitled
to recognize the exclusive right of a person who is registered on its books as
the owner of shares of its capital stock to receive dividends or other
distributions, to vote as such owner, and to hold liable for calls and
assessments any person who is registered on its books as the owner of shares of
its capital stock. The Corporation shall not be bound to recognize any equitable
or legal claim to or interest in such shares on the part of any other person.
(b) If a stockholder desires that notices and/or dividends shall be sent to
a name or address other than the name or address appearing on the stock ledger
maintained by the Corporation (or by the transfer agent or registrar, if any),
such stockholder shall have the duty to notify the Corporation (or the transfer
agent or registrar, if any) in writing, of such desire. Such written notice
shall specify the alternate name or address to be used.
Section 4. Record Date. In order that the Corporation may determine the
stockholders of record who are entitled to notice of or to vote at any meeting
of stockholders or any adjournment thereof, or entitled to receive payment of
any dividend or other distribution, or to make a determination of the
stockholders of record for any other proper purpose, the Board of Directors may,
in advance, fix a date as the record date for any such determination. Such date
shall not be more than 60 nor less than 10 days
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<PAGE>
before the date of such meeting, nor more than 60 days prior to the date of any
other action. A determination of stockholders of record entitled to notice of or
to vote at a meeting of stockholders shall apply to any adjournment of the
meeting taken pursuant to Section 8 of Article II; provided, however, that the
Board of Directors may fix a new record date for the adjourned meeting.
Section 5. Lost, Stolen or Destroyed Certificates. The Board of Directors
may direct a new certificate to be issued in place of any certificate
theretofore issued by the Corporation which is claimed to have been lost, stolen
or destroyed, upon the making of an affidavit of that fact by the person
claiming the certificate of stock to be lost, stolen or destroyed. When
authorizing such issue of a new certificate, the Board of Directors may, in its
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed certificate, or his legal
representative, to advertise the same in such manner as it shall require and/or
to give the Corporation a bond in such sum, or other security in such form, as
it may direct as indemnity against any claim that may be made against the
Corporation with respect to the certificate claimed to have been lost, stolen or
destroyed. ARTICLE X
GENERAL PROVISIONS
Section 1. Dividends. Subject to the provisions of the Certificate of
Incorporation, dividends upon the outstanding capital stock of the Corporation
may be declared by the Board of Directors at any regular or special meeting,
pursuant to law, and may be paid in cash, in property or in shares of the
Corporation's capital stock.
Section 2. Reserves. The Board of Directors shall have full power, subject
to the provisions of law and the Certificate of Incorporation, to determine
whether any, and, if so, what part, of the funds legally available for the
payment of dividends shall be declared as dividends and paid to the stockholders
of the Corporation. The Board of Directors, in its sole discretion, may fix a
sum which may be set aside or reserved over and above the paid-in capital of the
Corporation for working capital or as a reserve for any proper purpose, and may,
from time to time, increase, diminish or vary such fund or funds.
Section 3. Fiscal Year. The fiscal year of the Corporation shall be as
determined from time to time by the Board of Directors.
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Section 4. Seal. The corporate seal shall have inscribed thereon the name
of the Corporation, the year of its incorporation and the words "Corporate Seal"
and "Delaware".
ARTICLE XI
AMENDMENTS
The Board of Directors shall have the power to make, alter and repeal these
Bylaws, and to adopt new bylaws, by an affirmative vote of a majority of the
whole Board, provided that notice of the proposal to make, alter or repeal these
Bylaws, or to adopt new bylaws, must be included in the notice of the meeting of
the Board of Directors at which such action takes place.
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SECRETARY'S CERTIFICATE
I, RICHARD L. KRAMER, Secretary of PRECISE PLASTIC PRODUCTS, INC. (the
"Corporation"), a Delaware corporation, DO HEREBY CERTIFY that the foregoing is
a true and correct copy of the Corporation's Bylaws as adopted by the Board of
Directors of the Corporation on July 31, 1991.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the Corporate
Seal of the Corporation as of the 31st day of July, 1991.
/s/ Richard L. Kramer
---------------------------------------
Richard L. Kramer, Secretary
[Corporate Seal]
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<PAGE>
CERTIFICATE OF INCORPORATION
OF
Precise Technology of Delaware, Inc.
FIRST: The name of the corporation is:
Precise Technology of Delaware, Inc.
SECOND: The registered office of the corporation is to be located at The
Corporation Trust Company, 1209 Orange Street, in the City of Wilmington, in the
County of New Castle, in the State of Delaware. The name of its registered agent
at that address is The Corporation Trust Company, 1209 Orange Street,
Wilmington, DE 19801.
THIRD: The purpose of the corporation is to engage in any lawful act or
activity for which a corporation may be organized under the General Corporation
Law of Delaware.
FOURTH: The corporation shall be authorized to issue 3,000 shares of
common stock with a par value of $.01 per share.
FIFTH: Elections of directors need not be by written ballot.
SIXTH: The original by-laws of the corporation shall be adopted by the
initial incorporator named herein. Thereafter the board of directors shall have
the power, in addition to the stockholders, to make, alter or repeal the by-laws
of the corporation.
SEVENTH: A director of the corporation shall not be liable to the
corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (i) for any breach of the director's
duty of loyalty to the corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 174 of the Delaware General Corporation
Law, or (iv) for any transaction from which the director derived an improper
personal benefit. No amendment or repeal of this Article SEVENTH, or
subsequently adopted inconsistent provision of this Certificate of Incorporation
shall decrease the protection afforded to a director by this Article with
respect to any act or omission of the director occurring prior to such
amendment, repeal or adoption of an inconsistent provision.
EIGHTH: Whenever a compromise or arrangement is proposed between this
corporation and its creditors or any class of them and/or between this
corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this corporation or of any creditor or stockholder thereof or on
<PAGE>
the application of any receiver or receivers appointed for this corporation
under ss. 291 of Title 8 of the Delaware Code or on the application of trustees
in dissolution or any receiver or receivers appointed for the corporation under
ss. 279 of Title 8 of the Delaware Code order a meeting of the creditors or
class of creditors, and/or of the stockholders or class of stockholders of this
corporation, as the case may be, to be summoned in such manner as the said court
directs. If a majority in number representing three-fourths in value of the
creditors or class of creditors, and/or of the stockholders or class of
stockholders of this corporation, as the case may be, agree to any compromise or
arrangement and to any reorganization of this corporation as consequence of such
compromise or arrangement, the said compromise or arrangement and the said
reorganization shall, if sanctioned by the court to which the said application
has been made, be binding on all the creditors or class of creditors, and/or an
all the stockholders or class of stockholders, of this corporation, as the case
may be, and also on the corporation.
NINTH: The corporation reserves the right to amend, alter, change or
repeal any provision contained in this Certificate of Incorporation in the
manner prescribed at the time by statute, and all rights conferred upon
stockholders in this Certificate of Incorporation are granted subject to this
reservation.
TENTH: The name and mailing address of the incorporator are as follows:
Patricia A. Junker
KLETT LIEBER ROONEY & SCHORLING
40th Floor, One Oxford Centre
Pittsburgh, PA 15219
I, THE UNDERSIGNED, being the incorporator hereinbefore named, for the
purpose of forming a corporation pursuant to the General Corporation Law of the
State of Delaware, do make this Certificate, hereby declaring and certifying
that this is my act and deed and that the facts herein stated are true, and
accordingly have executed this Certificate on October 20, 1993.
/s/ Patricia A. Junker
-------------------------
Patricia A. Junker
Incorporator
<PAGE>
B Y - L A W S
OF
Precise Technology of Delaware, Inc.
(a Delaware Corporation)
...oo0oo...
ADOPTED: October 21, 1993
ARTICLE I
Offices and Fiscal Year
SECTION 1.01. Registered Office. The registered office of the corporation
shall be in The Corporation Trust Company, 1209 Orange Street, in the City of
Wilmington, in the County of New Castle, in the State of Delaware until
otherwise established by a vote of a majority of the board of directors in
office, and a statement of such change is filed in the manner provided by
statute.
SECTION 1.02. Other Offices. The corporation may also have offices at such
other places within or without the State of Delaware as the board of directors
may from time to time determine or the business of the corporation requires.
SECTION 1.03. Fiscal Year. The fiscal year of the corporation shall end on
the 31st day of December in each year.
ARTICLE II
Meetings of Stockholders
SECTION 2.01. Place of Meeting. All meetings of the stockholders of the
corporation shall be held at the registered office of the corporation, or at
such other place within or without the State of Delaware as shall be designated
by the board of directors in the notice of such meeting.
SECTION 2.02. Annual Meeting. The board of directors may fix the date and
time of the annual meeting of the stockholders, but if no such date and time is
fixed by the board, the meeting for any calendar year shall be held on the first
Monday of May in such year, if not a legal holiday, and if a legal holiday then
on the next succeeding business day at 10:00 o'clock A.M., and at the meeting
the stockholders then entitled
<PAGE>
to vote shall elect directors and shall transact such other business as may
properly be brought before the meeting.
SECTION 2.03. Special Meetings. Special meetings of the stockholders of
the corporation for any purpose or purposes for which meetings may lawfully be
called, may be called at any time by the chairman of the board, a majority of
the board of directors, the president, or at the request, in writing, of
stockholders owning a majority of the amount of the entire capital stock of the
corporation issued and outstanding and entitled to vote. At any time, upon
written request of any person or persons who have duly called a special meeting,
which written request shall state the purpose or purposes of the meeting, it
shall be the duty of the secretary to fix the date of the meeting to be held at
such date and time as the secretary may fix, not less than ten nor more than
sixty days after the receipt of the request, and to give due notice thereof. If
the secretary shall neglect or refuse to fix the time and date of such meeting
and give notice thereof, the person or persons calling the meeting may do so.
SECTION 2.04. Notice of Meetings. Written notice of the place, date and
hour of every meeting of the stockholders, whether annual or special, shall be
given to each stockholder of record entitled to vote at the meeting not less
than ten nor more than sixty days before the date of the meeting. Every notice
of a special meeting shall state the purpose or purposes thereof.
SECTION 2.05. Quorum, Manner of Acting and Adjournment. The holders of a
majority of the stock issued and outstanding (not including treasury stock) and
entitled to vote thereat, present in person or represented by proxy, shall
constitute a quorum at all meetings of the stockholders for the transaction of
business except as otherwise provided by statute, by the certificate of
incorporation or by these by-laws. If, however, such quorum shall not be present
or represented at any meeting of the stockholders, the stockholders entitled to
vote thereat, present in person or represented by proxy, shall have power to
adjourn the meeting from time to time, without notice other than announcement at
the meeting, until a quorum shall be present or represented. At any such
adjourned meeting, at which a quorum shall be present or represented, any
business may be transacted which might have been transacted at the meeting as
originally notified. If the adjournment is for more than thirty days, or if
after the adjournment a new record date is fixed for the adjourned meeting, a
notice of the adjourned meeting shall be given to each stockholder of record
entitled to vote at the meeting. When a quorum is present at any meeting, the
vote of the holders of the majority of the stock having voting power present in
person or represented by proxy shall decide any question brought before such
meeting, unless the question is one
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upon which, by express provision of the applicable statute, the certificate of
incorporation or these by-laws, a different vote is required, in which case such
express provision shall govern and control the decision of such question. Except
upon those questions governed by the aforesaid express provisions, the
stockholders present in person or by proxy at a duly organized meeting can
continue to do business until adjournment, notwithstanding withdrawal of enough
stockholders to leave less than a quorum.
SECTION 2.06. Organization. At every meeting of the stockholders, the
chairman of the board, if there be one, or in the case of a vacancy in the
office or absence of the chairman of the board, one of the following persons
present in the order stated: the vice chairman, if one has been appointed, the
president, the vice presidents in their order of rank and seniority, a chairman
designated by the board of directors or a chairman chosen by the stockholders
entitled to cast a majority of the votes that all stockholders present in person
or by proxy are entitled to cast, shall act as chairman, and the secretary, or,
in his absence, an assistant secretary, or in the absence of the secretary and
the assistant secretaries, a person appointed by the chairman, shall act as
secretary.
SECTION 2.07. Voting. Each stockholder shall at every meeting of the
stockholders be entitled to one vote in person or by proxy for each share of
capital stock having voting power held by such stockholder. No proxy shall be
voted or acted upon after three years from its date, unless the proxy provides
for a longer period. Every proxy shall be executed in writing by the stockholder
or by his duly authorized attorney-in-fact and filed with the secretary of the
corporation. A proxy, unless coupled with an interest, shall be revocable at
will, notwithstanding any other agreement or any provision in the proxy to the
contrary, but the revocation of a proxy shall not be effective until notice
thereof has been given to the secretary of the corporation. A duly executed
proxy shall be irrevocable if it states that it is irrevocable and if, and only
as long as, it is coupled with an interest sufficient in law to support an
irrevocable power. A proxy may be made irrevocable regardless of whether the
interest with which it is coupled is an interest in the stock itself or an
interest in the corporation generally. A proxy shall not be revoked by the death
or incapacity of the maker unless, before the vote is counted or the authority
is exercised, written notice of such death or incapacity is given to the
secretary of the corporation.
SECTION 2.08. Consent of Stockholders in Lieu of Meeting. Any action
required to be taken at any annual or special meeting of stockholders of the
corporation, or any action which may be taken at any annual or special meeting
of such
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<PAGE>
stockholders, may be taken without a meeting, without prior notice and without a
vote, if a consent or consents in writing, setting forth the action so taken,
shall be signed by the holders of outstanding stock having not less than the
minimum number of votes that would be necessary to authorize or take such action
at a meeting at which all shares entitled to vote thereon were present and
voted. Every written consent shall bear the date of signature of each
stockholder who signs the consent and no written consent shall be effective to
take the corporate action referred to therein unless, within sixty days of the
earliest dated consent delivered in the manner required above to the
corporation, written consents signed by a sufficient number of holders to take
action are delivered to the corporation by delivery to its registered office in
Delaware, its principal place of business, or an officer or agent of the
corporation having custody of the book in which proceedings of meetings of
stockholders are recorded. Delivery made to a corporation's registered office
shall be by hand or by certified or registered mail, return receipt requested.
Prompt notice of the taking of the corporate action without a meeting by less
than unanimous written consent shall be given to those stockholders who have not
consented in writing.
SECTION 2.09. Voting Lists. The officer who has charge of the stock ledger
of the corporation shall prepare and make, at least ten days before every
meeting of stockholders, a complete list of the stockholders entitled to vote at
the meeting. The list shall be arranged in alphabetical order and shall show the
address of each stockholder and the number of shares registered in the name of
each stockholder. The list shall be open to the examination of any stockholder,
for any purpose germane to the meeting, during ordinary business hours, for a
period of at least ten days prior to the meeting either at a place within the
city where the meeting is to be held, which place shall be specified in the
notice of the meeting, or, if not so specified, at the place where the meeting
is to be held. The list shall also be produced and kept at the time and place of
the meeting during the whole time thereof, and may be inspected by any
stockholder who is present.
SECTION 2.10. Voting by Ballot. All elections of directors shall be by
written ballot, unless otherwise provided in the certificate of incorporation;
the vote upon any other matter need not be by ballot.
SECTION 2.11. Inspectors of Election. In advance of any meeting of
stockholders the board of directors may appoint inspectors of election, who need
not be stockholders, to act at such meeting or any adjournment thereof. If
inspectors of election are not so appointed, the chairman of any such meeting
may, and upon the demand of any stockholder or his proxy at the
4
<PAGE>
meeting and before voting begins shall, appoint inspectors of election. The
number of inspectors shall be either one or three, as determined, in the case of
judges appointed upon demand of a stockholder, by stockholders present entitled
to cast a majority of the votes which all stockholders present are entitled to
cast thereon. No person who is a candidate for office shall act as an inspector.
In case any person appointed as an inspector fails to appear or fails or refuses
to act, the vacancy may be filled by appointment made by the board of directors
in advance of the convening of the meeting, or at the meeting by the chairman of
the meeting.
If inspectors of election are appointed as aforesaid, they shall determine
the number of shares outstanding and the voting power of each, the shares
represented at the meeting, the existence of a quorum, the authenticity,
validity and effect of proxies, receive votes or ballots, hear and determine all
challenges and questions in any way arising in connection with the right to
vote, count and tabulate all votes, determine the result, and do such acts as
may be proper to conduct the election or vote with fairness to all stockholders.
If there be three inspectors of election, the decision, act or certificate of a
majority shall be effective in all respects as the decision, act or certificate
of all.
On request of the chairman of the meeting or of any stockholder or his
proxy, the inspectors shall make a report in writing of any challenge or
question or matter determined by them, and execute a certificate of any fact
found by them.
ARTICLE III
Board of Directors
SECTION 3.01. Powers. The board of directors shall have full power to
manage the business and affairs of the corporation; and all powers of the
corporation, except those specifically reserved or granted to the stockholders
by statute, the certificate of incorporation or these by-laws, are hereby
granted to and vested in the board of directors.
SECTION 3.02. Number and Term of Office. The board of directors shall
consist of such number of directors, not less than 2 nor more than 7, as may be
determined from time to time by resolution of the board of directors. Each
director shall serve until the next annual meeting of the stockholders and until
his successor shall have been elected and qualified, except in the event of his
death, resignation or removal. All directors of the corporation shall be natural
persons, but need not be residents of Delaware or stockholders of the
corporation.
5
<PAGE>
SECTION 3.03. Vacancies. Vacancies and newly created directorships
resulting from any increase in the authorized number of directors may be filled
by a majority of the directors then in office, though less than a quorum, or by
a sole remaining director, and the directors so chosen shall hold office until
the next annual election and until their successors are duly elected and shall
qualify, unless sooner displaced. If there are no directors in office, then an
election of directors may be held in the manner provided by statute. Whenever
the holders of any class or classes of stock or series thereof are entitled to
elect one or more directors by the provisions of the certificate of
incorporation, vacancies and newly created directorships of such class or
classes or series may be filled by a majority of the directors elected by such
class or classes or series thereof then in office, or by a sole remaining
director so elected. If, at the time of filling any vacancy or any newly created
directorship, the directors then in office shall constitute less than a majority
of the whole board (as constituted immediately prior to any such increase), the
Court of Chancery may, upon application of any stockholder or stockholders
holding at least ten percent of the total number of the shares at the time
outstanding having the right to vote for such directors, summarily order an
election to be held to fill any such vacancies or newly created directorships,
or to replace the directors chosen by the directors then in office.
SECTION 3.04. Resignations. Any director of the corporation may resign at
any time by giving written notice to the president or the secretary of the
corporation. Such resignation shall take effect at the date of the receipt of
such notice or at any later time specified therein and, unless otherwise
specified therein, the acceptance of such resignation shall not be necessary to
make it effective.
SECTION 3.05. Organization. At every meeting of the board of directors,
the chairman of the board, if there be one, or, in the case of a vacancy in the
office or absence of the chairman of the board, one of the following officers
present in the order stated: the vice chairman of the board, if there be one,
the president, the vice presidents in their order of rank and seniority, or a
chairman chosen by a majority of the directors present, shall preside, and the
secretary, or, in his absence, an assistant secretary, or in the absence of the
secretary and the assistant secretaries, any person appointed by the chairman of
the meeting, shall act as secretary.
SECTION 3.06. Place of Meeting. The board of directors may hold its
meetings, both regular and special, at such place or places within or without
the State of Delaware as the board of directors may from time to time appoint,
or as may be designated in the notice calling the meeting.
6
<PAGE>
SECTION 3.07. Organization Meeting. The first meeting of each newly
elected board of directors shall be held at such time and place as shall be
fixed by the vote of the stockholders at the annual meeting and no notice of
such meeting shall be necessary to the newly elected directors in order legally
to constitute the meeting, provided a quorum shall be present. In the event of
the failure of the stockholders to fix the time or place of such first meeting
of the newly elected board of directors, or in the event such meeting is not
held at the time and place so fixed by the stockholders, the meeting may be held
at such time and place as shall be specified in a notice given as hereinafter
provided for special meetings of the board of directors, or as shall be
specified in a written waiver signed by all of the directors.
SECTION 3.08. Regular Meetings. Regular meetings of the board of directors
may be held without notice at such time and place as shall be designated from
time to time by resolution of the board of directors. If the date fixed for any
such regular meeting be a legal holiday under the laws of the State where such
meeting is to be held, then the same shall be held on the next succeeding
business day, not a Saturday, or at such other time as may be determined by
resolution of the board of directors. At such meetings, the directors shall
transact such business as may properly be brought before the meeting.
SECTION 3.09. Special Meetings. Special meetings of the board of directors
shall be held whenever called by the president or by two or more of the
directors. Notice of each such meeting shall be given to each director by
telephone or in writing at least 24 hours (in the case of notice by telephone)
or 48 hours (in the case of notice by telegram) or five days (in the case of
notice by mail) before the time at which the meeting is to be held. Each such
notice shall state the time and place of the meeting to be so held.
SECTION 3.10. Quorum, Manner of Acting and Adjournment. At all meetings of
the board a majority of the directors shall constitute a quorum for the
transaction of business and the act of a majority of the directors present at
any meeting at which there is a quorum shall be the act of the board of
directors, except as may be otherwise specifically provided by statute or by the
certificate of incorporation. If a quorum shall not be present at any meeting of
the board of directors, the directors present thereat may adjourn the meeting
from time to time, without notice other than announcement at the meeting, until
a quorum shall be present.
Unless otherwise restricted by the certificate of incorporation or these
by-laws, any action required or permitted to be taken at any meeting of the
board of directors or of any
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committee thereof may be taken without a meeting, if all members of the board
consent thereto in writing, and the writing or writings are filed with the
minutes of proceedings of the board.
SECTION 3.11. Executive and Other Committees. The board of directors may,
by resolution adopted by a majority of the whole board, designate an executive
committee and one or more other committees, each committee to consist of one or
more directors. The board may designate one or more directors as alternate
members of any committee, who may replace any absent or disqualified member at
any meeting of the committee. In the absence or disqualification of a member,
and the alternate or alternates, if any, designated for such member, of any
committee the member or members thereof present at any meeting and not
disqualified from voting, whether or not he or they constitute a quorum, may
unanimously appoint another director to act at the meeting in the place of any
such absent or disqualified member.
Any such committee to the extent provided in the resolution establishing
such committee shall have and may exercise all the power and authority of the
board of directors in the management of the business and affairs of the
corporation, including the power or authority to declare a dividend or to
authorize the issuance of stock, and may authorize the seal of the corporation
to be affixed to all papers which may require it; but no such committee shall
have the power or authority in reference to amending the certificate of
incorporation (except that a committee may, to the extent authorized in the
resolution or resolutions providing for the issuance of shares of stock adopted
by the board of directors as provided in Section 151(a) of the Delaware General
Corporation Law ("DGCL"), fix any of the preferences or rights of such shares
relating to dividends, redemption, dissolution, any distribution of assets of
the corporation or the conversion into, or the exchange of such shares for,
shares of any other class or classes or any other series of the same or any
other class or classes of stock of the corporation), adopting an agreement of
merger or consolidation under Section 251 or 252 of the DGCL, recommending to
the stockholders the sale, lease or exchange of all or substantially all of the
corporation's property and assets, recommending to the stockholders a
dissolution of the corporation or a revocation of a dissolution, or amending the
by-laws of the corporation; and, unless the resolution expressly so provides, no
such committee shall have the power or authority to declare a dividend, to
authorize the issuance of stock or to adopt a certificate of ownership and
merger pursuant to Section 253 of the DGCL. Such committee or committees shall
have such name or names as may be determined from time to time by resolution
adopted by the board of directors. Each committee so formed shall keep regular
minutes of its meetings and report the same to the board of directors when
required.
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SECTION 3.12. Compensation of Directors. Unless otherwise restricted by
the certificate of incorporation, the board of directors shall have the
authority to fix the compensation of directors. The directors may be paid their
expenses, if any, of attendance at each meeting of the board of directors and
may be paid a fixed sum for attendance at each meeting of the board of directors
or a stated salary as director. No such payment shall preclude any director from
serving the corporation in any other capacity and receiving compensation
therefor. Members of special or standing committees may be allowed like
compensation for attending committee meetings.
ARTICLE IV
Notice - Waivers - Meetings
SECTION 4.01. Notice, What Constitutes. Whenever, under the provisions of
the statutes of Delaware or the certificate of incorporation or these by-laws,
notice is required to be given to any director or stockholder, it shall not be
construed to mean personal notice, but such notice may be given in writing, by
mail, addressed to such director or stockholder, at his address as it appears on
the records of the corporation, with postage thereon prepaid, and such notice
shall be deemed to be given at the time when the same shall be deposited in the
United States mail. Notice to directors may also be given in accordance with
Section 3.09 of Article III hereof.
SECTION 4.02. Waivers of Notice. Whenever any written notice is required
to be given under the provisions of the certificate of incorporation, these
by-laws, or by statute, a waiver thereof in writing, signed by the person or
persons entitled to such notice, whether before or after the time stated
therein, shall be deemed equivalent to the giving of such notice. Neither the
business to be transacted at, nor the purpose of, any regular or special meeting
of the stockholders, directors, or members of a committee of directors need be
specified in any written waiver of notice of such meeting.
Attendance of a person, either in person or by proxy, at any meeting,
shall constitute a waiver of notice of such meeting, except where a person
attends a meeting for the express purpose of objecting at the beginning of the
meeting to the transaction of any business because the meeting was not lawfully
called or convened.
SECTION 4.03. Exception to Requirements of Notice. Whenever notice is
required to be given, under any provision of the DGCL or of the certificate of
incorporation or these by-laws, to any person with whom communication is
unlawful, the giving of
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such notice to such person shall not be required and there shall be no duty to
apply to any governmental authority or agency for a license or permit to give
such notice to such person. Any action or meeting which shall be taken or held
without notice to any such person with whom communication is unlawful shall have
the same force and effect as if such notice had been duly given. In the event
that the action taken by the corporation is such as to require the filing of a
certificate under any section of the DGCL, the certificate shall state, if such
is the fact and if notice is required, that notice was given to all persons
entitled to receive notice except such persons with whom communication is
unlawful.
Whenever notice is required to be given, under any provision of the DGCL
or the certificate of incorporation or these by-laws, to any stockholder to whom
(i) notice of two consecutive annual meetings, and all notices of meetings or of
the taking of action by written consent without a meeting to such person during
the period between such two consecutive annual meetings, or (ii) all, and at
least two, payments (if sent by first class mail) of dividends or interest on
securities during a 12 month period, have been mailed addressed to such person
at his address as shown on the records of the corporation and have been returned
undeliverable, the giving of such notice to such person shall not be required.
Any action or meeting which shall be taken or held without notice to such person
shall have the same force and effect as if such notice had been duly given. If
any such person shall deliver to the corporation a written notice setting forth
his then current address, the requirement that notice be given to such person
shall be reinstated. In the event that the action taken by the corporation is
such as to require the filing of a certificate under any section of the DGCL,
the certificate need not state that notice was not given to persons to whom
notice was not required to be given pursuant to this section.
SECTION 4.04. Conference Telephone Meetings. One or more directors may
participate in a meeting of the board, or of a committee of the board, by means
of conference telephone or similar communications equipment by means of which
all persons participating in the meeting can hear each other. Participation in a
meeting pursuant to this section shall constitute presence in person at such
meeting.
ARTICLE V
Officers
SECTION 5.01. Number, Qualifications and Designation. The officers of the
corporation shall be chosen by the board of
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directors and shall be a president, one or more vice presidents, a secretary, a
treasurer, and such other officers as may be elected in accordance with the
provisions of Section 5.03 of this Article. One person may hold more than one
office. Officers may be, but need not be, directors or stockholders of the
corporation. The board of directors may elect from among the members of the
board a chairman of the board and a vice chairman of the board who shall be
officers of the corporation.
SECTION 5.02. Election and Term of Office. The officers of the
corporation, except those elected by delegated authority pursuant to Section
5.03 of this Article, shall be elected annually by the board of directors, and
each such officer shall hold his office until his successor shall have been
elected and qualified, or until his earlier resignation or removal. Any officer
may resign at any time upon written notice to the corporation.
SECTION 5.03. Subordinate Officers, Committees and Agents. The board of
directors may from time to time elect such other officers and appoint such
committees, employees or other agents as it deems necessary, who shall hold
their offices for such terms and shall exercise such powers and perform such
duties as are provided in these by-laws, or as the board of directors may from
time to time determine. The board of directors may delegate to any officer or
committee the power to elect subordinate officers and to retain or appoint
employees or other agents, or committees thereof, and to prescribe the authority
and duties of such subordinate officers, committees, employees or other agents.
SECTION 5.04. The Chairman and Vice Chairman of the Board. The chairman of
the board or in his absence, the vice chairman of the board, shall preside at
all meetings of the stockholders and of the board of directors, and shall
perform such other duties as may from time to time be assigned to them by the
board of directors.
SECTION 5.05. The President. The president shall be the chief executive
officer of the corporation and shall have general supervision over the business
and operations of the corporation, subject, however, to the control of the board
of directors. He shall sign, execute, and acknowledge, in the name of the
corporation, deeds, mortgages, bonds, contracts or other instruments, authorized
by the board of directors, except in cases where the signing and execution
thereof shall be expressly delegated by the board of directors, or by these
by-laws, to some other officer or agent of the corporation; and, in general,
shall perform all duties incident to the office of president, and such other
duties as from time to time may be assigned to him by the board of directors.
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SECTION 5.06. The Vice Presidents. The vice presidents shall perform the
duties of the president in his absence and such other duties as may from time to
time be assigned to them by the board of directors or by the president.
SECTION 5.07. The Secretary. The secretary, or an assistant secretary,
shall attend all meetings of the stockholders and of the board of directors and
shall record the proceedings of the stockholders and of the directors and of
committees of the board in a book or books to be kept for that purpose; see that
notices are given and records and reports properly kept and filed by the
corporation as required by law; be the custodian of the seal of the corporation
and see that it is affixed to all documents to be executed on behalf of the
corporation under its seal; and, in general, perform all duties incident to the
office of secretary, and such other duties as may from time to time be assigned
to him by the board of directors or the president.
SECTION 5.08. The Treasurer. The treasurer or an assistant treasurer shall
have or provide for the custody of the funds or other property of the
corporation and shall keep a separate book account of the same to his credit as
treasurer; collect and receive or provide for the collection and receipt of
moneys earned by or in any manner due to or received by the corporation; deposit
all funds in his custody as treasurer in such banks or other places of deposit
as the board of directors may from time to time designate; whenever so required
by the board of directors, render an account showing his transactions as
treasurer and the financial condition of the corporation; and, in general,
discharge such other duties as may from time to time be assigned to him by the
board of directors or the president.
SECTION 5.09. Officers' Bonds. No officer of the corporation need provide
a bond to guarantee the faithful discharge of his duties unless the board of
directors shall by resolution so require a bond in which event such officer
shall give the corporation a bond (which shall be renewed if and as required) in
such sum and with such surety or sureties as shall be satisfactory to the board
of directors for the faithful performance of the duties of his office.
SECTION 5.10. Salaries. The salaries of the officers and agents of the
corporation elected by the board of directors shall be fixed from time to time
by the board of directors.
SECTION 5.11. Authority. The discharge by the corporation of its functions
as a trustee of any business trust for which it is appointed, and agrees to
serve, as trustee shall be deemed to be part of the ordinary business of the
corporation and any action taken on behalf of the corporation in its capacity
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as trustee of a business trust shall be deemed to have been taken in the regular
course of business of the corporation. Approval by the board of directors shall
not be required for the taking of any action by the corporation as a trustee of
a business trust and any such action may be taken by the officers of the
corporation under their own authority.
ARTICLE VI
Certificates of Stock, Transfer, Etc.
SECTION 6.01. Issuance. Each stockholder shall be entitled to a
certificate or certificates for shares of stock of the corporation owned by him
upon his request therefor. The stock certificates of the corporation shall be
numbered and registered in the stock ledger and transfer books of the
corporation as they are issued. They shall be signed by the president or a vice
president and by the secretary or an assistant secretary or the treasurer or an
assistant treasurer, and shall bear the corporate seal, which may be a
facsimile, engraved or printed. Any of or all the signatures upon such
certificate may be a facsimile, engraved or printed. In case any officer,
transfer agent or registrar who has signed, or whose facsimile signature has
been placed upon, any share certificate shall have ceased to be such officer,
transfer agent or registrar before the certificate is issued, it may be issued
with the same effect as if he were such officer, transfer agent or registrar at
the date of its issue.
SECTION 6.02. Transfer. Upon surrender to the corporation or the transfer
agent of the corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignation or authority to
transfer, it shall be the duty of the corporation to issue a new certificate to
the person entitled thereto, cancel the old certificate and record the
transaction upon its books. No transfer shall be made which would be
inconsistent with the provisions of Article 8, Title 6 of the Delaware Uniform
Commercial Code-Investment Securities.
SECTION 6.03. Stock Certificates. Stock certificates of the corporation
shall be in such form as provided by statute and approved by the board of
directors. The stock record books and the blank stock certificates books shall
be kept by the secretary or by any agency designated by the board of directors
for that purpose.
SECTION 6.04. Lost, Stolen, Destroyed or Mutilated Certificates. The board
of directors may direct a new certificate or certificates to be issued in place
of any certificate or certificates theretofore issued by the corporation
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alleged to have been lost, stolen or destroyed, upon the making of an affidavit
of that fact by the person claiming the certificate of stock to be lost, stolen
or destroyed. When authorizing such issue of a new certificate or certificates,
the board of directors may, in its discretion and as a condition precedent to
the issuance thereof, require the owner of such lost, stolen or destroyed
certificate or certificates, or his legal representative, to give the
corporation a bond in such sum as it may direct as indemnity against any claim
that may be made against the corporation with respect to the certificate alleged
to have been lost, stolen or destroyed.
SECTION 6.05. Record Holder of Shares. The corporation shall be entitled
to recognize the exclusive right of a person registered on its books as the
owner of shares to receive dividends, and to vote as such owner, and to hold
liable for calls and assessments a person registered on its books as the owner
of shares, and shall not be bound to recognize any equitable or other claim to
or interest in such share or shares on the part of any other person, whether or
not it shall have express or other notice thereof, except as otherwise provided
by the laws of Delaware.
SECTION 6.06. Determination of Stockholders of Record. In order that the
corporation may determine the stockholders entitled to notice of or to vote at
any meeting of stockholders or any adjournment thereof, the board of directors
may fix a record date, which record date shall not precede the date upon which
the resolution fixing the record date is adopted by the board of directors, and
which record date shall not be more than sixty nor less than ten days before the
date of such meeting. If no record date is fixed by the board of directors, the
record date for determining stockholders entitled to notice of or to vote at a
meeting of stockholders shall be at the close of business on the day next
preceding the day on which notice is given, or, if notice is waived, at the
close of business on the day next preceding the day on which the meeting is
held. A determination of stockholders of record entitled to notice of or to vote
at a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the board of directors may fix a new record date for the
adjourned meeting.
In order that the corporation may determine the stockholders entitled to
consent to corporate action in writing without a meeting, the board of directors
may fix a record date, which record date shall not precede the date upon which
the resolution fixing the record date is adopted by the board of directors, and
which date shall not be more than ten days after the date upon which the
resolution fixing the record date is adopted by the board of directors. If no
record has been fixed by the board of directors, the record date for determining
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stockholders entitled to consent to corporate action in writing without a
meeting, when no prior action by the board of directors, is required by the
DGCL, shall be the first date on which a signed written consent setting forth
the action taken or proposed to be taken is delivered to the corporation by
delivery to its registered office in Delaware, its principal place of business,
or an officer or agent of the corporation having custody of the book in which
proceedings of meetings of stockholders are recorded. Delivery made to a
corporation's registered office shall be by hand or by certified or registered
mail, return receipt requested. If no record date has been fixed by the board of
directors and prior action by the board of directors is required by the DGCL,
the record date for determining stockholders entitled to consent to corporate
action in writing without a meeting shall be at the close of business on the day
on which the board of directors adopts the resolution taking such prior action.
In order that the corporation may determine the stockholders entitled to
receive payment of any dividend or other distribution or allotment of any rights
of the stockholders entitled to exercise any rights in respect of any change,
conversion or exchange of stock, or for the purpose of any other lawful action,
the board of directors may fix a record date, which record date shall not
precede the date upon which the resolution fixing the record date is adopted,
and which record shall be not more than sixty days prior to such action. If no
record date is fixed, the record date for determining stockholders for any such
purpose shall be at the close of business on the day on which the board of
directors adopts the resolution relating thereto.
ARTICLE VII
Indemnification of Directors, Officers and
Other Authorized Representatives
SECTION 7.01. Indemnification of Authorized Representatives in Third Party
Proceedings. The corporation shall indemnify any person who was or is an
authorized representative of the corporation, and who was or is a party, or is
threatened to be made a party to any third party proceeding, by reason of the
fact that such person was or is an authorized representative of the corporation,
against expenses, judgments, penalties, fines and amounts paid in settlement
actually and reasonably incurred by such person in connection with such third
party proceeding if such person acted in good faith and in a manner such person
reasonably believed to be in, or not opposed to, the best interests of the
corporation and, with respect to any criminal third party proceeding, had no
reasonable cause to
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believe such conduct was unlawful. The termination of any third party proceeding
by judgment, order, settlement, indictment, conviction or upon a plea of nolo
contendere or its equivalent, shall not of itself create a presumption that the
authorized representative did not act in good faith and in a manner which such
person reasonably believed to be in or not opposed to, the best interests of the
corporation, and, with respect to any criminal third party proceeding, had
reasonable cause to believe that such conduct was unlawful.
SECTION 7.02. Indemnification of Authorized Representatives in Corporate
Proceedings. The corporation shall indemnify any person who was or is an
authorized representative of the corporation and who was or is a party or is
threatened to be made a party to any corporate proceeding, by reason of the fact
that such person was or is an authorized representative of the corporation,
against expenses actually and reasonably incurred by such person in connection
with the defense or settlement of such corporate action if such person acted in
good faith and in a manner reasonably believed to be in, or not opposed to, the
best interests of the corporation, except that no indemnification shall be made
in respect of any claim, issue or matter as to which such person shall have been
adjudged to be liable to the corporation unless and only to the extent that the
Court of Chancery or the court in which such corporate proceeding was pending
shall determine upon application that, despite the adjudication of liability but
in view of all the circumstances of the case, such authorized representative is
fairly and reasonably entitled to indemnity for such expenses which the Court of
Chancery or such other court shall deem proper.
SECTION 7.03. Mandatory Indemnification of Authorized Representatives. To
the extent that an authorized representative of the corporation has been
successful on the merits or otherwise in defense of any third party or corporate
proceeding or in defense of any claim, issue or matter therein, such person
shall be indemnified against expenses actually and reasonably incurred by such
person in connection therewith.
SECTION 7.04. Determination of Entitlement to Indemnification. Any
indemnification under Section 7.01, 7.02 or 7.03 of this Article (unless ordered
by a court) shall be made by the corporation only as authorized in the specific
case upon a determination that indemnification of the authorized representative
is proper in the circumstances because such person has either met the applicable
standard of conduct set forth in Section 7.01 or 7.02 or has been successful on
the merits or otherwise as set forth in Section 7.03 and that the amount
requested has been actually and reasonably incurred. Such determination shall be
made:
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(1) By the board of directors by a majority of a quorum consisting
of directors who were not parties to such third party or corporate
proceeding, or
(2) If such a quorum is not obtainable, or, even if obtainable, a
majority vote of such a quorum so directs, by independent legal counsel in
a written opinion, or
(3) By the stockholders.
SECTION 7.05. Advancing Expenses. Expenses actually and reasonably
incurred in defending a third party or corporate proceeding may be paid on
behalf of an authorized representative by the corporation in advance of the
final disposition of such third party or corporate proceeding upon receipt of an
undertaking by or on behalf of such authorized representative to repay such
amount if it shall ultimately be determined that such person is not entitled to
be indemnified by the corporation as authorized in this Article. The financial
ability of such authorized representative to make such repayment shall not be a
prerequisite to the making of an advance.
SECTION 7.06. Definitions. For purposes of this Article:
(1) "authorized representative" shall mean a director or officer of
the corporation, or a person serving at the request of the corporation as
a director, officer, or trustee, of another corporation, partnership,
joint venture, trust or other enterprise;
(2) "corporation" shall include, in addition to the resulting
corporation, any constituent corporation (including any constituent of a
constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power and authority to indemnify
its directors, officers, employees or agents, so that any person who is or
was a director, officer, employee or agent of such constituent
corporation, or is or was serving at the request of such constituent
corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, shall
stand in the same position under the provisions of this Article with
respect to the resulting or surviving corporation as such person would
have with respect to such constituent corporation if its separate
existence had continued.
(3) "corporate proceeding" shall mean any threatened, pending or
completed action or suit by or in the
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right of the corporation to procure a judgment in its favor or
investigative proceeding by the corporation;
(4) "criminal third party proceeding" shall include any action or
investigation which could or does lead to a criminal third party
proceeding;
(5) "expenses" shall include attorneys' fees and disbursements;
(6) "fines" shall include any excise taxes assessed on a person with
respect to an employee benefit plan;
(7) "not opposed to the best interest of the corporation" shall
include actions taken in good faith and in a manner the authorized
representative reasonably believed to be in the interest of the
participants and beneficiaries of an employee benefit plan;
(8) "other enterprises" shall include employee benefit plans;
(9) "party" shall include the giving of testimony or similar
involvement;
(10) "serving at the request of the corporation" shall include any
service as a director, officer or employee of the corporation which
imposes duties on, or involves services by, such director, officer or
employee with respect to an employee benefit plan, its participants, or
beneficiaries; and
(11) "third party proceeding" shall mean any threatened, pending or
completed action, suit or proceeding, whether civil, criminal,
administrative, or investigative, other than an action by or in the right
of the corporation.
SECTION 7.07. Insurance. The corporation may purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise against any liability asserted against
him and incurred by him in any such capacity, or arising out of his status as
such, whether or not the corporation would have the power or the obligation to
indemnify such person against such liability under the provisions of this
Article.
SECTION 7.08. Scope of Article. The indemnification of authorized
representatives and advancement of expenses, as
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authorized by the preceding provisions of this Article, shall not be deemed
exclusive of any other rights to which those seeking indemnification or
advancement of expenses may be entitled under any statute, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in an
official capacity and as to action in another capacity. The indemnification and
advancement of expenses provided by or granted pursuant to this Article shall,
unless otherwise provided when authorized or ratified, continue as to a person
who has ceased to be an authorized representative and shall inure to the benefit
of the heirs, executors and administrators of such a person.
SECTION 7.09. Reliance on Provisions. Each person who shall act as an
authorized representative of the corporation shall be deemed to be doing so in
reliance upon the rights of indemnification provided by this Article.
ARTICLE VIII
General Provisions
SECTION 8.01. Dividends. Dividends upon the capital stock of the
corporation, subject to the provisions of the certificate of incorporation, if
any, may be declared by the board of directors at any regular or special
meeting, pursuant to law. Dividends may be paid in cash, in property, or in
shares of the capital stock of the corporation, subject to the provisions of the
certificate of incorporation. Before payment of any dividend, there may be set
aside out of any funds of the corporation available for dividends such sum or
sums as the directors from time to time, in their absolute discretion, think
proper as a reserve or reserves to meet contingencies, or for equalizing
dividends, or for repairing or maintaining any property of the corporation, or
for such other purpose as the directors shall think conducive to the interest of
the corporation, and the directors may modify or abolish any such reserve in the
manner in which it was created.
SECTION 8.02. Annual Statements. The board of directors shall present at
each annual meeting, and at any special meeting of the stockholders when called
for by vote of the stockholders, a full and clear statement of the business and
condition of the corporation.
SECTION 8.03. Contracts. Except as otherwise provided in these by-laws,
the board of directors may authorize any officer or officers including the
chairman and vice chairman of the board of directors, or any agent or agents, to
enter into any contract or to execute or deliver any instrument on behalf of the
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corporation and such authority may be general or confined to specific instances.
SECTION 8.04. Checks. All checks, notes, bills of exchange or other orders
in writing shall be signed by such person or persons as the board of directors
may from time to time designate.
SECTION 8.05. Corporate Seal. The corporate seal shall have inscribed
thereon the name of the corporation, the year of its incorporation and the words
"Corporate Seal, Delaware". The seal may be used by causing it or a facsimile
thereof to be impressed or affixed or in any other manner reproduced.
SECTION 8.06. Deposits. All funds of the corporation shall be deposited
from time to time to the credit of the corporation in such banks, trust
companies, or other depositories as the board of directors may approve or
designate, and all such funds shall be withdrawn only upon checks signed by such
one or more officers or employees as the board of directors shall from time to
time determine.
SECTION 8.07. Corporate Records. Every stockholder shall, upon written
demand under oath stating the purpose thereof, have a right to examine, in
person or by agent or attorney, during the usual hours for business, for any
proper purpose, the stock ledger, books or records of account, and records of
the proceedings of the stockholders and directors, and make copies or extracts
therefrom. A proper purpose shall mean a purpose reasonably related to such
person's interest as a stockholder. In every instance where an attorney or other
agent shall be the person who seeks the right to inspection, the demand under
oath shall be accompanied by a power of attorney or such other writing which
authorizes the attorney or other agent to so act on behalf of the stockholder.
The demand under oath shall be directed to the corporation at its registered
office in Delaware or at its principal place of business. Where the stockholder
seeks to inspect the books and records of the corporation, other than its stock
ledger or list of stockholders, the stockholder shall first establish (1)
compliance with the provisions of this section respecting the form and manner of
making demand for inspection of such documents; and (2) that the inspection
sought is for a proper purpose. Where the stockholder seeks to inspect the stock
ledger or list of stockholders of the corporation and has complied with the
provisions of this section respecting the form and manner of making demand for
inspection of such documents, the burden of proof shall be upon the corporation
to establish that the inspection sought is for an improper purpose.
Any director shall have the right to examine the corporation's stock
ledger, a list of its stockholders and its
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other books and records for a purpose reasonably related to his position as a
director.
SECTION 8.08. Amendment of By-Laws. These by-laws may be altered, amended
or repealed or new by-laws may be adopted by the stockholders or by the board of
directors, when such power is conferred upon the board of directors by the
certificate of incorporation, at any regular meeting of the stockholders or of
the board of directors or at any special meeting of the stockholders or of the
board of directors if notice of such alteration, amendment, repeal or adoption
of new by-laws be contained in the notice of such special meeting.
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CERTIFICATE OF INCORPORATION
OF
PRECISE TECHNOLOGY OF ILLINOIS, INC.
1. The name of the corporation is Precise Technology of Illinois, Inc.
2. The address of its registered office in the State of Delaware is
Corporation Trust Center, 1209 Orange Street, in the City of Wilmington,
County of New Castle. The name of its registered agent at such address is
The Corporation Trust Company.
3. The nature of the business or purposes to be conducted or promoted is to
engage in any lawful act or activity for which corporations may be
organized under the General Corporation Law of Delaware.
4. The total number of shares of stock which the corporation shall have the
authority to issue is One Thousand Five Hundred (1,500); all of such
shares shall be without par value.
5. The name and mailing address of the sole incorporator is as follows:
Michael D. Schenker 35th Floor, BP America Building
200 Public Square
Cleveland, Ohio 44114-2302
The name and mailing address of each person who is to serve as a director
until the first annual meeting of the stockholders or until a successor is
elected and qualified, is as follows:
Richard L. Kramer 1430 Broadway Avenue
13th Floor
New York, New York 10018
William L. Remley 1430 Broadway Avenue
13th Floor
New York, New York 10018
6. The corporation is to have perpetual existence.
7. Election of directors need not be by written ballot unless the by-laws of
the corporation shall so provide.
8. The corporation reserves the right to amend, alter, change or repeal any
provision contained in this Certificate of Incorporation, in the manner
now or hereafter prescribed by statute, and all rights conferred upon
stockholders herein are granted subject to this reservation.
<PAGE>
9. A director of the corporation shall not be personally liable to the
corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director except for liability (i) for any breach of
the director's duty of loyalty to the corporation or its stockholders,
(ii) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) under Section 174 of the
Delaware General Corporation Law, or (iv) for any transaction from which
the director derived any improper personal benefit.
I, THE UNDERSIGNED, being the sole incorporator hereinbefore named, for
the purpose of forming a corporation pursuant to the General Corporation Law of
the State of Delaware, do make this Certificate, hereby declaring and certifying
that this is my act and deed and the facts herein stated are true, and
accordingly have hereunto set my hand this 29th day of September, 1995.
/s/ Michael D. Schenker
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Michael D. Schenker
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BY-LAWS
PRECISE TECHNOLOGY OF ILLINOIS, INC.
ARTICLE I
OFFICES
Section 1. Registered Office. The registered office of the Corporation
shall be at Corporation Trust Center, 1209 Orange Street, in the City of
Wilmington, County of New Castle, State of Delaware.
Section 2. Additional Offices. The Corporation may also have offices at
such other places, both within and without the State of Delaware, as the Board
of Directors may from time to time determine or as the business of the
Corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. Time and Place. A meeting of stockholders for any purpose may
be held at such time and place, within or without the State of Delaware, as the
Board of Directors may fix from time to time and as shall be stated in the
notice of the meeting or in a duly executed waiver of notice thereof.
Section 2. Annual Meeting. Annual meetings of stockholders shall be held
on September 15, if not a legal holiday, or, if a legal holiday, then on the
next secular day following, at 2 P.M., or at such other date and time as shall,
from time to time, be designated by the Board of Directors and stated in the
notice of the meeting. At such annual meeting, the stockholders shall elect a
Board of Directors and transact such other business as may properly be brought
before the meeting.
Section 3. Notice of Annual Meeting. Written notice of the annual meeting,
stating the place, date and time thereof, shall be given to each stockholder
entitled to vote at such meeting not less than 10 (unless a longer period is
required by law) nor more than 60 days prior to the meeting.
Section 4. Special Meetings. Special meetings of the stockholders, for any
purpose or purposes, unless otherwise prescribed by statute or by the
Certificate of Incorporation, may be called by the Chairman of the Board or Vice
Chairman of the Board, if any, and shall be called by the President or Secretary
at the request in writing of a majority of the Board of Directors, or at the
request in writing of the stockholders owning a majority of the shares of
capital stock of the Corporation
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issued and outstanding and entitled to vote. Such request shall state the
purpose or purposes of the proposed meeting.
Section 5. Notice of Special Meeting. Written notice of a special meeting,
stating the place, date and time thereof and the purpose or purposes for which
the meeting is called, shall be given to each stockholder entitled to vote at
such meeting not less than 10 (unless a longer period is required by law) nor
more than 60 days prior to the meeting.
Section 6. List of Stockholders. The officer in charge of the stock ledger
of the Corporation or the transfer agent shall prepare and make, at least 10
days before every meeting of stockholders, a complete list of the stockholders
entitled to vote at the meeting, arranged in alphabetical order, and showing the
address of each stockholder and the number of shares registered in the name of
each stockholder. Such list shall be open to the examination of any stockholder,
for any purpose germane to the meeting, during ordinary business hours, for a
period of at least 10 days prior to the meeting, at a place within the city
where the meeting is to be held, which place, if other than the place of the
meeting, shall be specified in the notice of the meeting. The list shall also be
produced and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any stockholder who is present in person
thereat.
Section 7. Presiding Officer; Order of Business.
(a) Meetings of stockholders shall be presided over by the Chairman of the
Board, if any, or, if he is not present (or, if there is none), by the Vice
Chairman of the Board, if any, or, if he is not present, by the President, or,
if he is not present, by such person who may have been chosen by the Board of
Directors, or, if none of such persons is present, by a chairman to be chosen by
the stockholders owning a majority of the shares of capital stock of the
Corporation issued and outstanding and entitled to vote at the meeting and who
are present in person or represented by proxy. The Secretary of the Corporation,
or, if he is not present, an Assistant Secretary, or if he is not present, such
person as may be chosen by the Board of Directors, shall act as secretary of
meetings of stockholders, or, if none of such persons is present, the
stockholders owning a majority of the shares of capital stock of the Corporation
issued and outstanding and entitled to vote at the meeting and who are present
in person or represented by proxy shall choose any person present to act as
secretary of the meeting.
(b) The following order of business, unless otherwise ordered at the
meeting, shall be observed as far as practicable and consistent with the
purposes of the meeting:
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1. Call of the meeting to order.
2. Presentation of proof of mailing of the notice of the meeting and,
if the meeting is a special meeting, the call thereof.
3. Presentation of proxies.
4. Announcement that a quorum is present.
5. Reading and approval of the minutes of the previous meeting.
6. Reports, if any, of officers.
7. Election of directors, if the meeting is an annual meeting or a
meeting called for that purpose.
8. Consideration of the specific purpose or purposes for which the
meeting has been called (other than the election of directors), if
the meeting is a special meeting.
9. Transaction of such other business as may properly come before the
meeting.
10. Adjournment.
Section 8. Quorum; Adjournments. The holders of a majority of the shares
of capital stock of the Corporation issued and outstanding and entitled to vote
thereat, present in person or represented by proxy, shall be necessary to, and
shall constitute a quorum for, the transaction of business at all meetings of
the stockholders, except as otherwise provided by statute or by the Certificate
of Incorporation. If, however, a quorum shall not be present or represented at
any meeting of the stockholders, the stockholders entitled to vote thereat,
present in person or represented by proxy, shall have the power to adjourn the
meeting from time to time, without notice of the adjourned meeting if the time
and place thereof are announced at the meeting at which the adjournment is
taken, until a quorum shall be present or represented. Even if a quorum shall be
present or represented at any meeting of the stockholders, the stockholders
entitled to vote thereat, present in person or represented by proxy, shall have
the power to adjourn the meeting from time to time for good cause, without
notice of the adjourned meeting if the time and place thereof are announced at
the meeting at which the adjournment is taken, until a date which is not more
than 30 days after the date of the original meeting. At any such adjourned
meeting, at which a quorum shall be present in person or represented by proxy,
any business may be transacted which might have been transacted at the meeting
as originally called. If the adjournment is for more than 30 days, or if after
the adjournment a new record
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date is fixed for the adjourned meeting, a notice of the adjourned meeting shall
be given to each stockholder of record entitled to vote thereat.
Section 9. Voting.
(a) At any meeting of stockholders, every stockholder having the right to
vote shall be entitled to vote in person or by proxy. Except as otherwise
provided by law or the Certificate of Incorporation, each stockholder of record
shall be entitled to one vote for each share of capital stock registered in his
name on the books of the Corporation.
(b) All elections shall be determined by a plurality vote, and, except as
otherwise provided by law or the Certificate of Incorporation, all other matters
shall be determined by a vote of a majority of the shares present in person or
represented by proxy and voting on such other matters.
Section 10. Action by Consent. Any action required or permitted by law or
the Certificate of Incorporation to be taken at any meeting of stockholders may
be taken without a meeting, without prior notice and without a vote, if a
written consent, setting forth the action so taken, shall be signed by the
holders of outstanding stock having not less than the minimum number of votes
that would be necessary to authorize or take such action at a meeting at which
all shares entitled to vote thereon were present or represented by proxy and
voted. Such written consent shall be filed with the minutes of meetings of
stockholders. Prompt notice of the taking of the corporate action without a
meeting by less than unanimous written consent shall be given to those
stockholders who have not so consented in writing thereto.
ARTICLE III
DIRECTORS
Section 1. General Powers; Number; Tenure. The business of the Corporation
shall be managed by its Board of Directors, which may exercise all powers of the
Corporation and perform all lawful acts and things which are not by law, the
Certificate of Incorporation or these Bylaws directed or required to be
exercised or performed by the stockholders. Within the limits specified in this
Section 1, the number of directors shall be no fewer than three nor more than
five, which specific number shall be determined by the Board of Directors,
except that if no such determination is made, the number of directors shall be
three. Except as otherwise provided in any valid stockholder agreement or voting
trust agreement by and among the stockholders of the Corporation, the directors
shall be elected at the annual meeting of the stockholders, except as provided
in Section 2 of this Article, and each director elected shall hold office until
his successor is elected and shall qualify.
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Except as otherwise provided in any valid stockholder agreement or voting trust
agreement by and among the stockholders of the Corporation or any other
agreement applicable to or binding upon the stockholders of the Corporation,
directors need not be stockholders.
Section 2. Vacancies. Except as otherwise provided in any valid
stockholder agreement or voting trust agreement by and among the stockholders of
the Corporation or any other agreement applicable to or binding upon the
stockholders of the Corporation, if any vacancies occur in the Board of
Directors, or if any new directorships are created, they may be filled by vote
of a majority of the directors then in office, although less than a quorum, or
by a sole remaining director. Each director so chosen shall hold office until
the next annual meeting of stockholders and until his successor is duly elected
and shall qualify. If there are no directors in office, any officer or
stockholder may call a special meeting of stockholders in accordance with the
provisions of the Certificate of Incorporation or these Bylaws, at which meeting
such vacancies shall be filled.
Section 3. Removal; Resignation.
(a) Except as otherwise provided by law or the Certificate of
Incorporation or in any valid stockholder agreement or voting trust agreement by
and among the stockholders of the Corporation or any other agreement applicable
to or binding upon stockholders of the Corporation, any director, directors or
the entire Board of Directors may be removed, with or without cause, by the
holders of a majority of the shares then entitled to vote at an election of
directors.
(b) Any director may resign at any time by giving written notice to the
Board of Directors, the Chairman of the Board, the Vice Chairman or the Board or
the President or the Secretary of the Corporation. Unless otherwise specified in
such written notice, a resignation shall take effect upon delivery thereof to
the Board of Directors or the designated officer. It shall not be necessary for
a resignation to be accepted before it becomes effective.
Section 4. Place of Meetings. The Board of Directors may hold meetings,
both regular and special, either within or without the State of Delaware.
Section 5. Annual Meeting. The annual meeting of each newly elected Board
of Directors shall be held immediately following the annual meeting of
stockholders, and no notice of such meeting shall be necessary to the newly
elected directors in order legally to constitute the meeting, provided a quorum
shall be present.
Section 6. Regular Meetings. Additional regular meetings of the Board of
Directors may be held without notice, at such time and place as may from time to
time be determined by the Board of Directors.
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Section 7. Special Meetings. Special meetings of the Board of Directors
may be called by the Chairman of the Board, the Vice Chairman of the Board or by
2 or more directors on at least 2 days' notice to each director, if such notice
is delivered personally or sent by telegram, or on at least 3 days' notice if
sent by mail. Special meetings shall be called by the Chairman of the Board,
Vice Chairman of the Board or 2 or more directors in like manner and on like
notice on the written request of one-half or more of the number of directors
then in office. Any such notice need not state the purpose or purposes of such
meeting except as provided in Article XI.
Section 8. Quorum; Adjournments. At all meetings of the Board of
Directors, a majority of the directors then in office shall constitute a quorum
for the transaction of business, and the act of a majority of the directors
present at any meeting at which there is a quorum shall be the act of the Board
of Directors, except as may be otherwise specifically provided by law or the
Certificate of Incorporation. If a quorum is not present at any meeting of the
Board of Directors, the directors present may adjourn the meeting, from time to
time, without notice other than announcement at the meeting, until a quorum
shall be present.
Section 9. Compensation. Directors shall be entitled to such compensation
for their services as directors and to such reimbursement for any reasonable
expenses incurred in attending directors' meetings as may from time to time be
fixed by the Board of Directors. The compensation of directors may be on such
basis as is determined by the Board of Directors. Any director receiving
compensation under these provisions shall not be barred from serving the
Corporation in any other capacity and receiving compensation and reimbursement
for reasonable expenses for such other services.
Section 10. Action by Consent. Any action required or permitted to be
taken at any meeting of the Board of Directors may be taken without a meeting if
a written consent to such action is signed by all members of the Board of
Directors and such written consent is filed with the minutes of its proceedings.
Section 11. Meetings by Telephone or Similar Communications. The Board of
Directors may participate in a meeting by means of conference telephone or
similar communications equipment by means of which all directors participating
in the meeting can hear each other, and participation in such meeting shall
constitute presence in person by such director at such meeting.
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ARTICLE IV
COMMITTEES
Section 1. Executive Committee. The Board of Directors, by resolution
adopted by a majority of the whole Board, may appoint an Executive Committee
consisting of not more than three directors, one of whom shall be designated as
Chairman of the Executive Committee. Each member of the Executive Committee
shall continue as a member thereof until the expiration of his term as a
director, or his earlier resignation, unless sooner removed as a member or as a
director.
Section 2. Powers. Unless circumscribed by resolution of the Board
appointing the Executive Committee or except as otherwise provided by law, the
Executive Committee shall have and may exercise all of the powers and authority
of the Board of Directors in the management of the business and affairs of the
Corporation including, without limitation, the power and authority to declare a
dividend in cash, property or its own shares and to authorize the issuance of
any shares of capital stock of the Corporation of any class now or hereafter
authorized, and any options or warrants for, and right to subscribe to, such
shares, and any securities convertible into or exchangeable for such shares; and
may authorize the seal of the Corporation to be affixed to all papers which may
require it.
Section 3. Procedure; Meetings. The Executive Committee shall fix its own
rules of procedure and shall meet at such times and at such place or places as
may be provided by such rules or as the members of the Executive Committee shall
provide. The Executive Committee shall keep regular minutes of its meetings and
deliver such minutes to the Board of Directors.
The Chairman of the Executive Committee, or, in his absence, a member of
the Executive Committee chosen by a majority of the members present, shall
preside at meetings of the Executive Committee, and another member thereof
chosen by the Executive Committee shall act as Secretary of the Executive
Committee.
Section 4. Quorum. A majority of the Executive Committee shall constitute
a quorum for the transaction of business, and the affirmative vote of a majority
of the members of the Executive Committee; provided, however, that when an
Executive Committee of one member is authorized under the provisions of Section
1 of this Article, such one member shall constitute a quorum.
Section 5. Other Committees. The Board of Directors, by resolutions
adopted by a majority of the whole Board, may appoint such other committee or
committees as it shall deem advisable and with such functions and duties as the
Board of Directors shall prescribe.
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Section 6. Vacancies; Changes; Discharge. The Board of Directors shall
have the power at any time to fill vacancies in, to change the membership of,
and to discharge any committee.
Section 7. Compensation. Members of any committee shall be entitled to
such compensation for their services as members of any such committee and to
such reimbursement for any reasonable expenses incurred in attending committee
meetings as may from time to time be fixed by the Board of Directors. Any member
may waive compensation for any meeting. Any committee member receiving
compensation under these provisions shall not be barred from serving the
Corporation in any other capacity and from receiving compensation and
reimbursement of reasonable expenses for such other services.
Section 8. Action by Consent. Any action required or permitted to be taken
at any meeting of any committee of the Board of Directors may be taken without a
meeting if a written consent to such action is signed by all members of the
committee and such written consent if filed with the minutes of its proceedings.
Section 9. Meetings by Telephone or Similar Communications. The members of
any committee designated by the Board of Directors may participate in a meeting
of such committee by means of a conference telephone or similar communications
equipment by means of which all persons participating in such meeting can hear
each other and participation in such meeting shall constitute presence in person
at such meeting.
ARTICLE V
NOTICES
Section 1. Form; Delivery. Whenever, under the provisions of law, the
Certificate of Incorporation or these Bylaws, notice is required to be given to
any director or stockholder, it shall not be construed to mean personal notice
unless otherwise specifically provided, but such notice may be given in writing,
by mail, addressed to such director or stockholder, at his address as it appears
on the records of the Corporation, with postage thereon prepaid. Such notices
shall be deemed to be given at the time they are deposited in the United States
mail. Notice to a director may also be given personally or by telegram sent to
his address as it appears on the records of the Corporation.
Section 2. Waiver. Whenever any notice is required to be given under the
provisions of law, the Certificate of Incorporation or these Bylaws, a written
waiver thereof, signed by the person or person entitled to said notice, whether
before or after the time stated therein, shall be deemed to be equivalent to
such notice. In addition,
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any stockholder who attends a meeting of stockholders in person, or is
represented at such meeting by proxy, without protesting at the commencement of
the meeting the lack of notice thereof to him, or any director who attends a
meeting of the Board of Directors without protesting, at the commencement of the
meeting, such lack of notice, shall be conclusively deemed to have waived notice
of such meeting.
ARTICLE VI
OFFICERS
Section 1. Designations. The officers of the Corporation shall be chosen
by the Board of Directors. The Board of Directors may choose a Chairman of the
Board, a Vice Chairman of the Board, a President, a Vice President or Vice
Presidents, a Secretary and a Treasurer, one or more Assistant Secretaries
and/or Assistant Treasurers and other officers and agents as it shall deem
necessary or appropriate. All officers of the Corporation shall exercise such
powers and perform such duties as shall from time to time be determined by the
Board of Directors. Any number of offices may be held by the same person, unless
the Certificate of Incorporation or these Bylaws otherwise provide.
Section 2. Term of Office; Removal. The Board of Directors at its annual
meeting after each annual meeting of stockholders shall choose a President, a
Secretary and a Treasurer. The Board of Directors may also choose a Chairman of
the Board, a Vice Chairman of the Board, a Vice President or Vice Presidents,
one or more Assistant Secretaries and/or Assistant Treasurers, and such other
officers and agents as it shall deem necessary or appropriate. Each officer of
the Corporation shall hold office until his successor is chosen and shall
qualify. Any officer elected or appointed by the Board of Directors may be
removed, with or without cause, at any time by the affirmative vote of a
majority of the directors then in office. Such removal shall not prejudice the
contract rights, if any, of the person so removed. Any vacancy occurring in any
office of the Corporation may be filled for the unexpired portion of the term by
the Board of Directors.
Section 3. Compensation. The salaries of all officers of the Corporation
shall be fixed from time to time by the Board of Directors and no officer shall
be prevented from receiving such salary by reason of the fact that he is also a
director of the Corporation.
Section 4. The Chairman of the Board.
(a) The Chairman of the Board, if any, shall be the chief executive
officer of the Corporation and, subject to the direction of the Board of
Directors, shall have general charge of the business, affairs and property of
the Corporation and general
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supervision over its other officers. In general, he shall perform the duties
incident to the office of Chairman of the Board and chief executive officer and
shall see that all orders and resolutions of the Board of Directors are carried
into effect. In addition to and not in limitation of the foregoing, the Chairman
of the Board shall be empowered to authorize any change of the registered office
or registered agent (or both) of the Corporation in the State of Delaware. He
shall, if present, preside at all meetings of stockholders and of the Board of
Directors.
(b) Unless otherwise prescribed by the Board of Directors, the Chairman of
the Board shall have full power and authority on behalf of the Corporation to
attend, act and vote at any meeting of security holders of other corporations in
which the Corporation may hold securities. At such meeting the Chairman of the
Board shall possess and may exercise any and all rights and powers incident to
the ownership of such securities which the Corporation might have possessed and
exercised if it had been present. The Board of Directors may from time to time
confer like powers upon any other person or persons.
(c) Unless otherwise prescribed by the Board of Directors, the Chairman of
the Board may delegate some or all of his duties to the Vice Chairman of the
Board, if any, or the President.
Section 5. The Vice Chairman of the Board. The Vice Chairman of the Board,
if any, shall, in the absence of the Chairman of the Board or in the event of
his disability, perform the duties and exercise the powers of the Chairman of
the Board and shall generally assist the Chairman of the Board and perform such
other duties and have such other powers as may from time to time be prescribed
by the Board of Directors. Unless otherwise prescribed by the Board of
Directors, the Vice Chairman of the Board may delegate some or all of his duties
to the President.
Section 6. The President. The President of the Corporation shall, subject
to the direction of the Board of Directors, perform such executive, supervisory
and management functions and duties as may be assigned to him from time to time
by the Board of Directors or delegated to him by the Chairman of the Board or
the Vice Chairman of the Board.
Section 7. The Vice Presidents. The Vice President, if any (or in the
event there be more than one, the Vice Presidents in the order designated, or in
the absence of any designation, in the order of their election), shall, in the
absence of the President or in the event of his disability, perform the duties
and exercise the powers of the President and shall generally assist the
President and perform such other duties and have such other powers as may from
time to time be prescribed by the Board of Directors.
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Section 8. The Secretary. The Secretary shall attend all meetings of the
Board of Directors and all meetings of stockholders and record all votes and the
proceedings of the meetings in a book to be kept for that purpose and shall
perform like duties for the Executive Committee or other committees, if
required. He shall give, or cause to be given, notice of all meetings of the
Board of Directors, and shall perform such other duties as may from time to time
be prescribed by the Board of Directors, the Chairman of the Board, the Vice
Chairman of the Board or the President, under whose supervision he shall act. He
shall have custody of the seal of the Corporation, and he, or an Assistant
Secretary, shall have authority to affix the same to any instrument requiring
it, and, when so affixed, the seal may be attested by his signature or by the
signature of such Assistant Secretary. The Board of Directors may give general
authority to any other officer to affix the seal of the Corporation and to
attest the affixing thereof by his signature.
Section 8. The Assistant Secretary. The Assistant Secretary, if any (or in
the event there be more than one, the Assistant Secretaries in the order
designated, or in the absence of any designation, in the order of their
election), shall, in the absence of the Secretary or in the event of his
disability, perform the duties and exercise the powers of the Secretary and
shall perform such other duties and have such other powers as may from time to
time be prescribed by the Board of Directors.
Section 9. The Treasurer. The Treasurer shall have the custody of the
corporate funds and other valuable effects, including securities, and shall keep
full and accurate accounts of receipts and disbursements in books belonging to
the Corporation and shall deposit all moneys and other valuable effects in the
name and to the credit of the Corporation in such depositories as may from time
to time be designated by the Board of Directors. He shall disburse the funds of
the Corporation as may be ordered by the Board of Directors, taking proper
vouchers for such disbursements, and shall render to the Chairman of the Board,
the Vice Chairman of the Board, the President and the Board of Directors, at
regular meetings of the Board, or whenever they may require it, an account of
all his transactions as Treasurer and of the financial condition of the
Corporation.
Section 10. The Assistant Treasurer. The Assistant Treasurer, if any (or
in the event there shall be more than one, the Assistant Treasurers in the order
designated, or in the absence of any designation, in the order of their
election), shall, in the absence of the Treasurer or in the event of his
disability, perform the duties and exercise the powers of the Treasurer and
shall perform such other duties and have such other powers as may from time to
time be prescribed by the Board of Directors.
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ARTICLE VII
INDEMNIFICATION OF
DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS
Reference is made to Section 145 (and any other relevant provisions) of
the General Corporation Law of the State of Delaware. Particular reference is
made to the class of persons (hereinafter called "Indemnitees") who may be
indemnified by a Delaware corporation pursuant to the provisions of such Section
145, namely, any person (or the heirs, executors or administrators of such
person) who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of the fact that such
person is or was a director, officer, employee or agent of such corporation, or
is or was serving at the request of such corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise. The Corporation shall (and is hereby obligated to) indemnify
the Indemnitees, and each of them, in each and every situation where the
Corporation is obligated to make such indemnification pursuant to the aforesaid
statutory provisions. The Corporation shall indemnify the Indemnitees, and each
of them, and shall advance expenses, in each and every situation where, under
the aforesaid statutory provisions, the Corporation is not obligated, but is
nevertheless permitted or empowered, to make such indemnification pursuant to
the aforesaid statutory provisions. With respect to any situation covered under
this Article VII, the Corporation shall promptly make or cause to be made, by
any of the methods referred to in subsection (d) of such Section 145, a
determination as to whether each Indemnitee acted in good faith and in a manner
such Indemnitee reasonably believed to be in or not opposed to the best
interests of the Corporation, and, in the case of any criminal action or
proceeding, had no reasonable cause to believe that such Indemnitee's conduct
was unlawful. No such indemnification shall be made (where not required by
statute) unless it is determined that such Indemnitee acted in good faith and in
a manner such Indemnitee reasonably believed to be in or not opposed to the best
interests of the Corporation, and, in the case of any criminal action or
proceeding, had no reasonable cause to believe that such Indemnitee's conduct
was unlawful.
ARTICLE VIII
AFFILIATED TRANSACTIONS AND INTERESTED DIRECTORS
Section 1. Affiliated Transactions (Directors and Officers). No contract
or transaction between the Corporation and one or more of its directors or
officers, or between the Corporation and any other corporation, partnership,
association or other organization in which one or more of its directors or
officers are directors or officers,
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or have a financial interest, shall be void or voidable solely for this reason,
or solely because the director or officer is present at or participates in the
meeting of the Board of Directors or committee thereof which authorizes the
contract or transaction or solely because his or their votes are counted for
such purpose, if:
(a) The material facts as to his relationship or interest and as to the
contract or transaction are disclosed or are known to the Board of Directors or
the committee, and the Board of Directors or committee in good faith authorizes
the contract or transaction by the affirmative vote of a majority of the
disinterested directors, even though the disinterested directors be less than a
quorum; or
(b) The material facts as to his relationship or interest and as to the
contract or transaction are disclosed or are known to the stockholders entitled
to vote thereon, and the contract or transaction is specifically approved in
good faith by vote of the stockholders; or
(c) The contract or transaction is fair as to the Corporation as of the
time it is authorized, approved or ratified by the Board of Directors, a
committee thereof, or the stockholders.
Section 2. Determining Quorum. Common or interested directors may be
counted in determining the presence of a quorum at a meeting of the Board of
Directors or of a committee thereof which authorizes the contract or
transaction.
Section 3. Affiliated Transactions (Stockholders). No contract or
transaction between the Corporation and one or more of its stockholders, or
between the Corporation and any other corporation, partnership, association or
other organization in which one or more of its stockholders are directors,
officers, stockholders or otherwise affiliated, shall be void or voidable solely
for this reason, or solely because the stockholder and the Corporation have
directors and/or officers in common and such directors or officers are present
at or participate in the meeting of the Board of Directors or committee thereof
which authorizes the contract or transaction between the Corporation and the
stockholder or solely because his or their votes are counted for such purpose.
ARTICLE IX
STOCK CERTIFICATES
Section 1. Form; Signatures.
(a) Every holder of stock in the Corporation shall be entitled to have a
certificate, signed by the Chairman of the Board, the Vice Chairman of the Board
or
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<PAGE>
the President and the Treasurer or an Assistant Treasurer or the Secretary or an
Assistant Secretary of the Corporation exhibiting the number and class (and
series, if any) of shares owned by him, and bearing the seal of the Corporation.
Such signatures and seal may be facsimile. A certificate may be manually signed
by a transfer agent or registrar other than the Corporation or its employee but
may be a facsimile. In case any officer who has signed, or whose facsimile
signature was placed on, a certificate shall have ceased to be such officer
before such certificate is issued, it may nevertheless be issued by the
Corporation with the same effect as if he were such officer at the date of its
issue.
(b) All stock certificates representing shares of capital stock which are
subject to restrictions on transfer or to other restrictions may have imprinted
thereon such notation to such effect as may be determined by the Board of
Directors.
Section 2. Registration of Transfer. Upon surrender to the Corporation or
any transfer agent of the Corporation of a certificate for shares duly endorsed
or accompanied by proper evidence of succession, assignment or authority to
transfer, including, if necessary, any legal opinion required by the Corporation
pursuant to any valid subscription or stockholders' agreement, it shall be the
duty of the Corporation or its transfer agent to issue a new certificate to the
person entitled thereto, to cancel the old certificate and to record the
transaction upon its books.
Section 3. Registered Stockholders.
(a) Except as otherwise provided by law, the Corporation shall be entitled
to recognize the exclusive right of a person who is registered on its books as
the owner of shares of its capital stock to receive dividends or other
distributions, to vote as such owner, and to hold liable for calls and
assessments any person who is registered on its books as the owner of shares of
its capital stock. The Corporation shall not be bound to recognize any equitable
or legal claim to or interest in such shares on the part of any other person.
(b) If a stockholder desires that notices and/or dividends shall be sent
to a name or address other than the name or address appearing on the stock
ledger maintained by the Corporation (or by the transfer agent or registrar, if
any), such stockholder shall have the duty to notify the Corporation (or the
transfer agent or registrar, if any) in writing, of such desire. Such written
notice shall specify the alternate name or address to be used.
Section 4. Record Date. In order that the Corporation may determine the
stockholders of record who are entitled to notice of or to vote at any meeting
of stockholders or any adjournment thereof, or entitled to receive payment of
any dividend or other distribution, or to make a determination of the
stockholders of record for any other proper purpose, the Board of Directors may,
in advance, fix a date as
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<PAGE>
the record date for any such determination. Such date shall not be more than 60
nor less than 10 days before the date of such meeting, nor more than 60 days
prior to the date of any other action. A determination of stockholders of record
entitled to notice of or to vote at a meeting of stockholders shall apply to any
adjournment of the meeting taken pursuant to Section 8 of Article II; provided,
however, that the Board of Directors may fix a new record date for the adjourned
meeting.
Section 5. Lost, Stolen or Destroyed Certificates. The Board of Directors
may direct a new certificate to be issued in place of any certificate
theretofore issued by the Corporation which is claimed to have been lost, stolen
or destroyed, upon the making of an affidavit of the fact by the person claiming
the certificate of stock to be lost, stolen or destroyed. When authorizing such
issue of a new certificate, the Board of Directors may, in its discretion and as
a condition precedent to the issuance thereof, require the owner of such lost,
stolen or destroyed certificate, or his legal representative, to advertise the
same in such manner as it shall require and/or to give the Corporation a bond in
such sum, or other security in such form, as it may direct as indemnity against
any claim that may be against the Corporation with respect to the certificate
claimed to have been lost, stolen or destroyed.
ARTICLE X
GENERAL PROVISIONS
Section 1. Dividends. Subject to the provisions of the Certificate of
Incorporation, dividends upon the outstanding capital stock of the Corporation
may be declared by the Board of Directors at any regular or special meeting,
pursuant to law, and may be paid in cash, in property or in shares of the
Corporation's capital stock.
Section 2. Reserves. The Board of Directors shall have full power, subject
to the provisions of law and the Certificate of Incorporation, to determine
whether any, and, if so, what part, of the funds legally available for the
payment of dividends shall be declared as dividends and paid to the stockholders
of the Corporation. The Board of Directors, in its sole discretion, may fix a
sum which may be set aside or reserved over and above the paid-in capital of the
Corporation for working capital or as a reserve for any proper purpose, and may,
from time to time, increase, diminish or vary such fund or funds.
Section 3. Fiscal Year. The fiscal year of the Corporation shall be as
determined from time to time by the Board of Directors.
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<PAGE>
Section 4. Seal. The corporate seal, if any, shall have inscribed thereon
the name of the Corporation, the year of its incorporation and the words
"Corporate Seal" and "Delaware".
ARTICLE XI
AMENDMENTS
The Board of Directors shall have the power to make, alter and repeal
these Bylaws, and to adopt new bylaws, by an affirmative vote of a majority of
the whole Board, provided that notice of the proposal to make, alter or repeal
these Bylaws, or to adopt new bylaws, must be included in the notice of the
meeting of the Board of Directors at which such action takes place.
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<PAGE>
TREDEGAR MOLDED PRODUCTS COMPANY
ARTICLES OF AMENDMENT
I
The name of the Corporation is Tredegar Molded Products Company (the
"Corporation").
II
Article I of the Corporation's Articles of Incorporation is hereby amended
to read in its entirety as follows:
"The name of the Corporation is Precise TMP, Inc."
III
The foregoing amendment was adopted by written consent of the
Corporation's sole shareholder on April 14, 1996.
Dated: April 4, 1996 TREDEGAR MOLDED PRODUCTS COMPANY
By: /s/ John R. Weeks
-------------------------
John R. Weeks, President
<PAGE>
ETHYL MOLDED PRODUCTS COMPANY
ARTICLES OF AMENDMENT
I
The name of the Corporation is Ethyl Molded Products Company (the
"Corporation").
II
Article I of the Corporation's Articles of incorporation is hereby amended
to read in its entirety as follows:
"The name of the Corporation is Tredegar
Molded Products Company."
III
The foregoing amendment was adopted by written consent of the
Corporation's sole shareholder on June 30, 1989.
Dated: June 30, 1989 ETHYL MOLDED PRODUCTS COMPANY
By: /s/ John D. Gottwald
----------------------
John D. Gottwald
President
<PAGE>
ARTICLES OF SERIAL DESIGNATION
OF
ETHYL MOLDED PRODUCTS COMPANY
FIRST: The name of the corporation is Ethyl Molded Products Company.
SECOND: The following resolution, establishing and designating a series of
shares and fixing and determining the relative rights and preferences thereof,
was duly adopted by the Board of Directors of the Corporation on December 16,
1983:
SERIAL PREFERRED STOCK, SERIES A
RESOLVED, that the Board of Directors hereby establishes a series of the
Serial Preferred Stock of the Corporation to consist of 1,700 shares, and the
Board of Directors hereby fixes and determines the relative rights and
preferences of the shares of such series as follows:
(1) Designation. The designation of the series of Serial Preferred
Stock established by this resolution shall be "$120.00 Cumulative
Preferred Stock, Series A (without par value)" (hereinafter called the
"Series A Stock").
(2) Dividends. The holders of shares of the Series A Stock shall be
entitled to receive, when and as declared by the Board of Directors, a
cumulative dividend in cash at the rate of One Hundred Twenty Dollars per
share per year, payable annually on the
<PAGE>
2.
last business day of December in each year (being hereinafter called a
"dividend period") beginning on the last business day of December, 1984.
Dividends on shares of the Series A Stock shall be cumulative commencing
with the first day of the first dividend period for which a dividend is
payable in accordance with the first sentence of this subdivision (whether
or not there shall be net profits or net assets of the Corporation legally
available for the payment of such dividends). All dividends declared upon
the shares of the Series A Stock shall be declared pro rata. Holders of
shares of the Series A Stock shall not be entitled to any dividends,
whether payable in cash, property or stock, in excess of the dividends
provided for herein.
(3) Redemption. The shares of the Series A Stock shall be subject to
redemption as follows:
Optional Redemption Right. At any time after the tenth
anniversary of the initial issuance of the Series A Stock, the
Corporation may call for redemption all or any part of the
outstanding Series A Stock at a price of $1,000 a share.
Redemption Procedure. Notice of redemption of shares of the
Series A Stock shall be given by a notice mailed by first class mail
not less than 30 nor more than 60 days prior to the date fixed for
redemption to the registered holders of the Series A Stock at their
addresses as shown on the
<PAGE>
3.
books of the Corporation. On or at any time before the redemption
date specified in any notice of redemption (the "Redemption Date")
the Corporation may deposit in trust, for the account of the holders
of the shares redeemed, funds necessary for such redemption with a
bank or trust company in Richmond, Virginia or New York, New York,
having capital and surplus aggregating at least $50,000,000. Upon
the mailing as hereinabove provided of the notice of such
redemption, provided such notice specifies the office of such bank
or trust company where such deposit in trust has been made (or the
date on which it will be made) and states that deposit is (or shall
be) immediately available to the holders of the shares to be
redeemed, and upon the making of such deposit in trust together with
irrevocable instructions and authority to pay the amounts due upon
redemption, then all shares with respect to the redemption of which
such deposit and instructions shall have been made and such notice
therefor given shall, whether or not the certificates therefor shall
have been surrendered for cancellation, be deemed no longer to be
outstanding for any purpose, and all rights with respect to such
shares shall thereupon cease and terminate, except only the right of
the holders of the certificates for such shares to receive, out
<PAGE>
4.
of the funds so deposited in trust, from and after the date of such
deposit, the amount payable upon the redemption thereof (including
all accumulated dividends), without interest.
Payment of Dividends at Redemption. Before redeeming any
shares of the Series A Stock, all accumulated dividends on the
Series A Stock, including the dividend payable on the Redemption
Date, shall be declared and paid on the Redemption Date.
(4) Rights on Liquidation, Dissolution, Winding Up. In the event of any
involuntary or voluntary liquidation, dissolution or winding up of the
Corporation, the holders of the Series A Stock then outstanding shall be
entitled to be paid out of assets of the Corporation available for distribution
to its stockholders an amount equal to $1,000 per share, plus an amount equal to
accumulated and unpaid dividends to and including the date on which such payment
is made, but the holders of Series A Stock shall be entitled to no further
participation in such distribution.
(5) Voting. The holders of the Series A Stock shall have no voting rights
except in the event that at any time or from time to time, while any shares of
the Series A Stock are outstanding, six or more annual dividends, whether
consecutive or not, on any shares of the Series A Stock shall be in arrears and
unpaid, whether
<PAGE>
5.
or not declared, then the holders of all of the outstanding shares of the Series
A Stock together with the holders of any other series of Serial Preferred Stock
then entitled to such a vote under the terms of the Articles of Incorporation of
the Corporation, voting as a single class, shall be entitled to elect two
members of the Board of Directors of the Corporation. Immediately after the
occurrence of such event, the number of directors of the Corporation shall be
increased by two and (unless a regular meeting of stockholders of the
Corporation is to be held within 60 days for the purpose of electing directors)
the Corporation shall give prompt notice to the holders of all of the
outstanding shares of the Serial Preferred Stock then so entitled to such a vote
of a special meeting of such holders to take place within 60 days after the
occurrence of such event. If such meeting shall not have been called as so
provided, such meeting may be called at the expense of the Corporation by the
holders of not less than five percent of such Serial Preferred Stock at the time
outstanding, on written notice specifying the time and place of the meeting
given by mail not less than ten days or more than 30 days before the date of
such meeting specified in such notice. At such meeting the holders of all of
such Serial Preferred Stock at the time outstanding, voting as a single class,
shall have
<PAGE>
6.
the right to elect the two additional members of the Board of Directors of the
Corporation.
If a regular meeting of the stockholders of the Corporation for the
purpose of electing directors is to be held within 60 days after the occurrence
of such event, then at such meeting, and, in any event, at each subsequent
meeting of the stockholders of the Corporation called for the purpose of
electing directors, the holders of such Serial Preferred Stock at the time
outstanding, voting as a single class, shall have the right to elect two members
of the Board of Directors on the same conditions as stated above.
At any special or regular meeting provided for in the next two preceding
paragraphs, each outstanding share of such Serial Preferred Stock shall be
entitled to one vote for the election of the directors provided for herein; the
holders of a majority of the shares of such Serial Preferred Stock at the time
outstanding shall constitute a quorum; and a plurality vote of such quorum shall
govern.
The directors elected by the holders of such Serial Preferred Stock shall
hold office until their successors shall be elected. The right of holders of the
Serial Preferred Stock to elect such two additional directors shall continue
until such time as all accumulated dividends on such shares have been paid in
full. The right shall be terminated for the time being and
<PAGE>
7.
the terms of the directors so elected shall automatically expire at such time as
all dividends on all outstanding shares of such Serial Preferred Stock in
arrears shall have been paid in full.
(6) Retirement of Redeemed Shares, etc. Shares of the Series A Stock which
have been acquired by the Corporation shall not be reissued as Series A Stock
but shall be retired and canceled in the manner provided by law and shall become
authorized as Serial Preferred Stock undesignated as to Series. Shares of Series
A Stock which are held by the Corporation shall not be deemed outstanding for
any purpose.
Dated: December 16, 1983
ETHYL MOLDED PRODUCTS COMPANY
By: /s/ F.D. Gottwald, Jr.
------------------------
F.D. Gottwald, Jr.,
Chairman of the Board
And by: /s/ E.W. Elmore
------------------------
E.W. Elmore, Secretary
<PAGE>
ARTICLES OF INCORPORATION
OF
ETHYL MOLDED PRODUCTS COMPANY
---------------
ARTICLE I
The name of the Corporation is Ethyl Molded Products Company.
ARTICLE II
The purpose for which the Corporation is organized is to engage in and
conduct any or all lawful business, not required to be specifically stated in
these Articles.
ARTICLE III
The Corporation shall have authority to issue 2,000 shares of Common
Stock, par value $1.00 per share, and 2,500 shares of Serial Preferred Stock,
without par value.
A. Serial Preferred Stock
1. Issuance in Series. The Board of Directors is hereby empowered to cause
the Serial Preferred Stock of the Corporation to be issued in series with such
of the variations permitted by clauses (a)-(h), both inclusive, of this section
1 as shall have been fixed and determined by the Board of Directors with respect
to any series prior to the issue of any shares of such series.
<PAGE>
2.
The shares of the Serial Preferred Stock of different series may vary as
to:
(a) the number of shares constituting such series and the designation of
such series, which shall be such as to distinguish the shares thereof from the
shares of all other series and classes;
(b) the rate of dividend, the time of payment and, if cumulative, the
dates from which dividends shall be cumulative, and the extent of participation
rights, if any;
(c) any right to vote with holders of shares of any other series or class
and any right to vote as a class, either generally or as a condition to
specified corporate act;
(d) the price at and the terms and conditions on which shares may be
redeemed;
(e) the amount payable upon shares in event of involuntary liquidation;
(f) the amount payable upon shares in event of voluntary liquidation;
(g) any sinking fund provisions for the redemption or purchase of shares;
and
(h) the terms and conditions on which shares may be converted, if the
shares of any series are issued with the privilege of conversion.
The shares of all series of Serial Preferred Stock shall be identical
except as, within the limitations set forth above in this section 1, shall have
been fixed and determined by the Board of Directors prior to the issuance
thereof.
<PAGE>
3.
2. Dividends. The holders of the Serial Preferred stock of each series
shall be entitled to receive, if and when declared payable by the Board of
Directors, dividends in lawful money of the United States of America, at the
dividend rate for such series, and not exceeding such rate except to the extent
of any participation right. Such dividends shall be payable on such dates as
shall be fixed for such series. Dividends, if cumulative and in arrears, shall
not bear interest.
No dividends shall be declared or paid upon or set apart for the Common
Stock or for stock of any other class hereafter created ranking junior to the
Serial Preferred Stock in respect of dividends or assets (hereinafter called
Junior Stock), and no shares of Serial Preferred Stock, Common Stock or Junior
Stock shall be purchased, redeemed or otherwise reacquired for a consideration,
nor shall any funds be set aside for or paid to any sinking funds therefor,
unless and until (i) full dividends on the outstanding Serial Preferred Stock at
the dividend rate or rates therefor, together with the full additional amount
required by any participation right, shall have been paid or declared and set
apart for payment with respect to all past dividend periods, to the extent that
the holders of the Serial Preferred Stock are entitled to dividends with respect
to any past dividend period, and the current dividend period, and (ii) all
mandatory sinking fund payments that shall have become due in respect of any
series of the Serial Preferred Stock shall have been made. Unless full dividends
with respect to all past dividend periods on the outstanding Serial Preferred
Stock at
<PAGE>
4.
the dividend rate or rates therefor, to the extent that holders of the Serial
Preferred Stock are entitled to dividends with respect to any particular past
dividend period, together with the full additional amount required by any
participation right, shall have been paid or declared and set apart for payment
and all mandatory sinking fund payments that shall have become due in respect of
any series of the Serial Preferred Stock shall have been made, no distributions
shall be made to the holders of the Serial Preferred Stock of any series unless
distributions are made to the holders of the Serial Preferred Stock of all
series then outstanding in proportion to the aggregate amounts of the
deficiencies in payments due to the respective series, and all payments shall be
applied, first, to dividends accrued and in arrears, next, to any amount
required by any participation right, and, finally, to mandatory sinking fund
payments. The terms "current dividend period" and "past dividend period" mean,
if two or more series of Serial Preferred Stock having different dividend
periods are at the time outstanding, the current dividend period or any past
dividend period, as the case may be, with respect to each such series.
3. Preference on Liquidation. In the event of any liquidation,
dissolution or winding up of the Corporation, the holders of the Serial
Preferred Stock of each series shall be entitled to receive, for each share
thereof, the fixed liquidation price for such series, plus, in case such
liquidation, dissolution or winding up shall have been voluntary, the fixed
liquidation premium for such series, if any, together in all
<PAGE>
5.
cases with a sum equal to all dividends accrued or in arrears thereon and the
full additional amount required by any participation right, before any
distribution of the assets shall be made to holders of the Common Stock or
Junior Stock; but the holders of the Serial Preferred Stock shall be entitled to
no further participation in such distribution. If, upon any such liquidation,
dissolution or winding up, the assets distributable among the holders of the
Serial Preferred Stock shall be insufficient to permit the payment of the full
preferential amounts aforesaid, then such assets shall be distributed among the
holders of the Serial Preferred Stock then outstanding ratably in proportion to
the full preferential amounts to which they are respectively entitled. For the
purposes of this section 3, the expression "dividends accrued or in arrears"
means, in respect of each share of the Serial Preferred Stock of any series at a
particular time, an amount equal to the product of the rate of dividend per
annum applicable to the shares of such series multiplied by the number of years
and any fractional part of a year that shall have elapsed from the date when
dividends on such shares became cumulative to the particular time in question
less the total amount of dividends actually paid on the shares of such series or
declared and set apart for payment thereon; provided, however, that, if the
dividends on such shares shall not be fully cumulative, such expression shall
mean the dividends, if any, cumulative in respect of such shares for the period
stated in the articles of serial designation
<PAGE>
6.
creating such shares less all dividends paid in or with respect to such period.
B. Common Stock
1. Subject to the provisions of law and the rights of holders of shares at
the time outstanding of all classes of stock having prior rights as to
dividends, the holders of Common Stock at the time outstanding shall be entitled
to receive such dividends at such times and in such amounts as the Board of
Directors may deem advisable.
2. In the event of any liquidation, dissolution or winding up (whether
voluntary or involuntary) of the Corporation, after the payment or provision for
payment in full of all debts and other liabilities of the Corporation and all
preferential amounts to which the holders of shares at the time outstanding of
all classes of stock having prior rights thereto shall be entitled, the
remaining net assets of the Corporation shall be distributed ratably among the
holders of the shares at the time outstanding of Common Stock.
3. The holders of Common Stock shall be entitled to one vote per share on
all matters.
C. Preemptive Rights
No holder of Serial Preferred Stock shall as such holder have any
preemptive or preferential right to purchase or subscribe to (a) any shares of
any class of stock of the Corporation, whether now or hereafter authorized, or
(b) any warrants,
<PAGE>
7.
rights or options to purchase any such stock, or (c) any securities or
obligations convertible into any such stock or into any warrants, rights or
options to purchase any such stock.
The holders of Common Stock shall have no preemptive rights to purchase or
subscribe to any shares of Serial Preferred Stock or to any shares of any class
of stock of the Corporation that may be issued on conversion of any shares of
Serial Preferred Stock.
ARTICLE IV
The initial registered office shall be located at P. O. Box 2189, 330
South Fourth Street in the City of Richmond, Virginia, and the initial
registered agent shall be E. Whitehead Elmore, who is a resident of Virginia and
a member of the Virginia State Bar, and whose business address is the same as
the address of the initial registered office.
ARTICLE V
The number of Directors constituting the initial Board of Directors shall
be three and the names and addresses of the persons who are to serve as the
initial directors are as follows:
Name Residence Address
---- -----------------
L.E. Blanchard, Jr. 4101 Sulgrave Road
Richmond, Virginia 23221
B.C. Gottwald 4203 Sulgrave Road
Richmond, Virginia 23221
F.D. Gottwald, Jr. 300 Herndon Road
Richmond, Virginia 23229
<PAGE>
8.
ARTICLE VI
1. The Corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative, arbitrative or
investigative (including an action or suit by or in the right of the Corporation
to procure a judgment in its favor) by reason of the fact that he is or was a
director or officer of the Corporation, or is or was serving at the request of
the Corporation as a director or officer of another corporation, partnership,
joint venture, trust or other entity against judgments, fines, amounts paid in
settlement, and expenses (including attorneys' fees) actually and reasonably
incurred by him in connection with such action, suit or proceeding if the person
acted in good faith or in a manner he reasonably believed to be in or not
opposed to the best interests of the Corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful. No termination of any action, suit or proceeding by judgment,
order, settlement, conviction, or upon a plea of nolo contendere or its
equivalent, shall of itself create a presumption that the person did not act in
good faith or did not act in a manner he reasonably believed to be in or not
opposed to the best interests of the Corporation, and, with respect to any
criminal action or proceeding, no such termination shall create a presumption
that the person had reasonable cause to believe that his conduct was unlawful.
<PAGE>
9.
2. In addition, the Corporation shall indemnify any person referred to in
section 1 of this Article who was or is a party or is threatened to be made a
party to any action, suit or proceeding referred to in section 1 of this Article
against all judgments, fines, amounts paid in settlement and expenses (including
attorneys' fees) actually and reasonably incurred by him in connection with any
such action, suit or proceeding where indemnification is not authorized by the
provisions of section 1 of this Article so long as (a) such person shall not
have been finally adjudged to be liable for gross negligence or willful
misconduct in the performance of his duty to the Corporation, or (b) in the case
of such adjudication the court in which such action or suit was brought shall
determine upon application that, despite the adjudication of liability but in
view of all circumstances of the case, such person if fairly and reasonably
entitled to indemnification.
3. Any indemnification under section 1 or 2 of this Article (unless
ordered by a court) shall be made by the Corporation only as authorized in the
specific case upon a determination that indemnification of any such person is
proper in the circumstances because he has met the applicable standard of
conduct set forth in such section 1 or 2. Such determination shall be made (a)
by the Corporation's Board of Directors by a majority vote of a quorum
consisting of Directors who were not parties to such action, suit or proceeding;
or (b) if such a quorum is not obtainable, or even if obtainable, a majority of
disinterested Directors so directs, by independent legal counsel
<PAGE>
10.
in a written opinion; or (c) by the shareholders. If the determination is to be
made by the Directors, they may rely, as to all questions of law, on the advice
of independent counsel.
4. Expenses (including attorneys' fees) incurred in defending an action,
suit or proceeding, whether civil, criminal, administrative, arbitrative or
investigative, may be paid by the Corporation in advance of the final
disposition of such action, suit or proceeding as authorized in the manner
provided in section 3 of this Article, upon receipt of an undertaking by or on
behalf of such person to repay such amount unless it shall ultimately be
determined that he is entitled to be indemnified by the Corporation as
authorized in this Article.
5. The Board of Directors is hereby empowered, by majority vote of a
quorum of disinterested Directors, to cause the Corporation to indemnify or
contract in advance to indemnify any person not specified in sections 1 and 2 of
this Article who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative, arbitrative or investigative, by reason of the fact
that he is or was an employee, agent or consultant of the Corporation, or is or
was serving at the request of the Corporation as an employee, agent or
consultant of another corporation, partnership, joint venture, trust or other
entity, to the same extent as if such person were specified as one to whom
indemnification is granted in section 1 or 2 of this Article. The provisions of
sections 3 and 4 of
<PAGE>
11.
this Article shall be applicable to any indemnification provided hereafter
pursuant to this section 5.
6. The Corporation may purchase and maintain insurance to indemnify it
against the whole or any portion of the liability assumed by it in accordance
with this Article and may also procure insurance, in such amounts as the Board
of Directors may determine, on behalf of any person who is or was a director,
officer, employee, agent or consultant of the Corporation, or is or was serving
at the request of the Corporation as a director, officer, employee, agent or
consultant of another corporation, partnership, joint venture, trust or other
entity, against any liability asserted against him and incurred by him in any
such capacity or arising out of his status as such, whether or not the
Corporation would have the power to indemnify him against such liability under
the provisions of this Article.
7. Every reference herein to director, officer, employee, agent or
consultant shall include former directors, officers, employees, agents and
consultants and their respective heirs, executors and administrators. The
indemnification hereby provided (and provided hereafter pursuant to the power
hereby conferred on the Board of Directors) shall not be exclusive of any other
rights to which any person may be entitled, including any right under policies
of insurance that may be purchased and maintained by the Corporation or others,
with respect to claims, issues or matters in relation to which the
<PAGE>
12.
Corporation would not have the power to indemnify such person under the
provisions of this Article.
Dated: December 8, 1983
/s/ Sandra L. Kramer
--------------------------------
Sandra L. Kramer, Incorporator
<PAGE>
TREDEGAR MOLDED PRODUCTS COMPANY
AMENDED AND RESTATED BY-LAWS
ARTICLE I
Meetings of Shareholders
1.1 Places of Meetings. All meetings of the shareholders shall be held at
such place, either within or without the Commonwealth of Virginia, as may, from
time to time, be fixed by the Board of Directors.
1.2 Annual Meetings. The annual meeting of the shareholders, for the
election of Directors and transaction of such other business as may come before
the meeting, shall be held in each year on or before April 30, or on such other
date as the Board of Directors of the Corporation may designate from time to
time.
1.3 Special Meetings. Special meetings of shareholders for any purpose or
purposes may be called at any time by the President of the Corporation, by a
majority of the Board of Directors or by a vote of the shareholders together
holding at least a majority of the authorizing shares of voting capital stock.
At a special meeting no business shall be transacted and no corporate action
shall be taken other than that stated in the notice of the meeting.
1.4 Notice of Meetings. Except as otherwise required by law, written or
printed notice stating the place, day and hour of
<PAGE>
every meeting of the shareholders and, in case of a special meeting, the purpose
or purposes for which the meeting is called, shall be mailed not less than ten
nor more than sixty days before the date of the meeting to each shareholder of
record entitled to vote at such meeting at his address that appears in the share
transfer books of the Corporation. Meetings may be held without notice if all
the shareholders entitled to vote at the meeting are present in person or by
proxy or if notice is waived in writing by those not present, either before or
after the meeting.
1.5 Quorum. Except as otherwise required by the Articles of Incorporation,
any number of shareholders together holding at least a majority of the
outstanding shares of capital stock entitled to vote with respect to the
business to be transacted, who shall be present in person or represented by
proxy at any meeting duly called, shall constitute a quorum for the transaction
of business. If less than a quorum shall be in attendance at the time for which
a meeting shall have been called, the meeting may be adjourned from time to time
by a majority of the shareholders present or represented by proxy without notice
other than by announcement at the meeting.
1.6 Voting. At any meeting of the shareholders, each shareholder of a
class entitled to vote on the matters coming before the meeting shall have one
vote, in person or by proxy, for each share of capital stock standing in his or
her name on
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the books of the Corporation at the time of such meeting or on any date fixed by
the Board of Directors not more than seventy days prior to the meeting. Every
proxy shall be in writing, dated and signed by the shareholder entitled to vote
or his duly authorized attorney-in-fact.
1.7 Action Without Meeting. Any action required or permitted to be taken
at a shareholders' meeting may be taken without a meeting and without action by
the Board of Directors if the action is taken by all of the shareholders
entitled to vote on the action. The action shall be evidenced by one or more
written consents describing the action taken, signed by all of the shareholders
entitled to vote on the action, and delivered to the secretary of the
Corporation for inclusion in the minutes for filing with the corporate records.
ARTICLE II
Directors
2.1 General Powers. The property, affairs and business of the Corporation
shall be managed under the direction of the Board of Directors, and except as
otherwise expressly provided by law, the Articles of Incorporation or these
By-laws, all of the powers of the Corporation shall be vested in such Board.
2.2 Number of Directors. The number of Directors shall be three (3) in
number.
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2.3 Election of Directors.
(a) Directors shall be elected at the annual meeting of shareholders to
succeed those Directors whose terms have expired and to fill any vacancies thus
existing.
(b) Directors shall hold their offices for terms of one year and until
their successors are elected. Any Director may be removed from office at a
meeting called expressly for that purpose by the vote of shareholders holding
not less than a majority of the shares entitled to vote at an election of
Directors.
(c) Any vacancy occurring in the Board of Directors may be filled by the
affirmative vote of the majority of the remaining Directors though less than a
quorum of the Board of Directors.
(d) A majority of the number of Directors fixed by these By-laws shall
constitute a quorum for the transaction of business. The act of a majority of
the Directors present at a meeting at which a quorum is present shall be the act
of the Board of Directors.
2.4 Meetings of Directors. Meetings of the Board of Directors shall be
held at places within or without the Commonwealth of Virginia and at times fixed
by resolution of the
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<PAGE>
Board, or upon call of the President, and the Secretary or officer performing
the Secretary's duties shall give not less than twenty-four hours' notice by
letter, telegraph or telephone (or in person) of all meetings of the Directors,
provided that notice need not be given of regular meetings held at times and
places fixed by resolution of the Board. An annual meeting of the Board of
Directors shall be held as soon as practicable after the adjournment of the
annual meeting of shareholders. Meetings may be held at any time without notice
if all of the Directors are present, or if those not present waive notice in
writing either before or after the meeting. Directors may be allowed, by
resolution of the Board, a reasonable fee and expenses for attendance at
meetings.
2.5 Action Without Meeting. Any action required or permitted to be taken
at a Board of Directors meeting may be taken without a meeting if the action is
taken by all of the members of the Board of Directors. The action shall be
evidenced by one or more written consents stating the action taken, signed by
each Director either before or after the action taken, and included in the
minutes or filed with the corporate records reflecting the action taken. Any
such consent has the effect of a meeting vote and may be described as such in
any document of the Corporation.
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ARTICLE III
Committees
3.1 Committees. The Board of Directors, by resolution duly adopted, may
establish such committees of the Board having limited authority in the
management of the affairs of the Corporation as it may deem advisable and the
members, terms and authority of such committees shall be as set forth in the
resolutions establishing the same.
3.2 Meetings. Regular and special meetings of any Committee established
pursuant to this Article may be called and held subject to the same requirements
with respect to time, place and notice as are specified in these By-laws for
regular and special meetings of the Board of Directors.
3.3 Quorum and Manner of Acting. A majority of the members of any
Committee serving at the time of any meeting thereof shall constitute a quorum
for the transaction of business at such meeting. The action of a majority of
those members present at a Committee meeting at which a quorum is present shall
constitute the act of the Committee.
3.4 Term of Office. Members of any Committee shall be elected as provided
above and shall hold office until their successors are elected by the Board of
Directors or until such Committee is dissolved by the Board of Directors.
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3.5 Resignation and Removal. Any member of a Committee may resign at any
time by giving written notice of his intention to do so to the President or the
Secretary of the Corporation, or may be removed, with or without cause, at any
time by such vote of the Board of Directors as would suffice for his election.
3.6 Vacancies. Any vacancy occurring in a Committee resulting from any
cause whatsoever may be filled by a majority of the number of Directors fixed by
these By-laws.
ARTICLE IV
Officers
4.1 Election. The officers of the Corporation shall consist of a
President, one or more Vice Presidents (any one or more of whom may be
designated as Executive Vice Presidents or Senior Vice Presidents), a Secretary
and a Treasurer. In addition, such other officers as are provided in Section 4.3
of this Article may from time to time be elected by the Board of Directors. All
officers shall hold office until the next annual meeting of the Board of
Directors or until their successors are elected. Any two officers may be
combined in the same person as the Board of Directors may determine, except that
the President and Secretary may not be the same person.
4.2 Removal of Officers; Vacancies. Any officer of the Corporation may be
removed summarily with or without cause, at
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any time by a resolution passed at any meeting by affirmative vote of a majority
of the number of Directors fixed by these By-laws. Vacancies may be filled at
any meeting of the Board of Directors.
4.3 Other Officers. Other officers may from time to time be elected by the
Board, including, without limitations, one or more Assistant Secretaries and
Assistant Treasurers.
4.4 Duties. The officers of the Corporation shall have such duties as
generally pertain to their offices, respectively, as well as such powers and
duties as are hereinafter provided and as from time to time shall be conferred
by the Board of Directors. The Board of Directors may require any officer to
give such bond for the faithful performance of his duties as the Board may see
fit.
4.5 Duties of the President. The President shall be the chief executive
and administrative officer of the Corporation and shall have direct supervision
over the business of the Corporation and its several officers, subject to the
Board of Directors. The President may sign and execute in the name of the
Corporation deeds, mortgages, bonds, contracts or other instruments, except in
cases where the signing and the execution thereof shall be expressly delegated
by the Board of Directors or by these By-laws to some other officer or agent of
the
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<PAGE>
Corporation or shall be required by law otherwise to be signed or executed. He
may appoint advisory committees as provided in Section 6 of Article III. In
addition, he shall perform all duties incident to the office of the President
and such other duties as from time to time may be assigned to him by the Board
of Directors.
4.6 Duties of the Vice Presidents. Each Vice President of the Corporation
(including any Executive Vice President and Senior Vice President) shall have
powers and duties as may from time to time be assigned to him by the Board of
Directors or the President. When there shall be more than one Vice President of
the Corporation, the Board of Directors may from time to time designate one of
them to perform the duties of the President in the absence of the President. Any
Vice President of the Corporation may sign and execute in the name of the
Corporation deeds, mortgages, bonds, contracts and other instruments, except in
cases where the signing and execution thereof shall be expressly delegated by
the Board of Directors or by these By-laws to some other officer or agent of the
Corporation or shall be required by law otherwise to be signed or executed.
4.7 Duties of the Treasurer. The Treasurer shall have charge and custody
of and be responsible for all funds and securities of the Corporation, and shall
cause all such funds and securities to be deposited in such banks and
depositories as the
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<PAGE>
Board of Directors from time to time may direct. He shall maintain adequate
accounts and records of all assets, liabilities and transactions of the
Corporation in accordance with generally accepted accounting practices; shall
exhibit his accounts and records to any of the Directors of the Corporation at
any time upon request at the office of the Corporation; shall render such
statements of his accounts and records and such other statements to the Board of
Directors and officers as often and in such manner as they shall require; and
shall make and file (or supervise the making and filing of) all tax returns
required by law. He shall in general perform all duties incident to the office
of Treasurer and such other duties as from time to time may be assigned to him
by the Board of Directors or the President.
4.8 Duties of the Secretary. The Secretary shall act as a secretary of all
meetings of the Board of Directors and all other Committees of the Board, and
the shareholders of the Corporation, and shall keep the minutes thereof in the
proper book or books to be provided for that purpose. He shall see that all
notices required to be given by the Corporation are duly given and served; shall
have custody of the seal of the Corporation and shall affix the seal or cause it
to be affixed to all certificates for stock of the Corporation and to all
documents the execution of which on behalf of the Corporation under its
corporate seal is duly authorized in accordance with the
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<PAGE>
provisions of these By-laws; shall have custody of all deeds, leases, contracts
and other important corporate documents; shall have charge of the books, records
and papers of the Corporation relating to its organization and management as a
Corporation; shall see that the reports, statements and other documents required
by law (except tax returns) are properly filed; and shall, in general, perform
all the duties incident to the office of Secretary and such other duties as from
time to time may be assigned to him by the Board of Directors or the President.
4.9 Other Duties of Officers. Any officer of the Corporation shall have,
in addition to the duties prescribed herein or by law, such other duties as from
time to time shall be prescribed by the Board of Directors or the President.
ARTICLE V
Capital Stock
5.1 Certificates. The shares of capital stock of the Corporation shall be
evidenced by certificates in forms prescribed by the Board of Directors and
executed in any manner permitted by law and stating thereon the information
required by law. Transfer agents and/or registrars for one or more classes of
shares of the Corporation may be appointed by the Board of Directors and may be
required to countersign certificates representing shares of such class or
classes. If any officer whose signature or facsimile thereof shall have been
used on a
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<PAGE>
share certificate shall for any reason cease to be an officer of the Corporation
and such certificate shall not then have been delivered by the Corporation, the
Board of Directors may nevertheless adopt such certificate and it may then be
issued and delivered as though such person had not ceased to be an officer of
the Corporation.
5.2 Lost, Destroyed and Mutilated Certificates. Holders of the shares of
the Corporation shall immediately notify the Corporation of any loss,
destruction or mutilation of the certificate therefor, and the Board of
Directors, may, in its discretion, cause one or more new certificates for the
same number of shares in the aggregate to be issued to such shareholder upon the
surrender of the mutilated certificate or upon satisfactory proof of such loss
or destruction, and the deposit of a bond in such form and amount and with such
surety as the Board of Directors may require.
5.3 Transfer of Shares. The shares of the Corporation shall be
transferable or assignable only on the books of the Corporation by the holders
in person or by attorney on surrender of the certificate for such shares duly
endorsed and, if sought to be transferred by attorney, accompanied by a written
power of attorney to have the same transferred on the books of the Corporation.
The Corporation will recognize the exclusive right
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<PAGE>
of the person registered on its books as the owner of shares to receive
dividends and to vote as such owner.
5.4 Fixing Record Date. For the purpose of determining shareholders
entitled to notice of or to vote at any meeting of the shareholders or any
adjournment thereof, or entitled to receive payment for any dividend, or in
order to make a determination of shareholders for any other proper purpose, the
Board of Directors may fix in advance a date as the record date for any such
determination of shareholders, such date in any case to be not more than seventy
days prior to the date on which the particular action, requiring such
determination of shareholders, is to be taken. If no record date is fixed for
the determination of shareholders entitled to notice of or to vote at a meeting
of shareholders, or shareholders entitled to receive payment of a dividend, the
date on which notice of the meeting is mailed or the date on which the
resolution of the Board of Directors declaring such dividend is adopted, as the
case may be, shall be the record date for such determination of shareholders.
When a determination of shareholders entitled to vote at any meeting of
shareholders has been made as provided in this section, such determination shall
apply to any adjournment thereof.
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<PAGE>
ARTICLE VI
Miscellaneous Provisions
6.1 Seal. The seal of the Corporation shall consist of a flat-face
circular die, of which there may be any number of counterparts, with the name of
the Corporation cut or engraved thereon.
6.2 Fiscal Year. The fiscal year of the Corporation shall end on December
31st of each year, and shall consist of such accounting periods as may be
recommended by the Treasurer and approved by the Board of Directors.
6.3 Books and Records. The Corporation shall keep correct and complete
books and records of account and shall keep minutes of the proceedings of its
shareholders and Board of Directors; and shall keep at its registered office or
principal place of business, or at the office of its transfer agent or registrar
a record of its shareholders, giving the names and addresses of all
shareholders, and the number, class and series of the shares being held.
6.4 Checks, Notes and Drafts. Checks, notes, drafts and other orders for
the payment of money shall be signed by such persons as the Board of Directors
from time to time may authorize. When the Board of Directors so authorizes,
however, the signature of any such person may be a facsimile.
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<PAGE>
6.5 Amendment of By-laws. These By-laws may be amended or altered at any
meeting of the Board of Directors by affirmative vote of a majority of the
number of Directors fixed by these By-laws. The shareholders entitled to vote in
respect of the election of Directors, however, shall have the power, by majority
vote of the outstanding shares of the Corporation, to rescind, alter, amend or
repeal any By-laws and to enact By-laws which, if expressly so provided, may not
be amended, altered or repealed by the Board of Directors.
6.6 Voting of Shares Held. Unless otherwise provided by resolution of the
Board of Directors, the President shall from time to time appoint an attorney or
attorneys or agent or agents of this Corporation, in the name and on behalf of
this Corporation, to cast the vote which this Corporation may be entitled to
cast as a shareholder or otherwise in any other corporation, any of whose stock
or securities may be held in this Corporation, at meetings of the holders of the
shares or other securities of such other corporation, or to consent in writing
to any action by any such other corporation, and shall instruct the person or
persons so appointed as to the manner of casting such votes or giving such
consent and may execute or cause to be executed on behalf of this Corporation
and under its corporate seal or otherwise, such written proxies, consents,
waivers or other instruments as may be necessary or proper in the premises; or,
in lieu of such appointment, the President may attend in
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<PAGE>
person any meetings of the holders of shares or other securities of any such
other corporation and there vote or exercise any or all power of this
Corporation as the holder of such shares or other securities of such other
corporation.
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<PAGE>
POLESTAR PLASTICS MANUFACTURING COMPANY
ARTICLES OF AMENDMENT
I
The name of the Corporation is Polestar Plastics Manufacturing Company (the
"Corporation").
II
Article I of the Corporation's Articles of Incorporation is hereby amended
to read in its entirety as follows:
"The name of the Corporation is Precise Polestar, Inc."
III
The foregoing amendment was adopted by written consent of the Corporation's
sole shareholder on April 24, 1996.
Dated: May 7, 1996 PRECISE POLESTAR, INC.
By:/s/ John R. Weeks
-----------------------------------
John R. Weeks, President
<PAGE>
ARTICLES OF INCORPORATION
OF
POLESTAR PLASTICS MANUFACTURING COMPANY
I.
The name of the Corporation is Polestar Plastics Manufacturing Company.
II.
The purpose for which the Corporation is formed is to transact any or all
lawful business, not required to be specifically stated in these Articles, for
which corporations may be incorporated under the Virginia Stock Corporation Act,
as amended from time to time.
III.
The number of shares which the Corporation shall have authority to issue
shall be 100 shares of Common Stock, no par value.
IV.
The initial registered office shall be located in the City of Richmond,
Virginia, at Riverfront Plaza - East Tower, 951 East Byrd Street, and the
initial registered agent shall be W. Jeffery Edwards, who is a resident of
Virginia and a member of the Virginia State Bar, and whose business address is
the same as the address of the initial registered office.
<PAGE>
V.
The number of Directors constituting the initial Board of Directors shall
be three (3), and the names and addresses of the persons who are to serve as the
initial Directors are as follows:
Name Residence Address
- ---- -----------------
Richard W. Goodrum 12830 River Hills Drive
Midlothian, Virginia 23113
Steven M. Johnson 412 Kilmarnock Road
Richmond, Virginia 23229
Norman A. Scher 5 Cedaridge Road
Richmond, Virginia 23229
VI.
(1) In this Article:
"applicant" means the person seeking indemnification pursuant to this
Article.
"expenses" includes counsel fees.
"liability" means the obligation to pay a judgment, settlement, penalty,
fine, including any excise tax assessed with respect to an employee benefit
plan, or reasonable expenses incurred with respect to a proceeding.
"party" includes an individual who was, is or is threatened to be made a
named defendant or respondent in a proceeding.
"proceeding" means any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative and whether
formal or informal.
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<PAGE>
(2) In any proceeding brought by or in the right of the Corporation or
brought by or on behalf of shareholders of the Corporation, no director or
officer of the Corporation shall be liable to the Corporation or its
shareholders for monetary damages with respect to any transaction, occurrence or
course of conduct, whether prior or subsequent to the effective date of this
Article, except for liability resulting from such person's having engaged in
willful misconduct or a knowing violation of the criminal law or any federal or
state securities law.
(3) The Corporation shall indemnify (a) any person who was or is a party to
any proceeding, including a proceeding brought by a shareholder in the right of
the Corporation or brought by or on behalf of shareholders of the Corporation,
by reason of the fact that he is or was a director or officer of the
Corporation, or (b) any director or officer who is or was serving at the request
of the Corporation a director, trustee, partner or officer of another
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise, against any liability incurred by him in connection with such
proceeding unless he engaged in willful misconduct or a knowing violation of the
criminal law. A person is considered to be serving an employee benefit plan at
the Corporation's request if his duties to the Corporation also impose duties
on, or otherwise involve services by, him to the plan or to participants in or
beneficiaries of the plan. The Board of Directors is hereby empowered, by a
majority vote of a quorum of disinterested
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<PAGE>
Directors, to enter into a contract to indemnify any Director or officer in
respect of any proceedings arising from any act or omission, whether occurring
before or after the execution of such contract.
(4) The provisions of this Article shall be applicable to all proceedings
commenced after the adoption hereof by the shareholders of the Corporation,
arising from any act or omission, whether occurring before or after such
adoption. No amendment or repeal of this Article shall have any effect on the
rights provided under this Article with respect to any act or omission occurring
prior to such amendment or repeal. The Corporation shall promptly take all such
actions, and make all such determinations, as shall be necessary or appropriate
to comply with its obligation to make any indemnity under this Article and shall
promptly pay or reimburse all reasonable expenses, including attorneys' fees,
incurred by any such director, officer, employee or agent in connection with
such actions and determinations or proceedings of any kind arising therefrom.
(5) The termination of any proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, shall not of
itself create a presumption that the applicant did not meet the standard of
conduct described in Section (2) or (3) of this Article.
(6) Any indemnification under Section (3) of this Article (unless ordered
by a court) shall be made by the Corporation only
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<PAGE>
as authorized in the specific case upon a determination that indemnification of
the applicant is proper in the circumstances because he has met the applicable
standard of conduct set forth in Section (3).
The determination shall be made:
(a) By the Board of Directors by a majority vote of a quorum consisting of
directors not at the time parties to the proceeding;
(b) If a quorum cannot be obtained under subsection (a) of this section, by
majority vote of a committee duly designated by the Board of Directors (in which
designation Directors who are parties may participate), consisting solely of two
or more Directors not at the time parties to the proceeding;
(c) By special legal counsel:
(i) Selected by the Board of Directors or its committee in the manner
prescribed in subsection (a) or (b) of this section; or
(ii) If a quorum of the Board of Directors cannot be obtained under
subsection (a) of this section and a committee cannot be designated under
subsection (b) of this section, selected by majority vote of the full Board
of Directors, in which selection directors who are parties may participate;
or
(d) By the shareholders, but shares owned by or voted under the control of
Directors who are at the time parties to the proceeding may not be voted on the
determination.
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<PAGE>
Any evaluation as to reasonableness of expenses shall be made in the same
manner as the determination that indemnification is appropriate, except that if
the determination is made by special legal counsel, such evaluation as to
reasonableness of expenses shall be made by those entitled under subsection (c)
of this section (6) to select counsel.
Notwithstanding the foregoing, in the event there has been a change in the
composition of a majority of the Board of Directors after the date of the
alleged act or omission with respect to which indemnification is claimed, any
determination as to indemnification and advancement of expenses with respect to
any claim for indemnification made pursuant to this Article shall be made by
special legal counsel agreed upon by the Board of Directors and the applicant.
If the Board of Directors and the applicant are unable to agree upon such
special legal counsel, the Board of Directors and the applicant each shall
select a nominee, and the nominees shall select such special legal counsel.
(7) (a) The Corporation shall pay for or reimburse the reasonable expenses
incurred by any applicant who is a party to a proceeding in advance of final
disposition of the proceeding or the making of any determination under section
(6) if the applicant furnishes the Corporation:
(i) a written statement of his good faith belief that he has met the
standard of conduct described in section (3); and
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<PAGE>
(ii) a written undertaking, executed personally or on his behalf, to repay
the advance if it is ultimately determined that he did not meet such standard of
conduct.
(b) The undertaking required by paragraph (ii) of subsection (a) of this
section shall be an unlimited general obligation of the applicant but need not
be secured and may be accepted without reference to financial ability to make
repayment.
(c) Authorizations of payments under this section shall be made by the
persons specified in section (6).
(8) The Board of Directors is hereby empowered, by majority vote of a
quorum consisting of disinterested Directors, to cause the Corporation to
indemnify or contract to indemnify any person not specified in section (2) or
(3) of this Article who was, is or may become a party to any proceeding, by
reason of the fact that he is or was an employee or agent of the Corporation, or
is or was serving at the request of the Corporation as director, officer,
employee or agent in another corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise, to the same extent as if such person
were specified as one to whom indemnification is granted in section (3). The
provisions of section (4) through (7) of this Article shall be applicable to any
indemnification provided thereafter pursuant to this section (8).
(9) The Corporation may purchase and maintain insurance to indemnify it
against the whole or any portion of the liability
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<PAGE>
assumed by it in accordance with this Article and may also procure insurance, in
such amounts as the Board of Directors may determine, on behalf of any person
who is or was a director, officer, employee or agent of the Corporation, or is
or was serving at the request of the Corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise, against any liability asserted
against or incurred by him in any such capacity or arising from his status as
such, whether or not the Corporation would have power to indemnify him against
such liability under the provisions of this Article.
(10) Every reference herein to directors, officers, employees or agents
shall include former directors, officers, employees and agents and their
respective heirs, executors and administrators. The indemnification hereby
provided and provided hereafter pursuant to the power conferred by this Article
on the Board of Directors shall not be exclusive of any other rights to which
any person may be entitled, including any right under policies of insurance that
may be purchased and maintained by the Corporation or others, with respect to
claims, issues or matters in relation to which the Corporation would not have
the power to indemnify such person under the provisions of this Article. Such
rights shall not prevent or restrict the power of the Corporation to make or
provide for any further indemnity, or provisions for determining entitlement to
indemnity, pursuant to one or more indemnification agreements, by-laws, or other
arrangements
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<PAGE>
(including, without limitation, creation of trust funds or security interests
funded by letters of credit or other means) approved by the Board of Directors
(whether or not any of the Directors of the Corporation shall be a party to or
beneficiary of any such agreements, by-laws or arrangements); provided, however,
that any provisions of such agreements, by-laws or other arrangements shall not
be effective if and to the extent that it is determined to be contrary to this
Article or applicable laws of the Commonwealth of Virginia.
(11) Each provision of this Article shall be severable, and an adverse
determination as to any such provision shall in no way affect the validity of
any other provisions.
Date: July 19, 1993
/s/ Nancy M. Taylor
-----------------------------------
Nancy M. Taylor, Incorporator
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<PAGE>
POLESTAR PLASTICS MANUFACTURING COMPANY
BY-LAWS
ARTICLE I
Meetings of Shareholders
1.1 Places of Meetings. All meetings of the shareholders shall be held at
such place, either within or without the Commonwealth of Virginia, as may, from
time to time, be fixed by the Board of Directors.
1.2 Annual Meetings. The annual meeting of the shareholders, for the
election of Directors and transaction of such other business as may come before
the meeting, shall be held in each year on or before April 30, or on such other
date as the Board of Directors of the Corporation may designate from time to
time.
1.3 Special Meetings. Special meetings of shareholders for any purpose or
purposes may be called at any time by the President of the Corporation, by a
majority of the Board of Directors or by a vote of the shareholders together
holding at least a majority of the authorizing shares of voting capital stock.
At a special meeting no business shall be transacted and no corporate action
shall be taken other than that stated in the notice of the meeting.
1.4 Notice of Meetings. Except as otherwise required by law, written or
printed notice stating the place, day and hour of
<PAGE>
every meeting of the shareholders and, in case of a special meeting, the purpose
or purposes for which the meeting is called, shall be mailed not less than ten
nor more than sixty days before the date of the meeting to each shareholder of
record entitled to vote at such meeting at his address that appears in the share
transfer books of the Corporation. Meetings may be held without notice if all
the shareholders entitled to vote at the meeting are present in person or by
proxy or if notice is waived in writing by those not present, either before or
after the meeting.
1.5 Quorum. Except as otherwise required by the Articles of Incorporation,
any number of shareholders together holding at least a majority of the
outstanding shares of capital stock entitled to vote with respect to the
business to be transacted, who shall be present in person or represented by
proxy at any meeting duly called, shall constitute a quorum for the transaction
of business. If less than a quorum shall be in attendance at the time for which
a meeting shall have been called, the meeting may be adjourned from time to time
by a majority of the shareholders present or represented by proxy without notice
other than by announcement at the meeting.
1.6 Voting. At any meeting of the shareholders, each shareholder of a class
entitled to vote on the matters coming before the meeting shall have one vote,
in person or by proxy, for each share of capital stock standing in his or her
name on
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the books of the Corporation at the time of such meeting or on any date fixed by
the Board of Directors not more than seventy days prior to the meeting. Every
proxy shall be in writing, dated and signed by the shareholder entitled to vote
or his duly authorized attorney-in-fact.
1.7 Action Without Meeting. Any action required or permitted to be taken at
a shareholders' meeting may be taken without a meeting and without action by the
Board of Directors if the action is taken by all of the shareholders entitled to
vote on the action. The action shall be evidenced by one or more written
consents describing the action taken, signed by all of the shareholders entitled
to vote on the action, and delivered to the secretary of the corporation for
inclusion in the minutes for filing with the corporate records.
ARTICLE II
Directors
2.1 General Powers. The property, affairs and business of the Corporation
shall be managed under the direction of the Board of Directors, and except as
otherwise expressly provided by law, the Articles of Incorporation or these
By-laws, all of the powers of the Corporation shall be vested in such Board.
2.2 Number of Directors. The number of Directors shall be three (3) in
number.
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2.3 Election of Directors.
(a) Directors shall be elected at the annual meeting of shareholders to
succeed those Directors whose terms have expired and to fill any vacancies thus
existing.
(b) Directors shall hold their offices for terms of one year and until
their successors are elected. Any Director may be removed from office at a
meeting called expressly for that purpose by the vote of shareholders holding
not less than a majority of the shares entitled to vote at an election of
Directors.
(c) Any vacancy occurring in the Board of Directors may be filled by the
affirmative vote of the majority of the remaining Directors though less than a
quorum of the Board of Directors.
(d) A majority of the number of Directors fixed by these By-laws shall
constitute a quorum for the transaction of business. The act of a majority of
the Directors present at a meeting at which a quorum is present shall be the act
of the Board of Directors.
2.4 Meetings of Directors. Meetings of the Board of Directors shall be held
at places within or without the Commonwealth of Virginia and at times fixed by
resolution of the
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Board, or upon call of the President, and the Secretary or officer performing
the Secretary's duties shall give not less than twenty-four hours' notice by
letter, telegraph or telephone (or in person) of all meetings of the Directors,
provided that notice need not be given of regular meetings held at times and
places fixed by resolution of the Board. An annual meeting of the Board of
Directors shall be held as soon as practicable after the adjournment of the
annual meeting of shareholders. Meetings may be held at any time without notice
if all of the Directors are present, or if those not present waive notice in
writing either before or after the meeting. Directors may be allowed, by
resolution of the Board, a reasonable fee and expenses for attendance at
meetings.
2.5 Action Without Meeting. Any action required or permitted to be taken at
a Board of Directors meeting may be taken without a meeting if the action is
taken by all of the members of the Board of Directors. The action shall be
evidenced by one or more written consents stating the action taken, signed by
each Director either before or after the action taken, and included in the
minutes or filed with the corporate records reflecting the action taken. Any
such consent has the effect of a meeting vote and may be described as such in
any document of the Corporation.
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ARTICLE III
Committees
3.1 Committees. The Board of Directors, by resolution duly adopted, may
establish such committees of the Board having limited authority in the
management of the affairs of the corporation as it may deem advisable and the
members, terms and authority of such committees shall be as set forth in the
resolutions establishing the same.
3.2 Meetings. Regular and special meetings of any Committee established
pursuant to this Article may be called and held subject to the same requirements
with respect to time, place and notice as are specified in these By-laws for
regular and special meetings of the Board of Directors.
3.3 Quorum and Manner of Acting. A majority of the members of any Committee
serving at the time of any meeting thereof shall constitute a quorum for the
transaction of business at such meeting. The action of a majority of those
members present at a Committee meeting at which a quorum is present shall
constitute the act of the Committee.
3.4 Term of Office. Members of any Committee shall be elected as provided
above and shall hold office until their successors are elected by the Board of
Directors or until such Committee is dissolved by the Board of Directors.
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3.5 Resignation and Removal. Any member of a Committee may resign at any
time by giving written notice of his intention to do so to the President or the
Secretary of the Corporation, or may be removed, with or without cause, at any
time by such vote of the Board of Directors as would suffice for his election.
3.6 Vacancies. Any vacancy occurring in a Committee resulting from any
cause whatsoever may be filled by a majority of the number of Directors fixed by
these By-laws.
ARTICLE IV
Officers
4.1 Election. The officers of the Corporation shall consist of a President,
one or more Vice Presidents (any one or more of whom may be designated as
Executive Vice Presidents or Senior Vice Presidents), a Secretary and a
Treasurer. In addition, such other officers as are provided in Section 4.3 of
this Article may from time to time be elected by the Board of Directors. All
officers shall hold office until the next annual meeting of the Board of
Directors or until their successors are elected. Any two officers may be
combined in the same person as the Board of Directors may determine, except that
the President and Secretary may not be the same person.
4.2 Removal of Officers; Vacancies. Any officer of the Corporation may be
removed summarily with or without cause, at
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any time by a resolution passed at any meeting by affirmative vote of a majority
of the number of Directors fixed by these By-laws. Vacancies may be filled at
any meeting of the Board of Directors.
4.3 Other Officers. Other officers may from time to time be elected by the
Board, including, without limitations, one or more Assistant Secretaries and
Assistant Treasurers.
4.4 Duties. The officers of the Corporation shall have such duties as
generally pertain to their offices, respectively, as well as such powers and
duties as are hereinafter provided and as from time to time shall be conferred
by the Board of Directors. The Board of Directors may require any officer to
give such bond for the faithful performance of his duties as the Board may see
fit.
4.5 Duties of the President. The President shall be the chief executive and
administrative officer of the Corporation and shall have direct supervision over
the business of the Corporation and its several officers, subject to the Board
of Directors. The President may sign and execute in the name of the Corporation
deeds, mortgages, bonds, contracts or other instruments, except in cases where
the signing and the execution thereof shall be expressly delegated by the Board
of Directors or by these By-laws to some other officer or agent of the
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Corporation or shall be required by law otherwise to be signed or executed. He
may appoint advisory committees as provided in Section 6 of Article III. In
addition, he shall perform all duties incident to the office of the President
and such other duties as from time to time may be assigned to him by the Board
of Directors.
4.6 Duties of the Vice Presidents. Each Vice President of the Corporation
(including any Executive Vice President and Senior Vice President) shall have
powers and duties as may from time to time be assigned to him by the Board of
Directors or the President. When there shall be more than one Vice President of
the Corporation, the Board of Directors may from time to time designate one of
them to perform the duties of the President in the absence of the President. Any
Vice President of the corporation may sign and execute in the name of the
Corporation deeds, mortgages, bonds, contracts and other instruments, except in
cases where the signing and execution thereof shall be expressly delegated by
the Board of Directors or by these By-laws to some other officer or agent of the
corporation or shall be required by law otherwise to be signed or executed.
4.7 Duties of the Treasurer. The Treasurer shall have charge and custody of
and be responsible for all funds and securities of the Corporation, and shall
cause all such funds and securities to be deposited in such banks and
depositories as the
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Board of Directors from time to time may direct. He shall maintain adequate
accounts and records of all assets, liabilities and transactions of the
Corporation in accordance with generally accepted accounting practices; shall
exhibit his accounts and records to any of the Directors of the Corporation at
any time upon request at the office of the Corporation; shall render such
statements of his accounts and records and such other statements to the Board of
Directors and officers as often and in such manner as they shall require; and
shall make and file (or supervise the making and filing of) all tax returns
required by law. He shall in general perform all duties incident to the office
of Treasurer and such other duties as from time to time may be assigned to him
by the Board of Directors or the President.
4.8 Duties of the Secretary. The Secretary shall act as a secretary of all
meetings of the Board of Directors and all other Committees of the Board, and
the shareholders of the Corporation, and shall keep the minutes thereof in the
proper book or books to be provided for that purpose. He shall see that all
notices required to be given by the Corporation are duly given and served; shall
have custody of the seal of the Corporation and shall affix the seal or cause it
to be affixed to all certificates for stock of the Corporation and to all
documents the execution of which on behalf of the Corporation under its
corporate seal is duly authorized in accordance with the
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<PAGE>
provisions of these By-laws; shall have custody of all deeds, leases, contracts
and other important corporate documents; shall have charge of the books, records
and papers of the Corporation relating to its organization and management as a
Corporation; shall see that the reports, statements and other documents required
by law (except tax returns) are properly filed; and shall, in general, perform
all the duties incident to the office of Secretary and such other duties as from
time to time may be assigned to him by the Board of Directors or the President.
4.9 Other Duties of Officers. Any officer of the Corporation shall have, in
addition to the duties prescribed herein or by law, such other duties as from
time to time shall be prescribed by the Board of Directors or the President.
ARTICLE V
Capital Stock
5.1 Certificates. The shares of capital stock of the Corporation shall be
evidenced by certificates in forms prescribed by the Board of Directors and
executed in any manner permitted by law and stating thereon the information
required by law. Transfer agents and/or registrars for one or more classes of
shares of the Corporation may be appointed by the Board of Directors and may be
required to countersign certificates representing shares of such class or
classes. If any officer whose signature or facsimile thereof shall have been
used on a
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share certificate shall for any reason cease to be an officer cf the Corporation
and such certificate shall not then have been delivered by the Corporation, the
Board of Directors may nevertheless adopt such certificate and it may then be
issued and delivered as though such person had not ceased to be an officer of
the Corporation.
5.2 Lost, Destroyed and Mutilated Certificates. Holders of the shares of
the Corporation shall immediately notify the Corporation of any loss,
destruction or mutilation of the certificate therefor, and the Board of
Directors may, in its discretion, cause one or more new certificates for the
same number of shares in the aggregate to be issued to such shareholder upon the
surrender of the mutilated certificate or upon satisfactory proof of such loss
or destruction, and the deposit of a bond in such form and amount and with such
surety as the Board of Directors may require.
5.3 Transfer of Shares. The shares of the Corporation shall be transferable
or assignable only on the books of the Corporation by the holders in person or
by attorney on surrender of the certificate for such shares duly endorsed and,
if sought to be transferred by attorney, accompanied by a written power of
attorney to have the same transferred on the books of the Corporation. The
Corporation will recognize the exclusive right
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of the person registered on its books as the owner of shares to receive
dividends and to vote as such owner.
5.4 Fixing Record Date. For the purpose of determining shareholders
entitled to notice of or to vote at any meeting of the shareholders or any
adjournment thereof, or entitled to receive payment for any dividend, or in
order to make a determination of shareholders for any other proper purpose, the
Board of Directors may fix in advance a date as the record date for any such
determination of shareholders, such date in any case to be not more than seventy
days prior to the date on which the particular action, requiring such
determination of shareholders, is to be taken. If no record date is fixed for
the determination of shareholders entitled to notice of or to vote at a meeting
of shareholders, or shareholders entitled to receive payment of a dividend, the
date on which notice of the meeting is mailed or the date on which the
resolution of the Board of Directors declaring such dividend is adopted, as the
case may be, shall be the record date for such determination of shareholders.
When a determination of shareholders entitled to vote at any meeting of
shareholders has been made as provided in this section, such determination shall
apply to any adjournment thereof.
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ARTICLE VI
Miscellaneous Provisions
6.1 Seal. The seal of the Corporation shall consist of a flat-face circular
die, of which there may be any number of counterparts, with the name Of the
Corporation cut or engraved thereon.
6.2 Fiscal Year. The fiscal year of the Corporation shall end on December
31st of each year, and shall consist of such accounting periods as may be
recommended by the Treasurer and approved by the Board of Directors.
6.3 Books and Records. The Corporation shall keep correct and complete
books and records of account and shall keep minutes of the proceedings of its
shareholders and Board of Directors; and shall keep at its registered office or
principal place of business, or at the office of its transfer agent or registrar
a record of its shareholders, giving the names and addresses of all
shareholders, and the number, class and series of the shares being held.
6.4 Checks, Notes and Drafts. Checks, notes, drafts and other orders for
the payment of money shall be signed by such persons as the Board of Directors
from time to time may authorize. When the Board of Directors so authorizes,
however, the signature of any such person may be a facsimile.
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6.5 Amendment of By-laws. These By-laws may be amended or altered at any
meeting of the Board of Directors by affirmative vote of a majority of the
number of Directors fixed by these By-laws. The shareholders entitled to vote in
respect of the election of Directors, however, shall have the power, by majority
vote of the outstanding shares of the Corporation, to rescind, alter, amend or
repeal any By-laws and to enact By-laws which, if expressly so provided, may not
be amended, altered or repealed by the Board of Directors.
6.6 Voting of Shares Held. Unless otherwise provided by resolution of the
Board of Directors, the President shall from time to time appoint an attorney or
attorneys or agent or agents of this Corporation, in the name and on behalf of
this Corporation, to cast the vote which this Corporation may be entitled to
cast as a shareholder or otherwise in any other corporation, any of whose stock
or securities may be held in this Corporation, at meetings of the holders of the
shares or other securities of such other corporation, or to consent in writing
to any action by any such other corporation, and shall instruct the person or
persons so appointed as to the manner of casting such votes or giving such
consent and may execute or cause to be executed on behalf of this Corporation
and under its corporate seal or otherwise, such written proxies, consents,
waivers or other instruments as may be necessary or proper in the premises; or,
in lieu of such appointment, the President may attend in
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person any meetings of the holders of shares or other securities of any such
other corporation and there vote or exercise any or all power of this
Corporation as the holder of such shares or other securities of such other
corporation.
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ARTICLES OF INCORPORATION
OF
MASSIE TOOL, MOLD & DIE, INC.
I.
The name of the Corporation is Massie Tool, Mold & Die, Inc.
II.
The street address of the principal office of the Corporation is 1100
Boulders Parkway, Richmond, Virginia, 23225. The mailing address of the
principal office of the Corporation is the same as the street address.
III.
The number of shares which the Corporation shall have authority to issue
shall be 100 shares of Common Stock, no par value, all of which are of the same
class.
IV.
The street address of the initial registered office of the Corporation in
the State of Florida is c/o The Prentice-Hall Corporation System, Inc., 110
North Magnolia Street, Tallahassee, Florida, 32301.
The name of the initial registered agent of the Corporation is The
Prentice-Hall Corporation System, Inc., whose business address is the same as
the address of the initial registered office.
The written acceptance of the initial registered agent, as required by the
provisions of Section 607.0501(3) of the Florida Business Corporation Act, is
set forth following the signature of
<PAGE>
the incorporator and is made a part of these Articles of Incorporation.
V.
The name and address of the incorporator are:
Name Address
---- -------
Nancy M. Taylor 1100 Boulders Parkway
Richmond, Virginia 23225
VI.
The purpose for which the Corporation is formed is to transact any or all
lawful business, not required to be specifically stated in these Articles, for
which corporations may be incorporated under the Florida Business Corporation
Act, as amended from time to time, and to have all of the general powers granted
to corporations organized under the Florida Business Corporation Act, whether
granted by specific statutory authority or by construction of law.
VII.
The number of Directors constituting the initial Board of Directors shall
be three (3), and the names and addresses of the persons who are to serve as the
initial Directors are as follows:
Name Residence Address
---- -----------------
Richard W. Goodrum 12830 River Hills Drive
Midlothian, Virginia 23113
Steven M. Johnson 412 Kilmarnock Road
Richmond, Virginia 23229
Norman A. Scher 5 Cedaridge Road
Richmond, Virginia 23229
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VIII.
The duration of the Corporation shall be perpetual.
IX.
(1) In this Article:
"applicant" means the person seeking indemnification pursuant to this
Article.
"expenses" includes counsel fees.
"liability" means the obligation to pay a judgment, settlement, penalty,
fine, including any excise tax assessed with respect to an employee benefit
plan, or reasonable expenses incurred with respect to a proceeding.
"party" includes an individual who was, is or is threatened to be made a
named defendant or respondent in a proceeding.
"proceeding" means any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative and whether
formal or informal.
(2) In any proceeding brought by or in the right of the Corporation or
brought by or on behalf of shareholders of the Corporation, no director or
officer of the Corporation shall be liable to the Corporation or its
shareholders for monetary damages with respect to any transaction, occurrence or
course of conduct, whether prior or subsequent to the effective date of this
Article, except for liability resulting from such person's having engaged in
willful misconduct or a knowing violation of the criminal law or any federal or
state securities law.
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(3) The Corporation shall indemnify (a) any person who was or is a party
to any proceeding, including a proceeding brought by a shareholder in the right
of the Corporation or brought by or on behalf of shareholders of the
Corporation, by reason of the fact that he is or was a director or officer of
the Corporation, or (b) any director or officer who is or was serving at the
request of the Corporation a director, trustee, partner or officer of another
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise, against any liability incurred by him in connection with such
proceeding unless he engaged in willful misconduct or a knowing violation of the
criminal law. A person is considered to be serving an employee benefit plan at
the Corporation's request if his duties to the Corporation also impose duties
on, or otherwise involve services by, him to the plan or to participants in or
beneficiaries of the plan. The Board of Directors is hereby empowered, by a
majority vote of a quorum of disinterested Directors, to enter into a contract
to indemnify any Director or officer in respect of any proceedings arising from
any act or omission, whether occurring before or after the execution of such
contract.
(4) The provisions of this Article shall be applicable to all proceedings
commenced after the adoption hereof by the shareholders of the Corporation,
arising from any act or omission, whether occurring before or after such
adoption. No amendment or repeal of this Article shall have any effect on the
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rights provided under this Article with respect to any act or omission occurring
prior to such amendment or repeal. The Corporation shall promptly take all such
actions, and make all such determinations, as shall be necessary or appropriate
to comply with its obligation to make any indemnity under this Article and shall
promptly pay or reimburse all reasonable expenses, including attorneys' fees,
incurred by any such director, officer, employee or agent in connection with
such actions and determinations or proceedings of any kind arising therefrom.
(5) The termination of any proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, shall not of
itself create a presumption that the applicant did not meet the standard of
conduct described in Section (2) or (3) of this Article.
(6) Any indemnification under Section (3) of this Article (unless ordered
by a court) shall be made by the Corporation only as authorized in the specific
case upon a determination that indemnification of the applicant is proper in the
circumstances because he has met the applicable standard of conduct set forth in
Section (3).
The determination shall be made:
(a) By the Board of Directors by a majority vote of a quorum
consisting of directors not at the time parties to the proceeding;
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(b) If a quorum cannot be obtained under subsection (a) of this
section, by majority vote of a committee duly designated by the Board of
Directors (in which designation Directors who are parties may participate),
consisting solely of two or more Directors not at the time parties to the
proceeding;
(c) By special legal counsel;
(i) Selected by the Board of Directors or its committee in the
manner prescribed in subsection (a) or (b) of this section; or
(ii) If a quorum of the Board of Directors cannot be obtained
under subsection (a) of this section and a committee cannot be
designated under subsection (b) of this section, selected by majority
vote of the full Board of Directors, in which selection directors who
are parties may participate; or
(d) By the shareholders, but shares owned by or voted under the
control of Directors who are at the time parties to the proceeding may not
be voted on the determination.
Any evaluation as to reasonableness of expenses shall be made in the same
manner as the determination that indemnification is appropriate, except that if
the determination is made by special legal counsel, such evaluation as to
reasonableness of expenses shall be made by those entitled under subsection (c)
of this section (6) to select counsel.
Notwithstanding the foregoing, in the event there has been a change in the
composition of a majority of the Board of Directors after the date of the
alleged act or omission with respect to
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which indemnification is claimed, any determination as to indemnification and
advancement of expenses with respect to any claim for indemnification made
pursuant to this Article shall be made by special legal counsel agreed upon by
the Board of Directors and the applicant. If the Board of Directors and the
applicant are unable to agree upon such special legal counsel, the Board of
Directors and the applicant each shall select a nominee, and the nominees shall
select such special legal counsel.
(7) (a) The Corporation shall pay for or reimburse the reasonable expenses
incurred by any applicant who is a party to a proceeding in advance of final
disposition of the proceeding or the making of any determination under section
(6) if the applicant furnishes the Corporation:
(i) a written statement of his good faith belief that he has met
the standard of conduct described in section (3); and
(ii) a written undertaking, executed personally or on his behalf,
to repay the advance if it is ultimately determined that he did not
meet such standard of conduct.
(b) The undertaking required by paragraph (ii) of subsection (a) of
this section shall be an unlimited general obligation of the applicant but
need not be secured and may be accepted without reference to financial
ability to make repayment.
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(c) Authorizations of payments under this section shall be made by the
persons specified in section (6).
(8) The Board of Directors is hereby empowered, by majority vote of a
quorum consisting of disinterested Directors, to cause the Corporation to
indemnify or contract to indemnify any person not specified in section (2) or
(3) of this Article who was, is or may become a party to any proceeding, by
reason of the fact that he is or was an employee or agent of the Corporation, or
is or was serving at the request of the Corporation as director, officer,
employee or agent in another corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise, to the same extent as if such person
were specified as one to whom indemnification is granted in section (3). The
provisions of section (4) through (7) of this Article shall be applicable to any
indemnification provided thereafter pursuant to this section (8).
(9) The Corporation may purchase and maintain insurance to indemnify it
against the whole or any portion of the liability assumed by it in accordance
with this Article and may also procure insurance, in such amounts as the Board
of Directors may determine, on behalf of any person who is or was a director,
officer, employee or agent of the Corporation, or is or was serving at the
request of the Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise, against any liability asserted against or incurred by him in any
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such capacity or arising from his status as such, whether or not the Corporation
would have power to indemnify him against such liability under the provisions of
this Article.
(10) Every reference herein to directors, officers, employees or agents
shall include former directors, officers, employees and agents and their
respective heirs, executors and administrators. The indemnification hereby
provided and provided hereafter pursuant to the power conferred by this Article
on the Board of Directors shall not be exclusive of any other rights to which
any person may be entitled, including any right under policies of insurance that
may be purchased and maintained by the Corporation or others, with respect to
claims, issues or matters in relation to which the Corporation would not have
the power to indemnify such person under the provisions of this Article. Such
rights shall not prevent or restrict the power of the Corporation to make or
provide for any further indemnity, or provisions for determining entitlement to
indemnity, pursuant to one or more indemnification agreements, by-laws, or other
arrangements (including, without limitation, creation of trust funds or security
interests funded by letters of credit or other means) approved by the Board of
Directors (whether or not any of the Directors of the Corporation shall be a
party to or beneficiary of any such agreements, by-laws or arrangements);
provided, however, that any provisions of such agreements, by-laws or other
arrangements shall not be effective if and to the extent that it
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is determined to be contrary to this Article or applicable laws of the State of
Florida.
(11) Each provision of this Article shall be severable, and an adverse
determination as to any such provision shall in no way affect the validity of
any other provisions.
Date: September 10, 1993
/s/ Nancy M. Taylor
-----------------------------
Nancy M. Taylor, Incorporator
Having been named as registered agent and to accept service of process for
the above-named Corporation at the place designated in these Articles of
Incorporation, I hereby accept the appointment as registered agent and agree to
act in this capacity. I further agree to comply with the provisions of all
statutes relating to the proper and complete performance of my duties, and I am
familiar with and accept the obligations of my position as registered agent.
Date: September 14, 1993 THE PRENTICE-HALL CORPORATION
SYSTEM, INC.
By: /s/ Barbara A. Buckley
-------------------------
Name: Barbara A. Buckley
Title: Assistant Vice President
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MASSIE TOOL, MOLD & DIE, INC.
BY-LAWS
ARTICLE I
Meetings of Shareholders
1.1 Places of Meetings. All meetings of the shareholders shall be held at
such place, either within or without the State of Florida, as may, from time to
time, be fixed by the Board of Directors.
1.2 Annual Meetings. The annual meeting of the shareholders, for the
election of Directors and transaction of such other business as may come before
the meeting, shall be held in each year on or before April 30, or on such other
date as the Board of Directors of the Corporation may designate from time to
time.
1.3 Special Meetings. Special meetings of shareholders for any purpose or
purposes may be called at any time by the President of the Corporation, by a
majority of the Board of Directors or by a vote of the shareholders together
holding at least a majority of the authorizing shares of voting capital stock.
At a special meeting no business shall be transacted and no corporate action
shall be taken other than that stated in the notice of the meeting.
<PAGE>
1.4 Notice of Meetings. Except as otherwise required by law, written or
printed notice stating the place, day and hour of every meeting of the
shareholders and, in case of a special meeting, the purpose or purposes for
which the meeting is called, shall be mailed not less than ten nor more than
sixty days before the date of the meeting to each shareholder of record entitled
to vote at such meeting at his address that appears in the share transfer books
of the Corporation. Meetings may be held without notice if all the shareholders
entitled to vote at the meeting are present in person or by proxy or if notice
is waived in writing by those not present, either before or after the meeting.
1.5 Quorum. Except as otherwise required by the Articles of Incorporation,
any number of shareholders together holding at least a majority of the
outstanding shares of capital stock entitled to vote with respect to the
business to be transacted, who shall be present in person or represented by
proxy at any meeting duly called, shall constitute a quorum for the transaction
of business. If less than a quorum shall be in attendance at the time for which
a meeting shall have been called, the meeting may be adjourned from time to time
by a majority of the shareholders present or represented by proxy without notice
other than by announcement at the meeting.
1.6 Voting. At any meeting of the shareholders, each shareholder of a class
entitled to vote on the matters coming before the meeting shall have one vote,
in person or by proxy,
<PAGE>
for each share of capital stock standing in his or her name on the books of the
Corporation at the time of such meeting or on any date fixed by the Board of
Directors not more than seventy days prior to the meeting. Every proxy shall be
in writing, dated and signed by the shareholder entitled to vote or his duly
authorized attorney-in-fact.
1.7 Action Without Meeting. Any action required or permitted to be taken at
a shareholders' meeting may be taken without a meeting and without action by the
Board of Directors if the action is taken by all of the shareholders entitled to
vote on the action. The action shall be evidenced by one or more written
consents describing the action taken, signed by all of the shareholders entitled
to vote on the action, and delivered to the secretary of the Corporation for
inclusion in the minutes for filing with the corporate records.
ARTICLE II
Directors
2.1 General Powers. The property, affairs and business of the Corporation
shall be managed under the direction of the Board of Directors, and except as
otherwise expressly provided by law, the Articles of Incorporation or these
By-laws, all of the powers of the Corporation shall be vested in such Board.
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2.2 Number of Directors. The number of Directors shall be three (3) in
number.
2.3 Election of Directors.
(a) Directors shall be elected at the annual meeting of shareholders to
succeed those Directors whose terms have expired and to fill any vacancies thus
existing.
(b) Directors shall hold their offices for terms of one year and until
their successors are elected. Any Director may be removed from office at a
meeting called expressly for that purpose by the vote of shareholders holding
not less than a majority of the shares entitled to vote at an election of
Directors.
(c) Any vacancy occurring in the Board of Directors may be filled by the
affirmative vote of the majority of the remaining Directors though less than a
quorum of the Board of Directors.
(d) A majority of the number of Directors fixed by these By-laws shall
constitute a quorum for the transaction of business. The act of a majority of
the Directors present at a meeting at which a quorum is present shall be the act
of the Board of Directors.
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2.4 Meetings of Directors. Meetings of the Board of Directors shall be held
at places within or without the State of Florida and at times fixed by
resolution of the Board, or upon call of the President, and the Secretary or
officer performing the Secretary's duties shall give not less than twenty-four
hours' notice by letter, telegraph or telephone (or in person) of all meetings
of the Directors, provided that notice need not be given of regular meetings
held at times and places fixed by resolution of the Board. An annual meeting of
the Board of Directors shall be held as soon as practicable after the
adjournment of the annual meeting of shareholders. Meetings may be held at any
time without notice if all of the Directors are present, or if those not present
waive notice in writing either before or after the meeting. Directors may be
allowed, by resolution of the Board, a reasonable fee and expenses for
attendance at meetings.
2.5 Action Without Meeting. Any action required or permitted to be taken at
a Board of Directors meeting may be taken without a meeting if the action is
taken by all of the members of the Board of Directors. The action shall be
evidenced by one or more written consents stating the action taken, signed by
each Director either before or after the action taken, and included in the
minutes or filed with the corporate records reflecting the action taken. Any
such consent has the effect of
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a meeting vote and may be described as such in any document of the Corporation.
ARTICLE III
Committees
3.1 Committees. The Board of Directors, by resolution duly adopted, may
establish such committees of the Board having limited authority in the
management of the affairs of the Corporation as it may deem advisable and the
members, terms and authority of such committees shall be as set forth in the
resolutions establishing the same.
3.2 Meetings. Regular and special meetings of any Committee established
pursuant to this Article may be called and held subject to the same requirements
with respect to time, place and notice as are specified in these By-laws for
regular and special meetings of the Board of Directors.
3.3 Quorum and Manner of Acting. A majority of the members of any Committee
serving at the time of any meeting thereof shall constitute a quorum for the
transaction of business at such meeting. The action of a majority of those
members present at a Committee meeting at which a quorum is present shall
constitute the act of the Committee.
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3.4 Term of Office. Members of any Committee shall be elected as provided
above and shall hold office until their successors are elected by the Board of
Directors or until such Committee is dissolved by the Board of Directors.
3.5 Resignation and Removal. Any member of a Committee may resign at any
time by giving written notice of his intention to do so to the President or the
Secretary of the Corporation, or may be removed, with or without cause, at any
time by such vote of the Board of Directors as would suffice for his election.
3.6 Vacancies. Any vacancy occurring in a Committee resulting from any
cause whatsoever may be filled by a majority of the number of Directors fixed by
these By-laws.
ARTICLE IV
Officers
4.1 Election. The officers of the Corporation shall consist of a President,
one or more Vice Presidents (any one or more of whom may be designated as
Executive Vice Presidents or Senior Vice Presidents), a Secretary and a
Treasurer. In addition, such other officers as are provided in section 4.3 of
this Article may from time to time be elected by the Board of Directors. All
officers shall hold office until the next annual meeting of the Board of
Directors or until their successors are elected. Any two officers may be
combined in the same person as
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the Board of Directors may determine, except that the President and Secretary
may not be the same person.
4.2 Removal of Officers; Vacancies. Any officer of the Corporation may be
removed summarily with or without cause, at any time by a resolution passed at
any meeting by affirmative vote of a majority of the number of Directors fixed
by these By-laws. Vacancies may be filled at any meeting of the Board of
Directors.
4.3 Other Officers. Other officers may from time to time be elected by the
Board, including, without limitations, one or more Assistant Secretaries and
Assistant Treasurers.
4.4 Duties. The officers of the Corporation shall have such duties as
generally pertain to their offices, respectively, as well as such powers and
duties as are hereinafter provided and as from time to time shall be conferred
by the Board of Directors. The Board of Directors may require any officer to
give such bond for the faithful performance of his duties as the Board may see
fit.
4.5 Duties of the President. The President shall be the chief executive and
administrative officer of the Corporation and shall have direct supervision over
the business of the Corporation and its several officers, subject to the Board
of
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<PAGE>
Directors. The President may sign and execute in the name of the Corporation
deeds, mortgages, bonds, contracts or other instruments, except in cases where
the signing and the execution thereof shall be expressly delegated by the Board
of Directors or by these By-laws to some other officer or agent of the
Corporation or shall be required by law otherwise to be signed or executed. He
may appoint advisory committees as provided in Article III. In addition, he
shall perform all duties incident to the office of the President and such other
duties as from time to time may be assigned to him by the Board of Directors.
4.6 Duties of the Vice Presidents. Each Vice President of the Corporation
(including any Executive Vice President and Senior Vice President) shall have
powers and duties as may from time to time be assigned to him by the Board of
Directors or the President. When there shall be more than one Vice President of
the Corporation, the Board of Directors may from time to time designate one of
them to perform the duties of the President in the absence of the President. Any
Vice President of the Corporation may sign and execute in the name of the
Corporation deeds, mortgages, bonds, contracts and other instruments, except in
cases where the signing and execution thereof shall be expressly delegated by
the Board of Directors or by these By-laws to some other officer or agent of the
Corporation or shall be required by law otherwise to be signed or executed.
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<PAGE>
4.7 Duties of the Treasurer. The Treasurer shall have charge and custody of
and be responsible for all funds and securities of the Corporation, and shall
cause all such funds and securities to be deposited in such banks and
depositories as the Board of Directors from time to time may direct. He shall
maintain adequate accounts and records of all assets, liabilities and
transactions of the Corporation in accordance with generally accepted accounting
practices; shall exhibit his accounts and records to any of the Directors of the
Corporation at any time upon request at the office of the Corporation; shall
render such statements of his accounts and records and such other statements to
the Board of Directors and officers as often and in such manner as they shall
require; and shall make and file (or supervise the making and filing of) all tax
returns required by law. He shall in general perform all duties incident to the
office of Treasurer and such other duties as from time to time may be assigned
to him by the Board of Directors or the President.
4.8 Duties of the Secretary. The Secretary shall act as a secretary of all
meetings of the Board of Directors and all other Committees of the Board, and
the shareholders of the Corporation, and shall keep the minutes thereof in the
proper book or books to be provided for that purpose. He shall see that all
notices required to be given by the Corporation are duly given and served; shall
have custody of the seal of the Corporation and
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<PAGE>
shall affix the seal or cause it to be affixed to all certificates for stock of
the Corporation and to all documents the execution of which on behalf of the
Corporation under its corporate seal is duly authorized in accordance with the
provisions of these By-laws; shall have custody of all deeds, leases, contracts
and other important corporate documents; shall have charge of the books, records
and papers of the Corporation relating to its organization and management as a
Corporation; shall see that the reports, statements and other documents required
by law (except tax returns) are properly filed; and shall, in general, perform
all the duties incident to the office of Secretary and such other duties as from
time to time may be assigned to him by the Board of Directors or the President.
4.9 Other Duties of Officers. Any officer of the Corporation shall have, in
addition to the duties prescribed herein or by law, such other duties as from
time to time shall be prescribed by the Board of Directors or the President.
ARTICLE V
Capital Stock
5.1 Certificates. The shares of capital stock of the Corporation shall be
evidenced by certificates in forms prescribed by the Board of Directors and
executed in any manner permitted by law and stating thereon the information
required by law. Transfer agents and/or registrars for one or more classes
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<PAGE>
of shares of the Corporation may be appointed by the Board of Directors and may
be required to countersign certificates representing shares of such class or
classes. If any officer whose signature or facsimile thereof shall have been
used on a share certificate shall for any reason cease to be an officer of the
Corporation and such certificate shall not then have been delivered by the
Corporation, the Board of Directors may nevertheless adopt such certificate and
it may then be issued and delivered as though such person had not ceased to be
an officer of the Corporation.
5.2 Lost, Destroyed and Mutilated Certificates. Holders of the shares of
the Corporation shall immediately notify the Corporation of any loss,
destruction or mutilation of the certificate therefor, and the Board of
Directors, may, in its discretion, cause one or more new certificates for the
same number of shares in the aggregate to be issued to such shareholder upon the
surrender of the mutilated certificate or upon satisfactory proof of such loss
or destruction, and the deposit of a bond in such form and amount and with such
surety as the Board of Directors may require.
5.3 Transfer of Shares. The shares of the Corporation shall be transferable
or assignable only on the books of the Corporation by the holders in person or
by attorney on surrender of the certificate for such shares duly endorsed and,
if sought
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<PAGE>
to be transferred by attorney, accompanied by a written power of attorney to
have the same transferred on the books of the Corporation. The Corporation will
recognize the exclusive right of the person registered on its books as the owner
of shares to receive dividends and to vote as such owner.
5.4 Fixing Record Date. For the purpose of determining shareholders
entitled to notice of or to vote at any meeting of the shareholders or any
adjournment thereof, or entitled to receive payment for any dividend, or in
order to make a determination of shareholders for any other proper purpose, the
Board of Directors may fix in advance a date as the record date for any such
determination of shareholders, such date in any case to be not more than seventy
days prior to the date on which the particular action, requiring such
determination of shareholders, is to be taken. If no record date is fixed for
the determination of shareholders entitled to notice of or to vote at a meeting
of shareholders, or shareholders entitled to receive payment of a dividend, the
date on which notice of the meeting is mailed or the date on which the
resolution of the Board of Directors declaring such dividend is adopted, as the
case may be, shall be the record date for such determination of shareholders.
When a determination of shareholders entitled to vote at any meeting of
shareholders has been made as provided in this section, such determination shall
apply to any adjournment thereof.
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<PAGE>
ARTICLE VI
Miscellaneous Provisions
6.1 Seal. The seal of the Corporation shall consist of a flat-face circular
die, of which there may be any number of counterparts, with the name of the
Corporation cut or engraved thereon.
6.2 Fiscal Year. The fiscal year of the Corporation shall end on December
31st of each year, and shall consist of such accounting periods as may be
recommended by the Treasurer and approved by the Board of Directors.
6.3 Books and Records. The Corporation shall keep correct and complete
books and records of account and shall keep minutes of the proceedings of its
shareholders and Board of Directors; and shall keep at its registered office or
principal place of business, or at the office of its transfer agent or registrar
a record of its shareholders, giving the names and addresses of all
shareholders, and the number, class and series of the shares being held.
6.4 Checks, Notes and Drafts. Checks, notes, drafts and other orders for
the payment of money shall be signed by such persons as the Board of Directors
from time to time may authorize. When the Board of Directors so authorizes,
however, the signature of any such person may be a facsimile.
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<PAGE>
6.5 Amendment of By-laws. These By-laws may be amended or altered at any
meeting of the Board of Directors by affirmative vote of a majority of the
number of Directors fixed by these By-laws. The shareholders entitled to vote in
respect of the election of Directors, however, shall have the power, by majority
vote of the outstanding shares of the Corporation, to rescind, alter, amend or
repeal any By-laws and to enact By-laws which, if expressly so provided, may not
be amended, altered or repealed by the Board of Directors.
6.6 Voting of Shares Held. Unless otherwise provided by resolution of the
Board of Directors, the President shall from time to time appoint an attorney or
attorneys or agent or agents of this Corporation, in the name and on behalf of
this Corporation, to cast the vote which this Corporation may be entitled to
cast as a shareholder or otherwise in any other corporation, any of whose stock
or securities may be held in this Corporation, at meetings of the holders of the
shares or other securities of such other corporation, or to consent in writing
to any action by any such other corporation, and shall instruct the person or
persons so appointed as to the manner of casting such votes or giving such
consent and may execute or cause to be executed on behalf of this Corporation
and under its corporate seal or otherwise, such written proxies, consents,
waivers or other instruments as may be necessary or proper in the premises; or,
in lieu of such appointment, the President may attend in
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<PAGE>
person any meetings of the holders of shares or other securities of any such
other corporation and there vote or exercise any or all power of this
Corporation as the holder of such shares or other securities of such other
corporation.
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<PAGE>
EXECUTION COPY
================================================================================
PRECISE TECHNOLOGY, INC.
11 1/8% SENIOR SUBORDINATED NOTES DUE 2007
------------------------
INDENTURE
Dated as of June 13, 1997
------------------------
------------------------
Marine Midland Bank
Trustee
------------------------
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE................... 1
Section 1.01. Definitions.................................................. 1
Section 1.02. Other Definitions............................................ 18
Section 1.03. Incorporation By Reference of Trust Indenture Act............ 18
Section 1.04. Rules of Construction........................................ 19
Section 1.05. Compliance Certificates and Opinions......................... 19
ARTICLE 2 THE NOTES.................................................... 21
Section 2.01. Form and Dating.............................................. 21
Section 2.02. Execution and Authentication................................. 22
Section 2.03. Registrar and Paying Agent................................... 23
Section 2.04. Paying Agent to Hold Money in Trust.......................... 23
Section 2.05. Holder Lists................................................. 24
Section 2.06. Transfer and Exchange........................................ 24
Section 2.07. Replacement Notes............................................ 36
Section 2.08. Outstanding Notes............................................ 36
Section 2.09. Treasury Notes............................................... 36
Section 2.10. Temporary Notes.............................................. 36
Section 2.11. Cancellation................................................. 37
Section 2.12. Defaulted Interest........................................... 37
ARTICLE 3 REDEMPTION AND PREPAYMENT.................................... 38
Section 3.01. Applicability of Article..................................... 38
Section 3.02. Election to Redeem; Notice to Trustee........................ 38
Section 3.03. Selection by Trustee of Notes to Be Redeemed................. 38
Section 3.04. Notice of Redemption......................................... 38
Section 3.05. Deposit of Redemption Price.................................. 39
Section 3.06. Notes Payable on Redemption Date............................. 39
Section 3.07. Notes Redeemed in Part....................................... 39
Section 3.08. Optional Redemption.......................................... 40
Section 3.09. Mandatory Redemption......................................... 40
Section 3.10. Offer to Purchase by Application of Excess Proceeds.......... 40
ARTICLE 4 COVENANTS.................................................... 42
Section 4.01. Payment of Principal, Premium and Interest................... 42
Section 4.02. Maintenance of Office or Agency.............................. 43
Section 4.03. Money for Security Payments to Be Held In Trust.............. 43
Section 4.04. Reports...................................................... 44
Section 4.05. Statement as to Compliance; Notice of Default. .............. 45
Section 4.06. Payment of Taxes and Other Claims............................ 46
Section 4.07. Limitation on Liens.......................................... 46
Section 4.08. Corporate Existence.......................................... 46
Section 4.09. Offer to Repurchase Upon Change of Control................... 46
Section 4.10. Asset Sales.................................................. 48
i
<PAGE>
Section 4.11. Limitation on Restricted Payments............................ 49
Section 4.12. Limitation on Incurrence of Indebtedness
and Issuance of Preferred Stock.............................. 51
Section 4.13. Transactions with Affiliates................................. 53
Section 4.14. Dividend and Other Payment Restrictions
Affecting Subsidiaries....................................... 54
Section 4.15. Limitation on Issuances and Sales of Capital Stock
of Wholly Owned Restricted Subsidiaries...................... 55
Section 4.16. Limitation on Layering Debt.................................. 55
Section 4.17. Additional Subsidiary Guarantees............................. 55
Section 4.18. Payments For Consent......................................... 56
ARTICLE 5 SUCCESSORS................................................... 56
Section 5.01. Merger, Consolidation, or Sale of All or
Substantially All Assets..................................... 56
Section 5.02. Successor Corporation Substituted............................ 57
ARTICLE 6 DEFAULTS AND REMEDIES........................................ 57
Section 6.01. Events of Default and Notice Thereof......................... 57
Section 6.02. Acceleration of Maturity; Rescission......................... 58
Section 6.03. Other Remedies............................................... 59
Section 6.04. Waiver of Past Defaults...................................... 59
Section 6.05. Control by Majority.......................................... 59
Section 6.06. Limitation on Suits.......................................... 60
Section 6.07. Rights of Holders of Notes to Receive Payment................ 60
Section 6.08. Collection Suit by Trustee................................... 60
Section 6.09. Trustee May File Proofs of Claim............................. 60
Section 6.10. Priorities................................................... 61
Section 6.11. Undertaking for Costs........................................ 61
Section 6.12. Waiver of Stay, Extension of Usury Laws...................... 61
ARTICLE 7 TRUSTEE...................................................... 62
Section 7.01. Duties of Trustee............................................ 62
Section 7.02. Rights of Trustee............................................ 63
Section 7.03. Individual Rights of Trustee................................. 63
Section 7.04. Trustee's Disclaimer......................................... 64
Section 7.05. Notice of Defaults........................................... 64
Section 7.06. Reports by Trustee to Holders of the Notes................... 64
Section 7.07. Compensation and Indemnity................................... 64
Section 7.08. Replacement of Trustee....................................... 65
Section 7.09. Successor Trustee by Merger, etc............................. 66
Section 7.10. Eligibility; Disqualification................................ 66
Section 7.11. Preferential Collection of Claims Against the Company........ 66
ARTICLE 8 LEGAL DEFEASANCE AND COVENANT DEFEASANCE..................... 67
Section 8.01. Option to Effect Legal Defeasance or Covenant Defeasance..... 67
Section 8.02. Legal Defeasance and Discharge............................... 67
Section 8.03. Covenant Defeasance.......................................... 67
Section 8.04. Conditions to Legal Defeasance or Covenant Defeasance........ 68
Section 8.05. Deposited Money and U.S. Government Obligations to be
Held in Trust; Other Miscellaneous Provisions................ 69
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Section 8.06. Reinstatement................................................ 70
ARTICLE 9 AMENDMENT, SUPPLEMENT AND WAIVER............................. 70
Section 9.01. Without Consent of Holders of Notes.......................... 70
Section 9.02. With Consent of Holders of Notes............................. 71
Section 9.03. Compliance with TIA.......................................... 72
Section 9.04. Revocation and Effect of Consents............................ 72
Section 9.05. Notation on or Exchange of Notes............................. 72
Section 9.06. Trustee to Sign Amendments, etc.............................. 72
ARTICLE 10 SUBORDINATION................................................ 73
Section 10.01.Agreement to Subordinate..................................... 73
Section 10.02.Liquidation; Dissolution; Bankruptcy......................... 73
Section 10.03.Default on Designated Senior Debt............................ 73
Section 10.04.Acceleration of Securities................................... 74
Section 10.05.When Distribution Must Be Paid Over.......................... 74
Section 10.06.Notice by Company............................................ 75
Section 10.07.Subrogation.................................................. 75
Section 10.08.Relative Rights.............................................. 75
Section 10.09.Subordination May Not Be Impaired by Company................. 76
Section 10.10.Distribution or Notice to Representative..................... 76
Section 10.11.Rights of Trustee and Paying Agent........................... 76
Section 10.12.Authorization to Effect Subordination........................ 76
ARTICLE 11 SATISFACTION AND DISCHARGE................................... 77
Section 11.01.Satisfaction and Discharge of Indenture...................... 77
Section 11.02.Application of Trust Money.................................. 77
ARTICLE 12 SUBSIDIARY GUARANTEES........................................ 78
Section 12.01.Subsidiary Guarantee......................................... 78
Section 12.02.Execution and Delivery of Guarantee.......................... 79
Section 12.03.Guarantors May Consolidate, etc., on Certain Terms........... 79
Section 12.04.Releases From Guarantees..................................... 80
Section 12.05.Limitation on Guarantor Liability............................ 80
Section 12.06.Subordination of Subsidiary Guarantees....................... 81
ARTICLE 13 MISCELLANEOUS................................................ 81
Section 13.01.Conflict of Any Provision of Indenture with TIA.............. 81
Section 13.02.Notices...................................................... 81
Section 13.03.Communication by Holders of Notes with Other
Holders of Notes............................................. 82
Section 13.04.Certificate and Opinion as to Conditions Precedent........... 82
Section 13.05.Legal Holidays............................................... 83
Section 13.06.No Personal Liability of Directors, Officers,
Employees and Stockholders................................... 83
Section 13.07.Governing Law; Submission to Jurisdiction.................... 83
Section 13.08.No Adverse Interpretation of Other Agreements................ 83
Section 13.09.Successors and Assigns....................................... 84
Section 13.10.Severability................................................. 84
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Section 13.11.Counterpart Originals........................................ 84
Section 13.12.Table of Contents, Headings, etc............................. 84
iv
<PAGE>
EXHIBITS
Exhibit A-1 Form of Restricted Definitive Note, Regulation S Permanent
Global Note and Rule 144A Global Note
Exhibit A-2 Form of Regulation S Temporary Global Note
Exhibit A-3 Form of Unrestricted Note
Exhibit B Form of Certificate of Transfer
Exhibit C Form of Certificate of Exchange
Exhibit D Form of Certificate from Acquiring Institutional
Accredited Investor
Exhibit E Form of Subsidiary Guarantee
Schedule I Schedule of Existing Indebtedness
v
<PAGE>
CROSS-REFERENCE TABLE*
Trust Indenture Indenture Section
Act Section
310(a)(1)...................................................7.10
(a)(2)...................................................7.10
(a)(3)...................................................N.A.
(a)(4)...................................................N.A.
(a)(5)...................................................7.10
(b)......................................................7.10
(c)......................................................N.A.
311(a)......................................................7.11
(b)......................................................7.11
(c)......................................................N.A.
312(a)......................................................11.03
(b)......................................................11.03
(c)......................................................11.03
313(a)......................................................7.06
(b)(1)...................................................N.A.
(b)(2)...................................................7.06; 7.07
(c)......................................................7.06; 10.02
(d)......................................................7.06
314(a)......................................................4.04; 11.02
(b)......................................................N.A.
(c)(1)...................................................11.04
(c)(2)...................................................11.04
(c)(3)...................................................N.A.
(d)......................................................N.A.
(f)......................................................N.A.
315(a)......................................................7.01
(b)......................................................7.05; 11.02
(c)......................................................7.01
(d)......................................................7.01
(e)......................................................6.11
316(a)(last sentence).......................................2.09
(a)(1)(A)................................................6.05
(a)(1)(B)................................................6.04
(a)(2)...................................................N.A.
(b)......................................................6.07
317(a)(1)...................................................6.08
(a)(2)...................................................6.09
(b)......................................................2.04
318(a)......................................................11.01
(b)......................................................N.A.
(c)......................................................11.01
N.A. means not applicable.
*This Cross-Reference Table is not part of the Indenture.
vi
<PAGE>
INDENTURE dated as of June 13, 1997 among Precise Technology, Inc., a
Delaware corporation (the "Company"), Precise TMP, Inc., a Virginia corporation
("Precise TMP"), Massie Tool, Mold & Die, Inc., a Florida corporation
("Massie"), Precise Polestar, Inc., a Virginia corporation ("Precise Polestar"),
Precise Technology of Delaware Inc., a Delaware corporation ("Precise
Delaware"), and Precise Technology of Illinois Inc., a Delaware corporation
("Precise Illinois") (each of Precise TMP, Massie, Precise Polestar, Precise
Delaware and Precise Illinois a "Guarantor", and together with certain future
Subsidiaries of the Company as set forth herein, the "Guarantors") and Marine
Midland Bank, as trustee (the "Trustee"). The Company, the Guarantors and the
Trustee agree as follows for the benefit of each other and for the equal and
ratable benefit of the Holders of the 11 1/8% Senior Subordinated Notes due 2007
(the "Notes").
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01.DEFINITIONS.
"Accredited Investor" has the meaning set forth in Rule 501(a) (1), (2),
(3) or (7) of the Securities Act.
"Acquired Debt" means, with respect to any specified Person, (i)
Indebtedness or preferred stock of any other Person existing at the time such
other Person is merged with or into or became a Subsidiary of such specified
Person, including, without limitation, Indebtedness or preferred stock incurred
in connection with, or in contemplation of, such other Person merging with or
into or becoming a Subsidiary of such specified Person, and (ii) Indebtedness
secured by a Lien encumbering any asset acquired by such specified Person.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise; provided that
beneficial ownership of 10% or more of the voting securities of a Person shall
be deemed to be control.
"Agent" means any Registrar, Paying Agent or co-registrar.
"Agent Members" means members of, or participants in, the Depository.
"Applicable Procedures" means applicable procedures of the Depository,
Euroclear or Cedel Bank, as the case may be.
"Asset Sale" means (i) the sale, lease, conveyance or other disposition of
any assets or rights (including, without limitation, by way of a sale and
leaseback) other than sales of inventory in the ordinary course of business
consistent with past practices (provided that the sale, lease, conveyance or
other disposition of all or substantially all of the assets of the Company and
its Subsidiaries taken as a whole will be governed by the provisions of Section
4.09 and/or the provisions of Section 5.01 and not by the
<PAGE>
provisions of Section 4.10), and (ii) the issuance of Equity Interests in any
Restricted Subsidiary or the sale of Equity Interests in any of the Company's
Restricted Subsidiaries, in the case of either clause (i) or (ii), whether in a
single transaction or a series of related transactions (a) that have a fair
market value in excess of $1.0 million or (b) for net proceeds in excess of $1.0
million. Notwithstanding the foregoing: (i) a transfer of assets or Equity
Interests by the Company to a Wholly Owned Restricted Subsidiary or by a Wholly
Owned Restricted Subsidiary to the Company or to another Wholly Owned Restricted
Subsidiary, (ii) an issuance of Equity Interests by a Wholly Owned Restricted
Subsidiary to the Company or to another Wholly Owned Restricted Subsidiary,
(iii) the disposal of obsolete equipment and machinery in the ordinary course of
business and (iv) a Restricted Payment that is permitted to be made, and is
made, under Section 4.11 will not be deemed to be Asset Sales.
"Bankruptcy Law" means Title 11, U.S. Code or any similar foreign, federal
or state law for the relief of debtors.
"Board of Directors" means the board of directors of the Company or any
duly authorized committee of such board.
"Board Resolution" means a copy of a resolution certified by the Secretary
or an Assistant Secretary of the Company to have been duly adopted by the Board
of Directors and to be in full force and effect on the date of such
certification and delivered to the Trustee.
"Borrowing Base" means, as of any date, an amount equal to the sum of (a)
85% of the face amount of all trade receivables owned by the Company and its
Restricted Subsidiaries as of such date that are not more than 90 days past due,
less the allowance for doubtful accounts, each of the foregoing determined in
accordance with GAAP, and (b) 50% of the book value of all inventory owned by
the Company and its Restricted Subsidiaries as of such date, less any applicable
reserves, each of the foregoing determined in accordance with GAAP. To the
extent that information is not available as to the amount of trade receivables
or inventory as of a specific date, the Company may utilize the most recent
available information for purposes of calculating the Borrowing Base.
"Broker-Dealer" has the meaning set forth in the Registration Rights
Agreement.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and Friday
that is not a day on which banking institutions in The City of New York are
authorized or obligated by law, regulation or executive order to close.
"Capital Lease Obligation" means, at the time any determination thereof is
to be made, the amount of the liability in respect of a capital lease that would
at such time be required to be capitalized on a balance sheet in accordance with
GAAP.
"Capital Stock" means (i) in the case of a corporation, corporate stock,
(ii) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
corporate stock, (iii) in the case of a partnership or limited liability
company, partnership or membership interests (whether general or limited) and
(iv) any other interest or participation that confers on a Person the right to
receive a share of the profits and losses of, or distributions of assets of, the
issuing Person.
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"Cash Equivalents" means (i) United States dollars, (ii) securities issued
or directly and fully guaranteed or insured by the United States government or
any agency or instrumentality thereof having maturities of not more than one
year from the date of acquisition, (iii) certificates of deposit and eurodollar
time deposits with maturities of one year or less from the date of acquisition,
bankers' acceptances with maturities not exceeding six months and overnight bank
deposits, in each case with any lender party to the Credit Agreement or with any
domestic commercial bank having capital and surplus in excess of $500 million,
(iv) repurchase obligations with a term of not more than seven days for
underlying securities of the types described in clauses (ii) and (iii) above
entered into with any financial institution meeting the qualifications specified
in clause (iii) above, (v) commercial paper rated at least P-1 by Moody's
Investors Service, Inc. or A-1 by Standard & Poor's Ratings Services and in each
case maturing within six months after the date of acquisition and (vi)
investment funds with total assets in excess of $500 million that invest at
least 95% of their assets in securities of the types described in clauses (i)
through (v) above.
"Change of Control" means the occurrence of any of the following:
(i) the sale, lease, transfer, conveyance or other disposition (other
than by way of merger or consolidation), in one or a series of
related transactions, of all or substantially all of the assets
of the Company and its Restricted Subsidiaries taken as a whole
to any "person" (as such term is defined in Section 13(d)(3) of
the Exchange Act) other than the Principals or their Related
Parties;
(ii) the adoption of a plan relating to the liquidation or dissolution
of the Company;
(iii) the consummation of any transaction (including, without
limitation, any merger or consolidation) the result of which is
that any "person" (as defined above), other than the Principals
and their Related Parties, becomes the "beneficial owner" (as
such term is defined in Rule 13d-3 and Rule 13d-5 under the
Exchange Act, except that a Person shall be deemed to have
"beneficial ownership" of all securities that such Person has the
right to acquire, whether such right is currently exercisable or
is exercisable only upon the occurrence of a subsequent
condition), directly or indirectly, of more than 50% of the
Voting Stock of the Company (measured by voting power rather than
number of shares); or
(iv) the first day on which a majority of the members of the Board of
Directors of the Company are not Continuing Directors.
"Code" means the Internal Revenue Code of 1986, as amended, or any
successor thereto.
"Company" means Precise Technology, Inc., a Delaware corporation, and any
successor thereto pursuant to Section 5.01 hereof.
"Company Request" or "Company Order" means a written request or order
signed in the name of the Company (i) by its Chairman, a Vice Chairman, its
President or a Vice President and (ii) by its Treasurer, an Assistant Treasurer,
its Secretary or an Assistant Secretary and delivered to the Trustee; provided,
however, that such written request or order may be signed by any two of the
officers or directors listed in clause (i) above in lieu of being signed by one
of such officers or directors listed in such clause (i) and one of the officers
listed in clause (ii) above.
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"Consolidated Cash Flow" means, with respect to any Person for any period,
the Consolidated Net Income of such Person for such period plus (i) an amount
equal to any extraordinary, non-recurring or unusual loss plus any net loss
realized in connection with an asset sale (to the extent such losses were
deducted or otherwise excluded in computing such Consolidated Net Income), plus
(ii) provision for taxes based on income or profits of such Person and its
Subsidiaries for such period, to the extent that such provision for taxes was
included in computing such Consolidated Net Income, plus (iii) consolidated
interest expense of such Person and its Subsidiaries for such period, whether
paid or accrued and whether or not capitalized (including, without limitation,
amortization of debt issuance costs and original issue discount, non-cash
interest payments, the interest component of any deferred payment obligations,
the interest component of all payments associated with Capital Lease
Obligations, commissions, discounts and other fees and charges incurred in
respect of letter of credit or bankers' acceptance financings, and net payments
(if any) pursuant to Hedging Obligations), to the extent that any such expense
was deducted in computing such Consolidated Net Income, plus (iv) depreciation,
amortization (including amortization of goodwill and other intangibles but
excluding amortization of prepaid cash expenses that were paid in a prior
period) and other non-cash expenses (excluding any such non-cash expense to the
extent that it represents an accrual of or reserve for cash expenses in any
future period or amortization of a prepaid cash expense that was paid in a prior
period) of such Person and its Subsidiaries for such period to the extent that
such depreciation, amortization and other non-cash expenses were deducted in
computing such Consolidated Net Income, plus (v) an amount equal to all premiums
on prepayments of debt, minus (vi) non-cash items increasing such Consolidated
Net Income for such period, in each case, on a consolidated basis and determined
in accordance with GAAP. Notwithstanding the foregoing, the provision for taxes
on the income or profits of, and the depreciation and amortization and other
non-cash charges of, a Subsidiary of the referent Person shall be added to
Consolidated Net Income to compute Consolidated Cash Flow only to the extent
that a corresponding amount would be permitted at the date of determination to
be dividended to the Company by such Subsidiary without prior approval (that has
not been obtained), and without direct or indirect restriction pursuant to the
terms of its charter and all agreements, instruments, judgments, decrees,
orders, statutes, rules and governmental regulations applicable to that
Subsidiary or its stockholders.
"Consolidated Net Income" means, with respect to any Person for any
period, the aggregate of the Net Income of such Person and its Restricted
Subsidiaries for such period, on a consolidated basis, determined in accordance
with GAAP; provided that (i) the Net Income (but not loss) of any Person that is
not a Restricted Subsidiary or that is accounted for by the equity method of
accounting shall be included only to the extent of the amount of dividends or
distributions paid in cash to the referent Person or a Wholly Owned Restricted
Subsidiary thereof that is a Guarantor and, for purposes of determining
Consolidated Cash Flow only, shall not exceed the consolidated net income of
such Person for such period, (ii) the Net Income of any Restricted Subsidiary
shall be excluded to the extent that the declaration or payment of dividends or
similar distributions by that Restricted Subsidiary of that Net Income is not at
the date of determination permitted without any prior governmental approval
(that has not been obtained) or, directly or indirectly, by operation of the
terms of its charter or any agreement, instrument, judgment, decree, order,
statute, rule or governmental regulation applicable to that Restricted
Subsidiary or its stockholders, (iii) the Net Income of any Person acquired in a
pooling of interests transaction for any period prior to the date of such
acquisition shall be excluded, (iv) the cumulative effect of a change in
accounting principles shall be excluded and (v) the Net Income of any Person
that is an Unrestricted Subsidiary shall be included only to the extent of the
amount of cash dividends or cash distributions paid to such Person or a
Restricted Subsidiary thereof.
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"Consolidated Net Worth" means, with respect to any Person as of any date,
the sum of (i) the consolidated equity of the common stockholders of such Person
and its consolidated Subsidiaries as of such date plus (ii) the respective
amounts reported on such Person's balance sheet as of such date with respect to
any series of preferred stock (other than Disqualified Stock) that by its terms
is not entitled to the payment of dividends unless such dividends may be
declared and paid only out of net earnings in respect of the year of such
declaration and payment, but only to the extent of any cash received by such
Person upon issuance of such preferred stock, less (x) all write-ups (other than
write-ups resulting from foreign currency translations and write-ups of tangible
assets of a going concern business made within 12 months after the acquisition
of such business) subsequent to the date of this Indenture in the book value of
any asset owned by such Person or a consolidated Subsidiary of such Person, (y)
all investments as of such date in unconsolidated Restricted Subsidiaries and in
Persons that are not Subsidiaries (except, in each case, Permitted Investments),
and (z) all unamortized debt discount and expense and unamortized deferred
charges as of such date, all of the foregoing determined in accordance with
GAAP.
"Continuing Directors" means, as of any date of determination, any member
of the Board of Directors of the Company who (i) was a member of such Board of
Directors on the date of this Indenture or (ii) was nominated by the Principals
or any Related Party to serve on such Board of Directors.
"Corporate Trust Office of the Trustee" shall be at the address of the
Trustee specified in Section 13.02 hereof or such other address as to which the
Trustee may give notice to the Company.
"Credit Agreement" means that certain Credit Agreement, dated as of June
13, 1997, by and among Parent, the Company and the Subsidiaries of the Company
named therein, the lenders named therein and Fleet National Bank, as Agent and
as issuing bank, providing for up to $30.0 million of revolving credit
borrowings, including any related notes, guarantees, collateral documents,
instruments and agreements executed in connection therewith, and in each case as
amended, modified (including any agreement extending the maturity of, increasing
the total commitment under or otherwise restructuring all or any portion of the
Indebtedness under such agreement or any successor or replacement agreement),
renewed, refunded, replaced, restated, supplemented or refinanced from time to
time.
"Custodian" means any receiver, trustee, assignee, liquidator or similar
official under any Bankruptcy Law.
"Default" means any event that is or with the passage of time or the
giving of notice or both would be an Event of Default.
"Definitive Notes" means Restricted Definitive Notes and Unrestricted
Definitive Notes.
"Depository" means, with respect to any Global Note, the Person specified
in Section 2.03 hereof as the Depository with respect to such Note, until a
successor shall have been appointed and become such pursuant to the applicable
provision of this Indenture, and, thereafter, "Depository" shall mean or include
such successor.
"Designated Senior Debt" means (i) any Indebtedness outstanding under the
Credit Agreement and (ii) any other Senior Debt, the principal amount of which
is $5.0 million or more and that has been designated by a Board Resolution as
"Designated Senior Debt."
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"Disqualified Stock" means any Capital Stock that, by its terms (or by the
terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at
the option of the holder thereof, in whole or in part, on or prior to the date
that is 91 days after the date on which the Notes mature.
"Equity Interests" means Capital Stock and all warrants, options or other
rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations of the SEC promulgated thereunder.
"Exchange Offer" means the offer that may be made by the Company pursuant
to the Registration Rights Agreement to exchange Notes (as defined in the
Registration Rights Agreement) for New Notes.
"Exchange Offer Registration Statement" has the meaning set forth in the
Registration Rights Agreement.
"Existing Indebtedness" means up to $6.8 million in aggregate principal
amount of Indebtedness of the Company and its Subsidiaries (other than
Indebtedness under the Credit Agreement) in existence on the date hereof and set
forth on Schedule I hereto (including any refinancings thereof), until such
amounts are permanently repaid.
"Fixed Charges" means, with respect to any Person and its Restricted
Subsidiaries for any period, the sum, without duplication, of (i) the
consolidated interest expense of such Person and its Restricted Subsidiaries for
such period, whether paid or accrued (including, without limitation,
amortization of debt issuance costs and original issue discount, non-cash
interest payments, the interest component of any deferred payment obligations,
the interest component of all payments associated with Capital Lease
Obligations, commissions, discounts and other fees and charges incurred in
respect of letter of credit or bankers' acceptance financings, and net payments
(if any) pursuant to Hedging Obligations) and (ii) the consolidated interest
expense of such Person and its Restricted Subsidiaries that was capitalized
during such period, and (iii) any interest expense on Indebtedness of another
Person that is Guaranteed by such Person or one of its Restricted Subsidiaries
or secured by a Lien on assets of such Person or one of its Restricted
Subsidiaries (whether or not such Guarantee or Lien is called upon) and (iv) all
dividend payments (including all dividend payments within 60 days of the
measurement date for any period), whether or not in cash, on any series of (A)
Disqualified Stock of such Person and (B) preferred stock of any Subsidiary of
such Person, other than dividend payments on Equity Interests payable solely in
Equity Interests of the Company and other than payments to such Person and its
Restricted Subsidiaries, in each case, on a consolidated basis and in accordance
with GAAP.
"Fixed Charge Coverage Ratio" means with respect to any Person and its
Restricted Subsidiaries for any period, the ratio of the Consolidated Cash Flow
of such Person and its Restricted Subsidiaries for such period to the Fixed
Charges of such Person and its Restricted Subsidiaries for such period. In the
event that the Company or any of its Restricted Subsidiaries incurs, assumes,
Guarantees or redeems any Indebtedness (other than revolving credit borrowings)
or issues or redeems preferred stock subsequent to the commencement of the
period for which the Fixed Charge Coverage Ratio is being calculated but prior
to the date on which the event for which the calculation of the Fixed Charge
Coverage Ratio is made (the
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"Calculation Date"), then the Fixed Charge Coverage Ratio shall be calculated
giving pro forma effect to such incurrence, assumption, Guarantee or redemption
of Indebtedness, or such issuance or redemption of preferred stock, and the
application of the net proceeds thereof, as if the same had occurred at the
beginning of the applicable four-quarter reference period. In addition, for
purposes of making the computation referred to above, (i) acquisitions that have
been made by the Company or any of its Restricted Subsidiaries, including
through mergers or consolidations and including any related financing
transactions, during the four-quarter reference period or subsequent to such
reference period and on or prior to the Calculation Date shall be deemed to have
occurred on the first day of the four-quarter reference period and Consolidated
Cash Flow for such reference period shall be calculated without giving effect to
clause (iii) of the proviso set forth in the definition of Consolidated Net
Income, and (ii) the Consolidated Cash Flow attributable to discontinued
operations, as determined in accordance with GAAP, and operations or businesses
disposed of prior to the Calculation Date, shall be excluded, and (iii) the
Fixed Charges attributable to discontinued operations, as determined in
accordance with GAAP, and operations or businesses disposed of prior to the
Calculation Date, shall be excluded, but only to the extent that the obligations
giving rise to such Fixed Charges will not be obligations of the referent Person
or any of its Restricted Subsidiaries following the Calculation Date.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession, which are in effect from time to time.
"Global Note" means, individually and collectively, the Regulation S
Global Note, the Rule 144A Global Note and the Unrestricted Global Note.
"Global Note Legend" means the legend set forth in Section 2.06(g)(ii).
"Government Securities" means securities that are (a) direct obligations
of the United States of America for the timely payment of which its full faith
and credit is pledged or (b) obligations of a Person controlled or supervised by
and acting as an agency or instrumentality of the United States of America the
timely payment of which is unconditionally guaranteed as a full faith and credit
obligation by the United States of America, which, in either case, are not
callable or redeemable at the option of the issuer thereof, and shall also
include a depository receipt issued by a bank (as defined in Section 3(a)(2) of
the Securities Act), as custodian with respect to any such Government Securities
or a specific payment of principal of or interest on any such Government
Securities held by such custodian for the account of the holder of such
depository receipt; provided that (except as required by law) such custodian is
not authorized to make any deduction from the amount payable to the holder of
such depository receipt from any amount received by the custodian in respect of
the Government Securities or the specific payment of principal of or interest on
the Government Securities evidenced by such depository receipt.
"Guarantee" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters of credit and
reimbursement agreements in respect thereof), of all or any part of any
Indebtedness.
"Guarantors" means each of (i) the Company's Subsidiaries listed in the
preamble to this Indenture and future Restricted Subsidiaries (having either
assets or stockholder's equity in excess of $50,000) and
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(ii) any other subsidiary that executes a Subsidiary Guarantee in accordance
with the provisions of this Indenture, and their respective successors and
assigns.
"Hedging Obligations" means, with respect to any Person, the obligations
of such Person under (i) interest rate swap agreements, currency rate swap
agreements, interest rate cap agreements and interest rate collar agreements and
(ii) other agreements or arrangements designed to protect such Person against
fluctuations in interest rates or currency values.
"Holder" means a Person in whose name a Note is registered.
"Indebtedness" means, with respect to any Person, any indebtedness of such
Person, whether or not contingent, in respect of borrowed money or evidenced by
bonds, notes, debentures or similar instruments or letters of credit (or
reimbursement agreements in respect thereof) or banker's acceptances or
representing Capital Lease Obligations or the balance deferred and unpaid of the
purchase price of any property or representing any Hedging Obligations, except
any such balance that constitutes an accrued expense or trade payable, if and to
the extent any of the foregoing indebtedness (other than letters of credit and
Hedging Obligations) would appear as a liability upon a balance sheet of such
Person prepared in accordance with GAAP, as well as all indebtedness of others
secured by a Lien on any asset of such Person (but only to the extent of the
fair market value of the assets subject to such Lien) (whether or not such
indebtedness is assumed by such Person) and, to the extent not otherwise
included, the Guarantee by such Person of any indebtedness of any other Person.
The amount of any Indebtedness outstanding as of any date shall be (i) the
accreted value thereof, in the case of any Indebtedness that does not require
current payments of interest, and (ii) the principal amount thereof, together
with any interest thereon that is more than 30 days past due, in the case of any
other Indebtedness.
"Indenture" means this Indenture, as amended or supplemented from time to
time.
"Initial Purchasers" means Bear, Stearns & Co. Inc. and Merrill Lynch,
Pierce, Fenner & Smith Incorporated.
"Interest Payment Date" means each June 15 and December 15, whether or not
such day is a Business Day.
"interest" means all interest payable with respect to the Notes,
including, without limitation Special Interest.
"Investments" means, with respect to any Person, all investments by such
Person in other Persons (including Affiliates) in the forms of direct or
indirect loans (including Guarantees of Indebtedness or other obligations),
advances or capital contributions (excluding commission, travel and similar
advances to officers and employees made in the ordinary course of business),
purchases or other acquisitions for consideration of Indebtedness, Equity
Interests or other securities, together with all items that are or would be
classified as investments on a balance sheet prepared in accordance with GAAP;
provided, however, that if the sole consideration for any such investment is
Capital Stock of the Company or a Subsidiary that is not Disqualified Stock,
then such investment shall not be deemed an Investment for purposes of this
Indenture. If the Company or any Restricted Subsidiary of the Company sells or
otherwise disposes of any Equity Interests of any direct or indirect Subsidiary
of the Company such that, after giving effect to any such sale or disposition,
such Person is no longer a Restricted Subsidiary of the Company, the Company
8
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shall be deemed to have made an Investment on the date of any such sale or
disposition equal to the fair market value of the Equity Interests of such
Restricted Subsidiary not sold or disposed of in an amount determined as
provided in the final paragraph of Section 4.11.
"Issuance Date" means the closing date for the sale and original issuance
of the Notes under this Indenture.
"Letter of Transmittal" means the letter of transmittal to be prepared by
the Company and sent to all Holders of the Notes for use by such Holders in
connection with the Exchange Offer.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction).
"Liquidated Damages" has the meaning set forth in the Registration Rights
Agreement.
"Make-Whole Premium" means, with respect to a Note, an amount equal to the
greater of (i) 5.563% of the outstanding principal amount of such Note and (ii)
the excess of (a) the present value of the remaining interest, premium and
principal payments due on such Note as if such Note were redeemed on June 15,
2002, computed using a discount rate equal to the Treasury Rate plus 75 basis
points, over (b) the outstanding principal amount of such Note.
"Management Agreement" means the agreement, dated as of March 15, 1996,
between the Company and Mentmore, as amended from time to time.
"Maturity" when used in respect to any Note means the date on which the
principal of (and premium, if any) and interest on such Note becomes due and
payable as therein or herein provided, whether at Stated Maturity or the
applicable Redemption Date and whether by declaration of acceleration, call for
redemption or otherwise.
"Mentmore" means Mentmore Holdings Corporation, a Delaware corporation, or
its successors.
"Moody's" means Moody's Investors Service, Inc., or its successors.
"Net Income" means, with respect to any Person for any period, the net
income (loss) of such Person, determined in accordance with GAAP and before any
reduction in respect of preferred stock dividends, excluding, however, (i) any
gain (but not loss), together with any related provision for taxes on such gain
(but not loss), realized in connection with (a) any asset sale (including,
without limitation, dispositions pursuant to sale and leaseback transactions) or
(b) the disposition of any securities by such Person or any of its Restricted
Subsidiaries or the extinguishment of any Indebtedness of such Person or any of
its Restricted Subsidiaries and (ii) any extraordinary or nonrecurring gain (but
not loss), together with any related provision for taxes on such extraordinary
or nonrecurring gain (but not loss).
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"Net Proceeds" means the aggregate cash proceeds received by the Company
or any of its Restricted Subsidiaries in respect of any Asset Sale (including,
without limitation, any cash received upon the sale or other disposition of any
non-cash consideration received in any Asset Sale), net of the direct costs
relating to such Asset Sale (including, without limitation, legal, accounting
and investment banking fees, and sales commissions) and any relocation expenses
incurred as a result thereof, taxes paid or payable as a result thereof (after
taking into account any available tax credits or deductions and any tax sharing
arrangements), amounts required to be applied to the repayment of Indebtedness
secured by a Lien on the asset or assets that were the subject of such Asset
Sale, any provision for permitted minority interests in any Restricted
Subsidiary as a result of such Asset Sale and any reserve established in
accordance with GAAP against any liabilities associated with the assets sold or
disposed of in such Asset Sale, including, without limitation, sales price
adjustments, pension and other post-employment benefit liabilities and
liabilities related to environmental matters or against any indemnification
obligations associated with the assets sold or disposed of in such Asset Sale or
provision for minority interest holders in any Restricted Subsidiary as a result
of such Asset Sale.
"New Notes" has the meaning set forth in the Registration Rights
Agreement.
"Non-Recourse Debt" means Indebtedness (i) as to which neither the Company
nor any of its Restricted Subsidiaries (a) provides credit support of any kind
(including any undertaking, agreement or instrument that would constitute
Indebtedness), (b) is directly or indirectly liable (as a guarantor or
otherwise), or (c) constitutes the lender; and (ii) no default with respect to
which (including any rights that the holders thereof may have to take
enforcement action against an Unrestricted Subsidiary) would permit (upon
notice, lapse of time or both) any holder of any other Indebtedness of the
Company or any of its Restricted Subsidiaries in excess of $5.0 million to
declare a default on such other Indebtedness or cause the payment thereof to be
accelerated or payable prior to its stated maturity; and (iii) as to which the
lenders have been notified in writing that they will not have any recourse to
the stock or assets of the Company or any of its Restricted Subsidiaries.
"Notes" means $75,000,000 aggregate principal amount of the Company's
111/8% Senior Subordinated Notes due 2007 issued pursuant to the Offering
Memorandum and any other 111/8% Senior Subordinated Notes due 2007 hereafter
issued in compliance with the provisions of this Indenture (including Section
4.12).
"Note Custodian" means the custodian for the Depository of the Global
Notes, or any successor entity thereto.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Offering Memorandum" means that certain offering memorandum with respect
to the Notes, dated June 10, 1997.
"Officer" means the Chairman of the Board, the President, any Vice
President, the Secretary or any Assistant Secretary of the Company or any
Guarantor, as applicable.
"Officers' Certificate" means a certificate signed on behalf of the
Company or any Guarantor, as applicable, by two Officers of the Company or any
Guarantor, as applicable, one of whom must be the
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principal executive officer, the principal financial officer, the treasurer or
the principal accounting officer of the Company or any Guarantor, as applicable,
that meets the requirements set forth in Section 1.05.
"Opinion of Counsel" means a written opinion of counsel, who may be
counsel for the Company or any Guarantor, as applicable, and who shall be
acceptable to the Trustee. Each such opinion shall include the statements
provided for in TIA Section 314(e) to the extent applicable.
"Parent" means Precise Holding Corporation, a Delaware corporation, or its
successors.
"Permitted Investments" means (a) any Investment in the Company or in a
Wholly Owned Restricted Subsidiary of the Company; (b) any Investment in Cash
Equivalents; (c) any Investment by the Company or any Restricted Subsidiary of
the Company in a Person, if as a result of such Investment (i) such Person
becomes a Wholly Owned Restricted Subsidiary of the Company and a Guarantor or
(ii) such Person is merged, consolidated or amalgamated with or into, or
transfers or conveys substantially all of its assets to, or is liquidated into,
the Company or a Wholly Owned Restricted Subsidiary of the Company; (d) any
Restricted Investment made as a result of the receipt of non-cash consideration
from an Asset Sale that was made pursuant to and in compliance with Section 4.10
hereof; (e) any acquisition of assets solely in exchange for the issuance of
Equity Interests (other than Disqualified Stock) of the Company; (f) reasonable
and customary loans and advances made to employees in connection with their
relocation (including related travel expenses) not to exceed $250,000 in the
aggregate at any one time outstanding; (g) any Investment existing on the date
of this Indenture; (i) any Investment acquired by the Company or any of its
Restricted Subsidiaries (x) in exchange for any other Investment or accounts
receivable held by the Company or any such Restricted Subsidiary in connection
with or as a result of a bankruptcy, workout, reorganization or recapitalization
of the issuer of such Investment or accounts receivable or (y) as the result of
a foreclosure by the Company or any of its Restricted Subsidiaries with respect
to any secured Investment or other transfer of title with respect to any secured
Investment in default; and (j) other Investments in any Person having an
aggregate fair market value (measured on the date each such Investment was made
and without giving effect to subsequent changes in value), when taken together
with all other Investments made pursuant to this clause (j) that are at the time
outstanding, not to exceed $5.0 million.
"Permitted Junior Securities" means Equity Interests in the Company or
debt securities that are subordinated to all Senior Debt (and any debt
securities issued in exchange for Senior Debt) to substantially the same extent
as, or to a greater extent than, the Notes are subordinated to Senior Debt.
"Permitted Liens" means (i) Liens securing Senior Debt that was permitted
by the terms of this Indenture to be incurred; (ii) Liens in favor of the
Company or any Restricted Subsidiary; (iii) Liens on property of a Person
existing at the time such Person is merged into or consolidated with the Company
or any Subsidiary of the Company; provided that such Liens were in existence
prior to the contemplation of such merger or consolidation and do not extend to
any assets other than those of the Person merged into or consolidated with the
Company; (iv) Liens on property existing at the time of acquisition thereof by
the Company or any Subsidiary of the Company, provided that such Liens were in
existence prior to the contemplation of such acquisition; (v) Liens to secure
the performance of statutory obligations, surety or appeal bonds, performance
bonds or other obligations of a like nature incurred in the ordinary course of
business; (v) Liens to secure Indebtedness (including Capital Lease Obligations)
permitted by clause (iii) of the second paragraph of Section 4.12 covering only
the assets acquired with such Indebtedness; (vi) Liens existing on the date
hereof; (vii) Liens for taxes, assessments or governmental charges or claims
that
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are not yet delinquent or that are being contested in good faith by appropriate
proceedings promptly instituted and diligently concluded, provided that any
reserve or other appropriate provision as shall be required in conformity with
GAAP shall have been made therefor; (viii) Liens on assets of Unrestricted
Subsidiaries that secure Non-Recourse Debt of Unrestricted Subsidiaries; (ix)
statutory Liens or landlords', carriers', warehousemens', mechanics', suppliers'
or similar Liens incurred in the ordinary course of business of the Company or
any Subsidiary of the Company; (x) easements, minor title defects,
irregularities in title or other charges or encumbrances on property not
interfering in any material respect with the use of such property by the Company
or a Subsidiary of the Company; (xi) Liens incurred or deposits made in the
ordinary course of business in connection with workers' compensation,
unemployment insurance and other types of social security; (xii) liens securing
industrial revenue bonds or other tax-favored financing; (xiii) deposit
arrangements entered into in connection with acquisitions or in the ordinary
course of business; (xiv) other Liens securing obligations incurred in the
ordinary course of business which obligations do not exceed $5.0 million at any
one time outstanding; and (xv) any extensions, substitutions, replacements or
renewals of the foregoing.
"Permitted Refinancing Indebtedness" means any Indebtedness of the Company
or any of its Restricted Subsidiaries issued in exchange for, or the net
proceeds of which are used to extend, refinance, renew, replace, defease or
refund, other Indebtedness of the Company or any of its Restricted Subsidiaries;
provided that: (i) the principal amount (or accreted value, if applicable) of
such Permitted Refinancing Indebtedness does not exceed the principal amount of
(or accreted value, if applicable), plus accrued interest on, the Indebtedness
so extended, refinanced, renewed, replaced, defeased or refunded (plus the
amount of reasonable expenses and prepayment premiums incurred in connection
therewith) (except to the extent such increase is a result of a simultaneous
incurrence of additional Indebtedness permitted to be incurred under this
Indenture); (ii) such Permitted Refinancing Indebtedness has a final maturity
date later than the final maturity date of, and has a Weighted Average Life to
Maturity equal to or greater than the Weighted Average Life to Maturity of, the
Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded; (iii) if the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded is subordinated in right of payment to the Notes,
such Permitted Refinancing Indebtedness has a final maturity date later than the
final maturity date of, and is subordinated in right of payment to, the Notes on
terms at least as favorable to the Holders of Notes as those contained in the
documentation governing the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded; and (iv) such Indebtedness is incurred either by
the Company or by the Restricted Subsidiary who is the obligor on the
Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded.
"Permitted Warrant Put Payment" means any payment or distribution (whether
in cash or securities of the Company) made after March 29, 2001 and in
accordance with the following sentence, by the Company or any of its Restricted
Subsidiaries to Parent in order to enable Parent to satisfy Parent's obligations
under the Warrant Agreement and/or the Shareholders Agreement to repurchase the
Put Shares (as defined in the Warrant Agreement) or to repay indebtedness
incurred by Parent to satisfy such obligations. If, after giving pro forma
effect to any Permitted Warrant Put Payment by the Company, the Fixed Charge
Coverage Ratio for the Company's most recently ended four full fiscal quarters
for which internal financial statements are available immediately preceding the
date on which such Permitted Warrant Put Payment is made is (i) greater than
2.50 to 1 and less than 2.75 to 1, then the Company will be permitted to make a
Permitted Warrant Put Payment in an amount not to exceed $5.0 million, (ii)
greater than or equal to 2.75 to 1 and less than 3.00 to 1, then the Company
will be permitted to make a Permitted Warrant Put Payment in an amount not to
exceed $10.0 million and (iii) greater than or equal to 3.00 to
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1, then the Company will be permitted to make a Permitted Warrant Put Payment in
an amount not to exceed $15.0 million.
"Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, limited liability company, trust,
unincorporated organization, government or any agency or political subdivision
thereof or any other entity.
"preferred stock" means any Equity Interest with preferential right of
payment of dividends or upon liquidation, dissolution, or winding up.
"Principals" means Richard L. Kramer and/or William L. Remley.
"Private Placement Legend" means the legend set forth in Section
2.06(g)(i)(A) to be placed on all Notes issued under this Indenture except as
permitted pursuant to Section 2.06(g)(i)(B).
"Public Equity Offering" means a bona fide underwritten sale to the public
of common stock of Parent or the Company pursuant to a registration statement
(other than on Form S-8 or any other form relating to securities issuable under
any benefit plan of Parent or the Company) that is declared effective by the SEC
and results in aggregate gross equity proceeds to the Company of at least $20.0
million.
"Redemption Date," when used with respect to any Note to be redeemed,
means the date fixed for such redemption pursuant to this Indenture.
"Redemption Price," when used with respect to any Note to be redeemed,
means the price at which it is to be redeemed pursuant to this Indenture.
"Registration Rights Agreement" means the Registration Rights Agreement,
dated as of June 13, 1997, by and among the Company, Precise TMP, Massie,
Precise Polestar, Precise Delaware, Precise Illinois and the Initial Purchasers,
as such agreement may be amended, modified or supplemented from time to time.
"Regular Record Date" for the interest payable on any Interest Payment
Date means the June 1 or December 1 (whether or not a Business Day), as the case
may be, next preceding such Interest Payment Date.
"Regulation S" means Regulation S promulgated under the Securities Act.
"Regulation S Global Note" means a Regulation S Temporary Global Note or
Regulation S Permanent Global Note, as appropriate.
"Regulation S Permanent Global Note" means a permanent global Note
substantially in the form of Exhibit A-1 hereto bearing the Global Note Legend
and the Private Placement Legend and deposited with or on behalf of and
registered in the name of the Depository or its nominee, issued in a
denomination equal to the outstanding principal amount of the Regulation S
Temporary Global Note upon expiration of the Restricted Period.
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"Regulation S Temporary Global Note" means a temporary global Note
substantially in the form of Exhibit A-2 hereto bearing the Private Placement
Legend and deposited with or on behalf of and registered in the name of the
Depository or its nominee, issued in a denomination equal to the outstanding
principal amount of the Notes initially sold in reliance on Rule 903 of
Regulation S.
"Related Parties" with respect to any Principal means (A) any spouse or
immediate family member of such Principal and any child or spouse of any spouse
or immediate family member of such Principal, (B) a trust, corporation,
partnership or other entity, the beneficiaries, stockholders, partners, owners
or Persons beneficially holding, directly or indirectly, a controlling interest
of which consist of any of such Principal and/or such other Persons referred to
in the immediately preceding clause (A) or (C) the trustees of any trust
referred to in clause (B).
"Repurchase Offer" means an offer made by the Company to purchase all or
any portion of a Holder's Notes pursuant to the provisions described under
Sections 4.09 or 4.10.
"Responsible Officer," when used with respect to the Trustee, means any
officer in the Corporate Trust Office of the Trustee with direct responsibility
for the administration of this Indenture and also means, with respect to a
particular corporate trust matter, any other officer to whom such matter is
referred because of his knowledge of and familiarity with the particular
subject.
"Restricted Broker-Dealer" has the meaning set forth in the Registration
Rights Agreement.
"Restricted Definitive Notes" means Notes that are substantially in the
form of the Notes attached hereto as Exhibit A-1, that do not include the
information called for by footnotes 1 and 2 thereof.
"Restricted Global Notes" means the Regulation S Global Notes and the Rule
144A Global Notes.
"Restricted Investment" means an Investment other than a Permitted
Investment.
"Restricted Period" means the 40-day restricted period as defined in
Regulation S.
"Restricted Subsidiary" of a Person means any Subsidiary of the referent
Person that is not an Unrestricted Subsidiary.
"Rule 144A" means Rule 144A promulgated under the Securities Act.
"Rule 144A Global Note" means a permanent global note that contains the
paragraph referred to in footnote 1 and the additional schedule referred to in
footnote 2 to the form of the Note attached hereto as Exhibit A-1, and that is
deposited with the Note Custodian and registered in the name of the Depository,
representing Notes sold to Accredited Investors or in reliance on Rule 144A, as
applicable.
"Rule 903" means Rule 903 promulgated under the Securities Act.
"Rule 904" means Rule 904 promulgated under the Securities Act.
"S&P" means Standard and Poor's Ratings Services, or its successors.
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"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the SEC promulgated thereunder.
"Senior Debt" of any Person means (i) all Indebtedness of such Person
under the Credit Agreement, including, without limitation, obligations to pay
principal and interest (including any interest accruing subsequent to the filing
of a petition of bankruptcy at the rate provided for in the documentation with
respect thereto, whether or not such interest is an allowed claim under
applicable law), reimbursement obligations under letters of credit, fees,
expenses and indemnities, and all Hedging Obligations with respect thereto,
whether outstanding on the date of this Indenture or hereafter incurred, (ii)
the principal of, premium, if any, and interest (including any interest accruing
subsequent to the filing of a petition of bankruptcy at the rate provided for in
the documentation with respect thereto, whether or not such interest is an
allowed claim under applicable law) on, and all other Obligations with respect
to, any other Indebtedness of such Person permitted to be incurred by such
Person under the terms of this Indenture, whether outstanding on the date of
this Indenture or hereafter incurred, unless the instrument under which such
Indebtedness is incurred expressly provides that it is on a parity with or
subordinated in right of payment to the Notes and (iii) all Obligations of such
Person with respect to the foregoing. Notwithstanding anything to the contrary
in the foregoing, Senior Debt shall not include (w) any liability for federal,
state, local or other taxes owed or owing by such Person, (x) any Indebtedness
of such Person to any of its Subsidiaries or other Affiliates, (y) any trade
payables or (z) any Indebtedness that is incurred in violation of this
Indenture.
"Shareholders Agreement" means the shareholders agreement, dated as of
March 29, 1996, as amended, among Parent, Sunderland, Hamilton Holdings Ltd.
Corporation, Delaware State Employees' Retirement Fund, Declaration of Trust for
Defined Benefit Plans of Zeneca Holdings Inc., Declaration of Trust for Defined
Benefit Plans of ICI American Holdings Inc., Rice Partners II, L.P. and John
Hancock Mutual Life Insurance Company, with respect to certain securities of
Parent.
"Shelf Registration Statement" has the meaning set forth in the
Registration Rights Agreement.
"Significant Subsidiary" means any Subsidiary which would be a
"significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Securities Act, as such Regulation is in effect on
the Issuance Date.
"Special Record Date" means a date fixed by the Trustee for the payment of
any Defaulted Interest pursuant to Section 2.12.
"Stated Maturity" means, with respect to any installment of interest or
principal on any series of Indebtedness, the date on which such payment of
interest or principal was scheduled to be paid in the original documentation
governing such Indebtedness, and shall not include any contingent obligations to
repay, redeem or repurchase any such interest or principal prior to the date
originally scheduled for the payment thereof.
"Subordinated Note Obligations" means any principal of, premium, if any,
and interest and Liquidated Damages, if any, on the Notes payable pursuant to
the terms of the Notes or upon acceleration, redemption, repurchase or other
acquisition thereof, together with and including any amounts received
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upon the exercise of rights of rescission or other rights of action (including
claims for damages) or otherwise, to the extent relating to the purchase price
of the Notes or amounts corresponding to such principal, premium, if any, or
interest and Liquidated Damages, if any, on the Notes.
"Subsidiary" means, with respect to any Person, (i) any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of Capital Stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by such
Person or one or more of the other Subsidiaries of that Person (or a combination
thereof) and (ii) any partnership (a) the sole general partner or the managing
general partner of which is such Person or a Subsidiary of such Person or (b)
the only general partners of which are such Person or of one or more
Subsidiaries of such Person (or any combination thereof).
"Subsidiary Guarantee" means any guarantee of the obligations of the
Company pursuant to Section 12 of this Indenture and the Notes by any Person in
accordance with the provisions of this Indenture.
"Sunderland" means Sunderland Industrial Holdings Corporation, a Delaware
corporation, or its successors.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. ss.ss.
77aaa-77bbbb) as in effect on the date on which this Indenture is qualified
under the TIA; provided, however, that in the event the Trust Indenture Act of
1939 is amended after such date, then "TIA" means, to the extent required by
such amendment, the Trust Indenture Act of 1939 as so amended.
"Treasury Rate" means the yield to maturity at the time of the computation
of United States Treasury securities with a constant maturity (as compiled by
and published in the most recent Federal Reserve Statistical Release H.15(519)),
which has become publicly available at least two Business Days prior to the date
fixed for prepayment (or, if such Statistical Release is no longer published,
any publicly available source of similar market data) most nearly equal to the
then remaining average life to the first date on which the Notes are subject to
optional redemption by the Company; provided, however, that if the average life
of such Note is not equal to the constant maturity of the United States Treasury
security for which weekly average yield is given, the Treasury Rate shall be
obtained by linear interpolation (calculated to the nearest one-twelfth of a
year) from the weekly average yields of United States Treasury securities for
which such yields are given, except that if the average life of the Notes is
less than one year, the weekly average yield on actually traded United States
Treasury securities adjusted to a constant maturity of one year shall be used.
"Trustee" means the party named as such above unless and until a successor
replaces it in accordance with the applicable provisions of this Indenture and
thereafter means such successor.
"Unrestricted Definitive Note" means Notes that are substantially in the
form of the Notes attached hereto as Exhibit A-3 that do not include the
information called for by footnotes 1 and 2 thereof.
"Unrestricted Global Note" means a permanent global Note that contains the
paragraph referred to in footnote 1 and the additional schedule referred to in
footnote 2 to the form of the Note attached hereto as Exhibit A-3, and that is
deposited with the Note Custodian and registered in the name of the Depository.
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"Unrestricted Notes" means the Unrestricted Global Notes and the
Unrestricted Definitive Notes.
"Unrestricted Subsidiary" means (i) any Subsidiary that is designated by
the Board of Directors as an Unrestricted Subsidiary pursuant to a Board
Resolution; but only to the extent that such Subsidiary: (a) has no Indebtedness
other than Non-Recourse Debt; (b) is not party to any agreement, contract,
arrangement or understanding with the Company or any Restricted Subsidiary of
the Company unless the terms of any such agreement, contract, arrangement or
understanding are no less favorable to the Company or such Restricted Subsidiary
than those that might be obtained at the time from Persons who are not
Affiliates of the Company; (c) is a Person with respect to which neither the
Company nor any of its Restricted Subsidiaries has any direct or indirect
obligation (x) to subscribe for additional Equity Interests or (y) to maintain
or preserve such Person's financial condition or to cause such Person to achieve
any specified levels of operating results; and (d) has not guaranteed or
otherwise directly or indirectly provided credit support for any Indebtedness of
the Company or any of its Restricted Subsidiaries. Any such designation by the
Board of Directors shall be evidenced to the Trustee by filing with the Trustee
a certified copy of the Board Resolution giving effect to such designation and
an Officers' Certificate certifying that such designation complied with the
foregoing conditions and was permitted by Section 4.11. If, at any time, any
Unrestricted Subsidiary would fail to meet the foregoing requirements as an
Unrestricted Subsidiary, it shall thereafter cease to be an Unrestricted
Subsidiary for purposes of this Indenture and any Indebtedness of such
Subsidiary shall be deemed to be incurred by a Restricted Subsidiary of the
Company as of such date (and, if such Indebtedness is not permitted to be
incurred as of such date under Section 4.12, the Company shall be in default of
such covenant). The Board of Directors of the Company may at any time designate
any Unrestricted Subsidiary to be a Restricted Subsidiary; provided that such
designation shall be deemed to be an incurrence of Indebtedness by a Restricted
Subsidiary of the Company of any outstanding Indebtedness of such Unrestricted
Subsidiary and such designation shall only be permitted if (i) such Indebtedness
is permitted under Section 4.12, calculated on a pro forma basis as if such
designation had occurred at the beginning of the four-quarter reference period,
and (ii) no Default or Event of Default would be in existence following such
designation.
"Voting Stock" of any Person as of any date means the Capital Stock of
such Person that is at the time entitled to vote in the election of the Board of
Directors of such Person.
"Warrant Agreement" means the warrant agreement, dated as of March 29,
1996, as amended, among Parent, Rice Partners II, L.P., John Hancock Mutual Life
Insurance Company, Delaware State Employees' Retirement Fund, Declaration of
Trust for Defined Benefit Plans of Zeneca Holdings Inc. and Declaration of Trust
for Defined Benefit Plans of ICI American Holdings Inc., with respect to certain
warrants of Parent.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (i) the sum
of the products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (b) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment, by (ii) the then outstanding principal
amount of such Indebtedness.
"Wholly Owned Subsidiary" of any Person means a Subsidiary of such Person
100% of the outstanding Capital Stock or other ownership interests of which
(other than directors' qualifying shares)
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shall at the time be owned by such Person or by one or more Wholly Owned
Subsidiaries of such Person and one or more Wholly Owned Subsidiaries of such
Person.
SECTION 1.02 OTHER DEFINITIONS.
Term Defined in
Section
"Act"................................................ 1.07
"Affiliate Transaction".............................. 4.13
"Asset Sale Offer"................................... 3.10
"Cedel Bank"......................................... 2.01
"Change of Control Offer"............................. 4.09
"Change of Control Payment"........................... 4.09
"Change of Control Payment Date"...................... 4.09
"Covenant Defeasance"................................ 8.03
"Defaulted Interest".................................. 2.12
"DTC"................................................ 2.03
"Euroclear".......................................... 2.01
"Event of Default"................................... 6.01
"Excess Proceeds"..................................... 4.10
"Incur"............................................... 4.12
"Legal Defeasance".................................... 8.02
"Offer Amount"........................................ 3.10
"Offer Period"........................................ 3.10
"Paying Agent"........................................ 2.03
"Payment Blockage Notice"............................. 10.03
"Payment Default".................................... 6.01
"Permitted Debt"...................................... 4.12
"Purchase Date"....................................... 3.10
"QIB"................................................ 2.01
"Registrar".......................................... 2.03
"Restricted Payments"................................ 4.11
"Rule 144 A Global Notes"............................ 2.01
"Successor Company".................................. 5.01
SECTION 1.03 INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT.
Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following
meanings:
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"indenture securities" means the Notes and the Subsidiary Guarantees;
"indenture security Holder" means a Holder of a Note;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee;
"obligor" on the Notes means the Company, each Guarantor and any
successor obligors upon the Notes.
All other terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule under the TIA
have the meanings so assigned to them.
SECTION 1.04. RULES OF CONSTRUCTION.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning assigned
to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and in the plural
include the singular;
(5) provisions apply to successive events and transactions; and
(6) references to sections of or rules under the Securities Act shall
be deemed to include substitute, replacement or successor
sections or rules adopted by the SEC from time to time.
SECTION 1.05. COMPLIANCE CERTIFICATES AND OPINIONS.
Upon any application or request by the Company to the Trustee to take any
action under any provision of this Indenture, the Company shall furnish to the
Trustee an Officers' Certificate stating that all conditions precedent, if any,
provided for in this Indenture (including any covenant compliance with which
constitutes a condition precedent) relating to the proposed action have been
complied with and an Opinion of Counsel stating that in the opinion of such
counsel all such conditions precedent, if any, have been complied with, except
that, in the case of any such application or request as to which the furnishing
of such documents is specifically required by any provision of this Indenture
relating to such particular application or request, no additional certificate or
opinion need be furnished.
Every certificate or opinion (other than the certificates required by
Section 4.05(a)) with respect to compliance with a condition or covenant
provided for in this Indenture shall comply with the provisions of TIA 314(e)
and shall include:
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(a) a statement that each individual signing such certificate or opinion has
read such covenant or condition and the definitions herein relating thereto;
(a) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(b) a statement that, in the opinion of each such individual, he or she
has made such examination or investigation as is necessary to enable him or her
to express an informed opinion as to whether or not such covenant or condition
has been complied with; and
(c) a statement as to whether, in the opinion of each such individual,
such condition or covenant has been complied with.
SECTION 1.06 FORM OF DOCUMENTS DELIVERED TO TRUSTEE.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representation
with respect to the matters upon which his certificate or opinion is based are
erroneous. Any such certificate or Opinion of Counsel may be based, insofar as
it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Company stating that the
information with respect to such factual matters is in the possession of the
Company, unless such counsel knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with respect to such
matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
SECTION 1.07.
ACTS OF HOLDERS.
(a) Any request, demand, authorization, direction, notice, consent, waiver
or other action provided by this Indenture to be given or taken by Holders may
be embodied in and evidenced by one or more instruments of substantially similar
tenor signed by such Holders in person or by agent duly appointed in writing;
and, except as herein otherwise expressly provided, such action shall become
effective when such instrument or instruments are delivered to the Trustee and,
where it is hereby expressly required, to the Company. Such instrument or
instruments (and the action embodied therein and evidenced thereby) are herein
sometimes referred to as the "Act" of the Holders signing such instrument or
instruments. Proof of execution of any such instrument or of a writing
appointing any such agent shall be sufficient for any
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purpose of this Indenture and (subject to TIA Section 315) conclusive in favor
of the Trustee and the Company, if made in the manner provided in this Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved in any reasonable manner that the Trustee
deems sufficient.
(c) The ownership of Notes shall be proved by a register kept by the
Registrar.
(d) If the Company shall solicit from the Holders any request, demand,
authorization, direction, notice, consent, waiver or other Act, the Company may,
at its option, by or pursuant to a Board Resolution, fix in advance a record
date for the determination of such Holders entitled to give such request,
demand, authorization, direction, notice, consent, waiver or other Act or to
revoke any consent previously given, but the Company shall have no obligation to
do so. Notwithstanding TIA Section 316(c), any such record date shall be the
record date specified in or pursuant to such Board Resolution, which shall be a
date not more than 30 days prior to the first solicitation of Holders generally
in connection therewith and no later than the date such solicitation is
completed.
If such a record date is fixed, such request, demand, authorization,
direction, notice, consent, waiver or other Act or revocation of any consent
previously given may be given before or after such record date, but only the
Holders of record at the close of business on such record date shall be deemed
to be Holders for the purposes of determining whether Holders of the requisite
proportion of Notes then outstanding have authorized or agreed or consented to
such request, demand, authorization, direction, notice, consent, waiver or other
Act, and for this purpose the Notes then outstanding shall be computed as of
such record date; provided that no such request, demand, authorization,
direction, notice, consent, waiver or other Act by the Holders on such recorded
date shall be deemed effective unless it shall become effective pursuant to the
provisions of this Indenture not later than six months after the record date.
(d) Any request, demand, authorization, direction, notice, consent, waiver
or other Act by the Holder of any Note shall bind every future Holder of the
same Note or the Holder of every Note issued upon the registration of transfer
thereof or in exchange therefor or in lieu thereof, in respect of anything done,
suffered or omitted to be done by the Trustee, any Paying Agent or the Company
in reliance thereon, whether or not notation of such action is made upon such
Note.
ARTICLE 2
THE NOTES
SECTION 2.01. FORM AND DATING.
The Notes and the Trustee's certificate of authentication shall be
substantially in the form of Exhibits A-1, A-2 and A-3 attached hereto. The
Subsidiary Guarantees shall be substantially in the form of Exhibit E, the terms
of which are incorporated in and made part of this Indenture. The Notes may have
notations, legends or endorsements required by law, stock exchange rule or
usage, as designated by the Company or its counsel. Each Note shall be dated the
date of its authentication. The Notes shall be in denominations of $1,000 and
integral multiples thereof (subject to a minimum initial purchase requirement of
$100,000 for Notes sold on original issuance by the Company to Accredited
Investors other than in reliance on Rule 144A or Regulation S).
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The Notes offered and sold in reliance on Rule 144A shall be issued
initially in the form of a Rule 144A Global Note. Notes offered and sold to
Accredited Investors in transactions exempt from registration under the
Securities Act not made in reliance on Rule 144A or Regulation S shall be issued
initially in the form of a separate Rule 144A Global Note. Notes offered and
sold in reliance on Regulation S shall be issued initially in the form of the
Regulation S Temporary Global Note, which shall be deposited on behalf of the
purchasers of the Notes represented thereby with the Note Custodian, at its New
York office, as custodian for the Depository, and registered in the name of the
Depository or the nominee of the Depository for the accounts of designated
agents holding on behalf of Euroclear or Cedel Bank, duly executed by the
Company and authenticated by the Trustee as hereinafter provided. The Restricted
Period shall be terminated upon the receipt by the Trustee of (i) a written
certificate from the Depository or the Note Custodian, together with copies of
certificates from Euroclear and Cedel Bank certifying that they have received
certification of non-United States beneficial ownership of 100% of the aggregate
principal amount of the Regulation S Temporary Global Note, and (ii) an
Officers' Certificate from the Company to the effect set forth in Section
13.04(a) hereof. Following the termination of the Restricted Period, beneficial
interests in the Regulation S Temporary Global Note shall be exchanged for
beneficial interests in Regulation S Permanent Global Notes pursuant to the
Applicable Procedures. Simultaneously with the authentication of Regulation S
Permanent Global Notes, the Trustee shall cancel the Regulation S Temporary
Global Note.
Notes issued in global form shall be substantially in the form of Exhibits
A-1, A-2 or A-3 attached hereto (including the Global Note Legend and the
"Schedule of Exchanges in the Global Note" attached thereto). Notes issued in
definitive form shall be substantially in the form of Exhibit A-1 or A-3
attached hereto (but without the Global Note Legend and without the "Schedule of
Exchanges of Interests in the Global Note" attached thereto). Each Global Note
shall represent such of the outstanding Notes as shall be specified therein and
each shall provide that it shall represent the aggregate principal amount of
outstanding Notes from time to time endorsed thereon and that the aggregate
principal amount of outstanding Notes represented thereby may from time to time
be reduced or increased, as appropriate, to reflect exchanges and redemptions.
Any endorsement of a Global Note to reflect the amount of any increase or
decrease in the aggregate principal amount of outstanding Notes represented
thereby shall be made by the Trustee or the Note Custodian, at the direction of
the Trustee, in accordance with instructions given by the Holder thereof as
required by Section 2.06 hereof.
The provisions of the "Operating Procedures of the Euroclear System" and
"Terms and Conditions Governing Use of Euroclear" and the "General Terms and
Conditions of Cedel Bank" and "Customer Handbook" of Cedel Bank shall be
applicable to transfers of beneficial interests in the Regulation S Temporary
Global Note and the Regulation S Permanent Global Notes that are held by the
Agent Members through Euroclear or Cedel Bank.
SECTION 2.02. EXECUTION AND AUTHENTICATION.
Two Officers shall sign the Notes for the Company by manual or facsimile
signature.
If an Officer whose signature is on a Note no longer holds that office at
the time a Note is authenticated, the Note shall nevertheless be valid.
A Note shall not be valid until authenticated by the manual signature of
the Trustee. The signature shall be conclusive evidence that the Note has been
authenticated under this Indenture.
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The Trustee shall, upon a written order of the Company signed by two
Officers, authenticate Notes for original issue in the aggregate principal
amount of up to $200,000,000 in one or more series. The aggregate principal
amount of Notes outstanding at any time may not exceed $200,000,000 except as
provided in Section 2.07 hereof.
The Trustee may appoint an authenticating agent acceptable to the Company
to authenticate Notes. An authenticating agent may authenticate Notes whenever
the Trustee may do so. Each reference in this Indenture to authentication by the
Trustee includes authentication by such agent. An authenticating agent has the
same rights as an Agent to deal with Holders or an Affiliate of the Company.
SECTION 2.03. REGISTRAR AND PAYING AGENT.
The Company shall maintain an office or agency where Notes may be
presented for registration of transfer or for exchange ("Registrar") and an
office or agency where Notes may be presented for payment ("Paying Agent"). The
Registrar shall keep a register of the Notes and of their transfer and exchange.
The Company may appoint one or more co-registrars and one or more additional
paying agents. The term "Registrar" includes any co-registrar and the term
"Paying Agent" includes any additional paying agent. The Company may change any
Paying Agent or Registrar without notice to any Holder. The Company shall notify
the Trustee in writing of the name and address of any Agent not a party to this
Indenture. If the Company fails to appoint or maintain another entity as
Registrar or Paying Agent, the Trustee shall act as such. The Company or any of
its Subsidiaries may act as Paying Agent or Registrar.
The Company initially appoints The Depository Trust Company ("DTC") to act
as Depository with respect to the Global Notes.
The Company initially appoints the Trustee to act as the Registrar and
Paying Agent and to act as Note Custodian with respect to the Global Notes.
SECTION 2.04. PAYING AGENT TO HOLD MONEY IN TRUST.
The Company shall require each Paying Agent other than the Trustee to
agree in writing that the Paying Agent will hold in trust for the benefit of
Holders or the Trustee all money held by the Paying Agent for the payment of
principal, premium, if any, or interest on the Notes, and will notify the
Trustee of any default by the Company or any Guarantor in making any such
payment. While any such default continues, the Trustee may require a Paying
Agent to pay all money held by it to the Trustee. The Company at any time may
require a Paying Agent to pay all money held by it to the Trustee. Upon payment
over to the Trustee, the Paying Agent (if other than the Company or a
Subsidiary) shall have no further liability for the money. If the Company or a
Subsidiary acts as Paying Agent, it shall segregate and hold in a separate trust
fund for the benefit of the Holders all money held by it as Paying Agent. Upon
any bankruptcy or reorganization proceedings relating to the Company or any
Guarantor, the Trustee shall serve as Paying Agent for the Notes.
SECTION 2.05. HOLDER LISTS.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
all Holders and shall otherwise comply with TIA ss. 312(a). If the Trustee is
not the Registrar, the Company and/or the Guarantors shall furnish to the
Trustee at least
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seven Business Days before each interest payment date and at such other times as
the Trustee may request in writing, a list in such form and as of such date as
the Trustee may reasonably require of the names and addresses of the Holders of
Notes and the Company and/or the Guarantors shall otherwise comply with TIA ss.
312(a).
SECTION 2.06. TRANSFER AND EXCHANGE.
(a) Transfer and Exchange of Global Notes. A Global Note may not be
transferred as a whole except by the Depository to a nominee of the Depository,
by a nominee of the Depository to the Depository or to another nominee of the
Depository, or by the Depository or any such nominee to a successor Depository
or a nominee of such successor Depository. All Global Notes will be exchanged by
the Company for Definitive Notes if (i) the Company delivers to the Trustee
notice from the Depository that it is unwilling or unable to continue to act as
Depository or that it is no longer a clearing agency registered under the
Exchange Act and, in either case, a successor Depository is not appointed by the
Company within 120 days after the date of such notice from the Depository or
(ii) the Company in its sole discretion determines that the Global Notes (in
whole but not in part) should be exchanged for Definitive Notes and delivers a
written notice to such effect to the Trustee; provided that in no event shall
the Regulation S Temporary Global Note be exchanged by the Company for
Definitive Notes prior to (x) the expiration of the Restricted Period and (y)
the receipt by the Registrar of any certificates certified in an Officers'
Certificate to be required pursuant to Rule 903 under the Securities Act. Upon
the occurrence of either of the preceding events in (i) or (ii) above,
Definitive Notes shall be issued in such names as the Depository shall instruct
the Trustee. Global Notes also may be exchanged or replaced, in whole or in
part, as provided in Sections 2.07 and 2.10 hereof. Every Note authenticated and
delivered in exchange for, or in lieu of, a Global Note or any portion thereof,
pursuant to Section 2.07 or 2.10 hereof, shall be authenticated and delivered in
the form of, and shall be, a Global Note. A Global Note may not be exchanged for
another Note other than as provided in this Section 2.06(a); however, beneficial
interests in a Global Note may be transferred and exchanged as provided in
Section 2.06(b), (c) or (f) hereof.
(b) Transfer and Exchange of Beneficial Interests in Global Notes. The
transfer and exchange of beneficial interests in the Global Notes shall be
effected through the Depository, in accordance with the provisions of this
Indenture and the Applicable Procedures. Beneficial interests in the Restricted
Global Notes shall be subject to restrictions on transfer described in the
Private Placement Legend to the extent required by the Securities Act. Transfers
of beneficial interests in the Global Notes also shall require compliance with
either subparagraph (i) or (ii) below, as applicable, as well as one or more of
the other following subparagraphs as applicable:
(i) Transfer of Beneficial Interests in the Same Global Note.
Beneficial interests in any Restricted Global Note may be transferred to
Persons who take delivery thereof in the form of a beneficial interest in
the same Restricted Global Note in accordance with the transfer
restrictions set forth in the Private Placement Legend; provided, however,
that prior to the expiration of the Restricted Period transfers of
beneficial interests in the Temporary Regulation S Global Note may not be
made to a U.S. Person or for the account or benefit of a U.S. Person (other
than an Initial Purchaser). Beneficial interests in any Unrestricted Global
Note may be transferred only to Persons who take delivery thereof in the
form of a beneficial interest in an Unrestricted Global Note. No written
orders or instructions shall be required to be delivered to the Registrar
to effect the transfers described in this Section 2.06(b)(i).
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(ii) All Other Transfers and Exchanges of Beneficial Interests in
Global Notes. In connection with all transfers and exchanges of beneficial
interests in a Global Note (other than a transfer of a beneficial interest
in a Global Note to a Person who takes delivery thereof in the form of a
beneficial interest in the same Global Note), the transferor of such
beneficial interest must deliver to the Registrar either (A) (1) a written
order from an Agent Member to the Depository in accordance with the
Applicable Procedures directing the Depository to credit or cause to be
credited a beneficial interest in another Global Note in an amount equal to
the beneficial interest to be transferred or exchanged and (2) instructions
given in accordance with the Applicable Procedures containing information
regarding the Agent Member account to be credited with such increase or (B)
(1) a written order from an Agent Member given to the Depository in
accordance with the Applicable Procedures directing the Depository to cause
to be issued a Definitive Note in an amount equal to the beneficial
interest to be transferred or exchanged and (2) instructions given by the
Depository to the Registrar containing information regarding the Person in
whose name such Definitive Note shall be registered to effect the
registration of transfer or exchange referred to in (1) above; provided
that in no event shall Definitive Notes be issued upon the registration of
transfer or exchange of beneficial interests in the Regulation S Temporary
Global Note prior to (x) the expiration of the Restricted Period and (y)
the receipt by the Registrar of any certificates certified in an Officers'
Certificate to be required pursuant to Rule 903 under the Securities Act.
Upon an Exchange Offer by the Company in accordance with Section 2.06(f)
hereof, the requirements of this Section 2.06(b)(ii) shall be deemed to
have been satisfied upon receipt by the Registrar of the instructions
contained in the Letter of Transmittal delivered by the Holder of such
beneficial interests in the Restricted Global Notes. Upon satisfaction of
all of the requirements for registration of transfer or exchange of
beneficial interests in Global Notes contained in this Indenture, the Notes
and otherwise applicable under the Securities Act, the Trustee shall adjust
the principal amount of the relevant Global Note(s) pursuant to Section
2.06(h) hereof.
(iii) Transfer of Beneficial Interests to Another Restricted Global
Note. A beneficial interest in any Restricted Global Note may be
transferred to a Person who takes delivery thereof in the form of a
beneficial interest in another Restricted Global Note if the transfer
complies with the requirements of clause (ii) above and the Registrar
receives the following:
(A) if the transferee will take delivery in the form of a
beneficial interest in the 144A Global Note, then the transferor must
deliver a certificate in the form of Exhibit B hereto, including the
certifications in item (1) thereof; and
(B) if the transferee will take delivery in the form of a
beneficial interest in the Regulation S Temporary Global Note or the
Regulation S Global Note, then the transferor must deliver a
certificate in the form of Exhibit B hereto, including the
certifications in item (2) thereof.
(iv) Transfer and Exchange of Beneficial Interests in a Restricted
Global Note for Beneficial Interests in the Unrestricted Global Note. A
beneficial interest in any Restricted Global Note may be exchanged by any
holder thereof for a beneficial interest in an Unrestricted Global Note or
transferred to a Person who takes delivery thereof in the form of a
beneficial interest in an Unrestricted Global Note if the exchange or
transfer complies with the requirements of clause (ii) above and:
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(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights Agreement
and the holder of the beneficial interest to be transferred, in the
case of an exchange, or the transferee, in the case of a transfer,
certifies in the applicable Letter of Transmittal that it is not (1) a
Broker-Dealer, (2) a Person participating in the distribution of the
Notes issues in the Exchange Offer or (3) a Person who is an affiliate
(as defined in Rule 144) of the Company;
(B) any such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration Rights
Agreement;
(C) any such transfer is effected by a Restricted Broker-Dealer
pursuant to the Exchange Offer Registration Statement in accordance
with the Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the holder of such beneficial interest in a
Restricted Global Note proposes to exchange such beneficial
interest for a beneficial interest in an Unrestricted Global
Note, a certificate from such holder in the form of Exhibit C
hereto, including the certifications in item (1)(a) thereof;
(2) if the holder of such beneficial interest in a
Restricted Global Note proposes to transfer such beneficial
interest to a Person who shall take delivery thereof in the form
of a beneficial interest in an Unrestricted Global Note, a
certificate from such holder in the form of Exhibit B hereto,
including the certifications in item (4) thereof; and
(3) in each such case set forth in this subparagraph (D), an
Opinion of Counsel in form reasonably acceptable to the Registrar
to the effect that such exchange or transfer is in compliance
with the Securities Act and that the restrictions on transfer
contained herein and in the Private Placement Legend are not
required in order to maintain compliance with the Securities Act.
If any such transfer is effected pursuant to subparagraph (B) or (D)
above at a time when an Unrestricted Global Note has not yet been issued,
the Company shall issue and, upon receipt of an authentication order in
accordance with Section 2.02 hereof, the Trustee shall authenticate one or
more Unrestricted Global Notes in an aggregate principal amount equal to
the principal amount of beneficial interests transferred pursuant to
subparagraph (B) or (D) above.
(v) Transfer and Exchange of Beneficial Interests in the Unrestricted
Global Note for Beneficial Interests in a Restricted Global Note.
Beneficial interests in an Unrestricted Global Note cannot be exchanged
for, or transferred to, Persons who take delivery thereof in the form of a
beneficial interest in a Restricted Global Note.
(c) Transfer or Exchange of Beneficial Interests in Global Notes for
Definitive Notes.
(i) If any holder of a beneficial interest in a Restricted Global
Note proposes to exchange such beneficial interest for a Restricted
Definitive Note or to transfer such beneficial
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interest to a Person who takes delivery thereof in the form of a
Restricted Definitive Note, then, upon receipt by the Registrar of the
following documentation:
(A) if the holder of such beneficial interest proposes to
exchange such beneficial interest for a Restricted Definitive
Note, a certificate from such holder in the form of Exhibit C
hereto, including the certifications in item (2)(a) thereof;
(B) if such beneficial interest is being transferred to a
QIB in accordance with Rule 144A under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto,
including the certifications in item (1) thereof;
(C) if such beneficial interest is being transferred to a
Non-U.S. Person (as defined in Regulation S of the Securities
Act) in an offshore transaction in accordance with Rule 903 or
Rule 904 under the Securities Act, a certificate to the effect
set forth in Exhibit B hereto, including the certifications in
item (2) thereof;
(D) if such beneficial interest is being transferred
pursuant to an exemption from the registration requirements of
the Securities Act in accordance with Rule 144 under the
Securities Act, a certificate to the effect set forth in Exhibit
B hereto, including the certifications in item (3)(a) thereof;
(E) if such beneficial interest is being transferred to an
Accredited Investor in reliance on an exemption from the
registration requirements of the Securities Act other than those
listed in subparagraphs (B) through (D) above, a certificate to
the effect set forth in Exhibit B hereto, including the
certifications, certificates and Opinion of Counsel required by
item (3)(d) thereof, if applicable;
(F) if such beneficial interest is being transferred to the
Company or any of its Subsidiaries, a certificate to the effect
set forth in Exhibit B hereto, including the certifications in
item (3)(b) thereof; or
(G) if such beneficial interest is being transferred
pursuant to an effective registration statement under the
Securities Act, a certificate to the effect set forth in Exhibit
B hereto, including the certifications in item (3)(c) thereof,
the Trustee shall cause the aggregate principal amount of the
applicable Restricted Global Note to be reduced accordingly pursuant
to Section 2.06(h) hereof, and the Company shall execute and the
Trustee shall authenticate and deliver to the Person designated in the
instructions a Restricted Definitive Note in the appropriate principal
amount. Any Restricted Definitive Note issued in exchange for a
beneficial interest in a Restricted Global Note pursuant to this
Section 2.06(c) shall be registered in such name or names and in such
authorized denomination or denominations as the holder of such
beneficial interest shall instruct the Registrar through instructions
from the Depository and the Agent Member. The Trustee shall deliver
such Restricted Definitive Notes to the Persons in whose names such
Notes are so registered. Any Restricted Definitive Note issued in
exchange for a beneficial interest in a Restricted Global Note
pursuant to this Section 2.06(c)(i) shall bear the Private Placement
Legend and shall be subject to all restrictions on transfer contained
therein.
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(ii) Notwithstanding Sections 2.06(c)(i)(A) and (C) hereof, a
beneficial interest in the Regulation S Temporary Global Note may not be
(A) exchanged for a Definitive Note prior to (x) the expiration of the
Restricted Period and (y) the receipt by the Registrar of any certificates
required pursuant to Rule 903(c)(3)(B) under the Securities Act or (B)
transferred to a Person who takes delivery thereof in the form of a
Definiti
ve Note prior to the conditions set forth in clause (A) above or
unless the transfer is pursuant to an exemption from the registration
requirements of the Securities Act other than Rule 903 or Rule 904.
(iii) Notwithstanding 2.06(c)(i) hereof, a holder of a beneficial
interest in a Restricted Global Note may exchange such beneficial interest
for an Unrestricted Definitive Note or may transfer such beneficial
interest to a Person who takes delivery thereof in the form of an
Unrestricted Definitive Note if:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights Agreement
and the holder of such beneficial interest, in the case of an
exchange, or the transferee, in the case of a transfer, certifies in
the applicable Letter of Transmittal that it is not (1) a
Broker-Dealer, (2) a Person participating in the distribution of the
Notes issued in the Exchange Offer or (3) a Person who is an affiliate
(as defined in Rule 144) of the Company;
(B) any such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration Rights
Agreement;
(C) any such transfer is effected by a Restricted Broker-Dealer
pursuant to the Exchange Offer Registration Statement in accordance
with the Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the holder of such beneficial interest in a
Restricted Global Note proposes to exchange such beneficial
interest for an Unrestricted Definitive Note, a certificate from
such holder in the form of Exhibit C hereto, including the
certifications in item (1)(b) thereof;
(2) if the holder of such beneficial interest in a
Restricted Global Note proposes to transfer such beneficial
interest to a Person who shall take delivery thereof in the form
of an Unrestricted Definitive Note, a certificate from such
holder in the form of Exhibit B hereto, including the
certifications in item (4) thereof; and
(3) in each such case set forth in this subparagraph (D), an
Opinion of Counsel in form reasonably acceptable to the Company,
to the effect that such exchange or transfer is in compliance
with the Securities Act and that the restrictions on transfer
contained herein and in the Private Placement Legend are not
required in order to maintain compliance with the Securities Act.
(iv) If any holder of a beneficial interest in an Unrestricted Global
Note proposes to exchange such beneficial interest for an Unrestricted
Definitive Note or to transfer such beneficial
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interest to a Person who takes delivery thereof in the form of an
Unrestricted Definitive Note, then, upon satisfaction of the conditions set
forth in Section 2.06(b)(ii) hereof, the Trustee shall cause the aggregate
principal amount of the applicable Unrestricted Global Note to be reduced
accordingly pursuant to Section 2.06(h) hereof, and the Company shall
execute and the Trustee shall authenticate and deliver to the Person
designated in the instructions an Unrestricted Definitive Note in the
appropriate principal amount. Any Unrestricted Definitive Note issued in
exchange for a beneficial interest pursuant to this Section 2.06(c)(iv)
shall be registered in such name or names and in such authorized
denomination or denominations as the holder of such beneficial interest
shall instruct the Registrar through instructions from the Depository and
the Agent Member. The Trustee shall deliver such Unrestricted Definitive
Notes to the Persons in whose names such Notes are so registered. Any
Unrestricted Definitive Note issued in exchange for a beneficial interest
pursuant to this Section 2.06(c)(iv) shall not bear the Private Placement
Legend. A beneficial interest in an Unrestricted Global Note cannot be
exchanged for a Restricted Definitive Note or transferred to a Person who
takes delivery thereof in the form of a Restricted Definitive Note.
(d) Transfer and Exchange of Definitive Notes for Beneficial Interests
in Global Notes.
(i) If any Holder of a Restricted Definitive Note proposes to exchange
such Note for a beneficial interest in a Restricted Global Note or to
transfer such Restricted Definitive Notes to a Person who takes delivery
thereof in the form of a beneficial interest in a Restricted Global Note,
then, upon receipt by the Registrar of the following documentation:
(A) if the Holder of such Restricted Definitive Note proposes to
exchange such Note for a beneficial interest in a Restricted Global
Note, a certificate from such Holder in the form of Exhibit C hereto,
including the certifications in item (2)(b) thereof;
(B) if such Restricted Definitive Note is being transferred to a
QIB in accordance with Rule 144A under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto, including the
certifications in item (1) thereof; or
(C) if such Restricted Definitive Note is being transferred to a
Non-U.S. Person in an offshore transaction in accordance with Rule 903
or Rule 904 under the Securities Act, a certificate to the effect set
forth in Exhibit B hereto, including the certifications in item (2)
thereof;
the Trustee shall cancel the Restricted Definitive Note, increase or cause
to be increased the aggregate principal amount of, in the case of clause
(A) above, the appropriate Restricted Global Note, in the case of clause
(B) above, the 144A Global Note, and in the case of clause (C) above, the
Regulation S Global Note.
(ii) A Holder of a Restricted Definitive Note may exchange such Note
for a beneficial interest in an Unrestricted Global Note or transfer such
Restricted Definitive Note to a Person who takes delivery thereof in the
form of a beneficial interest in an Unrestricted Global Note if:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights Agreement
and the Holder, in the case of an
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exchange, or the transferee, in the case of a transfer, certifies in
the applicable Letter of Transmittal that it is not (1) a
Broker-Dealer, (2) a Person participating in the distribution of the
Notes issued in the Exchange Offer or (3) a Person who is an affiliate
(as defined in Rule 144) of the Company;
(B) any such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration Rights
Agreement;
(C) any such transfer is effected by a Restricted Broker-Dealer
pursuant to the Exchange Offer Registration Statement in accordance
with the Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the Holder of such Restricted Definitive Notes
proposes to exchange such Notes for a beneficial interest in the
Unrestricted Global Note, a certificate from such Holder in the
form of Exhibit C hereto, including the certifications in item
(1)(c) thereof;
(2) if the Holder of such Restricted Definitive Notes
proposes to transfer such Notes to a Person who shall take
delivery thereof in the form of a beneficial interest in the
Unrestricted Global Note, a certificate from such Holder in the
form of Exhibit B hereto, including the certifications in item
(4) thereof; and
(3) in each such case set forth in this subparagraph (D), an
Opinion of Counsel in form reasonably acceptable to the Company
to the effect that such exchange or transfer is in compliance
with the Securities Act, that the restrictions on transfer
contained herein and in the Private Placement Legend are not
required in order to maintain compliance with the Securities Act,
and such Restricted Definitive Notes are being exchanged or
transferred in compliance with any applicable blue sky securities
laws of any State of the United States.
Upon satisfaction of the conditions of any of the subparagraphs in this
Section 2.06(d)(ii), the Trustee shall cancel the Restricted Definitive
Notes and increase or cause to be increased the aggregate principal amount
of the Unrestricted Global Note.
(iii) A Holder of an Unrestricted Definitive Note may exchange such
Note for a beneficial interest in an Unrestricted Global Note or transfer
such Unrestricted Definitive Notes to a Person who takes delivery thereof
in the form of a beneficial interest in an Unrestricted Global Note at any
time. Upon receipt of a request for such an exchange or registration of
transfer, the Trustee shall cancel the applicable Unrestricted Definitive
Note and increase or cause to be increased the aggregate principal amount
of the Unrestricted Global Note.
If any such exchange or transfer from a Definitive Note to a beneficial
interest is effected pursuant to subparagraphs (ii)(B), (ii)(D) or (iii) above
at a time when an Unrestricted Global Note has not yet been issued, the Company
shall issue and, upon receipt of an authentication order in accordance with
Section 2.02 hereof, the Trustee shall authenticate one or more Unrestricted
Global Notes in an aggregate
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principal amount equal to the principal amount of beneficial interests
transferred pursuant to subparagraphs (ii)(B), (ii)(D) or (iii) above.
(e) Transfer and Exchange of Definitive Notes for Definitive Notes. Upon
request by a Holder of Definitive Notes and such Holder's compliance with the
provisions of this Section 2.06(e), the Registrar shall register the transfer or
exchange of Definitive Notes. Prior to such registration of transfer or
exchange, the requesting Holder shall present or surrender to the Registrar the
Definitive Notes duly endorsed or accompanied by a written instruction of
transfer in form satisfactory to the Registrar duly executed by such Holder or
by his attorney, duly authorized in writing. In addition, the requesting Holder
shall provide any additional certifications, documents and information, as
applicable, pursuant to the provisions of this Section 2.06(e).
(i) Restricted Definitive Notes may be transferred to and registered
in the name of Persons who take delivery thereof if the Registrar receives
the following:
(A) if the transfer will be made pursuant to Rule 144A under the
Securities Act, then the transferor must deliver a certificate in the
form of Exhibit B hereto, including the certifications in item (1)
thereof;
(B) if the transfer will be made pursuant to Rule 903 or Rule
904, then the transferor must deliver a certificate in the form of
Exhibit B hereto, including the certifications in item (2) thereof;
and
(C) if the transfer will be made pursuant to any other exemption
from the registration requirements of the Securities Act, then the
transferor must deliver a certificate in the form of Exhibit B hereto,
including the certifications, certificates and Opinion of Counsel
required by item (3) thereof, if applicable.
(ii) Any Restricted Definitive Note may be exchanged by the Holder
thereof for an Unrestricted Definitive Note or transferred to a Person or
Persons who take delivery thereof in the form of an Unrestricted Definitive
Note if:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights Agreement
and the Holder, in the case of an exchange, or the transferee, in the
case of a transfer, certifies in the applicable Letter of Transmittal
that it is not (1) a Broker-Dealer, (2) a Person participating in the
distribution of the Notes issued in the Exchange Offer or (3) a Person
who is an affiliate (as defined in Rule 144) of the Company;
(B) any such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration Rights
Agreement;
(C) any such transfer is effected by a Restricted Broker-Dealer
pursuant to the Exchange Offer Registration Statement in accordance
with the Registration Rights Agreement; or
(D) the Registrar receives the following:
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(1) if the Holder of such Restricted Definitive Notes
proposes to exchange such Notes for an Unrestricted Definitive
Note, a certificate from such Holder in the form of Exhibit C
hereto, including the certifications in item (1)(d) thereof;
(2) if the Holder of such Restricted Definitive Notes
proposes to transfer such Notes to a Person who shall take
delivery thereof in the form of an Unrestricted Definitive Note,
a certificate from such Holder in the form of Exhibit B hereto,
including the certifications in item (4) thereof; and
(3) in each such case set forth in this subparagraph (D), an
Opinion of Counsel in form reasonably acceptable to the Company
to the effect that such exchange or transfer is in compliance
with the Securities Act, that the restrictions on transfer
contained herein and in the Private Placement Legend are not
required in order to maintain compliance with the Securities Act,
and such Restricted Definitive Note is being exchanged or
transferred in compliance with any applicable blue sky securities
laws of any State of the United States.
(iii) A Holder of Unrestricted Definitive Notes may transfer such
Notes to a Person who takes delivery thereof in the form of an Unrestricted
Definitive Note. Upon receipt of a request to register such a transfer, the
Registrar shall register the Unrestricted Definitive Notes pursuant to the
instructions from the Holder thereof. Unrestricted Definitive Notes cannot
be exchanged for or transferred to Persons who take delivery thereof in the
form of a Restricted Definitive Note.
(f) Exchange Offer. Upon the occurrence of the Exchange Offer in
accordance with the Registration Rights Agreement, the Company shall issue
and, upon receipt of an authentication order in accordance with Section
2.02, the Trustee shall authenticate (i) one or more Unrestricted Global
Notes in an aggregate principal amount equal to the principal amount of the
beneficial interests in the Restricted Global Notes tendered for acceptance
by Persons that certify in the applicable Letter of Transmittal that they
are not (x) Broker-Dealers, (y) Persons participating in the distribution
of the Notes issued in the Exchange Offer or (z) Persons who are Affiliates
(as defined in Rule 144) of the Company and accepted for exchange in the
Exchange Offer and (ii) Unrestricted Definitive Notes in an aggregate
principal amount equal to the principal amount of the Restricted Definitive
Notes accepted for exchange in the Exchange Offer. Concurrent with the
issuance of such Notes, the Trustee shall cause the aggregate principal
amount of the applicable Restricted Global Notes to be reduced accordingly,
and the Company shall execute and the Trustee shall authenticate and
deliver to the Persons designated by the Holders of Definitive Notes so
accepted Unrestricted Definitive Notes in the appropriate principal amount.
(g) Legends. The following legends shall appear on the face of all
Global Notes and Definitive Notes issued under this Indenture unless
specifically stated otherwise in the applicable provisions of this
Indenture.
(i) Private Placement Legend.
(A) Except as permitted by subparagraph (B) below, each Global
Note and each Definitive Note (and all Notes issued in exchange
therefor or substitution thereof) shall bear the legend in
substantially the following form:
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"THIS SECURITY (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER THE
U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND,
ACCORDINGLY, MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE
TRANSFERRED WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR
BENEFIT OF, U.S. PERSONS, EXCEPT AS SET FORTH IN THE FOLLOWING
SENTENCE. BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST
HEREIN, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED
INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES
ACT) (A "QIB"), (B) IT IS NOT A U.S. PERSON, IS NOT ACQUIRING THIS
NOTE FOR THE ACCOUNT OR BENEFIT OF A U.S. PERSON AND IS ACQUIRING THIS
NOTE IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER
THE SECURITIES ACT OR (C) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR"
(AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7) OF REGULATION D UNDER
THE SECURITIES ACT) (AN "IAI"), (2) AGREES THAT IT WILL NOT, WITHIN
THE TIME PERIOD REFERRED TO UNDER RULE 144(k) (TAKING INTO ACCOUNT THE
PROVISIONS OF RULE 144(d) UNDER THE SECURITIES ACT, IF APPLICABLE)
UNDER THE SECURITIES ACT AS IN EFFECT ON THE DATE OF THE TRANSFER OF
THIS NOTE, RESELL OR OTHERWISE TRANSFER THIS NOTE EXCEPT (A) TO THE
COMPANY OR ANY SUBSIDIARY THEREOF, (B) TO A PERSON WHOM THE HOLDER
REASONABLY BELIEVES IS A QIB PURCHASING FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF A QIB IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES
ACT, (C) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN
COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (D) PURSUANT TO THE
EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES
ACT (IF AVAILABLE), (E) TO AN IAI THAT, PRIOR TO SUCH TRANSFER,
FURNISHES TO THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS RELATING TO THE REGISTRATION OF
TRANSFER OF THIS NOTE (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM
THE TRUSTEE) AND, IF THE ISSUER SO REQUESTS, AN OPINION OF COUNSEL
REASONABLY ACCEPTABLE TO THE COMPANY THAT SUCH TRANSFER IS IN
COMPLIANCE WITH THE SECURITIES ACT OR (F) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND, IN EACH CASE, IN
ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS, AND (3) AGREES THAT
IT WILL DELIVER TO EACH PERSON TO WHOM THIS NOTE OR AN INTEREST HEREIN
IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. AS
USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND
"U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM BY RULE 902 OF
REGULATION S UNDER THE SECURITIES ACT. THE INDENTURE CONTAINS A
PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF
THIS NOTE IN VIOLATION OF THE FOREGOING RESTRICTIONS."
(B) Notwithstanding the foregoing, any Unrestricted Global Note
or Unrestricted Definitive Note issued pursuant to subparagraphs
(b)(iv), (c)(iii), (c)(iv),
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(d)(ii), (d)(iii), (e)(ii), (e)(iii) or (f) to this Section 2.06 (and
all Notes issued in exchange therefor or substitution thereof) shall
not bear the Private Placement Legend.
(ii) Global Note Legend. Each Global Note shall bear a legend in
substantially the following form:
"THIS GLOBAL NOTE IS HELD BY THE DEPOSITORY (AS DEFINED IN THE
INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE
BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO
ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY
MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 2.07
OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT
NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE, (III) THIS
GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT
TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE
TRANSFERRED TO A SUCCESSOR DEPOSITORY WITH THE PRIOR WRITTEN CONSENT
OF THE COMPANY."
(iii) Regulation S Temporary Global Note Legend. The Regulation S
Temporary Global Note shall bear a legend in substantially the following
form:
"THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL NOTE, AND
THE CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR CERTIFICATED
NOTES, ARE AS SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN). NEITHER
THE HOLDER NOR THE BENEFICIAL OWNERS OF THIS REGULATION S TEMPORARY
GLOBAL NOTE SHALL BE ENTITLED TO RECEIVE CASH PAYMENTS OF INTEREST
DURING THE PERIOD WHICH SUCH HOLDER HOLDS THIS NOTE. NOTHING IN THIS
LEGEND SHALL BE DEEMED TO PREVENT INTEREST FROM ACCRUING ON THIS
NOTE."
(h) Cancellation and/or Adjustment of Global Notes. At such time as all
beneficial interests in a particular Global Note have been exchanged for
Definitive Notes or a particular Global Note has been redeemed, repurchased or
cancelled in whole and not in part, each such Global Note shall be returned to
or retained and cancelled by the Trustee in accordance with Section 2.11 hereof.
At any time prior to such cancellation, if any beneficial interest in a Global
Note is exchanged for or transferred to a Person who will take delivery thereof
in the form of a beneficial interest in another Global Note or for Definitive
Notes, the principal amount of Notes represented by such Global Note shall be
reduced accordingly and an endorsement shall be made on such Global Note, by the
Trustee or by the Depository at the direction of the Trustee, to reflect such
reduction; and if the beneficial interest is being exchanged for or transferred
to a Person who will take delivery thereof in the form of a beneficial interest
in another Global Note, such other Global Note shall be increased accordingly
and an endorsement shall be made on such Global Note, by the Trustee or by the
Depository at the direction of the Trustee, to reflect such increase.
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(i) General Provisions Relating to Transfers and Exchanges.
(i) To permit registrations of transfers and exchanges, the Company
shall execute and the Trustee shall authenticate Global Notes and
Definitive Notes upon receipt of a Company Order or at the Registrar's
request.
(ii) No service charge shall be made to a holder of a beneficial
interest in a Global Note or to a Holder of a Definitive Note for any
registration of transfer or exchange, but the Company may require payment
of a sum sufficient to cover any transfer tax or similar governmental
charge payable in connection therewith (other than any such transfer taxes
or similar governmental charge payable upon exchange or transfer pursuant
to Sections 2.10, 3.07, 4.09, 4.10 and 9.05 hereof).
(iii) The Registrar shall not be required to register the transfer of
or exchange any Note selected for redemption in whole or in part, except
the unredeemed portion of any Note being redeemed in part.
(iv) All Global Notes and Definitive Notes issued upon any
registration of transfer or exchange of Global Notes or Definitive Notes
shall be the valid obligations of the Company, evidencing the same debt,
and entitled to the same benefits under this Indenture, as the Global Notes
or Definitive Notes surrendered upon such registration of transfer or
exchange.
(v) The Company shall not be required (A) to issue, to register the
transfer of or to exchange Notes during a period beginning at the opening
of business 15 days before the day of any selection of Notes for redemption
under Section 3.02 hereof and ending at the close of business on the day of
selection, (B) to register the transfer of or to exchange any Note so
selected for redemption in whole or in part, except the unredeemed portion
of any Note being redeemed in part or (C) to register the transfer of or to
exchange a Note between a record date and the next succeeding Interest
Payment Date.
(vi) Prior to due presentment for the registration of a transfer of
any Note, the Trustee, any Agent and the Company may deem and treat the
Person in whose name any Note is registered as the absolute owner of such
Note for the purpose of receiving payment of principal of and interest on
such Notes and for all other purposes, and none of the Trustee, any Agent
or the Company shall be affected by notice to the contrary.
(vii) The Trustee shall authenticate Global Notes and Definitive Notes
in accordance with the provisions of Section 2.02 hereof.
(viii) All certifications, certificates and Opinions of Counsel
required to be submitted to the Registrar pursuant to this Section 2.06 to
effect a registration of transfer or exchange may be submitted by
facsimile.
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SECTION 2.07. REPLACEMENT NOTES.
If any mutilated Note is surrendered to the Trustee, or the Company and
the Trustee and the Company receive evidence to their satisfaction of the
destruction, loss or theft of any Note, the Company shall issue and the Trustee,
upon the written order of the Company signed by two Officers of the Company,
shall authenticate a replacement Note if the Trustee's and the Company's
requirements are met. If required by the Trustee or the Company, an indemnity
bond must be supplied by the Holder that is sufficient in the judgment of the
Trustee and the Company to protect the Company, the Trustee, any Agent and any
authenticating agent from any loss that any of them may suffer if a Note is
replaced. The Company may charge for its expenses in replacing a Note.
Every replacement Note is an additional obligation of the Company and
shall be entitled to all of the benefits of this Indenture equally and
proportionately with all other Notes duly issued hereunder.
SECTION 2.08. OUTSTANDING NOTES.
The Notes outstanding at any time are all the Notes authenticated by the
Trustee except for those cancelled by it, those delivered to it for
cancellation, those reductions in the interest in a Global Note effected by the
Trustee in accordance with the provisions hereof, and those described in this
Section as not outstanding. Except as set forth in Section 2.09 hereof, a Note
does not cease to be outstanding because the Company or an Affiliate of the
Company holds the Note.
If a Note is replaced pursuant to Section 2.07 hereof, it ceases to be
outstanding unless the Trustee receives proof satisfactory to it that the
replaced Note is held by a bona fide purchaser.
If the principal amount of any Note is considered paid under Section 4.01
hereof, it ceases to be outstanding and interest on it ceases to accrue.
If the Paying Agent (other than the Company, a Subsidiary or an Affiliate
of any thereof) holds, on a redemption date or maturity date, money sufficient
to pay Notes payable on that date, then on and after that date such Notes shall
be deemed to be no longer outstanding and shall cease to accrue interest.
SECTION 2.09. TREASURY NOTES.
In determining whether the Holders of the required principal amount of
Notes have concurred in any direction, waiver or consent, Notes owned by the
Company, or by an Affiliate of the Company, shall be considered as though not
outstanding, except that for the purposes of determining whether the Trustee
shall be protected in relying on any such direction, waiver or consent, only
Notes that a Responsible Officer of the Trustee has been informed of by the
Company as being so owned shall be so disregarded.
SECTION 2.10. TEMPORARY NOTES.
Until permanent Notes are ready for delivery, the Company may prepare and
the Trustee shall authenticate temporary Notes upon a written order of the
Company signed by two Officers of the Company. Temporary Notes shall be
substantially in the form of permanent Notes but may have variations that the
Company considers appropriate for temporary Notes and as shall be reasonably
acceptable to the
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Trustee. Without unreasonable delay, the Company shall prepare and the Trustee
shall authenticate definitive Notes in exchange for temporary Notes.
Holders of temporary Notes shall be entitled to all of the benefits of
this Indenture.
SECTION 2.11. CANCELLATION.
The Company at any time may deliver Notes to the Trustee for cancellation.
The Registrar and Paying Agent shall forward to the Trustee any Notes
surrendered to them for registration of transfer, exchange or payment. The
Trustee and no one else shall cancel all Notes surrendered for registration of
transfer, exchange, payment, replacement or cancellation and shall destroy
cancelled Notes (subject to the record retention requirement of the Exchange
Act). Certification of the destruction of all cancelled Notes shall be delivered
to the Company. The Company may not issue new Notes to replace Notes that it has
paid or that have been delivered to the Trustee for cancellation.
SECTION 2.12. DEFAULTED INTEREST.
Interest on any Note which is payable, and is punctually paid or duly
provided for, on any Interest Payment Date shall be paid to the Person in whose
name that Note is registered at the close of business on the Regular Record Date
for such interest.
Any interest on any Note which is payable, but is not punctually paid or
duly provided for, on any Interest Payment Date and interest on such defaulted
interest at the applicable interest rate borne by the Notes, to the extent
lawful (such defaulted interest (and interest thereon) herein collectively
called "Defaulted Interest") shall forthwith cease to be payable to the Holder
on the relevant Regular Record Date by virtue of having been such Holder; and
such Defaulted Interest shall be paid by the Company to the Persons in whose
names the Notes are registered at the close of business on a Special Record Date
for the payment of such Defaulted Interest, which shall be fixed in the
following manner. The Company shall give the Trustee at least 15 days' written
notice (unless a shorter period is acceptable to the Trustee for its
convenience) of the amount of Defaulted Interest proposed to be paid on each
Note and the date of the proposed payment, and at the same time the Company
shall deposit with the Trustee an amount of money equal to the aggregate amount
proposed to be paid in respect of such Defaulted Interest or shall make
arrangements satisfactory to the Trustee for such deposit prior to the date of
the proposed payment, such money when deposited to be held by the Trustee in
trust for the benefit of the Persons entitled to such Defaulted Interest as in
this subsection provided. Thereupon the Trustee shall fix a Special Record Date
for the payment of such Defaulted Interest which shall not be more than 15 days
and not less than 10 days prior to the date of the proposed payment and not less
than 10 days after the receipt by the Trustee of the notice of the proposed
payment. The Trustee shall promptly notify the Company of such Special Record
Date. In the name and at the expense of the Company, the Trustee shall cause
notice of the proposed payment of such Defaulted Interest and the Special Record
Date therefor to be mailed, first-class postage prepaid, to each Holder at his
address as it appears in the Registrar, not less than 10 days prior to such
Special Record Date. Notice of the proposed payment of such Defaulted Interest
and the Special Record Date therefor having been so mailed, such Defaulted
Interest shall be paid to the Persons in whose names the Notes are registered at
the close of business on such Special Record Date.
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Subject to the foregoing provisions of this Section, each Note delivered
under this Indenture upon registration of transfer of or in exchange for or in
lieu of any other Note shall carry the rights to interest accrued and unpaid,
and to accrue, which were carried by such other Note.
ARTICLE 3
REDEMPTION AND PREPAYMENT
SECTION 3.01. APPLICABILITY OF ARTICLE.
Redemption of Notes at the election of the Company shall be made in
accordance with this Article 3.
SECTION 3.02. ELECTION TO REDEEM; NOTICE TO TRUSTEE.
The election of the Company to redeem any Notes pursuant to Section 3.08
shall be evidenced by a Board Resolution. In case of any redemption at the
election of the Company, the Company shall, at least 45 but not more than 60
days prior to the Redemption Date fixed by it (unless a shorter notice period
shall be satisfactory to the Trustee for its convenience), notify the Trustee of
such Redemption Date and of the principal amount of Notes to be redeemed.
SECTION 3.03. SELECTION BY TRUSTEE OF NOTES TO BE REDEEMED.
If less than all of the Notes are to be redeemed at any time, selection of
Notes for redemption shall be made by the Trustee in compliance with the
requirements of the principal national securities exchange, if any, on which
such Notes are listed, or, if such Notes are not so listed, on a pro rata basis,
by lot or by such method as the Trustee shall deem fair and appropriate;
provided that no Notes of $1,000 or less shall be redeemed in part.
The Trustee shall promptly notify the Company and the Registrar in writing
of the Notes selected for redemption and, in the case of any Notes selected for
partial redemption, the principal amount thereof to be redeemed.
For all purposes of this Indenture, unless the context otherwise requires,
all provisions relating to redemption of Notes shall relate, in the case of any
Note redeemed or to be redeemed only in part, to the portion of the principal
amount of such Note which has been or is to be redeemed.
SECTION 3.04. NOTICE OF REDEMPTION.
Notices of redemption shall be mailed by first class mail, postage
prepaid, at least 30 but not more than 60 days before the Redemption Date to
each Holder of Notes to be redeemed at such Holder's registered address. If any
Note is to be redeemed in part only, any notice of redemption that relates to
such Note shall state the portion of the principal amount thereof to be
redeemed.
All notices of redemption shall state:
(a) the Redemption Date;
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(b) the Redemption Price;
(c) if less than all Notes then outstanding are to be redeemed, the
identification (and, in the case of a Note to be redeemed in part, the
principal amount) of the particular Notes to be redeemed;
(d) that on the Redemption Date the Redemption Price will become due
and payable upon each such Note or portion thereof, and that (unless the
Company shall default in payment of the Redemption Price) interest thereon
shall cease to accrue on or after said date;
(e) the places or places where such Notes are to be surrendered for
payment of the Redemption Price;
(f) that Notes called for redemption must be surrendered to the Paying
Agent to collect the Redemption Price;
(g) the CUSIP number, if any, relating to such Notes, and
(h) in the case of a Note to be redeemed in part, the principal amount
of such Note to be redeemed and that after the Redemption Date upon
surrender of such Note, a new Note or Notes in the aggregate principal
amount equal to the unredeemed portion thereof will be issued.
Notice of redemption of Notes to be redeemed at the election of the
Company shall be given by the Company or, at its request, by the Trustee in the
name and at the expense of the Company.
SECTION 3.05. DEPOSIT OF REDEMPTION PRICE.
On or prior to any Redemption Date, the Company shall deposit with the
Trustee or with a Paying Agent (or, if the Company is acting as its owning
Paying Agent, segregate and hold in trust as provided in Section 4.03) an amount
of money in same day funds (or New York Clearing House funds if such deposit is
made prior to the applicable Redemption Date) sufficient to pay the Redemption
Price of, and accrued interest on, all the Notes or portions thereof which are
to be redeemed on that date.
SECTION 3.06. NOTES PAYABLE ON REDEMPTION DATE.
Notice of redemption having been given as aforesaid, the Notes so to be
redeemed shall, on the Redemption Date, become due and payable at the Redemption
Price therein specified and from and after such date (unless the Company shall
default in the payment of the Redemption Price and accrued interest) such Notes
shall cease to bear interest. Upon surrender of any such Note for redemption in
accordance with said notice, such Note shall be paid by the Company at the
Redemption Price together with accrued interest to the Redemption Date;
provided, however, that installments of interest whose Stated Maturity is on or
prior to the Redemption Date shall by payable to the Holders of such Notes,
registered as such on the relevant Regular Record Dates according to the terms
and the provisions of Section 2.12.
If any Note called for redemption shall not be so paid upon surrender
thereof for redemption, the principal thereof (and premium, if any, thereon)
shall, until paid, bear interest from the Redemption Date at the rate borne by
such Note.
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SECTION 3.07. NOTES REDEEMED IN PART.
Any Note which is to be redeemed only in part shall be surrendered at the
office or agency of the Company maintained for such purpose pursuant to Section
4.02 (with, if the Company, the Registrar or the Trustee so requires, due
endorsement by, or a written instrument of transfer in form satisfactory to the
Company, the Registrar or the Trustee duly executed by, the Holder thereof or
his attorney duly authorized in writing), and a new Note in principal amount
equal to the unpurchased or unredeemed portion will be issued in the name of the
Holder thereof upon cancellation of the original Note. On and after the purchase
or redemption date, unless the Company defaults in payment of the purchase or
redemption price, interest shall cease to accrue on Notes or portions thereof
purchased or called for redemption.
SECTION 3.08. OPTIONAL REDEMPTION.
(a) Except as described in this Section 3.08, the Notes will not be
redeemable at the Company's option prior to June 15, 2002. On and after June 15,
2002, the Notes will be subject to redemption at the option of the Company, in
whole or in part, upon not less than 30 nor more than 60 days' written notice,
at the Redemption Prices (expressed as a percentage of principal amount) set
forth below, plus accrued and unpaid interest thereon, if any, to the applicable
Redemption Date, if redeemed during the twelve-month period beginning on June 15
of each of the years indicated below:
REDEMPTION
YEAR PRICE
- ---- ----------
2002........................................................... 105.563%
2003........................................................... 103.708%
2004........................................................... 101.854%
2005 and thereafter............................................ 100.000%
In addition, at any time prior to June 15, 2000, the Company may on any
one or more occasions redeem up to 33 1/3% of the aggregate principal amount of
Notes originally issued (including, for this purpose, one or more series of
Notes issued under this Indenture after the date hereof) at a Redemption Price
of 111.125% of the principal amount thereof, plus accrued and unpaid interest
and Liquidated Damages, if any, thereon to the Redemption Date, with the net
cash proceeds of one or more Public Equity Offerings; provided that at least
66 2/3% of the Notes originally issued (including, for this purpose, one or more
series of Notes issued under this Indenture after the date hereof) remain
outstanding immediately after the occurrence of such redemption and provided,
further, that such redemption occurs within 60 days of the date of the closing
of such Public Equity Offering.
In addition, at any time prior to June 15, 2002, the Company may, at its
option, redeem the Notes, in whole or in part, at a Redemption Price equal to
100% of the principal amount thereof plus the applicable Make-Whole Premium.
(b) Any redemption pursuant to this Section 3.08 shall be made pursuant to
the provisions of Sections 3.01 through 3.07 hereof.
SECTION 3.09. MANDATORY REDEMPTION.
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Except as set forth under Sections 3.10, 4.09 and 4.10 hereof, the Company
shall not be required to make mandatory redemption or sinking fund payments with
respect to the Notes.
SECTION 3.10 OFFER TO PURCHASE BY APPLICATION OF EXCESS PROCEEDS.
In the event that, pursuant to Section 4.10 hereof, the Company shall be
required to commence an offer to all Holders to purchase Notes (an "Asset Sale
Offer"), it shall follow the procedures specified below.
The Asset Sale Offer shall remain open for a period of 20 Business Days
following its commencement and no longer, except to the extent that a longer
period is required by applicable law (the "Offer Period"). No later than five
Business Days after the termination of the Offer Period (the "Purchase Date"),
the Company shall purchase the principal amount of Notes required to be
purchased pursuant to Section 4.10 hereof (the "Offer Amount") or, if less than
the Offer Amount has been tendered, all Notes tendered in response to the Asset
Sale Offer.
If the Purchase Date is on or after a Regular Record Date and on or before
the related Interest Payment Date, any accrued and unpaid interest shall be paid
to the Person in whose name a Note is registered at the close of business on
such Regular Record Date, and no additional interest shall be payable to Holders
who tender Notes pursuant to the Asset Sale Offer.
Upon the commencement of an Asset Sale Offer, the Company shall send, by
first class mail, a notice to each of the Holders, with a copy to the Trustee.
The notice shall contain all instructions and materials necessary to enable such
Holders to tender Notes pursuant to the Asset Sale Offer. The Asset Sale Offer
shall be made to all Holders. The notice, which shall govern the terms of the
Asset Sale Offer, shall state:
(a) that the Asset Sale Offer is being made pursuant to this Section 3.10
and Section 4.10 hereof and the length of time the Asset Sale Offer
shall remain open;
(b) the Offer Amount, the purchase price and the Purchase Date;
(c) that any Note not tendered or accepted for payment shall continue to
accrue interest;
(d) that, unless the Company defaults in making such payment, any Note
accepted for payment pursuant to the Asset Sale Offer shall cease to
accrue interest after the Purchase Date;
(e) that Holders electing to have a Note purchased pursuant to any Asset
Sale Offer shall be required to surrender the Note, with the form
entitled "Option of Holder to Elect Purchase" on the reverse of the
Note completed, or transfer by book-entry transfer, to the Company, a
depositary, if appointed by the Company, or a Paying Agent at the
address specified in the notice not later than the third Business Day
preceding the end of the Offer Period;
(f) that Holders shall be entitled to withdraw their election if the
Company, the depositary or the Paying Agent, as the case may be,
receives, not later than the Business Day preceding the end of the
Offer Period, a telegram, telex, facsimile transmission or letter
setting forth
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the name of the Holder, the principal amount of the Note the Holder
delivered for purchase and a statement that such Holder is withdrawing
his election to have such Note purchased;
(g) that, if the aggregate principal amount of Notes surrendered by
Holders exceeds the Offer Amount, the Company shall select the Notes
to be purchased on a pro rata basis (with such adjustments as may be
deemed appropriate by the Company so that only Notes in denominations
of $1,000, or integral multiples thereof, shall be purchased); and
(h) that Holders whose Notes were purchased only in part shall be issued
new Notes equal in principal amount to the unpurchased portion of the
Notes surrendered (or transferred by book-entry transfer).
On or before 12:00 p.m. (New York City time) on each Purchase Date, the
Company shall, irrevocably deposit with the Trustee or Paying Agent in
immediately available funds the aggregate purchase price with respect to a
principal amount of Notes equal to the Offer Amount, together with accrued and
unpaid interest thereon to the Purchase Date, to be held for payment in
accordance with the terms of this Section 3.10. On the Purchase Date, the
Company shall, to the extent lawful, (i) accept for payment, on a pro rata basis
to the extent necessary, the Offer Amount of Notes or portions thereof tendered
pursuant to the Asset Sale Offer, or if less than the Offer Amount has been
tendered, all Notes tendered, (ii) deliver or clause the Paying Agent or
depositary, as the case may be, to deliver to the Trustee Notes so accepted and
(iii) deliver to the Trustee an Officer's Certificate stating that such Notes or
portions thereof were accepted for payment by the Company in accordance with the
terms of this Section 3.10. The Company, the Depository or the Paying Agent, as
the case may be, shall promptly (but in any case not later than three Business
Days after the Purchase Date) mail or deliver to each tendering Holder an amount
equal to the purchase price of the Notes tendered by such Holder and accepted by
the Company for purchase, plus any accrued and unpaid interest, thereon to the
Purchase Date, and the Company shall promptly issue a new Note, and the Trustee,
upon written request from the Company, shall authenticate and mail or deliver
such new Note to such Holder, equal in principal amount to any unpurchased
portion of the Note surrendered. Any Note not so accepted shall be promptly
mailed or delivered by the Company to the Holder thereof. The Company shall send
a notice to each Holder a stating the results of the Asset Sale Offer on the
Purchase Date.
Other than as specifically provided in this Section 3.10, any purchase
pursuant to this Section 3.10 shall be made pursuant to the provisions of
Sections 3.01 through 3.07 hereof.
ARTICLE 4
COVENANTS
SECTION 4.01 PAYMENT OF PRINCIPAL, PREMIUM AND INTEREST.
The Company shall pay or cause to be paid the principal of, premium, if
any, and interest on the Notes on the dates and in the manner provided in the
Notes. Principal, premium, if any, and interest shall be considered paid on the
date due if the Paying Agent, if other than the Company or a Subsidiary thereof,
holds as of 10:00 a.m. Eastern Time on the due date money deposited by the
Company in immediately
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available funds and designated for and sufficient to pay all principal, premium,
if any, and interest then due.
The Company shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue principal at the rate of the
then applicable interest rate on the Notes to the extent lawful; it shall pay
interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue installments of interest and Liquidated Damages
(without regard to any applicable grace period) at the same rate to the extent
lawful.
SECTION 4.02. MAINTENANCE OF OFFICE OR AGENCY.
The Company will maintain, in The City of New York, an office or agency
where Notes may be presented or surrendered for payment, where Notes may be
surrendered for registration of transfer or exchange and where notices and
demands to or upon the Company in respect of the Notes and this Indenture may be
served. The Company will give prompt written notice to the Trustee of any change
in the location of any such office or agency. If at any time the Company shall
fail to maintain any such required office or agency or shall fail to furnish the
Trustee with the address thereof, such presentations, surrenders, notices and
demands may be made or served at the Corporate Trust Office of the Trustee, and
the Company hereby appoints the Trustee as its agent to receive all such
presentations, surrenders, notices and demands.
The Company may from time to time designate one or more other offices or
agencies (in or outside of The City of New York) where the Notes may be
presented or surrendered for any or all such purposes, and may from time to time
rescind such designation; provided, however, that no such designation or
recession shall in any manner relieve the Company of its obligation to maintain
an office or agency in The City of New York for such purposes. The Company will
give prompt written notice to the Trustee of any such designation or recession
and any change in the location of any such office or agency.
SECTION 4.03. MONEY FOR SECURITY PAYMENTS TO BE HELD IN TRUST.
If the Company shall at any time act as its own Paying Agent, it will, on
or before each due date of the principal of, premium, if any, or interest on any
of the Notes, segregate and hold in trust for the benefit of the Persons
entitled thereto a sum sufficient to pay the principal, premium, if any, or
interest so becoming due until such sums shall be paid to such Persons or
otherwise disposed of as herein provided, and will promptly notify the Trustee
of its action or failure so to act.
Whenever the Company shall have one or more Paying Agents for the Notes,
it will, on or before each due date of the principal of, premium, if any, or
interest on any Notes, deposit with a Paying Agent a sum in same day funds (or
New York Clearing House funds if such deposit is made prior to the date on which
such deposit is required to be made) sufficient to pay the principal, premium,
if any, or interest so becoming due (or at the option of the Company, payment of
interest may be mailed by check to the Holders of the Notes at their respective
addresses set forth in the register of Holders of Notes; provided that all
payments with respect to Global Notes and Definitive Notes, the holders of which
have given wire transfer instructions to the Company shall receive such payments
of interest by wire transfer in same day funds) such sum to be held in trust for
the benefit of the Persons entitled to such principal, premium or interest and
(unless such Paying Agent is the Trustee) the Company will promptly notify the
Trustee of such action or any failure so to act.
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The Company will cause each Paying Agent other than the Trustee to execute
and deliver to the Trustee an instrument in which such Paying Agent shall agree
with the Trustee, subject to the provisions of this Section, that such Paying
Agent will:
(a) hold all sums held by it for the payment of the principal of, premium,
if any, or interest on Notes in trust for the benefit of the Persons
entitled thereto until such sums shall be paid to such Persons or
otherwise disposed of as herein provided;
(b) give the Trustee notice of any default by the Company (or any other
obligor upon the Notes) in the making of any payment of principal,
premium, if any, or interest;
(c) at any time during the continuance of any such default, upon the
written request of the Trustee, forthwith pay to the Trustee all sums
so held in trust by such Paying Agent; and
(d) acknowledge, accept and agree to comply in all respects with the
provisions of this Indenture relating to the duties, rights and
obligations of such Paying Agent.
The Company may at any time, for the purpose of obtaining the satisfaction
and discharge of this Indenture or for any other purpose, pay, or by Company
Order direct any Paying Agent to pay, to the Trustee all sums held in trust by
the Company or such Paying Agent, such sums to be held by the Trustee upon the
same trusts as those upon which such sums were held by the Company or such
Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such
Paying Agent shall be released from all further liability with respect to such
money.
Any money deposited with the Trustee or any Paying Agent, or then held by
the Company, in trust for the payment of the principal of, premium, if any, or
interest on any Note and remaining unclaimed for two years after such principal,
premium, if any, or interest has become due and payable shall be paid to the
Company on Company Request or (if then held by the Company) shall be discharged
from such trust; and the Holder of such Note shall thereafter, as an unsecured
general creditor, look only to the Company for payment thereof, and all
liability of the Trustee or such Paying Agent with respect to such trust money,
and all liability of the Company as trustee thereof, shall thereupon cease;
provided, however, that the Trustee or such Paying Agent, before being required
to make any such repayment, shall at the expense of the Company cause notice to
be promptly sent to each Holder that such money remains unclaimed and that,
after a date specified therein, which shall not be less than 30 days from the
date of such notification, any unclaimed balance of such money then remaining
will be repaid to the Company.
SECTION 4.04. REPORTS.
Whether or not required by the rules and regulations of the SEC, so long
as any Notes are outstanding, the Company shall furnish to the Holders of Notes
(i) all quarterly and annual financial information that would be required to be
contained in a filing with the SEC on Forms 10-Q and 10-K if the Company were
required to file such Forms, including a "Management's Discussion and Analysis
of Financial Condition and Results of Operations" that describes the financial
condition and results of operations of the Company and its consolidated
Subsidiaries (showing in reasonable detail, either on the face of the financial
statements or in the footnotes thereto and in Management's Discussion and
Analysis of Financial Condition and Results of Operations, the financial
condition and results of operations of the Company and its Restricted
Subsidiaries separate from the financial condition and results of operations of
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the Unrestricted Subsidiaries of the Company) and, with respect to the annual
information only, a report thereon by the Company's certified independent
accountants and (ii) all current reports that would be required to be filed with
the SEC on Form 8-K if the Company were required to file such reports; provided,
however, that the Company shall not be required to make any such filings on or
prior to the date on which the Company's quarterly report on Form 10-Q for the
fiscal quarter ended June 30, 1997 would have been required to be filed if, at
the time such filings would have been required to be made with the SEC, either
(i) the Company shall have provided to each Holder the information that would
have been required to be filed or (ii) the Exchange Offer Registration Statement
has been filed with the SEC but has not yet been declared effective and copies
of the Exchange Offer Registration Statement and any amendments thereto (to the
extent such registration statement and/or amendments contain additional
information not disclosed in the Offering Memorandum that would have been the
subject of a filing required to be made under Section 13 or 15(d) of the
Exchange Act) have been provided to each Holder, provided that any exhibits to
the Exchange Offer Registration Statement (or any amendments thereto) need not
be delivered to any Holder of the Notes, but sufficient copies thereto shall be
furnished to the Trustee as reasonably requested to permit the Trustee to
deliver any such exhibits to any Holder upon request. In addition, whether or
not required by the rules and regulations of the SEC, the Company shall file a
copy of all such information and reports with the SEC for public availability
(unless the SEC will not accept such a filing) and make such information
available to securities analysts and prospective investors upon request. In
addition, the Company and the Guarantors shall, for so long as any Notes remain
outstanding, furnish to the Holders and to securities analysts and prospective
investors, upon their request, the information required to be delivered pursuant
to Rule 144A(d)(4) under the Securities Act.
SECTION 4.05. STATEMENT AS TO COMPLIANCE; NOTICE OF DEFAULT.
(a) The Company and each Guarantor shall deliver to the Trustee, within 90
days after the end of each fiscal year ending after the date hereof, a brief
certificate of its principal executive officer, principal financial officer or
principal accounting officer stating whether, to such officer's knowledge, the
Company and such Guarantor is in compliance with all covenants and conditions to
be complied with by it under this Indenture (including with respect to any
Restricted Payments made during such year, the basis upon which the calculations
required by this Section 4.05 were computed, which calculations may be based on
the Company's latest financial statements), and further stating, as to each
Officer signing such certificate, that to the best of his or her knowledge each
entity is not in default in the performance or observance of any terms,
provisions and conditions of this Indenture (or, if a Default or Event of
Default shall have occurred, describing all such Defaults or Events of Default
of which he or she may have knowledge and what action the Company is taking or
proposes to take with respect thereto) and that to the best of his or her
knowledge no event has occurred and remains in existence by reason of which
payments on account of the principal of or interest, if any, on the Notes is
prohibited or if such event has occurred, a description of the event and what
action the Company is taking or proposes to take with respect thereto. For
purposes of this Section 4.05, such compliance shall be determined without
regard to any period of grace or requirement of notice under this Indenture.
(b) So long as not contrary to the then current recommendations of the
American Institute of Certified Public Accountants, the annual reports delivered
pursuant to Section 4.04 above shall be accompanied by a written statement of
the Company's independent public accountants (who shall be a firm of established
national reputation) that in making the examination necessary for certification
of such financial statements, nothing has come to their attention that would
lead them to believe that the Company has violated any provisions of Article 4
or Article 5 hereof or, if any such violation has occurred,
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specifying the nature and period of existence thereof, it being understood that
such accountants shall not be liable directly or indirectly to any Person for
any failure to obtain knowledge of any such violation. In the event that, after
the Company has used its best efforts to obtain the written statement of the
Company's independent public accountants required by the provisions of this
paragraph, such statement cannot be obtained, the Company shall deliver, in
satisfaction of its obligations under this Section 4.05(b), an Officers'
Certificate (A) certifying that it has used its best efforts to obtain such
required statement but was unable to do so and (B) attaching the written
statement of the Company's accountants that the Company received in lieu
thereof.
(c) The Company shall, within five Business Days, upon becoming aware of
any Default or Event of Default or any default under any document, instrument or
agreement representing Indebtedness of the Company or any Guarantor, deliver to
the Trustee an Officer's Certificate specifying such Default or Event of
Default.
SECTION 4.06. PAYMENT OF TAXES AND OTHER CLAIMS.
The Company shall pay or discharge or cause to be paid or discharged,
before the same shall become delinquent, (a) all material taxes, assessments and
governmental charges levied or imposed upon it or any Subsidiary or upon the
income, profits or property of the Company or any of its Subsidiaries and (b)
all material lawful claims for labor, materials and supplies, which, if unpaid,
might by law become a Lien upon the property of the Company or any of its
Subsidiaries that could produce a material adverse effect on the consolidated
financial condition of the Company; provided, however, that the Company shall
not be required to pay or discharge or cause to be paid or discharged any such
tax, assessment, charge or claim whose amount, applicability or validity is
being contested in good faith by appropriate proceedings and in respect of which
appropriate reserves (in the good faith judgment of management of the Company)
are being maintained in accordance with GAAP.
SECTION 4.07. LIMITATION ON LIENS.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, assume or suffer to
exist any Lien securing Indebtedness or trade payables on any asset now owned or
hereafter acquired, or any income or profits therefrom or assign or convey any
right to receive income therefrom, except Permitted Liens.
SECTION 4.08. CORPORATE EXISTENCE.
Subject to Article 5 hereof, the Company shall do or cause to be done all
things necessary to preserve and keep in full force and effect (i) its corporate
existence, and the corporate, partnership or other existence of each of its
Restricted Subsidiaries, in accordance with the respective organizational
documents (as the same may be amended from time to time) of the Company or any
such Restricted Subsidiary and (ii) the rights (charter and statutory), licenses
and franchises of the Company and its Restricted Subsidiaries; provided,
however, that the Company shall not be required to preserve any such right,
license or franchise, or the corporate, partnership or other existence of any of
its Restricted Subsidiaries, if the Board of Directors shall determine that the
preservation thereof is no longer desirable in the conduct of the business of
the Company and its Subsidiaries, taken as a whole, and that the loss thereof is
not adverse in any material respect to the Holders of the Notes.
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SECTION 4.09. OFFER TO REPURCHASE UPON CHANGE OF CONTROL.
(a) Upon the occurrence of a Change of Control, the Company shall make an
offer to purchase all or any part (equal to $1,000 or an integral multiple
thereof) of the Notes pursuant to the offer described below (the "Change of
Control Offer") at a price in cash (the "Change of Control Payment") equal to
101% of the aggregate principal amount thereof plus accrued and unpaid interest
and Liquidated Damages, if any, to the date of purchase.
(b) Within 30 days following any Change of Control, the Company shall mail
a notice to each Holder of Notes issued under this Indenture, with a copy to the
Trustee, with the following statements and/or information:
(1) a Change of Control Offer is being made pursuant to this Section 4.09
and that all Notes properly tendered pursuant to such Change of
Control Offer will be accepted for payment;
(2) the purchase price and the purchase date, which will be no earlier
than 30 days nor later than 60 days from the date such notice is
mailed, except as may be otherwise required by applicable law (the
"Change of Control Payment Date");
(3) any Note not properly tendered will remain outstanding and continue to
accrue interest;
(4) unless the Company defaults in the payment of the Change of Control
Payment, all Notes accepted for payment pursuant to the Change of
Control Offer will cease to accrue interest on the Change of Control
Payment Date;
(5) Holders electing to have any Notes purchased pursuant to a Change of
Control Offer will be required to surrender the Notes, with the form
entitled "Option of Holder to Elect Purchase" on the reverse of the
Notes completed, to the Paying Agent and at the address specified in
the notice prior to the close of business on the third Business Day
preceding the Change of Control Payment Date;
(6) Holders will be entitled to withdraw their tendered Notes and their
election to require the Company to purchase such Notes, provided that
the Paying Agent receives, not later than the close of business on the
third Business Day preceding the Change of Control Payment Date, a
telegram, telex, facsimile transmission or letter setting forth the
name of the Holder, the principal amount of Notes tendered for
purchase, and a statement that such Holder is withdrawing his tendered
Notes and his election to have such Notes purchased; and
(7) that Holders whose Notes are being purchased only in part will be
issued new Notes equal in principal amount to the unpurchased portion
of the Notes surrendered, which unpurchased portion must be equal to
$1,000 in principal amount or an integral multiple thereof.
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(c) Prior to complying with the provisions of this Section 4.09, but in
any event within 30 days following a Change of Control, the Company shall either
repay in full in cash all Indebtedness under the Credit Agreement (and terminate
all commitments thereunder) and all other Senior Debt the terms of which require
repayment upon a Change of Control or offer to repay in full in cash all
Indebtedness under the Credit Agreement (and terminate all commitments
thereunder) and all such other Senior Debt and to repay the Indebtedness owed to
(and terminate the commitments of) each lender which has accepted such offer or
obtain the requisite consents under the Credit Agreement and all such other
Senior Debt to permit the repurchase of the Notes.
(d) The Company shall comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws or regulations are applicable in connection with the repurchase
of the Notes pursuant to a Change of Control Offer. To the extent that the
provisions of any securities laws or regulations conflict with the provisions of
this Indenture, the Company shall comply with the applicable securities laws and
regulations and will not be deemed to have breached its obligations described in
this Indenture by virtue thereof.
(e) On the Change of Control Payment Date, the Company shall, to the
extent permitted by law, (1) accept for payment all Notes or portions thereof
properly tendered pursuant to the Change of Control Offer, (2) deposit with the
Paying Agent an amount equal to the aggregate Change of Control Payment in
respect of all Notes or portions thereof so tendered and (3) deliver, or cause
to be delivered, to the Trustee for cancellation the Notes so accepted together
with an Officers' Certificate stating that the aggregate principal amount of
Notes or portions thereof have been tendered to and purchased by the Company.
The Paying Agent shall promptly mail to each Holder of Notes so tendered the
Change of Control Payment for such Notes, and the Trustee will promptly
authenticate and mail (or cause to be transferred by book entry) to each Holder
a new Note equal in principal amount to any unpurchased portion of the Notes
surrendered, if any; provided, that each such new Note will be in a principal
amount of $1,000 or an integral multiple thereof. The Company will publicly
announce the results of the Change of Control Offer on or as soon as practicable
after the Change of Control Payment Date.
(f) Notwithstanding the foregoing, the Company shall not be required to
make a Change of Control Offer upon a Change of Control if a third party makes
the Change of Control Offer in the manner, at the times and otherwise in
compliance with the requirements set forth in this Section 4.09 applicable to a
Change of Control Offer made by the Company and purchases all Notes validly
tendered and not withdrawn under such Change of Control Offer.
(g) The Change of Control provisions described in this Section 4.09 will
be applicable whether or not any other provisions of this Indenture are
applicable.
SECTION 4.10. ASSET SALES.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, consummate an Asset Sale unless (i) the Company (or the
Restricted Subsidiary, as the case may be) receives consideration at the time of
such Asset Sale at least equal to the fair market value (evidenced by a Board
Resolution and as set forth in an Officers' Certificate delivered to the
Trustee) of the assets or Equity Interests issued or sold or otherwise disposed
of and (ii) at least 75% of the consideration therefor received by the Company
or such Restricted Subsidiary is in the form of cash; provided that the amount
of (x) any liabilities (as shown on the Company's or such Restricted
Subsidiary's most recent balance sheet) of the Company or
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any Restricted Subsidiary (other than contingent liabilities and liabilities
that are by their terms subordinated to the Notes or any guarantee thereof) that
are assumed by the transferee of any such assets pursuant to a customary
novation agreement that releases the Company or such Restricted Subsidiary from
further liability and (y) any securities, notes or other obligations received by
the Company or any such Restricted Subsidiary from such transferee that are
immediately converted by the Company or such Restricted Subsidiary into cash (to
the extent of the cash received), shall be deemed to be cash for purposes of
this provision.
Within 360 days after the receipt of any Net Proceeds from an Asset Sale,
the Company may apply such Net Proceeds, at its option, (a) to permanently
reduce (or, in the case of letters of credit or Eurodollar loans under the
Credit Agreement, cash collateralize) any Senior Debt (and to correspondingly
reduce commitments with respect thereto in the case of revolving borrowings), or
(b) to the acquisition of a controlling interest in another business, the making
of a capital expenditure or the acquisition of other long-term assets, in each
case, in the same line of business as the Company was engaged in on the date of
this Indenture. Pending the final application of any such Net Proceeds, the
Company may invest such Net Proceeds in any manner that is not prohibited by
this Indenture. Any Net Proceeds from Asset Sales that are not applied or
invested as provided in the first sentence of this paragraph shall be deemed to
constitute "Excess Proceeds." When the aggregate amount of Excess Proceeds
exceeds $5.0 million, the Company shall, within ten Business Days thereafter, be
required to make an Asset Sale Offer to purchase the maximum principal amount of
Notes that may be purchased out of the Excess Proceeds, at an offer price in
cash in an amount equal to 100% of the principal amount thereof plus accrued and
unpaid interest and Liquidated Damages, if any, thereon, to the date of
purchase, in accordance with the procedures set forth in this Indenture. To the
extent that the aggregate amount of Notes tendered pursuant to an Asset Sale
Offer is less than the Excess Proceeds, the Company may use any remaining Excess
Proceeds for general corporate purposes. If the aggregate principal amount of
Notes surrendered by Holders thereof exceeds the amount of Excess Proceeds, the
Trustee shall select the Notes to be purchased on a pro rata basis. Upon
completion of such offer to purchase, the amount of Excess Proceeds shall be
reset at zero.
The Company shall comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws or regulations are applicable in connection with the repurchase
of the Notes pursuant to an Asset Sale Offer. To the extent that the provisions
of any securities laws or regulations conflict with the provisions of this
Indenture, the Company will comply with the applicable securities laws and
regulations and shall not be deemed to have breached its obligations described
in this Indenture by virtue thereof.
SECTION 4.11. LIMITATION ON RESTRICTED PAYMENTS.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly: (i) declare or pay any dividend or make
any other payment or distribution on account of the Company's Equity Interests
(including, without limitation, any payment in connection with any merger or
consolidation involving the Company) or to the direct or indirect holders of the
Company's or any of its Restricted Subsidiaries' Equity Interests in their
capacity as such (other than dividends or distributions payable in Equity
Interests (other than Disqualified Stock) of the Company or dividends or
distributions payable to the Company or any Restricted Subsidiary of the
Company); (ii) purchase, redeem or otherwise acquire or retire for value
(including without limitation, in connection with any merger or consolidation
involving the Company) any Equity Interests of the Company or any direct or
indirect parent of the Company or other Affiliate of the Company (other than any
such Equity Interests owned by the Company
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or any Wholly Owned Subsidiary of the Company); (iii) make any payment on or
with respect to, or purchase, redeem, defease or otherwise acquire or retire for
value any Indebtedness that is subordinated to the Notes more than six months
prior to any scheduled maturity, mandatory redemption, scheduled principal
repayment or sinking fund payment date (other than regularly scheduled payments
of interest); or (iv) make any Restricted Investment (all such payments and
other actions set forth in clauses (i) through (iv) above being collectively
referred to as "Restricted Payments"), unless, at the time of and after giving
effect to such Restricted Payment:
(a) no Default or Event of Default would have occurred and be
continuing or would occur as a consequence thereof; and
(b) the Company shall, at the time of such Restricted Payment and
after giving pro forma effect thereto as if such Restricted Payment had
been made at the beginning of the applicable four-quarter period, have been
permitted to incur at least $1.00 of additional Indebtedness pursuant to
the Fixed Charge Coverage Ratio test set forth in Section 4.12 hereof; and
(c) such Restricted Payment, together with the aggregate amount of all
other Restricted Payments made by the Company and its Restricted
Subsidiaries after the date of this Indenture (excluding Restricted
Payments permitted by clauses (ii), (iii), (iv), (v), (vii) and (viii) of
the next succeeding paragraph), is less than the sum of (i) 50% of the
Consolidated Net Income of the Company for the period (taken as one
accounting period) from the beginning of the first fiscal quarter
commencing after the date of this Indenture to the end of the Company's
most recently ended fiscal quarter for which internal financial statements
are available at the time of such Restricted Payment (or, if such
Consolidated Net Income for such period is a deficit, less 100% of such
deficit), plus (ii) 100% of the aggregate net cash proceeds received by the
Company from the issue or sale since the date of this Indenture of Equity
Interests of the Company (other than Disqualified Stock) or of Disqualified
Stock or debt securities of the Company that have been converted into such
Equity Interests (other than Equity Interests (or Disqualified Stock or
convertible debt securities) sold to a Subsidiary of the Company and other
than Disqualified Stock or convertible debt securities that have been
converted into Disqualified Stock), plus (iii) to the extent that any
Restricted Investment that was made after the date of this Indenture is
sold for cash or otherwise liquidated or repaid for cash, the lesser of (A)
the cash return of capital with respect to such Restricted Investment (less
the cost of disposition, if any) (but only to the extent not included in
subclause (i) of this clause (c)), and (B) the initial amount of such
Restricted Investment, plus (iv) $5.0 million.
The foregoing provisions shall not prohibit: (i) the payment of any
dividend within 60 days after the date of declaration thereof, if at said date
of declaration such payment would have complied with the provisions of this
Indenture; (ii) the redemption, repurchase, retirement, defeasance or other
acquisition of any subordinated Indebtedness or Equity Interests of the Company
in exchange for, or out of the net cash proceeds of the substantially concurrent
sale (other than to a Subsidiary of the Company) of, other Equity Interests of
the Company (other than any Disqualified Stock); provided that the amount of any
such net cash proceeds that are utilized for any such redemption, repurchase,
retirement, defeasance or other acquisition shall be excluded from clause
(c)(ii) of the preceding paragraph; (iii) the defeasance, redemption, repurchase
or other acquisition of subordinated Indebtedness with the net cash proceeds
from an incurrence of Permitted Refinancing Indebtedness; (iv) the payment of
scheduled dividends on or the redemption, repurchase, retirement, defeasance or
other acquisition of, any Disqualified Stock issued after
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the date hereof in compliance with the provisions of this Indenture; (v) after
March 29, 2001, the Permitted Warrant Put Payment; (vi) payments made with
respect to the repurchase, redemption or other acquisition or retirement for
value of any Equity Interests of the Company, the Parent, Sunderland or any
Subsidiary of the Company held by any member of the Company's (or any of its
Restricted Subsidiaries'), Parent's or Sunderland's management pursuant to any
management equity subscription agreement or stock option agreement in effect as
of the date of this Indenture (provided that the aggregate price paid for all
such repurchased, redeemed, acquired or retired Equity Interests shall not
exceed $1.0 million in any twelve-month period); (vii) distributions to Parent
in order to enable Parent to pay franchise taxes and other ordinary course
operating expenses in an amount not to exceed $25,000 in any twelve-month
period; and (viii) the application of the proceeds of the offering of the Notes
pursuant to the Offering Memorandum in the manner contemplated in the section of
the Offering Memorandum titled "Use of Proceeds"; provided, however, that at the
time of, and after giving effect to, any Restricted Payment permitted under
clauses (i) through (vii) no Default or Event of Default shall have occurred and
be continuing. In addition, payments and transactions permitted pursuant to
clauses (s) through (y) under Section 4.13 hereof shall not be deemed to be
Restricted Payments.
The Board of Directors may designate any Restricted Subsidiary to be an
Unrestricted Subsidiary if such designation would not cause a Default. For
purposes of making such determination, all outstanding Investments by the
Company and its Restricted Subsidiaries (except to the extent repaid in cash) in
the Subsidiary so designated shall be deemed to be Restricted Payments at the
time of such designation and shall reduce the amount available for Restricted
Payments under the first paragraph of this covenant. All such outstanding
Investments shall be deemed to constitute Investments in an amount equal to the
greatest of (x) the net book value of such Investments at the time of such
designation and (y) the fair market value of such Investments at the time of
such designation. Such designation shall only be permitted if such Restricted
Payment would be permitted at such time and if such Restricted Subsidiary
otherwise meets the definition of an Unrestricted Subsidiary.
The amount of all Restricted Payments (other than cash) shall be the fair
market value on the date of the Restricted Payment of the asset(s) or securities
proposed to be transferred or issued by the Company or such Subsidiary, as the
case may be, pursuant to the Restricted Payment. Not later than the date of
making any Restricted Payment, the Company shall deliver to the Trustee an
Officers' Certificate stating that such Restricted Payment is permitted and
setting forth the basis upon which the calculations required by this Section
4.11 were computed, together with a copy of any fairness opinion or appraisal
required by this Indenture.
SECTION 4.12. LIMITATION ON INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF PREFERRED
STOCK.
The Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, create, incur, issue, assume, guarantee or otherwise
become directly or indirectly liable, contingently or otherwise, with respect to
(collectively, "incur") any Indebtedness (including Acquired Debt) and that the
Company shall not issue any Disqualified Stock and shall not permit any of its
Subsidiaries to issue any shares of preferred stock (other than to the Company
or a Restricted Subsidiary of the Company); provided, however, that the Company
may incur Indebtedness (including Acquired Debt) or issue shares of Disqualified
Stock if:
(i) the Fixed Charge Coverage Ratio for the Company's most recently
ended four full fiscal quarters for which internal financial statements are
available immediately preceding the date
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on which such additional Indebtedness is incurred or such Disqualified
Stock is issued would have been at least 2.0 to 1, determined on a pro
forma basis (including a pro forma application of the net proceeds
therefrom), as if the additional Indebtedness had been incurred, or the
Disqualified Stock had been issued, as the case may be, at the beginning of
such four-quarter period; and
(ii) no Default or Event of Default shall have occurred and be
continuing at the time of, or would occur after giving effect on a pro
forma basis to, such incurrence or issuance.
The provisions of the first paragraph of this Section 4.12 shall not apply
to the incurrence of any of the following items of Indebtedness or the issuance
of preferred stock or Disqualified Stock (collectively, "Permitted Debt"):
(i) the incurrence by the Company and its Subsidiaries of Indebtedness
arising under or in connection with the Credit Agreement; provided that the
aggregate principal amount of all Indebtedness (with letters of credit
being deemed to have a principal amount equal to the maximum potential
liability of the Company and its Restricted Subsidiaries thereunder)
outstanding under the Credit Agreement after giving effect to such
incurrence, including all Permitted Refinancing Indebtedness incurred to
refund, refinance or replace any other Indebtedness incurred pursuant to
this clause (i), does not exceed an amount equal to the greater of $50.0
million or $30.0 million plus the Borrowing Base, in each case less the
aggregate amount of all Indebtedness permanently repaid with the Net
Proceeds of any Asset Sale;
(ii) the incurrence by the Company and its Subsidiaries of the
Existing Indebtedness;
(iii) the incurrence by the Company or any of its Restricted
Subsidiaries of Indebtedness represented by Capital Lease Obligations,
mortgage financings or purchase money obligations, in each case incurred
for the purpose of financing all or any part of the purchase price or cost
of construction or improvement of property, plant or equipment used in the
business of the Company or such Restricted Subsidiary, in an aggregate
principal amount not to exceed the principal amount of such Capital Lease
Obligations outstanding on the date hereof plus $15.0 million at any time
outstanding;
(iv) the incurrence by the Company or any of its Restricted
Subsidiaries of Acquired Debt in connection with the acquisition of assets
or a new Restricted Subsidiary; provided that such Acquired Debt was
incurred by the prior owner of such assets or such Restricted Subsidiary
prior to such acquisition by the Company or one of its Restricted
Subsidiaries and was not incurred in connection with, or in contemplation
of, such acquisition by the Company or one of its Restricted Subsidiaries;
and provided further that the aggregate principal amount, accreted value or
liquidation preference, as applicable, of such Acquired Debt, together with
any other outstanding Indebtedness or preferred stock incurred pursuant to
this clause (iv), does not exceed $5.0 million;
(v) the incurrence by the Company or any of its Restricted
Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the
net proceeds of which are used to refund, refinance or replace Indebtedness
that was permitted by this Indenture to be incurred;
(vi) the incurrence by the Company or any of its Restricted
Subsidiaries of intercompany Indebtedness between or among the Company and
any of its Wholly Owned
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Restricted Subsidiaries; provided, however, that (A) any subsequent
issuance or transfer of Equity Interests that results in any such
Indebtedness being held by a Person other than the Company or a Wholly
Owned Restricted Subsidiary and (B) any sale or other transfer of any such
Indebtedness to a Person that is not either the Company or a Wholly Owned
Restricted Subsidiary (other than any pledge of such Indebtedness to the
lenders under the Credit Agreement) shall be deemed, in each case, to
constitute an incurrence of such Indebtedness by the Company or such
Restricted Subsidiary, as the case may be;
(vii) the incurrence by the Company or any of its Restricted
Subsidiaries of Hedging Obligations that are incurred for the purpose of
fixing or hedging interest rate risk with respect to any floating rate
Indebtedness that is permitted by the terms of this Indenture to be
outstanding, provided that the notional principal amount of any Hedging
Obligations does not significantly exceed the principal amount of
Indebtedness to which such agreement relates, or for the purpose of hedging
against fluctuations in currency values;
(viii) the Guarantee by the Company or any of the Restricted
Subsidiaries of Indebtedness of the Company or a Restricted Subsidiary of
the Company that was permitted to be incurred by another provision of this
covenant;
(ix) the issuance by the Company's Unrestricted Subsidiaries of
preferred stock or the incurrence by the Company's Unrestricted
Subsidiaries of Non-Recourse Debt, provided, however, that if any such
Indebtedness ceases to be Non-Recourse Debt of an Unrestricted Subsidiary,
such event shall be deemed to constitute an incurrence of Indebtedness by a
Restricted Subsidiary of the Company;
(x) the incurrence by the Company and its Restricted Subsidiaries of
Indebtedness represented by the $75,000,000 aggregate principal amount of
Notes issued pursuant to the Offering Memorandum and the Subsidiary
Guarantees and any Notes issued pursuant to Section 2.07 hereof; and
(xi) the incurrence by the Company or any of its Restricted
Subsidiaries of additional Indebtedness in an aggregate principal amount
(or accreted value, as applicable) or the issuance of preferred stock with
an aggregate liquidation preference at any time outstanding, including all
Permitted Refinancing Indebtedness incurred to refund, refinance or replace
any other Indebtedness incurred pursuant to this clause (xi), not to exceed
$10.0 million.
For purposes of determining compliance with this covenant, in the event
that an item of Indebtedness meets the criteria of more than one of the
categories of Permitted Debt described in clauses (i) through (xi) above or is
entitled to be incurred pursuant to the first paragraph of this covenant, the
Company shall, in its sole discretion, classify or reclassify such item of
Indebtedness in any manner that complies with this covenant and such item of
Indebtedness shall be treated as having been incurred pursuant to only one of
such clauses or pursuant to the first paragraph hereof. Accrual of interest, the
accretion of accreted value and the payment of interest in the form of
additional Indebtedness shall not be deemed to be an incurrence of Indebtedness
for purposes of this covenant.
SECTION 4.13 TRANSACTIONS WITH AFFILIATES.
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The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise
dispose of any of its properties or assets to, or purchase any property or
assets from, or enter into or make or amend any transaction, contract,
agreement, understanding, loan, advance or guarantee with, or for the benefit
of, any Affiliate (each of the foregoing, an "Affiliate Transaction"), unless
(i) such Affiliate Transaction is on terms that are no less favorable to the
Company or the relevant Restricted Subsidiary than those that would have been
obtained in a comparable transaction by the Company or such Restricted
Subsidiary with an unrelated Person and (ii) the Company delivers to the Trustee
(a) with respect to any Affiliate Transaction or series of related Affiliate
Transactions involving aggregate consideration in excess of $1.0 million, a
Board Resolution and an Officers' Certificate certifying that such Affiliate
Transaction complies with clause (i) above and that such Affiliate Transaction
has been approved by a majority of the Board of Directors and (b) with respect
to any Affiliate Transaction or series of related Affiliate Transactions
involving aggregate consideration in excess of $5.0 million, an opinion as to
the fairness to the Holders of such Affiliate Transaction from a financial point
of view issued by an accounting, appraisal or investment banking firm of
national standing; provided that (r) the application of the proceeds of the
offering of the Notes pursuant to the Offering Memorandum and the transactions
entered into in connection therewith in the manner contemplated in the section
of the Offering Memorandum titled "Use of Proceeds", (s) capital contributions,
advances, loans or other investments made by Parent to the Company or any of its
Restricted Subsidiaries, (t) (I) payments under the Management Agreement in an
amount not to exceed $300,000 in any twelve-month period and (II) after the
first anniversary of the original issuance of the Notes, additional payments
under the Management Agreement in an amount not to exceed $700,000 in any
twelve-month period, provided that the Company's Fixed Charge Coverage Ratio for
the Company's most recently ended four full fiscal quarters for which internal
financial statements are available immediately preceding the date on which such
payment under the Management Agreement is made, after giving pro forma effect to
such payment, is equal to or greater than 2.25 to 1 (in each case, plus
reasonable expenses incurred in connection with and reimbursable under the
Management Agreement), (u) payments by the Company or any of its Restricted
Subsidiaries to Mentmore and/or its Affiliates made for any financial advisory,
financing, underwriting or placement services or in respect of other investment
banking activities, including, without limitation, in connection with
acquisitions or divestitures, which payments are approved by a majority of the
Board of Directors of the Company in good faith, (v) payments under tax sharing
agreements to the extent such payments do not otherwise exceed the tax liability
the Company would have had were it not part of a consolidated group, (w) any
employment agreement, compensation agreement or employee benefit arrangement
entered into by the Company or any of its Restricted Subsidiaries in the
ordinary course of business, (x) transactions between or among Parent, the
Company and/or its Restricted Subsidiaries, (y) any other payment or
reimbursement of reasonable and customary fees and expenses incurred by an
Affiliate for services rendered to the Company or any of its Subsidiaries not to
exceed $100,000 in any twelve-month period (without duplication for any amounts
paid pursuant to any other clause of this covenant) and (z) Restricted Payments
that are permitted under Section 4.11 hereof, in each case, shall not be deemed
Affiliate Transactions.
SECTION 4.14 DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any encumbrance or restriction on the ability of any
Restricted Subsidiary to (i)(a) pay dividends or make any other distributions to
the Company or any of its Restricted Subsidiaries (1) on its Capital Stock or
(2) with respect to any other interest or participation in, or measured by, its
profits, or (b) pay any Indebtedness owed to the Company
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or any of its Restricted Subsidiaries, (ii) make loans or advances to the
Company or any of its Restricted Subsidiaries or (iii) transfer any of its
properties or assets to the Company or any of its Restricted Subsidiaries,
except for such encumbrances or restrictions existing under or by reason of (a)
Existing Indebtedness as in effect on the date of this Indenture, (b) the Credit
Agreement as in effect as of the date of this Indenture, and any amendments,
modifications, restatements, renewals, increases, supplements, refundings,
replacements or refinancings thereof, provided that such amendments,
modifications, restatements, renewals, increases, supplements, refundings,
replacement or refinancings are no more restrictive on a whole with respect to
such dividend and other payment restrictions than those contained in the Credit
Agreement as in effect on the date of this Indenture, (c) this Indenture and the
Notes, (d) applicable law, (e) any instrument governing Indebtedness or Capital
Stock of a Person acquired by the Company or any of its Restricted Subsidiaries
as in effect at the time of such acquisition (except to the extent such
Indebtedness was incurred in connection with or in contemplation of such
acquisition), which encumbrance or restriction is not applicable to any Person,
or the properties or assets of any Person, other than the Person, or the
property or assets of the Person (including any Subsidiary of the Person), so
acquired, provided that, in the case of Indebtedness, such Indebtedness was
permitted by the terms of this Indenture to be incurred, (f) by reason of
customary non-assignment and net worth provisions in leases or other agreements
entered into in the ordinary course of business and consistent with past
practices, (g) purchase money obligations for property acquired in the ordinary
course of business that impose restrictions of the nature described in clause
(iii) above on the property so acquired, (h) Permitted Refinancing Indebtedness,
provided that the restrictions contained in the agreements governing such
Permitted Refinancing Indebtedness are no more restrictive than those contained
in the agreements governing the Indebtedness being refinanced, (i) customary
restrictions in Capital Lease Obligations, security agreements or mortgages
securing Indebtedness of the Company or a Restricted Subsidiary to the extent
such restrictions restrict the transfer of the property subject to such Capital
Lease Obligations, security agreements or mortgages, (j) customary restrictions
with respect to an agreement that has been entered into for the sale or
disposition of assets or Capital Stock held by the Company or any Restricted
Subsidiary, (k) customary restrictions contained in any agreements or
documentation governing Indebtedness or preferred stock issued pursuant to
clause (xi) of Section 4.12 hereof and (l) the Warrant Agreement and the
Shareholders Agreement.
SECTION 4.15. LIMITATION ON ISSUANCES AND SALES OF CAPITAL STOCK OF WHOLLY OWNED
RESTRICTED SUBSIDIARIES.
The Company (i) shall not, and shall not permit any Wholly Owned
Restricted Subsidiary of the Company to, issue, transfer, convey, sell, lease or
otherwise dispose of any Capital Stock of any Wholly Owned Restricted Subsidiary
of the Company to any Person (other than the Company or a Wholly Owned
Restricted Subsidiary of the Company), unless (a) such issuance, transfer,
conveyance, sale, lease or other disposition is of all the Capital Stock of such
Wholly Owned Restricted Subsidiary and (b) the Net Proceeds from such transfer,
conveyance, sale, lease or other disposition are applied in accordance with
Section 4.10 hereof and (ii) shall not permit any Wholly Owned Restricted
Subsidiary of the Company to issue any of its Equity Interests (other than, if
necessary, shares of its Capital Stock constituting directors' qualifying
shares) to any Person other than to the Company or a Wholly Owned Restricted
Subsidiary of the Company.
SECTION 4.16. LIMITATION ON LAYERING DEBT.
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The Company shall not, incur, create, issue, assume, Guarantee or
otherwise become liable for any Indebtedness that is by its terms subordinate or
junior in right of payment to any Senior Debt and senior in any respect in right
of payment to the Notes and the Guarantors shall not incur, create, issue,
assume, Guarantee or otherwise become liable for any Indebtedness that is by its
terms subordinate or junior in right of payment to any Senior Debt and senior in
any respect in right of payment to the Subsidiary Guarantees.
SECTION 4.17. ADDITIONAL SUBSIDIARY GUARANTEES.
If the Company or any of its Subsidiaries shall acquire or create another
Subsidiary after the date hereof, then such newly acquired or created Subsidiary
(at any time such Subsidiary has net assets or stock holder's equity in excess
of $50,000) shall execute a Subsidiary Guarantee and deliver an Opinion of
Counsel, in accordance with the terms of this Indenture; provided, however, that
all Subsidiaries that have been properly designated as Unrestricted Subsidiaries
in accordance with this Indenture shall not be subject to the preceding clause
for so long as they continue to constitute Unrestricted Subsidiaries.
SECTION 4.18. PAYMENTS FOR CONSENT.
Neither the Company nor any of its Subsidiaries shall, directly or
indirectly, pay or cause to be paid any consideration, whether by way of
interest, fee or otherwise, to any Holder of any Notes for or as an inducement
to any consent, waiver or amendment of any of the terms or provisions of this
Indenture or the Notes unless such consideration is offered to be paid or is
paid to all Holders of the Notes that consent, waive or agree to amend in the
time frame set forth in the solicitation documents relating to such consent,
waiver or agreement.
ARTICLE 5
SUCCESSORS
SECTION 5.01. MERGER, CONSOLIDATION, OR SALE OF ALL OR SUBSTANTIALLY ALL ASSETS.
The Company shall not consolidate or merge with or into or wind up into
(whether or not the Company is the surviving corporation), or sell, assign,
transfer, lease, convey or otherwise dispose of all or substantially all of its
properties or assets in one or more related transactions to, any Person unless:
(i) the Company is the surviving corporation or the Person formed by or
surviving any such consolidation or merger (if other than the Company)
or to which such sale, assignment, transfer, lease, conveyance or
other disposition will have been made is a corporation organized or
existing under the laws of the United States, any state thereof or the
District of Columbia, (the Company or such Person, as the case may be,
being herein called the "Successor Company");
(ii) the Successor Company (if other than the Company) assumes all the
obligations of the Company under this Indenture and the Notes pursuant
to a supplemental indenture or other documents or instruments in form
reasonably satisfactory to the Trustee;
(iii) immediately after such transaction no Default or Event of Default
exists;
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(iv) except in the case of a merger of the Company with or into a Wholly
Owned Subsidiary of the Company, the Company or the Person formed by
or surviving any such consolidation or merger (if other than the
Company), or to which such sale, assignment, transfer, lease,
conveyance or other disposition shall have been made (A) shall have
Consolidated Net Worth immediately after the transaction equal to or
greater than the Consolidated Net Worth of the Company immediately
preceding the transaction and (B) shall, at the time of such
transaction and after giving pro forma effect thereto as if such
transaction had occurred at the beginning of the applicable
four-quarter period, be permitted to incur at least $1.00 of
additional Indebtedness pursuant to the Fixed Charge Coverage Ratio
test set forth in Section 4.12 hereof; and
(v) the Company has delivered to the Trustee an Officers' Certificate
stating that such consolidation, merger, sale, assignment, transfer,
lease, conveyance or other disposition and such supplemental indenture
complies with this Article and that all conditions precedent herein
provided for relating to such transaction have been complied with.
SECTION 5.02. SUCCESSOR CORPORATION SUBSTITUTED.
Upon any consolidation or merger, or any sale, assignment, transfer,
lease, conveyance or other disposition of all or substantially all of the assets
of the Company in accordance with Section 5.01 hereof, the successor corporation
formed by such consolidation or into or with which the Company is merged or to
which such sale, assignment, transfer, lease, conveyance or other disposition is
made shall succeed to, and be substituted for (so that from and after the date
of such consolidation, merger, sale, lease, conveyance or other disposition, the
provisions of this Indenture referring to the "Company" shall refer instead to
the successor corporation and not to the Company), and may exercise every right
and power of the Company under this Indenture with the same effect as if such
successor Person had been named as the Company herein; provided, however, that
the predecessor Company shall not be relieved from the obligation to pay the
principal of and interest on the Senior Notes except in the case of a sale of
all of the Company's assets that meets the requirements of Section 5.01 hereof.
ARTICLE 6
DEFAULTS AND REMEDIES
SECTION 6.01. EVENTS OF DEFAULT AND NOTICE THEREOF.
Each of the following constitutes an "Event of Default":
(a) default for 30 days or more in the payment when due of interest on, or
Liquidated Damages, if any, with respect to the Notes (whether or not
prohibited by Article 10 hereof);
(b) default in payment when due (whether payable at maturity, upon
redemption or otherwise) of the principal of or premium, if any, on
the Notes (whether or not prohibited by Article 10 hereof);
(c) failure by the Company to comply with Sections 4.09, 4.10 and 5.01
hereof;
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(d) failure by the Company for 30 days after receipt of written notice to
comply with any of its other agreements in this Indenture or the
Notes;
(e) default under any mortgage, indenture or instrument under which there
may be issued or by which there may be secured or evidenced any
Indebtedness for money borrowed by the Company or any of its
Restricted Subsidiaries (or the payment of which is guaranteed by the
Company or any of its Restricted Subsidiaries) whether such
Indebtedness or guarantee now exists, or is created after the date of
this Indenture, which default (1) is caused by the failure to pay
principal of or premium, if any, or interest on such Indebtedness
prior to the expiration of the grace period provided in such
Indebtedness on the date of such default (a "Payment Default") at its
stated final maturity (after giving effect to any applicable grace
periods) or (2) results in the acceleration of such Indebtedness prior
to its express maturity and, in each case, the principal amount of any
such Indebtedness, together with the principal amount of any other
such Indebtedness under which there has been a Payment Default or the
maturity of which has been so accelerated, aggregates $5.0 million or
more;
(f) failure by the Company or any of its Restricted Subsidiaries to pay
final and non-appealable judgments aggregating in excess of $5.0
million, which judgments are not paid, discharged or stayed for a
period of 60 days;
(g) the Company or any Restricted Subsidiary that is a Significant
Subsidiary pursuant to or within the meaning of any Bankruptcy Law:
(i) commences a voluntary case,
(ii) consents to the entry of an order for relief against it in an
involuntary case in which it is the debtor,
(iii) consents to the appointment of a Custodian of it or for all or
substantially all of its property,
(iv) makes a general assignment for the benefit of its creditors, or
(v) admits in writing its inability generally to pay its debts as the
same become due;
(h) a court of competent jurisdiction enters an order or decree under any
Bankruptcy Law that:
(i) is for relief against the Company or any Restricted Subsidiary
that is a Significant Subsidiary in an involuntary case in which
it is the debtor,
(ii) appoints a Custodian of the Company or any Restricted Subsidiary
that is a Significant Subsidiary or for all or substantially all
of the property of the Company or any Restricted Subsidiary that
is a Significant Subsidiary; or
(iii) orders the liquidation of the Company or any Restricted
Subsidiary that is a Significant Subsidiary,
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and the order or decree contemplated in clauses (i), (ii) or (iii) of
this clause (h), remains unstayed and in effect for 60 consecutive
days; or
(i) except as permitted by this Indenture, any Subsidiary Guarantee
shall be held in any judicial proceeding to be unenforceable or
invalid and such judgment has become final or non-appealable or
shall cease for any other reason to be in full force and effect
or any Guarantor, or any Person acting on behalf of any Guarantor
shall deny or disaffirm its obligations under its Subsidiary
Guarantee.
A Default under Section 6.01(d) is not an Event of Default until the
Trustee notifies the Company, or any Holder notifies the Company and the
Trustee, of the Default and the Company does not cure the Default within 30 days
after receipt of the notice. The notice must specify the Default, demand that it
be remedied and state that the notice is a "Notice of Default."
SECTION 6.02. ACCELERATION OF MATURITY; RESCISSION.
If any Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount of the then outstanding Notes may
declare all the Notes to be due and payable immediately by notice in writing to
the Company and the Trustee; provided that so long as any Indebtedness permitted
to be incurred pursuant to the Credit Agreement shall be outstanding, such
acceleration shall not be effective until the earlier of (i) an acceleration of
any such Indebtedness under the Credit Agreement or (ii) five Business Days
after receipt by the Company and the Agent of written notice of such
acceleration.
Notwithstanding the foregoing, in the case of an Event of Default
specified in clause (g) or (h) of Section 6.01 occurring with respect to the
Company, any Significant Subsidiary that is a Restricted Subsidiary or any group
of Restricted Subsidiaries that, taken together, would constitute a Significant
Subsidiary, all outstanding Notes will become due and payable without further
action or notice. Holders of the Notes may not enforce this Indenture or the
Notes except as provided in this Indenture. The Trustee may withhold from
Holders of the Notes notice of any continuing Default or Event of Default
(except a Default or Event of Default relating to the payment of principal or
interest) if it determines that withholding notice is in their interest.
SECTION 6.03. OTHER REMEDIES.
If an Event of Default occurs and is continuing, the Trustee may pursue
any available remedy to collect the payment of principal, premium, if any, and
interest on the Notes or to enforce the performance of any provision of the
Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any of
the Notes or does not produce any of them in the proceeding. A delay or omission
by the Trustee or any Holder of a Note in exercising any right or remedy
accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. All remedies are
cumulative to the extent permitted by law.
SECTION 6.04. WAIVER OF PAST DEFAULTS.
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Holders of not less than a majority in aggregate principal amount of the
then outstanding Notes by notice to the Trustee may on behalf of the Holders of
all of the Notes waive an existing Default or Event of Default and its
consequences hereunder, except a continuing Default or Event of Default in the
payment of the principal of, premium, if any, or interest on, any such Note held
by a non-consenting Holder; provided, however, that the Holders of at least a
majority in aggregate principal amount of the Notes then outstanding may rescind
an acceleration and its consequences, including any related payment default that
resulted from such acceleration. Upon any such waiver, such Default shall cease
to exist, and any Event of Default arising therefrom shall be deemed to have
been cured for every purpose of this Indenture; but no such waiver shall extend
to any subsequent or other Default or impair any right consequent thereon.
SECTION 6.05. CONTROL BY MAJORITY.
The Holders of a majority in aggregate principal amount of the then
outstanding Notes may direct the time, method and place of conducting any
proceeding for exercising any remedy available to the Trustee or exercising any
trust or power conferred on it. However, the Trustee may refuse to follow any
direction that conflicts with law or this Indenture that the Trustee determines
may be unduly prejudicial to the rights of other Holders of Notes or that may
involve the Trustee in personal liability. The Trustee may take any other action
which it deems proper which is not inconsistent with any such direction.
SECTION 6.06. LIMITATION ON SUITS.
No Holder of a Note will have any right to institute any proceeding with
respect to this Indenture or for any remedy hereunder, unless (i) such Holder
shall have previously given to the Trustee written notice of a continuing Event
of Default with respect to the Notes, (ii) the Holders of at least 25% in
aggregate principal amount of the Notes then outstanding shall have made written
request to the Trustee to institute such proceeding and, if requested by the
Trustee, provided reasonable indemnity to the Trustee, with respect to such
proceeding and (iii) the Trustee shall not have received from the Holders of a
majority in aggregate principal amount of the Notes then outstanding a direction
inconsistent with such request and shall have failed to institute such
proceeding within 60 days.
SECTION 6.07. RIGHTS OF HOLDERS OF NOTES TO RECEIVE PAYMENT.
Notwithstanding any other provision of this Indenture, the right of any
Holder of a Note to receive payment of principal, premium, if any, and interest
on any Note, on or after the respective due dates expressed in any Note, or to
bring suit for the enforcement of any such payment on or after such respective
dates, shall not be impaired or affected without the consent of such Holder.
SECTION 6.08. COLLECTION SUIT BY TRUSTEE.
If an Event of Default specified in Section 6.01(a) or (b) occurs and is
continuing, the Trustee is authorized to recover judgment in its own name and as
trustee of an express trust against the Company or any Guarantor for the whole
amount of principal of, premium, if any, and interest remaining unpaid on the
Notes and interest on overdue principal and, to the extent lawful, interest and
such further amount as shall be sufficient to cover the costs and expenses of
collection, including the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, and any other amounts due to
the Trustee under Section 7.07 hereof.
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SECTION 6.09. TRUSTEE MAY FILE PROOFS OF CLAIM.
The Trustee is authorized to file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Holders of the Notes allowed in any judicial proceedings relative to the Company
(or any other obligor upon the Notes), its creditors or its property and shall
be entitled and empowered to collect, receive and distribute any money or other
property payable or deliverable on any such claims and any custodian in any such
judicial proceeding is hereby authorized by each Holder to make such payments to
the Trustee, as administrative expenses associated with any such proceeding and
in the event that the Trustee shall consent to the making of such payments
directly to the Holders, to pay to the Trustee any amount due to it for the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel, and any other amounts due the Trustee under Section 7.07
hereof. To the extent that the payment of any such compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 7.07 hereof out of the estate in any such
proceeding, shall be denied for any reason, payment of the same shall be secured
by a Lien on, and shall be paid out of, any and all distributions, dividends,
money, securities and other properties that the Holders may be entitled to
receive in such proceeding whether in liquidation or under any plan of
reorganization or arrangement or otherwise. Nothing herein contained shall be
deemed to authorize the Trustee to authorize or consent to or accept or adopt on
behalf of any Holder any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Holder, or to authorize the
Trustee to vote in respect of the claim of any Holder in any such proceeding.
SECTION 6.10. PRIORITIES.
If the Trustee collects any money pursuant to this Article 6, it shall pay
out the money in the following order:
First: to the Trustee, its agents and attorneys for amounts due under
Section 7.07 hereof, including payment of all compensation, expense and
liabilities incurred, and all advances made, by the Trustee and the costs
and expenses of collection;
Second: to holders of Senior Debt of the Company and the Guarantors to the
extent required by Article 10 hereof or any Subsidiary Guarantee;
Third: to Holders of Notes for amounts due and unpaid on the Notes for
principal, premium, if any, and interest, ratably, without preference or
priority of any kind, according to the amounts due and payable on the
Notes for principal, premium and, if any, and interest, respectively;
Fourth: without duplication, to the Holders for any other Obligations
owing to the Holders under this Indenture and the Notes; and
Fifth: to the Company or to such party as a court of competent
jurisdiction shall direct.
The Trustee may fix a record date and payment date for any payment to
Holders of Notes pursuant to this Section 6.10.
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SECTION 6.11. UNDERTAKING FOR COSTS.
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as a Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, having due regard to
the merits and good faith of the claims or defenses made by the party litigant.
This Section does not apply to a suit by the Trustee, a suit by a Holder of a
Note pursuant to Section 6.07 hereof, or a suit by Holders of more than 10% in
principal amount of the then outstanding Notes.
SECTION 6.12. WAIVER OF STAY, EXTENSION OF USURY LAWS.
The Company covenants (to the extent that it may lawfully do so) that it
will not at any time insist upon, or plead, or in any manner whatsoever claim or
take the benefit or advantage of, any stay, extension or usury law wherever
enacted, now or at any time hereafter in force, which may affect the covenants
or the performance of this Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such
law, and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit the execution of
every such power as though no such law had been enacted.
ARTICLE 7
TRUSTEE
SECTION 7.01. DUTIES OF TRUSTEE.
(a) If an Event of Default has occurred and is continuing, the Trustee
shall exercise such of the rights and powers vested in it by this Indenture, and
use the same degree of care and skill in its exercise, as a prudent person would
exercise or use under the circumstances in the conduct of his own affairs.
(b) Except during the continuance of an Event of Default:
(1) the duties of the Trustee shall be determined solely by the
express provisions of this Indenture and the Trustee need perform only
those duties that are specifically set forth in this Indenture and no
others, and no implied covenants or obligations shall be read into this
Indenture against the Trustee; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness
of the opinions expressed therein, upon certificates or opinions furnished
to the Trustee and conforming to the requirements of this Indenture,
provided that the Trustee shall examine the certificates and opinions to
determine whether or not they conform to the requirements of this
Indenture.
(c) The Trustee may not be relieved from liabilities for its own negligent
action, its own negligent failure to act, or its own willful misconduct, except
that:
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(i) this paragraph does not limit the effect of paragraph (b) of
this Section 7.01;
(ii) the Trustee shall not be liable for any error of judgment made
in good faith by a Responsible Officer, unless it is proved that the
Trustee was negligent in ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.05 hereof.
(d) Whether or not therein expressly so provided, every provision of this
Indenture that in any way relates to the Trustee is subject to paragraphs (a),
(b), and (c) of this Section.
(e) No provision of this Indenture shall require the Trustee to expend or
risk its own funds or incur any liability. The Trustee shall be under no
obligation to exercise any of its rights and powers under this Indenture unless
the Holders shall have offered to the Trustee security and indemnity
satisfactory to it against any loss, liability or expense.
(f) The Trustee shall not be liable for interest on any money received by
it except as the Trustee may agree in writing with the Company. Money held in
trust by the Trustee need not be segregated from other funds except to the
extent required by law.
(g) The Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, debenture or
other paper or documents, but the Trustee, in its discretion may make such
further inquiry or investigation into such facts or matters as it may see fit,
and, if the Trustee shall determine to make such further inquiry or
investigation, it shall be entitled to examine the books, records and premises
of the Company or any Guaranteeing Subsidiary, personally or by agent or
attorney.
SECTION 7.02. RIGHTS OF TRUSTEE.
(a) The Trustee may conclusively rely upon any document believed by it to
be genuine and to have been signed or presented by the proper person. The
Trustee need not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require an
Officers' Certificate or an Opinion of Counsel. The Trustee shall not be liable
for any action it takes or omits to take in good faith in reliance on such
Officers' Certificate or Opinion of Counsel. The Trustee may consult with
counsel and the written advice of such counsel or any Opinion of Counsel shall
be full and complete authorization and protection from liability in respect of
any action taken, suffered or omitted by it hereunder in good faith and in
reliance thereon.
(c) The Trustee may act through its attorneys and agents and shall not be
responsible for the misconduct or negligence of any agent appointed with due
care.
(d) The Trustee shall not be liable for any action it takes or omits to
take in good faith that it believes to be authorized or within the rights or
powers conferred upon it by this Indenture.
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(e) Unless otherwise specifically provided in this Indenture, any demand,
request, direction or notice from the Company or any Guarantor shall be
sufficient if signed by an Officer of the Company or such Guarantor. A
permissive right granted to the Trustee hereunder shall not be deemed an
obligation to act.
(f) The Trustee shall be under no obligation to exercise any of the rights
or powers vested in it by this Indenture at the request or direction of any of
the Holders unless such Holders shall have offered to the Trustee reasonable
security or indemnity against the costs, expenses and liabilities that might be
incurred by it in compliance with such request or direction.
(g) The Trustee shall not be charged with knowledge of any Default or
Event of Default unless either (i) a Responsible Officer of the Trustee shall
have actual knowledge of such Default or Event of Default or (ii) written notice
of such Default or Event of Default shall have been given to the Trustee by the
Company or any Holder.
SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE.
The Trustee, in its individual or any other capacity, may become the owner
or pledgee of Notes and may otherwise deal with the Company or any Affiliate of
the Company with the same rights it would have if it were not Trustee. However,
in the event that the Trustee acquires any conflicting interest it must
eliminate such conflict within 90 days, apply to the SEC for permission to
continue as trustee or resign. Any Agent may do the same with like rights and
duties. The Trustee is also subject to Sections 7.10 and 7.11 hereof.
SECTION 7.04. TRUSTEE'S DISCLAIMER.
The Trustee shall not be responsible for and makes no representation as to
the validity or adequacy of this Indenture or the Notes, it shall not be
accountable for the Company's use of the proceeds from the Notes or any money
paid to the Company or upon the direction of the Company under any provision of
this Indenture, it shall not be responsible for the use or application of any
money received by any Paying Agent other than the Trustee, and it shall not be
responsible for any statement or recital herein or any statement in the Notes or
any other document in connection with the sale of the Notes or pursuant to this
Indenture other than its certificate of authentication.
SECTION 7.05. NOTICE OF DEFAULTS.
If a Default or Event of Default occurs and is continuing and if it is
known to the Trustee, the Trustee shall mail to Holders of Notes a notice of the
Default or Event of Default within 90 days after it occurs. Except in the case
of a Default or Event of Default in payment of principal of, premium, if any, or
interest on any Note, the Trustee may withhold the notice if and so long as a
committee of its Responsible Officers in good faith determines that withholding
the notice is in the interests of the Holders of the Notes.
SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS OF THE NOTES.
Within 60 days after each May 15 beginning with the May 15 following the
date of this Indenture, and for so long as Notes remain outstanding, the Trustee
shall mail to the Holders of the Notes a brief
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report dated as of such reporting date that complies with TIA ss. 313(a) (but if
no event described in TIA ss. 313(a) has occurred within the twelve months
preceding the reporting date, no report need be transmitted). The Trustee also
shall comply with TIA ss. 313(b)(2). The Trustee shall also transmit by mail all
reports as required by TIA ss. 313(c).
A copy of each report at the time of its mailing to the Holders of Notes
shall be mailed to the Company and filed with the SEC and each stock exchange on
which the Notes are listed in accordance with TIA ss. 313(d). The Company shall
promptly notify the Trustee when the Notes are listed on any stock exchange.
SECTION 7.07. COMPENSATION AND INDEMNITY.
The Company shall pay to the Trustee, from time to time as may be agreed
upon between them, reasonable compensation for its acceptance of this Indenture
and services hereunder. The Trustee's compensation shall not be limited by any
law on compensation of a trustee of an express trust. The Company shall
reimburse the Trustee promptly upon request for all reasonable disbursements,
advances and expenses incurred or made by it in addition to the compensation for
its services. Such expenses shall include the reasonable compensation,
disbursements and expenses of the Trustee's agents and counsel.
The Company shall indemnify the Trustee against any and all losses,
liabilities or expenses (other than taxes based on the income of the Trustee)
incurred by it arising out of or in connection with the acceptance or
administration of its duties under this Indenture, including the costs and
expenses of enforcing this Indenture against the Company (including this Section
7.07) and defending itself against any claim (whether asserted by the Company or
any Holder or any other Person) or liability in connection with the exercise or
performance of any of its powers or duties hereunder, except to the extent any
such loss, liability or expense may be attributable to its negligence or bad
faith. The Trustee shall notify the Company promptly of any claim for which it
may seek indemnity. Failure by the Trustee to so notify the Company shall not
relieve the Company of its obligations hereunder. The Company shall defend the
claim and the Trustee shall cooperate in the defense. The Trustee may have
separate counsel and the Company shall pay the reasonable fees and expenses of
such counsel. The Company need not pay for any settlement made without its
consent, which consent shall not be unreasonably withheld.
The obligations of the Company under this Section 7.07 shall survive the
resignation or removal of the Trustee and the satisfaction and discharge of this
Indenture.
To secure the Company's payment obligations in this Section, the Trustee
shall have a Lien prior to the Notes on all money or property held or collected
by the Trustee, except that held in trust to pay principal and interest on
particular Notes. Such Lien shall survive the satisfaction and discharge of this
Indenture.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01(g) or (h) hereof occurs, the expenses and the
compensation for the services (including the fees and expenses of its agents and
counsel) are intended to constitute expenses of administration under any
Bankruptcy Law.
The Trustee shall comply with the provisions of TIA ss. 313(b)(2) to the
extent applicable.
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SECTION 7.08. REPLACEMENT OF TRUSTEE.
A resignation or removal of the Trustee and appointment of a successor
Trustee shall become effective only upon the successor Trustee's acceptance of
appointment as provided in this Section 7.08.
The Trustee may resign in writing at any time and be discharged from the
trust hereby created by so notifying the Company. The Holders of Notes of a
majority in principal amount of the then outstanding Notes may remove the
Trustee by so notifying the Trustee and the Company in writing. The Company may
remove the Trustee if:
(a) the Trustee fails to comply with Section 7.10 hereof,
(b) the Trustee is adjudged a bankrupt or an insolvent or an order for
relief is entered with respect to the Trustee under any Bankruptcy Law;
(c) a Custodian or public officer takes charge of the Trustee or its
property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the office
of Trustee for any reason, the Company shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holders
of a majority in principal amount of the then outstanding Notes may appoint a
successor Trustee to replace the successor Trustee appointed by the Company.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company, or
the Holders of Notes of at least 10% in principal amount of the then outstanding
Notes may petition any court of competent jurisdiction for the appointment of a
successor Trustee.
If the Trustee, after written request by any Holder of a Note who has been
a Holder of a Note for at least six months, fails to comply with Section 7.10,
such Holder of a Note may petition any court of competent jurisdiction for the
removal of the Trustee and the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its appointment
to the retiring Trustee and to the Company. Thereupon, the resignation or
removal of the retiring Trustee shall become effective, and the successor
Trustee shall have all the rights, powers and duties of the Trustee under this
Indenture. The successor Trustee shall mail a notice of its succession to
Holders of the Notes. The retiring Trustee shall promptly transfer all property
held by it as Trustee to the successor Trustee, provided all sums owing to the
Trustee hereunder have been paid and subject to the Lien provided for in Section
7.07 hereof. Notwithstanding replacement of the Trustee pursuant to this Section
7.08, the Company's obligations under Section 7.07 hereof shall continue for the
benefit of the retiring Trustee.
SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER, ETC.
If the Trustee consolidates, merges or converts into, or transfers all or
substantially all of its corporate trust business (including the trust created
by this Indenture) to, another corporation, the successor corporation without
any further act shall be the successor Trustee.
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SECTION 7.10. ELIGIBILITY; DISQUALIFICATION.
There shall at all times be a Trustee hereunder that is a corporation
organized and doing business under the laws of the United States of America or
of any state thereof that is authorized under such laws to exercise corporate
trustee power, that is subject to supervision or examination by federal or state
authorities and that has, or is a wholly owned subsidiary of a bank holding
company that has, a combined capital and surplus of at least $100 million as set
forth in its most recent published annual report of condition.
This Indenture shall always have a Trustee who satisfies the requirements
of TIA ss. 310(a)(1), (2) and (5). The Trustee is subject to TIA ss. 310(b).
SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST THE COMPANY.
The Trustee is subject to TIA ss. 311(a), excluding any creditor
relationship listed in TIA ss. 311(b). A Trustee who has resigned or been
removed shall be subject to TIA ss. 311(a) to the extent indicated therein.
ARTICLE 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
SECTION 8.01. OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT DEFEASANCE.
The Company may, at its option by Board Resolution, at any time, with
respect to the Notes, elect to have either Section 8.02 hereof or Section 8.03
hereof be applied to all Notes and Subsidiary Guarantees then outstanding upon
compliance with the conditions set forth in this Article 8.
SECTION 8.02.
LEGAL DEFEASANCE AND DISCHARGE.
Upon the Company's exercise under Section 8.01 of the option applicable to
this Section 8.02, the Company and the Guarantors, if any, shall be deemed to
have been discharged from their respective obligations with respect to all Notes
and Subsidiary Guarantees then outstanding on the date the conditions set forth
below are satisfied (hereinafter, "Legal Defeasance"). For this purpose, such
defeasance means that the Company and any Guarantor shall be deemed to have paid
and discharged the entire indebtedness represented by the Notes and any
Subsidiary Guarantees outstanding, which shall thereafter be deemed to be
"outstanding" only for the purposes of Section 8.05 and the other Sections of
this Indenture referred to in (A) and (B) below, and to have satisfied all its
other obligations under such Notes, Subsidiary Guarantees and this Indenture
(and the Trustee, on demand of and at the expense of the Company, shall execute
proper instruments acknowledging the same), except for the following which shall
survive until otherwise terminated or discharged hereunder: (A) the rights of
Holders of Notes then outstanding to receive solely from the trust fund
described in Section 8.04 and as more fully set forth in such Section, payments
in respect of the principal of (and premium, if any), interest and Liquidated
Damages, if any, on such Notes when such payments are due, or on the Redemption
Date, as the case may be, (B) the Company's obligations with respect to such
Notes under Sections 2.03, 2.04, 2.05, 2.06, 2.07, 2.10, 4.02 and 4.03, (C) the
rights, powers, trusts, duties, indemnities and immunities of the Trustee
hereunder and the Company's obligations in connection therewith and (D) this
Article 8. Subject to compliance with this
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Article 8, the Company may exercise its option under this Section 8.02
notwithstanding the prior exercise of its option under Section 8.03 with respect
to the Notes.
SECTION 8.03. COVENANT DEFEASANCE.
Upon the Company's exercise under Section 8.01 of the option applicable to
this Section 8.03, the Company and each Guarantor shall be released from its
obligations under the covenants contained in Article 5 and in Sections 4.04,
4.06, 4.07, 4.09, 4.10, 4.11, 4.12, 4.13, 4.14, 4.15, 4.16, 4.17 and 4.18 with
respect to the outstanding Notes and Subsidiary Guarantees, if any, on and after
the date the conditions set forth below are satisfied (hereinafter, "Covenant
Defeasance"), and the Notes and the Subsidiary Guarantees, if any, shall
thereafter be deemed to be not "outstanding" for the purposes of any direction,
waiver, consent or declaration or Act of Holders (and the consequences of any
thereof) in connection with such covenants, but shall continue to be deemed
"outstanding" for all other purposes hereunder (it being understood that such
Notes and Subsidiary Guarantees, if any, shall not be deemed outstanding for
financial accounting purposes). For this purpose, such covenant defeasance means
that, with respect to the outstanding Notes and Subsidiary Guarantees, if any,
the Company and any Guarantor may omit to comply with and shall have no
liability in respect of any term, condition or limitation set forth in any such
covenant, whether directly or indirectly, by reason of any reference elsewhere
herein to any such covenant or by reason of any reference in any such covenant
to any other provision herein or in any other document and such omission to
comply shall not constitute a Default or an Event of Default under Section
6.01(c) or Section 6.01(d), but, except as specified above, the remainder of
this Indenture and such Notes and Subsidiary Guarantees, if any, shall be
unaffected thereby. In addition, upon the Company's exercise under Section 8.01
of the option applicable to Section 8.03, Sections 6.01(c) through 6.01(f) and
Section 6.01(i) shall not constitute Events of Default.
SECTION 8.04. CONDITIONS TO LEGAL DEFEASANCE OR COVENANT DEFEASANCE.
The following shall be the conditions to application of either Section
8.02 or Section 8.03 to the outstanding Notes and Subsidiary Guarantees:
(i) the Company must irrevocably deposit with the Trustee, in trust, for
the benefit of the Holders of the Notes and without retaining any legal interest
in the corpus of such trust, cash in U.S. dollars, non-callable Government
Securities, or a combination thereof, in such amounts as will be sufficient, in
the opinion of a nationally recognized firm of independent public accountants,
to pay the principal of, premium, if any, and interest and Liquidated Damages,
if any, due on the outstanding Notes on the Stated Maturity thereof or on the
applicable Redemption Date, as the case may be, and the Company must specify
whether the Notes are being defeased to maturity or to a particular redemption
date;
(ii) in the case of Legal Defeasance, the Company shall have delivered to
the Trustee an Opinion of Counsel in the United States reasonably acceptable to
the Trustee confirming that, subject to customary assumptions and exclusions,
(A) the Company has received from, or there has been published by, the United
States Internal Revenue Service a ruling or (B) since the date of this
Indenture, there has been a change in the applicable U.S. federal income tax
law, in either case to the effect that, and based thereon such Opinion of
Counsel in the United States shall confirm that, subject to customary
assumptions and exclusions, the Holders of the outstanding Notes will not
recognize income, gain or loss for U.S. federal income tax purposes as a result
of such Legal Defeasance and will be subject to U.S. federal
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income tax on the same amounts, in the same manner and at the same times as
would have been the case if such Legal Defeasance had not occurred;
(iii) in the case of Covenant Defeasance, the Company shall have delivered
to the Trustee an Opinion of Counsel in the United States reasonably acceptable
to the Trustee confirming that, subject to customary assumptions and exclusions,
the Holders of the outstanding Notes will not recognize income, gain or loss for
U.S. federal income tax purposes as a result of such Covenant Defeasance and
will be subject to such tax on the same amounts, in the same manner and at the
same times as would have been the case if such Covenant Defeasance had not
occurred;
(iv) no Default or Event of Default shall have occurred and be continuing
on the date of such deposit (other than a Default or Event of Default resulting
from the borrowing of funds to be applied to such deposit) or, insofar as Events
of Default set forth in Sections 6.01(g) and (h), at any time in the period
ending on the 91st day after the date of such deposit (it being understood that
this condition shall not be satisfied until the expiration of such period);
(v) such Legal Defeasance or Covenant Defeasance shall not result in a
breach or violation of, or constitute a default under, any material agreement or
instrument (other than this Indenture) to which the Company or any of its
Subsidiaries is a party or by which the Company or any of its Subsidiaries is
bound;
(vi) the Company shall have delivered to the Trustee an Opinion of Counsel
to the effect that, as of the date of such opinion and subject to customary
assumptions and exclusions (which assumptions and exclusions shall not relate to
the operation of Section 547 of the United States Bankruptcy Code or any
analogous laws of the state governing the provisions of this Indenture)
following the deposit the trust funds will not be subject to the effect of any
applicable bankruptcy, insolvency, reorganization or similar laws affecting
creditors' rights generally under any applicable U.S. federal or state law, and
that the Trustee has a perfected security interest in such trust funds for the
ratable benefit of the Holders;
(vii) the Company shall have delivered to the Trustee an Officers'
Certificate stating that the deposit was not made by the Company with the intent
of preferring the Holders of Notes over the other creditors of the Company or
with the intent of defeating, hindering, delaying or defrauding any creditors of
the Company or others;
(viii) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel in the United States (which Opinion of
Counsel may be subject to customary assumptions and exclusions) each stating
that all conditions precedent provided for or relating to the Legal Defeasance
or the Covenant Defeasance, as the case may be, have been complied with; and
(ix) the Trustee shall have received such other documents and assurances
as the Trustee shall reasonably require.
SECTION 8.05. DEPOSITED MONEY AND U.S. GOVERNMENT OBLIGATIONS TO BE HELD IN
TRUST; OTHER MISCELLANEOUS PROVISIONS.
Subject to the provisions of the last paragraph of Section 4.03, all money
and Government Securities (including the proceeds thereof) deposited with the
Trustee (or other qualifying trustee,
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collectively for purposes of this Section 8.05, the "Trustee") pursuant to
Section 8.04 in respect of the Notes then outstanding shall be held in trust and
applied by the Trustee, in accordance with the provisions of such Notes and this
Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Holders of such Notes of all sums due and to become due
thereon in respect of principal (and premium, if any) and interest, but such
money need not be segregated from other funds except to the extent required by
law.
The Company shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the cash or Government Securities
deposited pursuant to Section 8.04 or the principal and interest received in
respect thereof other than any such tax, fee or other charge which by law is for
the account of the Holders of the Notes then outstanding.
Anything in this Article 8 to the contrary notwithstanding, the Trustee
shall deliver or pay to the Company from time to time upon Company Request any
money or Government Securities held by it as provided in Section 8.04 which, in
the opinion of a nationally recognized firm of independent public accountants
expressed in a written certification thereof delivered to the Trustee (which may
be the opinion delivered under Section 8.04(i)), are in excess of the amount
thereof which would then be required to be deposited to effect an equivalent
Legal Defeasance or Covenant Defeasance.
SECTION 8.06. REINSTATEMENT.
If the Trustee or Paying Agent is unable to apply any United States
dollars or Government Securities in accordance with Section 8.02 or 8.03, as the
case may be, by reason of any order or judgment of any court or governmental
authority enjoining, restraining or otherwise prohibiting such application, then
the Company's and any Guarantor's obligations under this Indenture, the Notes
and the Subsidiary Guarantees, if any, shall be revived and reinstated as though
no deposit had occurred pursuant to Section 8.02 or 8.03, as the case may be,
until such time as the Trustee or Paying Agent is permitted to apply all such
money in accordance with Section 8.02 or 8.03, as the case may be; provided,
however, that if the Company or any Guarantor makes any payment of principal of
(or premium, if any) or interest on any Note following the reinstatement of its
obligations, the Company or any Guarantor shall be subrogated to the rights of
the Holders of such Notes to receive such payment from the money held by the
Trustee or Paying Agent.
ARTICLE 9
AMENDMENT, SUPPLEMENT AND WAIVER
SECTION 9.01. WITHOUT CONSENT OF HOLDERS OF NOTES.
Notwithstanding Section 9.02 of this Indenture, the Company and the
Trustee may amend or supplement this Indenture or Notes, and with respect to a
Subsidiary Guarantee, the Guarantor under such Subsidiary Guarantee and the
Trustee may amend or supplement such Subsidiary Guarantee, without the consent
of any Holder of a Note:
(a) to cure any ambiguity, defect or inconsistency;
(b) to provide for uncertificated Notes in addition to or in place of
certificated Notes;
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(c) to comply with Article 5 hereof;
(d) to provide for the assumption of the Company's or any Guarantor's
obligations to the Holders of the Notes;
(e) to make any change that would provide any additional rights or
benefits to the Holders of the Notes or that does not adversely
affect the legal rights hereunder of any such Holder;
(f) to add covenants for the benefit of the Holders or to surrender any
right or power conferred upon the Company;
(g) to comply with requirements of the SEC in order to effect or
maintain the qualification of this Indenture under the TIA; or
(h) to add a Guarantor under this Indenture.
Upon the written request of the Company accompanied by resolutions of the
Board of Directors authorizing the execution of any such amended or supplemental
Indenture, and upon receipt by the Trustee of an Officers' Certificate and an
Opinion of Counsel in compliance with Section 1.05 hereof, the Trustee shall
join with the Company and the Guarantors, if any, in the execution of any
amended or supplemental Indenture authorized or permitted by the terms of this
Indenture and to make any further appropriate agreements and stipulations that
may be therein contained, but the Trustee shall not be obligated to enter into
such amended or supplemental Indenture that affects its own rights, duties or
immunities under this Indenture or otherwise.
SECTION 9.02. WITH CONSENT OF HOLDERS OF NOTES.
Except as provided below in this Section 9.02, this Indenture, the Notes
and a Subsidiary Guarantee issued hereunder may be amended or supplemented with
the consent of the Holders of at least a majority in principal amount of the
Notes then outstanding (including, without limitation, consents obtained in
connection with a purchase of, or tender offer or exchange offer for, the
Notes), and, subject to Sections 6.02, 6.04 and 6.07 hereof, any existing
default or compliance with any provision of this Indenture, the Notes or the
Subsidiary Guarantees may be waived with the consent of the Holders of a
majority in principal amount of the then outstanding Notes (including consents
obtained in connection with a tender offer or exchange offer for the Notes).
Upon the request of the Company accompanied by resolutions of the Board of
Directors authorizing the execution of any such amended or supplemental
Indenture, and upon the filing with the Trustee of evidence satisfactory to the
Trustee of the consent of the Holders of Notes as aforesaid, and upon receipt by
the Trustee of an Officers' Certificate and an Opinion of Counsel in compliance
with Section 1.05 hereof, the Trustee shall join with the Company and any
Guarantor in the execution of such amended or supplemental Indenture unless such
amended or supplemental Indenture affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise, in which case the Trustee may in
its discretion, but shall not be obligated to, enter into such amended or
supplemental Indenture.
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The consent of the Holders is not necessary under this Section 9.02 to
approve the particular form of any proposed amendment. It is sufficient if such
consent approves the substance of the proposed amendment.
After an amendment, supplement or waiver under this Section 9.02 becomes
effective, the Company shall mail to the Holders of Notes affected thereby a
notice briefly describing the amendment, supplement or waiver. Any failure of
the Company to mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such amended or supplemental
Indenture or waiver. Subject to Sections 6.04 and 6.07 hereof, the Holders of a
majority in aggregate principal amount of the Notes then outstanding may waive
compliance in a particular instance by the Company with any provision of this
Indenture, the Notes or the Subsidiary Guarantees, if any. However, without the
consent of each Holder affected, an amendment or waiver may not (with respect to
any Note or Subsidiary Guarantee held by a non-consenting Holder):
(i) reduce the principal amount of the Notes whose Holders must consent
to an amendment, supplement or waiver;
(ii) reduce the principal of or change the fixed maturity of any Note or
alter the provisions with respect to the redemption of the Notes
(other than provisions relating to the covenants described under
Sections 4.09 and 4.10);
(iii) reduce the rate of or change the time for payment of interest on any
Note;
(iv) waive a Default or Event of Default in the payment of principal of,
premium, if any, or interest on the Notes (except a rescission of
acceleration of the Notes by the Holders of at least a majority in
aggregate principal amount of such Notes and a waiver of the payment
default that resulted from such acceleration);
(v) make any Note payable in money other than that stated in such Notes;
(vi) make any change in Section 6.04 or 6.07;
(vii) waive a redemption payment with respect to any Note (other than a
payment required by Section 4.09 or Section 4.10);
(viii) make any change in Article 10 or the subordination provisions of
any Subsidiary Guarantee that would adversely affect the legal
rights of the Holders of the Notes; or
(ix) make any change in the foregoing amendment and waiver provisions of
this Article 9.
SECTION 9.03. COMPLIANCE WITH TIA.
Every amendment or supplement to this Indenture or the Notes shall be set
forth in an amended or supplemental Indenture that complies with the TIA as then
in effect.
SECTION 9.04.
REVOCATION AND EFFECT OF CONSENTS.
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Until an amendment, supplement or waiver becomes effective, a consent to
it by a Holder of a Note is a continuing consent by the Holder of a Note and
every subsequent Holder of a Note or portion of a Note that evidences the same
debt as the consenting Holder's Note, even if notation of the consent is not
made on any Note. However, any such Holder of a Note or subsequent Holder of a
Note may revoke the consent as to its Note if the Trustee receives written
notice of revocation before the date the waiver, supplement or amendment becomes
effective. An amendment, supplement or waiver becomes effective in accordance
with its terms and thereafter binds every Holder.
SECTION 9.05. NOTATION ON OR EXCHANGE OF NOTES.
The Trustee may, but shall not be required to, place an appropriate
notation about an amendment, supplement or waiver on any Note thereafter
authenticated. The Company in exchange for all Notes may issue and the Trustee
shall authenticate new Notes that reflect the amendment, supplement or waiver.
Failure to make the appropriate notation or issue a new Note shall not
affect the validity and effect of such amendment, supplement or waiver.
SECTION 9.06. TRUSTEE TO SIGN AMENDMENTS, ETC.
The Trustee shall sign any amended or supplemental indenture authorized
pursuant to this Article 9 if the amendment or supplement does not adversely
affect the rights, duties, liabilities or immunities of the Trustee. The Company
may not sign an amendment or supplemental Indenture until the Board of Directors
approves it. In signing or refusing to sign any amended or supplemental
indenture the Trustee shall be entitled to receive and (subject to Section 7.01)
shall be fully protected in relying upon an Officers' Certificate and an Opinion
of Counsel stating that the execution of such amended or supplemental indenture
is authorized or permitted by this Indenture, that it is not inconsistent
herewith, and that it will be valid and binding upon the Company and the
Guarantors, if any, in accordance with its terms.
ARTICLE 10
SUBORDINATION
SECTION 10.01. AGREEMENT TO SUBORDINATE.
The Company agrees, and each Holder by accepting a Note agrees, that the
payment (by set-off or otherwise) of principal of, premium, if any and interest
and Liquidated Damages, if any, on the Notes (including with respect to any
repurchases of the Notes) shall be subordinated in right of payment, as set
forth in this Article 10, to the prior payment in full in cash, or at the option
of the holders of Senior Debt, in Cash Equivalents of all obligations in respect
of Senior Debt, whether outstanding on the date hereof or thereafter incurred.
SECTION 10.02. LIQUIDATION; DISSOLUTION; BANKRUPTCY.
Upon any distribution to creditors of the Company upon any total or
partial liquidation, dissolution or winding up of the Company or in a
bankruptcy, reorganization, insolvency, receivership or similar proceeding
relating to the Company or its property, whether voluntary or involuntary, an
assignment for the benefit of creditors or any marshalling of the Company's
assets and liabilities, the holders of Senior
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Debt will be entitled to receive payment in full in cash, or at the option of
the holders of Senior Debt, in Cash Equivalents, of all Obligations due or to
become due in respect of such Senior Debt (including interest after the
commencement of any such proceeding at the rate specified in the applicable
Senior Debt) before the Holders of Notes will be entitled to receive any payment
of any kind or character with respect to the Notes, and until all Obligations
with respect to Senior Debt are paid in full in cash, or at the option of the
holders of Senior Debt, in Cash Equivalents, any distribution of any kind or
character to which the Holders of Notes would be entitled shall be made to the
holders of Senior Debt (except that Holders of Notes may receive Permitted
Junior Securities and payments made from the trust described in Article 8
hereof).
SECTION 10.03. DEFAULT ON DESIGNATED SENIOR DEBT.
The Company shall not make, directly or indirectly, (x) any payment upon
or in respect of the Notes (except in Permitted Junior Securities or from the
trust described in Article 8 hereof) or (y) acquire any of the Notes for cash or
property or otherwise or make any other distribution with respect to the Notes
if:
(i) any default occurs and is continuing (beyond any applicable grace
period) in the payment when due, whether at maturity, upon any
redemption, by declaration or otherwise, of any principal of,
interest on, unpaid drawings for letters of credit issued in respect
of, or regularly accruing fees with respect to, any Designated
Senior Debt or
(ii) any other default occurs and is continuing with respect to
Designated Senior Debt that permits holders of the Designated Senior
Debt as to which such default relates to accelerate its maturity and
the Trustee receives a notice of such default (a "Payment Blockage
Notice" ) from the Company or the holders of any Designated Senior
Debt.
The Company may and shall resume payments on the Notes:
(a) in the case of a payment default, upon the date on which such
default is cured or waived and
(b) in case of a nonpayment default, the earlier of the date on which
such nonpayment default is cured or waived or 179 days after the
date on which the applicable Payment Blockage Notice is received,
unless the maturity of any Designated Senior Debt has been
accelerated.
No new period of payment blockage may be commenced unless and until (i)
360 days have elapsed since the effectiveness of the immediately prior Payment
Blockage Notice and (ii) all scheduled payments of principal, premium, if any,
and interest and Liquidated Damages, if any, on the Notes that have come due
have been paid in full in cash. No nonpayment default that existed or was
continuing on the date of delivery of any Payment Blockage Notice to the Trustee
shall be, or be made, the basis for a subsequent Payment Blockage Notice unless
such nonpayment default shall have been waived for a period of not less than 90
days (it being acknowledged that any subsequent action, or any breach of any
financial covenants for a period commencing after the date of delivery of any
Payment Blockage Notice which, in either case, would give rise to a default
pursuant to any provision under which a default previously existed or was
continuing shall constitute a new default for this purpose).
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SECTION 10.04. ACCELERATION OF SECURITIES.
If the Company fails to make any payment on the Notes when due or within
any applicable grace period, whether or not on account of the payment blockage
provision referred to above, such failure shall constitute an Event of Default
and shall entitle the holders of the Notes to accelerate the maturity thereof.
The Company shall promptly notify holders of Senior Debt if payment of the Notes
is accelerated because of an Event of Default.
SECTION 10.05. WHEN DISTRIBUTION MUST BE PAID OVER.
In the event that the Trustee or any Holder receives any payment of any
Subordinated Note Obligations at a time when the Trustee or such Holder, as
applicable, has actual knowledge that such payment is prohibited by Section
10.02 or 10.03 hereof, such payment shall be held by the Trustee or such Holder,
in trust for the benefit of, and shall be paid forthwith over and delivered,
upon written request, to, the holders of Senior Debt as their interests may
appear or their representative under the indenture or other agreement (if any)
pursuant to which Senior Debt may have been issued, as their respective
interests may appear, for application to the payment of all Obligations with
respect to Senior Debt remaining unpaid to the extent necessary to pay such
Obligations in full in accordance with their terms, after giving effect to any
concurrent payment or distribution to or for the holders of Senior Debt.
In the event that any Holder receives any payment or payments pursuant to
this Indenture and the amount or total amount of such payment or payments
exceeds the amount, if any, that such Holder would be entitled to receive upon
the proper application of the subordination provisions of this Article 10, the
payment of such excess amount shall be deemed null and void, and the Holder
agrees that it will be obliged to return the amount of the excess payment to the
Company, as instructed in a written notice of such excess payment, within ten
days of receiving such notice.
With respect to the holders of Senior Debt, the Trustee undertakes to
perform only such obligations on the part of the Trustee as are specifically set
forth in this Article 10, and no implied covenants or obligations with respect
to the holders of Senior Debt shall be read into this Indenture against the
Trustee. The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Debt, and shall not be liable to any such holders if the
Trustee shall pay over or distribute to or on behalf of Holders or the Company
or any other Person money or assets to which any holders of Senior Debt shall be
entitled by virtue of this Article 10, except if such payment is made as a
result of the willful misconduct or gross negligence of the Trustee.
SECTION 10.06. NOTICE BY COMPANY.
The Company shall promptly notify the Trustee and the Paying Agent of any
facts known to the Company that would cause a payment of any Subordinated Note
Obligations to violate this Article 10, but failure to give such notice shall
not affect the subordination of the Notes to the Senior Debt as provided in this
Article 10.
SECTION 10.07. SUBROGATION.
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After all Senior Debt is paid in full and until the Notes are paid in
full in cash, Holders of Notes shall be subrogated (equally and ratably with all
other Indebtedness pari passu with the Notes) to the rights of holders of Senior
Debt to receive distributions applicable to Senior Debt to the extent that
distributions otherwise payable to the Holders of Notes have been applied to the
payment of Senior Debt. A distribution made under this Article 10 to holders of
Senior Debt that otherwise would have been made to Holders of Notes is not, as
between the Company and Holders, a payment by the Company on the Senior Debt.
SECTION 10.08. RELATIVE RIGHTS.
This Article 10 defines the relative rights of Holders of Notes and
holders of Senior Debt. Nothing in this Indenture shall:
(1) impair, as between the Company and Holders of Notes, the obligation
of the Company, which is absolute and unconditional, to pay
principal of, premium, if any, and interest on the Notes in
accordance with their terms;
(2) affect the relative rights of Holders of Notes and creditors of the
Company other than their rights in relation to holders of Senior
Debt; or
(3) prevent the Trustee or any Holder of Notes from exercising its
available remedies upon a Default or Event of Default, subject to
the rights of holders and owners of Senior Debt to receive
distributions and payments otherwise payable to Holders of Notes.
If the Company fails because of this Article 10 to pay principal of,
premium, if any, or interest on a Note on the due date, the failure is
nevertheless a Default or an Event of Default.
SECTION 10.09. SUBORDINATION MAY NOT BE IMPAIRED BY COMPANY.
No right of any holder of Senior Debt to enforce the subordination of the
Indebtedness evidenced by the Notes shall be impaired by any act or failure to
act by the Company or any Holder or by the failure of the Company or any Holder
to comply with this Indenture.
SECTION 10.10. DISTRIBUTION OR NOTICE TO REPRESENTATIVE.
Whenever a distribution is to be made or a notice given to holders of
Senior Debt, the distribution may be made and the notice given to their
representative.
Upon any payment or distribution of assets of the Company referred to in
this Article 10, the Trustee and the Holders of Notes shall be entitled to rely
upon any order or decree made by any court of competent jurisdiction or upon any
certificate of such representative or of the liquidating trustee or agent or
other Person making any distribution to the Trustee or to the Holders of Notes
for the purpose of ascertaining the Persons entitled to participate in such
distribution, the holders of the Senior Debt and other Indebtedness of the
Company, the amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this Article 10.
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SECTION 10.11. RIGHTS OF TRUSTEE AND PAYING AGENT.
Notwithstanding the provisions of this Article 10 or any other provision
of this Indenture, the Trustee shall not be charged with knowledge of the
existence of any facts that would prohibit the making of any payment or
distribution by the Trustee, and the Trustee and the Paying Agent may continue
to make payments on the Notes, unless the Trustee shall have received at its
Corporate Trust Office at least five Business Days prior to the date of such
payment written notice of facts that would cause the payment of any Subordinated
Note Obligations to violate this Article 10. Only the Company or a
representative may give the notice. Nothing in this Article 10 shall impair the
claims of, or payments to, the Trustee under or pursuant to Section 7.07 hereof.
Trustee in its individual or any other capacity may hold Senior Debt with
the same rights it would have if it were not Trustee. Any Agent may do the same
with like rights.
SECTION 10.12. AUTHORIZATION TO EFFECT SUBORDINATION.
Each Holder of Notes, by the Holder's acceptance thereof, authorizes and
directs the Trustee on such Holder's behalf to take such action as may be
necessary or appropriate to effectuate the subordination as provided in this
Article 10, and appoints the Trustee to act as such Holder's attorney-in-fact
for any and all such purposes. If the Trustee does not file a proper proof of
claim or proof of debt in the form required in any proceeding referred to in
Section 6.09 hereof at least 30 days before the expiration of the time to file
such claim, a representative of Designated Senior Debt is hereby authorized to
file an appropriate claim for and on behalf of the Holders of the Notes.
ARTICLE 11
SATISFACTION AND DISCHARGE
SECTION 11.01. SATISFACTION AND DISCHARGE OF INDENTURE.
This Indenture shall be discharged and will cease to be of further effect
as to all Notes issued hereunder, when either
(a) all such Notes theretofore authenticated and delivered (except lost,
stolen or destroyed Notes which have been replaced or paid and Notes
for whose payment money has theretofore been deposited in trust and
thereafter repaid to the Company) have been delivered to the Trustee
for cancellation; or
(b) (i) all such Notes not theretofore delivered to such Trustee
for cancellation have become due and payable by reason of the
making of a notice of redemption or otherwise or will become
due and payable within one year and the Company or a
Guarantor, if any, has irrevocably deposited or caused to be
deposited with such Trustee as trust funds in trust an amount
of money sufficient to pay and discharge the entire
Indebtedness on such Notes not theretofore delivered to the
Trustee for cancellation for principal, premium, if any, and
accrued interest to the date of maturity or redemption;
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(ii) no Default or Event of Default with respect to this Indenture
or the Notes shall have occurred and be continuing on the date
of such deposit or shall occur as a result of such deposit and
such deposit will not result in a breach or violation of, or
constitute a default under, any other instrument to which the
Company or a Guarantor, if any, is a party or by which the
Company or a Guarantor, if any, is bound;
(iii) the Company or a Guarantor, if any, has paid or caused to be
paid all sums payable by it under this Indenture; and
(iv) the Company has delivered irrevocable instructions to the
Trustee under this Indenture to apply the deposited money
toward the payment of such Notes at maturity or the redemption
date, as the case may be.
In addition, the Company must deliver an Officers' Certificate and an
Opinion of Counsel to the Trustee stating that all conditions precedent to
satisfaction and discharge have been satisfied.
SECTION 11.02. APPLICATION OF TRUST MONEY.
Subject to the provisions of the last paragraph of Section 4.03, all
money deposited with the Trustee pursuant to Section 11.01 shall be held in
trust and applied by it, in accordance with the provisions of the Notes and this
Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as Paying Agent) as the Trustee may determine, to
Persons entitled thereto, of the principal (and premium, if any) and interest
for whose payment such money has been deposited with the Trustee.
If the Trustee or Paying Agent is unable to apply any money in accordance
with Section 11.01 by reason of any legal proceeding or by reason of any order
or judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, the Company's obligations under this
Indenture and the Notes shall be revived and reinstated as though such deposit
had occurred pursuant to Section 11.01; provided that if the Company has made
any payment of principal of, premium, if any, or interest on any Notes because
of the reinstatement of its obligations, the Company shall be subrogated to the
rights of the Holders of such Notes to receive such payment from the money held
by the Trustee or Paying Agent.
ARTICLE 12
SUBSIDIARY GUARANTEES
SECTION 12.01. SUBSIDIARY GUARANTEE.
Each of the Guarantors hereby, jointly and severally, unconditionally
guarantees to each Holder of a Note authenticated and delivered by the Trustee
and to the Trustee and its successors and assigns, irrespective of the validity
and enforceability of this Indenture, the Notes or the Obligations of the
Company hereunder or thereunder, that: (a) the principal of, premium, if any,
and interest and Liquidated Damages, if any, on the Notes will be promptly paid
in full when due, whether at maturity, by
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acceleration, redemption or otherwise, and interest on overdue principal,
premium, if any, and (to the extent permitted by law) interest on any interest,
if any, and Liquidated Damages, if any, on the Notes and all other obligations
of the Company to the Holders or the Trustee hereunder or thereunder will be
promptly paid in full or performed, all in accordance with the terms hereof and
thereof; and (b) in case of any extension of time of payment or renewal of any
Notes or any of such other obligations, that same will be promptly paid in full
when due or performed in accordance with the terms of the extension or renewal,
whether at stated maturity, by acceleration or otherwise. Failing payment when
due of any amount so guaranteed or any performance so guaranteed for whatever
reason, the Guarantors will be jointly and severally obligated to pay the same
immediately. The Guarantors hereby agree that their obligations hereunder shall
be unconditional, irrespective of the validity, regularity or enforceability of
the Notes or this Indenture, the absence of any action to enforce the same, any
waiver or consent by any Holder of the Notes with respect to any provisions
hereof or thereof, the recovery of any judgment against the Company, any action
to enforce the same or any other circumstance which might otherwise constitute a
legal or equitable discharge or defense of a Guarantor. Each Guarantor hereby
waives diligence, presentment, demand of payment, filing of claims with a court
in the event of insolvency or bankruptcy of the Company, any right to require a
proceeding first against the Company, protest, notice and all demands whatsoever
and covenant that this Subsidiary Guarantee will not be discharged except by
complete performance of the obligations contained in the Notes and this
Indenture. If any Holder or the Trustee is required by any court or otherwise to
return to the Company or any Guarantor, or any Custodian, Trustee, liquidator or
other similar official acting in relation to either the Company or any
Guarantor, any amount paid by either to the Trustee or such Holder, this
Subsidiary Guarantee, to the extent theretofore discharged, shall be reinstated
in full force and effect. Each Guarantor agrees that it shall not be entitled to
any right of subrogation in relation to the Holders in respect of any
obligations guaranteed hereby. Each Guarantor further agrees that, as between
such Guarantor, on the one hand, and the Holders and the Trustee, on the other
hand, (x) the maturity of the obligations guaranteed hereby may be accelerated
as provided in Article 6 for the purposes of this Subsidiary Guarantee,
notwithstanding any stay, injunction or other prohibition preventing such
acceleration in respect of the obligations guaranteed hereby, and (y) in the
event of any declaration of acceleration of such obligations as provided in
Article 6, such obligations (whether or not due and payable) shall forthwith
become due and payable by such Guarantor for the purpose of this Subsidiary
Guarantee.
Notwithstanding the foregoing, in the event that any Subsidiary Guarantee
hereunder would constitute or result in a violation of any applicable fraudulent
conveyance or similar law of any relevant jurisdiction, the liability of a
Guarantor under such Subsidiary Guarantee shall be reduced to the maximum amount
permissible under such fraudulent conveyance or similar law.
SECTION 12.02. EXECUTION AND DELIVERY OF SUBSIDIARY GUARANTEE.
To evidence its Subsidiary Guarantee set forth in Section 12.01, each
Guarantor hereby agrees that a notation of such Subsidiary Guarantee
substantially in the form of Exhibit E shall be endorsed by an officer of such
Guarantor on each Note authenticated and delivered by the Trustee and that this
Indenture shall be executed on behalf of such Guarantor by its President or one
of its Vice Presidents.
Each Guarantor hereby agrees that its Subsidiary Guarantee set forth in
Section 12.01 shall remain in full force and effect notwithstanding any failure
to endorse on each Note a notation of such Subsidiary Guarantee.
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If an Officer whose signature is on this Indenture or on the Subsidiary
Guarantee no longer holds that office at the time the Trustee authenticates the
Note on which a Subsidiary Guarantee is endorsed, the Subsidiary Guarantee shall
be valid nevertheless.
The delivery of any Note by the Trustee, after the authentication thereof
hereunder, shall constitute due delivery of the Subsidiary Guarantee set forth
in this Indenture on behalf of the Guarantors.
SECTION 12.03 GUARANTORS MAY CONSOLIDATE, ETC., ON CERTAIN TERMS.
Subject to Section 12.04, no Guarantor may consolidate or merge with or
into (whether or not such Guarantor is the surviving Person) another Person
unless:
(a) such Guarantor is the surviving Person or the Person formed by or
surviving any such consolidation or merger (if other than such Guarantor)
is a corporation organized or existing under the laws of the United
States, any state thereof or the District of Columbia and expressly
assumes all the Obligations of such Guarantor pursuant to a supplemental
indenture in form and substance reasonably satisfactory to the Trustee,
under the Notes and this Indenture;
(b) immediately after giving effect to such transaction no Default or
Event of Default exists;
(c) the Company would be permitted by virtue of the Company's pro forma
Fixed Charge Coverage Ratio, immediately after giving effect to such
transaction (on a pro forma basis), to incur at least $1.00 of additional
Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in
Section 4.12 hereof; and
(d) the Guarantor has delivered to the Trustee an Officers' Certificate
stating that such consolidation or merger and such supplemental indenture
complies with this Article and that all conditions precedent herein
provided for relating to such transaction have been complied with.
In case of any such consolidation or merger and upon the assumption by
the successor corporation, by supplemental indenture, executed and delivered to
the Trustee and satisfactory in form to the Trustee, of the Subsidiary Guarantee
endorsed upon the Notes and the due and punctual performance of all of the
covenants and conditions of this Indenture to be performed by the Guarantor,
such successor corporation shall succeed to and be substituted for the Guarantor
with the same effect as if it had been named herein as a Guarantor. Such
successor corporation thereupon may cause to be signed any or all of the
Subsidiary Guarantees to be endorsed upon all of the Notes issuable hereunder
which theretofore shall not have been signed by the Company and delivered to the
Trustee. All the Subsidiary Guarantees so issued shall in all respects have the
same legal rank and benefit under this Indenture as the Subsidiary Guarantees
theretofore and thereafter issued in accordance with the terms of this Indenture
as though all of such Subsidiary Guarantees had been issued at the date of the
execution hereof.
Except as set forth in Articles 4 and 5, nothing contained in this
Indenture shall prevent any consolidation or merger of a Guarantor with or into
the Company or another Guarantor or shall prevent any sale or conveyance of the
property of a Guarantor as an entirety or substantially as an entirety to the
Company or another Guarantor.
SECTION 12.04 RELEASES FROM SUBSIDIARY GUARANTEES.
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In the event of a sale or other disposition of all of the assets of any
Guarantor, by way of merger, consolidation or otherwise, or a sale or
disposition of all of the Capital Stock of any Guarantor, then such Guarantor
(in the event of a sale or other disposition, by way of such a merger,
consolidation or otherwise, of all of the Capital Stock of such Guarantor) or
the Person acquiring the property (in the event of a sale or other disposition
of all of the assets of such Guarantor) shall be released and relieved of its
obligations under its Subsidiary Guarantee or Section 12.03, as the case may be;
provided that in the event of an Asset Sale, the Net Proceeds from such sale or
other disposition are applied in accordance with the provisions of Section 4.10.
Upon delivery by the Company to the Trustee of an Officers' Certificate and an
Opinion of Counsel to the effect that such sale or other disposition was made by
the Company in accordance with the provisions of this Indenture, including
without limitation Section 4.10, the Trustee shall execute any documents
reasonably required in order to evidence the release of any Guarantor from its
obligations under its Subsidiary Guarantee. Any Guarantor not released from its
obligations under its Subsidiary Guarantee shall remain liable for the full
amount of principal of and interest on the Notes and for the other obligations
of any Guarantor under the Indenture as provided in this Article 12.
SECTION 12.05. LIMITATION ON GUARANTOR LIABILITY.
For purposes hereof, each Guarantor's liability shall be limited to the
lesser of (i) the aggregate amount of the Obligations of the Company under the
Notes and this Indenture and (ii) the amount, if any, which would not have (A)
rendered such Guarantor "insolvent" (as such term is defined in the United
States Bankruptcy Code and in the Debtor and Creditor Law of the State of New
York) or (B) left such Guarantor with unreasonably small capital at the time its
Subsidiary Guarantee of the Notes was entered into; provided that, it will be a
presumption in any lawsuit or other proceeding in which a Guarantor is a party
that the amount guaranteed pursuant to the Subsidiary Guarantee is the amount
set forth in clause (i) above unless any creditor, or representative of
creditors of such Guarantor, or debtor in possession or trustee in bankruptcy of
the Guarantor, otherwise proves in such a lawsuit that the aggregate liability
of the Guarantor is the amount set forth in clause (ii) above. In making any
determination as to solvency or sufficiency of capital of a Guarantor in
accordance with the previous sentence, the right of such Guarantor to
contribution from other Guarantors, and any other rights such Guarantor may
have, contractual or otherwise, shall be taken into account.
SECTION 12.06. SUBORDINATION OF SUBSIDIARY GUARANTEES.
The obligations of each Guarantor under its Subsidiary Guarantee pursuant
to this Article 12 shall be junior and subordinated to the prior payment in full
in cash, or at the option of the holders of Senior Debt, in Cash Equivalents of
all obligations in respect of Senior Debt of such Guarantor, whether outstanding
on the date hereof or thereafter incurred (including amounts for which the
Guarantors will be liable for under the Subsidiary Guarantees issued from time
to time with respect to Senior Debt of such Guarantor or the Company) on the
same basis as the Notes are junior and subordinated to Senior Debt. For the
purposes of the foregoing sentence, the Trustee and the Holders shall have the
right to receive and/or retain payments by any of the Guarantors only at such
times as they may receive and/or retain payments in respect of the Notes
pursuant to this Indenture, including Article 10 hereof.
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ARTICLE 13
MISCELLANEOUS
SECTION 13.01. CONFLICT OF ANY PROVISION OF INDENTURE WITH TIA.
If any provision of this Indenture limits, qualifies, or conflicts with
the duties imposed by TIA ss. 318(c), the imposed duties shall control.
SECTION 13.02. NOTICES.
Any notice or communication by the Company, any Guarantor or the Trustee
to the others is duly given if in writing and delivered in Person or mailed by
first class mail (registered or certified, return receipt requested), telecopier
or overnight air courier guaranteeing next day delivery, to the others' address:
If to the Company or any Guarantor:
Precise Technology, Inc.
501 Mosside Boulevard
North Versailles, Pennsylvania 15137-2553
Attention: Secretary
Facsimile: (412)823-4110
With, in the case of any notice of a Default or an Event of Default, a
copy to:
Winston & Strawn
200 Park Avenue, 42nd Floor
New York, New York 10166
Attention: Robert W. Ericson, Esq.
Facsimile: (212) 294-4700
and
Mentmore Holdings Corporation
1430 Broadway, 13th Floor
New York, New York 10018-3308
Attention: William L. Remley
Facsimile (212) 391-1393
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If to the Trustee:
Marine Midland Bank
140 Broadway, 12th Floor
New York, New York 10005
Attention: Corporate Trust Department -- Precise Technology, Inc.
Facsimile: (212) 658-6425
The Company, any Guarantor or the Trustee, by notice to the others may
designate additional or different addresses for subsequent notices or
communications.
All notices and communications (other than those sent to Holders) shall
be deemed to have been duly given: at the time delivered by hand, if personally
delivered; five Business Days after being deposited in the mail, postage
prepaid, if mailed; when receipt acknowledged, if telecopied; and the next
Business Day after timely delivery to the courier, if sent by overnight air
courier guaranteeing next day delivery.
Any notice or communication to a Holder shall be mailed by first class
mail, certified or registered, return receipt requested, or by overnight air
courier guaranteeing next day delivery to its address shown on the register kept
by the Registrar. Any notice or communication shall also be so mailed to any
Person described in TIA ss. 313(c), to the extent required by the TIA. Failure
to mail a notice or communication to a Holder or any defect in it shall not
affect its sufficiency with respect to other Holders.
If a notice or communication is mailed in the manner provided above
within the time prescribed, it is duly given, whether or not the addressee
receives it.
If the Company mails a notice or communication to Holders, it shall mail
a copy to the Trustee and each Agent at the same time.
SECTION 13.03. COMMUNICATION BY HOLDERS OF NOTES WITH OTHER HOLDERS OF NOTES.
Holders may communicate pursuant to TIA ss. 312(b) with other Holders
with respect to their rights under this Indenture or the Notes. The Company, any
Guarantor, the Trustee, the Registrar and anyone else shall have the protection
of TIA ss. 312(c).
SECTION 13.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.
Upon any request or application by the Company and/or any Guarantor to
the Trustee to take any action under this Indenture, the Company and/or any
Guarantor, as the case may be, shall furnish to the Trustee:
(a) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set
forth in Section 1.05 hereof) stating that, in the opinion of the
signers, all conditions precedent and covenants, if any, provided
for in this Indenture relating to the proposed action have been
satisfied; and
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(b) an Opinion of Counsel in form and substance reasonably satisfactory
to the Trustee (which shall include the statements set forth in
Section 1.05 hereof) stating that, in the opinion of such counsel,
all such conditions precedent and covenants have been satisfied.
SECTION 13.05. LEGAL HOLIDAYS.
In any case where any Interest Payment Date, any date established for
payment of Defaulted Interest pursuant to Section 2.12, or any Maturity with
respect to any Note shall not be a Business Day, then (notwithstanding any other
provisions of this Indenture, the Notes or any Subsidiary Guarantee) payment of
interest or principal (and premium, if any) need not be made on such date but
may be made on the next succeeding Business Day with the same force and effect
as if made on the Interest Payment Date or date established for payment of
Defaulted Interest pursuant to Section 2.12 or Maturity, and no interest shall
accrue with respect to such payment for the period from and after such Interest
Payment Date or date established for payment of Defaulted Interest pursuant to
Section 2.12 or Maturity, as the case may be, to the next succeeding Business
Day.
SECTION 13.06. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS,
EMPLOYEES AND STOCKHOLDERS.
No director, officer, employee, incorporator or stockholder of the Company
or a Guarantor, as such, shall have any liability for any obligations of the
Company or the Guarantors under the Notes, the Subsidiary Guarantees, if any, or
this Indenture or for any claim based on, in respect of, or by reason of such
obligations or their creation. Each Holder of the Notes by accepting a Note
waives and releases all such liability. The waiver and release are part of the
consideration for issuance of the Notes. Such waiver may not be effective to
waive liabilities under the federal securities laws and it is the view of the
SEC that such a waiver is against public policy.
SECTION 13.07. GOVERNING LAW; SUBMISSION TO JURISDICTION.
THIS INDENTURE, THE NOTES AND THE SUBSIDIARY GUARANTEES, SHALL BE,
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF
NEW YORK, WITHOUT REGARD TO THE CHOICE OF LAW RULES THEREOF. BY THE EXECUTION
AND DELIVERY OF THIS INDENTURE, EACH OF THE COMPANY AND THE GUARANTORS SUBMITS
TO THE JURISDICTION OF ANY FEDERAL OR STATE COURT IN THE STATE OF NEW YORK IN
ANY SUIT OR PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE.
SECTION 13.08. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.
This Indenture may not be used to interpret any other indenture, loan or
debt agreement of the Company or its Subsidiaries or of any other Person. Any
such indenture, loan or debt agreement may not be used to interpret this
Indenture.
SECTION 13.09. SUCCESSORS AND ASSIGNS.
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All covenants and agreements in this Indenture by the Company and the
Guarantors shall bind their respective successors and assigns, whether so
expressed or not. All covenants and agreements in this Indenture by the Trustee
shall bind its respective successors and assigns, whether so expressed or not.
SECTION 13.10. SEVERABILITY.
In case any provision in this Indenture or in the Notes shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
SECTION 13.11. COUNTERPART ORIGINALS.
The parties may sign any number of copies of this Indenture. Each signed
copy shall be an original, but all of them together represent the same
agreement.
SECTION 13.12. TABLE OF CONTENTS, HEADINGS, ETC.
The Table of Contents, Cross-Reference Table and Headings of the Articles
and Sections of this Indenture have been inserted for convenience of reference
only, are not to be considered a part of this Indenture and shall in no way
modify or restrict any of the terms or provisions hereof.
[Signatures on following page]
85
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed in New York, New York as of the day and year first above written.
PRECISE TECHNOLOGY, INC.
Dated: June 13, 1997 By: /s/ William L. Remley
-----------------------------
Name: William L. Remley
Title:
PRECISE TMP, INC.
Dated: June 13, 1997 By: /s/ William L. Remley
-----------------------------
Name: William L. Remley
Title:
MASSIE TOOL, MOLD & DIE, INC.
Dated: June 13, 1997 By: /s/ William L. Remley
-----------------------------
Name: William L. Remley
Title:
PRECISE POLESTAR, INC.
Dated: June 13, 1997 By: /s/ William L. Remley
-----------------------------
Name: William L. Remley
Title:
PRECISE TECHNOLOGY OF DELAWARE INC.
Dated: June 13, 1997 By: /s/ William L. Remley
-----------------------------
Name: William L. Remley
Title:
PRECISE TECHNOLOGY OF ILLINOIS INC.
Dated: June 13, 1997 By: /s/ William L. Remley
-----------------------------
Name: William L. Remley
Title:
MARINE MIDLAND BANK, as Trustee
Dated: June 13, 1997 By: /s/ Eileen M. Hughes
-----------------------------
Name: Eileen M. Hughes
Title: Assistant Vice President
<PAGE>
EXHIBIT A-1
(Face of Note)
11 1/8% Senior Subordinated Notes due 2007
No. CUSIP No:
PRECISE TECHNOLOGY, INC.
promises to pay to ______ or registered assigns, the principal sum of $________
_______________________________ Dollars on June 15, 2007.
Interest Payment Dates: June 15 and December 15
Record Dates: June 1 and December 1
Reference is made to the further provisions of this Note contained herein, which
will for all purposes have the same effect as if set forth at this place.
Dated: _______
PRECISE TECHNOLOGY, INC.
By:______________________________
Name:
Title:
By:______________________________
Name:
Title:
This is one of the 11 1/8% Senior Subordinated
Notes due 2007 referred to in the
within-mentioned Indenture:
Marine Midland Bank,
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as Trustee
By: _____________________________
Authorized Signature
A-1-2
<PAGE>
(Back of Note)
11 1/8% Senior Subordinated Notes due 2007
[Unless and until it is exchanged in whole or in part for Notes in definitive
form, this Note may not be transferred except as a whole by the Depository to a
nominee of the Depository or by a nominee of the Depository to the Depository or
another nominee of the Depository or by the Depository or any such nominee to a
successor Depository or a nominee of such successor Depository. Unless this
certificate is presented by an authorized representative of The Depository Trust
Company (55 Water Street, New York, New York) ("DTC") to the issuer or its agent
for registration of transfer, exchange or payment, and any certificate issued is
registered in the name of Cede & Co. or such other name as may be requested by
an authorized representative of DTC (and any payment is made to Cede & Co. or
such other entity as may be requested by an authorized representative of DTC),
ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY
PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an
interest herein.]1
"THIS SECURITY (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY
NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED STATES
OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS, EXCEPT AS SET FORTH IN
THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST
HEREIN, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL
BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) (A "QIB"), (B) IT IS
NOT A U.S. PERSON, IS NOT ACQUIRING THIS NOTE FOR THE ACCOUNT OR BENEFIT OF A
U.S. PERSON AND IS ACQUIRING THIS NOTE IN AN OFFSHORE TRANSACTION IN COMPLIANCE
WITH REGULATION S UNDER THE SECURITIES ACT OR (C) IT IS AN INSTITUTIONAL
"ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7) OF
REGULATION D UNDER THE SECURITIES ACT) (AN "IAI"), (2) AGREES THAT IT WILL NOT,
WITHIN THE TIME PERIOD REFERRED TO UNDER RULE 144(k) (TAKING INTO ACCOUNT THE
PROVISIONS OF RULE 144(d) UNDER THE SECURITIES ACT, IF APPLICABLE) UNDER THE
SECURITIES ACT AS IN EFFECT ON THE DATE OF THE TRANSFER OF THIS NOTE, RESELL OR
OTHERWISE TRANSFER THIS NOTE EXCEPT (A) TO THE COMPANY OR ANY SUBSIDIARY
THEREOF, (B) TO A PERSON WHOM THE HOLDER REASONABLY BELIEVES IS A QIB PURCHASING
FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QIB IN COMPLIANCE WITH RULE 144A
UNDER THE SECURITIES ACT, (C) OUTSIDE THE UNITED STATES IN AN OFFSHORE
TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (D) PURSUANT
TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT
(IF AVAILABLE), (E) TO AN IAI THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO THE
TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS
RELATING TO THE REGISTRATION OF TRANSFER OF THIS NOTE (THE FORM OF WHICH LETTER
CAN BE OBTAINED FROM
- -----------------------
1 This paragraph should be included only if the Note is a Global Note.
A-1-3
<PAGE>
THE TRUSTEE) AND, IF THE ISSUER SO REQUESTS, AN OPINION OF COUNSEL REASONABLY
ACCEPTABLE TO THE COMPANY THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE
SECURITIES ACT OR (F) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT AND, IN EACH CASE, IN ACCORDANCE WITH APPLICABLE STATE SECURITIES
LAWS, AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS NOTE OR AN
INTEREST HEREIN IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS
LEGEND. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND
"U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM BY RULE 902 OF REGULATION S UNDER
THE SECURITIES ACT. THE INDENTURE CONTAINS A PROVISION REQUIRING THE TRUSTEE TO
REFUSE TO REGISTER ANY TRANSFER OF THIS NOTE IN VIOLATION OF THE FOREGOING
RESTRICTIONS."
"THIS GLOBAL NOTE IS HELD BY THE DEPOSITORY (AS DEFINED IN THE INDENTURE
GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL
OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES
EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED
PURSUANT TO SECTION 2.07 OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE
EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE,
(III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT
TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO
A SUCCESSOR DEPOSITORY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY."
Capitalized terms used herein shall have the meanings assigned to them in the
Indenture referred to below.
1. INTEREST. Precise Technology, Inc., a Delaware corporation (the "Company"),
promises to pay interest on the principal amount of this Note at 111/8% per
annum from the Issuance Date until June 15, 2007 and shall pay the Liquidated
Damages, if any, payable pursuant to Section 5 of the Registration Rights
Agreement referred to below. The Company shall pay interest and Liquidated
Damages, if any, semi-annually in arrears on June 15 and December 15 of each
year (each an "Interest Payment Date"), or if any such day is not a Business
Day, on the next succeeding Business Day. Interest on the Notes will accrue from
the most recent date to which interest has been paid or, if no interest has been
paid, from the Issuance Date; provided that if there is no existing Default in
the payment of interest, and if this Note is authenticated between a record date
referred to on the face hereof and the next succeeding Interest Payment Date,
interest shall accrue from such next succeeding Interest Payment Date; provided,
further, that the first Interest Payment Date shall be December 15, 1997. The
Company shall pay interest (including post-petition interest in any proceeding
under any Bankruptcy Law) on overdue principal and premium, if any, from time to
time on demand at a rate equal to the per annum rate on the Notes then in
effect; it shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue installments of interest and
Liquidated Damages (without regard to any applicable grace periods) from time to
time on demand at the same rate to the extent lawful. Interest will be computed
on the basis of a 360-day year of twelve 30-day months.
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2. METHOD OF PAYMENT. The Company shall make payments in respect of Global Notes
(including principal, premium, if any, and interest and Liquidated Damages, if
any) by wire transfer of immediately available funds to the accounts specified
by the Note Custodian or, at the option of the Company, payment of interest and
Liquidated Damages, if any, may be made by check mailed to the Holders of the
Notes at their respective addresses set forth in the register of Holders of
Notes. Notwithstanding the foregoing, all payments with respect to the Notes
(the Holders of which have provided wire transfer instructions to the Company at
least ten Business Days prior to the applicable payment date), will be required
to be made by wire transfer of immediately available funds to the accounts
specified by the Holders thereof. Such payment shall be made in such coin or
currency of the United States of America as at the time of payment is legal
tender for the payment of public and private debts.
3. PAYING AGENT AND REGISTRAR. Initially, Marine Midland Bank, the Trustee under
the Indenture, will act as Paying Agent and Registrar. The Notes may be
presented for registration of transfer and exchange at the offices of the
Registrar. The Company may change any Paying Agent or Registrar without notice
to any Holder. The Company or any of its Subsidiaries may act in any such
capacity.
4. INDENTURE. The Company issued the Notes under an Indenture dated as of June
13, 1997 ("Indenture") between the Company and the Trustee. The terms of the
Notes include those stated in the Indenture and those made part of the Indenture
by reference to the Trust Indenture Act of 1939, as amended (15 U.S. Code ss.ss.
77aaa-77bbbb). The Notes are subject to all such terms, and Holders are referred
to the Indenture and such Act for a statement of such terms. The Notes are
general unsecured obligations of the Company limited to $200,000,000 in
aggregate principal amount.
5. OPTIONAL REDEMPTION.
Except as set forth in the following paragraphs, the Notes will not be
redeemable at the Company's option prior to June 15, 2002. On and after June 15,
2002, the Notes will be subject to redemption at the option of the Company, in
whole or in part, upon not less than 30 nor more than 60 days' written notice,
at the Redemption Prices (expressed as a percentage of principal amount) set
forth below, plus accrued and unpaid interest thereon, if any, to the applicable
Redemption Date, if redeemed during the twelve-month period beginning on June 15
of each of the years indicated below:
REDEMPTION
Year PRICE
-----
2002 ........................................... 105.563%
2003 ........................................... 103.708%
2004 ........................................... 101.854%
2005 and thereafter.............................. 100.000%
In addition, at any time prior to June 15, 2000, the Company may on any
one or more occasions redeem up to 33 1/3% of the aggregate principal amount of
Notes originally issued
A-1-5
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(including, for this purpose, one or more series of Notes issued under the
Indenture after the date of the Indenture) at a Redemption Price of 111.125% of
the principal amount thereof, plus accrued and unpaid interest and Liquidated
Damages, if any, thereon, to the Redemption Date, with the net cash proceeds of
one or more Public Equity Offerings; provided that at least 662/3% of the Notes
originally issued (including, for this purpose, one or more series of Notes
issued under the Indenture after the date of the Indenture) remain outstanding
immediately after the occurrence of such redemption and provided, that such
redemption occurs within 60 days of the date of the closing of each such Public
Equity Offering. The Trustee shall select the Notes to be purchased in the
manner described in the Indenture.
In addition, at any time prior to June 15, 2002, the Company may, at its
option, redeem the Notes, in whole or in part, at a Redemption Price equal to
100% of the principal amount thereof plus the applicable Make-Whole Premium.
6. MANDATORY REDEMPTION. Except as set forth in paragraph 8, the Company shall
not be required to make mandatory redemption or sinking fund payments with
respect to the Notes.
7. NOTICE OF REDEMPTION. Notice of redemption will be mailed by first class
mail, postage prepaid, at least 30 days but not more than 60 days before the
Redemption Date to each Holder of Notes to be redeemed at such Holder's
registered address. If any Note is to be redeemed in part only, any notice of
redemption that relates to such Note shall state the portion of the principal
amount thereof to be redeemed. On or after the Redemption Date, unless the
Company defaults in making the redemption payments, interest ceases to accrue on
the Notes or portions thereof called for redemption.
8. REPURCHASE AT OPTION OF HOLDERS. (a) Upon the occurrence of a Change of
Control, the Company shall make an offer (a "Change of Control Offer") to
purchase all or any part (equal to $1,000 or an integral multiple thereof) of
the Notes at a price in cash equal to 101% of the aggregate principal amount
thereof plus accrued and unpaid interest and Liquidated Damages, if any,
thereon, to the date of purchase (the "Change of Control Payment"). Prior to
complying with the provisions of Section 4.09 of the Indenture, but in any event
within 30 days following a Change of Control, the Company shall either repay in
full in cash all Indebtedness under the Credit Agreement (and terminate all
commitments thereunder) and all other Senior Debt the terms of which require
repayment upon a Change of Control or offer to repay in full in cash all
Indebtedness under the Credit Agreement (and terminate all commitments
thereunder) and all such other Senior Debt and to repay the Indebtedness owed to
(and terminate the commitments of) each lender which has accepted such offer or
obtain the requisite consents under the Credit Agreement and all such other
Senior Debt to permit the repurchase of the Notes. Within 30 days following any
Change of Control, the Company shall mail a notice to each Holder of Notes
issued under the Indenture, with a copy to the Trustee, containing the
information set forth in Section 4.09 of the Indenture. Holders of Notes that
are subject to an offer to purchase may elect to have such Notes purchased by
completing the form entitled "Option of Holder to Elect Purchase" on the reverse
side of this Note.
(b) When the aggregate amount of Excess Proceeds in connection with Asset
Sales by the Company exceeds $5.0 million, the Company shall make an offer to
all Holders of Notes (an
A-1-6
<PAGE>
"Asset Sale Offer") to purchase the maximum principal amount of Notes that may
be purchased out of the Excess Proceeds, at an offer price in cash equal to 100%
of the principal amount thereof plus accrued and unpaid interest and Liquidated
Damages, if any, thereon to the date of purchase, in accordance with the
procedures set forth in Section 3.10 of the Indenture. The Company will commence
an Asset Sale Offer with respect to Excess Proceeds within ten Business Days
after the date that Excess Proceeds exceeds $5.0 million by mailing by first
class mail the notice required pursuant to the terms Section 3.10 of the
Indenture, with a copy to the Trustee. To the extent that the aggregate amount
of Notes tendered pursuant to an Asset Sale Offer is less than the Excess
Proceeds, the Company may use any remaining Excess Proceeds for general
corporate purposes. If the aggregate principal amount of Notes surrendered by
Holders thereof exceeds the amount of Excess Proceeds, the Trustee shall select
the Notes to be purchased on a pro rata basis. Upon completion of such offer to
purchase, the amount of Excess Proceeds shall be reset at zero. Holders of Notes
that are the subject of an offer to purchase will receive an Asset Sale Offer
from the Company prior to any related purchase date and may elect to have such
Notes purchased by completing the form entitled "Option of Holder to Elect
Purchase" on the reverse side of this Note.
9. DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in registered form without
coupons in minimum denominations of $1,000 and integral multiples of $1,000 in
excess thereof (subject to a minimum initial purchase requirement of $100,000
for Notes sold to institutional investors that qualify as accredited investors
as defined in Rule 501(a)(1), (2), (3) and (7) under the Securities Act other
than in reliance on Rule 144A or Regulation S). The transfer of Notes may be
registered and Notes may be exchanged only as provided in Article 2 of the
Indenture. The Registrar and the Trustee may require a Holder, among other
things, to furnish appropriate endorsements and transfer documents (including
legal opinions) and the Company may require a Holder to pay any taxes and fees
required by law or permitted by the Indenture. The Company need not exchange or
register the transfer of any Note or portion of a Note selected for redemption,
except for the unredeemed portion of any Note being redeemed in part. Also, it
need not exchange or register the transfer of any Notes for a period of 15 days
before a selection of Notes to be redeemed or during the period between a record
date and the corresponding Interest Payment Date.
10. PERSONS DEEMED OWNERS. The registered Holder of a Note may be treated as its
owner for all purposes.
11. SUBORDINATION. Each Holder by accepting a Note agrees that the payment (by
set-off or otherwise) of principal of, premium, if any, and interest and
Liquidated Damages, if any, on the Notes (including with respect to any
repurchases of the Notes) is subordinated in right of payment, to the extent and
in the manner provided in Article 10 of the Indenture, to the prior payment in
full in cash, or at the option of the holders of Senior Debt, in Cash
Equivalents of all obligations in respect of Senior Debt, whether outstanding on
the date of the Indenture or thereafter incurred.
12. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain exceptions, the
Indenture, the Notes or any Subsidiary Guarantee may be amended or supplemented
with the consent of the Holders of at least a majority in principal amount of
the then outstanding Notes (including, without limitation, consents obtained in
connection with a purchase of, or tender offer or exchange offer for, the
Notes), and, subject to the terms of the Indenture and any applicable Subsidiary
Guarantee, any existing default or compliance with any provision of the
Indenture, the Notes or any Subsidiary
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<PAGE>
Guarantee may be waived with the consent of the Holders of a majority in
principal amount of the then outstanding Notes (including consents obtained in
connection with a tender offer or exchange offer for the Notes). Without the
consent of any Holder of a Note, the Indenture, the Notes and any Subsidiary
Guarantee may be amended or supplemented to cure any ambiguity, defect or
inconsistency, to provide for uncertificated Notes in addition to or in place of
certificated Notes, to comply with Article 5 of the Indenture, to provide for
the assumption of the Company's or any Guarantor's obligations to Holders of the
Notes, to make any change that would provide any additional rights or benefits
to the Holders of the Notes or that does not adversely affect the legal rights
under the Indenture of any such Holder, to add covenants for the benefit of the
Holders or to surrender any right or power conferred upon the Company, to comply
with the requirements of the SEC in order to effect or maintain the
qualification of the Indenture under the TIA or to add a Guarantor under the
Indenture.
13. DEFAULTS AND REMEDIES. Each of the following constitutes an "Event of
Default": (a) default in payment when due (payable at maturity, upon redemption
or otherwise), of principal of or premium, if any, on the Notes (whether or not
such payment shall be prohibited by Article 10 of the Indenture); (b) default
for 30 days or more in the payment when due of interest on, or Liquidated
Damages, if any, with respect to the Notes (whether or not such payment shall be
prohibited by Article 10 of the Indenture; (c) failure by the Company to comply
with Sections 4.09, 4.10 and 5.01 of the Indenture; (d) failure by the Company
for 30 days after receipt of written notice to comply with any of its other
agreements in the Indenture or the Notes; (e) default under any mortgage,
indenture or instrument under which there may be issued or by which there may be
secured or evidenced any Indebtedness for money borrowed by the Company or any
of its Restricted Subsidiaries (or the payment of which is guaranteed by the
Company or any of its Restricted Subsidiaries) whether such Indebtedness or
guarantee now exists, or is created after the date of the Indenture, which
default (1) is caused by the failure to pay principal of or premium, if any, or
interest on such Indebtedness prior to the expiration of the grace period
provided in such Indebtedness on the date of such default (a "Payment Default")
at its stated final maturity (after giving effect to any applicable grace
periods) or (2) results in the acceleration of such Indebtedness prior to its
express maturity and, in each case, the principal amount of any such
Indebtedness, together with the principal amount of any other such Indebtedness
under which there has been a Payment Default or the maturity of which has been
so accelerated, aggregates $5.0 million or more; (f) failure by the Company or
any of its Restricted Subsidiaries to pay final and non-appealable judgments
aggregating in excess of $5.0 million, which judgments are not paid, discharged
or stayed for a period of 60 days; (g) the Company or any Restricted Subsidiary
that is a Significant Subsidiary pursuant to or within the meaning of any
Bankruptcy Law: (i) commences a voluntary case, (ii) consents to the entry of an
order for relief against it in an involuntary case in which it is the debtor,
(iii) consents to the appointment of a Custodian of it or for all or
substantially all of its property, (iv) makes a general assignment for the
benefit of its creditors, or (v) admits in writing its inability generally to
pay its debts as the same become due; (h) a court of competent jurisdiction
enters an order or decree under any Bankruptcy Law that: (i) is for relief
against the Company or any Restricted Subsidiary that is a Significant
Subsidiary in an involuntary case in which it is the debtor, (ii) appoints a
Custodian of the Company or any Restricted Subsidiary that is a Significant
Subsidiary or for all or substantially all of the property of the Company or any
Restricted Subsidiary that is a Significant Subsidiary; or (iii) orders the
liquidation of the Company or any Restricted Subsidiary that is a Significant
Subsidiary, and the
A-1-8
<PAGE>
order or decree contemplated in clauses (i), (ii) or (iii) of this clause (h),
remains unstayed and in effect for 60 consecutive days; or (i) except as
permitted by the Indenture, any Subsidiary Guarantee shall be held in any
judicial proceeding to be unenforceable or invalid and such judgment has become
final or non-appealable or shall cease for any other reason to be in full force
and effect or any Guarantor, or any Person acting on behalf of any Guarantor
shall deny or disaffirm its obligations under its Subsidiary Guarantee.
If any Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount of the then outstanding Notes may
declare all the Notes to be due and payable immediately by notice in writing to
the Company and the Trustee; provided that so long as any Indebtedness permitted
to be incurred pursuant to the Credit Agreement shall be outstanding, such
acceleration shall not be effective until the earlier of (i) an acceleration of
any such Indebtedness under the Credit Agreement or (ii) five Business Days
after receipt by the Company and the Agent of written notice of such
acceleration. Notwithstanding the foregoing, in the case of an Event of Default
arising from certain events of bankruptcy or insolvency, with respect to the
Company, any Significant Subsidiary that is a Restricted Subsidiary or any group
of Restricted Subsidiaries that, taken together, would constitute a Significant
Subsidiary, all outstanding Notes will become due and payable without further
action or notice. Holders of the Notes may not enforce the Indenture or the
Notes except as provided in the Indenture. Subject to certain limitations,
Holders of a majority in principal amount of the then outstanding Notes may
direct the Trustee in its exercise of any trust or power. The Trustee may
withhold from Holders of the Notes notice of any continuing Default or Event of
Default (except a Default or Event of Default relating to the payment of
principal or interest) if it determines that withholding notice is in their
interest.
14. TRUSTEE DEALINGS WITH COMPANY. The Trustee, in its individual or any other
capacity, may become the owner or pledgee of Notes and may otherwise deal with
the Company with the same rights it would have if it were not the Trustee.
15. NO RECOURSE AGAINST OTHERS. A director, officer, employee or stockholder, as
such, of the Company shall not have any liability for any obligations of the
Company under these Notes or the Indenture or for any claim based on, in respect
of or by reason of such obligations or their creation. Each Holder by accepting
any of these Notes waives and releases all such liability.
16. AUTHENTICATION. This Note shall not be valid until authenticated by the
manual signature of the Trustee.
17. ABBREVIATIONS. Customary abbreviations may be used in the name of a Holder
or an assignee, such as: TEN COM (= tenants in common), TENANT (= tenants by the
entireties), JT TEN (= joint tenants with right of survivorship and not as
tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors
Act).
18. ADDITIONAL RIGHTS OF HOLDERS OF TRANSFER RESTRICTED SECURITIES. In addition
to the rights provided to Holders of the Notes under the Indenture, Holders of
Transferred Restricted Securities (as defined in the Registration Rights
Agreement) shall have all the rights set forth in the
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<PAGE>
Registration Rights Agreement, dated as of the date hereof, among the Company,
the Guarantors and the Initial Purchaser (the "Registration Rights Agreement").
19. SUBSIDIARY GUARANTEES. Payment of principal, premium, if any, and interest
(including interest on overdue principal and overdue interest, if lawful) and
Liquidated Damages, if any, is unconditionally guaranteed by certain
subsidiaries of the Company. Such guaranties are junior and subordinated to the
guaranties of such subsidiaries on the same basis as the Notes are junior and
subordinated to Senior Debt.
20. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the Committee on
Uniform Security Identification Procedures, the Company have caused CUSIP
numbers to be printed on the Notes and the Trustee may use CUSIP numbers in
notices of redemption as a convenience to Holders. No representation is made as
to the accuracy of such numbers either as printed on the Notes or as contained
in any notice of redemption and reliance may be placed only on the other
identification numbers placed thereon.
The Company shall furnish to any Holder upon written request and without
charge a copy of the Indenture and/or the Registration Rights Agreement.
Requests may be made to:
Precise Technology, Inc.
501 Mosside Boulevard
North Versailles, Pennsylvania 15137-2553
Attention: Secretary
Facsimile: (412)823-4110
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<PAGE>
ASSIGNMENT FORM
To assign this Note, fill in the form below: (I) or (we) assign and
transfer this Note to
- --------------------------------------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. no.)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint__________________________________________________ to
transfer this Note on the books of the Company. The agent may substitute another
to act for him.
- --------------------------------------------------------------------------------
Date: __________
Your Signature:___________________
(Sign exactly as your name appears on the
face of this Note)
Signature Guarantee.
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<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Company pursuant
to Section 4.09 or 4.10 of the Indenture, check the box below:
|_| Section 4.09 |_| Section 4.10
If you want to elect to have only part of the Note purchased by the
Company pursuant to Section 4.09 or Section 4.10 of the Indenture, state the
amount you elect to have purchased:
$_____________
Date: __________
Your Signature:___________________
(Sign exactly as your name appears on the
face of this Note)
Tax Identification No.:
Signature Guarantee.
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<PAGE>
SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE2
The following exchanges of a part of this Global Note for an interest in
another Global Note or for a Definitive Note, or exchanges of a part of another
Global Note or Definitive Note for an interest in this Global Note, have been
made:
Principal
Amount of Amount of Amount
decrease in increase in of this
Principal Principal Global Note Signature of
Amount Amount following such authorized officer
of this of this decrease of Trustee or
Date of Exchange Global Note Global Note (or increase) Note Custodian
- ---------------- ----------- ----------- ------------- --------------
- ---------------------
2 This should be included only if the Note is a Global Note.
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<PAGE>
EXHIBIT A-2
(Face of Regulation S Temporary Global Note)
11 1/8% Senior Subordinated Notes due 2007
No. CUSIP No:
PRECISE TECHNOLOGY, INC.
promises to pay to Cede & Co. or registered assigns, the principal sum of
_______________________________ Dollars on __________, 2007.
Interest Payment Dates: June 15 and December 15
Record Dates: June 1 and December 1
Reference is made to the further provisions of this Note contained herein, which
will for all purposes have the same effect as of set forth at this place.
Dated: __________
PRECISE TECHNOLOGY, INC.
By:______________________________
Name:
Title:
By:______________________________
Name:
Title:
This is one of the 11 1/8% Senior Subordinated
Notes due 2007 referred to in the
within-mentioned Indenture:
Marine Midland Bank,
As Trustee
By: _____________________________
Authorized Signature
A-2-1
<PAGE>
(Back of Regulation S Temporary Global Note)
11 1/8% Senior Subordinated Notes due 2007
THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL NOTE, AND THE
CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR CERTIFICATED NOTES, ARE AS
SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN). NEITHER THE HOLDER NOR THE
BENEFICIAL OWNERS OF THIS REGULATION S TEMPORARY GLOBAL NOTE SHALL BE ENTITLED
TO RECEIVE CASH PAYMENTS OF INTEREST DURING THE PERIOD WHICH SUCH HOLDER HOLDS
THIS NOTE. NOTHING IN THIS LEGEND SHALL BE DEEMED TO PREVENT INTEREST FROM
ACCRUING ON THIS NOTE.
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN DEFINITIVE
FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITORY TO A
NOMINEE OF THE DEPOSITORY OR BY A NOMINEE OF THE DEPOSITORY TO THE DEPOSITORY OR
ANOTHER NOMINEE OF THE DEPOSITORY OR BY THE DEPOSITORY OR ANY SUCH NOMINEE TO A
SUCCESSOR DEPOSITORY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITORY. UNLESS THIS
CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY (55 WATER STREET, NEW YORK, NEW YORK) ("DTC") TO THE COMPANY OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS MAY BE
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR SUCH OTHER ENTITY AS MAY BE REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
"THIS SECURITY (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY
NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED STATES
OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS, EXCEPT AS SET FORTH IN
THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST
HEREIN, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL
BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) (A "QIB"), (B) IT IS
NOT A U.S. PERSON, IS NOT ACQUIRING THIS NOTE FOR THE ACCOUNT OR BENEFIT OF A
U.S. PERSON AND IS ACQUIRING THIS NOTE IN AN OFFSHORE TRANSACTION IN COMPLIANCE
WITH REGULATION S UNDER THE SECURITIES ACT OR (C) IT IS AN INSTITUTIONAL
"ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7) OF
REGULATION D UNDER THE SECURITIES ACT) (AN "IAI"), (2) AGREES THAT IT WILL NOT,
WITHIN THE TIME PERIOD REFERRED TO UNDER RULE 144(k) (TAKING INTO
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<PAGE>
ACCOUNT THE PROVISIONS OF RULE 144(d) UNDER THE SECURITIES ACT, IF APPLICABLE)
UNDER THE SECURITIES ACT AS IN EFFECT ON THE DATE OF THE TRANSFER OF THIS NOTE,
RESELL OR OTHERWISE TRANSFER THIS NOTE EXCEPT (A) TO THE COMPANY OR ANY
SUBSIDIARY THEREOF, (B) TO A PERSON WHOM THE HOLDER REASONABLY BELIEVES IS A QIB
PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QIB IN COMPLIANCE WITH
RULE 144A UNDER THE SECURITIES ACT, (C) OUTSIDE THE UNITED STATES IN AN OFFSHORE
TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (D) PURSUANT
TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT
(IF AVAILABLE), (E) TO AN IAI THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO THE
TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS
RELATING TO THE REGISTRATION OF TRANSFER OF THIS NOTE (THE FORM OF WHICH LETTER
CAN BE OBTAINED FROM THE TRUSTEE) AND, IF THE ISSUER SO REQUESTS, AN OPINION OF
COUNSEL REASONABLY ACCEPTABLE TO THE COMPANY THAT SUCH TRANSFER IS IN COMPLIANCE
WITH THE SECURITIES ACT OR (F) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT AND, IN EACH CASE, IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS, AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS
NOTE OR AN INTEREST HEREIN IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT
OF THIS LEGEND. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED
STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM BY RULE 902 OF
REGULATION S UNDER THE SECURITIES ACT. THE INDENTURE CONTAINS A PROVISION
REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS NOTE IN
VIOLATION OF THE FOREGOING RESTRICTIONS."
Capitalized terms used herein shall have the meanings assigned to them in the
Indenture referred to below.
1. INTEREST. Precise Technology, Inc., a Delaware corporation (the "Company"),
promises to pay interest on the principal amount of this Note at 111/8% per
annum from the Issuance Date until June 15, 2007 and shall pay the Liquidated
Damages, if any, payable pursuant to Section 5 of the Registration Rights
Agreement referred to below. The Company shall pay interest and Liquidated
Damages, if any, semi-annually in arrears on June 15 and December 15 of each
year (each an "Interest Payment Date"), or if any such day is not a Business
Day, on the next succeeding Business Day. Interest on the Notes will accrue from
the most recent date to which interest has been paid or, if no interest has been
paid, from the Issuance Date; provided that if there is no existing Default in
the payment of interest, and if this Note is authenticated between a record date
referred to on the face hereof and the next succeeding Interest Payment Date,
interest shall accrue from such next succeeding Interest Payment Date; provided,
further, that the first Interest Payment Date shall be December 15, 1997. The
Company shall pay interest (including post-petition interest in any proceeding
under any Bankruptcy Law) on overdue principal and premium, if any, from time to
time on demand at a rate equal to the per annum rate on the Notes then in
effect; it shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue installments of interest and
Liquidated Damages (without regard to any applicable grace periods) from time to
time on demand at the same rate to the extent lawful. Interest will be computed
on the basis of a 360-day year of twelve 30-day months.
A-2-3
<PAGE>
2. METHOD OF PAYMENT. The Company shall make payments in respect of Global Notes
(including principal, premium, if any, and interest and Liquidated Damages, if
any) by wire transfer of immediately available funds to the accounts specified
by the Note Custodian or, at the option of the Company, payment of interest and
Liquidated Damages, if any, may be made by check mailed to the Holders of the
Notes at their respective addresses set forth in the register of Holders of
Notes. Notwithstanding the foregoing, all payments with respect to the Notes
(the Holders of which have provided wire transfer instructions to the Company at
least ten Business Days prior to the applicable payment date), will be required
to be made by wire transfer of immediately available funds to the accounts
specified by the Holders thereof. Such payment shall be made in such coin or
currency of the United States of America as at the time of payment is legal
tender for the payment of public and private debts.
3. PAYING AGENT AND REGISTRAR. Initially, Marine Midland Bank, the Trustee under
the Indenture, will act as Paying Agent and Registrar. The Notes may be
presented for registration of transfer and exchange at the offices of the
Registrar. The Company may change any Paying Agent or Registrar without notice
to any Holder. The Company or any of its Subsidiaries may act in any such
capacity.
4. INDENTURE. The Company issued the Notes under an Indenture dated as of June
13, 1997 ("Indenture") between the Company and the Trustee. The terms of the
Notes include those stated in the Indenture and those made part of the Indenture
by reference to the Trust Indenture Act of 1939, as amended (15 U.S. Code ss.ss.
77aaa-77bbbb). The Notes are subject to all such terms, and Holders are referred
to the Indenture and such Act for a statement of such terms. The Notes are
general unsecured obligations of the Company limited to $200,000,000 in
aggregate principal amount.
5. OPTIONAL REDEMPTION.
Except as set forth in the following paragraphs, the Notes will not be
redeemable at the Company's option prior to June 15, 2002. On and after June 15,
2002, the Notes will be subject to redemption at the option of the Company, in
whole or in part, upon not less than 30 nor more than 60 days' written notice,
at the Redemption Prices (expressed as a percentage of principal amount) set
forth below, plus accrued and unpaid interest thereon, if any, to the applicable
Redemption Date, if redeemed during the twelve-month period beginning on June 15
of each of the years indicated below:
Year REDEMPTION
PRICE
-----
2002 .................................... 105.563%
2003 .................................... 103.708%
2004 .................................... 101.854%
2005 and thereafter............................... 100.000%
In addition, at any time prior to June 15, 2000, the Company may on any
one or more occasions redeem up to 331/3% of the aggregate principal amount of
Notes originally issued (including, for this purpose, one or more series of
Notes issued under the Indenture after the date of the Indenture) at a
Redemption Price of 111.125% of the principal amount thereof, plus accrued and
unpaid interest and Liquidated Damages, if any, thereon, to the Redemption Date,
with the net cash proceeds of one or more Public Equity Offerings; provided that
at least 66 2/3%
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<PAGE>
of the Notes originally issued (including, for this purpose, one or more series
of Notes issued under the Indenture after the date of the Indenture) remain
outstanding immediately after the occurrence of such redemption and provided,
that such redemption occurs within 60 days of the date of the closing of each
such Public Equity Offering. The Trustee shall select the Notes to be purchased
in the manner described in the Indenture.
In addition, at any time prior to June 15, 2002, the Company may, at its
option, redeem the Notes, in whole or in part, at a Redemption Price equal to
100% of the principal amount thereof plus the applicable Make-Whole Premium.
6. MANDATORY REDEMPTION. Except as set forth in paragraph 8, the Company shall
not be required to make mandatory redemption or sinking fund payments with
respect to the Notes.
7. NOTICE OF REDEMPTION. Notice of redemption will be mailed by first class
mail, postage prepaid, at least 30 days but not more than 60 days before the
Redemption Date to each Holder of Notes to be redeemed at such Holder's
registered address. If any Note is to be redeemed in part only, any notice of
redemption that relates to such Note shall state the portion of the principal
amount thereof to be redeemed. On or after the Redemption Date, unless the
Company defaults in making the redemption payments, interest ceases to accrue on
the Notes or portions thereof called for redemption.
8. REPURCHASE AT OPTION OF HOLDERS. (a) Upon the occurrence of a Change of
Control, the Company shall make an offer (a "Change of Control Offer") to
purchase all or any part (equal to $1,000 or an integral multiple thereof) of
the Notes at a price in cash equal to 101% of the aggregate principal amount
thereof plus accrued and unpaid interest and Liquidated Damages, if any,
thereon, to the date of purchase (the "Change of Control Payment"). Prior to
complying with the provisions of Section 4.09 of the Indenture, but in any event
within 30 days following a Change of Control, the Company shall either repay in
full in cash all Indebtedness under the Credit Agreement (and terminate all
commitments thereunder) and all other Senior Debt the terms of which require
repayment upon a Change of Control or offer to repay in full in cash all
Indebtedness under the Credit Agreement (and terminate all commitments
thereunder) and all such other Senior Debt and to repay the Indebtedness owed to
(and terminate the commitments of) each lender which has accepted such offer or
obtain the requisite consents under the Credit Agreement and all such other
Senior Debt to permit the repurchase of the Notes. Within 30 days following any
Change of Control, the Company shall mail a notice to each Holder of Notes
issued under the Indenture, with a copy to the Trustee, containing the
information set forth in Section 4.09 of the Indenture. Holders of Notes that
are subject to an offer to purchase may elect to have such Notes purchased by
completing the form entitled "Option of Holder to Elect Purchase" on the reverse
side of this Note.
(b) When the aggregate amount of Excess Proceeds in connection with Asset
Sales by the Company exceeds $5.0 million, the Company shall make an offer to
all Holders of Notes (an "Asset Sale Offer") to purchase the maximum principal
amount of Notes that may be purchased out of the Excess Proceeds, at an offer
price in cash equal to 100% of the principal amount thereof plus accrued and
unpaid interest and Liquidated Damages, if any, thereon to the date of purchase,
in accordance with the procedures set forth in Section 3.10 of the Indenture.
The Company will commence an Asset Sale Offer with respect to Excess Proceeds
within ten Business Days after the date that Excess Proceeds exceeds $5.0
million by mailing by first class mail the notice required pursuant to the terms
Section 3.10 of the Indenture, with a copy to the Trustee. To the extent that
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<PAGE>
the aggregate amount of Notes tendered pursuant to an Asset Sale Offer is less
than the Excess Proceeds, the Company may use any remaining Excess Proceeds for
general corporate purposes. If the aggregate principal amount of Notes
surrendered by Holders thereof exceeds the amount of Excess Proceeds, the
Trustee shall select the Notes to be purchased on a pro rata basis. Upon
completion of such offer to purchase, the amount of Excess Proceeds shall be
reset at zero. Holders of Notes that are the subject of an offer to purchase
will receive an Asset Sale Offer from the Company prior to any related purchase
date and may elect to have such Notes purchased by completing the form entitled
"Option of Holder to Elect Purchase" on the reverse side of this Note.
9. DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in registered form without
coupons in minimum denominations of $1,000 and integral multiples of $1,000 in
excess thereof (subject to a minimum initial purchase requirement of $100,000
for Notes sold to institutional investors that qualify as accredited investors
as defined in Rule 501(a)(1), (2), (3) and (7) under the Securities Act other
than in reliance on Rule 144A or Regulation S). The transfer of Notes may be
registered and Notes may be exchanged only as provided in Article 2 of the
Indenture. The Registrar and the Trustee may require a Holder, among other
things, to furnish appropriate endorsements and transfer documents (including
legal opinions) and the Company may require a Holder to pay any taxes and fees
required by law or permitted by the Indenture. The Company need not exchange or
register the transfer of any Note or portion of a Note selected for redemption,
except for the unredeemed portion of any Note being redeemed in part. Also, it
need not exchange or register the transfer of any Notes for a period of 15 days
before a selection of Notes to be redeemed or during the period between a record
date and the corresponding Interest Payment Date.
10. PERSONS DEEMED OWNERS. The registered Holder of a Note may be treated as its
owner for all purposes.
11. SUBORDINATION. Each Holder by accepting a Note agrees that the payment (by
set-off or otherwise) of principal of, premium, if any, and interest and
Liquidated Damages, if any, on the Notes (including with respect to any
repurchases of the Notes) is subordinated in right of payment, to the extent and
in the manner provided in Article 10 of the Indenture, to the prior payment in
full in cash, or at the option of the holders of Senior Debt, in Cash
Equivalents of all obligations in respect of Senior Debt, whether outstanding on
the date of the Indenture or thereafter incurred.
12. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain exceptions, the
Indenture, the Notes or any Subsidiary Guarantee may be amended or supplemented
with the consent of the Holders of at least a majority in principal amount of
the then outstanding Notes (including, without limitation, consents obtained in
connection with a purchase of, or tender offer or exchange offer for, the
Notes), and, subject to the terms of the Indenture and any applicable Subsidiary
Guarantee, any existing default or compliance with any provision of the
Indenture, the Notes or any Subsidiary Guarantee may be waived with the consent
of the Holders of a majority in principal amount of the then outstanding Notes
(including consents obtained in connection with a tender offer or exchange offer
for the Notes). Without the consent of any Holder of a Note, the Indenture, the
Notes and any Subsidiary Guarantee may be amended or supplemented to cure any
ambiguity, defect or inconsistency, to provide for uncertificated Notes in
addition to or in place of certificated Notes, to comply with Article 5 of the
Indenture, to provide for the assumption of the Company's or any Guarantor's
obligations to Holders of the Notes, to make any change that would provide any
additional rights or benefits to the Holders of the Notes or that does not
adversely affect the legal rights under the Indenture of any such Holder, to add
covenants for the benefit of the Holders or to surrender any right or power
conferred upon the Company, to comply with the requirements
A-2-6
<PAGE>
of the SEC in order to effect or maintain the qualification of the Indenture
under the TIA or to add a Guarantor under the Indenture.
13. DEFAULTS AND REMEDIES. Each of the following constitutes an "Event of
Default": (a) default in payment when due (payable at maturity, upon redemption
or otherwise), of principal of or premium, if any, on the Notes (whether or not
such payment shall be prohibited by Article 10 of the Indenture); (b) default
for 30 days or more in the payment when due of interest on, or Liquidated
Damages, if any, with respect to the Notes (whether or not such payment shall be
prohibited by Article 10 of the Indenture; (c) failure by the Company to comply
with Sections 4.09, 4.10 and 5.01 of the Indenture; (d) failure by the Company
for 30 days after receipt of written notice to comply with any of its other
agreements in the Indenture or the Notes; (e) default under any mortgage,
indenture or instrument under which there may be issued or by which there may be
secured or evidenced any Indebtedness for money borrowed by the Company or any
of its Restricted Subsidiaries (or the payment of which is guaranteed by the
Company or any of its Restricted Subsidiaries) whether such Indebtedness or
guarantee now exists, or is created after the date of the Indenture, which
default (1) is caused by the failure to pay principal of or premium, if any, or
interest on such Indebtedness prior to the expiration of the grace period
provided in such Indebtedness on the date of such default (a "Payment Default")
at its stated final maturity (after giving effect to any applicable grace
periods) or (2) results in the acceleration of such Indebtedness prior to its
express maturity and, in each case, the principal amount of any such
Indebtedness, together with the principal amount of any other such Indebtedness
under which there has been a Payment Default or the maturity of which has been
so accelerated, aggregates $5.0 million or more; (f) failure by the Company or
any of its Restricted Subsidiaries to pay final and non-appealable judgments
aggregating in excess of $5.0 million, which judgments are not paid, discharged
or stayed for a period of 60 days; (g) the Company or any Restricted Subsidiary
that is a Significant Subsidiary pursuant to or within the meaning of any
Bankruptcy Law: (i) commences a voluntary case, (ii) consents to the entry of an
order for relief against it in an involuntary case in which it is the debtor,
(iii) consents to the appointment of a Custodian of it or for all or
substantially all of its property, (iv) makes a general assignment for the
benefit of its creditors, or (v) admits in writing its inability generally to
pay its debts as the same become due; (h) a court of competent jurisdiction
enters an order or decree under any Bankruptcy Law that: (i) is for relief
against the Company or any Restricted Subsidiary that is a Significant
Subsidiary in an involuntary case in which it is the debtor, (ii) appoints a
Custodian of the Company or any Restricted Subsidiary that is a Significant
Subsidiary or for all or substantially all of the property of the Company or any
Restricted Subsidiary that is a Significant Subsidiary; or (iii) orders the
liquidation of the Company or any Restricted Subsidiary that is a Significant
Subsidiary, and the order or decree contemplated in clauses (i), (ii) or (iii)
of this clause (h), remains unstayed and in effect for 60 consecutive days; or
(i) except as permitted by the Indenture, any Subsidiary Guarantee shall be held
in any judicial proceeding to be unenforceable or invalid and such judgment has
become final or non-appealable or shall cease for any other reason to be in full
force and effect or any Guarantor, or any Person acting on behalf of any
Guarantor shall deny or disaffirm its obligations under its Subsidiary
Guarantee.
If any Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount of the then outstanding Notes may
declare all the Notes to be due and payable immediately by notice in writing to
the Company and the Trustee; provided that so long as any Indebtedness permitted
to be incurred pursuant to the Credit Agreement shall be outstanding, such
acceleration shall not be effective until the earlier of (i) an acceleration of
any such Indebtedness under the Credit Agreement or (ii) five Business Days
after receipt by the Company and the Agent
A-2-7
<PAGE>
of written notice of such acceleration. Notwithstanding the foregoing, in the
case of an Event of Default arising from certain events of bankruptcy or
insolvency, with respect to the Company, any Significant Subsidiary that is a
Restricted Subsidiary or any group of Restricted Subsidiaries that, taken
together, would constitute a Significant Subsidiary, all outstanding Notes will
become due and payable without further action or notice. Holders of the Notes
may not enforce the Indenture or the Notes except as provided in the Indenture.
Subject to certain limitations, Holders of a majority in principal amount of the
then outstanding Notes may direct the Trustee in its exercise of any trust or
power. The Trustee may withhold from Holders of the Notes notice of any
continuing Default or Event of Default (except a Default or Event of Default
relating to the payment of principal or interest) if it determines that
withholding notice is in their interest.
14. TRUSTEE DEALINGS WITH COMPANY. The Trustee, in its individual or any other
capacity, may become the owner or pledgee of Notes and may otherwise deal with
the Company with the same rights it would have if it were not the Trustee.
15. NO RECOURSE AGAINST OTHERS. A director, officer, employee or stockholder, as
such, of the Company shall not have any liability for any obligations of the
Company under these Notes or the Indenture or for any claim based on, in respect
of or by reason of such obligations or their creation. Each Holder by accepting
any of these Notes waives and releases all such liability.
16. AUTHENTICATION. This Note shall not be valid until authenticated by the
manual signature of the Trustee.
17. ABBREVIATIONS. Customary abbreviations may be used in the name of a Holder
or an assignee, such as: TEN COM (= tenants in common), TENANT (= tenants by the
entireties), JT TEN (= joint tenants with right of survivorship and not as
tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors
Act).
18. ADDITIONAL RIGHTS OF HOLDERS OF TRANSFER RESTRICTED SECURITIES. In addition
to the rights provided to Holders of the Notes under the Indenture, Holders of
Transferred Restricted Securities (as defined in the Registration Rights
Agreement) shall have all the rights set forth in the Registration Rights
Agreement, dated as of the date hereof, among the Company, the Guarantors and
the Initial Purchaser (the "Registration Rights Agreement").
19. SUBSIDIARY GUARANTEES. Payment of principal, premium, if any, and interest
(including interest on overdue principal and overdue interest, if lawful) and
Liquidated Damages, if any, is unconditionally guaranteed by certain
subsidiaries of the Company. Such guaranties are junior and subordinated to the
guaranties of such subsidiaries on the same basis as the Notes are junior and
subordinated to Senior Debt.
20. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the Committee on
Uniform Security Identification Procedures, the Company have caused CUSIP
numbers to be printed on the Notes and the Trustee may use CUSIP numbers in
notices of redemption as a convenience to Holders. No representation is made as
to the accuracy of such numbers either as printed on the Notes or as contained
in any notice of redemption and reliance may be placed only on the other
identification numbers placed thereon.
The Company shall furnish to any Holder upon written request and without
charge a copy of the Indenture and/or the Registration Rights Agreement.
Requests may be made to:
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<PAGE>
Precise Technology, Inc.
501 Mosside Boulevard
North Versailles, Pennsylvania 15137-2553
Attention: Secretary
Facsimile: (412) 823-4110
A-2-9
<PAGE>
ASSIGNMENT FORM
To assign this Note, fill in the form below: (I) or (we) assign and
transfer this Note to
- --------------------------------------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. no.)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint__________________________________________________ to
transfer this Note on the books of the Company. The agent may substitute another
to act for him.
- --------------------------------------------------------------------------------
Date: __________
Your Signature:___________________
(Sign exactly as your name appears on the
face of this Note)
Signature Guarantee.
A-2-10
<PAGE>
SCHEDULE OF EXCHANGES OF REGULATION S TEMPORARY GLOBAL NOTE
The following exchanges of a part of this Regulation S Temporary Global Note for
an interest in another Global Note, or of other Restricted Global Notes for an
interest in this Regulation S Temporary Global Note, have been made:
Principal
Amount of Amount of Amount
decrease in increase in of this
Principal Principal Global Note Signature of
Amount Amount following such authorized officer
of this of this decrease of Trustee or
Date of Exchange Global Note Global Note (or increase) Note Custodian
- ---------------- ----------- ----------- ------------- --------------
A-2-11
<PAGE>
EXHIBIT A-3
(Face of Unrestricted Note)
111/8% Senior Subordinated Notes due 2007
No. CUSIP No.
PRECISE TECHNOLOGY, INC.
promises to pay to Cede & Co. or registered assigns, the principal sum of
_______________________________ Dollars on __________, 2007.
Interest Payment Dates: June 15 and December 15
Record Dates: June 1 and December 1
Reference is made for the further provisions of this Note contained herein,
which will for all purposes have the same effect as if set forth at this place.
Dated: ____________
PRECISE TECHNOLOGY, INC.
By:______________________________
Name:
Title:
By:______________________________
Name:
Title:
This is one of the 11 1/8% Senior Subordinated
Notes due 2007 referred to in the
within-mentioned Indenture:
Marine Midland Bank,
as Trustee
By: _____________________________
Authorized Signature
A-3-1
<PAGE>
(Back of Unrestricted Note)
11 1/8% Senior Subordinated Notes due 2007
[Unless and until it is exchanged in whole or in part for Notes in definitive
form, this Note may not be transferred except as a whole by the Depository to a
nominee of the Depository or by a nominee of the Depository to the Depository or
another nominee of the Depository or by the Depository or any such nominee to a
successor Depository or a nominee of such successor Depository. Unless this
certificate is presented by an authorized representative of The Depository Trust
Company (55 Water Street, New York, New York) ("DTC") to the issuer or its agent
for registration of transfer, exchange or payment, and any certificate issued is
registered in the name of Cede & Co. or such other name as may be requested by
an authorized representative of DTC (and any payment is made to Cede & Co. or
such other entity as may be requested by an authorized representative of DTC),
ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY
PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an
interest herein.]1
"THIS GLOBAL NOTE IS HELD BY THE DEPOSITORY (AS DEFINED IN THE INDENTURE
GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL
OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES
EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED
PURSUANT TO SECTION 2.07 OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE
EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE,
(III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT
TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO
A SUCCESSOR DEPOSITORY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY."
Capitalized terms used herein shall have the meanings assigned to them in the
Indenture referred to below.
1. INTEREST. Precise Technology, Inc., a Delaware corporation (the "Company"),
promises to pay interest on the principal amount of this Note at 111/8% per
annum from the Issuance Date until June 15, 2007 and shall pay the Liquidated
Damages, if any, payable pursuant to Section 5 of the Registration Rights
Agreement referred to below. The Company shall pay interest and Liquidated
Damages, if any, semi-annually in arrears on June 15 and December 15 of each
year (each an "Interest Payment Date"), or if any such day is not a Business
Day, on the next succeeding Business Day. Interest on the Notes will accrue from
the most recent date to which interest has been paid or, if no interest has been
paid, from the Issuance Date; provided that if there is no existing Default in
the payment of interest, and if this Note is authenticated between a record date
referred to on the face hereof and the next succeeding Interest Payment Date,
interest shall accrue from such next succeeding Interest Payment Date; provided,
further, that the first Interest Payment Date shall be December 15, 1997. The
Company shall pay interest (including post-petition interest in any proceeding
under any Bankruptcy Law) on overdue principal and premium, if any, from time to
time on demand at a rate equal to the per annum rate on the Notes then in
effect; it shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on
- --------------------
1. This paragraph should be included only if the Note is a Global Note.
A-3-2
<PAGE>
overdue installments of interest and Liquidated Damages (without regard to any
applicable grace periods) from time to time on demand at the same rate to the
extent lawful. Interest will be computed on the basis of a 360-day year of
twelve 30-day months.
2. METHOD OF PAYMENT. The Company shall make payments in respect of Global Notes
(including principal, premium, if any, and interest and Liquidated Damages, if
any) by wire transfer of immediately available funds to the accounts specified
by the Note Custodian or, at the option of the Company, payment of interest and
Liquidated Damages, if any, may be made by check mailed to the Holders of the
Notes at their respective addresses set forth in the register of Holders of
Notes. Notwithstanding the foregoing, all payments with respect to the Notes
(the Holders of which have provided wire transfer instructions to the Company at
least ten Business Days prior to the applicable payment date), will be required
to be made by wire transfer of immediately available funds to the accounts
specified by the Holders thereof. Such payment shall be made in such coin or
currency of the United States of America as at the time of payment is legal
tender for the payment of public and private debts.
3. PAYING AGENT AND REGISTRAR. Initially, Marine Midland Bank, the Trustee under
the Indenture, will act as Paying Agent and Registrar. The Notes may be
presented for registration of transfer and exchange at the offices of the
Registrar. The Company may change any Paying Agent or Registrar without notice
to any Holder. The Company or any of its Subsidiaries may act in any such
capacity.
4. INDENTURE. The Company issued the Notes under an Indenture dated as of June
13, 1997 ("Indenture") between the Company and the Trustee. The terms of the
Notes include those stated in the Indenture and those made part of the Indenture
by reference to the Trust Indenture Act of 1939, as amended (15 U.S. Code ss.ss.
77aaa-77bbbb). The Notes are subject to all such terms, and Holders are referred
to the Indenture and such Act for a statement of such terms. The Notes are
general unsecured obligations of the Company limited to $200,000,000 in
aggregate principal amount.
5. OPTIONAL REDEMPTION.
Except as set forth in the following paragraphs, the Notes will not be
redeemable at the Company's option prior to June 15, 2002. On and after June 15,
2002, the Notes will be subject to redemption at the option of the Company, in
whole or in part, upon not less than 30 nor more than 60 days' written notice,
at the Redemption Prices (expressed as a percentage of principal amount) set
forth below, plus accrued and unpaid interest thereon, if any, to the applicable
Redemption Date, if redeemed during the twelve-month period beginning on June 15
of each of the years indicated below:
Year REDEMPTION
PRICE
2002 .................................... 105.563%
2003 .................................... 103.708%
2004 .................................... 101.854%
2005 and thereafter............................... 100.000%
In addition, at any time prior to June 15, 2000, the Company may on any
one or more occasions redeem up to 331/3% of the aggregate principal amount of
Notes originally issued (including, for this purpose, one or more series of
Notes issued under the Indenture after
A-3-3
<PAGE>
the date of the Indenture) at a Redemption Price of 111.125% of the principal
amount thereof, plus accrued and unpaid interest and Liquidated Damages, if any,
thereon, to the Redemption Date, with the net cash proceeds of one or more
Public Equity Offerings; provided that at least 662/3% of the Notes originally
issued (including, for this purpose, one or more series of Notes issued under
the Indenture after the date of the Indenture) remain outstanding immediately
after the occurrence of such redemption and provided, that such redemption
occurs within 60 days of the date of the closing of each such Public Equity
Offering. The Trustee shall select the Notes to be purchased in the manner
described in the Indenture.
In addition, at any time prior to June 15, 2002, the Company may, at its
option, redeem the Notes, in whole or in part, at a Redemption Price equal to
100% of the principal amount thereof plus the applicable Make-Whole Premium.
6. MANDATORY REDEMPTION. Except as set forth in paragraph 8, the Company shall
not be required to make mandatory redemption or sinking fund payments with
respect to the Notes.
7. NOTICE OF REDEMPTION. Notice of redemption will be mailed by first class
mail, postage prepaid, at least 30 days but not more than 60 days before the
Redemption Date to each Holder of Notes to be redeemed at such Holder's
registered address. If any Note is to be redeemed in part only, any notice of
redemption that relates to such Note shall state the portion of the principal
amount thereof to be redeemed. On or after the Redemption Date, unless the
Company defaults in making the redemption payments, interest ceases to accrue on
the Notes or portions thereof called for redemption.
8. REPURCHASE AT OPTION OF HOLDERS. (a) Upon the occurrence of a Change of
Control, the Company shall make an offer (a "Change of Control Offer") to
purchase all or any part (equal to $1,000 or an integral multiple thereof) of
the Notes at a price in cash equal to 101% of the aggregate principal amount
thereof plus accrued and unpaid interest and Liquidated Damages, if any,
thereon, to the date of purchase (the "Change of Control Payment"). Prior to
complying with the provisions of Section 4.09 of the Indenture, but in any event
within 30 days following a Change of Control, the Company shall either repay in
full in cash all Indebtedness under the Credit Agreement (and terminate all
commitments thereunder) and all other Senior Debt the terms of which require
repayment upon a Change of Control or offer to repay in full in cash all
Indebtedness under the Credit Agreement (and terminate all commitments
thereunder) and all such other Senior Debt and to repay the Indebtedness owed to
(and terminate the commitments of) each lender which has accepted such offer or
obtain the requisite consents under the Credit Agreement and all such other
Senior Debt to permit the repurchase of the Notes. Within 30 days following any
Change of Control, the Company shall mail a notice to each Holder of Notes
issued under the Indenture, with a copy to the Trustee, containing the
information set forth in Section 4.09 of the Indenture. Holders of Notes that
are subject to an offer to purchase may elect to have such Notes purchased by
completing the form entitled "Option of Holder to Elect Purchase" on the reverse
side of this Note.
(b) When the aggregate amount of Excess Proceeds in connection with Asset
Sales by the Company exceeds $5.0 million, the Company shall make an offer to
all Holders of Notes (an "Asset Sale Offer") to purchase the maximum principal
amount of Notes that may be purchased out of the Excess Proceeds, at an offer
price in cash equal to 100% of the principal amount thereof plus accrued and
unpaid interest and Liquidated Damages, if any, thereon to the date of purchase,
in accordance with the procedures set forth in Section 3.10 of the Indenture.
The Company will
A-3-4
<PAGE>
commence an Asset Sale Offer with respect to Excess Proceeds within ten Business
Days after the date that Excess Proceeds exceeds $5.0 million by mailing by
first class mail the notice required pursuant to the terms Section 3.10 of the
Indenture, with a copy to the Trustee. To the extent that the aggregate amount
of Notes tendered pursuant to an Asset Sale Offer is less than the Excess
Proceeds, the Company may use any remaining Excess Proceeds for general
corporate purposes. If the aggregate principal amount of Notes surrendered by
Holders thereof exceeds the amount of Excess Proceeds, the Trustee shall select
the Notes to be purchased on a pro rata basis. Upon completion of such offer to
purchase, the amount of Excess Proceeds shall be reset at zero. Holders of Notes
that are the subject of an offer to purchase will receive an Asset Sale Offer
from the Company prior to any related purchase date and may elect to have such
Notes purchased by completing the form entitled "Option of Holder to Elect
Purchase" on the reverse side of this Note.
9. DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in registered form without
coupons in minimum denominations of $1,000 and integral multiples of $1,000 in
excess thereof (subject to a minimum initial purchase requirement of $100,000
for Notes sold to institutional investors that qualify as accredited investors
as defined in Rule 501(a)(1), (2), (3) and (7) under the Securities Act other
than in reliance on Rule 144A or Regulation S). The transfer of Notes may be
registered and Notes may be exchanged only as provided in Article 2 of the
Indenture. The Registrar and the Trustee may require a Holder, among other
things, to furnish appropriate endorsements and transfer documents (including
legal opinions) and the Company may require a Holder to pay any taxes and fees
required by law or permitted by the Indenture. The Company need not exchange or
register the transfer of any Note or portion of a Note selected for redemption,
except for the unredeemed portion of any Note being redeemed in part. Also, it
need not exchange or register the transfer of any Notes for a period of 15 days
before a selection of Notes to be redeemed or during the period between a record
date and the corresponding Interest Payment Date.
10. PERSONS DEEMED OWNERS. The registered Holder of a Note may be treated as its
owner for all purposes.
11. SUBORDINATION. Each Holder by accepting a Note agrees that the payment (by
set-off or otherwise) of principal of, premium, if any, and interest and
Liquidated Damages, if any, on the Notes (including with respect to any
repurchases of the Notes) is subordinated in right of payment, to the extent and
in the manner provided in Article 10 of the Indenture, to the prior payment in
full in cash, or at the option of the holders of Senior Debt, in Cash
Equivalents of all obligations in respect of Senior Debt, whether outstanding on
the date of the Indenture or thereafter incurred.
12. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain exceptions, the
Indenture, the Notes or any Subsidiary Guarantee may be amended or supplemented
with the consent of the Holders of at least a majority in principal amount of
the then outstanding Notes (including, without limitation, consents obtained in
connection with a purchase of, or tender offer or exchange offer for, the
Notes), and, subject to the terms of the Indenture and any applicable Subsidiary
Guarantee, any existing default or compliance with any provision of the
Indenture, the Notes or any Subsidiary Guarantee may be waived with the consent
of the Holders of a majority in principal amount of the then outstanding Notes
(including consents obtained in connection with a tender offer or exchange offer
for the Notes). Without the consent of any Holder of a Note, the Indenture, the
Notes and any Subsidiary Guarantee may be amended or supplemented to cure any
ambiguity, defect or inconsistency, to provide for uncertificated Notes in
addition to or in place of certificated Notes, to comply with Article 5 of the
Indenture, to provide for the assumption of the Company's or any Guarantor's
obligations to Holders of the Notes, to make any change that would provide any
additional rights or benefits to the Holders of the Notes or that does not
adversely affect the legal
A-3-5
<PAGE>
rights under the Indenture of any such Holder, to add covenants for the benefit
of the Holders or to surrender any right or power conferred upon the Company, to
comply with the requirements of the SEC in order to effect or maintain the
qualification of the Indenture under the TIA or to add a Guarantor under the
Indenture.
13. DEFAULTS AND REMEDIES. Each of the following constitutes an "Event of
Default": (a) default in payment when due (payable at maturity, upon redemption
or otherwise), of principal of or premium, if any, on the Notes (whether or not
such payment shall be prohibited by Article 10 of the Indenture); (b) default
for 30 days or more in the payment when due of interest on, or Liquidated
Damages, if any, with respect to the Notes (whether or not such payment shall be
prohibited by Article 10 of the Indenture; (c) failure by the Company to comply
with Sections 4.09, 4.10 and 5.01 of the Indenture; (d) failure by the Company
for 30 days after receipt of written notice to comply with any of its other
agreements in the Indenture or the Notes; (e) default under any mortgage,
indenture or instrument under which there may be issued or by which there may be
secured or evidenced any Indebtedness for money borrowed by the Company or any
of its Restricted Subsidiaries (or the payment of which is guaranteed by the
Company or any of its Restricted Subsidiaries) whether such Indebtedness or
guarantee now exists, or is created after the date of the Indenture, which
default (1) is caused by the failure to pay principal of or premium, if any, or
interest on such Indebtedness prior to the expiration of the grace period
provided in such Indebtedness on the date of such default (a "Payment Default")
at its stated final maturity (after giving effect to any applicable grace
periods) or (2) results in the acceleration of such Indebtedness prior to its
express maturity and, in each case, the principal amount of any such
Indebtedness, together with the principal amount of any other such Indebtedness
under which there has been a Payment Default or the maturity of which has been
so accelerated, aggregates $5.0 million or more; (f) failure by the Company or
any of its Restricted Subsidiaries to pay final and non-appealable judgments
aggregating in excess of $5.0 million, which judgments are not paid, discharged
or stayed for a period of 60 days; (g) the Company or any Restricted Subsidiary
that is a Significant Subsidiary pursuant to or within the meaning of any
Bankruptcy Law: (i) commences a voluntary case, (ii) consents to the entry of an
order for relief against it in an involuntary case in which it is the debtor,
(iii) consents to the appointment of a Custodian of it or for all or
substantially all of its property, (iv) makes a general assignment for the
benefit of its creditors, or (v) admits in writing its inability generally to
pay its debts as the same become due; (h) a court of competent jurisdiction
enters an order or decree under any Bankruptcy Law that: (i) is for relief
against the Company or any Restricted Subsidiary that is a Significant
Subsidiary in an involuntary case in which it is the debtor, (ii) appoints a
Custodian of the Company or any Restricted Subsidiary that is a Significant
Subsidiary or for all or substantially all of the property of the Company or any
Restricted Subsidiary that is a Significant Subsidiary; or (iii) orders the
liquidation of the Company or any Restricted Subsidiary that is a Significant
Subsidiary, and the order or decree contemplated in clauses (i), (ii) or (iii)
of this clause (h), remains unstayed and in effect for 60 consecutive days; or
(i) except as permitted by the Indenture, any Subsidiary Guarantee shall be held
in any judicial proceeding to be unenforceable or invalid and such judgment has
become final or non-appealable or shall cease for any other reason to be in full
force and effect or any Guarantor, or any Person acting on behalf of any
Guarantor shall deny or disaffirm its obligations under its Subsidiary
Guarantee.
If any Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount of the then outstanding Notes may
declare all the Notes to be due and payable immediately by notice in writing to
the Company and the Trustee; provided that so long as any Indebtedness permitted
to be incurred pursuant to the Credit Agreement shall be outstanding, such
acceleration shall not be effective until the earlier of (i) an acceleration of
any such Indebtedness
A-3-6
<PAGE>
under the Credit Agreement or (ii) five Business Days after receipt by the
Company and the Agent of written notice of such acceleration. Notwithstanding
the foregoing, in the case of an Event of Default arising from certain events of
bankruptcy or insolvency, with respect to the Company, any Significant
Subsidiary that is a Restricted Subsidiary or any group of Restricted
Subsidiaries that, taken together, would constitute a Significant Subsidiary,
all outstanding Notes will become due and payable without further action or
notice. Holders of the Notes may not enforce the Indenture or the Notes except
as provided in the Indenture. Subject to certain limitations, Holders of a
majority in principal amount of the then outstanding Notes may direct the
Trustee in its exercise of any trust or power. The Trustee may withhold from
Holders of the Notes notice of any continuing Default or Event of Default
(except a Default or Event of Default relating to the payment of principal or
interest) if it determines that withholding notice is in their interest.
14. TRUSTEE DEALINGS WITH COMPANY. The Trustee, in its individual or any other
capacity, may become the owner or pledgee of Notes and may otherwise deal with
the Company with the same rights it would have if it were not the Trustee.
15. NO RECOURSE AGAINST OTHERS. A director, officer, employee or stockholder, as
such, of the Company shall not have any liability for any obligations of the
Company under these Notes or the Indenture or for any claim based on, in respect
of or by reason of such obligations or their creation. Each Holder by accepting
any of these Notes waives and releases all such liability.
16. AUTHENTICATION. This Note shall not be valid until authenticated by the
manual signature of the Trustee.
17. ABBREVIATIONS. Customary abbreviations may be used in the name of a Holder
or an assignee, such as: TEN COM (= tenants in common), TENANT (= tenants by the
entireties), JT TEN (= joint tenants with right of survivorship and not as
tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors
Act).
18. ADDITIONAL RIGHTS OF HOLDERS OF TRANSFER RESTRICTED SECURITIES. In addition
to the rights provided to Holders of the Notes under the Indenture, Holders of
Transferred Restricted Securities (as defined in the Registration Rights
Agreement) shall have all the rights set forth in the Registration Rights
Agreement, dated as of the date hereof, among the Company, the Guarantors and
the Initial Purchaser (the "Registration Rights Agreement").
19. SUBSIDIARY GUARANTEES. Payment of principal, premium, if any, and interest
(including interest on overdue principal and overdue interest, if lawful) and
Liquidated Damages, if any, is unconditionally guaranteed by certain
subsidiaries of the Company. Such guaranties are junior and subordinated to the
guaranties of such subsidiaries on the same basis as the Notes are junior and
subordinated to Senior Debt.
20. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the Committee on
Uniform Security Identification Procedures, the Company have caused CUSIP
numbers to be printed on the Notes and the Trustee may use CUSIP numbers in
notices of redemption as a convenience to Holders. No representation is made as
to the accuracy of such numbers either as printed on the Notes or as contained
in any notice of redemption and reliance may be placed only on the other
identification numbers placed thereon.
The Company shall furnish to any Holder upon written request and without
charge a copy of the Indenture and/or the Registration Rights Agreement.
Requests may be made to:
A-3-7
<PAGE>
Precise Technology, Inc.
501 Mosside Boulevard
North Versailles, Pennsylvania 15137-2553
Attention: Secretary
Facsimile: (412) 823-4110
A-3-8
<PAGE>
EXHIBIT B
FORM OF CERTIFICATE OF TRANSFER
Precise Technology, Inc.
501 Mosside Boulevard
North Versailles, Pennsylvania 15137-2553
Marine Midland Bank
140 Broadway, 12th Floor
New York, New York 10005
Re: 11 1/8% Senior Subordinated Notes due 2007
Reference is hereby made to the Indenture, dated as of June 13, 1997 (the
"Indenture"), between Precise Technology, Inc., as issuer (the "Company"), and
Marine Midland Bank, as trustee. Capitalized terms used but not defined herein
shall have the meanings given to them in the Indenture.
______________, (the "Transferor") owns and proposes to transfer the
Note[s] or interest in such Note[s] specified in Annex A hereto, in the
principal amount of $___________ in such Note[s] or interests (the "Transfer"),
to __________ (the "Transferee"), as further specified in Annex A hereto. In
connection with the Transfer, the Transferor hereby certifies that:
[CHECK ALL THAT APPLY]
1.|_|Check if Transferee will take delivery of a beneficial interest in the 144A
Global Note or a Restricted Definitive Note Pursuant to Rule 144A. The Transfer
is being effected pursuant to and in accordance with Rule 144A under the United
States Securities Act of 1933, as amended (the "Securities Act"), and,
accordingly, the Transferor hereby further certifies that the beneficial
interest or Restricted Definitive Note is being transferred to a Person that the
Transferor reasonably believed and believes is purchasing the beneficial
interest or Restricted Definitive Note for its own account, or for one or more
accounts with respect to which such Person exercises sole investment discretion,
and such Person and each such account is a "qualified institutional buyer"
within the meaning of Rule 144A in a transaction meeting the requirements of
Rule 144A and such Transfer is in compliance with any applicable blue sky
securities laws of any state of the United States. Upon consummation of the
proposed Transfer in accordance with the terms of the Indenture, the transferred
beneficial interest or Restricted Definitive Note will be subject to the
restrictions on transfer enumerated in the Private Placement Legend printed on
the 144A Global Note and/or the Restricted Definitive Note and in the Indenture
and the Securities Act.
2.|_|Check if Transferee will take delivery of a beneficial interest in the
Temporary Regulation S Global Note, the Regulation S Global Note or a Restricted
Definitive Note pursuant to Regulation S. The Transfer is being effected
pursuant to and in accordance with Rule 903 or Rule 904 under the Securities Act
and, accordingly, the Transferor hereby further certifies that (i) the Transfer
is not being made to a person in the United States and (x) at the time the buy
order was originated, the Transferee was outside the United States or such
Transferor and any Person acting
B-1
<PAGE>
on its behalf reasonably believed and believes that the Transferee was outside
the United States or (y) the transaction was executed in, on or through the
facilities of a designated offshore securities market and neither such
Transferor nor any Person acting on its behalf knows that the transaction was
prearranged with a buyer in the United States, (ii) no directed selling efforts
have been made in contravention of the requirements of Rule 903(b) or Rule
904(b) of Regulation S under the Securities Act, (iii) the transaction is not
part of a plan or scheme to evade the registration requirements of the
Securities Act and (iv) if the proposed transfer is being made prior to the
expiration of the Restricted Period, the transfer is not being made to a U.S.
Person or for the account or benefit of a U.S. Person (other than an Initial
Purchaser). Upon consummation of the proposed transfer in accordance with the
terms of the Indenture, the transferred beneficial interest or Restricted
Definitive Note will be subject to the restrictions on Transfer enumerated in
the Private Placement Legend printed on the Regulation S Global Note, the
Temporary Regulation S Global Note and/or the Definitive Note and in the
Indenture and the Securities Act.
3.|_|Check and complete if Transferee will take delivery of a Restricted
Definitive Note pursuant to any provision of the Securities Act other than Rule
144A or Regulation S. The Transfer is being effected in compliance with the
transfer restrictions applicable to Restricted Definitive Notes and pursuant to
and in accordance with the Securities Act and any applicable blue sky securities
laws of any state of the United States, and accordingly the Transferor hereby
further certifies that (check one):
(a)|_|such Transfer is being effected pursuant to and in accordance with
Rule 144 under the Securities Act;
or
(b)|_|such Transfer is being effected to the Company or a Subsidiary
thereof;
or
(c)|_|such Transfer is being effected pursuant to an effective
registration statement under the Securities Act and in compliance with the
prospectus delivery requirements of the Securities Act;
or
(d)|_|such Transfer is being effected to an Accredited Investor and
pursuant to an exemption from the registration requirements of the Securities
Act other than Rule 144A, Rule 144 or Rule 904, and the Transferor hereby
further certifies that the Transfer complies with the transfer restrictions
applicable to Restricted Definitive Notes and the requirements of the exemption
claimed, which certification is supported by (1) a certificate executed by the
Transferee in the form of Exhibit D to the Indenture and (2) if the Company so
requests, an Opinion of Counsel reasonably acceptable to the Company provided by
the Transferor or the Transferee (a copy of which the Transferor has attached to
this certification), to the effect that such Transfer is in compliance with the
Securities Act. Upon consummation of the proposed transfer in accordance with
the terms of the Indenture, the transferred beneficial interest or Restricted
Definitive Note will be subject to the restrictions on transfer enumerated in
the Private Placement Legend printed on the Restricted Definitive Notes and in
the Indenture and the Securities Act.
B-2
<PAGE>
4.|_|Check if Transferee will take delivery of a beneficial interest in an
Unrestricted Global Note or of an Unrestricted Definitive Note.
(a)|_|Check if Transfer is pursuant to Rule 144. (i) The Transfer is being
effected pursuant to and in accordance with Rule 144 under the Securities Act
and in compliance with the transfer restrictions contained in the Indenture and
any applicable blue sky securities laws of any state of the United States and
(ii) the restrictions on transfer contained in the Indenture and the Private
Placement Legend are not required in order to maintain compliance with the
Securities Act. Upon consummation of the proposed Transfer in accordance with
the terms of the Indenture, the transferred beneficial interest or Unrestricted
Definitive Note will no longer be subject to the restrictions on transfer
enumerated in the Private Placement Legend printed on the Restricted Global
Notes, on Restricted Definitive Notes and in the Indenture.
(b)|_|Check if Transfer is Pursuant to Regulation S. (i) The Transfer is
being effected pursuant to and in accordance with Rule 903 or Rule 904 under the
Securities Act and in compliance with the transfer restrictions contained in the
Indenture and any applicable blue sky securities laws of any state of the United
States and (ii) the restrictions on transfer contained in the Indenture and the
Private Placement Legend are not required in order to maintain compliance with
the Securities Act. Upon consummation of the proposed Transfer in accordance
with the terms of the Indenture, the transferred beneficial interest or
Unrestricted Definitive Note will no longer be subject to the restrictions on
transfer enumerated in the Private Placement Legend printed on the Restricted
Global Notes, on Restricted Definitive Notes and in the Indenture.
(c)|_|Check if Transfer is Pursuant to Other Exemption. (i) The Transfer
is being effected pursuant to and in compliance with an exemption from the
registration requirements of the Securities Act other than Rule 144, Rule 903 or
Rule 904 and in compliance with the transfer restrictions contained in the
Indenture and any applicable blue sky securities laws of any State of the United
States and (ii) the restrictions on transfer contained in the Indenture and the
Private Placement Legend are not required in order to maintain compliance with
the Securities Act. Upon consummation of the proposed Transfer in accordance
with the terms of the Indenture, the transferred beneficial interest or
Unrestricted Definitive Note will not be subject to the restrictions on transfer
enumerated in the Private Placement Legend printed on the Restricted Global
Notes or Restricted Definitive Notes and in the Indenture.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company.
---------------------------
[Insert Name of Transferor]
By:
------------------------
Name:
Title:
Dated: ,
------------------ ----
B-3
<PAGE>
ANNEX A TO CERTIFICATE OF TRANSFER
1. The Transferor owns and proposes to transfer the following:
|_|a beneficial interest in the:
(i) |_| 144A Global Note (QIB Global Note) (CUSIP No. 74018P AA7),
or
(ii) 144A Global Note |_| (Accredited Investor Global Note) (CUSIP
No. 74018P AB5).
2. After the Transfer, the Transferee will hold:
[CHECK ONE]
(a)|_|a beneficial interest in the:
(i) |_| 144A Global Note (QIB Global Note) (CUSIP No. 74018P AA7),
or
(ii) |_| 144A Global Note (Accredited Investor Global Note) (CUSIP
No. 74018P AB5), or
(iii) |_| Unrestricted Global Note (CUSIP_); or
(b)|_|a Restricted Definitive Note; or
(c)|_|an Unrestricted Definitive Note,
in accordance with the terms of the Indenture.
B-4
<PAGE>
EXHIBIT C
FORM OF CERTIFICATE OF EXCHANGE
Precise Technology, Inc.
501 Mosside Boulevard
North Versailles, Pennsylvania 15137-2553
Marine Midland Bank
140 Broadway, 12th Floor
New York, New York 10005
Re: 11 1/8% Senior Subordinated Notes due 2007 (CUSIP )
----------------------------------------------------------------------
Reference is hereby made to the Indenture, dated as of June 13, 1997 (the
"Indenture"), between Precise Technology, Inc., as issuer (the "Company"), and
Marine Midland Bank, as trustee. Capitalized terms used but not defined herein
shall have the meanings given to them in the Indenture.
_________________, (the "Owner") owns and proposes to exchange the Note[s]
or interest in such Note[s] specified herein, in the principal amount of
$____________ in such Note[s] or interests (the "Exchange"). In connection with
the Exchange, the Owner hereby certifies that:
1. Exchange of Restricted Definitive Notes or Beneficial Interests in a
Restricted Global Note for Unrestricted Definitive Notes or Beneficial Interests
in an Unrestricted Global Note
(a)|_|Check if Exchange is from beneficial interest in a Restricted Global
Note to beneficial interest in an Unrestricted Global Note. In connection with
the Exchange of the Owner's beneficial interest in a Restricted Global Note for
a beneficial interest in an Unrestricted Global Note in an equal principal
amount, the Owner hereby certifies (i) the beneficial interest is being acquired
for the Owner's own account without transfer, (ii) such Exchange has been
effected in compliance with the transfer restrictions applicable to the
Restricted Global Notes and pursuant to and in accordance with the United States
Securities Act of 1933, as amended (the "Securities Act"), (iii) the
restrictions on transfer contained in the Indenture and the Private Placement
Legend are not required in order to maintain compliance with the Securities Act
and (iv) the beneficial interest in an Unrestricted Global Note is being
acquired in compliance with any applicable blue sky securities laws of any state
of the United States.
(b)|_|Check if Exchange is from beneficial interest in a Restricted Global
Note to Unrestricted Definitive Note. In connection with the Exchange of the
Owner's beneficial interest in a Restricted Global Note for an Unrestricted
Definitive Note, the Owner hereby certifies (i) the Definitive Note is being
acquired for the Owner's own account without transfer, (ii) such Exchange has
been effected in compliance with the transfer restrictions applicable to the
Restricted Global Notes and pursuant to and in accordance with the Securities
Act, (iii) the restrictions on transfer contained in the Indenture and the
Private Placement Legend are not required in order to maintain compliance with
the Securities Act and (iv) the Unrestricted Definitive Note is being acquired
in compliance with any applicable blue sky securities laws of any state of the
United States.
C-1
<PAGE>
(c)|_|Check if Exchange is from Restricted Definitive Note to beneficial
interest in an Unrestricted Global Note. In connection with the Owner's Exchange
of a Restricted Definitive Note for a beneficial interest in an Unrestricted
Global Note, the Owner hereby certifies (i) the beneficial interest is being
acquired for the Owner's own account without transfer, (ii) such Exchange has
been effected in compliance with the transfer restrictions applicable to
Restricted Definitive Notes and pursuant to and in accordance with the
Securities Act, (iii) the restrictions on transfer contained in the Indenture
and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act and (iv) the beneficial interest is being
acquired in compliance with any applicable blue sky securities laws of any state
of the United States.
(d)|_|Check if Exchange is from Restricted Definitive Note to Unrestricted
Definitive Note. In connection with the Owner's Exchange of a Restricted
Definitive Note for an Unrestricted Definitive Note, the Owner hereby certifies
(i) the Unrestricted Definitive Note is being acquired for the Owner's own
account without transfer, (ii) such Exchange has been effected in compliance
with the transfer restrictions applicable to Restricted Definitive Notes and
pursuant to and in accordance with the Securities Act, (iii) the restrictions on
transfer contained in the Indenture and the Private Placement Legend are not
required in order to maintain compliance with the Securities Act and (iv) the
Unrestricted Definitive Note is being acquired in compliance with any applicable
blue sky securities laws of any state of the United States.
2. Exchange of Restricted Definitive Notes or Beneficial Interests in Restricted
Global Notes for Restricted Definitive Notes or Beneficial Interests in
Restricted Global Notes
(a)|_|Check if Exchange is from beneficial interest in a Restricted Global
Note to Restricted Definitive Note. In connection with the Exchange of the
Owner's beneficial interest in a Restricted Global Note for a Restricted
Definitive Note with an equal principal amount, the Owner hereby certifies that
the Restricted Definitive Note is being acquired for the Owner's own account
without transfer. Upon consummation of the proposed Exchange in accordance with
the terms of the Indenture, the Restricted Definitive Note issued will continue
to be subject to the restrictions on transfer enumerated in the Private
Placement Legend printed on the Restricted Definitive Note and in the Indenture
and the Securities Act.
(b)|_|Check if Exchange is from Restricted Definitive Note to beneficial
interest in a Restricted Global Note. In connection with the Exchange of the
Owner's Restricted Definitive Note for a beneficial interest in the [CHECK ONE]
|_| 144A Global Note or |_| Regulation S Global Note, with an equal principal
amount, the Owner hereby certifies (i) such Owner acquired such Restricted
Definitive Note in a transaction pursuant to Rule 144A or Regulation S, (ii) the
beneficial interest is being acquired for the Owner's own account without
transfer and (iii) such Exchange has been effected in compliance with the
transfer restrictions applicable to the Restricted Global Notes and pursuant to
and in accordance with the Securities Act, and in compliance with any applicable
blue sky securities laws of any state of the United States. Upon consummation of
the proposed Exchange in accordance with the terms of the Indenture, the
beneficial interest issued will be subject to the restrictions on transfer
enumerated in the Private Placement Legend printed on the relevant Restricted
Global Note and in the Indenture and the Securities Act.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company.
C-2
<PAGE>
[Insert Name of Owner]
By:
----------------------------
Name:
Title:
Dated: ,
---------------- ----
C-3
<PAGE>
EXHIBIT D
FORM OF CERTIFICATE FROM
ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR
Precise Technology, Inc.
501 Mosside Boulevard
North Versailles, Pennsylvania 15137-2553
Marine Midland Bank
140 Broadway, 12th Floor
New York, New York 10005
Re: 11 1/8% Senior Subordinated Notes due 2007
Reference is hereby made to the Indenture, dated as of June 13, 1997 (the
"Indenture"), between Precise Technology, Inc., as issuer (the "Company"), and
First Trust of New York, National Association, as trustee. Capitalized terms
used but not defined herein shall have the meanings given to them in the
Indenture.
In connection with our proposed purchase of $____________ aggregate
principal amount of Restricted Definitive Notes we confirm that:
1. We understand that any subsequent transfer of the Notes or any interest
therein is subject to certain restrictions and conditions set forth in the
Indenture and the undersigned agrees to be bound by, and not to resell, pledge
or otherwise transfer the Notes or any interest therein except in compliance
with, such restrictions and conditions and the United States Securities Act of
1933, as amended (the "Securities Act").
2. We understand that the Notes have not been registered under the
Securities Act, and that the Notes and any interest therein may not be offered
or sold except as permitted in the following sentence. We agree, on our own
behalf and on behalf of each account for which we acquire any Notes (for which
are acting as hereinafter stated), that such Notes may be offered, resold,
pledged or otherwise transferred only (i) to a person whom we reasonably believe
to be a "qualified institutional buyer" (as defined in Rule 144A under the
Securities Act) in a transaction meeting the requirements of Rule 144A, in a
transaction meeting the requirements of Rule 144 under the Securities Act,
outside the United States in a transaction meeting the requirements of Rule 904
under the Securities Act, or in accordance with another exemption from the
registration requirements of the Securities Act (and based upon an Opinion of
Counsel if the Company so Requests), (ii) to the Company or (iii) pursuant to an
effective registration statement, and, in each case, in accordance with any
applicable securities laws of any State of the United States or any other
applicable jurisdiction. We further agree to provide to any person purchasing
the Definitive Note or a beneficial interest in a Global Note from us in a
transaction meeting the requirements of (i) or (ii) of this paragraph a notice
advising such purchaser that resales thereof are restricted as stated herein.
D-1
<PAGE>
3. We understand that, on any proposed resale of the Notes or beneficial
interest therein, we will be required to furnish to you and the Company such
certifications, legal opinions and other information as you and the Company may
reasonably require to confirm that the proposed sale complies with the foregoing
restrictions. We further understand that the Notes purchased by us will bear a
legend to the foregoing effect. We further understand that any subsequent
transfer by us of the Notes or beneficial interest therein acquired by us must
be effected through one of the Placement Agents.
4. We are an institutional "accredited investor" (as defined in Rule
501(a)(1),(2),(3) or(7) of Regulation D under the Securities Act) and have such
knowledge and experience in financial and business matters as to be capable of
evaluating the merits and risks of our investment in the Notes, and we and any
accounts for which we are acting are each able to bear the economic risk of our
or its investment.
5. We are acquiring the Notes without a view to distribution thereof in
violation of the Securities Act for our own account or for one or more accounts
(each of which is an institutional "accredited investor") as to each of which we
exercise sole investment discretion.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby.
------------------------------------
[Insert Name of Accredited Investor]
------------------------------------
By:
Name:
Title:
Dated: ,
----------------- ----
D-2
<PAGE>
EXHIBIT E
SUBSIDIARY GUARANTEE
Each Guarantor hereby, jointly and severally, unconditionally guarantees
to each Holder of a Note authenticated and delivered by the Trustee and to the
Trustee and its successors and assigns, irrespective of the validity and
enforceability of the Indenture, the Notes and the Obligations of the Company
under the Notes or under the Indenture, that: (a) the principal of, premium, if
any, interest and Liquidated Damages, if any, on the Notes will be promptly paid
in full when due, subject to any applicable grace period, whether at maturity,
by acceleration, redemption or otherwise, and interest on overdue principal,
premium, if any, (to the extent permitted by law) interest on any interest, if
any, and Liquidated Damages, if any, on the Notes and all other payment
Obligations of the Company to the Holders or the Trustee under the Indenture or
under the Notes will be promptly paid in full and performed, all in accordance
with the terms thereof; and (b) in case of any extension of time of payment or
renewal of any Notes or any of such other payment Obligations, the same will be
promptly paid in full when due or performed in accordance with the terms of the
extension or renewal, subject to any applicable grace period, whether at stated
maturity, by acceleration, redemption or otherwise. Failing payment when so due
of any amount so guaranteed for whatever reason, the Guarantors will be jointly
and severally obligated to pay the same immediately.
The obligations of the Guarantor to the Holders and to the Trustee
pursuant to this Subsidiary Guarantee and the Indenture are expressly set forth
in Article 12 of the Indenture, and reference is hereby made to such Indenture
for the precise terms of this Subsidiary Guarantee. The terms of Article 12 of
the Indenture are incorporated herein by reference. This Subsidiary Guarantee is
subject to release as and to the extent provided in Section 12.04 of the
Indenture.
This is a continuing Subsidiary Guarantee and shall remain in full force
and effect and shall be binding upon each Guarantor and its respective
successors and assigns to the extent set forth in the Indenture until full and
final payment of all of the Company's Obligations under the Notes and the
Indenture and shall inure to the benefit of the successors and assigns of the
Trustee and the Holders and, in the event of any transfer or assignment of
rights by any Holder or the Trustee, the rights and privileges herein conferred
upon that party shall automatically extend to and be vested in such transferee
or assignee, all subject to the terms and conditions hereof. This is a
Subsidiary Guarantee of payment and not a guarantee of collection.
This Subsidiary Guarantee shall not be valid or obligatory for any purpose
until the certificate of authentication on the Note upon which this Subsidiary
Guarantee is noted shall have been executed by the Trustee under the Indenture
by the manual signature of one of its authorized officers.
For purposes hereof, each Guarantor's liability shall be limited to the
lesser of (i) the aggregate amount of the Obligations of the Company under the
Notes and the Indenture and (ii) the amount, if any, which would not have (A)
rendered such Guarantor "insolvent" (as such term is defined in the Bankruptcy
Law and in the Debtor and Creditor Law of the State of New York) or (B) left
such Guarantor with unreasonably small capital at the time its Subsidiary
Guarantee of the Notes was entered into; provided that, it will be a presumption
in any lawsuit or other proceeding in which a Guarantor is a party that the
amount guaranteed pursuant to the Subsidiary Guarantee is the amount set forth
in clause (i) above unless any creditor, or representative of creditors of such
Guarantor, or debtor in possession or trustee in bankruptcy of such Guarantor,
otherwise proves in such a lawsuit that the aggregate liability of the Guarantor
is limited to the amount set forth in clause (ii) above. The Indenture provides
that, in making any determination as to the solvency or sufficiency of capital
of a Guarantor in accordance with the previous
<PAGE>
sentence, the right of such Guarantors to contribution from other Guarantors and
any other rights such Guarantors may have, contractual or otherwise, shall be
taken into account.
Capitalized terms used herein have the same meanings given in the
Indenture unless otherwise indicated.
<PAGE>
PRECISE TMP, INC.
By:
-----------------------------
Name:
Title:
MASSIE TOOL, MOLD & DIE, INC.
By:
-----------------------------
Name:
Title:
PRECISE POLESTAR, INC.
By:
-----------------------------
Name:
Title:
PRECISE TECHNOLOGY OF DELAWARE INC.
By:
-----------------------------
Name:
Title:
PRECISE TECHNOLOGY OF ILLINOIS INC.
By:
-----------------------------
Name:
Title:
<PAGE>
SCHEDULE I
Term Loans:
Delaware State Loan $112,604.00
Concord Comm. Corp. (Phg tool EDM) $186,339.21
Concord Comm. Corp. (TMP EDM) $171,942.12
-----------
SUBTOTAL: $470,885.33
Cap Leases:
Phoenixcor (Del Presses) $1,184,237.24
Heller Financial (LAF Presses) $778,009.22
TM Acceptance (PGH Presses) $2,519,605.18
US Bancorp. (Polestar Presses) $382,964.99
Concord Comm. Corp. (TMP S. Graf.) $408,317.06
Pencader Assoc. (Del) $118,102.47
OTHER CAPITAL LEASES:
Vision Fin. (PGH fork trk) $3,031.51,
Iron & Glass Bank (Eng Software) $40,081.00
Concord Capital Lease (Various Equip) $271,014.89
Concord Comm. (Pgh tooling grinder) $57,701.18
Concord Comm. (Unity Tooling EDM) $118,908.64
Concord Comm. (PHG Tool CNC) $145,262.01
Concord Comm. (Massie Grinder $223,410.00
-------------
$6,250,645.39
-------------
Totals $6,721,530.72
<PAGE>
EXECUTION COPY
================================================================================
PRECISE TECHNOLOGY, INC.
PRECISE TMP, INC.
MASSIE TOOL, MOLD & DIE, INC.
PRECISE POLESTAR, INC.
PRECISE TECHNOLOGY OF DELAWARE INC.
PRECISE TECHNOLOGY OF ILLINOIS INC.
11 1/8% SENIOR SUBORDINATED NOTES DUE 2007
REGISTRATION RIGHTS AGREEMENT
June 13, 1997
BEAR, STEARNS & CO. INC.
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
================================================================================
<PAGE>
This Registration Rights Agreement (this "Agreement") is made and entered
into as of June 13, 1997 by and among Precise Technology, Inc., a Delaware
corporation (the "Company"), Precise TMP, Inc., a Virginia corporation, Massie
Tool, Mold & Die, Inc., a Florida corporation, Precise Polestar, Inc., a
Virginia corporation, Precise Technology of Delaware Inc., a Delaware
corporation, and Precise Technology of Illinois Inc., a Delaware corporation
(collectively, the "Guarantors"), Bear, Stearns & Co. Inc. and Merrill Lynch,
Pierce, Fenner & Smith Incorporated (each a "Purchaser" and, collectively, the
"Purchasers"), each of whom has agreed to purchase the Company's 11 1/8% Senior
Subordinated Notes due 2007 (the "Notes") pursuant to the Purchase Agreement (as
defined below).
This Agreement is made pursuant to the Purchase Agreement, dated June 10,
1997 (the "Purchase Agreement"), by and among the Company, the Guarantors and
the Purchasers. In order to induce the Purchasers to purchase the Notes, the
Company has agreed to provide the registration rights set forth in this
Agreement. The execution and delivery of this Agreement is a condition to the
obligations of the Purchasers set forth in Sections 2 and 3 of the Purchase
Agreement.
The parties hereby agree as follows:
SECTION 1. DEFINITIONS
As used in this Agreement, the following capitalized terms shall have the
following meanings:
Act: The Securities Act of 1933, as amended.
Broker-Dealer: Any broker or dealer registered under the Exchange Act.
Broker-Dealer Transfer Restricted Securities: New Notes that are acquired
by a Broker-Dealer in the Exchange Offer in exchange for Notes that such
Broker-Dealer acquired for its own account as a result of market making
activities or other trading activities (other than Notes acquired directly from
the Company or any of its affiliates).
Closing Date: The date of this Agreement.
Commission: The Securities and Exchange Commission.
Consummate: A Registered Exchange Offer shall be deemed "Consummated" for
purposes of this Agreement upon the occurrence of (i) the filing and
effectiveness under the Act of the Exchange Offer Registration Statement
relating to the New Notes to be issued in the Exchange Offer, (ii) the
maintenance of such Registration Statement continuously effective and the
keeping of the Exchange Offer open for a period not less than the minimum period
required pursuant to Section 3(b) hereof, and (iii) the delivery by the Company
to the Registrar under the Indenture of New Notes in the same aggregate
principal amount as the aggregate principal amount of Notes that were tendered
by Holders thereof pursuant to the Exchange Offer.
Damages Payment Date: With respect to the Notes, each Interest Payment
Date.
Effectiveness Target Date: As defined in Section 5.
Exchange Act: The Securities Exchange Act of 1934, as amended.
<PAGE>
Exchange Offer: The registration by the Company under the Act of the New
Notes pursuant to a Registration Statement pursuant to which the Company offers
the Holders of all outstanding Transfer Restricted Securities the opportunity to
exchange all such outstanding Transfer Restricted Securities held by such
Holders for New Notes in an aggregate principal amount equal to the aggregate
principal amount of the Transfer Restricted Securities tendered in such exchange
offer by such Holders.
Exchange Offer Registration Statement: The Registration Statement relating
to the Exchange Offer, including the related Prospectus.
Exempt Resales: The transactions in which the Purchasers propose to sell
the Notes to (i) certain "qualified institutional buyers," as such term is
defined in Rule 144A under the Act, (ii) certain institutional "accredited
investors," as such term is defined in Rule 501(a)(1), (2), (3) or (7) of
Regulation D under the Act ("Accredited Institutions") and (iii) non-U.S.
persons permitted to purchase the Notes in offshore transactions in reliance
upon Regulation S under the Act.
Holders: As defined in Section 2(b) hereof.
Indenture: The Indenture, dated as of June 13, 1997, between the Company,
the Guarantors and Marine Midland Bank, as trustee (the "Trustee"), pursuant to
which the Subordinated Notes are to be issued, as such Indenture is amended or
supplemented from time to time in accordance with the terms thereof.
Interest Payment Date: As defined in the Indenture and the Subordinated
Notes.
NASD: National Association of Securities Dealers, Inc.
New Notes: The Company's 11 1/8% New Senior Subordinated Notes due 2007 to
be issued pursuant to the Indenture in the Exchange Offer.
Person: An individual, partnership, corporation, trust or unincorporated
organization, or a government or agency or political subdivision thereof.
Prospectus: The prospectus included in a Registration Statement, as amended
or supplemented by any prospectus supplement and by all other amendments
thereto, including post-effective amendments, and all material incorporated by
reference into such Prospectus.
Purchasers: As defined in the preamble hereto.
Record Holder: With respect to any Damages Payment Date relating to Notes,
each Person who is a Holder of Notes on the record date with respect to the
Interest Payment Date on which such Damages Payment Date shall occur.
Registration Default: As defined in Section 5 hereof.
Registration Statement: Any registration statement of the Company relating
to (a) an offering of New Notes pursuant to an Exchange Offer or (b) the
registration for resale of Transfer Restricted Securities pursuant to the Shelf
Registration Statement, which is filed pursuant to the provisions of this
Agreement, in each case, including the Prospectus included therein, all
amendments and supplements thereto (including post-effective amendments) and all
exhibits and material incorporated by reference therein.
<PAGE>
Restricted Broker-Dealer: Any Broker-Dealer which holds Broker-Dealer
Transfer Restricted Securities.
Shelf Filing Deadline: As defined in Section 4 hereof.
Shelf Registration Statement: As defined in Section 4 hereof.
Subordinated Notes: The Notes and the New Notes.
TIA: The Trust Indenture Act of 1939 (15 U.S.C. Section 77aaa-77bbbb) as in
effect on the date of the Indenture.
Transfer Restricted Securities: Each Note, until the earliest to occur of
(a) the date on which such Note is exchanged in the Exchange Offer and entitled
to be resold to the public by the Holder thereof without complying with the
prospectus delivery requirements of the Act, (b) the date on which such Note has
been effectively registered under the Act and disposed of in accordance with a
Shelf Registration Statement and (c) the date on which such Note is distributed
to the public pursuant to Rule 144 under the Act or by a Restricted
Broker-Dealer pursuant to the "Plan of Distribution" contemplated by the
Exchange Offer Registration Statement (including delivery of the Prospectus
contained therein).
Underwritten Registration or Underwritten Offering: A registration in which
securities of the Company are sold to an underwriter for reoffering to the
public.
SECTION 2. SECURITIES SUBJECT TO THIS AGREEMENT
(a) Transfer Restricted Securities. The securities entitled to the benefits
of this Agreement are the Transfer Restricted Securities.
(b) Holders of Transfer Restricted Securities. A Person is deemed to be a
holder of Transfer Restricted Securities (each, a "Holder") whenever such Person
owns Transfer Restricted Securities.
SECTION 3. REGISTERED EXCHANGE OFFER
(a) Unless the Exchange Offer shall not be permissible under applicable law
or Commission policy (after the procedures set forth in Section 6(a) below have
been complied with), the Company and the Guarantors shall (i) cause to be filed
with the Commission as soon as practicable after the Closing Date, but in no
event later than 45 days after the Closing Date, a Registration Statement under
the Act relating to the New Notes and the Exchange Offer, (ii) use their best
efforts to cause such Registration Statement to become effective at the earliest
possible time, but in no event later than 150 days after the Closing Date, (iii)
in connection with the foregoing, file (A) all pre-effective amendments to such
Registration Statement as may be necessary in order to cause such Registration
Statement to become effective, (B) if applicable, a post-effective amendment to
such Registration Statement pursuant to Rule 430A under the Act and (C) cause
all necessary filings, if any, in connection with the registration and
qualification of the New Notes to be made under the Blue Sky laws of such
jurisdictions as are necessary to permit Consummation of the Exchange Offer, and
(iv) promptly following the effectiveness of such Registration Statement,
commence the Exchange Offer. The Exchange Offer shall be on the appropriate form
permitting registration of the
<PAGE>
New Notes to be offered in exchange for the Transfer Restricted Securities and
to permit sales of Broker-Dealer Transfer Restricted Securities by Restricted
Broker-Dealers as contemplated by Section 3(c) below.
(b) The Company shall use its best efforts to cause the Exchange Offer
Registration Statement to be effective continuously and shall keep the Exchange
Offer open for a period of not less than the minimum period required under
applicable federal and state securities laws to Consummate the Exchange Offer;
provided, however, that in no event shall such period be less than 20 business
days. The Company shall cause the Exchange Offer to comply with all applicable
federal and state securities laws. Without the consent of the Purchasers, no
securities other than the Subordinated Notes and the Subsidiary Guarantees shall
be included in the Exchange Offer Registration Statement. The Company shall use
its best efforts to cause the Exchange Offer to be Consummated on the earliest
practicable date after the Exchange Offer Registration Statement has become
effective, but in no event later than 30 business days thereafter.
(c) The Company shall indicate in a "Plan of Distribution" section
contained in the Prospectus contained in the Exchange Offer Registration
Statement that any Restricted Broker-Dealer who holds Notes that are Transfer
Restricted Securities and that were acquired for its own account as a result of
market-making activities or other trading activities (other than Transfer
Restricted Securities acquired directly from the Company or an affiliate of the
Company), may exchange such Notes pursuant to the Exchange Offer; however, such
Restricted Broker-Dealer may be deemed to be an "underwriter" within the meaning
of the Act and must, therefore, deliver a prospectus meeting the requirements of
the Act in connection with any resales of the New Notes received by such
Restricted Broker-Dealer in the Exchange Offer, which prospectus delivery
requirement may be satisfied by the delivery by such Restricted Broker-Dealer of
the Prospectus contained in the Exchange Offer Registration Statement. Such
"Plan of Distribution" section shall also contain all other information with
respect to such sales of Broker-Dealer Transfer Restricted Securities by
Restricted Broker-Dealers that the Commission may require in order to permit
such sales pursuant thereto, but such "Plan of Distribution" shall not name any
such Restricted Broker-Dealer or disclose the amount of Notes held by any such
Restricted Broker-Dealer, except to the extent required by the Commission as a
result of a change in policy after the date of this Agreement.
The Company and the Guarantors shall use their best efforts to keep the
Exchange Offer Registration Statement continuously effective, supplemented and
amended as required by the provisions of Section 6(c) below to the extent
necessary to ensure that it is available for sales of Broker-Dealer Transfer
Restricted Securities by Restricted Broker-Dealers, and to ensure that it
conforms with the requirements of this Agreement, the Act and the policies,
rules and regulations of the Commission as announced from time to time, for a
period of one year from the date on which the Exchange Offer Registration
Statement is declared effective.
The Company shall provide sufficient copies of the latest version of such
Prospectus to such Restricted Broker-Dealers promptly upon request at any time
during such one-year period in order to facilitate such resales.
SECTION 4. SHELF REGISTRATION
(a) Shelf Registration. If (i) the Company is not required to file an
Exchange Offer Registration Statement or to consummate the Exchange Offer
because, in the reasonable determination of the Company, the Exchange Offer is
not permitted by applicable law or Commission policy (after the procedures set
forth in Section 6(a) below have been complied with) or (ii) any Holder of
Transfer Restricted Securities shall notify the Company within 20 business days
of the Consummation of the Exchange Offer, in its reasonable
<PAGE>
discretion, (A) that such Holder is prohibited by applicable law or Commission
policy from participating in the Exchange Offer, or (B) that such Holder may not
resell the New Notes acquired by it in the Exchange Offer to the public without
delivering a prospectus and that the Prospectus contained in the Exchange Offer
Registration Statement is not appropriate or available for such resales by such
Holder, or (C) that such Holder is a Broker-Dealer and holds Notes acquired
directly from the Company or one of its affiliates, then the Company and the
Guarantors shall
(x) cause to be filed a shelf registration statement pursuant to Rule
415 under the Act, which may be an amendment to the Exchange Offer
Registration Statement (in either event, the "Shelf Registration
Statement") on or prior to the earliest to occur of (1) the 30th day after
the date on which the Company determines that it is not required to file
the Exchange Offer Registration Statement, (2) the 30th day after the date
on which the Company receives notice from a Holder of Transfer Restricted
Securities as contemplated by clause (ii) above, and (3) the 60th day after
the Closing Date (such earliest date being the "Shelf Filing Deadline"),
which Shelf Registration Statement shall provide for resales of all
Transfer Restricted Securities the Holders of which shall have provided the
information required pursuant to Section 4(b) hereof; and
(y) use their best efforts to cause such Shelf Registration Statement
to be declared effective by the Commission on or before the 60th day after
the Shelf Filing Deadline.
The Company and the Guarantors shall use their best efforts to keep such Shelf
Registration Statement continuously effective, supplemented and amended as
required by the provisions of Sections 6(b) and (c) hereof to the extent
necessary to ensure that it is available for resales of Notes by the Holders of
Transfer Restricted Securities entitled to the benefit of this Section 4(a), and
to ensure that it conforms with the requirements of this Agreement, the Act and
the policies, rules and regulations of the Commission as announced from time to
time, for a period of two years following the Closing Date, or such shorter
period ending when (i) all Notes covered by the Shelf Registration Statement
have been sold in the manner set forth therein or (ii) a subsequent Shelf
Registration Statement relating to the Notes has been declared effective under
the Act. Notwithstanding the foregoing, the Company shall not be required to
file a Shelf Registration Statement with respect to the Notes of any Holder
(other than Notes of a Purchaser) as a result of such Holder not being able to
make the representations required by Section 6(a) in connection with the
Exchange Offer.
(b) Provision by Holders of Certain Information in Connection with the
Shelf Registration Statement. No Holder of Transfer Restricted Securities may
include any of its Transfer Restricted Securities in any Shelf Registration
Statement pursuant to this Agreement unless and until such Holder furnishes to
the Company in writing, within 20 business days after receipt of a request
therefor, such information as the Company may reasonably request for use in
connection with any Shelf Registration Statement or Prospectus or preliminary
Prospectus included therein. No Holder of Transfer Restricted Securities shall
be entitled to Liquidated Damages pursuant to Section 5 hereof unless and until
such Holder shall have provided all such reasonably requested information. Each
Holder as to which any Shelf Registration Statement is being effected agrees to
furnish promptly to the Company all information required to be disclosed in
order to make the information previously furnished to the Company by such Holder
not materially misleading.
<PAGE>
SECTION 5. LIQUIDATED DAMAGES
If (i) any of the Registration Statements required by this Agreement is not
filed with the Commission on or prior to the date specified for such filing in
this Agreement, (ii) any of such Registration Statements has not been declared
effective by the Commission on or prior to the date specified for such
effectiveness in this Agreement (the "Effectiveness Target Date"), (iii) the
Exchange Offer has not been Consummated within 30 business days after the
Effectiveness Target Date with respect to the Exchange Offer Registration
Statement or (iv) any Registration Statement required by this Agreement is filed
and declared effective but shall thereafter cease to be effective or fail to be
usable for its intended purpose without being succeeded immediately by a
post-effective amendment to such Registration Statement that cures such failure
and that is itself immediately declared effective (each such event referred to
in clauses (i) through (iv), a "Registration Default"), the Company and the
Guarantors hereby jointly and severally agree to pay liquidated damages
("Liquidated Damages") to each Holder of Transfer Restricted Securities with
respect to the first 90-day period immediately following the occurrence of such
Registration Default, in an amount equal to $.05 per week per $1,000 principal
amount of Transfer Restricted Securities held by such Holder for each week or
portion thereof that the Registration Default continues. The amount of the
Liquidated Damages shall increase by an additional $.05 per week per $1,000 in
principal amount of Transfer Restricted Securities with respect to each
subsequent 90-day period until all Registration Defaults have been cured, up to
a maximum amount of Liquidated Damages of $.50 per week per $1,000 principal
amount of Transfer Restricted Securities. All accrued Liquidated Damages shall
be paid to the affected Record Holders by the Company by wire transfer of
immediately available funds or by federal funds check on each Damages Payment
Date, as provided in the Indenture. Following the cure of all Registration
Defaults relating to any particular Transfer Restricted Securities, the accrual
of Liquidated Damages with respect to such Transfer Restricted Securities will
cease. Notwithstanding the foregoing, the Company may issue a notice that the
Shelf Registration Statement is unusable pending the announcement of a material
corporate transaction and may issue any notice suspending the use of the Shelf
Registration Statement required under applicable securities laws to be issued
and, in the event that the aggregate number of days in any consecutive
twelve-month period for which all such notices are issued and effective does not
exceed 45 days in the aggregate, then Liquidated Damages will not be payable as
described above as a result of such suspension.
All obligations of the Company and the Guarantors set forth in the
preceding paragraph that are outstanding with respect to any Transfer Restricted
Security at the time such security ceases to be a Transfer Restricted Security
shall survive until such time as all such obligations with respect to such
Security shall have been satisfied in full. If the Company has complied with the
provisions of Sections 3, 4 and 6 hereof, the accrual and payment of Liquidated
Damages, as set forth above, shall be the sole and exclusive remedy of the
Holders against the Company and the Guarantors for the events constituting a
Registration Default.
SECTION 6. REGISTRATION PROCEDURES
(a) Exchange Offer Registration Statement. In connection with the Exchange
Offer, the Company and the Guarantors shall comply with all of the provisions of
Section 6(c) below, shall use their best efforts to effect such exchange to
permit the sale of Transfer Restricted Securities being sold in accordance with
the intended method or methods of distribution thereof, and shall comply with
all of the following provisions:
<PAGE>
(i) If in the reasonable opinion of counsel to the Company there is a
question as to whether the Exchange Offer is permitted by applicable law,
the Company and the Guarantors hereby agree, to the extent reasonably
practicable, to seek a no-action letter or other favorable decision from
the Commission allowing the Company and the Guarantors to Consummate an
Exchange Offer for Notes. The Company and the Guarantors each hereby agrees
to pursue the issuance of such a decision to the Commission staff level but
shall not be required to take commercially unreasonable action to effect a
change of Commission policy. The Company and the Guarantors each hereby
agrees, however, to (A) participate in telephonic conferences with the
Commission, (B) deliver to the Commission staff an analysis prepared by
counsel to the Company setting forth the legal bases, if any, upon which
such counsel has concluded that such an Exchange Offer should be permitted
and (C) diligently pursue a resolution (which need not be favorable) by the
Commission staff of such submission.
(ii) As a condition to its participation in the Exchange Offer
pursuant to the terms of this Agreement, each Holder of Transfer Restricted
Securities shall furnish, upon the request of the Company, prior to the
Consummation thereof, a written representation to the Company (which may be
contained in the letter of transmittal contemplated by the Exchange Offer
Registration Statement) to the effect that (A) it is not an affiliate,
directly or indirectly, of the Company, (B) it is not engaged in, and does
not intend to engage in, and has no arrangement or understanding with any
person to participate in, a distribution of the New Notes to be issued in
the Exchange Offer, (C) it is acquiring the New Notes in its ordinary
course of business and (D) it is not acting on behalf of any Person who
could not make the foregoing representations. Such Holder shall also make
such other representations as may be required to comply with applicable law
or policy of the Commission with respect to the Exchange Offer. In
addition, all such Holders of Transfer Restricted Securities shall
otherwise cooperate in the Company's preparations for the Exchange Offer.
Each Holder hereby acknowledges and agrees that any Restricted
Broker-Dealer and any such Holder using the Exchange Offer to participate
in a distribution of the securities to be acquired in the Exchange Offer
(1) could not under Commission policy as in effect on the date of this
Agreement rely on the position of the Commission enunciated in Morgan
Stanley and Co., Inc. (available June 5, 1991) and Exxon Capital Holdings
Corporation (available May 13, 1988), as interpreted in the Commission's
letter to Shearman & Sterling dated July 2, 1993, and similar no-action
letters (including, if applicable, any no-action letter obtained pursuant
to clause (i) above), and (2) must comply with the registration and
prospectus delivery requirements of the Act in connection with a secondary
resale transaction and that such a secondary resale transaction should be
covered by an effective registration statement containing the selling
security holder information required by Item 507 or 508, as applicable, of
Regulation S-K if the resales are of New Notes obtained by such Holder in
exchange for Notes acquired by such Holder directly from the Company. The
Company shall not be required to register the Notes of any Holder (other
than Notes of a Purchaser) that fails to furnish the representations
required by the first sentence of this paragraph.
(iii) Prior to effectiveness of the Exchange Offer Registration
Statement, the Company and the Guarantors shall provide a supplemental
letter to the Commission (A) stating that the Company and the Guarantors
are registering the Exchange Offer in reliance on the position of the
Commission enunciated in Exxon Capital Holdings Corporation (available May
13, 1988), Morgan Stanley and Co., Inc. (available June 5, 1991) and, if
applicable, any no-action letter obtained pursuant to clause (i) above and
(B) including a representation that neither the Company nor any of the
Guarantors has entered into any arrangement or understanding with any
Person to distribute the New Notes to be received in the Exchange Offer and
that, to the best of the Company's information and belief, each Holder
participating in the Exchange Offer is acquiring the New Notes in its
ordinary course of
<PAGE>
business and has no arrangement or understanding with any Person to
participate in the distribution of the New Notes received in the Exchange
Offer.
(b) Shelf Registration Statement. In connection with the Shelf Registration
Statement, the Company and the Guarantors shall comply with all the provisions
of Section 6(c) below and shall use their best efforts to effect such
registration to permit the sale of the Transfer Restricted Securities being sold
in accordance with the intended method or methods of distribution thereof (as
indicated in the information furnished to the Company pursuant to Section 4(b)
hereof), and pursuant thereto the Company will as expeditiously as possible (in
accordance with Section 4 hereof) prepare and file with the Commission a
Registration Statement relating to the registration on any appropriate form
under the Act, which form shall be available for the sale of the Transfer
Restricted Securities in accordance with the intended method or methods of
distribution thereof.
(c) General Provisions. In connection with any Registration Statement and
any related Prospectus required by this Agreement to permit the sale or resale
of Transfer Restricted Securities (including, without limitation, any Exchange
Offer Registration Statement and the related Prospectus, to the extent that the
same are required to be available to permit sales of Broker-Dealer Transfer
Restricted Securities by Restricted Broker-Dealers), the Company shall:
(i) use its best efforts to keep such Registration Statement
continuously effective and provide all requisite financial statements
(including, if required by the Act or any regulation thereunder, financial
statements of the Guarantors) for the period specified in Section 3 or 4 of
this Agreement, as applicable; upon the occurrence of any event that would
cause any such Registration Statement or the Prospectus contained therein
(A) to contain a material misstatement or omission or (B) not to be
effective and usable for resale of Transfer Restricted Securities during
the period required by this Agreement, the Company shall, upon becoming
aware thereof, file promptly an appropriate amendment to such Registration
Statement, in the case of clause (A), correcting any such misstatement or
omission, and, in the case of either clause (A) or (B), use its best
efforts to cause such amendment to be declared effective and such
Registration Statement and the related Prospectus to become usable for
their intended purpose(s) as soon as practicable thereafter;
(ii) prepare and file with the Commission such amendments and
post-effective amendments to the Registration Statement as may be necessary
to keep the Registration Statement effective for the applicable period set
forth in Section 3 or 4 hereof, as applicable, or such shorter period as
will terminate when all Transfer Restricted Securities covered by such
Registration Statement have been sold or a subsequent Registration
Statement has been declared effective; cause the Prospectus to be
supplemented by any required Prospectus supplement, and as so supplemented
to be filed pursuant to Rule 424 under the Act, and to comply fully with
the applicable provisions of Rules 424 and 430A under the Act in a timely
manner; and comply with the provisions of the Act with respect to the
disposition of all securities covered by such Registration Statement during
the applicable period in accordance with the intended method or methods of
distribution by the sellers thereof set forth in such Registration
Statement or supplement to the Prospectus;
(iii) in the event that a Shelf Registration Statement is filed or a
Restricted Broker-Dealer would be required to deliver a Prospectus
contained in an Exchange Offer Registration Statement, advise the managing
underwriter(s), if any, and selling Holders promptly and, if requested by
such Persons, to confirm such advice in writing, (A) when the Prospectus or
any Prospectus supplement or post-effective amendment has been filed, and,
with respect to any Registration Statement or any post-effective amendment
thereto, when the same has become effective, (B) of any request by the
<PAGE>
Commission for amendments to the Registration Statement or amendments or
supplements to the Prospectus or for additional information relating
thereto, (C) of the issuance by the Commission of any stop order suspending
the effectiveness of the Registration Statement under the Act or of the
suspension by any state securities commission of the qualification of the
Transfer Restricted Securities for offering or sale in any jurisdiction, or
the initiation of any proceeding for any of the preceding purposes, (D) of
the existence of any fact or the happening of any event that makes any
statement of a material fact made in the Registration Statement, the
Prospectus, any amendment or supplement thereto, or any document
incorporated by reference therein untrue, or that requires the making of
any additions to or changes in the Registration Statement or the Prospectus
in order to make the statements therein not misleading. If at any time the
Commission shall issue any stop order suspending the effectiveness of the
Registration Statement, or any state securities commission or other
regulatory authority shall issue an order suspending the qualification or
exemption from qualification of the Transfer Restricted Securities under
state securities or Blue Sky laws, the Company and the Guarantors shall use
their reasonable best efforts to obtain the withdrawal or lifting of such
order at the earliest possible time;
(iv) in the event that a Shelf Registration Statement is filed or a
Restricted Broker-Dealer would be required to deliver a Prospectus
contained in an Exchange Offer Registration Statement, furnish to each of
the selling Holders specifically named in or covered by any Registration
Statement or Prospectus and each of the managing underwriter(s) in
connection with such sale, if any, before filing with the Commission,
copies of any Registration Statement or any Prospectus included therein or
any amendments or supplements to any such Registration Statement or
Prospectus (including all documents incorporated by reference after the
initial filing of such Registration Statement), which documents will be
subject to the review of such Holders and underwriter(s) in connection with
such sale, if any, for a period of at least five business days, and the
Company will not file any such Registration Statement or Prospectus or any
amendment or supplement to any such Registration Statement or Prospectus
(including all such documents incorporated by reference) to which selling
Holders of 25% or more in aggregate principal amount of Transfer Restricted
Securities covered by such Registration Statement or the managing
underwriter(s) in connection with such sale, if any, shall reasonably
object within five business days after the receipt thereof. A selling
Holder or managing underwriter, if any, shall be deemed to have reasonably
objected to such filing if such Registration Statement, amendment,
Prospectus or supplement, as applicable, as proposed to be filed, contains
a material misstatement or omission;
(v) in the event that a Shelf Registration Statement is filed or a
Restricted Broker-Dealer would be required to deliver a Prospectus
contained in an Exchange Offer Registration Statement, prior to 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 selling
Holders covered by such Registration Statement and to the managing
underwriter(s) in connection with such sale, if any, make the Company's
representatives available (and representatives of the Guarantors) for
discussion of such document and other customary due diligence matters on
reasonable prior notice, and include such information in such document
prior to the filing thereof as such selling Holders or managing
underwriter(s), if any, reasonably may request within five business days of
the receipt of the proposed filing;
(vi) in the event that a Shelf Registration Statement is filed or a
Restricted Broker-Dealer would be required to deliver a Prospectus
contained in an Exchange Offer Registration Statement, make available at
reasonable times, and at the offices where normally kept, for inspection by
the selling Holders, any underwriter participating in any disposition
pursuant to such Registration
<PAGE>
Statement, and any attorney or accountant retained by such selling Holders
or any of the underwriter(s), all financial and other records, pertinent
corporate documents and properties of the Company and the Guarantors and
cause the Company's and the Guarantors' officers, directors and employees,
as applicable, to supply all information reasonably requested by any such
Holder, underwriter, attorney or accountant in connection with such
Registration Statement subsequent to the filing thereof and prior to its
effectiveness, in each case to the extent reasonably necessary to enable
them to exercise any applicable due diligence responsibilities;
(vii) in the event that a Shelf Registration Statement is filed, if
requested by any selling Holders covered by such Registration Statement or
the underwriter(s) in connection with such sale, if any, as promptly as
practicable incorporate in any Registration Statement or Prospectus,
pursuant to a supplement or post-effective amendment if necessary, such
information as such selling Holders and underwriter(s), if any, may
reasonably request to have included therein, including, without limitation,
information relating to the "Plan of Distribution" of the Transfer
Restricted Securities, information with respect to the principal amount of
Transfer Restricted Securities being sold to such underwriter(s), the
purchase price being paid therefor and any other terms of the offering of
the Transfer Restricted Securities to be sold in such offering; and make
all required filings of such Prospectus supplement or post-effective
amendment as soon as practicable after the Company is notified of the
matters to be incorporated in such Prospectus supplement or post-effective
amendment; provided that, if any such Holder or underwriter had the
opportunity to review a filing pursuant to clause (iv) or clause (v) above
and the information proposed to be included was available at the time of
and could have been included in such earlier filing, all costs relating to
the inclusion of such information pursuant to a supplement or
post-effective amendment to such Registration Statement shall be paid for
by the party(ies) requesting such inclusion;
(viii) use its best efforts to cause the Transfer Restricted
Securities covered by the Registration Statement to be rated with the
appropriate rating agencies, if so requested by the Holders of a majority
in aggregate principal amount of Subordinated Notes covered thereby or the
underwriter(s), if any;
(ix) in the event that a Shelf Registration Statement is filed,
furnish to each selling Holder covered by such Registration Statement, on
request, and each of the managing underwriter(s) in connection with such
sale, if any, without charge, at least one copy of the Registration
Statement, as first filed with the Commission, and of each amendment
thereto, including all documents incorporated by reference therein and all
exhibits (including exhibits incorporated therein by reference);
(x) in the event that a Shelf Registration Statement is filed or a
Restricted Broker-Dealer would be required to deliver a Prospectus
contained in an Exchange Offer Registration Statement, deliver to each
selling Holder and each of the underwriter(s), if any, without charge, as
many copies of the Prospectus (including each preliminary prospectus) and
any amendment or supplement thereto as such Persons reasonably may request;
the Company and the Guarantors hereby consent to the use of the Prospectus
and any amendment or supplement thereto by each of the selling Holders and
each of the underwriter(s), if any, in connection with the offering and the
sale of the Transfer Restricted Securities covered by the Prospectus or any
amendment or supplement thereto provided that the Company has not advised
such Persons otherwise pursuant to Section 6(c)(iii);
(xi) in the event that a Shelf Registration Statement is filed or a
Restricted Broker-Dealer would be required to deliver a Prospectus
contained in an Exchange Offer Registration Statement, enter into, and
cause the Guarantors to enter into, such customary agreements (including an
<PAGE>
underwriting agreement), and make, and cause the Guarantors to make, such
customary representations and warranties, and take all such other
reasonable actions in connection therewith in order to expedite or
facilitate the disposition of the Transfer Restricted Securities pursuant
to any Registration Statement contemplated by this Agreement, all to such
extent as may be reasonably requested by any Holder of Transfer Restricted
Securities or managing underwriter in connection with any sale or resale
pursuant to any Registration Statement contemplated by this Agreement; and
whether or not an underwriting agreement is entered into and whether or not
the registration is an Underwritten Registration, the Company and the
Guarantors shall:
(A) furnish to each selling Holder and each managing underwriter,
if any, upon the effectiveness of the Shelf Registration Statement and
to each Restricted Broker-Dealer upon Consummation of the Exchange
Offer:
(1) such representations and warranties with respect to the
business of the Company and the Guarantors and the Registration
Statement, Prospectus and documents, if any, incorporated by
reference therein, in each case, as are customarily made by
issuers to underwriters in primary underwritten offerings of debt
securities similar to the Subordinated Notes, and confirm the
same if and when requested;
(2) an opinion, dated the date of Consummation of the
Exchange Offer or the date of effectiveness of the Shelf
Registration Statement, as the case may be, of counsel for the
Company and the Guarantors, covering the matters customarily
covered in opinions requested in underwritten offerings of debt
securities similar to the Subordinated Notes and such other
matters as such parties may reasonably request, and in any event
including a statement to the effect that such counsel has
participated in conferences with officers and other
representatives of the Company, representatives of the
independent public accountants for the Company, the Purchasers'
representatives and the Purchasers' counsel in connection with
the preparation of such Registration Statement and the related
Prospectus and have considered the matters required to be stated
therein and the statements contained therein, although such
counsel has not independently verified the accuracy, completeness
or fairness of such statements; and that such counsel advises
that, on the basis of the foregoing (relying as to materiality to
a large extent upon facts provided to such counsel by officers
and other representatives of the Company and without independent
check or verification), no facts came to such counsel's attention
that caused such counsel to believe that the applicable
Registration Statement, at the time such Registration Statement
or any post-effective amendment thereto became effective, and, in
the case of the Exchange Offer Registration Statement, as of the
date of Consummation, contained an untrue statement of a material
fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not
misleading, or that the Prospectus contained in such Registration
Statement as of its date and, in the case of the opinion dated
the date of Consummation of the Exchange Offer, as of the date of
Consummation, contained an untrue statement of a material fact or
omitted to state a material fact necessary in order to make the
statements therein, in light of the circumstances under which
they were made, not misleading. Without limiting the foregoing,
such counsel may state further that such counsel assumes no
responsibility for, and has not independently verified, the
accuracy, completeness or fairness of the financial statements,
notes and schedules and other financial data included in any
Registration Statement contemplated by this Agreement or the
related Prospectus; and
<PAGE>
(3) provided that the requesting Holders, underwriter(s), if
any, or other such financial intermediary furnish the undertaking
required in SAS 72, if required, a customary comfort letter in
form and substance reasonably satisfactory to the requesting
Holders, underwriter(s), if any, or other financial intermediary,
dated as of the date of Consummation of the Exchange Offer or the
date of effectiveness of the Shelf Registration Statement, as the
case may be, from the Company's independent accountants, in the
customary form and covering matters of the type customarily
covered in comfort letters to underwriters in connection with
primary underwritten offerings;
(B) set forth in full or incorporate by reference in the
underwriting agreement, if any, the indemnification provisions and
procedures of Section 8 hereof with respect to all parties to be
indemnified pursuant to said Section; and
(C) deliver such other documents and certificates as may be
reasonably requested by such parties to evidence compliance with
clause (A) above and with any customary conditions contained in the
underwriting agreement or other agreement entered into by the Company
pursuant to this clause (xi), if any.
If at any time the representations and warranties of the Company and the
Guarantors contemplated in clause (A)(1) above cease to be true and correct, the
Company or the Guarantors shall so advise the Purchasers and the underwriter(s),
if any, each selling Holder and Restricted Broker-Dealers, if any, promptly and,
if requested by such Persons, shall confirm such advice in writing;
(xii) prior to any public offering of Transfer Restricted Securities
provided for under this Agreement, cooperate with, and cause the Guarantors
to cooperate with, the selling Holders, the underwriter(s), if any, and
their respective counsel in connection with the registration and
qualification of the Transfer Restricted Securities under the state
securities or Blue Sky laws of such domestic jurisdictions as the selling
Holders or underwriter(s), if any, may reasonably request in writing and do
any and all other acts or things necessary or advisable to enable the
disposition in such jurisdictions of the Transfer Restricted Securities
covered by the Shelf Registration Statement; provided, however, that
neither the Company nor any of the Guarantors shall be required to register
or qualify as a foreign corporation where it is not now so qualified or to
take any action that would subject it to the service of process in suits or
to taxation, other than as to matters and transactions relating to the
Registration Statement, in any jurisdiction where it is not now so subject;
(xiii) in the event that a Shelf Registration Statement is filed,
shall issue, upon the request of any Holder of Notes covered by the Shelf
Registration Statement contemplated by this Agreement, Notes not bearing
legends restricting their transfer, having an aggregate principal amount
equal to the aggregate principal amount of Notes surrendered to the Company
by such Holder in exchange therefor or being sold by such Holder; such New
Notes to be registered in the name of such Holder or in the name of the
purchaser(s) of such Subordinated Notes, as the case may be; in return, the
Notes held by such Holder shall be surrendered to the Company for
cancellation;
(xiv) in the event that a Shelf Registration Statement is filed, in
connection with any sale of Transfer Restricted Securities that will result
in such securities no longer being Transfer Restricted Securities,
cooperate with, and cause the Guarantors to cooperate with, the selling
Holders and the underwriter(s), if any, to facilitate the timely
preparation and delivery of certificates representing Transfer Restricted
Securities to be sold and not bearing any restrictive legends; and enable
such Transfer Restricted Securities to be in such denominations and
registered in such names as the Holders
<PAGE>
or the underwriter(s), if any, may reasonably request at least two business
days prior to any sale of Transfer Restricted Securities made by such
underwriter(s);
(xv) use its best efforts to cause the Transfer Restricted Securities
covered by the Registration Statement to be registered with or approved by
such other governmental agencies or authorities as may be necessary to
enable the seller or sellers thereof or the underwriter(s), if any, to
consummate the disposition of such Transfer Restricted Securities, except
as may be required solely as a consequence of the nature of such seller's
business and subject to the proviso contained in clause (xii) above;
(xvi) in the event that a Shelf Registration Statement is filed or a
Restricted Broker-Dealer would be required to deliver a Prospectus
contained in an Exchange Offer Registration Statement, if any fact or event
contemplated by clause 6(c)(iii)(D) hereof shall exist or have occurred,
prepare a supplement or post-effective amendment to the Registration
Statement or related Prospectus or any document incorporated therein by
reference or file any other required document so that, as thereafter
delivered to the purchasers of Transfer Restricted Securities, the
Prospectus will not contain an untrue statement of a material fact or omit
to state any material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading;
(xvii) provide a CUSIP number for all Transfer Restricted Securities
not later than the effective date of the first Registration Statement
required by this Agreement and provide the Trustee under the Indenture with
printed certificates for the Transfer Restricted Securities which are in a
form eligible for deposit with The Depositary Trust Company;
(xviii) cooperate and assist in any filings required to be made with
the NASD and in the performance of any due diligence investigation by any
underwriter (including any "qualified independent underwriter") that is
required to be retained in accordance with the rules and regulations of the
NASD, and use its reasonable best efforts to cause such Registration
Statement to become effective and approved by such governmental agencies or
authorities as may be necessary to enable the Holders selling Transfer
Restricted Securities to consummate the disposition of such Transfer
Restricted Securities;
(xix) otherwise use its best efforts to comply with all applicable
rules and regulations of the Commission, and make generally available to
its security holders, as soon as practicable, a consolidated earnings
statement meeting the requirements of Rule 158 (which need not be audited)
for the twelve-month period (A) commencing at the end of any fiscal quarter
in which Transfer Restricted Securities are sold to underwriters in a firm
or best efforts Underwritten Offering or (B) if not sold to underwriters in
such an offering, beginning on the first day of the Company's first fiscal
quarter commencing after the effective date of the Registration Statement;
(xx) cause the Indenture to be qualified under the TIA not later than
the effective date of the first Registration Statement required by this
Agreement, and, in connection therewith, cooperate, and cause the
Guarantors to cooperate, with the Trustee and the Holders of Subordinated
Notes to effect such changes to the Indenture as may be required for such
Indenture to be so qualified in accordance with the terms of the TIA; and
execute, and cause the Guarantors to execute, and use its best efforts to
cause the Trustee to execute, all documents that may be required to effect
such changes and all other forms and documents required to be filed with
the Commission to enable such Indenture to be so qualified in a timely
manner; and
<PAGE>
(xxi) use its best efforts to cause all Transfer Restricted Securities
covered by the Registration Statement to be listed on each securities
exchange on which similar securities issued by the Company are then listed
if requested by the Holders of a majority in aggregate principal amount of
Notes or the managing underwriter(s), if any.
Each Holder agrees by acquisition of a Transfer Restricted Security that,
upon receipt of any notice from the Company of the existence of any fact of the
kind described in Section 6(c)(iii)(D) hereof, such Holder will forthwith
discontinue disposition of Transfer Restricted Securities pursuant to the
applicable Registration Statement until such Holder's receipt of the copies of
the supplemented or amended Prospectus contemplated by Section 6(c)(xvi) hereof,
or until it is advised in writing (the "Advice") by the Company that the use of
the Prospectus may be resumed, and has received copies of any amendments or
supplements thereto. If so directed by the Company, each Holder will deliver to
the Company (at the Company's expense) all copies, other than permanent file
copies then in such Holder's possession, of the Prospectus covering such
Transfer Restricted Securities that was current at the time of receipt of such
notice. In the event the Company shall give any such notice, the time period
regarding the effectiveness of such Registration Statement set forth in Section
3 or 4 hereof, as applicable, shall be extended by the number of days during the
period from and including the date of the giving of such notice pursuant to
Section 6(c)(iii)(D) hereof to and including the date when each selling Holder
covered by such Registration Statement shall have received the copies of the
supplemented or amended Prospectus contemplated by Section 6(c)(xvi) hereof or
shall have received the Advice.
SECTION 7. REGISTRATION EXPENSES
(a) All expenses incident to the Company's or the Guarantors performance of
or compliance with this Agreement will be borne by the Company or the
Guarantors, regardless of whether a Registration Statement becomes effective,
including without limitation: (i) all registration and filing fees and expenses
(including filings made by any Purchaser or Holder with the NASD (and, if
applicable, the fees and expenses of any "qualified independent underwriter" and
its counsel that may be required by the rules and regulations of the NASD));
(ii) all fees and expenses of compliance with federal securities and state Blue
Sky or securities laws; (iii) all expenses of printing (including printing
certificates for the New Notes to be issued in the Exchange Offer and printing
of Prospectuses), messenger and delivery services and telephone; (iv) all fees
and disbursements of counsel for the Company, the Guarantors and, subject to
Section 7(b) below, the Holders of Transfer Restricted Securities; (v) all
application and filing fees in connection with listing Subordinated Notes on a
national securities exchange or automated quotation system pursuant to the
requirements hereof; and (vi) all fees and disbursements of independent
certified public accountants of the Company and the Guarantors (including the
expenses of any special audit and comfort letters required by or incident to
such performance).
The Company will, in any event, bear its and the Guarantor's internal
expenses (including, without limitation, all salaries and expenses of its
officers and employees performing legal or accounting duties), the expenses of
any annual audit and the fees and expenses of any Person, including special
experts, retained by the Company.
(b) In connection with any Registration Statement required by this
Agreement (including, without limitation, the Exchange Offer Registration
Statement and the Shelf Registration Statement), the Company will reimburse the
Holders of Transfer Restricted Securities being tendered in the Exchange Offer
and/or resold pursuant to the "Plan of Distribution" contained in the Exchange
Offer Registration Statement or registered pursuant to the Shelf Registration
Statement, as applicable, for the reasonable fees
<PAGE>
and disbursements of not more than one counsel, who shall be Latham & Watkins or
such other counsel as may be chosen by the Holders of a majority in principal
amount of the Transfer Restricted Securities for whose benefit such Registration
Statement is being prepared. The Company and the Guarantors shall not have any
obligation to pay any underwriting fees, discounts or commissions attributable
to the sale of any New Notes pursuant to this Agreement.
SECTION 8. INDEMNIFICATION
(a) The Company and the Guarantors, jointly and severally, agree to
indemnify and hold harmless (i) each Holder, (ii) each person, if any, who
controls any Holder within the meaning of Section 15 of the Act or Section 20(a)
of the Exchange Act and (iii) the respective officers, directors, partners,
employees, representatives and agents of any Holder or any controlling person
(each a "Participant") to the fullest extent lawful, from and against any and
all losses, liabilities, claims, damages and expenses whatsoever (including but
not limited to attorneys' fees and any and all expenses whatsoever incurred in
investigating, preparing or defending against any investigation or litigation,
commenced or threatened, or any claim whatsoever, and any and all amounts paid
in settlement of any claim or litigation), joint or several, to which they or
any of them may become subject under the Act, the Exchange Act or otherwise,
insofar as such losses, liabilities, claims, damages or expenses (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement or
the Prospectus, or in any supplement thereto or amendment thereof, 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, in the light of the circumstances under which they were made, not
misleading; provided, however, that the Company and the Guarantors will not be
liable in any such case to the extent, but only to the extent, that (i) any such
loss, liability, claim, damage or expense arises out of or is based upon any
such untrue statement or alleged untrue statement or omission or alleged
omission made therein in reliance upon and in conformity with written
information furnished to the Company or the Guarantors by or on behalf of any
Holder, underwriter or other Purchaser expressly for use therein and (ii) the
foregoing indemnity with respect to any untrue statement contained in or omitted
from a Registration Statement or the Prospectus shall not inure to the benefit
of any Holder (or any person controlling such Holder), from whom the person
asserting any such loss, liability, claim, damage or expense purchased any of
the Subordinated Notes which are the subject thereof if it is finally judicially
determined that such loss, liability, claim, damage or expense resulted solely
from the fact that the Holder sold Subordinated Notes to a person to whom there
was not sent or given, at or prior to the written confirmation of such sale, a
copy of the Registration Statement and the Prospectus, as amended or
supplemented, and (x) the Company shall have previously and timely furnished
sufficient copies of the Registration Statement or Prospectus, as so amended or
Supplemented, to such Holder in accordance with this Agreement and (y) the
Registration Statement or Prospectus, as so amended or supplemented, would have
corrected such untrue statement or omission of a material fact. This indemnity
agreement will be in addition to any liability which the Company and the
Guarantors may otherwise have, including, under this Agreement.
(b) Each Participant (and each underwriter in an underwritten offering
pursuant to a Shelf Registration Statement) will be required to agree (and each
Holder hereby agrees), severally and not jointly, to indemnify and hold harmless
the Company, the Guarantors and each person, if any, who controls the Company or
the Guarantors within the meaning of Section 15 of the Act or Section 20(a) of
the Exchange Act, against any losses, liabilities, claims, damages and expenses
whatsoever (including but not limited to attorneys' fees and any and all
expenses whatsoever incurred in investigating, preparing or defending against
any investigation or litigation, commenced or threatened, or any claim
whatsoever and
<PAGE>
any and all amounts paid in settlement of any claim or litigation), to which
they or any of them may become subject under the Act, the Exchange Act or
otherwise, insofar as such losses, liabilities, claims, damages or expenses (or
actions in respect thereof) arise out of or are based upon any untrue statement
or alleged untrue statement of a material fact contained in the Registration
Statement or the Prospectus, or in any amendment thereof 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, in the light of the circumstances under which they were
made, not misleading, in each case to the extent, but only to the extent, that
any such loss, liability, claim, damage or expense arises out of or is based
upon any untrue statement or alleged untrue statement or omission or alleged
omission made therein in reliance upon and in conformity with written
information furnished to the Company or the Guarantors by or on behalf of such
Participant expressly for use therein. This indemnity will be in addition to any
liability which a Holder may otherwise have, including under this Agreement. In
no event, however, shall the liability of any selling Holder hereunder be
greater in amount than the dollar amount of the proceeds received by such Holder
upon its sale of the Transfer Restricted Securities giving rise to such
indemnification obligation.
(c) Promptly after receipt by an indemnified party under subsection (a) or
(b) above of notice of the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying
party under such subsection, notify each party against whom indemnification is
to be sought in writing of the commencement thereof (but the failure so to
notify an indemnifying party shall not relieve it from any liability which it
may have under this Section 8 except to the extent that it has been prejudiced
in any material respect by such failure or from any liability which it may
otherwise have). In case any such action is brought against any indemnified
party, and it notifies an indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate therein, and to the extent it
may elect by written notice delivered to the indemnified party promptly after
receiving the aforesaid notice from such indemnified party, to assume the
defense thereof with counsel reasonably satisfactory to such indemnified party.
Notwithstanding the foregoing, the indemnified party or parties shall have the
right to employ its or their own counsel in any such case, but the fees and
expenses of such counsel shall be at the expense of such indemnified party or
parties unless (i) the employment of such counsel shall have been authorized in
writing by the indemnifying parties in connection with the defense of such
action, (ii) the indemnifying parties shall not have employed counsel to take
charge of the defense of such action within a reasonable time after notice of
commencement of the action, or (iii) such indemnified party or parties shall
have been advised in writing that there may be defenses available to it or them
which are different from or additional to those available to one or all of the
indemnifying parties (in which case the indemnifying party or parties shall not
have the right to direct the defense of such action on behalf of the indemnified
party or parties), in any of which events such fees and expenses of counsel
shall be borne by the indemnifying parties; provided, however, that the
indemnifying party under subsection (a) or (b) above, shall only be liable for
the legal expenses of one counsel (in addition to any local counsel) for all
indemnified parties in each jurisdiction in which any claim or action is
brought; provided, however, that the indemnifying party shall be liable for
separate counsel for any indemnified party in a jurisdiction, if counsel to the
indemnified party or parties shall have reasonably concluded in writing that
there may be defenses available to such indemnified party that are different
from or additional to those available to one or more of the other indemnified
parties and that separate counsel for such indemnified party is prudent under
the circumstances. Anything in this subsection to the contrary notwithstanding,
an indemnifying party shall not be liable for any settlement of any claim or
action effected without its prior written consent; provided, however, that such
consent was not unreasonably withheld.
(d) In order to provide for contribution in circumstances in which the
indemnification provided for in this Section 8 is for any reason held to be
unavailable to an indemnified party or is insufficient to
<PAGE>
hold harmless a party indemnified thereunder, the Company, the Guarantors and
each Participant (or other indemnifying person) shall contribute to the
aggregate losses, claims, damages, liabilities and expenses of the nature
contemplated by such indemnification provision (including any investigation,
legal and other expenses incurred in connection with, and any amount paid in
settlement of, any action, suit or proceeding or any claims asserted, but after
deducting in the case of losses, claims, damages, liabilities and expenses
suffered by the Company, any contribution received by the Company from Persons,
other than the Holders, who may also be liable for contribution, including
Persons who control the Company within the meaning of Section 15 of the Act or
Section 20(a) of the Exchange Act) to which the Company and any Participant (or
other indemnifying person) may be subject, in such proportion as is appropriate
to reflect the relative benefits received by the Company and any Participant
from their sale of Transfer Restricted Securities or, if such allocation is not
permitted by applicable law or indemnification is not available as a result of
the indemnifying party not having received notice as provided in this Section 8,
in such proportion as is appropriate to reflect not only the relative benefits
referred to above but also the relative fault of the Company and the Guarantors,
on the one hand, and the Participants (or other indemnifying person), on the
other hand, in connection with the statements or omissions which resulted in
such losses, claims, damages, liabilities or expenses, as well as any other
relevant equitable considerations. The relative benefits received by the Company
and any Participant shall be deemed to be in the same proportion as (x) the
total proceeds from the offering (net of discounts but before deducting
expenses) of the Subordinated Notes received by the Company and (y) the total
proceeds received by such Participant upon its sale of Subordinated Notes which
would otherwise give rise to the indemnification obligation, respectively. The
relative fault of the Company and the Guarantors and of the Participant (or
other indemnifying person) shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company or the Participants and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Company, the Guarantors and each Holder agree that it
would not be just and equitable if contribution pursuant to this Section 8 were
determined by pro rata allocation or by any other method of allocation which
does not take into account the equitable considerations referred to above.
Notwithstanding the provisions of this Section 8, (i) no Holder shall be
required to contribute, in the aggregate, any amount in excess of the amount by
which the total value of the Subordinated Notes held by such Holder exceeds the
amount of any damages which such Holder has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission and (ii) no Person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. For purposes of
this Section 8, (A) each person, if any, who controls a Holder within the
meaning of Section 15 of the Act or Section 20(a) of the Exchange Act and (B)
the respective officers, directors, partners, employees, representatives and
agents of a Holder or any controlling Person shall have the same rights to
contribution as such Holder, and each Person, if any, who controls the Company
within the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act
shall have the same rights to contribution as the Company, subject in each case
to clauses (i) and (ii) of this Section 8(d). Any party entitled to contribution
will, promptly after receipt of notice of commencement of any action, suit or
proceeding against such party in respect of which a claim for contribution may
be made against another party or parties under this Section 8, notify such party
or parties from whom contribution may be sought, but the failure to so notify
such party or parties shall not relieve the party or parties from whom
contribution may be sought from any obligation it or they may have under this
Section 8 or otherwise (except to the extent it has been prejudiced in any
material respect by such failure). No party shall be liable for contribution
with respect to any action or claim settled without its prior written consent;
provided, however, that such written consent was not unreasonably withheld.
<PAGE>
SECTION 9. RULE 144A
Unless the Company is then subject to Section 13 or 15(d) of the Exchange
Act, the Company hereby agrees with each Holder, for so long as any Transfer
Restricted Securities remain outstanding, to make available, upon request, to
any Holder or beneficial owner of Transfer Restricted Securities in connection
with any sale thereof and any prospective purchaser of such Transfer Restricted
Securities from such Holder or beneficial owner, the information required by
Rule 144A(d)(4) under the Act in order to permit resales of such Transfer
Restricted Securities pursuant to Rule 144A.
SECTION 10. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS
No Holder may participate in any Underwritten Registration hereunder unless
such Holder (a) agrees to sell such Holder's Transfer Restricted Securities on
the basis provided in any underwriting arrangements approved by the Persons
entitled hereunder to approve such arrangements and (b) completes and executes
all reasonable questionnaires, powers of attorney, indemnities, underwriting
agreements, lock-up letters and other documents required under the terms of such
underwriting arrangements, which, in any event, shall be reasonably satisfactory
to the Company and customary in connection with underwritten securities
offerings.
SECTION 11. SELECTION OF UNDERWRITERS
The Holders of Transfer Restricted Securities covered by the Shelf
Registration Statement who desire to do so may sell such Transfer Restricted
Securities in an Underwritten Offering. In any such Underwritten Offering, the
investment banker or investment bankers and manager or managers that will
administer the offering will be selected by the Holders of a majority in
aggregate principal amount of the Transfer Restricted Securities included in
such offering; provided, that such investment bankers and managers must be
reasonably satisfactory to the Company. Except as expressly provided for herein,
neither the Company nor the Guarantors shall be responsible for any fees, costs
or expenses of such bankers or managers or their respective advisors or
representatives.
SECTION 12. MISCELLANEOUS
(a) Remedies. The Company and the Guarantors agree that monetary damages
(including the Liquidated Damages contemplated hereby) would not be adequate
compensation for any loss incurred by reason of a breach by it of the provisions
of this Agreement and hereby agree to waive the defense in any action for
specific performance that a remedy at law would be adequate; provided, however,
if the Company has complied with the provisions of Sections 3, 4 and 6 hereof,
the accrual and payment of Liquidated Damages, as set forth in Section 5 above,
shall be the sole and exclusive remedy of the Holders against the Company and
the Guarantors for the events constituting a Registration Default.
(b) No Inconsistent Agreements. The Company will not, and will cause the
Guarantors not to, on or after the date of this Agreement enter into any
agreement with respect to its securities that is inconsistent with the rights
granted to the Holders in this Agreement or otherwise conflicts with the
provisions hereof. Neither the Company nor any of the Guarantors has previously
entered into any agreement granting any registration rights with respect to its
securities to any Person which would permit such Person to (i) include its
securities in any Registration Statement or (ii) participate in any Underwritten
Registration or Underwritten
<PAGE>
Offering. The rights granted to the Holders hereunder do not in any way conflict
with and are not inconsistent with the rights granted to the holders of the
Company's securities under any agreement in effect on the date hereof.
(c) Adjustments Affecting the Subordinated Notes. The Company and the
Guarantors will not take any action with respect to the Subordinated Notes that
would materially and adversely affect the ability of the Holders to Consummate
any Exchange Offer.
(d) Amendments and Waivers. The provisions of this Agreement may not be
amended, modified or supplemented, and waivers or consents to or departures from
the provisions hereof may not be given, unless the Company has obtained the
written consent of Holders of a majority of the outstanding principal amount of
Transfer Restricted Securities. Notwithstanding the foregoing, a waiver or
consent to departure from the provisions hereof that relates exclusively to the
rights of Holders whose securities are sold or exchanged pursuant to a
Registration Statement and that does not affect directly or indirectly the
rights of other Holders whose securities are not being tendered pursuant to such
Exchange Offer may be given by the Holders of a majority of the outstanding
principal amount of Transfer Restricted Securities being sold or exchanged
pursuant to such Registration Statement.
(e) Notices. All notices and other communications provided for or permitted
hereunder shall be made in writing by hand-delivery, first-class mail
(registered or certified, return receipt requested), telex, telecopier, or air
courier guaranteeing overnight delivery:
(i) if to a Holder, at the address set forth on the records of the
Registrar under the Indenture, with a copy to the Registrar under the
Indenture; and
(ii) if to the Company:
Precise Technology, Inc.
501 Mosside Boulevard
North Versailles, Pennsylvania 15137
Telecopier No.: (412) 823-4110
Attention: Secretary
With a copy to:
Mentmore Holdings Corporation
1430 Broadway
13th Floor
New York, New York 10018-3308
Telecopier No.: (212) 391-1393
Attention: William L. Remley
and
Winston & Strawn
200 Park Avenue
New York, New York 10166
Telecopier No.: (212) 294-4700
Attention: Robert W. Ericson, Esq.
<PAGE>
(iii) notice to the Company shall be deemed notice to any and every
Guarantor.
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five business
days after being deposited in the mail, postage prepaid, if mailed; when
answered back, if telexed; when receipt acknowledged, if telecopied; and on the
next business day, if timely delivered to an air courier guaranteeing overnight
delivery.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee at the
address specified in the Indenture.
(f) Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the successors and assigns of each of the parties, including
without limitation and without the need for an express assignment, subsequent
Holders of Transfer Restricted Securities; provided, however, that this
Agreement shall not inure to the benefit of or be binding upon a successor or
assign of a Holder unless and to the extent such successor or assign acquired
Transfer Restricted Securities from such Holder.
(g) 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 be an original and all of which taken
together shall constitute one and the same agreement.
(h) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(i) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE
CONFLICT OF LAW RULES THEREOF.
(j) 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.
(k) Entire Agreement. This Agreement together with the other Operative
Documents (as defined in the Purchase 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. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein
with respect to the registration rights granted by the Company with respect to
the Transfer Restricted Securities. This Agreement supersedes all prior
agreements and understandings between the parties with respect to such subject
matter.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
Precise Technology, Inc.
By: /s/ William L. Remley
-----------------------------
Name:
Title:
Precise TMP, Inc.
By: /s/ William L. Remley
-----------------------------
Name:
Title:
Massie Tool, Mold & Die, Inc.
By: /s/ William L. Remley
-----------------------------
Name:
Title:
Precise Polestar, Inc.
By: /s/ William L. Remley
-----------------------------
Name:
Title:
Precise Technology of Delaware Inc.
By: /s/ William L. Remley
-----------------------------
Name:
Title:
Precise Technology of Illinois Inc.
By: /s/ William L. Remley
-----------------------------
Name:
Title:
<PAGE>
Bear, Stearns & Co. Inc.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
By: Bear, Stearns & Co. Inc.
By: /s/ J. Andrew Bugas
-----------------------------
Name: J. Andrew Bugas
Title: Senior Managing Director
<PAGE>
EXECUTION COPY
================================================================================
PRECISE TECHNOLOGY, INC.
$75,000,000
11 1/8% Senior Subordinated Notes due 2007
Purchase Agreement
June 10, 1997
BEAR, STEARNS & CO. INC.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
================================================================================
<PAGE>
PRECISE TECHNOLOGY, INC.
$75,000,000
11 1/8% Senior Subordinated Notes due 2007
PURCHASE AGREEMENT
June 10, 1996
New York, New York
BEAR, STEARNS & CO. INC.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
c/o Bear, Stearns & Co. Inc.
245 Park Avenue
New York, New York 10167
Ladies & Gentlemen:
Precise Technology, Inc., a Delaware corporation (the "Company"), proposes
to issue and sell to Bear, Stearns & Co. Inc. and Merrill Lynch, Pierce, Fenner
& Smith Incorporated (the "Initial Purchasers") $75,000,000 aggregate principal
amount of its 11 1/8% Senior Subordinated Notes due 2007 (the "Notes"), subject
to the terms and conditions set forth herein. The Notes will be issued pursuant
to an indenture (the "Indenture"), to be dated the Closing Date (as defined
below), among the Company and Marine Midland Bank, as trustee (the "Trustee").
Capitalized terms used herein and not otherwise defined shall have the meanings
assigned to such terms in the Indenture.
1. Issuance of Securities. The Company proposes, upon the terms and subject
to the conditions set forth herein, to issue and sell to the Initial Purchasers
an aggregate of $75,000,000 principal amount of Notes. The Company's payment
obligations under the Subordinated Notes (as defined below) will be jointly and
severally guaranteed (the "Subsidiary Guarantees") on a senior subordinated
basis by Precise TMP, Inc., Massie Tool, Mold & Die, Inc., Precise Polestar,
Inc., Precise Technology of Delaware Inc. and Precise Technology of Illinois
Inc. (collectively, the "Guarantors") pursuant to the Subsidiary Guarantees. The
Notes and the New Notes (as defined below) issuable in exchange therefor are
collectively referred to herein as the "Subordinated Notes." All references to
Notes, New Notes and Subordinated Notes shall be deemed to include the
Subsidiary Guarantees related thereto.
Upon original issuance thereof, and until such time as the same is no
longer required under the applicable requirements of the Securities Act of 1933,
as amended (the "Act"), the Notes (and all securities issued in exchange
therefor or in substitution thereof) shall bear the following legend:
"THIS SECURITY (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER
THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT") AND, ACCORDINGLY, MAY NOT BE OFFERED, SOLD, PLEDGED OR
OTHERWISE TRANSFERRED WITHIN THE UNITED STATES OR TO, OR FOR THE
ACCOUNT OR BENEFIT OF, U.S. PERSONS, EXCEPT AS SET FORTH IN THE
FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL
INTEREST HEREIN, THE HOLDER (1) REPRESENTS THAT (A) IT
<PAGE>
IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A
UNDER THE SECURITIES ACT) (A "QIB"), (B) IT IS NOT A U.S. PERSON,
IS NOT ACQUIRING THIS NOTE FOR THE ACCOUNT OR BENEFIT OF A U.S.
PERSON AND IS ACQUIRING THIS NOTE IN AN OFFSHORE TRANSACTION IN
COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT OR (C) IT
IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE
501(A)(1), (2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES
ACT) (AN "IAI"), (2) AGREES THAT IT WILL NOT, WITHIN THE TIME
PERIOD REFERRED TO UNDER RULE 144(k) (TAKING INTO ACCOUNT THE
PROVISIONS OF RULE 144(d) UNDER THE SECURITIES ACT, IF
APPLICABLE) UNDER THE SECURITIES ACT AS IN EFFECT ON THE DATE OF
THE TRANSFER OF THIS NOTE, RESELL OR OTHERWISE TRANSFER THIS NOTE
EXCEPT (A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) TO A
PERSON WHOM THE HOLDER REASONABLY BELIEVES IS A QIB PURCHASING
FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QIB IN COMPLIANCE
WITH RULE 144A UNDER THE SECURITIES ACT, (C) OUTSIDE THE UNITED
STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904
UNDER THE SECURITIES ACT, (D) PURSUANT TO THE EXEMPTION FROM
REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF
AVAILABLE), (E) TO AN IAI THAT, PRIOR TO SUCH TRANSFER, FURNISHES
TO THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS
AND AGREEMENTS RELATING TO THE REGISTRATION OF TRANSFER OF THIS
NOTE (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE)
AND, IF THE ISSUER SO REQUESTS, AN OPINION OF COUNSEL REASONABLY
ACCEPTABLE TO THE COMPANY THAT SUCH TRANSFER IS IN COMPLIANCE
WITH THE SECURITIES ACT OR (F) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND, IN EACH
CASE, IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS, AND
(3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS NOTE
OR AN INTEREST HEREIN IS TRANSFERRED A NOTICE SUBSTANTIALLY TO
THE EFFECT OF THIS LEGEND. AS USED HEREIN, THE TERMS "OFFSHORE
TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS
GIVEN TO THEM BY RULE 902 OF REGULATION S UNDER THE SECURITIES
ACT."
2. Offering. The Notes will be offered and sold to the Initial
Purchasers pursuant to an exemption from the registration requirements
under the Act. The Company has prepared a preliminary offering
memorandum, dated May 19, 1997 (the "Preliminary Offering
Memorandum"), and a final offering memorandum, dated June 10, 1997
(the "Offering Memorandum"), relating to the Company and the Notes.
The Initial Purchasers have advised the Company that the Initial
Purchasers will make offers (the "Exempt Resales") of the Notes on the
terms set forth in the Offering Memorandum, as amended or
supplemented, solely to (i) persons whom the Initial Purchasers
reasonably believe to be "qualified institutional buyers" as defined
in Rule 144A under the Act ("QIBs"), (ii) a limited number of other
institutional "accredited investors," as defined in Rule 501(a) (1),
(2), (3) or (7) under the Act, that, prior to their purchase of the
Notes, deliver to the Initial Purchasers a letter containing the
representations and agreements set forth in Annex A to the Offering
Memorandum (each, an "Accredited Institution"), and (iii) to non-U.S.
persons permitted to purchase the Notes in offshore transactions in
reliance upon Regulation S under the Act (each, a "Regulation S
Purchaser") (such persons specified in clauses (i), (ii) and (iii)
being referred to herein as the "Eligible Purchasers"). The Initial
Purchasers will offer the Notes to Eligible
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<PAGE>
Purchasers initially at a price equal to 100% of the principal amount thereof.
Such price may be changed at any time without notice.
Holders (including subsequent transferees) of the Notes will have the
registration rights set forth in the registration rights agreement relating
thereto (the "Registration Rights Agreement") in substantially the form of
Exhibit A hereto, to be dated the Closing Date, for so long as such Notes
constitute "Transfer Restricted Securities" (as defined in the Registration
Rights Agreement). Pursuant to the Registration Rights Agreement, the Company
will agree to file with the Securities and Exchange Commission (the
"Commission"), under the circumstances set forth therein, (i) a registration
statement under the Act (the "Exchange Offer Registration Statement") relating
to the 111/8% New Senior Subordinated Notes due 2007 (the "New Notes") to be
offered in exchange for the Notes (the "Exchange Offer") and (ii) a shelf
registration statement pursuant to Rule 415 under the Act (the "Shelf
Registration Statement") relating to the resale by certain holders of the Notes,
and to use their best efforts to cause such Registration Statements to be
declared effective and to consummate the Exchange Offer. This Agreement, the
Subordinated Notes, the Subsidiary Guarantees, the Indenture and the
Registration Rights Agreement, are hereinafter sometimes referred to
collectively as the "Operative Documents."
3. Purchase, Sale and Delivery. (a) On the basis of the representations,
warranties and covenants contained in this Agreement, and subject to its terms
and conditions, the Company agrees to issue and sell to the Initial Purchasers,
and the Initial Purchasers agree to purchase from the Company, $75,000,000
aggregate principal amount of Notes. The purchase price for the Notes will be
$970.00 per $1,000 principal amount thereof.
(b) Delivery of the Notes shall be made, against payment of the purchase
price therefor, at the offices of Latham & Watkins, 885 Third Avenue, New York,
New York 10022, or such other location as may be mutually acceptable. Such
delivery and payment shall be made at 9:00 A.M. New York City time, on June 13,
1997, or at such other time as shall be agreed upon by the Initial Purchasers
and the Company. The time and date of such delivery and payment are herein
called the "Closing Date."
(c) Notes sold by the Initial Purchasers to QIBs, Accredited Institutions
and pursuant to Regulations S will be represented by separate Notes in
definitive global form, registered in the name of Cede & Co., as nominee of the
Depository Trust Company ("DTC"), each having an aggregate principal amount
corresponding to the aggregate principal amount of the Notes sold to such QIBs,
Accredited Institutions and pursuant to Regulations S (collectively, the "Global
Notes"). The Global Notes shall be delivered by the Company to the Initial
Purchasers (or as the Initial Purchasers direct) in each case with any transfer
taxes thereon duly paid by the Company against payment by the Initial Purchasers
of the purchase price thereof by wire transfer in same day funds to the order of
the Company. The Global Notes shall be made available to the Initial Purchasers
for inspection not later than 9:30 a.m., New York City time, on the business day
immediately preceding the Closing Date.
4. Agreements of the Company and the Guarantors. Each of the Company and
the Guarantors, jointly and severally, covenants and agrees with the Initial
Purchasers as follows:
(a) To advise the Initial Purchasers promptly and, if requested by the
Initial Purchasers, confirm such advice in writing, (i) of the issuance by
any state securities commission of any stop order suspending the
qualification or exemption from qualification of any Subordinated Notes for
offering or sale in any jurisdiction, or the initiation of any proceeding
for such purpose by any state securities commission or other regulatory
authority and (ii) of the happening of any event that, in the reasonable
opinion of either counsel to the Company or counsel to the Initial
Purchasers, makes any statement of a material fact made in the Preliminary
4
<PAGE>
Offering Memorandum or the Offering Memorandum untrue or that requires the
making of any additions to or changes in the Preliminary Offering
Memorandum or the Offering Memorandum in order to make the statements
therein, in the light of the circumstances under which they are made, not
misleading. The Company and the Guarantors shall use their best efforts to
prevent the issuance of any stop order or order suspending the
qualification or exemption of any Subordinated Notes under any state
securities or Blue Sky laws and, if at any time any state securities
commission or other regulatory authority shall issue an order suspending
the qualification or exemption of any Subordinated Notes under any state
securities or Blue Sky laws, the Company and the Guarantors shall use their
best efforts to obtain the withdrawal or lifting of such order at the
earliest possible time.
(b) To furnish the Initial Purchasers and those persons identified by
the Initial Purchasers to the Company, without charge, as many copies of
the Preliminary Offering Memorandum and the Offering Memorandum, and any
amendments or supplements thereto, as the Initial Purchasers may reasonably
request. The Company and the Guarantors consent to the use of the
Preliminary Offering Memorandum and the Offering Memorandum, and any
amendments and supplements thereto required pursuant hereto, by the Initial
Purchasers in connection with Exempt Resales.
(c) Not to amend or supplement the Offering Memorandum prior to the
Closing Date unless the Initial Purchasers shall previously have been
advised thereof and shall not have objected thereto within a reasonable
time after being furnished a copy thereof. The Company shall promptly
prepare, upon the Initial Purchasers' reasonable request, any amendment or
supplement to the Preliminary Offering Memorandum or the Offering
Memorandum that may be necessary or advisable in connection with Exempt
Resales.
(d) If, after the date hereof and prior to the consummation of any
Exempt Resale, any event shall occur as a result of which, in the judgment
of the Company or in the reasonable opinion of counsel for the Company or
counsel for the Initial Purchasers, it becomes necessary or advisable to
amend or supplement the Offering Memorandum in order to make the statements
therein, in the light of the circumstances when such Offering Memorandum is
delivered to an Eligible Purchaser which is a prospective purchaser, not
misleading, or if it is necessary or advisable to amend or supplement the
Offering Memorandum to comply with applicable law, (i) to notify the
Initial Purchasers (who will thereafter not use such Offering Memorandum to
confirm sales of the Notes until it is appropriately amended or
supplemented) and (ii) to prepare promptly an appropriate amendment or
supplement to such Offering Memorandum so that the statements therein as so
amended or supplemented will not, in the light of the circumstances when it
is so delivered, be misleading, or so that such Offering Memorandum will
comply with applicable law.
(e) To cooperate with the Initial Purchasers and counsel for the
Initial Purchasers in connection with the qualification or registration of
the Subordinated Notes under the securities or Blue Sky laws of such
jurisdictions of the United States as the Initial Purchasers may reasonably
request and to continue such qualification in effect so long as required
for the Exempt Resales; provided, however, that neither the Company nor any
Guarantor shall be required in connection therewith to register or qualify
as a foreign corporation where it is not now so qualified or to take any
action that would subject it to service of process in suits or taxation, in
each case, other than as to matters and transactions relating to the
Offering Memorandum or Exempt Resales, in any jurisdiction where it is not
now so subject.
(f) Whether or not the transactions contemplated by this Agreement are
consummated or this Agreement becomes effective or is terminated, to pay
all costs, expenses, fees and taxes incident to the performance of the
obligations of the Company and the Guarantors hereunder, including in
connection with: (i) the preparation, printing, filing and distribution of
the Preliminary Offering Memorandum and the Offering Memorandum (including,
without limitation,
5
<PAGE>
financial statements) and all amendments and supplements thereto required
pursuant hereto, (ii) the qualification or registration of the Notes for
offer and sale under the securities or Blue Sky laws of the several states
(including, without limitation, the preparation and delivery of all
preliminary and final Blue Sky memoranda and all other agreements,
memoranda, correspondence and all other documents prepared and delivered in
connection herewith and with the Exempt Resales and the reasonable fees and
disbursements of counsel for the Initial Purchasers relating thereto
(provided that such fees and disbursements shall not exceed $10,000 in the
aggregate)), (iii) the preparation, issuance, transfer and delivery by the
Company of the Notes and the Guarantors of the Subsidiary Guarantees to the
Initial Purchasers, (iv) furnishing such copies of the Preliminary Offering
Memorandum and the Offering Memorandum, and all amendments and supplements
thereto, as may be reasonably requested for use in connection with Exempt
Resales, (v) the fees, disbursements and expenses of the Company's and
Guarantors' counsel and accountants, (vi) all expenses and listing fees in
connection with the application for quotation of the Subordinated Notes in
the National Association of Securities Dealers, Inc. ("NASD") Private
Offering, Resales and Trading through Automated Linkages ("PORTAL") market,
(vii) all fees and expenses (including fees and expenses of counsel to the
Company) of the Company and the Guarantors in connection with the approval
of the Subordinated Notes by DTC for "book-entry" transfer, (viii) rating
the Subordinated Notes by rating agencies, (ix) the reasonable fees and
expenses of the Trustee and its counsel, (x) the performance by the Company
and the Guarantors of their other obligations under this Agreement and the
other Operative Documents and (xi) "roadshow" travel and other reasonable
expenses incurred in connection with the marketing and sale of the Notes
(other than customary expenses paid for by the Initial Purchasers).
(g) To use the proceeds from the sale of the Notes in the manner
described in the Offering Memorandum under the caption "Use of Proceeds."
(h) Not to voluntarily claim, and to resist actively any attempts to
claim, the benefit of any usury laws against the holders of any
Subordinated Notes.
(i) To do and perform all things required to be done and performed
under this Agreement by it prior to or after the Closing Date and to
satisfy all conditions precedent on its part to the delivery of the
Subordinated Notes.
(j) Not to sell, offer for sale or solicit offers to buy or otherwise
negotiate in respect of any security (as defined in the Act) that would be
integrated with the sale of the Notes in a manner that would require the
registration under the Act of the sale to the Initial Purchasers or the
Eligible Purchasers of the Notes or to take any other action that would
result in the Exempt Resales not being exempt from registration under the
Act.
(k) For so long as any of the Subordinated Notes remain outstanding
and during any period in which the Company is not subject to Section 13 or
15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), upon request, to make available to any QIB or beneficial owner of
Notes in connection with any sale thereof and any prospective purchaser of
such Notes from such QIB or beneficial owner, the information required by
Rule 144A(d)(4) under the Act.
(l) To cause the Exchange Offer to be made in the appropriate form to
i permit registered New Notes to be offered in exchange for the Notes and
to comply with all applicable federal and state securities laws in
connection with the Exchange Offer, subject to the terms of the
Registration Rights Agreement.
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(m) To comply with all of its agreements set forth in the
representation letters of the Company to DTC relating to the approval of
the Subordinated Notes by DTC for "book-entry" transfer.
(n) To use its best efforts to effect the inclusion of the
Subordinated Notes in PORTAL and to obtain approval of the Notes by DTC for
"book-entry" transfer.
(o) For so long as any of the Subordinated Notes remain outstanding,
to deliver without charge to the Initial Purchasers, as they may reasonably
request, promptly upon their becoming available, copies of all reports,
financial statements and proxy or information statements filed by the
Company with the Commission or any national securities exchange, all
publicly available information that the Company distributes to its public
stockholders and such other publicly available information concerning the
Company or its Subsidiaries, including without limitation, press releases.
(p) Prior to the Closing Date, to furnish to the Initial Purchasers,
as soon as they have been prepared in the ordinary course by the Company,
copies of any unaudited interim financial statements for any period
subsequent to the periods covered by the financial statements appearing in
the Offering Memorandum.
(q) Not to take and not permit any of its Subsidiaries to take,
directly or indirectly, any action designed to, or that would reasonably be
expected to, cause or result in stabilization or manipulation of the price
of any security of the Company to facilitate the sale or resale of the
Subordinated Notes. Except as permitted by the Act, the Company will not
distribute any (i) preliminary offering memorandum, including, without
limitation, the Preliminary Offering Memorandum, (ii) offering memorandum,
including, without limitation, the Offering Memorandum, or (iii) other
offering material in connection with the offering and sale of the
Subordinated Notes.
(r) To comply with all of its agreements in the Indenture, the
Registration Rights Agreement and the other Operative Documents.
5. Representations and Warranties. (a) The Company and the Guarantors,
jointly and severally, represent and warrant to the Initial Purchasers that:
(i) The Preliminary Offering Memorandum and the Offering Memorandum have
been prepared in connection with the Exempt Resales. The Preliminary
Offering Memorandum, at the date thereof and at all time subsequent thereto
to the date hereof, and the Offering Memorandum as of the date hereof, do
not, and any supplement or amendment to them will not, contain any untrue
statement of a material fact or omit to state any material fact necessary
in order to make the statements therein, in the light of the circumstances
under which they were made, not misleading, except that the representations
and warranties contained in this paragraph shall not apply to statements in
or omissions from the Preliminary Offering Memorandum and the Offering
Memorandum (or any supplement or amendment thereto) made in reliance upon
and in conformity with information relating to the Initial Purchasers
furnished to the Company, in writing, by the Initial Purchasers expressly
for use therein.
(ii) When the Notes are issued and delivered pursuant to this
Agreement, no Note will be of the same class (within the meaning of Rule
144A under the Act) as securities of the Company or the Guarantors that are
listed on a national securities exchange registered under Section 6 of the
Exchange Act or that are quoted in a United States automated inter-dealer
quotation system.
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(iii) Each of the Company and its Subsidiaries (A) has been duly
organized and is validly existing as a corporation in good standing under
the laws of its respective jurisdiction of incorporation, (B) has all
requisite corporate power and authority to carry on its business as
described in the Offering Memorandum and to own, lease and operate its
properties, and (C) is duly qualified and in good standing as a foreign
corporation authorized to do business in each jurisdiction in which the
nature of its business or its ownership or leasing of property requires
such qualification, except where the failure to be so qualified would not
reasonably be expected to (y) result in a material adverse effect on the
properties, business, results of operations, condition (financial or
otherwise) or prospects of the Company and its Subsidiaries, taken as a
whole or (z) result in a material adverse affect on the ability of the
Company and the Guarantors to perform their respective obligations under
this Agreement and the other Operative Documents (any of the events set
forth in clauses (y) or (z), a "Material Adverse Effect").
(iv) All of the outstanding shares of capital stock of the Company and
each of its Subsidiaries have been duly authorized, validly issued, and are
fully paid and nonassessable and were not issued in violation of any
preemptive or similar rights. On March 31, 1997, after giving pro forma
effect to the issuance and sale of the Notes pursuant hereto and the
consummation of the other Refinancing Transactions (as defined in the
Offering Memorandum) in the manner contemplated in the Offering Memorandum,
the Company would have had an authorized and outstanding consolidated
capitalization as set forth in the Offering Memorandum under the caption
"Capitalization."
(v) Except for capital stock of the Company's Subsidiaries pledged in
connection with the New Credit Agreement, (i) all of the outstanding
capital stock of each of the Company's Subsidiaries is owned by the
Company, directly or through another Subsidiary, free and clear of any
security interest, claim, lien, limitation on voting rights or encumbrance
and (ii) there are not currently, and will not be as a result of the
Offering, any outstanding subscriptions, rights, warrants, calls,
commitments of sale or options to acquire, or instruments convertible into
or exchangeable for, any capital stock or other equity interest of the
Company or any of its Subsidiaries.
(vi) The Company has all requisite corporate power and authority to
execute, deliver and perform its obligations under this Agreement and each
of the other Operative Documents to which it is a party and to consummate
the transactions contemplated hereby and thereby, including, without
limitation, the corporate power and authority to issue, sell and deliver
the Subordinated Notes as provided herein and therein.
(vii) Each Guarantor has all requisite corporate power and authority
to execute, deliver and perform its respective obligations under this
Agreement and each of the other Operative Documents to which it is a party
and to consummate the transactions contemplated hereby and thereby,
including, without limitation, the corporate power and authority to endorse
its guarantee on the Subordinated Notes as provided herein and therein.
(viii) This Agreement has been duly and validly authorized, executed
and delivered by each of the Company and the Guarantors and (assuming the
due authorization, execution and delivery by the Initial Purchasers) is a
valid and binding agreement of the Company and the Guarantors, enforceable
against them in accordance with its terms, except as enforcement may be
limited by applicable bankruptcy, insolvency, fraudulent conveyance,
moratorium, reorganization or other similar laws and court decisions
relating to or affecting the rights of creditors generally or by general
principles of equity, and except as rights to indemnification and
contribution may be limited by applicable law.
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(ix) The Indenture has been duly and validly authorized by the Company
and, when duly executed and delivered by the Company (assuming the due
authorization, execution and delivery by the Trustee), will be a valid and
binding agreement of the Company, enforceable against it in accordance with
its terms, except as enforcement may be limited by applicable bankruptcy,
insolvency, fraudulent conveyance, moratorium, reorganization or other
similar laws and court decisions relating to or affecting the rights of
creditors generally or by general principles of equity, and except as
rights to indemnification and contribution may be limited by applicable
law.
(x) The Notes have been duly and validly authorized for issuance and
sale to the Initial Purchasers by the Company pursuant to this Agreement
and, when executed, issued and authenticated in accordance with the terms
of the Indenture and delivered against payment therefor in accordance with
the terms hereof and thereof, will be valid and binding obligations of the
Company, enforceable against it in accordance with their terms and entitled
to the benefits of the Indenture, except as enforcement may be limited by
applicable bankruptcy, insolvency, fraudulent conveyance, moratorium,
reorganization or other similar laws and court decisions relating to or
affecting the rights of creditors generally or by general principles of
equity, and except as rights to indemnification and contribution may be
limited by applicable law.
(xi) The New Notes have been duly and validly authorized for issuance
by the Company and, when executed, issued and authenticated in accordance
with the terms of the Exchange Offer and the Indenture, will be valid and
binding obligations of the Company, enforceable against it in accordance
with their terms and entitled to the benefits of the Indenture, except as
enforcement may be limited by applicable bankruptcy, insolvency, fraudulent
conveyance, moratorium, reorganization or other similar laws and court
decisions relating to or affecting the rights of creditors generally or by
general principles of equity, and except as rights to indemnification and
contribution may be limited by applicable law.
(xii) The Subsidiary Guarantees have been duly and validly authorized
by each of the Guarantors and, when executed, issued and authenticated in
accordance with the terms of the Indenture and when the Subordinated Notes
have been executed, issued, authenticated and delivered in accordance with
the terms thereof, will be valid and binding agreements of the Guarantors,
enforceable against them in accordance with their terms, except as
enforcement may be limited by applicable bankruptcy, insolvency, fraudulent
conveyance, moratorium, reorganization or other similar laws and court
decisions relating to or affecting the rights of creditors generally or by
general principles of equity, and except as rights to indemnification and
contribution may be limited by applicable law.
(xiii) No registration under the Act of the Notes is required for the
sale of the Notes to the Initial Purchasers as contemplated hereby or for
the Exempt Resales assuming (A) that the purchasers who buy the Notes in
the Exempt Resales are Eligible Purchasers and (B) the accuracy of the
Initial Purchasers' representations regarding the absence of general
solicitation in connection with the sale of Notes to the Initial Purchasers
and the Exempt Resales contained herein. No form of general solicitation or
general advertising (as those terms are used in Regulation D under the Act)
was used by the Company, the Guarantors or any of their representatives
(other than the Initial Purchasers, as to which the Company and the
Guarantors make no representation or warranty) in connection with the offer
and sale of any of the Notes in connection with Exempt Resales, including,
but not limited to, articles, notices or other communications published in
any newspaper, magazine, or similar medium or broadcast over television or
radio, or any seminar or meeting whose attendees have been invited by any
general solicitation or general advertising. No securities of the same
class as the Notes have been issued and sold by the Company or any of its
Subsidiaries within the six-month period immediately prior to the date
hereof.
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(xiv) The Registration Rights Agreement has been duly and validly
authorized by each of the Company and the Guarantors and, when duly
executed and delivered by each of the Company and the Guarantors (assuming
due authorization, execution and delivery thereof by the Initial
Purchasers), will be a valid and binding agreement of each of the Company
and the Guarantors, enforceable against them in accordance with its terms,
except as enforcement may be limited by applicable bankruptcy, insolvency,
fraudulent conveyance, moratorium, reorganization or other similar laws and
court decisions relating to or affecting the rights of creditors generally
or by general principles of equity, and except as rights to indemnification
and contribution may be limited by applicable law.
(xv) The New Credit Agreement (as defined in the Offering Memorandum)
has been duly and validly authorized by each of the Company and its
Subsidiaries party thereto and, when duly executed and delivered by each of
the Company and its Subsidiaries party thereto (assuming the due
authorization, execution and delivery by the agent and the lenders party
thereto), will be a valid and binding agreement of each of the Company and
its Subsidiaries party thereto, enforceable against them in accordance with
its terms, except as enforcement may be limited by applicable bankruptcy,
insolvency, fraudulent conveyance, moratorium, reorganization or other
similar laws and court decisions relating to or affecting the rights of
creditors generally or by general principles of equity, and except as
rights to indemnification and contribution may be limited by applicable
law.
(xvi) The Amendment and Consent Agreement (the "Amendment and Consent
Agreement"), by and among the parties to the Warrant Agreement (as defined
in the Offering Memorandum) and the Shareholder Agreement (as defined in
the Offering Memorandum) has been duly and validly authorized, executed and
delivered by each of Parent (as defined in the Offering Memorandum) and the
Company and, (assuming the due authorization, execution and delivery by the
other parties thereto), is a valid and binding agreement of each of Parent
and the Company, enforceable against them in accordance with its terms,
except as enforcement may be limited by applicable bankruptcy, insolvency,
fraudulent conveyance, moratorium, reorganization or other similar laws and
court decisions relating to or affecting the rights of creditors generally
or by general principles of equity, and except as rights to indemnification
and contribution may be limited by applicable law.
(xvii) The terms of Indenture, the Notes, the New Notes, the
Subsidiary Guarantees, the Registration Rights Agreement and the New Credit
Agreement, respectively, when executed and delivered, will conform in all
material respects to the descriptions thereof in the Offering Memorandum.
(xviii) None of (A) the execution, delivery or performance by the
Company and the Guarantors of this Agreement and the other Operative
Documents, (B) the issuance and sale of the Subordinated Notes and the
Subsidiary Guarantees by the Company and the Guarantors and (C) the
consummation by the Company and the Guarantors of the transactions
described in the Offering Memorandum under the caption "Use of Proceeds,"
violates, conflicts with or constitutes a breach of any of the terms or
provisions of, or a default under (or an event that with notice or the
lapse of time, or both, would constitute a default), or requires consent
under (other than those as to which the requisite waivers or consents have
been obtained or will be obtained on or prior to the Closing Date by the
Company or any of its Subsidiaries), or results in the imposition of a lien
or encumbrance on any properties of the Company or any of its Subsidiaries
(except as contemplated by any of the Operative Documents or the New Credit
Agreement), or an acceleration of any indebtedness of the Company or any of
its Subsidiaries pursuant to (assuming compliance with all applicable state
securities or Blue Sky laws and assuming the accuracy of the
representations and
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warranties of the Initial Purchasers in this Agreement), (1) the charter or
bylaws of the Company or any of its Subsidiaries, (2) any material
obligation, agreement, covenant or condition contained in any bond,
debenture, note, indenture, mortgage, deed of trust or other material
agreement or instrument to which the Company or any of its Subsidiaries is
a party or by which any of them or their property is or may be bound
(except any such agreement or instrument that is terminated on or prior to
the Closing Date and after giving effect to any amendment of such agreement
or instrument on or prior to the Closing Date), (3) any statute, rule or
regulation applicable to the Company, the Guarantors or any Subsidiary
thereof or any of their assets or properties (whether owned or leased), or
(4) any judgment, order or decree of any court or governmental agency or
authority having jurisdiction over the Company or any of its Subsidiaries
or any of their assets or properties, except for violations, conflicts,
breaches or defaults with respect to clauses (C)(2) through (C)(4) of this
paragraph that, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect. To the best knowledge of the
Company and the Guarantors, there exists no condition that, with notice,
the passage of time or otherwise, would constitute a default under any such
agreement or instrument referred to in clause (C)(2), except for such
defaults that would not reasonably be expected to have a Material Adverse
Effect. No consent, approval, authorization or order of, or filing,
registration, qualification, license or permit of or with any court or
governmental agency, body or administrative agency having jurisdiction over
the Company, any of the Guarantors or any of their respective properties or
assets is required for (i) the execution, delivery and performance by the
Company and the Guarantors of this Agreement and the other Operative
Documents, (ii) the issuance and sale of the Subordinated Notes and the
Subsidiary Guarantees by the Company and the Guarantors and the
transactions contemplated hereby and thereby, or (iii) the consummation by
the Company and the Guarantors of the transactions described in the
Offering Memorandum under the caption "Use of Proceeds," except such as
have been obtained or made or will be obtained or made on or prior to the
Closing Date or (w) as may be required under state securities or Blue Sky
laws or the laws of any foreign jurisdiction in connection with the offer
and sale of the Subordinated Notes and the Subsidiary Guarantees, (x) as
may be required by the NASD, (y) in the case of the Registration Rights
Agreement and the transactions contemplated thereby, under the Act and the
Trust Indenture Act of 1939, as amended (the "Trust Indenture Act") and (z)
as would not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect.
(xix) There is (A) no action, suit or proceeding before or by any
court, arbitrator or governmental agency, body or official, domestic or
foreign, having jurisdiction over the Company or any of its Subsidiaries,
now pending or, to the best knowledge of the Company or any Subsidiary,
threatened to which the Company or any Subsidiary thereof is or may be a
party or to which the business or property of the Company or any Subsidiary
thereof is or may be subject, (B) no statute, rule, regulation or order
applicable to the Company or any Subsidiary or any of their respective
businesses or properties that has been enacted, adopted or issued by any
governmental agency or, to the knowledge of the Company, that has been
proposed by any governmental body or (C) no injunction, restraining order
or order by a federal or state court or foreign court of competent
jurisdiction to which the Company or any Subsidiary thereof is or may be
subject or to which the business, assets, or property of the Company or any
Subsidiary thereof are or may be subject, that, in the case of clauses (A),
(B) and (C) above, (1) would be required to be disclosed in the Preliminary
Offering Memorandum and the Offering Memorandum if each of such documents
were a prospectus under the Act and that is not so disclosed, or (2) would
reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect.
(xx) No action has been taken and no statute, rule, regulation or
order has been enacted, adopted or issued by any governmental agency that
has jurisdiction over the Company or any of its Subsidiaries that prohibits
the issuance of the Subordinated Notes or prohibits the use of the
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Offering Memorandum; no injunction, restraining order or order of any
nature by a federal or state court of competent jurisdiction has been
issued that prohibits the issuance of the Subordinated Notes or prohibits
the sale of the Subordinated Notes in any jurisdiction referred to in
Section 4(e) hereof.
(xxi) There is (A) no material unfair labor practice complaint pending
against the Company or any of its Subsidiaries or, to the best knowledge of
the Company and the Guarantors, threatened against any of them, before the
National Labor Relations Board, any state or local labor relations board or
any foreign labor relations board, and no material grievance or material
arbitration proceeding arising out of or under any collective bargaining
agreement is pending against the Company or any of its Subsidiaries or, to
the best knowledge of the Company and the Guarantors, threatened against
any of them, (B) no material strike, labor dispute, slowdown or stoppage
pending against the Company or any of its Subsidiaries or, to the best
knowledge of the Company and the Guarantors, threatened against any of them
and (C) to the best knowledge of the Company and the Guarantors, no union
representation question existing with respect to the employees of the
Company and its Subsidiaries which, in the case of clauses (A), (B) or (C),
would reasonably be expected to have a Material Adverse Effect. None of the
Company or any of its Subsidiaries has violated (A) any federal, state or
local law or foreign law relating to discrimination in hiring, promotion or
pay of employees applicable to the Company or any of its Subsidiaries, (B)
any applicable wage or hour laws or (C) any provision of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), or the rules
and regulations thereunder applicable to the Company or any of its
Subsidiaries, which, in the case of clauses (A), (B) or (C), would
reasonably be expected to have a Material Adverse Effect.
(xxii) None of the Company or any of its Subsidiaries has violated any
foreign, federal, state or local law or regulation relating to the
protection of human health and safety, the environment or hazardous or
toxic substances or wastes, pollutants or contaminants ("Environmental
Laws") which would reasonably be expected to have a Material Adverse
Effect.
(xxiii) There is no liability, or to the best knowledge of the
Company, alleged potential liability, (including, without limitation,
alleged or potential liability or investigatory costs, cleanup costs,
governmental response costs, natural resource damages, property damages,
personal injuries or penalties) of the Company or any of its Subsidiaries
arising out of, based on or resulting from (a) the presence or release into
the environment of any Hazardous Material (as defined herein) at any
location, whether or not owned by the Company or any of its Subsidiaries
which would reasonably be expected to have a Material Adverse Effect or (b)
any violation or alleged violation of any Environmental Law, which alleged
or potential liability would be required to be disclosed in the Offering
Memorandum if such document were a prospectus under the Act and that is not
so disclosed. The term "Hazardous Material" means (a) any "hazardous
substance" as defined by the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, (b) any "hazardous
waste" as defined by the Resource Conservation and Recovery Act, as
amended, (c) any petroleum or petroleum product, (d) any polychlorinated
biphenyl and (e) any pollutant or contaminant or hazardous, dangerous or
toxic chemical, material waste or substance regulated under or within the
meaning of any other Environmental Law.
(xxiv) The Company and each of its Subsidiaries has such permits,
licenses, franchises and authorizations of governmental or regulatory
authorities ("permits"), including, without limitation, under any
applicable Environmental Laws, as are necessary to own, lease and operate
their respective properties and to conduct their respective businesses in
the manner described in the Offering Memorandum, except for those permits
the absence of which would not reasonably be expected to have a Material
Adverse Effect; the Company and each of its Subsidiaries has
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fulfilled and performed all of its obligations with respect to such
permits, except for such obligations the failure of which to be fulfilled
or performed would not reasonably be expected to have a Material Adverse
Effect, and no event has occurred which allows, or after notice or lapse of
time would allow, revocation or termination thereof or results in any other
material impairment of the rights of the holder of any such permit, except
for any such events that, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect and, except as
described in the Offering Memorandum, such permits contain no restrictions
that are or will be materially burdensome to the Company or any of its
Subsidiaries.
(xxv) Each of the Company and its Subsidiaries has, (A) good and
marketable title to all of the properties and assets described in the
Offering Memorandum as owned by it, free and clear of all liens, charges,
encumbrances and restrictions (except Permitted Liens (as defined in the
Offering Memorandum under "Description of Notes") and liens under
agreements that will be terminated on the Closing Date), (B) peaceful and
undisturbed possession under all material leases to which any of them is a
party as lessee and (C) all material licenses, certificates, permits,
authorizations, approvals, franchises and other rights from, and has made
all material declarations and filings with, all federal, state and local
authorities, all self-regulatory authorities and all courts and other
tribunals (each an "Authorization") necessary to engage in the business
conducted by it in the manner described in the Offering Memorandum, except,
in the case of clauses (A), (B) and (C), for such exceptions which,
individually or in the aggregate, would not reasonably be expected to have
a Material Adverse Effect. No proceeding has been instituted by any
governmental body or agency to limit, suspend or revoke any such
Authorization, except such proceedings which, individually, or in the
aggregate, would not reasonably be expected to have a Material Adverse
Effect. All such Authorizations are and, after giving effect to the
Refinancing Transactions, will be valid and in full force and effect and
the Company and its Subsidiaries are in compliance in all material respects
with the terms and conditions of all such Authorizations and with the rules
and regulations of the regulatory authorities having jurisdiction with
respect thereto, except for such noncompliances which, individually or in
the aggregate, would not reasonably be expected to have a Material Adverse
Effect. All material leases to which the Company or any of its Subsidiaries
is a party are valid and binding and no default by the Company or any of
its Subsidiaries has occurred and is continuing thereunder and, to the best
knowledge of the Company and the Guarantors, no defaults by the other
parties thereto are existing under any such lease that adversely affect the
Company's or any Guarantor's rights under such lease in any material
respect.
(xxvi) The material properties of the Company and its Subsidiaries are
in good repair (reasonable wear and tear excepted) and are suitable for
their uses, with such exceptions as would not reasonably be expected to
have a Material Adverse Effect.
(xxvii) The Company and each of its Subsidiaries owns, possesses or
has the right to employ all patents, patent rights, licenses, inventions,
copyrights, know-how (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, software, systems or
procedures), trademarks, service marks and trade names, inventions,
computer programs, technical data and information (collectively, the
"Intellectual Property"), the absence of which would reasonably be expected
to have a Material Adverse Effect. Neither the Company nor any of its
Subsidiaries has received any notice of infringement of or conflict with
asserted rights of others with respect to any of the foregoing. The use of
the Company's material Intellectual Property in connection with the
business and operations of the Company and its Subsidiaries as it is now
conducted does not infringe on the rights of any person.
(xxviii) All tax returns required to be filed by the Company and
except where the failure to file such tax returns
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would not reasonably be expected to have a Material Adverse Effect. All
taxes, including withholding taxes, penalties and interest, assessments,
fees and other charges due or claimed to be due from such entities or that
are due and payable have been paid, other than those for which the failure
to pay would not reasonably be expected to have an Material Adverse Effect
or that are being contested in good faith and for which adequate reserves
have been provided in accordance with generally accepted accounting
principles or those currently payable without penalty or interest. To the
knowledge of the Company and the Guarantors, there are no material proposed
additional tax assessments against the Company, any of its Subsidiaries or
the assets or property of the Company or any of its Subsidiaries.
(xxix) None of the Company or any of its Subsidiaries is an
"investment company" or a "promoter" or "principal" for an "investment
company" within the meaning of the Investment Company Act of 1940, as
amended (the "Investment Company Act").
(xxx) There are no holders of securities of the Company or any of its
Subsidiaries who, by reason of the execution by the Company and the
Guarantors of this Agreement or any other Operative Document or the
consummation of the transactions contemplated hereby and thereby, have the
right to request or demand that the Company or any of its Subsidiaries
register under the Act securities held by them.
(xxxi) Each of the Company and its Subsidiaries maintains a system of
internal accounting controls sufficient to provide reasonable assurance
that: (a) transactions are executed in accordance with management's general
or specific authorizations; (b) transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain accountability for assets;
(c) access to assets is permitted only in accordance with management's
general or specific authorization; and (d) the recorded accountability for
assets is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect thereto.
(xxxii) Each of the Company and its Subsidiaries maintains insurance
(including self-insurance) covering its properties, operations, personnel
and businesses and, in the reasonable judgment of the Company, such
insurance will insure against such losses and risks as are adequate in
accordance with customary industry practice to protect the Company and its
Subsidiaries and their respective businesses. None of the Company or any of
its Subsidiaries has received notice from any insurer or agent of such
insurer that substantial capital improvements or other expenditures will
have to be made in order to continue such insurance. All material insurance
policies will be outstanding and in full force and effect as of the Closing
Date.
(xxxiii) None of the Company or any Guarantor has (a) taken, directly
or indirectly, any action designed to, or that might reasonably be expected
to, cause or result in stabilization or manipulation of the price of any
security of the Company or any Guarantor to facilitate the sale or resale
of the Notes or (b) since the date of the Preliminary Offering Memorandum
(1) sold, bid for, purchased or paid any person any compensation for
soliciting purchases of the Notes or (2) paid or agreed to pay to any
person any compensation for soliciting another to purchase any other
securities of the Company or any Guarantor, except as disclosed in the
Offering Memorandum.
(xxxiv) The execution and delivery of this Agreement, the other
Operative Documents and the sale of the Notes to be purchased by the
Eligible Purchasers will not involve any non-exempt prohibited transaction
within the meaning of Section 406 of ERISA or Section 4975 of the Internal
Revenue Code of 1986 on the part of the Company or any of its Subsidiaries.
The representation made by the Company and the Guarantors in the preceding
sentence is made in reliance upon and
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<PAGE>
subject to the accuracy of, and compliance with, the representations and
covenants made or deemed made by the Eligible Purchasers as set forth in
the Offering Memorandum under the caption "Notice to Investors."
(xxxv) Each of the Preliminary Offering Memorandum and the Offering
Memorandum, as of its date, and each amendment or supplement thereto, as of
its date, contains the information specified in, and meets the requirements
of, Rule 144A(d)(4) under the Act.
(xxxvi) Subsequent to the respective dates as of which information is
given in the Offering Memorandum and up to the Closing Date, except as
disclosed in the Offering Memorandum, (a) none of the Company or any of its
Subsidiaries has incurred any liabilities or obligations, direct or
contingent, which are material, individually or in the aggregate, to the
Company and its Subsidiaries taken as a whole, nor entered into any
transaction not in the ordinary course of business, (b) there has not been,
singly or in the aggregate, any change or development which would
reasonably be expected have a Material Adverse Effect and (c) there has
been no dividend or distribution of any kind declared, paid or made by the
Company on any class of its capital stock.
(xxxvii) None of the execution, delivery and performance of this
Agreement, the issuance and sale of the Subordinated Notes, the application
of the proceeds from the issuance and sale of the Subordinated Notes and
the consummation of the Refinancing Transactions as set forth in the
Offering Memorandum, will violate Regulations G, T, U or X promulgated by
the Board of Governors of the Federal Reserve System.
(xxxviii) The Company has no direct or indirect Subsidiaries other
than the Guarantors.
(xxxix) To the best knowledge of the Company and the Guarantors, the
accountants who have certified or will certify the financial statements
included or to be included as part of the Offering Memorandum are
independent accountants. The historical financial statements of the Company
and its Subsidiaries comply as to form in all material respects with the
accounting requirements applicable to registration statements on Form S-1
under the Act and present fairly in all material respects the financial
position and results of operations of the Company and its Subsidiaries at
the dates and for the periods indicated. Such financial statements have
been prepared in accordance with generally accepted accounting principles
applied on a consistent basis throughout the periods presented. The pro
forma financial statements included in the Offering Memorandum have been
prepared on a basis consistent with such historical statements, except for
the pro forma adjustments specified therein, and give effect to assumptions
made on a reasonable basis and present fairly in all material respects the
historical and proposed transactions contemplated by this Agreement and the
other Operative Documents; and such pro forma financial statements comply
as to form in all material respects with the accounting requirements
applicable to registration statements on Form S-1 under the Act. In the
opinion of the Company and the Guarantors, the assumptions used in the
preparation of the pro forma financial statements are reasonable and the
adjustments used therein are appropriate to give effect to the transactions
and circumstances referred to therein. The other financial and statistical
information and data included in the Offering Memorandum, historical and
pro forma, are accurately presented in all material respects and were
prepared on a basis consistent with the financial statements, historical
and pro forma, included in the Offering Memorandum and the books and
records of the Company and the Guarantors.
(xl) The Company and the Guarantors do not intend to, nor do they
believe that they will, incur debts beyond their ability to pay such debts
as they mature. Immediately after the consummation of the transactions
contemplated by this Agreement, the fair value and the present
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<PAGE>
fair saleable value of the assets of the Company on a consolidated basis
will exceed the amount that will be required to be paid on or in respect of
the existing debts and other liabilities (including contingent liabilities)
of the Company on a consolidated basis as they become absolute and matured.
Immediately after the consummation of the transactions contemplated by this
Agreement, the assets of the Company on a consolidated basis will not
constitute unreasonably small capital to carry out its businesses as it is
proposed to be conducted, including the capital needs of the Company on a
consolidated basis, taking into account the projected capital requirements
and capital availability.
(xli) Except pursuant to this Agreement, there are no contracts,
agreements or understandings between the Company and any other person or
between any Guarantor and any other person that would give rise to a valid
claim against the Company, any Guarantor or the Initial Purchasers for a
brokerage commission, finder's fee or like payment in connection with the
issuance, purchase and sale of the Subordinated Notes.
(xlii) The Company and each of its Subsidiaries have complied with all
of the provisions of Florida H.B. 1771, codified as Section 517.075 of the
Florida statutes, and all regulations promulgated thereunder relating to
issuers doing business with the Government of Cuba or with any person or
any affiliate located in Cuba.
(xliii) Each certificate signed by any officer of the Company or any
Guarantor and delivered to the Initial Purchasers or counsel for the
Initial Purchasers shall be deemed to be a representation and warranty by
the Company or the Guarantor, as the case may be, to the Initial Purchasers
as to the matters covered thereby.
(xliv) Prior to the Exchange Offer or the effectiveness of the Shelf
Registration Statement, the Indenture is not required to be qualified under
the Trust Indenture Act.
(xlv) None of the Company, the Guarantors nor any of their respective
affiliates or any person acting on its or their behalf (other than the
Initial Purchasers, as to whom the Company and the Guarantors make no
representation) has engaged or will engage in any directed selling efforts
within the meaning of Regulation S with respect to the Notes or the
Subsidiary Guarantees.
The Company and the Guarantors acknowledge that each of the Initial
Purchasers and, for purposes of the opinions to be delivered to the Initial
Purchasers pursuant to Section 8 hereof, counsel for the Company and the
Guarantors and counsel for the Initial Purchasers, will rely upon the accuracy
and truth of the foregoing representations and hereby consent to such reliance.
(b) Each of the Initial Purchasers individually represents, warrants and
covenants to the Company and the Guarantors and agrees that:
(i) Such Initial Purchaser is a QIB, with such knowledge and
experience in financial and business matters as are necessary in order to
evaluate the merits and risks of an investment in the Notes.
(ii) Such Initial Purchaser (A) is not acquiring the Notes with a view
to any distribution thereof that would violate the Act or the securities
laws of any state of the United States or any other applicable jurisdiction
and (B) will be reoffering and reselling the Notes only to (x) QIBs in
reliance on the exemption from the registration requirements of the Act
provided by Rule 144A, (y) not more than ten Accredited Institutions that
execute and deliver a letter containing certain representations and
agreements in the form attached as Annex A to the Offering Memorandum and
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<PAGE>
(z) persons other than U.S. persons (as such term is defined in Regulation
S) in offshore transactions in reliance upon Regulation S under the Act.
(iii) No form of general solicitation or general advertising (as those
terms are used in Regulation D under the Act) nor any conduct constituting
a public offering within the meaning of Section 4(2) of the Act has been or
will be used by the Initial Purchaser or any of its representatives in
connection with the offer and sale of any of the Notes, including, but not
limited to, articles, notices or other communications published in any
newspaper, magazine, or similar medium or broadcast over television or
radio, or any seminar or meeting whose attendees have been invited by any
general solicitation or general advertising.
(iv) Such Initial Purchaser agrees that, in connection with the Exempt
Resales, it will solicit offers to buy the Notes only from, and will offer
to sell the Notes only to, Eligible Purchasers. The Initial Purchaser
further agrees that it will offer to sell the Notes only to, and will
solicit offers to buy the Notes only from, (1)(A) QIBs who, in purchasing
the Notes will be deemed to have represented and agreed that (x) they are
purchasing the Notes for their own accounts or accounts with respect to
which they exercise sole investment discretion and that they or such
accounts are QIBs and (y) they acknowledge that the seller of such Notes
may be relying on the exemption from the provisions of Section 5 of the Act
provided by Rule 144A thereunder and that such Notes will not have been
registered under the Act, (B) Accredited Institutions who make the
representations contained in, and execute and return to the Initial
Purchaser, a certificate in the form of Annex A attached to the Offering
Memorandum and (C) Regulation S purchasers who, in purchasing the Notes
will be deemed to have represented and agreed that their purchase of Notes
pursuant to Regulation S is not part of a plan or scheme to evade the
registration provisions of the Act and (2) Eligible Purchasers that agree
that (x) Notes purchased by them may be resold, pledged or otherwise
transferred only (I) to a person whom the seller reasonably believes is a
QIB in a transaction meeting the requirements of Rule 144A under the Act,
(II) in a transaction meeting the requirements of Rule 144 under the Act,
(III) outside the United States to a foreign person in a transaction
meeting the requirements of Rule 904 of the Act, (IV) in accordance with
another exemption from the registration requirements of the Act (and based
upon an opinion of counsel acceptable to the Company), (V) to the Company
or (VI) pursuant to an effective registration statement and, in each case,
in accordance with the applicable securities laws of any state of the
United States or any other applicable jurisdiction and (y) they will
deliver to each person to whom such Notes or an interest therein is
transferred a notice substantially to the effect of the foregoing.
(v) None of such Initial Purchaser nor any of its affiliates or any
person acting on its or their behalf has engaged or will engage in any
directed selling efforts within the meaning of Regulation S with respect to
the Notes or the Subsidiary Guarantees.
(vi) The Notes offered and sold by such Initial Purchaser pursuant
hereto in reliance on Regulation S have been and will be offered and sold
to persons who are not U.S. persons only in offshore transactions (as such
terms are defined in Regulation S).
(vii) The sale of the Notes offered and sold by such Initial Purchaser
pursuant hereto in reliance on Regulation S is not part of a plan or scheme
to evade the registration provisions of the Act.
(viii) Such Initial Purchaser further represents and agrees that (1)
it has not offered or sold and will not offer or sell any Notes to persons
in the United Kingdom prior to the expiry of the period of six months from
the issue date of the Notes, except to persons whose ordinary activities
involve them in acquiring, holding, managing or disposing of investments
(as principal or agent)
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for the purposes of their business or otherwise in circumstances which have
not resulted and will not result in an offer to the public in the United
Kingdom within the meaning of the Public Offers of Securities Regulations
1995, (ii) it has complied and will comply with all applicable provisions
of the Financial Services Act 1986 with respect to anything done by it in
relation to the Notes in, from or otherwise involving the United Kingdom
and (iii) it has only issued or passed on and will only issue or pass on in
the United Kingdom any document received by it in connection with the
issuance of the Notes to a person who is of a kind described in Article
11(3) of the Financial Services Act of 1986 (Investment Advertisements)
(Exemptions) Order 1996 or is a person to whom the document may otherwise
lawfully be issued or passed on.
Each of the Initial Purchasers understands that the Company and the
Guarantors and, for purposes of the opinions to be delivered to the Initial
Purchasers pursuant to Section 8 hereof, counsel for the Company and counsel for
the Initial Purchasers will rely upon the accuracy and truth of the foregoing
representations and hereby consents to such reliance.
6. Indemnification.
(a) The Company and the Guarantors, jointly and severally, agree to
indemnify and hold harmless (i) each of the Initial Purchasers, (ii) each
person, if any, who controls either of the Initial Purchasers within the
meaning of Section 15 of the Act or Section 20(a) of the Exchange Act and
(iii) the respective officers, directors, partners, employees,
representatives and agents of any of the Initial Purchasers or any
controlling person to the fullest extent lawful, from and against any and
all losses, liabilities, claims, damages and expenses whatsoever (including
but not limited to attorneys' fees and any and all expenses whatsoever
incurred in investigating, preparing or defending against any investigation
or litigation, commenced or threatened, or any claim whatsoever, and any
and all amounts paid in settlement of any claim or litigation), to which
they or any of them may become subject under the Act, the Exchange Act or
otherwise, insofar as such losses, liabilities, claims, damages or expenses
(or actions in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in the
Preliminary Offering Memorandum or the Offering Memorandum, or in any
supplement thereto or amendment thereof, 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, in the
light of the circumstances under which they were made, not misleading;
provided, however, that neither the Company nor any Guarantor will be
liable in any such case to the extent, but only to the extent, that any
such loss, liability, claim, damage or expense (i) arises out of or is
based upon any such untrue statement or alleged untrue statement or
omission or alleged omission made therein in reliance upon and in
conformity with written information furnished to the Company by or on
behalf of the Initial Purchasers expressly for use therein or (ii) is
caused by an untrue statement or omission or alleged untrue statement or
omission that was contained or made in the Preliminary Offering Memorandum
and (1) any such loss, liability, claim, damage or expense suffered by any
indemnified party resulted from an action, claim, or suit by any person who
purchased Notes from the Initial Purchasers in the Offering, (2) the
Initial Purchasers failed to deliver or provide a copy of the Offering
Memorandum to such person at or prior to the confirmation of the sale of
such Notes, (3) the Company shall have previously furnished copies of the
Offering Memorandum to the Initial Purchasers and (4) the Offering
Memorandum (as so amended and supplemented) would have cured the defect
giving rise to such loss, liability, claim, damage or expense. This
indemnity agreement will be in addition to any liability which the Company
and the Guarantors may otherwise have, including under this Agreement.
(b) Each of the Initial Purchasers, severally and not jointly, agrees
to indemnify and hold harmless (i) each of the Company and the Guarantors,
(ii) each person, if any, who controls the
18
<PAGE>
Company or any Guarantor within the meaning of Section 15 of the Act or
Section 20(a) of the Exchange Act and (iii) their respective officers,
directors, partners, members, employees, representatives and agents or any
controlling person to the fullest extent lawful from and against any
losses, liabilities, claims, damages and expenses whatsoever (including but
not limited to attorneys' fees and any and all expenses whatsoever incurred
in investigating, preparing or defending against any investigation or
litigation, commenced or threatened, or any claim whatsoever and any and
all amounts paid in settlement of any claim or litigation), joint or
several, to which they or any of them may become subject under the Act, the
Exchange Act or otherwise, insofar as such losses, liabilities, claims,
damages or expenses (or actions in respect thereof) arise out of or are
based upon any untrue statement or alleged untrue statement of a material
fact contained in the Preliminary Offering Memorandum or the Offering
Memorandum, or in any amendment thereof 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, in the light of the circumstances under which they were
made, not misleading, in each case to the extent, but only to the extent,
that any such loss, liability, claim, damage or expense arises out of or is
based upon any untrue statement or alleged untrue statement or omission or
alleged omission made therein in reliance upon and in conformity with
written information furnished to the Company by or on behalf of the Initial
Purchasers expressly for use therein; provided, however, that in no case
shall the Initial Purchasers be liable or responsible for any amount in
excess of the discounts and commissions received by the Initial Purchasers,
as set forth on the cover page of the Offering Memorandum. This indemnity
will be in addition to any liability which the Initial Purchasers may
otherwise have, including under this Agreement.
(c) Promptly after receipt by an indemnified party under subsection
(a) or (b) above of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made
against the indemnifying party under such subsection, notify each party
against whom indemnification is to be sought in writing of the commencement
thereof (but the failure so to notify an indemnifying party shall not
relieve it from any liability which it may have under this Section 6 or
otherwise except to the extent that it has been prejudiced in any material
respect by such failure). In case any such action is brought against any
indemnified party, and it notifies an indemnifying party of the
commencement thereof, the indemnifying party will be entitled to
participate therein, and to the extent it may elect by written notice
delivered to the indemnified party promptly after receiving the aforesaid
notice from such indemnified party, to assume the defense thereof with
counsel reasonably satisfactory to such indemnified party. Notwithstanding
the foregoing, the indemnified party or parties shall have the right to
employ its or their own counsel in any such case, but the fees and expenses
of such counsel shall be at the expense of such indemnified party or
parties unless (i) the employment of such counsel shall have been
authorized in writing by the indemnifying parties in connection with the
defense of such action, (ii) the indemnifying parties shall not have
employed counsel to take charge of the defense of such action within a
reasonable time after notice of commencement of the action, or (iii) such
indemnified party or parties shall have been advised in writing by counsel
that there may be legal defenses available to it or them which are
different from or additional to those available to one or all of the
indemnifying parties (in which case the indemnifying party or parties shall
not have the right to direct the defense of such action on behalf of the
indemnified party or parties), in any of which events such fees and
expenses of counsel shall be borne by the indemnifying parties; provided,
however, that the indemnifying party under subsection (a) or (b) above
shall only be liable for the legal expenses of one counsel (in addition to
any local counsel) for all indemnified parties in each jurisdiction in
which any claim or action is brought; provided, however, that the
indemnifying party shall be liable for separate counsel for any indemnified
party in a jurisdiction, if counsel to the indemnified party or parties
shall have reasonably concluded in writing that there may be defenses
available to such indemnified party that are different from or additional
to those
19
<PAGE>
available to one or more of the other indemnified parties and that separate
counsel for such indemnified party is prudent under the circumstances.
Anything in this subsection to the contrary notwithstanding, an
indemnifying party shall not be liable for any settlement of any claim or
action effected without its prior written consent; provided, however, that
such consent was not unreasonably withheld.
7. Contribution. In order to provide for contribution in circumstances in
which the indemnification provided for in Section 6 is for any reason held to be
unavailable to an indemnified party or is insufficient to hold harmless a party
indemnified thereunder, the Company and the Guarantors, on the one hand, and the
Initial Purchasers, on the other hand, shall contribute to the aggregate losses,
claims, damages, liabilities and expenses of the nature contemplated by such
indemnification provision (including any investigation, legal and other expenses
incurred in connection with, and any amount paid in settlement of, any action,
suit or proceeding or any claims asserted, but after deducting in the case of
losses, claims, damages, liabilities and expenses suffered by the Company or the
Guarantors, any contribution received by the Company or the Guarantors from
persons, other than the Initial Purchasers, who may also be liable for
contribution, including persons who control the Company or the Guarantors within
the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act) to
which the Company, the Guarantors and one or both of the Initial Purchasers may
be subject, in such proportion as is appropriate to reflect the relative
benefits received by the Company and the Guarantors, on one hand, and the
Initial Purchasers, on the other hand, from the offering of the Notes or, if
such allocation is not permitted by applicable law or indemnification is not
available as a result of the indemnifying party not having received notice as
provided in Section 6, in such proportion as is appropriate to reflect not only
the relative benefits referred to above but also the relative fault of the
Company and the Guarantors, on one hand, and the Initial Purchasers, on the
other hand, in connection with the statements or omissions which resulted in
such losses, claims, damages, liabilities or expenses, as well as any other
relevant equitable considerations. The relative benefits received by the Company
and the Guarantors, on one hand, and the Initial Purchasers, on the other hand,
shall be deemed to be in the same proportion as (i) the total proceeds from the
offering of Notes (net of discounts but before deducting expenses) received by
the Company and the Guarantors and (ii) the discounts received by the Initial
Purchasers, respectively, in each case as set forth in the table on the cover
page of the Offering Memorandum. The relative fault of the Company and the
Guarantors, on one hand, and of the Initial Purchasers, on the other hand, shall
be determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company, the Guarantors
or the Initial Purchasers and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company, the Guarantors and the Initial Purchasers agree that it would not
be just and equitable if contribution pursuant to this Section 7 were determined
by pro rata allocation or by any other method of allocation which does not take
into account the equitable considerations referred to above. Notwithstanding the
provisions of this Section 7, (i) in no case shall either of the Initial
Purchasers be required to contribute any amount in excess of the amount by which
the discount applicable to the Notes purchased by such Initial Purchaser
pursuant to this Agreement exceeds the amount of any damages which such Initial
Purchaser has otherwise been required to pay by reason of any untrue or alleged
untrue statement or omission or alleged omission and (ii) no person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section 7, (A) each person,
if any, who controls either of the Initial Purchasers within the meaning of
Section 15 of the Act or Section 20(a) of the Exchange Act and (B) the
respective officers, directors, partners, employees, representatives and agents
of any of the Initial Purchasers or any controlling person shall have the same
rights to contribution as such Initial Purchaser, and each person, if any, who
controls the Company or any Guarantor within the meaning of Section 15 of the
Act or Section 20(a) of the Exchange Act shall have the same rights to
contribution as the Company or such Guarantor, subject in each case to clauses
(i) and (ii) of this Section 7. Any party entitled to contribution will,
promptly after receipt
20
<PAGE>
of notice of commencement of any action, suit or proceeding against such party
in respect of which a claim for contribution may be made against another party
or parties under this Section 7, notify such party or parties from whom
contribution may be sought, but the failure to so notify such party or parties
shall not relieve the party or parties from whom contribution may be sought from
any obligation it or they may have under this Section 7 or otherwise (except to
the extent it has been prejudiced in any material respect by such failure). No
party shall be liable for contribution with respect to any action or claim
settled without its prior written consent; provided, however, that such written
consent was not unreasonably withheld.
8. Conditions of Initial Purchasers' Obligations. The several obligations
of the Initial Purchasers to purchase and pay for the Notes, as provided herein,
shall be subject to the satisfaction or waivers of the following conditions:
(a) All of the representations and warranties of the Company and the
Guarantors contained in this Agreement shall be true and correct in all
material respects on the date hereof and on the Closing Date with the same
force and effect as if made on and as of the date hereof and the Closing
Date, respectively. The Company and the Guarantors shall have performed or
complied in all material respects with all of the agreements herein
contained and required to be performed or complied with by it at or prior
to the Closing Date.
(b) The Offering Memorandum shall have been printed and copies made
available to the Initial Purchasers not later than 12:00 p.m., New York
City time, on the day following the date of this Agreement or at such later
date and time as to which the Initial Purchasers may agree, and no stop
order suspending the qualification or exemption from qualification of the
Notes in any jurisdiction referred to in Section 4(e) shall have been
issued and no proceeding for that purpose shall have been commenced or
shall be pending or, to the best knowledge of the Company, threatened.
(c) As of the Closing Date, no action shall have been taken and no
statute, rule, regulation or order shall have been enacted, adopted or
issued by any governmental agency which would, as of the Closing Date,
prohibit the issuance of the Notes; no action, suit or proceeding shall
have been commenced and be pending against or affecting or, to the best
knowledge of the Company and the Guarantors, threatened against, the
Company or any of the Guarantors before any court or arbitrator or any
governmental body, agency or official that, if adversely determined, would
reasonably be expected to have a Material Adverse Effect; and no stop order
shall have been issued preventing the use of the Offering Memorandum, or
any amendment or supplement thereto, or which would reasonably be expected
to have a Material Adverse Effect.
(d) Since the dates as of which information is given in the Offering
Memorandum and except as disclosed in the Offering Memorandum, (i) there
shall not have been any material adverse change, or any development that is
reasonably likely to result in a material adverse change, in the capital
stock or the long-term debt, or material increase in the short-term debt,
of the Company and the Guarantors from that set forth in the Offering
Memorandum, (ii) no dividend or distribution of any kind shall have been
declared, paid or made by the Company on any class of its capital stock,
and (iii) neither the Company nor any of its Subsidiaries shall have
incurred any liabilities or obligations, direct or contingent, that are
material, individually or in the aggregate, to the Company and its
Subsidiaries, taken as a whole, and that are required to be disclosed on a
balance sheet or notes thereto in accordance with generally accepted
accounting principles and are not disclosed on the latest balance sheet or
notes thereto included in the Offering Memorandum. Since the date hereof
and since the dates as of which information is given in the Offering
Memorandum, there shall not have occurred any change in the properties,
business,
21
<PAGE>
results of operations, condition (financial or otherwise), affairs or
prospects of the Company or the Guarantors which has had or would
reasonably be expected to have a Material Adverse Effect.
(e) The Initial Purchasers shall have received a certificate, dated
the Closing Date, signed on behalf of the Company and the Guarantors by the
Chief Executive Officer, President or any Vice President and the Controller
or other principal financial or accounting officer of the Company, in form
and substance reasonably satisfactory to the Initial Purchasers,
confirming, as of the Closing Date, (i) the matters set forth in paragraphs
(a), (b), (c) and (d) of this Section 8, (ii) each signer of such
certificate has examined the Offering Memorandum and the Offering
Memorandum does not contain an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary in
order to make the statements therein not misleading, and (iii) that, as of
the Closing Date, the obligations of the Company and the Guarantors to be
performed hereunder on or prior thereto have been duly performed in all
material respects.
(f) The Initial Purchasers shall have received on the Closing Date (i)
an opinion, dated the Closing Date, in form and substance satisfactory to
the Initial Purchasers and counsel to the Initial Purchasers, of Winston &
Strawn, counsel for the Company and the Guarantors, to the effect set forth
in Exhibit B hereto (with customary exceptions and qualifications) and (ii)
copies of each opinion of counsel to the Company or the Guarantors, if any,
delivered in connection with the New Credit Agreement and the Amendment and
Consent Agreement, which opinions shall allow the Initial Purchasers to
rely thereon.
(g) The Initial Purchasers shall have received an opinion, dated the
Closing Date, in form and substance reasonably satisfactory to the Initial
Purchasers, of Latham & Watkins, counsel to the Initial Purchasers,
covering such matters as are customarily covered in such opinions.
(h) At the time this Agreement is executed and at the Closing Date,
the Initial Purchasers shall have received from Ernst & Young LLP,
independent public accountants for the Company, dated as of the date of
this Agreement and as of the Closing Date, customary comfort letters
addressed to the Initial Purchasers and in form and substance satisfactory
to the Initial Purchasers and counsel to the Initial Purchasers with
respect to the financial statements for the fiscal years ended December 31,
1994, December 31, 1995 and December 31, 1996 and certain other financial
information of the Company contained in the Offering Memorandum.
(i) Latham & Watkins shall have been furnished with such documents, in
addition to those set forth above, as they may reasonably require for the
purpose of enabling them to review or pass upon the matters referred to in
this Section 8 and in order to evidence the accuracy, completeness or
satisfaction in all material respects of any of the representations,
warranties or conditions herein contained.
(j) Prior to the Closing Date, the Company and the Guarantors shall
have furnished to the Initial Purchasers such further information,
certificates and documents as the Initial Purchasers may reasonably
request.
(k) The Company, the Guarantors and the Trustee shall have entered
into the Indenture and the Subsidiary Guarantees, as the case may be, and
the Initial Purchasers shall have received counterparts, conformed as
executed, thereof.
(l) The Company and the Guarantors shall have entered into the
Registration Rights Agreement and the Initial Purchasers shall have
received counterparts, conformed as executed, thereof.
22
<PAGE>
(m) The Company and its Subsidiaries party thereto shall have entered
into the New Credit Agreement, in the form attached hereto as Exhibit C
(with such changes as the Initial Purchasers shall have agreed to in their
reasonable discretion), and the Initial Purchasers shall have received
counterparts, conformed as executed, thereof and of all other documents and
agreements entered into in connection therewith.
(n) Each condition to the initial borrowing under the New Credit
Agreement (other than the issuance and sale of the Subordinated Notes
pursuant hereto) shall have been satisfied or waived. There shall exist at
and as of the Closing Date (after giving effect to the transactions
contemplated by this Agreement) no conditions that would constitute a
default (or an event that with notice or the lapse of time, or both, would
constitute a default) under the New Credit Agreement. At or prior to the
Closing Date, the closing under the New Credit Agreement shall have been
consummated on terms that conform in all material respects to the
description thereof in the Offering Memorandum and the Initial Purchasers
shall have received evidence satisfactory to the Initial Purchasers of the
consummation thereof.
(o) The Amendment and Consent Agreement, in form and substance
reasonably acceptable to the Initial Purchasers, shall have been executed
by all the parties thereto and shall have become effective, and the Initial
Purchasers shall have received counterparts, conformed as executed, thereof
and of all other documents and agreements entered into in connection
therewith.
(p) Mentmore (as defined in the Offering Memorandum) and the Company
shall have entered into the Management Agreement (as defined in the
Offering Memorandum), in the form attached hereto as Exhibit D (with such
changes as the Initial Purchasers shall have agreed to in their reasonable
discretion), and the Initial Purchasers shall have received counterparts,
conformed as executed, thereof and of all other documents and agreements
entered into in connection therewith.
(q) Parent, the Company and the other parties thereto shall have
entered into the First Amendment to Warrant Purchase Agreement, in the form
attached hereto as Exhibit E (with such changes as the Initial Purchasers
shall have agreed to in their reasonable discretion), and the Initial
Purchasers shall have received counterparts, conformed as executed, thereof
and of all other documents and agreements entered into in connection
therewith.
(r) Parent, the Company and the other parties thereto shall have
entered into the First Amendment to Shareholder Agreement, in the form
attached hereto as Exhibit F (with such changes as the Initial Purchasers
shall have agreed to in their reasonable discretion), and the Initial
Purchasers shall have received counterparts, conformed as executed, thereof
and of all other documents and agreements entered into in connection
therewith.
All opinions, certificates, letters and other documents required by this
Section 8 to be delivered by the Company and the Guarantors will be in
compliance with the provisions hereof only if they are reasonably satisfactory
in form and substance to the Initial Purchasers. The Company and the Guarantors
will furnish the Initial Purchasers with such conformed copies of such opinions,
certificates, letters and other documents as they shall reasonably request.
9. Initial Purchasers' Information. The Company and the Guarantors
acknowledge that the statements with respect to the offering of the Notes set
forth in the last paragraph of the cover page, the first sentence of the third
paragraph, the sixth sentence of the fourth paragraph and the fifth paragraph
under the caption "Plan of Distribution" in such Offering Memorandum constitute
the only information furnished in writing by the Initial Purchasers expressly
for use in the Offering Memorandum.
23
<PAGE>
10. Survival of Representations and Agreements. All representations and
warranties, covenants and agreements of the Initial Purchasers, the Company and
the Guarantors contained in this Agreement, including the agreements contained
in Sections 4(f) and 11(d), the indemnity agreements contained in Section 6 and
the contribution agreements contained in Section 7, shall remain operative and
in full force and effect regardless of any investigation made by or on behalf of
the Initial Purchasers, any controlling person thereof or by or on behalf of the
Company or any Guarantor or any controlling person thereof, and shall survive
delivery of and payment for the Notes to and by the Initial Purchasers. The
representations contained in Section 5 and the agreements contained in Sections
4(f), 6, 7 and 11(d) shall survive the termination of this Agreement, including
any termination pursuant to Section 11.
11. Effective Date of Agreement; Termination.
(a) This Agreement shall become effective upon execution and delivery
of a counterpart hereof by each of the parties hereto.
(b) The Initial Purchasers shall have the right to terminate this
Agreement at any time prior to the Closing Date by notice to the Company
from the Initial Purchasers, without liability (other than with respect to
Sections 6 and 7) on the Initial Purchasers' part to the Company or any
Guarantor if, on or prior to such date, (i) the Company or any Guarantor
shall have failed, refused or been unable to perform in any material
respect any agreement on its part to be performed hereunder at or prior
thereto, (ii) any other condition to the obligations of the Initial
Purchasers hereunder as provided in Section 8 is not fulfilled when and as
required in any material respect (other than solely as a result of
nonfulfillment of the condition set forth in Section 8(g)), (iii) since the
date hereof, in the reasonable judgment of the Initial Purchasers, there
shall have occurred an event or development that has or would be reasonably
expected to have a Material Adverse Effect, other than as set forth in the
Offering Memorandum, or (iv)(A) any domestic or international event or act
or occurrence has materially disrupted, or in the reasonable opinion of the
Initial Purchasers will in the immediate future materially disrupt, the
market for the Company's securities or for securities in general; or (B)
trading in securities generally on the New York or American Stock Exchanges
shall have been suspended or materially limited, or minimum or maximum
prices for trading shall have been established, or maximum ranges for
prices for securities shall have been required, on such exchange, or by
such exchange or other regulatory body or governmental authority having
jurisdiction; or (C) a banking moratorium shall have been declared by
federal or state authorities, or a moratorium in foreign exchange trading
by major international banks or persons shall have been declared; or (D)
there is an outbreak or escalation of armed hostilities involving the
United States on or after the date hereof, or if there has been a
declaration by the United States of a national emergency or war, the effect
of which shall be, in the Initial Purchasers' reasonable judgment, to make
it inadvisable or impracticable to proceed with the offering or delivery of
the Notes on the terms and in the manner contemplated in the Offering
Memorandum; or (E) there shall have been such a material adverse change in
general economic, political or financial conditions or if the effect of
international conditions on the financial markets in the United States
shall be such as, in the Initial Purchasers' reasonable judgment, makes it
inadvisable or impracticable to proceed with the delivery of the Notes as
contemplated hereby.
(c) Any notice of termination pursuant to this Section 11 shall be by
telephone, telex, telephonic facsimile, or telegraph, confirmed in writing
by letter.
(d) If this Agreement shall be terminated pursuant to any of the
provisions hereof (otherwise than pursuant to any of clauses (iii) or (iv)
of Section 11(b), in which case each party will be responsible for its own
expenses), or if the sale of the Notes provided for herein is not
consummated because any condition to the obligations of the Initial
Purchasers set forth herein is
24
<PAGE>
not satisfied (other than solely as a result of the nonfulfillment of the
condition set forth in Section 8(g)) or because of any refusal, inability
or failure on the part of the Company or any Guarantor to perform any
agreement herein or comply with any provision hereof, the Company and the
Guarantors will reimburse the Initial Purchasers for all out-of-pocket
expenses (including the reasonable fees and expenses of Initial Purchasers'
counsel), incurred by the Initial Purchasers in connection herewith.
12. Notice. All communications hereunder, except as may be otherwise
specifically provided herein, shall be in writing and, if sent to the Initial
Purchasers shall be mailed, delivered, or telexed, telegraphed or telecopied and
confirmed in writing to Bear, Stearns & Co. Inc., 245 Park Avenue, New York, New
York 10167, Attention: High Yield Capital Markets, telecopy number: (212)
272-2725, with a copy to Latham & Watkins, 885 Third Avenue, Suite 1000, New
York, New York 10022, Attention: Roger H. Kimmel, Esq., telecopy number (212)
751-4864; and if sent to the Company or any Guarantor, shall be mailed,
delivered or telexed, telegraphed or telecopied and confirmed in writing to
Precise Technology, Inc., 501 Mosside Boulevard, North Versailles, Pennsylvania
15137, Attention: Secretary, telecopy number: (412) 823-4110, with copies to
Mentmore Holdings Corporation, 1430 Broadway, 13th Floor, New York, New York,
10018-3308, Attention: William L. Remley, telecopy number (212) 391- 1393 and
Winston & Strawn, 200 Park Avenue, New York, New York 10166, Attention: Robert
W. Ericson, Esq., telecopy number (212) 294-4700; provided, however, that any
notice pursuant to Section 7 shall be mailed, delivered or telexed, telegraphed
or telecopied and confirmed in writing.
13. Parties. This Agreement shall be binding upon the Initial Purchasers,
the Company, and the Guarantors and their respective successors and assigns.
This Agreement shall inure solely to the benefit of the Initial Purchasers, the
Company and the Guarantors and the controlling persons and agents referred to in
Sections 6 and 7, and their respective successors and assigns, and no other
person shall have or be construed to have any legal or equitable right, remedy
or claim under or in respect of or by virtue of this Agreement or any provision
herein contained. The term "successors and assigns" shall not include a
purchaser, in its capacity as such, of Subordinated Notes from the Initial
Purchasers.
14. Construction. This Agreement shall be construed in accordance with the
internal laws of the State of New York. TIME IS OF THE ESSENCE IN THIS
AGREEMENT.
15. Captions. The captions included in this Agreement are included solely
for convenience of reference and are not to be considered a part of this
Agreement.
16. Counterparts. This Agreement may be executed in various counterparts
which together shall constitute one and the same instrument.
[Signature page to follow]
25
<PAGE>
If the foregoing correctly sets forth the understanding among the Initial
Purchasers, the Company and the Guarantors please so indicate in the space
provided below for that purpose, whereupon this letter shall constitute a
binding agreement between us.
Very truly yours,
PRECISE TECHNOLOGY, INC.
By: /s/ William L. Remley
----------------------------------------
Name:
Title:
PRECISE TMP, INC.
By: /s/ William L. Remley
----------------------------------------
Name:
Title:
MASSIE TOOL, MOLD & DIE, INC.
By: /s/ William L. Remley
----------------------------------------
Name:
Title:
PRECISE POLESTAR, INC.
By: /s/ William L. Remley
----------------------------------------
Name:
Title:
PRECISE TECHNOLOGY OF DELAWARE INC.
By: /s/ William L. Remley
----------------------------------------
Name:
Title:
PRECISE TECHNOLOGY OF ILLINOIS INC.
By: /s/ William L. Remley
----------------------------------------
Name:
Title:
<PAGE>
BEAR, STEARNS & CO. INC.
By: /s/ J. Andrew Bugas
----------------------------------
Name: J. Andrew Bugas
Title:
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By: /s/ Gregory Alan Margolies
----------------------------------
Name: Gregory Alan Margolies
Title: Authorized Signatory
<PAGE>
Execution Copy
--------------
$30,000,000
CREDIT AGREEMENT
Dated as of June 13, 1997
Among
PRECISE HOLDING CORPORATION,
as Guarantor,
-------------
PRECISE TECHNOLOGY, INC.,
as Borrower,
------------
CERTAIN SUBSIDIARIES OF
PRECISE TECHNOLOGY, INC.,
as Subsidiary Guarantors,
-------------------------
and
FLEET NATIONAL BANK,
as Issuing Bank,
----------------
and
FLEET NATIONAL BANK,
as Lender and as Agent
----------------------
<PAGE>
T A B L E O F C O N T E N T S
Section Page
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
1.01. Certain Defined Terms................................................. 1
1.02. Computation of Time Periods........................................... 25
1.03. Accounting Terms...................................................... 25
1.04. Construction.......................................................... 26
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES
AND THE LETTERS OF CREDIT
2.01. The Advances.......................................................... 26
2.02. Making the Advances................................................... 27
2.03. Issuance of and Drawings and Reimbursement Under Letters of Credit.... 28
2.04. Repayment of Advances................................................. 29
2.05. Termination or Reduction of the Commitments........................... 31
2.06. Prepayments........................................................... 31
2.07. Interest.............................................................. 33
2.08. Fees.................................................................. 34
2.09. Conversion of Revolving Credit Advances............................... 35
2.10. Increased Costs, Etc.................................................. 35
2.11. Payments and Computations............................................. 37
2.12. Taxes................................................................. 38
2.13. Sharing of Payments, Etc.............................................. 40
2.14. Use of Proceeds....................................................... 41
2.15. Source of Funds....................................................... 41
ARTICLE III
CONDITIONS OF LENDING
3.01. Conditions Precedent to Initial Extension of Credit................... 42
3.02. Conditions Precedent to Each Borrowing and Issuance................... 50
3.03. Certain Requirements with respect to Permitted Acquisitions........... 50
3.04. Determinations Under Section 3.01..................................... 51
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.01. Representations and Warranties........................................ 51
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Section Page
ARTICLE V
COVENANTS
5.01. Affirmative Covenants................................................. 62
5.02. Negative Covenants.................................................... 67
5.03. Reporting Requirements................................................ 78
5.04. Financial Covenants................................................... 82
ARTICLE VI
EVENTS OF DEFAULT
6.01. Events of Default..................................................... 85
6.02. Actions in Respect of the Letters of Credit upon Default.............. 88
ARTICLE VII
THE AGENT
7.01. Authorization and Action.............................................. 88
7.02. Agent's Reliance, Etc................................................. 89
7.03. Fleet and Affiliates.................................................. 89
7.04. Lender Credit Decision................................................ 89
7.05. Indemnification....................................................... 90
7.06. Successor Agents...................................................... 91
ARTICLE VIII
MISCELLANEOUS
8.01. Amendments, Etc....................................................... 91
8.02. Notices, Etc.......................................................... 92
8.03. No Waiver; Remedies................................................... 93
8.04. Costs and Expenses.................................................... 93
8.05. Right of Set-off...................................................... 94
8.06. Binding Effect........................................................ 95
8.07. Assignments and Participations........................................ 95
8.08. Execution in Counterparts............................................. 98
8.09. No Liability of the Issuing Bank...................................... 98
8.10. Confidentiality....................................................... 99
8.11. Jurisdiction, Etc..................................................... 99
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SCHEDULES
Schedule I - Commitments and Applicable Lending Offices
Schedule II - Existing Accounts
Schedule 4.01(a) - Share Ownership
Schedule 4.01(b) - Subsidiaries
Schedule 4.01(d) - Authorizations, Approvals, Actions, Notices and Filings
Schedule 4.01(l) - Plans and Multiemployer Plans
Schedule 4.01(y) - Open Years
Schedule 4.01(cc) - Existing Debt
Schedule 4.01(dd) - Owned Real Property
Schedule 4.01(ee) - Leased Real Property
Schedule 4.01(ff) - Investments
Schedule 4.01(gg) - Intellectual Property
Schedule 4.01(ii) - Labor Matters
Schedule 5.02(a)(iii) - Existing Liens
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EXHIBITS
Exhibit A - Form of Note
Exhibit B - Form of Notice of Borrowing
Exhibit C - Form of Assignment and Acceptance
Exhibit D-1 - Form of Pledge and Security Agreement
Exhibit D-2 - Form of Parent Pledge and Security Agreement
Exhibit E - Form of Intellectual Property Security Agreement
Exhibit F-1 - Form of Parent Guaranty
Exhibit F-2 - Form of Subsidiary Guaranty
Exhibit G - Form of Opinion of Borrower's Counsel
Exhibit H - Form of Senior Subordinated Notes Indenture
Exhibit I - Form of Senior Subordinated Notes Guaranty
Exhibit J - Form of Registration Rights Agreement
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CREDIT AGREEMENT
CREDIT AGREEMENT dated as of June 13, 1997 among PRECISE HOLDING
CORPORATION, a Delaware corporation (together with its successors and assigns,
"Parent"), PRECISE TECHNOLOGY, INC., a Delaware corporation (together with its
successors and assigns, the "Borrower"), each Subsidiary Guarantor (together
with each of their respective successors and assigns, collectively, the
"Subsidiary Guarantors"), the banks, financial institutions and other
institutional lenders listed on the signature pages hereof and each Eligible
Assignee that shall become a party hereto pursuant to Section 8.07 (the
"Lenders") and Fleet National Bank, as agent (together with any successor
appointed pursuant to Article VII, the "Agent") for the Lenders hereunder and as
Issuing Bank.
PRELIMINARY STATEMENTS:
The Borrower has requested that the Lenders lend to the Borrower up to
$30,000,000 in order to (i) effect the Refinancing Transactions, (ii) furnish
certain working capital, (iii) fund the Permitted Acquisitions and certain
general corporate requirements of the Borrower and its Subsidiaries and (iv) pay
transaction fees and expenses in connection with the transactions contemplated
hereby. The Lenders have indicated their willingness to agree to lend such
amounts on the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements contained herein, the parties hereto hereby agree as
follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.01. 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):
"Advance" means a Revolving Credit Advance or a Letter of Credit
Advance.
"Affiliate" means, as to any Person, any other Person that, directly
or indirectly, controls, is controlled by or is under common control with
such Person or is a director or officer of such Person. For purposes of
this definition, the term "control" (including the terms "controlling",
"controlled by" and "under common control with") of a Person means the
possession, direct or indirect, of the power to direct or cause the
direction of the management and policies of such Person, whether through
the ownership of Voting Stock, by contract or otherwise.
"Agent" has the meaning specified in the recital of parties to this
Agreement.
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"Agent's Account" means the account of the Agent maintained by the
Agent at Fleet National Bank, ABA No. 011-000-138, for further credit to
Account No. 151035103156 or such other account maintained by the Agent and
designated by the Agent in a written notice to the Lenders and the
Borrower.
"Agreement" shall mean this Credit Agreement, as supplemented,
amended, restated or otherwise modified from time to time.
"Applicable Lending Office" means, with respect to each Lender, such
Lender's Domestic Lending Office in the case of a Base Rate Advance and
such Lender's Eurodollar Lending Office in the case of a Eurodollar Rate
Advance.
"Applicable Margin" means, in the case of (x) Base Rate Advances,
1.50% and (y) Eurodollar Rate Advances, 2.50%.
"Appropriate Lender" means, at any time, with respect to (a) the
Revolving Credit Facility, all Lenders (other than the Issuing Bank) and
(b) the Letter of Credit Facility, (i) the Issuing Bank and (ii) if the
other Lenders have made Letter of Credit Advances pursuant to Section
2.03(c) that are outstanding at such time, each such other Lender.
"Assigned Agreements" means all Assigned Agreements referred to in
Section 1(e) of the Security Agreement.
"Assignment and Acceptance" means an assignment and acceptance entered
into by a Lender and an Eligible Assignee, and accepted by the Agent, in
accordance with Section 8.07 and in substantially the form of Exhibit C
hereto.
"Available Amount" of any Letter of Credit means, at any time, the
maximum amount available to be drawn and unreimbursed under such Letter of
Credit at such time (assuming compliance at such time with all conditions
to drawing).
"Bank Hedge Agreement" means any interest rate Hedge Agreement
required or permitted under Article V that is entered into by and between
the Borrower and any Lender.
"Base Rate" means a fluctuating interest rate per annum in effect from
time to time, which rate per annum shall at all times be equal to the
higher of:
(a) the rate of interest announced publicly by Fleet in New York,
New York, from time to time, as its prime rate (and such term shall
not be construed to be its best or most favorable rate); and
(b) 1/2 of one percent per annum above the Federal Funds Rate.
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"Base Rate Advance" means an Advance that bears interest as provided
in Section 2.07(a)(x).
"Borrower" has the meaning specified in the recital of parties to this
Agreement.
"Borrower's Account" means the account of the Borrower maintained by
the Borrower with Fleet at its office at One Federal Street, Boston,
Massachusetts 02110, Account No. 9373825604, or such other account as the
Borrower and the Agent may from time to time designate as the "Borrower's
Account".
"Borrowing" means a borrowing consisting of simultaneous Revolving
Credit Advances of the same Type made by the Lenders.
"Business" means the business of operating an injection molder of
plastic products for sale and distribution, including without limitation
the assets relating to any such business.
"Business Day" means a day of the year on which banks are not required
or authorized by law to close in New York City or Pittsburgh, Pennsylvania
and, if the applicable Business Day relates to any Eurodollar Rate
Advances, on which dealings are carried on in the London interbank market.
"Calculation Period" means the period of four consecutive fiscal
quarters last ended before the date of the respective event or incurrence
which requires calculations to be made on a Pro Forma Basis.
"Capital Expenditures" means, for any Person for any period, the sum
of, without duplication, all cash expenditures made, directly or
indirectly, by such Person or any of its Subsidiaries during such period
for equipment, fixed assets, real property or improvements, or for
replacements or substitutions therefor or additions thereto, that have been
or should be, in accordance with GAAP, reflected as additions to property,
plant or equipment on a Consolidated balance sheet of such Person;
provided, however, in no event shall any Capital Expenditures made with the
proceeds of a Recovery Payment in accordance with the proviso set forth in
the definition of Extraordinary Receipt be deemed to constitute Capital
Expenditures for purposes hereof; provided further that it is understood
that in no event shall any payment of principal or interest under or the
incurrence of any Capitalized Lease be deemed to be a Capital Expenditure
for purposes of this definition.
"Capitalized Leases" means all leases that have been or should be, in
accordance with GAAP, recorded as capitalized leases.
"Cash Equivalents" means any of the following, to the extent owned by
any Loan Party free and clear of all Liens other than Liens created under
the Collateral Documents and having a maturity of not greater than 180 days
from the date of acquisition thereof: (a) readily marketable direct
obligations of the Government of the United States or any
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agency or instrumentality thereof or obligations unconditionally guaranteed
by the full faith and credit of the Government of the United States, (b)
insured certificates of deposit or time deposits, certificates of deposit
and Eurodollar time deposits with maturities of one year or less from the
date of acquisition, bankers acceptances with maturities not exceeding six
months, and overnight bank deposits, in each case with any commercial bank
that is a Lender or a member of the Federal Reserve System, issues (or the
parent of which issues) commercial paper rated as described in clause (c),
is organized under the laws of the United States or any State thereof and
has combined capital and surplus of at least $500,000,000, (c) commercial
paper in an aggregate amount of no more than $250,000 per issuer
outstanding at any time, issued by any corporation organized under the laws
of any State of the United States and rated at least "Prime-1" (or the then
equivalent grade) by Moody's or "A-1" (or the then equivalent grade) by
S&P, (d) repurchase obligations with a maturity of not more than seven days
for underlying securities of the type described in clauses (a) and (b)
above with any financial institution meeting the criteria of (b) above or
(e) Investments in money market or mutual funds that invest in Cash
Equivalents of the types described in clauses (a), (b), (c) and (d) above.
"CERCLA" means the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended from time to time, 42 U.S.C. ss. 9601
et seq.
"CERCLIS" means the Comprehensive Environmental Response, Compensation
and Liability Information System maintained by the U.S. Environmental
Protection Agency.
"Change of Control" means at any time (i) a "Change of Control" under
and as defined in the Senior Subordinated Notes Indenture shall have
occurred; (ii) the Permitted Holders (individually or collectively) shall
cease to be the record and beneficial owner (directly or indirectly) of at
least 80% in the aggregate of the Voting Stock of Parent; (iii) Parent
shall cease to be the record and beneficial owner of at least 100% of the
Voting Stock of the Borrower; (iv) any Person or two or more Persons (other
than the Permitted Holders) acting in concert shall have acquired
beneficial ownership (within the meaning of Rule 13d-3 of the Securities
and Exchange Commission under the Securities Exchange Act of 1934),
directly or indirectly, of Voting Stock of Parent (or other securities
convertible into such Voting Stock) representing more than 20% of the
combined voting power of all Voting Stock of Parent; or (v) any Person or
two or more Persons (other than the Permitted Holders) acting in concert
shall have acquired by contract or otherwise, or shall have entered into a
contract or arrangement that, upon consummation, will result in its or
their acquisition of the power to exercise, directly or indirectly, a
controlling influence over the management or policies of Parent.
"Collateral" means all "Collateral" and all "Intellectual Property
Collateral" referred to in the Collateral Documents, all Mortgaged
Properties, all cash and Cash Equivalents delivered as collateral and all
other property (whether real or personal) that is or is intended to be
subject to any Lien in favor of the Collateral Agent for the benefit of the
Secured Parties.
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"Collateral Agent" means the Agent acting as collateral agent for the
Secured Parties pursuant to the Collateral Documents, and any successor
thereto appointed pursuant to the terms of the respective Collateral
Documents.
"Collateral Documents" means the Security Agreement, the Intellectual
Property Security Agreement, each Guaranty, each Mortgage and any other
agreement that creates or purports to create a Lien in favor of the
Collateral Agent for the benefit of the Secured Parties.
"Commitment" means a Revolving Credit Commitment or a Letter of Credit
Commitment.
"Confidential Information" means information that the Borrower
furnishes to the Agent or any Lender on a confidential basis, but does not
include any such information that is or becomes generally available to the
public or that is or becomes available to the Agent or such Lender from a
source other than the Borrower.
"Consolidated" refers, with respect to any Person, to the
consolidation of accounts of such Person and its Subsidiaries in accordance
with GAAP.
"Conversion", "Convert" and "Converted" each refer to a conversion of
Advances of one Type into Advances of the other Type pursuant to Section
2.09 or 2.10.
"Current Assets" of any Person means all assets of such Person that
would, in accordance with GAAP, be classified as current assets of a
company conducting a business the same as or similar to that of such
Person, after deducting adequate reserves in each case in which a reserve
is proper in accordance with GAAP.
"Current Liabilities" of any Person means (a) all Debt of such Person
that by its terms is payable on demand or matures within one year after the
date of determination excluding Funded Debt and (b) all other items
(including, without limitation, taxes accrued as estimated) that in
accordance with GAAP would be classified as current liabilities of such
Person.
"Debt" of any Person means, without duplication, (a) all indebtedness
of such Person for borrowed money, (b) all Obligations of such Person for
the deferred purchase price of property or services (other than trade
payables not overdue by more than 90 days (unless diligently contested in
good faith) incurred in the ordinary course of such Person's business), (c)
all Obligations of such Person evidenced by notes, bonds, debentures or
other similar instruments, (d) all Obligations of such Person created or
arising under any conditional sale or other title retention agreement with
respect to property acquired by such Person (even though the rights and
remedies of the seller or lender under such agreement in the event of
default are limited to repossession or sale of such property), (e) all
Obligations of such Person as lessee under Capitalized Leases, (f) all
Obligations, contingent or otherwise, of such Person under acceptance,
letter of credit or similar facilities, (g) all Obligations of such Person
to purchase, redeem, retire,
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defease or otherwise make any payment in respect of any capital stock of or
other ownership or profit interest in such Person or any other Person or
any warrants, rights or options to acquire such capital stock (other than
Obligations of such Person in respect of management profit sharing plans),
valued, in the case of Redeemable Preferred Stock, at the greater of its
voluntary or involuntary liquidation preference plus accrued and unpaid
dividends, (h) all Obligations of such Person in respect of Hedge
Agreements, (i) all Debt of others referred to in clauses (a) through (h)
above or clause (j) below guaranteed directly or indirectly in any manner
by such Person, or in effect guaranteed directly or indirectly by such
Person through an agreement (1) to pay or purchase such Debt or to advance
or supply funds for the payment or purchase of such Debt, (2) to purchase,
sell or lease (as lessee or lessor) property, or to purchase or sell
services, primarily for the purpose of enabling the debtor to make payment
of such Debt or to assure the holder of such Debt against loss, (3) to
supply funds to or in any other manner invest in the debtor (including any
agreement to pay for property or services irrespective of whether such
property is received or such services are rendered) or (4) otherwise to
assure a creditor against loss, and (j) all Debt referred to in clauses (a)
through (i) above of another Person secured by (or for which the holder of
such Debt has an existing right, contingent or otherwise, to be secured by)
any Lien on property (including, without limitation, accounts and contract
rights) owned by such Person, even though such Person has not assumed or
become liable for the payment of such Debt, but only to the extent of the
fair market value of such property securing such Debt.
"Debt Agreements" has the meaning specified in Section
3.01(g)(xviii)(C).
"Default" means any Event of Default or any event that would
constitute an Event of Default but for the requirement that notice be given
or time elapse or both.
"Documents" means the Loan Documents and the Senior Subordinated Notes
Documents.
"Domestic Lending Office" means, with respect to any Lender, the
office of such Lender specified as its "Domestic Lending Office" opposite
its name on Schedule I hereto or in the Assignment and Acceptance pursuant
to which it became a Lender, as the case may be, or such other office of
such Lender as such Lender may from time to time specify to the Borrower
and the Agent.
"EBITDA" means, with respect to any Person for any period, the sum,
determined on a Consolidated basis, of (a) net income (or net loss), (b)
Interest Expense, (c) income tax expense, (d) depreciation expense, (e)
amortization expense (including, to the extent excluded from the definition
of Interest Expense, any amortization of deferred financing costs), (f)
investment banking fees incurred by such Person in connection with the
transactions contemplated by this Agreement and the Senior Subordinated
Note Documents, and (g) extraordinary or non-recurring losses and charges
deducted in calculating net income less extraordinary or non-recurring
gains added in calculating net income, in each case of such Person and its
Subsidiaries, determined in accordance with GAAP for such period.
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"Effective Date" has the meaning specified in Section 8.06.
"Eligible Assignee" means with respect to any Facility: (i) a Lender;
(ii) an Affiliate of a Lender; (iii) a commercial bank organized under the
laws of the United States, or any State thereof, and having a combined
capital and surplus of at least $500,000,000; (iv) a savings and loan
association or savings bank organized under the laws of the United States,
or any State thereof, and having a combined capital and surplus of at least
$500,000,000; (v) a commercial bank organized under the laws of any other
country that is a member of the OECD or has concluded special lending
arrangements with the International Monetary Fund associated with its
General Arrangements to Borrow or a political subdivision of any such
country, and having a combined capital and surplus of at least
$500,000,000, so long as such bank is acting through a branch or agency
located in the United States; (vi) a finance company, insurance company or
other financial institution or fund (whether a corporation, partnership,
trust or other entity) that is engaged in making, purchasing or otherwise
investing in commercial loans in the ordinary course of its business and
having a combined capital and surplus of at least $500,000,000; and (vii)
any other Person approved by the Agent and the Borrower, such approval not
to be unreasonably withheld or delayed; provided, however, that neither any
Loan Party nor any Affiliate of a Loan Party shall qualify as an Eligible
Assignee under this definition.
"Environmental Claim" means any written allegation, notice of
violation, action, claim, Environmental Lien, demand, abatement or other
order or direction by any Governmental Authority or any other Person for
personal injury (including sickness, disease or death), tangible or
intangible property damage, damage to the environment, nuisance, pollution,
contamination or other adverse effects on the environment, or for fines,
penalties or restrictions resulting from or based upon (i) the existence,
or the continuation of the existence, of a release (including, without
limitation, sudden or non-sudden accidental or non-accidental releases) of,
or exposure to, any Hazardous Material, audible noise above applicable
standards in, into or onto the environment (including, without limitation,
the air, soil, surface water or groundwater) at, in, by, from or related to
any property currently or formerly owned, operated or leased by any Loan
Party or any activities or operations thereof; (ii) the transportation,
storage, treatment or disposal of Hazardous Materials in connection with
any property currently or formerly owned, operated or leased by any Loan
Party or its current or former operations or facilities; or (iii) the
violation, or alleged violation, of any Environmental Law, order or
Environmental Permit relating to environmental matters connected with any
property currently or formerly owned, leased or operated by any Loan Party.
"Environmental Costs and Liabilities" means any and all losses,
liabilities, obligations, damages, fines, penalties, judgments, actions,
claims, costs and expenses (including, without limitation, fees,
disbursements and expenses of legal counsel, experts, engineers and
consultants and the costs of investigation, feasibility studies and removal
and remedial actions) arising from or under any Environmental Law or from
any order, contract or agreement with any Governmental Authority or other
Person.
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"Environmental Law" means any Federal, state, local or foreign law
(including common law), ordinance, rule, regulation, code, order, writ,
judgment, injunction, decree or judicial or agency interpretation, policy
or guidance having the force and effect of law, relating to the
environment, health, safety or natural resources, including, without
limitation, CERCLA; RCRA; the Federal Water Pollution Control Act, 33
U.S.C. ss. 1251 et seq.; the Toxic Substances Control Act, 15 U.S.C. ss.
2601 et seq.; the Clean Air Act, 42 U.S.C. ss. 7401 et seq.; the Safe
Drinking Water Act, 42 U.S.C. ss. 3803 et seq.; the Oil Pollution Act of
1990, 33 U.S.C. ss. 2701 et seq.; the Hazardous Material Transportation
Act, 49 U.S.C. ss. 1801 et seq.; the Toxic Substances and Control Act, 15
U.S.C. ss. 2601 et. seq.; the Occupational Safety and Health Act, 29 U.S.C.
ss. 651 et seq.; and any state and local or foreign counterparts or
equivalents, in each case as amended from time to time.
"Environmental Permit" means any permit, approval, license,
authorization, variance, registration or permission required under any
Environmental Law or by any Governmental Authority.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations promulgated and rulings
issued thereunder.
"ERISA Affiliate" means any corporation, trade or business that is or
was (i) a member or general partner of the controlled group of any Loan
Party, or under common control with any Loan Party, within the meaning of
Section 414(b) or (c) of the Internal Revenue Code or (ii) a member of an
affiliated group as defined in Section 414(m) of the Internal Revenue Code.
"ERISA Event" means (a) (i) the occurrence of a reportable event,
within the meaning of Section 4043(c) of ERISA, with respect to any Pension
Plan unless the 30-day notice requirement with respect to such event has
been waived by the PBGC; or (ii) the requirements of subsection (1) of
Section 4043(b) of ERISA (without regard to subsection (2) of such Section)
are met with respect to a contributing sponsor, as defined in Section
4001(a)(13) of ERISA, of a Pension Plan, and an event described in
paragraph (9), (10), (11), (12) or (13) of Section 4043(c) of ERISA is
reasonably expected to occur with respect to such Pension Plan within the
following 30 days; (b) failure by any Loan Party or an ERISA affiliate to
make a payment to a Pension Plan required under Section 302(c) of ERISA;
(c) the provision by the administrator of any Pension Plan of a notice of
intent to terminate such Pension Plan, pursuant to Section 4041(a)(2) of
ERISA (including any such notice with respect to a plan amendment referred
to in Section 4041(e) of ERISA); (d) the cessation of operations at a
facility of any Loan Party or any ERISA Affiliate in the circumstances
described in Section 4062(e) of ERISA; (e) the complete or partial
withdrawal by any Loan Party or any ERISA Affiliate from a Multiemployer
Plan or a multiple employer plan (as described in Sections 4063 and 4064 of
ERISA) during a plan year; (f) the conditions for imposition of a lien
under Section 302(f) of ERISA shall have been met with respect to any
Pension Plan; (g) the adoption of an amendment to a Pension Plan requiring
the
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provision of security to such Pension Plan, pursuant to Section 307 of
ERISA; or (h) the institution by the PBGC of proceedings to terminate a
Pension Plan pursuant to Section 4042 of ERISA, or the occurrence of any
event or condition described in Section 4042 of ERISA that could reasonably
constitute grounds for the termination of, or the appointment of a trustee
to administer, such Pension Plan.
"Eurocurrency Liabilities" has the meaning specified in Regulation D
of the Board of Governors of the Federal Reserve System, as in effect from
time to time.
"Eurodollar Lending Office" means, with respect to any Lender, the
office of such Lender specified as its "Eurodollar Lending Office" opposite
its name on Schedule I hereto or in the Assignment and Acceptance pursuant
to which it became a Lender (or, if no such office is specified, its
Domestic Lending Office), or such other office of such Lender as such
Lender may from time to time specify to the Borrower and the Agent.
"Eurodollar Rate" means, for any Interest Period for all Eurodollar
Rate Advances comprising part of the same Borrowing, the rate appearing on
Page 3750 of the Telerate Service (or on any successor or substitute page
of such Service, or any successor to or substitute for such Service,
providing rate quotations comparable to those currently provided on such
page of such Service, as determined by the Agent from time to time for
purposes of providing quotations of interest rates applicable to U.S.
dollar deposits in the London interbank market) at approximately 11:00
A.M., London time, two Business Days prior to the commencement of such
Interest Period, as the rate for U.S. dollar deposits with a maturity
comparable to such Interest Period. In the event that such rate is not
available at such time for any reason, then the "Eurodollar Rate" with
respect to such Eurodollar Rate Advance for such Interest Period shall be
the rate at which U.S. dollar deposits of $5,000,000, and for a maturity
comparable to such Interest Period, are offered in immediately available
funds in the London interbank market at approximately 11:00 A.M., London
time, two Business Days prior to the commencement of such Interest Period.
"Eurodollar Rate Advance" means an Advance that bears interest as
provided in Section 2.07(a)(y).
"Eurodollar Rate Reserve Percentage" for any Interest Period for all
Eurodollar Rate Advances comprising part of the same Borrowing means the
reserve percentage applicable two Business Days before the first day of
such Interest Period under regulations issued from time to time by the
Board of Governors of the Federal Reserve System (or any successor) for
determining the maximum reserve requirement (including, without limitation,
any emergency, supplemental or other marginal reserve requirement) for a
member bank of the Federal Reserve System in New York City with respect to
liabilities or assets consisting of or including Eurocurrency Liabilities
(or with respect to any other category of liabilities that includes
deposits by reference to which the interest rate on Eurodollar Rate
Advances is determined) having a term equal to such Interest Period.
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"Events of Default" has the meaning specified in Section 6.01.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
(or any similar successor Federal statute), and the rules and regulations
thereunder, as the same are in effect from time to time.
"Existing Accounts" means each of the accounts of the Borrower
maintained by the Borrower as listed on Schedule II.
"Existing Debt" has the meaning specified in Section 4.01(cc).
"Existing Precise Credit Agreement" means the Credit Agreement, dated
as of March 28, 1996, as amended through the date hereof, among Parent, the
Borrower and the lenders party thereto.
"Existing Precise Redeemable Preferred Stock" means (i) 575 shares of
Series A Cumulative Exchangeable Preferred Stock and (ii) 250 shares of
Series B Cumulative Redeemable Preferred Stock issued by the Borrower in
connection with the acquisition of TMP.
"Existing Precise Subordinated Notes" means the 12.25% senior
subordinated notes due 2006 issued by the Borrower.
"Extraordinary Receipt" means any cash received by or paid to or for
the account of any Person not in the ordinary course of business,
including, without limitation, proceeds of insurance (other than proceeds
of business interruption insurance to the extent such proceeds constitute
compensation for lost earnings) and condemnation awards (and payments in
lieu thereof); provided, however, that an Extraordinary Receipt shall not
include cash receipts received by the Borrower or any Subsidiary of the
Borrower from proceeds of insurance or a condemnation award in respect of
loss or damage to equipment, fixed assets or real property of the Borrower
or any Subsidiary of the Borrower (such receipt, a "Recovery Payment") to
the extent that such proceeds are applied (or in respect of which
expenditures were previously incurred) to replace or repair the equipment,
fixed assets or real property for which such proceeds were received in
accordance with the terms of the Loan Documents and so long as (i) no
Default or Event of Default exists or is continuing at the time such
Recovery Payment is received by the Borrower or any Subsidiary of the
Borrower, (ii) such replacement or repair is commenced within nine months
after the occurrence of such damage or loss and (iii) such proceeds do not
exceed $10,000,000 in the aggregate for all occurrences. The Borrower shall
deliver a certificate to the Agent on behalf of the Lenders signed by an
authorized officer of the Borrower within ten (10) days after the end of
each Fiscal Year certifying compliance with the foregoing clauses (i), (ii)
and (iii).
"Facility" means the Revolving Credit Facility or the Letter of Credit
Facility.
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<PAGE>
"Federal Funds Rate" means, for any period, a fluctuating interest
rate per annum equal for each day during such period (i) to the rate
published by the Telerate service on page five of its daily report as the
"New York Offered Rate" as of 10:00 A.M. (New York City time) for such day
(or, if such day is not a Business Day, for the immediately preceding
Business Day) or (ii) if the Telerate service shall cease to publish or
otherwise shall not publish such rate for any day that is a Business Day,
to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers, as published for such day (or, if such day is not a Business
Day, for the next preceding Business Day) by the Federal Reserve Bank of
New York, or, if such rate is not so published for any day that is a
Business Day, the average of the quotations for such day for such
transactions received by the Agent from three Federal funds brokers of
recognized standing selected by it.
"Final Maturity Date" means June 30, 2002.
"Fiscal Year" means a fiscal year of any Loan Party or any Subsidiary
of any Loan Party ending on December 31 in any calendar year.
"Fixed Charge Coverage Ratio" means, with respect to any Person for
any Rolling Period, the ratio of (a) Consolidated EBITDA for such Person
and its Subsidiaries for such Rolling Period less the amount of all Capital
Expenditures of such Person and its Subsidiaries that have been paid in
cash during such Rolling Period to (b) the sum of (i) Interest Expense of
such Person and its Subsidiaries that has been paid in cash during such
Rolling Period and (ii) regularly scheduled principal payments of Funded
Debt and any Capitalized Leases of such Person and its Subsidiaries made
during such Rolling Period.
"Fleet" means Fleet National Bank in its individual capacity.
"Funded Debt" of any Person means Debt of such Person that by its
terms matures more than one year after the date of creation or matures
within one year from such date but is renewable or extendible, at the
option of such Person, to a date more than one year after such date or
arises under a revolving credit or similar agreement that obligates the
lender or lenders to extend credit during a period of more than one year
after such date, including, without limitation, all amounts of Funded Debt
of such Person required to be paid or prepaid within one year after the
date of determination.
"GAAP" has the meaning specified in Section 1.03.
"Governmental Authority" means any nation or government, any state or
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"Guaranties" has the meaning specified in Section 3.01(g)(x).
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<PAGE>
"Guarantor" means each of Parent, each Subsidiary Guarantor and each
other party to a Guaranty.
"Guaranty" has the meaning specified in Section 3.01(g)(x).
"Hazardous Materials" means (a) any petroleum or petroleum products,
radioactive materials, asbestos, urea formaldehyde, polychlorinated
biphenyls, and radon gas; (b) any chemicals, materials or substances
defined as or included in the definition of "hazardous substances,"
"hazardous waste," "hazardous materials," "extremely hazardous substances,"
"restricted hazardous waste," "toxic substances," "toxic pollutants,"
"contaminants," or "pollutants," or words of similar import, under any
applicable Environmental Law; and (c) any other chemical, material or
substance, exposure to which is prohibited, limited or regulated by any
Governmental Authority under Environmental Laws.
"Hedge Agreements" means interest rate swap, cap, floor or collar
agreements, interest rate future or option contracts, currency swap
agreements, currency future or option contracts and other similar
agreements or arrangement.
"Hedge Bank" means any Lender in its capacity as a party to a Bank
Hedge Agreement.
"Indemnified Party" has the meaning specified in Section 8.04(b).
"Information Package" means, with respect to each Permitted
Acquisition, an information package consisting of (i) a description of the
Business being acquired, (ii) historical financial statements (which may be
unaudited) for the respective Business for at least the two full fiscal
years most recently ended and the latest 12-month period ended with the
last day of the fiscal quarter last ended, (iii) projections for the five
years after the respective Permitted Acquisition, (iv) an officer's
certificate for the Rolling Period ended on the date of the most recent
delivery of quarterly financial statements pursuant to Section 5.03(c)
hereof indicating Pro Forma compliance with the financial covenants
contained in Section 5.04 hereof and (v) any other information which the
Borrower in good faith determines should be furnished so that the
Information Package for the respective Business being acquired is, to the
best of the Borrower's knowledge after reasonable investigation, true and
correct in all material respects and is not incomplete by omitting to state
any fact necessary to make the information (taken as a whole) contained
therein not misleading in any material respect.
"Initial Extension of Credit" means the earlier to occur of the
initial Borrowing and the initial issuance of a Letter of Credit hereunder.
"Insufficiency" means, with respect to any Pension Plan or
Multiemployer Plan, the amount, if any, of its unfunded benefit liabilities
(with respect to a Multiemployer
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<PAGE>
Plan, its proportionate share of unfunded benefit liabilities), as defined
in Section 4001(a)(18) of ERISA.
"Intellectual Property Collateral" means all Intellectual Property
Collateral referred to in Section 1 of the Intellectual Property Security
Agreement.
"Intellectual Property Security Agreement" has the meaning specified
in Section 3.01(g)(xv).
"Interest Coverage Ratio" means, with respect to any Person for any
Rolling Period, the ratio of (a) Consolidated EBITDA of such Person and its
Subsidiaries for the most recent twelve month period to (b) Interest
Expense of such Person and its Subsidiaries during such Rolling Period.
"Interest Expense" means, with respect to any Person for any period,
the amount by which (i) interest expense (including the interest component
on obligations under Capitalized Leases but excluding any amortization of
deferred financing costs), whether paid or accrued, on all Debt of such
Person and its Subsidiaries for such period, including, without limitation
and without duplication, (a) interest expense in respect of Debt resulting
from Advances, (b) commissions, discounts and other fees and charges
payable in connection with letters of credit (including, without
limitation, any Letters of Credit) and (c) any net payment payable in
connection with Hedge Agreements exceeds (ii) the sum of (A) any net
credits received in connection with Hedge Agreements and (B) interest
income, whether paid or accrued, of such Person for such period.
"Interest Period" means, for each Eurodollar Rate Advance comprising
part of the same Borrowing, the period commencing on the date of such
Eurodollar Rate Advance or the date of the Conversion of any Base Rate
Advance into such Eurodollar Rate Advance, and ending on the last day of
the period selected by the Borrower pursuant to the provisions below and,
thereafter, each subsequent period commencing on the last day of the
immediately preceding Interest Period and ending on the last day of the
period selected by the Borrower pursuant to the provisions below. The
duration of each such Interest Period shall be one, two, three or six
months, as the Borrower may, upon notice received by the Agent not later
than 11:00 A.M. (New York City time) on the third Business Day prior to the
first day of such Interest Period, select; provided, however, that:
(a) the Borrower may not select any Interest Period with respect
to any Eurodollar Rate Advance that ends after the Final Maturity
Date;
(b) Interest Periods commencing on the same date for Eurodollar
Rate Advances comprising part of the same Borrowing shall be of the
same duration;
(c) whenever the last day of any Interest Period would otherwise
occur on a day other than a Business Day, the last day of such
Interest Period shall be
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<PAGE>
extended to occur on the next succeeding Business Day, provided,
however, that, if such extension would cause the last day of such
Interest Period to occur in the next following calendar month, the
last day of such Interest Period shall occur on the immediately
preceding Business Day; and
(d) whenever the first day of any Interest Period occurs on a day
of an initial calendar month for which there is no numerically
corresponding day in the calendar month that succeeds such initial
calendar month by the number of months equal to the number of months
in such Interest Period, such Interest Period shall end on the last
Business Day of such succeeding calendar month.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended from time to time, and the regulations promulgated and rulings
issued thereunder.
"Inventory" means all Inventory referred to in Section 1(b) of the
Security Agreement.
"Investment" in any Person means any loan or advance to such Person,
any purchase or other acquisition of any capital stock or other ownership
or profit interest, warrants, rights, options, obligations or other
securities of such Person, any capital contribution to such Person or any
other investment in such Person, including, without limitation, any
arrangement pursuant to which the investor incurs Debt of the types
referred to in clause (i) or (j) of the definition of "Debt" in respect of
such Person.
"Investment Agreements" has the meaning specified in Section
3.01(g)(xviii)(F).
"Issuing Bank" means Fleet and each Eligible Assignee to which a
Letter of Credit Commitment hereunder has been assigned pursuant to Section
8.07.
"L/C Cash Collateral Account" means the non-interest bearing cash
collateral account with the Issuing Bank in the name of the Borrower but
under the sole dominion and control of the Agent, which account is subject
to the terms of the Security Agreement.
"L/C Related Documents" has the meaning specified in Section
2.04(b)(ii).
"Lenders" means Fleet, the Issuing Bank and each Person that shall
become a Lender hereunder pursuant to Section 8.07 (but excludes any
participant of any Lender).
"Letter of Credit" has the meaning specified in Section 2.01(b).
"Letter of Credit Advance" means an advance made by the Issuing Bank
or any Lender pursuant to Section 2.03(c).
"Letter of Credit Agreement" has the meaning specified in Section
2.03(a).
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<PAGE>
"Letter of Credit Commitment" means the amount set forth opposite the
Issuing Bank's name on Schedule I hereto under the caption "Letter of
Credit Commitment" or, if the Issuing Bank has entered into one or more
Assignment and Acceptances, the aggregate amount set forth for the Issuing
Bank in the Register maintained by the Agent pursuant to Section 8.07(e) as
the Issuing Bank's "Letter of Credit Commitment", as such amount may be
reduced at or prior to such time pursuant to Section 2.05.
"Letter of Credit Facility" means, at any time, an amount equal to the
aggregate amount of the Issuing Bank's Letter of Credit Commitment at such
time.
"Leverage Ratio" means, with respect to any Person at any date of
determination, the ratio of (a) Funded Debt (other than contingent
obligations of the type described in clause (f) or (h) in the definition of
"Debt") of such Person at such date to (b) EBITDA of such Person and its
Subsidiaries for the then most recent twelve month period on such date.
"Lien" means any lien, security interest or other charge or
encumbrance of any kind, or any other type of preferential arrangement,
including, without limitation, the lien or retained security title of a
conditional vendor and any easement, right of way or other encumbrance on
title to real property.
"Loan Documents" means for purposes of this Agreement and the Notes
and any amendment or modification hereof or thereof and for all other
purposes other than for purposes of the Collateral Documents, (i) this
Agreement, (ii) the Notes, (iii) the Collateral Documents, (iv) each Letter
of Credit Agreement and (v) each Guaranty and (b) for purposes of the
Collateral Documents, (i) this Agreement, (ii) the Notes, (iii) the
Collateral Documents, (iv) each Letter of Credit Agreement, (v) each
Guaranty and (vi) each Bank Hedge Agreement, in each case as amended or
otherwise modified from time to time.
"Loan Parties" means the Borrower and each Subsidiary Guarantor.
"Management Agreements" has the meaning specified in Section
3.01(g)(xviii)(D).
"Margin Stock" has the meaning specified in Regulation U.
"Material Adverse Change" means any material adverse change in the
assets, business, condition (financial or otherwise), operations,
performance or properties of the Borrower and its Subsidiaries (on a
Consolidated basis).
"Material Adverse Effect" means a material adverse effect on (a) the
assets, business, condition (financial or otherwise), operations,
performance or properties of the Borrower and its Subsidiaries taken as a
whole, (b) the rights and remedies of the Agent or any Lender under any
Loan Document or (c) the ability of Parent or any Loan Party
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<PAGE>
to perform its Obligations in any material respect under any Loan Document
to which it is or is to be a party.
"Mentmore Holdings" means Mentmore Holdings Corporation, a Delaware
corporation.
"Mentmore Management Agreement" means the Management Agreement, dated
as of March 15, 1996, between the Borrower and Mentmore Holdings, as
amended.
"Moody's" means Moody's Investor Service, Inc.
"Mortgage" means each mortgage, deed of trust or deed to secure debt
required to be delivered pursuant to the terms of this Agreement and
pursuant to which any Loan Party shall have granted to the Collateral Agent
a mortgage lien on such Loan Party's Mortgaged Property, together with any
assignment of leases and rents to be executed in connection therewith.
"Mortgage Policy" means each mortgage title insurance policy (and all
endorsements thereto) in form and substance satisfactory to the Agent for
each Mortgaged Property required to be delivered pursuant to this
Agreement.
"Mortgaged Property" means each real property owned or leased by the
Borrower and each Subsidiary Guarantor and required to be mortgaged
pursuant to this Agreement.
"Multiemployer Plan" means a multiemployer plan, as defined in Section
4001(a)(3) of ERISA, to which any Loan Party or any ERISA Affiliate is
making or accruing an obligation to make contributions, or has within any
of the preceding five plan years made or accrued an obligation to make
contributions.
"Net Cash Proceeds" means, with respect to any sale, lease, transfer
or other disposition of any asset or the sale or issuance of any Debt or
capital stock or other ownership or profit interest, any securities
convertible into or exchangeable for capital stock or other ownership or
profit interest or any warrants, rights, options or other securities to
acquire capital stock or other ownership or profit interest by any Person,
then the aggregate amount of cash received from time to time (whether as
initial consideration or through payment or disposition of deferred
consideration) by or on behalf of such Person in connection with such
transaction after deducting therefrom only (without duplication) (a)
brokerage commissions, underwriting fees and discounts, investment banking
fees to unaffiliated third parties, legal fees, finder's fees and other
similar fees and commissions, (b) the amount of taxes (including, without
limitation, any Federal, state or local income taxes payable pursuant to
any Tax Sharing Agreement) payable in connection with or as a result of
such transaction, (c) the amount of any Debt secured by a Lien on such
asset that, by the terms of such transaction, is required to be repaid upon
such disposition, (d) (without duplication) any portion of the Net Cash
Proceeds for which the Borrower determines in good faith that a reserve
should be taken
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<PAGE>
under GAAP against potential liabilities incurred with the receipt of such
net proceeds (including not by way of limitation against any purchase price
adjustment or indemnity claim), in each case to the extent, but only to the
extent, that the amounts so deducted are properly attributable to such
transaction or to the asset that is the subject thereof and are, at the
time of receipt of such cash, actually paid, accrued or reserved (other
than pursuant to any Tax Sharing Agreement) to a Person that is not an
Affiliate of such Person or any Loan Party or any Affiliate of any Loan
Party and (e) an amount equal to 10% of the Consolidated assets of the
Borrower and its Subsidiaries set forth on the most recently available
Consolidated financial statements of the Borrower.
"New Subordinated Notes" has the meaning specified in Section
5.02(b)(vi).
"Non-Precise Subsidiary" means each Subsidiary of Sunderland other
than Parent and its Subsidiaries and the Borrower and its Subsidiaries.
"Nonratable Assignment" means an assignment by a Lender pursuant to
Section 8.07(a) of a portion of its rights and obligations under this
Agreement, other than an assignment of a uniform, and not a varying,
percentage of all of the rights and obligations of such Lender under and in
respect of all of the Revolving Credit Facility.
"Note" means a promissory note of the Borrower payable to the order of
any Lender, in substantially the form of Exhibit A hereto, evidencing the
aggregate indebtedness of the Borrower to such Lender resulting from the
Revolving Credit Advances made by such Lender.
"Notice of Borrowing" has the meaning specified in Section 2.02(a).
"Notice of Issuance" has the meaning specified in Section 2.03(a).
"NPL" means the National Priorities List under CERCLA.
"Obligation" means, with respect to any Person, any payment,
performance or other obligation of such Person of any kind, including,
without limitation, any liability of such Person on any claim, whether or
not the right of any creditor to payment in respect of such claim is
reduced to judgment, liquidated, unliquidated, fixed, contingent, matured,
disputed, undisputed, legal, equitable, secured or unsecured, and whether
or not such claim is discharged, stayed or otherwise affected by any
proceeding referred to in Section 6.01(f). Without limiting the generality
of the foregoing, the Obligations of the Loan Parties under the Loan
Documents include (a) the obligation to pay principal, interest, Letter of
Credit commissions, charges, expenses, fees, attorneys' fees and
disbursements, indemnities and other amounts payable by any Loan Party
under any Loan Document and (b) the obligation of any Loan Party to
reimburse any amount in respect of any of the foregoing that any Lender, in
its reasonable discretion, may elect to pay or advance on behalf of such
Loan Party.
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<PAGE>
"OECD" means the Organization for Economic Cooperation and
Development.
"Offering Memorandum" means the final offering memorandum, dated June
10, 1997, provided to the Agent by the Borrower prior to the Effective
Date.
"Open Year" has the meaning specified in Section 4.01(y).
"Other Taxes" has the meaning specified in Section 2.12(b).
"Parent" has the meaning specified in the recital of parties to this
Agreement.
"Parent Guaranty" has the meaning specified in 3.01(g)(ix).
"Parent Shareholders Agreement" means the shareholders agreement,
dated as of March 29, 1996, as amended, among Parent, Sunderland, Hamilton
Holdings Ltd. Corporation, Delaware State Employees' Retirement Fund,
Declaration of Trust for Defined Benefit Plans of Zeneca Holdings Inc.,
Declaration of Trust for Defined Benefit Plans of ICI American Holdings
Inc., Rice Partners II, L.P. and John Hancock Mutual Life Insurance
Company, with respect to certain securities of Parent.
"PBGC" means the Pension Benefit Guaranty Corporation as established
and maintained pursuant to Title IV of ERISA.
"Pension Plan" means any Plan that is an "employee pension benefit
plan" as defined in Section 3(2) of ERISA.
"Permitted Acquisition" means the acquisition by the Borrower or any
of its Wholly-Owned Subsidiaries of assets constituting an entire business,
division or product line of any Person engaged in the Business not already
a Subsidiary of the Borrower or 100% of the capital stock of such Person in
accordance with the requirements of this Agreement.
"Permitted Holders" means (i) Sunderland, (ii) any Principal and (iii)
(A) any spouse or immediate family member of either Principal and any child
or spouse of any spouse or immediate family member of such Principal, (B) a
trust, corporation, partnership or other entity, the beneficiaries,
stockholders, partners, owners or Persons beneficially holding, directly or
indirectly, a controlling interest of which consist of any of such
Principal and/or such other Persons referred to in the immediately
preceding clause (A), or (C) the trustees of any trust referred to in
clause (B).
"Permitted Liens" means (a) Liens in favor of any Loan Party or any of
its Subsidiaries; (b) Liens placed upon assets of a Person to be used in
the ordinary course of business of the Borrower or any Wholly-Owned
Subsidiary of the Borrower existing at the time such Person is merged into
or consolidated with the Borrower or any Wholly-Owned Subsidiary of the
Borrower in compliance with this Agreement, provided that (1)
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<PAGE>
the aggregate outstanding principal amount of all Debt secured by Liens
permitted by this clause (b) shall not at any time exceed the amount
permitted by Section 5.02(b)(iii) and (2) in all events, the Lien
encumbering such assets does not encumber any other asset, any inventory or
any receivables of the Borrower or such Subsidiary; (c) Liens to secure the
performance of statutory obligations, surety or appeal bonds, performance
bonds or other obligations of a like nature incurred in the ordinary course
of business; (d) Liens for taxes, assessments or governmental charges or
claims arising as a matter of law that are not yet delinquent or that are
being contested in good faith by appropriate proceedings promptly
instituted and diligently concluded, provided that any reserve or other
appropriate provision as shall be required in conformity with GAAP shall
have been made therefor; (e) statutory Liens or landlords', carriers',
warehousemens', mechanics', suppliers' or similar Liens incurred in the
ordinary course of business of any Loan Party or any of its Subsidiaries
which do not secure Debt for borrowed money and (x) which do not in the
aggregate materially detract from the value of the property or assets of
the Borrower and its Subsidiaries taken as a whole or materially impair the
operation of the business of the Borrower and its Subsidiaries taken as a
whole or (y) which are being contested in good faith by appropriate
proceedings, which proceedings have the effect of preventing the forfeiture
or sale of the property or assets subject to any such Lien; (f) easements,
minor title defects, irregularities in title or other charges or
encumbrances on property, in each case whether now or hereafter in
existence, not securing Debt and, in the reasonable opinion of the Agent,
not interfering in any material respect with the use of such property by
any Loan Party or any of its Subsidiaries; (g) Liens incurred or deposits
made in the ordinary course of business in connection with workers'
compensation, unemployment insurance and other types of social security
(exclusive of obligations in respect of the payment for borrowed money);
(h) Liens securing industrial revenue bonds or other tax-favored financing;
(i) deposit arrangements entered into in connection with acquisitions
permitted by this Agreement or in the ordinary course of business; (j)
Liens not otherwise permitted by the foregoing clauses (a) through (k)
securing obligations incurred in the ordinary course of business which
obligations do not exceed in the aggregate $2,000,000 at any time
outstanding; and (k) any extensions, substitutions, replacements or
renewals of the foregoing, provided that (x) the aggregate principal amount
of the Debt, if any, secured by such Liens does not increase from that
amount outstanding at the time of any such renewal or extension and (y) any
such renewal or extension does not encumber any additional assets or
properties of the Borrower or any of its Subsidiaries.
"Person" means an individual, partnership, corporation (including a
business trust), limited liability company, joint stock company, trust,
unincorporated association, joint venture or other entity, or a government
or any political subdivision or agency thereof.
"Plan" means any employee benefit plan within the meaning of Section
3(3) of ERISA and any other similar plans, policies, programs, practices,
agreements, understandings or arrangements (written or oral), established
or maintained by any Loan Party or any ERISA Affiliate or under which any
Loan Party or any ERISA Affiliate has
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<PAGE>
or could have any obligation or liability, actual or contingent, other than
a Multiemployer Plan, including, without limitation, all incentive, bonus,
deferred compensation, stock option, stock purchase, pension, medical,
severance, profit sharing and retirement plans, policies, programs,
practices, agreements, understandings or arrangements.
"Plan Asset Regulations" has the meaning specified in Section 2.15.
"Plant and Equipment" means all Plant and Equipment referred to in
Section 1(a) of the Security Agreement.
"Pledged Debt" means all Pledged Debt referred to in the Preliminary
Statement to the Security Agreement.
"Pledged Shares" means all Pledged Shares referred to in the
Preliminary Statement to the Security Agreement.
"Preferred Stock" means, with respect to any corporation, capital
stock issued by such corporation that is entitled to a preference or
priority over any other capital stock issued by such corporation upon any
distribution of such corporation's assets, whether by dividend or upon
liquidation.
"Principal" means Richard L. Kramer and/or William L. Remley.
"Pro Forma Basis" means, with respect to any incurrence of Debt or
Permitted Acquisition, the calculation of the Consolidated results of the
Borrower and its Subsidiaries otherwise determined in accordance with this
Agreement as if the respective Debt or Permitted Acquisition (and all other
Debt incurred or Permitted Acquisitions effected during the respective
Calculation Period or thereafter and on or prior to the date of
determination) (each such date, a "Determination Date") had been effected
on the first day of the respective Calculation Period; provided that all
such calculations shall take into account the following assumptions:
(i) pro forma effect shall be given to (1) any Debt incurred
subsequent to the end of the Calculation Period and prior to the
Determination Date, (2) any Debt incurred during such period to the
extent such Debt is outstanding at the Determination Date and (3) any
Debt to be incurred on the Determination Date, in each case as if such
Debt had been incurred on the first day of such Calculation Period and
after giving effect to the application of the proceeds thereof;
(ii) interest expense attributable to interest on any Debt
(whether existing or being incurred) bearing a floating interest rate
shall be computed as if the rate in effect on the date of computation
had been the applicable rate for the entire period;
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<PAGE>
(iii) there shall be excluded from interest expense any interest
expense related to any amount of Debt that was outstanding during such
Calculation Period or thereafter but that is not outstanding or is to
be permanently repaid on the Determination Date; and
(iv) pro forma effect shall be given to all Permitted
Acquisitions that occur during such Calculation Period or thereafter
and on or prior to the Determination Date (including any Debt assumed
or acquired in connection therewith) as if they had occurred on the
first day of such Calculation Period.
"Pro Rata Share" of any amount means, with respect to any Lender at
any time, the product of such amount times a fraction the numerator of
which is the amount of such Lender's Revolving Credit Commitment at such
time and the denominator of which is the Revolving Credit Facility at such
time.
"PTCE 90-1" has the meaning specified in Section 2.15.
"PTCE 91-38" has the meaning specified in Section 2.15.
"PTCE 95-60" has the meaning specified in Section 2.15.
"PTCE 96-23" has the meaning specified in Section 2.15.
"QPAM" has the meaning specified in Section 2.15.
"QPAM Exemption" has the meaning specified in Section 2.15.
"RCRA" means the Resource Conservation and Recovery Act, as the same
may be amended from time to time, 42 U.S.C. ss. 6901 et seq.
"Receivables" means all Receivables referred to in Section 1(c) of the
Security Agreement.
"Recovery Payment" has the meaning set forth in the definition of
"Extraordinary Receipt."
"Redeemable" means, with respect to any capital stock or other
ownership or profit interest, Debt or other right or Obligation, any such
right or Obligation that (a) the issuer has undertaken to redeem at a fixed
or determinable date or dates, whether by operation of a sinking fund or
otherwise, or upon the occurrence of a condition not solely within the
control of the issuer or (b) is redeemable at the option of the holder.
"Refinancing Transactions" collectively refers to the transactions set
forth in Section 3.01(e).
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<PAGE>
"Register" has the meaning specified in Section 8.07(e).
"Registration Rights Agreement" means the Registration Rights
Agreement by and among the Borrower, the Subsidiary Guarantors and the
Initial Purchasers named therein substantially in the form of Exhibit J
hereto.
"Regulation U" means Regulation U of the Board of Governors of the
Federal Reserve System, as in effect from time to time.
"Required Lenders" means at any time Lenders owed or holding in excess
of 50% of the sum of (a) the aggregate principal amount of the Revolving
Credit Advances outstanding at such time, (b) the aggregate Available
Amount of all Letters of Credit outstanding at such time and (c) the
aggregate Unused Revolving Credit Commitments at such time. For purposes of
this definition, the aggregate principal amount of Letter of Credit
Advances owing to the Issuing Bank and the Available Amount of each Letter
of Credit shall be considered to be owed to the Lenders ratably in
accordance with their respective Revolving Credit Commitments.
"Responsible Officer" means any executive officer of any Loan Party or
any Subsidiary of any Loan Party.
"Revolving Credit Advance" has the meaning specified in Section
2.01(a).
"Revolving Credit Commitment" means, with respect to any Revolving
Credit Lender at any time, the amount set forth opposite such Lender's name
on Schedule I hereto under the caption "Revolving Credit Commitment" or, if
a Lender has entered into one or more Assignments and Acceptances, the
aggregate amount set forth for such Lender in the Register maintained by
the Agent pursuant to Section 8.07(e) as such Lender's "Revolving Credit
Commitment", as such amount may be reduced at or prior to such time
pursuant to Section 2.05.
"Revolving Credit Facility" means, at any time, the aggregate amount
of the Lenders' Revolving Credit Commitments at such time.
"Rolling Period" means with respect to any month, the consecutive
twelve month period ending on the last day of such month.
"S&P" means Standard & Poors Ratings Group.
"Secured Obligations" has the meaning specified in the Security
Agreement.
"Secured Parties" means the Collateral Agent, the Agent, the Lenders,
the Hedge Banks and the other Persons the Obligations owing to which are or
are purported to be secured by the Collateral under the terms of the
Collateral Documents.
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"Security Agreement" has the meaning specified in Section
3.01(g)(vii).
"Senior Debt" of any Person means all Funded Debt of such Person other
than Debt outstanding under the Senior Subordinated Notes.
"Senior Leverage Ratio" means, with respect to any Person at any date
of determination, the ratio of (a) Total Senior Debt (other than contingent
obligations of the type described in clause (f) or (h) of the definition of
"Debt") of such Person at such date to (b) EBITDA of such Person and its
Subsidiaries for the then most recent twelve month period ending on such
date.
"Senior Subordinated Note Documents" means the Senior Subordinated
Notes, the Senior Subordinated Notes Indenture, the Registration Rights
Agreement, the Senior Subordinated Notes Guaranty and all other documents
and agreements executed and delivered in connection therewith.
"Senior Subordinated Notes" means the Company's senior subordinated
notes due 2007 in the aggregate principal amount of $75,000,000 issued by
the Borrower pursuant to the Senior Subordinated Notes Indenture, including
any notes offered in the Exchange Offer (as defined in the Offering
Memorandum).
"Senior Subordinated Notes Guaranty" means the Guaranty provided by
the Subsidiary Guarantors pursuant to the terms of the Senior Subordinated
Notes Indenture substantially in the form of Exhibit I hereto.
"Senior Subordinated Notes Indenture" means the Indenture between the
Borrower, as issuer, and Marine Midland Bank, as trustee, substantially in
the form of Exhibit H hereto.
"Shareholders' Agreements" has the meaning specified in Section
3.01(g)(xviii)(A).
"Solvent" and "Solvency" mean, with respect to any Person on a
particular date, that on such date (a) the fair value of the property of
such Person is greater than the total amount of liabilities, including,
without limitation, contingent liabilities, of such Person, (b) the present
fair salable value of the assets of such Person is not less than the amount
that will be required to pay the probable liability of such Person on its
debts as they become absolute and matured, (c) such Person does not intend
to, and does not believe that it will, incur debts or liabilities beyond
such Person's ability to pay such debts and liabilities as they mature and
(d) such Person is not engaged in business or a transaction, and is not
about to engage in business or a transaction, for which such Person's
property would constitute an unreasonably small capital. The amount of
contingent liabilities at any time shall be computed as the amount that, in
the light of all the facts and circumstances existing at such time,
represents the amount that can reasonably be expected to become an actual
or matured liability.
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"Source" has the meaning specified in Section 2.15.
"Stock Option Plan" means the Sunderland Industrial Holdings
Corporation 1997 Key Employee Nonqualified Stock Option Plan established by
Sunderland in April 1997.
"Subsidiary" of any Person means any corporation, partnership, joint
venture, limited liability company, trust or estate of which (or in which)
more than 50% of (a) the issued and outstanding capital stock having
ordinary voting power to elect a majority of the Board of Directors of such
corporation (irrespective of whether at the time capital stock of any other
class or classes of such corporation shall or might have voting power upon
the occurrence of any contingency), (b) the interest in the capital or
profits of such limited liability company, partnership or joint venture or
(c) the beneficial interest in such trust or estate is at the time directly
or indirectly owned or controlled by such Person, by such Person and one or
more of its other Subsidiaries or by one or more of such Person's other
Subsidiaries.
"Subsidiary Guarantor" has the meaning specified in the recital of
parties to this Agreement, all such Subsidiary Guarantors are Wholly-Owned
Subsidiaries of the Borrower.
"Subsidiary Guaranty" has the meaning specified in Section 3.01(g)(x).
"Sunderland" means Sunderland Industrial Holdings Corporation, a
Delaware corporation.
"Tax Sharing Agreements" has the meaning specified in Section
3.01(g)(xviii)(E).
"Taxes" has the meaning specified in Section 2.12(a).
"TMP" means Precise TMP, Inc. (formerly known as Tredegar Molded
Products Company), a Virginia corporation and a Wholly-Owned Subsidiary of
the Borrower.
"Total Leverage Ratio" means, with respect to any Person at any date
of determination, the ratio of (a) Funded Debt (other than contingent
obligations of the type described in clause (f) or (h) in the definition of
"Debt") of such Person at such date to (b) EBITDA of such Person and its
Subsidiaries for the then most recent twelve month period ending on such
date.
"Total Senior Debt" means, for any period, the aggregate outstanding
principal amount of all Senior Debt on any date of determination thereof.
"Type" refers to the distinction between Advances bearing interest at
the Base Rate and Advances bearing interest at the Eurodollar Rate.
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"UCC" means the Uniform Commercial Code as from time to time in effect
in the relevant jurisdiction.
"Unused Revolving Credit Commitment" means, with respect to any Lender
at any time, (a) such Lender's Revolving Credit Commitment at such time
minus (b) the sum of (i) the aggregate principal amount of all Advances
made by such Lender (in its capacity as a Lender) and outstanding at such
time, plus (ii) such Lender's Pro Rata Share of (A) the aggregate Available
Amount of all Letters of Credit outstanding at such time and (B) the
aggregate principal amount of all Letter of Credit Advances made by the
Issuing Bank, in its capacity as Issuing Bank, outstanding at such time.
"Voting Stock" means capital stock issued by a corporation, or
equivalent interests in any other Person, the holders of which are
ordinarily, in the absence of contingencies, entitled to vote for the
election of directors (or persons performing similar functions) of such
Person, even if the right so to vote has been suspended by the happening of
such a contingency.
"Warrant Agreement" means the warrant agreement, dated as of March 29,
1996, as amended, among Parent, Rice Partners II, L.P., John Hancock Mutual
Life Insurance Company, Delaware State Employees' Retirement Fund,
Declaration of Trust for Defined Benefit Plans of Zeneca Holdings Inc. and
Declaration of Trust for Defined Benefit Plans of ICI American Holdings
Inc., with respect to certain warrants of Parent.
"Warrant Payments" means the interest payments required to be made by
Parent pursuant to and arising in accordance with the Warrant Agreement
and/or the Parent Shareholders Agreement.
"Wholly-Owned Subsidiary" means, as to any Person, (i) any corporation
100% of whose capital stock is at the time owned by such Person and/or one
or more Wholly-Owned Subsidiaries of such Person and (ii) any partnership,
association, joint venture or other entity in which such Person and/or one
or more Wholly-Owned Subsidiaries of such Person has a 100% equity interest
at such time.
"Withdrawal Liability" has the meaning specified in Part I of Subtitle
E of Title IV of ERISA.
SECTION 1.02. Computation of Time Periods. In this Agreement in the
computation of periods of time from a specified date to a later specified date,
the word "from" means "from and including" and the words "to" and "until" each
mean "to but excluding".
SECTION 1.03. Accounting Terms. All accounting terms not specifically
defined herein shall be construed in accordance with generally accepted
accounting principles consistent with those applied in the preparation of the
financial statements referred to in Section 4.01(f) ("GAAP").
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SECTION 1.04. Construction. References to a Section, subsection, Schedule
or Exhibit mean a Section or subsection of or a Schedule or Exhibit to this
Agreement, unless otherwise specified, and the word "including" means
"including, without limitation," whether so stated or not.
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES
AND THE LETTERS OF CREDIT
SECTION 2.01. The Advances. (a) The Revolving Credit Advances. Each Lender
severally agrees, on the terms and conditions hereinafter set forth, to make
advances (each a "Revolving Credit Advance") to the Borrower from time to time
on any Business Day during the period from the Effective Date until the Final
Maturity Date in an amount for each such Advance not to exceed such Lender's
Unused Revolving Credit Commitment at such time after giving effect to any
repayment of Letter of Credit Advances from proceeds of such Revolving Credit
Advances, which Revolving Credit Advances shall, at the option of the Borrower,
be Base Rate Advances or Eurodollar Rate Advances. Each Borrowing of (x) Base
Rate Advances shall be in an aggregate amount of $100,000 or any whole multiple
thereof and (y) Eurodollar Rate Advances shall be in an aggregate amount of
$300,000 or an integral multiple of $100,000 in excess thereof, (other than a
Borrowing the proceeds of which shall be used solely to repay or prepay in full
outstanding Letter of Credit Advances made by the Issuing Bank) and shall
consist of Revolving Credit Advances made simultaneously by the Lenders ratably
according to their Revolving Credit Commitments. Within the limits of each
Lender's Unused Revolving Credit Commitment in effect from time to time, the
Borrower may borrow under this Section 2.01(a), prepay pursuant to Section
2.06(a) and reborrow under this Section 2.01(a).
(b) Letters of Credit. The Issuing Bank agrees, on the terms and conditions
hereinafter set forth, to issue letters of credit (the "Letters of Credit") for
the account of the Borrower from time to time on any Business Day during the
period from the Effective Date until 60 days before the Final Maturity Date (i)
in an aggregate Available Amount for all Letters of Credit issued by the Issuing
Bank not to exceed at any time the Letter of Credit Commitment at such time and
(ii) in an Available Amount for each such Letter of Credit not to exceed the
lesser of (x) the Letter of Credit Facility at such time and (y) the aggregate
Unused Revolving Credit Commitments of the Lenders at such time. No Letter of
Credit shall have an expiration date (including all rights of the Borrower or
the beneficiary to require renewal) later than the earlier of 60 days before the
Final Maturity Date and one year after the date of issuance thereof. Within the
limits of the Letter of Credit Facility, and subject to the limits referred to
above, the Borrower may request the issuance of Letters of Credit under this
Section 2.01(b), repay any Letter of Credit Advances resulting from drawings
thereunder pursuant to Section 2.03(c) and request the issuance of additional
Letters of Credit under this Section 2.01(b). The Letter of Credit Advances
shall not exceed $2,000,000 in the aggregate at any one time outstanding.
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SECTION 2.02. Making the Advances. (a) Except as otherwise provided in
Section 2.03, each Borrowing shall be made on notice, given not later than 11:00
A.M. (New York City time) on the second Business Day prior to the date of the
proposed Borrowing in the case of a Borrowing consisting of Eurodollar Rate
Advances or on the same Business Day in the case of a Borrowing consisting of
Base Rate Advances, by the Borrower to the Agent, which shall give to each
Appropriate Lender prompt notice thereof by telex or telecopier. Each such
notice by the Borrower of a Borrowing (a "Notice of Borrowing") shall be in
writing, or telex or telecopier, in substantially the form of Exhibit B hereto,
specifying therein the requested (i) date of such Borrowing, (ii) Type of
Advances comprising such Borrowing, (iii) aggregate amount of such Borrowing and
(iv) in the case of a Borrowing consisting of Eurodollar Rate Advances, initial
Interest Period for each such Advance. Each Appropriate Lender shall, before
1:00 P.M. (New York City time) on the date of such Borrowing, make available for
the account of its Applicable Lending Office to the Agent at the Agent's
Account, in same day funds, such Lender's ratable portion of such Borrowing in
accordance with the respective Commitments under the Revolving Credit Facility
of such Lender and the other Appropriate Lenders. After the Agent's receipt of
such funds and upon fulfillment of the applicable conditions set forth in
Article III, the Agent shall first make a portion of such funds equal to the
aggregate principal amount of any Letter of Credit Advances made by the Issuing
Bank and by any other Lender and outstanding on the date of such Borrowing, plus
interest accrued and unpaid thereon to and as of such date, available to the
Issuing Bank and such other Lenders for repayment of such Letter of Credit
Advances.
(b) Anything in subsection (a) of this Section 2.02 to the contrary
notwithstanding, (i) the Borrower may not select Eurodollar Rate Advances for
the initial Borrowing or for any Borrowing if the aggregate amount of such
Borrowing is less than $300,000 and any integral multiple of $100,000 in excess
thereof or if the obligation of the Appropriate Lenders to make Eurodollar Rate
Advances shall then be suspended pursuant to Section 2.09 or Section 2.10 and
(ii) with respect to Borrowings consisting of Eurodollar Rate Advances, such
Eurodollar Rate Advances may not be outstanding as part of more than six
separate Borrowings in the aggregate.
(c) Each Notice of Borrowing shall be irrevocable and binding on the
Borrower. In the case of any Borrowing that the related Notice of Borrowing
specifies is to be comprised of Eurodollar Rate Advances, the Borrower shall
indemnify each Appropriate Lender against any loss, cost or expense incurred by
such Lender as a result of any failure to fulfill on or before the date
specified in such Notice of Borrowing for such Borrowing the applicable
conditions set forth in Article III, including, without limitation, any loss,
cost or expense incurred by reason of the liquidation or reemployment of
deposits or other funds acquired by such Lender to fund the Advance to be made
by such Lender as part of such Borrowing when such Advance, as a result of such
failure, is not made on such date.
(d) Unless the Agent shall have received notice from an Appropriate Lender
prior to the date of any Borrowing under a Facility under which such Lender has
a Commitment that such Lender will not make available to the Agent such Lender's
ratable portion of such Borrowing, the Agent may assume that such Lender has
made such portion available to the
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Agent on the date of such Borrowing in accordance with subsection (a) or (b) of
this Section 2.02 and the Agent may, in reliance upon such assumption, make
available to the Borrower on such date a corresponding amount. If and to the
extent that such Lender shall not have so made such ratable portion available to
the Agent, such Lender and the Borrower severally agree to repay or pay to the
Agent forthwith on demand such corresponding amount and to pay interest thereon,
for each day from the date such amount is made available to the Borrower until
the date such amount is repaid or paid to the Agent, at (i) in the case of the
Borrower, the interest rate applicable at such time under Section 2.07 to
Advances comprising such Borrowing and (ii) in the case of such Lender, the
Federal Funds Rate. If such Lender shall pay to the Agent such corresponding
amount, such amount so paid shall constitute such Lender's Advance as part of
such Borrowing for all purposes.
(e) The failure of any Lender to make the Advance to be made by it as part
of any Borrowing shall not relieve any other Lender of its obligation, if any,
hereunder to make its Advance on the date of such Borrowing, but no Lender shall
be responsible for the failure of any other Lender to make the Advance to be
made by such other Lender on the date of any Borrowing.
SECTION 2.03. Issuance of and Drawings and Reimbursement Under Letters of
Credit. (a) Request for Issuance. Each Letter of Credit shall be issued upon
notice, given not later than 12:00 P.M. (New York City time) on the third
Business Day prior to the date of the proposed issuance of such Letter of
Credit, by the Borrower to the Issuing Bank. Each such notice of issuance of a
Letter of Credit (a "Notice of Issuance") shall be by telephone, confirmed
immediately in writing, or telex or telecopier, specifying therein the requested
(A) date of such issuance (which shall be a Business Day), (B) Available Amount
of such Letter of Credit, (C) expiration date of such Letter of Credit, (D) name
and address of the beneficiary of such Letter of Credit and (E) form of such
Letter of Credit, and shall be accompanied by such application and agreement for
letter of credit as the Issuing Bank may specify to the Borrower for use in
connection with such requested Letter of Credit (a "Letter of Credit
Agreement"). If the requested form of such Letter of Credit is acceptable to the
Issuing Bank in its reasonable discretion, the Issuing Bank will, upon
fulfillment of the applicable conditions set forth in Article III, make such
Letter of Credit available to the Borrower at its office referred to in Section
8.02 or as otherwise agreed with the Borrower in connection with such issuance.
In the event and to the extent that the provisions of any Letter of Credit
Agreement shall conflict with this Agreement, the provisions of this Agreement
shall govern.
(b) Letter of Credit Reports. The Issuing Bank shall furnish to each Lender
(A) on the first Business Day of the first two months of each quarterly period a
written report summarizing issuance and expiration dates of Letters of Credit
issued by the Issuing Bank during the preceding month and drawings during such
month under all Letters of Credit issued by the Issuing Bank and (B) on the
first Business Day of each calendar quarter a written report setting forth the
average daily aggregate Available Amount during the preceding calendar quarter
of all Letters of Credit issued by the Issuing Bank.
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(c) Drawing and Reimbursement. The payment by the Issuing Bank of a draft
drawn under any Letter of Credit shall constitute for all purposes of this
Agreement the making by the Issuing Bank of a Letter of Credit Advance, which
shall be a Base Rate Advance, in the amount of such draft. In the event of any
drawing under a Letter of Credit, the Agent shall promptly notify each Lender
and each Lender shall purchase from the Issuing Bank, and the Issuing Bank shall
sell and assign to each such Lender, such Lender's Pro Rata Share of such
outstanding Letter of Credit Advance as of the date of such purchase, by making
available for the account of its Applicable Lending Office to the Agent for the
account of the Issuing Bank, by deposit to the Agent's Account, in same day
funds, an amount equal to the portion of the outstanding principal amount of
such Letter of Credit Advance to be purchased by such Lender. Promptly after
receipt thereof, the Agent shall transfer such funds to the Issuing Bank. The
Borrower hereby agrees to each such sale and assignment. Each Lender agrees to
purchase its Pro Rata Share of an outstanding Letter of Credit Advance on (i)
the Business Day on which notice of the drawing under the related Letter of
Credit is given by the Issuing Bank, provided such notice is given not later
than 12:00 P.M. (New York City time) on such Business Day or (ii) the first
Business Day next succeeding such demand if such notice is given after such
time. Upon any such assignment by the Issuing Bank to any other Lender of a
portion of a Letter of Credit Advance, the Issuing Bank represents and warrants
to such other Lender that the Issuing Bank is the legal and beneficial owner of
such interest being assigned by it, free and clear of any liens, but makes no
other representation or warranty and assumes no responsibility with respect to
such Letter of Credit Advance, the Loan Documents or any Loan Party. If and to
the extent that any Lender shall not have so made the amount of such Letter of
Credit Advance available to the Agent, such Lender agrees to pay to the Agent
forthwith on demand such amount together with interest thereon, for each day
from the date of demand by the Issuing Bank until the date such amount is paid
to the Agent, at the Federal Funds Rate for its account or the account of the
Issuing Bank, as applicable. If such Lender shall pay to the Agent such amount
for the account of the Issuing Bank on any Business Day, such amount so paid in
respect of principal shall constitute a Letter of Credit Advance made by such
Lender on such Business Day for purposes of this Agreement, and the outstanding
principal amount of the Letter of Credit Advance made by the Issuing Bank shall
be reduced by such amount on such Business Day.
(d) Failure to Make Letter of Credit Advances. The failure of any Lender to
make the Letter of Credit Advance to be made by it on the date specified in
Section 2.03(c) shall not relieve any other Lender of its obligation hereunder
to make its Letter of Credit Advance on such date, but no Lender shall be
responsible for the failure of any other Lender to make the Letter of Credit
Advance to be made by such other Lender on such date.
SECTION 2.04. Repayment of Advances. (a) Revolving Credit Advances. The
Borrower shall repay to the Agent for the ratable account of the Lenders on the
Final Maturity Date the aggregate outstanding principal amount of the Revolving
Credit Advances then outstanding.
(b) Letter of Credit Advances. (i) The Borrower shall repay to the Agent
for the account of the Issuing Bank and each other Lender that has made a Letter
of Credit Advance
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on the earlier of demand and the Final Maturity Date the outstanding principal
amount of each Letter of Credit Advance made by each of them.
(ii) The Obligations of the Borrower under this Agreement, any Letter of
Credit Agreement and any other agreement or instrument relating to any Letter of
Credit shall be unconditional and irrevocable, and shall be paid strictly in
accordance with the terms of this Agreement, such Letter of Credit Agreement and
such other agreement or instrument under all circumstances, including, without
limitation, the following circumstances:
(A) any lack of validity or enforceability of any Loan Document, any
Letter of Credit Agreement, any Letter of Credit or any other agreement,
instrument or document relating thereto (all of the foregoing being,
collectively, the "L/C Related Documents");
(B) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Obligations of the Borrower in respect of
any L/C Related Document or any other amendment or waiver of or any consent
to departure from all or any of the L/C Related Documents;
(C) the existence of any claim, set-off, defense or other right that
the Borrower may have at any time against any beneficiary or any transferee
of a Letter of Credit (or any Persons for whom any such beneficiary or any
such transferee may be acting), the Issuing Bank or any other Person,
whether in connection with the transactions contemplated by the L/C Related
Documents or any unrelated transaction;
(D) any statement under a Letter of Credit or another L/C Related
Document proving to be forged, fraudulent, invalid or insufficient in any
respect or any statement therein being untrue or inaccurate in any respect,
provided that the Issuing Bank shall not have acted with willful misconduct
or gross negligence with respect to such statement;
(E) payment by the Issuing Bank under a Letter of Credit against
presentation of a draft or certificate that does not strictly comply with
the terms of such Letter of Credit;
(F) any exchange, release or non-perfection of any Collateral or other
collateral, or any release or amendment or waiver of or consent to
departure from any guarantee, for all or any of the Obligations of the
Borrower in respect of the L/C Related Documents; or
(G) any other circumstance or happening whatsoever, whether or not
similar to any of the foregoing, including, without limitation, any other
circumstance that might otherwise constitute a defense available to, or a
discharge of, the Borrower or a guarantor.
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SECTION 2.05. Termination or Reduction of the Commitments. (a) Optional.
The Borrower may, upon at least five Business Days' notice to the Agent,
terminate in whole or reduce in part the unused portions of the Letter of Credit
Facility and the Unused Revolving Credit Commitments; provided, however, that
each partial reduction of the Revolving Credit Facility or the Letter of Credit
Facility (i) shall be in an aggregate amount of $1,000,000 or an integral
multiple of $1,000,000 in excess thereof and (ii) shall be made ratably among
the Appropriate Lenders in accordance with their Commitments with respect to
such Facility.
(b) Mandatory. (i) The Revolving Credit Facility shall terminate in its
entirety on June 30, 1997 unless the date of the Initial Extension of Credit has
occurred on or before such date.
(ii) The Revolving Credit Facility shall terminate in its entirety on the
Final Maturity Date.
(iii) The Revolving Credit Facility shall be automatically and permanently
reduced on the date on which any prepayment is required to be made pursuant to
Section 2.06(b)(i) or 2.06(b)(ii) by an amount equal to the aggregate amount of
Net Cash Proceeds required to be used to prepay the Revolving Credit Facility
under Section 2.06(b)(i) or 2.06(b)(ii).
The Letter of Credit Facility shall be automatically and permanently
reduced from time to time on the date of each reduction in the Revolving Credit
Facility by the amount, if any, by which the amount of the Letter of Credit
Facility exceeds the Revolving Credit Facility after giving effect to such
reduction of the Revolving Credit Facility.
SECTION 2.06. Prepayments. (a) Optional. The Borrower shall have the right
to prepay the outstanding aggregate principal amount of the Advances comprising
part of the same Borrowing, in whole or ratably in part, without premium or
penalty, together with accrued interest and fees to the date of such prepayment
on the aggregate principal amount prepaid on the following terms and conditions:
(i) the Borrower shall have the right to prepay Base Rate Advances on
the same day's notice but shall give at least three Business Days' notice
in the case of Eurodollar Rate Advances, in each case to the Agent
(received not later than 12:00 P.M. (New York City time)) stating the
proposed date and aggregate principal amount of the prepayment;
(ii) each partial prepayment of (x) Base Rate Advances shall be in an
aggregate principal amount of $100,000 or any whole multiple thereof and
(y) Eurodollar Rate Advances shall be in an aggregate principal amount of
$300,000 or an integral multiple of $100,000 in excess thereof, provided
that if any partial prepayment of Eurodollar Rate Advances made pursuant to
any Borrowing shall reduce the outstanding Eurodollar Rate Advances made
pursuant to such Borrowing to an amount less than the minimum borrowing
amount applicable pursuant to Section 2.02(b), then such Borrowing shall be
Converted at the end of the then current Interest Period into a Base Rate
Advance and
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any election of an Interest Period with respect thereto given by the
Borrower shall have no force or effect;
(iii) if any prepayment of a Eurodollar Rate Advance is made on a date
other than the last day of an Interest Period for such Advance the Borrower
shall also pay any amounts owing pursuant to Section 8.04(c).
(b) Mandatory. (i) The Borrower shall, on the date of receipt of the Net
Cash Proceeds by any Loan Party or any Subsidiary of any Loan Party from (A) the
sale, lease, transfer or other disposition of any assets (other than sales of
(x) Inventory or (y) equipment which, in the good faith opinion of the Borrower,
is obsolete, each in the ordinary course of business and consistent with past
practices) of such Loan Party or such Subsidiary, (B) the incurrence or issuance
by such Loan Party or such Subsidiary of any Debt (other than Debt incurred or
issued pursuant to Section 5.02(b)), or (C) any Extraordinary Receipt received
by or paid to or for the account of such Loan Party or such Subsidiary and not
otherwise included in clause (A) or (B) above, prepay an aggregate principal
amount of the Revolving Credit Advances equal to, in the case of clause (A) and
(C) above, 100% of the amount of such Net Cash Proceeds and, in the case of
Clause (B) above, 50% of such Net Cash Proceeds and to permanently reduce the
Revolving Credit Facility to the extent set forth in Section 2.05(b)(iii);
provided, however, that so long as (i) no Default or Event of Default then
exists and (ii) the Senior Leverage Ratio of the Borrower and its Subsidiaries
for the twelve month period then most recently ended is less than 2.0x, the
percentage of Net Cash Proceeds used for such prepayment from issuances of debt
described under clause (B) above shall be reduced to zero.
(ii) The Borrower shall, on the date of receipt of the Net Cash Proceeds by
any Loan Party or any Subsidiary of any Loan Party from the sale or issuance by
any Loan Party or any Subsidiary of any Loan Party of any capital stock or other
ownership or profit interest, any securities convertible into or exchangeable
for capital stock or other ownership or profit interest or any warrants, rights
or options to acquire capital stock or other ownership or profit interest
received by or paid to or for the account of such Loan Party or such Subsidiary
and not otherwise included herein (other than capital stock of the Borrower
issued in connection with a Permitted Acquisition or stock options granted to
management of the Borrower and permitted under this Agreement to acquire capital
stock of the Borrower), prepay an aggregate principal amount of the Revolving
Credit Advances equal to the amount of such Net Cash Proceeds and to permanently
reduce the Revolving Credit Facility to the extent set forth in Section
2.05(b)(iii).
(iii) The Borrower shall, on each Business Day, prepay an aggregate
principal amount of the Revolving Credit Advances comprising part of the same
Borrowings, and the Letter of Credit Advances equal to the amount by which (A)
the sum of the aggregate principal amount of (x) the Revolving Credit Advances
and (y) the Letter of Credit Advances then outstanding plus the aggregate
Available Amount of all Letters of Credit then outstanding exceeds the Revolving
Credit Facility. Each such prepayment shall be applied as set forth in Section
2.06(c).
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(iv) The Borrower shall, on each Business Day, pay to the Agent for deposit
in the L/C Cash Collateral Account an amount sufficient to cause the aggregate
amount on deposit in such Account to equal the amount by which the aggregate
Available Amount of all Letters of Credit then outstanding exceeds the Letter of
Credit Facility on such Business Day.
(v) All prepayments under this Section 2.06(b) shall be made together with
accrued interest to the date of such prepayment on the principal amount prepaid.
(c) Prepayment of Revolving Credit Facility. Each prepayment of the
Revolving Credit Facility made pursuant to Section 2.06(a) or Section 2.06(b)
shall be (1) first, applied to prepay Letter of Credit Advances then outstanding
until such Advances are paid in full, (2) second, applied to prepay Revolving
Credit Advances then outstanding comprising part of the same Borrowings in
accordance with the respective Pro Rata Share of the Lenders until such Advances
are paid in full and (3) third, deposited in the L/C Cash Collateral Account to
cash collateralize 100% of the Available Amount of the Letters of Credit then
outstanding; and, in the case of prepayments of the Revolving Credit Facility
required pursuant to Sections 2.06(b)(i) and 2.06(b)(ii), the Revolving Credit
Facility shall be permanently reduced as set forth in Section 2.05(b)(iii). Upon
the drawing of any Letter of Credit for which funds are on deposit in the L/C
Cash Collateral Account, such funds shall be applied to reimburse the Issuing
Bank or the Lenders, as applicable.
SECTION 2.07. Interest. (a) Scheduled Interest. The Borrower shall pay
interest on the unpaid principal amount of each Advance owing to each Lender
from the date of such Advance until such principal amount shall be paid in full,
at the following rates per annum:
(x) Base Rate Advances. For each Letter of Credit Advance and during
such periods as each such Revolving Credit Advance is a Base Rate Advance,
a rate per annum equal at all times to the sum of (A) the Base Rate in
effect from time to time plus (B) the Applicable Margin in effect from time
to time, payable in arrears quarterly on the last Business Day of each
March, June, September and December during such periods commencing
September 30, 1997, on the date of any prepayment thereof to the extent
required under Section 2.06 and on the Final Maturity Date.
(y) Eurodollar Rate Advances. During such periods as each such
Revolving Credit Advance is a Eurodollar Rate Advance, a rate per annum
equal at all times during each Interest Period for each such Revolving
Credit Advance to the sum of (A) the Eurodollar Rate for such Interest
Period for such Advance plus (B) the Applicable Margin, payable in arrears
on the last day of such Interest Period and, if such Interest Period has a
duration of more than three months, subject to clause (d) of the definition
of "Interest Period," on each day that occurs during such Interest Period
every three months from the first day of such Interest Period until the
date such Eurodollar Rate Advance shall be Converted or paid in full.
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(b) Default Interest. Upon the occurrence and during the continuance of an
Event of Default under Section 6.01(c) with respect to any covenant contained in
Section 5.04 or under Section 6.01(a), the Borrower shall pay interest on (i)
the unpaid principal amount of each Advance owing to each Lender, payable in
arrears on the dates referred to in clause (a) of this Section 2.07 and on
demand, at a rate per annum equal at all times to 2% per annum above the rate
per annum required to be paid on such Advance pursuant to clause (a) of this
Section 2.07 and (ii) to the fullest extent permitted by law, the amount of any
interest, fee or other amount payable hereunder that is not paid when due, from
the date such amount shall be due until such amount shall be paid in full,
payable in arrears on the date such amount shall be paid in full and on demand,
at a rate per annum equal at all times to 2% per annum above the rate per annum
required to be paid, in the case of interest, on the Type of Advance on which
such interest has accrued pursuant to clause (a) of this Section 2.07.
(c) Notice of Interest Rate. Promptly after receipt of a Notice of
Borrowing pursuant to Section 2.02(a), the Agent shall give notice to the
Borrower and each Lender of the applicable interest rate determined by the Agent
for purposes of clause (a) of this Section 2.07.
SECTION 2.08. Fees. (a) Commitment Fee. The Borrower shall pay to the Agent
for the account of the Lenders a commitment fee, from the date hereof in the
case of the Agent and the Lenders named herein and from the effective date
specified in the Assignment and Acceptance pursuant to which it became a Lender
in the case of each other Lender until the Final Maturity Date, payable in
arrears quarterly on the last Business Day of each March, June, September and
December, commencing September 30, 1997, and on the Final Maturity Date, at the
rate of 1/2 of 1% per annum on the average daily Unused Revolving Credit
Commitment of such Lender.
(b) Letter of Credit Fees, Etc. (i) The Borrower shall pay to the Agent for
the account of each Lender a Letter of Credit fee, payable in arrears quarterly
on the last Business Day of each March, June, September and December, commencing
September 30, 1997, and on the Final Maturity Date, at the rate of 2.25% per
annum on such Lender's Pro Rata Share of the average daily aggregate Available
Amount during such quarter of all Letters of Credit outstanding from time to
time.
(ii) The Borrower shall pay to the Issuing Bank, for its own account, a
facing fee in respect of each Letter of Credit issued by it hereunder, payable
in arrears on the last Business Day of each March, June, September and December,
commencing September 30, 1997, and on the Final Maturity Date, at the rate of
1/4 of 1% per annum on the average daily aggregate Available Amount during such
quarter of such Letter of Credit.
(iii) In addition, the Borrower shall pay to the Issuing Bank, for its own
account, such commissions, issuance fees, fronting fees, transfer fees and other
fees and charges in connection with the issuance or administration of each
Letter of Credit as the Borrower and the Issuing Bank shall agree.
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(c) Agent's Fees. The Borrower shall pay to the Agent for its own account
such fees as may from time to time be agreed between the Borrower and the Agent.
SECTION 2.09. Conversion of Revolving Credit Advances. (a) Optional. The
Borrower may on any Business Day, upon notice given to the Agent not later than
12:00 P.M. (New York City time) on the third Business Day prior to the date of
the proposed Conversion and subject to the provisions of Sections 2.07 and 2.10,
Convert all or any portion of the Revolving Credit Advances of one Type
comprising the same Borrowing into Revolving Credit Advances of the other Type;
provided, however, that if any Conversion of Eurodollar Rate Advances into Base
Rate Advances is made other than on the last day of an Interest Period for such
Eurodollar Rate Advances the Borrower shall also pay any amounts owing pursuant
to Section 8.04(c), any Conversion of Base Rate Advances into Eurodollar Rate
Advances shall be in an amount not less than the minimum amount specified in
Section 2.02(b), no Conversion of any Advances shall result in more separate
Borrowings than permitted under Section 2.02(b) and each Conversion of Revolving
Credit Advances comprising part of the same Borrowing shall be made ratably
among the Lenders in accordance with their Revolving Credit Commitments. Each
such notice of Conversion shall, within the restrictions specified above,
specify (i) the date of such Conversion, (ii) the Revolving Credit Advances to
be Converted and (iii) if such Conversion is into Eurodollar Rate Advances, the
duration of the initial Interest Period for such Advances. Each notice of
Conversion shall be irrevocable and binding on the Borrower.
(b) Mandatory. (i) On the date on which the aggregate unpaid principal
amount of Eurodollar Rate Advances comprising any Borrowing shall be reduced, by
payment or prepayment or otherwise, to less than $300,000, such Advances shall
automatically Convert into Base Rate Advances.
(ii) If the Borrower shall fail to select the duration of any Interest
Period for any Revolving Credit Advances that are outstanding and have been
Converted into Eurodollar Rate Advances in accordance with the provisions
contained in the definition of "Interest Period" in Section 1.01, the Agent will
forthwith so notify the Borrower and the Lenders, whereupon each such Eurodollar
Rate Advance will automatically, on the last day of the then existing Interest
Period therefor, Convert into a Base Rate Advance.
(iii) Upon the occurrence and during the continuance of any Event of
Default, (x) each Revolving Credit Advance that has been Converted into a
Eurodollar Rate Advance will automatically, on the last day of the then existing
Interest Period therefor, Convert into a Base Rate Advance and (y) the
obligation of the Lenders to make, or to Convert Revolving Credit Advances into,
Eurodollar Rate Advances shall be suspended.
SECTION 2.10. Increased Costs, Etc. (a) If, due to either (i) any change
in, or in the interpretation of, any law or regulation or (ii) the compliance
with any guideline or request from any central bank or other Governmental
Authority (whether or not having the force of law) effective after the date
hereof, there shall be any increase in the cost to any Lender of agreeing to
make or of making, funding or maintaining Eurodollar Rate Advances or of
agreeing to issue or of issuing or maintaining Letters of Credit or of agreeing
to make or of making or
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maintaining Letter of Credit Advances, then the Borrower shall from time to
time, upon demand by such Lender (with a copy of such demand to the Agent), pay
to the Agent for the account of such Lender additional amounts sufficient to
compensate such Lender for such increased cost. A certificate as to the amount
of such increased cost, submitted to the Borrower by such Lender, shall be
conclusive and binding for all purposes, absent manifest error.
(b) If any Lender reasonably determines that compliance with any law or
regulation or any guideline or request from any central bank or other
Governmental Authority (whether or not having the force of law) effective after
the date hereof affects or would affect the amount of capital required or
expected to be maintained by such Lender or any corporation controlling such
Lender and that the amount of such capital is increased by or based upon the
existence of such Lender's commitment to lend or to issue Letters of Credit
hereunder and other commitments of such type or the issuance or maintenance of
the Letters of Credit (or similar contingent obligations), then, upon demand by
such Lender (with a copy of such demand to the Agent), the Borrower shall pay to
the Agent for the account of such Lender, from time to time as specified by such
Lender, additional amounts sufficient to compensate such Lender in the light of
such circumstances, to the extent that such Lender reasonably determines such
increase in capital to be allocable to the existence of such Lender's commitment
to lend or to issue Letters of Credit hereunder or to the issuance or
maintenance of any Letters of Credit. A certificate as to such amounts submitted
to the Borrower by such Lender shall be conclusive and binding for all purposes,
absent manifest error.
(c) If, with respect to any Eurodollar Rate Advances under any Facility,
Lenders owed at least 50% of the then aggregate unpaid principal amount thereof
notify the Agent that the Eurodollar Rate for any Interest Period for such
Advances will not adequately reflect the cost to such Lenders of making, funding
or maintaining their Eurodollar Rate Advances for such Interest Period, the
Agent shall forthwith so notify the Borrower and the Appropriate Lenders,
whereupon (i) each such Eurodollar Rate Advance under any Facility will
automatically, on the last day of the then existing Interest Period therefor,
Convert into a Base Rate Advance and (ii) the obligation of the Appropriate
Lenders to make, or to Convert Advances into, Eurodollar Rate Advances shall be
suspended until the Agent shall notify the Borrower that such Lenders have
determined that the circumstances causing such suspension no longer exist.
(d) Notwithstanding any other provision of this Agreement, if the
introduction of or any change in or in the interpretation of any law or
regulation shall make it unlawful, or any central bank or other Governmental
Authority shall assert that it is unlawful, for any Lender or its Eurodollar
Lending Office to perform its obligations hereunder to make Eurodollar Rate
Advances or to continue to fund or maintain Eurodollar Rate Advances hereunder,
then, on notice thereof and demand therefor by such Lender to the Borrower
through the Agent, (i) each Eurodollar Rate Advance under each Facility under
which such Lender has a Commitment will automatically, upon such demand, Convert
into a Base Rate Advance and (ii) the obligation of the Appropriate Lenders to
make, or to Convert Advances into, Eurodollar Rate Advances shall be suspended
until the Agent shall notify the Borrower that such Lender has determined that
the circumstances causing such suspension no longer exist.
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SECTION 2.11. Payments and Computations. (a) The Borrower shall make each
payment hereunder and under the Notes, irrespective of any right of counterclaim
or set-off, not later than 11:00 A.M. (New York City time) on the day when due
in U.S. dollars to the Agent at the Agent's Account in same day funds. The Agent
will promptly thereafter cause like funds to be distributed (i) if such payment
by the Borrower is in respect of principal, interest, commitment fees or any
other Obligation then payable hereunder and under the Notes to more than one
Lender, to such Lenders for the account of their respective Applicable Lending
Offices ratably in accordance with the amounts of such respective Obligations
then payable to such Lenders and (ii) if such payment by the Borrower is in
respect of any Obligation then payable hereunder to one Lender, to such Lender
for the account of its Applicable Lending Office, in each case to be applied in
accordance with the terms of this Agreement. Upon its acceptance of an
Assignment and Acceptance and recording of the information contained therein in
the Register pursuant to Section 8.07(e), from and after the effective date of
such Assignment and Acceptance, the Agent shall make all payments hereunder and
under the Notes in respect of the interest assigned thereby to the Lender
assignee thereunder, and the parties to such Assignment and Acceptance shall
make all appropriate adjustments in such payments for periods prior to such
effective date directly between themselves.
(b) If the Agent receives funds for application to the Obligations under
the Loan Documents under circumstances for which the Loan Documents do not
specify the Advances or the Facility to which, or the manner in which, such
funds are to be applied, the Agent may, but shall not be obligated to, elect to
distribute such funds to each Lender ratably in accordance with such Lender's
proportionate share of the principal amount of all outstanding Advances and the
Available Amount of all Letters of Credit then outstanding, in repayment or
prepayment of such of the outstanding Advances or other Obligations owed to such
Lender as the Agent shall direct.
(c) The Borrower hereby authorizes each Lender, if and to the extent
payment owed to such Lender is not made when due hereunder or, in the case of a
Lender, under the Note held by such Lender, to charge from time to time against
any or all of the Borrower's accounts with such Lender any amount so due.
(d) All computations of interest, fees and Letter of Credit commissions
shall be made by the Agent on the basis of a year of 360 days, in each case for
the actual number of days (including the first day but excluding the last day)
occurring in the period for which such interest, fees or commissions are
payable. Each determination by the Agent of an interest rate, fee or commission
hereunder shall be conclusive and binding for all purposes, absent manifest
error.
(e) Whenever any payment hereunder or under the Notes shall be stated to be
due on a day other than a Business Day, such payment shall 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 interest or commitment fee, as the
case may be; provided, however, that, if such extension would cause payment of
interest on or principal of Eurodollar Rate Advances to be
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made in the next following calendar month, such payment shall be made on the
next preceding Business Day.
(f) Unless the Agent shall have received notice from the Borrower prior to
the date on which any payment is due to any Lender hereunder that the Borrower
will not make such payment in full, the Agent may assume that the Borrower has
made such payment in full to the Agent on such date and the Agent may, in
reliance upon such assumption, cause to be distributed to each such Lender on
such due date an amount equal to the amount then due such Lender. If and to the
extent the Borrower shall not have so made such payment in full to the Agent,
each such Lender shall repay to the Agent forthwith on demand such amount
distributed to such Lender together with interest thereon, for each day from the
date such amount is distributed to such Lender until the date such Lender repays
such amount to the Agent, at the Federal Funds Rate.
SECTION 2.12. Taxes. (a) Subject to Sections 2.12(e) and (f), any and all
payments by the Borrower hereunder or under the Notes shall be made, in
accordance with Section 2.11, free and clear of and without deduction for any
and all present or future taxes, levies, imposts, deductions, charges or
withholdings imposed by a Governmental Authority, and all liabilities with
respect thereto, excluding, in the case of each Lender and the Agent, net income
taxes that are imposed by the United States and franchise taxes and net income
taxes that are imposed on such Lender or the Agent by the state or foreign
jurisdiction under the laws of which such Lender or the Agent (as the case may
be) is organized or any political subdivision thereof and, in the case of each
Lender, franchise taxes and net income taxes that are imposed on such Lender by
the state or foreign jurisdiction of such Lender's Applicable Lending Office or
any political subdivision thereof (all such non-excluded taxes, 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 hereunder or under any Note to any Lender or
the Agent, (i) the sum payable shall be increased as may be necessary so that
after making all required deductions (including deductions applicable to
additional sums payable under this Section 2.12) such Lender or the Agent (as
the case may be) receives an amount equal to the sum it would have received had
no such deductions been made, (ii) the Borrower shall make such deductions and
(iii) the Borrower shall pay the full amount deducted to the relevant taxation
authority or other authority in accordance with applicable law.
(b) In addition, the Borrower shall pay any present or future stamp,
documentary, excise, property or similar taxes, charges or levies that arise
from any payment made hereunder or under the Notes or from the execution,
delivery or registration of, or otherwise with respect to, this Agreement or the
Notes (hereinafter referred to as "Other Taxes").
(c) The Borrower shall indemnify each Lender and the Agent for the full
amount of Taxes and Other Taxes, and for the full amount of taxes imposed by any
jurisdiction on amounts payable under this Section 2.12, paid by such Lender or
the Agent (as the case may be) and any liability (including penalties, additions
to Tax, interest and expenses) arising
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therefrom or with respect thereto. This indemnification shall be made within 30
days from the date such Lender or the Agent (as the case may be) makes written
demand therefor.
(d) Within 30 days after the date of any payment of Taxes, the Borrower
shall furnish to the Agent, at its address referred to in Section 8.02, the
original receipt of payment thereof or a certified copy of such receipt. In the
case of any payment hereunder or under the Notes by or on behalf of the Borrower
through an account or branch outside the United States or on behalf of the
Borrower by a payor that is not a United States person, if the Borrower
determines that no Taxes are payable in respect thereof, the Borrower shall
furnish, or shall cause such payor to furnish, to the Agent, at such address, an
opinion of counsel acceptable to the Agent stating that such payment is exempt
from Taxes. For purposes of this subsection (d) and subsection (e), the terms
"United States" and "United States person" shall have the meanings specified in
Section 7701 of the Internal Revenue Code.
(e) Each Lender organized under the laws of a jurisdiction outside the
United States shall, on or prior to the date of its execution and delivery of
this Agreement in the case of each Lender or the Issuing Bank, as the case may
be, and on the date of the Assignment and Acceptance pursuant to which it became
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 thereafter
as such Lender remains lawfully able to do so), provide the Agent and the
Borrower with Internal Revenue Service form 1001 or 4224, as well as form W-9 or
W-8, as appropriate, or any successor form prescribed by the Internal Revenue
Service, certifying that such Lender is exempt from or is entitled to a reduced
rate of United States withholding tax on payments under this Agreement or the
Notes. If the form provided by a Lender at the time such Lender first becomes a
party to this Agreement indicates a United States interest withholding tax rate
in excess of zero, withholding tax at such rate shall be considered excluded
from Taxes unless and until such Lender provides the appropriate form certifying
that a lesser rate applies, whereupon withholding tax at such lesser rate only
shall be considered excluded from Taxes for periods governed by such form;
provided, however, that, if at the date of the Assignment and Acceptance
pursuant to which a Lender becomes a party to this Agreement, the Lender
assignor was entitled to payments under subsection (a) of this Section 2.12 in
respect of United States withholding tax with respect to interest paid at such
date, then, to such extent, the term Taxes shall include (in addition to
withholding taxes that may be imposed in the future or other amounts otherwise
includable in Taxes) United States withholding tax, if any, applicable with
respect to the Lender assignee on such date. If any form or document referred to
in this subsection (e) of this Section 2.12 requires the disclosure of
information, other than information necessary to compute the tax payable and
information required on the date hereof by Internal Revenue Service form 1001 or
4224, that the Lender reasonably considers to be confidential, the Lender shall
give notice thereof to the Borrower and shall not be obligated to include in
such form or document such confidential information. Notwithstanding anything to
the contrary contained herein, if the withholding taxes applicable to any
payment under any Note or under this Agreement to a Lender or Lender assignor
shall be increased from that which would have otherwise been applicable at the
time of the execution and delivery by such Lender of this Agreement or the date
of the Assignment and Acceptance pursuant to which it became a Lender, as the
case may be, due to (i) a change in the manner in which such Lender or Lender
assignor
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holds its interest in the Note, or (ii) an audit of the Internal Revenue Service
indicating that such Lender or Lender assignor is not entitled to an exemption
from, or a reduced rate for, such withholding taxes at the date of the execution
and delivery by such Lender of this Agreement or the date of the Assignment and
Acceptance pursuant to which it became a Lender then any withholding taxes
resulting therefrom shall be considered excluded from Taxes.
(f) For any period with respect to which a Lender has failed to provide the
Borrower with the appropriate form described in subsection (e) of this Section
2.12 (other than if such failure is due to a change in law occurring after the
date on which a form originally was required to be provided or if such form
otherwise is not required under subsection (e) of this Section 2.12), such
Lender shall not be entitled to indemnification under subsection (a) or (c) of
this Section 2.12 with respect to Taxes imposed by the United States; provided,
however, that should a Lender 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 to assist such Lender to recover such Taxes.
SECTION 2.13. Sharing of Payments, Etc. If any Lender shall obtain at any
time any payment (whether voluntary, involuntary, through the exercise of any
right of set-off, or otherwise) (a) on account of Obligations due and payable to
such Lender hereunder and under the Notes at such time in excess of its ratable
share (according to the proportion of (i) the amount of such Obligations due and
payable to such Lender at such time to (ii) the aggregate amount of the
Obligations due and payable to all Lenders hereunder and under the Notes at such
time) of payments on account of the Obligations due and payable to all Lenders
hereunder and under the Notes at such time obtained by all the Lenders at such
time or (b) on account of Obligations owing (but not due and payable) to such
Lender hereunder and under the Notes at such time in excess of its ratable share
(according to the proportion of (i) the amount of such Obligations owing to such
Lender at such time to (ii) the aggregate amount of the Obligations owing (but
not due and payable) to all Lenders hereunder and under the Notes at such time)
of payments on account of the Obligations owing (but not due and payable) to all
Lenders hereunder and under the Notes at such time obtained by all of the
Lenders at such time, such Lender shall forthwith purchase from the other
Lenders such participations in the Obligations due and payable or owing to them,
as the case may be, as shall be necessary to cause such purchasing Lender to
share the excess payment ratably with each of them; provided, however, that if
all or any portion of such excess payment is thereafter recovered from such
purchasing Lender, such purchase from each other Lender shall be rescinded and
such other Lender shall repay to the purchasing Lender the purchase price to the
extent of such Lender's ratable share (according to the proportion of (i) the
purchase price paid to such Lender to (ii) the aggregate purchase price paid to
all Lenders) of such recovery together with an amount equal to such Lender's
ratable share (according to the proportion of (i) the amount of such other
Lender's required repayment to (ii) the total amount so recovered from the
purchasing Lender) of any interest or other amount paid or payable by the
purchasing Lender in respect of the total amount so recovered. The Borrower
agrees that any Lender so purchasing a participation from another Lender
pursuant to this Section 2.13 may, to the fullest extent permitted by law,
exercise all its rights of payment (including the right of set-off) with respect
to such participation as fully as if such Lender were the direct creditor of the
Borrower in the amount of such participation.
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SECTION 2.14. Use of Proceeds. The proceeds of the Advances and issuances
of Letters of Credit shall be available (and the Borrower agrees that it shall
use such proceeds and Letters of Credit) solely to (i) effect the Refinancing
Transactions, (ii) furnish working capital, (iii) fund the Permitted
Acquisitions and certain general corporate requirements of the Borrower and its
Subsidiaries and (iv) pay transaction fees and expenses in connection with the
transactions contemplated hereby.
SECTION 2.15. Source of Funds. To the extent any Advance hereunder is made
by or on behalf of an insurance company, bank, or an entity deemed to hold
assets of any employee benefit plan subject to ERISA or other plan as defined in
and subject to the prohibited transaction provisions of Section 4975 of the
Internal Revenue Code pursuant to applicable Department of Labor regulations
(the "Plan Asset Regulations"), or any such plan acting on its own behalf, such
insurance company, bank, entity or plan warrants and represents that at least
one of the following statements is an accurate representation as to each source
of funds (a "Source") to be used by such insurance company, bank, entity or plan
to make any Advance hereunder:
(a) the Source consists of plan assets subject to the discretionary
authority or control of an in-house asset manager as such term is defined in
Section IV(a) of Prohibited Transaction Class Exemption 96-23 (issued April 10,
1996) ("PTCE 96-23"), and any Advance hereunder is exempt under the provisions
of PTCE 96-23; or
(b) the Source is an "insurance company general account" as such term is
defined in section V(e) of Prohibited Transaction Class Exemption 95-60 (issued
July 12, 1995) ("PTCE 95-60"), and any Advance hereunder is exempt under the
provisions of PTCE 95-60; or
(c) the Source is either (x) an insurance company pooled separate account,
within the meaning of Prohibited Transaction Class Exemption 90-1 (issued
January 29, 1990) ("PTCE 90-1") or (y) a bank collective investment fund, within
the meaning of Prohibited Transaction Class Exemption 91-38 (issued July 12,
1991) ("PTCE 91-38") and, except as such insurance company or bank has disclosed
to the Borrower in writing pursuant to this paragraph (c), no plan or group of
plans maintained by the same employer or employee organization, beneficially
owns more than 10% of all assets allocated to such pooled separate account or
collective investment fund; and, in either such case, all records necessary to
establish the availability of each exemption by reason thereof will be
maintained and made available as required by the terms of such exemption; or
(d) the Source is an "investment fund" (within the meaning of Part V of
Prohibited Transaction Class Exemption 84-14 (issued March 13, 1984) (the "QPAM
Exemption") managed by a "qualified professional asset manager" ("QPAM") within
the meaning of Part V of the QPAM exemption) which has been identified pursuant
to this paragraph (d), such that the Advances by or on behalf of such investment
fund are exempt from the application of the prohibited transaction rules of
ERISA and Section 4975 of the Internal Revenue Code, provided that no party to
the transactions described in this Credit Agreement and
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no affiliate (within the meaning of Section V(c)(1) of the QPAM Exemption) of
such party has, or at any time during the immediately preceding year exercised,
the authority to appoint or terminate the identified QPAM as manager of the
assets of any employee benefit plan that has an interest in such investment fund
(which plans have been identified pursuant to this paragraph (d)) or to
negotiate the terms of said QPAM's management agreement on behalf of any such
identified plan; or
(e) the Source is a "governmental plan" as defined in Title I, Section
3(32) of ERISA; or
(f) the Source is one or more "employee benefit plans" (or other plan as
defined in and subject to Section 4975 of the Internal Revenue Code) or a
separate account, trust fund, or other entity comprising one or more such plans
(determined after giving effect to the Plan Asset Regulations) each of which has
been identified to the Borrower in writing pursuant to this paragraph (f); or
(g) the Source does not include assets of any employee benefit plan or
other plan, other than a plan exempt from coverage under ERISA and from the
prohibited transactions of Section 4975 of the Internal Revenue Code.
ARTICLE III
CONDITIONS OF LENDING
SECTION 3.01. Conditions Precedent to Initial Extension of Credit. The
obligation of each Lender to make an Advance or of the Issuing Bank to issue a
Letter of Credit on the occasion of the Initial Extension of Credit hereunder is
subject to the satisfaction of the following conditions precedent before or
concurrently with the Initial Extension of Credit:
(a) The Lenders shall be satisfied with the corporate and legal
structure and capitalization of Parent and the Loan Parties, including the
terms and conditions of the charter, bylaws and each class of capital stock
of Parent and the Loan Parties and of each agreement or instrument relating
to such structure or capitalization.
(b) There shall not have occurred (and the Lenders shall not have
become aware of) any facts, conditions or other information not previously
known which the Lenders shall determine has, or would reasonably be
expected to have, (x) a material adverse effect on the rights or remedies
of the Agent or the Lenders, or on the ability of Parent or any Loan Party
to perform its obligations to the Agent and the Lenders or (y) a Material
Adverse Effect.
(c) All material governmental (domestic and foreign) and third party
approvals and/or consents necessary in connection with the consummation of
the Refinancing Transactions and the other transactions contemplated hereby
shall have been (or will,
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within the time frame required, be) obtained and remain in full effect, and
all applicable waiting periods shall have expired without any action being
taken by any competent authority which restrains, prevents or imposes
materially adverse conditions upon the consummation of the Refinancing
Transactions and the other transactions contemplated by this Agreement and
the other Documents or otherwise referred to herein or therein.
Additionally, there shall not exist any judgment, order, injunction or
other restraint issued or filed by any court of competent jurisdiction or a
hearing seeking injunctive relief or other legal restraint pending or
notified in such court prohibiting or imposing materially adverse
conditions upon the consummation of the transactions contemplated by this
Agreement, the Notes or any other Documents.
(d) There shall exist no action, suit, investigation, litigation or
proceeding affecting Parent, any Loan Party or any of its properties or any
Subsidiary of any Loan Party or any of their respective properties pending
or threatened before any court, governmental agency or arbitrator that
purports to affect the legality, validity or enforceability of this
Agreement, the Notes, any other Document or the consummation of the
transactions contemplated hereby or thereby or which the Agent shall
determine has, or would reasonably be expected to have, a Material Adverse
Effect.
(e) (i) The Lenders shall have received evidence, in form, scope and
substance satisfactory to them, that all Debt under the Existing
Precise Credit Agreement and the Existing Precise Subordinated Notes
has been or will be, simultaneously with the transactions contemplated
herein, prepaid, redeemed or defeased in full or otherwise satisfied
and extinguished, together with all interest thereon and all other
amounts owing pursuant thereto. In addition, the creditors under the
Existing Precise Credit Agreement and the Existing Precise
Subordinated Notes shall have terminated and released all pledges of
and security interests in and Liens (if any) on the stock, assets and
properties owned by each Loan Party and any of its Subsidiaries and
the Agent shall have received such releases of security interests in
and Liens on the stock, assets and properties owned by each Loan Party
and its Subsidiaries, which releases shall be in form, scope and
substance satisfactory to the Agent. Without limiting the foregoing,
there shall have been delivered (A) proper termination statements
(Form UCC-3 or the appropriate equivalent) for filing under the UCC of
each jurisdiction where a financing statement (Form UCC-1 or the
appropriate equivalent) was filed with respect to each Loan Party and
its Subsidiaries in connection with the security interests created
with respect to such Debt and the documentation related thereto, (B)
terminations or assignments of any security interest in, or Lien on,
any patents, trademarks, copyrights, or similar interests of each Loan
Party or any of its Subsidiaries on which filings have been made and
(C) terminations of all mortgages, leasehold mortgages and deeds of
trust created with respect to the property of each Loan Party or any
of its Subsidiaries, all of which shall be in form, scope and
substance satisfactory to the Agent. All accrued fees and expenses of
the Agent and the Lenders (including the accrued fees and expenses of
counsel to the Agent and of local counsel to the Lenders) shall have
been paid.
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(ii) The Borrower shall or will simultaneously with the
transactions contemplated herein have repurchased, retired or redeemed
all of the outstanding Existing Precise Subordinated Notes in
accordance with their terms, or on such other terms and conditions as
may be satisfactory to the Agent and the Required Lenders and all
securities and note purchase agreements pursuant to which the Existing
Precise Subordinated Notes were issued shall have been terminated and
be of no further force or effect. Notwithstanding anything to the
contrary contained in the foregoing, the prepayment premium, if any,
in connection with the repurchase, retirement or redemption of the
Existing Precise Subordinated Notes shall not exceed, in the
aggregate, $2,200,000.
(iii) The Borrower shall or will simultaneously with the
transactions contemplated herein have redeemed the Existing Precise
Redeemable Preferred Stock for an aggregate principal amount not to
exceed $8,300,000.
(iv) The Borrower shall or will simultaneously with the
transactions contemplated herein have repurchased 124 shares of common
stock of the Borrower from Parent for an aggregate principal amount
not to exceed $3,500,000.
(v) The Borrower shall or will simultaneously with the
transactions contemplated herein have made a distribution to Parent in
an aggregate amount not to exceed $6,500,000.
(vi) The Agent shall or will simultaneously with the transactions
contemplated herein have received evidence, in form, scope and
substance satisfactory to it, that the matters set forth in this
Section 3.01(e) have been satisfied on such date.
(f) (i) The Borrower shall or will simultaneously with the
transactions contemplated herein have received gross cash proceeds in
an aggregate principal amount of $75,000,000 from the issuance by the
Borrower of a like principal amount of the Senior Subordinated Notes
on terms substantially as set forth in the Senior Subordinated Notes
Indenture. On the date of the Initial Extension of Credit, and
concurrently with the incurrence of Advances on such date, the
Borrower shall or will simultaneously with the transactions
contemplated herein have utilized the net cash proceeds from the
issuance of the Senior Subordinated Notes to effect, in part, the
Refinancing Transactions.
(ii) All terms of, and documentation for, the Senior Subordinated
Notes and the other Senior Subordinated Note Documents (including,
without limitation, amortization, maturities, interest rates,
covenants, defaults, remedies, sinking fund provisions, subordination
provisions and other terms) shall be required to be satisfactory in
scope, form and substance to the Agent, it being understood and agreed
that in any event the Senior Subordinated Notes shall be unsecured but
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may be guaranteed on a senior subordinated basis by the Subsidiaries
of the Borrower. On the date of the Initial Extension of Credit, there
shall have been delivered to the Agent true and complete copies of all
Senior Subordinated Note Documents.
(g) The Agent shall have received on or before the day of the Initial
Extension of Credit (unless otherwise specified) the following, each dated
such day (unless otherwise specified), in form and substance satisfactory
to the Agent (unless otherwise specified) and (except for the Notes) in
sufficient copies for each Lender:
(i) The Notes payable to the order of the Lenders.
(ii) Certified copies of the resolutions of the Board of
Directors of the Borrower, each Guarantor and each other Loan Party
approving this Agreement, the Notes, the Mortgages and each other
Document to which it is or is to be a party, and of all documents
evidencing other necessary corporate action and governmental
approvals, if any, with respect to this Agreement, the Notes and each
other Document.
(iii) A copy of a certificate of the Secretary of State of the
jurisdiction of incorporation of the Borrower, each Guarantor and each
other Loan Party, dated on or reasonably near the date of the Initial
Extension of Credit, in each case listing the charter of such Person
and each amendment thereto on file in his office and certifying that
(A) such charter is a true and correct copy thereof, (B) such
amendments are the only amendments to such charter on file in his
office, (C) such Person has paid all franchise taxes to the date of
such certificate and (D) such Person is duly incorporated and in good
standing under the laws of the State of the jurisdiction of its
incorporation.
(iv) A copy of a certificate of the Secretary of State of the
States of New York, Pennsylvania, Illinois, Indiana, Florida,
Massachusetts and Missouri dated on or reasonably near the date of the
Initial Extension of Credit, stating that each Loan Party that does
business in such state is duly qualified and in good standing as a
foreign corporation in such state and has filed all annual reports
required to be filed to the date of such certificate.
(v) A certificate of the Borrower, each Guarantor and each other
Loan Party, signed on behalf of such Person by its President or Vice
President and its Secretary or Assistant Secretary, dated the date of
the Initial Extension of Credit (the statements made in which
certificate shall be true on and as of the date of the Initial
Extension of Credit), certifying as to (A) the absence of any
amendments to the charter of such Person since the date of the
Secretary of State's certificate referred to in Section 3.01(g)(iii),
(B) a true and correct copy of the bylaws of such Person as in effect
on the date of the Initial Extension of Credit, (C) the due
incorporation and good standing of such Person as a corporation
organized under
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the laws of the jurisdiction of its incorporation and the absence of
any proceeding for the dissolution or liquidation of such Person, (D)
the completeness and accuracy of the representations and warranties
contained in the Documents as though made on and as of the date of the
Initial Extension of Credit and (E) the absence of any event occurring
and continuing, or resulting from the Initial Extension of Credit,
that constitutes a Default.
(vi) A certificate of the Secretary or Assistant Secretary of the
Borrower, each Guarantor and each other Loan Party certifying the
names and true signatures of the officers of such Persons authorized
to sign this Agreement, the Notes and each other Document to which
they are or are to be parties and the other documents to be delivered
hereunder and thereunder.
(vii) (A) A pledge and security agreement in substantially the
form of Exhibit D-1, duly executed by each Loan Party and (B) a pledge
and security agreement in substantially the form of Exhibit D-2, duly
executed by Parent (together with each other pledge and security
agreement delivered pursuant to Section 5.01(m) or 5.01(n), in each
case as amended, supplemented or otherwise modified from time to time
in accordance with its terms, collectively, the "Security Agreement"),
together with:
(1) certificates representing the Pledged Shares and the
Pledged Debt referred to therein accompanied, in the case of the
Pledged Shares, by undated stock powers executed in blank,
(2) acknowledgment copies or stamped receipt copies of
proper financing statements, to be duly filed on or within a
short time after the day of the Initial Extension of Credit under
the UCC of the States of New York, Pennsylvania, Illinois,
Indiana, Delaware, Florida, Massachusetts and Missouri and all
other jurisdictions that the Collateral Agent may deem necessary
or desirable in order to perfect and protect the Liens created
under the Collateral Documents, covering the Collateral described
in the Security Agreement,
(3) completed requests for information, dated on or before
the date of the Initial Extension of Credit, listing the
financing statements referred to in clause (2) next above and all
other effective financing statements filed in the jurisdictions
referred to in clause (2) next above that name each Loan Party as
debtor, together with copies of such other financing statements,
(4) duly executed copies in proper form to be filed of all
recordings and filings of or with respect to the Security
Agreement that the Collateral Agent may deem necessary or
desirable in order to perfect and protect the Liens created
thereby,
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(5) evidence of the insurance required by the terms of the
Security Agreement,
(6) unless already provided pursuant to Section 3.01(e),
executed termination statements (Form UCC-3 or a comparable
form), in proper form to be duly filed on the date of the Initial
Extension of Credit under the UCC of all jurisdictions that the
Collateral Agent may deem desirable in order to terminate or
amend existing Liens on the Collateral described in the Security
Agreement except for Permitted Liens, and
(7) evidence that all other action that the Collateral Agent
may reasonably deem necessary or desirable in order to perfect
and protect the Liens and security interests created under the
Security Agreement has been taken.
(viii) (A) fully executed counterparts of Mortgages in form and
substance reasonably satisfactory to the Agent, which Mortgages
shall cover such of the real property owned by any Loan Party as
are designated as such on Schedule 4.01(dd) (each a "Mortgaged
Property" and, collectively, the "Mortgaged Properties"),
together with evidence that counterparts of the Mortgages have
been delivered to the title insurance company insuring the lien
of such Mortgages for recording in all places to the extent
necessary or, in the reasonable opinion of the Agent desirable,
to effectively create a valid and enforceable first priority
mortgage lien on each Mortgaged Property (subject to only
Permitted Liens) in favor of the Agent for the benefit of the
Secured Parties, and
(B) mortgage policies on each Mortgaged Property issued by
such title insurers reasonably satisfactory to the Agent and in
amounts satisfactory to the Agent assuring the Agent that the
Mortgages on the Mortgaged Properties are valid and enforceable
first priority mortgage liens on the respective Mortgaged
Properties, free and clear of all defects, interests and
encumbrances except Permitted Liens, and such Mortgage Policies
shall otherwise be in form and substance reasonably satisfactory
to the Agent (including all endorsements thereto), and shall
include, as appropriate, an endorsement for future advances under
this Agreement and the Notes and for any other matter that the
Agent in its discretion may reasonably request, shall not include
an exception for mechanics' liens or creditors' rights, and shall
provide for affirmative insurance and such reinsurance as the
Agent in its discretion may reasonably request.
(ix) A guaranty in substantially the form of Exhibit F-1 (as
amended, supplemented or otherwise modified from time to time in
accordance with its terms, the "Parent Guaranty"), duly executed by
Parent.
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(x) A guaranty in substantially the form of Exhibit F-2 (as
amended, supplemented or otherwise modified from time to time in
accordance with its terms, the "Subsidiary Guaranty" and, together
with the Parent Guaranty and with each other guaranty delivered
pursuant to Section 5.01(m), in each case as amended, supplemented or
otherwise modified from time to time in accordance with its terms, the
"Guaranties"), duly executed by each Subsidiary Guarantor.
(xi) Such financial, business and other information regarding
each Loan Party and its Subsidiaries as the Lenders shall have
reasonably requested, including, without limitation, information as to
possible contingent liabilities, tax matters, environmental matters,
obligations under Plans, collective bargaining agreements and other
arrangements with employees, audited annual financial statements for
the years ended December 31, 1994, December 31, 1995 and December 31,
1996, interim financial statements for the three month period ended
March 31, 1996 and March 31, 1997 and detailed forecasts prepared by
management, in form and substance satisfactory to the Agent, of
balance sheets, income statements and cash flow statements on a
monthly basis for the first year following the day of the Initial
Extension of Credit and on an annual basis for each year thereafter
until the Final Maturity Date.
(xii) A solvency opinion from Corporate Valuation Advisors, Inc.
addressed to the Agent and each of the Lenders and dated the date of
the Initial Extension of Credit and supporting the conclusions that,
after giving effect to the consummation of the Refinancing
Transactions, including the issuance of the Senior Subordinated Notes
and the incurrence of all financings contemplated herein, each of the
Borrower and its Subsidiaries taken as a whole are not insolvent and
will not be rendered insolvent by the indebtedness incurred in
connection herewith, will not be left with unreasonably small capital
with which to engage in their respective businesses and will not have
incurred debt beyond their ability to pay such debts as they mature
and become due, which solvency opinion shall be in form and substance
satisfactory to the Agent.
(xiii) Environmental assessment reports, in form and substance
satisfactory to the Lenders.
(xiv) Evidence of insurance (including, without limitation,
business interruption insurance) naming the Collateral Agent as
additional insured and loss payee with such responsible and reputable
insurance companies or associations, and in such amounts and covering
such risks, as is reasonably satisfactory to the Collateral Agent.
(xv) An intellectual property security agreement in substantially
the form of Exhibit E (together with each other intellectual property
security agreement delivered pursuant to Section 5.01(m) or Section
5.01(n), in each case as amended, supplemented or otherwise modified
from time to time in accordance
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with its terms, the "Intellectual Property Security Agreement"), duly
executed by each Loan Party, together with evidence that all action
that the Collateral Agent may deem necessary or desirable in order to
perfect and protect the liens and security interests created under the
Intellectual Property Security Agreement has been taken.
(xvi) A favorable opinion of Winston & Strawn, counsel for the
Borrower, in substantially the form of Exhibit G hereto.
(xvii) A favorable opinion of (A) Karp & Genauer, P.A., Florida
counsel to the Borrower and each Guarantor,
(B) Winston & Strawn, Illinois counsel to the Borrower and
each Guarantor,
(C) Bose, McKinney & Evans, Indiana counsel to the Borrower
and each Guarantor,
(D) Goulston & Storrs, Massachusetts counsel to the Borrower
and each Guarantor,
(E) Gallop, Johnson & Neuman, L.C., Missouri counsel to the
Borrower and each Guarantor, and
(F) Klett, Lieber, Rooney & Schorling, Pennsylvania counsel
to the Borrower and each Guarantor,
each in form and substance acceptable to the Agent.
(xviii) (A) all existing agreements entered into by any Loan
Party governing the terms and relative rights of its capital
stock and any agreements entered into by shareholders relating to
any such entity with respect to its capital stock (collectively,
the "Shareholders' Agreements");
(B) all existing Plans and Multiemployer Plans;
(C) all agreements evidencing or relating to Debt (other
than in respect of Obligations under Capitalized Leases) of any
Loan Party if the outstanding principal amount thereof exceeds
(or upon the utilization of any unused commitments may exceed)
$100,000 (collectively, the "Debt Agreements");
(D) all existing management, consulting and similar
agreements (other than employment agreements) entered into by
each Loan Party with any of their respective Affiliates
(including, without limitation, the
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<PAGE>
Mentmore Management Agreement) (collectively, the "Management
Agreements");
(E) all existing tax sharing, all allocation and other
similar agreements entered into by each Loan Party (collectively,
the "Tax Sharing Agreements"); and
(F) all existing agreements evidencing or relating to any
Investments if the amount theretofore invested exceeded (or if
any requirement to make additional investments would exceed)
$100,000 (other than Cash Equivalents) (collectively, the
"Investment Agreements");
all of which Shareholders' Agreements, Plans, Multiemployer Plans, Debt
Agreements, Management Agreements, Tax Sharing Agreements and Investment
Agreements shall be in form and substance reasonably satisfactory to the
Agent and shall be in full force and effect on the date of the Initial
Extension of Credit.
SECTION 3.02. Conditions Precedent to Each Borrowing and Issuance. The
obligation of each Lender to make a Revolving Credit Advance on the occasion of
each Borrowing (including the Initial Extension of Credit), and the obligation
of the Issuing Bank to issue a Letter of Credit (including the initial
issuance), shall be subject to the conditions precedent that on the date of such
Borrowing or issuance (a) the following statements shall be true (and each of
the giving of the applicable Notice of Borrowing, Notice of Issuance and the
acceptance by the Borrower of the proceeds of such Borrowing or of such Letter
of Credit shall constitute a representation and warranty by the Borrower that
both on the date of such notice and on the date of such Borrowing or issuance
such statements are true):
(i) the representations and warranties contained in each Document are
correct on and as of such date, before and after giving effect to such
Borrowing or issuance and to the application of the proceeds therefrom, as
though made on and as of such date other than any such representations or
warranties that, by their terms, refer to a specific date other than the
date of such Borrowing or issuance, in which case as of such specific date;
and
(ii) no event has occurred and is continuing, or would result from
such Borrowing or issuance or from the application of the proceeds
therefrom, that constitutes a Default;
and (b) the Agent shall have received such other approvals, opinions or
documents as any Lender through the Agent may reasonably request.
SECTION 3.03. Certain Requirements with respect to Permitted Acquisitions.
Prior to the making of any Revolving Credit Advance the proceeds of which are to
be used to acquire a Business or Businesses in accordance with the requirements
of this Agreement, (i) the Lenders shall have received a certificate from an
authorized financial officer of the Borrower
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certifying the specific uses to be made of the proceeds thereof (broken down by
Permitted Acquisition) which certificate shall be in form and detail reasonably
satisfactory to the Agent, (ii) neither the Agent nor the Required Lenders shall
have become aware of any negative facts, conditions or other information which
would reasonably lead the Agent or the Required Lenders to believe that (A) the
information provided in any Information Package with respect to any Permitted
Acquisition is not true and accurate in all material respects (or was not true
and accurate in all material respects at the time such Information Package was
furnished pursuant to this Agreement) or is incomplete by omitting to state any
fact necessary to make such information not misleading in any material respect
(or was incomplete by omitting to state any fact necessary to make such
information not misleading in any material respect at the time such Information
Package was furnished pursuant to this Agreement) and neither the Agent nor the
Required Lenders shall have so informed the Borrower in writing thereof or (B)
the representations and warranties made in any of Sections 4.01(t), 4.01(u),
4.01(v) and 4.01(jj) are (or were) untrue in any material respect at the time
such representations and warranties are (or were) made or deemed made and
neither the Agent nor the Required Lenders shall have so informed the Borrower
in writing thereof, (iii) the Borrower shall have satisfied the relevant
requirements of Sections 5.01(k) and 5.02(d)(iv) and (iv) the Borrower shall
have delivered to the Agent evidence, in form and substance satisfactory to the
Agent, demonstrating that all documentation necessary to maintain the priority
and/or enforceability of the security interests in or Liens upon the Collateral
for the benefit of the Collateral Agent and the Secured Parties with respect to
the Business being acquired and the Revolving Credit Advance to be made and as
may be necessary under applicable law to maintain the priority of the security
interests in such Collateral.
SECTION 3.04. Determinations Under Section 3.01. For purposes of
determining compliance with the conditions specified in Sections 3.01, each
Lender shall be deemed to have consented to, approved or accepted or to be
satisfied with each document or other matter required thereunder to be consented
to or approved by or acceptable or satisfactory to the Lenders unless an officer
of the Agent responsible for the transactions contemplated by the Documents
shall have received notice from such Lender prior to the Initial Extension of
Credit specifying its objection thereto and if the Initial Extension of Credit
consists of a Borrowing, such Lender shall not have made available to the Agent
such Lender's ratable portion of such Borrowing.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Representations and Warranties. In order to induce the
Lenders to enter into this Agreement and to make the Revolving Credit Advances,
and issue (or participate in) the Letters of Credit as provided herein, each of
Parent (but only to the extent each such representation or warranty applies
specifically to Parent), the Borrower and each other Loan Party makes the
following representations, warranties and agreements, in each case after giving
effect to the Refinancing Transactions, all of which shall survive the execution
and
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delivery of this Agreement and the other Documents and the making of the
Revolving Credit Advances and issuance of the Letters of Credit, with the
occurrence of each Borrowing and issuance of a Letter of Credit on or after the
date of the Initial Extension of Credit being deemed to constitute a
representation and warranty that the matters specified in this Article IV are
true and correct on and as of the date of the Initial Extension of Credit and on
the date of each such Borrowing and issuance of a Letter of Credit (it being
understood and agreed that any representation or warranty which by its terms is
made as of a specified date shall be required to be true and correct in all
material respects only as of such specified date).
(a) Each of Parent and the Borrower (i) is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation, (ii) is duly qualified and in good
standing as a foreign corporation in each other jurisdiction in which it
owns or leases property or assets or in which the conduct of its business
requires it to so qualify or be licensed, except where the failure to be so
qualified would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect and (iii) has all requisite
corporate power and authority (including, without limitation, all material
governmental licenses, permits and other approvals) to own or lease and
operate its properties and assets and to carry on its business as now
conducted and as presently proposes to be conducted. On the date of the
Initial Extension of Credit and upon the completion of the Refinancing
Transactions, the authorized capital stock of the Borrower consists of
1,000 shares of common stock, no par value per share, of which 1 (one)
share is issued and outstanding. All of the outstanding capital stock of
the Borrower has been validly issued free of pre-emptive rights, is fully
paid and non-assessable and, is owned by Parent in the amounts and types
specified in Schedule 4.01(a) free and clear of all Liens. Except as set
forth on Schedule 4.01(a), the Borrower has no outstanding securities
convertible into or exchangeable for its capital stock or outstanding any
rights to subscribe for or to purchase, or any options or warrants for the
purchase of, or any agreements providing for the issuance (contingent or
otherwise) of, or any calls, commitments or claims of any character
relating to, its capital stock.
(b) Set forth on Schedule 4.01(b) hereto is a complete and accurate
list, as of the date hereof, of all Subsidiaries of each of Parent and the
Borrower, showing as of the date hereof (as to each such Subsidiary) the
jurisdiction of its incorporation, the number of shares of each class of
capital stock authorized, and the number outstanding, on the date hereof
and the percentage of the outstanding shares of each such class owned
(directly or indirectly) by each of Parent and the Borrower and the number
of shares covered by all outstanding options, warrants, rights of
conversion or purchase and similar rights at the date hereof. All of the
outstanding capital stock of such Subsidiaries has been validly issued free
of pre-emptive rights, is fully paid and non-assessable and is owned by the
Borrower or one or more of its Subsidiaries free and clear of all Liens,
except those created under the Loan Documents. Each such Subsidiary (i) is
a corporation duly organized, validly existing and in good standing under
the laws of the jurisdiction of its incorporation, (ii) is duly qualified
and in good standing as a foreign corporation in each other jurisdiction in
which it owns or leases property or assets or in
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which the conduct of its business requires it to so qualify or be licensed,
except where the failure to be so qualified would not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect and
(iii) has all requisite corporate power and authority (including, without
limitation, all material governmental licenses, permits and other
approvals) to own or lease and operate its properties and assets and to
carry on its business as now conducted and as presently proposes to be
conducted. Except as set forth on Schedule 4.01(b), no Subsidiary of the
Borrower or the Borrower has outstanding any securities convertible into or
exchangeable for its capital stock or outstanding any rights to subscribe
for or to purchase, or any options or warrants for the purchase of, or any
agreements providing for the issuance (contingent or otherwise) of, or any
calls, commitments or claims of any character relating to, its capital
stock.
(c) The execution, delivery and performance by Parent and each Loan
Party of this Agreement, the Notes and each other Document to which it is a
party, the consummation of the transactions contemplated hereby and thereby
and the compliance by it with the terms and provisions hereof and thereof,
are within Parent's and such Loan Party's corporate powers, have been duly
authorized by all necessary corporate action, and do not (i) contravene
Parent's or any Loan Party's charter or bylaws (or equivalent
organizational documentation), (ii) violate any law (including, without
limitation, the Exchange Act and the Racketeer Influenced and Corrupt
Organizations Chapter of the Organized Crime Control Act of 1970), rule,
regulation (including, without limitation, Regulation X of the Board of
Governors of the Federal Reserve System), order, writ, judgment,
injunction, decree, determination or award, (iii) conflict with or result
in the breach of, or constitute a default under, any material contract,
loan agreement, indenture, mortgage, deed of trust, lease or other
instrument binding on or affecting Parent or any Loan Party, any of their
respective Subsidiaries or any of their respective properties or assets or
(iv) except for the Liens created under the Loan Documents, result in or
require the creation or imposition of any Lien upon or with respect to any
of the properties or assets of Parent or any Loan Party or any of their
Subsidiaries. Neither Parent nor any Loan Party nor any of their
Subsidiaries is in violation of any such law, rule, regulation, order,
writ, judgment, injunction, decree, determination or award or in breach of
any such contract, loan agreement, indenture, mortgage, deed of trust,
lease or other instrument, in each case where such breach, requirement or
imposition would, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect.
(d) No authorization or approval or other action by, and no notice to
or filing with, any Governmental Authority or regulatory body or any other
third party is required for (i) the due execution, delivery, recordation,
filing or performance by Parent or any Loan Party of this Agreement, or any
other Document to which it is a party, or for the consummation of the
transactions contemplated hereby or thereby, (ii) the grant by Parent or
any Loan Party of the Liens granted by it pursuant to the Collateral
Documents, (iii) the perfection or maintenance of the Liens created by the
Collateral Documents (including the first priority nature thereof) or (iv)
the exercise by the Agent, the Collateral Agent or any Lender of its rights
under the Loan Documents or the remedies
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in respect of the Collateral pursuant to the Collateral Documents, except
for the authorizations, approvals, actions, notices and filings listed on
Schedule 4.01(d), all of which have been duly obtained, taken, given or
made and are in full force and effect. All applicable waiting periods in
connection with the transactions contemplated hereby have expired without
any action having been taken by any competent authority restraining,
preventing or imposing materially adverse conditions upon the rights of
Parent, the Loan Parties or their Subsidiaries freely to transfer or
otherwise dispose of, or to create any Lien on, any properties or assets
now owned or hereafter acquired by any of them.
(e) This Agreement has been, and each of the other Documents when
delivered hereunder will have been, duly executed and delivered by Parent
and each Loan Party thereto. This Agreement and each other Document is the
legal, valid and binding obligation of Parent and each Loan Party that is a
party thereto, enforceable against Parent and such Loan Party in accordance
with its terms, except as enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or other laws relating to or
limiting creditors' rights or by equitable principles generally (regardless
of whether enforcement is sought in equity or at law).
(f) The Consolidated balance sheet of the Borrower and its
Subsidiaries as at December 31, 1994, December 31, 1995 and December 31,
1996, and the Consolidated related statements of income and cash flows and
the notes thereto of the Borrower and its Subsidiaries for the Fiscal Year
then ended, accompanied by an opinion of Ernst & Young LLP, independent
public accountants, and the Consolidated balance sheets of TMP and its
Subsidiaries as at December 31, 1994 and December 31, 1995, and the related
Consolidated statements of income and cash flows and the notes thereto of
TMP and its Subsidiaries for the Fiscal Year then ended, duly certified by
the chief financial officer of the Borrower, copies of which have been
furnished to each Lender, fairly present, the financial condition of the
Borrower and its Subsidiaries and TMP and its Subsidiaries as at such dates
and the results of the operations and cash flow of the Borrower and its
Subsidiaries and TMP and its Subsidiaries for the periods ended on such
dates, all in accordance with GAAP applied on a consistent basis, and since
December 31, 1996 there has been no Material Adverse Change. Except as
fully disclosed in such financial statements, there were as of the date of
such balance sheets referred to in this Section 4.01(f) no liabilities or
obligations with respect to any Loan Party or any of their respective
Subsidiaries of any nature whatsoever (whether absolute, accrued,
contingent or otherwise and whether or not due) which, either individually
or in aggregate, would reasonably be expected to have a Material Adverse
Effect on such Loan Party or any of its Subsidiaries (other than any such
liabilities or obligations which arise in the ordinary course of business
in connection with contracts entered into by any such Person). As of such
balance sheet date, no Loan Party knows of any basis for the assertion
against it or any of its Subsidiaries of any liability or obligation of any
nature whatsoever that is not fully disclosed in such financial statements
which, either individually or in the aggregate, would be expected to have a
Material Adverse Effect on such Loan Party or any of its Subsidiaries. All
information contained in each
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<PAGE>
Information Package furnished to the Lenders pursuant to Section 5.01(k)
(with respect to subsequently acquired Businesses) is, to the best
knowledge of the Borrower, true and accurate in all material respects and
not incomplete by omitting to state any fact necessary to make such
information not misleading in any material respect.
(g) The Consolidated and consolidating forecasted balance sheets,
income statements and cash flows statements and the notes thereto of the
Borrower and its Subsidiaries delivered to the Lenders pursuant to Section
3.01(g)(xi) or 5.03 were prepared in good faith on a basis consistent with
the financial statements referred to in Section 4.01(f), and there are no
statements or conclusions therein which are based upon or include
information known to the Borrower to be misleading in any material respect
or which fail to take into account material information regarding the
matters reported therein. On the date of the Initial Extension of Credit,
the Borrower believed that such forecasts were reasonable.
(h) Any information, exhibit or report (including, without limitation,
the Offering Memorandum and all information contained in the Documents but
excluding any financial projections) prepared and furnished by Parent, any
Loan Party or their respective agents to the Agent or any Lender for
purposes of or in connection with this Agreement, the other Documents or
any transaction contemplated hereby or thereby is, and all other such
information hereafter prepared and furnished by or on behalf of Parent, any
Loan Party or any of their respective Subsidiaries in writing to the Agent
or any Lender, will be, true and accurate in all material respects on the
date as of which such information is dated or certified and not incomplete
by omitting to state any fact necessary to make such information not
misleading in any material respect at such time in light of the
circumstances under which such information was provided.
(i) There is no action, suit, investigation, litigation or proceeding
affecting Parent, any Loan Party or any of their Subsidiaries, including
any Environmental Claim, pending or threatened before any court,
governmental agency or arbitrator (i) that affects or purports to affect
the legality, validity or enforceability of this Agreement or any other
Document or the consummation of the transactions contemplated hereby or
thereby, (ii) with respect to any material Debt of Parent, any Loan Party
or any of their respective Subsidiaries or (iii) that would reasonably be
expected to have a Material Adverse Effect.
(j) No proceeds of any Advance or drawings under any Letter of Credit
will be used to acquire any equity security of a class that is registered
pursuant to Section 12 of the Exchange Act.
(k) Neither Parent nor any Loan Party is engaged in the business of
extending credit for the purpose of purchasing or carrying Margin Stock,
and no proceeds of any Advance or drawings under any Letter of Credit will
be used to purchase or carry any Margin Stock or to extend credit to others
for the purpose of purchasing or carrying any Margin Stock.
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(l) Set forth on Schedule 4.01(l) hereto is a complete and accurate
list of all Plans and Multiemployer Plans. No ERISA Event has occurred or
is reasonably expected to occur with respect to any Plan or Multiemployer
Plan. Each Plan and each Multiemployer Plan (i) is in substantial
compliance with ERISA and the Internal Revenue Code, (ii) has been
maintained in substantial compliance with its terms and with the
requirements of any and all applicable laws, statutes, rules, regulations
and orders and (iii) has been maintained, where required, in good standing
with applicable regulatory authorities. As of the last annual actuarial
valuation date, the funded current liability percentage, as defined in
Section 302(d)(8) of ERISA, of each Pension Plan is at least 90% and there
has been no material adverse change in the funding status of any such Plan
since such date.
(m) To the best knowledge of the Borrower, Schedule B (Actuarial
Information) to the most recent annual report (Form 5500 Series) for each
Plan (where applicable), copies of which have been filed with the Internal
Revenue Service and furnished to the Lenders, is complete and accurate and
fairly presents the funding status of such Plan, and since the date of such
Schedule B there has been no material adverse change in such funding
status.
(n) Neither Parent nor any Loan Party nor any ERISA Affiliate has
incurred or is reasonably expected to incur any Withdrawal Liability to any
Multiemployer Plan. Neither Parent nor any Loan Party nor any ERISA
Affiliate has been notified by the sponsor of a Multiemployer Plan that
such Multiemployer Plan is in reorganization or has been terminated, within
the meaning of Title IV of ERISA, and no such Multiemployer Plan, to the
best knowledge of the Borrower, is reasonably expected to be in
reorganization or to be terminated, within the meaning of Title IV of
ERISA.
(o) Neither Parent nor any Loan Party, nor any Plan, nor any trust
created thereunder, nor any trustee or administrator thereof, has engaged
in a transaction in connection with which any Loan Party, any Plan or, such
trust, could be subject to either a material civil penalty assessed
pursuant to Section 409 or 502(i) of ERISA or a material tax imposed
pursuant to Section 4975 or 4976 of the Internal Revenue Code. No Plan
which is subject to Section 302 of ERISA or Section 412 of the Internal
Revenue Code has incurred an "accumulated funding deficiency" as defined in
either of such Sections, whether or not waived, nor has requested or
obtained any extension of any applicable amortization period. No Plan is a
plan described in Section 4063(a) of ERISA.
(p) Neither Parent nor any of the Loan Parties have liability under
any employee benefit plan, within the meaning of Section 3(3) of ERISA,
other than plans maintained by the Loan Parties. Each Plan that is subject
to Parts 1, 2 and 4 of Subtitle B of Title I of ERISA is "qualified" within
the meaning of Section 401(a) of the Internal Revenue Code and has been
determined by the Internal Revenue Service to be so qualified, the trusts
maintained thereunder have been determined by the Internal Revenue Service
to be exempt from taxation under Section 501(a) of the Internal Revenue
Code, and all required submissions have been made to the Internal Revenue
Service with respect
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to maintaining the "qualified" status of each such Plan under Section
401(a) of the Internal Revenue Code.
(q) Except as set forth in the financial statements referred to in
this Section 4.01 and in Section 5.03, neither Parent nor any of the Loan
Parties and their respective Subsidiaries have material liability with
respect to "expected post retirement benefit obligations" within the
meaning of Statement of Financial Accounting Standards No. 106, and no Plan
provides benefits, including without limitation death or medical benefits
(whether or not insured), with respect to current or former employees or
dependents thereof of Parent or any Loan Party beyond their retirement or
other termination of service (other than (i) coverage mandated by
applicable law, (ii) death benefits or retirement benefits under any
Pension Plan, (iii) deferred compensation benefits accrued as liabilities
on the books of Parent or any Loan Party or (iv) benefits the full cost of
which is borne by the current or former employee (or his or her dependents
or beneficiaries)). All reports, notices and other disclosure relating to
Plans required to be filed with, or furnished to, government entities, plan
participants or plan beneficiaries have been timely filed and furnished in
all material respects in accordance with applicable law. With respect to
each applicable Plan, Parent, the Loan Parties and all ERISA Affiliates
have complied in all material respects with the provisions of Section
4980B(f) of the Internal Revenue Code.
(r) Neither Parent nor any of the Loan Parties have received or are
aware of any material actions, claims (other than routine claims for
benefits), lawsuits or arbitrations pending or, threatened with respect to
any Plan or against any fiduciary of any Plan, and neither Parent nor the
Loan Parties have knowledge of any facts that could give rise to any such
actions, claims, lawsuits or arbitrations. Neither Parent nor any Loan
Party nor any ERISA Affiliate has ever contributed to, or withdrawn in a
partial or complete withdrawal (within the meaning of Sections 4205 or 4203
of ERISA, respec tively) from, any Multiemployer Plan or has any fixed or
contingent liability under Section 4204 of ERISA.
(s) The use of the proceeds of any Advance or drawings under any
Letter of Credit will not be a prohibited transaction within the meaning of
Section 406 of ERISA.
(t) The operations and properties of each Loan Party and each of its
Subsidiaries comply in all material respects with all applicable
Environmental Laws, and each Loan Party and each of its Subsidiaries have
obtained, maintain and comply with all material Environmental Permits
necessary for their respective businesses, operations and properties, all
past Environmental Claims have been resolved without ongoing material
obligations or costs, and no facts or circumstances exist that would (i)
form the basis of an Environmental Claim against any Loan Party or any of
its Subsidiaries or any of their respective properties, (ii) cause any such
property to be subject to any restrictions on ownership, occupancy, use or
transferability under any Environmental Law, or (iii) give rise to
Environmental Costs and Liabilities, except for such of the
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foregoing which would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
(u) No Loan Party nor any of its Subsidiaries has received (i) any
notice or claim to the effect that it is or may be liable to any Person or
Governmental Authority as a result of or in connection with any Hazardous
Materials or (ii) any letter or request for information under CERCLA or
comparable state laws, and, none of the current or former operations of the
Loan Party or any of its Subsidiaries is the subject of any Federal or
state investigation relating to or in connection with any Hazardous
Materials or Environmental Claims at any location, except for such of the
foregoing which would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
(v) No Loan Party nor any of its Subsidiaries nor any of their
respective facilities or operations are subject to any outstanding written
order or agreement with any Governmental Authority or private party
relating to (i) any actual or potential violation of or liability under
Environmental Laws or (ii) any Environmental Claims, except for such of the
foregoing which would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
(w) (i) The provisions of the Collateral Documents are effective to
create in favor of the Collateral Agent for the benefit of the Secured
Parties a legal, valid and enforceable security interest in all right,
title and interest of each Loan Party and Parent in the Collateral, and the
Collateral Documents, upon the filing of Form UCC-1 financing statements or
the appropriate equivalent (which filings, if this representation and
warranty is made on or after the tenth day after the date of the Initial
Extension of Credit, have been made), creates a fully perfected first
priority lien on, and security interest in, all right, title and interest
in all of the Collateral, subject to no other Liens (other than Permitted
Liens). Each of Parent and each Loan Party to the Collateral Documents has
good and valid title to all Collateral owned by it, free and clear of all
Liens except Permitted Liens.
(ii) The Mortgages create, upon recording thereof, as security for the
obligations to be secured thereby, a valid and enforceable first priority
perfected security interest in and mortgage lien on all of the Mortgaged
Properties in favor of the Collateral Agent for the benefit of the Secured
Parties and subject to no other Liens (other than Permitted Liens). Each
Loan Party has good and marketable title to all fee-owned Mortgaged
Properties owned by such Loan Party free and clear of all leases, occupancy
interests and all Liens except Permitted Liens.
(x) Parent, each Loan Party and each of their respective Subsidiaries
has filed, has caused to be filed or has been included in all tax returns
(Federal, state, local and foreign) required to be filed and has paid all
taxes shown thereon to be due, together with applicable interest and
penalties on or before the due dates thereof.
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(y) Set forth on Schedule 4.01(y) hereto is a complete and accurate
list, as of the date hereof, of each taxable year of Parent, each Loan
Party and each of their respective Subsidiaries and Affiliates for which
Federal income tax returns have been filed and for which the expiration of
the applicable statute of limitations for assessment or collection has not
occurred by reason of extension or otherwise (an "Open Year").
(z) There is no unpaid amount, as of the date hereof, of adjustments
to the Federal income tax liability of Parent, each Loan Party and each of
their respective Subsidiaries proposed by the Internal Revenue Service with
respect to Open Years. No issues have been raised by the Internal Revenue
Service in respect of Open Years that, either individually or in the
aggregate, would reasonably be expected to have a Material Adverse Effect.
There is no unpaid amount, as of the date hereof, of adjustments to the
state, local and foreign tax liability of Parent, each Loan Party and their
respective Subsidiaries and Affiliates proposed by all state, local and
foreign taxing authorities (other than amounts arising from adjustments to
Federal income tax returns, if any that, either individually or in the
aggregate, would reasonably be expected to have a Material Adverse Effect).
No issues have been raised by such taxing authorities that, could have a
Material Adverse Effect.
(aa) Neither Parent nor any Loan Party nor any of their respective
Subsidiaries is an "investment company," or an "affiliated person" of, or
"promoter" or "principal underwriter" for, an "investment company," as such
terms are defined in the Investment Company Act of 1940, as amended.
Neither the making of any Advances, nor the issuance of any Letters of
Credit, nor the application of the proceeds or repayment thereof by the
Borrower, nor the consummation of the other transactions contemplated
hereby, will violate any provision of such Act or any rule, regulation or
order of the Securities and Exchange Commission thereunder.
(bb) The Borrower and its Subsidiaries (taken as a whole) are, and
after the consummation of the Refinancing Transactions and the transactions
contemplated by this Agreement and the other Documents and receipt and
application by the Borrower of the proceeds of the Borrowings in accordance
with the terms of this Agreement will be, Solvent.
(cc) (i) Set forth on Schedule 4.01(cc) hereto is a complete and
accurate list, as of the date hereof, of all Debt of, each of Parent,
each Loan Party and each of their respective Subsidiaries which is to
remain outstanding after giving effect to the Refinancing Transactions
and the other transactions contemplated herein (excluding the Advances
and the Letters of Credit, collectively, the "Existing Debt") in each
case showing the aggregate principal amount thereof and the name of
the respective borrower and Parent or any Loan Party or any of its
Subsidiaries or any other entity which directly or indirectly
guaranteed such debt.
(ii) Neither Parent nor any Loan Party nor any of their
respective Subsidiaries is liable for any Debt or other obligations of
any nature whatsoever
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(whether absolute, accrued, contingent or otherwise and whether or not
due) of any Non-Precise Subsidiaries, but excluding such obligations
in which Parent, the Borrower and its Subsidiaries are jointly and
severally liable as a matter of law.
(iii) The subordination provisions contained in the Senior
Subordinated Notes and the other Senior Subordinated Note Documents
are enforceable against the Borrower and its Subsidiaries, the
respective guarantors thereunder and the holders of the Senior
Subordinated Notes, and all Obligations of Parent and the Loan Parties
under the Loan Documents are the within the definition of "Senior
Debt" included in such subordination provisions.
(iv) At the time of consummation thereof, the issuance of the
Senior Subordinated Notes shall have been consummated, and all actions
taken by Parent, each Loan Party or any of their respective
Subsidiaries pursuant to or in furtherance of the issuance of the
Senior Subordinated Notes shall have been taken, in accordance with
the terms of the Senior Subordinated Note Documents and all applicable
United States and other laws. At the time of consummation thereof, all
consents, approvals of and permits for, and filings and registrations
with, and all other actions in respect of, all Governmental Agencies,
authorities or instrumentalities required in order to make or
consummate the issuance of the Senior Subordinated Notes have been (or
will, within the time frame required, be) obtained, given, filed or
taken and are or will be in full force and effect (or effective
judicial relief with respect thereto has been obtained). Any
applicable waiting periods with respect to the issuance of the Senior
Subordinated Notes shall have expired without any action being taken
by any competent authority which restrains, prevents or imposes
material adverse conditions upon the issuance of the Senior
Subordinated Notes. Additionally, there does not exist any judgment,
order or injunction prohibiting or imposing material adverse
conditions upon the issuance of the Senior Subordinated Notes or the
occurrence of any Borrowing or the performance by Parent, any Loan
Party or any of their respective Subsidiaries of their obligations
under the respective Documents.
(dd) Set forth on Schedule 4.01(dd) hereto is a complete and accurate
list of all real property as of the date hereof owned by any Loan Party or
any of its Subsidiaries, showing the street address, county or other
relevant jurisdiction, state, record owner and book and fair value thereof.
Each Loan Party or such Subsidiary has good, marketable and insurable fee
simple title to such real property, free and clear of all Liens, other than
Permitted Liens.
(ee) Set forth on Schedule 4.01(ee) hereto is a complete and accurate
list of all leases as of the date hereof of real property under which any
Loan Party or any of its Subsidiaries is the lessee, showing the street
address, county or other relevant jurisdiction, state, lessor, lessee,
expiration date and annual rental cost thereof. Each such lease is the
legal, valid and binding obligation of the lessor thereof, enforceable in
accordance with its terms.
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(ff) Set forth on Schedule 4.01(ff) hereto is a complete and accurate
list of all Investments as of the date hereof held by any Loan Party or any
of its Subsidiaries having a fair market value in excess of $50,000,
showing the amount, obligor or issuer and maturity, if any, thereof. Parent
has no Subsidiaries other than those Subsidiaries of Parent listed on
Schedule 4.01(b) hereto. The Borrower has no Subsidiaries other than those
Subsidiaries of the Borrower listed on Schedule 4.01(b) hereto.
(gg) Set forth on Schedule 4.01(gg) hereto is a complete and accurate
list as of the date hereof of all patents, trademarks, trade names, service
marks and copyrights, and all applications therefor and licenses thereof,
of each Loan Party or any of its Subsidiaries, showing as of the date
hereof the jurisdiction in which registered, the registration number, the
date of registration and the expiration date.
(hh) Each Loan Party and each of its Subsidiaries has good, marketable
and valid title to all assets owned by it, including, without limitation,
all property reflected as owned by it in the balance sheets of each Loan
Party referred to in Section 4.01(f) (except as sold or otherwise disposed
of since the date of such balance sheets pursuant to any transactions not
prohibited under this Agreement), free and clear of all Liens, other than
(i) as referred to in the balance sheets or in the notes thereto or (ii)
Permitted Liens.
(ii) Neither Parent nor any Loan Party nor any Subsidiary of any Loan
Party is (A) engaged in any unfair labor practice that would reasonably be
expected to have a Material Adverse Effect or (B) a party to a collective
bargaining agreement as of the date hereof, except as set forth in Schedule
4.01(ii). The Loan Parties and Parent are in compliance in all material
respects with all applicable laws, agreements and contracts relating to
employment, employment practices, wages, hours and terms and conditions of
employment, including, but not limited to, employee compensation matters.
There is (i) no unfair labor practice complaint or unlawful employment
practice charge pending against Parent, any Loan Party or any Subsidiary of
any Loan Party or, to the best of Parent's, the Borrower's and each other
Loan Party's knowledge, threatened against any of them, and no grievance or
arbitration proceeding arising out of or under any collective bargaining
agreement is so pending against Parent, any Loan Party or any Subsidiary of
any Loan Party or, threatened against any of them, (ii) no strike, labor
dispute, slowdown or stoppage pending against Parent, any Loan Party or any
Subsidiary of any Loan Party or, to the best of Parent's, the Borrower's
and each other Loan Party's knowledge, threatened against any of them,
(iii) no union representation proceeding pending with respect to the
employees of Parent, any Loan Party or any Subsidiary of any Loan Party and
(iv) neither Parent nor any Loan Party nor any Subsidiary of any Loan Party
has received notice of the intent of any Federal, state, local or foreign
agency responsible for the enforcement of labor or employment laws to
conduct an investigation with respect to or relating to Parent, any Loan
Party or any Subsidiary of any Loan Party and no such investigation is in
progress except (with respect to any matter specified in clause (i), (ii),
(iii) or (iv) above, either individually or in the aggregate) such as would
not reasonably be expected to have a Material Adverse Effect.
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(jj) Each of Parent, each Loan Party and each of their respective
Subsidiaries is in compliance with all applicable statues, laws,
ordinances, codes, rules, regulations and orders of, and all applicable
restrictions imposed by, all governmental bodies, domestic or foreign, in
respect of the conduct of its business and the ownership of its property
and assets (including applicable statues, regulations, orders and
restrictions relating to environmental standards and controls) to the
extent required as of the date of the Initial Extension of Credit, except
such instances of noncompliance as would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
Neither the business nor the properties of any Loan Party or any of its
Subsidiaries is affected by any fire, explosion, accident, strike, lockout
or other labor dispute, drought, storm, hail, earthquake, embargo, act of
God or of the public enemy or other casualty (whether or not covered by
insurance) that would reasonably be expected to have a Material Adverse
Effect.
(kk) Neither Parent, any Loan Party nor any of its Subsidiaries is in
default under any contract, document or agreement to which it is a party,
and no event, condition or occurrence currently exists, or will result from
the execution, delivery and performance by Parent or such Loan Party of
this Agreement or any of the Documents to which it is a party and the
transactions contemplated hereby and thereby, which, after notice or lapse
of time, or both, will constitute such a default by Parent or such Loan
Party under any contract, document or agreement to which its a party, in
each case which, either individually or in the aggregate, would reasonably
be expected to have a Material Adverse Effect.
(ll) On the date of the Initial Extension of Credit, all
representations and warranties made by Parent and any Loan Party in the
Senior Subordinated Note Documents were true and correct in all material
respects as at the time as of which such representations and warranties
were made (or deemed made). On the date of the Initial Extension of Credit,
all representations and warranties contained in the other Loan Documents
shall be true and correct in all material respects as if made on such date.
ARTICLE V
COVENANTS
SECTION 5.01. Affirmative Covenants. So long as any Advance, any fees or
any other Obligations owing hereunder shall remain unpaid, any Letter of Credit
shall be outstanding or any Lender shall have any Commitment hereunder, each
Loan Party, and, to the extent expressly made applicable, Parent will:
(a) Compliance with Laws, Etc. Comply, and cause each of its
Subsidiaries to comply, and Parent will comply, with all applicable laws,
rules, regulations and orders, such compliance to include, without
limitation, compliance with ERISA and the Racketeer Influenced and Corrupt
Organizations Chapter of the Organized Crime Control
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Act of 1970, except for such instances of non-compliance as would not
reasonably be expected to have a Material Adverse Effect.
(b) Payment of Taxes, Etc. Pay and discharge, and cause each of its
Subsidiaries to pay and discharge, and Parent will pay and discharge,
before the same shall become delinquent, (i) all Taxes, assessments and
governmental charges or levies imposed upon it or upon its property that,
either individually or in the aggregate, would reasonably be expected to
have a Material Adverse Effect and (ii) all lawful claims that, if unpaid,
might by law become a Lien upon its property that, either individually or
in the aggregate, would reasonably be expected to have a Material Adverse
Effect; provided, however, that each Loan Party shall not be required to
pay or discharge any such Tax, assessment, charge or claim that is being
contested in good faith and by proper proceedings and as to which
appropriate reserves are being maintained, unless and until any Lien
resulting therefrom attaches to its property and becomes enforceable
against its other creditors.
(c) Compliance with Environmental Laws. Comply, and cause each of its
Subsidiaries to comply, and will use its best efforts to cause all lessees
and other Persons operating or occupying its owned and leased properties to
comply with all applicable Environmental Laws and Environmental Permits;
obtain and renew, and cause each of its Subsidiaries to obtain and renew,
all Environmental Permits necessary for its operations and properties; and
conduct, and cause each of its Subsidiaries to conduct, any investigation,
study, sampling and testing, and undertake any cleanup, removal, remedial
or other action necessary to remove and clean up all Hazardous Materials
from any of its properties, in accordance with the requirements of all
Environmental Laws, except for such instances of non-compliance as would
not, either individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect.
(d) Maintenance of Properties and Assets; Insurance. Each Loan Party
will, and cause each of its Subsidiaries to, (i) keep all property and
assets necessary in its business in good working order and condition
(ordinary wear and tear excepted), (ii) maintain insurance against loss or
damage of the kinds customarily insured against by corporations similarly
situated and owning properties and engaged in like businesses, with
reputable insurers or with the government of the United States of America
or any agency or instrumentality thereof, in such amounts (giving effect to
self insurance) with such deductibles and by such methods as shall be
customary for corporations similarly situated in the industry, (iii)
maintain public liability insurance with financially sound and reputable
insurance companies in such amounts and coverage as determined in good
faith by senior management of each Loan Party to be appropriate for each
Loan Party and their respective Subsidiaries and (iv) maintain workers'
compensation insurance with financially sound and reputable insurance
companies as statutorily required by each applicable locale.
(e) Preservation of Corporate Existence, Etc. Preserve and maintain,
and cause each of its Subsidiaries to preserve and maintain, and Parent
will preserve and
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maintain its corporate existence, rights (charter and statutory), and its
material permits, licenses, approvals, privileges and franchises except as
otherwise permitted under Section 5.02(c).
(f) Visitation Rights. At any reasonable time and from time to time
upon prior notice and at the Borrower's expense permit the Agent or any of
the Lenders or any agents or representatives thereof, to (i) examine, audit
and make copies of and abstracts from the records and books of account of,
(ii) visit the properties of, any Loan Party or any of its Subsidiaries,
and (iii) discuss the affairs, finances and accounts of any Loan Party or
any of its Subsidiaries with any of their officers or directors and with
their independent certified public accountants; it being understood however
that, unless an Event of Default has occurred or is continuing, each Lender
shall bear its own cost with respect to the exercise of its visitation
rights under this Section 5.01(f) in excess of one such visit per annum.
(g) Preparation of Environmental Reports. At the request of the Agent
at the following times: (i) upon the receipt of a notice under Section
5.03(q) of this Agreement, (ii) upon the acquisition of real property by
any Loan Party or any of its Subsidiaries and (iii) upon the occurrence or
continuance of an Event of Default arising from any environmental matters
connected with any property owned, leased or operated by any Loan Party,
provide to the Lenders within 60 days after such request, at the expense of
the Borrower, a Phase I environmental site assessment report for any of its
properties described in such request, prepared by a nationally recognized
environmental consulting firm (and, if based upon the reasonable
recommendation of such environmental consulting firm, a Phase II
environmental site assessment report) indicating the presence or absence of
Hazardous Materials and the estimated cost of any compliance, removal or
remedial action required under applicable Environmental Law or by any
Governmental Authority in connection with any Hazardous Materials on such
properties. Such Phase I environmental assessment report shall have been
dated within: (A) six months of the date of the event described in (i) or
(iii), above, or, in the case of an acquisition described in (ii) above,
the earlier of the date of a purchase agreement entered into with respect
to such acquisition or the date of any Information Package delivered to the
Agent in connection therewith; or (B) twelve months of the applicable date
described in (A) if supplemented with a review report prepared by a
nationally recognized environmental consulting firm.
(h) Keeping of Books. Keep, and cause each of its Subsidiaries to
keep, proper books of record and account, in which true, full and correct
entries shall be made of all financial dealings and transactions and the
assets and business of each Loan Party and each of its Subsidiaries
sufficient to enable financial statements for each Loan Party to be
prepared in accordance with generally accepted accounting principles.
(i) Compliance with Terms of Leaseholds. Make all payments and
otherwise perform all obligations in respect of all leases of real property
to which any Loan Party or any of its Subsidiaries is a party, keep such
leases in full force and effect and not
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allow such leases to lapse or be terminated or any rights to renew such
leases to be forfeited or cancelled, notify the Agent of any material
default by any party with respect to such leases and cooperate with the
Agent in all respects to cure any such default, except for such instances
of noncompliance with this clause (i) as would not reasonably be expected
to have a Material Adverse Effect.
(j) Performance of Obligations. Perform, and cause each of its
Subsidiaries to perform, and Parent will perform, all of its obligations
under the terms of each mortgage, indenture, security agreement, loan
agreement, credit agreement or any other agreement, contract or instrument
by which it is bound, except such non-performance as would not, either
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. In addition to the requirements of the immediately
preceding sentence, the Borrower will perform all of its obligations under
the terms of the Senior Subordinated Note Documents and the Mentmore
Management Agreement.
(k) Certain Requirements with respect to Permitted Acquisitions.
Unless the Required Lenders otherwise agree in writing with respect to any
Business acquired after the Effective Date, prior to (and within any time
requirements specified below) any acquisition (or concurrently with the
consummation thereof as specified below) by the Borrower or any of its
Wholly-Owned Subsidiaries of a Business, the Borrower shall furnish to the
Agent (with sufficient copies for each of the Lenders, and the Agent will
promptly forward to each of the Lenders):
(i) at least twenty (20) Business Days prior to the acquisition
of the respective Business, the Information Package relating to such
Business;
(ii) concurrently with the acquisition of such Business and to
the extent required by the Agent, fully executed counterparts of a
Mortgage, in form and substance reasonably satisfactory to the Agent,
which Mortgage shall cover the owned property of the Business to be
acquired, together with evidence that counterparts of such Mortgage
have been delivered to the title insurance company insuring the lien
on such property for recording in all places to the extent necessary
or, in the reasonable opinion of the Agent, desirable to effectively
create a valid and enforceable first priority mortgage lien on such
property in favor of the Collateral Agent (or such other trustee as
may be required or desired under local law) for the benefit of the
Secured Parties;
(iii) concurrently with the acquisition of such Business and to
the extent required by the Agent, a Mortgage Policy on the owned real
property associated with such Business issued by title insurers
reasonably satisfactory to the Agent in amounts reasonably
satisfactory to the Agent assuring the Agent that the Mortgage on such
property is a valid and enforceable first priority mortgage lien on
such property, free and clear of all defects and encumbrances except
Permitted Liens and such Mortgage Policy shall otherwise be in form
and substance reasonably satisfactory to the Agent;
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(iv) in the case of any property that is a leasehold,
concurrently with the acquisition of such property and to the extent
required by the Agent, a true and correct copy of the lease for such
property;
(v) concurrently with the acquisition of such Business, an
opinion of local counsel reasonably satisfactory to the Agent, which
shall cover the perfection of the security interests granted pursuant
to such Mortgage and such other matters incident to the transaction
contemplated thereby as the Agent may reasonably request; and
(vi) an officer's certificate of the Borrower certifying the
proposed sources and uses of funds contemplated in connection with the
acquisition of the respective Business.
(l) Transactions with Affiliates. Conduct, and cause each of its
Subsidiaries to conduct, all transactions otherwise permitted under the
Loan Documents with any of their Affiliates on terms that are fair and
reasonable and no less favorable to such Loan Party or such Subsidiary than
it would obtain in a comparable arm's-length transaction with a Person not
an Affiliate; provided that, so long as no Default or Event of Default
exists or would result therefrom, the foregoing restriction shall not apply
to (i) any payments under the Tax Sharing Agreement permitted by Section
5.02(f) hereof and (ii) the payment by the Borrower of management fees to
Mentmore under the Mentmore Management Agreement in an aggregate amount not
to exceed amounts permitted under the Senior Subordinated Notes Indenture;
provided, further, that the payment of any such fees in excess of $300,000
per annum would be permitted under Section 5.04 hereof.
(m) Covenant to Give Security. In addition to the requirements of
Section 5.01(n), upon the request of the Collateral Agent following the
occurrence and during the continuance of an Event of Default, and at the
expense of the Borrower, (i) within 10 days after such request, furnish to
the Collateral Agent a description of the real and personal properties of
each Loan Party and each of its Subsidiaries in detail satisfactory to the
Collateral Agent, (ii) within 15 days after such request, duly execute and
deliver to the Collateral Agent mortgages, pledges, assignments and other
security agreements, as specified by and in form and substance satisfactory
to the Collateral Agent, securing payment of all the Obligations of each
Loan Party under the Loan Documents and constituting Liens on all such
properties, (iii) within 30 days after such request, take whatever action
(including, without limitation, the recording of mortgages, the filing of
UCC financing statements, the giving of notices and the endorsement of
notices on title documents) may be necessary or advisable in the opinion of
the Collateral Agent to vest in the Collateral Agent (or in any
representative of the Agent designated by it) valid and subsisting Liens on
the properties purported to be subject to the security agreements delivered
pursuant to this Section 5.01(m), enforceable against all third parties in
accordance with their terms, (iv) within 60 days after such request,
deliver to the Collateral Agent a signed copy of a favorable opinion,
addressed to the Collateral Agent, of counsel for the Borrower acceptable
to the Collateral Agent as to the matters contained
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in clauses (i), (ii) and (iii) of this Section 5.01(m), as to such security
agreements being legal, valid and binding obligations of each Loan Party
enforceable in accordance with their terms and as to such other matters as
the Collateral Agent may request and (v) at any time and from time to time,
promptly execute and deliver any and all further instruments and documents
and take all such other action as the Collateral Agent may deem desirable
in obtaining the full benefits of, or in preserving the Liens of, such
security agreements.
(n) Additional Loan Parties. Cause any newly organized or acquired
direct or indirect Subsidiary of the Borrower to execute and deliver to the
Agent as promptly as practicable and in any event within 30 days after the
organization or acquisition of such Subsidiary (A) a security agreement
supplement in the form of Exhibit A to the Security Agreement, (B) a
guaranty in form and substance satisfactory to the Agent and (C) such other
documents, agreements, certificates or instruments as the Agent may
reasonably request, in each case in form and substance satisfactory to the
Agent, and to take all such other actions that may be necessary or that the
Agent may deem desirable in order to perfect and protect any pledge,
assignment or security interest granted by such security agreement
(granting a security interest in the receivables, inventory, deposit
accounts, equipment, intellectual property and other assets of such
Subsidiary) of such Subsidiary to the Agent for the benefit of the Lenders
or to enable the Agent to exercise and enforce its rights and remedies
thereunder.
(o) Transfer of Blocked Accounts. The Borrower will notify all of its
account debtors of the transfer of all of the Existing Accounts to Fleet
and will arrange to have all amounts owing by such account debtors to the
Borrower to be paid into the blocked accounts to be maintained by the
Borrower with Fleet as soon as practicable after the Effective Date but in
any event no later than six months from the Effective Date.
SECTION 5.02. Negative Covenants. So long as any Advance, together with
interest, fees and all other Obligations incurred hereunder and under the Notes
shall remain unpaid, any Letter of Credit shall be outstanding or any Lender
shall have any Commitment hereunder, each of Parent (to the extent expressly
made applicable) and each Loan Party covenants and agrees that it will not, at
any time:
(a) Liens, Etc. Create, incur, assume or suffer to exist, or permit
any of its Subsidiaries to create, incur, assume or suffer to exist, or
Parent will not create, incur, assume or suffer to exist, any Lien on or
with respect to any of its properties of any character (including, without
limitation, accounts) whether now owned or hereafter acquired, or sign or
file or suffer to exist under the UCC of any jurisdiction, a financing
statement that names any Loan Party or any of its Subsidiaries as debtor,
or sign or suffer to exist any security agreement authorizing any secured
party thereunder to file such financing statement, or assign any accounts
or other right to receive income, excluding, however, from the operation of
the foregoing restrictions the following:
(i) Liens created under the Loan Documents;
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(ii) Permitted Liens;
(iii) Liens existing on the Effective Date and described on
Schedule 5.02(a)(iii) hereto;
(iv) Liens arising in connection with Capitalized Leases
permitted under Section 5.02(b)(ii); provided that no such Lien shall
extend to or cover any Collateral or assets other than the assets
subject to such Capitalized Leases;
(v) purchase money Liens upon or in real property or equipment
acquired or held by the Borrower in the ordinary course of business to
secure the purchase price of such real property or equipment or to
secure Debt incurred solely for the purpose of financing the
acquisition of any such real property or equipment to be subject to
such Liens, or Liens existing on any such real property or equipment
at the time of acquisition (other than any such Liens created in
contemplation of such acquisition that do not secure the purchase
price), or extensions, renewals or replacements of any of the
foregoing for the same or a lesser amount; provided, however, that no
such Lien shall extend to or cover any property other than the
property or equipment being acquired, and no such extension, renewal
or replacement shall extend to or cover any property not theretofore
subject to the Lien being extended, renewed or replaced; and provided
further that the aggregate principal amount of the Debt secured by
Liens permitted by this clause (v) shall not exceed the amount
permitted under Section 5.02(b)(iii) at any time outstanding and that
any such Debt shall not otherwise be prohibited by the terms of the
Loan Documents;
(vi) the filing of financing statements solely as a precautionary
measure in connection with operating leases;
(vii) the replacement, extension or renewal of any Lien permitted
by clause (iii) of this Section 5.02(a) upon or in the same property
theretofore subject thereto or the replacement, extension or renewal
(without increase in the amount or change in any direct or contingent
obligor) of the Debt secured thereby; and
(viii) Liens of the Borrower permitted under the terms of the
Senior Subordinated Notes Indenture.
(b) Debt. Create, incur or assume, or permit any of its Subsidiaries
to create, incur or assume, or Parent will not create, incur or assume, any
Debt other than:
(i) Debt in respect of Hedge Agreements designed to hedge against
fluctuations in interest rates or foreign exchange rates incurred in
the ordinary course of business and consistent with prudent business
practice;
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(ii) Obligations under Capitalized Leases so long as the
aggregate principal amount of such Obligations shall not exceed the
aggregate principal amount of Capitalized Leases outstanding on the
Effective Date plus $15,000,000 at any time outstanding;
(iii) Debt secured by Liens permitted by Section 5.02(a)(v) and
clause (b) of the definition of "Permitted Liens" and Debt (other than
subordinated Debt incurred pursuant to Section 5.02(b)(vi)) assumed or
acquired in connection with a Permitted Acquisition as permitted under
this Agreement, so long as the aggregate principal amount of all such
Debt shall not exceed $25,000,000 at any time outstanding;
(iv) Debt of the Borrower pursuant to the Senior Subordinated
Notes in an aggregate principal amount not to exceed $75,000,000;
(v) Debt under the Loan Documents;
(vi) unsecured subordinated Debt of the Borrower (the "New
Subordinated Notes") so long as (1) the aggregate outstanding
principal amount thereof does not exceed $25,000,000, (2) at least
twenty (20) Business Days prior to the issuance thereof, the Borrower
shall have delivered to each of the Lenders substantially final drafts
of the documents pursuant to which the New Subordinated Notes are to
be issued and with any changes thereto made after the initial delivery
of such documents to be delivered to the Agent and with any
significant changes thereto made after such initial delivery to be
delivered to each of the Lenders at least five (5) Business Days prior
to the issuance of such New Subordinated Notes, (3) the final maturity
date thereof is at least one year beyond the Final Maturity Date, (4)
there are no required amortization, mandatory redemption or sinking
fund provisions prior to the one-year anniversary of the Final
Maturity Date, (5) all other terms and conditions thereof (excluding
interest rates but including, without limitation, covenants, defaults,
remedies and subordination provisions) are no less favorable to the
Agent than the Senior Subordinated Notes, and the Required Lenders
have not informed the Borrower in writing prior to the end of such
twenty (20) Business Days that the terms of the New Subordinated Notes
are not reasonably acceptable to them, (6) no Default or Event of
Default then exists or would result therefrom, (7) based on
calculations made by the Borrower on a Pro Forma Basis as if the
incurrence of such Debt had occurred on the first day of the
respective Calculation Period relating to such incurrence, no Default
or Event of Default will exist under, or would have existed during the
period beginning on the first day of the respective Calculation Period
and ended on the Determination Date under, the financial covenants
contained in Section 5.04, (8) based on good faith projections
prepared by the Borrower for the period from the date of the Debt to
the date which is one year thereafter, the level of financial
performance measured by the covenants set forth in Section 5.04, shall
be better than or equal to such level as would be
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required to provide that no Default or Event of Default will exist
under the financial covenants contained in Section 5.04, as compliance
with such covenants will be required through the date which is one
year from the date of the incurrence of such Debt, (9) the Borrower
shall have delivered to the Agent an officer's certificate executed by
an authorized financial officer of the Borrower, certifying to the
best of such officer's knowledge, compliance with the requirements of
this Section 5.02(b)(vi) and containing the calculations required by
the preceding clauses (7) and (8), (10) the net cash proceeds thereof
shall be used (A) for the same purposes as Revolving Credit Advances
or (B) to make a voluntary prepayment of Advances and (11) until such
proceeds are so used, the Borrower shall deposit such proceeds with
the Agent pursuant to a cash collateral arrangement reasonably
satisfactory to the Agent whereby such proceeds shall be disbursed to
the Borrower from time to time for the purposes described in clause
(A) or (B) of the immediately preceding clause (10), with such
proceeds to be so disbursed to the Borrower upon (x) written
certification by an authorized officer of the Borrower that no Default
or Event of Default then exists or would result from the use of such
proceeds and as to the intended use of such proceeds and (y)
compliance by the Borrower with the applicable terms of this Agreement
with respect to the use of such proceeds, provided that at any time
while an Event of Default has occurred and is continuing, the Required
Lenders may direct the Agent (in which case the Agent shall, and is
hereby authorized by the Borrower to, follow said directions) to apply
any or all proceeds then on deposit in such cash collateral account to
the repayment of Obligations hereunder;
(vii) indorsement of negotiable instruments for deposit or
collection or similar transactions in the ordinary course of business;
(viii) Existing Debt to the extent the same is listed on Schedule
4.01(cc), and refinancings or renewals of such Existing Debt shall be
permitted so long as (A) such refinancings and renewals shall not be
in excess of the respective amounts set forth on Schedule 4.01(cc) and
(B) any such renewal or extension does not encumber any additional
assets or properties of the Borrower or any of its Subsidiaries;
(ix) intercompany Debt among the Borrower and its Wholly-Owned
Subsidiaries to the extent permitted by Section 5.02(e)(xi);
(x) Debt of the Borrower and its Subsidiaries consisting of
accrued expenses and trade payables incurred in the ordinary course of
business; and
(xi) Debt of the Borrower and its Subsidiaries not otherwise
permitted under this Section 5.02(b) in an aggregate principal amount
not to exceed $2,000,000 at any one time outstanding.
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(c) Mergers, Etc. Merge into or consolidate with any Person or permit
any Person to merge into it, or permit any of its Subsidiaries to do so,
except (A) so long as no Default or Event of Default then exists or would
result therefrom, the Borrower or any Wholly-Owned Subsidiary of the
Borrower may be merged into or consolidated with the Borrower (so long as
the Borrower is the surviving corporation of such merger) or any other
Wholly-Owned Subsidiary of the Borrower and (B) the Borrower and its
Wholly-Owned Subsidiaries shall be permitted to merge with another Person
(so long as such Borrower or Subsidiary is the surviving corporation) and
so long as such merger is used to effect a Permitted Acquisition in
compliance with Section 5.02(d)(iv).
(d) Purchases, Sales, Etc. of Assets. Sell, lease, transfer or
otherwise dispose of, any property or assets, or purchase or otherwise
acquire (in one or a series of related transactions) any part of the
property or assets of any Person, or grant any option or other right to
purchase, lease or otherwise acquire any property or assets (other than
purchases or other acquisitions of Inventory and materials in the ordinary
course of its business) or permit any of its Subsidiaries to do so, except:
(i) (A) sales of Inventory, (B) proceeds from condemnation,
casualty losses and other similar dispositions and (C) sales of
Inventory and other assets which, in the reasonable opinion of the
Borrower, are obsolete, uneconomic or no longer useful in the conduct
of its business, in each case in the ordinary course of its business
consistent with past practices;
(ii) sales of equipment to a customer of the Borrower or any of
its Subsidiaries approved by the Agent pursuant to terms that are (x)
ancillary to an agreement to supply such customer with products of the
Borrower or any such Subsidiary which is entered into after the date
hereof on an arm's-length basis and (y) commercially reasonable in the
context of such supply agreement, so long as (a) the equipment sold is
used in the production of such products for such customer and (b) the
fair market value of all equipment disposed of pursuant to this clause
(ii) after the date hereof does not exceed $1,500,000 in the
aggregate;
(iii) sales of other assets for cash and for fair market value in
an aggregate amount for all Loan Parties not to exceed $2,000,000 in
any Fiscal Year; and
(iv) the Borrower and each of its Wholly-Owned Subsidiaries may
make Permitted Acquisitions so long as (1) as a result of the
respective Permitted Acquisition, such Businesses are wholly-owned by
the Borrower or such Wholly-Owned Subsidiary, (2) such Businesses are
located in the United States or such other location satisfactory to
the Agent, (3) the Collateral Agent is able to obtain a first priority
perfected security interest in and lien upon the assets and properties
of such Businesses so acquired with rights and remedies of the Lenders
comparable to those available in this Agreement (subject only to
Permitted Liens) and the Borrower or such Subsidiary shall have taken
all of the actions specified
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in Section 5.01(k) with respect thereto, (4) at least twenty (20)
Business Days prior to the consummation of any Permitted Acquisition
of any Business, the Borrower shall have delivered to each of the
Lenders the Information Package for the respective Business or
Businesses and the certificate required pursuant to Section 5.01(k),
(5) any Permitted Acquisition of (x) any one Business in which the
total consideration exceeds $20,000,000 or (y) any Businesses in which
the total consideration exceeds $40,000,000, shall be subject to the
prior written consent of the Agent and the Required Lenders and (6)
the Borrower shall have delivered to the Agent an officer's
certificate executed by an authorized financial officer of the
Borrower, certifying (i) that based on calculations made by the
Borrower on a Pro Forma Basis after giving effect to the respective
Permitted Acquisition, no Default or Event of Default will exist
under, or would have existed during the period of four consecutive
fiscal quarters last reported (or required to be reported pursuant to
Section 5.03(c) or (d), as the case may be) prior to the date of the
respective Permitted Acquisition, the financial covenants contained in
Section 5.04, and (ii) to the best of such officer's knowledge,
compliance with the requirements of preceding causes (1) through (5).
Notwithstanding anything contained in this Section 5.02(d) to the contrary,
Capital Expenditures shall be permitted to the extent such Capital
Expenditures are not in violation of Section 5.04(e).
(e) Investments in Other Persons. Make or hold, or permit any of its
Subsidiaries to make or hold, any Investment in any Person other than:
(i) loans and advances by the Borrower to its employees in the
ordinary course of its business as presently conducted in an aggregate
principal amount (determined without regard to any writedowns or
write-offs of such loans or advances) not to exceed $250,000 at any
time outstanding;
(ii) Investments by the Borrower and its Subsidiaries in cash and
Cash Equivalents;
(iii) Investments by the Borrower in Hedge Agreements permitted
under Section 5.02(b)(i);
(iv) Investments existing on the Effective Date and described on
Schedule 4.01(ff) hereto;
(v) Parent, the Borrower and the Borrower's Wholly-Owned
Subsidiaries may hold the stock in their respective Wholly-Owned
Subsidiaries;
(vi) extensions of trade credit in the ordinary course of
business and payable or dischargeable in accordance with customary
terms;
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(vii) the Borrower and its Subsidiaries may acquire and own
investments (including notes or other debt obligations or securities)
received in connection with the bankruptcy or reorganization of their
suppliers and customers and in settlement of delinquent obligations
of, or disputes with, their customers or suppliers in the ordinary
course of business;
(viii) Investments in the Borrower or in a Wholly-Owned
Subsidiary of the Borrower provided such Wholly-Owned Subsidiary has
delivered a Guarantee in form and substance satisfactory to the Agent;
(ix) any Investment by any Loan Party in a Person, if as a result
of such Investment (A) such Person becomes a Wholly-Owned Subsidiary
of such Loan Party and a Subsidiary Guarantor or (B) such Person is
merged, consolidated or amalgamated with or into, or transfers or
conveys substantially all of its assets to, or is liquidated into,
such Loan Party or a Wholly-Owned Subsidiary of such Loan Party
provided such Wholly-Owned Subsidiary has delivered a Guarantee in
form and substance satisfactory to the Agent;
(x) Investments made as a result of the receipt of non-cash
consideration from an asset sale that was made pursuant to and in
compliance with Section 5.02(d) hereof;
(xi) any Subsidiary of the Borrower may make intercompany loans
to the Borrower or to any Wholly-Owned Subsidiary of the Borrower, and
the Borrower may make intercompany loans to its Wholly-Owned
Subsidiaries;
(xii) any acquisition of assets solely in exchange for the
issuance of capital stock, or warrants, options and other rights to
acquire capital stock (but excluding any debt security that is
convertible into, or exchangeable for, capital stock), of any Loan
Party or any of its Subsidiaries; and
(xiii) other Investments in any Person having an aggregate fair
market value (measured on the date each such Investment was made and
without giving effect to subsequent changes in value), when taken
together with all other Investments made pursuant to this clause
(xiii) that are at any time outstanding, not to exceed $1,000,000 in
the aggregate.
(f) Dividends, Etc. Declare or pay any dividends, purchase, redeem,
retire, defease or otherwise acquire for value any of its, or its direct or
indirect parent corporation's, capital stock or any warrants, rights or
options to acquire such capital stock, now or hereafter outstanding, return
any capital to its stockholders as such, make any distribution of assets,
capital stock, warrants, rights, options, obligations or securities to its
stockholders as such or issue or sell any capital stock or any warrants,
rights or options to acquire such capital stock, or permit its Subsidiaries
to do any of the foregoing, except that any Subsidiary of the Borrower may
pay Dividends to the
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Borrower or any Wholly-Owned Subsidiary of the Borrower. Notwithstanding
the foregoing, so long as there shall exist no Default or Event of Default
(both before and after giving effect to the payment thereof), (i) the
Borrower may make any payment required to be made under any Tax Sharing
Agreement, (ii) the Borrower may pay cash Dividends to Sunderland at the
times and in the amounts necessary to enable Sunderland to repurchase
outstanding shares of Sunderland's common stock following the death,
disability or termination of employment of John R. Weeks, Michael M.
Farrell or any other eligible participant (who was a regular, full-time
employee of Borrower at the time of his or her death, disability or
termination of employment) pursuant to and in accordance with the Stock
Option Plan, provided that the aggregate amount of cash Dividends paid by
the Borrower to Sunderland pursuant to this clause (ii) shall not exceed
$1,000,000 in any Fiscal Year of the Borrower and Sunderland immediately
uses such Dividends to make such payments and (iii) the Borrower may pay
cash Dividends to Parent at the times and in the amounts necessary to
enable Parent to make the Warrant Payments so long as (A) Parent
immediately uses such proceeds to make such payments, (B) if, after giving
pro forma effect to any Warrant Payments by the Borrower, the Interest
Coverage Ratio for the Borrower's most recently ended four full fiscal
quarters for which financial statements are available immediately preceding
the date of on which such Warrant Payments are made is greater than 3.25 to
1 and (C) the Borrower is in pro forma compliance with the covenants set
forth in Section 5.04.
(g) Change in Nature of Business. Make, or permit any of its
Subsidiaries to make, any change in the nature of its business as carried
on at the Effective Date. Notwithstanding anything to the contrary
contained in this Agreement, (i) Parent will not engage in any business,
will have no material assets other than its ownership interest in the
Borrower and its Subsidiaries and will have no significant liabilities
other than those in connection with this Agreement and the other Loan
Documents and (ii) each of the Borrower and each Subsidiary Guarantor will
not engage in any business other than the business in which the Borrower
and such Subsidiary Guarantor is engaged on the Effective Date. Parent will
at all times own 100% of the capital stock of the Borrower.
(h) Amendments to Charter and Certain Other Agreements. Amend, modify
or change, or permit any of its Subsidiaries to amend, modify or change, or
Parent will not amend, modify or change, (i) its charter, certificate of
incorporation (including, without limitation, by the filing or modification
of any certificate of designation) or bylaws (or equivalent organizational
documentation) (except as necessary in connection with a transaction
permitted under Section 5.02(c) so long as any such amendment, modification
or change is not materially adverse in any respect to the interests of the
Lenders and is not otherwise prohibited by the terms of this Agreement),
(ii) any agreement entered into by it with respect to its capital stock, or
enter into any new agreement with respect to its capital stock (including,
but not limited to, the Parent Shareholders Agreement), and any provision
of the Mentmore Management Agreement or the Warrant Agreement, other than
amendments, modifications or changes thereto or to such new agreements
which are not materially adverse in any respect to the interests of the
Lenders and are not otherwise prohibited by the terms of this Agreement (in
the
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case of each of clauses (i) and (ii) other than in connection with any
issuance of any capital stock not prohibited by the terms of this
Agreement), (iii) any provision of any Tax Sharing Agreement, or enter into
any new tax sharing agreement (except where the entry into a new tax
sharing agreement would not reasonably be expected to have a Material
Adverse Effect and the terms of which would not be materially adverse in
any respect to the interests of the Lenders, and would not otherwise be
prohibited by the terms of this Agreement), or (iv) any of the covenants
contained in the Senior Subordinated Notes Indenture, the Senior
Subordinated Notes Guaranty or the documentation relating to the New
Subordinated Notes or any of the subordination provisions (including any
definition referred to therein) of the Senior Subordinated Notes Indenture,
the Senior Subordinated Notes Guaranty or the documentation relating to the
New Subordinated Notes or add any additional covenants by the Borrower in
the Senior Subordinated Notes Indenture or by Parent or any guarantor in
the Senior Subordinated Notes Guaranty or otherwise amend or modify any of
the Senior Subordinated Note Documents (including, but not limited to, the
Registration Rights Agreement) or any documentation relating to the New
Subordinated Notes in a manner that the Agent reasonably deems material.
(i) Limitation on Certain Restrictions on Subsidiaries. Create or
otherwise cause or suffer to exist or become effective, or permit any of
its Subsidiaries to create or otherwise cause or suffer to exist or become
effective, directly or indirectly, any encumbrance or restriction on the
ability of any Subsidiary of the Borrower to (a) pay dividends or make any
other distributions on its capital stock or any other interest or
participation in its profits owned by the Borrower or any of its
Subsidiaries, or pay any Debt owed to the Borrower or any Subsidiary of the
Borrower, (b) make loans or advances to the Borrower or any Subsidiary of
the Borrower or (c) transfer any of its properties or assets to the
Borrower, except in each case for such encumbrances or restrictions
existing under or by reason of (i) applicable law, (ii) this Agreement and
the other Documents, (iii) customary provisions restricting subletting or
assignment of any lease governing a leasehold interest of the Borrower or
any Subsidiary of the Borrower, (iv) customary provisions restricting
assignment of any licensing agreement entered into by the Borrower or any
Subsidiary of the Borrower in the ordinary course of business, (v)
customary provisions restricting the transfer of assets subject to Liens
permitted under Section 5.02(a)(v) or (vi), (vi) Existing Debt, (vii) any
instrument governing Debt or capital stock of a Person acquired by such
Loan Party or any of its Subsidiaries as in effect at the time of such
acquisition (except to the extent such Debt was incurred in connection with
or in contemplation of such acquisition), which encumbrance or restriction
is not applicable to any Person, or the properties of any Person, other
than the Person, or property or assets of the Person (including any
Subsidiary of the Person), so acquired, provided that, in the case of Debt,
such Debt was permitted by the terms of this Agreement to be incurred,
(viii) refinancings or renewals of Existing Debt permitted under Section
5.02(b)(viii) hereof, (ix) customary restrictions in Capitalized Leases,
security agreements or mortgages securing Debt of such Loan Party or any of
its Subsidiaries to the extent such restrictions restrict the transfer of
the property subject to such Capitalized Lease, security agreement or
mortgage, (x) customary restrictions with
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respect to an agreement that has been entered into for the sale or
disposition of assets or capital stock held by such Loan Party or any of
its Subsidiaries, (xi) customary restrictions contained in any agreements
or documentation governing Debt permitted under Section 5.02(b)(xi) hereof
or governing the issuance of Preferred Stock permitted under Section
5.02(m) hereof, and (xii) (A) the Warrant Agreement, as amended, and (B)
the Parent Shareholder Agreement, as amended.
(j) Accounting Changes. Make or permit, or permit any of its
Subsidiaries to make or permit, any change in (i) accounting policies or
reporting practices, except as required by generally accepted accounting
principles or (ii) Fiscal Year.
(k) Prepayments, Etc. of Debt. Make (or give any notice in respect of)
any voluntary or optional payment or prepayment on or redemption or
acquisition for value of, or any prepayment or redemption as a result of
any change of control or similar event of, including, in each case without
limitation, by way of depositing with the trustee with respect thereto
money or securities before due for the purpose of paying when due, or make
any payment in violation of any subordination terms of, any Debt the
aggregate principal amount of which is in excess of $100,000 at any one
time outstanding, other than (i) the prepayment of the Advances in
accordance with the terms of this Agreement or (ii) any refinancing or
renewal of Debt as permitted by Sections 5.02(b)(i), (ii), (iii), (vii),
(viii), (ix), (x) and (xi), or permit any of its Subsidiaries to do any of
the foregoing.
(l) Creation of Subsidiaries. Establish, create or acquire, or permit
any of its Subsidiaries to establish, create or acquire, or Parent shall
not establish, create or acquire, any Subsidiaries after the Effective Date
without the prior written consent of the Agent in its sole discretion,
except for the creation by the Borrower of a Wholly-Owned Subsidiary of the
Borrower in connection with a Permitted Acquisition if (i) 100% of the
assets and capital stock of such new Subsidiary are pledged in a first
priority basis to the Collateral Agent pursuant to the Security Agreement
and the certificates representing such stock, together with stock powers
duly executed in blank, are delivered to the Collateral Agent and (ii) such
new Subsidiary executes and delivers to the Agent a counterpart of the
Subsidiary Guaranty and the Security Agreement. In addition, each new
Subsidiary shall execute and deliver all other relevant documentation of
the type described in Article III hereof as such new Subsidiary would have
had to deliver if such new Subsidiary were a Subsidiary and/or a Subsidiary
Guarantor on the Effective Date.
(m) Issuance of Capital Stock. Issue after the date hereof, or permit
any of its Subsidiaries to issue after the date hereof (i) any class of
capital stock with mandatory redemption rights maturing earlier than June
30, 2003 or (ii) options or warrants to purchase or securities convertible
into, capital stock of the type described in clause (i) above, except (w)
options, registration rights or repurchase obligations under the
Shareholders Agreement to the extent permitted under this Agreement, (x)
transfers and replacements of then outstanding shares of capital stock, (y)
stock splits, stock dividends and similar issuances of shares of common
stock which do not decrease the percentage
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ownership of any Loan Party or any of its Subsidiaries in any class of the
capital stock of such Subsidiary and (z) to qualify directors to the extent
required by applicable law.
(n) Negative Pledge. Enter into or suffer to exist, or permit any of
its Subsidiaries to enter into or suffer to exist, any agreement
prohibiting or conditioning the creation or assumption of any Lien upon any
of its property or assets other than (i) in favor of the Secured Parties or
(ii) in connection with (A) the Senior Subordinated Notes or (B) any Debt
secured by purchase money Liens and Capitalized Leases, in each case, to
the extent permitted under Sections 5.02(b)(ii) and (iii), respectively.
Parent will not create, incur, assume or suffer any Lien upon, or with
respect to, the capital stock of the Borrower, and will not sell, transfer,
assign, pledge, hypothecate or otherwise convey any interest in the capital
stock of the Borrower to any Person.
(o) Partnerships. Become a general partner in any general or limited
partnership or joint venture, or permit any of its Subsidiaries to do so.
(p) Other Transactions. Engage, or permit any of its Subsidiaries to
engage, in any transaction involving commodity options or futures contracts
or any similar speculative transactions (including, without limitation,
take-or-pay contracts) except for Hedge Agreements permitted under Section
5.02(b)(i).
(q) Hazardous Material. (i) Operate in violation of or allow any of
its Subsidiaries or any Person occupying any of the property owned or
leased by any Loan Party or any of its Subsidiaries to operate in violation
of, any Environmental Law, or (ii) store, manage or dispose of, or permit
or allow, or permit any of its Subsidiaries to permit or allow, any Person
operating or occupying any of its properties to store, manage or dispose
of, any Hazardous Material at, on, in, under or near any such property in
violation of any Environmental Law, except where such instances of
non-compliance with this Section 5.02(q) would, either individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect.
(r) ERISA. Directly or indirectly:
(i) engage in any transaction, or permit any of its ERISA
Affiliates to engage in any transaction, in connection with which the
Borrower could be subject to either a tax imposed by Section 4975(a)
of the Internal Revenue Code or the corresponding civil penalty
assessed pursuant to Section 502(i) of ERISA, which penalties and
taxes for all such transactions could be expected to have, in the
aggregate, a Material Adverse Effect;
(ii) permit to exist, or permit any of its ERISA Affiliates to
permit to exist, any accumulated funding deficiency, for which a
waiver has not been obtained from the Internal Revenue Service, with
respect to any Pension Plan;
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(iii) permit to exist, or permit any of its ERISA Affiliates to
permit to exist, any failure to make contributions or any unfunded
benefits liability which creates, or with the passage of time and any
failure to make contributions would create, a statutory lien or
requirement to provide security under ERISA or the Internal Revenue
Code in favor of the PBGC or any Pension Plan, Multiemployer Plan or
other entity;
(iv) permit, or permit any of its ERISA Affiliates to permit, the
sum of the amount of unfunded benefit liabilities (determined in
accordance with Statement of Financial Accounting Standards No. 87)
under all Pension Plans (excluding each Pension Plan with an amount of
unfunded benefit liabilities of zero or less) to exceed $500,000;
(v) fail to make any payment, or permit any of its ERISA
Affiliates to fail to make any payment, to any Multiemployer Plan that
it or any if its ERISA Affiliates may be required to make under such
Multiemployer Plan, any agreement relating to such Multiemployer Plan,
or any law pertaining thereto that could reasonably be expected to
have, in the aggregate, a Material Adverse Effect; or
(vi) withdraw, or permit any of its ERISA Affiliates to withdraw,
from any Multiemployer Plan where such withdrawal is likely to result
in any liability which could be expected to have, in the aggregate, a
Material Adverse Effect.
SECTION 5.03. Reporting Requirements. So long as any Advance shall remain
unpaid, any Letter of Credit shall be outstanding or any Lender shall have any
Commitment hereunder, each Loan Party will furnish to the Lenders, to the extent
the following provisions are applicable:
(a) Default Notice. As soon as possible and in any event within two
(2) days after any Loan Party obtains knowledge of the occurrence of each
Default or any event, development or occurrence reasonably likely to have a
Material Adverse Effect continuing on the date of such statement, a
statement of the chief financial officer of the Borrower setting forth
details of such Default, event, development or occurrence and the action
that the Borrower has taken and proposes to take with respect thereto.
(b) Monthly Financials. As soon as available and in any event within
thirty (30) days after the end of each month, a Consolidated and
consolidating balance sheet of the Borrower and its Subsidiaries as of the
end of such month and Consolidated and consolidating statements of income
and Consolidated statements of cash flows of the Borrower and its
Subsidiaries for the period commencing at the end of the previous month and
ending with the end of such month and Consolidated and consolidating
statements of income and Consolidated statements of cash flows of the
Borrower and its Subsidiaries for the period commencing at the end of the
previous Fiscal Year and ending with the end of such month, setting forth
in each case in comparative form the corresponding figures for the
corresponding month of the preceding Fiscal Year, all in reasonable detail
and duly certified by the chief financial officer of the Borrower,
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together with (i) a certificate of said officer stating that no Default has
occurred and is continuing or, if a Default has occurred and is continuing,
a statement as to the nature thereof and the action that the Borrower has
taken and proposes to take with respect thereto, (ii) a schedule in form
satisfactory to the Agent of the computations used by the Borrower in
determining compliance with the covenants contained in Sections 5.04(a)
through (d) and, (iii) in the event of any change from GAAP in the
generally accepted accounting principles used in the preparation of such
financial statements, a statement of reconciliation conforming such
financial statements to GAAP.
(c) Quarterly Financials. As soon as available and in any event within
forty-five (45) days after the end of each of the first three quarters of
each Fiscal Year, Consolidated and consolidating balance sheets of the
Borrower and its Subsidiaries as of the end of such quarter and
Consolidated and consolidating statements of income and a Consolidated
statement of cash flows of the Borrower and its Subsidiaries for the period
commencing at the end of the previous fiscal quarter and ending with the
end of such fiscal quarter and Consolidated and consolidating statements of
income and a Consolidated statement of cash flows of the Borrower and its
Subsidiaries for the period commencing at the end of the previous Fiscal
Year and ending with the end of such quarter, setting forth in each case in
comparative form the corresponding figures for the corresponding period of
the preceding Fiscal Year, all in reasonable detail and duly certified
(subject to year-end audit adjustments) by the chief financial officer of
the Borrower as having been prepared in accordance with generally accepted
accounting principles consistent with those applied in the most recent
annual audit, together with (i) a certificate of said officer stating that
no Default has occurred and is continuing or, if a Default has occurred and
is continuing, a statement as to the nature thereof and the action that the
Borrower has taken and proposes to take with respect thereto, (ii) a
schedule in form satisfactory to the Agent of the computations used by the
Borrower in determining compliance with the covenants contained in Sections
5.04(a) through (d) and (iii) in the event of any change from GAAP in the
generally accepted accounting principles used in the preparation of such
financial statements, a statement of reconciliation conforming such
financial statements to GAAP.
(d) Annual Financials. As soon as available and in any event within
ninety (90) days after the end of each Fiscal Year, a copy of the annual
audit report for such year for Parent and its Subsidiaries, including
therein Consolidated and consolidating balance sheets of Parent and its
Subsidiaries as of the end of such Fiscal Year and Consolidated and
consolidating statements of income and a Consolidated statement of cash
flows of the Borrower and its Subsidiaries for such Fiscal Year, in each
case accompanied by an opinion acceptable to the Required Lenders of Ernst
& Young LLP or other independent public accountants of recognized standing
acceptable to the Required Lenders, together with (i) a certificate of such
accounting firm to the Lenders stating that in the course of the regular
audit of the business of the Borrower and its Subsidiaries, which audit was
conducted by such accounting firm in accordance with generally accepted
auditing standards, such accounting firm has obtained no knowledge that a
Default has occurred and is continuing, or if, in the opinion of such
accounting firm, a
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Default has occurred and is continuing, a statement as to the nature
thereof, (ii) a schedule in form satisfactory to the Agent of the
computations used by such accountants in determining, as of the end of such
Fiscal Year, compliance with the covenants contained in Sections 5.04(a)
through (d), (iii) a certificate of the chief financial officer of the
Borrower stating that no Default has occurred and is continuing or, if a
default has occurred and is continuing, a statement as to the nature
thereof and the action that the Borrower has taken and proposes to take
with respect thereto and (iv) in the event of any change from GAAP in the
generally accepted accounting principles used in the preparation of such
financial statements, a statement of reconciliation conforming such
financial statements to GAAP.
(e) Forecasts. As soon as available and in any event no later than
fifteen (15) days after the end of each Fiscal Year, forecasts prepared by
management of the Borrower and each Subsidiary of the Borrower, in form and
detail satisfactory to the Agent, of balance sheets, income statements and
cash flow statements on a monthly basis for the Fiscal Year following such
Fiscal Year then ended and on an annual basis for each Fiscal Year
thereafter until the Final Maturity Date.
(f) Plan Adoptions, Etc. Promptly after (i) the adoption or formal
commitment to the adoption thereof, a copy of any new Plan or Multiemployer
Plan of any Loan Party or ERISA Affiliate and (ii) any amendment or formal
commitment to any amendment thereof, a copy of such amendment to any Plan
or Multiemployer Plan of any Loan Party or ERISA Affiliate.
(g) ERISA Events and ERISA Reports. (i) Promptly and in any event
within ten (10) days after any Loan Party or any ERISA Affiliate knows or
has reason to know that any ERISA Event has occurred, a statement of the
chief financial officer of the Borrower describing such ERISA Event and the
action, if any, that such Loan Party or such ERISA Affiliate has taken and
proposes to take with respect thereto and (ii) on the date any records,
documents or other information must be furnished to the PBGC with respect
to any Plan pursuant to Section 4010 of ERISA, a copy of such records,
documents and information.
(h) Plan Terminations. Promptly and in any event within two (2) days
after receipt thereof by any Loan Party or any ERISA Affiliate, copies of
each notice from the PBGC stating its intention to terminate any Plan or to
have a trustee appointed to administer any Plan.
(i) Actuarial Reports. Promptly upon receipt thereof by any Loan Party
or any ERISA Affiliate, a copy of the annual actuarial valuation report of
each Plan the funded current liability percentage (as defined in Section
302(d)(8) of ERISA) of which is less than 100%.
(j) Plan Annual Reports. Promptly and in any event within thirty (30)
days after the filing thereof with the Internal Revenue Service, copies of
each Schedule B
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(Actuarial Information) to the annual report (Form 5500 Series) with
respect to each Plan.
(k) Multiemployer Plan Notices. Promptly and in any event within five
(5) days after receipt thereof by any Loan Party or any ERISA Affiliate
from the sponsor of a Multiemployer Plan, copies of each notice concerning
(i) the imposition of Withdrawal Liability by any such Multiemployer Plan,
(ii) the reorganization or termination, within the meaning of Title IV of
ERISA, of any such Multiemployer Plan or (iii) the amount of liability
incurred, or that may be incurred, by such Loan Party or any ERISA
Affiliate in connection with any event described in clause (i) or (ii).
(l) Litigation. Promptly after the commencement thereof, notice of all
actions, suits, investigations, litigation and proceedings before any court
or governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, affecting Parent, any Loan Party or
any of their respective Subsidiaries of the type described in Section
4.01(i).
(m) Securities Reports. Promptly after the sending or filing thereof,
copies of all proxy statements, financial statements and reports that any
Loan Party or any of their respective Subsidiaries sends to its
stockholders, and copies of all regular, periodic and special reports, and
all registration statements, that any Loan Party or any of their respective
Subsidiaries files with the Securities and Exchange Commission or any
Governmental Authority that may be substituted therefor, or with any
national securities exchange.
(n) Creditor Reports. Promptly after the furnishing thereof, copies of
any statement or report furnished to the holders of the Senior Subordinated
Notes or to any other holder of the securities of any Loan Party or of any
of its Subsidiaries pursuant to the terms of any indenture, loan, credit or
similar agreement and not otherwise required to be furnished to the Lenders
pursuant to any other clause of this Section 5.03.
(o) Agreement Notices. Promptly upon receipt thereof, copies of all
notices, requests and other documents received by Parent, any Loan Party or
any of their respective Subsidiaries under or pursuant to any indenture,
loan, credit or similar agreement regarding or related to any breach or
default by any party thereto or any other event that could materially
impair the value of the interests or the rights of Parent, any Loan Party
or any of their respective Subsidiaries or otherwise have a Material
Adverse Effect and copies of any amendment, modification or waiver of any
provision of any indenture, loan, credit or similar agreement as the Agent
may reasonably request.
(p) Tax Certificates. Within thirty days after the Borrower (or the
common parent corporation of the affiliated group (within the meaning of
Section 1504(a)(1) of the Internal Revenue Code) of which the Borrower is a
member) has filed its final Federal income tax return in respect of a
taxable year, a certificate, signed by the President or the chief financial
officer of the Borrower (or the common parent
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corporation), stating that the common parent corporation has filed its
Federal income tax return and paid the full amount of taxes reported
thereon as being due by such affiliated group.
(q) Environmental Conditions. Promptly, and in no event more than
three (3) days, after the assertion or occurrence thereof, notice of any
Environmental Claim against or of any condition or occurrence on any
property of any Loan Party or any of its Subsidiaries that (i) could be
reasonably expected to result in Environmental Costs and Liabilities equal
to or in excess of $500,000 in the aggregate or (ii) causes such property
to be subject to any restrictions on the ownership, occupancy, use or
transferability by any Loan Party of such property under any Environmental
Law. All such notices shall describe in reasonable detail the nature of the
claim, investigation, condition, occurrence or removal or remedial action
and such Loan Party's response thereto. In addition, such Loan Party will
provide the Lenders with copies of all written communications with any
government or governmental agency relating to material capital expenditures
required under Environmental Law or with any Person relating to any
Environmental Claim of which notice is required to be given pursuant to
this Section 5.03(q), and such detailed reports of any such Environmental
Claim as may be requested by the Agent; provided that in any event such
Persons shall deliver to each Lender all notices received by them from any
government or governmental agency under, or pursuant to, CERCLA.
(r) Real Property. As soon as available and in any event within thirty
(30) days after the end of each Fiscal Year, a report supplementing
Schedules 4.01(dd) and 4.01(ee) hereto, including an identification of all
real and leased property disposed of by the Borrower during such Fiscal
Year, a list and description (including the street address, county or other
relevant jurisdiction, state, record owner, book value thereof, and in the
case of leases of property, lessor, lessee, expiration date and annual
rental cost thereof) of all real property acquired or leased during such
Fiscal Year and a description of such other changes in the information
included in such Schedules as may be necessary for such Schedules to be
accurate and complete.
(s) Insurance. As soon as available, and in any event within thirty
(30) days after the end of each Fiscal Year, a report summarizing the
insurance coverage (specifying type, amount and carrier) in effect for each
Loan Party and containing such additional information as any Lender
(through the Agent) may reasonably specify.
(t) Other Information. Such other information respecting the assets,
business, condition (financial or otherwise), operations, performance or
properties of Parent, any Loan Party or any of their respective
Subsidiaries as any Lender (through the Agent) may from time to time
request.
SECTION 5.04. Financial Covenants. So long as any Advance or any other
Obligations hereunder or under any Note shall remain unpaid, any Letter of
Credit shall be outstanding or any Lender shall have any Commitment hereunder,
the Borrower and its Subsidiaries (on a Consolidated basis) will:
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(a) (i) Total Leverage Ratio. Maintain a Total Leverage Ratio for each
period set forth below of not more than the amount set forth below for
such period:
Fiscal Quarter Ending Ratio
--------------------- -----
03/31/1998 5.625:1
06/30/1998 5.25:1
09/30/1998 5.00:1
12/31/1998 4.75:1
03/31/1999 4.60:1
06/30/1999 4.40:1
09/30/1999 4.30:1
12/31/1999 4.05:1
03/31/2000 4.05:1
06/30/2000 4.05:1
09/30/2000 4.05:1
12/31/2000 3.35:1
03/31/2001 3.35:1
06/30/2001 3.35:1
09/30/2001 3.35:1
12/31/2001 3.00:1
and thereafter
(ii) Senior Leverage Ratio. Maintain a Senior Leverage Ratio at
September 30, 1997 and December 31, 1997 of 1.80:1.
(b) Fixed Charge Coverage Ratio. Maintain a Fixed Charge Coverage
Ratio for each Rolling Period set forth below of not less than the amount
set forth below for such Rolling Period:
Rolling Period Ending Ratio
--------------------- -----
09/30/1997 1.05:1
12/31/1997 1.05:1
03/31/1998 1.05:1
06/30/1998 1.05:1
09/30/1998 1.15:1
12/31/1998 1.15:1
03/31/1999 1.25:1
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06/30/1999 1.30:1
09/30/1999 1.35:1
12/31/1999 1.40:1
03/31/2000 1.40:1
06/30/2000 1.40:1
09/30/2000 1.40:1
12/31/2000 1.50:1
and thereafter
(c) Interest Coverage Ratio. Maintain an Interest Coverage Ratio for
each Rolling Period set forth below of not less than the amount set forth
below for such Rolling Period:
Rolling Period Ending Ratio
09/30/1997 1.60:1
12/31/1997 1.60:1
03/31/1998 1.60:1
06/30/1998 1.60:1
09/30/1998 1.60:1
12/31/1998 1.90:1
03/31/1999 1.90:1
06/30/1999 1.90:1
09/30/1999 1.90:1
12/31/1999 2.20:1
03/31/2000 2.20:1
06/30/2000 2.20:1
09/30/2000 2.20:1
12/31/2000 2.60:1
03/31/2001 2.60:1
06/30/2001 2.60:1
09/30/2001 2.60:1
12/31/2001 3.00:1
and thereafter
(d) Minimum Net Worth. Maintain at all times an excess of total assets
over total liabilities (excluding all subordinated Debt of the Borrower and
its Subsidiaries), in each case, of the Borrower and its Subsidiaries (on a
Consolidated basis) not less than an aggregate amount of $54,000,000 on the
date of Initial Extension of Credit, which amount is subject to increase at
a rate of 80% of Consolidated net income of the Borrower and its
Subsidiaries.
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(e) Capital Expenditures. Not make any Capital Expenditures that would
cause the aggregate of all such Capital Expenditures made by the Borrower
in any Fiscal Year set forth below to exceed the amount set forth below for
such Fiscal Year:
Fiscal Year Amount
----------- ------
1997 $5,000,000
1998 $5,000,000
1999 $2,000,000
2000 $2,000,000
2001 $2,000,000
ARTICLE VI
EVENTS OF DEFAULT
SECTION 6.01. Events of Default. If any of the following events ("Events of
Default") shall occur and be continuing:
(a) the Borrower shall fail to pay any principal of, or interest on,
any Advance, or Parent or any Loan Party shall fail to make any other
payment under any Loan Document, in each case when the same becomes due and
payable and such default with respect to a payment of interest shall
continue unremedied for a period of four days; or
(b) any representation or warranty made by Parent or any Loan Party
(or any of its officers) under or in connection with any Loan Document
shall prove to have been incorrect in any material respect when made; or
(c) Parent, the Borrower or any other Loan Party shall fail to perform
or observe any term, covenant or agreement contained in Sections 2.14,
5.01(e), (k), (m) or (n), 5.02 or 5.04; or
(d) Parent or any Loan Party shall fail to perform any other term,
covenant or agreement contained in any Loan Document on its part to be
performed or observed if such failure shall remain unremedied for 15
Business Days after the earlier of the date on which (A) a Responsible
Officer of the Borrower becomes aware of such failure or (B) written notice
thereof shall have been given to the Borrower by the Agent or any Lender;
or
(e) Parent or any Loan Party or any of their respective Subsidiaries
shall fail to pay any principal of, premium or interest on or any other
amount payable in respect of any Debt that is outstanding in a principal or
notional amount of at least $1,500,000 either individually or in the
aggregate (but excluding Debt outstanding hereunder) of
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Parent, such Loan Party or such Subsidiary (as the case may be), when the
same becomes due and payable (whether by scheduled maturity, required
prepayment, acceleration, demand or otherwise), and such failure shall
continue after the applicable grace period, if any, specified in the
agreement or instrument relating to such Debt; or any other event shall
occur or condition shall exist under any agreement or instrument relating
to any such Debt and shall continue after the applicable grace period, if
any, specified in such agreement or instrument, if the effect of such event
or condition is to accelerate, or to permit the acceleration of, the
maturity of such Debt or otherwise to cause, or to permit the holder
thereof (or a trustee with respect thereto) to cause, such Debt to mature;
or any such Debt shall be declared to be due and payable or required to be
prepaid or redeemed (other than by a regularly scheduled required
prepayment or redemption), purchased or defeased, or an offer to prepay,
redeem, purchase or defease such Debt shall be required to be made, in each
case prior to the stated maturity thereof; or
(f) Parent, any Loan Party or any of their respective Subsidiaries
shall generally not pay its debts as such debts become due, or shall admit
in writing its inability to pay its debts generally, or shall make a
general assignment for the benefit of creditors; or any proceeding shall be
instituted by or against Parent, any Loan Party or any of their respective
Subsidiaries seeking to adjudicate it a bankrupt or insolvent, or seeking
liquidation, winding up, reorganization, arrangement, adjustment,
protection, relief, or composition of it or its debts under any law
relating to bankruptcy, insolvency or reorganization or relief of debtors,
or seeking the entry of an order for relief or the appointment of a
receiver, trustee, or other similar official for it or for any substantial
part of its property and, in the case of any such proceeding instituted
against it (but not instituted by it) that is being diligently contested by
it in good faith, either such proceeding shall remain undismissed or
unstayed for a period of 30 days or any of the actions sought in such
proceeding (including, without limitation, the entry of an order for relief
against, or the appointment of a receiver, trustee, custodian or other
similar official for, it or any substantial part of its property) shall
occur; or Parent, any Loan Party or any of their respective Subsidiaries
shall take any corporate action to authorize any of the actions set forth
above in this subsection (f); or
(g) any judgment or order for the payment of money in excess of
$500,000 (to the extent not fully paid or discharged) shall be rendered
against Parent, any Loan Party or any of their respective Subsidiaries and
either (i) enforcement proceedings shall have been commenced by any
creditor upon such judgment or order or (ii) there shall be any period of
30 consecutive days during which a stay of enforcement of such judgment or
order, by reason of a pending appeal or otherwise, shall not be in effect;
or
(h) any non-monetary judgment or order that would reasonably be
expected to have a Material Adverse Effect shall be rendered against
Parent, any Loan Party or any of their respective Subsidiaries, and there
shall be any period of 30 consecutive days during which a stay of
enforcement of such judgment or order, by reason of a pending appeal or
otherwise, shall not be in effect; or
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(i) any provision of any Loan Document after delivery thereof pursuant
to Section 3.01 or 5.01(m) shall for any reason cease to be in full force
and effect and cease to be valid and binding on or enforceable against
Parent or any Loan Party party to it, or any such Loan Party shall so state
in writing; or
(j) any Collateral Document after delivery thereof pursuant to Section
3.01 or 5.01(m) shall for any reason (other than pursuant to the terms
thereof) cease to create a valid and perfected first priority lien on and
security interest in any portion of Collateral purported to be covered
thereby; or
(k) any ERISA Event shall have occurred with respect to a Pension Plan
or a Multiemployer Plan and the sum (determined as of the date of
occurrence of such ERISA Event) of the Insufficiency of such Plan and the
Insufficiency of any and all other Pension Plans and Multiemployer Plans
with respect to which an ERISA Event shall have occurred and then exist (or
the liability of Parent, the Loan Parties and the ERISA Affiliates related
to such ERISA Event) exceeds $500,000; or
(l) Parent, any Loan Party or any ERISA Affiliate shall have been
notified by the sponsor of a Multiemployer Plan that it has incurred
Withdrawal Liability to such Multiemployer Plan in an amount that, when
aggregated with all other amounts required to be paid to Multiemployer
Plans by Parent, the Loan Parties and the ERISA Affiliates as Withdrawal
Liability (determined as of the date of such notification), exceeds
$500,000; or
(m) Parent, any Loan Party or any ERISA Affiliate shall have been
notified by the sponsor of a Multiemployer Plan that such Multiemployer
Plan is in reorganization or is being terminated, within the meaning of
Title IV of ERISA, and as a result of such reorganization or termination
the aggregate annual contributions of Parent, the Loan Parties and the
ERISA Affiliates to all Multiemployer Plans that are then in reorganization
or being terminated have been or will be increased over the amounts
contributed to such Multiemployer Plans for the plan years of such
Multiemployer Plans immediately preceding the plan year in which such
reorganization or termination occurs by an amount exceeding $250,000 in the
aggregate; or
(n) a Change of Control shall occur;
then, and in any such event, the Agent (i) shall at the request, or may with the
consent, of the Required Lenders, by notice to the Borrower, declare the
obligation of each Appropriate Lender to make Advances (other than Letter of
Credit Advances by an Issuing Bank or a Revolving Credit Lender pursuant to
Section 2.03(c)) and of each Issuing Bank to issue Letters of Credit to be
terminated, whereupon the same shall forthwith terminate, and (ii) shall at the
request, or may with the consent, of the Required Lenders, by notice to the
Borrower, declare the Notes, all interest thereon and all other amounts payable
under this Agreement and the other Loan Documents to be forthwith due and
payable, whereupon the Notes, all such interest and all such amounts shall
become and be forthwith due and payable, without presentment, demand, protest
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or further notice of any kind, all of which are hereby expressly waived by the
Borrower; provided, however, that in the event of an actual or deemed entry of
an order for relief with respect to any Loan Party or any of its Subsidiaries
under the Federal Bankruptcy Code, (x) the obligation of each Lender to make
Advances (other than Letter of Credit Advances by the Issuing Bank or a
Revolving Credit Lender pursuant to Section 2.03(c)) and of the Issuing Bank to
issue Letters of Credit shall automatically be terminated and (y) the Notes, all
such interest and all such amounts shall automatically become and be due and
payable, without presentment, demand, protest or any notice of any kind, all of
which are hereby expressly waived by the Borrower.
SECTION 6.02. Actions in Respect of the Letters of Credit upon Default. If
any Event of Default shall have occurred and be continuing, the Agent may,
irrespective of whether it is taking any of the actions described in Section
6.01 or otherwise, make demand upon the Borrower to, and forthwith upon such
demand the Borrower will, pay to the Agent on behalf of the Lenders in same day
funds at the Agent's office designated in such demand, for deposit in the L/C
Cash Collateral Account, an amount equal to the aggregate Available Amount of
all Letters of Credit then outstanding. If at any time the Agent determines that
any funds held in the L/C Cash Collateral Account are subject to any right or
claim of any Person other than the Agent and the Lenders or that the total
amount of such funds is less than the aggregate Available Amount of all Letters
of Credit, the Borrower will, forthwith upon demand by the Agent, pay to the
Agent, as additional funds to be deposited and held in the L/C Cash Collateral
Account, an amount equal to the excess of (a) such aggregate Available Amount
over (b) the total amount of funds, if any, then held in the L/C Cash Collateral
Account that the Agent determines to be free and clear of any such right and
claim.
ARTICLE VII
THE AGENT
SECTION 7.01. Authorization and Action. Each Lender (in its capacities as a
Lender, the Issuing Bank (if applicable) and a potential Hedge Bank) hereby
appoints and authorizes the Agent (for purposes of this Article VII, the term
"Agent" shall include Fleet (and/or any of its affiliates) in its capacity as
Collateral Agent pursuant to any of the Collateral Documents where it at any
time acts as such) to take such action as agent on its behalf and to exercise
such powers and discretion under this Agreement and the other Loan Documents as
are delegated to the Agent by the terms hereof and thereof, together with such
powers and discretion as are reasonably incidental thereto. As to any matters
not expressly provided for by the Loan Documents (including, without limitation,
enforcement or collection of the Notes), the Agent shall not be required to
exercise any discretion or take any action, but shall be required to act or to
refrain from acting (and shall be fully protected in so acting or refraining
from acting) upon the instructions of the Required Lenders, and such
instructions shall be binding upon all Lenders and all holders of Notes;
provided, however, that the Agent shall not be required to take any action that
exposes the Agent to personal liability or that is contrary to this Agreement or
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applicable law. The Agent agrees to give to each Lender prompt notice of each
notice given to it by the Borrower pursuant to the terms of this Agreement.
SECTION 7.02. Agent's Reliance, Etc. Neither the Agent nor any of its
directors, officers, agents or employees shall be liable for any action taken or
omitted to be taken by it or them under or in connection with the Loan
Documents, except for its or their own gross negligence or willful misconduct.
Without limitation of the generality of the foregoing, the Agent: (a) may treat
the payee of any Note as the holder thereof until the Agent receives and accepts
an Assignment and Acceptance entered into by the Lender that is the payee of
such Note, as assignor, and an Eligible Assignee, as assignee, as provided in
Section 8.07; (b) may consult with legal counsel (including counsel for any Loan
Party), independent public accountants and other experts selected by it and
shall not be liable for any action taken or omitted to be taken in good faith by
it in accordance with the advice of such counsel, accountants or experts; (c)
makes no warranty or representation to any Lender and shall not be responsible
to any Lender for any statements, warranties or representations (whether written
or oral) made in or in connection with the Loan Documents; (d) shall not have
any duty to ascertain or to inquire as to the performance or observance of any
of the terms, covenants or conditions of any Loan Document on the part of any
Loan Party or to inspect the property (including the books and records) of any
Loan Party; (e) shall not be responsible to any Lender for the due execution,
legality, validity, enforceability, genuineness, sufficiency or value of, or the
perfection or priority of any Lien or security interest created or purported to
be created under or in connection with, any Loan Document or any other
instrument or document furnished pursuant thereto; and (f) shall incur no
liability under or in respect of any Loan Document by acting upon any notice,
consent, certificate or other instrument or writing (which may be by telegram,
telecopy or telex) believed by it to be genuine and signed or sent by the proper
party or parties.
SECTION 7.03. Fleet and Affiliates. With respect to its Commitments, the
Advances made by it and the Notes issued to it, Fleet (and any successor Agent)
shall have the same rights and powers under the Loan Documents as any other
Lender and may exercise the same as though it were not the Agent; and the term
"Lender" or "Lenders" shall, unless otherwise expressly indicated, include Fleet
in its individual capacity. Fleet and its Affiliates may accept deposits from,
lend money to, act as trustee under indentures of, accept investment banking
engagements from and generally engage in any kind of business with, any Loan
Party, any of its Subsidiaries, any of their respective Affiliates and any
Person who may do business with or own securities of any Loan Party or any such
Subsidiary, all as if Fleet were not the Agent and without any duty to account
therefor to the Lenders.
SECTION 7.04. Lender Credit Decision. Each Lender acknowledges that it has,
independently and without reliance upon the Agent or any other Lender and based
on the financial statements referred to in Section 4.01 and such other documents
and information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. Each Lender also acknowledges that it has
and will, independently and without reliance upon the Agent or any other Lender
and based on such documents and information as it shall deem appropriate at the
time, has made and will continue to make its own credit decisions in entering
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into this Agreement and the other Loan Documents and in taking or not taking
action under this Agreement or under the other Loan Documents.
SECTION 7.05. Indemnification. (a) Each Lender severally agrees to
indemnify the Agent (to the extent not promptly reimbursed by the Borrower) from
and against such Lender's ratable share (determined as provided below) of any
and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever (including, without limitation, fees and expenses of counsel) that
may be imposed on, incurred by, or asserted against the Agent in any way
relating to or arising out of the Loan Documents or any action taken or omitted
by the Agent under the Loan Documents; provided, however, 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. Without limitation of
the foregoing, each Lender agrees to reimburse the Agent promptly upon demand
for its ratable share of any costs and expenses (including, without limitation,
fees and expenses of counsel) payable by the Borrower under Section 8.04, to the
extent that the Agent is not promptly reimbursed for such costs and expenses by
the Borrower. For purposes of this Section 7.05, the Lenders' respective ratable
shares of any amount shall be determined, at any time, according to the sum of
(a) the aggregate principal amount of the Advances outstanding at such time and
owing to the respective Lenders, (b) their respective Pro Rata Shares of the
aggregate Available Amount of all Letters of Credit outstanding at such time and
(c) their respective Unused Revolving Credit Commitments at such time. The
failure of any Lender to reimburse the Agent promptly upon demand for its
ratable share of any amount required to be paid by the Lender to the Agent as
provided herein shall not relieve any other Lender of its obligation hereunder
to reimburse the Agent for its ratable share of such amount, but no Lender shall
be responsible for the failure of any other Lender to reimburse the Agent for
such other Lender's ratable share of such amount. Without prejudice to the
survival of any other agreement of any Lender hereunder, the agreement and
obligations of each Lender contained in this Section 7.05(a) shall survive the
payment in full of principal, interest, fees and all other amounts payable
hereunder and under the other Loan Documents.
(b) Each Lender severally agrees to indemnify the Issuing Bank (to the
extent not promptly reimbursed by the Borrower) from and against such Lender's
ratable share (determined as provided below) of any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever (including, without
limitation, fees and expenses of counsel) that may be imposed on, incurred by,
or asserted against the Issuing Bank in any way relating to or arising out of
the Loan Documents or any action taken or omitted by the Issuing Bank under the
Loan Documents; provided, however, that no Lender shall be liable for any
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting solely from the
Issuing Bank's gross negligence or willful misconduct. Without limitation of the
foregoing, each Lender agrees to reimburse the Issuing Bank promptly upon demand
for its ratable share of any costs and expenses (including, without limitation,
fees and expenses of counsel) payable by the Borrower under Section 8.04, to the
extent that the Issuing Bank is not promptly reimbursed for such costs and
expenses by the Borrower. For purposes of this
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Section 7.05(b), the Lenders' respective ratable shares of any amount shall be
determined, at any time, according to the sum of (a) the aggregate principal
amount of the Advances outstanding at such time and owing to the respective
Lenders, (b) their respective Pro Rata Shares of the aggregate Available Amount
of all Letters of Credit outstanding at such time and (c) their respective
Unused Revolving Credit Commitments at such time. The failure of any Lender to
reimburse the Issuing Bank promptly upon demand for its ratable share of any
amount required to be paid by the Lenders to the Issuing Bank as provided herein
shall not relieve any other Lender of its obligation hereunder to reimburse the
Issuing Bank for its ratable share of such amount, but no Lender shall be
responsible for the failure of any other Lender to reimburse the Issuing Bank
for such other Lender's ratable share of such amount. Without prejudice to the
survival of any other agreement of any Lender hereunder, the agreement and
obligations of each Lender contained in this Section 7.05(b) shall survive the
payment in full of principal, interest, fees and all other amounts payable
hereunder and under the other Loan Documents.
SECTION 7.06. Successor Agents. The Agent may resign at any time by giving
written notice thereof to the Lenders and the Borrower and may be removed at any
time with or without cause by the Required Lenders. Upon any such resignation or
removal, the Required Lenders shall have the right to appoint a successor Agent.
If no successor Agent shall have been so appointed by the Required Lenders, and
shall have accepted such appointment, within 30 days after the retiring Agent's
giving of notice of resignation or the Required Lenders' removal of the retiring
Agent, then the retiring Agent may, on behalf of the Lenders, appoint a
successor Agent, which shall be a commercial bank organized under the laws of
the United States or of any State thereof and having a combined capital and
surplus of at least $500,000,000. Upon the acceptance of any appointment as
Agent hereunder by a successor Agent and upon the execution and filing or
recording of such financing statements, or amendments thereto, and such other
instruments or notices, as may be necessary or desirable, or as the Required
Lenders may request, in order to continue the perfection of the Liens granted or
purported to be granted by the Collateral Documents, such successor Agent shall
succeed to and become vested with all the rights, powers, discretion, privileges
and duties of the retiring Agent, and the retiring Agent shall be discharged
from its duties and obligations under the Loan Documents. After any retiring
Agent's resignation or removal hereunder as Agent, the provisions of this
Article VII shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was Agent under this Agreement.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01. Amendments, Etc. No amendment, forbearance or waiver of any
provision of this Agreement or the Notes or any other Loan Document, nor consent
to any departure by the Borrower therefrom, shall in any event be effective
unless the same shall be in writing and signed (or, in the case of the
Collateral Documents, consented to) by the Required Lenders, and then such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given; provided, however, that (a) no amendment,
waiver or
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consent shall, unless in writing and signed by all of the Lenders, do any of the
following at any time: (i) waive any of the conditions specified in Section 3.01
or 3.02 or, in the case of the Initial Extension of Credit, Section 3.03, (ii)
change the number of Lenders or the percentage of (x) the Commitments, (y) the
aggregate unpaid principal amount of the Advances or (z) the aggregate Available
Amount of outstanding Letters of Credit that, in each case, shall be required
for the Lenders or any of them to take any action hereunder, (iii) release a
substantial part of the Collateral in any transaction or series of related
transactions or permit the creation, incurrence, assumption or existence of any
Lien on all or substantially all of the Collateral in any transaction or series
of related transactions to secure any Obligations other than Obligations owing
to the Secured Parties under the Loan Documents or (iv) amend this Section 8.01
and (b) no amendment, waiver or consent shall, unless in writing and signed by
all of the Lenders if affected by such amendment, waiver or consent, (i)
increase the Commitments of such Lender or subject such Lender to any additional
obligations, (ii) reduce the principal of, or interest on, the Notes held by
such Lender or any fees or other amounts payable hereunder to such Lender, (iii)
postpone any date fixed for any payment of principal of, or interest on, the
Notes held by such Lender or any fees or other amounts payable hereunder to such
Lender or (iv) change the order of application of any prepayment set forth in
Section 2.06 in any manner that materially affects such Lender; provided further
that no amendment, waiver or consent shall, unless in writing and signed by the
Issuing Bank, in addition to the Lenders required above to take such action,
affect the rights or obligations of the Issuing Bank under this Agreement; and
provided further that no amendment, waiver or consent shall, unless in writing
and signed by the Agent in addition to the Lenders required above to take such
action, affect the rights or duties of the Agent under this Agreement.
SECTION 8.02. Notices, Etc. All notices and other communications provided
for hereunder shall be in writing (including telegraphic, telecopy or telex
communication) and mailed, telegraphed, telecopied, telexed or delivered, if to
Parent or the Borrower, at its address at 501 Mosside Boulevard, North
Versailles, PA 15137, Attention: John R. Weeks, telecopier number (412)
823-4110, with copies to (a) Mentmore Holdings Corporation, 1430 Broadway, 13th
Floor, New York, NY 10018-3308, Attention: William L. Remley, telecopier number
(212) 391-1393 and (b) Winston & Strawn, 200 Park Avenue, New York, NY 10166,
Attention: Robert Ericson, telecopier number (212) 294-4700; if to any Lender,
at its Domestic Lending Office specified in the Assignment and Acceptance
pursuant to which it became a Lender; and if to the Agent or the Issuing Bank,
at its address at 56 East 42nd Street, New York, New York 10017, Attention: Paul
Tarantino, telecopier number (212) 346-4806; or, as to each party, at such other
address as shall be designated by such party in a written notice to the other
parties. All such notices and communications shall, when mailed, telegraphed,
telecopied or telexed, be effective when deposited in the mails, delivered to
the telegraph company, transmitted by telecopier or confirmed by telex
answerback, respectively, except that notices and communications to the Agent
pursuant to Article II, III or VII shall not be effective until received by the
Agent. Delivery by telecopier of an executed counterpart of any amendment or
waiver of any provision of this Agreement or the Notes or of any Exhibit hereto
to be executed and delivered hereunder shall be effective as delivery of a
manually executed counterpart thereof.
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SECTION 8.03. No Waiver; Remedies. No failure on the part of any Lender or
the Agent to exercise, and no delay in exercising, any right hereunder or under
any Note shall operate as a waiver thereof; nor shall any single or partial
exercise of any such right preclude any other or further exercise thereof or the
exercise of any other right. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law.
SECTION 8.04. Costs and Expenses. (a) The Borrower agrees to pay on demand
(i) all reasonable costs and expenses of the Agent in connection with the
preparation, execution, delivery, administration, modification and amendment of
the Loan Documents (including, without limitation, (A) all due diligence,
collateral review, syndication, transportation, computer, duplication,
appraisal, audit, insurance, consultant, search, filing and recording fees and
out-of-pocket expenses and (B) the reasonable fees and expenses of counsel for
the Agent with respect thereto, with respect to advising the Agent as to its
rights and responsibilities, or the perfection, protection or preservation of
rights or interests, under the Loan Documents, with respect to negotiations with
any Loan Party or with other creditors of any Loan Party or any of its
Subsidiaries arising out of any Default or any events or circumstances that may
give rise to a Default and with respect to presenting claims in or otherwise
participating in or monitoring any bankruptcy, insolvency or other similar
proceeding involving creditors' rights generally and any proceeding ancillary
thereto) and (ii) all reasonable costs and expenses of the Agent and the Lenders
in connection with the enforcement of the Loan Documents, whether in any action,
suit or litigation, any bankruptcy, insolvency or other similar proceeding
affecting creditors' rights generally (including, without limitation, the
reasonable fees and expenses of counsel for the Agent (which fees and expenses
shall include, without limitation, support staff costs and amounts expended in
litigation preparation and computerized research, telephone and telefax
expenses, mileage, depositions, postage, photocopies, process service, video
tapes and each Lender with respect thereto).
(b) The Borrower agrees to indemnify and hold harmless the Agent, each
Lender and each of their Affiliates and their respective officers, directors,
employees, agents and advisors (each, an "Indemnified Party") from and against
any and all claims, damages, losses, liabilities and expenses (including,
without limitation, fees and expenses of counsel) that may be incurred by or
asserted or awarded against any Indemnified Party, in each case arising out of
or in connection with or by reason of, or in connection with the preparation for
a defense of, any investigation, litigation or proceeding arising out of,
related to or in connection with (i) the Facilities, the actual or proposed use
of the proceeds of the Advances or the Letters of Credit, the Loan Documents or
any of the transactions contemplated hereby or thereby or (ii) the actual or
alleged presence of Hazardous Materials on any property of any Loan Party or any
of its Subsidiaries or any Environmental Claim relating in any way to any Loan
Party or any of its Subsidiaries, in each case whether or not such
investigation, litigation or proceeding is brought by any Loan Party, its
directors, shareholders or creditors or an Indemnified Party or any Indemnified
Party is otherwise a party thereto and whether or not the transactions
contemplated hereby are consummated, except to the extent such claim, damage,
loss, liability or expense is proven to have resulted solely from such
Indemnified Party's gross negligence or willful misconduct. The Borrower also
agrees not to assert any claim against the Agent, any Lender or any of their
Affiliates, or any of their respective officers, directors, employees, attorneys
and
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agents, on any theory of liability, for special, indirect, consequential or
punitive damages arising out of or otherwise relating to the Facilities, the
actual or proposed use of the proceeds of the Advances or the Letters of Credit,
the Loan Documents or any of the transactions contemplated thereby.
(c) If any payment of principal of, or Conversion of, any Eurodollar Rate
Advance is made by the Borrower to or for the account of a Lender other than on
the last day of the Interest Period for such Advance, as a result of a payment
or Conversion pursuant to Section 2.09(b)(i) or 2.10(d), acceleration of the
maturity of the Notes pursuant to Section 6.01 or for any other reason or by an
Eligible Assignee to a Lender other than on the last day of the Interest Period
for such Advance upon an assignment of rights and obligations under this
Agreement pursuant to Section 8.07 as a result of a demand by the Borrower
pursuant to Section 8.07(a), the Borrower shall, upon demand by such Lender
(with a copy of such demand to the Agent), pay to the Agent for the account of
such Lender any amounts required to compensate such Lender for any additional
losses, costs or expenses that it may reasonably incur as a result of such
payment, including, without limitation, any loss (including loss of anticipated
profits), cost or expense incurred by reason of the liquidation or reemployment
of deposits or other funds acquired by any Lender to fund or maintain such
Advance.
(d) If any Loan Party fails to pay when due any costs, expenses or other
amounts payable by it under any Loan Document, including, without limitation,
fees and expenses of counsel and indemnities, such amount may be paid on behalf
of such Loan Party by the Agent or any Lender, in its sole discretion.
(e) Without prejudice to the survival of any other agreement of any Loan
Party hereunder or under any other Loan Document, the agreements and obligations
of the Borrower contained in Sections 2.10 and 2.12 and this Section 8.04 shall
survive the indefeasible and irrevocable payment in full of principal, interest,
fees and all other amounts payable hereunder and under any of the other Loan
Documents.
SECTION 8.05. Right of Set-off. Upon (a) the occurrence and during the
continuance of any Event of Default and (b) the making of the request or the
granting of the consent specified by Section 6.01 to authorize the Agent to
declare the Notes due and payable pursuant to the provisions of Section 6.01,
each Lender and each of its respective Affiliates is hereby authorized at any
time and from time to time, to the fullest extent permitted by law, to set off
and otherwise apply any and all deposits (general or special, time or demand,
provisional or final) at any time held and other indebtedness at any time owing
by such Lender or such Affiliate to or for the credit or the account of the
Borrower against any and all of the Obligations of the Borrower now or hereafter
existing under this Agreement and the Note or Notes (if any) held by such
Lender, irrespective of whether such Lender shall have made any demand under
this Agreement or such Note or Notes and although such obligations may be
unmatured. Each Lender agrees promptly to notify the Borrower after any such
set-off and application; provided, however, that the failure to give such notice
shall not affect the validity of such set-off and application. The rights of
each Lender and its respective Affiliates under this Section are in
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addition to other rights and remedies (including, without limitation, other
rights of set-off) that such Lender and its respective Affiliates may have.
SECTION 8.06. Binding Effect. This Agreement shall become effective on the
date (the "Effective Date") on which each of Parent, the Borrower and the Agent
have signed a counterpart hereof (whether the same or different counterparts)
and Parent and the Borrower shall have delivered the same to the Agent and
thereafter shall be binding upon and inure to the benefit of Parent, the
Borrower and the Agent and their respective successors and assigns, except that
neither Parent nor the Borrower shall have the right to assign their respective
rights hereunder or any interest herein without the prior written consent of the
Lenders.
SECTION 8.07. Assignments and Participations. (a) Each Lender may and, if
demanded by the Borrower (following a demand by such Lender pursuant to Section
2.10 or 2.12) upon at least 5 Business Days' notice to such Lender and the
Agent, shall assign to one or more Eligible Assignees all or a portion of its
rights and obligations under this Agreement (including, without limitation, all
or a portion of its Commitment or Commitments, the Advances owing to it and the
Note or Notes held by it); provided, however, that (i) each such assignment
shall be of a uniform, and not a varying, percentage of all rights and
obligations under and in respect of one or more Facilities, (ii) except in the
case of an assignment to a Person that, immediately prior to such assignment,
was a Lender or an assignment of all of a Lender's rights and obligations under
this Agreement, the amount of the Commitment of the assigning Lender being
assigned pursuant to each such assignment (determined as of the date of the
Assignment and Acceptance with respect to such assignment) shall in no event be
less than the lesser of (x) $5,000,000 in the aggregate and (y) the total amount
of such assigning Lender's Commitment hereunder, (iii) each such assignment
shall be to an Eligible Assignee, (iv) each such assignment made as a result of
a demand by the Borrower pursuant to this Section 8.07(a) shall be arranged by
the Borrower after consultation with the Agent, shall be either an assignment of
all of the rights and obligations of the assigning Lender under this Agreement
or an assignment of a portion of such rights and obligations made concurrently
with another such assignment or other such assignments that together cover all
of the rights and obligations of the assigning Lender under this Agreement and
shall be to one or more Eligible Assignees that are not then claiming the
amounts demanded by the assigning Lender under Section 2.10 or 2.11, (v) no
Lender shall be obligated to make any such assignment as a result of a demand by
the Borrower pursuant to this Section 8.07(a) unless and until such Lender shall
have received one or more payments from either the Borrower or one or more
Eligible Assignees in an aggregate amount at least equal to the aggregate
outstanding principal amount of the Advances owing to such Lender, together with
accrued interest thereon to the date of payment of such principal amount and all
other amounts payable to such Lender under this Agreement, (vi) no such
assignments to any Person that is not a Lender or an Affiliate of a Lender shall
be permitted without the consent of the Agent (until the Agent shall have
notified the Lenders that syndication of the Commitments hereunder has been
completed) and the Borrower (such consent of the Borrower shall not be
unreasonably withheld or delayed) provided that no consent of the Borrower shall
be required upon the occurrence and the continuance of an Event of Default, and
(vii) the parties to each such assignment shall execute and deliver to the
Agent, for its
- 95 -
<PAGE>
acceptance and recording in the Register, an Assignment and Acceptance, together
with any Note or Notes subject to such assignment and a processing and
recordation fee of $3,500.
(b) The Issuing Bank may assign to an Eligible Assignee all of its rights
and obligations under the undrawn portion of its Letter of Credit Commitment at
any time; provided, however, that (i) each such assignment shall be to an
Eligible Assignee and (ii) the parties to each such assignment shall execute and
deliver to the Agent, for its acceptance and recording in the Register, an
Assignment and Acceptance, together with a processing and recordation fee of
$3,500.
(c) Upon such execution, delivery, acceptance and recording, from and after
the effective date specified in such Assignment and Acceptance, (x) the assignee
thereunder shall be a party hereto and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such Assignment and
Acceptance, have the rights and obligations of a Lender or the Issuing Bank, as
the case may be, hereunder and (y) the Lender or the Issuing Bank assignor
thereunder shall, to the extent that rights and obligations hereunder have been
assigned by it pursuant to such Assignment and Acceptance, relinquish its rights
and be released from its obligations under this Agreement (and, in the case of
an Assignment and Acceptance covering all or the remaining portion of an
assigning Lender's or the Issuing Bank's rights and obligations under this
Agreement, such Lender or the Issuing Bank shall cease to be a party hereto).
(d) By executing and delivering an Assignment and Acceptance, the Lender
assignor thereunder and the assignee thereunder confirm to and agree with each
other and the other parties hereto as follows: (i) other than as provided in
such Assignment and Acceptance, such assigning Lender makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement or
any other Loan Document or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of, or the perfection or priority of any lien
or security interest created or purported to be created under or in connection
with, this Agreement or any other Loan Document or any other instrument or
document furnished pursuant hereto or thereto; (ii) such assigning Lender makes
no representation or warranty and assumes no responsibility with respect to the
financial condition of the Borrower or any other Loan Party or the performance
or observance by any Loan Party of any of its obligations under any Loan
Document or any other instrument or document furnished pursuant thereto; (iii)
such assignee confirms that it has received a copy of this Agreement, together
with copies of the financial statements referred to in Section 4.01, and such
other documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into such Assignment and Acceptance; (iv)
such assignee will, independently and without reliance upon the Agent, such
assigning Lender or any other Lender and based on such documents and information
as it shall deem appropriate at the time, make and continue to make its own
credit decisions entering into such Assignment and Acceptance and thereafter in
taking or not taking action under this Agreement; (v) such assignee confirms
that it is an Eligible Assignee; (vi) such assignee appoints and authorizes the
Agent to take such action as agent on its behalf and to exercise such powers and
discretion under the Loan Documents as are delegated to the Agent by the terms
hereof, together with such powers and discretion as are reasonably incidental
thereto; and (vii) such
- 96 -
<PAGE>
assignee agrees that it will perform in accordance with their terms all of the
obligations which by the terms of this Agreement and the other Loan Documents
are required to be performed by it as a Lender or Issuing Bank, as the case may
be.
(e) The Agent shall maintain at its address referred to in Section 8.02 a
copy of each Assignment and Acceptance delivered to and accepted by it and a
register for the recordation of the names and addresses of the Lenders and the
Commitment under each Facility of, and principal amount of the Advances owing
under each Facility to, each Lender from time to time (the "Register"). The
entries in the Register shall be conclusive and binding for all purposes, absent
manifest error, and the Borrower, the Agent and the Lenders may treat each
Person whose name is recorded in the Register as a Lender hereunder for all
purposes of this Agreement. The Register shall be available for inspection by
the Borrower or any Lender at any reasonable time and from time to time upon
reasonable prior notice.
(f) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender and an assignee, together with any Note or Notes subject to
such assignment, the Agent shall, if such Assignment and Acceptance has been
completed and is in substantially the form of Exhibit C hereto, (i) accept such
Assignment and Acceptance, (ii) record the information contained therein in the
Register and (iii) give prompt notice thereof to the Borrower. In the case of
any assignment by a Lender, within five Business Days after its receipt of such
notice, the Borrower, at its own expense, shall execute and deliver to the Agent
in exchange for the surrendered Note or Notes a new Note to the order of such
Eligible Assignee in an amount equal to the Commitment assumed by it under a
Facility pursuant to such Assignment and Acceptance and, if the assigning Lender
has retained a Commitment hereunder under such Facility, a new Note to the order
of the assigning Lender in an amount equal to the Commitment retained by it
hereunder. Such new Note or Notes shall be in an aggregate principal amount
equal to the aggregate principal amount of such surrendered Note or Notes, shall
be dated the effective date of such Assignment and Acceptance and shall
otherwise be in substantially the form of Exhibit A hereto, as the case may be.
(g) Each Lender may sell participations in or to all or a portion of its
rights and obligations under this Agreement (including, without limitation, all
or a portion of its Commitments, the Advances owing to it and the Note or Notes
(if any) held by it) to any Person other than any Loan Party or any Subsidiary
or Affiliate of a Loan Party (subject to the consent of the Borrower, such
consent not to be unreasonably withheld or delayed); provided, however, that (i)
such Lender's obligations under this Agreement (including, without limitation,
its Commitments) shall remain unchanged, (ii) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations,
(iii) such Lender shall remain the holder of any such Note for all purposes of
this Agreement, (iv) the Borrower, the Agent and the other Lenders shall
continue to deal solely and directly with such Lender in connection with such
Lender's rights and obligations under this Agreement, (v) no participant under
any such participation shall have any right to approve any amendment or waiver
of any provision of any Loan Document, or any consent to any departure by any
Loan Party therefrom, except to the extent that such amendment, waiver or
consent would reduce the principal of, or interest on, the Notes or any fees or
other amounts payable hereunder, in each case to the extent subject to such
- 97 -
<PAGE>
participation, postpone any date fixed for any payment of principal of, or
interest on, the Notes or any fees or other amounts payable hereunder, in each
case to the extent subject to such participation, or release all or
substantially all of the Collateral.
(h) Any Lender may, in connection with any assignment or participation or
proposed assignment or participation pursuant to this Section 8.07, disclose to
the assignee or participant or proposed assignee or participant any information
relating to the Borrower furnished to such Lender by or on behalf of the
Borrower; provided, however, that, prior to any such disclosure, the assignee or
participant or proposed assignee or participant shall agree to preserve the
confidentiality of any Confidential Information received by it from such Lender.
(i) Notwithstanding any other provision contained in this Agreement, any
Lender may at any time create a security interest in all or any portion of its
rights under this Agreement (including, without limitation, the Advances owing
to it and the Note or Notes held by it) in favor of any Federal Reserve Bank in
accordance with Regulation A of the Board of Governors of the Federal Reserve
System.
SECTION 8.08. Execution in Counterparts. This Agreement may be executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
Delivery of an executed counterpart of a signature page to this Agreement by
telecopier shall be effective as delivery of a manually executed counterpart of
this Agreement.
SECTION 8.09. No Liability of the Issuing Bank. The Borrower assumes all
risks of the acts or omissions of any beneficiary or transferee of any Letter of
Credit with respect to its use of such Letter of Credit. Neither the Issuing
Bank nor any of its officers or directors shall be liable or responsible for:
(a) the use that may be made of any Letter of Credit or any acts or omissions of
any beneficiary or transferee in connection therewith; (b) the validity,
sufficiency or genuineness of documents, or of any endorsement thereon, even if
such documents should prove to be in any or all respects invalid, insufficient,
fraudulent or forged; (c) payment by the Issuing Bank against presentation of
documents that do not comply with the terms of a Letter of Credit, including
failure of any documents to bear any reference or adequate reference to the
Letter of Credit; or (d) any other circumstances whatsoever in making or failing
to make payment under any Letter of Credit, except that the Borrower shall have
a claim against the Issuing Bank, and the Issuing Bank shall be liable to the
Borrower, to the extent of any direct, but not consequential, damages suffered
by the Borrower that the Borrower proves were caused by (i) the Issuing Bank's
willful misconduct or gross negligence in determining whether documents
presented under any Letter of Credit comply with the terms of the Letter of
Credit or (ii) the Issuing Bank's willful failure to make lawful payment under a
Letter of Credit after the presentation to it of a draft and certificates
strictly complying with the terms and conditions of the Letter of Credit. In
furtherance and not in limitation of the foregoing, the Issuing Bank may accept
documents that appear on their face to be in order, without responsibility for
further investigation, regardless of any notice or information to the contrary.
- 98 -
<PAGE>
SECTION 8.10. Confidentiality. Neither the Agent nor any Lender shall
disclose any Confidential Information to any Person without the consent of the
Borrower, other than (a) to the Agent's or such Lender's Affiliates and their
respective officers, directors, employees, agents and advisors and to actual or
prospective Eligible Assignees and participants, and then only on a confidential
basis, (b) as required by any law, rule or regulation or judicial process and
(c) as requested or required by any state, Federal or foreign authority or
examiner regulating banks or banking.
SECTION 8.11. Jurisdiction, Etc. (a) THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER
SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAW OF THE STATE OF
NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED ENTIRELY IN SUCH
STATE. ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY
OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK
SITTING IN NEW YORK CITY OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF
NEW YORK, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH PARTY TO THIS
AGREEMENT HEREBY IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY,
GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS. EACH
SUCH PARTY HEREBY FURTHER IRREVOCABLY WAIVES ANY CLAIM THAT ANY SUCH COURT LACKS
PERSONAL JURISDICTION OVER SUCH PARTY, AND AGREES NOT TO PLEAD OR CLAIM, IN ANY
LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT BROUGHT IN ANY OF THE AFORESAID COURTS, THAT SUCH COURT LACK PERSONAL
JURISDICTION OVER SUCH PARTY. EACH SUCH PARTY FURTHER IRREVOCABLY CONSENTS TO
THE SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH
ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED
MAIL, POSTAGE PREPAID, TO SUCH PARTY AT ITS ADDRESS SET FORTH IN SECTION 8.02 OR
ON SCHEDULE I, SUCH SERVICE TO BECOME EFFECTIVE 30 DAYS AFTER SUCH MAILING. EACH
SUCH PARTY HEREBY IRREVOCABLY WAIVES ANY OBJECTION TO SUCH SERVICE OF PROCESS
AND FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY ACTION OR
PROCEEDING COMMENCED HEREUNDER OR UNDER ANY LOAN DOCUMENT THAT SERVICE OF
PROCESS WAS IN ANY WAY INVALID OR INEFFECTIVE. NOTHING HEREIN SHALL AFFECT THE
RIGHT OF THE AGENT, THE COLLATERAL AGENT, ANY LENDER OR THE HOLDER OF ANY NOTE
TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL
PROCEEDINGS OR OTHERWISE PROCEED AGAINST ANY PARTY IN ANY OTHER JURISDICTION.
(b) EACH PARTY TO THIS AGREEMENT HERETO HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES TO THE FULLEST EXTENT PERMITTED UNDER APPLICABLE LAW ANY
OBJECTION WHICH IT MAY NOW
- 99 -
<PAGE>
OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY OF THE AFORESAID ACTIONS OR
PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER
LOAN DOCUMENT BROUGHT IN THE COURTS REFERRED TO IN CLAUSE (a) ABOVE AND HEREBY
FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT
THAT ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN
AN INCONVENIENT FORUM.
(c) EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES ALL
RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT
OF OR RELATING TO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY.
- 100 -
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
PRECISE HOLDING CORPORATION
By /s/ William L. Remley
------------------------------------
Name: William L. Remley
Title: Vice President
PRECISE TECHNOLOGY, INC.
By /s/ William L. Remley
------------------------------------
Name: William L. Remley
Title: Vice President
PRECISE TECHNOLOGY OF DELAWARE, INC.
By /s/ William L. Remley
------------------------------------
Name: William L. Remley
Title: Vice President
PRECISE TECHNOLOGY OF ILLINOIS, INC.
By /s/ William L. Remley
Name: William L. Remley
------------------------------------
Title: Vice President
PRECISE TMP, INC.
By /s/ William L. Remley
------------------------------------
Name: William L. Remley
Title: Vice President
[Signature Page to the Credit Agreement]
<PAGE>
PRECISE POLESTAR, INC.
By /s/ William L. Remley
------------------------------------
Name: William L. Remley
Title: Vice President
MASSIE TOOL, MOLD & DIE, INC.
By /s/ William L. Remley
------------------------------------
Name: William L. Remley
Title: Vice President
FLEET NATIONAL BANK, as Agent and as
Issuing Bank
By /s/ John E. Duncan
------------------------------------
Name: John E. Duncan
Title: Managing Director
[Signature Page to the Credit Agreement]
<PAGE>
LENDERS:
FLEET NATIONAL BANK
By /s/ John E. Duncan
------------------------------------
Name: John E. Duncan
Title: Managing Director
CREDITANSTALT-BANKVEREIN
By /s/ Gregory F. Mathis
------------------------------------
Name: Gregory F. Mathis
Title: Vice President
By /s/ Clifford L. Wells
------------------------------------
Name: Clifford L. Wells
Title: Vice President
<PAGE>
SCHEDULE I
COMMITMENTS AND APPLICABLE LENDING OFFICES
<TABLE>
<CAPTION>
Letter of Domestic Eurodollar
Name of Initial Revolving Credit Credit Lending Lending
Lender Commitment Commitment Office Office
<S> <C> <C> <C> <C>
Fleet National Bank $15,000,000 $2,000,000 Credit Matters Credit Matters
-------------- --------------
56 East 42nd Street 56 East 42nd Street
New York, NY 10017 New York, NY 10017
Tel: (212) 907-5191 Tel: (212)907-5191
Fax: (212) 907-5637 Fax: (212) 907-5637
Attn: Jed Duncan Attn: Jed Duncan
One Federal Street One Federal Street
Boston, MA 02110 Boston, MA 02110
Tel: (617) 346-4453 Tel: (617) 346-4453
Fax: (617) 346-4806 Fax: (617) 346-4806
Attn: Eric VanderMel Attn: Eric VanderMel
Operations Operations
---------- ----------
One Federal Street One Federal Street
Boston, MA 02110 Boston, MA 02110
Tel: (617) 346-4401 Tel: (617) 346-4401
Fax: (617) 346-4806 Fax: (617) 346-4806
Attn: Paul Taratino Attn: Paul Taratino
Payments Payments
-------- --------
One Federal Street One Federal Street
Boston, MA 02110 Boston, MA 02110
Tel: (617) 346-4401 Tel: (617) 346-4401
Fax: (617) 346-4806 Fax: (617) 346-4806
Attn: Paul Taratino Attn: Paul Taratino
ABA No.: 011-000-138 ABA No.: 011-000-138
Acct. No.: Acct. No.:
151035103156 151035103156
Reference: Precise Reference: Precise
Technology, Inc. Technology, Inc.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Letter of Domestic Eurodollar
Name of Initial Revolving Credit Credit Lending Lending
Lender Commitment Commitment Office Office
<S> <C> <C> <C> <C>
Creditanstalt $15,000,000 $0 Credit Matters Credit Matters
Corporate Finance, -------------- --------------
Inc. Two Greenwich Plaza Two Greenwich Plaza
Greenwich, CT 06830 Greenwich, CT 06830
Tel: (203) 861-6590 Tel: (203) 861-6590
Attn: Fiona McKone Attn: Fiona McKone
Tel: (203) 861-6581 Tel: (203) 861-6581
Attn: Gregory F. Attn: Gregory F.
Mathis Mathis
Fax: (203) 861-1475 Fax: (203) 861-1475
Operations Operations
---------- ----------
Two Greenwich Plaza Two Greenwich Plaza
Greenwich, CT 06820 Greenwich, CT 06820
Tel: (203) 861-6421 Tel: (203) 861-6421
Attn: Jennifer Attn: Jennifer
Poccia Poccia
Fax: (203) 861-6594 Fax: (203) 861-6594
Payments Payments
-------- --------
Two Greenwich Plaza Two Greenwich Plaza
Greenwich, CT 06830 Greenwich, CT 06830
Tel: (203) 861-6421 Tel: (203) 861-6421
Attn: Kim Newsome Attn: Kim Newsome
Tel: (203) 861-6423 Tel: (203) 861-6423
Attn: Jennifer Attn: Jennifer
Poccia Poccia
ABA No.: 021 000 021 ABA No.: 021 000 021
Acct. No.: 544-7- Acct. No.: 544-7-
73095 73095
Reference: Precise Reference: Precise
Technology, Inc. Technology, Inc.
Total $30,000,000 $2,000,000
</TABLE>
<PAGE>
SCHEDULE II
EXISTING ACCOUNTS
<TABLE>
<CAPTION>
Account # Account Title/Address Bank Purpose ABA #
- --------- --------------------- ---- ------- -----
Name/Address
------------
Corp.
- -----
Accounts
- --------
<S> <C> <C> <C> <C>
0101199488 Precise Technology, Inc. Nationsbank Controlled Disb A/C 061112788
Attn John Pesarsick Charlotte, NC Precise Technology, Inc.
501 Mosside Boulevard
North Versailles, PA 15137
3750637364 Precise Technology, Inc. Nationsbank TMP & Polestar Lockbox A/C, 111000012
Attn John Pesarsick Atlanta, GA Precise EFT Customers &
501 Mosside Boulevard Master Account (Wire Trfs,
North Versailles, PA 15137 Controlled Disb Funding)
029-6411 Precise Technology, Inc. for Mellon Bank (West) Lockbox A/C 043000261
Nationsbank N.A. as Agent Pittsburgh, PA (Opened 4/01/96)
501 Mosside Boulevard
North Versailles, PA 15137
170-4149 Precise Technology, Inc. Mellon Bank, N.A. Pittsburgh Hourly Payroll 043000261
Hourly Payroll 3 Mellon Bank Center
501 Mosside Boulevard Room 153-3502
North Versailles, PA 15137 PGH, PA 15259-0001
032-8022 Precise Technology, Inc. Mellon Bank, N.A. PGH Tool Shop Hourly Payroll 043000261
Tool Shop Hourly Payroll 3 Mellon Bank Center
501 Mosside Boulevard Room 153-3502
North Versailles, PA 15137 PGH, PA 15259-0001
576-80994-2 Precise Technology, Inc. Marine Midland Bank Rochester Hourly Payroll 021001088
455 Rochester Street 68 Genesee Street
Avon, NY 14414-9504 Avon, NY 14414
094-2516 Precise Technology, Inc. Mellon Bank, N.A. Layayette Hourly Payroll 043000261
4750 Swisher Road 3 Mellon Bank Center
West Lafayette, IN 47906 Room 153-3502
PGH, PA 15259-0001
170-4288 Precise Technology, Inc. Mellon Bank, N.A. Salary Payroll-Precise 043000261
Attn John Pesarsick 3 Mellon Bank Center Technology, Inc.
501 Mosside Boulevard Room 153-3502
North Versailles, PA 15137 PGH, PA 15259-0001
140-6512 Precise Technology, Inc. Mellon Bank, N.A. Corporate Petty Cash A/C 043000261
Petty Cash Fund 3 Mellon Bank Center
501 Mosside Boulevard Room 153-3502
North Versailles, PA 15137 PGH, PA 15259-0001
576-81207-2 Precise Technology, Inc. Marine Midland Bank Misc. (P/R Corrections, C.O.D., 021001088
Special Account 68 Genesee Street Etc.)
455 Rochester Street Avon, NY 14414
Avon, NY 14414
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Account # Account Title/Address Bank Purpose ABA #
- --------- --------------------- ---- ------- -----
Name/Address
------------
<S> <C> <C> <C> <C>
3750067358 Precise Technology, Inc. Nationsbank PGH Plant Petty Cash 111000013
501 Mosside Boulevard Charlotte, NC
North Versailles, PA 15137
Attn: Diane Thomas
3750067361 Precise Technology, Inc. Nationsbank Lafayette Petty Cash 111000012
4750 Swisher Road Charlotte, NC
West Lafayette, IN 47906
Attn: Tammy Metzinger
<CAPTION>
Delaware
- --------
Acct:
- -----
<S> <C> <C> <C> <C>
0101199496 Precise Technology of DE Inc. Nationsbank Controlled Disb A/C 061112788
Attn John Pesarsick Charlotte, NC Precise Technology of
501 Mosside Boulevard Delaware, Inc.
North Versailles, PA 15137
145-3010 Precise Technology of DE Inc. Mellon Bank, N.A. Delaware Hourly Payroll 043000261
Salary/Hourly Payroll AC 3 Mellon Bank Center (Hourly & Salary)
501 Mosside Boulevard Room 153-3502
North Versailles, PA 15137 PGH, PA 15259-0001
3750805497 Precise Technology of DE Inc. Nationsbank Delaware Petty Cash 111000012
Petty Cash Account Charlotte, NC
220 Lake Drive
Newark, DE 19702-3319
<CAPTION>
Unity Acct:
- -----------
<S> <C> <C> <C> <C>
0101199504 Precise Technology of DE Inc. Nationsbank Controlled Disb A/C 061112788
Attn John Pesarsick Charlotte, NC Precise Technology of Illinois,
501 Mosside Boulevard Inc.
North Versailles, PA 15137
005-67925 Precise Tech of Illinois, Inc. Mellon Bank, N.A. Unity Payroll 043000261
70 East Rawls Road 3 Mellon Bank Center (Hourly & Salary)
Des Plaines, IL 60018-1327 Room 153-3502 (Opened 7/01/96)
Attn: Judy Chang PGH, PA 15259-0001
3750067345 Precise Tech of Illinois, Inc. Nationsbank Unity Petty Cash 111000012
70 East Rawls Road Charlotte, NC
Des Plaines, IL 60018-1327
Attn: Judy Chang
<CAPTION>
TMP Acct:
- ---------
<S> <C> <C> <C> <C>
3750054824 Precise TMP, Inc. Nationsbank Precise TMP, Inc. 111000012
Attn John Pesarsick Charlotte, NC Salary Payroll
501 Mosside Boulevard
North Versailles, PA 15137
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Account # Account Title/Address Bank Purpose ABA #
- --------- --------------------- ---- ------- -----
Name/Address
------------
<S> <C> <C> <C> <C>
3750054811 Precise TMP, Inc. Nationsbank Hourly Payroll 111000012
2701 75th Street North Charlotte, NC St. Pete Mold
St. Petersburg, FL 33710
3750054808 Precise TMP, Inc. Nationsbank Hourly Payroll 111000012
2701 75th Street North Charlotte, NC St Pete Tool
St. Petersburg, FL 33710
44846330 Precise TMP, Inc. Bay Bank Hourly Payroll 011001742
134 Ferry Street Shrewsberry, MA South Grafton
South Grafton, MA 01560
280154004192 Precise TMP, Inc. Boatmen's 1st Nat'l Hourly Payroll 101000035
1701 Johnson Industrial Drive Bank of Kansas City Excelsior Springs
Excelsior Springs, MO 64021 Excelsior Springs, MO
0101199512 Precise TMP, Inc. Nationsbank Controlled Disb A/C 061112788
Attn John Pesarsick Charlotte, NC Precise TMP, Inc.
501 Mosside Boulevard
North Versailles, PA 15137
3750067374 Precise TMP, Inc. Nationsbank Excelsior Springs 111000012
1701 Johnson Industrial Drive Charlotte, NC Petty Cash
Excelsior Springs, MO 640??
Attn: Al Surabian
3750067390 Precise TMP, Inc. Nationsbank South Grafton 111000012
134 Ferry Street Charlotte, NC Petty Cash
South Grafton, MA 01560
Attn: Linda Kubiak
3750067400 Precise TMP, Inc. Nationsbank St. Pete Molding 111000012
2701 75th Street North Charlotte, NC Petty Cash
St. Petersburg, FL 33710
Attn: Dean Riordan
3750067413 Precise TMP, Inc. Nationsbank Massie Petty Cash 111000012
2701 75th Street North Charlotte, NC
St. Petersburg, FL 33710
Attn: Dean Riordan
<CAPTION>
Polestar Acct:
- --------------
<S> <C> <C> <C> <C>
0101199520 Precise Polestar, Inc. Nationsbank Controlled Disb A/C 061112788
Attn: John Pesarsick Charlotte, NC Precise Polestar, Inc.
501 Mosside Boulevard
North Versailles, PA 15137
005-6741 Precise Polestar, Inc. Mellon Bank, N.A. Polestar Payroll 043000261
3110 Research Drive 3 Mellon Bank Center (Hourly & Salary)
State College, PA 16801 Room 153-3502 (Opened 7/01/96)
Attn: Craig McMullen PGH, PA 15259-0001
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Account # Account Title/Address Bank Purpose ABA #
- --------- --------------------- ---- ------- -----
Name/Address
------------
<S> <C> <C> <C> <C>
3750067332 Precise Polestar, Inc. Nationsbank Polestar Petty Cash 111000012
3110 Research Drive Charlotte, NC
State College, PA 16801
Attn: Craig McMullen
</TABLE>
<PAGE>
SCHEDULE 4.01(a)
SHARE OWNERSHIP
Borrower's Capital Stock owned by Parent:
- -----------------------------------------
o 1,000 shares of Common Stock authorized, no par value, of which 1
share is issued and outstanding.
<PAGE>
SCHEDULE 4.01(b)
SUBSIDIARIES OF PARENT AND BORROWER
<TABLE>
<CAPTION>
Jurisdiction No. Of Shares
------------ -------------
Subsidiary of Incorporation Authorized Outstanding Ownership Rights
- ---------- ---------------- ---------- ----------- --------- ------
Borrower
- --------
<S> <C> <C> <C> <C> <C>
Precise Technology Delaware 3,000 1000 100% by Borrower None
of Delaware, Inc.
Precise Technology Delaware 1,500 100 100% by Borrower None
of Illinois, Inc.
Precise TMP, Inc. Virginia 4,500(1) 1,000(2) 100% by Borrower None
Precise Polestar, Inc. Virginia 100 10 100% by Precise TMP None
Massie Tool, Mold Florida 100 10 100% by Precise TMP None
& Die, Inc.
<CAPTION>
Parent
- ------
<S> <C> <C> <C> <C> <C>
Borrower Delaware 1,500(3) 1(4) 100% by Parent None
</TABLE>
(1) 2,000 shares of Common Stock and 2,500 shares of Serial Preferred Stock
(2) 1,000 shares of Common Stock
(3) 1,000 shares of Common Stock and 500 shares of 9-1/2% Preferred Stock
(4) 1 share of Common Stock
<PAGE>
SCHEDULE 4.01(d)
AUTHORIZATIONS, APPROVALS, ACTIONS, NOTICES AND FILINGS
<TABLE>
<CAPTION>
UCC-1 Financing Statements:
- ---------------------------
Company Filing Locations
- ------- ----------------
<S> <C>
Precise Technology, Inc. Delaware Secretary of State
New Castle County, DE
Florida Secretary of State
Pinellas County, FL
Illinois Secretary of State
Cook County, IL
Massachusetts Secretary of the Commonwealth
Town of Grafton, MA
Missouri Secretary of State
Clay County, MO
Pennsylvania Secretary of the Commonwealth
Allegheny County (PA) Prothonotary
Centre County (PA) Prothonotary
Indiana Secretary of State
Tippecanoe County, IN
New York Secretary of State
New York County, NY
Precise TMP, Inc. Florida Secretary of State
Pinellas County, FL
Massachusetts Secretary of the Commonwealth
Worcester District, MA
Town of Grafton, MA
Northbridge (MA) Town Clerk
Clay County, MO
Clay County Recorder, MO
Virginia State Corporation Commission
Chesterfield County, VA
Missouri Secretary of State
Virginia Secretary of State
City of Richmond, VA
Precise Technology of Delaware, Inc. Delaware Secretary of State
New Castle County, DE
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Company Filing Locations
- ------- ----------------
<S> <C>
Precise Technology of Illinois, Inc. Delaware Secretary of State
New Castle County, DE
Illinois Secretary of State
Cook County, IL
Precise Polestar, Inc. Pennsylvania Secretary of the Commonwealth
Centre County (PA) Prothonotary
Virginia Secretary of State
City of Richmond, VA
Massie Tool, Mold & Die, Inc. Florida Secretary of State
Pinellas County, FL
Precise Holding Corporation Delaware Secretary of State
New Castle County, DE
New York Secretary of State
New York County, NY
<CAPTION>
UCC-3 Termination Statements:
- -----------------------------
Company Filing Locations
- ------- ----------------
<S> <C>
Precise Technology, Inc. Pennsylvania Secretary of the Commonwealth
Allegheny County (PA) Prothonotary
Allegheny County (PA) Recorder
Indiana Secretary of State
Tippecanoe County, IN
New York Secretary of State
Livingston County, NY
Precise TMP, Inc. Pennsylvania Secretary of the Commonwealth
Allegheny County (PA) Prothonotary
Florida Secretary of State
Pinellas County, FL
Massachusetts Secretary of the Commonwealth
Worcester Count (Worcester District), MA
Grafton (MA) Town Clerk
Northbridge (MA) Town Clerk
Missouri Secretary of State
Clay County, MO
Clay County Recorder, MO
North Carolina Secretary of State
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Company Filing Locations
- ------- ----------------
<S> <C>
Precise TMP, Inc. Alamance County, NC
Virginia State Corporation Commission
Chesterfield County, VA
Ohio Secretary of State
Precise Technology of Delaware, Inc. Pennsylvania Secretary of the Commonwealth
Allegheny County (PA) Prothonotary
Delaware Secretary of State
New Castle County, DE
Precise Technology of Illinois, Inc. Pennsylvania Secretary of the Commonwealth
Allegheny County (PA) Prothonotary
Precise Polestar, Inc. Pennsylvania Secretary of the Commonwealth
Allegheny County (PA) Prothonotary
Centre County (PA) Prothonotary
Centre County (PA) Recorder
Massie Tool, Mold & Die, Inc. Pennsylvania Secretary of the Commonwealth
Allegheny County (PA) Prothonotary
Unity Mold Corporation Illinois Secretary of State
Cook County, IL
Pennsylvania Secretary of the Commonwealth
Allegheny County (PA) Prothonotary
Precise Holding Corporation New York Secretary of State
New York County, NY
<CAPTION>
Mortgage Filings:
- -----------------
Company Filing Locations
- ------- ----------------
<S> <C>
Precise TMP, Inc. Clerk of the Circuit Court of Pinellas County, Fla.
Worcester County (Worcester District) Registry of Deeds
Worcester County (Worcester District) Registry District of the
Land Court
Recorder of Deeds of Clay County, MO
Unity Mold Corporation The Office of the Recorder of Deeds of Cook County, IL
Precise Technology, Inc. Livingston County Clerk
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Company Filing Locations
- ------- ----------------
<S> <C>
Precise Technology, Inc. Recorder of Deeds of Allegheny County, Pennsylvania
Recorder of Deeds of Centre County, Pennsylvania
Office of the Recorder for Tippecanoe County, IN
<CAPTION>
Mortgage Releases:
- ------------------
<S> <C>
See Mortgage Filings
</TABLE>
<PAGE>
SCHEDULE 4.01(l)
PLANS AND MULTIEMPLOYER PLANS
1. Precise Technology, Inc. Employee Retirement Benefit Plan
2. Precise Technology, Inc. Pension Plan U.E.
3. Precise TMP/Unity Savings Plan
4. Sunderland Industrial Holdings Corporation 1997 Key Employee
Nonqualified Stock Option Plan
<PAGE>
SCHEDULE 4.01(y)
OPEN YEARS*/
1. Sunderland Industrial Holdings Corp. & Subs., 1995.
2. Sunderland Industrial Holding Corp. & Subs., 1994.
3. Precise Technology, Inc. & Subsidiary, 1993.
4. Precise Technology, Inc. (Formerly Precise Plastic Products, Inc.),
1992.
5. Precise Plastics Products, Inc. c/o Sunderland Industrial Holding
Corp., 1991.
- --------
*/Year references are to calendar years.
<PAGE>
SCHEDULE 4.01(cc)
EXISTING DEBT
<TABLE>
<S> <C>
1. 11 1/8% Senior Subordinated Notes due 2007 $75,000,000
2. Amounts owed under that certain Equipment Lease Agreement dated
March 17, 1993 by and between Heller Financial Leasing, Inc. and
Borrower as amended, pursuant to:
Rental Schedule No. 1 dated March 17, 1993 in the original $57,285*
amount of $180,880.00 in connection with the purchase of one
Nissei FS360S100ASE Injection Molding Machine, Serial No.
S36NO20.
Rental Schedule No. 2 dated March 17, 1993 in the original $70,088*
amount of $180,880.00 in connection with the purchase of one
Nissei FS360S100ASE Injection Molding Machine, Serial No.
S36NO38.
Rental Schedule No. 3 dated March 17, 1993 in the original $67,143*
amount of $173,280.00 in connection with the purchase of one
Nissei FS360S100ASE Injection Molding Machine, Serial No.
S36NO37.
Rental Schedule No. 4 dated March 17, 1993 in the original $67,143*
amount of $173,280.00 in connection with the purchase of one
Nissei FS360S100ASE Injection Molding Machine, Serial No.
S36NO32.
Rental Schedule No. 5 dated March 17, 1993 in the original $53,449*
amount of $137,940.00 in connection with the purchase of one
Nissei FS260S71ASE Injection Molding Machine, Serial No.
S26NO39.
Rental Schedule No. 6 dated March 17, 1993 in the original $53,449*
amount of $137,940.00 in connection with the purchase of one
Nissei FS260S71ASE Injection Molding Machine, Serial No.
S26NO40.
Rental Schedule No. 7 dated March 17, 1993 in the original $48,222*
amount of $124,450.00 in connection with the purchase of one
Nissei FS210S50ASE Injection Molding Machine, Serial No.
S21NO26.
<PAGE>
Rental Schedule No. 8 dated March 17, 1993 in the original $48,222*
amount of $124,450.00 in connection with the purchase of one
Nissei FS210S50ASE Injection Molding Machine, Serial No.
S21NO27.
Rental Schedule No. 9 dated March 17, 1993 in the original $48,222*
amount of $124,450.00 in connection with the purchase of one
Nissei FS210S50ASE Injection Molding Machine, Serial No.
S21NO31.
Rental Schedule No. 10 dated March 17, 1993 in the original $48,222*
amount of $124,450.00 in connection with the purchase of one
Nissei FS210S50ASE Injection Molding Machine, Serial No.
S21NO32.
Rental Schedule No. 11 dated March 17, 1993 in the original $48,222*
amount of $124,450.00 in connection with the purchase of one
Nissei FS210S50ASE Injection Molding Machine, Serial No.
S21NO33.
Rental Schedule No. 12 dated March 17, 1993 in the original $48,222*
amount of $124,450.00 in connection with the purchase of one
Nissei FS210S50ASE Injection Molding Machine, Serial No.
S21NO35.
Rental Schedule No. 13 dated March 17, 1993 in the original $48,222*
amount of $124,450.00 in connection with the purchase of one
Nissei FS210S50ASE Injection Molding Machine, Serial No.
S21NO36.
Rental Schedule No. 14 dated September 15, 1995, in the original $71,897*
amount of $115,884.00 in connection with the purchase of one
Nissei FS160S36ASE Injection Molding Machine, Serial
No.S16Q044.
3. Amounts owed under that certain Master Equipment Lease dated July 17, $40,081*
1995 by and between Iron and Glass Bank and Borrower in the original
amount of $98,885.00 in connection with the purchase of software and
related items.
4. Amounts owed under that certain Lease No. 5293 dated March 11, 1994 by $186,928*
and between P.C. Leasing, a division of Phoenixcor, Inc. and Precise
Technology of Delaware, Inc. in the original amount of $314,427.00 in
connection with the purchase of one Netstal model HP3500/1650 Injection
Molding Machine, Serial No. 9N93309 (Guaranteed by Borrower).
<PAGE>
5. Amounts owed under that certain Lease No. 5163 dated December 17, 1993 $147,459*
by and between P.C. leasing, a division of Phoenixcor, Inc. and Precise
Technology of Delaware, Inc. in the original amount of $265,660.00 in
connection with the purchase of one HP2400/870 Injection Molding Machine,
Serial No. 93303 (Guaranteed by Borrower).
6. Amounts owed under that certain Lease No. 4814 dated March 12, 1994 by $142,398*
and between P.C. Leasing, a division of Phoenixcor, Inc. and Precise
Technology of Delaware, Inc. in the original amount of $265,660.00 in
connection with the purchase of one Netstal model HP2400/870 Injection
Molding Machine, Serial No. 93304 (Guaranteed by Borrower).
7. Amounts owed under that certain Lease No. 5104 dated December 20, 1993 $168,539*
by and between P.C. Leasing, a division of Phoenixcor, Inc. and Precise
Technology of Delaware, Inc. in the original amount of $314,427.00 in
connection with the purchase of one HP3500/1650 Injection Molding
Machine, Serial No. 93306 (Guaranteed by Borrower).
8. Amounts owed under that certain Lease No. 4812 dated March 10, 1994 by $174,530*
and between P.C. Leasing, a division of Phoenixcor, Inc. and Precise
Technology of Delaware, Inc. in the original amount of $314,427.00 in
connection with the purchase of one Netstal model HP3500/1650 Injection
Molding Machine, Serial No. 93307 (Guaranteed by Borrower).
9. Amounts owed under that certain Lease No. 4813 dated December 21, 1993 $180,895*
by and between P.C. Leasing, a division of Phoenixcor, Inc. and Precise
Technology of Delaware, Inc. in the original amount of $314,427.00 in
connection with the purchase of one HP3500/1650 Injection Molding
Machine, Serial No. 93308 (Guaranteed by Borrower).
10. Amounts owed under that certain Lease No. 5911 dated December 19, 1995 $183,489*
by and between P.C. Leasing, a division of Phoenixcor, Inc. and Precise
Technology of Delaware, Inc. in the original amount of $276,888.20 in
connection with the purchase of one Netstal HP4000/1650 Sycap Injection
Molding Machine, Serial No. 9N95193 (Guaranteed by Borrower).
11. Amounts owed under that certain lease dated December 22, 1993 by and $81,293*
between P.C. Leasing, a division of Phoenixcor, Inc. And Borrower in the
original amount of $271,105.00 in connection with the purchase of various
equipment including two special hot stamping systems.
12. Amounts owed under that certain Lease Agreement dated January 6, 1995 by $3,032*
and between Vision Financial Group, Inc. and Borrower in the original
amount of $16,250.00 in connection with the purchase of one Hyster
Spacesaver model S50XL2 Fork Lift Truck, Serial No. C187V10385R.
<PAGE>
13. Amounts owed under that certain Loan and Security Agreement dated as of $112,604*
December 1, 1994 by and among The Delaware Economic Development Authority,
Precise Technology of Delaware, Inc. And Borrower (as guarantor) in the
original amount of $200,000.00 in connection with the purchase of certain
machinery and equipment
14. Amounts owed under that certain Master Equipment Lease dated January 6, $21,000*
1996 by and between Tredegar and Iron and Glass Bank in the original
amount of $30,000.00 in connection with the purchase of software.
15. Amounts owed under that certain Promissory Note by Borrower to Concord $186,296*
Commercial, Division of Marine Midland Business Loans, Inc. ("Concord")
dated March 26, 1996 and that certain Security Agreement by and between
Borrower and Concord dated March 26, 1996 in the original amount of
$272,040.00 in connection with the purchase of one Charmilles Roboform
Model 2000 EDM Machining Center, Serial No. 125129 and one Roboform Model
C200 EDM Machining Center, Serial No. 26155.
16. Amounts owed under that certain Equipment Lease No. 2464 by and between $1,144,669*
Borrower and Toshiba Machine Company, America dated as of March 22,
1996 in the original amount of $1,460,060 in connection with the purchase of
eight Toshiba Plastic Injection Molding Machines.
17. Amounts owed under that certain Equipment Lease No. 2470 by and between $129,627*
Borrower and Toshiba Machine Company, America dated as of May 29,
1996 in the original amount or $145,035 in connection with the purchase of a
Toshiba Plastic Injection Molding Machine, Serial #625102.
18. Amounts owed under that certain Equipment Lease No. 2503 by and between $134,847*
Borrower and Toshiba Machine Company, America dated as of July 30, 1996
in the original amount or $144,810 in connection with the purchase of a
Toshiba Plastic Injection Molding Machine, Serial # 625303.
19. Amounts owed under that certain Equipment Lease No. 2518 by and between $134,989*
Borrower and Toshiba Machine Company, America dated as of July 30, 1996
in the original amount or $144,810 in connection with the purchase of a
Toshiba Plastic Injection Molding Machine, Serial # 625202.
20. Amounts owed under that certain Equipment Lease No. 2537 by and between $130,492*
Borrower and Toshiba Machine Company, America dated as of September
30, 996 in the original amount or $144,810 in connection with the purchase
of a Toshiba Plastic Injection Molding Machine, Serial # 627404.
21. Amounts owed under that certain Equipment Lease No. 2552 by and between $132,798*
Borrower and Toshiba Machine Company, America dated as of October 31,
1996 in the original amount of $144,810 in connection with the purchase of a
Toshiba Plastic Injection Molding Machine, Serial # 627604.
<PAGE>
22. Amounts owed under that certain Equipment Lease No. 2553 by and between $132,798*
Borrower and Toshiba Machine Company, America dated as of October 31,
1996 in the original amount of $144,810 in connection with the purchase of a
Toshiba Plastic Injection Molding Machine, Serial # 628204.
23. Amounts owed under that certain Equipment Lease No. 2561 by and between $131,826*
Borrower and Toshiba Machine Company, America dated as of December
31, 1996 in the original amount of $144,810 in connection with the purchase
of a Toshiba Plastic Injection Molding Machine, Serial # 636610.
24. Amounts owed under that certain Equipment Lease No. 2570 by and between $125,675*
Borrower and Toshiba Machine Company, America dated as of January 31,
1997 in the original amount of $144,810 in connection with the purchase of a
Toshiba Plastic Injection Molding Machine, Serial # 628304.
25. Amounts owed under that certain Equipment Lease No. 2574 by and between $188,842*
Borrower and Toshiba Machine Company, America dated as of January 31,
1997 in the original amount of $217,575 in connection with the purchase of a
Toshiba Plastic Injection Molding Machine, Serial # 521309.
26. Amounts owed under that certain Equipment Lease No. 2589 by and between $133,042*
Borrower and Toshiba Machine Company, America dated as of March 31,
1997 in the original amount of $144,810 in connection with the purchase of a
Toshiba Plastic Injection Molding Machine, Serial # 641212.
27. Amounts owed under that certain Promissory Note (A/C #28470-3) by and $171,942*
between Precise TMP, Inc. and Concord Commercial Corp., dated as of May
2, 1996 in the original amount of $215,000 in connection with the purchase
of a Charmilles Roboform EDM Machine, Serial #600452.
28. Amounts owed under that Certain Lease Agreement #28470-4 by and $225,710*
between Precise TMP, Inc. and Concord Commercial Corp., dated as of
August 29, 1996 in the original amount of $269,300 in connection with the
purchase of a Sumitomo Plastic Injection Molding Machine, Serial #
MOEN0012.
29. Amounts owed under that certain Lease Agreement #28470-7 by and between $182,607*
Precise TMP, Inc. and Concord Commercial Corp., dated as of November 15,
1996 in the original amount of $204,550 in connection with the purchase of a
Sumitomo Plastic Injection Molding Machine, Serial #MOEQ0080.
30. Amounts owed under that certain Lease Agreement #28470-8 by and between $271,015*
Borrower and Concord Commercial Corp., dated as of December 2, 1996 in
the original amount of $354,019 in connection with the purchase of various
equipment including a Special Robotics System for Tobacco, a Fork Truck,
an Optical Measuring Machine and Pro-Engineer Software and a
Workstation.
<PAGE>
31. Amounts owed under that certain Lease Agreement #28470-10 by and $60,357*
between Borrower and Concord Commercial Corp., dated as of February 11,
1997 in the original amount of $68,268 in connection with the purchase of a
Okamoto Automatic Surface Grinder, Serial #75003.
32. Amounts owed under that certain Lease Agreement #28470-11 by and $151,623*
between Borrower and Concord Commercial Corp., dated as of March 18,
1997 in the original amount of $164,300 in connection with the purchase of a
Bostomatic CNC Milling and Drilling Machine, Serial #32-311.
33. Amounts owed under that certain Lease Agreement #28470-12 by and $123,886*
between Precise Technology of Illinois, Inc. and Concord Commercial Corp.,
dated as of April 9, 1997 in the original amount of $128,798 in connection
with the purchase of a Charmilles Roboform EDM Machine, Serial #DD3008.
34. Amounts owed under that certain Lease Agreement #28470-13 by and $223,410*
between Precise TMP, Inc. and Concord Commercial Corp., dated as of May
28, 1997 in the original amount of $223,410 in connection with the purchase
of a Okamoto Surface Grinding Machine, Serial #S8121.
35. Amounts owed under that certain Lease Agreement #16113-12470 by and $382,965*
between Precise Polestar, Inc. and U.S. Bancorp Leasing & Financial, dated
as of June 3, 1996 in the original amount of $470,000 in connection with
the purchase of (3) Sumitomo Plastic Injection Molding Machines.
</TABLE>
*Outstanding as of May 31, 1997
<PAGE>
SCHEDULE 4.01(dd)
OWNED REAL PROPERTY
<TABLE>
<CAPTION>
Owned Properties Book Value Fair Market Value
---------------- ---------- -----------------
<S> <C> <C> <C>
1. 2701 75th Street North $2,320,113 $2,200,000(1)
2600 72nd Street North
St. Petersburg, Florida 33710
Parcel 3A and 3B,
CTIC Policy FL5097 107 20701
County: Pinellas County
Owner: Precise TMP, Inc.
2. 2401 72nd Street North $1,245,833 $1,917,100(2)
St. Petersburg, Florida 33710
Parcel 1, CTIC Policy FL5097 107 20701
County: Pinellas County
Owner: Precise TMP, Inc.
3. Anvil Street Parking Lot Amount included in $80,000(2)
St. Petersburg, Florida 33710 book value of No. 2
Parcel 2, CTIC Policy FL5097 107 20701
County: Pinellas County
Owner: Precise TMP, Inc.
4. 132-134 Ferry Street $869,667 $1,200,000(1)
South Grafton, Massachusetts 01560
CTIC Policy 9751-00428
County: Worcester District
Owner: Precise TMP, Inc.
5. 1701 Johnson Industrial Drive $1,207,708 $843,100(2)
Excelsior Springs, Missouri 64021
CTIC Policy 26-908-107-9720391
County: Clay County
Owner: Precise TMP, Inc.
6. 501 Mosside Boulevard $1,695,629 $2,000,000(3)
North Versailles, Pennsylvania
15137-2553
CTIC Policy 97-418
County: Allegheny County
Owner: Borrower
<PAGE>
<CAPTION>
Owned Properties Book Value Fair Market Value
---------------- ---------- -----------------
<S> <C> <C> <C>
7. 4750 Swisher Road $1,337,425 $940,000(3)
West Lafayette, Indiana 47906-9766
CTIC Commitment 97-1273
County: Tippecanoe County
Owner: Borrower
8. 70 East Rawls Road $679,478 $600,000(4)
Des Plaines, Illinois 60018
CTIC Policy 1401 007661779 D1
County: Cook County
Owner: Precise Technology of Illinois, Inc.
</TABLE>
- -----------------------------
(1) Based on appraisals received in 1996.
(2) Based on tax values of each property.
(3) Based on appraisals received in 1992.
(4) Based on appraisals received in 1995.
<PAGE>
SCHEDULE 4.01(ee)
LEASED REAL PROPERTY
<TABLE>
<CAPTION>
Leased Properties Expiration Date Annual Rental
----------------- --------------- -------------
<S> <C> <C> <C>
1. One Main Street June 30, 1998 $144,000
Northbridge, Massachusetts 01588
County: Worcester District
Lessee: Precise TMP, Inc.
Lessor: Sidney Covich, Trustee of
Whitinsville Redevelopment Trust
2. Industrial Drive June 2001; $183,750
Holden, Massachusetts one 2-year renewal option
County: Worcester County
Lessee: Precise TMP, Inc.
Lessor: Michael A. Gaffin, Trustee of
Jarrell Realty Trust
3. 3110 Research Drive July 30, 2003; $217,000
State College, Pennsylvania 16801 two 5-year renewal options
County: Centre County
Lessee: Precise Polestar, Inc.
Lessor: Partners Plus
4. Moshannon Valley Enterprise Center April 1, 2002 $68,351
North Philipsburg, Pennsylvania 16866 option for additional
County: Centre County 5 year term at
Lessee: Precise Polestar, Inc. negotiated rent
Lessor: Moshannon Valley Economic
Development Partnership, Inc.
5. 220 Lake Drive, Suite 300 December 31, 1999 $192,264
Newark, Delaware 19702-3319 2 five year
County: New Castle County renewal options
Lessee: Precise Technology of
Delaware, Inc.
Lessor: Pencader Hundred-OP&F, Inc.
<PAGE>
<CAPTION>
Leased Properties Expiration Date Annual Rental
----------------- --------------- -------------
<S> <C> <C> <C>
6. 50/60 East Rawls Road July 31, 1997; currently $79,416.96 plus
Des Plaines, Illinois 60018 negotiating 2-year extension CPI adjustment
County: Cook County
Lessee: Precise Technology
of Illinois, Inc.
Lessor: Water Saver Faucet Co.
7. 11260 Chester Road, Suite 225 July 31, 1997 $30,959
Cincinnati, Ohio Vacant and will
County: Hamilton County not be renewed
Lessee: Precise TMP, Inc.
Lessor: Spectrum Office Tower
8. Richmond Sales Office April 1998 $16,125
4825 Radford Avenue
Suite 101
Richmond, VA 23230
County: Independent City
Lessee: Precise Technology, Inc.
Lessor: H.S.K. Associates, Inc.
9. 1225 Jay Lane December 2005 $237,200.04
Riverbend Industrial Park
Graham, North Carolina 27253
County: Alamance County
Lessee: Precise TMP, Inc.
Lessor: Riverbend Associates
10. 2601 75th Street North October 31, 1997 $112,000
St. Petersburg, Florida 33710
County: Pinellas County
Lessee: Precise TMP, Inc.
Lessor: Ram Industries, Inc.
</TABLE>
<PAGE>
SCHEDULE 4.01(ff)
INVESTMENTS
<TABLE>
<CAPTION>
Amount Obligor/Issuer Maturity
------ -------------- --------
Borrower:
- ---------
<S> <C> <C> <C>
1,000 shares of Common Stock Precise Technology of Delaware, Inc. N/A
100 shares of Common Stock Precise Technology of Illinois, Inc. N/A
1,000 shares of Common Stock Precise TMP, Inc. N/A
<CAPTION>
Parent:
- -------
<S> <C> <C>
1 share of Common Stock Borrower N/A
<CAPTION>
Subsidiary Guarantors:
- ----------------------
<S> <C> <C> <C>
10 shares of Common Stock Precise Polestar, Inc. N/A
held by Precise TMP, Inc.
10 shares of Common Stock Massie Tool, Mold & Die, Inc. N/A
held by Precise TMP, Inc.
</TABLE>
<PAGE>
SCHEDULE 4.01(gg)
INTELLECTUAL PROPERTY
<TABLE>
<CAPTION>
Jurisdiction Registration Date of Expiration Date
------------ ------------ ------- ---------------
Number Registration
Patents
- -------
<S> <C> <C> <C> <C>
Precise TMP, Inc.
- -----------------
Squeeze Bottle Atomizer U.S. Patent & 4,223,842 9/23/80 9/23/97
Trademark Office
Squeeze Bottle Dispenser U.S. Patent & 4,226,367 10/7/80 10/7/97
Trademark Office
Dispenser U.S. Patent & 4,235,557 11/25/80 11/25/97
Trademark Office
Tablet Dispenser U.S. Patent & 5,275,291 1/4/94 1/4/11
Trademark Office
Precise Technology, Inc.
- ------------------------
Hand-Held Cap Opener U.S. Patent & 4,770,069 9/13/88 9/13/05
for Child Resistant Containers Trademark Office
<CAPTION>
Trademarks
- ----------
<S> <C> <C> <C> <C>
Precise TMP, Inc.
- -----------------
For aerosol and spray pump U.S. Patent & 1,123,729 8/7/79 8/7/99
actuators and valves, all being Trademark Office
parts and fittings for containers.
</TABLE>
<PAGE>
SCHEDULE 4.01(ii)
LABOR MATTERS
1. Precise Technology, Inc. and United Electrical, Radio and Machine
Workers of America (U.E.) and Local 645, United Electrical, Radio and
Machine Workers of America (U.E.).
<PAGE>
SCHEDULE 5.02(iii)
EXISTING LIENS
Uniform Commercial Code Filings: None, Except:
Precise Technology, Inc.
<TABLE>
<CAPTION>
Filing Filing Filing Description Comments
Secured Party Location Date Number of Collateral
<S> <C> <C> <C> <C> <C>
Heller Financial, Inc. S/S Pennsylvania 4/5/93 21801581 Thirteen (13) Leased
Nissei Equipment
Injection Molding
Machines
Concord Commercial S/S Pennsylvania 5/13/93 21930269 One (1) Leased Nissei
Corporation Injection Molding
Machine
Siemens Credit S/S Pennsylvania 5/20/93 21950740 One (1) Leased
Corporation ROLM 9200 Phone
and Phonemail
System
Copelco Credit S/S Pennsylvania 8/9/93 22281608 Leased Copier
Corporation (assignee of Equipment
Van Dyk Business
Systems)
P.C. Leasing, a Division S/S Pennsylvania 1/27/94 22791021 Two (2) Leased USI
of Phoenixcor, Inc. Hot Stamping
Systems and one (1)
Zellerbach Heat
Tunnel
Citicorp Dealer Finance S/S Pennsylvania 5/24/94 23160818 One (1) 530XL
(assignee of Equipco, Forklift bearing serial
Division Phillips Corp.) no. B010B9223P
Citicorp Dealer Finance S/S Pennsylvania 7/11/94 23310056 One (1) 530XL
(assignee of Equipco, Forklift bearing serial
Division Phillips Corp.) no. B010B09582R
Vision Financial Group, S/S Pennsylvania 2/2/95 23960465 One (1) Hyster Fork
Inc. Truck bearing serial
no. C187V10385R
Siemens Credit S/S Pennsylvania 2/28/95 24031158 One (1) Leased
Corporation ROLM 9600 Phone
and Phonemail
System
</TABLE>
<PAGE>
Precise Technology, Inc. (cont'd)
<TABLE>
<CAPTION>
Filing Filing Filing Description Comments
Secured Party Location Date Number of Collateral
<S> <C> <C> <C> <C> <C>
The DuPont Merck S/S Pennsylvania 2/28/95 24040299 DuPont
Pharmaceutical Company Merck/DuPont Parts
bearing supplier
identification nos.
4280, 4284, 4281,
4283, 4341, 4342 and
4282
EI DuPont De Nemours S/S Pennsylvania 2/28/95 24040301 DuPont
Medical Product Division Merck/DuPont Parts
bearing supplier
identification nos.
4352B, 4352A, 4350,
4351, 4373, 4340,
4438, 4377, 4377A,
4375, 4376, 4374,
4378, 4348, 4373,
4344, 4343, 4337,
4338 and 4429
Iron and Glass Bank S/S Pennsylvania 7/7/95 24450799 Computer Software
and Demonstration
Station
Heller Financial Leasing, S/S Pennsylvania 9/22/95 24690963 One (1) Nessei
Inc. Injection Molding
Machine
Toshiba Machine S/S Pennsylvania 11/6/95 24831054 One (1) Toshiba
Company, America Plastic Injection
Molding Machine
bearing serial no.
509707
Business Credit Leasing S/S Pennsylvania 3/4/96 25211497 Equipment under
Lease no. 564472
TM Acceptance Corp. S/S Pennsylvania 3/25/96 25281420 One (1) Toshiba
Plastic Injection
Molding Machine
bearing serial no.
620301
</TABLE>
<PAGE>
Precise Technology, Inc. (cont'd)
<TABLE>
<CAPTION>
Filing Filing Filing Description Comments
Secured Party Location Date Number of Collateral
<S> <C> <C> <C> <C> <C>
Concord Commercial, a S/S Pennsylvania 4/21/92 20730254 One (1) Roboform 1) Amendment
division of HSBC Model C200 EDM filing - 5/13/93 -
Business Loans, Inc. Machining Center change of name of
(assignee of Concord the Debtor from
Commercial Corporation) Precise Plastic
Products, Inc. to
Precise Technology,
Inc.
2) Assignment filing
to Concord
Commercial: 4/1/96
3) Continuation
filing: 1/17/97
Concord Commercial, a S/S Pennsylvania 4/1/96 25310583 One (1) Charmilles
division of HSBC Roboform Model
Business Loans, Inc. 2000 EDM Machining
(assignee of Concord Center
Commercial Corporation)
Heller Financial, Inc. S/S Pennsylvania 4/17/96 25361129 One (1) Toshiba Assignment Filing
(assignee of TM Plastic Injection to Heller Financial
Acceptance Corp.) Molding Machine Leasing, Inc.:
bearing serial no. 6/26/96
625102
U.S. Bancorp Leasing & S/S Pennsylvania 6/18/96 25570326 Three (3) Sumitomo
Financial - Machine Tool Plastic Injection
Finance Group Molding Machines
with all accessories
and attachments
Heller Financial Leasing, S/S Pennsylvania 1/12/96 25060183 One (1) Toshiba Assignment filing to
Inc. (assignee of TM Plastic Injection Heller Financial
Acceptance Corp.) Molding Machine Leasing, Inc.:
bearing serial no. 6/26/96
509707
Heller Financial Leasing, S/S Pennsylvania 1/12/96 25060184 One (1) Toshiba Assignment filing to
Inc. (assignee of TM Plastic Injection Heller Financial
Acceptance Corp.) Molding Machine Leasing, Inc.:
bearing serial no. 6/26/96
517811
Heller Financial Leasing, S/S Pennsylvania 3/18/96 25260389 One (1) Toshiba Assignment filing to
Inc. (assignee of TM Plastic Injection Heller Financial
Acceptance Corp.) Molding Machine Leasing, Inc.:
bearing serial no. 6/26/96
520507
</TABLE>
<PAGE>
Precise Technology, Inc. (cont'd)
<TABLE>
<CAPTION>
Filing Filing Filing Description Comments
Secured Party Location Date Number of Collateral
<S> <C> <C> <C> <C> <C>
Heller Financial Leasing, S/S Pennsylvania 3/27/96 25300089 One (1) Toshiba Assignment filing to
Inc. (assignee of TM Plastic Injection Heller Financial
Acceptance Corp.) Molding Machine Leasing, Inc.:
bearing serial no. 6/26/96
620301
Heller Financial Leasing, S/S Pennsylvania 2/7/96 25140369 One (1) Toshiba Assignment filing to
Inc. (assignee of TM Plastic Injection Heller Financial
Acceptance Corp.) Molding Machine Leasing, Inc.:
bearing serial no. 6/28/96
519211
Heller Financial Leasing, S/S Pennsylvania 2/20/96 25171277 One (1) Toshiba Assignment filing to
Inc. (assignee of TM Plastic Injection Heller Financial
Acceptance Corp.) Molding Machine Leasing, Inc.:
bearing serial no. 6/28/96
517706
Heller Financial Leasing, S/S Pennsylvania 2/20/96 25171278 One (1) Toshiba Assignment filing to
Inc. (assignee of TM Plastic Injection Heller Financial
Acceptance Corp.) Molding Machine Leasing, Inc.:
bearing serial no. 6/28/96
517205
Heller Financial Leasing, S/S Pennsylvania 3/18/96 25260390 One (1) Toshiba Assignment filing to
Inc. (assignee of TM Plastic Injection Heller Financial
Acceptance Corp.) Molding Machine Leasing, Inc.:
bearing serial no. 6/28/96
520807
Heller Financial Leasing, S/S Pennsylvania 7/3/96 25620444 One (1) Toshiba Assignment filing to
Inc. (assignee of TM Plastic Injection Heller Financial
Acceptance Corp.) Molding Machine Leasing, Inc.:
bearing serial no. 9/30/96
625303
Heller Financial Leasing, S/S Pennsylvania 11/6/95 24831053 One (1) Toshiba Assignment filing to
Inc. (assignee of TM Plastic Injection Heller Financial
Acceptance Corp.) Molding Machine Leasing, Inc.:
bearing serial no. 7/10/96
509707
Heller Financial Leasing, S/S Pennsylvania 7/24/96 25690165 One (1) Toshiba Assignment filing to
Inc. (assignee of TM Plastic Injection Heller Financial
Acceptance Corp.) Molding Machine Leasing, Inc.:
bearing serial no. 9/30/96
625202
</TABLE>
<PAGE>
Precise Technology, Inc. (cont'd)
<TABLE>
<CAPTION>
Filing Filing Filing Description Comments
Secured Party Location Date Number of Collateral
<S> <C> <C> <C> <C> <C>
Heller Financial Leasing, S/S Pennsylvania 9/19/96 25870479 One (1) Toshiba
Inc. (assignee of TM Plastic Injection
Acceptance Corp.) Molding Machine
bearing serial no.
521309
Heller Financial Leasing, S/S Pennsylvania 9/19/96 25870480 One (1) Toshiba
Inc. (assignee of TM Plastic Injection
Acceptance Corp.) Molding Machine
bearing serial no.
627404
TM Acceptance Corp. S/S Pennsylvania 10/28/96 26000485 One (1) Toshiba
Plastic Injection
Molding Machine
bearing serial no.
628204
TM Acceptance Corp. S/S Pennsylvania 10/28/96 26000486 One (1) Toshiba
Plastic Injection
Molding Machine
bearing serial no.
627604
Concord Commercial, a S/S Pennsylvania 11/8/96 26050111 One (1) Charmilles
division of HSBC Robofil Injection
Business Loans, Inc. Molding Machine
TM Acceptance Corp. S/S Pennsylvania 11/26/96 26101263 One (1) Toshiba
Plastic Injection
Molding Machine
bearing serial no.
628304
Concord Commercial, a S/S Pennsylvania 11/27/96 26110311 One (1) each model
division of HSBC L290 Special System
Business Loans, Inc. for Tobacco, Optical
Measuring Machine
and Pro Engineer and
Workstation including
attachments and
accessories
Siemens Credit S/S Pennsylvania 12/18/96 26180018 Two Siemens 9230
Corporation Phone Systems
TM Acceptance Corp. S/S Pennsylvania 12/24/96 26201145 One (1) Toshiba
Plastic Injection
Molding Machine
bearing serial no.
636610
</TABLE>
<PAGE>
Precise Technology, Inc. (cont'd)
<TABLE>
<CAPTION>
Filing Filing Filing Description Comments
Secured Party Location Date Number of Collateral
<S> <C> <C> <C> <C> <C>
Concord Commercial, S/S Pennsylvania 2/21/97 26390180 One (1) Okamoto
division of HSBC Automatic Surface
Business Loans, Inc. Grinder
TM Acceptance Corp. S/S Pennsylvania 2/24/97 26400298 One (1) Toshiba
Plastic Injection
Molding Machine
bearing serial no.
641212
Concord Commercial, S/S Pennsylvania 3/11/97 26450152 One (1) Bostomatic
division of HSBC CNC Bed Type
Business Loans, Inc. Precision Milling,
Drilling, Boring and
Container Machine
General Electric Capital Allegheny County 2/15/91 91-01467 Machine Tools to 1) Amendment
Corporation (Prothonotary), PA include One (1) filing - 10/25/93 -
Cincinnati Milacron change of name of
bearing serial no. Debtor from Precise
4036A61/91-26 Plastic Products,
Inc. to Precise
Technology, Inc.
2) Continuation
Filing: 10/2/95
Concord Commercial, Allegheny County 4/21/92 92-02883 One (1) Roboform 1) Amendment
division of HSBC (Prothonotary), PA C200 EDM filing - 5/7/93 -
Business Loans, Inc. Machining Center change of name of
(assignee of Concord Debtor from Precise
Commercial Corporation) Plastic Products,
Inc. to Precise
Technology, Inc.
2) Assignment filing
to HSBC: 4/8/96
3) Continuation
Filing: 1/24/97
Concord Commercial, Allegheny County 4/2/96 96-2213 One (1) Charmilles
division of HSBC (Prothonotary), PA Roboform EDM
Business Loans, Inc. Machining Center
Heller Financial, Inc. Allegheny County 4/5/93 02252 Thirteen (13) Leased
(Prothonotary), PA Nissei Equipment
Injection Molding
Machines
Concord Commercial Allegheny County 5/7/93 03072 One (1) Leased Nissei
Corporation (Prothonotary), PA Model FS260S71ASE
Injection Molding
Machine with NC-
90006 Controls
</TABLE>
<PAGE>
Precise Technology, Inc. (cont'd)
<TABLE>
<CAPTION>
Filing Filing Filing Description Comments
Secured Party Location Date Number of Collateral
<S> <C> <C> <C> <C> <C>
Siemens Credit Allegheny County 5/19/93 03339 One (1) Leased
Corporation (Prothonotary), PA ROLM 9200 Model
230 Phone and
Phonemail System
Copelco Capital, Inc. Allegheny County 8/10/93 05379 Leased Copier Amendment filing-
(assignee of Van Dyk (Prothonotary), PA Equipment 4/8/96 - change
Business Systems) name of secured
party from Copelco
Credit Corporation
to Copelco Credit,
Inc.
P.C. Leasing, a Division Allegheny County 1/27/94 00470 Two (2) Leased USI
of Phoenixcor, Inc. (Prothonotary), PA Hot Stamping
Systems and one (1)
Zellerbach Heat
Tunnel
Citicorp Dealer Finance Allegheny County 5/23/94 03371 One (1) 530XL
(assignee of Equipco, (Prothonotary), PA Forklift bearing serial
Division Phillips Corp.) no. B010B9223P
Citicorp Dealer Finance Allegheny County 7/8/94 04570-94 One (1) 530XL
(assignee of Equipco, (Prothonotary), PA Forklift bearing serial
Division Phillips Corp.) no. B010B09582R
Vision Financial Group, Allegheny County 2/2/95 95-00756 One (1) Hyster Fork
Inc. (Prothonotary), PA Truck bearing serial
no. C187V10385R
Siemens Credit Allegheny County 2/28/95 95-001325 One (1) Leased
Corporation (Prothonotary), PA ROLM 9600 Model
210 Phone and
Phonemail System
Heller Financial, Inc. Allegheny County 4/17/96 002694 One (1) Toshiba Assignment filing to
(assignee of TM (Prothonotary), PA Plastic Injection Heller Financial
Acceptance Corp.) Molding Machine Leasing, Inc.:
bearing serial no. 6/26/96
625102
Heller Financial Leasing, Allegheny County 1/16/96 96-00317 One (1) Toshiba Assignment filing to
Inc. (assignee of TM (Prothonotary), PA Plastic Injection Heller Financial
Acceptance Corp.) Molding Machine Leasing, Inc.:
bearing serial no. 6/26/96
509707
</TABLE>
<PAGE>
Precise Technology, Inc. (cont'd)
<TABLE>
<CAPTION>
Filing Filing Filing Description Comments
Secured Party Location Date Number of Collateral
<S> <C> <C> <C> <C> <C>
Heller Financial Leasing, Allegheny County 1/16/96 96-318 One (1) Toshiba Assignment filing to
Inc. (assignee of TM (Prothonotary), PA Plastic Injection Heller Financial
Acceptance Corp.) Molding Machine Leasing, Inc.:
bearing serial no. 6/26/96
517811
Iron and Glass Bank Allegheny County 7/10/95 95-04538 Computer Software
(Prothonotary), PA and Demonstration
Station
Heller Financial Leasing, Allegheny County 9/22/95 95-06371 One (1) Nessei
Inc. (Prothonotary), PA Injection Molding
Machine
TM Acceptance Corp. Allegheny County 11/21/95 95-07568 One (1) Toshiba
(Prothonotary), PA Plastic Injection
Molding Machine
bearing serial no.
509707
Heller Financial Leasing, Allegheny County 3/27/96 96-002113 One (1) Toshiba Assignment filing to
Inc. (assignee of TM (Prothonotary), PA Plastic Injection Heller Financial
Acceptance Corp.) Molding Machine Leasing, Inc.:
bearing serial no. 6/26/96
620301
TM Acceptance Corp. Allegheny County 4/2/96 002270 One (1) Toshiba
(Prothonotary), PA Plastic Injection
Molding Machine
bearing serial no.
620301
Heller Financial Leasing, Allegheny County 2/9/96 96-000960 One (1) Toshiba Assignment filing to
Inc. (assignee of TM (Prothonotary), PA Plastic Injection Heller Financial
Acceptance Corp.) Molding Machine Leasing, Inc.: 7/2/96
bearing serial no.
519211
Heller Financial Leasing, Allegheny County 2/20/96 96-001190 One (1) Toshiba Assignment filing to
Inc. (assignee of TM (Prothonotary), PA Plastic Injection Heller Financial
Acceptance Corp.) Molding Machine Leasing, Inc.: 7/2/96
bearing serial no.
517205
Heller Financial Leasing, Allegheny County 2/20/96 96-001191 One (1) Toshiba Assignment filing to
Inc. (assignee of TM (Prothonotary), PA Plastic Injection Heller Financial
Acceptance Corp.) Molding Machine Leasing, Inc.: 7/2/96
bearing serial no.
517706
</TABLE>
<PAGE>
Precise Technology, Inc. (cont'd)
<TABLE>
<CAPTION>
Filing Filing Filing Description Comments
Secured Party Location Date Number of Collateral
<S> <C> <C> <C> <C> <C>
Heller Financial Leasing, Allegheny County 3/20/96 96-001926 One (1) Toshiba Assignment filing to
Inc. (assignee of TM (Prothonotary), PA Plastic Injection Heller Financial
Acceptance Corp.) Molding Machine Leasing, Inc.: 7/2/96
bearing serial no.
520807
Heller Financial Leasing, Allegheny County 3/20/96 96-1928 One (1) Toshiba Assignment filing to
Inc. (assignee of TM (Prothonotary), PA Plastic Injection Heller Financial
Acceptance Corp.) Molding Machine Leasing, Inc.:
bearing serial no. 6/26/96
520507
Heller Financial Leasing, Allegheny County 7/16/96 96-5081 One (1) Toshiba Assignment filing to
Inc. (assignee of TM (Prothonotary), PA Plastic Injection Heller Financial
Acceptance Corp.) Molding Machine Leasing, Inc.:
bearing serial no. 10/1/96
625303
Heller Financial Leasing, Allegheny County 7/29/96 96-5407 One (1) Toshiba Assignment filing to
Inc. (assignee of TM (Prothonotary), PA Plastic Injection Heller Financial
Acceptance Corp.) Molding Machine Leasing, Inc.:
bearing serial no. 10/1/96
625202
TM Acceptance Corp. Allegheny County 9/23/96 96-006788 One (1) Toshiba
(Prothonotary), PA Plastic Injection
Molding Machine
bearing serial no.
521309
TM Acceptance Corp. Allegheny County 9/23/96 96-6789 One (1) Toshiba
(Prothonotary), PA Plastic Injection
Molding Machine
bearing serial no.
627404
Concord Commercial, a Allegheny County 11/14/96 96-8109 One (1) Charmilles
division of HSBC (Prothonotary), PA Robofil Injection
Business Loans, Inc. Molding Machine
TM Acceptance Corp. Allegheny County 12/4/96 96-8624 One (1) Toshiba
(Prothonotary), PA Plastic Injection
Molding Machine
bearing serial no.
628304
Siemens Credit Allegheny County 12/27/96 96-9346 Two Siemens 9230
Corporation (Prothonotary), PA Phone Systems
</TABLE>
<PAGE>
Precise Technology, Inc. (cont'd)
<TABLE>
<CAPTION>
Filing Filing Filing Description Comments
Secured Party Location Date Number of Collateral
<S> <C> <C> <C> <C> <C>
TM Acceptance Corp. Allegheny County 12/30/96 96-9366 One (1) Toshiba
(Prothonotary), PA Plastic Injection
Molding Machine
bearing serial no.
636610
Concord Commercial, Allegheny County 2/21/97 97-001198 One (1) Okamoto
division of HSBC (Prothonotary), PA Automatic Surface
Business Loans, Inc. Grinder
Concord Commercial, Allegheny County 3/11/97 97-001715 One (1) Bostomatic
division of HSBC (Prothonotary), PA Model 32 CNE Bed
Business Loans, Inc. Type Precision
Milling, Drilling,
Boring and
Contouring Machine
General Electric Capital Allegheny County 2/15/91 45473 Machine Tools to 1) Amendment
Corporation (Real Estate Records), include One (1) filing - 10/25/93 -
PA Cincinnati Milacron change of name of
bearing serial no. Debtor from Precise
4036A61/91-26 Plastic Products,
Inc. to Precise
Technology, Inc.
2) Continuation
Filing: 9/27/95
Concord Commercial, Allegheny County 4/30/92 47557 One (1) Roboform 1) Amendment
division of HSBC (Real Estate Records), EDM Machining filing - 5/13/93 -
Business Loans, Inc. PA Center change of name of
(assignee of Concord Debtor from Precise
Commercial Corporation) Plastic Products,
Inc. to Precise
Technology, Inc.
2) Assignment filing
to HSBC: 4/1/96
3) Continuation
filing: 2/3/97
Concord Commercial Allegheny County 5/13/93 49199 One (1) Nissei
Corporation (Real Estate Records), Injection Molding
PA Machine
Concord Commercial Allegheny County 11/8/93 49746 One (1) Nissei
Corporation (Real Estate Records), Injection Molding
PA Machine
Concord Commercial, Allegheny County 4/1/96 52494 One (1) Charmilles
division of HSBC (Real Estate Records), Roboform EDM
Business Loans, Inc. PA Machining Center
</TABLE>
<PAGE>
Precise Technology, Inc. (cont'd)
<TABLE>
<CAPTION>
Filing Filing Filing Description Comments
Secured Party Location Date Number of Collateral
<S> <C> <C> <C> <C> <C>
TM Acceptance Corp. Allegheny County 11/6/96 53266 One (1) Toshiba
(Real Estate Records), Plastic Injection
PA Molding Machine
bearing serial no.
628204
TM Acceptance Corp. Allegheny County 11/6/96 53267 One (1) Toshiba
(Real Estate Records), Plastic Injection
PA Molding Machine
bearing serial no.
627604
U.S. Bancorp Leasing & Centre County 6/17/96 96-575 Three (3) Sumitomo
Financial - Machine Tool (Prothonotary), PA Plastic Injection
Finance Group Molding Machine and
all accessories and
attachments
Citicorp Dealer Finance S/S Delaware 5/23/94 9406975 One (1) S30XL
(assignee of Equipco, Forklift bearing serial
Division of Phillips Corp.) no. B010B9223P
Citicorp Dealer Finance S/S Delaware 7/12/94 9409357 One (1) S30XL
(assignee of Equipco, Forklift bearing serial
Division of Phillips Corp.) no. B010B9582R
Ashland Chemical S/S Delaware 6/10/96 96-15916 Purchase Money
Company Security Interest in
plastic resin Montell
Polypropylene SD 242
Business Credit Leasing S/S Florida 6/3/96 960000114220 One (1) Leased Sharp
(assignee of Van Dyk Copier bearing serial
Business Systems) no. 66200431
Siemens Credit S/S Florida 12/18/96 960000264312 One (1) Siemen 9230
Corporation Phone System
Heller Financial, Inc. S/S Indiana 4/5/93 1837987 Thirteen (13) Leased
Nissei Injection
Molding Machines
P.C., Leasing, a division S/S Indiana 3/18/94 1901496 Two USI Special Hot
of Phoenixcor, Inc. Stamping Systems
bearing serial nos.
12994507931 and
12994507932 and one
(1) Zellerbach
Hanagata Auto L-
Sealer
</TABLE>
<PAGE>
Precise Technology, Inc. (cont'd)
<TABLE>
<CAPTION>
Filing Filing Filing Description Comments
Secured Party Location Date Number of Collateral
<S> <C> <C> <C> <C> <C>
American National Bank S/S Indiana 9/16/94 1937693 All molds of Outer
and Trust Company of Circle Products, Ltd.
Chicago (assignee of delivered to, and used
Outer Circle Products, by, Precise
Ltd.) Technology, Inc.
Siemens Credit S/S Indiana 4/1/95 1970345 One (1) Rolm 9200
Corporation Phone and Phonemail
System
Heller Financial Leasing, S/S Indiana 9/26/95 2010880 One (1) Nissei
Inc. Injection Molding
Machine
Associates Leasing Inc. S/S New York 6/20/94 126101 One (1) Hyster
(assignee of Liftech Forklift bearing serial
Handling Inc.) no. B010B09573R
The DuPont Merek S/S New York 3/1/95 042367 DuPont Merek/
Pharmaceutical Company DuPont parts bearing
supplier identification
no. 4339
Ashland Chemical S/S New York 5/24/96 104773 Purchase Money
Company Security Interest in
plastic resin - Montell
Polypropane SD 242
</TABLE>
<PAGE>
B. Precise Technology of Delaware, Inc.
<TABLE>
<CAPTION>
Filing Filing Filing Description Comments
Secured Party Location Date Number of Collateral
<S> <C> <C> <C> <C> <C>
P.C. Leasing, a division S/S Delaware 2/9/94 9401759 One (1) HP Amended: 10/11/94
of Phoenixcor, Inc. 3500/1650 Injection
Molding Machine
P.C. Leasing, a division S/S Delaware 2/9/94 9401760 One (1) HP 2900/870 Amended: 10/11/94
of Phoenixcor, Inc. Injection Molding
Machine
P.C. Leasing, a division S/S Delaware 2/9/94 9401761 One (1) HP
of Phoenixcor, Inc. 3500/1650 Injection
Molding Machine
P.C. Leasing, a division S/S Delaware 3/25/94 9404060 One (1) Netstal
of Phoenixcor, Inc. Model HP 3500/1650
Injection Molding
Machine
P.C. Leasing, a division S/S Delaware 3/25/94 9404061 One (1) Netstal Amended: 10/11/94
of Phoenixcor, Inc. Model HP 3500/1650
Injection Molding
Machine
P.C. Leasing, a division S/S Delaware 3/25/94 9404062 One (1) Netstal
of Phoenixcor, Inc. Model HP 3500/1650
Injection Molding
Machine
P.C. Leasing, a division S/S Delaware 3/25/94 9404063 One (1) Netstal Amendment filing-
of Phoenixcor, Inc. Model HP 3500/1650 8/31/94 - addition
Injection Molding of serial no.
Machine bearing
serial no. 93304
</TABLE>
<PAGE>
Precise Technology of Delaware, Inc. (cont'd)
<TABLE>
<CAPTION>
Filing Filing Filing Description Comments
Secured Party Location Date Number of Collateral
<S> <C> <C> <C> <C> <C>
Delaware Economic S/S Delaware 1/3/95 25904 Various equipment to
Development Authority include Seven (7)
Conveyor Systems
bearing serial nos.
2385, 2384, 2366,
2387, 2386, 2383 and
2367; and one (1)
Five-Ton Bridge
Crane bearing serial
no. 9406116B; and
Air Compressor
bearing serial no.
F9417U94054; one
(1) Dryer bearing
serial no. 941TM711;
one (1) Granulator
bearing serial no.
120-1414; and
BRP/Rico Equipment
Pallet Truck bearing
serial no. 11588
</TABLE>
<PAGE>
Precise Technology of Delaware, Inc. (cont'd)
<TABLE>
<CAPTION>
Filing Filing Filing Description Comments
Secured Party Location Date Number of Collateral
<S> <C> <C> <C> <C> <C>
Phoenixcor, Inc. S/S Delaware 1/11/96 96-00859 One (1) Netstal HP
4000/1650 Sycap
Injection Molding
Machine
Delaware Economic New Castle, DE 1/3/95 9500025 Various equipment to
Development Authority include Seven (7)
Conveyor Systems
bearing serial nos.
2385, 2384, 2366,
2387, 2386, 2383 and
2367; and one (1)
Five-Ton Bridge
Crane bearing serial
no. 9406116B; and
Air Compressor
bearing serial no.
F9417U94054; one
(1) Dryer bearing
serial no. 941TM711;
one (1) Granulator
bearing serial no.
120-1414; and
BRP/Rico Equipment
Pallet Truck bearing
serial no. 11588
</TABLE>
C. Precise Technology of Illinois, Inc.
<TABLE>
<CAPTION>
Filing Filing Filing Description Comments
Secured Party Location Date Number of Collateral
<S> <C> <C> <C> <C> <C>
Concord Commercial, S/S Illinois 4/15/97 3677416 One Roboform
division of HSBC Injection Molding
Business Loans, Inc. Machine
</TABLE>
<PAGE>
D. Precise TMP, Inc.
<TABLE>
<CAPTION>
Filing Filing Filing Description Comments
Secured Party Location Date Number of Collateral
<S> <C> <C> <C> <C> <C>
Concord Commercial, S/S Florida 11/8/96 960000236395 One (1) CMS
division of HSBC Machining Center
Business Loans, Inc.
Concord Commercial, S/S Florida 7/9/96 960000141962 One (1) Charmilles
division of HSBC Roboform 40 Die
Business Loans, Inc. Sinking EDM
Machine
Concord Commercial, Pinellas County, FL 6/28/96 96-177096 One (1) Charmilles
division of HSBC Book 9387 Roboform 40 Die
Business Loans, Inc. Page 526 Sinking EDM
Machine
Concord Commercial, S/S Massachusetts 8/26/96 412714 One (1) Sumitomo
division of HSBC Injection Molding
Business Loans, Inc. Machine
Toyota Motor Credit S/S Massachusetts 9/30/96 419637 One (1) Toyota
Corp. (assignee of Brodie, Forklift bearing serial
Inc.) no. 65664
Concord Commercial, S/S Massachusetts 11/20/96 430911 One (1) Sumitomo
division of HSBC Injection Molding
Business Loans, Inc. Machine
Concord Commercial, Town of Grafton, MA 8/27/96 8047 One (1) Sumitomo
division of HSBC Injection Molding
Business Loans, Inc. Machine
Toyota Motor Credit Town of Grafton, MA 10/1/96 8056 One (1) Toyota
Corp. (assignee of Brodie, Forklift bearing serial
Inc.) no. 65664
Concord Commercial, Town of Grafton, MA 11/21/96 8069 One (1) Sumitomo
division of HSBC Injection Molding
Business Loans, Inc. Machine
</TABLE>
<PAGE>
E. Precise Polestar, Inc.
<TABLE>
<CAPTION>
Filing Filing Filing Description Comments
Secured Party Location Date Number of Collateral
<S> <C> <C> <C> <C> <C>
U.S. Bancorp Leasing & S/S Pennsylvania 6/18/96 25570328 Three (3) Sumitomo
Financial - Machine Tool Plastic Injection
Finance Group Molding Machines
Ethicon-Endo-Surgery, S/S Pennsylvania 12/19/96 26180869 Equipment of Secured
Inc. Party (the "Owner")
supplied to Debtor
U.S. Bancorp Leasing & Centre County 6/17/96 96-574 Three (3) Sumitomo
Financial - Machine Tool (Prothonotary), PA Plastic Injection
Finance Group Molding Machines
Ethicon-Endo-Surgery, Centre County 12/18/96 96-1214 Equipment of Secured
Inc. (Prothonotary, PA), Party (the "Owner")
PA supplied to Debtor
</TABLE>
F. Massie Mold, Tool & Die, Inc.
<TABLE>
<CAPTION>
Filing Filing Filing Description Comments
Secured Party Location Date Number of Collateral
<S> <C> <C> <C> <C> <C>
NONE
</TABLE>
G. Precise Holding Corporation
<TABLE>
<CAPTION>
Filing Filing Filing Description Comments
Secured Party Location Date Number of Collateral
<S> <C> <C> <C> <C> <C>
NONE
</TABLE>
<PAGE>
EXHIBIT A TO THE
CREDIT AGREEMENT
REVOLVING CREDIT NOTE
New York, New York
$____________ Dated:____________
FOR VALUE RECEIVED, the undersigned, PRECISE TECHNOLOGY, INC., a Delaware
corporation (the "Borrower"), HEREBY PROMISES TO PAY to the order of
____________________ or its registered assigns (the "Lender") for the account of
its Applicable Lending Office (as defined in the Credit Agreement referred to
below) the aggregate principal amount of the Revolving Credit Advances (as
defined below) owing to the Lender by the Borrower pursuant to the Credit
Agreement dated as of June 13, 1997 (as amended, supplemented or otherwise
modified from time to time, the "Credit Agreement"; terms defined therein being
used herein as therein defined) among Precise Holding Corporation, the Borrower,
certain subsidiaries of the Borrower, the lenders from time to time party
thereto (including the Lender) and Fleet National Bank, as Agent for the Lender
and such other lenders on the Final Maturity Date.
The Borrower promises to pay interest on the unpaid principal amount of
each Revolving Credit Advance from the date of such Revolving Credit Advance
until such principal amount is paid in full, at such interest rates, and payable
at such times, as are specified in the Credit Agreement.
Both principal and interest are payable in lawful money of the United
States of America to Fleet National Bank, as Agent, at Fleet National Bank, ABA
No. 011-000-138, for further credit to Account No. 151035103156, in same day
funds. Each Revolving Credit Advance owing to the Lender by the Borrower and the
maturity thereof, and all payments made on account of principal thereof, shall
be recorded by the Lender and, prior to any transfer hereof, endorsed on the
grid attached hereto, which is part of this Note.
This Note is one of the Notes referred to in, and is entitled to the
benefits of, the Credit Agreement. The Credit Agreement, among other things, (i)
provides for the making of advances (the "Revolving Credit Advances") by the
Lender to the Borrower from time to time in an aggregate amount not to exceed at
any time outstanding the U.S. dollar amount first above mentioned, the
indebtedness of the Borrower resulting from each such Revolving Credit Advance
being evidenced by this Note, and (ii) contains provisions for acceleration of
the maturity hereof upon the happening of certain stated events and also for
prepayments on account of principal
KL2:197205.2
<PAGE>
2
hereof prior to the maturity hereof upon the terms and conditions therein
specified. The obligations of the Borrower under this Note, and the obligations
of the other Loan Parties under the Loan Documents, are secured by the
Collateral as provided in the Loan Documents. All payments made by the Borrower
under this Note shall be made without relief from valuation and appraisement
laws.
The Borrower waives presentment, protest and demand, and also notice of
protest, of demand, of nonpayment, of dishonor and of maturity. No single or
partial exercise of any power hereunder shall preclude other or further exercise
thereof or the exercise of any other power. This Note may not be changed orally,
but only by an agreement in writing which is signed by the party or parties
against which enforcement of any waiver, change, modification or discharge is
sought.
THIS NOTE AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE. ANY
LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS NOTE MAY BE BROUGHT IN THE
COURTS OF THE STATE OF NEW YORK SITTING IN NEW YORK CITY OR OF THE UNITED STATES
FOR THE SOUTHERN DISTRICT OF NEW YORK, AND, BY EXECUTION AND DELIVERY OF THIS
NOTE, THE BORROWER IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS
PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID
COURTS THAT ANY SUCH COURTS LACK PERSONAL JURISDICTION OVER THE BORROWER. THE
BORROWER HEREBY FURTHER IRREVOCABLY WAIVES ANY CLAIM THAT ANY SUCH COURTS LACK
PERSONAL JURISDICTION OVER SUCH PARTY, AND AGREES NOT TO PLEAD OR CLAIM, IN ANY
LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS NOTE BROUGHT IN ANY OF THE
AFORESAID COURTS. THE BORROWER WAIVES TRIAL BY JURY AND ALL OTHER NOTICES OR
DEMANDS IN CONNECTION WITH THE DELIVERY, ACCEPTANCE, PERFORMANCE, DEFAULT OR
ENFORCEMENT OF PAYMENT OF THIS NOTE.
PRECISE TECHNOLOGY, INC.
By____________________________________
Name:
Title:
KL2:197205.2
<PAGE>
3
ADVANCES AND PAYMENTS OF PRINCIPAL
================================================================================
Amount of
Revolving Amount of Unpaid
Credit Principal Paid Principal Notation
Date Advance or Prepaid Balance Made By
================================================================================
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
<PAGE>
EXHIBIT B TO THE
CREDIT AGREEMENT
NOTICE OF BORROWING
Fleet National Bank,
as Agent under the Credit
Agreement referred to below
56 East 42nd Street New York, New York
New York, NY 10017 [Date]
Attention:
Ladies and Gentlemen:
The undersigned, PRECISE TECHNOLOGY, INC., a Delaware corporation (the
"Borrower"), refers to the Credit Agreement, dated as of June 13, 1997 (as
amended, supplemented or otherwise modified from time to time, the "Credit
Agreement", the terms defined therein being used herein as therein defined)
among Precise Holding Corporation, the Borrower, certain subsidiaries of the
Borrower, the lenders from time to time party thereto (including the Lender) and
Fleet National Bank, as Agent for the Lender, and hereby gives you notice,
irrevocably, pursuant to Section 2.02 of the Credit Agreement that the Borrower
hereby requests a Borrowing under the Credit Agreement, and in that connection
sets forth below the information relating to such Borrowing (the "Proposed
Borrowing") as required by Section 2.02(a) of the Credit Agreement:
(i) The Business Day of the Proposed Borrowing is _________ __, ____.
(ii) The Type of Advances comprising the Proposed Borrowing is [Base
Rate Advances] [Eurodollar Rate Advances].
(iii) The aggregate amount of the Proposed Borrowing is $__________.
(iv) The initial Interest Period for each Eurodollar Rate Advance made
as part of the Proposed Borrowing is __________ month[s].
KL2:197646.4
<PAGE>
The Borrower hereby certifies that the following statements are true on the
date hereof, and will be true on the date of the Proposed Borrowing:
(A) the representations and warranties contained in each Document are
true and correct on and as of such date, before and after giving effect to
such Proposed Borrowing and to the application of the proceeds therefrom,
as though made on and as of such date other than any such representations
or warranties that, by their terms, refer to a specific date other than the
date of such Borrowing, in which case as of such specific date; and
(B) no event has occurred and is continuing, or would result from such
Proposed Borrowing or from the application of the proceeds therefrom, that
constitutes a Default.
Very truly yours,
PRECISE TECHNOLOGY, INC.
By:___________________________________
Name:
Title:
KL2:197646.4
<PAGE>
EXHIBIT C TO THE
CREDIT AGREEMENT
FORM OF ASSIGNMENT AND ACCEPTANCE
Reference is made to the Credit Agreement dated as of June 13, 1997 (as
amended, supplemented or otherwise modified from time to time, the "Credit
Agreement") among Precise Holding Corporation, Precise Technology, Inc. (the
"Borrower"), certain subsidiaries of the Borrower, the Lenders (as defined in
the Credit Agreement) and Fleet National Bank, as agent for the Lenders (the
"Agent"). Terms defined in the Credit Agreement are used herein with the same
meaning.
The "Assignor" and the "Assignee" referred to on Schedule 1 hereto hereby
agree as follows:
1. The Assignor hereby sells, assigns and delivers to the Assignee, and the
Assignee hereby purchases and assumes from the Assignor, an interest in and to
the Assignor's rights and obligations under the Credit Agreement as of the date
hereof equal to the percentage interest specified on Schedule 1 hereto of all
outstanding rights and obligations under the Credit Agreement Facility specified
on Schedule 1 hereto. After giving effect to such sale and assignment, the
Assignee's Commitment and the amount of the Advances owing to the Assignee will
be as set forth on Schedule 1 hereto.
2. The Assignor (i) represents and warrants that it is the legal and
beneficial owner of the interest being assigned by it hereunder and that such
interest is free and clear of any adverse claim placed thereon by the Assignor;
(ii) makes no representation or warranty and assumes no responsibility with
respect to any statements, warranties or representations made in or in
connection with the Loan Documents or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of, or the perfection or
priority of any lien or security interest created or purported to be created
under or in connection with, the Loan Documents or any other instrument or
document furnished pursuant thereto; (iii) makes no representation or warranty
and assumes no responsibility with respect to the financial condition of Parent,
the Borrower or any other Loan Party or the performance or observance by Parent,
the Borrower or any other Loan Party of any of their respective obligations
under any Loan Document to which they are a party or any other instrument or
document furnished pursuant thereto; and (iv) attaches the Note held by the
Assignor and requests that the Agent exchange such Note for a new Note payable
to the order of the Assignee in an amount equal to the Commitment assumed by the
Assignee pursuant hereto or new Note payable to the order of the Assignee in an
amount equal to the Commitment assumed by the Assignee pursuant hereto and to
the order of the
KL2:201527.1
<PAGE>
Assignor in an amount equal to the Commitment retained by the Assignor under the
Credit Agreement, respectively, as specified on Schedule 1 hereto.
3. The Assignee (i) confirms that it has received a copy of the Credit
Agreement, together with copies of the financial statements referred to in
Section 4.01(f) thereof, the other Loan Documents and such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into this Assignment and Acceptance; (ii) agrees that it has
and will, independently and without reliance upon the Agent, the Assignor or any
other Lender and based on such documents and information as it has deemed or
shall deem appropriate at the time, make and continue to make its own credit
decisions in entering into this Assignment and Acceptance and in taking or not
taking action under the Credit Agreement; (iii) confirms that it is an Eligible
Assignee; (iv) appoints and authorizes the Agent to take such action as agent on
its behalf and to exercise such powers and discretion under the Loan Documents
as are delegated to the Agent by the terms thereof, together with such powers
and discretion as are reasonably incidental thereto; [and] (v) agrees that it
will perform in accordance with their terms all of the obligations that by the
terms of the Credit Agreement and the other Loan Documents are required to be
performed by it as a Lender[; and (vi) to the extent legally entitled to do so,
attaches the U.S. Internal Revenue Service forms required under Section 2.12(e)
of the Credit Agreement].
4. Following the execution of this Assignment and Acceptance by the
Assignor and Assignee, an executed original hereof (together with attachments)
will be delivered to the Agent for acceptance and recording by the Agent. The
effective date for this Assignment and Acceptance (the "Assignment Effective
Date") shall be the date of acceptance hereof by the Agent and the receipt by
the Agent of the processing and recordation fee referred to in Section 8.07(a)
of the Credit Agreement, unless otherwise specified on Schedule 1 hereto.
5. Upon such acceptance and recording by the Agent, as of the Assignment
Effective Date, (i) the Assignee shall be a party to the Credit Agreement and,
to the extent provided in this Assignment and Acceptance, have the rights and
obligations of a Lender thereunder and under the other Loan Documents, and (ii)
the Assignor shall, to the extent provided in this Assignment and Acceptance,
relinquish its rights and be released from its obligations under the Credit
Agreement and the other Loan Documents.
6. Upon such acceptance and recording by the Agent, from and after the
Assignment Effective Date, the Agent shall make all payments under the Credit
Agreement and the Notes in respect of the interest assigned hereby (including,
without limitation, all payments of principal, interest and commitment fees with
respect thereto) to the Assignee. The Assignor and Assignee shall make all
appropriate adjustments in payments under the Credit Agreement and the Notes for
periods prior to the Assignment Effective Date directly between themselves.
- --------
(1) Include if the Assignee is organized under the laws of a jurisdiction
outside of the United States.
<PAGE>
7. THIS ASSIGNMENT AND ACCEPTANCE SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE
AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE.
8. This Assignment and Acceptance may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement. Delivery of an executed
counterpart of Schedule 1 to this Assignment and Acceptance by telecopier shall
be effective as delivery of a manually executed counterpart of this Assignment
and Acceptance.
IN WITNESS WHEREOF, the Assignor and the Assignee have caused Schedule 1 to
this Assignment and Acceptance to be executed by their officers thereunto duly
authorized as of the date specified thereon.
KL2:201527.1
<PAGE>
SCHEDULE 1
to
ASSIGNMENT AND ACCEPTANCE
As to the Revolving Credit Facility in respect of which an interest is being
assigned:
Percentage interest assigned: _______%
Assignee's Commitment: $_______
[Assignor's Retained Commitment: $_______]
Aggregate outstanding principal amount of Advances assigned: $_______
Principal amount of _________Note payable to Assignee: $_______
Principal amount of _________Note payable to Assignor: $_______
Assignment Effective Date (if other than date of acceptance by Agent):
_________ __, ____
Payment Instructions:
ASSIGNOR:
_______________
_______________
_______________
Attention:
Reference:
ASSIGNEE:
_______________
_______________
_______________
Attention:
Reference:
KL2:201527.1
<PAGE>
Domestic Lending Office of Assignee: Eurodollar Lending Office of Assignee:
___________________________________ ______________________________________
Attention: Attention:
Tel.: Tel.:
Fax: Fax:
[NAME OF ASSIGNOR], as Assignor
By____________________________________
Name:
Title:
Dated: ______________________ , ____
[NAME OF ASSIGNEE], as Assignee
By____________________________________
Name:
Title:
Dated: ______________________ , ____
KL2:201527.1
<PAGE>
Accepted and Approved this ____ day of ___________,
FLEET NATIONAL BANK,
as Agent
By_____________________________
Name:
Title:
<PAGE>
EXHIBIT D-1 TO THE
CREDIT AGREEMENT
PLEDGE AND SECURITY AGREEMENT
Dated June 13, 1997
From
PRECISE TECHNOLOGY, INC.,
and
VARIOUS SUBSIDIARIES OF PRECISE TECHNOLOGY, INC.,
as Grantors,
to
FLEET NATIONAL BANK,
as Collateral Agent
<PAGE>
T A B L E O F C O N T E N T S
Section Page
1. Grant and Pledge of Security ........................................... 2
2. Security for Obligations ............................................... 5
3. Grantors Remain Liable ................................................. 5
4. Delivery of Security Collateral and Account Collateral ................. 5
5. Maintaining the L/C Cash Collateral Account ............................ 6
6. Maintaining the Blocked Accounts ....................................... 6
7. Investing of Amounts in the L/C Cash Collateral Account ................ 7
8. Representations, Warranties and Covenants .............................. 7
9. Further Assurances ..................................................... 9
10. As to Plant and Equipment and Inventory ............................... 10
11. Insurance ............................................................. 11
12. Place of Perfection; Records; Collection of Receivables ............... 12
13. Voting Rights; Dividends; Etc. ........................................ 13
14. [Intentionally Omitted] ............................................... 14
15. [Intentionally Omitted] ............................................... 14
16. Transfer and Other Liens; Additional Shares ........................... 14
17. Collateral Agent Appointed Attorney-in-Fact ........................... 14
18. Collateral Agent May Perform .......................................... 15
19. Remedies .............................................................. 15
20. Registration Rights ................................................... 17
<PAGE>
Section Page
21. Collateral Agent ...................................................... 18
22. Indemnity and Expenses ................................................ 22
23. Security Interest Absolute ............................................ 22
24. Amendments; Waivers; Etc. ............................................. 23
25. Addresses for Notices ................................................. 24
26. Continuing Security Interest; Assignments under the Credit Agreement .. 24
27. Release and Termination ............................................... 24
28. Jurisdiction, Etc. .................................................... 25
Schedule I - Pledged Shares and Pledged Debt
Schedule II - Assigned Agreements
Schedule III - Locations of Plant and Equipment and Inventory
Schedule IV - Inventory Schedule for Section 8(d)
Schedule V - Blocked Accounts
Schedule VI - Trade Names
Exhibit A - Form of Blocked Account Letter
Exhibit B - Form of Pledge and Security Agreement Supplement
Exhibit C - Form of Consent and Agreement
<PAGE>
PLEDGE AND SECURITY AGREEMENT
PLEDGE AND SECURITY AGREEMENT (as amended, supplemented or otherwise
modified from time to time, this "Agreement"), dated June 13, 1997, made by and
among PRECISE TECHNOLOGY, INC., a Delaware corporation (the "Borrower"), each of
the other Persons listed on the signature page hereof and the Additional
Collateral Grantors (as defined in Section 24(c)) (the Borrower, such other
Persons and such Additional Collateral Grantors collectively referred to herein
as the "Grantors", and each individually, a "Grantor") to FLEET NATIONAL BANK
("Fleet"), as collateral agent (together with any successor collateral agent
appointed pursuant to Section 21, the "Collateral Agent") for the Secured
Parties, as custodian for the Hedge Banks and as Issuing Bank.
PRELIMINARY STATEMENTS.
(1) Precise Holding Corporation, a Delaware corporation, the Borrower and
each Subsidiary Guarantor have entered into a Credit Agreement, dated as of June
13, 1997, (said Agreement, as it may hereafter be amended, supplemented or
otherwise modified from time to time, being the "Credit Agreement", the terms
defined therein and not otherwise defined herein being used herein as therein
defined) with Fleet, as agent (together with any successor agent appointed
pursuant to Article VII of the Credit Agreement, the "Agent"), and the Lenders
from time to time party thereto.
(2) Pursuant to the Subsidiary Guaranty, each Subsidiary Guarantor has
guaranteed to the Lenders the payment when due of all obligations and
liabilities of the Borrower under or with respect to the Loan Documents.
(3) Each Grantor is the record owner of all stock at any time pledged or
required to be pledged hereunder, including without limitation the shares of
stock described in Part I of Schedule I hereto and issued by the corporations
named therein (the "Pledged Shares") and of the indebtedness described in Part
II of said Schedule I and issued by the obligors named therein (the "Pledged
Debt").
(4) It is a condition precedent to the making of Advances by the Lenders
and the issuance of Letters of Credit by the Issuing Bank under the Credit
Agreement and the entry by the Hedge Banks into the Bank Hedge Agreements with
the Borrower from time to time that each Grantor shall have granted the
assignment and security interest and made the pledge and assignment contemplated
by this Agreement.
(5) Each Grantor will obtain benefits from the incurrence of Advances and
the issuance of Letters of Credit under the Credit Agreement and the entering
into of Bank Hedge Agreements with the Hedge Banks and, accordingly, each
Grantor desires to execute this Agreement to satisfy the conditions described in
the preceding paragraph (4).
NOW, THEREFORE, in consideration of the premises and in order to induce the
Lenders to make Advances and the Issuing Bank to issue Letters of Credit under
the Credit Agreement and to induce the Hedge Banks to enter into Bank Hedge
Agreements with the
KL2:194292.6
<PAGE>
Borrower from time to time, each Grantor hereby agrees with the Collateral Agent
for the ratable benefit of the Secured Parties as follows:
Section 1. Grant and Pledge of Security. Each Grantor hereby assigns and
pledges to the Collateral Agent for the ratable benefit of the Secured Parties,
and hereby grants to the Collateral Agent for the ratable benefit of the Secured
Parties a security interest in, the following, in each case, as to each type of
property described below, whether now owned or hereafter owned or acquired,
wherever located and whether now or hereafter existing (collectively, the
"Collateral"):
(a) all of such Grantor's right, title and interest in and to all
"equipment", as such term is defined in the Uniform Commercial Code as in
effect on the date hereof in the State of New York (the "New York UCC"),
now or hereafter owned by such Grantor and, in any event, shall include,
but shall not be limited to, all machinery, plant, equipment, furnishings,
movable trade fixtures and vehicles and any or all additions, substitutions
and replacements of any of the foregoing, wherever located, together with
all attachments, components, parts, equipment and accessories installed
thereon or affixed thereto, together with all condemnation awards,
materials, appurtenances, rights and other property interests now or at any
time hereafter owned by each Grantor in the property (such property
hereinafter referred to as the "Property") (any and all such machinery,
plant, Property, equipment, furnishings, fixtures, attachments, components,
parts and accessions being the "Plant and Equipment");
(b) all of such Grantor's right, title and interest in and to all
merchandise, inventory and goods in all of its forms, including, without
limitation, (i) all raw materials, work in process therefor, parts,
components, assemblies, supplies, materials, finished products and other
goods and materials used or consumed in the manufacture or production
thereof (including, without limitation, all wrapping, packaging,
advertising, shipping materials, labels and other devices, names or marks
affixed or to be affixed thereto for purposes of selling or of identifying
the same or the seller or manufacturer thereof owned, consumed, used or
held for use or sale, directly or indirectly, by, or on behalf of or for
the account of such Grantor), (ii) goods in which such Grantor has an
interest in mass or a joint or other interest or right of any kind
(including, without limitation, goods in which such Grantor has an interest
or right as consignee), (iii) goods that are returned to or repossessed by
such Grantor and (iv) all "inventory" as such term is defined in the New
York UCC and all additions, substitutions and replacements thereof, and all
accessions thereto and products thereof and documents therefor (any and all
such inventory, accessions, products and documents being the "Inventory");
(c) all of such Grantor's right, title and interest in and to any
"account" and "general intangibles" as each such term is defined in the New
York UCC and, in any event, shall include, but shall not be limited to, all
accounts, contract rights, "chattel paper" (as defined in the New York
KL2:194292.6
2
<PAGE>
UCC and hereinafter referred to as "Chattel Paper"), instruments, deposit
accounts, general intangibles and other rights and obligations of any kind,
whether or not arising out of or in connection with the sale or lease of
goods or the rendering of services, and all rights now or hereafter
existing in and to all security agreements, leases and other contracts and
"documents" (as defined in the New York UCC and hereinafter referred to as
"Documents"), and all guaranties, endorsements and indemnifications on, or
of, any of the foregoing, securing or otherwise relating to any such
accounts, contract rights, Chattel Paper, instruments, deposit accounts,
general intangibles, rights or obligations (any and all such accounts,
contract rights, Chattel Paper, instruments, deposit accounts, general
intangibles, rights and obligations, to the extent not referred to in
clause (d), (e), (f) or (g) below, being the "Receivables", and any and all
such leases, security agreements and other contracts and Documents being
the "Related Contracts");
(d) all of the following (the "Security Collateral"):
(i) the Pledged Shares and the certificates representing the
Pledged Shares, and all dividends, cash, instruments and other
property from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of the Pledged
Shares;
(ii) the Pledged Debt and the instruments evidencing the Pledged
Debt, and all interest, cash, instruments and other property from time
to time received, receivable or otherwise distributed in respect of or
in exchange for any or all of the Pledged Debt;
(iii) all additional shares of stock from time to time acquired
by such Grantor in any manner, and the certificates representing such
additional shares, and all dividends, cash, instruments and other
property from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of such
shares; and
(iv) all additional indebtedness from time to time owed to such
Grantor and the instruments evidencing such indebtedness, and all
interest, cash, instruments and other property from time to time
received, receivable or otherwise distributed in respect of or in
exchange for any or all of such indebtedness;
(e) all of such Grantor's right, title and interest in and to each of
the agreements listed on Schedule II, and each Bank Hedge Agreement to
which such Grantor is or may hereafter become a party, in each case as such
agreements may be amended or otherwise modified from time to time
(collectively, the "Assigned Agreements"), including, without limitation,
(i) all rights of such Grantor to receive moneys due and to become due
under or pursuant to the Assigned Agreements, (ii) all rights of such
Grantor to receive proceeds of any insurance, indemnity, warranty or
guaranty with respect to the Assigned Agreements, (iii) claims of such
Grantor for damages arising out of or for breach of or default under the
Assigned Agreements and (iv) the right of such Grantor to terminate the
Assigned Agreements, to perform thereunder and to compel performance and
otherwise exercise all remedies thereunder (all such Collateral being the
"Agreement Collateral");
(f) all of the following (collectively, the "Account Collateral"):
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(i) the L/C Cash Collateral Account, all funds held therein and
all certificates and instruments, if any, from time to time
representing or evidencing the L/C Cash Collateral Account;
(ii) all other deposit accounts of such Grantor, all funds held
therein and all certificates and instruments, if any, from time to
time representing or evidencing such deposit accounts;
(iii) all Collateral Investments (as hereinafter defined) from
time to time and all certificates and instruments, if any, from time
to time representing or evidencing the Collateral Investments;
(iv) all notes, certificates of deposit, deposit accounts, checks
and other instruments from time to time hereafter delivered to or
otherwise possessed by the Collateral Agent for or on behalf of such
Grantor in substitution for or in addition to any or all of the then
existing Account Collateral; and
(v) all interest, dividends, cash, instruments and other property
from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of the then existing Account
Collateral;
(g) all of such Grantor's right, title and interest in and to all
general intangibles of such Grantor (other than general intangibles for
money due or to become due and described in clause (c) above), including,
without limitation, all trademarks, trade names, trade styles, trade
secrets, service marks, logos, copyrights, patents, patent applications,
computer programs and all permits, licenses (written or oral), license
applications, registrations and goodwill relating to or associated with any
of the foregoing; and
(h) all proceeds of any and all of the foregoing Collateral
(including, without limitation, proceeds that constitute property of the
types described in clauses (a) through (g) of this Section 1 and all
accessions and additions to, all substitutions for and all proceeds,
products, substitutions and replacement of any and all of the foregoing)
and, to the extent not otherwise included, all (i) payments under insurance
(whether or not the Collateral Agent is the loss payee thereof), or any
indemnity, warranty or guaranty, payable by reason of loss or damage to or
otherwise and any and all other products of, or any rents, profits or other
amounts from time to time paid or payable with respect to any of the
foregoing Collateral and (ii) cash.
Notwithstanding clauses (a) through (h), the payment and performance of
each Grantor's obligations shall not be secured by more than 66% of the total
combined voting power of all classes of capital stock owed by such Grantor of
any foreign Subsidiary entitled to vote. Following a change in the relevant
provisions of the Internal Revenue Code or the regulations, published rules,
published rulings, notices or other official pronouncements issued or
promulgated thereunder, if the Collateral Agent or the Required Lenders request
a pledge of additional stock of any foreign Subsidiary of a Grantor, all of the
stock of which foreign Subsidiary has not already been pledged pursuant to this
Agreement, then within 90 days after
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such request the relevant Grantor shall either (i) pledge such additional stock
of such foreign Subsidiary or (ii) deliver to the Collateral Agent an opinion of
the counsel of the respective Grantor, which counsel shall be reasonably
acceptable to the Collateral Agent, that the requested pledge of such additional
stock is more likely than not to cause the undistributed earnings of such
foreign Subsidiary to be treated as a deemed dividend to such foreign
Subsidiary's United States parent for Federal income tax purposes.
Section 2. Security for Obligations. This Agreement secures (i) the full
and prompt payment when due (whether at the stated maturity, by acceleration or
otherwise) of all obligations and liabilities (including, without limitation,
the principal of and interest on the Notes issued by, and Advances made to, the
Borrower under the Credit Agreement, and all indemnities, fees and interest
thereon or owed thereunder) of each Grantor to the Secured Parties, whether now
existing or hereafter incurred under, arising out of or in connection with any
Loan Document (including, without limitation, in the case of each Subsidiary
Guarantor, all of its obligations and liabilities under the Subsidiary Guaranty)
to which such Grantor is a party and the due performance and compliance by each
Grantor with all of the terms, conditions and agreements contained in the Credit
Agreement and such other Loan Documents (all such principal, interest,
indemnities, fees, obligations and liabilities being herein collectively called
the "Credit Agreement Obligations"); (ii) to the extent that any Bank Hedge
Agreement is entitled to the benefits of this Agreement, the full and prompt
payment when due (whether at the stated maturity, by acceleration or otherwise)
of all obligations and liabilities of each Grantor to the Hedge Banks, whether
now existing or hereafter incurred under, arising out of or in connection with
any such Bank Hedge Agreement and the due performance and compliance by such
Grantor with all the terms, conditions and agreements contained in such Bank
Hedge Agreement (all such obligations and liabilities described in this clause
(ii) being herein collectively called the "Other Obligations", and together with
the Credit Agreement Obligations, collectively the "Secured Obligations").
Without limiting the generality of the foregoing, this Agreement secures the
payment of all amounts that constitute part of the Secured Obligations and would
be owed by such Grantor to the Secured Parties under the Loan Documents but for
the fact that they are unenforceable or not allowable due to the existence of a
bankruptcy, reorganization or similar proceeding involving such Grantor.
Section 3. Grantors Remain Liable. Anything herein to the contrary
notwithstanding, (a) each Grantor shall remain liable under the contracts and
agreements included in the Collateral to the extent set forth therein to perform
all of its duties and obligations thereunder to the same extent as if this
Agreement had not been executed, (b) the exercise by the Collateral Agent of any
of the rights hereunder shall not release any Grantor from any of its duties or
obligations under the contracts and agreements included in the Collateral and
(c) no Secured Party shall have any obligation or liability under the contracts
and agreements included in the Collateral by reason of this Agreement or any
other Loan Document, nor shall any Secured Party be obligated to perform any of
the obligations or duties of any Grantor thereunder or to take any action to
collect or enforce any claim for payment assigned hereunder.
Section 4. Delivery of Security Collateral and Account Collateral. All
certificates or instruments representing or evidencing Security Collateral or
Account Collateral shall be delivered to and held by or on behalf of the
Collateral Agent pursuant hereto and shall be in
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suitable form for transfer by delivery, or shall be accompanied by duly executed
instruments of transfer or assignment in blank, all in form and substance
satisfactory to the Collateral Agent. Upon the occurrence and during the
continuance of an Event of Default and upon acceleration of all Borrowings under
the Credit Agreement, the Collateral Agent shall have the right, at any time in
its discretion and without notice to any Grantor, to transfer to or to register
in the name of the Collateral Agent or any of its nominees any or all of the
Security Collateral and Account Collateral, subject only to the revocable rights
specified in Section 13(a). In addition, the Collateral Agent shall have the
right at any time to exchange certificates or instruments representing or
evidencing Security Collateral or Account Collateral for certificates or
instruments of smaller or larger denominations.
Section 5. Maintaining the L/C Cash Collateral Account. So long as any
Advance or any other Secured Obligation shall remain unpaid, any Letter of
Credit or Bank Hedge Agreement shall be outstanding or any Lender shall have any
Commitment under the Credit Agreement:
(a) The Borrower will maintain the L/C Cash Collateral Account with
the Collateral Agent; and
(b) It shall be a term and condition of the L/C Cash Collateral
Account, notwithstanding any term or condition to the contrary in any other
agreement relating to the L/C Cash Collateral Account, as the case may be,
and except as otherwise provided by the provisions of Section 19, that no
amount (including, without limitation, interest on Collateral Investments)
shall be paid or released to or for the account of, or withdrawn by or for
the account of, the Borrower or any other Person from the L/C Cash
Collateral Account and shall be funded in accordance with the terms of the
Credit Agreement.
The L/C Cash Collateral Account shall be subject to such applicable laws, and
such applicable regulations of the Board of Governors of the Federal Reserve
System and of any other appropriate banking or governmental authority, as may
now or hereafter be in effect.
Section 6. Maintaining the Blocked Accounts. So long as any Advance shall
remain unpaid, any Letter of Credit or Bank Hedge Agreement shall be outstanding
or any Lender shall have any Commitment under the Credit Agreement:
(a) Each Grantor shall maintain blocked deposit accounts ("Blocked
Accounts") only with banks ("Blocked Account Banks") that have entered into
letter agreements in substantially the form of Exhibit A (or such other
form as the Collateral Agent shall agree) with such Grantor and the
Collateral Agent ("Blocked Account Letters"). After the Initial Extension
of Credit and in accordance with Section 5.01(o) of the Credit Agreement,
the Borrower shall deliver each Blocked Account Letter to the Collateral
Agent, duly executed by each Grantor, the Collateral Agent and the Blocked
Account Bank party thereto.
(b) Each Grantor shall immediately instruct each Person obligated at
any time to make any payment to such Grantor for any reason (an "Obligor")
to make such
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payment to a Blocked Account and, if an Event of Default shall have
occurred and be continuing, shall, at the request of the Collateral Agent,
pay to the Collateral Agent for application as provided by the terms of the
Credit Agreement, at the end of each Business Day, all proceeds of
Collateral. So long as an Event of Default shall not have occurred and be
continuing or if the Collateral Agent shall not have given the notice
referred to in the immediately preceding sentence, such Grantor may operate
the Blocked Account in accordance with its past business practice.
(c) Upon any termination of any Blocked Account Letter or other
agreement with respect to the maintenance of a Blocked Account by such
Grantor or any Blocked Account Bank, such Grantor shall immediately notify
all Obligors that were making payments to such Blocked Account to make all
future payments to another Blocked Account. Such Grantor agrees to
terminate any or all Blocked Accounts and Blocked Account Letters upon
request by the Collateral Agent.
Section 7. Investing of Amounts in the L/C Cash Collateral Account. If
requested by the Borrower, the Collateral Agent will, subject to the provisions
of Section 19, from time to time (a) invest amounts on deposit in the L/C Cash
Collateral Account in such Cash Equivalents in the name of the Collateral Agent
as the Borrower may select subject to approval of the Collateral Agent and (b)
invest interest paid on the Cash Equivalents referred to in clause (a) above,
and reinvest other proceeds of any such Cash Equivalents that may mature or be
sold, in each case in such Cash Equivalents in the name of the Collateral Agent
as the Borrower may select subject to approval of the Collateral Agent (the Cash
Equivalents referred to in clauses (a) and (b) above being collectively
"Collateral Investments"). Interest and proceeds that are not invested or
reinvested in Collateral Investments as provided above shall be deposited and
held in the L/C Cash Collateral Account.
Section 8. Representations, Warranties and Covenants. Each Grantor
represents, warrants, agrees and covenants as to itself and its Collateral,
which representations, warranties, agreements and covenants shall survive
execution and delivery of this Agreement, as follows:
(a) All of the Plant and Equipment is located at the places specified
beneath such Grantor's name on Part I of Schedule III hereto. All of the
Inventory is located at the places specified beneath such Grantor's name on
Part II of Schedule III hereto. The chief place of business and chief
executive office of such Grantor and the office where such Grantor keeps
its records concerning the Receivables, and the original copies of each
Assigned Agreement and all originals of all Chattel Paper that evidence
Receivables, are located at the address listed below the name of such
Grantor on the signature pages hereof or, in the case of any Additional
Collateral Grantor, at the address listed below the name of such Additional
Collateral Grantor on its Pledge and Security Agreement Supplement (as
defined in Section 24(c)). A complete copy of each Assigned Agreement has
been delivered to the Collateral Agent. None of the Receivables or
Agreement Collateral is evidenced by a promissory note or other instrument.
(b) Such Grantor is the legal and beneficial owner of the Collateral
free and clear of any Lien or other right, title or interest of any Person
except for the security interest created under this Agreement and Liens
permitted by Section 5.02(a) of the Credit
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Agreement, and such Grantor shall defend the Collateral against all claims
and demands of all Persons at any time claiming the same or any interest
therein adverse to the Collateral Agent. No effective financing statement
or other instrument similar in effect covering or purporting to cover all
or any part of the Collateral is on file in any recording office, except
such as may have been filed in favor of the Collateral Agent relating to
this Agreement and those Liens permitted under Section 5.02(a) of the
Credit Agreement.
(c) Set forth on Schedule VI hereto a complete and accurate list as of
the date hereof of all names under which the Grantor is doing business,
including, without limitation, trade names, division names and fictitious
names.
(d) Such Grantor has exclusive possession and control of the Plant and
Equipment and the Inventory, except for such Inventory as shall have been
consigned by the Grantor in the ordinary course of business to its
customers and subcontractors or as described on Schedule IV hereto.
(e) All of the shares of stock that constitute Pledged Shares have
been duly authorized and validly issued and are fully paid and
non-assessable and each Grantor is the legal, record and beneficial owner
of, and has good and marketable title to, such Pledged Shares, subject to
no pledge, lien, mortgage hypothetication, security interest, charge,
option or other encumbrance whatsoever except the liens and security
interests created by this Agreement. The Pledged Debt has been duly
authorized, authenticated or issued and delivered, is the legal, valid and
binding obligation of the issuers thereof, enforceable in accordance with
its terms, except as enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or other laws relating to or
limiting creditors' rights or by equitable principles generally (regardless
of whether enforcement is sought in equity or at law), and is not in
default. Each Grantor has full power, authority and legal right to pledge
the Pledged Shares and Pledged Debt pledged by it pursuant to this
Agreement.
(f) As of the date hereof, the Pledged Shares constitute the
percentage of the issued and outstanding shares of stock of the issuers
thereof indicated on Part I of Schedule I hereto. As of the date hereof,
the Pledged Debt is outstanding in the principal amount indicated on Part
II of Schedule I hereto.
(g) The Assigned Agreements, true and complete copies of which have
been furnished to each Lender, have been duly authorized, executed and
delivered by the Grantors and, to the best knowledge of the Grantors, all
other parties thereto, have not been amended or otherwise modified, are in
full force and effect and are binding upon and enforceable against the
Grantor in accordance with their terms, except as enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or other laws
relating to or limiting creditors' rights or by equitable principles
generally (regardless of whether enforcement is sought in equity or at
law). There exists no default under any Assigned Agreement by the Grantors
and, to the best knowledge of the Grantors, any other party thereto. Each
party (other than any Loan Party) to any Assigned Agreement (other than the
Bank Hedge Agreements) has executed and delivered to such Grantor a
consent, in substantially the form of Exhibit C hereto (or such other form
as the Collateral
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Agent shall agree), to the assignment of the Agreement Collateral to the
Collateral Agent pursuant to this Agreement.
(h) No Grantor has Blocked Accounts or other deposit accounts other
than those listed on Schedule V hereto.
(i) All filings and other actions necessary or desirable to perfect
and protect the security interest in the Collateral taken as a whole
created under this Agreement have been duly made or taken, and this
Agreement, the pledge of the Security Collateral pursuant hereto and the
pledge and assignment of the Account Collateral pursuant hereto, together
with such filings and other actions, create a valid and perfected first
priority security interest in the Collateral taken as a whole, securing the
payment of the Secured Obligations, except for Collateral subject to Liens
permitted pursuant to Section 5.02(a) of the Credit Agreement.
(j) No consent of any other Person and no authorization, approval or
other action by, and no notice to or filing with, any governmental
authority or regulatory body or other third party is required (i) for the
grant by such Grantor of the assignment and security interest granted
hereunder, for the pledge by such Grantor of the Security Collateral
pursuant hereto or for the execution, delivery or performance of this
Agreement by such Grantor, (ii) for the perfection or maintenance of the
pledge, assignment and security interest created hereunder (including the
first priority nature of such pledge, assignment or security interest),
except for the filing of financing and continuation statements under the
UCC, which financing statements have been duly filed and are effective,
under applicable law, to perfect the security interest granted to the
Collateral Agent herein, or (iii) for the exercise by the Collateral Agent
of its voting or other rights provided for in this Agreement or the
remedies in respect of the Collateral pursuant to this Agreement, except
where the failure to obtain such consent or authorization would not, either
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
(k) The Inventory has been produced by each Grantor in compliance in
all material respects with all requirements of the Fair Labor Standards
Act.
(l) This Agreement is made with full recourse to each Grantor
(including, without limitation, with full recourse to all assets of such
Grantor) and pursuant to and upon all warranties, representations,
covenants and agreements on the part of such Grantor contained herein, in
the other Collateral Documents and otherwise in writing in connection
herewith or therewith.
Section 9. Further Assurances. (a) Each Grantor agrees that from time to
time, at its own expense, it shall promptly execute and deliver all further
instruments and documents, and take all further action, that may be necessary or
desirable, or that the Collateral Agent may reasonably request, in order to
perfect and protect any pledge, assignment or security interest granted or
purported to be granted hereby or to enable the Collateral Agent to exercise and
enforce its rights and remedies hereunder with respect to any Collateral.
Without limiting the generality of the foregoing, each Grantor will: (i) upon
the occurrence and during the
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continuance of an Event of Default and upon the acceleration of all Borrowings
under the Credit Agreement, if the Collateral Agent so directs, legend, in form
and manner satisfactory to the Collateral Agent, its Receivables and the Related
Contracts, as well as books, records and documents (if any) of such Grantor
evidencing or pertaining to such Receivables and Related Contracts with an
appropriate reference to the fact that such Receivables and Related Contracts
have been assigned to the Collateral Agent and that the Collateral Agent has a
security interest therein; (ii) if any Collateral shall be evidenced by a
promissory note or other instrument or Chattel Paper, deliver and pledge to the
Collateral Agent hereunder such note or instrument duly indorsed and accompanied
by duly executed instruments of transfer or assignment, all in form and
substance satisfactory to the Collateral Agent; and (iii) execute and file such
financing or continuation statements, or amendments thereto, and such other
instruments or notices, as may be necessary or desirable, or as the Collateral
Agent may reasonably request, in order to perfect and preserve the pledge,
assignment and security interest granted or purported to be granted hereunder.
(b) Each Grantor hereby authorizes the Collateral Agent to file one or more
financing or continuation statements, and amendments thereto, relating to all or
any part of the Collateral without the signature of such Grantor where permitted
by law. A photocopy or other reproduction of this Agreement or any financing
statement covering the Collateral or any part thereof shall be sufficient as a
financing statement where permitted by law.
(c) Each Grantor shall furnish to the Collateral Agent from time to time
statements and schedules further identifying and describing the Collateral and
such other reports in connection with the Collateral as the Collateral Agent may
reasonably request, all in reasonable detail.
(d) Each Grantor shall promptly notify the Collateral Agent (but in any
event, within 2 Business Days) after it acquires beneficial ownership of real
property and, within 15 Business Days after the Collateral Agent's request, such
Grantor shall issue a mortgage to the Collateral Agent for the benefit of the
Secured Parties, in form and substance satisfactory to the Collateral Agent.
Section 10. As to Plant and Equipment and Inventory. (a) Each Grantor shall
keep the Plant and Equipment and the Inventory (other than Plant and Equipment
and Inventory sold in the ordinary course of business) at the places therefor
specified in Section 8(a) or, upon 30 days' prior written notice to the
Collateral Agent, at such other places in a jurisdiction where all action
required by Section 9 shall have been taken with respect to the Plant and
Equipment and the Inventory and, at the request of the Collateral Agent, an
opinion of counsel acceptable to the Collateral Agent shall have been furnished
to the Collateral Agent prior to any such change of location to the effect that
all financing or continuation statements and amendment or supplements thereto
have been filed in the appropriate filing office or offices, and all other
actions have been taken, in order to perfect (and maintain the perfection of)
the security interest granted hereby in respect of the types of Collateral.
(b) Each Grantor shall cause the Plant and Equipment to be maintained and
preserved in the same condition, repair and working order as when new, ordinary
wear and tear excepted, and in accordance with any manufacturer's manual where
applicable, and shall
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forthwith, or in the case of any loss or damage to any of the Plant and
Equipment as quickly as practicable after the occurrence thereof, make or cause
to be made all repairs, replacements and other improvements in connection
therewith that are necessary or desirable to such end. Notwithstanding the
foregoing, no Grantor shall be required to maintain, preserve, repair, replace
or improve any Plant or Equipment if the Board of Directors or senior executive
officers of such Grantor shall determine in the reasonable business judgement of
such Board of Directors or senior executive officers, as the case may be, that
not doing so is in the best interests of such Grantor. Each Grantor shall
promptly furnish to the Collateral Agent a statement respecting any material
loss or damage to any of the Plant and Equipment.
(c) Each Grantor shall pay promptly when due all property and other taxes,
assessments and governmental charges or levies imposed upon, and all claims
(including, without limitation, claims for labor, materials and supplies)
against, the Plant and Equipment and Inventory, except those being contested
diligently in good faith. In producing the Inventory, each Grantor shall comply
in all material respects with all requirements of the Fair Labor Standards Act.
Section 11. Insurance. (a) Each Grantor shall, at its own expense, maintain
insurance with respect to the Plant and Equipment and the Inventory against loss
or damage of the kinds customarily insured against by corporations similarly
situated and owning properties and engaged in like businesses, with reputable
insurers or with the government of the United States of America or any agency or
instrumentality thereof, in such amounts (giving effect to self insurance) with
such deductibles and by such methods as shall be customary for corporations
similarly situated in the industry. Each policy for liability insurance shall
provide for all losses to be paid on behalf of the Collateral Agent and such
Grantor as their interests may appear, and each policy for property damage
insurance shall provide for all losses to be paid directly to the Collateral
Agent, for the ratable benefit of the Secured Parties and, in certain
circumstances, to the Borrower in accordance with, and as permitted by, the
terms of the Credit Agreement. Each such policy shall in addition (i) name such
Grantor and the Collateral Agent as insured parties thereunder (without any
representation or warranty by or obligation upon the Collateral Agent) as their
interests may appear, (ii) provide that there shall be no recourse against the
Collateral Agent for payment of premiums or other amounts with respect thereto
and (iii) provide that at least 10 days' prior written notice of cancellation or
of lapse shall be given to the Collateral Agent by the insurer. Each Grantor
shall, as often as the Collateral Agent reasonably requests, deliver to the
Collateral Agent original or duplicate policies of such insurance and a report
of a reputable insurance broker with respect to such insurance. Further, each
Grantor shall, at the request of the Collateral Agent, duly execute and deliver
instruments of assignment of such insurance policies to comply with the
requirements of Section 9 and cause the insurers to acknowledge notice of such
assignment.
(b) Reimbursement under any liability insurance maintained by any Grantor
pursuant to this Section 11 may be paid directly to the Person who shall have
incurred liability covered by such insurance. In case of any loss involving
damage to the Plant and Equipment or the Inventory when subsection (c) of this
Section 11 is not applicable, such Grantor shall make or cause to be made the
necessary repairs to or replacements of such Plant and Equipment or such
Inventory, and any proceeds of insurance maintained by such Grantor pursuant to
this Section 11 shall be applied pursuant to and in accordance with the Credit
Agreement.
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Notwithstanding the foregoing, no Grantor shall be required to repair or replace
any Plant or Equipment if the Board of Directors or senior executive officers of
such Grantor shall determine in the reasonable business judgment of such Board
of Directors or senior executive officers, as the case may be, that not doing so
is in the best interests of such grantor.
(c) Upon the occurrence and during the continuance of any Event of Default,
all insurance payments in respect of such Plant and Equipment or such Inventory
shall be paid to and applied by the Collateral Agent as specified in Section
19(b).
Section 12. Place of Perfection; Records; Collection of Receivables. (a)
Each Grantor shall keep its chief place of business and chief executive office
and the office where it keeps its records concerning the Collateral, and the
original copies of the Assigned Agreements and all originals of all Chattel
Paper that evidence Receivables, at the location therefor specified in Section
8(a) or, upon 30 days' prior written notice to the Collateral Agent, at such
other locations in a jurisdiction where all actions required by Section 9 shall
have been taken with respect to the Collateral and, at the request of the
Collateral Agent, an opinion of counsel acceptable to the Collateral Agent shall
have been furnished to the Collateral Agent prior to any such change of location
to the effect that all financing or continuation statements and amendment or
supplements thereto have been filed in the appropriate filing office or offices,
and all other actions have been taken, in order to perfect (and maintain the
perfection of) the security interest granted hereby in respect of the types of
Collateral. Each Grantor will hold and preserve such records, Assigned
Agreements and Chattel Paper and will permit representatives of the Collateral
Agent at any and all reasonable times to inspect and make abstracts from such
records and Chattel Paper.
(b) Except as otherwise provided in this subsection (b), each Grantor shall
continue to collect, at its own expense, all amounts due or to become due such
Grantor under the Receivables. Upon the occurrence and during the continuance of
any Event of Default, in connection with such collections, each Grantor may take
(and, at the Collateral Agent's direction, shall take) such action as such
Grantor or the Collateral Agent may deem necessary or advisable to enforce
collection of the Receivables; provided, however, that the Collateral Agent
shall have the right upon the occurrence and during the continuance of an Event
of Default, upon notice to such Grantor of its intention to do so, to notify the
obligors under any Receivables of the assignment of such Receivables to the
Collateral Agent and to direct such obligors to make payment of all amounts due
or to become due to such Grantor thereunder directly to the Collateral Agent
and, upon such notification and at the expense of such Grantor, to enforce
collection of any such Receivables, and to adjust, settle or compromise the
amount or payment thereof, in the same manner and to the same extent as such
Grantor might have done. After receipt by any Grantor of the notice from the
Collateral Agent referred to in the proviso to the immediately preceding
sentence, (i) all amounts and proceeds (including instruments) received by such
Grantor in respect of the Receivables shall be received in trust for the benefit
of the Collateral Agent hereunder, shall be segregated from other funds of such
Grantor and shall be forthwith paid over to the Collateral Agent in the same
form as so received (with any necessary indorsement) to be applied as provided
by Section 19(b) of this Agreement and (ii) such Grantor shall not adjust,
settle or compromise the amount or payment of any Receivable, release wholly or
partly any obligor thereof, or allow any credit or discount thereon.
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Section 13. Voting Rights; Dividends; Etc. (a) So long as no Event of
Default shall have occurred and be continuing:
(i) Each Grantor shall be entitled to exercise any and all voting and
other consensual rights pertaining to the Security Collateral or any part
thereof for any purpose not inconsistent with the terms of this Agreement
or the other Documents; provided, however, that such Grantor shall not
exercise or refrain from exercising any such right if such action (a) would
reasonably be expected to have a material adverse effect on the value of
the Security Collateral or any part thereof or (b) would violate or be
inconsistent with any of the terms of this Agreement, the Credit Agreement,
any other Loan Document or any Bank Hedge Agreement;
(ii) Each Grantor shall be entitled to receive and retain any and all
dividends and interest paid in respect of the Security Collateral permitted
by the Credit Agreement; provided, however, that any and all
(A) dividends and interest paid or payable other than in cash in
respect of, and instruments and other property received, receivable or
otherwise distributed in respect of, or in exchange for, such Security
Collateral, and
(B) dividends and other distributions paid or payable in cash in
respect of such Security Collateral in connection with a partial or
total liquidation or dissolution
shall be, and shall be forthwith delivered to the Collateral Agent to hold
as, Security Collateral and shall, if received by such Grantor, be received
in trust for the benefit of the Collateral Agent, be segregated from the
other property or funds of such Grantor and be forthwith delivered to the
Collateral Agent as Security Collateral in the same form as so received
(with any necessary indorsement). Notwithstanding the foregoing, it is
understood that any and all dividends and other distributions paid or
payable in cash in respect of such Security Collateral in connection with a
reduction of capital, capital surplus or paid-in-surplus and any and all
cash paid, payable or otherwise distributed in respect of principal of, or
in redemption of, or in exchange for, such Security Collateral shall be
forthwith delivered to the Blocked Accounts by such Grantor.
(iii) The Collateral Agent shall execute and deliver (or cause to
be executed and delivered) to each Grantor all such proxies and other
instruments as such Grantor may reasonably request for the purpose of
enabling such Grantor to exercise the voting and other rights that it
is entitled to exercise pursuant to paragraph (i) above and to receive
the dividends or interest payments that it is authorized to receive
and retain pursuant to paragraph (ii) above.
(b) Upon the occurrence and during the continuance of an Event of
Default:
(i) All rights of each Grantor (x) to exercise or refrain from
exercising the voting and other consensual rights that it would
otherwise be entitled to exercise pursuant to Section 13(a)(i) shall,
upon notice to such Grantor by the Collateral Agent, cease and
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(y) to receive the dividends and interest payments that it would
otherwise be authorized to receive and retain pursuant to Section
13(a)(ii) shall automatically cease, and all such rights shall
thereupon become vested in the Collateral Agent, which shall thereupon
have the sole right to exercise or refrain from exercising such voting
and other consensual rights and to receive and hold as Security
Collateral such dividends and interest payments.
(ii) All dividends and interest payments that are received by any
Grantor contrary to the provisions of paragraph (i) of this Section
13(b) shall be received in trust for the benefit of the Collateral
Agent, shall be segregated from other funds of such Grantor and shall
be forthwith paid over to the Collateral Agent as Security Collateral
in the same form as so received (with any necessary indorsement).
Section 14. [Intentionally Omitted]
Section 15. [Intentionally Omitted]
Section 16. Transfers and Other Liens; Additional Shares. (a) Each Grantor
agrees not (i) to sell, assign (by operation of law or otherwise) or otherwise
dispose of, or grant any option with respect to, any of the Collateral, except
sales, assignments and dispositions otherwise permitted under the Credit
Agreement, or (ii) to create or suffer to exist any Lien upon or with respect to
any of the Collateral except for the pledge, assignment and security interest
created under this Agreement and the Liens permitted under Section 5.02(a) of
the Credit Agreement.
(b) Each Grantor shall (i) for the Pledged Shares and all other shares of
stock pledged hereunder that are issued by issuers which are controlled by such
Grantor, cause each issuer of the Pledged Shares and each issuer of all other
shares of stock pledged hereunder not to issue any stock or other securities in
addition to or in substitution for the Pledged Shares or such other shares
issued by any such issuer, except to such Grantor, and (ii) pledge hereunder,
immediately upon its acquisition (directly or indirectly) thereof, any and all
additional shares of stock or other securities.
Section 17. Collateral Agent Appointed Attorney-in-Fact. Each Grantor
hereby irrevocably appoints the Collateral Agent, effective upon the occurrence
and during the continuation of any Event of Default, such Grantor's
attorney-in-fact, with full authority in the place and stead of such Grantor and
in the name of such Grantor or otherwise, from time to time in the Collateral
Agent's discretion and upon notice to such Grantor, to take any action and to
execute any instrument that the Collateral Agent may deem necessary or advisable
to accomplish the purposes of this Agreement, including, without limitation:
(a) to obtain and adjust insurance required to be paid to the
Collateral Agent pursuant to Section 11,
(b) to ask for, demand, collect, sue for, recover, compromise, receive
and give acquittance and receipts for moneys due and to become due under or
in respect of any of the Collateral,
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(c) to receive, indorse and collect any drafts or other instruments,
documents and Chattel Paper, in connection with clause (a) or (b) above,
and
(d) to file any claims or take any action or institute any proceedings
that the Collateral Agent may deem necessary or desirable for the
collection of any of the Collateral or otherwise to enforce compliance with
the terms and conditions of any Assigned Agreement or the rights of the
Collateral Agent with respect to any of the Collateral.
Section 18. Collateral Agent May Perform. If any Grantor fails to perform
any agreement contained herein, the Collateral Agent may itself perform, or
cause performance of, such agreement, and the expenses of the Collateral Agent
incurred in connection therewith shall be payable by such Grantor under Section
22(b).
Section 19. Remedies. If any Event of Default shall have occurred and be
continuing:
(a) The Collateral Agent may exercise in respect of the Collateral, in
addition to other rights and remedies provided for herein or otherwise
available to it, all the rights and remedies of a secured party upon
default under the New York UCC (whether or not the New York UCC applies to
the affected Collateral) and also may (i) require each Grantor to, and each
Grantor hereby agrees that it will at its expense and upon request of the
Collateral Agent forthwith, assemble all or part of the Collateral as
directed by the Collateral Agent and make it available to the Collateral
Agent at a place and time to be designated by the Collateral Agent and (ii)
without notice except as specified below, sell the Collateral or any part
thereof in one or more parcels at public or private sale, at any of the
Collateral Agent's offices or elsewhere, for cash, on credit or for future
delivery, and upon such other terms as the Collateral Agent may deem
commercially reasonable. Each Grantor agrees that, to the extent notice of
sale shall be required by law, at least ten days' notice to such Grantor of
the time and place of any public sale or the time after which any private
sale is to be made shall constitute reasonable notification. The Collateral
Agent shall not be obligated to make any sale of Collateral regardless of
notice of sale having been given. The Collateral Agent may adjourn any
public or private sale from time to time by announcement at the time and
place fixed therefor, and such sale may, without further notice, be made at
the time and place to which it was so adjourned.
(b) (i) All cash proceeds received by the Collateral Agent in respect
of any sale of, collection from, or other realization upon all or any part
of the Collateral may, in the discretion of the Collateral Agent, be held
by the Collateral Agent as collateral for, and/or then or at any time
thereafter applied (after payment of any amounts payable to the Collateral
Agent pursuant to Section 22) shall be applied as follows:
(A) first, to the extent proceeds remain after the application of
any amounts pursuant to Section 22, an amount equal to the outstanding
Primary Obligations (as defined in Section 19(b)(ii)) shall be paid to
the Secured Parties as provided in Section 19(b)(iv) hereof, with each
Secured Party receiving an amount equal to such outstanding Primary
Obligations
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(as defined in Section 19(b)(ii)) or, if the proceeds are insufficient
to pay in full all such Primary Obligations, its Pro Rata Share of the
amount remaining to be distributed;
(B) second, to the extent proceeds remain after the application
pursuant to the preceding clause (A), an amount equal to the
outstanding Secondary Obligations (as defined in Section 19(b)(ii))
shall be paid to the Secured Parties as provided in Section 19(b)(iv)
hereof, with each Secured Party receiving an amount equal to its
outstanding Secondary Obligations, or, if the proceeds are
insufficient to pay in full all such Secondary Obligations, its Pro
Rata Share (as defined in Section 19(b)(ii)) of the amount remaining
to be distributed; and
(C) third, to the extent proceeds remain after the application
pursuant to the preceding clauses (A) and (B), and following the
termination of this Agreement pursuant to Section 27 hereof, to the
relevant Grantor or to whomever may be lawfully entitled to receive
such surplus.
(ii) For purposes of this Agreement (x) "Pro Rata Share" shall
mean, when calculating a Secured Party's portion of any distribution
or amount, that amount (expressed as a percentage) equal to a fraction
the numerator of which is the then unpaid amount of such Secured
Party's Primary Obligations or Secondary Obligations, as the case may
be, and the denominator of which is the then outstanding amount of all
Primary Obligations or Secondary Obligations, as the case may be, (y)
"Primary Obligations" shall mean (i) in the case of the Credit
Agreement Obligations, all principal of, and interest on, all
Advances, and all fees and (ii) in the case of the Other Obligations
that are secured by this Agreement or any other Collateral Document,
all amounts due under such Bank Hedge Agreements and (z) "Secondary
Obligations" shall mean all Secured Obligations other than Primary
Obligations.
(iii) When payments to Secured Parties are based upon their
respective Pro Rata Shares, the amounts received by such Secured
Parties hereunder shall be applied (for purposes of making
determinations under this Section 19(b) only) (i) first, to their
Primary Obligations and (ii) second, to their Secondary Obligations.
If any payment to any Secured Party of its Pro Rata Share of any
distribution would result in overpayment to such Secured Party, such
excess amount shall instead be distributed in respect of the unpaid
Primary Obligations or Secondary Obligations, as the case may be, of
the other Secured Parties, with each Secured Party whose Primary
Obligations or Secondary Obligations, as the case may be, have not
been paid in full to receive an amount equal to such excess amount
multiplied by a fraction the numerator of which is the unpaid Primary
Obligations or Secondary Obligations, as the case may be, of such
Secured Party and the denominator of which is the unpaid Primary
Obligations or Secondary Obligations, as the case may be, of all
Secured Parties entitled to such distribution.
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(iv) All payments required to be made hereunder shall be made (x)
if to the Lenders, to the Collateral Agent under the Credit Agreement
for the account of the Lenders, and (y) if to the Hedge Banks, to the
trustee, paying agent or other similar representative (each a
"Representative") for the Hedge Banks or, in the absence of such a
Representative, directly to the Hedge Banks, as their interests may
appear.
(v) For purposes of applying payments received in accordance with
this Section 19(b), the Collateral Agent shall be entitled to rely
upon the Representative for the Hedge Banks or, in the absence of such
a Representative, upon the Hedge Banks for a determination (which each
Representative for any Hedge Banks and the Lenders agree (or shall
agree) to provide upon request of the Collateral Agent) of the
outstanding Primary Obligations and Secondary Obligations owed to the
Lenders or the Hedge Banks, as the case may be. Unless it has actual
knowledge (including by way of written notice from a Lender or a Hedge
Bank) to the contrary, each Representative, in furnishing information
pursuant to the preceding sentence, and the Collateral Agent, in
acting hereunder, shall be entitled to assume that no Secondary
Obligations are outstanding. Unless it has actual knowledge (including
by way of written notice from a Hedge Bank) to the contrary, the
Collateral Agent, in acting hereunder, shall be entitled to assume
that no Bank Hedge Agreements are in existence.
(vi) It is understood that the Grantors shall remain jointly and
severally liable to the extent of any deficiency between the amount of
the proceeds of the Collateral and the aggregate amount of the Secured
Obligations.
(c) The Collateral Agent may exercise any and all rights and remedies
of the Grantors under or in connection with the Assigned Agreements or
otherwise in respect of the Collateral, including, without limitation, any
and all rights of any Grantor to demand or otherwise require payment of any
amount under, or performance of any provision of, any Assigned Agreement.
(d) All payments received by any Grantor under or in connection with
any Assigned Agreement or otherwise in respect of the Collateral shall be
received in trust for the benefit of the Collateral Agent, shall be
segregated from other funds of such Grantor and shall be forthwith paid
over to the Collateral Agent in the same form as so received (with any
necessary indorsement).
(e) The Collateral Agent may, without notice to any Grantor except as
required by law and at any time or from time to time, charge, set-off and
otherwise apply all or any part of the Secured Obligations against the L/C
Cash Collateral Account or any part thereof.
Section 20. Registration Rights. If the Collateral Agent shall determine to
exercise its right to sell all or any of the Security Collateral pursuant to
Section 19, each Grantor agrees that, upon request of the Collateral Agent, such
Grantor will, at its own expense:
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(a) execute and deliver, and cause each issuer of the Security
Collateral contemplated to be sold and the directors and officers thereof
to execute and deliver, all such instruments and documents, and do or cause
to be done all such other acts and things, as may be necessary or, in the
opinion of the Collateral Agent, advisable to register such Security
Collateral under the provisions of the Securities Act of 1933, as amended
from time to time (the "Securities Act"), to cause the registration
statement relating thereto to become effective and to remain effective for
such period as prospectuses are required by law to be furnished and to make
all amendments and supplements thereto and to the related prospectus that,
in the opinion of the Collateral Agent, are necessary or advisable, all in
conformity with the requirements of the Securities Act and the rules and
regulations of the Securities and Exchange Commission applicable thereto;
(b) use its best efforts to qualify the Security Collateral under the
state securities or "Blue Sky" laws and to obtain all necessary
governmental approvals for the sale of the Security Collateral, as
requested by the Collateral Agent;
(c) cause each such issuer to make available to its security holders,
as soon as practicable, an earnings statement that will satisfy the
provisions of Section 11(a) of the Securities Act;
(d) provide the Collateral Agent with such other information
(including, without limitation, forward looking information) as may be
necessary or, in the opinion of the Collateral Agent, advisable to enable
the Collateral Agent to effect the sale of such Security Collateral; and
(e) do or cause to be done all such other acts and things as may be
necessary to make such sale of the Security Collateral or any part thereof
valid and binding and in compliance with applicable law.
Notwithstanding anything contained in this Agreement, the Collateral Agent
may sell all or any of the Security Collateral at a private sale without
registering such Security Collateral under the provisions of the Securities Act
and the Collateral Agent is not liable for any reduced value of such Security
Collateral received by the Collateral Agent as a result of such sale. The
Collateral Agent is authorized, in connection with any sale of the Security
Collateral pursuant to Section 19, to deliver or otherwise disclose to any
prospective purchaser of the Security Collateral (i) any registration statement
or prospectus, and all supplements and amendments thereto, prepared pursuant to
clause (a) above, (ii) any information and projections provided to it pursuant
to clause (d) above and (iii) any other information in its possession relating
to the Security Collateral.
Section 21. The Collateral Agent. (a) The Secured Parties, by their
acceptance of the benefits of this Agreement and the other Loan Documents,
hereby irrevocably designate Fleet to act as the Collateral Agent with respect
to this Agreement and as specified in the other Loan Documents. Each Secured
Party hereby irrevocably authorizes, and each holder of any Note by the
acceptance of such Note and by the acceptance of the benefits of this Agreement
and the other Loan Documents shall be deemed irrevocably to authorize, the
Collateral Agent to take
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such action on its behalf under the provisions of this Agreement and the other
Loan Documents and any other instruments and agreements referred to herein or
therein and to exercise such powers and to perform such duties hereunder and
thereunder as are specifically delegated to or required of the Collateral Agent
by the terms hereof or thereof and such other powers as are reasonably
incidental thereto. The Collateral Agent may perform any of its duties hereunder
and under the other Loan Documents by or through its authorized agents or
employees.
(b) The Collateral Agent shall have no duties or responsibilities except
those expressly set forth in this Agreement and in the other Loan Documents. The
duties of the Collateral Agent shall be mechanical and administrative in nature;
the Collateral Agent shall not have by reason of this Agreement, any other Loan
Document or any Bank Hedge Agreement a fiduciary relationship in respect of any
Secured Party; and nothing in this Agreement, any other Loan Document or any
Bank Hedge Agreement, expressed or implied, is intended to or shall be so
construed as to impose upon the Collateral Agent any obligations in respect of
this Agreement or any other Loan Document except as expressly set forth herein
or therein.
(c) The Collateral Agent shall not be responsible for insuring the
Collateral hereunder or any collateral under the other Collateral Documents or
for the payment of taxes, charges or assessments or discharging of Liens upon
the Collateral hereunder or any collateral under the Collateral Documents or
otherwise as to the maintenance of the Collateral hereunder or any collateral
under the Collateral Documents. The Collateral Agent shall not be required to
ascertain or inquire as to the performance by any Grantor of any of the
covenants or agreements contained in this Agreement or any other Loan Document
or any Bank Hedge Agreement.
(d) The Collateral Agent shall be under no obligation or duty to take any
action under this Agreement or any other Loan Document if taking such action (i)
would subject the Collateral Agent to a tax in any jurisdiction where it is not
then subject to a tax or (ii) would require the Collateral Agent to qualify to
do business in any jurisdiction where it is not then so qualified, unless the
Collateral Agent receives security or indemnity satisfactory to it against such
tax (or equivalent liability), or any liability resulting from such
qualification, in each case as results from the taking of such action under this
Agreement or any other Loan Document or (iii) would subject the Collateral Agent
to in personam jurisdiction in any locations where it is not then so subject.
Notwithstanding any other provision of this Agreement or any other Loan
Document, neither the Collateral Agent nor any of its officers, directors,
employees, affiliates or agents shall, in its individual capacity, be personally
liable for any action taken or omitted to be taken by it in accordance with this
Agreement or any other Loan Document except for its own gross negligence or
willful misconduct.
(e) Independently and without reliance upon the Collateral Agent, each
Secured Party, to the extent it deems appropriate, has made and shall continue
to make (i) its own independent investigation of the financial condition and
affairs of each Grantor in connection with the making and the continuance of the
Obligations and the taking or not taking of any action in connection therewith,
and (ii) its own appraisal of the creditworthiness of each Grantor, and the
Collateral Agent shall have no duty or responsibility, either initially or on a
continuing basis, to provide any Secured Party with any credit or other
information with respect thereto, whether coming into its possession before the
extension of any Obligations or the purchase of any Notes or at any time or
times thereafter. The Collateral Agent shall not be responsible in any manner
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whatsoever to any Secured Party for the correctness of any recitals, statements,
information, representations or warranties in any Document or in any document,
certificate or other writing delivered in connection therewith or for the
execution, effectiveness, genuineness, validity, enforceability, perfection,
collectibility, priority or sufficiency of this Agreement or the other Documents
or the security interests granted hereunder or thereunder or the financial
condition of any Grantor or be required to make any inquiry concerning either
the performance or observance of any of the terms, provisions or conditions of
this Agreement or any other Loan Document, or the financial condition of any
Grantor, or the existence or possible existence of any Default or Event of
Default. The Collateral Agent makes no representations as to the value or
condition of the Collateral hereunder or the collateral under any other
Collateral Document or any part thereof, or as to the title of any Grantor
thereto or as to the security afforded by this Agreement or the other Collateral
Documents.
(f) (i) No Secured Party shall have the right to cause the Collateral Agent
to take any action with respect to the Collateral hereunder or the collateral
under any other Collateral Document, with only the Required Lenders (or after
the repayment in full of all Credit Agreement Obligations, the holders of a
majority of the outstanding Other Obligations) having the right to direct the
Collateral Agent to take any such action. If the Collateral Agent shall request
instructions from the Required Lenders (or after the repayment in full of all
Credit Agreement Obligations, the holders of a majority of the outstanding Other
Obligations), with respect to any act or action (including failure to act) in
connection with this Agreement or any other Collateral Document, the Collateral
Agent shall be entitled to refrain from such act or taking such action unless
and until it shall have received instructions from the Required Lenders (or
after the repayment in full of all Credit Agreement Obligations, the holders of
a majority of the outstanding Other Obligations) and to the extent requested,
appropriate indemnification in respect of actions to be taken, and the
Collateral Agent shall not incur liability to any Person by reason of so
refraining. Without limiting the foregoing, no Secured Party shall have any
right of action whatsoever against the Collateral Agent as a result of the
Collateral Agent acting or refraining from acting hereunder in accordance with
the instructions of the Required Lenders (or after the repayment in full of all
Credit Agreement Obligations, the holders of a majority of the outstanding Other
Obligations).
(ii) The Collateral Agent shall be under no obligation to exercise any of
the rights or powers vested in it by this Agreement or any other Loan Document
at the request or direction of any of the Secured Parties, unless such Secured
Parties shall have offered to the Collateral Agent reasonable security or
indemnity against the costs, expenses and liabilities that might be incurred by
it in compliance with such request or direction.
(g) The Collateral Agent shall be entitled to rely, and shall be fully
protected in relying, upon any note, writing, resolution, notice, statement,
certificate, telex, teletype or telecopier message, cablegram, radiogram, order
or other document or telephone message signed, sent or made by the proper Person
or entity, and, with respect to all legal matters pertaining to this Agreement
or any other Document and its duties hereunder or thereunder, upon advice of
counsel selected by it.
(h) To the extent the Collateral Agent is not reimbursed and indemnified by
any Grantor under this Agreement or any other Loan Document, the Secured Parties
will reimburse
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and indemnify the Collateral Agent, in proportion to their respective
outstanding principal amounts (including, for this purpose, any unpaid Primary
Obligations in respect of Bank Hedge Agreements, as outstanding principal) of
Obligations, for and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever which may be imposed on, incurred by or
asserted against the Collateral Agent in performing its duties hereunder or
under any other Loan Document, or in any way relating to or arising out of its
actions as Collateral Agent in respect of this Agreement or under any other Loan
Document (including any amounts required to be returned by the Collateral Agent
in respect of Collateral hereunder or collateral under any other Collateral
Document) except for those resulting solely from the Collateral Agent's own
gross negligence or willful misconduct. The indemnities set forth in this
Section 21(h) shall survive the repayment of all Obligations, with the
respective indemnification at such time to be based upon the outstanding
principal amounts (determined as described above) of Obligations at the time of
the respective occurrence upon which the claim against the Collateral Agent is
based or, if same is not reasonably determinable, based upon the outstanding
principal amounts (determined as described above) of Obligations as in effect
immediately prior to the termination of this Agreement. The indemnities set
forth in this Section 21(h) are in addition to any indemnities provided by the
Lenders to the Collateral Agent pursuant to the Credit Agreement, with the
effect being that the Lenders shall be responsible for indemnifying the
Collateral Agent to the extent the Collateral Agent does not receive payments
pursuant to this Section 21(h) from the Secured Parties (although in such event,
and upon the payment in full of all such amounts owing to the Collateral Agent,
the respective Lenders who paid same shall be subrogated to the rights of the
Collateral Agent to receive payment from the Secured Parties).
(i) With respect to its obligations as a lender under the Credit Agreement
and any other Loan Documents to which the Collateral Agent is a party, and to
act as agent under one or more of such Loan Documents, the Collateral Agent
shall have the rights and powers specified therein and herein for a "Lender" or
an "Collateral Agent", as the case may be, and may exercise the same rights and
powers as though it were not performing the duties specified herein; and the
terms "Lender," "Required Lenders," "holders of Notes," or any similar terms
shall, unless the context clearly otherwise indicates, include the Collateral
Agent in its individual capacity. The Collateral Agent may accept deposits from,
lend money to, and generally engage in any kind of banking, trust or other
business with any Grantor or any Affiliate or Subsidiary of any Grantor as if it
were not performing the duties specified herein or in the other Loan Documents,
and may accept fees and other consideration from any Grantor for services in
connection with the Credit Agreement, the other Loan Documents and otherwise
without having to account for the same to the Secured Parties.
(j) The Collateral Agent may deem and treat the payee of any Note as the
owner thereof for all purposes hereof unless and until written notice of the
assignment, transfer or endorsement thereof, as the case may be, shall have been
filed with the Collateral 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 final and conclusive and binding on
any subsequent holder, transferee, assignee or endorsee, as the case may be, of
such Note or of any Note or Notes issued in exchange therefor.
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(k) The Collateral Agent may resign from the performance of all of its
functions and duties under this Agreement at any time by giving 20 Business
Days' prior or written notice to each Grantor and the Secured Parties. Such
resignation shall take effect upon the appointment of a successor Collateral
Agent pursuant to clause (ii) or (iii) of this Section 21(k).
(ii) If a successor Collateral Agent shall not have been appointed
within said 20 Business Day period by the Required Lenders, the Collateral
Agent, with the consent of each Grantor, which consent shall not be
unreasonably withheld or delayed, shall then appoint a successor Collateral
Agent who shall serve as Collateral Agent hereunder until such time, if
any, as the Required Lenders appoint a successor Collateral Agent as
provided above.
(iii) If no successor Collateral Agent has been appointed pursuant to
clause (ii) of this Section 21(k) by the 20th Business Day after the date
of such notice of resignation was given by the Collateral Agent, the
Required Lenders shall then appoint a successor Collateral Agent who shall
serve as Collateral Agent hereunder until such time, if any, as the
Required Lenders appoint a successor Collateral Agent as provided above.
(l) Each Grantor (by its execution and delivery hereof) hereby agrees that
it shall pay to Fleet as the Collateral Agent, such fees as have been separately
agreed to in writing with Fleet for acting as Collateral Agent hereunder and
under the other Collateral Documents. In the event a successor Collateral Agent
is appointed pursuant to Section 21(k), each Grantor hereby agrees to pay such
successor Collateral Agent such fees for acting as such as would customarily be
charged by such Collateral Agent for acting in such capacity in similar
situations.
Section 22. Indemnity and Expenses. (a) Each of the Grantors jointly and
severally agrees to indemnify each Secured Party from and against any and all
claims, losses and liabilities growing out of or resulting from this Agreement
(including, without limitation, enforcement of this Agreement), except claims,
losses or liabilities found in a final, appealable judgment by a court of
competent jurisdiction to have resulted solely from such Secured Party's gross
negligence or wilful misconduct.
(b) Each Grantor jointly and severally agrees to pay to the Collateral
Agent, upon demand, the amount of any and all reasonable costs and expenses,
including, without limitation, the reasonable fees and expenses of its counsel
and of any experts and agents (including, without limitation, the following
costs of such counsel: support staff, litigation preparation, computerized
research, telephone, telefax, mileage, deposition, postage, photocopy, process
service, video tape and other similar costs), that the Collateral Agent may
incur in connection with (i) the administration of this Agreement, (ii) the
custody, preservation, use or operation of, or the sale of, collection from or
other realization upon, any of the Collateral, (iii) the exercise or enforcement
of any of the rights of the Collateral Agent or any other Secured Party
hereunder or (iv) the failure by such Grantor to perform or observe any of the
provisions hereof.
Section 23. Security Interest Absolute. The obligations of each Grantor
under this Agreement are independent of the Secured Obligations, and a separate
action or actions may be
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brought and prosecuted against such Grantor to enforce this Agreement,
irrespective of whether any action is brought against the other Grantors or
whether the other Grantors are joined in any such action or actions. All rights
of the Collateral Agent and the pledge, assignment and security interest
hereunder, and all obligations of each Grantor hereunder, shall be absolute and
unconditional, irrespective of:
(i) any lack of validity or enforceability of any Loan Document, any
Bank Hedge Agreement or any other agreement or instrument relating thereto;
(ii) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Secured Obligations, or any other
amendment or waiver of or any consent to any departure from any Loan
Document or any Bank Hedge Agreement, including, without limitation, any
increase in the Secured Obligations resulting from the extension of
additional credit to any Grantor or any of its Subsidiaries or otherwise;
(iii) any taking, exchange, release or nonperfection of any other
collateral, or any taking, release or amendment or waiver of or consent to
departure from any guaranty, for all or any of the Secured Obligations;
(iv) any manner of application of collateral, or proceeds thereof, to
all or any of the Secured Obligations, or any manner of sale or other
disposition of any collateral for all or any of the Secured Obligations or
any other assets of any Grantor or any of its Subsidiaries;
(v) any change, restructuring or termination of the corporate
structure or existence of any Grantor or any of its Subsidiaries; or
(vi) any other circumstance that might otherwise constitute a defense
available to, or a discharge of, such Grantor or a third-party grantor of a
security interest.
Section 24. Amendments; Waivers; Etc. (a) No amendment or waiver of any
provision of this Agreement, and no consent to any departure by any Grantor
herefrom, shall in any event be effective unless the same shall be in writing
and signed by the Collateral Agent, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.
(b) No failure on the part of the Collateral Agent, any Lender or any Hedge
Bank to exercise, and no delay in exercising, any right, power or privilege
hereunder shall operate as a waiver thereof or consent thereto; nor shall any
single or partial exercise of any such right, power or privilege preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege.
(c) Upon the execution and delivery by any Person of a security agreement
supplement in substantially the form of Exhibit B hereto (each a "Pledge and
Security Agreement Supplement"), (i) such Person shall be referred to as an
"Additional Collateral Grantor" and shall be and become a Grantor, and each
reference in this Agreement to "Grantor" shall also mean and be a reference to
such Additional Collateral Grantor and (ii) the supplements attached to each
KL2:194292.6
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<PAGE>
Pledge and Security Agreement Supplement shall be incorporated into and become a
part of and supplement Schedules I through VII hereto, as appropriate, and the
Collateral Agent may attach such supplements to such Schedules, and each
reference to such Schedules shall mean and be a reference to such Schedules, as
supplemented pursuant hereto.
Section 25. Addresses for Notices. All notices and other communications
provided for hereunder shall be in writing (including telecopier, telegraphic or
telex communication) and mailed, telecopied, telegraphed, telexed, cabled or
delivered, if to any Grantor, addressed to it at the address set forth below the
name of such Grantor on the signature pages hereof (or, in the case of any
Additional Collateral Grantor, at the address set forth below the name of such
Additional Collateral Grantor on the signature page of its Pledge and Security
Agreement Supplement), and if to the Collateral Agent, any Lender, the Issuing
Bank or any Hedge Bank, addressed to it at its address set forth in Section 8.02
of the Credit Agreement, or, as to any party, at such other address as shall be
designated by such party in a written notice to the each other party complying
as to delivery with the terms of this Section 25. All such notices and other
communications shall, when mailed, telecopied, telegraphed or telexed, be
effective when deposited in the mails, delivered to the telegraph company,
transmitted by telecopier or confirmed by telex answerback, respectively,
addressed as aforesaid.
Section 26. Continuing Security Interest; Assignments under the Credit
Agreement. This Agreement shall create a continuing security interest in the
Collateral and shall (a) remain in full force and effect until the latest of the
indefeasible and irrevocable payment in full in cash of the Secured Obligations,
the Final Maturity Date and the termination or expiration of all Bank Hedge
Agreements, (b) be binding upon each Grantor, its successors and assigns and (c)
inure, together with the rights and remedies of the Collateral Agent hereunder,
to the benefit of the Secured Parties and their respective successors,
transferees and assigns. Without limiting the generality of the foregoing clause
(c), any Lender may assign or otherwise transfer all or any portion of its
rights and obligations under the Credit Agreement (including, without
limitation, all or any portion of its Commitment, the Advances owing to it and
the Note or Notes held by it) to any other Person, and such other Person shall
thereupon become vested with all the benefits in respect thereof granted to such
Lender herein or otherwise, in each case as provided in Section 8.07 of the
Credit Agreement.
Section 27. Release and Termination. (a) Upon any sale, lease, transfer or
other disposition of any item of Collateral in accordance with the terms of the
Loan Documents (other than sales of Inventory in the ordinary course of business
consistent with past practices), the Collateral Agent will, at the appropriate
Grantor's expense, execute and deliver to such Grantor such documents as such
Grantor shall reasonably request to evidence the release of such item of
Collateral from the assignment and security interest granted hereby; provided,
however, that (i) at the time of such request and such release no Event of
Default shall have occurred and be continuing, (ii) such Grantor shall have
delivered to the Collateral Agent, at least ten Business Days prior to the date
of the proposed release, a written request for release describing the item of
Collateral and the terms of the sale, lease, transfer or other disposition in
reasonable detail, including, without limitation, the price thereof and any
expenses in connection therewith, together with a form of release for execution
by the Collateral Agent and a certification by such Grantor to the effect that
the transaction is in compliance with the Loan Documents and as to such other
matters as the Collateral Agent may request and (iii) the Net Cash Proceeds of
any such sale,
KL2:194292.6
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<PAGE>
lease, transfer or other disposition required to be applied in accordance with
Section 2.06 of the Credit Agreement shall be paid to, or in accordance with the
instructions of, the Collateral Agent at the closing.
(b) Upon the latest of the indefeasible and irrevocable payment in full in
cash of the Secured Obligations, the Final Maturity Date and the termination or
expiration of all Bank Hedge Agreements, the pledge, assignment and security
interest granted hereby shall terminate and all rights to the Collateral shall
revert to the appropriate Grantor. Upon any such termination, the Collateral
Agent will, at the appropriate Grantor's expense, execute and deliver to such
Grantor such documents as such Grantor shall reasonably request to evidence such
termination.
Section 28. Jurisdiction, Etc. (a) THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND
BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND
TO BE PERFORMED ENTIRELY IN SUCH STATE. UNLESS OTHERWISE DEFINED HEREIN OR IN
THE CREDIT AGREEMENT, TERMS USED IN ARTICLE 9 OF THE NEW YORK UCC ARE USED
HEREIN AS THEREIN DEFINED. ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT, ANY OTHER DOCUMENT OR ANY BANK HEDGE AGREEMENT MAY BE BROUGHT IN THE
COURTS OF THE STATE OF NEW YORK SITTING IN NEW YORK CITY OR OF THE UNITED STATES
FOR THE SOUTHERN DISTRICT OF NEW YORK, AND, BY EXECUTION AND DELIVERY OF THIS
AGREEMENT, EACH PARTY TO THIS AGREEMENT HEREBY IRREVOCABLY ACCEPTS FOR ITSELF
AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION
OF THE AFORESAID COURTS. EACH SUCH PARTY HEREBY FURTHER IRREVOCABLY WAIVES ANY
CLAIM THAT ANY SUCH COURTS LACK PERSONAL JURISDICTION OVER SUCH PARTY, AND
AGREES NOT TO PLEAD OR CLAIM, IN ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO
THIS AGREEMENT, ANY OTHER DOCUMENT TO WHICH IT IS A PARTY OR ANY BANK HEDGE
AGREEMENT BROUGHT IN ANY OF THE AFORESAID COURTS, THAT ANY SUCH COURTS LACK
PERSONAL JURISDICTION OVER SUCH PARTY. EACH SUCH PARTY FURTHER IRREVOCABLY
CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN
ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR
CERTIFIED MAIL, POSTAGE PREPAID, TO SUCH PARTY AT ITS ADDRESS SET FORTH IN
SECTION 8.02 OF THE CREDIT AGREEMENT, SUCH SERVICE TO BECOME EFFECTIVE 30 DAYS
AFTER SUCH MAILING. EACH SUCH PARTY HEREBY IRREVOCABLY WAIVES ANY OBJECTION TO
SUCH SERVICE OF PROCESS AND FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD
OR CLAIM IN ANY ACTION OR PROCEEDING COMMENCED HEREUNDER OR UNDER ANY OTHER
DOCUMENT OR UNDER ANY BANK HEDGE AGREEMENT THAT SERVICE OF PROCESS WAS IN ANY
WAY INVALID OR INEFFECTIVE. NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE AGENT,
THE COLLATERAL AGENT, ANY SECURED PARTY OR ANY HEDGE BANK TO SERVE PROCESS IN
ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE
KL2:194292.6
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<PAGE>
LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST ANY PARTY IN ANY OTHER
JURISDICTION.
(b) EACH PARTY TO THIS AGREEMENT HERETO HEREBY IRREVOCABLY WAIVES TO THE
FULLEST EXTENT PERMITTED UNDER APPLICABLE LAW ANY OBJECTION WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY OF THE AFORESAID ACTIONS OR
PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT, ANY OTHER
DOCUMENT OR ANY BANK HEDGE AGREEMENT BROUGHT IN THE COURTS REFERRED TO IN CLAUSE
(a) ABOVE AND HEREBY FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM
IN ANY SUCH COURT THAT ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT
HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
(c) EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES ALL
RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT
OF OR RELATING TO THIS AGREEMENT, THE OTHER DOCUMENTS, ANY BANK HEDGE AGREEMENT
OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
KL2:194292.6
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<PAGE>
IN WITNESS WHEREOF, each Grantor has caused this Agreement to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.
PRECISE TECHNOLOGY, INC.,
as Grantor
By ___________________________________
Name:
Title:
PRECISE TECHNOLOGY OF DELAWARE, INC.
By ___________________________________
Name:
Title:
PRECISE TECHNOLOGY OF ILLINOIS, INC.
By ___________________________________
Name:
Title:
PRECISE TMP, INC.
By ___________________________________
Name:
Title:
PRECISE POLESTAR, INC.
By ___________________________________
Name:
Title:
[Signature Page to the General Pledge and Security Agreement]
KL2:194292.6
<PAGE>
MASSIE TOOL, MOLD & DIE, INC.
By ___________________________________
Name:
Title:
Agreed and consented to as of
the date first above written:
FLEET NATIONAL BANK,
as Collateral Agent
By _______________________________
Name:
Title:
[Signature Page to the General Pledge and Security Agreement]
KL2:194292.6
<PAGE>
Schedule I
Part I
PLEDGED SHARES
Percentage of
Issuing Corporation Number of Shares Shares Outstanding Par Value
- ------------------- ---------------- ------------------ ---------
$
Part II
PLEDGED DEBT
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<PAGE>
Schedule II
ASSIGNED AGREEMENTS
KL2:194292.6
<PAGE>
Schedule III
Part I
LOCATIONS OF PLANT AND EQUIPMENT
Part II
LOCATIONS OF INVENTORY
KL2:194292.6
<PAGE>
Schedule IV
INVENTORY SCHEDULE FOR SECTION 8(a)
KL2:194292.6
<PAGE>
Schedule V
BLOCKED ACCOUNTS
Bank Name:
Bank Address:
Contact:
1. Account Name:
Account Number:
2. Account Name:
Account Number:
3. Account Name:
Account Number:
KL2:194292.6
<PAGE>
Schedule VI
TRADE NAMES
KL2:194292.6
<PAGE>
EXHIBIT A
to
Pledge and Security Agreement
FORM OF BLOCKED ACCOUNT LETTER
_______________, 199_
[Bank]
[Address]
Attn: ________________
Re: [NAME OF GRANTOR]
Ladies and Gentlemen:
Reference is made to deposit accounts listed on the attached Schedule I
into which certain monies, instruments and other properties are deposited from
time to time (the "Accounts") maintained with you by ____________ (the
"Company"). Pursuant to a Pledge and Security Agreement dated June 13, 1997 (the
"Security Agreement"), the Company has granted to Fleet National Bank, as
collateral agent (the "Collateral Agent") for the Lenders referred to in the
Credit Agreement dated as of June 13, 1997 (the "Credit Agreement"; unless
otherwise defined herein, the terms defined in the Credit Agreement being used
herein as therein defined) with the Company, a security interest in certain
property of the Company, including, among other things, the following (the
"Account Collateral"): the Accounts, all funds held therein and all certificates
and instruments, if any, from time to time representing or evidencing the
Accounts, all notes, certificates of deposit, checks, interest, dividends, cash,
instruments and other property from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all of the then
existing Account Collateral and all proceeds of any and all of the foregoing
Account Collateral and, to the extent not otherwise included, all (i) payments
under insurance (whether or not the Collateral Agent is the loss payee thereof),
or any indemnity, warranty or guaranty, payable by reason of loss or damage to
or otherwise with respect to any of the foregoing Account Collateral and (ii)
cash. It is a condition to the continued maintenance of the Accounts with you
that you agree to this letter agreement.
By signing this letter agreement, you acknowledge notice of, and consent to
the terms and provisions of, the Security Agreement and confirm to the
Collateral Agent that you have received no notice of any other pledge or
assignment of the Accounts. Further, you hereby agree with the Collateral Agent
that:
KL2:194292.6
<PAGE>
(a) Notwithstanding anything to the contrary in any other agreement
relating to the Accounts, the Accounts are and will be subject to the terms
and conditions of the Security Agreement, will be maintained solely for the
benefit of the Collateral Agent, will be entitled "_________________ " and
will be subject to written instructions only from an officer of the
Collateral Agent.
(b) Upon the written request of the Collateral Agent to you, which
request shall specify that an "Event of Default" under the Credit Agreement
has occurred and is continuing (which writing may be by telex or telecopy
and upon which you may conclusively rely, absent manifest error), you shall
immediately transfer (at the cost and expense of the Company) subject to
your usual deposit terms, all funds then or thereafter deposited in the
Accounts by wire transfer to the Collateral Agent at
__________________________, Account No. _____________, _________________.
(c) From and after the date that the Collateral Agent shall have sent
to you a written notice (which writing may be by telex or telecopy and upon
which you may conclusively rely, absent manifest error) that an "Event of
Default" under the Credit Agreement has occurred and until the date, if
any, that the Collateral Agent shall have advised you in writing (which
writing may be by telex or telecopy and upon which you may conclusively
rely, absent manifest error) that no Event of Default is continuing, you
shall not honor any withdrawal or transfer from, or any check, draft or
other item of payment on, the Accounts, other than any withdrawal,
transfer, check, draft or other item made in writing by the Collateral
Agent or bearing the written consent of the Collateral Agent, and, to the
extent of collected funds in the Accounts, you shall honor each such
withdrawal, transfer, check, draft or other item made in writing by the
Collateral Agent or bearing the written consent of the Collateral Agent.
(d) You will follow your usual operating procedures for the handling
of the Accounts, including any remittance received in the Accounts that
contains restrictive endorsements, irregularities (such as a variance
between the written and numerical amounts), undated or postdated items,
missing signatures, incorrect payees, etc.
(e) You will maintain a record of all checks and other remittance
items received in the Accounts and furnish to the Collateral Agent a
monthly statement of the Accounts.
(f) You shall furnish to the Collateral Agent, promptly upon the
reasonable written request of the Collateral Agent in each instance, the
bank statements and all other information regarding the Accounts, to the
extent the same is provided to the Company, for the period of time
specified in such written notice, and the Company hereby authorizes you to
furnish same.
(g) You agree that you will not make, and you hereby waive all of your
rights to make, any charge, debit or offset to the Accounts for any reason
whatsoever, and
KL2:194292.6
2
<PAGE>
waive any and all liens, whether contractual or provided under law, which
you may have or hereafter acquire on the Accounts or funds therein, in each
case, other than any charge, offset, debit or lien in respect of your
customary service charges relating to the Accounts.
(h) All service charges and fees with respect to the Accounts shall be
payable by the Company.
(i) The Collateral Agent shall be entitled to exercise any and all
rights of the Company in respect of the Accounts in accordance with the
terms of the Security Agreement, and the undersigned shall comply in all
respects with such exercise.
This letter agreement shall be binding upon you and your successors and
assigns and shall inure to the benefit of the Collateral Agent, the Lenders and
their successors, transferees and assigns. You may terminate this letter
agreement only upon thirty days' prior written notice to the Company and the
Collateral Agent. Upon such termination you shall close the Accounts and
transfer all funds in the Accounts to the Company.
KL2:194292.6
3
<PAGE>
THIS LETTER AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE
PERFORMED ENTIRELY IN SUCH STATE.
Very truly yours,
[NAME OF GRANTOR]
By:___________________________________
Name:
Title:
FLEET NATIONAL BANK,
as Collateral Agent
By:___________________________________
Name:
Title:
Acknowledged and agreed to as of
the date first above written:
[BANK]
By:_______________________________
Name:
Title:
KL2:194292.6
4
<PAGE>
SCHEDULE I
Accounts
1. Account Name:
Account Number:
2. Account Name:
Account Number:
3. Account Name:
Account Number:
KL2:194292.6
<PAGE>
EXHIBIT B
to
Pledge and Security Agreement
FORM OF PLEDGE AND SECURITY AGREEMENT SUPPLEMENT
[Date]
Ladies and Gentlemen:
Reference is made to the above-captioned Pledge and Security Agreement,
dated as of June 13, 1997 (as amended, supplemented or otherwise modified, the
"Security Agreement"). Unless otherwise defined herein, terms defined in the
Security Agreement are used herein as therein defined.
The undersigned hereby agrees, as of the date first above written, to
become a Grantor under the Security Agreement as if it were an original party
thereto and agrees that each reference in the Security Agreement to a "Grantor"
shall also mean and be a reference to the undersigned.
The undersigned hereby assigns and pledges to the Collateral Agent for its
benefit, the benefit of the Issuing Bank and the ratable benefit of the Lenders
and hereby grants to the Collateral Agent for its benefit, the benefit of the
Issuing Bank and the ratable benefit of the Lenders as collateral for the
Secured Obligations a pledge and assignment of, and a security interest in, all
of the right, title and interest of the undersigned in and to its Collateral,
whether now owned or hereafter acquired, wherever located and whether now or
hereafter existing.
The undersigned has attached hereto supplements to Schedules I through VII
to the Security Agreement, and the undersigned hereby certifies that such
supplements have been prepared by the undersigned in substantially the form of
the Schedules to the Security Agreement and are accurate and complete as of the
date first above written.
The undersigned hereby makes each representation and warranty set forth in
Section 8 of the Security Agreement as to itself and as to its Collateral to the
same extent as
KL2:194292.6
<PAGE>
each other Grantor and hereby agrees to be bound as a Grantor by all of the
terms and provisions of the Security Agreement to the same extent as all other
Grantors.
THIS LETTER SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED
ENTIRELY IN SUCH STATE.
Very truly yours,
[NAME OF ADDITIONAL
GRANTOR]
By ___________________________________
Name:
Title:
Address:
KL2:194292.6
2
<PAGE>
EXHIBIT C
to
Pledge and Security Agreement
FORM OF CONSENT AND AGREEMENT
The undersigned hereby acknowledges notice of, and consents to the terms
and provisions of, the Pledge and Security Agreement dated June 13, 1997 (the
"Security Agreement"; the terms defined therein being used herein as therein
defined) from PRECISE TECHNOLOGY, INC., (the "Borrower") and each other Grantor
party thereto to FLEET NATIONAL BANK, as collateral agent (the "Collateral
Agent") for the Secured Parties referred to therein, and hereby agrees with the
Collateral Agent that:
(a) The undersigned will make all payments to be made by it under or in
connection with the __________ Agreement dated _______________, 19__ (the
"Assigned Agreement") between the undersigned and the Borrower in accordance
with the instructions of the Collateral Agent.
(b) All payments referred to in paragraph (a) above shall be made by the
undersigned irrespective of, and without deduction for, any counterclaim,
defense, recoupment or set-off and shall be final, and the undersigned will not
seek to recover from any Secured Party for any reason any such payment once
made.
(c) The Collateral Agent shall be entitled to exercise any and all rights
and remedies of the Borrower under the Assigned Agreement in accordance with the
terms of the Security Agreement, and the undersigned shall comply in all
respects with such exercise.
(d) The undersigned will not, without the prior written consent of the
Collateral Agent, (i) cancel or terminate the Assigned Agreement or consent to
or accept any cancellation or termination thereof, (ii) amend or otherwise
modify the Assigned Agreement, or (iii) make any prepayment of amounts to become
due under or in connection with the Assigned Agreement, except as expressly
provided therein.
In order to induce the Lenders to make Advances under the Credit Agreement,
the undersigned repeats and reaffirms for the benefit of the Secured Parties the
representations and warranties made in Section _____ of the Assigned Agreement.
This Consent and Agreement shall be binding upon the undersigned and its
successors and assigns, and shall inure, together with the rights and remedies
of the Collateral Agent hereunder, to the benefit of the Secured Parties and
their successors, transferees and assigns.
KL2:194292.6
<PAGE>
THIS CONSENT AND AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE
PERFORMED ENTIRELY IN SUCH STATE.
IN WITNESS WHEREOF, the undersigned has duly executed this Consent and
Agreement as of the date set opposite its name below.
Dated: _______________, 19__
[NAME OF OBLIGOR]
By: __________________________________
Name:
Title:
KL2:194292.6
2
<PAGE>
EXHIBIT D-2 TO THE
CREDIT AGREEMENT
PARENT PLEDGE AND SECURITY AGREEMENT
Dated June 13, 1997
From
PRECISE HOLDING CORPORATION,
as Grantor,
to
FLEET NATIONAL BANK,
as Collateral Agent
<PAGE>
T A B L E O F C O N T E N T S
Section Page
1. Grant and Pledge of Security 2
2. Security for Obligations 2
3. Grantor Remains Liable 3
4. Delivery of Collateral 3
5. Representations, Warranties and Covenants 3
6. Further Assurances 4
7. Voting Rights; Dividends; Etc. 5
8. Transfers and Other Liens; Additional Shares 6
9. Collateral Agent Appointed Attorney-in-Fact 6
10. Collateral Agent May Perform 7
11. Remedies 7
12. Registration Rights 9
13. The Collateral Agent 10
14. Indemnity and Expenses 14
15. Security Interest Absolute 14
16. Amendments; Waivers; Etc 15
17. Addresses for Notices 15
18. Continuing Security Interest; Assignments under the
Credit Agreement 15
19. Release and Termination 16
20. Jurisdiction, Etc. 16
Schedule I-Pledged Shares
<PAGE>
PARENT PLEDGE AND SECURITY AGREEMENT
PARENT PLEDGE AND SECURITY AGREEMENT (as amended, supplemented or otherwise
modified from time to time, this "Agreement"), dated June 13, 1997, made by and
between PRECISE HOLDING CORPORATION, a Delaware corporation (the "Grantor") to
FLEET NATIONAL BANK ("Fleet"), as collateral agent (together with any successor
collateral agent appointed pursuant to Section 13, the "Collateral Agent") for
the Secured Parties, as custodian for the Hedge Banks and as Issuing Bank.
PRELIMINARY STATEMENTS.
(1) The Grantor, Precise Technology, Inc., a Delaware corporation (the
"Borrower"), and each Subsidiary Guarantor have entered into a Credit Agreement,
dated as of June 13, 1997, (said Agreement, as it may hereafter be amended,
supplemented or otherwise modified from time to time, being the "Credit
Agreement", the terms defined therein and not otherwise defined herein being
used herein as therein defined) with Fleet, as agent (together with any
successor agent appointed pursuant to Article VII of the Credit Agreement, the
"Agent"), and the Lenders from time to time party thereto.
(2) Pursuant to the Parent Guaranty, the Grantor has guaranteed to the
Lenders the payment when due of all obligations and liabilities of the Borrower
under or with respect to the Loan Documents.
(3) The Grantor is the record owner of all stock at any time pledged or
required to be pledged hereunder, including without limitation the shares of
stock described in Schedule I hereto and issued by the corporation named therein
(the "Pledged Shares").
(4) It is a condition precedent to the making of Advances by the Lenders
and the issuance of Letters of Credit by the Issuing Bank under the Credit
Agreement and the entry by the Hedge Banks into the Bank Hedge Agreements with
the Borrower from time to time that the Grantor shall have granted the
assignment and security interest and made the pledge and assignment contemplated
by this Agreement.
(5) The Grantor will obtain benefits from the incurrence of Advances and
the issuance of Letters of Credit under the Credit Agreement and the entering
into of Bank Hedge Agreements with the Hedge Banks and, accordingly, the Grantor
desires to execute this Agreement to satisfy the conditions described in the
preceding paragraph (4).
NOW, THEREFORE, in consideration of the premises and in order to induce the
Lenders to make Advances and the Issuing Bank to issue Letters of Credit under
the Credit Agreement and to induce the Hedge Banks to enter into Bank Hedge
Agreements with the Borrower from time to time, the Grantor hereby agrees with
the Collateral Agent for the ratable benefit of the Secured Parties as follows:
KL2:200855.2
<PAGE>
Section 1. Grant and Pledge of Security. The Grantor hereby assigns and
pledges to the Collateral Agent for the ratable benefit of the Secured Parties,
and hereby grants to the Collateral Agent for the ratable benefit of the Secured
Parties a security interest in, the following, in each case, as to each type of
property described below, whether now owned or hereafter owned or acquired,
wherever located and whether now or hereafter existing (collectively, the
"Collateral"):
(a) the Pledged Shares and the certificates representing the Pledged
Shares, and all dividends, cash, instruments and other property from time
to time received, receivable or otherwise distributed in respect of or in
exchange for any or all of the Pledged Shares; and
(b) all proceeds of any and all of the foregoing Collateral.
Notwithstanding clauses (a) through (c), the payment and performance of the
Grantor's obligations shall not be secured by more than 66% of the total
combined voting power of all classes of capital stock owed by the Grantor of any
foreign Subsidiary entitled to vote. Following a change in the relevant
provisions of the Internal Revenue Code or the regulations, published rules,
published rulings, notices or other official pronouncements issued or
promulgated thereunder, if the Collateral Agent or the Required Lenders request
a pledge of additional stock of any foreign Subsidiary of the Grantor, all of
the stock of which foreign Subsidiary has not already been pledged pursuant to
this Agreement, then within 90 days after such request the Grantor shall either
(i) pledge such additional stock of such foreign Subsidiary or (ii) deliver to
the Collateral Agent an opinion of the counsel of the Grantor, which counsel
shall be reasonably acceptable to the Collateral Agent, that the requested
pledge of such additional stock is more likely than not to cause the
undistributed earnings of such foreign Subsidiary to be treated as a deemed
dividend to such foreign Subsidiary's United States parent for Federal income
tax purposes.
Section 2. Security for Obligations. This Agreement secures (i) the full
and prompt payment when due (whether at the stated maturity, by acceleration or
otherwise) of all obligations and liabilities (including, without limitation,
the principal of and interest on the Notes issued by, and Advances made to, the
Borrower under the Credit Agreement, and all indemnities, fees and interest
thereon or owed thereunder) of the Grantor to the Secured Parties, whether now
existing or hereafter incurred under, arising out of or in connection with any
Loan Document (including, without limitation, all of the Grantor's obligations
and liabilities under the Parent Guaranty) to which the Grantor is a party and
the due performance and compliance by the Grantor with all of the terms,
conditions and agreements contained in the Credit Agreement and such other Loan
Documents (all such principal, interest, indemnities, fees, obligations and
liabilities being herein collectively called the "Credit Agreement
Obligations"); (ii) to the extent that any Bank Hedge Agreement is entitled to
the benefits of this Agreement, the full and prompt payment when due (whether at
the stated maturity, by acceleration or otherwise) of all obligations and
liabilities of the Grantor to the Hedge Banks, whether now existing or hereafter
incurred under, arising out of or in connection with any such Bank Hedge
Agreement and the due performance and compliance by the Grantor with all the
terms, conditions and agreements contained in such Bank Hedge Agreement (all
such obligations and liabilities described in this clause (ii) being herein
collectively called the "Other Obligations", and together with the Credit
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Agreement Obligations, collectively the "Secured Obligations"). Without limiting
the generality of the foregoing, this Agreement secures the payment of all
amounts that constitute part of the Secured Obligations and would be owed by the
Grantor to the Secured Parties under the Loan Documents but for the fact that
they are unenforceable or not allowable due to the existence of a bankruptcy,
reorganization or similar proceeding involving the Grantor.
Section 3. Grantor Remains Liable. Anything herein to the contrary
notwithstanding, (a) the Grantor shall remain liable under the contracts and
agreements included in the Collateral to the extent set forth therein to perform
all of its duties and obligations thereunder to the same extent as if this
Agreement had not been executed, (b) the exercise by the Collateral Agent of any
of the rights hereunder shall not release the Grantor from any of its duties or
obligations under the contracts and agreements included in the Collateral and
(c) no Secured Party shall have any obligation or liability under the contracts
and agreements included in the Collateral by reason of this Agreement or any
other Loan Document, nor shall any Secured Party be obligated to perform any of
the obligations or duties of the Grantor thereunder or to take any action to
collect or enforce any claim for payment assigned hereunder.
Section 4. Delivery of Collateral. All certificates or instruments
representing or evidencing Collateral shall be delivered to and held by or on
behalf of the Collateral Agent pursuant hereto and shall be in suitable form for
transfer by delivery, or shall be accompanied by duly executed instruments of
transfer or assignment in blank, all in form and substance satisfactory to the
Collateral Agent. Upon the occurrence and during the continuance of an Event of
Default and upon acceleration of all Borrowings under the Credit Agreement, the
Collateral Agent shall have the right, at any time in its discretion and without
notice to the Grantor, to transfer to or to register in the name of the
Collateral Agent or any of its nominees any or all of the Collateral, subject
only to the revocable rights specified in Section 8(a). In addition, the
Collateral Agent shall have the right at any time to exchange certificates or
instruments representing or evidencing Collateral for certificates or
instruments of smaller or larger denominations.
Section 5. Representations, Warranties and Covenants. The Grantor
represents, warrants, agrees and covenants as to itself and its Collateral,
which representations, warranties, agreements and covenants shall survive
execution and delivery of this Agreement, as follows:
(a) The Grantor is the legal and beneficial owner of the Collateral
free and clear of any Lien or other right, title or interest of any Person
except for the security interest created under this Agreement and Liens
permitted by Section 5.02(a) of the Credit Agreement, and the Grantor shall
defend the Collateral against all claims and demands of all Persons at any
time claiming the same or any interest therein adverse to the Collateral
Agent. No effective financing statement or other instrument similar in
effect covering or purporting to cover all or any part of the Collateral is
on file in any recording office, except such as may have been filed in
favor of the Collateral Agent relating to this Agreement and those Liens
permitted under Section 5.02(a) of the Credit Agreement.
(b) All of the shares of stock that constitute Pledged Shares have
been duly authorized and validly issued and are fully paid and
non-assessable and the Grantor is the legal, record and beneficial owner
of, and has good and marketable title to, such Pledged
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Shares, subject to no pledge, lien, mortgage hypothetication, security
interest, charge, option or other encumbrance whatsoever except the liens
and security interests created by this Agreement. The Grantor has full
power, authority and legal right to pledge the Pledged Shares pledged by it
pursuant to this Agreement.
(c) As of the date hereof, the Pledged Shares constitute the
percentage of the issued and outstanding shares of stock of the issuers
thereof indicated on Part I of Schedule I hereto.
(d) All filings and other actions necessary or desirable to perfect
and protect the security interest in the Collateral taken as a whole
created under this Agreement have been duly made or taken, and this
Agreement, the pledge of the Collateral pursuant hereto, together with such
filings and other actions, create a valid and perfected first priority
security interest in the Collateral taken as a whole, securing the payment
of the Secured Obligations, except for Collateral subject to Liens
permitted pursuant to Section 5.02(a) of the Credit Agreement.
(e) No consent of any other Person and no authorization, approval or
other action by, and no notice to or filing with, any governmental
authority or regulatory body or other third party is required (i) for the
grant by the Grantor of the assignment and security interest granted
hereunder, for the pledge by the Grantor of the Collateral pursuant hereto
or for the execution, delivery or performance of this Agreement by the
Grantor, (ii) for the perfection or maintenance of the pledge, assignment
and security interest created hereunder (including the first priority
nature of such pledge, assignment or security interest), except for the
filing of financing and continuation statements under the UCC, which
financing statements have been duly filed and are effective, under
applicable law, to perfect the security interest granted to the Collateral
Agent herein, or (iii) for the exercise by the Collateral Agent of its
voting or other rights provided for in this Agreement or the remedies in
respect of the Collateral pursuant to this Agreement, except where the
failure to obtain such consent or authorization would not, either
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
(f) This Agreement is made with full recourse to the Grantor
(including, without limitation, with full recourse to all assets of the
Grantor) and pursuant to and upon all warranties, representations,
covenants and agreements on the part of the Grantor contained herein, in
the other Collateral Documents and otherwise in writing in connection
herewith or therewith.
Section 6. Further Assurances. (a) The Grantor agrees that from time to
time, at its own expense, it shall promptly execute and deliver all further
instruments and documents, and take all further action, that may be necessary or
desirable, or that the Collateral Agent may reasonably request, in order to
perfect and protect any pledge, assignment or security interest granted or
purported to be granted hereby or to enable the Collateral Agent to exercise and
enforce its rights and remedies hereunder with respect to any Collateral.
Without limiting the generality of the foregoing, the Grantor will: (i) if any
Collateral shall be evidenced by a promissory note or other instrument or
chattel paper, deliver and pledge to the Collateral Agent
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hereunder such note or instrument duly indorsed and accompanied by duly executed
instruments of transfer or assignment, all in form and substance satisfactory to
the Collateral Agent; and (ii) execute and file such financing or continuation
statements, or amendments thereto, and such other instruments or notices, as may
be necessary or desirable, or as the Collateral Agent may reasonably request, in
order to perfect and preserve the pledge, assignment and security interest
granted or purported to be granted hereunder.
(b) The Grantor hereby authorizes the Collateral Agent to file one or more
financing or continuation statements, and amendments thereto, relating to all or
any part of the Collateral without the signature of the Grantor where permitted
by law. A photocopy or other reproduction of this Agreement or any financing
statement covering the Collateral or any part thereof shall be sufficient as a
financing statement where permitted by law.
(c) The Grantor shall furnish to the Collateral Agent from time to time
statements and schedules further identifying and describing the Collateral and
such other reports in connection with the Collateral as the Collateral Agent may
reasonably request, all in reasonable detail.
Section 7. Voting Rights; Dividends; Etc. (a) So long as no Event of
Default shall have occurred and be continuing:
(i) The Grantor shall be entitled to exercise any and all voting and
other consensual rights pertaining to the Collateral or any part thereof
for any purpose not inconsistent with the terms of this Agreement or the
other Documents; provided, however, that the Grantor shall not exercise or
refrain from exercising any such right if such action (a) would reasonably
be expected to have a material adverse effect on the value of the
Collateral or any part thereof or (b) would violate or be inconsistent with
any of the terms of this Agreement, the Credit Agreement, any other Loan
Document or any Bank Hedge Agreement;
(ii) The Grantor shall be entitled to receive and retain any and all
dividends and interest paid in respect of the Collateral permitted by the
Credit Agreement; provided, however, that any and all
(A) dividends and interest paid or payable other than in cash in
respect of, and instruments and other property received, receivable or
otherwise distributed in respect of, or in exchange for, such
Collateral, and
(B) dividends and other distributions paid or payable in cash in
respect of such Collateral in connection with a partial or total
liquidation or dissolution
shall be, and shall be forthwith delivered to the Collateral Agent to hold
as, Collateral and shall, if received by the Grantor, be received in trust
for the benefit of the Collateral Agent, be segregated from the other
property or funds of the Grantor and be forthwith delivered to the
Collateral Agent as Collateral in the same form as so received (with any
necessary indorsement). Notwithstanding the foregoing, it is understood
that any and all dividends and other distributions paid or payable in cash
in respect of such Collateral in
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connection with a reduction of capital, capital surplus or paid-in-surplus
and any and all cash paid, payable or otherwise distributed in respect of
principal of, or in redemption of, or in exchange for, such Collateral
shall be forthwith delivered to blocked accounts maintained by the Grantor
with Fleet.
(iii) The Collateral Agent shall execute and deliver (or cause to be
executed and delivered) to the Grantor all such proxies and other
instruments as the Grantor may reasonably request for the purpose of
enabling the Grantor to exercise the voting and other rights that it is
entitled to exercise pursuant to paragraph (i) above and to receive the
dividends or interest payments that it is authorized to receive and retain
pursuant to paragraph (ii) above.
(b) Upon the occurrence and during the continuance of an Event of
Default:
(i) All rights of the Grantor (x) to exercise or refrain from
exercising the voting and other consensual rights that it would otherwise
be entitled to exercise pursuant to Section 7(a)(i) shall, upon notice to
the Grantor by the Collateral Agent, cease and (y) to receive the dividends
and interest payments that it would otherwise be authorized to receive and
retain pursuant to Section 7(a)(ii) shall automatically cease, and all such
rights shall thereupon become vested in the Collateral Agent, which shall
thereupon have the sole right to exercise or refrain from exercising such
voting and other consensual rights and to receive and hold as Collateral
such dividends and interest payments.
(ii) All dividends and interest payments that are received by the
Grantor contrary to the provisions of paragraph (i) of this Section 7(b)
shall be received in trust for the benefit of the Collateral Agent, shall
be segregated from other funds of the Grantor and shall be forthwith paid
over to the Collateral Agent as Collateral in the same form as so received
(with any necessary indorsement).
Section 8. Transfers and Other Liens; Additional Shares. (a) The Grantor
agrees not (i) to sell, assign (by operation of law or otherwise) or otherwise
dispose of, or grant any option with respect to, any of the Collateral, except
sales, assignments and dispositions otherwise permitted under the Credit
Agreement, or (ii) to create or suffer to exist any Lien upon or with respect to
any of the Collateral except for the pledge, assignment and security interest
created under this Agreement and the Liens permitted under Section 5.02(a) of
the Credit Agreement.
(b) The Grantor shall (i) for the Pledged Shares and all other shares of
stock pledged hereunder that are issued by issuers which are controlled by the
Grantor, cause each issuer of the Pledged Shares and each issuer of all other
shares of stock pledged hereunder not to issue any stock or other securities in
addition to or in substitution for the Pledged Shares or such other shares
issued by any such issuer, except to the Grantor, and (ii) pledge hereunder,
immediately upon its acquisition (directly or indirectly) thereof, any and all
additional shares of stock or other securities.
Section 9. Collateral Agent Appointed Attorney-in-Fact. The Grantor hereby
irrevocably appoints the Collateral Agent, effective upon the occurrence and
during the continuation of any Event of Default, the Grantor's attorney-in-fact,
with full authority in the
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place and stead of the Grantor and in the name of the Grantor or otherwise, from
time to time in the Collateral Agent's discretion and upon notice to the
Grantor, to take any action and to execute any instrument that the Collateral
Agent may deem necessary or advisable to accomplish the purposes of this
Agreement, including, without limitation:
(a) to ask for, demand, collect, sue for, recover, compromise, receive
and give acquittance and receipts for moneys due and to become due under or
in respect of any of the Collateral,
(b) to receive, indorse and collect any drafts or other instruments,
documents and Chattel Paper, in connection with clause (a) or (b) above,
and
(c) to file any claims or take any action or institute any proceedings
that the Collateral Agent may deem necessary or desirable for the
collection of any of the Collateral or otherwise to enforce compliance with
the terms and conditions of any Assigned Agreement or the rights of the
Collateral Agent with respect to any of the Collateral.
Section 10. Collateral Agent May Perform. If the Grantor fails to perform
any agreement contained herein, the Collateral Agent may itself perform, or
cause performance of, such agreement, and the expenses of the Collateral Agent
incurred in connection therewith shall be payable by the Grantor under Section
14(b).
Section 11. Remedies. If any Event of Default shall have occurred and be
continuing:
(a) The Collateral Agent may exercise in respect of the Collateral, in
addition to other rights and remedies provided for herein or otherwise
available to it, all the rights and remedies of a secured party upon
default under the New York UCC (whether or not the New York UCC applies to
the affected Collateral) and also may (i) require the Grantor to, and the
Grantor hereby agrees that it will at its expense and upon request of the
Collateral Agent forthwith, assemble all or part of the Collateral as
directed by the Collateral Agent and make it available to the Collateral
Agent at a place and time to be designated by the Collateral Agent and (ii)
without notice except as specified below, sell the Collateral or any part
thereof in one or more parcels at public or private sale, at any of the
Collateral Agent's offices or elsewhere, for cash, on credit or for future
delivery, and upon such other terms as the Collateral Agent may deem
commercially reasonable. The Grantor agrees that, to the extent notice of
sale shall be required by law, at least ten days' notice to the Grantor of
the time and place of any public sale or the time after which any private
sale is to be made shall constitute reasonable notification. The Collateral
Agent shall not be obligated to make any sale of Collateral regardless of
notice of sale having been given. The Collateral Agent may adjourn any
public or private sale from time to time by announcement at the time and
place fixed therefor, and such sale may, without further notice, be made at
the time and place to which it was so adjourned.
(b) (i) All cash proceeds received by the Collateral Agent in respect
of any sale of, collection from, or other realization upon all or any part
of the Collateral may,
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in the discretion of the Collateral Agent, be held by the Collateral Agent
as collateral for, and/or then or at any time thereafter applied (after
payment of any amounts payable to the Collateral Agent pursuant to Section
14) shall be applied as follows:
(A) first, to the extent proceeds remain after the application of
any amounts pursuant to Section 14, an amount equal to the outstanding
Primary Obligations (as defined in Section 11(b)(ii)) shall be paid to
the Secured Parties as provided in Section 11(b)(iv) hereof, with each
Secured Party receiving an amount equal to such outstanding Primary
Obligations (as defined in Section 11(b)(ii)) or, if the proceeds are
insufficient to pay in full all such Primary Obligations, its Pro Rata
Share of the amount remaining to be distributed;
(B) second, to the extent proceeds remain after the application
pursuant to the preceding clause (A), an amount equal to the
outstanding Secondary Obligations (as defined in Section 11(b)(ii))
shall be paid to the Secured Parties as provided in Section 11(b)(iv)
hereof, with each Secured Party receiving an amount equal to its
outstanding Secondary Obligations, or, if the proceeds are
insufficient to pay in full all such Secondary Obligations, its Pro
Rata Share (as defined in Section 11(b)(ii)) of the amount remaining
to be distributed; and
(C) third, to the extent proceeds remain after the application
pursuant to the preceding clauses (A) and (B), and following the
termination of this Agreement pursuant to Section 19 hereof, to the
Grantor or to whomever may be lawfully entitled to receive such
surplus.
(ii) For purposes of this Agreement (x) "Pro Rata Share" shall mean,
when calculating a Secured Party's portion of any distribution or amount,
that amount (expressed as a percentage) equal to a fraction the numerator
of which is the then unpaid amount of such Secured Party's Primary
Obligations or Secondary Obligations, as the case may be, and the
denominator of which is the then outstanding amount of all Primary
Obligations or Secondary Obligations, as the case may be, (y) "Primary
Obligations" shall mean (i) in the case of the Credit Agreement
Obligations, all principal of, and interest on, all Advances, and all fees
and (ii) in the case of the Other Obligations that are secured by this
Agreement or any other Collateral Document, all amounts due under such Bank
Hedge Agreements and (z) "Secondary Obligations" shall mean all Secured
Obligations other than Primary Obligations.
(iii) When payments to Secured Parties are based upon their respective
Pro Rata Shares, the amounts received by such Secured Parties hereunder
shall be applied (for purposes of making determinations under this Section
11(b) only) (i) first, to their Primary Obligations and (ii) second, to
their Secondary Obligations. If any payment to any Secured Party of its Pro
Rata Share of any distribution would result in overpayment to such Secured
Party, such excess amount shall instead be distributed in respect of the
unpaid Primary Obligations or Secondary
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Obligations, as the case may be, of the other Secured Parties, with each
Secured Party whose Primary Obligations or Secondary Obligations, as the
case may be, have not been paid in full to receive an amount equal to such
excess amount multiplied by a fraction the numerator of which is the unpaid
Primary Obligations or Secondary Obligations, as the case may be, of such
Secured Party and the denominator of which is the unpaid Primary
Obligations or Secondary Obligations, as the case may be, of all Secured
Parties entitled to such distribution.
(iv) All payments required to be made hereunder shall be made (x) if
to the Lenders, to the Collateral Agent under the Credit Agreement for the
account of the Lenders, and (y) if to the Hedge Banks, to the trustee,
paying agent or other similar representative (each a "Representative") for
the Hedge Banks or, in the absence of such a Representative, directly to
the Hedge Banks, as their interests may appear.
(v) For purposes of applying payments received in accordance with this
Section 11(b), the Collateral Agent shall be entitled to rely upon the
Representative for the Hedge Banks or, in the absence of such a
Representative, upon the Hedge Banks for a determination (which each
Representative for any Hedge Banks and the Lenders agree (or shall agree)
to provide upon request of the Collateral Agent) of the outstanding Primary
Obligations and Secondary Obligations owed to the Lenders or the Hedge
Banks, as the case may be. Unless it has actual knowledge (including by way
of written notice from a Lender or a Hedge Bank) to the contrary, each
Representative, in furnishing information pursuant to the preceding
sentence, and the Collateral Agent, in acting hereunder, shall be entitled
to assume that no Secondary Obligations are outstanding. Unless it has
actual knowledge (including by way of written notice from a Hedge Bank) to
the contrary, the Collateral Agent, in acting hereunder, shall be entitled
to assume that no Bank Hedge Agreements are in existence.
(vi) It is understood that the Grantor shall remain liable to the
extent of any deficiency between the amount of the proceeds of the
Collateral and the aggregate amount of the Secured Obligations.
(c) The Collateral Agent may exercise any and all rights and remedies of
the Grantor in respect of the Collateral.
(d) The Collateral Agent may, without notice to the Grantor except as
required by law and at any time or from time to time, charge, set-off and
otherwise apply all or any part of the Secured Obligations against the L/C Cash
Collateral Account or any part thereof.
Section 12. Registration Rights. If the Collateral Agent shall determine to
exercise its right to sell all or any of the Collateral pursuant to Section 11,
the Grantor agrees that, upon request of the Collateral Agent, the Grantor will,
at its own expense:
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(a) execute and deliver, and cause each issuer of the Collateral
contemplated to be sold and the directors and officers thereof to execute
and deliver, all such instruments and documents, and do or cause to be done
all such other acts and things, as may be necessary or, in the opinion of
the Collateral Agent, advisable to register such Collateral under the
provisions of the Securities Act of 1933, as amended from time to time (the
"Securities Act"), to cause the registration statement relating thereto to
become effective and to remain effective for such period as prospectuses
are required by law to be furnished and to make all amendments and
supplements thereto and to the related prospectus that, in the opinion of
the Collateral Agent, are necessary or advisable, all in conformity with
the requirements of the Securities Act and the rules and regulations of the
Securities and Exchange Commission applicable thereto;
(b) use its best efforts to qualify the Collateral under the state
securities or "Blue Sky" laws and to obtain all necessary governmental
approvals for the sale of the Collateral, as requested by the Collateral
Agent;
(c) cause each such issuer to make available to its security holders,
as soon as practicable, an earnings statement that will satisfy the
provisions of Section 11(a) of the Securities Act;
(d) provide the Collateral Agent with such other information
(including, without limitation, forward looking information) as may be
necessary or, in the opinion of the Collateral Agent, advisable to enable
the Collateral Agent to effect the sale of such Collateral; and
(e) do or cause to be done all such other acts and things as may be
necessary to make such sale of the Collateral or any part thereof valid and
binding and in compliance with applicable law.
Notwithstanding anything contained in this Agreement, the Collateral Agent
may sell all or any of the Collateral at a private sale without registering such
Collateral under the provisions of the Securities Act and the Collateral Agent
is not liable for any reduced value of such Collateral received by the
Collateral Agent as a result of such sale. The Collateral Agent is authorized,
in connection with any sale of the Collateral pursuant to Section 11, to deliver
or otherwise disclose to any prospective purchaser of the Collateral (i) any
registration statement or prospectus, and all supplements and amendments
thereto, prepared pursuant to clause (a) above, (ii) any information and
projections provided to it pursuant to clause (d) above and (iii) any other
information in its possession relating to the Collateral.
Section 13. The Collateral Agent. (a) The Secured Parties, by their
acceptance of the benefits of this Agreement and the other Loan Documents,
hereby irrevocably designate Fleet to act as the Collateral Agent with respect
to this Agreement and as specified in the other Loan Documents. Each Secured
Party hereby irrevocably authorizes, and each holder of any Note by the
acceptance of such Note and by the acceptance of the benefits of this Agreement
and the other Loan Documents shall be deemed irrevocably to authorize, the
Collateral Agent to take such action on its behalf under the provisions of this
Agreement and the other Loan Documents and any other instruments and agreements
referred to herein or therein and to exercise such
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powers and to perform such duties hereunder and thereunder as are specifically
delegated to or required of the Collateral Agent by the terms hereof or thereof
and such other powers as are reasonably incidental thereto. The Collateral Agent
may perform any of its duties hereunder and under the other Loan Documents by or
through its authorized agents or employees.
(b) The Collateral Agent shall have no duties or responsibilities except
those expressly set forth in this Agreement and in the other Loan Documents. The
duties of the Collateral Agent shall be mechanical and administrative in nature;
the Collateral Agent shall not have by reason of this Agreement, any other Loan
Document or any Bank Hedge Agreement a fiduciary relationship in respect of any
Secured Party; and nothing in this Agreement, any other Loan Document or any
Bank Hedge Agreement, expressed or implied, is intended to or shall be so
construed as to impose upon the Collateral Agent any obligations in respect of
this Agreement or any other Loan Document except as expressly set forth herein
or therein.
(c) The Collateral Agent shall not be responsible for the payment of taxes,
charges or assessments or discharging of Liens upon the Collateral hereunder or
any collateral under the Collateral Documents or otherwise as to the maintenance
of the Collateral hereunder or any collateral under the Collateral Documents.
The Collateral Agent shall not be required to ascertain or inquire as to the
performance by the Grantor of any of the covenants or agreements contained in
this Agreement or any other Loan Document or any Bank Hedge Agreement.
(d) The Collateral Agent shall be under no obligation or duty to take any
action under this Agreement or any other Loan Document if taking such action (i)
would subject the Collateral Agent to a tax in any jurisdiction where it is not
then subject to a tax or (ii) would require the Collateral Agent to qualify to
do business in any jurisdiction where it is not then so qualified, unless the
Collateral Agent receives security or indemnity satisfactory to it against such
tax (or equivalent liability), or any liability resulting from such
qualification, in each case as results from the taking of such action under this
Agreement or any other Loan Document or (iii) would subject the Collateral Agent
to in personam jurisdiction in any locations where it is not then so subject.
Notwithstanding any other provision of this Agreement or any other Loan
Document, neither the Collateral Agent nor any of its officers, directors,
employees, affiliates or agents shall, in its individual capacity, be personally
liable for any action taken or omitted to be taken by it in accordance with this
Agreement or any other Loan Document except for its own gross negligence or
willful misconduct.
(e) Independently and without reliance upon the Collateral Agent, each
Secured Party, to the extent it deems appropriate, has made and shall continue
to make (i) its own independent investigation of the financial condition and
affairs of the Grantor in connection with the making and the continuance of the
Obligations and the taking or not taking of any action in connection therewith,
and (ii) its own appraisal of the creditworthiness of the Grantor, and the
Collateral Agent shall have no duty or responsibility, either initially or on a
continuing basis, to provide any Secured Party with any credit or other
information with respect thereto, whether coming into its possession before the
extension of any Obligations or the purchase of any Notes or at any time or
times thereafter. The Collateral Agent shall not be responsible in any manner
whatsoever to any Secured Party for the correctness of any recitals, statements,
information, representations or warranties in any Document or in any document,
certificate or other writing delivered in connection therewith or for the
execution, effectiveness, genuineness, validity,
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enforceability, perfection, collectibility, priority or sufficiency of this
Agreement or the other Documents or the security interests granted hereunder or
thereunder or the financial condition of the Grantor or be required to make any
inquiry concerning either the performance or observance of any of the terms,
provisions or conditions of this Agreement or any other Loan Document, or the
financial condition of the Grantor, or the existence or possible existence of
any Default or Event of Default. The Collateral Agent makes no representations
as to the value or condition of the Collateral hereunder or the collateral under
any other Collateral Document or any part thereof, or as to the title of the
Grantor thereto or as to the security afforded by this Agreement or the other
Collateral Documents.
(f) (i) No Secured Party shall have the right to cause the Collateral Agent
to take any action with respect to the Collateral hereunder or the collateral
under any other Collateral Document, with only the Required Lenders (or after
the repayment in full of all Credit Agreement Obligations, the holders of a
majority of the outstanding Other Obligations) having the right to direct the
Collateral Agent to take any such action. If the Collateral Agent shall request
instructions from the Required Lenders (or after the repayment in full of all
Credit Agreement Obligations, the holders of a majority of the outstanding Other
Obligations), with respect to any act or action (including failure to act) in
connection with this Agreement or any other Collateral Document, the Collateral
Agent shall be entitled to refrain from such act or taking such action unless
and until it shall have received instructions from the Required Lenders (or
after the repayment in full of all Credit Agreement Obligations, the holders of
a majority of the outstanding Other Obligations) and to the extent requested,
appropriate indemnification in respect of actions to be taken, and the
Collateral Agent shall not incur liability to any Person by reason of so
refraining. Without limiting the foregoing, no Secured Party shall have any
right of action whatsoever against the Collateral Agent as a result of the
Collateral Agent acting or refraining from acting hereunder in accordance with
the instructions of the Required Lenders (or after the repayment in full of all
Credit Agreement Obligations, the holders of a majority of the outstanding Other
Obligations).
(ii) The Collateral Agent shall be under no obligation to exercise any of
the rights or powers vested in it by this Agreement or any other Loan Document
at the request or direction of any of the Secured Parties, unless such Secured
Parties shall have offered to the Collateral Agent reasonable security or
indemnity against the costs, expenses and liabilities that might be incurred by
it in compliance with such request or direction.
(g) The Collateral Agent shall be entitled to rely, and shall be fully
protected in relying, upon any note, writing, resolution, notice, statement,
certificate, telex, teletype or telecopier message, cablegram, radiogram, order
or other document or telephone message signed, sent or made by the proper Person
or entity, and, with respect to all legal matters pertaining to this Agreement
or any other Document and its duties hereunder or thereunder, upon advice of
counsel selected by it.
(h) To the extent the Collateral Agent is not reimbursed and indemnified by
the Grantor under this Agreement or any other Loan Document, the Secured Parties
will reimburse and indemnify the Collateral Agent, in proportion to their
respective outstanding principal amounts (including, for this purpose, any
unpaid Primary Obligations in respect of Bank Hedge Agreements, as outstanding
principal) of Obligations, for and against any and all liabilities,
KL2:200855.2
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obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever which may be imposed
on, incurred by or asserted against the Collateral Agent in performing its
duties hereunder or under any other Loan Document, or in any way relating to or
arising out of its actions as Collateral Agent in respect of this Agreement or
under any other Loan Document (including any amounts required to be returned by
the Collateral Agent in respect of Collateral hereunder or collateral under any
other Collateral Document) except for those resulting solely from the Collateral
Agent's own gross negligence or willful misconduct. The indemnities set forth in
this Section 13(h) shall survive the repayment of all Obligations, with the
respective indemnification at such time to be based upon the outstanding
principal amounts (determined as described above) of Obligations at the time of
the respective occurrence upon which the claim against the Collateral Agent is
based or, if same is not reasonably determinable, based upon the outstanding
principal amounts (determined as described above) of Obligations as in effect
immediately prior to the termination of this Agreement. The indemnities set
forth in this Section 13(h) are in addition to any indemnities provided by the
Lenders to the Collateral Agent pursuant to the Credit Agreement, with the
effect being that the Lenders shall be responsible for indemnifying the
Collateral Agent to the extent the Collateral Agent does not receive payments
pursuant to this Section 13(h) from the Secured Parties (although in such event,
and upon the payment in full of all such amounts owing to the Collateral Agent,
the respective Lenders who paid same shall be subrogated to the rights of the
Collateral Agent to receive payment from the Secured Parties).
(i) With respect to its obligations as a lender under the Credit Agreement
and any other Loan Documents to which the Collateral Agent is a party, and to
act as agent under one or more of such Loan Documents, the Collateral Agent
shall have the rights and powers specified therein and herein for a "Lender" or
a "Collateral Agent", as the case may be, and may exercise the same rights and
powers as though it were not performing the duties specified herein; and the
terms "Lender," "Required Lenders," "holders of Notes," or any similar terms
shall, unless the context clearly otherwise indicates, include the Collateral
Agent in its individual capacity. The Collateral Agent may accept deposits from,
lend money to, and generally engage in any kind of banking, trust or other
business with the Grantor or any Affiliate or Subsidiary of the Grantor as if it
were not performing the duties specified herein or in the other Loan Documents,
and may accept fees and other consideration from the Grantor for services in
connection with the Credit Agreement, the other Loan Documents and otherwise
without having to account for the same to the Secured Parties.
(j) The Collateral Agent may deem and treat the payee of any Note as the
owner thereof for all purposes hereof unless and until written notice of the
assignment, transfer or endorsement thereof, as the case may be, shall have been
filed with the Collateral 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 final and conclusive and binding on
any subsequent holder, transferee, assignee or endorsee, as the case may be, of
such Note or of any Note or Notes issued in exchange therefor.
(k) The Collateral Agent may resign from the performance of all of its
functions and duties under this Agreement at any time by giving 20 Business
Days' prior or written notice to the Grantor and the Secured Parties. Such
resignation shall take effect upon the appointment of a successor Collateral
Agent pursuant to clause (i) or (ii) of this Section 13(k).
KL2:200855.2
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(i) If a successor Collateral Agent shall not have been appointed
within said 20 Business Day period by the Required Lenders, the Collateral
Agent, with the consent of the Grantor, which consent shall not be
unreasonably withheld or delayed, shall then appoint a successor Collateral
Agent who shall serve as Collateral Agent hereunder until such time, if
any, as the Required Lenders appoint a successor Collateral Agent as
provided above.
(ii) If no successor Collateral Agent has been appointed pursuant to
clause (i) of this Section 13(k) by the 20th Business Day after the date of
such notice of resignation was given by the Collateral Agent, the Required
Lenders shall then appoint a successor Collateral Agent who shall serve as
Collateral Agent hereunder until such time, if any, as the Required Lenders
appoint a successor Collateral Agent as provided above.
(l) The Grantor (by its execution and delivery hereof) hereby agrees that
it shall pay to Fleet as the Collateral Agent, such fees as have been separately
agreed to in writing with Fleet for acting as Collateral Agent hereunder and
under the other Collateral Documents. In the event a successor Collateral Agent
is appointed pursuant to Section 13(k), the Grantor hereby agrees to pay such
successor Collateral Agent such fees for acting as such as would customarily be
charged by such Collateral Agent for acting in such capacity in similar
situations.
Section 14. Indemnity and Expenses. (a) The Grantor agrees to indemnify
each Secured Party from and against any and all claims, losses and liabilities
growing out of or resulting from this Agreement (including, without limitation,
enforcement of this Agreement), except claims, losses or liabilities found in a
final, appealable judgment by a court of competent jurisdiction to have resulted
solely from such Secured Party's gross negligence or wilful misconduct.
(b) The Grantor agrees to pay to the Collateral Agent, upon demand, the
amount of any and all reasonable costs and expenses, including, without
limitation, the reasonable fees and expenses of its counsel and of any experts
and agents (including, without limitation, the following costs of such counsel:
support staff, litigation preparation, computerized research, telephone,
telefax, mileage, deposition, postage, photocopy, process service, video tape
and other similar costs), that the Collateral Agent may incur in connection with
(i) the administration of this Agreement, (ii) the custody, preservation, use or
operation of, or the sale of, collection from or other realization upon, any of
the Collateral, (iii) the exercise or enforcement of any of the rights of the
Collateral Agent or any other Secured Party hereunder or (iv) the failure by the
Grantor to perform or observe any of the provisions hereof.
Section 15. Security Interest Absolute. The obligations of the Grantor
under this Agreement are independent of the Secured Obligations, and a separate
action or actions may be brought and prosecuted against the Grantor to enforce
this Agreement. All rights of the Collateral Agent and the pledge, assignment
and security interest hereunder, and all obligations of the Grantor hereunder,
shall be absolute and unconditional, irrespective of:
(i) any lack of validity or enforceability of any Loan Document, any
Bank Hedge Agreement or any other agreement or instrument relating thereto;
KL2:200855.2
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<PAGE>
(ii) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Secured Obligations, or any other
amendment or waiver of or any consent to any departure from any Loan
Document or any Bank Hedge Agreement, including, without limitation, any
increase in the Secured Obligations resulting from the extension of
additional credit to the Grantor or any of its Subsidiaries or otherwise;
(iii) any taking, exchange, release or nonperfection of any other
collateral, or any taking, release or amendment or waiver of or consent to
departure from any guaranty, for all or any of the Secured Obligations;
(iv) any manner of application of collateral, or proceeds thereof, to
all or any of the Secured Obligations, or any manner of sale or other
disposition of any collateral for all or any of the Secured Obligations or
any other assets of the Grantor or any of its Subsidiaries;
(v) any change, restructuring or termination of the corporate
structure or existence of the Grantor or any of its Subsidiaries; or
(vi) any other circumstance that might otherwise constitute a defense
available to, or a discharge of, the Grantor or a third-party grantor of a
security interest.
Section 16. Amendments; Waivers; Etc. (a) No amendment or waiver of any
provision of this Agreement, and no consent to any departure by the Grantor
herefrom, shall in any event be effective unless the same shall be in writing
and signed by the Collateral Agent, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.
(b) No failure on the part of the Collateral Agent, any Lender or any Hedge
Bank to exercise, and no delay in exercising, any right, power or privilege
hereunder shall operate as a waiver thereof or consent thereto; nor shall any
single or partial exercise of any such right, power or privilege preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege.
Section 17. Addresses for Notices. All notices and other communications
provided for hereunder shall be in writing (including telecopier, telegraphic or
telex communication) and mailed, telecopied, telegraphed, telexed, cabled or
delivered, if to the Grantor, addressed to it at the address set forth below its
name on the signature pages hereof and if to the Collateral Agent, any Lender,
the Issuing Bank or any Hedge Bank, addressed to it at its address set forth in
Section 8.02 of the Credit Agreement, or, as to any party, at such other address
as shall be designated by such party in a written notice to the each other party
complying as to delivery with the terms of this Section 17. All such notices and
other communications shall, when mailed, telecopied, telegraphed or telexed, be
effective when deposited in the mails, delivered to the telegraph company,
transmitted by telecopier or confirmed by telex answerback, respectively,
addressed as aforesaid.
Section 18. Continuing Security Interest; Assignments under the Credit
Agreement. This Agreement shall create a continuing security interest in the
Collateral and shall
KL2:200855.2
15
<PAGE>
(a) remain in full force and effect until the latest of the indefeasible and
irrevocable payment in full in cash of the Secured Obligations, the Final
Maturity Date and the termination or expiration of all Bank Hedge Agreements,
(b) be binding upon the Grantor, its successors and assigns and (c) inure,
together with the rights and remedies of the Collateral Agent hereunder, to the
benefit of the Secured Parties and their respective successors, transferees and
assigns. Without limiting the generality of the foregoing clause (c), any Lender
may assign or otherwise transfer all or any portion of its rights and
obligations under the Credit Agreement (including, without limitation, all or
any portion of its Commitment, the Advances owing to it and the Note or Notes
held by it) to any other Person, and such other Person shall thereupon become
vested with all the benefits in respect thereof granted to such Lender herein or
otherwise, in each case as provided in Section 8.07 of the Credit Agreement.
Section 19. Release and Termination. (a) Upon any sale, lease, transfer or
other disposition of any item of Collateral in accordance with the terms of the
Loan Documents, the Collateral Agent will, at the Grantor's expense, execute and
deliver to the Grantor such documents as the Grantor shall reasonably request to
evidence the release of such item of Collateral from the assignment and security
interest granted hereby; provided, however, that (i) at the time of such request
and such release no Event of Default shall have occurred and be continuing, (ii)
the Grantor shall have delivered to the Collateral Agent, at least ten Business
Days prior to the date of the proposed release, a written request for release
describing the item of Collateral and the terms of the sale, lease, transfer or
other disposition in reasonable detail, including, without limitation, the price
thereof and any expenses in connection therewith, together with a form of
release for execution by the Collateral Agent and a certification by the Grantor
to the effect that the transaction is in compliance with the Loan Documents and
as to such other matters as the Collateral Agent may request and (iii) the Net
Cash Proceeds of any such sale, lease, transfer or other disposition required to
be applied in accordance with Section 2.06 of the Credit Agreement shall be paid
to, or in accordance with the instructions of, the Collateral Agent at the
closing.
(b) Upon the latest of the indefeasible and irrevocable payment in full in
cash of the Secured Obligations, the Final Maturity Date and the termination or
expiration of all Bank Hedge Agreements, the pledge, assignment and security
interest granted hereby shall terminate and all rights to the Collateral shall
revert to the Grantor. Upon any such termination, the Collateral Agent will, at
the Grantor's expense, execute and deliver to the Grantor such documents as the
Grantor shall reasonably request to evidence such termination.
Section 20. Jurisdiction, Etc. (a) THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND
BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND
TO BE PERFORMED ENTIRELY IN SUCH STATE. UNLESS OTHERWISE DEFINED HEREIN OR IN
THE CREDIT AGREEMENT, TERMS USED IN ARTICLE 9 OF THE NEW YORK UCC ARE USED
HEREIN AS THEREIN DEFINED. ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT, ANY OTHER DOCUMENT OR ANY BANK HEDGE AGREEMENT MAY BE BROUGHT IN THE
COURTS OF THE STATE OF NEW YORK SITTING IN NEW YORK CITY OR OF THE UNITED STATES
FOR THE SOUTHERN DISTRICT OF NEW YORK, AND, BY EXECUTION AND DELIVERY OF THIS
KL2:200855.2
16
<PAGE>
AGREEMENT, EACH PARTY TO THIS AGREEMENT HEREBY IRREVOCABLY ACCEPTS FOR ITSELF
AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION
OF THE AFORESAID COURTS. EACH SUCH PARTY HEREBY FURTHER IRREVOCABLY WAIVES ANY
CLAIM THAT ANY SUCH COURTS LACK PERSONAL JURISDICTION OVER SUCH PARTY, AND
AGREES NOT TO PLEAD OR CLAIM, IN ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO
THIS AGREEMENT, ANY OTHER DOCUMENT TO WHICH IT IS A PARTY OR ANY BANK HEDGE
AGREEMENT BROUGHT IN ANY OF THE AFORESAID COURTS, THAT ANY SUCH COURTS LACK
PERSONAL JURISDICTION OVER SUCH PARTY. EACH SUCH PARTY FURTHER IRREVOCABLY
CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN
ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR
CERTIFIED MAIL, POSTAGE PREPAID, TO SUCH PARTY AT ITS ADDRESS SET FORTH IN
SECTION 8.02 OF THE CREDIT AGREEMENT, SUCH SERVICE TO BECOME EFFECTIVE 30 DAYS
AFTER SUCH MAILING. EACH SUCH PARTY HEREBY IRREVOCABLY WAIVES ANY OBJECTION TO
SUCH SERVICE OF PROCESS AND FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD
OR CLAIM IN ANY ACTION OR PROCEEDING COMMENCED HEREUNDER OR UNDER ANY OTHER
DOCUMENT OR UNDER ANY BANK HEDGE AGREEMENT THAT SERVICE OF PROCESS WAS IN ANY
WAY INVALID OR INEFFECTIVE. NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE AGENT,
THE COLLATERAL AGENT, ANY SECURED PARTY OR ANY HEDGE BANK TO SERVE PROCESS IN
ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE
PROCEED AGAINST ANY PARTY IN ANY OTHER JURISDICTION.
(b) EACH PARTY TO THIS AGREEMENT HERETO HEREBY IRREVOCABLY WAIVES TO THE
FULLEST EXTENT PERMITTED UNDER APPLICABLE LAW ANY OBJECTION WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY OF THE AFORESAID ACTIONS OR
PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT, ANY OTHER
DOCUMENT OR ANY BANK HEDGE AGREEMENT BROUGHT IN THE COURTS REFERRED TO IN CLAUSE
(a) ABOVE AND HEREBY FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM
IN ANY SUCH COURT THAT ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT
HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
(c) EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES ALL
RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT
OF OR RELATING TO THIS AGREEMENT, THE OTHER DOCUMENTS, ANY BANK HEDGE AGREEMENT
OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
KL2:200855.2
17
IN WITNESS WHEREOF, the Grantor has caused this Agreement to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.
PRECISE HOLDING CORPORATION,
as Grantor
By ___________________________________
Name:
Title:
Agreed and consented to as of
the date first above written:
FLEET NATIONAL BANK,
as Collateral Agent
By _______________________________
Name:
Title:
[Signature Page to Parent Pledge and Security Agreement]
KL2:200855.2
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Schedule I
PLEDGED SHARES
Percentage of
Issuing Corporation Number of Shares Shares Outstanding Par Value
- ------------------- ---------------- ------------------ ---------
$
KL2:200855.2
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EXHIBIT E TO THE
CREDIT AGREEMENT
PATENT, TRADEMARK AND COPYRIGHT PLEDGE
AND SECURITY AGREEMENT
Dated June 13, 1997
from
PRECISE TECHNOLOGY, INC.,
and
THE OTHER GRANTORS NAMED HEREIN,
as Grantors,
to
FLEET NATIONAL BANK,
as Collateral Agent
KL2:192595.3
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TABLE OF CONTENTS
PRELIMINARY STATEMENTS:........................................- 1 -
SECTION 1. Grant of Security..............................................- 2 -
SECTION 2. Security for Obligations.......................................- 3 -
SECTION 3. Grantor Remains Liable.........................................- 3 -
SECTION 4. Representations and Warranties.................................- 3 -
SECTION 5. Further Assurances.............................................- 5 -
SECTION 6. Transfers and Other Liens......................................- 7 -
SECTION 7. The Collateral Agent Appointed Attorney-in-Fact................- 7 -
SECTION 8. The Collateral Agent May Perform...............................- 8 -
SECTION 9. The Collateral Agent's Duties..................................- 8 -
SECTION 10. Remedies.......................................................- 8 -
SECTION 11. Indemnity and Expenses........................................- 10 -
SECTION 12. Amendments; Waivers; Etc......................................- 10 -
SECTION 13. Notices, Etc..................................................- 10 -
SECTION 14. Continuing Security Interest; Assignments
Under the Credit Agreement..................................- 10 -
SECTION 15. Release and Termination.......................................- 11 -
SECTION 16. GOVERNING LAW; TERMS..........................................- 11 -
KL2:192595.3
<PAGE>
SCHEDULES
Schedule I - Patents and Patent Applications
Schedule II - Trademark and Service Mark Registrations and Applications
Schedule III - Copyright Registrations and Applications
Schedule IV - Licenses
Schedule V - Pending Litigation/Unauthorized Uses
KL2:192595.3
<PAGE>
PATENT, TRADEMARK AND COPYRIGHT PLEDGE AND SECURITY
AGREEMENT
PATENT, TRADEMARK AND COPYRIGHT PLEDGE AND SECURITY AGREEMENT (as amended,
supplemented or otherwise modified from time to time, this "Agreement"), dated
June 13, 1997, made by and among PRECISE TECHNOLOGY, INC., a Delaware
corporation (the "Borrower"), each of the other Persons listed on the signature
page hereof and the Additional Collateral Grantors (as defined in the Security
Agreement) (Parent, the Borrower, such other Persons and such Additional
Collateral Grantors collectively referred to herein as the "Grantors" and each
individually, a "Grantor") to FLEET NATIONAL BANK ("Fleet"), as collateral agent
(together with any successor collateral agent appointed pursuant to Section 21
of the Security Agreement (the "Collateral Agent") for the Secured Parties, as
custodian for the Hedge Banks and as Issuing Bank.
PRELIMINARY STATEMENTS:
(1) Precise Holding Corporation, a Delaware corporation, the Borrower and
each Subsidiary Guarantor have entered into a Credit Agreement, dated as of June
13, 1997, (said Agreement, as it may hereafter be amended, supplemented or
otherwise modified from time to time, being the "Credit Agreement", the terms
defined therein and not otherwise defined herein being used herein as therein
defined) with Fleet, as agent (together with any successor agent appointed
pursuant to Article VII of the Credit Agreement, the "Agent"), and the Lenders
from time to time party thereto.
(3) Pursuant to the Subsidiary Guaranty, each Subsidiary Guarantor has
guaranteed to the Lenders the payment when due of all obligations and
liabilities of the Borrower under or with respect to the Loan Documents.
(4) It is a condition precedent to the making of Advances by the Lenders
and the issuance of Letters of Credit by the Issuing Bank under the Credit
Agreement and the entry by the Hedge Banks into the Bank Hedge Agreements with
the Borrower from time to time that each Grantor shall have granted the
assignment and security interest and made the pledge and assignment contemplated
by this Agreement.
(5) Each Grantor will obtain benefits from the incurrence of Advances and
the issuance of Letters of Credit under the Credit Agreement and the entering
into of Bank Hedge Agreements with the Hedge Banks and, accordingly, each
Grantor desires to execute this Agreement to satisfy the conditions described in
the preceding paragraph (4).
NOW, THEREFORE, in consideration of the premises and in order to induce the
Lenders to make Advances and the Issuing Bank to issue Letters of Credit under
the Credit Agreement and to induce the Hedge Banks to enter into Bank Hedge
Agreements with the Borrower from time to time, each Grantor hereby agrees with
the Collateral Agent for the ratable benefit of the Secured Parties as follows:
KL2:192595.3
<PAGE>
SECTION 1. Grant of Security. Each Grantor hereby assigns and pledges to
the Collateral Agent for the ratable benefit of the Secured Parties, and hereby
grants to the Collateral Agent for the ratable benefit of the Secured Parties, a
security interest in all of such Grantor's right, title and interest in and to
the following, whether now owned or hereafter acquired, whether now or hereafter
existing (collectively, the "Intellectual Property Collateral"):
(a) all patents, patent applications and patentable inventions,
including, without limitation, each patent and patent application
identified on Schedule I attached hereto and made a part hereof, and
including without limitation (i) all inventions and improvements described
and claimed therein, (ii) the right to sue or otherwise recover for any
misappropriations thereof, (iii) all income, royalties, damages and other
payments now and hereafter due and/or payable with respect thereto
(including, without limitation, payments under all licenses entered into in
connection therewith, and damages and payments for past and future
infringements thereof), and (iv) all rights corresponding thereto
throughout the world and all reissues, divisions, continuations,
continuations-in-part, substitutes, renewals, and extensions thereof, all
improvements thereon and all other rights of any kind whatsoever of such
Grantor accruing thereunder or pertaining thereto (the "Patents");
(b) all trademarks, service marks, trade names, trade dress or other
indicia of trade origin, trademark and service mark registrations, and
applications for trademark or service mark registrations and any renewals
thereof, including, without limitation, each registration and application
identified on Schedule II attached hereto and made a part hereof, and
including without limitation (i) the right to sue or otherwise recover for
any and all past, present and future infringements and misappropriations
thereof, (ii) all income, royalties, damages and other payments now and
hereafter due and/or payable with respect thereto (including, without
limitation, payments under all licenses entered into in connection
therewith, and damages and payments for past or future infringements
thereof), and (iii) all rights corresponding thereto throughout the world
and all other rights of any kind whatsoever of such Grantor accruing
thereunder or pertaining thereto, together in each case with the goodwill
of the business connected with the use of, and symbolized by, each such
trademark, service mark, trade name, trade dress or other indicia of trade
origin (the "Trademarks"); and
(c) all copyrights, whether statutory or common law, and whether or
not the underlying works of authorship have been published, and all works
of authorship and other intellectual property rights therein, all
copyrights of works based on, incorporated in, derived from or relating to
works covered by such copyrights, all right, title and interest to make and
exploit all derivative works based on or adopted from works covered by such
copyrights, and all copyright registrations and copyright applications, and
any renewals or extensions thereof, including, without limitation, each
copyright registration and copyright application, if any, identified on
Schedule III attached hereto and made a part hereof, and including, without
limitation, (i) the right to print, publish and distribute any of the
foregoing, (ii) the right to sue or otherwise recover for any and all past,
present and future infringements and misappropriations thereof, (iii) all
income, royalties, damages and other payments now and hereafter due and/or
payable with respect thereto
KL2:192595.3
- 2 -
<PAGE>
(including, without limitation, payments under all licenses entered into in
connection therewith, and damages and payments for past or future
infringements thereof), and (iv) all rights corresponding thereto
throughout the world and all other rights of any kind whatsoever of such
Grantor accruing thereunder or pertaining thereto (the "Copyrights"); and
(d) all license agreements with any other Person in connection with
any of the Patents or Trademarks, or such other Person's patents, trade
names, trademarks or copyrights, whether such Grantor is a licensor or
licensee under any such license agreement, including, without limitation,
the license agreements listed on Schedule IV attached hereto and made a
part hereof, subject, in each case, to the terms of such license
agreements, including, without limitation, terms requiring consent to a
grant of a security interest, and any right to prepare for sale, sell and
advertise for sale, all Inventory (as defined in the Security Agreement)
now or hereafter owned by such Grantor and now or hereafter covered by such
licenses (the "Licenses").
SECTION 2. Security for Obligations. The pledge, assignment and security
interest granted under this Agreement by each Grantor secure the payment of all
Obligations of such Grantor now or hereafter existing under this Agreement and
the other Loan Documents whether for principal, interest, premiums, fees,
expenses, or otherwise (all such Obligations being the "Secured Obligations").
Without limiting the generality of the foregoing, this Agreement secures the
payment of all amounts that constitute part of the Secured Obligations and would
be owed by any Grantor to the Collateral Agent but for the fact that they are
unenforceable or not allowable due to the existence of a bankruptcy,
reorganization or similar proceeding involving such Grantor.
SECTION 3. Grantor Remains Liable. Anything herein to the contrary
notwithstanding, (i) each Grantor shall remain liable under the contracts and
agreements included in the Intellectual Property Collateral to the extent set
forth therein to perform all of its duties and obligations thereunder to the
same extent as if this Agreement had not been executed, (ii) the exercise by the
Collateral Agent of any of the rights hereunder shall not release each Grantor
from any of its duties or obligations under the contracts and agreements
included in the Intellectual Property Collateral and (iii) the Collateral Agent
has no obligation or liability under the contracts and agreements included in
the Intellectual Property Collateral by reason of this Agreement, nor shall the
Collateral Agent be obligated to perform any of the obligations or duties of
such Grantor thereunder or to take any action to collect or enforce any claim
for payment assigned hereunder.
SECTION 4. Representations and Warranties. Each Grantor represents and
warrants as to itself and its Intellectual Property Collateral as follows:
(a) Such Grantor is the legal and beneficial owner of the entire
right, title and interest in and to the Intellectual Property Collateral in
which it is granting a security interest free and clear of any Lien, except
for the pledge, assignment and security interest created by this Agreement.
No effective financing statement or other instrument similar
KL2:192595.3
- 3 -
<PAGE>
in effect covering all or any part of the Intellectual Property Collateral
or listing such Grantor or any trade name of such Grantor as debtor is on
file in any recording office (including, without limitation, the United
States Patent and Trademark Office), except such as may have been filed in
favor of the Collateral Agent relating to this Agreement and those Liens
permitted by Section 5.02(a) of the Credit Agreement.
(b) Set forth in Schedule I is a complete and accurate list of all
patents and all patent applications owned by such Grantor. Set forth in
Schedule II is a complete and accurate list of all trademark and service
mark registrations and all trademark and service mark applications owned by
such Grantor. Set forth in Schedule III is a complete and accurate list of
all copyright registrations and copyright applications owned by each
Grantor. Set forth in Schedule IV is a complete and accurate list of all
Licenses owned by such Grantor in which such Grantor is (i) a licensor with
respect to any of the Patents, Trademarks or Copyrights, or (ii) a licensee
of any other person's patents, trade names, trademarks or copyrights. Such
Grantor has made all necessary filings and recordations to protect and
maintain its interest in the patents, patent applications, trademark and
service mark registrations, trademark and service mark applications,
copyright registrations and copyright applications and licenses set forth
in Schedules I, II, III and IV.
(c) Each patent, patent application, trademark or service mark
registration, and trademark or service mark application and copyright
registration or copyright application of such Grantor set forth in
Schedules I, II and III is subsisting and has not been adjudged invalid,
unregistrable or unenforceable, in whole or in part, and is valid,
registrable and enforceable. Each License of such Grantor identified in
Schedule IV is validly subsisting and has not been adjudged invalid or
unenforceable, in whole or in part, and is valid and enforceable. Such
Grantor has notified the Collateral Agent in writing of all uses of any
item of Intellectual Property Collateral which could reasonably be expected
to lead to such item becoming invalid or unenforceable, including
unauthorized uses by third parties and uses which were not supported by the
goodwill of the business connected with such Intellectual Property
Collateral.
(d) Such Grantor has not made a previous assignment, transfer or
agreement constituting a present or future assignment, transfer or
encumbrance of any of the Intellectual Property Collateral. Such Grantor
has not granted any license (other than those listed in Schedule IV
hereto), release, covenant not to sue, or non-assertion assurance to any
person with respect to any part of the Intellectual Property Collateral.
(e) Such Grantor has used reasonable and proper statutory notice in
connection with its use of each patent, each registered trademark and
service mark and each registered copyright contained in Schedules I, II and
III.
(f) This Agreement creates a valid and perfected first priority
security interest in the Intellectual Property Collateral, securing the
payment of the Secured Obligations, and all filings and other actions
necessary or desirable to perfect and protect such security interest have
been duly made or taken.
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<PAGE>
(g) No authorization, approval or other action by, and no notice to or
filing with, any governmental authority or regulatory body or any other
third party is required for (i) the grant by such Grantor of the assignment
and security interest granted hereby or the execution, delivery or
performance of this Agreement by such Grantor, (ii) the perfection or
maintenance of the pledge, assignment and security interest created hereby
(including the first priority nature of such pledge, assignment or security
interest) or (iii) the exercise by the Collateral Agent of its rights
provided for in this Agreement or the remedies in respect of the
Intellectual Property Collateral pursuant to this Agreement, in each case
other than the filing of financing and continuation statements under the
UCC, which financing statements have been duly filed, and the filing of
this Agreement with the United States Patent and Trademark Office,except
where the failure to obtain such authorization or approval or other action
would not, either individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect.
(h) Except for the Licenses set forth in Schedule IV and except as set
forth in Schedule V hereto, such Grantor has no knowledge of the existence
of any right or any claim that is likely to be made by any third party
relating to any item of Intellectual Property Collateral.
(i) Except as set forth in Schedule V, no claim has been made and is
continuing or threatened that any item of Intellectual Property Collateral
is invalid or unenforceable or that the use by such Grantor of any
Intellectual Property Collateral does or may violate the rights of any
person. Except as set forth in Schedule V, there is currently no
infringement or unauthorized use of any item of Intellectual Property
Collateral.
(j) Such Grantor has taken all necessary steps to use consistent
standards of quality in the manufacture, distribution and sale of all
products sold and the provision of all services provided under or in
connection with any of the Trademarks and has taken all necessary steps to
ensure that all licensed users of any of the Trademarks use such consistent
standards of quality.
(k) There are no conditions precedent to the effectiveness of this
Agreement that have not been satisfied or waived.
SECTION 5. Further Assurances. (a) Each Grantor agrees that from time to
time, at its own expense, it shall promptly execute and deliver all further
instruments and documents, and take all further action, that may be necessary or
that the Collateral Agent may deem desirable and may reasonably request, in
order to perfect and protect any pledge, assignment or security interest granted
or purported to be granted hereby (including, without limitation, the
first-priority nature thereof) or to enable the Collateral Agent to exercise and
enforce its rights and remedies hereunder with respect to any part of the
Intellectual Property Collateral. Without limiting the generality of the
foregoing, each Grantor shall promptly execute and file such financing or
continuation statements, or amendments thereto, and such other instruments or
notices, as may be necessary or as the Collateral Agent may deem desirable and
may reasonably request in order to perfect and preserve the pledge, assignment
and security interest granted or purported to be granted hereby.
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(b) Each Grantor hereby authorizes the Collateral Agent to file one or more
financing or continuation statements, and amendments thereto, relating to all or
any part of the Intellectual Property Collateral without the signature of such
Grantor where permitted by law. A photocopy or other reproduction of this
Agreement or any financing statement covering the Intellectual Property
Collateral or any part thereof shall be sufficient as a financing statement
where permitted by law.
(c) Each Grantor shall furnish to the Collateral Agent from time to time
statements and schedules further identifying and describing the Intellectual
Property Collateral and such other reports in connection with the Intellectual
Property Collateral as the Collateral Agent may reasonably request, all in
reasonable detail.
(d) Each Grantor agrees that, should it obtain an ownership interest in any
Patent, Trademark, Copyright or License which is not now a part of the
Intellectual Property Collateral, (i) the provisions of Section 1 hereof shall
automatically apply thereto, (ii) any such Patent, Trademark, Copyright or
License shall automatically become part of the Intellectual Property Collateral,
and (iii) with respect to any ownership interest in any patent, patent
application, trademark or service mark registration, trademark or service mark
application, copyright registration, copyright application or license that such
Grantor should obtain, it shall give prompt written notice thereof to the
Collateral Agent in accordance with Section 13 hereof. Each Grantor authorizes
the Collateral Agent to modify this Agreement by amending Schedules I, II, III
and IV (and will cooperate reasonably with the Collateral Agent in effecting any
such amendment) to include any patent, patent application, trademark or service
mark registration, trademark or service mark application, copyright application
or license which becomes part of the Intellectual Property Collateral under this
Section.
(e) With respect to each patent, patent application, trademark or service
mark registration, trademark or service mark application, copyright
registration, copyright application and license, such Grantor agrees to take all
necessary steps, including, without limitation, in the United States Patent and
Trademark Office or in any court, to (i) maintain each such patent, patent
application, trademark or service mark registration, trademark or service mark
application, copyright registration, copyright application and license and (ii)
pursue each such application for Patent, Trademark or Copyright now or hereafter
included in the Intellectual Property Collateral, including, without limitation,
the filing of responses to office actions issued by the United States Patent and
Trademark Office, the filing of applications for renewal or extension, the
filing of affidavits under Sections 8 and 15 of the United States Trademark Act,
and the participation in opposition, cancellation and infringement and
misappropriation proceedings, the filing of divisional, continuation,
continuation-in-part and substitute applications, the filing of applications for
re-issue, renewal or extensions, the payment of maintenance fees, and the
participation in interference, reexamination, opposition, infringement and
misappropriation proceedings. Each Grantor agrees to take corresponding steps
with respect to each new or acquired Patent, Trademark, Copyright or License to
which it is now or later becomes entitled. Any expenses incurred in connection
with such activities shall be borne by such Grantor. Such Grantor shall not,
without the written consent of the Collateral Agent, discontinue use of or
otherwise abandon any Patent, Trademark or Copyright identified in Schedules I,
II and III, or abandon any right to file an application for a Patent, Trademark
or
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Copyright, or abandon any pending application for a Patent, Trademark or
Copyright identified in Schedules I, II and III. Further, such Grantor shall
not, without the written consent of the Collateral Agent, discontinue use of or
otherwise abandon any other Patent, Trademark or Copyright or abandon any right
to file an application for any other Patent, Trademark or Copyright or abandon
any pending application for any other Patent, Trademark or Copyright.
(f) Each Grantor agrees to notify the Collateral Agent promptly and in
writing if it learns (i) that any item of the Intellectual Property Collateral
may be determined to have become abandoned or dedicated or (ii) of any adverse
determination or the institution of any proceeding (including, without
limitation, the institution of any proceeding in the United States Patent and
Trademark Office or any court) regarding any item of the Intellectual Property
Collateral.
(g) In the event that any Grantor becomes aware that any item of the
Intellectual Property Collateral is infringed or misappropriated by a third
party, such Grantor shall promptly notify the Collateral Agent and shall take
such actions as such Grantor or the Collateral Agent deems reasonable and
appropriate under the circumstances to protect such Intellectual Property
Collateral, including, without limitation, suing for infringement or
misappropriation and for an injunction against such infringement or
misappropriation. Any expense incurred in connection with such activities shall
be borne by such Grantor.
(h) Each Grantor shall continue to use proper statutory notice in
connection with its use of each of its patents, registered trademarks and
service marks and registered copyrights contained in Schedules I, II, III.
(i) Each Grantor shall take all steps which it or the Collateral Agent
deems reasonable and appropriate under the circumstances to preserve and protect
its Intellectual Property Collateral, including, without limitation, maintaining
the quality of any and all products or services used or provided in connection
with any of the Trademarks, consistent with the quality of the products and
services as of the date hereof, and taking all steps necessary to ensure that
all licensed users of any of the Trademarks use such consistent standards of
quality.
SECTION 6. Transfers and Other Liens. Each Grantor agrees not (i) to sell,
assign (by operation of law or otherwise) or otherwise dispose of, or grant any
option with respect to, any item of the Intellectual Property Collateral or (ii)
to create or suffer to exist any Lien upon or with respect to any of the
Intellectual Property Collateral, except for the pledge, assignment and security
interest created by this Agreement and except as otherwise permitted by the
other Loan Documents.
SECTION 7. The Collateral Agent Appointed Attorney-in-Fact. Each Grantor
hereby irrevocably appoints the Collateral Agent such Grantor's
attorney-in-fact, with full authority in the place and stead of such Grantor and
in the name of such Grantor or otherwise, from time to time upon the occurrence
and during the continuance of a Default and with prior notice to such Grantor,
to take any action and to execute any instrument that may be necessary or that
the Collateral Agent may deem desirable to accomplish the purposes of this
Agreement, including, without limitation:
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(a) to ask for, demand, collect, sue for, recover, compromise, receive
and give acquittance and receipts for moneys due and to become due under or
in respect of any of the Intellectual Property Collateral,
(b) to receive, endorse and collect any drafts, instruments, chattel
paper and other documents in connection with subsection 7(a) hereof and
give full discharge for the same; and
(c) to file any claims or take any action or to institute any
proceedings that may be necessary or that the Collateral Agent may deem
desirable for the collection of any payments relating to any of the
Intellectual Property Collateral or otherwise to enforce the rights of the
Collateral Agent with respect to any of the Intellectual Property
Collateral.
SECTION 8. The Collateral Agent May Perform. If any Grantor fails to
perform any agreement contained herein, the Collateral Agent, with prior notice
to such Grantor, may itself perform, or cause performance of, such agreement,
and the expenses of the Collateral Agent incurred in connection therewith shall
be payable by such Grantor under Section 11 hereof.
SECTION 9. The Collateral Agent's Duties. The powers conferred on the
Collateral Agent hereunder are solely to protect its interest in the
Intellectual Property Collateral and shall not impose any duty upon it to
exercise any such powers. Except for the exercise of reasonable care in the safe
custody and preservation of the certificates of registration for any of the
Trademarks or the letters patent for any of the Patents in its possession and
the accounting for moneys actually received by it hereunder, the Collateral
Agent shall have no duty as to any Intellectual Property Collateral, whether or
not the Collateral Agent has or is deemed to have knowledge of such matters, or
as to the taking of any necessary steps to preserve rights against any parties
or any other rights pertaining to any Intellectual Property Collateral. The
Collateral Agent shall be deemed to have exercised reasonable care in the
custody and preservation of the certificates of registration for any of the
Trademarks or the letters patent for any of the Patents in its possession if
such certificates of registration and letters patent are accorded treatment
substantially equal to that which the Borrower accords its own property of like
tenor. The Collateral Agent may resign from the performance of all of its
functions and duties under this Agreement at any time in accordance with the
provisions of Section 21 of the Security Agreement.
SECTION 10. Remedies. If any Event of Default shall have occurred and be
continuing:
(a) The Collateral Agent may exercise in respect of the Intellectual
Property Collateral, in addition to other rights and remedies provided for
herein or otherwise available to it, all the rights and remedies of a
secured party upon default under the Uniform Commercial Code in effect in
the State of New York at such time (the "New York UCC") whether or not the
New York UCC applies to the affected Intellectual Property Collateral, and
also may (i) require each Grantor to, and each Grantor hereby
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agrees that it shall at its own expense and upon request of the Collateral
Agent forthwith, assemble all or part of the documents and things embodying
any part of the Intellectual Property Collateral as directed by the
Collateral Agent and make them available to the Collateral Agent at a place
to be designated by the Collateral Agent that is reasonably convenient to
both parties and (ii) without notice except as specified below, sell the
Intellectual Property Collateral or any part thereof in one or more parcels
at public or private sale, at any exchange or broker's board or at any of
the Collateral Agent's offices or elsewhere, for cash, on credit or for
future delivery, and upon such other terms as the Collateral Agent may deem
commercially reasonable. In the event of any sale, assignment, or other
disposition of any of the Intellectual Property Collateral of any Grantor,
the goodwill of the business connected with and symbolized by any
Trademarks subject to such disposition shall be included, and such Grantor
shall supply to the Collateral Agent or its designee such Grantor's
know-how and expertise, and documents and things embodying the same,
relating to the manufacture, distribution, advertising and sale of products
or the provision of services relating to any Intellectual Property
Collateral subject to such disposition, and such Grantor's customer lists
and other records and documents relating to such Intellectual Property
Collateral and to the manufacture, distribution, advertising and sale of
such products and services. Such Grantor agrees that, to the extent notice
of sale shall be required by law, at least ten days' notice to such Grantor
of the time and place of any public sale or the time after which any
private sale is to be made shall constitute reasonable notification. The
Collateral Agent shall not be obligated to make any sale of Intellectual
Property Collateral regardless of notice of sale having been given. The
Collateral Agent may adjourn any public or private sale from time to time
by announcement at the time and place fixed therefor, and such sale,
without further notice, may be made at the time and place to which it was
so adjourned.
(b) Any cash held by the Collateral Agent as Collateral and all cash
proceeds received by the Collateral Agent in respect of any sale of,
collection from, or other realization upon, all or any part of the
Intellectual Property Collateral may, in the discretion of the Collateral
Agent, be held by the Collateral Agent as collateral for, and/or then or at
any time thereafter applied in whole or in part by the Collateral Agent for
the ratable benefit of the Secured Parties against, all or any part of the
Secured Obligations in such order in accordance with Section 20(b) of the
Security Agreement.
(c) It is understood that the Grantors shall remain jointly and
severally liable to the extent of any deficiency between the amount of the
proceeds of the Intellectual Property Collateral and the aggregate amount
of the Secured Obligations.
(d) The Collateral Agent may exercise any and all rights and remedies
of such Grantor in respect to the Intellectual Property Collateral,
including, without limitation, any and all rights of any Grantor to demand
or otherwise require payment of any amount under, or performance of any
provision of, any of the Intellectual Property Collateral.
(e) All payments received by any Grantor in respect of the
Intellectual Property Collateral shall be received in trust for the benefit
of the Collateral Agent, shall be segregated from other funds of such
Grantor and shall be forthwith paid over to the
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Collateral Agent in the same form as so received (with any necessary
endorsement or assignment).
SECTION 11. Indemnity and Expenses. (a) Each Grantor agrees to indemnify
the Collateral Agent and its officers, directors, employees, agents and advisors
(each an "Indemnified Party") from and against any and all claims, losses and
liabilities growing out of or resulting from this Agreement (including, without
limitation, enforcement of this Agreement), except to the extent that such
claims, losses or liabilities are found in a final, nonappealable judgment by a
court of competent jurisdiction to have resulted from such Indemnified Party's
gross negligence or willful misconduct.
(b) Each Grantor jointly and severally agrees to pay to the Collateral
Agent, upon demand, the amount of any and all reasonable costs and expenses
(including, without limitation, the reasonable fees and expenses of its counsel
and of any experts and agents, including, without limitation, the following
costs of such counsel, experts and agents: support staff, litigation
preparation, computerized research, telephone, telefax, mileage, deposition,
postage, photocopy, process service, video tape and other similar costs) that
the Collateral Agent may incur in connection with (i) the administration of this
Agreement, (ii) the custody, preservation, use or operation of, or the sale of,
collection from or other realization upon, any of the Intellectual Property
Collateral, (iii) the exercise or enforcement of any of the rights of the
Collateral Agent or (iv) the failure by such Grantor to perform or observe any
of the provisions hereof.
SECTION 12. Amendments; Waivers; Etc. (a) No amendment or waiver of any
provision of this Agreement, and no consent to any departure by any Grantor
herefrom, shall in any event be effective unless the same shall be in writing
and signed by the Agent and the Collateral Agent, and then such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given.
(b) No failure on the part of the Collateral Agent to exercise, and no
delay in exercising, any right, power or privilege hereunder shall operate as a
waiver thereof or consent thereto; nor shall any single or partial exercise of
any such right, power or privilege preclude any other or further exercise
thereof or the exercise of any other right, power or privilege.
SECTION 13. Notices, Etc. All notices and other communications provided for
hereunder shall be in writing (including telecopier, telegraphic or telex
communication) and mailed, telecopied, telegraphed, telexed or delivered, (i) if
to any Grantor or the Collateral Agent, addressed to it at its address set forth
in Section 8.02 of the Credit Agreement or (ii) as to any party at such other
address as shall be designated by such party in a notice to each other party
complying as to delivery with the terms of this Section 13. All such notices and
other communications shall, when mailed, telecopied, telegraphed or telexed, be
effective when deposited in the mails, transmitted by telecopier, delivered to
the telegraph company or confirmed by telex answerback, respectively, addressed
as aforesaid.
SECTION 14. Continuing Security Interest; Assignments Under the Credit
Agreement. This Agreement shall create a continuing security interest in the
Intellectual Property Collateral and shall (i) remain in full force and effect
until the later of (x) the
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indefeasible and irrevocable cash payment in full of the Secured Obligations and
(y) the Final Maturity Date, (ii) be binding upon such Grantor, its successors
and assigns and (iii) inure, together with the rights and remedies of the
Collateral Agent hereunder, to the benefit of, and be enforceable by, the
Collateral Agent and its respective successors, transferees and assigns. Without
limiting the generality of this Section 14(iii), any Collateral Agent may assign
or otherwise transfer all or any portion of its rights and obligations under the
Credit Agreement (including, without limitation, all or any portion of its
Commitment or Commitments, the Advances owing to it and any Note or Notes held
by it) to any other Person, and such other Person shall thereupon become vested
with all the benefits in respect thereof granted to such Collateral Agent herein
or otherwise, in each case as provided in Section 8.07 of the Credit Agreement.
SECTION 15. Release and Termination. (a) Upon any sale, lease, transfer or
other disposition of any item of Intellectual Property Collateral in accordance
with the terms of the Loan Documents (other than sales of Inventory in the
ordinary course of business), the Collateral Agent shall, at the appropriate
Grantor's expense, execute and deliver to such Grantor such documents as such
Grantor shall reasonably request to evidence the release of such item of
Intellectual Property Collateral from the assignment and security interest
granted hereby; provided, however, that (i) at the time of such request and such
release, no Default shall have occurred and be continuing, (ii) such Grantor
shall have delivered to the Collateral Agent, at least five Business Days prior
to the date of the proposed release, a request for release describing the item
of the Intellectual Property Collateral and the terms of the sale, lease,
transfer or other disposition in reasonable detail (including, without
limitation, the price thereof and any expenses in connection therewith),
together with a form of release for execution by the Collateral Agent and a
certification by such Grantor to the effect that the transaction is in
compliance with the Loan Documents and as to such other matters as the
Collateral Agent may request and (iii) the Collateral Agent shall have approved
such sale, lease transfer or other disposition in writing.
(b) Upon the later of (i) the indefeasible and irrevocable cash payment in
full of the Secured Obligations and (ii) the Final Maturity Date, the pledge,
assignment and security interest granted hereby shall automatically terminate
and all rights to the Intellectual Property Collateral shall revert to such
Grantor. Upon any such termination and reversion, the Collateral Agent shall, at
such Grantor's expense, execute and deliver to such Grantor such documents as
such Grantor shall reasonably request to evidence such termination and
reversion.
SECTION 16. GOVERNING LAW; TERMS. (a) THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE
AND TO BE PERFORMED ENTIRELY IN SUCH STATE, EXCEPT TO THE EXTENT THAT THE
VALIDITY OR PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR REMEDIES
HEREUNDER, IN RESPECT OF ANY PARTICULAR INTELLECTUAL PROPERTY COLLATERAL ARE
GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK. UNLESS
OTHERWISE DEFINED HEREIN OR IN THE CREDIT AGREEMENT, TERMS USED IN ARTICLE 9 OF
THE
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NEW YORK UCC ARE USED HEREIN AS THEREIN DEFINED. ANY LEGAL ACTION OR PROCEEDING
WITH RESPECT TO THIS AGREEMENT, ANY OTHER DOCUMENT OR ANY BANK HEDGE AGREEMENT
MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK SITTING IN NEW YORK CITY
OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK, AND, BY EXECUTION
AND DELIVERY OF THIS AGREEMENT, EACH PARTY TO THIS AGREEMENT HEREBY IRREVOCABLY
ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS. EACH SUCH PARTY
HEREBY FURTHER IRREVOCABLY WAIVES ANY CLAIM THAT ANY SUCH COURTS LACK PERSONAL
JURISDICTION OVER SUCH PARTY, AND AGREES NOT TO PLEAD OR CLAIM, IN ANY LEGAL
ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT, ANY OTHER DOCUMENT OR ANY
BANK HEDGE AGREEMENT TO WHICH IT IS A PARTY BROUGHT IN ANY OF THE AFORESAID
COURTS, THAT ANY SUCH COURTS LACK PERSONAL JURISDICTION OVER SUCH PARTY. EACH
SUCH PARTY FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF
THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF
COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO SUCH PARTY
AT ITS ADDRESS SET FORTH IN SECTION 8.02 OF THE CREDIT AGREEMENT, SUCH SERVICE
TO BECOME EFFECTIVE 30 DAYS AFTER SUCH MAILING. EACH SUCH PARTY HEREBY
IRREVOCABLY WAIVES ANY OBJECTION TO SUCH SERVICE OF PROCESS AND FURTHER
IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY ACTION OR PROCEEDING
COMMENCED HEREUNDER OR UNDER ANY OTHER DOCUMENT OR UNDER ANY BANK HEDGE
AGREEMENT THAT SERVICE OF PROCESS WAS IN ANY WAY INVALID OR INEFFECTIVE. NOTHING
HEREIN SHALL AFFECT THE RIGHT OF THE AGENT, THE COLLATERAL AGENT, ANY SECURED
PARTY OR ANY HEDGE BANK TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR
TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST ANY PARTY IN ANY
OTHER JURISDICTION.
(b) EACH PARTY TO THIS AGREEMENT HERETO HEREBY IRREVOCABLY WAIVES TO THE
FULLEST EXTENT PERMITTED UNDER APPLICABLE LAW ANY OBJECTION WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY OF THE AFORESAID ACTIONS OR
PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT, ANY OTHER
DOCUMENT OR ANY BANK HEDGE AGREEMENT BROUGHT IN THE COURTS REFERRED TO IN CLAUSE
(a) ABOVE AND HEREBY FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM
IN ANY SUCH COURT THAT ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT
HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
(c) EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES ALL
RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT
OF OR RELATING TO THIS
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<PAGE>
AGREEMENT, THE OTHER DOCUMENTS, ANY BANK HEDGE AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY.
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IN WITNESS WHEREOF, each Grantor has caused this Agreement to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.
PRECISE TECHNOLOGY, INC.
By:___________________________________
Name:
Title:
PRECISE TECHNOLOGY OF DELAWARE, INC.
By:___________________________________
Name:
Title:
PRECISE TECHNOLOGY OF ILLINOIS, INC.
By:___________________________________
Name:
Title:
PRECISE TMP, INC.
By:___________________________________
Name:
Title:
PRECISE POLESTAR, INC.
By:___________________________________
Name:
Title:
[Signature Page to the Patent, Trademark and Copyright Pledge
and Security Agreement]
KL2:192595.3
<PAGE>
MASSIE TOOL, MOLD & DIE, INC.
By:___________________________________
Name:
Title:
Agreed and consented to as of
the date first above written:
FLEET NATIONAL BANK,
as Collateral Agent
By:______________________________
Name:
Title:
[Signature Page to the Patent, Trademark and Copyright Pledge
and Security Agreement]
KL2:192595.3
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the ____ day of , before me personally came
__________________________________ to me known, who, being by me duly sworn, did
depose and say he resides at __________________________________________
____________________________________________________________ and that he is the
_______________________ of ____________, the corporation described in and which
executed the above instrument; that he has been authorized to execute said
instrument on behalf of said corporation; and that he signed said instrument on
behalf of said corporation pursuant to said authority.
________________________
Notary Public
[Notarial Seal]
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the ____ day of , before me personally came
___________________________________________ to me known, who, being by me duly
sworn, did depose and say he resides at
_________________________________________
____________________________________________________________ and that he is the
_______________________ of ___________, the corporation described in and which
executed the above instrument; that he has been authorized to execute said
instrument on behalf of said corporation; and that he signed said instrument on
behalf of said corporation pursuant to said authority.
________________________
Notary Public
[Notarial Seal]
KL2:192595.3
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the ____ day of before me personally came
___________________________________________ to me known, who, being by me duly
sworn, did depose and say he resides at
_________________________________________
____________________________________________________________ and that he is the
_______________________ of Fleet National Bank, the banking corporation
described in and which executed the above instrument; that he has been
authorized to execute said instrument on behalf of said corporation; and that he
signed said instrument on behalf of said corporation pursuant to said authority.
________________________
Notary Public
[Notarial Seal]
KL2:192595.3
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<PAGE>
EXHIBIT F-1 TO THE
CREDIT AGREEMENT
PARENT GUARANTY
Dated June 13, 1997
from
PRECISE HOLDING CORPORATION,
as Guarantor,
in favor of
THE SECURED PARTIES REFERRED TO IN
THE CREDIT AGREEMENT REFERRED TO HEREIN
<PAGE>
TABLE OF CONTENTS
Section Page
1. Guaranty .............................................................. 1
2. Guaranty Absolute ..................................................... 2
3. Security .............................................................. 3
4. Waivers and Acknowledgments ........................................... 3
5. Subrogation ........................................................... 4
6. Subordination ......................................................... 4
7. Payments Free and Clear of Taxes, Etc. ................................ 5
8. Representations and Warranties ........................................ 8
9. Affirmative Covenants ................................................. 10
10. [Intentionally Omitted] ............................................... 10
11. Amendments, Etc. ...................................................... 10
12. Notices, Etc. ......................................................... 10
13. No Waiver; Remedies ................................................... 11
14. Fees; Expenses ........................................................ 11
15. Right of Set-off ...................................................... 11
16. Indemnification ....................................................... 11
17. Continuing Guaranty; Assignments under the Credit Agreement ........... 12
18. Counterparts .......................................................... 12
<PAGE>
19. Payments by Guarantor ................................................. 12
20. GOVERNING LAW; JURISDICTION; WAIVER OF JURY TRIAL, ETC. ............... 12
ii
<PAGE>
PARENT GUARANTY
This GUARANTY, dated as of June 13, 1997 (as amended, modified or
supplemented from time to time, this "Guaranty"), made by PRECISE HOLDING
CORPORATION, a Delaware corporation (the "Guarantor"), in favor of the Secured
Parties (as defined in the Credit Agreement referred to below).
WHEREAS, the Lenders and Fleet National Bank, as agent for the Lenders, are
parties to a Credit Agreement dated as of June 13, 1997 (said Agreement, as it
may hereafter be amended, supplemented or otherwise modified from time to time,
being the "Credit Agreement", the terms defined therein and not otherwise
defined herein being used herein as therein defined) with the Guarantor, Precise
Technology, Inc. (the "Borrower"), and certain Subsidiaries of the Borrower as
set forth therein. The Borrower is a Wholly-Owned Subsidiary of the Guarantor.
It is a condition precedent to the making of Advances and the issuances of
Letters of Credit by the Lenders under the Credit Agreement that the Guarantor
shall have executed and delivered this Guaranty; and
WHEREAS, the Guarantor will obtain benefits from the receipt of Advances by
the Borrower under the Credit Agreement and, accordingly, desires to execute
this Guaranty in order to satisfy the condition described in the preceding
paragraph;
NOW, THEREFORE, in consideration of the foregoing and other benefits
accruing to the Guarantor, the receipt and sufficiency of which are hereby
acknowledged, and in order to induce the Lenders to make Advances and to issue
Letters of Credit under the Credit Agreement from time to time, the Guarantor
hereby makes the following representations and warranties to the Secured Parties
and hereby covenants and agrees with each Secured Party as follows:
Section 1. Guaranty. The Guarantor hereby unconditionally and irrevocably
guarantees (i) the full and prompt payment in cash when due (whether at the
stated maturity, by acceleration or otherwise) of all obligations and
liabilities (including, without limitation, the principal of and interest on the
Notes issued by, and Advances made to, the Borrower under the Credit Agreement,
and all indemnities, fees and interest thereon or owed thereunder) owing by each
Loan Party to the Secured Parties, whether now existing or hereafter incurred
under, arising out of or in connection with any Loan Document to which such Loan
Party is a party and the due performance and compliance by each Loan Party with
all of the terms, conditions and agreements contained in the Credit Agreement
and such other Loan Documents (all such principal, interest, indemnities, fees,
obligations and liabilities being herein collectively called the "Guaranteed
Obligations"), and agrees to pay any and all expenses (including reasonable
counsel fees and expenses, including, without limitation, the following costs of
such counsel:
KL2:193861.3
<PAGE>
support staff, litigation preparation, computerized research, telephone,
telefax, mileage, deposition, postage, photocopy, process service, video tape
and other similar costs) incurred by the Agent or any other Secured Party in
enforcing any rights under this Guaranty. Without limiting the generality of the
foregoing, the Guarantor's liability shall extend to all amounts that constitute
part of the Guaranteed Obligations and would be owed by the Borrower to the
Agent or any other Secured Party under the Loan Documents but for the fact that
they are unenforceable or not allowable due to the existence of a bankruptcy,
reorganization or similar proceeding involving the Borrower.
Section 2. Guaranty Absolute. The Guarantor, unconditionally and
irrevocably, guarantees that the Guaranteed Obligations will be paid strictly in
accordance with the terms of the Loan Documents, 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 Agent or any other Secured Party with respect
thereto. The Obligations of the Guarantor under this Guaranty are independent of
the Guaranteed Obligations or any other Obligations of any other Loan Party
under the Loan Documents, and a separate action or actions may be brought and
prosecuted against the Guarantor to enforce this Guaranty, irrespective of
whether any action is brought against the Borrower or any other Loan Party or
whether the Borrower or any other Loan Party is joined in any such action or
actions. The liability of the Guarantor under this Guaranty shall be
irrevocable, absolute and unconditional irrespective of, and the Guarantor
hereby irrevocably waives any defenses it may now or hereafter have in any way
relating to, any or all of the following:
(a) any lack of validity or enforceability of any Loan Document or any
agreement or instrument relating thereto;
(b) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Guaranteed Obligations or any other
Obligations of any other Loan Party under the Loan Documents, or any other
release, amendment or waiver of or any consent to departure from any Loan
Document, including, without limitation, any increase in the Guaranteed
Obligations resulting from the extension of additional credit to the
Borrower or otherwise;
(c) any taking, exchange, release or non-perfection of any Collateral,
or any taking, release or amendment or waiver of or consent to departure
from any other guaranty, for all or any of the Guaranteed Obligations;
(d) any manner of application of Collateral, or proceeds thereof, to
all or any of the Guaranteed Obligations, or any manner of sale or other
disposition of any Collateral for all or any of the Guaranteed Obligations
or any other Obligations of any Loan Party or any Subsidiary of any Loan
Party under the Loan Documents or any other assets of any Loan Party or any
Subsidiary of any Loan Party;
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<PAGE>
(e) any change, restructuring or termination of the corporate
structure or existence of any Loan Party or any Subsidiary of any Loan
Party;
(f) any failure of any Secured Party to disclose to the Borrower or
the Guarantor any information relating to the financial condition,
operations, properties or prospects of any other Loan Party now or in the
future known to any Secured Party (the Guarantor waiving any duty on the
part of the Secured Parties to disclose such information); or
(g) any other circumstance (including, without limitation, any statute
of limitations) or any existence of or reliance on any representation by
the Agent or any other Secured Party that might otherwise constitute a
defense available to, or a discharge of, the Borrower, the Guarantor or any
other guarantor or surety.
This Guaranty shall continue to be effective or be reinstated, as the case may
be, if at any time any payment of any of the Guaranteed Obligations is rescinded
or must otherwise be returned by any Secured Party or any other Person upon the
insolvency, bankruptcy or reorganization of the Borrower or any other Loan Party
or otherwise, all as though such payment had not been made. This Guaranty shall
constitute a guaranty of payment and performance, and not of collection.
Notwithstanding the foregoing, the Guarantor's waivers under clauses (b), (c),
(f) and (g) of this Section 2 shall not apply in respect of any action or
inaction taken by the Agent or any other Secured Party with respect to the
foregoing clauses (b), (c), (f) and (g) of this Section 2 to the extent that
such action or inaction is proven to constitute willful misconduct.
Section 3. Security. This Guaranty is secured by a first priority perfected
continuing security interest in all of the assets and property of the Guarantor
granted to the Collateral Agent pursuant to the Parent Pledge and Security
Agreement dated the date hereof between Parent and the Collateral Agent.
Section 4. Waivers and Acknowledgments. (a) The Guarantor hereby waives
promptness, diligence, notice of acceptance and any other notice with respect to
any of the Guaranteed Obligations and this Guaranty and any requirement that the
Agent or any other Secured Party protect, secure, perfect or insure any Lien or
any property subject thereto or exhaust any right or take any action against the
Borrower or any other Person or any Collateral (except as shall be required by
applicable law and cannot be waived).
(b) The Guarantor hereby waives any right to revoke this Guaranty, and
acknowledges that this Guaranty is continuing in nature and applies to all
Guaranteed Obligations, whether existing now or in the future.
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KL2:193861.3
<PAGE>
(c) The Guarantor acknowledges that it will receive substantial direct and
indirect benefits from the financing arrangements contemplated by the Loan
Documents and that the waivers set forth in this Section 4 are knowingly made in
contemplation of such benefits.
Notwithstanding the foregoing, the Guarantor's waivers under clauses (a) and (b)
of this Section 4 shall not apply in respect of any action or inaction taken by
the Agent or any other Secured Party with respect to the foregoing clauses (a)
and (b) of this Section 4 to the extent that such action or inaction is proven
to constitute willful misconduct.
Section 5. Subrogation. The Guarantor will not exercise any rights that it
may now or hereafter acquire against the Borrower or any other insider guarantor
that arise from the existence, payment, performance or enforcement of the
Guarantor's Obligations under this Guaranty (whether contractual, under Section
509 of Title 11 of the United States Code entitled "Bankruptcy" as now or
hereafter in effect, or any successor thereto, or otherwise) or any other Loan
Document, including, without limitation, any right of subrogation,
reimbursement, exoneration, contribution or indemnification and any right to
participate in any claim or remedy of the Agent or any other Secured Party
against the Borrower or any other insider guarantor or any Collateral, whether
or not such claim, remedy or right arises in equity or under contract, statute
or common law, including, without limitation, the right to take or receive from
the Borrower or any other insider guarantor, directly or indirectly, in cash or
other property or by set-off or in any other manner, payment or security on
account of such claim, remedy or right, unless and until all of the Guaranteed
Obligations and all other amounts payable under this Guaranty shall have been
paid in full in cash and the Commitments shall have expired or terminated. If
any amount shall be paid to the Guarantor in violation of the preceding sentence
at any time prior to the later of (x) the indefeasible and irrevocable payment
in full in cash of the Guaranteed Obligations and all other amounts payable
under this Guaranty and (y) the Final Maturity Date, such amount shall be held
in trust for the benefit of the Agent and the other Secured Parties and shall
forthwith be paid to the Agent to be credited and applied to the Guaranteed
Obligations and all other amounts payable under this Guaranty, whether matured
or unmatured, in accordance with the terms of the Loan Documents, or to be held
as Collateral for any Guaranteed Obligations or other amounts payable under this
Guaranty thereafter arising. If (i) the Guarantor shall make payment to the
Agent or any other Secured Party of all or any part of the Guaranteed
Obligations, (ii) all of the Guaranteed Obligations and all other amounts
payable under this Guaranty shall be paid in full in cash and (iii) the Final
Maturity Date shall have occurred, the Agent and the other Secured Parties will,
at the Guarantor's request and expense, execute and deliver to the Guarantor
appropriate documents, without recourse and without representation or warranty,
necessary to evidence the transfer by subrogation to the Guarantor of an
interest in the Guaranteed Obligations resulting from such payment by the
Guarantor.
Section 6. Subordination. Any and all rights and claims of the Guarantor
against the Borrower or any of its property, arising by reason of any payment by
the Guarantor to the Agent pursuant to the provisions of this Guaranty shall be
subordinate and subject in right of
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KL2:193861.3
<PAGE>
payment to the prior payment and satisfaction of all Guaranteed Obligations and
all other amounts payable under this Guaranty. Any Debt of the Borrower, now or
hereafter held by the Guarantor, is hereby subordinated to all indebtedness and
obligations guaranteed hereby. Upon the occurrence and during the continuance of
an Event of Default, any such indebtedness of the Borrower to the Guarantor
shall, if the Agent so requests, be collected, enforced, and received by the
Guarantor in trust for the Agent and held as security for the payment of the
Guaranteed Obligations to the Agent, but without reducing or affecting in any
manner the liability of the Guarantor hereunder.
Section 7. Payments Free and Clear of Taxes, Etc. (a) Subject to Sections
7(e) and (f), any and all payments by the Guarantor hereunder or under the Notes
shall be made, in accordance with Section 2.11 of the Credit Agreement, free and
clear of and without deduction for any and all present or future taxes, levies,
imposts, deductions, charges or withholdings imposed by a Governmental
Authority, and all liabilities with respect thereto, excluding net income taxes
and franchise taxes imposed on the Agent or any Lender as a result of a present
or former connection between the Agent or such Lender and the jurisdiction of
the Governmental Authority imposing such tax or any political subdivision or
taxing authority thereof or therein (other than any such connection arising
solely from the Agent or such Lender having executed, delivered or performed its
obligations or received a payment under, or enforced, this Guaranty, the Credit
Agreement or any Note) (all such non-excluded taxes, levies, imposts,
deductions, charges, withholdings and liabilities being hereinafter referred to
as "Taxes"). If the Guarantor shall be required by law to deduct any Taxes from
or in respect of any sum payable hereunder or under any Note to any Lender or
the Agent, (i) the sum payable shall be increased as may be necessary so that
after making all required deductions (including deductions applicable to
additional sums payable under this Section 7) such Lender or the Agent (as the
case may be) receives an amount equal to the sum it would have received had no
such deductions been made, (ii) the Guarantor shall make such deductions and
(iii) the Guarantor shall pay the full amount deducted to the relevant taxation
authority or other authority in accordance with applicable law; provided,
however, that the Guarantor shall not be required to increase such amounts
payable to any Lender organized under the laws of a jurisdiction outside the
United States to the extent provided in subsection (f) of this Section 7, and
shall not be required to indemnify such Lender pursuant to this Section 7(a) if
such Lender fails to comply with the requirements of subsection (e) of this
Section 7 (without regard to the last sentence thereof).
(b) In addition, the Guarantor shall pay any present or future stamp,
documentary, excise, property or similar taxes, charges or levies that arise
from any payment made hereunder or under the Notes or from the execution,
delivery or registration of, or otherwise with respect to, this Guaranty, the
Credit Agreement or the Notes; excluding any present or future stamp,
documentary, excise, property or similar taxes, charges or levies (including
without limitation, mortgage recording taxes and similar fees) that arise as a
result of sales, assignments or other transfers of rights hereunder by any
Lender (all such non-excluded taxes, charges and levies being hereinafter
referred to as "Other Taxes").
- 5 -
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<PAGE>
(c) The Guarantor shall indemnify each Lender and the Agent for the full
amount of Taxes and Other Taxes, and for the full amount of taxes imposed by any
jurisdiction on amounts payable under this Section 7, paid by such Lender or the
Agent (as the case may be) and any liability (including penalties, additions to
Tax, interest and expenses) arising therefrom or with respect thereto. This
indemnification shall be made within 30 days from the date such Lender or the
Agent (as the case may be) makes written demand therefor.
(d) Within 30 days after the date of any payment of Taxes, the Guarantor
shall furnish to the Agent, at its address referred to in Section 8.02 of the
Credit Agreement, the original receipt of payment thereof or a certified copy of
such receipt or, if none is available, other documentary evidence showing such
payment. In the case of any payment hereunder or under the Notes by or on behalf
of the Guarantor through an account or branch outside the United States or on
behalf of the Guarantor by a payor that is not a United States person, if the
Guarantor determines that no Taxes are payable in respect thereof, the Guarantor
shall furnish, or shall cause such payor to furnish, to the Agent, at such
address, an opinion of counsel acceptable to the Agent stating that such payment
is exempt from Taxes. For purposes of subsections (d) and (e) of this Section 7,
the terms "United States" and "United States person" shall have the meanings
specified in Section 7701 of the Internal Revenue Code.
(e) Each Lender organized under the laws of a jurisdiction outside the
United States shall, on or prior to the date of its execution and delivery of
this Guaranty in the case of each initial Lender or the Issuing Bank, as the
case may be, and on the date of the Assignment and Acceptance pursuant to which
it became 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 thereafter as such Lender remains lawfully able to do so), provide the
Agent and the Borrower with Internal Revenue Service form 1001 or 4224, as well
as form W-9 or W-8, as appropriate, or any successor form prescribed by the
Internal Revenue Service, certifying that such Lender is exempt from or is
entitled to a reduced rate of United States withholding tax on payments under
this Guaranty, the Credit Agreement or the Notes. If the form provided by a
Lender at the time such Lender first becomes a party to the Credit Agreement
indicates a United States interest withholding tax rate in excess of zero,
withholding tax at such rate shall be considered excluded from Taxes unless and
until such Lender provides the appropriate form certifying that a lesser rate
applies, whereupon withholding tax at such lesser rate only shall be considered
excluded from Taxes for periods governed by such form; provided, however, that,
if at the date of the Assignment and Acceptance pursuant to which a Lender
becomes a party to the Credit Agreement, the Lender assignor was entitled to
payments under subsection (a) of this Section 7 in respect of United States
withholding tax with respect to interest paid at such date, then, to such
extent, the term Taxes shall include (in addition to withholding taxes that may
be imposed in the future or other amounts otherwise includable in Taxes) United
States withholding tax, if any, applicable with respect to the Lender assignee
on such date. If any form or document referred to in this subsection (e) of this
Section 7 requires the disclosure of information, other than information
necessary to compute the tax payable and information required on the date hereof
by Internal Revenue Service form 1001 or 4224, that the Lender
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<PAGE>
reasonably considers to be confidential, the Lender shall give notice thereof to
the Borrower and shall not be obligated to include in such form or document such
confidential information. Notwithstanding anything to the contrary contained
herein, if the withholding taxes applicable to any payment under any Note or
under the Credit Agreement to a Lender or Lender assignor shall be increased
from that which would have otherwise been applicable at the time of the
execution and delivery by such Lender of the Credit Agreement or the date of the
Assignment and Acceptance pursuant to which it became a Lender, as the case may
be, due to (i) a change in the manner in which such Lender or Lender assignor
holds its interest in the Note, or (ii) an audit of the Internal Revenue Service
indicating that such Lender or Lender assignor is not entitled to an exemption
from, or a reduced rate for, such withholding taxes at the date of the execution
and delivery by such Lender of the Credit Agreement or the date of the
Assignment and Acceptance pursuant to which it became a Lender then any
withholding taxes resulting therefrom shall be considered excluded from Taxes.
(f) For any period with respect to which a Lender has failed to provide the
Guarantor with the appropriate form or document described in subsection (e) of
this Section 7 (other than if such failure is due to a change in law occurring
after the date on which a form originally was required to be provided or if such
form otherwise is not required to obtain an exemption from Taxes), such Lender
shall not be entitled to indemnification under subsection (a) or (c) of this
Section 7 with respect to Taxes imposed by the United States; provided, however,
that should a Lender become subject to Taxes because of its failure to deliver a
form required hereunder, the Guarantor shall take such steps as such Lender
shall reasonably request to assist such Lender to recover such Taxes.
(g) If requested by the Guarantor, and at the Guarantor's expense, any
Lender and the Agent shall take such steps as may be appropriate in the sole
discretion of such Lender or the Agent, as the case may be, to seek a refund of
any Taxes or Other Taxes paid by the Guarantor. If any Lender or the Agent
receives a refund in respect of any Taxes or Other Taxes for which the Lender
has received payment from the Guarantor hereunder, such Lender and the Agent,
within 15 days of such receipt, shall deliver to the Guarantor the amount of
such refund. In addition, within 15 days of a written request of the Guarantor,
any Lender and the Agent shall execute and deliver to the Guarantor such
certificates, forms or other documents which can be reasonably furnished
consistent with the facts and which are reasonably necessary in the opinion of
such Lender and the Agent to assist the Guarantor in applying for refunds of
Taxes or Other Taxes remitted hereunder.
(h) If the Guarantor is required to pay any amounts pursuant to the
provisions of this Section 7, and if thereafter any Lender or the Agent shall
receive or be granted a credit against or remission or other relief for any
Taxes solely in respect of the amounts so paid by the Guarantor, such Lender
shall, to the extent that it can do so without prejudice to the retention of the
amount of such credit, remission or other relief, pay to the Guarantor as soon
as reasonably practicable after the date on which such Lender or the Agent
effectively obtains the benefit of such credit, remission or other relief an
amount which such Lender reasonably
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<PAGE>
determines to be equal to such credit, remission or other relief less any sum
which the Lender is required by law to deduct therefrom. The Lender may, in its
sole discretion, determine the order of utilization of all charges, deductions,
credits and expenses.
(i) In the event that any Lender or the Agent receives written
communication from any Governmental Authority with respect to an assessment or
proposed assessment of any Taxes or Other Taxes which the Guarantor is liable to
indemnify pursuant to the provisions of this Section 7, such Lender or the Agent
shall notify the Guarantor in writing as soon as reasonably practicable after
receipt of such written communication.
Section 8. Representations and Warranties. The Guarantor hereby represents
and warrants as follows:
(a) The Guarantor (i) is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation, (ii) is duly qualified and in good standing as a foreign
corporation in each other jurisdiction in which it owns or leases property
or assets or in which the conduct of its business requires it to so qualify
or be licensed, except where the failure to be so qualified would not,
either individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect, and (iii) has all requisite corporate power and
authority (including, without limitation, all material governmental
licenses, permits and other approvals) to own or lease and operate its
properties and assets and to carry on its business as now conducted and as
presently proposes to be conducted.
(b) The execution, delivery and performance by the Guarantor of this
Guaranty and each other Document to which it is a party, and the
consummation of the transactions contemplated hereby and thereby and the
compliance by it with the terms and provisions thereof, are within the
Guarantor's corporate powers, have been duly authorized by all necessary
corporate action and do not (i) contravene the Guarantor's charter or
bylaws (or equivalent documentation), (ii) violate any law (including,
without limitation, the Exchange Act and the Racketeer Influenced and
Corrupt Organizations Chapter of the Organized Crime Control Act of 1970),
rule, regulation (including, without limitation, Regulation X of the Board
of Governors of the Federal Reserve System), order, writ, judgment,
injunction, decree, determination or award, (iii) conflict with or result
in the breach of, or constitute a default under, any material contract,
loan agreement, indenture, mortgage, deed of trust, lease or other
instrument binding on or affecting the Guarantor, any of its Subsidiaries
or any of their respective properties or assets or (iv) except for the
Liens created under the Loan Documents, result in or require the creation
or imposition of any Lien upon or with respect to any of the properties or
assets of the Guarantor or any of its Subsidiaries. Neither the Guarantor
nor any of its Subsidiaries is in violation of any such law, rule,
regulation, order, writ, judgment, injunction, decree, determination or
award or in breach of any such contract, loan agreement, indenture,
mortgage, deed of trust, lease or other instrument, in each case
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<PAGE>
where such breach or imposition would, either individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
(c) No authorization or approval or other action by, and no notice to
or filing with, any Governmental Authority or regulatory body or any other
third party is required for (i) the due execution, delivery, recordation,
filing or performance by the Guarantor of this Guaranty and each other
Document to which it is a party, or for the consummation of the
transactions contemplated hereby and thereby, (ii) the grant by the
Guarantor of the Liens granted by it pursuant to the Collateral Documents,
(iii) the perfection or maintenance of the Liens created by the Collateral
Documents (including the first priority nature thereof) or (iv) the
exercise by the Agent, the Collateral Agent or any Lender of its rights
under the Loan Documents or the remedies in respect of the Collateral
pursuant to the Collateral Documents, except for the authorizations,
approvals, actions, notices and filings listed on Schedule 4.01(d) to the
Credit Agreement, all of which have been duly obtained, taken, given or
made and are in full force and effect. All applicable waiting periods in
connection with the transactions contemplated hereby have expired without
any action having been taken by any competent authority restraining,
preventing or imposing materially adverse conditions upon the rights of the
Guarantor or any of its Subsidiaries freely to transfer or otherwise
dispose of, or to create any Lien on, any properties or assets now owned or
hereafter acquired by any of them, except where the failure to obtain such
authorization or approval or other action would not, either individually or
in the aggregate, reasonably be expected to have a Material Adverse Effect.
(d) There is no action, suit, investigation, litigation or proceeding
affecting the Guarantor or any of its Subsidiaries, including any
Environmental Claim, pending or threatened before any court, governmental
agency or arbitrator (i) that affects or purports to affect the legality,
validity or enforceability of this Guaranty or any other Loan Document or
the consummation of the transactions contemplated hereby or thereby, (ii)
with respect to any material Debt of the Guarantor or any of its
Subsidiaries or (iii) that would reasonably be expected to have a Material
Adverse Effect.
(e) This Guaranty has been duly executed and delivered by the
Guarantor. This Guaranty is the legal, valid and binding obligation of the
Guarantor, enforceable against the Guarantor in accordance with its terms,
except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or other laws relating to or limiting creditors'
rights or by equitable principles generally (regardless of whether
enforcement is sought in equity or at law).
(f) Any information, exhibit or report (including, without limitation,
the Offering Memorandum and all information contained in the Documents but
excluding any financial projections) prepared and furnished by or on behalf
of the Guarantor in writing to any Secured Party for purposes of or in
connection with this Guaranty, the other
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<PAGE>
Documents or any transaction contemplated herein or therein is, and all
other such information hereafter prepared and furnished by or on behalf of
the Guarantor in writing to the Agent or any Secured Party will be, true
and accurate in all material respects on the date as of which such
information is dated or certified and not incomplete by omitting to state
any fact necessary to make such information not misleading in any material
respect at such time in light of the circumstances under which such
information was provided.
(g) There are no conditions precedent to the effectiveness of this
Guaranty that have not been satisfied or waived.
(h) The Guarantor has, independently and without reliance upon the
Agent or any Lender and based on such documents and information as it has
deemed appropriate, made its own credit analysis and decision to enter into
this Guaranty.
Section 9. Affirmative Covenants. The Guarantor covenants and agrees that,
so long as any part of the Guaranteed Obligations shall remain unpaid, any
Letter of Credit shall be outstanding or any Lender shall have any Commitment,
the Guarantor will at all times require, perform or observe, and will cause each
Loan Party and each of their respective Subsidiaries to perform or observe, all
of the terms, covenants and agreements that the Loan Documents state that the
Guarantor or the Borrower or any other Loan Party is to perform or observe or
that the Guarantor or the Borrower is to cause any Loan Party's Subsidiaries to
perform or observe.
Section 10. [Intentionally Omitted]
Section 11. Amendments, Etc. No amendment or waiver of any provision of
this Guaranty and no consent to any departure by the Guarantor therefrom shall
in any event be effective unless the same shall be in writing and signed by the
Agent and the Required Lenders, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given; provided, however, that no amendment, waiver or consent shall, unless in
writing and signed by all of the Lenders, (a) release or limit the liability of
the Guarantor hereunder, (b) postpone any date fixed for payment hereunder or
(c) amend this Section 11.
Section 12. Notices, Etc. All notices and other communications provided for
hereunder shall be in writing (including telegraphic, telecopy or telex
communication) and mailed, telegraphed, telecopied, telexed or delivered to it,
if to the Guarantor, addressed to it at 501 Mosside Boulevard, North Versailles,
PA 15137, Attention: John R. Weeks, telecopier number (412) 823-4110, with
copies to (a) Mentmore Holdings Corporation, 1430 Broadway, 13th Floor, New
York, NY 10018-3308, Attention: William L. Remley, telecopier number (212)
391-1393 and (b) Winston & Strawn, 200 Park Avenue, New York, NY 10166,
Attention: Robert Ericson, telecopier number (212) 294-4700; if to the Agent or
any Lender, at its address
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<PAGE>
specified in Section 8.02 of the Credit Agreement, or as to any party at such
other address as shall be designated by such party in a written notice to each
other party. All such notices and other communications shall, when mailed,
telegraphed, telecopied or telexed, be effective when deposited in the mails,
delivered to the telegraph company, transmitted by telecopier or confirmed by
telex answerback, respectively.
Section 13. No Waiver; Remedies. No failure on the part of the Agent, the
Collateral Agent or any other Secured Party 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. The remedies herein
provided are cumulative and not exclusive of any remedies provided by law.
Section 14. Fees; Expenses. The Guarantor hereby agrees to pay all
out-of-pocket costs and expenses of the Agent in connection with the enforcement
of this Guaranty and any amendment, waiver or consent relating hereto
(including, without limitation, the reasonable fees and disbursements of counsel
employed by the Secured Parties, including, without limitation, the following
costs of such counsel: support staff, litigation preparation, computerized
research, telephone, telefax, mileage, deposition, postage, photocopy, process
service, video tape and other similar costs).
Section 15. Right of Set-off. Upon (a) the occurrence and during the
continuance of any Event of Default and (b) the making of the request or the
granting of the consent specified by Section 6.01 of the Credit Agreement to
authorize the Agent to declare the Notes due and payable pursuant to the
provisions of said Section 6.01, each Lender and each of its respective
affiliates is hereby authorized at any time and from time to time, to the
fullest extent permitted by law, to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held and
other indebtedness at any time owing by such Lender or such affiliate to or for
the credit or the account of the Guarantor against any and all of the
Obligations of the Guarantor now or hereafter existing under this Guaranty,
whether or not such Lender shall have made any demand under this Guaranty and
although such Obligations may be unmatured. Each Lender agrees promptly to
notify the Guarantor after any such set-off and application; provided, however,
that the failure to give such notice shall not affect the validity of such
set-off and application. The rights of each Lender and its respective affiliates
under this Section 15 are in addition to other rights and remedies (including,
without limitation, other rights of set-off) that such Lender and its respective
affiliates may have.
Section 16. Indemnification. Without limitation on any other Obligations of
the Guarantor or remedies of the Secured Parties under this Guaranty, the
Guarantor shall, to the fullest extent permitted by law, indemnify, defend and
save and hold harmless each Secured Party from and against, and shall pay on
demand, any and all losses, liabilities, damages, costs, expenses and charges
(including the reasonable fees and disbursements of such Secured Party's legal
counsel) suffered or incurred by such Secured Party as a result of any failure
of any
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<PAGE>
Guaranteed Obligations to be the legal, valid and binding obligations of the
Guarantor enforceable against the Guarantor in accordance with their terms.
Section 17. Continuing Guaranty; Assignments under the Credit Agreement.
This Guaranty is a continuing guaranty and shall (a) remain in full force and
effect until the later of (i) the indefeasible and irrevocable payment in full
in cash of the Guaranteed Obligations and all other amounts payable under this
Guaranty and (ii) the Final Maturity Date, (b) be binding upon the Guarantor,
its successors and assigns and (c) inure to the benefit of and be enforceable by
the Agent, the Collateral Agent and the other Secured Parties and their
successors, transferees and assigns. Without limiting the generality of the
foregoing clause (c), any Secured Party may assign or otherwise transfer all or
any portion of its rights and obligations under the Credit Agreement (including,
without limitation, all or any portion of its Commitment, the Advances owing to
it and the Note or Notes held by it) to any other Person, and such other Person
shall thereupon become vested with all the benefits in respect thereof granted
to such Secured Party herein or otherwise, in each case, subject to the
conditions as and to the extent provided in Section 8.07 of the Credit
Agreement.
Section 18. Counterparts. This Guaranty may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which when so executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument. A set of counterparts
executed by all the parties hereto shall be lodged with the Guarantor and the
Agent.
Section 19. Payments by Guarantor. All payments by the Guarantor hereunder
will be made without setoff, counterclaim or other defense.
Section 20. GOVERNING LAW; JURISDICTION; WAIVER OF JURY TRIAL, ETC. (a)
THIS GUARANTY AND THE RIGHTS AND OBLIGATIONS OF THE SECURED PARTIES AND THE
GUARANTOR SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED ENTIRELY
IN SUCH STATE. ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS GUARANTY OR
ANY OTHER DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK SITTING
IN NEW YORK CITY OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK,
AND, BY EXECUTION AND DELIVERY OF THIS GUARANTY, EACH PARTY TO THIS GUARANTY
HEREBY IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY
AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS. EACH SUCH PARTY
HEREBY FURTHER IRREVOCABLY WAIVES ANY CLAIM THAT ANY SUCH COURTS LACK PERSONAL
JURISDICTION OVER SUCH PARTY, AND AGREES NOT TO PLEAD OR CLAIM, IN ANY LEGAL
ACTION OR PROCEEDING WITH RESPECT TO THIS GUARANTY OR ANY OTHER DOCUMENT BROUGHT
IN ANY OF THE AFORESAID COURTS, THAT SUCH
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<PAGE>
COURT LACKS PERSONAL JURISDICTION OVER SUCH PARTY. EACH SUCH PARTY FURTHER
IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED
COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY
REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO SUCH PARTY IN ACCORDANCE WITH
SECTION 12, SUCH SERVICE TO BECOME EFFECTIVE 30 DAYS AFTER SUCH MAILING. EACH
SUCH PARTY HEREBY IRREVOCABLY WAIVES ANY OBJECTION TO SUCH SERVICE OF PROCESS
AND FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY ACTION OR
PROCEEDING COMMENCED HEREUNDER OR UNDER ANY DOCUMENT THAT SERVICE OF PROCESS WAS
IN ANY WAY INVALID OR INEFFECTIVE. NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE
AGENT, THE COLLATERAL AGENT, ANY LENDER OR THE HOLDER OF ANY NOTE TO SERVE
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR
OTHERWISE PROCEED AGAINST ANY PARTY IN ANY OTHER JURISDICTION.
(b) THE GUARANTOR IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST
EXTENT IT MAY LEGALLY AND EFFECTIVELY DO SO, ANY OBJECTION THAT IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUIT, ACTION OR PROCEEDING ARISING
OUT OF OR RELATING TO THIS GUARANTY OR ANY OF THE OTHER DOCUMENTS TO WHICH IT IS
A PARTY IN THE COURTS REFERRED TO IN (a) ABOVE. THE GUARANTOR HEREBY IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, THE DEFENSE OF AN INCONVENIENT
FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.
(c) THE GUARANTOR HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN
ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR
OTHERWISE) ARISING OUT OF OR RELATING TO THIS GUARANTY, ANY OF THE DOCUMENTS,
THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY OR THE ACTIONS OF THE AGENT, THE
COLLATERAL AGENT OR ANY OTHER SECURED PARTY IN THE NEGOTIATION, ADMINISTRATION,
PERFORMANCE OR ENFORCEMENT HEREOF OR THEREOF.
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<PAGE>
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be duly
executed and delivered by an officer thereunto duly authorized as of the date
first above written.
PRECISE HOLDING CORPORATION
By ___________________________________
Name:
Title:
[Signature Page to the Parent Guaranty]
KL2:193861.3
<PAGE>
EXHIBIT F-2 TO THE
CREDIT AGREEMENT
SUBSIDIARY GUARANTY
Dated June 13, 1997
from
CERTAIN SUBSIDIARIES OF
PRECISE TECHNOLOGY, INC.,
as Guarantors, in favor of
THE SECURED PARTIES REFERRED TO IN
THE CREDIT AGREEMENT REFERRED TO HEREIN
<PAGE>
TABLE OF CONTENTS
Section Page
1. Guaranty .............................................................. 1
2. Guaranty Absolute ..................................................... 2
3. Security .............................................................. 3
4. Waivers and Acknowledgments ........................................... 3
5. Subrogation ........................................................... 4
6. Subordination ......................................................... 5
7. Payments Free and Clear of Taxes, Etc. ................................ 5
8. Representations and Warranties ........................................ 8
9. Affirmative Covenants ................................................. 10
10. [Intentionally Omitted] ............................................... 10
11. Amendments, Etc. ...................................................... 10
12. Notices, Etc. ......................................................... 10
13. No Waiver; Remedies ................................................... 11
14. Fees; Expenses ........................................................ 11
15. Right of Set-off ...................................................... 11
16. Indemnification ....................................................... 11
17. Continuing Guaranty; Assignments under the Credit Agreement ........... 12
18. Counterparts. ......................................................... 12
19. Payments by Guarantors ................................................ 12
20. Additional Subsidiaries ............................................... 12
<PAGE>
Section Page
21. GOVERNING LAW; JURISDICTION; WAIVER OF JURY TRIAL; ETC. ............... 12
Schedule I - Outstanding Capital Stock of each Guarantor
-ii-
<PAGE>
SUBSIDIARY GUARANTY
This GUARANTY, dated as of June 13, 1997 (as amended, modified or
supplemented from time to time, this "Guaranty"), made by each of the
undersigned (each, a "Guarantor" and collectively, the "Guarantors"), in favor
of the Secured Parties (as defined in the Credit Agreement referred to below).
WHEREAS, the Lenders and Fleet National Bank, as Agent for the Lenders, are
parties to a Credit Agreement dated as of June 13, 1997 (said Agreement, as it
may hereafter be amended, supplemented or otherwise modified from time to time,
being the "Credit Agreement", the terms defined therein and not otherwise
defined herein being used herein as therein defined) with Precise Holding
Corporation ("Parent"), Precise Technology, Inc. (the "Borrower"), and the
Guarantors. Each Guarantor is a direct or indirect Subsidiary of the Borrower.
It is a condition precedent to the making of Advances and the issuances of
Letters of Credit by the Lenders under the Credit Agreement that each Guarantor
shall have executed and delivered this Guaranty; and
WHEREAS, each Guarantor will obtain benefits from the receipt of Advances
by the Borrower under the Credit Agreement and, accordingly, desires to execute
this Guaranty in order to satisfy the condition described in the preceding
paragraph;
NOW, THEREFORE, in consideration of the foregoing and other benefits
accruing to each Guarantor, the receipt and sufficiency of which are hereby
acknowledged, and in order to induce the Lenders to make Advances and to issue
Letters of Credit under the Credit Agreement from time to time, each Guarantor
hereby makes the following representations and warranties to the Secured Parties
and hereby covenants and agrees with each Secured Party as follows:
Section 1. Guaranty. (a) Each Guarantor, jointly and severally, hereby
unconditionally and irrevocably guarantees (i) the full and prompt payment in
cash when due (whether at the stated maturity, by acceleration or otherwise) of
all obligations and liabilities (including, without limitation, the principal of
and interest on the Notes issued by, and Advances made to, the Borrower under
the Credit Agreement, and all indemnities, fees and interest thereon or owed
thereunder) owing by each Loan Party to the Secured Parties, whether now
existing or hereafter incurred under, arising out of or in connection with any
Loan Document to which such Loan Party is a party and the due performance and
compliance by each Loan Party with all of the terms, conditions and agreements
contained in the Credit Agreement and such other Loan Documents (all such
principal, interest, indemnities, fees, obligations and liabilities being herein
collectively called the "Guaranteed Obligations"), and agrees to pay any and all
expenses (including reasonable counsel fees and expenses, including, without
limitation, the following costs of such counsel: support staff, litigation
preparation, computerized research, telephone, telefax, mileage, deposition,
postage, photocopy, process service, video tape and other similar costs)
incurred by the Agent or any other Secured Party in enforcing any rights
KL2:193918.4
<PAGE>
under this Guaranty. Without limiting the generality of the foregoing, each
Guarantor's liability shall extend to all amounts that constitute part of the
Guaranteed Obligations and would be owed by the Borrower to the Agent or any
other Secured Party under the Loan Documents but for the fact that they are
unenforceable or not allowable due to the existence of a bankruptcy,
reorganization or similar proceeding involving the Borrower.
(b) The liability of each Guarantor under this Guaranty shall not exceed
the greater of (i) the net benefit realized by such Guarantor from the proceeds
of the Advances made from time to time by the Borrower to such Guarantor or any
Subsidiary of such Guarantor and (ii) the greater of (x) 95% of the Adjusted Net
Assets of such Guarantor on the date of delivery hereof and (y) 95% of the
Adjusted Net Assets of such Guarantor on the date any demand is made hereunder.
"Adjusted Net Assets" of such Guarantor at any date means the lesser of (x) the
amount by which the present fair salable value of the property of such Guarantor
exceeds the total amount of liabilities (including, without limitation, the
maximum amount reasonably expected to come due in respect of contingent
liabilities, other than contingent liabilities of such Guarantor under this
Guaranty) of such Guarantor at such date and (y) the amount by which the present
fair salable value of the assets of such Guarantor at such date exceeds the
amount that will be required to pay the probable liability of such Guarantor on
its debt, excluding debt in respect of this Guaranty, as they become absolute
and matured.
Section 2. Guaranty Absolute. Each Guarantor, jointly and severally,
unconditionally and irrevocably, guarantees that the Guaranteed Obligations will
be paid strictly in accordance with the terms of the Loan Documents, 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 Agent or any other Secured
Party with respect thereto. The Obligations of each Guarantor under this
Guaranty are independent of the Guaranteed Obligations or any other Obligations
of any other Guarantor or any other Loan Party under the Loan Documents, and a
separate action or actions may be brought and prosecuted against each Guarantor
to enforce this Guaranty, irrespective of whether any action is brought against
the Borrower, any other Guarantor or any other Loan Party or whether the
Borrower, any other Guarantor, or any other Loan Party is joined in any such
action or actions. The liability of each Guarantor under this Guaranty shall be
irrevocable, absolute and unconditional irrespective of, and each Guarantor
hereby irrevocably waives any defenses it may now or hereafter have in any way
relating to, any or all of the following:
(a) any lack of validity or enforceability of any Loan Document or any
agreement or instrument relating thereto;
(b) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Guaranteed Obligations or any other
Obligations of any other Loan Party or Parent under the Loan Documents, or
any other release, amendment or waiver of or any consent to departure from
any Loan Document, including, without limitation, any increase in the
Guaranteed Obligations resulting from the extension of additional credit to
the Borrower or otherwise;
KL2:193918.4
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<PAGE>
(c) any taking, exchange, release or non-perfection of any Collateral,
or any taking, release or amendment or waiver of or consent to departure
from any other guaranty, for all or any of the Guaranteed Obligations;
(d) any manner of application of Collateral, or proceeds thereof, to
all or any of the Guaranteed Obligations, or any manner of sale or other
disposition of any Collateral for all or any of the Guaranteed Obligations
or any other Obligations of any Loan Party or any Subsidiary of any Loan
Party or Parent under the Loan Documents or any other assets of any Loan
Party or any Subsidiary of any Loan Party or Parent;
(e) any change, restructuring or termination of the corporate
structure or existence of any Loan Party or any Subsidiary of any Loan
Party or Parent;
(f) any failure of any Secured Party to disclose to the Borrower or
any Guarantor any information relating to the financial condition,
operations, properties or prospects of any other Loan Party or Parent now
or in the future known to any Secured Party (each Guarantor waiving any
duty on the part of the Secured Parties to disclose such information); or
(g) any other circumstance (including, without limitation, any statute
of limitations) or any existence of or reliance on any representation by
the Agent or any other Secured Party that might otherwise constitute a
defense available to, or a discharge of, the Borrower, each Guarantor or
any other guarantor or surety.
This Guaranty shall continue to be effective or be reinstated, as the case may
be, if at any time any payment of any of the Guaranteed Obligations is rescinded
or must otherwise be returned by any Secured Party or any other Person upon the
insolvency, bankruptcy or reorganization of the Borrower or any other Loan Party
or Parent or otherwise, all as though such payment had not been made. This
Guaranty shall constitute a guaranty of payment and performance, and not of
collection.
Notwithstanding the foregoing, the Guarantor's waivers under clauses (b), (c),
(f) and (g) of this Section 2 shall not apply in respect of any action or
inaction taken by the Agent or any other Secured Party with respect to the
foregoing clauses (b), (c), (f) and (g) of this Section 2 to the extent that
such action or inaction constitutes willful misconduct.
Section 3. Security. This Guaranty is secured by a first priority perfected
security interest in all of the assets and property of each Guarantor granted to
the Collateral Agent pursuant to the Security Agreement and the Intellectual
Property Security Agreement.
Section 4. Waivers and Acknowledgments. (a) Each Guarantor hereby waives
promptness, diligence, notice of acceptance and any other notice with respect to
any of the Guaranteed Obligations and this Guaranty and any requirement that the
Agent or any other Secured Party protect, secure, perfect or insure any Lien or
any property subject thereto or
KL2:193918.4
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<PAGE>
exhaust any right or take any action against the Borrower, any other Guarantor
or any other Person or any Collateral (except as shall be required by applicable
law and cannot be waived).
(b) Each Guarantor hereby waives any right to revoke this Guaranty, and
acknowledges that this Guaranty is continuing in nature and applies to all
Guaranteed Obligations, whether existing now or in the future.
(c) Each Guarantor acknowledges that it will receive substantial direct and
indirect benefits from the financing arrangements contemplated by the Loan
Documents and that the waivers set forth in this Section 4 are knowingly made in
contemplation of such benefits.
Notwithstanding the foregoing, the Guarantor's waivers under clauses (a) and (b)
of this Section 4 shall not apply in respect of any action or inaction taken by
the Agent or any other Secured Party with respect to the foregoing clauses (a)
and (b) of this Section 4 to the extent that such action or inaction constitutes
willful misconduct.
Section 5. Subrogation. No Guarantor will exercise any rights that it may
now or hereafter acquire against the Borrower, any other Guarantor or any other
insider guarantor that arise from the existence, payment, performance or
enforcement of such Guarantor's Obligations under this Guaranty (whether
contractual, under Section 509 of Title 11 of the United States Code entitled
"Bankruptcy" as now or hereafter in effect, or any successor thereto, or
otherwise) or any other Loan Document, including, without limitation, any right
of subrogation, reimbursement, exoneration, contribution or indemnification and
any right to participate in any claim or remedy of the Agent or any other
Secured Party against the Borrower, any other Guarantor or any other insider
guarantor or any Collateral, whether or not such claim, remedy or right arises
in equity or under contract, statute or common law, including, without
limitation, the right to take or receive from the Borrower, any other Guarantor
or any other insider guarantor, directly or indirectly, in cash or other
property or by set-off or in any other manner, payment or security on account of
such claim, remedy or right, unless and until all of the Guaranteed Obligations
and all other amounts payable under this Guaranty shall have been paid in full
in cash and the Commitments shall have expired or terminated. If any amount
shall be paid to any Guarantor in violation of the preceding sentence at any
time prior to the later of (x) the payment in full in cash of the Guaranteed
Obligations and all other amounts payable under this Guaranty and (y) the Final
Maturity Date, such amount shall be held in trust for the benefit of the Agent
and the other Secured Parties and shall forthwith be paid to the Agent to be
credited and applied to the Guaranteed Obligations and all other amounts payable
under this Guaranty, whether matured or unmatured, in accordance with the terms
of the Loan Documents, or to be held as Collateral for any Guaranteed
Obligations or other amounts payable under this Guaranty thereafter arising. If
(i) any Guarantor shall make payment to the Agent or any other Secured Party of
all or any part of the Guaranteed Obligations, (ii) all of the Guaranteed
Obligations and all other amounts payable under this Guaranty shall be paid in
full in cash and (iii) the Final Maturity Date shall have occurred, the Agent
and the other Secured Parties will, at such Guarantor's request and expense,
execute and deliver to such Guarantor appropriate documents, without recourse
and without representation
KL2:193918.4
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<PAGE>
or warranty, necessary to evidence the transfer by subrogation to such Guarantor
of an interest in the Guaranteed Obligations resulting from such payment by such
Guarantor.
Section 6. Subordination. Any and all rights and claims of any Guarantor
against the Borrower or any of its property, arising by reason of any payment by
such Guarantor to the Agent pursuant to the provisions of this Guaranty shall be
subordinate and subject in right of payment to the prior payment and
satisfaction of all Guaranteed Obligations and all other amounts payable under
this Guaranty. Any Debt of the Borrower, now or hereafter held by any Guarantor,
is hereby subordinated to all indebtedness and obligations guaranteed hereby.
Upon the occurrence and during the continuance of an Event of Default, any such
indebtedness of the Borrower to such Guarantor shall, if the Agent so requests,
be collected, enforced, and received by such Guarantor in trust for the Agent
and held as security for the payment of the Guaranteed Obligations to the Agent,
but without reducing or affecting in any manner the liability of any Guarantor
hereunder.
Section 7. Payments Free and Clear of Taxes, Etc. (a) Subject to Sections
7(e) and (f), any and all payments by each Guarantor hereunder or under the
Notes shall be made, in accordance with Section 2.11 of the Credit Agreement,
free and clear of and without deduction for any and all present or future taxes,
levies, imposts, deductions, charges or withholdings imposed by a Governmental
Authority, and all liabilities with respect thereto, excluding net income taxes
and franchise taxes imposed on the Agent or any Lender as a result of a present
or former connection between the Agent or such Lender and the jurisdiction of
the Governmental Authority imposing such tax or any political subdivision or
taxing authority thereof or therein (other than any such connection arising
solely from the Agent or such Lender having executed, delivered or performed its
obligations or received a payment under, or enforced, this Guaranty, the Credit
Agreement or any Note) (all such non-excluded taxes, levies, imposts,
deductions, charges, withholdings and liabilities being hereinafter referred to
as "Taxes"). If any Guarantor shall be required by law to deduct any Taxes from
or in respect of any sum payable hereunder or under any Note to any Lender or
the Agent, (i) the sum payable shall be increased as may be necessary so that
after making all required deductions (including deductions applicable to
additional sums payable under this Section 7) such Lender or the Agent (as the
case may be) receives an amount equal to the sum it would have received had no
such deductions been made, (ii) such Guarantor shall make such deductions and
(iii) such Guarantor shall pay the full amount deducted to the relevant taxation
authority or other authority in accordance with applicable law; provided,
however, that no Guarantor shall be required to increase such amounts payable to
any Lender organized under the laws of a jurisdiction outside the United States
to the extent provided in subsection (f) of this Section 7, and shall not be
required to indemnify such Lender pursuant to this Section 7(a) if such Lender
fails to comply with the requirements of subsection (e) of this Section 7
(without regard to the last sentence thereof).
(b) In addition, each Guarantor shall pay any present or future stamp,
documentary, excise, property or similar taxes, charges or levies that arise
from any payment made hereunder or under the Notes or from the execution,
delivery or registration of, or
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<PAGE>
otherwise with respect to, this Guaranty, the Credit Agreement or the Notes;
excluding any present or future stamp, documentary, excise, property or similar
taxes, charges or levies (including without limitation, mortgage recording taxes
and similar fees) that arise as a result of sales, assignments or other
transfers of rights hereunder by any Lender (all such non-excluded taxes,
charges and levies being hereinafter referred to as "Other Taxes").
(c) Each Guarantor shall indemnify each Lender and the Agent for the full
amount of Taxes and Other Taxes, and for the full amount of taxes imposed by any
jurisdiction on amounts payable under this Section 7, paid by such Lender or the
Agent (as the case may be) and any liability (including penalties, additions to
Tax, interest and expenses) arising therefrom or with respect thereto. This
indemnification shall be made within 30 days from the date such Lender or the
Agent (as the case may be) makes written demand therefor.
(d) Within 30 days after the date of any payment of Taxes, each Guarantor
shall furnish to the Agent, at its address referred to in Section 8.02 of the
Credit Agreement, the original receipt of payment thereof or a certified copy of
such receipt or, if none is available, other documentary evidence showing such
payment. In the case of any payment hereunder or under the Notes by or on behalf
of any Guarantor through an account or branch outside the United States or on
behalf of any Guarantor by a payor that is not a United States person, if such
Guarantor determines that no Taxes are payable in respect thereof, such
Guarantor shall furnish, or shall cause such payor to furnish, to the Agent, at
such address, an opinion of counsel acceptable to the Agent stating that such
payment is exempt from Taxes. For purposes of subsections (d) and (e) of this
Section 7, the terms "United States" and "United States person" shall have the
meanings specified in Section 7701 of the Internal Revenue Code.
(e) Each Lender organized under the laws of a jurisdiction outside the
United States shall, on or prior to the date of its execution and delivery of
this Guaranty in the case of each initial Lender or the Issuing Bank, as the
case may be, and on the date of the Assignment and Acceptance pursuant to which
it became 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 thereafter as such Lender remains lawfully able to do so), provide the
Agent and the Borrower with Internal Revenue Service form 1001 or 4224, as well
as form W-9 or W-8, as appropriate, or any successor form prescribed by the
Internal Revenue Service, certifying that such Lender is exempt from or is
entitled to a reduced rate of United States withholding tax on payments under
this Guaranty, the Credit Agreement or the Notes. If the form provided by a
Lender at the time such Lender first becomes a party to the Credit Agreement
indicates a United States interest withholding tax rate in excess of zero,
withholding tax at such rate shall be considered excluded from Taxes unless and
until such Lender provides the appropriate form certifying that a lesser rate
applies, whereupon withholding tax at such lesser rate only shall be considered
excluded from Taxes for periods governed by such form; provided, however, that,
if at the date of the Assignment and Acceptance pursuant to which a Lender
becomes a party to the Credit Agreement, the Lender assignor was entitled to
payments under subsection (a) of this Section 7 in respect of United States
withholding tax with respect to interest paid at such date, then, to such
extent, the term Taxes shall include (in addition to withholding taxes that may
be
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<PAGE>
imposed in the future or other amounts otherwise includable in Taxes) United
States withholding tax, if any, applicable with respect to the Lender assignee
on such date. If any form or document referred to in this subsection (e) of this
Section 7 requires the disclosure of information, other than information
necessary to compute the tax payable and information required on the date hereof
by Internal Revenue Service form 1001 or 4224, that the Lender reasonably
considers to be confidential, the Lender shall give notice thereof to the
Borrower and shall not be obligated to include in such form or document such
confidential information. Notwithstanding anything to the contrary contained
herein, if the withholding taxes applicable to any payment under any Note or
under the Credit Agreement to a Lender or Lender assignor shall be increased
from that which would have otherwise been applicable at the time of the
execution and delivery by such Lender of the Credit Agreement or the date of the
Assignment and Acceptance pursuant to which it became a Lender, as the case may
be, due to (i) a change in the manner in which such Lender or Lender assignor
holds its interest in the Note, or (ii) an audit of the Internal Revenue Service
indicating that such Lender or Lender assignor is not entitled to an exemption
from, or a reduced rate for, such withholding taxes at the date of the execution
and delivery by such Lender of the Credit Agreement or the date of the
Assignment and Acceptance pursuant to which it became a Lender then any
withholding taxes resulting therefrom shall be considered excluded from Taxes.
(f) For any period with respect to which a Lender has failed to provide any
Guarantor with the appropriate form or document described in subsection (e) of
this Section 7 (other than if such failure is due to a change in law occurring
after the date on which a form originally was required to be provided or if such
form otherwise is not required to obtain an exemption from Taxes), such Lender
shall not be entitled to indemnification under subsection (a) or (c) of this
Section 7 with respect to Taxes imposed by the United States; provided, however,
that should a Lender become subject to Taxes because of its failure to deliver a
form required hereunder, each Guarantor shall take such steps as such Lender
shall reasonably request to assist such Lender to recover such Taxes.
(g) If requested by any Guarantor, and at such Guarantor's expense, any
Lender and the Agent shall take such steps as may be appropriate in the sole
discretion of such Lender or the Agent, as the case may be, to seek a refund of
any Taxes or Other Taxes paid by such Guarantor. If any Lender or the Agent
receives a refund in respect of any Taxes or Other Taxes for which the Lender
has received payment from such Guarantor hereunder, such Lender and the Agent,
within 15 days of such receipt, shall deliver to such Guarantor the amount of
such refund. In addition, within 15 days of a written request of any Guarantor,
any Lender and the Agent shall execute and deliver to such Guarantor such
certificates, forms or other documents which can be reasonably furnished
consistent with the facts and which are reasonably necessary in the opinion of
such Lender and the Agent to assist such Guarantor in applying for refunds of
Taxes or Other Taxes remitted hereunder.
(h) If any Guarantor is required to pay any amounts pursuant to the
provisions of this Section 7, and if thereafter any Lender or the Agent shall
receive or be granted a credit against or remission or other relief for any
Taxes solely in respect of the amounts so paid by
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<PAGE>
such Guarantor, such Lender shall, to the extent that it can do so without
prejudice to the retention of the amount of such credit, remission or other
relief, pay to such Guarantor as soon as reasonably practicable after the date
on which such Lender or the Agent effectively obtains the benefit of such
credit, remission or other relief an amount which such Lender reasonably
determines to be equal to such credit, remission or other relief less any sum
which the Lender is required by law to deduct therefrom. The Lender may, in its
sole discretion, determine the order of utilization of all charges, deductions,
credits and expenses.
(i) In the event that any Lender or the Agent receives written
communication from any Governmental Authority with respect to an assessment or
proposed assessment of any Taxes or Other Taxes which any Guarantor is liable to
indemnify pursuant to the provisions of this Section 7, such Lender or the Agent
shall notify such Guarantor in writing as soon as reasonably practicable after
receipt of such written communication.
Section 8. Representations and Warranties. Each Guarantor hereby represents
and warrants as follows:
(a) Such Guarantor (i) is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation, (ii) is duly qualified and in good standing as a foreign
corporation in each other jurisdiction in which it owns or leases property
or assets or in which the conduct of its business requires it to so qualify
or be licensed, except where the failure to be so qualified would not,
either individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect, and (iii) has all requisite corporate power and
authority (including, without limitation, all material governmental
licenses, permits and other approvals) to own or lease and operate its
properties and assets and to carry on its business as now conducted and as
presently proposes to be conducted. All of the outstanding capital stock of
such Guarantor has been validly issued free of pre-emptive rights, is fully
paid and non-assessable and is owned by the Persons and in the amounts and
types specified in Schedule I free and clear of all Liens.
(b) The execution, delivery and performance by such Guarantor of this
Guaranty and each other Document to which it is a party, and the
consummation of the transactions contemplated hereby and thereby and the
compliance by it with the terms and provisions thereof, are within such
Guarantor's corporate powers, have been duly authorized by all necessary
corporate action and do not (i) contravene any Guarantor's charter or
bylaws (or equivalent documentation), (ii) violate any law (including,
without limitation, the Exchange Act and the Racketeer Influenced and
Corrupt Organizations Chapter of the Organized Crime Control Act of 1970),
rule, regulation (including, without limitation, Regulation X of the Board
of Governors of the Federal Reserve System), order, writ, judgment,
injunction, decree, determination or award, (iii) conflict with or result
in the breach of, or constitute a default under, any material contract,
loan agreement, indenture, mortgage, deed of trust, lease or other
instrument binding on or affecting any Guarantor, any of its Subsidiaries
or any of their respective properties or
KL2:193918.4
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<PAGE>
assets or (iv) except for the Liens created under the Loan Documents,
result in or require the creation or imposition of any Lien upon or with
respect to any of the properties or assets of any Guarantor or any of its
Subsidiaries. No Guarantor nor any of its Subsidiaries is in violation of
any such law, rule, regulation, order, writ, judgment, injunction, decree,
determination or award or in breach of any such contract, loan agreement,
indenture, mortgage, deed of trust, lease or other instrument, in each case
where such breach or imposition would, either individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
(c) No authorization or approval or other action by, and no notice to
or filing with, any Governmental Authority or regulatory body or any other
third party is required for (i) the due execution, delivery, recordation,
filing or performance by such Guarantor of this Guaranty and each other
Document to which it is a party, or for the consummation of the
transactions contemplated hereby or thereby, (ii) the grant by such
Guarantor of the Liens granted by it pursuant to the Collateral Documents,
(iii) the perfection or maintenance of the Liens created by the Collateral
Documents (including the first priority nature thereof) or (iv) the
exercise by the Agent, the Collateral Agent or any Lender of its rights
under the Loan Documents or the remedies in respect of the Collateral
pursuant to the Collateral Documents, except for the authorizations,
approvals, actions, notices and filings listed on Schedule 4.01(d) to the
Credit Agreement, all of which have been duly obtained, taken, given or
made and are in full force and effect. All applicable waiting periods in
connection with the transactions contemplated hereby have expired without
any action having been taken by any competent authority restraining,
preventing or imposing materially adverse conditions upon the rights of
such Guarantor or any of its Subsidiaries freely to transfer or otherwise
dispose of, or to create any Lien on, any properties or assets now owned or
hereafter acquired by any of them except where the failure to be obtain
such approval or authorization or other action would not, either
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
(d) There is no action, suit, investigation, litigation or proceeding
affecting such Guarantor or any of its Subsidiaries, including any
Environmental Claim, pending or threatened before any court, governmental
agency or arbitrator (i) that affects or purports to affect the legality,
validity or enforceability of this Guaranty or any other Loan Document or
the consummation of the transactions contemplated hereby or thereby, (ii)
with respect to any material Debt of any Guarantor or any of its
Subsidiaries or (iii) that would reasonably be expected to have a Material
Adverse Effect.
(e) This Guaranty has been duly executed and delivered by such
Guarantor. This Guaranty is the legal, valid and binding obligation of such
Guarantor, enforceable against such Guarantor in accordance with its terms
except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or other laws relating to or limiting creditors'
rights or by equitable principles generally (regardless of whether
enforcement is sought in equity or at law).
KL2:193918.4
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<PAGE>
(f) Any information, exhibit or report (including, without limitation,
the Offering Memorandum and all information contained in the Documents but
excluding any financial projections) prepared and furnished by or on behalf
of such Guarantor or any of its Subsidiaries in writing to any Secured
Party for purposes of or in connection with this Guaranty, the other
Documents or any transaction contemplated herein or therein is, and all
other such information hereafter prepared and furnished by or on behalf of
such Guarantor or any of its Subsidiaries in writing to any Secured Parties
will be, true and accurate in all material respects on the date as of which
such information is dated or certified and not incomplete by omitting to
state any fact necessary to make such information not misleading in any
material respect at such time in light of the circumstances under which
such information was provided.
(g) There are no conditions precedent to the effectiveness of this
Guaranty that have not been satisfied or waived.
(h) Such Guarantor has, independently and without reliance upon the
Agent or any Lender and based on such documents and information as it has
deemed appropriate, made its own credit analysis and decision to enter into
this Guaranty.
Section 9. Affirmative Covenants. Each Guarantor covenants and agrees that,
so long as any part of the Guaranteed Obligations shall remain unpaid, any
Letter of Credit shall be outstanding or any Lender shall have any Commitment,
such Guarantor will at all times require, perform or observe, and will cause
each Loan Party and each of their respective Subsidiaries and Parent to perform
or observe, all of the terms, covenants and agreements that the Loan Documents
state that such Guarantor or the Borrower or any other Loan Party or Parent is
to perform or observe or that such Guarantor or the Borrower is to cause any
Loan Party's Subsidiaries to perform or observe.
Section 10. [Intentionally Omitted]
Section 11. Amendments, Etc. No amendment or waiver of any provision of
this Guaranty and no consent to any departure by any Guarantor therefrom shall
in any event be effective unless the same shall be in writing and signed by the
Agent and the Required Lenders, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given; provided, however, that no amendment, waiver or consent shall, unless in
writing and signed by all of the Lenders, (a) release or limit the liability of
any Guarantor hereunder, (b) postpone any date fixed for payment hereunder or
(c) amend this Section 11.
Section 12. Notices, Etc. All notices and other communications provided for
hereunder shall be in writing (including telegraphic, telecopy or telex
communication) and mailed, telegraphed, telecopied, telexed or delivered to it,
if to any Guarantor, addressed to it at 501 Mosside Boulevard, North Versailles,
PA 15137, Attention: John R. Weeks, telecopier number (412) 823-4110, with
copies to (a) Mentmore Holdings Corporation, 1430 Broadway,
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13th Floor, New York, NY 10018-3308, Attention: William L. Remley, telecopier
number (212) 391-1393 and (b) Winston & Strawn, 200 Park Avenue, New York, NY
10166, Attention: Robert Ericson, telecopier number (212) 294-4700; if to the
Agent or any Lender, at its address specified in Section 8.02 of the Credit
Agreement, or as to any party at such other address as shall be designated by
such party in a written notice to each other party. All such notices and other
communications shall, when mailed, telegraphed, telecopied or telexed, be
effective when deposited in the mails, delivered to the telegraph company,
transmitted by telecopier or confirmed by telex answerback, respectively.
Section 13. No Waiver; Remedies. No failure on the part of the Agent, the
Collateral Agent or any other Secured Party 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. The remedies herein
provided are cumulative and not exclusive of any remedies provided by law.
Section 14. Fees; Expenses. The Guarantors hereby jointly and severally
agree to pay all out-of-pocket costs and expenses of the Agent in connection
with the enforcement of this Guaranty and any amendment, waiver or consent
relating hereto (including, without limitation, the reasonable fees and
disbursements of counsel employed by the Secured Parties, including, without
limitation, the following costs of such counsel: support staff, litigation
preparation, computerized research, telephone, telefax, mileage, deposition,
postage, photocopy, process service, video tape and other similar costs).
Section 15. Right of Set-off. Upon (a) the occurrence and during the
continuance of any Event of Default and (b) the making of the request or the
granting of the consent specified by Section 6.01 of the Credit Agreement to
authorize the Agent to declare the Notes due and payable pursuant to the
provisions of said Section 6.01, each Lender and each of its respective
affiliates is hereby authorized at any time and from time to time, to the
fullest extent permitted by law, to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held and
other indebtedness at any time owing by such Lender or such affiliate to or for
the credit or the account of any Guarantor against any and all of the
Obligations of such Guarantor now or hereafter existing under this Guaranty,
whether or not such Lender shall have made any demand under this Guaranty and
although such Obligations may be unmatured. Each Lender agrees promptly to
notify such Guarantor after any such set-off and application; provided, however,
that the failure to give such notice shall not affect the validity of such
set-off and application. The rights of each Lender and its respective affiliates
under this Section 15 are in addition to other rights and remedies (including,
without limitation, other rights of set-off) that such Lender and its respective
affiliates may have.
Section 16. Indemnification. Without limitation on any other Obligations of
any Guarantor or remedies of the Secured Parties under this Guaranty, each
Guarantor shall, to the fullest extent permitted by law, indemnify, defend and
save and hold harmless each Secured Party from and against, and shall pay on
demand, any and all losses, liabilities, damages, costs, expenses and charges
(including the reasonable fees and disbursements of such Secured Party's
KL2:193918.4
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<PAGE>
legal counsel) suffered or incurred by such Secured Party as a result of any
failure of any Guaranteed Obligations to be the legal, valid and binding
obligations of each Guarantor enforceable against any Guarantor in accordance
with their terms.
Section 17. Continuing Guaranty; Assignments under the Credit Agreement.
This Guaranty is a continuing guaranty and shall (a) remain in full force and
effect until the later of (i) the indefeasible and irrevocable payment in full
in cash of the Guaranteed Obligations and all other amounts payable under this
Guaranty and (ii) the Final Maturity Date, (b) be binding upon each Guarantor,
its successors and assigns and (c) inure to the benefit of and be enforceable by
the Agent, the Collateral Agent and the other Secured Parties and their
successors, transferees and assigns. Without limiting the generality of the
foregoing clause (c), any Secured Party may assign or otherwise transfer all or
any portion of its rights and obligations under the Credit Agreement (including,
without limitation, all or any portion of its Commitment, the Advances owing to
it and the Note or Notes held by it) to any other Person, and such other Person
shall thereupon become vested with all the benefits in respect thereof granted
to such Secured Party herein or otherwise, in each case, subject to the
conditions as and to the extent provided in Section 8.07 of the Credit
Agreement.
Section 18. Counterparts. This Guaranty may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which when so executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument. A set of counterparts
executed by all the parties hereto shall be lodged with the Guarantors and the
Agent.
Section 19. Payments by Guarantors. All payments made by any Guarantor
hereunder will be made without setoff, counterclaim or other defense.
Section 20. Additional Subsidiaries. It is understood and agreed that any
Subsidiary of any Loan Party that is required to execute a counterpart of this
Guaranty pursuant to the Credit Agreement shall automatically become a Guarantor
hereunder by executing a counterpart hereof and delivering the same to the
Agent.
Section 21. GOVERNING LAW; JURISDICTION; WAIVER OF JURY TRIAL; ETC. (a)
THIS GUARANTY AND THE RIGHTS AND OBLIGATIONS OF THE SECURED PARTIES AND EACH
GUARANTOR SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED ENTIRELY
IN SUCH STATE. ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS GUARANTY OR
ANY OTHER DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK SITTING
IN NEW YORK CITY OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK,
AND, BY EXECUTION AND DELIVERY OF THIS GUARANTY, EACH PARTY TO THIS GUARANTY
HEREBY IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY
AND UNCONDITIONALLY, THE JURISDICTION OF THE
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<PAGE>
AFORESAID COURTS. EACH SUCH PARTY HEREBY FURTHER IRREVOCABLY WAIVES ANY CLAIM
THAT ANY SUCH COURTS LACK PERSONAL JURISDICTION OVER SUCH PARTY, AND AGREES NOT
TO PLEAD OR CLAIM, IN ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
GUARANTY OR ANY OTHER LOAN DOCUMENT BROUGHT IN ANY OF THE AFORESAID COURTS, THAT
SUCH COURT LACKS PERSONAL JURISDICTION OVER SUCH PARTY. EACH SUCH PARTY FURTHER
IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED
COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY
REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO SUCH PARTY IN ACCORDANCE WITH
SECTION 12, SUCH SERVICE TO BECOME EFFECTIVE 30 DAYS AFTER SUCH MAILING. EACH
SUCH PARTY HEREBY IRREVOCABLY WAIVES ANY OBJECTION TO SUCH SERVICE OF PROCESS
AND FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY ACTION OR
PROCEEDING COMMENCED HEREUNDER OR UNDER ANY LOAN DOCUMENT THAT SERVICE OF
PROCESS WAS IN ANY WAY INVALID OR INEFFECTIVE. NOTHING HEREIN SHALL AFFECT THE
RIGHT OF THE AGENT, THE COLLATERAL AGENT, ANY LENDER OR THE HOLDER OF ANY NOTE
TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL
PROCEEDINGS OR OTHERWISE PROCEED AGAINST ANY PARTY IN ANY OTHER JURISDICTION.
(b) EACH GUARANTOR IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST
EXTENT IT MAY LEGALLY AND EFFECTIVELY DO SO, ANY OBJECTION THAT IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUIT, ACTION OR PROCEEDING ARISING
OUT OF OR RELATING TO THIS GUARANTY OR ANY OF THE OTHER DOCUMENTS TO WHICH IT IS
A PARTY IN THE COURTS REFERRED TO IN (a) ABOVE. EACH GUARANTOR HEREBY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, THE DEFENSE OF AN
INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH
COURT.
(c) EACH GUARANTOR HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN
ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR
OTHERWISE) ARISING OUT OF OR RELATING TO THIS GUARANTY, ANY OF THE DOCUMENTS,
THE TRANS ACTIONS CONTEMPLATED HEREBY OR THEREBY OR THE ACTIONS OF THE AGENT,
THE COLLATERAL AGENT OR ANY OTHER SECURED PARTY IN THE NEGOTIATION,
ADMINISTRATION, PERFORMANCE OR ENFORCEMENT HEREOF OR THEREOF.
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<PAGE>
IN WITNESS WHEREOF, each Guarantor has caused this Guaranty to be duly
executed and delivered by an officer thereunto duly authorized as of the date
first above written.
PRECISE TECHNOLOGY OF DELAWARE, INC.
By ___________________________________
Name:
Title:
PRECISE TECHNOLOGY OF ILLINOIS, INC.
By ___________________________________
Name:
Title:
PRECISE TMP, INC.
By ___________________________________
Name:
Title:
PRECISE POLESTAR, INC.
By ___________________________________
Name:
Title:
MASSIE TOOL, MOLD & DIE, INC.
By ___________________________________
Name:
Title:
[Signature Page to the Subsidiary Guaranty]
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Schedule I
to Subsidiary Guaranty
Outstanding Capital Stock of each Guarantor
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EXHIBIT G
[Form of Opinion of Borrower's Counsel]
June 13, 1997
To the Agent and each of the Lenders party
to the Credit Agreement referred to below
and the Collateral Agent referred to therein
Ladies and Gentlemen:
We have acted as special counsel to Precise Holding Corporation, a
Delaware corporation ("Parent"), Precise Technology, Inc., a Delaware
corporation (the "Borrower") and each Subsidiary Guarantor in connection with
the execution and delivery by Parent, the Borrower and each Subsidiary Guarantor
of the Credit Agreement, dated as of June 13, 1997 (the "Credit Agreement")
among Parent, the Borrower, each Subsidiary Guarantor, the financial
institutions from time to time party thereto (the "Lenders"), and Fleet National
Bank, as agent (the "Agent"), and the transactions contemplated thereby. This
opinion is delivered to you pursuant to Section 3.01(g)(xvi) of the Credit
Agreement. Unless otherwise indicated, capitalized terms used herein but not
otherwise defined herein shall have the respective meanings set forth in the
Loan Documents. Parent, the Borrower, each Subsidiary Guarantor collectively are
referred to as the "Loan Parties" and each a "Loan Party". Parent, the Borrower,
Precise Technology of Delaware Inc., a Delaware corporation, and Precise
Technology of Illinois Inc., a Delaware corporation, collectively are referred
to as the "Delaware Loan Parties" and each a "Delaware Loan Party".
In connection with this opinion, we have examined:
(i) the Credit Agreement;
(ii) the Note;
(iii) the Parent Guaranty;
(iv) the Subsidiary Guaranty;
(v) the Security Agreement;
(vi) the Intellectual Property Security Agreement;
(vii) the Mortgages;
(viii) the Senior Subordinated Notes;
(ix) the Senior Subordinated Notes Indenture;
<PAGE>
June 13, 1997
Page 2
(x) the Senior Subordinated Notes Guaranty; and
(xi) UCC-1 Financing Statements the unexecuted forms of which are
attached hereto as Exhibit A (collectively the "Financing
Statements").
The documents described in clauses (i) through (vii) and (xi) are
hereinafter referred to collectively as the "Loan Documents" and the documents
described in clauses (i) through (xi) are referred to collectively as the
"Documents". References in this opinion letter to the "New York UCC" are to the
Uniform Commercial Code currently in effect in the State of New York.
We have also examined such other agreements, instruments and documents,
and such questions of law as we have deemed necessary or appropriate to enable
us to render the opinions expressed below. Additionally, we have examined
originals or copies, certified to our satisfaction, of such certificates of
public officials and officers and representatives of the Loan Parties and we
have made such inquiries of officers and representatives of the Loan Parties as
we have deemed relevant or necessary, as the basis for the opinions set forth
herein.
In rendering the opinions expressed below, we have, with your consent,
assumed that the signatures of persons signing all documents in connection with
which this opinion is rendered are genuine, all documents submitted to us as
originals or duplicate originals are authentic and all documents submitted to us
as copies, whether certified or not, conform to authentic original documents.
Additionally, we have, with your consent, assumed and relied upon, the
following:
(a) the accuracy and completeness of all certificates and other
statements, documents, records, financial statements and papers reviewed by us,
and the accuracy and completeness of all representations, warranties, schedules
and exhibits contained in the Documents, with respect to the factual matters set
forth therein;
(b) all parties to the documents reviewed by us (other than the Loan
Parties) are duly organized, validly existing and in good standing under the
laws of all jurisdictions where they are conducting their businesses or
otherwise required to be so qualified, and have full power and authority to
execute, deliver and perform under such documents and all such documents have
been duly authorized, executed and delivered by such parties;
(c) neither the Agent, nor any Lender nor any of their respective
representatives have any knowledge (actual or constructive) of any adverse
claim, lien, security interest, claim, encumbrance, interest or other condition
of title affecting any of the Collateral, except for Liens described in the Loan
Documents, Liens assigned to the Collateral Agent pursuant to the Loan
<PAGE>
June 13, 1997
Page 3
Documents and Liens the existence of which would reasonably be expected not to
have a Material Adverse Effect;
(d) each Document constitutes the valid and binding obligation of each
party thereto (other than the Loan Parties) enforceable against such party in
accordance with its terms;
(e) the descriptions of the Collateral in the Loan Documents reasonably
describe the property intended to be described as Collateral; and
(f) all of the transactions contemplated by the Loan Documents in
connection with the Initial Extension of Credit, the Refinancing Transactions,
and the issuance of the Senior Subordinated Notes pursuant to the Senior
Subordinated Notes Indenture have been consummated, and consummated
concurrently, such that no delivery or payment contemplated thereby shall be
deemed to have been made until all such transactions shall have been completed.
Whenever our opinion with respect to the existence or absence of facts
is indicated to be based on our knowledge or awareness, we are referring to the
knowledge of the particular Winston & Strawn attorneys who have represented the
Loan Parties during the course of our limited representation of the Loan Parties
in connection with the Documents. Except as expressly set forth herein, we have
not undertaken any independent investigation, examination or inquiry to
determine the existence or absence of any facts and no inference as to our
knowledge concerning any facts should be drawn as a result of the limited
representations undertaken by us.
Based upon the foregoing and subject to the qualifications stated
herein, we are of the opinion that:
1. Each Delaware Loan Party (i) is a corporation duly incorporated,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation, (ii) is duly qualified and in good standing as a foreign
corporation in each other jurisdiction in which it owns or leases property or
assets or in which the conduct of its business requires it to so qualify or be
licensed, except where the failure to be so qualified would not, individually or
in the aggregate, reasonably be expected to have a Material Adverse Effect and
(iii) has all requisite corporate power and authority to own or lease and
operate its properties and assets and to carry on its business as now conducted.
All of the outstanding capital stock of each Delaware Loan Party has been
validly issued, is fully paid and non-assessable and, to our knowledge, was not
issued in violation of any preemptive or similar rights. To our knowledge, no
Delaware Loan Party has outstanding any securities convertible into or
exchangeable for its capital stock or has outstanding any rights to subscribe
for or to purchase, or any options for the purchase of, or any agreements
providing for the issuance (contingent or otherwise) of, or any
<PAGE>
June 13, 1997
Page 4
calls, commitments or claims of any character relating to, its capital stock.
2. Each Delaware Loan Party has all requisite corporate power and
authority to execute, deliver and perform its obligations under each of the Loan
Documents to which it is a party and has taken all necessary corporate action to
authorize the execution and delivery of and the performance by it of its
obligations under each of such Loan Documents. Each Loan Party has duly executed
and delivered each of the Loan Documents to which it is a party, and each of
such Loan Documents constitutes the valid and binding obligation of such Loan
Party, enforceable against such Loan Party in accordance with its terms.
3. The execution, delivery and performance by each Loan Party of the
Loan Documents to which it is a party, and the consummation of the transactions
contemplated thereby, do not (i) contravene any Loan Party's charter or bylaws,
(ii) violate any law or regulation (or any writ, judgment, injunction, decree,
determination or award of any court or governmental entity known to us)
applicable to such Loan Party; (iii) to our knowledge, conflict with or result
in the breach of, or constitute a default under, any contract, loan agreement,
indenture, mortgage, deed of trust, lease or other instrument binding on or
affecting any Loan Party, any of its Subsidiaries or any of their respective
properties or assets (which conflict, breach or default would individually or in
the aggregate reasonably be expected to have a Material Adverse Effect) or (iv)
except for the Liens created under the Loan Documents, result in or require the
creation or imposition of any Lien upon or with respect to any of the properties
or assets of any Loan Party or any of its Subsidiaries.
4. No authorization or approval or other action by, and no notice to or
filing with, any Governmental Authority or regulatory body or, to our knowledge,
any other third party, is required for (i) the due execution, delivery, or
performance by any Loan Party of any Loan Document to which it is a party, or
for the consummation of the transactions contemplated thereby, (ii) the grant by
any Loan Party of the Liens granted by it pursuant to the Collateral Documents,
(iii) the perfection of the Liens created by the Collateral Documents, except
for the filings listed on Schedule 4.01(d) to the Credit Agreement.
5. To our knowledge, there is no action, suit, investigation,
litigation or proceeding affecting any Loan Party pending or threatened before
any court, governmental agency or arbitrator (i) that affects or purports to
affect the legality, validity or enforceability of the Documents, the Senior
Subordinated Notes or the consummation of the transactions contemplated thereby,
or (ii) that could reasonably be expected to have a Material Adverse Effect.
6. No Loan Party nor any of its Subsidiaries is an "investment
company," or a "holding company" of an "investment
<PAGE>
June 13, 1997
Page 5
company" as such terms are defined in the Investment Company Act of 1940, as
amended.
7. The subordination provisions contained in the Senior Subordinated
Notes and the other Senior Subordinated Note Documents are enforceable against
the Borrower and the respective guarantors party thereto, and the Obligations of
each Loan Party under the Loan Documents and the Guaranteed Obligations of each
Loan Party (as defined in the Parent Guaranty and the Subsidiary Guaranty) are
within the definition of "Senior Debt" under the Senior Subordinated Notes
Indenture.
8. The Security Agreement is effective to create in favor of the
Collateral Agent for the benefit of the Secured Parties a valid security
interest under the New York UCC in all of the right, title and interest of each
Loan Party in, to and under all "equipment", "inventory", "accounts",
"instruments", "documents", "chattel paper" and "general intangibles" (as such
terms are defined in the New York UCC) that are included within the definition
of "Collateral" set forth in the Security Agreement (collectively referred to
hereinafter as the "Article 9 Collateral"), to the extent a security interest
may be created therein under the New York UCC, except that (a) such security
interest will continue in such Article 9 Collateral after its sale, exchange or
other disposition only to the extent provided in Sections 9-306, 9-307 and 9-308
of the New York UCC, (b) the security interest in Article 9 Collateral in which
any Loan Party acquires rights after the commencement of a case under the
Federal Bankruptcy Code in respect of such Loan Party may be limited by Section
552 of such Code and (c) the security interest in any such Article 9 Collateral
constituting a "security" (as defined in the New York UCC) is enforceable only
to the extent that such security also has been transferred to the Collateral
Agent or a Person designated by it in one of the ways set forth in Section
8-313(1) of the New York UCC (delivery of possession thereof to the Collateral
Agent being one of such ways).
9. Assuming that the Financing Statements are filed in the offices set
forth on Schedule I hereto and are not subsequently released, terminated or
modified, the Collateral Agent's security interest in the Article 9 Collateral
described therein will be perfected.
When filed in each of the jurisdictions identified in Schedule I
hereto, the effectiveness of the Financing Statements will lapse on the
expiration of a five year period from their date of filing unless appropriate
continuation statements are filed within the six month period prior to
expiration of the applicable five year period. If the Loan Party that has
executed particular Financing Statements so changes its name, identity or
corporate structure that such Financing Statements become seriously misleading,
such Financing Statements will be ineffective to perfect a security interest in
Article 9 Collateral acquired more than four months after such change. If any
such Loan Party changes
<PAGE>
June 13, 1997
Page 6
its chief executive office to a new jurisdiction outside the jurisdiction in
which it has its chief executive office as indicated in the Security Agreement,
the effectiveness of such Financing Statements will be terminated four months
after such change as to Article 9 Collateral consisting of "accounts" (as such
term is defined in the New York UCC).
10. Upon delivery pursuant to the Security Agreement to the Collateral
Agent of certificates representing the Pledged Shares and Pledged Debt (as such
terms are defined in the Security Agreement) together with undated stock or bond
powers duly endorsed in blank, and assuming that the Collateral Agent is taking
possession of the Pledged Shares and Pledged Debt for value and in good faith
and without notice of any adverse claim with respect thereto within the meaning
of the New York UCC, the Security Agreement creates a valid and perfected
security interest in the Pledged Shares and Pledged Debt in favor of the
Collateral Agent.
In giving the opinions set forth in paragraphs 8 through 10 above, we
have examined standard compilations of the Uniform Commercial Code as in effect
in jurisdictions other than the State of New York to determine the appropriate
location(s) and the types of forms required for the filing of financing
statements in such jurisdictions. In addition, we have assumed that none of the
Article 9 Collateral consists or will consist of fixtures, minerals or the like
(including oil and gas and accounts relating thereto), interests in real estate
cooperatives, consumer goods or farm products, livestock, crops, gain, timber,
equipment used in farming operations and/or accounts or general intangibles
resulting from the sale thereof.
The opinions as expressed herein are subject to the following
qualifications:
(a) the enforceability of the Loan Documents and the obligations of the
Loan Parties thereunder and the availability of certain rights and remedial
provisions provided for in the Loan Documents are subject to the effect of
bankruptcy, fraudulent conveyance or transfer, insolvency, reorganization,
liquidation, conservatorship, and moratorium laws and are subject to limitations
imposed by other laws and judicial decisions relating to or affecting the rights
of creditors or secured creditors generally, and general principles of equity
(regardless of whether enforcement is considered in proceedings at law or in
equity) upon the availability of injunctive relief or other equitable remedies;
(b) as to our opinions set forth in paragraph 2 hereof, we express no
opinion as to the enforceability of cumulative remedies to the extent such
cumulative remedies purport to or would have the effect of compensating the
party entitled to the benefits thereof in amounts in excess of the actual loss
suffered by such party;
<PAGE>
June 13, 1997
Page 7
(c) we express no opinion as to any Collateral as to which the creation
and perfection of security interests therein are not governed solely by the New
York UCC or any Collateral consisting of goods that are or may become fixtures
on any premises, nor do we express any opinion with respect to the creation,
perfection or enforceability of security interests in property in which it is
illegal or violative of governmental rules or regulations to grant a security
interest, or any security interest in any "accounts," "chattel paper,"
"documents," "instruments" or "general intangibles" (as defined in the New York
UCC) with respect to which the account debtor or obligor is the United States of
America, any state, county, city, municipality or other governmental body, or
any department, agency or instrumentality thereof, unless the same has been
assigned to the Collateral Agent to the extent required by the Assignment of
Claims Act of 1940, as amended, or any similar law or regulation relating to the
assignment or pledge thereof;
(d) we express no opinion as to the perfection of a security interest
in any Collateral consisting of "proceeds" (as such term is defined in the New
York UCC) to the extent such perfection is limited as set forth in Section 9-306
of the New York UCC and note that, under certain circumstances described in
Sections 9-307 and 9-308 of the New York UCC, purchasers of Collateral may take
the same free of a perfected security interest;
(e) we have not made nor undertaken to make any investigation of the
state of title to the Collateral or the location thereof and we express no
opinion as to the priority of the liens, security interests or pledges granted
or purported to be granted by the Loan Documents;
(f) any purported assignment of any agreement or any governmental
approval, license or permit may be subject to restrictions upon assignment or
transfer which, although not necessarily applicable to assignments intended as
security, may be required to be satisfied before the Collateral Agent will be
treated as an assignee (other than a collateral assignee) thereof, except to the
extent that consents to or approvals of such assignment have been obtained from
the appropriate governmental body or third party;
(g) the rights of debtors, guarantors and other secured parties to
receive notices under Section 9-504 and 9-505 of the New York UCC may not be
waived prior to default and the failure to comply with such notice requirements
may bar or limit the recovery of any deficiency remaining after the retention or
sale of repossessed collateral and further, we express no opinion as to the
right of the Collateral Agent to enforce any of its rights without notice to the
relevant Loan Party and without judicial hearing or without bond, nor do we
express any opinion as to whether the periods of notice set forth in the Loan
Documents are enforceable;
<PAGE>
June 13, 1997
Page 8
(h) certain provisions of the Loan Documents regarding the application
of proceeds realized from the sale of Collateral do not make reference (although
they do not have to in order to enable the Collateral Agent to exercise the
rights and remedies of a secured party under the New York UCC) to the Collateral
Agent's obligations to satisfy indebtedness due to the holders of subordinate
security interests in such collateral under certain conditions under Section
9-504(l)(c) of the New York UCC or to account to Loan Party involved for any
surplus proceeds;
(i) notwithstanding certain language of the Loan Documents, the
Collateral Agent may be limited to recovering only reasonable expenses with
respect to the retaking, holding, preparing for sale or lease, selling, leasing
and the like of Collateral and reasonable attorneys' fees and legal expenses and
only reasonable compensation for funding losses, increased costs or yield
protection;
(j) the duties to exercise reasonable care in the custody and
preservation of Collateral in a secured party's possession, to deal with and to
dispose of Collateral in a commercially reasonable manner as required by the
Code or other applicable law may not be disclaimed by agreement, modified,
waived or released prior to a default;
(k) we express no opinion with respect to the validity, binding effect
or enforceability of any provision of the Loan Documents which purports to
authorize the Collateral Agent to sign or file financing statements or other
documents without the signature of the relevant Loan Party (except to the extent
a secured party may execute and file financing statements without the signature
of the debtor under Section 9-402(2) of the New York UCC);
(l) we express no opinion with respect to the validity, binding effect
or enforceability of any purported waiver, release or disclaimer under any of
the Loan Documents relating to (i) statutory or equitable rights and defenses of
the Loan Parties which are not subject to waiver, release or disclaimer, or (ii)
rights or claims of, or duties owing to, the Loan Parties (including, without
limitation, any waiver, release or disclaimer of any provision of the New York
UCC) to the extent limited by Sections 1-102(3), 9-207 and 9-501(3) of the New
York UCC or other provisions of applicable law, or to the extent such rights,
claims and duties otherwise exist as a matter of law except to the extent the
Loan Party has effectively so waived, released or disclaimed such rights, claims
or duties in accordance with Section 9-501 of the New York UCC or other
applicable law;
(m) we express no opinion as to the Collateral Agent's ability to use
"self-help" remedies to repossess the Collateral if a breach of the peace were
to occur;
<PAGE>
June 13, 1997
Page 9
(n) certain other rights, remedies and waivers contained in the Loan
Documents may be rendered ineffective, or limited by, applicable laws, rules,
regulations, constitutional requirements or judicial decisions governing such
provisions, but such laws, rules, regulations, constitutional limitations and
judicial decisions do not, in our opinion, make the Loan Documents inadequate
for the practical realization of the benefits and/or security provided by such
Loan Documents, although they may result in a delay thereof (and we express no
opinion with respect to the economic consequences of any such delay);
(o) we express no opinion with respect to the applicability or effect
of federal or state anti-trust, securities or "blue sky" laws with respect to
the transactions contemplated by the Loan Documents;
(p) we express no opinion with respect to the validity, binding effect
or enforceability of any provision of the Loan Documents purporting to eliminate
any obligation to marshall assets; and
(q) we express no opinion with respect to any provisions of the Loan
Documents purporting to appoint the Collateral Agent as attorney-in-fact or
agent for any Loan Party.
The opinions expressed herein are based upon and are limited to the
laws of the State of New York, the General Corporation Law of the State of
Delaware and the laws of the United States of America and we express no opinion
with respect to the laws of any other state or jurisdiction.
Our opinions set forth in this letter are based upon the facts in
existence and laws in effect on the date hereof and we expressly disclaim any
obligation to update our opinions herein, regardless of whether changes in such
facts or laws come to our attention after the delivery hereof.
This opinion is solely for the benefit of the addressees hereof (and
each other entity that hereafter becomes a Lender under the Credit Agreement).
This opinion may not be relied upon in any manner by any other person and may
not be quoted or filed with a governmental agency without our prior written
consent.
Very truly yours,
<PAGE>
SCHEDULE I
UCC-1 FILING JURISDICTIONS
Name of Entity Filing Locations
- -------------- ----------------
Precise Technology, Inc. Delaware Secretary of State
New Castle County, DE
Florida Secretary of State
Pinellas County, FL
Illinois Secretary of State
Cook County, IL
Massachusetts Secretary of Commonwealth
Town of Grafton, MA
Missouri Secretary of State
Clay County, MO
Pennsylvania Secretary of Commonwealth
Allegheny County (PA) Prothonotary
Centre County (PA) Prothonotary
Indiana Secretary of State
Tippecanoe County, IN
New York Secretary of State
New York County, NY
Precise TMP, Inc. Florida Secretary of State
Pinellas County, FL
Massachusetts Secretary of Commonwealth
Worcester District, MA
Town of Grafton, MA
Northbridge (MA) Town Clerk
Clay County, MO
Clay County Recorder, MO
Missouri Secretary of State
Precise Technology of
Delaware, Inc. Delaware Secretary of State
New Castle County, DE
Precise Technology of
Illinois, Inc. Delaware Secretary of State
New Castle County, DE
Illinois Secretary of State
Cook County, IL
Precise Polestar, Inc. Pennsylvania Secretary of the Commonwealth
Centre County (PA) Prothonotary
Virginia Secretary of State
City of Richmond, VA
Massie Tool, Mold
& Die, Inc. Florida Secretary of State
Pinellas County, FL
Precise Holding Corporation New York Secretary of State
New York County, NY
Delaware Secretary of State
New Castle County, DE
<PAGE>
EXHIBIT H
EXECUTION COPY
================================================================================
PRECISE TECHNOLOGY, INC.
11 1/8% SENIOR SUBORDINATED NOTES DUE 2007
------------------------
INDENTURE
Dated as of June 13, 1997
------------------------
------------------------
Marine Midland Bank
Trustee
------------------------
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE................... 1
Section 1.01. Definitions.................................................. 1
Section 1.02. Other Definitions............................................ 18
Section 1.03. Incorporation By Reference of Trust Indenture Act............ 18
Section 1.04. Rules of Construction........................................ 19
Section 1.05. Compliance Certificates and Opinions......................... 19
ARTICLE 2 THE NOTES.................................................... 21
Section 2.01. Form and Dating.............................................. 21
Section 2.02. Execution and Authentication................................. 22
Section 2.03. Registrar and Paying Agent................................... 23
Section 2.04. Paying Agent to Hold Money in Trust.......................... 23
Section 2.05. Holder Lists................................................. 24
Section 2.06. Transfer and Exchange........................................ 24
Section 2.07. Replacement Notes............................................ 36
Section 2.08. Outstanding Notes............................................ 36
Section 2.09. Treasury Notes............................................... 36
Section 2.10. Temporary Notes.............................................. 36
Section 2.11. Cancellation................................................. 37
Section 2.12. Defaulted Interest........................................... 37
ARTICLE 3 REDEMPTION AND PREPAYMENT.................................... 38
Section 3.01. Applicability of Article..................................... 38
Section 3.02. Election to Redeem; Notice to Trustee........................ 38
Section 3.03. Selection by Trustee of Notes to Be Redeemed................. 38
Section 3.04. Notice of Redemption......................................... 38
Section 3.05. Deposit of Redemption Price.................................. 39
Section 3.06. Notes Payable on Redemption Date............................. 39
Section 3.07. Notes Redeemed in Part....................................... 39
Section 3.08. Optional Redemption.......................................... 40
Section 3.09. Mandatory Redemption......................................... 40
Section 3.10. Offer to Purchase by Application of Excess Proceeds.......... 40
ARTICLE 4 COVENANTS.................................................... 42
Section 4.01. Payment of Principal, Premium and Interest................... 42
Section 4.02. Maintenance of Office or Agency.............................. 43
Section 4.03. Money for Security Payments to Be Held In Trust.............. 43
Section 4.04. Reports...................................................... 44
Section 4.05. Statement as to Compliance; Notice of Default. .............. 45
Section 4.06. Payment of Taxes and Other Claims............................ 46
Section 4.07. Limitation on Liens.......................................... 46
Section 4.08. Corporate Existence.......................................... 46
Section 4.09. Offer to Repurchase Upon Change of Control................... 46
Section 4.10. Asset Sales.................................................. 48
i
<PAGE>
Section 4.11. Limitation on Restricted Payments............................ 49
Section 4.12. Limitation on Incurrence of Indebtedness
and Issuance of Preferred Stock.............................. 51
Section 4.13. Transactions with Affiliates................................. 53
Section 4.14. Dividend and Other Payment Restrictions
Affecting Subsidiaries....................................... 54
Section 4.15. Limitation on Issuances and Sales of Capital Stock
of Wholly Owned Restricted Subsidiaries...................... 55
Section 4.16. Limitation on Layering Debt.................................. 55
Section 4.17. Additional Subsidiary Guarantees............................. 55
Section 4.18. Payments For Consent......................................... 56
ARTICLE 5 SUCCESSORS................................................... 56
Section 5.01. Merger, Consolidation, or Sale of All or
Substantially All Assets..................................... 56
Section 5.02. Successor Corporation Substituted............................ 57
ARTICLE 6 DEFAULTS AND REMEDIES........................................ 57
Section 6.01. Events of Default and Notice Thereof......................... 57
Section 6.02. Acceleration of Maturity; Rescission......................... 58
Section 6.03. Other Remedies............................................... 59
Section 6.04. Waiver of Past Defaults...................................... 59
Section 6.05. Control by Majority.......................................... 59
Section 6.06. Limitation on Suits.......................................... 60
Section 6.07. Rights of Holders of Notes to Receive Payment................ 60
Section 6.08. Collection Suit by Trustee................................... 60
Section 6.09. Trustee May File Proofs of Claim............................. 60
Section 6.10. Priorities................................................... 61
Section 6.11. Undertaking for Costs........................................ 61
Section 6.12. Waiver of Stay, Extension of Usury Laws...................... 61
ARTICLE 7 TRUSTEE...................................................... 62
Section 7.01. Duties of Trustee............................................ 62
Section 7.02. Rights of Trustee............................................ 63
Section 7.03. Individual Rights of Trustee................................. 63
Section 7.04. Trustee's Disclaimer......................................... 64
Section 7.05. Notice of Defaults........................................... 64
Section 7.06. Reports by Trustee to Holders of the Notes................... 64
Section 7.07. Compensation and Indemnity................................... 64
Section 7.08. Replacement of Trustee....................................... 65
Section 7.09. Successor Trustee by Merger, etc............................. 66
Section 7.10. Eligibility; Disqualification................................ 66
Section 7.11. Preferential Collection of Claims Against the Company........ 66
ARTICLE 8 LEGAL DEFEASANCE AND COVENANT DEFEASANCE..................... 67
Section 8.01. Option to Effect Legal Defeasance or Covenant Defeasance..... 67
Section 8.02. Legal Defeasance and Discharge............................... 67
Section 8.03. Covenant Defeasance.......................................... 67
Section 8.04. Conditions to Legal Defeasance or Covenant Defeasance........ 68
Section 8.05. Deposited Money and U.S. Government Obligations to be
Held in Trust; Other Miscellaneous Provisions................ 69
ii
<PAGE>
Section 8.06. Reinstatement................................................ 70
ARTICLE 9 AMENDMENT, SUPPLEMENT AND WAIVER............................. 70
Section 9.01. Without Consent of Holders of Notes.......................... 70
Section 9.02. With Consent of Holders of Notes............................. 71
Section 9.03. Compliance with TIA.......................................... 72
Section 9.04. Revocation and Effect of Consents............................ 72
Section 9.05. Notation on or Exchange of Notes............................. 72
Section 9.06. Trustee to Sign Amendments, etc.............................. 72
ARTICLE 10 SUBORDINATION................................................ 73
Section 10.01.Agreement to Subordinate..................................... 73
Section 10.02.Liquidation; Dissolution; Bankruptcy......................... 73
Section 10.03.Default on Designated Senior Debt............................ 73
Section 10.04.Acceleration of Securities................................... 74
Section 10.05.When Distribution Must Be Paid Over.......................... 74
Section 10.06.Notice by Company............................................ 75
Section 10.07.Subrogation.................................................. 75
Section 10.08.Relative Rights.............................................. 75
Section 10.09.Subordination May Not Be Impaired by Company................. 76
Section 10.10.Distribution or Notice to Representative..................... 76
Section 10.11.Rights of Trustee and Paying Agent........................... 76
Section 10.12.Authorization to Effect Subordination........................ 76
ARTICLE 11 SATISFACTION AND DISCHARGE................................... 77
Section 11.01.Satisfaction and Discharge of Indenture...................... 77
Section 11.02.Application of Trust Money.................................. 77
ARTICLE 12 SUBSIDIARY GUARANTEES........................................ 78
Section 12.01.Subsidiary Guarantee......................................... 78
Section 12.02.Execution and Delivery of Guarantee.......................... 79
Section 12.03.Guarantors May Consolidate, etc., on Certain Terms........... 79
Section 12.04.Releases From Guarantees..................................... 80
Section 12.05.Limitation on Guarantor Liability............................ 80
Section 12.06.Subordination of Subsidiary Guarantees....................... 81
ARTICLE 13 MISCELLANEOUS................................................ 81
Section 13.01.Conflict of Any Provision of Indenture with TIA.............. 81
Section 13.02.Notices...................................................... 81
Section 13.03.Communication by Holders of Notes with Other
Holders of Notes............................................. 82
Section 13.04.Certificate and Opinion as to Conditions Precedent........... 82
Section 13.05.Legal Holidays............................................... 83
Section 13.06.No Personal Liability of Directors, Officers,
Employees and Stockholders................................... 83
Section 13.07.Governing Law; Submission to Jurisdiction.................... 83
Section 13.08.No Adverse Interpretation of Other Agreements................ 83
Section 13.09.Successors and Assigns....................................... 84
Section 13.10.Severability................................................. 84
iii
<PAGE>
Section 13.11.Counterpart Originals........................................ 84
Section 13.12.Table of Contents, Headings, etc............................. 84
iv
<PAGE>
EXHIBITS
Exhibit A-1 Form of Restricted Definitive Note, Regulation S Permanent
Global Note and Rule 144A Global Note
Exhibit A-2 Form of Regulation S Temporary Global Note
Exhibit A-3 Form of Unrestricted Note
Exhibit B Form of Certificate of Transfer
Exhibit C Form of Certificate of Exchange
Exhibit D Form of Certificate from Acquiring Institutional
Accredited Investor
Exhibit E Form of Subsidiary Guarantee
Schedule I Schedule of Existing Indebtedness
v
<PAGE>
CROSS-REFERENCE TABLE*
Trust Indenture Indenture Section
Act Section
310(a)(1)...................................................7.10
(a)(2)...................................................7.10
(a)(3)...................................................N.A.
(a)(4)...................................................N.A.
(a)(5)...................................................7.10
(b)......................................................7.10
(c)......................................................N.A.
311(a)......................................................7.11
(b)......................................................7.11
(c)......................................................N.A.
312(a)......................................................11.03
(b)......................................................11.03
(c)......................................................11.03
313(a)......................................................7.06
(b)(1)...................................................N.A.
(b)(2)...................................................7.06; 7.07
(c)......................................................7.06; 10.02
(d)......................................................7.06
314(a)......................................................4.04; 11.02
(b)......................................................N.A.
(c)(1)...................................................11.04
(c)(2)...................................................11.04
(c)(3)...................................................N.A.
(d)......................................................N.A.
(f)......................................................N.A.
315(a)......................................................7.01
(b)......................................................7.05; 11.02
(c)......................................................7.01
(d)......................................................7.01
(e)......................................................6.11
316(a)(last sentence).......................................2.09
(a)(1)(A)................................................6.05
(a)(1)(B)................................................6.04
(a)(2)...................................................N.A.
(b)......................................................6.07
317(a)(1)...................................................6.08
(a)(2)...................................................6.09
(b)......................................................2.04
318(a)......................................................11.01
(b)......................................................N.A.
(c)......................................................11.01
N.A. means not applicable.
*This Cross-Reference Table is not part of the Indenture.
vi
<PAGE>
INDENTURE dated as of June 13, 1997 among Precise Technology, Inc., a
Delaware corporation (the "Company"), Precise TMP, Inc., a Virginia corporation
("Precise TMP"), Massie Tool, Mold & Die, Inc., a Florida corporation
("Massie"), Precise Polestar, Inc., a Virginia corporation ("Precise Polestar"),
Precise Technology of Delaware Inc., a Delaware corporation ("Precise
Delaware"), and Precise Technology of Illinois Inc., a Delaware corporation
("Precise Illinois") (each of Precise TMP, Massie, Precise Polestar, Precise
Delaware and Precise Illinois a "Guarantor", and together with certain future
Subsidiaries of the Company as set forth herein, the "Guarantors") and Marine
Midland Bank, as trustee (the "Trustee"). The Company, the Guarantors and the
Trustee agree as follows for the benefit of each other and for the equal and
ratable benefit of the Holders of the 11 1/8% Senior Subordinated Notes due 2007
(the "Notes").
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01.DEFINITIONS.
"Accredited Investor" has the meaning set forth in Rule 501(a) (1), (2),
(3) or (7) of the Securities Act.
"Acquired Debt" means, with respect to any specified Person, (i)
Indebtedness or preferred stock of any other Person existing at the time such
other Person is merged with or into or became a Subsidiary of such specified
Person, including, without limitation, Indebtedness or preferred stock incurred
in connection with, or in contemplation of, such other Person merging with or
into or becoming a Subsidiary of such specified Person, and (ii) Indebtedness
secured by a Lien encumbering any asset acquired by such specified Person.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise; provided that
beneficial ownership of 10% or more of the voting securities of a Person shall
be deemed to be control.
"Agent" means any Registrar, Paying Agent or co-registrar.
"Agent Members" means members of, or participants in, the Depository.
"Applicable Procedures" means applicable procedures of the Depository,
Euroclear or Cedel Bank, as the case may be.
"Asset Sale" means (i) the sale, lease, conveyance or other disposition of
any assets or rights (including, without limitation, by way of a sale and
leaseback) other than sales of inventory in the ordinary course of business
consistent with past practices (provided that the sale, lease, conveyance or
other disposition of all or substantially all of the assets of the Company and
its Subsidiaries taken as a whole will be governed by the provisions of Section
4.09 and/or the provisions of Section 5.01 and not by the
<PAGE>
provisions of Section 4.10), and (ii) the issuance of Equity Interests in any
Restricted Subsidiary or the sale of Equity Interests in any of the Company's
Restricted Subsidiaries, in the case of either clause (i) or (ii), whether in a
single transaction or a series of related transactions (a) that have a fair
market value in excess of $1.0 million or (b) for net proceeds in excess of $1.0
million. Notwithstanding the foregoing: (i) a transfer of assets or Equity
Interests by the Company to a Wholly Owned Restricted Subsidiary or by a Wholly
Owned Restricted Subsidiary to the Company or to another Wholly Owned Restricted
Subsidiary, (ii) an issuance of Equity Interests by a Wholly Owned Restricted
Subsidiary to the Company or to another Wholly Owned Restricted Subsidiary,
(iii) the disposal of obsolete equipment and machinery in the ordinary course of
business and (iv) a Restricted Payment that is permitted to be made, and is
made, under Section 4.11 will not be deemed to be Asset Sales.
"Bankruptcy Law" means Title 11, U.S. Code or any similar foreign, federal
or state law for the relief of debtors.
"Board of Directors" means the board of directors of the Company or any
duly authorized committee of such board.
"Board Resolution" means a copy of a resolution certified by the Secretary
or an Assistant Secretary of the Company to have been duly adopted by the Board
of Directors and to be in full force and effect on the date of such
certification and delivered to the Trustee.
"Borrowing Base" means, as of any date, an amount equal to the sum of (a)
85% of the face amount of all trade receivables owned by the Company and its
Restricted Subsidiaries as of such date that are not more than 90 days past due,
less the allowance for doubtful accounts, each of the foregoing determined in
accordance with GAAP, and (b) 50% of the book value of all inventory owned by
the Company and its Restricted Subsidiaries as of such date, less any applicable
reserves, each of the foregoing determined in accordance with GAAP. To the
extent that information is not available as to the amount of trade receivables
or inventory as of a specific date, the Company may utilize the most recent
available information for purposes of calculating the Borrowing Base.
"Broker-Dealer" has the meaning set forth in the Registration Rights
Agreement.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and Friday
that is not a day on which banking institutions in The City of New York are
authorized or obligated by law, regulation or executive order to close.
"Capital Lease Obligation" means, at the time any determination thereof is
to be made, the amount of the liability in respect of a capital lease that would
at such time be required to be capitalized on a balance sheet in accordance with
GAAP.
"Capital Stock" means (i) in the case of a corporation, corporate stock,
(ii) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
corporate stock, (iii) in the case of a partnership or limited liability
company, partnership or membership interests (whether general or limited) and
(iv) any other interest or participation that confers on a Person the right to
receive a share of the profits and losses of, or distributions of assets of, the
issuing Person.
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"Cash Equivalents" means (i) United States dollars, (ii) securities issued
or directly and fully guaranteed or insured by the United States government or
any agency or instrumentality thereof having maturities of not more than one
year from the date of acquisition, (iii) certificates of deposit and eurodollar
time deposits with maturities of one year or less from the date of acquisition,
bankers' acceptances with maturities not exceeding six months and overnight bank
deposits, in each case with any lender party to the Credit Agreement or with any
domestic commercial bank having capital and surplus in excess of $500 million,
(iv) repurchase obligations with a term of not more than seven days for
underlying securities of the types described in clauses (ii) and (iii) above
entered into with any financial institution meeting the qualifications specified
in clause (iii) above, (v) commercial paper rated at least P-1 by Moody's
Investors Service, Inc. or A-1 by Standard & Poor's Ratings Services and in each
case maturing within six months after the date of acquisition and (vi)
investment funds with total assets in excess of $500 million that invest at
least 95% of their assets in securities of the types described in clauses (i)
through (v) above.
"Change of Control" means the occurrence of any of the following:
(i) the sale, lease, transfer, conveyance or other disposition (other
than by way of merger or consolidation), in one or a series of
related transactions, of all or substantially all of the assets
of the Company and its Restricted Subsidiaries taken as a whole
to any "person" (as such term is defined in Section 13(d)(3) of
the Exchange Act) other than the Principals or their Related
Parties;
(ii) the adoption of a plan relating to the liquidation or dissolution
of the Company;
(iii) the consummation of any transaction (including, without
limitation, any merger or consolidation) the result of which is
that any "person" (as defined above), other than the Principals
and their Related Parties, becomes the "beneficial owner" (as
such term is defined in Rule 13d-3 and Rule 13d-5 under the
Exchange Act, except that a Person shall be deemed to have
"beneficial ownership" of all securities that such Person has the
right to acquire, whether such right is currently exercisable or
is exercisable only upon the occurrence of a subsequent
condition), directly or indirectly, of more than 50% of the
Voting Stock of the Company (measured by voting power rather than
number of shares); or
(iv) the first day on which a majority of the members of the Board of
Directors of the Company are not Continuing Directors.
"Code" means the Internal Revenue Code of 1986, as amended, or any
successor thereto.
"Company" means Precise Technology, Inc., a Delaware corporation, and any
successor thereto pursuant to Section 5.01 hereof.
"Company Request" or "Company Order" means a written request or order
signed in the name of the Company (i) by its Chairman, a Vice Chairman, its
President or a Vice President and (ii) by its Treasurer, an Assistant Treasurer,
its Secretary or an Assistant Secretary and delivered to the Trustee; provided,
however, that such written request or order may be signed by any two of the
officers or directors listed in clause (i) above in lieu of being signed by one
of such officers or directors listed in such clause (i) and one of the officers
listed in clause (ii) above.
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"Consolidated Cash Flow" means, with respect to any Person for any period,
the Consolidated Net Income of such Person for such period plus (i) an amount
equal to any extraordinary, non-recurring or unusual loss plus any net loss
realized in connection with an asset sale (to the extent such losses were
deducted or otherwise excluded in computing such Consolidated Net Income), plus
(ii) provision for taxes based on income or profits of such Person and its
Subsidiaries for such period, to the extent that such provision for taxes was
included in computing such Consolidated Net Income, plus (iii) consolidated
interest expense of such Person and its Subsidiaries for such period, whether
paid or accrued and whether or not capitalized (including, without limitation,
amortization of debt issuance costs and original issue discount, non-cash
interest payments, the interest component of any deferred payment obligations,
the interest component of all payments associated with Capital Lease
Obligations, commissions, discounts and other fees and charges incurred in
respect of letter of credit or bankers' acceptance financings, and net payments
(if any) pursuant to Hedging Obligations), to the extent that any such expense
was deducted in computing such Consolidated Net Income, plus (iv) depreciation,
amortization (including amortization of goodwill and other intangibles but
excluding amortization of prepaid cash expenses that were paid in a prior
period) and other non-cash expenses (excluding any such non-cash expense to the
extent that it represents an accrual of or reserve for cash expenses in any
future period or amortization of a prepaid cash expense that was paid in a prior
period) of such Person and its Subsidiaries for such period to the extent that
such depreciation, amortization and other non-cash expenses were deducted in
computing such Consolidated Net Income, plus (v) an amount equal to all premiums
on prepayments of debt, minus (vi) non-cash items increasing such Consolidated
Net Income for such period, in each case, on a consolidated basis and determined
in accordance with GAAP. Notwithstanding the foregoing, the provision for taxes
on the income or profits of, and the depreciation and amortization and other
non-cash charges of, a Subsidiary of the referent Person shall be added to
Consolidated Net Income to compute Consolidated Cash Flow only to the extent
that a corresponding amount would be permitted at the date of determination to
be dividended to the Company by such Subsidiary without prior approval (that has
not been obtained), and without direct or indirect restriction pursuant to the
terms of its charter and all agreements, instruments, judgments, decrees,
orders, statutes, rules and governmental regulations applicable to that
Subsidiary or its stockholders.
"Consolidated Net Income" means, with respect to any Person for any
period, the aggregate of the Net Income of such Person and its Restricted
Subsidiaries for such period, on a consolidated basis, determined in accordance
with GAAP; provided that (i) the Net Income (but not loss) of any Person that is
not a Restricted Subsidiary or that is accounted for by the equity method of
accounting shall be included only to the extent of the amount of dividends or
distributions paid in cash to the referent Person or a Wholly Owned Restricted
Subsidiary thereof that is a Guarantor and, for purposes of determining
Consolidated Cash Flow only, shall not exceed the consolidated net income of
such Person for such period, (ii) the Net Income of any Restricted Subsidiary
shall be excluded to the extent that the declaration or payment of dividends or
similar distributions by that Restricted Subsidiary of that Net Income is not at
the date of determination permitted without any prior governmental approval
(that has not been obtained) or, directly or indirectly, by operation of the
terms of its charter or any agreement, instrument, judgment, decree, order,
statute, rule or governmental regulation applicable to that Restricted
Subsidiary or its stockholders, (iii) the Net Income of any Person acquired in a
pooling of interests transaction for any period prior to the date of such
acquisition shall be excluded, (iv) the cumulative effect of a change in
accounting principles shall be excluded and (v) the Net Income of any Person
that is an Unrestricted Subsidiary shall be included only to the extent of the
amount of cash dividends or cash distributions paid to such Person or a
Restricted Subsidiary thereof.
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"Consolidated Net Worth" means, with respect to any Person as of any date,
the sum of (i) the consolidated equity of the common stockholders of such Person
and its consolidated Subsidiaries as of such date plus (ii) the respective
amounts reported on such Person's balance sheet as of such date with respect to
any series of preferred stock (other than Disqualified Stock) that by its terms
is not entitled to the payment of dividends unless such dividends may be
declared and paid only out of net earnings in respect of the year of such
declaration and payment, but only to the extent of any cash received by such
Person upon issuance of such preferred stock, less (x) all write-ups (other than
write-ups resulting from foreign currency translations and write-ups of tangible
assets of a going concern business made within 12 months after the acquisition
of such business) subsequent to the date of this Indenture in the book value of
any asset owned by such Person or a consolidated Subsidiary of such Person, (y)
all investments as of such date in unconsolidated Restricted Subsidiaries and in
Persons that are not Subsidiaries (except, in each case, Permitted Investments),
and (z) all unamortized debt discount and expense and unamortized deferred
charges as of such date, all of the foregoing determined in accordance with
GAAP.
"Continuing Directors" means, as of any date of determination, any member
of the Board of Directors of the Company who (i) was a member of such Board of
Directors on the date of this Indenture or (ii) was nominated by the Principals
or any Related Party to serve on such Board of Directors.
"Corporate Trust Office of the Trustee" shall be at the address of the
Trustee specified in Section 13.02 hereof or such other address as to which the
Trustee may give notice to the Company.
"Credit Agreement" means that certain Credit Agreement, dated as of June
13, 1997, by and among Parent, the Company and the Subsidiaries of the Company
named therein, the lenders named therein and Fleet National Bank, as Agent and
as issuing bank, providing for up to $30.0 million of revolving credit
borrowings, including any related notes, guarantees, collateral documents,
instruments and agreements executed in connection therewith, and in each case as
amended, modified (including any agreement extending the maturity of, increasing
the total commitment under or otherwise restructuring all or any portion of the
Indebtedness under such agreement or any successor or replacement agreement),
renewed, refunded, replaced, restated, supplemented or refinanced from time to
time.
"Custodian" means any receiver, trustee, assignee, liquidator or similar
official under any Bankruptcy Law.
"Default" means any event that is or with the passage of time or the
giving of notice or both would be an Event of Default.
"Definitive Notes" means Restricted Definitive Notes and Unrestricted
Definitive Notes.
"Depository" means, with respect to any Global Note, the Person specified
in Section 2.03 hereof as the Depository with respect to such Note, until a
successor shall have been appointed and become such pursuant to the applicable
provision of this Indenture, and, thereafter, "Depository" shall mean or include
such successor.
"Designated Senior Debt" means (i) any Indebtedness outstanding under the
Credit Agreement and (ii) any other Senior Debt, the principal amount of which
is $5.0 million or more and that has been designated by a Board Resolution as
"Designated Senior Debt."
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"Disqualified Stock" means any Capital Stock that, by its terms (or by the
terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at
the option of the holder thereof, in whole or in part, on or prior to the date
that is 91 days after the date on which the Notes mature.
"Equity Interests" means Capital Stock and all warrants, options or other
rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations of the SEC promulgated thereunder.
"Exchange Offer" means the offer that may be made by the Company pursuant
to the Registration Rights Agreement to exchange Notes (as defined in the
Registration Rights Agreement) for New Notes.
"Exchange Offer Registration Statement" has the meaning set forth in the
Registration Rights Agreement.
"Existing Indebtedness" means up to $6.8 million in aggregate principal
amount of Indebtedness of the Company and its Subsidiaries (other than
Indebtedness under the Credit Agreement) in existence on the date hereof and set
forth on Schedule I hereto (including any refinancings thereof), until such
amounts are permanently repaid.
"Fixed Charges" means, with respect to any Person and its Restricted
Subsidiaries for any period, the sum, without duplication, of (i) the
consolidated interest expense of such Person and its Restricted Subsidiaries for
such period, whether paid or accrued (including, without limitation,
amortization of debt issuance costs and original issue discount, non-cash
interest payments, the interest component of any deferred payment obligations,
the interest component of all payments associated with Capital Lease
Obligations, commissions, discounts and other fees and charges incurred in
respect of letter of credit or bankers' acceptance financings, and net payments
(if any) pursuant to Hedging Obligations) and (ii) the consolidated interest
expense of such Person and its Restricted Subsidiaries that was capitalized
during such period, and (iii) any interest expense on Indebtedness of another
Person that is Guaranteed by such Person or one of its Restricted Subsidiaries
or secured by a Lien on assets of such Person or one of its Restricted
Subsidiaries (whether or not such Guarantee or Lien is called upon) and (iv) all
dividend payments (including all dividend payments within 60 days of the
measurement date for any period), whether or not in cash, on any series of (A)
Disqualified Stock of such Person and (B) preferred stock of any Subsidiary of
such Person, other than dividend payments on Equity Interests payable solely in
Equity Interests of the Company and other than payments to such Person and its
Restricted Subsidiaries, in each case, on a consolidated basis and in accordance
with GAAP.
"Fixed Charge Coverage Ratio" means with respect to any Person and its
Restricted Subsidiaries for any period, the ratio of the Consolidated Cash Flow
of such Person and its Restricted Subsidiaries for such period to the Fixed
Charges of such Person and its Restricted Subsidiaries for such period. In the
event that the Company or any of its Restricted Subsidiaries incurs, assumes,
Guarantees or redeems any Indebtedness (other than revolving credit borrowings)
or issues or redeems preferred stock subsequent to the commencement of the
period for which the Fixed Charge Coverage Ratio is being calculated but prior
to the date on which the event for which the calculation of the Fixed Charge
Coverage Ratio is made (the
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"Calculation Date"), then the Fixed Charge Coverage Ratio shall be calculated
giving pro forma effect to such incurrence, assumption, Guarantee or redemption
of Indebtedness, or such issuance or redemption of preferred stock, and the
application of the net proceeds thereof, as if the same had occurred at the
beginning of the applicable four-quarter reference period. In addition, for
purposes of making the computation referred to above, (i) acquisitions that have
been made by the Company or any of its Restricted Subsidiaries, including
through mergers or consolidations and including any related financing
transactions, during the four-quarter reference period or subsequent to such
reference period and on or prior to the Calculation Date shall be deemed to have
occurred on the first day of the four-quarter reference period and Consolidated
Cash Flow for such reference period shall be calculated without giving effect to
clause (iii) of the proviso set forth in the definition of Consolidated Net
Income, and (ii) the Consolidated Cash Flow attributable to discontinued
operations, as determined in accordance with GAAP, and operations or businesses
disposed of prior to the Calculation Date, shall be excluded, and (iii) the
Fixed Charges attributable to discontinued operations, as determined in
accordance with GAAP, and operations or businesses disposed of prior to the
Calculation Date, shall be excluded, but only to the extent that the obligations
giving rise to such Fixed Charges will not be obligations of the referent Person
or any of its Restricted Subsidiaries following the Calculation Date.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession, which are in effect from time to time.
"Global Note" means, individually and collectively, the Regulation S
Global Note, the Rule 144A Global Note and the Unrestricted Global Note.
"Global Note Legend" means the legend set forth in Section 2.06(g)(ii).
"Government Securities" means securities that are (a) direct obligations
of the United States of America for the timely payment of which its full faith
and credit is pledged or (b) obligations of a Person controlled or supervised by
and acting as an agency or instrumentality of the United States of America the
timely payment of which is unconditionally guaranteed as a full faith and credit
obligation by the United States of America, which, in either case, are not
callable or redeemable at the option of the issuer thereof, and shall also
include a depository receipt issued by a bank (as defined in Section 3(a)(2) of
the Securities Act), as custodian with respect to any such Government Securities
or a specific payment of principal of or interest on any such Government
Securities held by such custodian for the account of the holder of such
depository receipt; provided that (except as required by law) such custodian is
not authorized to make any deduction from the amount payable to the holder of
such depository receipt from any amount received by the custodian in respect of
the Government Securities or the specific payment of principal of or interest on
the Government Securities evidenced by such depository receipt.
"Guarantee" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters of credit and
reimbursement agreements in respect thereof), of all or any part of any
Indebtedness.
"Guarantors" means each of (i) the Company's Subsidiaries listed in the
preamble to this Indenture and future Restricted Subsidiaries (having either
assets or stockholder's equity in excess of $50,000) and
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(ii) any other subsidiary that executes a Subsidiary Guarantee in accordance
with the provisions of this Indenture, and their respective successors and
assigns.
"Hedging Obligations" means, with respect to any Person, the obligations
of such Person under (i) interest rate swap agreements, currency rate swap
agreements, interest rate cap agreements and interest rate collar agreements and
(ii) other agreements or arrangements designed to protect such Person against
fluctuations in interest rates or currency values.
"Holder" means a Person in whose name a Note is registered.
"Indebtedness" means, with respect to any Person, any indebtedness of such
Person, whether or not contingent, in respect of borrowed money or evidenced by
bonds, notes, debentures or similar instruments or letters of credit (or
reimbursement agreements in respect thereof) or banker's acceptances or
representing Capital Lease Obligations or the balance deferred and unpaid of the
purchase price of any property or representing any Hedging Obligations, except
any such balance that constitutes an accrued expense or trade payable, if and to
the extent any of the foregoing indebtedness (other than letters of credit and
Hedging Obligations) would appear as a liability upon a balance sheet of such
Person prepared in accordance with GAAP, as well as all indebtedness of others
secured by a Lien on any asset of such Person (but only to the extent of the
fair market value of the assets subject to such Lien) (whether or not such
indebtedness is assumed by such Person) and, to the extent not otherwise
included, the Guarantee by such Person of any indebtedness of any other Person.
The amount of any Indebtedness outstanding as of any date shall be (i) the
accreted value thereof, in the case of any Indebtedness that does not require
current payments of interest, and (ii) the principal amount thereof, together
with any interest thereon that is more than 30 days past due, in the case of any
other Indebtedness.
"Indenture" means this Indenture, as amended or supplemented from time to
time.
"Initial Purchasers" means Bear, Stearns & Co. Inc. and Merrill Lynch,
Pierce, Fenner & Smith Incorporated.
"Interest Payment Date" means each June 15 and December 15, whether or not
such day is a Business Day.
"interest" means all interest payable with respect to the Notes,
including, without limitation Special Interest.
"Investments" means, with respect to any Person, all investments by such
Person in other Persons (including Affiliates) in the forms of direct or
indirect loans (including Guarantees of Indebtedness or other obligations),
advances or capital contributions (excluding commission, travel and similar
advances to officers and employees made in the ordinary course of business),
purchases or other acquisitions for consideration of Indebtedness, Equity
Interests or other securities, together with all items that are or would be
classified as investments on a balance sheet prepared in accordance with GAAP;
provided, however, that if the sole consideration for any such investment is
Capital Stock of the Company or a Subsidiary that is not Disqualified Stock,
then such investment shall not be deemed an Investment for purposes of this
Indenture. If the Company or any Restricted Subsidiary of the Company sells or
otherwise disposes of any Equity Interests of any direct or indirect Subsidiary
of the Company such that, after giving effect to any such sale or disposition,
such Person is no longer a Restricted Subsidiary of the Company, the Company
8
<PAGE>
shall be deemed to have made an Investment on the date of any such sale or
disposition equal to the fair market value of the Equity Interests of such
Restricted Subsidiary not sold or disposed of in an amount determined as
provided in the final paragraph of Section 4.11.
"Issuance Date" means the closing date for the sale and original issuance
of the Notes under this Indenture.
"Letter of Transmittal" means the letter of transmittal to be prepared by
the Company and sent to all Holders of the Notes for use by such Holders in
connection with the Exchange Offer.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction).
"Liquidated Damages" has the meaning set forth in the Registration Rights
Agreement.
"Make-Whole Premium" means, with respect to a Note, an amount equal to the
greater of (i) 5.563% of the outstanding principal amount of such Note and (ii)
the excess of (a) the present value of the remaining interest, premium and
principal payments due on such Note as if such Note were redeemed on June 15,
2002, computed using a discount rate equal to the Treasury Rate plus 75 basis
points, over (b) the outstanding principal amount of such Note.
"Management Agreement" means the agreement, dated as of March 15, 1996,
between the Company and Mentmore, as amended from time to time.
"Maturity" when used in respect to any Note means the date on which the
principal of (and premium, if any) and interest on such Note becomes due and
payable as therein or herein provided, whether at Stated Maturity or the
applicable Redemption Date and whether by declaration of acceleration, call for
redemption or otherwise.
"Mentmore" means Mentmore Holdings Corporation, a Delaware corporation, or
its successors.
"Moody's" means Moody's Investors Service, Inc., or its successors.
"Net Income" means, with respect to any Person for any period, the net
income (loss) of such Person, determined in accordance with GAAP and before any
reduction in respect of preferred stock dividends, excluding, however, (i) any
gain (but not loss), together with any related provision for taxes on such gain
(but not loss), realized in connection with (a) any asset sale (including,
without limitation, dispositions pursuant to sale and leaseback transactions) or
(b) the disposition of any securities by such Person or any of its Restricted
Subsidiaries or the extinguishment of any Indebtedness of such Person or any of
its Restricted Subsidiaries and (ii) any extraordinary or nonrecurring gain (but
not loss), together with any related provision for taxes on such extraordinary
or nonrecurring gain (but not loss).
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"Net Proceeds" means the aggregate cash proceeds received by the Company
or any of its Restricted Subsidiaries in respect of any Asset Sale (including,
without limitation, any cash received upon the sale or other disposition of any
non-cash consideration received in any Asset Sale), net of the direct costs
relating to such Asset Sale (including, without limitation, legal, accounting
and investment banking fees, and sales commissions) and any relocation expenses
incurred as a result thereof, taxes paid or payable as a result thereof (after
taking into account any available tax credits or deductions and any tax sharing
arrangements), amounts required to be applied to the repayment of Indebtedness
secured by a Lien on the asset or assets that were the subject of such Asset
Sale, any provision for permitted minority interests in any Restricted
Subsidiary as a result of such Asset Sale and any reserve established in
accordance with GAAP against any liabilities associated with the assets sold or
disposed of in such Asset Sale, including, without limitation, sales price
adjustments, pension and other post-employment benefit liabilities and
liabilities related to environmental matters or against any indemnification
obligations associated with the assets sold or disposed of in such Asset Sale or
provision for minority interest holders in any Restricted Subsidiary as a result
of such Asset Sale.
"New Notes" has the meaning set forth in the Registration Rights
Agreement.
"Non-Recourse Debt" means Indebtedness (i) as to which neither the Company
nor any of its Restricted Subsidiaries (a) provides credit support of any kind
(including any undertaking, agreement or instrument that would constitute
Indebtedness), (b) is directly or indirectly liable (as a guarantor or
otherwise), or (c) constitutes the lender; and (ii) no default with respect to
which (including any rights that the holders thereof may have to take
enforcement action against an Unrestricted Subsidiary) would permit (upon
notice, lapse of time or both) any holder of any other Indebtedness of the
Company or any of its Restricted Subsidiaries in excess of $5.0 million to
declare a default on such other Indebtedness or cause the payment thereof to be
accelerated or payable prior to its stated maturity; and (iii) as to which the
lenders have been notified in writing that they will not have any recourse to
the stock or assets of the Company or any of its Restricted Subsidiaries.
"Notes" means $75,000,000 aggregate principal amount of the Company's
111/8% Senior Subordinated Notes due 2007 issued pursuant to the Offering
Memorandum and any other 111/8% Senior Subordinated Notes due 2007 hereafter
issued in compliance with the provisions of this Indenture (including Section
4.12).
"Note Custodian" means the custodian for the Depository of the Global
Notes, or any successor entity thereto.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Offering Memorandum" means that certain offering memorandum with respect
to the Notes, dated June 10, 1997.
"Officer" means the Chairman of the Board, the President, any Vice
President, the Secretary or any Assistant Secretary of the Company or any
Guarantor, as applicable.
"Officers' Certificate" means a certificate signed on behalf of the
Company or any Guarantor, as applicable, by two Officers of the Company or any
Guarantor, as applicable, one of whom must be the
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principal executive officer, the principal financial officer, the treasurer or
the principal accounting officer of the Company or any Guarantor, as applicable,
that meets the requirements set forth in Section 1.05.
"Opinion of Counsel" means a written opinion of counsel, who may be
counsel for the Company or any Guarantor, as applicable, and who shall be
acceptable to the Trustee. Each such opinion shall include the statements
provided for in TIA Section 314(e) to the extent applicable.
"Parent" means Precise Holding Corporation, a Delaware corporation, or its
successors.
"Permitted Investments" means (a) any Investment in the Company or in a
Wholly Owned Restricted Subsidiary of the Company; (b) any Investment in Cash
Equivalents; (c) any Investment by the Company or any Restricted Subsidiary of
the Company in a Person, if as a result of such Investment (i) such Person
becomes a Wholly Owned Restricted Subsidiary of the Company and a Guarantor or
(ii) such Person is merged, consolidated or amalgamated with or into, or
transfers or conveys substantially all of its assets to, or is liquidated into,
the Company or a Wholly Owned Restricted Subsidiary of the Company; (d) any
Restricted Investment made as a result of the receipt of non-cash consideration
from an Asset Sale that was made pursuant to and in compliance with Section 4.10
hereof; (e) any acquisition of assets solely in exchange for the issuance of
Equity Interests (other than Disqualified Stock) of the Company; (f) reasonable
and customary loans and advances made to employees in connection with their
relocation (including related travel expenses) not to exceed $250,000 in the
aggregate at any one time outstanding; (g) any Investment existing on the date
of this Indenture; (i) any Investment acquired by the Company or any of its
Restricted Subsidiaries (x) in exchange for any other Investment or accounts
receivable held by the Company or any such Restricted Subsidiary in connection
with or as a result of a bankruptcy, workout, reorganization or recapitalization
of the issuer of such Investment or accounts receivable or (y) as the result of
a foreclosure by the Company or any of its Restricted Subsidiaries with respect
to any secured Investment or other transfer of title with respect to any secured
Investment in default; and (j) other Investments in any Person having an
aggregate fair market value (measured on the date each such Investment was made
and without giving effect to subsequent changes in value), when taken together
with all other Investments made pursuant to this clause (j) that are at the time
outstanding, not to exceed $5.0 million.
"Permitted Junior Securities" means Equity Interests in the Company or
debt securities that are subordinated to all Senior Debt (and any debt
securities issued in exchange for Senior Debt) to substantially the same extent
as, or to a greater extent than, the Notes are subordinated to Senior Debt.
"Permitted Liens" means (i) Liens securing Senior Debt that was permitted
by the terms of this Indenture to be incurred; (ii) Liens in favor of the
Company or any Restricted Subsidiary; (iii) Liens on property of a Person
existing at the time such Person is merged into or consolidated with the Company
or any Subsidiary of the Company; provided that such Liens were in existence
prior to the contemplation of such merger or consolidation and do not extend to
any assets other than those of the Person merged into or consolidated with the
Company; (iv) Liens on property existing at the time of acquisition thereof by
the Company or any Subsidiary of the Company, provided that such Liens were in
existence prior to the contemplation of such acquisition; (v) Liens to secure
the performance of statutory obligations, surety or appeal bonds, performance
bonds or other obligations of a like nature incurred in the ordinary course of
business; (v) Liens to secure Indebtedness (including Capital Lease Obligations)
permitted by clause (iii) of the second paragraph of Section 4.12 covering only
the assets acquired with such Indebtedness; (vi) Liens existing on the date
hereof; (vii) Liens for taxes, assessments or governmental charges or claims
that
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are not yet delinquent or that are being contested in good faith by appropriate
proceedings promptly instituted and diligently concluded, provided that any
reserve or other appropriate provision as shall be required in conformity with
GAAP shall have been made therefor; (viii) Liens on assets of Unrestricted
Subsidiaries that secure Non-Recourse Debt of Unrestricted Subsidiaries; (ix)
statutory Liens or landlords', carriers', warehousemens', mechanics', suppliers'
or similar Liens incurred in the ordinary course of business of the Company or
any Subsidiary of the Company; (x) easements, minor title defects,
irregularities in title or other charges or encumbrances on property not
interfering in any material respect with the use of such property by the Company
or a Subsidiary of the Company; (xi) Liens incurred or deposits made in the
ordinary course of business in connection with workers' compensation,
unemployment insurance and other types of social security; (xii) liens securing
industrial revenue bonds or other tax-favored financing; (xiii) deposit
arrangements entered into in connection with acquisitions or in the ordinary
course of business; (xiv) other Liens securing obligations incurred in the
ordinary course of business which obligations do not exceed $5.0 million at any
one time outstanding; and (xv) any extensions, substitutions, replacements or
renewals of the foregoing.
"Permitted Refinancing Indebtedness" means any Indebtedness of the Company
or any of its Restricted Subsidiaries issued in exchange for, or the net
proceeds of which are used to extend, refinance, renew, replace, defease or
refund, other Indebtedness of the Company or any of its Restricted Subsidiaries;
provided that: (i) the principal amount (or accreted value, if applicable) of
such Permitted Refinancing Indebtedness does not exceed the principal amount of
(or accreted value, if applicable), plus accrued interest on, the Indebtedness
so extended, refinanced, renewed, replaced, defeased or refunded (plus the
amount of reasonable expenses and prepayment premiums incurred in connection
therewith) (except to the extent such increase is a result of a simultaneous
incurrence of additional Indebtedness permitted to be incurred under this
Indenture); (ii) such Permitted Refinancing Indebtedness has a final maturity
date later than the final maturity date of, and has a Weighted Average Life to
Maturity equal to or greater than the Weighted Average Life to Maturity of, the
Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded; (iii) if the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded is subordinated in right of payment to the Notes,
such Permitted Refinancing Indebtedness has a final maturity date later than the
final maturity date of, and is subordinated in right of payment to, the Notes on
terms at least as favorable to the Holders of Notes as those contained in the
documentation governing the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded; and (iv) such Indebtedness is incurred either by
the Company or by the Restricted Subsidiary who is the obligor on the
Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded.
"Permitted Warrant Put Payment" means any payment or distribution (whether
in cash or securities of the Company) made after March 29, 2001 and in
accordance with the following sentence, by the Company or any of its Restricted
Subsidiaries to Parent in order to enable Parent to satisfy Parent's obligations
under the Warrant Agreement and/or the Shareholders Agreement to repurchase the
Put Shares (as defined in the Warrant Agreement) or to repay indebtedness
incurred by Parent to satisfy such obligations. If, after giving pro forma
effect to any Permitted Warrant Put Payment by the Company, the Fixed Charge
Coverage Ratio for the Company's most recently ended four full fiscal quarters
for which internal financial statements are available immediately preceding the
date on which such Permitted Warrant Put Payment is made is (i) greater than
2.50 to 1 and less than 2.75 to 1, then the Company will be permitted to make a
Permitted Warrant Put Payment in an amount not to exceed $5.0 million, (ii)
greater than or equal to 2.75 to 1 and less than 3.00 to 1, then the Company
will be permitted to make a Permitted Warrant Put Payment in an amount not to
exceed $10.0 million and (iii) greater than or equal to 3.00 to
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1, then the Company will be permitted to make a Permitted Warrant Put Payment in
an amount not to exceed $15.0 million.
"Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, limited liability company, trust,
unincorporated organization, government or any agency or political subdivision
thereof or any other entity.
"preferred stock" means any Equity Interest with preferential right of
payment of dividends or upon liquidation, dissolution, or winding up.
"Principals" means Richard L. Kramer and/or William L. Remley.
"Private Placement Legend" means the legend set forth in Section
2.06(g)(i)(A) to be placed on all Notes issued under this Indenture except as
permitted pursuant to Section 2.06(g)(i)(B).
"Public Equity Offering" means a bona fide underwritten sale to the public
of common stock of Parent or the Company pursuant to a registration statement
(other than on Form S-8 or any other form relating to securities issuable under
any benefit plan of Parent or the Company) that is declared effective by the SEC
and results in aggregate gross equity proceeds to the Company of at least $20.0
million.
"Redemption Date," when used with respect to any Note to be redeemed,
means the date fixed for such redemption pursuant to this Indenture.
"Redemption Price," when used with respect to any Note to be redeemed,
means the price at which it is to be redeemed pursuant to this Indenture.
"Registration Rights Agreement" means the Registration Rights Agreement,
dated as of June 13, 1997, by and among the Company, Precise TMP, Massie,
Precise Polestar, Precise Delaware, Precise Illinois and the Initial Purchasers,
as such agreement may be amended, modified or supplemented from time to time.
"Regular Record Date" for the interest payable on any Interest Payment
Date means the June 1 or December 1 (whether or not a Business Day), as the case
may be, next preceding such Interest Payment Date.
"Regulation S" means Regulation S promulgated under the Securities Act.
"Regulation S Global Note" means a Regulation S Temporary Global Note or
Regulation S Permanent Global Note, as appropriate.
"Regulation S Permanent Global Note" means a permanent global Note
substantially in the form of Exhibit A-1 hereto bearing the Global Note Legend
and the Private Placement Legend and deposited with or on behalf of and
registered in the name of the Depository or its nominee, issued in a
denomination equal to the outstanding principal amount of the Regulation S
Temporary Global Note upon expiration of the Restricted Period.
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"Regulation S Temporary Global Note" means a temporary global Note
substantially in the form of Exhibit A-2 hereto bearing the Private Placement
Legend and deposited with or on behalf of and registered in the name of the
Depository or its nominee, issued in a denomination equal to the outstanding
principal amount of the Notes initially sold in reliance on Rule 903 of
Regulation S.
"Related Parties" with respect to any Principal means (A) any spouse or
immediate family member of such Principal and any child or spouse of any spouse
or immediate family member of such Principal, (B) a trust, corporation,
partnership or other entity, the beneficiaries, stockholders, partners, owners
or Persons beneficially holding, directly or indirectly, a controlling interest
of which consist of any of such Principal and/or such other Persons referred to
in the immediately preceding clause (A) or (C) the trustees of any trust
referred to in clause (B).
"Repurchase Offer" means an offer made by the Company to purchase all or
any portion of a Holder's Notes pursuant to the provisions described under
Sections 4.09 or 4.10.
"Responsible Officer," when used with respect to the Trustee, means any
officer in the Corporate Trust Office of the Trustee with direct responsibility
for the administration of this Indenture and also means, with respect to a
particular corporate trust matter, any other officer to whom such matter is
referred because of his knowledge of and familiarity with the particular
subject.
"Restricted Broker-Dealer" has the meaning set forth in the Registration
Rights Agreement.
"Restricted Definitive Notes" means Notes that are substantially in the
form of the Notes attached hereto as Exhibit A-1, that do not include the
information called for by footnotes 1 and 2 thereof.
"Restricted Global Notes" means the Regulation S Global Notes and the Rule
144A Global Notes.
"Restricted Investment" means an Investment other than a Permitted
Investment.
"Restricted Period" means the 40-day restricted period as defined in
Regulation S.
"Restricted Subsidiary" of a Person means any Subsidiary of the referent
Person that is not an Unrestricted Subsidiary.
"Rule 144A" means Rule 144A promulgated under the Securities Act.
"Rule 144A Global Note" means a permanent global note that contains the
paragraph referred to in footnote 1 and the additional schedule referred to in
footnote 2 to the form of the Note attached hereto as Exhibit A-1, and that is
deposited with the Note Custodian and registered in the name of the Depository,
representing Notes sold to Accredited Investors or in reliance on Rule 144A, as
applicable.
"Rule 903" means Rule 903 promulgated under the Securities Act.
"Rule 904" means Rule 904 promulgated under the Securities Act.
"S&P" means Standard and Poor's Ratings Services, or its successors.
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"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the SEC promulgated thereunder.
"Senior Debt" of any Person means (i) all Indebtedness of such Person
under the Credit Agreement, including, without limitation, obligations to pay
principal and interest (including any interest accruing subsequent to the filing
of a petition of bankruptcy at the rate provided for in the documentation with
respect thereto, whether or not such interest is an allowed claim under
applicable law), reimbursement obligations under letters of credit, fees,
expenses and indemnities, and all Hedging Obligations with respect thereto,
whether outstanding on the date of this Indenture or hereafter incurred, (ii)
the principal of, premium, if any, and interest (including any interest accruing
subsequent to the filing of a petition of bankruptcy at the rate provided for in
the documentation with respect thereto, whether or not such interest is an
allowed claim under applicable law) on, and all other Obligations with respect
to, any other Indebtedness of such Person permitted to be incurred by such
Person under the terms of this Indenture, whether outstanding on the date of
this Indenture or hereafter incurred, unless the instrument under which such
Indebtedness is incurred expressly provides that it is on a parity with or
subordinated in right of payment to the Notes and (iii) all Obligations of such
Person with respect to the foregoing. Notwithstanding anything to the contrary
in the foregoing, Senior Debt shall not include (w) any liability for federal,
state, local or other taxes owed or owing by such Person, (x) any Indebtedness
of such Person to any of its Subsidiaries or other Affiliates, (y) any trade
payables or (z) any Indebtedness that is incurred in violation of this
Indenture.
"Shareholders Agreement" means the shareholders agreement, dated as of
March 29, 1996, as amended, among Parent, Sunderland, Hamilton Holdings Ltd.
Corporation, Delaware State Employees' Retirement Fund, Declaration of Trust for
Defined Benefit Plans of Zeneca Holdings Inc., Declaration of Trust for Defined
Benefit Plans of ICI American Holdings Inc., Rice Partners II, L.P. and John
Hancock Mutual Life Insurance Company, with respect to certain securities of
Parent.
"Shelf Registration Statement" has the meaning set forth in the
Registration Rights Agreement.
"Significant Subsidiary" means any Subsidiary which would be a
"significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Securities Act, as such Regulation is in effect on
the Issuance Date.
"Special Record Date" means a date fixed by the Trustee for the payment of
any Defaulted Interest pursuant to Section 2.12.
"Stated Maturity" means, with respect to any installment of interest or
principal on any series of Indebtedness, the date on which such payment of
interest or principal was scheduled to be paid in the original documentation
governing such Indebtedness, and shall not include any contingent obligations to
repay, redeem or repurchase any such interest or principal prior to the date
originally scheduled for the payment thereof.
"Subordinated Note Obligations" means any principal of, premium, if any,
and interest and Liquidated Damages, if any, on the Notes payable pursuant to
the terms of the Notes or upon acceleration, redemption, repurchase or other
acquisition thereof, together with and including any amounts received
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upon the exercise of rights of rescission or other rights of action (including
claims for damages) or otherwise, to the extent relating to the purchase price
of the Notes or amounts corresponding to such principal, premium, if any, or
interest and Liquidated Damages, if any, on the Notes.
"Subsidiary" means, with respect to any Person, (i) any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of Capital Stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by such
Person or one or more of the other Subsidiaries of that Person (or a combination
thereof) and (ii) any partnership (a) the sole general partner or the managing
general partner of which is such Person or a Subsidiary of such Person or (b)
the only general partners of which are such Person or of one or more
Subsidiaries of such Person (or any combination thereof).
"Subsidiary Guarantee" means any guarantee of the obligations of the
Company pursuant to Section 12 of this Indenture and the Notes by any Person in
accordance with the provisions of this Indenture.
"Sunderland" means Sunderland Industrial Holdings Corporation, a Delaware
corporation, or its successors.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. ss.ss.
77aaa-77bbbb) as in effect on the date on which this Indenture is qualified
under the TIA; provided, however, that in the event the Trust Indenture Act of
1939 is amended after such date, then "TIA" means, to the extent required by
such amendment, the Trust Indenture Act of 1939 as so amended.
"Treasury Rate" means the yield to maturity at the time of the computation
of United States Treasury securities with a constant maturity (as compiled by
and published in the most recent Federal Reserve Statistical Release H.15(519)),
which has become publicly available at least two Business Days prior to the date
fixed for prepayment (or, if such Statistical Release is no longer published,
any publicly available source of similar market data) most nearly equal to the
then remaining average life to the first date on which the Notes are subject to
optional redemption by the Company; provided, however, that if the average life
of such Note is not equal to the constant maturity of the United States Treasury
security for which weekly average yield is given, the Treasury Rate shall be
obtained by linear interpolation (calculated to the nearest one-twelfth of a
year) from the weekly average yields of United States Treasury securities for
which such yields are given, except that if the average life of the Notes is
less than one year, the weekly average yield on actually traded United States
Treasury securities adjusted to a constant maturity of one year shall be used.
"Trustee" means the party named as such above unless and until a successor
replaces it in accordance with the applicable provisions of this Indenture and
thereafter means such successor.
"Unrestricted Definitive Note" means Notes that are substantially in the
form of the Notes attached hereto as Exhibit A-3 that do not include the
information called for by footnotes 1 and 2 thereof.
"Unrestricted Global Note" means a permanent global Note that contains the
paragraph referred to in footnote 1 and the additional schedule referred to in
footnote 2 to the form of the Note attached hereto as Exhibit A-3, and that is
deposited with the Note Custodian and registered in the name of the Depository.
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"Unrestricted Notes" means the Unrestricted Global Notes and the
Unrestricted Definitive Notes.
"Unrestricted Subsidiary" means (i) any Subsidiary that is designated by
the Board of Directors as an Unrestricted Subsidiary pursuant to a Board
Resolution; but only to the extent that such Subsidiary: (a) has no Indebtedness
other than Non-Recourse Debt; (b) is not party to any agreement, contract,
arrangement or understanding with the Company or any Restricted Subsidiary of
the Company unless the terms of any such agreement, contract, arrangement or
understanding are no less favorable to the Company or such Restricted Subsidiary
than those that might be obtained at the time from Persons who are not
Affiliates of the Company; (c) is a Person with respect to which neither the
Company nor any of its Restricted Subsidiaries has any direct or indirect
obligation (x) to subscribe for additional Equity Interests or (y) to maintain
or preserve such Person's financial condition or to cause such Person to achieve
any specified levels of operating results; and (d) has not guaranteed or
otherwise directly or indirectly provided credit support for any Indebtedness of
the Company or any of its Restricted Subsidiaries. Any such designation by the
Board of Directors shall be evidenced to the Trustee by filing with the Trustee
a certified copy of the Board Resolution giving effect to such designation and
an Officers' Certificate certifying that such designation complied with the
foregoing conditions and was permitted by Section 4.11. If, at any time, any
Unrestricted Subsidiary would fail to meet the foregoing requirements as an
Unrestricted Subsidiary, it shall thereafter cease to be an Unrestricted
Subsidiary for purposes of this Indenture and any Indebtedness of such
Subsidiary shall be deemed to be incurred by a Restricted Subsidiary of the
Company as of such date (and, if such Indebtedness is not permitted to be
incurred as of such date under Section 4.12, the Company shall be in default of
such covenant). The Board of Directors of the Company may at any time designate
any Unrestricted Subsidiary to be a Restricted Subsidiary; provided that such
designation shall be deemed to be an incurrence of Indebtedness by a Restricted
Subsidiary of the Company of any outstanding Indebtedness of such Unrestricted
Subsidiary and such designation shall only be permitted if (i) such Indebtedness
is permitted under Section 4.12, calculated on a pro forma basis as if such
designation had occurred at the beginning of the four-quarter reference period,
and (ii) no Default or Event of Default would be in existence following such
designation.
"Voting Stock" of any Person as of any date means the Capital Stock of
such Person that is at the time entitled to vote in the election of the Board of
Directors of such Person.
"Warrant Agreement" means the warrant agreement, dated as of March 29,
1996, as amended, among Parent, Rice Partners II, L.P., John Hancock Mutual Life
Insurance Company, Delaware State Employees' Retirement Fund, Declaration of
Trust for Defined Benefit Plans of Zeneca Holdings Inc. and Declaration of Trust
for Defined Benefit Plans of ICI American Holdings Inc., with respect to certain
warrants of Parent.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (i) the sum
of the products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (b) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment, by (ii) the then outstanding principal
amount of such Indebtedness.
"Wholly Owned Subsidiary" of any Person means a Subsidiary of such Person
100% of the outstanding Capital Stock or other ownership interests of which
(other than directors' qualifying shares)
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shall at the time be owned by such Person or by one or more Wholly Owned
Subsidiaries of such Person and one or more Wholly Owned Subsidiaries of such
Person.
SECTION 1.02 OTHER DEFINITIONS.
Term Defined in
Section
"Act"................................................ 1.07
"Affiliate Transaction".............................. 4.13
"Asset Sale Offer"................................... 3.10
"Cedel Bank"......................................... 2.01
"Change of Control Offer"............................. 4.09
"Change of Control Payment"........................... 4.09
"Change of Control Payment Date"...................... 4.09
"Covenant Defeasance"................................ 8.03
"Defaulted Interest".................................. 2.12
"DTC"................................................ 2.03
"Euroclear".......................................... 2.01
"Event of Default"................................... 6.01
"Excess Proceeds"..................................... 4.10
"Incur"............................................... 4.12
"Legal Defeasance".................................... 8.02
"Offer Amount"........................................ 3.10
"Offer Period"........................................ 3.10
"Paying Agent"........................................ 2.03
"Payment Blockage Notice"............................. 10.03
"Payment Default".................................... 6.01
"Permitted Debt"...................................... 4.12
"Purchase Date"....................................... 3.10
"QIB"................................................ 2.01
"Registrar".......................................... 2.03
"Restricted Payments"................................ 4.11
"Rule 144 A Global Notes"............................ 2.01
"Successor Company".................................. 5.01
SECTION 1.03 INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT.
Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following
meanings:
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"indenture securities" means the Notes and the Subsidiary Guarantees;
"indenture security Holder" means a Holder of a Note;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee;
"obligor" on the Notes means the Company, each Guarantor and any
successor obligors upon the Notes.
All other terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule under the TIA
have the meanings so assigned to them.
SECTION 1.04. RULES OF CONSTRUCTION.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning assigned
to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and in the plural
include the singular;
(5) provisions apply to successive events and transactions; and
(6) references to sections of or rules under the Securities Act shall
be deemed to include substitute, replacement or successor
sections or rules adopted by the SEC from time to time.
SECTION 1.05. COMPLIANCE CERTIFICATES AND OPINIONS.
Upon any application or request by the Company to the Trustee to take any
action under any provision of this Indenture, the Company shall furnish to the
Trustee an Officers' Certificate stating that all conditions precedent, if any,
provided for in this Indenture (including any covenant compliance with which
constitutes a condition precedent) relating to the proposed action have been
complied with and an Opinion of Counsel stating that in the opinion of such
counsel all such conditions precedent, if any, have been complied with, except
that, in the case of any such application or request as to which the furnishing
of such documents is specifically required by any provision of this Indenture
relating to such particular application or request, no additional certificate or
opinion need be furnished.
Every certificate or opinion (other than the certificates required by
Section 4.05(a)) with respect to compliance with a condition or covenant
provided for in this Indenture shall comply with the provisions of TIA 314(e)
and shall include:
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(a) a statement that each individual signing such certificate or opinion has
read such covenant or condition and the definitions herein relating thereto;
(a) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(b) a statement that, in the opinion of each such individual, he or she
has made such examination or investigation as is necessary to enable him or her
to express an informed opinion as to whether or not such covenant or condition
has been complied with; and
(c) a statement as to whether, in the opinion of each such individual,
such condition or covenant has been complied with.
SECTION 1.06 FORM OF DOCUMENTS DELIVERED TO TRUSTEE.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representation
with respect to the matters upon which his certificate or opinion is based are
erroneous. Any such certificate or Opinion of Counsel may be based, insofar as
it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Company stating that the
information with respect to such factual matters is in the possession of the
Company, unless such counsel knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with respect to such
matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
SECTION 1.07.
ACTS OF HOLDERS.
(a) Any request, demand, authorization, direction, notice, consent, waiver
or other action provided by this Indenture to be given or taken by Holders may
be embodied in and evidenced by one or more instruments of substantially similar
tenor signed by such Holders in person or by agent duly appointed in writing;
and, except as herein otherwise expressly provided, such action shall become
effective when such instrument or instruments are delivered to the Trustee and,
where it is hereby expressly required, to the Company. Such instrument or
instruments (and the action embodied therein and evidenced thereby) are herein
sometimes referred to as the "Act" of the Holders signing such instrument or
instruments. Proof of execution of any such instrument or of a writing
appointing any such agent shall be sufficient for any
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purpose of this Indenture and (subject to TIA Section 315) conclusive in favor
of the Trustee and the Company, if made in the manner provided in this Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved in any reasonable manner that the Trustee
deems sufficient.
(c) The ownership of Notes shall be proved by a register kept by the
Registrar.
(d) If the Company shall solicit from the Holders any request, demand,
authorization, direction, notice, consent, waiver or other Act, the Company may,
at its option, by or pursuant to a Board Resolution, fix in advance a record
date for the determination of such Holders entitled to give such request,
demand, authorization, direction, notice, consent, waiver or other Act or to
revoke any consent previously given, but the Company shall have no obligation to
do so. Notwithstanding TIA Section 316(c), any such record date shall be the
record date specified in or pursuant to such Board Resolution, which shall be a
date not more than 30 days prior to the first solicitation of Holders generally
in connection therewith and no later than the date such solicitation is
completed.
If such a record date is fixed, such request, demand, authorization,
direction, notice, consent, waiver or other Act or revocation of any consent
previously given may be given before or after such record date, but only the
Holders of record at the close of business on such record date shall be deemed
to be Holders for the purposes of determining whether Holders of the requisite
proportion of Notes then outstanding have authorized or agreed or consented to
such request, demand, authorization, direction, notice, consent, waiver or other
Act, and for this purpose the Notes then outstanding shall be computed as of
such record date; provided that no such request, demand, authorization,
direction, notice, consent, waiver or other Act by the Holders on such recorded
date shall be deemed effective unless it shall become effective pursuant to the
provisions of this Indenture not later than six months after the record date.
(d) Any request, demand, authorization, direction, notice, consent, waiver
or other Act by the Holder of any Note shall bind every future Holder of the
same Note or the Holder of every Note issued upon the registration of transfer
thereof or in exchange therefor or in lieu thereof, in respect of anything done,
suffered or omitted to be done by the Trustee, any Paying Agent or the Company
in reliance thereon, whether or not notation of such action is made upon such
Note.
ARTICLE 2
THE NOTES
SECTION 2.01. FORM AND DATING.
The Notes and the Trustee's certificate of authentication shall be
substantially in the form of Exhibits A-1, A-2 and A-3 attached hereto. The
Subsidiary Guarantees shall be substantially in the form of Exhibit E, the terms
of which are incorporated in and made part of this Indenture. The Notes may have
notations, legends or endorsements required by law, stock exchange rule or
usage, as designated by the Company or its counsel. Each Note shall be dated the
date of its authentication. The Notes shall be in denominations of $1,000 and
integral multiples thereof (subject to a minimum initial purchase requirement of
$100,000 for Notes sold on original issuance by the Company to Accredited
Investors other than in reliance on Rule 144A or Regulation S).
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The Notes offered and sold in reliance on Rule 144A shall be issued
initially in the form of a Rule 144A Global Note. Notes offered and sold to
Accredited Investors in transactions exempt from registration under the
Securities Act not made in reliance on Rule 144A or Regulation S shall be issued
initially in the form of a separate Rule 144A Global Note. Notes offered and
sold in reliance on Regulation S shall be issued initially in the form of the
Regulation S Temporary Global Note, which shall be deposited on behalf of the
purchasers of the Notes represented thereby with the Note Custodian, at its New
York office, as custodian for the Depository, and registered in the name of the
Depository or the nominee of the Depository for the accounts of designated
agents holding on behalf of Euroclear or Cedel Bank, duly executed by the
Company and authenticated by the Trustee as hereinafter provided. The Restricted
Period shall be terminated upon the receipt by the Trustee of (i) a written
certificate from the Depository or the Note Custodian, together with copies of
certificates from Euroclear and Cedel Bank certifying that they have received
certification of non-United States beneficial ownership of 100% of the aggregate
principal amount of the Regulation S Temporary Global Note, and (ii) an
Officers' Certificate from the Company to the effect set forth in Section
13.04(a) hereof. Following the termination of the Restricted Period, beneficial
interests in the Regulation S Temporary Global Note shall be exchanged for
beneficial interests in Regulation S Permanent Global Notes pursuant to the
Applicable Procedures. Simultaneously with the authentication of Regulation S
Permanent Global Notes, the Trustee shall cancel the Regulation S Temporary
Global Note.
Notes issued in global form shall be substantially in the form of Exhibits
A-1, A-2 or A-3 attached hereto (including the Global Note Legend and the
"Schedule of Exchanges in the Global Note" attached thereto). Notes issued in
definitive form shall be substantially in the form of Exhibit A-1 or A-3
attached hereto (but without the Global Note Legend and without the "Schedule of
Exchanges of Interests in the Global Note" attached thereto). Each Global Note
shall represent such of the outstanding Notes as shall be specified therein and
each shall provide that it shall represent the aggregate principal amount of
outstanding Notes from time to time endorsed thereon and that the aggregate
principal amount of outstanding Notes represented thereby may from time to time
be reduced or increased, as appropriate, to reflect exchanges and redemptions.
Any endorsement of a Global Note to reflect the amount of any increase or
decrease in the aggregate principal amount of outstanding Notes represented
thereby shall be made by the Trustee or the Note Custodian, at the direction of
the Trustee, in accordance with instructions given by the Holder thereof as
required by Section 2.06 hereof.
The provisions of the "Operating Procedures of the Euroclear System" and
"Terms and Conditions Governing Use of Euroclear" and the "General Terms and
Conditions of Cedel Bank" and "Customer Handbook" of Cedel Bank shall be
applicable to transfers of beneficial interests in the Regulation S Temporary
Global Note and the Regulation S Permanent Global Notes that are held by the
Agent Members through Euroclear or Cedel Bank.
SECTION 2.02. EXECUTION AND AUTHENTICATION.
Two Officers shall sign the Notes for the Company by manual or facsimile
signature.
If an Officer whose signature is on a Note no longer holds that office at
the time a Note is authenticated, the Note shall nevertheless be valid.
A Note shall not be valid until authenticated by the manual signature of
the Trustee. The signature shall be conclusive evidence that the Note has been
authenticated under this Indenture.
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The Trustee shall, upon a written order of the Company signed by two
Officers, authenticate Notes for original issue in the aggregate principal
amount of up to $200,000,000 in one or more series. The aggregate principal
amount of Notes outstanding at any time may not exceed $200,000,000 except as
provided in Section 2.07 hereof.
The Trustee may appoint an authenticating agent acceptable to the Company
to authenticate Notes. An authenticating agent may authenticate Notes whenever
the Trustee may do so. Each reference in this Indenture to authentication by the
Trustee includes authentication by such agent. An authenticating agent has the
same rights as an Agent to deal with Holders or an Affiliate of the Company.
SECTION 2.03. REGISTRAR AND PAYING AGENT.
The Company shall maintain an office or agency where Notes may be
presented for registration of transfer or for exchange ("Registrar") and an
office or agency where Notes may be presented for payment ("Paying Agent"). The
Registrar shall keep a register of the Notes and of their transfer and exchange.
The Company may appoint one or more co-registrars and one or more additional
paying agents. The term "Registrar" includes any co-registrar and the term
"Paying Agent" includes any additional paying agent. The Company may change any
Paying Agent or Registrar without notice to any Holder. The Company shall notify
the Trustee in writing of the name and address of any Agent not a party to this
Indenture. If the Company fails to appoint or maintain another entity as
Registrar or Paying Agent, the Trustee shall act as such. The Company or any of
its Subsidiaries may act as Paying Agent or Registrar.
The Company initially appoints The Depository Trust Company ("DTC") to act
as Depository with respect to the Global Notes.
The Company initially appoints the Trustee to act as the Registrar and
Paying Agent and to act as Note Custodian with respect to the Global Notes.
SECTION 2.04. PAYING AGENT TO HOLD MONEY IN TRUST.
The Company shall require each Paying Agent other than the Trustee to
agree in writing that the Paying Agent will hold in trust for the benefit of
Holders or the Trustee all money held by the Paying Agent for the payment of
principal, premium, if any, or interest on the Notes, and will notify the
Trustee of any default by the Company or any Guarantor in making any such
payment. While any such default continues, the Trustee may require a Paying
Agent to pay all money held by it to the Trustee. The Company at any time may
require a Paying Agent to pay all money held by it to the Trustee. Upon payment
over to the Trustee, the Paying Agent (if other than the Company or a
Subsidiary) shall have no further liability for the money. If the Company or a
Subsidiary acts as Paying Agent, it shall segregate and hold in a separate trust
fund for the benefit of the Holders all money held by it as Paying Agent. Upon
any bankruptcy or reorganization proceedings relating to the Company or any
Guarantor, the Trustee shall serve as Paying Agent for the Notes.
SECTION 2.05. HOLDER LISTS.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
all Holders and shall otherwise comply with TIA ss. 312(a). If the Trustee is
not the Registrar, the Company and/or the Guarantors shall furnish to the
Trustee at least
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seven Business Days before each interest payment date and at such other times as
the Trustee may request in writing, a list in such form and as of such date as
the Trustee may reasonably require of the names and addresses of the Holders of
Notes and the Company and/or the Guarantors shall otherwise comply with TIA ss.
312(a).
SECTION 2.06. TRANSFER AND EXCHANGE.
(a) Transfer and Exchange of Global Notes. A Global Note may not be
transferred as a whole except by the Depository to a nominee of the Depository,
by a nominee of the Depository to the Depository or to another nominee of the
Depository, or by the Depository or any such nominee to a successor Depository
or a nominee of such successor Depository. All Global Notes will be exchanged by
the Company for Definitive Notes if (i) the Company delivers to the Trustee
notice from the Depository that it is unwilling or unable to continue to act as
Depository or that it is no longer a clearing agency registered under the
Exchange Act and, in either case, a successor Depository is not appointed by the
Company within 120 days after the date of such notice from the Depository or
(ii) the Company in its sole discretion determines that the Global Notes (in
whole but not in part) should be exchanged for Definitive Notes and delivers a
written notice to such effect to the Trustee; provided that in no event shall
the Regulation S Temporary Global Note be exchanged by the Company for
Definitive Notes prior to (x) the expiration of the Restricted Period and (y)
the receipt by the Registrar of any certificates certified in an Officers'
Certificate to be required pursuant to Rule 903 under the Securities Act. Upon
the occurrence of either of the preceding events in (i) or (ii) above,
Definitive Notes shall be issued in such names as the Depository shall instruct
the Trustee. Global Notes also may be exchanged or replaced, in whole or in
part, as provided in Sections 2.07 and 2.10 hereof. Every Note authenticated and
delivered in exchange for, or in lieu of, a Global Note or any portion thereof,
pursuant to Section 2.07 or 2.10 hereof, shall be authenticated and delivered in
the form of, and shall be, a Global Note. A Global Note may not be exchanged for
another Note other than as provided in this Section 2.06(a); however, beneficial
interests in a Global Note may be transferred and exchanged as provided in
Section 2.06(b), (c) or (f) hereof.
(b) Transfer and Exchange of Beneficial Interests in Global Notes. The
transfer and exchange of beneficial interests in the Global Notes shall be
effected through the Depository, in accordance with the provisions of this
Indenture and the Applicable Procedures. Beneficial interests in the Restricted
Global Notes shall be subject to restrictions on transfer described in the
Private Placement Legend to the extent required by the Securities Act. Transfers
of beneficial interests in the Global Notes also shall require compliance with
either subparagraph (i) or (ii) below, as applicable, as well as one or more of
the other following subparagraphs as applicable:
(i) Transfer of Beneficial Interests in the Same Global Note.
Beneficial interests in any Restricted Global Note may be transferred to
Persons who take delivery thereof in the form of a beneficial interest in
the same Restricted Global Note in accordance with the transfer
restrictions set forth in the Private Placement Legend; provided, however,
that prior to the expiration of the Restricted Period transfers of
beneficial interests in the Temporary Regulation S Global Note may not be
made to a U.S. Person or for the account or benefit of a U.S. Person (other
than an Initial Purchaser). Beneficial interests in any Unrestricted Global
Note may be transferred only to Persons who take delivery thereof in the
form of a beneficial interest in an Unrestricted Global Note. No written
orders or instructions shall be required to be delivered to the Registrar
to effect the transfers described in this Section 2.06(b)(i).
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(ii) All Other Transfers and Exchanges of Beneficial Interests in
Global Notes. In connection with all transfers and exchanges of beneficial
interests in a Global Note (other than a transfer of a beneficial interest
in a Global Note to a Person who takes delivery thereof in the form of a
beneficial interest in the same Global Note), the transferor of such
beneficial interest must deliver to the Registrar either (A) (1) a written
order from an Agent Member to the Depository in accordance with the
Applicable Procedures directing the Depository to credit or cause to be
credited a beneficial interest in another Global Note in an amount equal to
the beneficial interest to be transferred or exchanged and (2) instructions
given in accordance with the Applicable Procedures containing information
regarding the Agent Member account to be credited with such increase or (B)
(1) a written order from an Agent Member given to the Depository in
accordance with the Applicable Procedures directing the Depository to cause
to be issued a Definitive Note in an amount equal to the beneficial
interest to be transferred or exchanged and (2) instructions given by the
Depository to the Registrar containing information regarding the Person in
whose name such Definitive Note shall be registered to effect the
registration of transfer or exchange referred to in (1) above; provided
that in no event shall Definitive Notes be issued upon the registration of
transfer or exchange of beneficial interests in the Regulation S Temporary
Global Note prior to (x) the expiration of the Restricted Period and (y)
the receipt by the Registrar of any certificates certified in an Officers'
Certificate to be required pursuant to Rule 903 under the Securities Act.
Upon an Exchange Offer by the Company in accordance with Section 2.06(f)
hereof, the requirements of this Section 2.06(b)(ii) shall be deemed to
have been satisfied upon receipt by the Registrar of the instructions
contained in the Letter of Transmittal delivered by the Holder of such
beneficial interests in the Restricted Global Notes. Upon satisfaction of
all of the requirements for registration of transfer or exchange of
beneficial interests in Global Notes contained in this Indenture, the Notes
and otherwise applicable under the Securities Act, the Trustee shall adjust
the principal amount of the relevant Global Note(s) pursuant to Section
2.06(h) hereof.
(iii) Transfer of Beneficial Interests to Another Restricted Global
Note. A beneficial interest in any Restricted Global Note may be
transferred to a Person who takes delivery thereof in the form of a
beneficial interest in another Restricted Global Note if the transfer
complies with the requirements of clause (ii) above and the Registrar
receives the following:
(A) if the transferee will take delivery in the form of a
beneficial interest in the 144A Global Note, then the transferor must
deliver a certificate in the form of Exhibit B hereto, including the
certifications in item (1) thereof; and
(B) if the transferee will take delivery in the form of a
beneficial interest in the Regulation S Temporary Global Note or the
Regulation S Global Note, then the transferor must deliver a
certificate in the form of Exhibit B hereto, including the
certifications in item (2) thereof.
(iv) Transfer and Exchange of Beneficial Interests in a Restricted
Global Note for Beneficial Interests in the Unrestricted Global Note. A
beneficial interest in any Restricted Global Note may be exchanged by any
holder thereof for a beneficial interest in an Unrestricted Global Note or
transferred to a Person who takes delivery thereof in the form of a
beneficial interest in an Unrestricted Global Note if the exchange or
transfer complies with the requirements of clause (ii) above and:
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(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights Agreement
and the holder of the beneficial interest to be transferred, in the
case of an exchange, or the transferee, in the case of a transfer,
certifies in the applicable Letter of Transmittal that it is not (1) a
Broker-Dealer, (2) a Person participating in the distribution of the
Notes issues in the Exchange Offer or (3) a Person who is an affiliate
(as defined in Rule 144) of the Company;
(B) any such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration Rights
Agreement;
(C) any such transfer is effected by a Restricted Broker-Dealer
pursuant to the Exchange Offer Registration Statement in accordance
with the Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the holder of such beneficial interest in a
Restricted Global Note proposes to exchange such beneficial
interest for a beneficial interest in an Unrestricted Global
Note, a certificate from such holder in the form of Exhibit C
hereto, including the certifications in item (1)(a) thereof;
(2) if the holder of such beneficial interest in a
Restricted Global Note proposes to transfer such beneficial
interest to a Person who shall take delivery thereof in the form
of a beneficial interest in an Unrestricted Global Note, a
certificate from such holder in the form of Exhibit B hereto,
including the certifications in item (4) thereof; and
(3) in each such case set forth in this subparagraph (D), an
Opinion of Counsel in form reasonably acceptable to the Registrar
to the effect that such exchange or transfer is in compliance
with the Securities Act and that the restrictions on transfer
contained herein and in the Private Placement Legend are not
required in order to maintain compliance with the Securities Act.
If any such transfer is effected pursuant to subparagraph (B) or (D)
above at a time when an Unrestricted Global Note has not yet been issued,
the Company shall issue and, upon receipt of an authentication order in
accordance with Section 2.02 hereof, the Trustee shall authenticate one or
more Unrestricted Global Notes in an aggregate principal amount equal to
the principal amount of beneficial interests transferred pursuant to
subparagraph (B) or (D) above.
(v) Transfer and Exchange of Beneficial Interests in the Unrestricted
Global Note for Beneficial Interests in a Restricted Global Note.
Beneficial interests in an Unrestricted Global Note cannot be exchanged
for, or transferred to, Persons who take delivery thereof in the form of a
beneficial interest in a Restricted Global Note.
(c) Transfer or Exchange of Beneficial Interests in Global Notes for
Definitive Notes.
(i) If any holder of a beneficial interest in a Restricted Global
Note proposes to exchange such beneficial interest for a Restricted
Definitive Note or to transfer such beneficial
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interest to a Person who takes delivery thereof in the form of a
Restricted Definitive Note, then, upon receipt by the Registrar of the
following documentation:
(A) if the holder of such beneficial interest proposes to
exchange such beneficial interest for a Restricted Definitive
Note, a certificate from such holder in the form of Exhibit C
hereto, including the certifications in item (2)(a) thereof;
(B) if such beneficial interest is being transferred to a
QIB in accordance with Rule 144A under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto,
including the certifications in item (1) thereof;
(C) if such beneficial interest is being transferred to a
Non-U.S. Person (as defined in Regulation S of the Securities
Act) in an offshore transaction in accordance with Rule 903 or
Rule 904 under the Securities Act, a certificate to the effect
set forth in Exhibit B hereto, including the certifications in
item (2) thereof;
(D) if such beneficial interest is being transferred
pursuant to an exemption from the registration requirements of
the Securities Act in accordance with Rule 144 under the
Securities Act, a certificate to the effect set forth in Exhibit
B hereto, including the certifications in item (3)(a) thereof;
(E) if such beneficial interest is being transferred to an
Accredited Investor in reliance on an exemption from the
registration requirements of the Securities Act other than those
listed in subparagraphs (B) through (D) above, a certificate to
the effect set forth in Exhibit B hereto, including the
certifications, certificates and Opinion of Counsel required by
item (3)(d) thereof, if applicable;
(F) if such beneficial interest is being transferred to the
Company or any of its Subsidiaries, a certificate to the effect
set forth in Exhibit B hereto, including the certifications in
item (3)(b) thereof; or
(G) if such beneficial interest is being transferred
pursuant to an effective registration statement under the
Securities Act, a certificate to the effect set forth in Exhibit
B hereto, including the certifications in item (3)(c) thereof,
the Trustee shall cause the aggregate principal amount of the
applicable Restricted Global Note to be reduced accordingly pursuant
to Section 2.06(h) hereof, and the Company shall execute and the
Trustee shall authenticate and deliver to the Person designated in the
instructions a Restricted Definitive Note in the appropriate principal
amount. Any Restricted Definitive Note issued in exchange for a
beneficial interest in a Restricted Global Note pursuant to this
Section 2.06(c) shall be registered in such name or names and in such
authorized denomination or denominations as the holder of such
beneficial interest shall instruct the Registrar through instructions
from the Depository and the Agent Member. The Trustee shall deliver
such Restricted Definitive Notes to the Persons in whose names such
Notes are so registered. Any Restricted Definitive Note issued in
exchange for a beneficial interest in a Restricted Global Note
pursuant to this Section 2.06(c)(i) shall bear the Private Placement
Legend and shall be subject to all restrictions on transfer contained
therein.
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(ii) Notwithstanding Sections 2.06(c)(i)(A) and (C) hereof, a
beneficial interest in the Regulation S Temporary Global Note may not be
(A) exchanged for a Definitive Note prior to (x) the expiration of the
Restricted Period and (y) the receipt by the Registrar of any certificates
required pursuant to Rule 903(c)(3)(B) under the Securities Act or (B)
transferred to a Person who takes delivery thereof in the form of a
Definiti
ve Note prior to the conditions set forth in clause (A) above or
unless the transfer is pursuant to an exemption from the registration
requirements of the Securities Act other than Rule 903 or Rule 904.
(iii) Notwithstanding 2.06(c)(i) hereof, a holder of a beneficial
interest in a Restricted Global Note may exchange such beneficial interest
for an Unrestricted Definitive Note or may transfer such beneficial
interest to a Person who takes delivery thereof in the form of an
Unrestricted Definitive Note if:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights Agreement
and the holder of such beneficial interest, in the case of an
exchange, or the transferee, in the case of a transfer, certifies in
the applicable Letter of Transmittal that it is not (1) a
Broker-Dealer, (2) a Person participating in the distribution of the
Notes issued in the Exchange Offer or (3) a Person who is an affiliate
(as defined in Rule 144) of the Company;
(B) any such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration Rights
Agreement;
(C) any such transfer is effected by a Restricted Broker-Dealer
pursuant to the Exchange Offer Registration Statement in accordance
with the Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the holder of such beneficial interest in a
Restricted Global Note proposes to exchange such beneficial
interest for an Unrestricted Definitive Note, a certificate from
such holder in the form of Exhibit C hereto, including the
certifications in item (1)(b) thereof;
(2) if the holder of such beneficial interest in a
Restricted Global Note proposes to transfer such beneficial
interest to a Person who shall take delivery thereof in the form
of an Unrestricted Definitive Note, a certificate from such
holder in the form of Exhibit B hereto, including the
certifications in item (4) thereof; and
(3) in each such case set forth in this subparagraph (D), an
Opinion of Counsel in form reasonably acceptable to the Company,
to the effect that such exchange or transfer is in compliance
with the Securities Act and that the restrictions on transfer
contained herein and in the Private Placement Legend are not
required in order to maintain compliance with the Securities Act.
(iv) If any holder of a beneficial interest in an Unrestricted Global
Note proposes to exchange such beneficial interest for an Unrestricted
Definitive Note or to transfer such beneficial
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interest to a Person who takes delivery thereof in the form of an
Unrestricted Definitive Note, then, upon satisfaction of the conditions set
forth in Section 2.06(b)(ii) hereof, the Trustee shall cause the aggregate
principal amount of the applicable Unrestricted Global Note to be reduced
accordingly pursuant to Section 2.06(h) hereof, and the Company shall
execute and the Trustee shall authenticate and deliver to the Person
designated in the instructions an Unrestricted Definitive Note in the
appropriate principal amount. Any Unrestricted Definitive Note issued in
exchange for a beneficial interest pursuant to this Section 2.06(c)(iv)
shall be registered in such name or names and in such authorized
denomination or denominations as the holder of such beneficial interest
shall instruct the Registrar through instructions from the Depository and
the Agent Member. The Trustee shall deliver such Unrestricted Definitive
Notes to the Persons in whose names such Notes are so registered. Any
Unrestricted Definitive Note issued in exchange for a beneficial interest
pursuant to this Section 2.06(c)(iv) shall not bear the Private Placement
Legend. A beneficial interest in an Unrestricted Global Note cannot be
exchanged for a Restricted Definitive Note or transferred to a Person who
takes delivery thereof in the form of a Restricted Definitive Note.
(d) Transfer and Exchange of Definitive Notes for Beneficial Interests
in Global Notes.
(i) If any Holder of a Restricted Definitive Note proposes to exchange
such Note for a beneficial interest in a Restricted Global Note or to
transfer such Restricted Definitive Notes to a Person who takes delivery
thereof in the form of a beneficial interest in a Restricted Global Note,
then, upon receipt by the Registrar of the following documentation:
(A) if the Holder of such Restricted Definitive Note proposes to
exchange such Note for a beneficial interest in a Restricted Global
Note, a certificate from such Holder in the form of Exhibit C hereto,
including the certifications in item (2)(b) thereof;
(B) if such Restricted Definitive Note is being transferred to a
QIB in accordance with Rule 144A under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto, including the
certifications in item (1) thereof; or
(C) if such Restricted Definitive Note is being transferred to a
Non-U.S. Person in an offshore transaction in accordance with Rule 903
or Rule 904 under the Securities Act, a certificate to the effect set
forth in Exhibit B hereto, including the certifications in item (2)
thereof;
the Trustee shall cancel the Restricted Definitive Note, increase or cause
to be increased the aggregate principal amount of, in the case of clause
(A) above, the appropriate Restricted Global Note, in the case of clause
(B) above, the 144A Global Note, and in the case of clause (C) above, the
Regulation S Global Note.
(ii) A Holder of a Restricted Definitive Note may exchange such Note
for a beneficial interest in an Unrestricted Global Note or transfer such
Restricted Definitive Note to a Person who takes delivery thereof in the
form of a beneficial interest in an Unrestricted Global Note if:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights Agreement
and the Holder, in the case of an
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exchange, or the transferee, in the case of a transfer, certifies in
the applicable Letter of Transmittal that it is not (1) a
Broker-Dealer, (2) a Person participating in the distribution of the
Notes issued in the Exchange Offer or (3) a Person who is an affiliate
(as defined in Rule 144) of the Company;
(B) any such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration Rights
Agreement;
(C) any such transfer is effected by a Restricted Broker-Dealer
pursuant to the Exchange Offer Registration Statement in accordance
with the Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the Holder of such Restricted Definitive Notes
proposes to exchange such Notes for a beneficial interest in the
Unrestricted Global Note, a certificate from such Holder in the
form of Exhibit C hereto, including the certifications in item
(1)(c) thereof;
(2) if the Holder of such Restricted Definitive Notes
proposes to transfer such Notes to a Person who shall take
delivery thereof in the form of a beneficial interest in the
Unrestricted Global Note, a certificate from such Holder in the
form of Exhibit B hereto, including the certifications in item
(4) thereof; and
(3) in each such case set forth in this subparagraph (D), an
Opinion of Counsel in form reasonably acceptable to the Company
to the effect that such exchange or transfer is in compliance
with the Securities Act, that the restrictions on transfer
contained herein and in the Private Placement Legend are not
required in order to maintain compliance with the Securities Act,
and such Restricted Definitive Notes are being exchanged or
transferred in compliance with any applicable blue sky securities
laws of any State of the United States.
Upon satisfaction of the conditions of any of the subparagraphs in this
Section 2.06(d)(ii), the Trustee shall cancel the Restricted Definitive
Notes and increase or cause to be increased the aggregate principal amount
of the Unrestricted Global Note.
(iii) A Holder of an Unrestricted Definitive Note may exchange such
Note for a beneficial interest in an Unrestricted Global Note or transfer
such Unrestricted Definitive Notes to a Person who takes delivery thereof
in the form of a beneficial interest in an Unrestricted Global Note at any
time. Upon receipt of a request for such an exchange or registration of
transfer, the Trustee shall cancel the applicable Unrestricted Definitive
Note and increase or cause to be increased the aggregate principal amount
of the Unrestricted Global Note.
If any such exchange or transfer from a Definitive Note to a beneficial
interest is effected pursuant to subparagraphs (ii)(B), (ii)(D) or (iii) above
at a time when an Unrestricted Global Note has not yet been issued, the Company
shall issue and, upon receipt of an authentication order in accordance with
Section 2.02 hereof, the Trustee shall authenticate one or more Unrestricted
Global Notes in an aggregate
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principal amount equal to the principal amount of beneficial interests
transferred pursuant to subparagraphs (ii)(B), (ii)(D) or (iii) above.
(e) Transfer and Exchange of Definitive Notes for Definitive Notes. Upon
request by a Holder of Definitive Notes and such Holder's compliance with the
provisions of this Section 2.06(e), the Registrar shall register the transfer or
exchange of Definitive Notes. Prior to such registration of transfer or
exchange, the requesting Holder shall present or surrender to the Registrar the
Definitive Notes duly endorsed or accompanied by a written instruction of
transfer in form satisfactory to the Registrar duly executed by such Holder or
by his attorney, duly authorized in writing. In addition, the requesting Holder
shall provide any additional certifications, documents and information, as
applicable, pursuant to the provisions of this Section 2.06(e).
(i) Restricted Definitive Notes may be transferred to and registered
in the name of Persons who take delivery thereof if the Registrar receives
the following:
(A) if the transfer will be made pursuant to Rule 144A under the
Securities Act, then the transferor must deliver a certificate in the
form of Exhibit B hereto, including the certifications in item (1)
thereof;
(B) if the transfer will be made pursuant to Rule 903 or Rule
904, then the transferor must deliver a certificate in the form of
Exhibit B hereto, including the certifications in item (2) thereof;
and
(C) if the transfer will be made pursuant to any other exemption
from the registration requirements of the Securities Act, then the
transferor must deliver a certificate in the form of Exhibit B hereto,
including the certifications, certificates and Opinion of Counsel
required by item (3) thereof, if applicable.
(ii) Any Restricted Definitive Note may be exchanged by the Holder
thereof for an Unrestricted Definitive Note or transferred to a Person or
Persons who take delivery thereof in the form of an Unrestricted Definitive
Note if:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights Agreement
and the Holder, in the case of an exchange, or the transferee, in the
case of a transfer, certifies in the applicable Letter of Transmittal
that it is not (1) a Broker-Dealer, (2) a Person participating in the
distribution of the Notes issued in the Exchange Offer or (3) a Person
who is an affiliate (as defined in Rule 144) of the Company;
(B) any such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration Rights
Agreement;
(C) any such transfer is effected by a Restricted Broker-Dealer
pursuant to the Exchange Offer Registration Statement in accordance
with the Registration Rights Agreement; or
(D) the Registrar receives the following:
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(1) if the Holder of such Restricted Definitive Notes
proposes to exchange such Notes for an Unrestricted Definitive
Note, a certificate from such Holder in the form of Exhibit C
hereto, including the certifications in item (1)(d) thereof;
(2) if the Holder of such Restricted Definitive Notes
proposes to transfer such Notes to a Person who shall take
delivery thereof in the form of an Unrestricted Definitive Note,
a certificate from such Holder in the form of Exhibit B hereto,
including the certifications in item (4) thereof; and
(3) in each such case set forth in this subparagraph (D), an
Opinion of Counsel in form reasonably acceptable to the Company
to the effect that such exchange or transfer is in compliance
with the Securities Act, that the restrictions on transfer
contained herein and in the Private Placement Legend are not
required in order to maintain compliance with the Securities Act,
and such Restricted Definitive Note is being exchanged or
transferred in compliance with any applicable blue sky securities
laws of any State of the United States.
(iii) A Holder of Unrestricted Definitive Notes may transfer such
Notes to a Person who takes delivery thereof in the form of an Unrestricted
Definitive Note. Upon receipt of a request to register such a transfer, the
Registrar shall register the Unrestricted Definitive Notes pursuant to the
instructions from the Holder thereof. Unrestricted Definitive Notes cannot
be exchanged for or transferred to Persons who take delivery thereof in the
form of a Restricted Definitive Note.
(f) Exchange Offer. Upon the occurrence of the Exchange Offer in
accordance with the Registration Rights Agreement, the Company shall issue
and, upon receipt of an authentication order in accordance with Section
2.02, the Trustee shall authenticate (i) one or more Unrestricted Global
Notes in an aggregate principal amount equal to the principal amount of the
beneficial interests in the Restricted Global Notes tendered for acceptance
by Persons that certify in the applicable Letter of Transmittal that they
are not (x) Broker-Dealers, (y) Persons participating in the distribution
of the Notes issued in the Exchange Offer or (z) Persons who are Affiliates
(as defined in Rule 144) of the Company and accepted for exchange in the
Exchange Offer and (ii) Unrestricted Definitive Notes in an aggregate
principal amount equal to the principal amount of the Restricted Definitive
Notes accepted for exchange in the Exchange Offer. Concurrent with the
issuance of such Notes, the Trustee shall cause the aggregate principal
amount of the applicable Restricted Global Notes to be reduced accordingly,
and the Company shall execute and the Trustee shall authenticate and
deliver to the Persons designated by the Holders of Definitive Notes so
accepted Unrestricted Definitive Notes in the appropriate principal amount.
(g) Legends. The following legends shall appear on the face of all
Global Notes and Definitive Notes issued under this Indenture unless
specifically stated otherwise in the applicable provisions of this
Indenture.
(i) Private Placement Legend.
(A) Except as permitted by subparagraph (B) below, each Global
Note and each Definitive Note (and all Notes issued in exchange
therefor or substitution thereof) shall bear the legend in
substantially the following form:
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"THIS SECURITY (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER THE
U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND,
ACCORDINGLY, MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE
TRANSFERRED WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR
BENEFIT OF, U.S. PERSONS, EXCEPT AS SET FORTH IN THE FOLLOWING
SENTENCE. BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST
HEREIN, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED
INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES
ACT) (A "QIB"), (B) IT IS NOT A U.S. PERSON, IS NOT ACQUIRING THIS
NOTE FOR THE ACCOUNT OR BENEFIT OF A U.S. PERSON AND IS ACQUIRING THIS
NOTE IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER
THE SECURITIES ACT OR (C) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR"
(AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7) OF REGULATION D UNDER
THE SECURITIES ACT) (AN "IAI"), (2) AGREES THAT IT WILL NOT, WITHIN
THE TIME PERIOD REFERRED TO UNDER RULE 144(k) (TAKING INTO ACCOUNT THE
PROVISIONS OF RULE 144(d) UNDER THE SECURITIES ACT, IF APPLICABLE)
UNDER THE SECURITIES ACT AS IN EFFECT ON THE DATE OF THE TRANSFER OF
THIS NOTE, RESELL OR OTHERWISE TRANSFER THIS NOTE EXCEPT (A) TO THE
COMPANY OR ANY SUBSIDIARY THEREOF, (B) TO A PERSON WHOM THE HOLDER
REASONABLY BELIEVES IS A QIB PURCHASING FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF A QIB IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES
ACT, (C) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN
COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (D) PURSUANT TO THE
EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES
ACT (IF AVAILABLE), (E) TO AN IAI THAT, PRIOR TO SUCH TRANSFER,
FURNISHES TO THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS RELATING TO THE REGISTRATION OF
TRANSFER OF THIS NOTE (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM
THE TRUSTEE) AND, IF THE ISSUER SO REQUESTS, AN OPINION OF COUNSEL
REASONABLY ACCEPTABLE TO THE COMPANY THAT SUCH TRANSFER IS IN
COMPLIANCE WITH THE SECURITIES ACT OR (F) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND, IN EACH CASE, IN
ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS, AND (3) AGREES THAT
IT WILL DELIVER TO EACH PERSON TO WHOM THIS NOTE OR AN INTEREST HEREIN
IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. AS
USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND
"U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM BY RULE 902 OF
REGULATION S UNDER THE SECURITIES ACT. THE INDENTURE CONTAINS A
PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF
THIS NOTE IN VIOLATION OF THE FOREGOING RESTRICTIONS."
(B) Notwithstanding the foregoing, any Unrestricted Global Note
or Unrestricted Definitive Note issued pursuant to subparagraphs
(b)(iv), (c)(iii), (c)(iv),
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(d)(ii), (d)(iii), (e)(ii), (e)(iii) or (f) to this Section 2.06 (and
all Notes issued in exchange therefor or substitution thereof) shall
not bear the Private Placement Legend.
(ii) Global Note Legend. Each Global Note shall bear a legend in
substantially the following form:
"THIS GLOBAL NOTE IS HELD BY THE DEPOSITORY (AS DEFINED IN THE
INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE
BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO
ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY
MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 2.07
OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT
NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE, (III) THIS
GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT
TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE
TRANSFERRED TO A SUCCESSOR DEPOSITORY WITH THE PRIOR WRITTEN CONSENT
OF THE COMPANY."
(iii) Regulation S Temporary Global Note Legend. The Regulation S
Temporary Global Note shall bear a legend in substantially the following
form:
"THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL NOTE, AND
THE CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR CERTIFICATED
NOTES, ARE AS SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN). NEITHER
THE HOLDER NOR THE BENEFICIAL OWNERS OF THIS REGULATION S TEMPORARY
GLOBAL NOTE SHALL BE ENTITLED TO RECEIVE CASH PAYMENTS OF INTEREST
DURING THE PERIOD WHICH SUCH HOLDER HOLDS THIS NOTE. NOTHING IN THIS
LEGEND SHALL BE DEEMED TO PREVENT INTEREST FROM ACCRUING ON THIS
NOTE."
(h) Cancellation and/or Adjustment of Global Notes. At such time as all
beneficial interests in a particular Global Note have been exchanged for
Definitive Notes or a particular Global Note has been redeemed, repurchased or
cancelled in whole and not in part, each such Global Note shall be returned to
or retained and cancelled by the Trustee in accordance with Section 2.11 hereof.
At any time prior to such cancellation, if any beneficial interest in a Global
Note is exchanged for or transferred to a Person who will take delivery thereof
in the form of a beneficial interest in another Global Note or for Definitive
Notes, the principal amount of Notes represented by such Global Note shall be
reduced accordingly and an endorsement shall be made on such Global Note, by the
Trustee or by the Depository at the direction of the Trustee, to reflect such
reduction; and if the beneficial interest is being exchanged for or transferred
to a Person who will take delivery thereof in the form of a beneficial interest
in another Global Note, such other Global Note shall be increased accordingly
and an endorsement shall be made on such Global Note, by the Trustee or by the
Depository at the direction of the Trustee, to reflect such increase.
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(i) General Provisions Relating to Transfers and Exchanges.
(i) To permit registrations of transfers and exchanges, the Company
shall execute and the Trustee shall authenticate Global Notes and
Definitive Notes upon receipt of a Company Order or at the Registrar's
request.
(ii) No service charge shall be made to a holder of a beneficial
interest in a Global Note or to a Holder of a Definitive Note for any
registration of transfer or exchange, but the Company may require payment
of a sum sufficient to cover any transfer tax or similar governmental
charge payable in connection therewith (other than any such transfer taxes
or similar governmental charge payable upon exchange or transfer pursuant
to Sections 2.10, 3.07, 4.09, 4.10 and 9.05 hereof).
(iii) The Registrar shall not be required to register the transfer of
or exchange any Note selected for redemption in whole or in part, except
the unredeemed portion of any Note being redeemed in part.
(iv) All Global Notes and Definitive Notes issued upon any
registration of transfer or exchange of Global Notes or Definitive Notes
shall be the valid obligations of the Company, evidencing the same debt,
and entitled to the same benefits under this Indenture, as the Global Notes
or Definitive Notes surrendered upon such registration of transfer or
exchange.
(v) The Company shall not be required (A) to issue, to register the
transfer of or to exchange Notes during a period beginning at the opening
of business 15 days before the day of any selection of Notes for redemption
under Section 3.02 hereof and ending at the close of business on the day of
selection, (B) to register the transfer of or to exchange any Note so
selected for redemption in whole or in part, except the unredeemed portion
of any Note being redeemed in part or (C) to register the transfer of or to
exchange a Note between a record date and the next succeeding Interest
Payment Date.
(vi) Prior to due presentment for the registration of a transfer of
any Note, the Trustee, any Agent and the Company may deem and treat the
Person in whose name any Note is registered as the absolute owner of such
Note for the purpose of receiving payment of principal of and interest on
such Notes and for all other purposes, and none of the Trustee, any Agent
or the Company shall be affected by notice to the contrary.
(vii) The Trustee shall authenticate Global Notes and Definitive Notes
in accordance with the provisions of Section 2.02 hereof.
(viii) All certifications, certificates and Opinions of Counsel
required to be submitted to the Registrar pursuant to this Section 2.06 to
effect a registration of transfer or exchange may be submitted by
facsimile.
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SECTION 2.07. REPLACEMENT NOTES.
If any mutilated Note is surrendered to the Trustee, or the Company and
the Trustee and the Company receive evidence to their satisfaction of the
destruction, loss or theft of any Note, the Company shall issue and the Trustee,
upon the written order of the Company signed by two Officers of the Company,
shall authenticate a replacement Note if the Trustee's and the Company's
requirements are met. If required by the Trustee or the Company, an indemnity
bond must be supplied by the Holder that is sufficient in the judgment of the
Trustee and the Company to protect the Company, the Trustee, any Agent and any
authenticating agent from any loss that any of them may suffer if a Note is
replaced. The Company may charge for its expenses in replacing a Note.
Every replacement Note is an additional obligation of the Company and
shall be entitled to all of the benefits of this Indenture equally and
proportionately with all other Notes duly issued hereunder.
SECTION 2.08. OUTSTANDING NOTES.
The Notes outstanding at any time are all the Notes authenticated by the
Trustee except for those cancelled by it, those delivered to it for
cancellation, those reductions in the interest in a Global Note effected by the
Trustee in accordance with the provisions hereof, and those described in this
Section as not outstanding. Except as set forth in Section 2.09 hereof, a Note
does not cease to be outstanding because the Company or an Affiliate of the
Company holds the Note.
If a Note is replaced pursuant to Section 2.07 hereof, it ceases to be
outstanding unless the Trustee receives proof satisfactory to it that the
replaced Note is held by a bona fide purchaser.
If the principal amount of any Note is considered paid under Section 4.01
hereof, it ceases to be outstanding and interest on it ceases to accrue.
If the Paying Agent (other than the Company, a Subsidiary or an Affiliate
of any thereof) holds, on a redemption date or maturity date, money sufficient
to pay Notes payable on that date, then on and after that date such Notes shall
be deemed to be no longer outstanding and shall cease to accrue interest.
SECTION 2.09. TREASURY NOTES.
In determining whether the Holders of the required principal amount of
Notes have concurred in any direction, waiver or consent, Notes owned by the
Company, or by an Affiliate of the Company, shall be considered as though not
outstanding, except that for the purposes of determining whether the Trustee
shall be protected in relying on any such direction, waiver or consent, only
Notes that a Responsible Officer of the Trustee has been informed of by the
Company as being so owned shall be so disregarded.
SECTION 2.10. TEMPORARY NOTES.
Until permanent Notes are ready for delivery, the Company may prepare and
the Trustee shall authenticate temporary Notes upon a written order of the
Company signed by two Officers of the Company. Temporary Notes shall be
substantially in the form of permanent Notes but may have variations that the
Company considers appropriate for temporary Notes and as shall be reasonably
acceptable to the
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Trustee. Without unreasonable delay, the Company shall prepare and the Trustee
shall authenticate definitive Notes in exchange for temporary Notes.
Holders of temporary Notes shall be entitled to all of the benefits of
this Indenture.
SECTION 2.11. CANCELLATION.
The Company at any time may deliver Notes to the Trustee for cancellation.
The Registrar and Paying Agent shall forward to the Trustee any Notes
surrendered to them for registration of transfer, exchange or payment. The
Trustee and no one else shall cancel all Notes surrendered for registration of
transfer, exchange, payment, replacement or cancellation and shall destroy
cancelled Notes (subject to the record retention requirement of the Exchange
Act). Certification of the destruction of all cancelled Notes shall be delivered
to the Company. The Company may not issue new Notes to replace Notes that it has
paid or that have been delivered to the Trustee for cancellation.
SECTION 2.12. DEFAULTED INTEREST.
Interest on any Note which is payable, and is punctually paid or duly
provided for, on any Interest Payment Date shall be paid to the Person in whose
name that Note is registered at the close of business on the Regular Record Date
for such interest.
Any interest on any Note which is payable, but is not punctually paid or
duly provided for, on any Interest Payment Date and interest on such defaulted
interest at the applicable interest rate borne by the Notes, to the extent
lawful (such defaulted interest (and interest thereon) herein collectively
called "Defaulted Interest") shall forthwith cease to be payable to the Holder
on the relevant Regular Record Date by virtue of having been such Holder; and
such Defaulted Interest shall be paid by the Company to the Persons in whose
names the Notes are registered at the close of business on a Special Record Date
for the payment of such Defaulted Interest, which shall be fixed in the
following manner. The Company shall give the Trustee at least 15 days' written
notice (unless a shorter period is acceptable to the Trustee for its
convenience) of the amount of Defaulted Interest proposed to be paid on each
Note and the date of the proposed payment, and at the same time the Company
shall deposit with the Trustee an amount of money equal to the aggregate amount
proposed to be paid in respect of such Defaulted Interest or shall make
arrangements satisfactory to the Trustee for such deposit prior to the date of
the proposed payment, such money when deposited to be held by the Trustee in
trust for the benefit of the Persons entitled to such Defaulted Interest as in
this subsection provided. Thereupon the Trustee shall fix a Special Record Date
for the payment of such Defaulted Interest which shall not be more than 15 days
and not less than 10 days prior to the date of the proposed payment and not less
than 10 days after the receipt by the Trustee of the notice of the proposed
payment. The Trustee shall promptly notify the Company of such Special Record
Date. In the name and at the expense of the Company, the Trustee shall cause
notice of the proposed payment of such Defaulted Interest and the Special Record
Date therefor to be mailed, first-class postage prepaid, to each Holder at his
address as it appears in the Registrar, not less than 10 days prior to such
Special Record Date. Notice of the proposed payment of such Defaulted Interest
and the Special Record Date therefor having been so mailed, such Defaulted
Interest shall be paid to the Persons in whose names the Notes are registered at
the close of business on such Special Record Date.
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Subject to the foregoing provisions of this Section, each Note delivered
under this Indenture upon registration of transfer of or in exchange for or in
lieu of any other Note shall carry the rights to interest accrued and unpaid,
and to accrue, which were carried by such other Note.
ARTICLE 3
REDEMPTION AND PREPAYMENT
SECTION 3.01. APPLICABILITY OF ARTICLE.
Redemption of Notes at the election of the Company shall be made in
accordance with this Article 3.
SECTION 3.02. ELECTION TO REDEEM; NOTICE TO TRUSTEE.
The election of the Company to redeem any Notes pursuant to Section 3.08
shall be evidenced by a Board Resolution. In case of any redemption at the
election of the Company, the Company shall, at least 45 but not more than 60
days prior to the Redemption Date fixed by it (unless a shorter notice period
shall be satisfactory to the Trustee for its convenience), notify the Trustee of
such Redemption Date and of the principal amount of Notes to be redeemed.
SECTION 3.03. SELECTION BY TRUSTEE OF NOTES TO BE REDEEMED.
If less than all of the Notes are to be redeemed at any time, selection of
Notes for redemption shall be made by the Trustee in compliance with the
requirements of the principal national securities exchange, if any, on which
such Notes are listed, or, if such Notes are not so listed, on a pro rata basis,
by lot or by such method as the Trustee shall deem fair and appropriate;
provided that no Notes of $1,000 or less shall be redeemed in part.
The Trustee shall promptly notify the Company and the Registrar in writing
of the Notes selected for redemption and, in the case of any Notes selected for
partial redemption, the principal amount thereof to be redeemed.
For all purposes of this Indenture, unless the context otherwise requires,
all provisions relating to redemption of Notes shall relate, in the case of any
Note redeemed or to be redeemed only in part, to the portion of the principal
amount of such Note which has been or is to be redeemed.
SECTION 3.04. NOTICE OF REDEMPTION.
Notices of redemption shall be mailed by first class mail, postage
prepaid, at least 30 but not more than 60 days before the Redemption Date to
each Holder of Notes to be redeemed at such Holder's registered address. If any
Note is to be redeemed in part only, any notice of redemption that relates to
such Note shall state the portion of the principal amount thereof to be
redeemed.
All notices of redemption shall state:
(a) the Redemption Date;
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(b) the Redemption Price;
(c) if less than all Notes then outstanding are to be redeemed, the
identification (and, in the case of a Note to be redeemed in part, the
principal amount) of the particular Notes to be redeemed;
(d) that on the Redemption Date the Redemption Price will become due
and payable upon each such Note or portion thereof, and that (unless the
Company shall default in payment of the Redemption Price) interest thereon
shall cease to accrue on or after said date;
(e) the places or places where such Notes are to be surrendered for
payment of the Redemption Price;
(f) that Notes called for redemption must be surrendered to the Paying
Agent to collect the Redemption Price;
(g) the CUSIP number, if any, relating to such Notes, and
(h) in the case of a Note to be redeemed in part, the principal amount
of such Note to be redeemed and that after the Redemption Date upon
surrender of such Note, a new Note or Notes in the aggregate principal
amount equal to the unredeemed portion thereof will be issued.
Notice of redemption of Notes to be redeemed at the election of the
Company shall be given by the Company or, at its request, by the Trustee in the
name and at the expense of the Company.
SECTION 3.05. DEPOSIT OF REDEMPTION PRICE.
On or prior to any Redemption Date, the Company shall deposit with the
Trustee or with a Paying Agent (or, if the Company is acting as its owning
Paying Agent, segregate and hold in trust as provided in Section 4.03) an amount
of money in same day funds (or New York Clearing House funds if such deposit is
made prior to the applicable Redemption Date) sufficient to pay the Redemption
Price of, and accrued interest on, all the Notes or portions thereof which are
to be redeemed on that date.
SECTION 3.06. NOTES PAYABLE ON REDEMPTION DATE.
Notice of redemption having been given as aforesaid, the Notes so to be
redeemed shall, on the Redemption Date, become due and payable at the Redemption
Price therein specified and from and after such date (unless the Company shall
default in the payment of the Redemption Price and accrued interest) such Notes
shall cease to bear interest. Upon surrender of any such Note for redemption in
accordance with said notice, such Note shall be paid by the Company at the
Redemption Price together with accrued interest to the Redemption Date;
provided, however, that installments of interest whose Stated Maturity is on or
prior to the Redemption Date shall by payable to the Holders of such Notes,
registered as such on the relevant Regular Record Dates according to the terms
and the provisions of Section 2.12.
If any Note called for redemption shall not be so paid upon surrender
thereof for redemption, the principal thereof (and premium, if any, thereon)
shall, until paid, bear interest from the Redemption Date at the rate borne by
such Note.
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SECTION 3.07. NOTES REDEEMED IN PART.
Any Note which is to be redeemed only in part shall be surrendered at the
office or agency of the Company maintained for such purpose pursuant to Section
4.02 (with, if the Company, the Registrar or the Trustee so requires, due
endorsement by, or a written instrument of transfer in form satisfactory to the
Company, the Registrar or the Trustee duly executed by, the Holder thereof or
his attorney duly authorized in writing), and a new Note in principal amount
equal to the unpurchased or unredeemed portion will be issued in the name of the
Holder thereof upon cancellation of the original Note. On and after the purchase
or redemption date, unless the Company defaults in payment of the purchase or
redemption price, interest shall cease to accrue on Notes or portions thereof
purchased or called for redemption.
SECTION 3.08. OPTIONAL REDEMPTION.
(a) Except as described in this Section 3.08, the Notes will not be
redeemable at the Company's option prior to June 15, 2002. On and after June 15,
2002, the Notes will be subject to redemption at the option of the Company, in
whole or in part, upon not less than 30 nor more than 60 days' written notice,
at the Redemption Prices (expressed as a percentage of principal amount) set
forth below, plus accrued and unpaid interest thereon, if any, to the applicable
Redemption Date, if redeemed during the twelve-month period beginning on June 15
of each of the years indicated below:
REDEMPTION
YEAR PRICE
- ---- ----------
2002........................................................... 105.563%
2003........................................................... 103.708%
2004........................................................... 101.854%
2005 and thereafter............................................ 100.000%
In addition, at any time prior to June 15, 2000, the Company may on any
one or more occasions redeem up to 33 1/3% of the aggregate principal amount of
Notes originally issued (including, for this purpose, one or more series of
Notes issued under this Indenture after the date hereof) at a Redemption Price
of 111.125% of the principal amount thereof, plus accrued and unpaid interest
and Liquidated Damages, if any, thereon to the Redemption Date, with the net
cash proceeds of one or more Public Equity Offerings; provided that at least
66 2/3% of the Notes originally issued (including, for this purpose, one or more
series of Notes issued under this Indenture after the date hereof) remain
outstanding immediately after the occurrence of such redemption and provided,
further, that such redemption occurs within 60 days of the date of the closing
of such Public Equity Offering.
In addition, at any time prior to June 15, 2002, the Company may, at its
option, redeem the Notes, in whole or in part, at a Redemption Price equal to
100% of the principal amount thereof plus the applicable Make-Whole Premium.
(b) Any redemption pursuant to this Section 3.08 shall be made pursuant to
the provisions of Sections 3.01 through 3.07 hereof.
SECTION 3.09. MANDATORY REDEMPTION.
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Except as set forth under Sections 3.10, 4.09 and 4.10 hereof, the Company
shall not be required to make mandatory redemption or sinking fund payments with
respect to the Notes.
SECTION 3.10 OFFER TO PURCHASE BY APPLICATION OF EXCESS PROCEEDS.
In the event that, pursuant to Section 4.10 hereof, the Company shall be
required to commence an offer to all Holders to purchase Notes (an "Asset Sale
Offer"), it shall follow the procedures specified below.
The Asset Sale Offer shall remain open for a period of 20 Business Days
following its commencement and no longer, except to the extent that a longer
period is required by applicable law (the "Offer Period"). No later than five
Business Days after the termination of the Offer Period (the "Purchase Date"),
the Company shall purchase the principal amount of Notes required to be
purchased pursuant to Section 4.10 hereof (the "Offer Amount") or, if less than
the Offer Amount has been tendered, all Notes tendered in response to the Asset
Sale Offer.
If the Purchase Date is on or after a Regular Record Date and on or before
the related Interest Payment Date, any accrued and unpaid interest shall be paid
to the Person in whose name a Note is registered at the close of business on
such Regular Record Date, and no additional interest shall be payable to Holders
who tender Notes pursuant to the Asset Sale Offer.
Upon the commencement of an Asset Sale Offer, the Company shall send, by
first class mail, a notice to each of the Holders, with a copy to the Trustee.
The notice shall contain all instructions and materials necessary to enable such
Holders to tender Notes pursuant to the Asset Sale Offer. The Asset Sale Offer
shall be made to all Holders. The notice, which shall govern the terms of the
Asset Sale Offer, shall state:
(a) that the Asset Sale Offer is being made pursuant to this Section 3.10
and Section 4.10 hereof and the length of time the Asset Sale Offer
shall remain open;
(b) the Offer Amount, the purchase price and the Purchase Date;
(c) that any Note not tendered or accepted for payment shall continue to
accrue interest;
(d) that, unless the Company defaults in making such payment, any Note
accepted for payment pursuant to the Asset Sale Offer shall cease to
accrue interest after the Purchase Date;
(e) that Holders electing to have a Note purchased pursuant to any Asset
Sale Offer shall be required to surrender the Note, with the form
entitled "Option of Holder to Elect Purchase" on the reverse of the
Note completed, or transfer by book-entry transfer, to the Company, a
depositary, if appointed by the Company, or a Paying Agent at the
address specified in the notice not later than the third Business Day
preceding the end of the Offer Period;
(f) that Holders shall be entitled to withdraw their election if the
Company, the depositary or the Paying Agent, as the case may be,
receives, not later than the Business Day preceding the end of the
Offer Period, a telegram, telex, facsimile transmission or letter
setting forth
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the name of the Holder, the principal amount of the Note the Holder
delivered for purchase and a statement that such Holder is withdrawing
his election to have such Note purchased;
(g) that, if the aggregate principal amount of Notes surrendered by
Holders exceeds the Offer Amount, the Company shall select the Notes
to be purchased on a pro rata basis (with such adjustments as may be
deemed appropriate by the Company so that only Notes in denominations
of $1,000, or integral multiples thereof, shall be purchased); and
(h) that Holders whose Notes were purchased only in part shall be issued
new Notes equal in principal amount to the unpurchased portion of the
Notes surrendered (or transferred by book-entry transfer).
On or before 12:00 p.m. (New York City time) on each Purchase Date, the
Company shall, irrevocably deposit with the Trustee or Paying Agent in
immediately available funds the aggregate purchase price with respect to a
principal amount of Notes equal to the Offer Amount, together with accrued and
unpaid interest thereon to the Purchase Date, to be held for payment in
accordance with the terms of this Section 3.10. On the Purchase Date, the
Company shall, to the extent lawful, (i) accept for payment, on a pro rata basis
to the extent necessary, the Offer Amount of Notes or portions thereof tendered
pursuant to the Asset Sale Offer, or if less than the Offer Amount has been
tendered, all Notes tendered, (ii) deliver or clause the Paying Agent or
depositary, as the case may be, to deliver to the Trustee Notes so accepted and
(iii) deliver to the Trustee an Officer's Certificate stating that such Notes or
portions thereof were accepted for payment by the Company in accordance with the
terms of this Section 3.10. The Company, the Depository or the Paying Agent, as
the case may be, shall promptly (but in any case not later than three Business
Days after the Purchase Date) mail or deliver to each tendering Holder an amount
equal to the purchase price of the Notes tendered by such Holder and accepted by
the Company for purchase, plus any accrued and unpaid interest, thereon to the
Purchase Date, and the Company shall promptly issue a new Note, and the Trustee,
upon written request from the Company, shall authenticate and mail or deliver
such new Note to such Holder, equal in principal amount to any unpurchased
portion of the Note surrendered. Any Note not so accepted shall be promptly
mailed or delivered by the Company to the Holder thereof. The Company shall send
a notice to each Holder a stating the results of the Asset Sale Offer on the
Purchase Date.
Other than as specifically provided in this Section 3.10, any purchase
pursuant to this Section 3.10 shall be made pursuant to the provisions of
Sections 3.01 through 3.07 hereof.
ARTICLE 4
COVENANTS
SECTION 4.01 PAYMENT OF PRINCIPAL, PREMIUM AND INTEREST.
The Company shall pay or cause to be paid the principal of, premium, if
any, and interest on the Notes on the dates and in the manner provided in the
Notes. Principal, premium, if any, and interest shall be considered paid on the
date due if the Paying Agent, if other than the Company or a Subsidiary thereof,
holds as of 10:00 a.m. Eastern Time on the due date money deposited by the
Company in immediately
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available funds and designated for and sufficient to pay all principal, premium,
if any, and interest then due.
The Company shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue principal at the rate of the
then applicable interest rate on the Notes to the extent lawful; it shall pay
interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue installments of interest and Liquidated Damages
(without regard to any applicable grace period) at the same rate to the extent
lawful.
SECTION 4.02. MAINTENANCE OF OFFICE OR AGENCY.
The Company will maintain, in The City of New York, an office or agency
where Notes may be presented or surrendered for payment, where Notes may be
surrendered for registration of transfer or exchange and where notices and
demands to or upon the Company in respect of the Notes and this Indenture may be
served. The Company will give prompt written notice to the Trustee of any change
in the location of any such office or agency. If at any time the Company shall
fail to maintain any such required office or agency or shall fail to furnish the
Trustee with the address thereof, such presentations, surrenders, notices and
demands may be made or served at the Corporate Trust Office of the Trustee, and
the Company hereby appoints the Trustee as its agent to receive all such
presentations, surrenders, notices and demands.
The Company may from time to time designate one or more other offices or
agencies (in or outside of The City of New York) where the Notes may be
presented or surrendered for any or all such purposes, and may from time to time
rescind such designation; provided, however, that no such designation or
recession shall in any manner relieve the Company of its obligation to maintain
an office or agency in The City of New York for such purposes. The Company will
give prompt written notice to the Trustee of any such designation or recession
and any change in the location of any such office or agency.
SECTION 4.03. MONEY FOR SECURITY PAYMENTS TO BE HELD IN TRUST.
If the Company shall at any time act as its own Paying Agent, it will, on
or before each due date of the principal of, premium, if any, or interest on any
of the Notes, segregate and hold in trust for the benefit of the Persons
entitled thereto a sum sufficient to pay the principal, premium, if any, or
interest so becoming due until such sums shall be paid to such Persons or
otherwise disposed of as herein provided, and will promptly notify the Trustee
of its action or failure so to act.
Whenever the Company shall have one or more Paying Agents for the Notes,
it will, on or before each due date of the principal of, premium, if any, or
interest on any Notes, deposit with a Paying Agent a sum in same day funds (or
New York Clearing House funds if such deposit is made prior to the date on which
such deposit is required to be made) sufficient to pay the principal, premium,
if any, or interest so becoming due (or at the option of the Company, payment of
interest may be mailed by check to the Holders of the Notes at their respective
addresses set forth in the register of Holders of Notes; provided that all
payments with respect to Global Notes and Definitive Notes, the holders of which
have given wire transfer instructions to the Company shall receive such payments
of interest by wire transfer in same day funds) such sum to be held in trust for
the benefit of the Persons entitled to such principal, premium or interest and
(unless such Paying Agent is the Trustee) the Company will promptly notify the
Trustee of su
ch action or any failure so to act.
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The Company will cause each Paying Agent other than the Trustee to execute
and deliver to the Trustee an instrument in which such Paying Agent shall agree
with the Trustee, subject to the provisions of this Section, that such Paying
Agent will:
(a) hold all sums held by it for the payment of the principal of, premium,
if any, or interest on Notes in trust for the benefit of the Persons
entitled thereto until such sums shall be paid to such Persons or
otherwise disposed of as herein provided;
(b) give the Trustee notice of any default by the Company (or any other
obligor upon the Notes) in the making of any payment of principal,
premium, if any, or interest;
(c) at any time during the continuance of any such default, upon the
written request of the Trustee, forthwith pay to the Trustee all sums
so held in trust by such Paying Agent; and
(d) acknowledge, accept and agree to comply in all respects with the
provisions of this Indenture relating to the duties, rights and
obligations of such Paying Agent.
The Company may at any time, for the purpose of obtaining the satisfaction
and discharge of this Indenture or for any other purpose, pay, or by Company
Order direct any Paying Agent to pay, to the Trustee all sums held in trust by
the Company or such Paying Agent, such sums to be held by the Trustee upon the
same trusts as those upon which such sums were held by the Company or such
Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such
Paying Agent shall be released from all further liability with respect to such
money.
Any money deposited with the Trustee or any Paying Agent, or then held by
the Company, in trust for the payment of the principal of, premium, if any, or
interest on any Note and remaining unclaimed for two years after such principal,
premium, if any, or interest has become due and payable shall be paid to the
Company on Company Request or (if then held by the Company) shall be discharged
from such trust; and the Holder of such Note shall thereafter, as an unsecured
general creditor, look only to the Company for payment thereof, and all
liability of the Trustee or such Paying Agent with respect to such trust money,
and all liability of the Company as trustee thereof, shall thereupon cease;
provided, however, that the Trustee or such Paying Agent, before being required
to make any such repayment, shall at the expense of the Company cause notice to
be promptly sent to each Holder that such money remains unclaimed and that,
after a date specified therein, which shall not be less than 30 days from the
date of such notification, any unclaimed balance of such money then remaining
will be repaid to the Company.
SECTION 4.04. REPORTS.
Whether or not required by the rules and regulations of the SEC, so long
as any Notes are outstanding, the Company shall furnish to the Holders of Notes
(i) all quarterly and annual financial information that would be required to be
contained in a filing with the SEC on Forms 10-Q and 10-K if the Company were
required to file such Forms, including a "Management's Discussion and Analysis
of Financial Condition and Results of Operations" that describes the financial
condition and results of operations of the Company and its consolidated
Subsidiaries (showing in reasonable detail, either on the face of the financial
statements or in the footnotes thereto and in Management's Discussion and
Analysis of Financial Condition and Results of Operations, the financial
condition and results of operations of the Company and its Restricted
Subsidiaries separate from the financial condition and results of operations of
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the Unrestricted Subsidiaries of the Company) and, with respect to the annual
information only, a report thereon by the Company's certified independent
accountants and (ii) all current reports that would be required to be filed with
the SEC on Form 8-K if the Company were required to file such reports; provided,
however, that the Company shall not be required to make any such filings on or
prior to the date on which the Company's quarterly report on Form 10-Q for the
fiscal quarter ended June 30, 1997 would have been required to be filed if, at
the time such filings would have been required to be made with the SEC, either
(i) the Company shall have provided to each Holder the information that would
have been required to be filed or (ii) the Exchange Offer Registration Statement
has been filed with the SEC but has not yet been declared effective and copies
of the Exchange Offer Registration Statement and any amendments thereto (to the
extent such registration statement and/or amendments contain additional
information not disclosed in the Offering Memorandum that would have been the
subject of a filing required to be made under Section 13 or 15(d) of the
Exchange Act) have been provided to each Holder, provided that any exhibits to
the Exchange Offer Registration Statement (or any amendments thereto) need not
be delivered to any Holder of the Notes, but sufficient copies thereto shall be
furnished to the Trustee as reasonably requested to permit the Trustee to
deliver any such exhibits to any Holder upon request. In addition, whether or
not required by the rules and regulations of the SEC, the Company shall file a
copy of all such information and reports with the SEC for public availability
(unless the SEC will not accept such a filing) and make such information
available to securities analysts and prospective investors upon request. In
addition, the Company and the Guarantors shall, for so long as any Notes remain
outstanding, furnish to the Holders and to securities analysts and prospective
investors, upon their request, the information required to be delivered pursuant
to Rule 144A(d)(4) under the Securities Act.
SECTION 4.05. STATEMENT AS TO COMPLIANCE; NOTICE OF DEFAULT.
(a) The Company and each Guarantor shall deliver to the Trustee, within 90
days after the end of each fiscal year ending after the date hereof, a brief
certificate of its principal executive officer, principal financial officer or
principal accounting officer stating whether, to such officer's knowledge, the
Company and such Guarantor is in compliance with all covenants and conditions to
be complied with by it under this Indenture (including with respect to any
Restricted Payments made during such year, the basis upon which the calculations
required by this Section 4.05 were computed, which calculations may be based on
the Company's latest financial statements), and further stating, as to each
Officer signing such certificate, that to the best of his or her knowledge each
entity is not in default in the performance or observance of any terms,
provisions and conditions of this Indenture (or, if a Default or Event of
Default shall have occurred, describing all such Defaults or Events of Default
of which he or she may have knowledge and what action the Company is taking or
proposes to take with respect thereto) and that to the best of his or her
knowledge no event has occurred and remains in existence by reason of which
payments on account of the principal of or interest, if any, on the Notes is
prohibited or if such event has occurred, a description of the event and what
action the Company is taking or proposes to take with respect thereto. For
purposes of this Section 4.05, such compliance shall be determined without
regard to any period of grace or requirement of notice under this Indenture.
(b) So long as not contrary to the then current recommendations of the
American Institute of Certified Public Accountants, the annual reports delivered
pursuant to Section 4.04 above shall be accompanied by a written statement of
the Company's independent public accountants (who shall be a firm of established
national reputation) that in making the examination necessary for certification
of such financial statements, nothing has come to their attention that would
lead them to believe that the Company has violated any provisions of Article 4
or Article 5 hereof or, if any such violation has occurred,
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specifying the nature and period of existence thereof, it being understood that
such accountants shall not be liable directly or indirectly to any Person for
any failure to obtain knowledge of any such violation. In the event that, after
the Company has used its best efforts to obtain the written statement of the
Company's independent public accountants required by the provisions of this
paragraph, such statement cannot be obtained, the Company shall deliver, in
satisfaction of its obligations under this Section 4.05(b), an Officers'
Certificate (A) certifying that it has used its best efforts to obtain such
required statement but was unable to do so and (B) attaching the written
statement of the Company's accountants that the Company received in lieu
thereof.
(c) The Company shall, within five Business Days, upon becoming aware of
any Default or Event of Default or any default under any document, instrument or
agreement representing Indebtedness of the Company or any Guarantor, deliver to
the Trustee an Officer's Certificate specifying such Default or Event of
Default.
SECTION 4.06. PAYMENT OF TAXES AND OTHER CLAIMS.
The Company shall pay or discharge or cause to be paid or discharged,
before the same shall become delinquent, (a) all material taxes, assessments and
governmental charges levied or imposed upon it or any Subsidiary or upon the
income, profits or property of the Company or any of its Subsidiaries and (b)
all material lawful claims for labor, materials and supplies, which, if unpaid,
might by law become a Lien upon the property of the Company or any of its
Subsidiaries that could produce a material adverse effect on the consolidated
financial condition of the Company; provided, however, that the Company shall
not be required to pay or discharge or cause to be paid or discharged any such
tax, assessment, charge or claim whose amount, applicability or validity is
being contested in good faith by appropriate proceedings and in respect of which
appropriate reserves (in the good faith judgment of management of the Company)
are being maintained in accordance with GAAP.
SECTION 4.07. LIMITATION ON LIENS.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, assume or suffer to
exist any Lien securing Indebtedness or trade payables on any asset now owned or
hereafter acquired, or any income or profits therefrom or assign or convey any
right to receive income therefrom, except Permitted Liens.
SECTION 4.08. CORPORATE EXISTENCE.
Subject to Article 5 hereof, the Company shall do or cause to be done all
things necessary to preserve and keep in full force and effect (i) its corporate
existence, and the corporate, partnership or other existence of each of its
Restricted Subsidiaries, in accordance with the respective organizational
documents (as the same may be amended from time to time) of the Company or any
such Restricted Subsidiary and (ii) the rights (charter and statutory), licenses
and franchises of the Company and its Restricted Subsidiaries; provided,
however, that the Company shall not be required to preserve any such right,
license or franchise, or the corporate, partnership or other existence of any of
its Restricted Subsidiaries, if the Board of Directors shall determine that the
preservation thereof is no longer desirable in the conduct of the business of
the Company and its Subsidiaries, taken as a whole, and that the loss thereof is
not adverse in any material respect to the Holders of the Notes.
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SECTION 4.09. OFFER TO REPURCHASE UPON CHANGE OF CONTROL.
(a) Upon the occurrence of a Change of Control, the Company shall make an
offer to purchase all or any part (equal to $1,000 or an integral multiple
thereof) of the Notes pursuant to the offer described below (the "Change of
Control Offer") at a price in cash (the "Change of Control Payment") equal to
101% of the aggregate principal amount thereof plus accrued and unpaid interest
and Liquidated Damages, if any, to the date of purchase.
(b) Within 30 days following any Change of Control, the Company shall mail
a notice to each Holder of Notes issued under this Indenture, with a copy to the
Trustee, with the following statements and/or information:
(1) a Change of Control Offer is being made pursuant to this Section 4.09
and that all Notes properly tendered pursuant to such Change of
Control Offer will be accepted for payment;
(2) the purchase price and the purchase date, which will be no earlier
than 30 days nor later than 60 days from the date such notice is
mailed, except as may be otherwise required by applicable law (the
"Change of Control Payment Date");
(3) any Note not properly tendered will remain outstanding and continue to
accrue interest;
(4) unless the Company defaults in the payment of the Change of Control
Payment, all Notes accepted for payment pursuant to the Change of
Control Offer will cease to accrue interest on the Change of Control
Payment Date;
(5) Holders electing to have any Notes purchased pursuant to a Change of
Control Offer will be required to surrender the Notes, with the form
entitled "Option of Holder to Elect Purchase" on the reverse of the
Notes completed, to the Paying Agent and at the address specified in
the notice prior to the close of business on the third Business Day
preceding the Change of Control Payment Date;
(6) Holders will be entitled to withdraw their tendered Notes and their
election to require the Company to purchase such Notes, provided that
the Paying Agent receives, not later than the close of business on the
third Business Day preceding the Change of Control Payment Date, a
telegram, telex, facsimile transmission or letter setting forth the
name of the Holder, the principal amount of Notes tendered for
purchase, and a statement that such Holder is withdrawing his tendered
Notes and his election to have such Notes purchased; and
(7) that Holders whose Notes are being purchased only in part will be
issued new Notes equal in principal amount to the unpurchased portion
of the Notes surrendered, which unpurchased portion must be equal to
$1,000 in principal amount or an integral multiple thereof.
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(c) Prior to complying with the provisions of this Section 4.09, but in
any event within 30 days following a Change of Control, the Company shall either
repay in full in cash all Indebtedness under the Credit Agreement (and terminate
all commitments thereunder) and all other Senior Debt the terms of which require
repayment upon a Change of Control or offer to repay in full in cash all
Indebtedness under the Credit Agreement (and terminate all commitments
thereunder) and all such other Senior Debt and to repay the Indebtedness owed to
(and terminate the commitments of) each lender which has accepted such offer or
obtain the requisite consents under the Credit Agreement and all such other
Senior Debt to permit the repurchase of the Notes.
(d) The Company shall comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws or regulations are applicable in connection with the repurchase
of the Notes pursuant to a Change of Control Offer. To the extent that the
provisions of any securities laws or regulations conflict with the provisions of
this Indenture, the Company shall comply with the applicable securities laws and
regulations and will not be deemed to have breached its obligations described in
this Indenture by virtue thereof.
(e) On the Change of Control Payment Date, the Company shall, to the
extent permitted by law, (1) accept for payment all Notes or portions thereof
properly tendered pursuant to the Change of Control Offer, (2) deposit with the
Paying Agent an amount equal to the aggregate Change of Control Payment in
respect of all Notes or portions thereof so tendered and (3) deliver, or cause
to be delivered, to the Trustee for cancellation the Notes so accepted together
with an Officers' Certificate stating that the aggregate principal amount of
Notes or portions thereof have been tendered to and purchased by the Company.
The Paying Agent shall promptly mail to each Holder of Notes so tendered the
Change of Control Payment for such Notes, and the Trustee will promptly
authenticate and mail (or cause to be transferred by book entry) to each Holder
a new Note equal in principal amount to any unpurchased portion of the Notes
surrendered, if any; provided, that each such new Note will be in a principal
amount of $1,000 or an integral multiple thereof. The Company will publicly
announce the results of the Change of Control Offer on or as soon as practicable
after the Change of Control Payment Date.
(f) Notwithstanding the foregoing, the Company shall not be required to
make a Change of Control Offer upon a Change of Control if a third party makes
the Change of Control Offer in the manner, at the times and otherwise in
compliance with the requirements set forth in this Section 4.09 applicable to a
Change of Control Offer made by the Company and purchases all Notes validly
tendered and not withdrawn under such Change of Control Offer.
(g) The Change of Control provisions described in this Section 4.09 will
be applicable whether or not any other provisions of this Indenture are
applicable.
SECTION 4.10. ASSET SALES.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, consummate an Asset Sale unless (i) the Company (or the
Restricted Subsidiary, as the case may be) receives consideration at the time of
such Asset Sale at least equal to the fair market value (evidenced by a Board
Resolution and as set forth in an Officers' Certificate delivered to the
Trustee) of the assets or Equity Interests issued or sold or otherwise disposed
of and (ii) at least 75% of the consideration therefor received by the Company
or such Restricted Subsidiary is in the form of cash; provided that the amount
of (x) any liabilities (as shown on the Company's or such Restricted
Subsidiary's most recent balance sheet) of the Company or
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any Restricted Subsidiary (other than contingent liabilities and liabilities
that are by their terms subordinated to the Notes or any guarantee thereof) that
are assumed by the transferee of any such assets pursuant to a customary
novation agreement that releases the Company or such Restricted Subsidiary from
further liability and (y) any securities, notes or other obligations received by
the Company or any such Restricted Subsidiary from such transferee that are
immediately converted by the Company or such Restricted Subsidiary into cash (to
the extent of the cash received), shall be deemed to be cash for purposes of
this provision.
Within 360 days after the receipt of any Net Proceeds from an Asset Sale,
the Company may apply such Net Proceeds, at its option, (a) to permanently
reduce (or, in the case of letters of credit or Eurodollar loans under the
Credit Agreement, cash collateralize) any Senior Debt (and to correspondingly
reduce commitments with respect thereto in the case of revolving borrowings), or
(b) to the acquisition of a controlling interest in another business, the making
of a capital expenditure or the acquisition of other long-term assets, in each
case, in the same line of business as the Company was engaged in on the date of
this Indenture. Pending the final application of any such Net Proceeds, the
Company may invest such Net Proceeds in any manner that is not prohibited by
this Indenture. Any Net Proceeds from Asset Sales that are not applied or
invested as provided in the first sentence of this paragraph shall be deemed to
constitute "Excess Proceeds." When the aggregate amount of Excess Proceeds
exceeds $5.0 million, the Company shall, within ten Business Days thereafter, be
required to make an Asset Sale Offer to purchase the maximum principal amount of
Notes that may be purchased out of the Excess Proceeds, at an offer price in
cash in an amount equal to 100% of the principal amount thereof plus accrued and
unpaid interest and Liquidated Damages, if any, thereon, to the date of
purchase, in accordance with the procedures set forth in this Indenture. To the
extent that the aggregate amount of Notes tendered pursuant to an Asset Sale
Offer is less than the Excess Proceeds, the Company may use any remaining Excess
Proceeds for general corporate purposes. If the aggregate principal amount of
Notes surrendered by Holders thereof exceeds the amount of Excess Proceeds, the
Trustee shall select the Notes to be purchased on a pro rata basis. Upon
completion of such offer to purchase, the amount of Excess Proceeds shall be
reset at zero.
The Company shall comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws or regulations are applicable in connection with the repurchase
of the Notes pursuant to an Asset Sale Offer. To the extent that the provisions
of any securities laws or regulations conflict with the provisions of this
Indenture, the Company will comply with the applicable securities laws and
regulations and shall not be deemed to have breached its obligations described
in this Indenture by virtue thereof.
SECTION 4.11. LIMITATION ON RESTRICTED PAYMENTS.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly: (i) declare or pay any dividend or make
any other payment or distribution on account of the Company's Equity Interests
(including, without limitation, any payment in connection with any merger or
consolidation involving the Company) or to the direct or indirect holders of the
Company's or any of its Restricted Subsidiaries' Equity Interests in their
capacity as such (other than dividends or distributions payable in Equity
Interests (other than Disqualified Stock) of the Company or dividends or
distributions payable to the Company or any Restricted Subsidiary of the
Company); (ii) purchase, redeem or otherwise acquire or retire for value
(including without limitation, in connection with any merger or consolidation
involving the Company) any Equity Interests of the Company or any direct or
indirect parent of the Company or other Affiliate of the Company (other than any
such Equity Interests owned by the Company
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or any Wholly Owned Subsidiary of the Company); (iii) make any payment on or
with respect to, or purchase, redeem, defease or otherwise acquire or retire for
value any Indebtedness that is subordinated to the Notes more than six months
prior to any scheduled maturity, mandatory redemption, scheduled principal
repayment or sinking fund payment date (other than regularly scheduled payments
of interest); or (iv) make any Restricted Investment (all such payments and
other actions set forth in clauses (i) through (iv) above being collectively
referred to as "Restricted Payments"), unless, at the time of and after giving
effect to such Restricted Payment:
(a) no Default or Event of Default would have occurred and be
continuing or would occur as a consequence thereof; and
(b) the Company shall, at the time of such Restricted Payment and
after giving pro forma effect thereto as if such Restricted Payment had
been made at the beginning of the applicable four-quarter period, have been
permitted to incur at least $1.00 of additional Indebtedness pursuant to
the Fixed Charge Coverage Ratio test set forth in Section 4.12 hereof; and
(c) such Restricted Payment, together with the aggregate amount of all
other Restricted Payments made by the Company and its Restricted
Subsidiaries after the date of this Indenture (excluding Restricted
Payments permitted by clauses (ii), (iii), (iv), (v), (vii) and (viii) of
the next succeeding paragraph), is less than the sum of (i) 50% of the
Consolidated Net Income of the Company for the period (taken as one
accounting period) from the beginning of the first fiscal quarter
commencing after the date of this Indenture to the end of the Company's
most recently ended fiscal quarter for which internal financial statements
are available at the time of such Restricted Payment (or, if such
Consolidated Net Income for such period is a deficit, less 100% of such
deficit), plus (ii) 100% of the aggregate net cash proceeds received by the
Company from the issue or sale since the date of this Indenture of Equity
Interests of the Company (other than Disqualified Stock) or of Disqualified
Stock or debt securities of the Company that have been converted into such
Equity Interests (other than Equity Interests (or Disqualified Stock or
convertible debt securities) sold to a Subsidiary of the Company and other
than Disqualified Stock or convertible debt securities that have been
converted into Disqualified Stock), plus (iii) to the extent that any
Restricted Investment that was made after the date of this Indenture is
sold for cash or otherwise liquidated or repaid for cash, the lesser of (A)
the cash return of capital with respect to such Restricted Investment (less
the cost of disposition, if any) (but only to the extent not included in
subclause (i) of this clause (c)), and (B) the initial amount of such
Restricted Investment, plus (iv) $5.0 million.
The foregoing provisions shall not prohibit: (i) the payment of any
dividend within 60 days after the date of declaration thereof, if at said date
of declaration such payment would have complied with the provisions of this
Indenture; (ii) the redemption, repurchase, retirement, defeasance or other
acquisition of any subordinated Indebtedness or Equity Interests of the Company
in exchange for, or out of the net cash proceeds of the substantially concurrent
sale (other than to a Subsidiary of the Company) of, other Equity Interests of
the Company (other than any Disqualified Stock); provided that the amount of any
such net cash proceeds that are utilized for any such redemption, repurchase,
retirement, defeasance or other acquisition shall be excluded from clause
(c)(ii) of the preceding paragraph; (iii) the defeasance, redemption, repurchase
or other acquisition of subordinated Indebtedness with the net cash proceeds
from an incurrence of Permitted Refinancing Indebtedness; (iv) the payment of
scheduled dividends on or the redemption, repurchase, retirement, defeasance or
other acquisition of, any Disqualified Stock issued after
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the date hereof in compliance with the provisions of this Indenture; (v) after
March 29, 2001, the Permitted Warrant Put Payment; (vi) payments made with
respect to the repurchase, redemption or other acquisition or retirement for
value of any Equity Interests of the Company, the Parent, Sunderland or any
Subsidiary of the Company held by any member of the Company's (or any of its
Restricted Subsidiaries'), Parent's or Sunderland's management pursuant to any
management equity subscription agreement or stock option agreement in effect as
of the date of this Indenture (provided that the aggregate price paid for all
such repurchased, redeemed, acquired or retired Equity Interests shall not
exceed $1.0 million in any twelve-month period); (vii) distributions to Parent
in order to enable Parent to pay franchise taxes and other ordinary course
operating expenses in an amount not to exceed $25,000 in any twelve-month
period; and (viii) the application of the proceeds of the offering of the Notes
pursuant to the Offering Memorandum in the manner contemplated in the section of
the Offering Memorandum titled "Use of Proceeds"; provided, however, that at the
time of, and after giving effect to, any Restricted Payment permitted under
clauses (i) through (vii) no Default or Event of Default shall have occurred and
be continuing. In addition, payments and transactions permitted pursuant to
clauses (s) through (y) under Section 4.13 hereof shall not be deemed to be
Restricted Payments.
The Board of Directors may designate any Restricted Subsidiary to be an
Unrestricted Subsidiary if such designation would not cause a Default. For
purposes of making such determination, all outstanding Investments by the
Company and its Restricted Subsidiaries (except to the extent repaid in cash) in
the Subsidiary so designated shall be deemed to be Restricted Payments at the
time of such designation and shall reduce the amount available for Restricted
Payments under the first paragraph of this covenant. All such outstanding
Investments shall be deemed to constitute Investments in an amount equal to the
greatest of (x) the net book value of such Investments at the time of such
designation and (y) the fair market value of such Investments at the time of
such designation. Such designation shall only be permitted if such Restricted
Payment would be permitted at such time and if such Restricted Subsidiary
otherwise meets the definition of an Unrestricted Subsidiary.
The amount of all Restricted Payments (other than cash) shall be the fair
market value on the date of the Restricted Payment of the asset(s) or securities
proposed to be transferred or issued by the Company or such Subsidiary, as the
case may be, pursuant to the Restricted Payment. Not later than the date of
making any Restricted Payment, the Company shall deliver to the Trustee an
Officers' Certificate stating that such Restricted Payment is permitted and
setting forth the basis upon which the calculations required by this Section
4.11 were computed, together with a copy of any fairness opinion or appraisal
required by this Indenture.
SECTION 4.12. LIMITATION ON INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF PREFERRED
STOCK.
The Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, create, incur, issue, assume, guarantee or otherwise
become directly or indirectly liable, contingently or otherwise, with respect to
(collectively, "incur") any Indebtedness (including Acquired Debt) and that the
Company shall not issue any Disqualified Stock and shall not permit any of its
Subsidiaries to issue any shares of preferred stock (other than to the Company
or a Restricted Subsidiary of the Company); provided, however, that the Company
may incur Indebtedness (including Acquired Debt) or issue shares of Disqualified
Stock if:
(i) the Fixed Charge Coverage Ratio for the Company's most recently
ended four full fiscal quarters for which internal financial statements are
available immediately preceding the date
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on which such additional Indebtedness is incurred or such Disqualified
Stock is issued would have been at least 2.0 to 1, determined on a pro
forma basis (including a pro forma application of the net proceeds
therefrom), as if the additional Indebtedness had been incurred, or the
Disqualified Stock had been issued, as the case may be, at the beginning of
such four-quarter period; and
(ii) no Default or Event of Default shall have occurred and be
continuing at the time of, or would occur after giving effect on a pro
forma basis to, such incurrence or issuance.
The provisions of the first paragraph of this Section 4.12 shall not apply
to the incurrence of any of the following items of Indebtedness or the issuance
of preferred stock or Disqualified Stock (collectively, "Permitted Debt"):
(i) the incurrence by the Company and its Subsidiaries of Indebtedness
arising under or in connection with the Credit Agreement; provided that the
aggregate principal amount of all Indebtedness (with letters of credit
being deemed to have a principal amount equal to the maximum potential
liability of the Company and its Restricted Subsidiaries thereunder)
outstanding under the Credit Agreement after giving effect to such
incurrence, including all Permitted Refinancing Indebtedness incurred to
refund, refinance or replace any other Indebtedness incurred pursuant to
this clause (i), does not exceed an amount equal to the greater of $50.0
million or $30.0 million plus the Borrowing Base, in each case less the
aggregate amount of all Indebtedness permanently repaid with the Net
Proceeds of any Asset Sale;
(ii) the incurrence by the Company and its Subsidiaries of the
Existing Indebtedness;
(iii) the incurrence by the Company or any of its Restricted
Subsidiaries of Indebtedness represented by Capital Lease Obligations,
mortgage financings or purchase money obligations, in each case incurred
for the purpose of financing all or any part of the purchase price or cost
of construction or improvement of property, plant or equipment used in the
business of the Company or such Restricted Subsidiary, in an aggregate
principal amount not to exceed the principal amount of such Capital Lease
Obligations outstanding on the date hereof plus $15.0 million at any time
outstanding;
(iv) the incurrence by the Company or any of its Restricted
Subsidiaries of Acquired Debt in connection with the acquisition of assets
or a new Restricted Subsidiary; provided that such Acquired Debt was
incurred by the prior owner of such assets or such Restricted Subsidiary
prior to such acquisition by the Company or one of its Restricted
Subsidiaries and was not incurred in connection with, or in contemplation
of, such acquisition by the Company or one of its Restricted Subsidiaries;
and provided further that the aggregate principal amount, accreted value or
liquidation preference, as applicable, of such Acquired Debt, together with
any other outstanding Indebtedness or preferred stock incurred pursuant to
this clause (iv), does not exceed $5.0 million;
(v) the incurrence by the Company or any of its Restricted
Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the
net proceeds of which are used to refund, refinance or replace Indebtedness
that was permitted by this Indenture to be incurred;
(vi) the incurrence by the Company or any of its Restricted
Subsidiaries of intercompany Indebtedness between or among the Company and
any of its Wholly Owned
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Restricted Subsidiaries; provided, however, that (A) any subsequent
issuance or transfer of Equity Interests that results in any such
Indebtedness being held by a Person other than the Company or a Wholly
Owned Restricted Subsidiary and (B) any sale or other transfer of any such
Indebtedness to a Person that is not either the Company or a Wholly Owned
Restricted Subsidiary (other than any pledge of such Indebtedness to the
lenders under the Credit Agreement) shall be deemed, in each case, to
constitute an incurrence of such Indebtedness by the Company or such
Restricted Subsidiary, as the case may be;
(vii) the incurrence by the Company or any of its Restricted
Subsidiaries of Hedging Obligations that are incurred for the purpose of
fixing or hedging interest rate risk with respect to any floating rate
Indebtedness that is permitted by the terms of this Indenture to be
outstanding, provided that the notional principal amount of any Hedging
Obligations does not significantly exceed the principal amount of
Indebtedness to which such agreement relates, or for the purpose of hedging
against fluctuations in currency values;
(viii) the Guarantee by the Company or any of the Restricted
Subsidiaries of Indebtedness of the Company or a Restricted Subsidiary of
the Company that was permitted to be incurred by another provision of this
covenant;
(ix) the issuance by the Company's Unrestricted Subsidiaries of
preferred stock or the incurrence by the Company's Unrestricted
Subsidiaries of Non-Recourse Debt, provided, however, that if any such
Indebtedness ceases to be Non-Recourse Debt of an Unrestricted Subsidiary,
such event shall be deemed to constitute an incurrence of Indebtedness by a
Restricted Subsidiary of the Company;
(x) the incurrence by the Company and its Restricted Subsidiaries of
Indebtedness represented by the $75,000,000 aggregate principal amount of
Notes issued pursuant to the Offering Memorandum and the Subsidiary
Guarantees and any Notes issued pursuant to Section 2.07 hereof; and
(xi) the incurrence by the Company or any of its Restricted
Subsidiaries of additional Indebtedness in an aggregate principal amount
(or accreted value, as applicable) or the issuance of preferred stock with
an aggregate liquidation preference at any time outstanding, including all
Permitted Refinancing Indebtedness incurred to refund, refinance or replace
any other Indebtedness incurred pursuant to this clause (xi), not to exceed
$10.0 million.
For purposes of determining compliance with this covenant, in the event
that an item of Indebtedness meets the criteria of more than one of the
categories of Permitted Debt described in clauses (i) through (xi) above or is
entitled to be incurred pursuant to the first paragraph of this covenant, the
Company shall, in its sole discretion, classify or reclassify such item of
Indebtedness in any manner that complies with this covenant and such item of
Indebtedness shall be treated as having been incurred pursuant to only one of
such clauses or pursuant to the first paragraph hereof. Accrual of interest, the
accretion of accreted value and the payment of interest in the form of
additional Indebtedness shall not be deemed to be an incurrence of Indebtedness
for purposes of this covenant.
SECTION 4.13 TRANSACTIONS WITH AFFILIATES.
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The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise
dispose of any of its properties or assets to, or purchase any property or
assets from, or enter into or make or amend any transaction, contract,
agreement, understanding, loan, advance or guarantee with, or for the benefit
of, any Affiliate (each of the foregoing, an "Affiliate Transaction"), unless
(i) such Affiliate Transaction is on terms that are no less favorable to the
Company or the relevant Restricted Subsidiary than those that would have been
obtained in a comparable transaction by the Company or such Restricted
Subsidiary with an unrelated Person and (ii) the Company delivers to the Trustee
(a) with respect to any Affiliate Transaction or series of related Affiliate
Transactions involving aggregate consideration in excess of $1.0 million, a
Board Resolution and an Officers' Certificate certifying that such Affiliate
Transaction complies with clause (i) above and that such Affiliate Transaction
has been approved by a majority of the Board of Directors and (b) with respect
to any Affiliate Transaction or series of related Affiliate Transactions
involving aggregate consideration in excess of $5.0 million, an opinion as to
the fairness to the Holders of such Affiliate Transaction from a financial point
of view issued by an accounting, appraisal or investment banking firm of
national standing; provided that (r) the application of the proceeds of the
offering of the Notes pursuant to the Offering Memorandum and the transactions
entered into in connection therewith in the manner contemplated in the section
of the Offering Memorandum titled "Use of Proceeds", (s) capital contributions,
advances, loans or other investments made by Parent to the Company or any of its
Restricted Subsidiaries, (t) (I) payments under the Management Agreement in an
amount not to exceed $300,000 in any twelve-month period and (II) after the
first anniversary of the original issuance of the Notes, additional payments
under the Management Agreement in an amount not to exceed $700,000 in any
twelve-month period, provided that the Company's Fixed Charge Coverage Ratio for
the Company's most recently ended four full fiscal quarters for which internal
financial statements are available immediately preceding the date on which such
payment under the Management Agreement is made, after giving pro forma effect to
such payment, is equal to or greater than 2.25 to 1 (in each case, plus
reasonable expenses incurred in connection with and reimbursable under the
Management Agreement), (u) payments by the Company or any of its Restricted
Subsidiaries to Mentmore and/or its Affiliates made for any financial advisory,
financing, underwriting or placement services or in respect of other investment
banking activities, including, without limitation, in connection with
acquisitions or divestitures, which payments are approved by a majority of the
Board of Directors of the Company in good faith, (v) payments under tax sharing
agreements to the extent such payments do not otherwise exceed the tax liability
the Company would have had were it not part of a consolidated group, (w) any
employment agreement, compensation agreement or employee benefit arrangement
entered into by the Company or any of its Restricted Subsidiaries in the
ordinary course of business, (x) transactions between or among Parent, the
Company and/or its Restricted Subsidiaries, (y) any other payment or
reimbursement of reasonable and customary fees and expenses incurred by an
Affiliate for services rendered to the Company or any of its Subsidiaries not to
exceed $100,000 in any twelve-month period (without duplication for any amounts
paid pursuant to any other clause of this covenant) and (z) Restricted Payments
that are permitted under Section 4.11 hereof, in each case, shall not be deemed
Affiliate Transactions.
SECTION 4.14 DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any encumbrance or restriction on the ability of any
Restricted Subsidiary to (i)(a) pay dividends or make any other distributions to
the Company or any of its Restricted Subsidiaries (1) on its Capital Stock or
(2) with respect to any other interest or participation in, or measured by, its
profits, or (b) pay any Indebtedness owed to the Company
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or any of its Restricted Subsidiaries, (ii) make loans or advances to the
Company or any of its Restricted Subsidiaries or (iii) transfer any of its
properties or assets to the Company or any of its Restricted Subsidiaries,
except for such encumbrances or restrictions existing under or by reason of (a)
Existing Indebtedness as in effect on the date of this Indenture, (b) the Credit
Agreement as in effect as of the date of this Indenture, and any amendments,
modifications, restatements, renewals, increases, supplements, refundings,
replacements or refinancings thereof, provided that such amendments,
modifications, restatements, renewals, increases, supplements, refundings,
replacement or refinancings are no more restrictive on a whole with respect to
such dividend and other payment restrictions than those contained in the Credit
Agreement as in effect on the date of this Indenture, (c) this Indenture and the
Notes, (d) applicable law, (e) any instrument governing Indebtedness or Capital
Stock of a Person acquired by the Company or any of its Restricted Subsidiaries
as in effect at the time of such acquisition (except to the extent such
Indebtedness was incurred in connection with or in contemplation of such
acquisition), which encumbrance or restriction is not applicable to any Person,
or the properties or assets of any Person, other than the Person, or the
property or assets of the Person (including any Subsidiary of the Person), so
acquired, provided that, in the case of Indebtedness, such Indebtedness was
permitted by the terms of this Indenture to be incurred, (f) by reason of
customary non-assignment and net worth provisions in leases or other agreements
entered into in the ordinary course of business and consistent with past
practices, (g) purchase money obligations for property acquired in the ordinary
course of business that impose restrictions of the nature described in clause
(iii) above on the property so acquired, (h) Permitted Refinancing Indebtedness,
provided that the restrictions contained in the agreements governing such
Permitted Refinancing Indebtedness are no more restrictive than those contained
in the agreements governing the Indebtedness being refinanced, (i) customary
restrictions in Capital Lease Obligations, security agreements or mortgages
securing Indebtedness of the Company or a Restricted Subsidiary to the extent
such restrictions restrict the transfer of the property subject to such Capital
Lease Obligations, security agreements or mortgages, (j) customary restrictions
with respect to an agreement that has been entered into for the sale or
disposition of assets or Capital Stock held by the Company or any Restricted
Subsidiary, (k) customary restrictions contained in any agreements or
documentation governing Indebtedness or preferred stock issued pursuant to
clause (xi) of Section 4.12 hereof and (l) the Warrant Agreement and the
Shareholders Agreement.
SECTION 4.15. LIMITATION ON ISSUANCES AND SALES OF CAPITAL STOCK OF WHOLLY OWNED
RESTRICTED SUBSIDIARIES.
The Company (i) shall not, and shall not permit any Wholly Owned
Restricted Subsidiary of the Company to, issue, transfer, convey, sell, lease or
otherwise dispose of any Capital Stock of any Wholly Owned Restricted Subsidiary
of the Company to any Person (other than the Company or a Wholly Owned
Restricted Subsidiary of the Company), unless (a) such issuance, transfer,
conveyance, sale, lease or other disposition is of all the Capital Stock of such
Wholly Owned Restricted Subsidiary and (b) the Net Proceeds from such transfer,
conveyance, sale, lease or other disposition are applied in accordance with
Section 4.10 hereof and (ii) shall not permit any Wholly Owned Restricted
Subsidiary of the Company to issue any of its Equity Interests (other than, if
necessary, shares of its Capital Stock constituting directors' qualifying
shares) to any Person other than to the Company or a Wholly Owned Restricted
Subsidiary of the Company.
SECTION 4.16. LIMITATION ON LAYERING DEBT.
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The Company shall not, incur, create, issue, assume, Guarantee or
otherwise become liable for any Indebtedness that is by its terms subordinate or
junior in right of payment to any Senior Debt and senior in any respect in right
of payment to the Notes and the Guarantors shall not incur, create, issue,
assume, Guarantee or otherwise become liable for any Indebtedness that is by its
terms subordinate or junior in right of payment to any Senior Debt and senior in
any respect in right of payment to the Subsidiary Guarantees.
SECTION 4.17. ADDITIONAL SUBSIDIARY GUARANTEES.
If the Company or any of its Subsidiaries shall acquire or create another
Subsidiary after the date hereof, then such newly acquired or created Subsidiary
(at any time such Subsidiary has net assets or stock holder's equity in excess
of $50,000) shall execute a Subsidiary Guarantee and deliver an Opinion of
Counsel, in accordance with the terms of this Indenture; provided, however, that
all Subsidiaries that have been properly designated as Unrestricted Subsidiaries
in accordance with this Indenture shall not be subject to the preceding clause
for so long as they continue to constitute Unrestricted Subsidiaries.
SECTION 4.18. PAYMENTS FOR CONSENT.
Neither the Company nor any of its Subsidiaries shall, directly or
indirectly, pay or cause to be paid any consideration, whether by way of
interest, fee or otherwise, to any Holder of any Notes for or as an inducement
to any consent, waiver or amendment of any of the terms or provisions of this
Indenture or the Notes unless such consideration is offered to be paid or is
paid to all Holders of the Notes that consent, waive or agree to amend in the
time frame set forth in the solicitation documents relating to such consent,
waiver or agreement.
ARTICLE 5
SUCCESSORS
SECTION 5.01. MERGER, CONSOLIDATION, OR SALE OF ALL OR SUBSTANTIALLY ALL ASSETS.
The Company shall not consolidate or merge with or into or wind up into
(whether or not the Company is the surviving corporation), or sell, assign,
transfer, lease, convey or otherwise dispose of all or substantially all of its
properties or assets in one or more related transactions to, any Person unless:
(i) the Company is the surviving corporation or the Person formed by or
surviving any such consolidation or merger (if other than the Company)
or to which such sale, assignment, transfer, lease, conveyance or
other disposition will have been made is a corporation organized or
existing under the laws of the United States, any state thereof or the
District of Columbia, (the Company or such Person, as the case may be,
being herein called the "Successor Company");
(ii) the Successor Company (if other than the Company) assumes all the
obligations of the Company under this Indenture and the Notes pursuant
to a supplemental indenture or other documents or instruments in form
reasonably satisfactory to the Trustee;
(iii) immediately after such transaction no Default or Event of Default
exists;
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(iv) except in the case of a merger of the Company with or into a Wholly
Owned Subsidiary of the Company, the Company or the Person formed by
or surviving any such consolidation or merger (if other than the
Company), or to which such sale, assignment, transfer, lease,
conveyance or other disposition shall have been made (A) shall have
Consolidated Net Worth immediately after the transaction equal to or
greater than the Consolidated Net Worth of the Company immediately
preceding the transaction and (B) shall, at the time of such
transaction and after giving pro forma effect thereto as if such
transaction had occurred at the beginning of the applicable
four-quarter period, be permitted to incur at least $1.00 of
additional Indebtedness pursuant to the Fixed Charge Coverage Ratio
test set forth in Section 4.12 hereof; and
(v) the Company has delivered to the Trustee an Officers' Certificate
stating that such consolidation, merger, sale, assignment, transfer,
lease, conveyance or other disposition and such supplemental indenture
complies with this Article and that all conditions precedent herein
provided for relating to such transaction have been complied with.
SECTION 5.02. SUCCESSOR CORPORATION SUBSTITUTED.
Upon any consolidation or merger, or any sale, assignment, transfer,
lease, conveyance or other disposition of all or substantially all of the assets
of the Company in accordance with Section 5.01 hereof, the successor corporation
formed by such consolidation or into or with which the Company is merged or to
which such sale, assignment, transfer, lease, conveyance or other disposition is
made shall succeed to, and be substituted for (so that from and after the date
of such consolidation, merger, sale, lease, conveyance or other disposition, the
provisions of this Indenture referring to the "Company" shall refer instead to
the successor corporation and not to the Company), and may exercise every right
and power of the Company under this Indenture with the same effect as if such
successor Person had been named as the Company herein; provided, however, that
the predecessor Company shall not be relieved from the obligation to pay the
principal of and interest on the Senior Notes except in the case of a sale of
all of the Company's assets that meets the requirements of Section 5.01 hereof.
ARTICLE 6
DEFAULTS AND REMEDIES
SECTION 6.01. EVENTS OF DEFAULT AND NOTICE THEREOF.
Each of the following constitutes an "Event of Default":
(a) default for 30 days or more in the payment when due of interest on, or
Liquidated Damages, if any, with respect to the Notes (whether or not
prohibited by Article 10 hereof);
(b) default in payment when due (whether payable at maturity, upon
redemption or otherwise) of the principal of or premium, if any, on
the Notes (whether or not prohibited by Article 10 hereof);
(c) failure by the Company to comply with Sections 4.09, 4.10 and 5.01
hereof;
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(d) failure by the Company for 30 days after receipt of written notice to
comply with any of its other agreements in this Indenture or the
Notes;
(e) default under any mortgage, indenture or instrument under which there
may be issued or by which there may be secured or evidenced any
Indebtedness for money borrowed by the Company or any of its
Restricted Subsidiaries (or the payment of which is guaranteed by the
Company or any of its Restricted Subsidiaries) whether such
Indebtedness or guarantee now exists, or is created after the date of
this Indenture, which default (1) is caused by the failure to pay
principal of or premium, if any, or interest on such Indebtedness
prior to the expiration of the grace period provided in such
Indebtedness on the date of such default (a "Payment Default") at its
stated final maturity (after giving effect to any applicable grace
periods) or (2) results in the acceleration of such Indebtedness prior
to its express maturity and, in each case, the principal amount of any
such Indebtedness, together with the principal amount of any other
such Indebtedness under which there has been a Payment Default or the
maturity of which has been so accelerated, aggregates $5.0 million or
more;
(f) failure by the Company or any of its Restricted Subsidiaries to pay
final and non-appealable judgments aggregating in excess of $5.0
million, which judgments are not paid, discharged or stayed for a
period of 60 days;
(g) the Company or any Restricted Subsidiary that is a Significant
Subsidiary pursuant to or within the meaning of any Bankruptcy Law:
(i) commences a voluntary case,
(ii) consents to the entry of an order for relief against it in an
involuntary case in which it is the debtor,
(iii) consents to the appointment of a Custodian of it or for all or
substantially all of its property,
(iv) makes a general assignment for the benefit of its creditors, or
(v) admits in writing its inability generally to pay its debts as the
same become due;
(h) a court of competent jurisdiction enters an order or decree under any
Bankruptcy Law that:
(i) is for relief against the Company or any Restricted Subsidiary
that is a Significant Subsidiary in an involuntary case in which
it is the debtor,
(ii) appoints a Custodian of the Company or any Restricted Subsidiary
that is a Significant Subsidiary or for all or substantially all
of the property of the Company or any Restricted Subsidiary that
is a Significant Subsidiary; or
(iii) orders the liquidation of the Company or any Restricted
Subsidiary that is a Significant Subsidiary,
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and the order or decree contemplated in clauses (i), (ii) or (iii) of
this clause (h), remains unstayed and in effect for 60 consecutive
days; or
(i) except as permitted by this Indenture, any Subsidiary Guarantee
shall be held in any judicial proceeding to be unenforceable or
invalid and such judgment has become final or non-appealable or
shall cease for any other reason to be in full force and effect
or any Guarantor, or any Person acting on behalf of any Guarantor
shall deny or disaffirm its obligations under its Subsidiary
Guarantee.
A Default under Section 6.01(d) is not an Event of Default until the
Trustee notifies the Company, or any Holder notifies the Company and the
Trustee, of the Default and the Company does not cure the Default within 30 days
after receipt of the notice. The notice must specify the Default, demand that it
be remedied and state that the notice is a "Notice of Default."
SECTION 6.02. ACCELERATION OF MATURITY; RESCISSION.
If any Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount of the then outstanding Notes may
declare all the Notes to be due and payable immediately by notice in writing to
the Company and the Trustee; provided that so long as any Indebtedness permitted
to be incurred pursuant to the Credit Agreement shall be outstanding, such
acceleration shall not be effective until the earlier of (i) an acceleration of
any such Indebtedness under the Credit Agreement or (ii) five Business Days
after receipt by the Company and the Agent of written notice of such
acceleration.
Notwithstanding the foregoing, in the case of an Event of Default
specified in clause (g) or (h) of Section 6.01 occurring with respect to the
Company, any Significant Subsidiary that is a Restricted Subsidiary or any group
of Restricted Subsidiaries that, taken together, would constitute a Significant
Subsidiary, all outstanding Notes will become due and payable without further
action or notice. Holders of the Notes may not enforce this Indenture or the
Notes except as provided in this Indenture. The Trustee may withhold from
Holders of the Notes notice of any continuing Default or Event of Default
(except a Default or Event of Default relating to the payment of principal or
interest) if it determines that withholding notice is in their interest.
SECTION 6.03. OTHER REMEDIES.
If an Event of Default occurs and is continuing, the Trustee may pursue
any available remedy to collect the payment of principal, premium, if any, and
interest on the Notes or to enforce the performance of any provision of the
Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any of
the Notes or does not produce any of them in the proceeding. A delay or omission
by the Trustee or any Holder of a Note in exercising any right or remedy
accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. All remedies are
cumulative to the extent permitted by law.
SECTION 6.04. WAIVER OF PAST DEFAULTS.
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Holders of not less than a majority in aggregate principal amount of the
then outstanding Notes by notice to the Trustee may on behalf of the Holders of
all of the Notes waive an existing Default or Event of Default and its
consequences hereunder, except a continuing Default or Event of Default in the
payment of the principal of, premium, if any, or interest on, any such Note held
by a non-consenting Holder; provided, however, that the Holders of at least a
majority in aggregate principal amount of the Notes then outstanding may rescind
an acceleration and its consequences, including any related payment default that
resulted from such acceleration. Upon any such waiver, such Default shall cease
to exist, and any Event of Default arising therefrom shall be deemed to have
been cured for every purpose of this Indenture; but no such waiver shall extend
to any subsequent or other Default or impair any right consequent thereon.
SECTION 6.05. CONTROL BY MAJORITY.
The Holders of a majority in aggregate principal amount of the then
outstanding Notes may direct the time, method and place of conducting any
proceeding for exercising any remedy available to the Trustee or exercising any
trust or power conferred on it. However, the Trustee may refuse to follow any
direction that conflicts with law or this Indenture that the Trustee determines
may be unduly prejudicial to the rights of other Holders of Notes or that may
involve the Trustee in personal liability. The Trustee may take any other action
which it deems proper which is not inconsistent with any such direction.
SECTION 6.06. LIMITATION ON SUITS.
No Holder of a Note will have any right to institute any proceeding with
respect to this Indenture or for any remedy hereunder, unless (i) such Holder
shall have previously given to the Trustee written notice of a continuing Event
of Default with respect to the Notes, (ii) the Holders of at least 25% in
aggregate principal amount of the Notes then outstanding shall have made written
request to the Trustee to institute such proceeding and, if requested by the
Trustee, provided reasonable indemnity to the Trustee, with respect to such
proceeding and (iii) the Trustee shall not have received from the Holders of a
majority in aggregate principal amount of the Notes then outstanding a direction
inconsistent with such request and shall have failed to institute such
proceeding within 60 days.
SECTION 6.07. RIGHTS OF HOLDERS OF NOTES TO RECEIVE PAYMENT.
Notwithstanding any other provision of this Indenture, the right of any
Holder of a Note to receive payment of principal, premium, if any, and interest
on any Note, on or after the respective due dates expressed in any Note, or to
bring suit for the enforcement of any such payment on or after such respective
dates, shall not be impaired or affected without the consent of such Holder.
SECTION 6.08. COLLECTION SUIT BY TRUSTEE.
If an Event of Default specified in Section 6.01(a) or (b) occurs and is
continuing, the Trustee is authorized to recover judgment in its own name and as
trustee of an express trust against the Company or any Guarantor for the whole
amount of principal of, premium, if any, and interest remaining unpaid on the
Notes and interest on overdue principal and, to the extent lawful, interest and
such further amount as shall be sufficient to cover the costs and expenses of
collection, including the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, and any other amounts due to
the Trustee under Section 7.07 hereof.
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SECTION 6.09. TRUSTEE MAY FILE PROOFS OF CLAIM.
The Trustee is authorized to file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Holders of the Notes allowed in any judicial proceedings relative to the Company
(or any other obligor upon the Notes), its creditors or its property and shall
be entitled and empowered to collect, receive and distribute any money or other
property payable or deliverable on any such claims and any custodian in any such
judicial proceeding is hereby authorized by each Holder to make such payments to
the Trustee, as administrative expenses associated with any such proceeding and
in the event that the Trustee shall consent to the making of such payments
directly to the Holders, to pay to the Trustee any amount due to it for the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel, and any other amounts due the Trustee under Section 7.07
hereof. To the extent that the payment of any such compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 7.07 hereof out of the estate in any such
proceeding, shall be denied for any reason, payment of the same shall be secured
by a Lien on, and shall be paid out of, any and all distributions, dividends,
money, securities and other properties that the Holders may be entitled to
receive in such proceeding whether in liquidation or under any plan of
reorganization or arrangement or otherwise. Nothing herein contained shall be
deemed to authorize the Trustee to authorize or consent to or accept or adopt on
behalf of any Holder any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Holder, or to authorize the
Trustee to vote in respect of the claim of any Holder in any such proceeding.
SECTION 6.10. PRIORITIES.
If the Trustee collects any money pursuant to this Article 6, it shall pay
out the money in the following order:
First: to the Trustee, its agents and attorneys for amounts due under
Section 7.07 hereof, including payment of all compensation, expense and
liabilities incurred, and all advances made, by the Trustee and the costs
and expenses of collection;
Second: to holders of Senior Debt of the Company and the Guarantors to the
extent required by Article 10 hereof or any Subsidiary Guarantee;
Third: to Holders of Notes for amounts due and unpaid on the Notes for
principal, premium, if any, and interest, ratably, without preference or
priority of any kind, according to the amounts due and payable on the
Notes for principal, premium and, if any, and interest, respectively;
Fourth: without duplication, to the Holders for any other Obligations
owing to the Holders under this Indenture and the Notes; and
Fifth: to the Company or to such party as a court of competent
jurisdiction shall direct.
The Trustee may fix a record date and payment date for any payment to
Holders of Notes pursuant to this Section 6.10.
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SECTION 6.11. UNDERTAKING FOR COSTS.
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as a Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, having due regard to
the merits and good faith of the claims or defenses made by the party litigant.
This Section does not apply to a suit by the Trustee, a suit by a Holder of a
Note pursuant to Section 6.07 hereof, or a suit by Holders of more than 10% in
principal amount of the then outstanding Notes.
SECTION 6.12. WAIVER OF STAY, EXTENSION OF USURY LAWS.
The Company covenants (to the extent that it may lawfully do so) that it
will not at any time insist upon, or plead, or in any manner whatsoever claim or
take the benefit or advantage of, any stay, extension or usury law wherever
enacted, now or at any time hereafter in force, which may affect the covenants
or the performance of this Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such
law, and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit the execution of
every such power as though no such law had been enacted.
ARTICLE 7
TRUSTEE
SECTION 7.01. DUTIES OF TRUSTEE.
(a) If an Event of Default has occurred and is continuing, the Trustee
shall exercise such of the rights and powers vested in it by this Indenture, and
use the same degree of care and skill in its exercise, as a prudent person would
exercise or use under the circumstances in the conduct of his own affairs.
(b) Except during the continuance of an Event of Default:
(1) the duties of the Trustee shall be determined solely by the
express provisions of this Indenture and the Trustee need perform only
those duties that are specifically set forth in this Indenture and no
others, and no implied covenants or obligations shall be read into this
Indenture against the Trustee; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness
of the opinions expressed therein, upon certificates or opinions furnished
to the Trustee and conforming to the requirements of this Indenture,
provided that the Trustee shall examine the certificates and opinions to
determine whether or not they conform to the requirements of this
Indenture.
(c) The Trustee may not be relieved from liabilities for its own negligent
action, its own negligent failure to act, or its own willful misconduct, except
that:
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(i) this paragraph does not limit the effect of paragraph (b) of
this Section 7.01;
(ii) the Trustee shall not be liable for any error of judgment made
in good faith by a Responsible Officer, unless it is proved that the
Trustee was negligent in ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.05 hereof.
(d) Whether or not therein expressly so provided, every provision of this
Indenture that in any way relates to the Trustee is subject to paragraphs (a),
(b), and (c) of this Section.
(e) No provision of this Indenture shall require the Trustee to expend or
risk its own funds or incur any liability. The Trustee shall be under no
obligation to exercise any of its rights and powers under this Indenture unless
the Holders shall have offered to the Trustee security and indemnity
satisfactory to it against any loss, liability or expense.
(f) The Trustee shall not be liable for interest on any money received by
it except as the Trustee may agree in writing with the Company. Money held in
trust by the Trustee need not be segregated from other funds except to the
extent required by law.
(g) The Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, debenture or
other paper or documents, but the Trustee, in its discretion may make such
further inquiry or investigation into such facts or matters as it may see fit,
and, if the Trustee shall determine to make such further inquiry or
investigation, it shall be entitled to examine the books, records and premises
of the Company or any Guaranteeing Subsidiary, personally or by agent or
attorney.
SECTION 7.02. RIGHTS OF TRUSTEE.
(a) The Trustee may conclusively rely upon any document believed by it to
be genuine and to have been signed or presented by the proper person. The
Trustee need not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require an
Officers' Certificate or an Opinion of Counsel. The Trustee shall not be liable
for any action it takes or omits to take in good faith in reliance on such
Officers' Certificate or Opinion of Counsel. The Trustee may consult with
counsel and the written advice of such counsel or any Opinion of Counsel shall
be full and complete authorization and protection from liability in respect of
any action taken, suffered or omitted by it hereunder in good faith and in
reliance thereon.
(c) The Trustee may act through its attorneys and agents and shall not be
responsible for the misconduct or negligence of any agent appointed with due
care.
(d) The Trustee shall not be liable for any action it takes or omits to
take in good faith that it believes to be authorized or within the rights or
powers conferred upon it by this Indenture.
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(e) Unless otherwise specifically provided in this Indenture, any demand,
request, direction or notice from the Company or any Guarantor shall be
sufficient if signed by an Officer of the Company or such Guarantor. A
permissive right granted to the Trustee hereunder shall not be deemed an
obligation to act.
(f) The Trustee shall be under no obligation to exercise any of the rights
or powers vested in it by this Indenture at the request or direction of any of
the Holders unless such Holders shall have offered to the Trustee reasonable
security or indemnity against the costs, expenses and liabilities that might be
incurred by it in compliance with such request or direction.
(g) The Trustee shall not be charged with knowledge of any Default or
Event of Default unless either (i) a Responsible Officer of the Trustee shall
have actual knowledge of such Default or Event of Default or (ii) written notice
of such Default or Event of Default shall have been given to the Trustee by the
Company or any Holder.
SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE.
The Trustee, in its individual or any other capacity, may become the owner
or pledgee of Notes and may otherwise deal with the Company or any Affiliate of
the Company with the same rights it would have if it were not Trustee. However,
in the event that the Trustee acquires any conflicting interest it must
eliminate such conflict within 90 days, apply to the SEC for permission to
continue as trustee or resign. Any Agent may do the same with like rights and
duties. The Trustee is also subject to Sections 7.10 and 7.11 hereof.
SECTION 7.04. TRUSTEE'S DISCLAIMER.
The Trustee shall not be responsible for and makes no representation as to
the validity or adequacy of this Indenture or the Notes, it shall not be
accountable for the Company's use of the proceeds from the Notes or any money
paid to the Company or upon the direction of the Company under any provision of
this Indenture, it shall not be responsible for the use or application of any
money received by any Paying Agent other than the Trustee, and it shall not be
responsible for any statement or recital herein or any statement in the Notes or
any other document in connection with the sale of the Notes or pursuant to this
Indenture other than its certificate of authentication.
SECTION 7.05. NOTICE OF DEFAULTS.
If a Default or Event of Default occurs and is continuing and if it is
known to the Trustee, the Trustee shall mail to Holders of Notes a notice of the
Default or Event of Default within 90 days after it occurs. Except in the case
of a Default or Event of Default in payment of principal of, premium, if any, or
interest on any Note, the Trustee may withhold the notice if and so long as a
committee of its Responsible Officers in good faith determines that withholding
the notice is in the interests of the Holders of the Notes.
SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS OF THE NOTES.
Within 60 days after each May 15 beginning with the May 15 following the
date of this Indenture, and for so long as Notes remain outstanding, the Trustee
shall mail to the Holders of the Notes a brief
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report dated as of such reporting date that complies with TIA ss. 313(a) (but if
no event described in TIA ss. 313(a) has occurred within the twelve months
preceding the reporting date, no report need be transmitted). The Trustee also
shall comply with TIA ss. 313(b)(2). The Trustee shall also transmit by mail all
reports as required by TIA ss. 313(c).
A copy of each report at the time of its mailing to the Holders of Notes
shall be mailed to the Company and filed with the SEC and each stock exchange on
which the Notes are listed in accordance with TIA ss. 313(d). The Company shall
promptly notify the Trustee when the Notes are listed on any stock exchange.
SECTION 7.07. COMPENSATION AND INDEMNITY.
The Company shall pay to the Trustee, from time to time as may be agreed
upon between them, reasonable compensation for its acceptance of this Indenture
and services hereunder. The Trustee's compensation shall not be limited by any
law on compensation of a trustee of an express trust. The Company shall
reimburse the Trustee promptly upon request for all reasonable disbursements,
advances and expenses incurred or made by it in addition to the compensation for
its services. Such expenses shall include the reasonable compensation,
disbursements and expenses of the Trustee's agents and counsel.
The Company shall indemnify the Trustee against any and all losses,
liabilities or expenses (other than taxes based on the income of the Trustee)
incurred by it arising out of or in connection with the acceptance or
administration of its duties under this Indenture, including the costs and
expenses of enforcing this Indenture against the Company (including this Section
7.07) and defending itself against any claim (whether asserted by the Company or
any Holder or any other Person) or liability in connection with the exercise or
performance of any of its powers or duties hereunder, except to the extent any
such loss, liability or expense may be attributable to its negligence or bad
faith. The Trustee shall notify the Company promptly of any claim for which it
may seek indemnity. Failure by the Trustee to so notify the Company shall not
relieve the Company of its obligations hereunder. The Company shall defend the
claim and the Trustee shall cooperate in the defense. The Trustee may have
separate counsel and the Company shall pay the reasonable fees and expenses of
such counsel. The Company need not pay for any settlement made without its
consent, which consent shall not be unreasonably withheld.
The obligations of the Company under this Section 7.07 shall survive the
resignation or removal of the Trustee and the satisfaction and discharge of this
Indenture.
To secure the Company's payment obligations in this Section, the Trustee
shall have a Lien prior to the Notes on all money or property held or collected
by the Trustee, except that held in trust to pay principal and interest on
particular Notes. Such Lien shall survive the satisfaction and discharge of this
Indenture.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01(g) or (h) hereof occurs, the expenses and the
compensation for the services (including the fees and expenses of its agents and
counsel) are intended to constitute expenses of administration under any
Bankruptcy Law.
The Trustee shall comply with the provisions of TIA ss. 313(b)(2) to the
extent applicable.
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SECTION 7.08. REPLACEMENT OF TRUSTEE.
A resignation or removal of the Trustee and appointment of a successor
Trustee shall become effective only upon the successor Trustee's acceptance of
appointment as provided in this Section 7.08.
The Trustee may resign in writing at any time and be discharged from the
trust hereby created by so notifying the Company. The Holders of Notes of a
majority in principal amount of the then outstanding Notes may remove the
Trustee by so notifying the Trustee and the Company in writing. The Company may
remove the Trustee if:
(a) the Trustee fails to comply with Section 7.10 hereof,
(b) the Trustee is adjudged a bankrupt or an insolvent or an order for
relief is entered with respect to the Trustee under any Bankruptcy Law;
(c) a Custodian or public officer takes charge of the Trustee or its
property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the office
of Trustee for any reason, the Company shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holders
of a majority in principal amount of the then outstanding Notes may appoint a
successor Trustee to replace the successor Trustee appointed by the Company.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company, or
the Holders of Notes of at least 10% in principal amount of the then outstanding
Notes may petition any court of competent jurisdiction for the appointment of a
successor Trustee.
If the Trustee, after written request by any Holder of a Note who has been
a Holder of a Note for at least six months, fails to comply with Section 7.10,
such Holder of a Note may petition any court of competent jurisdiction for the
removal of the Trustee and the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its appointment
to the retiring Trustee and to the Company. Thereupon, the resignation or
removal of the retiring Trustee shall become effective, and the successor
Trustee shall have all the rights, powers and duties of the Trustee under this
Indenture. The successor Trustee shall mail a notice of its succession to
Holders of the Notes. The retiring Trustee shall promptly transfer all property
held by it as Trustee to the successor Trustee, provided all sums owing to the
Trustee hereunder have been paid and subject to the Lien provided for in Section
7.07 hereof. Notwithstanding replacement of the Trustee pursuant to this Section
7.08, the Company's obligations under Section 7.07 hereof shall continue for the
benefit of the retiring Trustee.
SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER, ETC.
If the Trustee consolidates, merges or converts into, or transfers all or
substantially all of its corporate trust business (including the trust created
by this Indenture) to, another corporation, the successor corporation without
any further act shall be the successor Trustee.
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SECTION 7.10. ELIGIBILITY; DISQUALIFICATION.
There shall at all times be a Trustee hereunder that is a corporation
organized and doing business under the laws of the United States of America or
of any state thereof that is authorized under such laws to exercise corporate
trustee power, that is subject to supervision or examination by federal or state
authorities and that has, or is a wholly owned subsidiary of a bank holding
company that has, a combined capital and surplus of at least $100 million as set
forth in its most recent published annual report of condition.
This Indenture shall always have a Trustee who satisfies the requirements
of TIA ss. 310(a)(1), (2) and (5). The Trustee is subject to TIA ss. 310(b).
SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST THE COMPANY.
The Trustee is subject to TIA ss. 311(a), excluding any creditor
relationship listed in TIA ss. 311(b). A Trustee who has resigned or been
removed shall be subject to TIA ss. 311(a) to the extent indicated therein.
ARTICLE 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
SECTION 8.01. OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT DEFEASANCE.
The Company may, at its option by Board Resolution, at any time, with
respect to the Notes, elect to have either Section 8.02 hereof or Section 8.03
hereof be applied to all Notes and Subsidiary Guarantees then outstanding upon
compliance with the conditions set forth in this Article 8.
SECTION 8.02.
LEGAL DEFEASANCE AND DISCHARGE.
Upon the Company's exercise under Section 8.01 of the option applicable to
this Section 8.02, the Company and the Guarantors, if any, shall be deemed to
have been discharged from their respective obligations with respect to all Notes
and Subsidiary Guarantees then outstanding on the date the conditions set forth
below are satisfied (hereinafter, "Legal Defeasance"). For this purpose, such
defeasance means that the Company and any Guarantor shall be deemed to have paid
and discharged the entire indebtedness represented by the Notes and any
Subsidiary Guarantees outstanding, which shall thereafter be deemed to be
"outstanding" only for the purposes of Section 8.05 and the other Sections of
this Indenture referred to in (A) and (B) below, and to have satisfied all its
other obligations under such Notes, Subsidiary Guarantees and this Indenture
(and the Trustee, on demand of and at the expense of the Company, shall execute
proper instruments acknowledging the same), except for the following which shall
survive until otherwise terminated or discharged hereunder: (A) the rights of
Holders of Notes then outstanding to receive solely from the trust fund
described in Section 8.04 and as more fully set forth in such Section, payments
in respect of the principal of (and premium, if any), interest and Liquidated
Damages, if any, on such Notes when such payments are due, or on the Redemption
Date, as the case may be, (B) the Company's obligations with respect to such
Notes under Sections 2.03, 2.04, 2.05, 2.06, 2.07, 2.10, 4.02 and 4.03, (C) the
rights, powers, trusts, duties, indemnities and immunities of the Trustee
hereunder and the Company's obligations in connection therewith and (D) this
Article 8. Subject to compliance with this
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Article 8, the Company may exercise its option under this Section 8.02
notwithstanding the prior exercise of its option under Section 8.03 with respect
to the Notes.
SECTION 8.03. COVENANT DEFEASANCE.
Upon the Company's exercise under Section 8.01 of the option applicable to
this Section 8.03, the Company and each Guarantor shall be released from its
obligations under the covenants contained in Article 5 and in Sections 4.04,
4.06, 4.07, 4.09, 4.10, 4.11, 4.12, 4.13, 4.14, 4.15, 4.16, 4.17 and 4.18 with
respect to the outstanding Notes and Subsidiary Guarantees, if any, on and after
the date the conditions set forth below are satisfied (hereinafter, "Covenant
Defeasance"), and the Notes and the Subsidiary Guarantees, if any, shall
thereafter be deemed to be not "outstanding" for the purposes of any direction,
waiver, consent or declaration or Act of Holders (and the consequences of any
thereof) in connection with such covenants, but shall continue to be deemed
"outstanding" for all other purposes hereunder (it being understood that such
Notes and Subsidiary Guarantees, if any, shall not be deemed outstanding for
financial accounting purposes). For this purpose, such covenant defeasance means
that, with respect to the outstanding Notes and Subsidiary Guarantees, if any,
the Company and any Guarantor may omit to comply with and shall have no
liability in respect of any term, condition or limitation set forth in any such
covenant, whether directly or indirectly, by reason of any reference elsewhere
herein to any such covenant or by reason of any reference in any such covenant
to any other provision herein or in any other document and such omission to
comply shall not constitute a Default or an Event of Default under Section
6.01(c) or Section 6.01(d), but, except as specified above, the remainder of
this Indenture and such Notes and Subsidiary Guarantees, if any, shall be
unaffected thereby. In addition, upon the Company's exercise under Section 8.01
of the option applicable to Section 8.03, Sections 6.01(c) through 6.01(f) and
Section 6.01(i) shall not constitute Events of Default.
SECTION 8.04. CONDITIONS TO LEGAL DEFEASANCE OR COVENANT DEFEASANCE.
The following shall be the conditions to application of either Section
8.02 or Section 8.03 to the outstanding Notes and Subsidiary Guarantees:
(i) the Company must irrevocably deposit with the Trustee, in trust, for
the benefit of the Holders of the Notes and without retaining any legal interest
in the corpus of such trust, cash in U.S. dollars, non-callable Government
Securities, or a combination thereof, in such amounts as will be sufficient, in
the opinion of a nationally recognized firm of independent public accountants,
to pay the principal of, premium, if any, and interest and Liquidated Damages,
if any, due on the outstanding Notes on the Stated Maturity thereof or on the
applicable Redemption Date, as the case may be, and the Company must specify
whether the Notes are being defeased to maturity or to a particular redemption
date;
(ii) in the case of Legal Defeasance, the Company shall have delivered to
the Trustee an Opinion of Counsel in the United States reasonably acceptable to
the Trustee confirming that, subject to customary assumptions and exclusions,
(A) the Company has received from, or there has been published by, the United
States Internal Revenue Service a ruling or (B) since the date of this
Indenture, there has been a change in the applicable U.S. federal income tax
law, in either case to the effect that, and based thereon such Opinion of
Counsel in the United States shall confirm that, subject to customary
assumptions and exclusions, the Holders of the outstanding Notes will not
recognize income, gain or loss for U.S. federal income tax purposes as a result
of such Legal Defeasance and will be subject to U.S. federal
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income tax on the same amounts, in the same manner and at the same times as
would have been the case if such Legal Defeasance had not occurred;
(iii) in the case of Covenant Defeasance, the Company shall have delivered
to the Trustee an Opinion of Counsel in the United States reasonably acceptable
to the Trustee confirming that, subject to customary assumptions and exclusions,
the Holders of the outstanding Notes will not recognize income, gain or loss for
U.S. federal income tax purposes as a result of such Covenant Defeasance and
will be subject to such tax on the same amounts, in the same manner and at the
same times as would have been the case if such Covenant Defeasance had not
occurred;
(iv) no Default or Event of Default shall have occurred and be continuing
on the date of such deposit (other than a Default or Event of Default resulting
from the borrowing of funds to be applied to such deposit) or, insofar as Events
of Default set forth in Sections 6.01(g) and (h), at any time in the period
ending on the 91st day after the date of such deposit (it being understood that
this condition shall not be satisfied until the expiration of such period);
(v) such Legal Defeasance or Covenant Defeasance shall not result in a
breach or violation of, or constitute a default under, any material agreement or
instrument (other than this Indenture) to which the Company or any of its
Subsidiaries is a party or by which the Company or any of its Subsidiaries is
bound;
(vi) the Company shall have delivered to the Trustee an Opinion of Counsel
to the effect that, as of the date of such opinion and subject to customary
assumptions and exclusions (which assumptions and exclusions shall not relate to
the operation of Section 547 of the United States Bankruptcy Code or any
analogous laws of the state governing the provisions of this Indenture)
following the deposit the trust funds will not be subject to the effect of any
applicable bankruptcy, insolvency, reorganization or similar laws affecting
creditors' rights generally under any applicable U.S. federal or state law, and
that the Trustee has a perfected security interest in such trust funds for the
ratable benefit of the Holders;
(vii) the Company shall have delivered to the Trustee an Officers'
Certificate stating that the deposit was not made by the Company with the intent
of preferring the Holders of Notes over the other creditors of the Company or
with the intent of defeating, hindering, delaying or defrauding any creditors of
the Company or others;
(viii) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel in the United States (which Opinion of
Counsel may be subject to customary assumptions and exclusions) each stating
that all conditions precedent provided for or relating to the Legal Defeasance
or the Covenant Defeasance, as the case may be, have been complied with; and
(ix) the Trustee shall have received such other documents and assurances
as the Trustee shall reasonably require.
SECTION 8.05. DEPOSITED MONEY AND U.S. GOVERNMENT OBLIGATIONS TO BE HELD IN
TRUST; OTHER MISCELLANEOUS PROVISIONS.
Subject to the provisions of the last paragraph of Section 4.03, all money
and Government Securities (including the proceeds thereof) deposited with the
Trustee (or other qualifying trustee,
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collectively for purposes of this Section 8.05, the "Trustee") pursuant to
Section 8.04 in respect of the Notes then outstanding shall be held in trust and
applied by the Trustee, in accordance with the provisions of such Notes and this
Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Holders of such Notes of all sums due and to become due
thereon in respect of principal (and premium, if any) and interest, but such
money need not be segregated from other funds except to the extent required by
law.
The Company shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the cash or Government Securities
deposited pursuant to Section 8.04 or the principal and interest received in
respect thereof other than any such tax, fee or other charge which by law is for
the account of the Holders of the Notes then outstanding.
Anything in this Article 8 to the contrary notwithstanding, the Trustee
shall deliver or pay to the Company from time to time upon Company Request any
money or Government Securities held by it as provided in Section 8.04 which, in
the opinion of a nationally recognized firm of independent public accountants
expressed in a written certification thereof delivered to the Trustee (which may
be the opinion delivered under Section 8.04(i)), are in excess of the amount
thereof which would then be required to be deposited to effect an equivalent
Legal Defeasance or Covenant Defeasance.
SECTION 8.06. REINSTATEMENT.
If the Trustee or Paying Agent is unable to apply any United States
dollars or Government Securities in accordance with Section 8.02 or 8.03, as the
case may be, by reason of any order or judgment of any court or governmental
authority enjoining, restraining or otherwise prohibiting such application, then
the Company's and any Guarantor's obligations under this Indenture, the Notes
and the Subsidiary Guarantees, if any, shall be revived and reinstated as though
no deposit had occurred pursuant to Section 8.02 or 8.03, as the case may be,
until such time as the Trustee or Paying Agent is permitted to apply all such
money in accordance with Section 8.02 or 8.03, as the case may be; provided,
however, that if the Company or any Guarantor makes any payment of principal of
(or premium, if any) or interest on any Note following the reinstatement of its
obligations, the Company or any Guarantor shall be subrogated to the rights of
the Holders of such Notes to receive such payment from the money held by the
Trustee or Paying Agent.
ARTICLE 9
AMENDMENT, SUPPLEMENT AND WAIVER
SECTION 9.01. WITHOUT CONSENT OF HOLDERS OF NOTES.
Notwithstanding Section 9.02 of this Indenture, the Company and the
Trustee may amend or supplement this Indenture or Notes, and with respect to a
Subsidiary Guarantee, the Guarantor under such Subsidiary Guarantee and the
Trustee may amend or supplement such Subsidiary Guarantee, without the consent
of any Holder of a Note:
(a) to cure any ambiguity, defect or inconsistency;
(b) to provide for uncertificated Notes in addition to or in place of
certificated Notes;
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(c) to comply with Article 5 hereof;
(d) to provide for the assumption of the Company's or any Guarantor's
obligations to the Holders of the Notes;
(e) to make any change that would provide any additional rights or
benefits to the Holders of the Notes or that does not adversely
affect the legal rights hereunder of any such Holder;
(f) to add covenants for the benefit of the Holders or to surrender any
right or power conferred upon the Company;
(g) to comply with requirements of the SEC in order to effect or
maintain the qualification of this Indenture under the TIA; or
(h) to add a Guarantor under this Indenture.
Upon the written request of the Company accompanied by resolutions of the
Board of Directors authorizing the execution of any such amended or supplemental
Indenture, and upon receipt by the Trustee of an Officers' Certificate and an
Opinion of Counsel in compliance with Section 1.05 hereof, the Trustee shall
join with the Company and the Guarantors, if any, in the execution of any
amended or supplemental Indenture authorized or permitted by the terms of this
Indenture and to make any further appropriate agreements and stipulations that
may be therein contained, but the Trustee shall not be obligated to enter into
such amended or supplemental Indenture that affects its own rights, duties or
immunities under this Indenture or otherwise.
SECTION 9.02. WITH CONSENT OF HOLDERS OF NOTES.
Except as provided below in this Section 9.02, this Indenture, the Notes
and a Subsidiary Guarantee issued hereunder may be amended or supplemented with
the consent of the Holders of at least a majority in principal amount of the
Notes then outstanding (including, without limitation, consents obtained in
connection with a purchase of, or tender offer or exchange offer for, the
Notes), and, subject to Sections 6.02, 6.04 and 6.07 hereof, any existing
default or compliance with any provision of this Indenture, the Notes or the
Subsidiary Guarantees may be waived with the consent of the Holders of a
majority in principal amount of the then outstanding Notes (including consents
obtained in connection with a tender offer or exchange offer for the Notes).
Upon the request of the Company accompanied by resolutions of the Board of
Directors authorizing the execution of any such amended or supplemental
Indenture, and upon the filing with the Trustee of evidence satisfactory to the
Trustee of the consent of the Holders of Notes as aforesaid, and upon receipt by
the Trustee of an Officers' Certificate and an Opinion of Counsel in compliance
with Section 1.05 hereof, the Trustee shall join with the Company and any
Guarantor in the execution of such amended or supplemental Indenture unless such
amended or supplemental Indenture affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise, in which case the Trustee may in
its discretion, but shall not be obligated to, enter into such amended or
supplemental Indenture.
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The consent of the Holders is not necessary under this Section 9.02 to
approve the particular form of any proposed amendment. It is sufficient if such
consent approves the substance of the proposed amendment.
After an amendment, supplement or waiver under this Section 9.02 becomes
effective, the Company shall mail to the Holders of Notes affected thereby a
notice briefly describing the amendment, supplement or waiver. Any failure of
the Company to mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such amended or supplemental
Indenture or waiver. Subject to Sections 6.04 and 6.07 hereof, the Holders of a
majority in aggregate principal amount of the Notes then outstanding may waive
compliance in a particular instance by the Company with any provision of this
Indenture, the Notes or the Subsidiary Guarantees, if any. However, without the
consent of each Holder affected, an amendment or waiver may not (with respect to
any Note or Subsidiary Guarantee held by a non-consenting Holder):
(i) reduce the principal amount of the Notes whose Holders must consent
to an amendment, supplement or waiver;
(ii) reduce the principal of or change the fixed maturity of any Note or
alter the provisions with respect to the redemption of the Notes
(other than provisions relating to the covenants described under
Sections 4.09 and 4.10);
(iii) reduce the rate of or change the time for payment of interest on any
Note;
(iv) waive a Default or Event of Default in the payment of principal of,
premium, if any, or interest on the Notes (except a rescission of
acceleration of the Notes by the Holders of at least a majority in
aggregate principal amount of such Notes and a waiver of the payment
default that resulted from such acceleration);
(v) make any Note payable in money other than that stated in such Notes;
(vi) make any change in Section 6.04 or 6.07;
(vii) waive a redemption payment with respect to any Note (other than a
payment required by Section 4.09 or Section 4.10);
(viii) make any change in Article 10 or the subordination provisions of
any Subsidiary Guarantee that would adversely affect the legal
rights of the Holders of the Notes; or
(ix) make any change in the foregoing amendment and waiver provisions of
this Article 9.
SECTION 9.03. COMPLIANCE WITH TIA.
Every amendment or supplement to this Indenture or the Notes shall be set
forth in an amended or supplemental Indenture that complies with the TIA as then
in effect.
SECTION 9.04.
REVOCATION AND EFFECT OF CONSENTS.
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Until an amendment, supplement or waiver becomes effective, a consent to
it by a Holder of a Note is a continuing consent by the Holder of a Note and
every subsequent Holder of a Note or portion of a Note that evidences the same
debt as the consenting Holder's Note, even if notation of the consent is not
made on any Note. However, any such Holder of a Note or subsequent Holder of a
Note may revoke the consent as to its Note if the Trustee receives written
notice of revocation before the date the waiver, supplement or amendment becomes
effective. An amendment, supplement or waiver becomes effective in accordance
with its terms and thereafter binds every Holder.
SECTION 9.05. NOTATION ON OR EXCHANGE OF NOTES.
The Trustee may, but shall not be required to, place an appropriate
notation about an amendment, supplement or waiver on any Note thereafter
authenticated. The Company in exchange for all Notes may issue and the Trustee
shall authenticate new Notes that reflect the amendment, supplement or waiver.
Failure to make the appropriate notation or issue a new Note shall not
affect the validity and effect of such amendment, supplement or waiver.
SECTION 9.06. TRUSTEE TO SIGN AMENDMENTS, ETC.
The Trustee shall sign any amended or supplemental indenture authorized
pursuant to this Article 9 if the amendment or supplement does not adversely
affect the rights, duties, liabilities or immunities of the Trustee. The Company
may not sign an amendment or supplemental Indenture until the Board of Directors
approves it. In signing or refusing to sign any amended or supplemental
indenture the Trustee shall be entitled to receive and (subject to Section 7.01)
shall be fully protected in relying upon an Officers' Certificate and an Opinion
of Counsel stating that the execution of such amended or supplemental indenture
is authorized or permitted by this Indenture, that it is not inconsistent
herewith, and that it will be valid and binding upon the Company and the
Guarantors, if any, in accordance with its terms.
ARTICLE 10
SUBORDINATION
SECTION 10.01. AGREEMENT TO SUBORDINATE.
The Company agrees, and each Holder by accepting a Note agrees, that the
payment (by set-off or otherwise) of principal of, premium, if any and interest
and Liquidated Damages, if any, on the Notes (including with respect to any
repurchases of the Notes) shall be subordinated in right of payment, as set
forth in this Article 10, to the prior payment in full in cash, or at the option
of the holders of Senior Debt, in Cash Equivalents of all obligations in respect
of Senior Debt, whether outstanding on the date hereof or thereafter incurred.
SECTION 10.02. LIQUIDATION; DISSOLUTION; BANKRUPTCY.
Upon any distribution to creditors of the Company upon any total or
partial liquidation, dissolution or winding up of the Company or in a
bankruptcy, reorganization, insolvency, receivership or similar proceeding
relating to the Company or its property, whether voluntary or involuntary, an
assignment for the benefit of creditors or any marshalling of the Company's
assets and liabilities, the holders of Senior
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Debt will be entitled to receive payment in full in cash, or at the option of
the holders of Senior Debt, in Cash Equivalents, of all Obligations due or to
become due in respect of such Senior Debt (including interest after the
commencement of any such proceeding at the rate specified in the applicable
Senior Debt) before the Holders of Notes will be entitled to receive any payment
of any kind or character with respect to the Notes, and until all Obligations
with respect to Senior Debt are paid in full in cash, or at the option of the
holders of Senior Debt, in Cash Equivalents, any distribution of any kind or
character to which the Holders of Notes would be entitled shall be made to the
holders of Senior Debt (except that Holders of Notes may receive Permitted
Junior Securities and payments made from the trust described in Article 8
hereof).
SECTION 10.03. DEFAULT ON DESIGNATED SENIOR DEBT.
The Company shall not make, directly or indirectly, (x) any payment upon
or in respect of the Notes (except in Permitted Junior Securities or from the
trust described in Article 8 hereof) or (y) acquire any of the Notes for cash or
property or otherwise or make any other distribution with respect to the Notes
if:
(i) any default occurs and is continuing (beyond any applicable grace
period) in the payment when due, whether at maturity, upon any
redemption, by declaration or otherwise, of any principal of,
interest on, unpaid drawings for letters of credit issued in respect
of, or regularly accruing fees with respect to, any Designated
Senior Debt or
(ii) any other default occurs and is continuing with respect to
Designated Senior Debt that permits holders of the Designated Senior
Debt as to which such default relates to accelerate its maturity and
the Trustee receives a notice of such default (a "Payment Blockage
Notice" ) from the Company or the holders of any Designated Senior
Debt.
The Company may and shall resume payments on the Notes:
(a) in the case of a payment default, upon the date on which such
default is cured or waived and
(b) in case of a nonpayment default, the earlier of the date on which
such nonpayment default is cured or waived or 179 days after the
date on which the applicable Payment Blockage Notice is received,
unless the maturity of any Designated Senior Debt has been
accelerated.
No new period of payment blockage may be commenced unless and until (i)
360 days have elapsed since the effectiveness of the immediately prior Payment
Blockage Notice and (ii) all scheduled payments of principal, premium, if any,
and interest and Liquidated Damages, if any, on the Notes that have come due
have been paid in full in cash. No nonpayment default that existed or was
continuing on the date of delivery of any Payment Blockage Notice to the Trustee
shall be, or be made, the basis for a subsequent Payment Blockage Notice unless
such nonpayment default shall have been waived for a period of not less than 90
days (it being acknowledged that any subsequent action, or any breach of any
financial covenants for a period commencing after the date of delivery of any
Payment Blockage Notice which, in either case, would give rise to a default
pursuant to any provision under which a default previously existed or was
continuing shall constitute a new default for this purpose).
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SECTION 10.04. ACCELERATION OF SECURITIES.
If the Company fails to make any payment on the Notes when due or within
any applicable grace period, whether or not on account of the payment blockage
provision referred to above, such failure shall constitute an Event of Default
and shall entitle the holders of the Notes to accelerate the maturity thereof.
The Company shall promptly notify holders of Senior Debt if payment of the Notes
is accelerated because of an Event of Default.
SECTION 10.05. WHEN DISTRIBUTION MUST BE PAID OVER.
In the event that the Trustee or any Holder receives any payment of any
Subordinated Note Obligations at a time when the Trustee or such Holder, as
applicable, has actual knowledge that such payment is prohibited by Section
10.02 or 10.03 hereof, such payment shall be held by the Trustee or such Holder,
in trust for the benefit of, and shall be paid forthwith over and delivered,
upon written request, to, the holders of Senior Debt as their interests may
appear or their representative under the indenture or other agreement (if any)
pursuant to which Senior Debt may have been issued, as their respective
interests may appear, for application to the payment of all Obligations with
respect to Senior Debt remaining unpaid to the extent necessary to pay such
Obligations in full in accordance with their terms, after giving effect to any
concurrent payment or distribution to or for the holders of Senior Debt.
In the event that any Holder receives any payment or payments pursuant to
this Indenture and the amount or total amount of such payment or payments
exceeds the amount, if any, that such Holder would be entitled to receive upon
the proper application of the subordination provisions of this Article 10, the
payment of such excess amount shall be deemed null and void, and the Holder
agrees that it will be obliged to return the amount of the excess payment to the
Company, as instructed in a written notice of such excess payment, within ten
days of receiving such notice.
With respect to the holders of Senior Debt, the Trustee undertakes to
perform only such obligations on the part of the Trustee as are specifically set
forth in this Article 10, and no implied covenants or obligations with respect
to the holders of Senior Debt shall be read into this Indenture against the
Trustee. The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Debt, and shall not be liable to any such holders if the
Trustee shall pay over or distribute to or on behalf of Holders or the Company
or any other Person money or assets to which any holders of Senior Debt shall be
entitled by virtue of this Article 10, except if such payment is made as a
result of the willful misconduct or gross negligence of the Trustee.
SECTION 10.06. NOTICE BY COMPANY.
The Company shall promptly notify the Trustee and the Paying Agent of any
facts known to the Company that would cause a payment of any Subordinated Note
Obligations to violate this Article 10, but failure to give such notice shall
not affect the subordination of the Notes to the Senior Debt as provided in this
Article 10.
SECTION 10.07. SUBROGATION.
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After all Senior Debt is paid in full and until the Notes are paid in
full in cash, Holders of Notes shall be subrogated (equally and ratably with all
other Indebtedness pari passu with the Notes) to the rights of holders of Senior
Debt to receive distributions applicable to Senior Debt to the extent that
distributions otherwise payable to the Holders of Notes have been applied to the
payment of Senior Debt. A distribution made under this Article 10 to holders of
Senior Debt that otherwise would have been made to Holders of Notes is not, as
between the Company and Holders, a payment by the Company on the Senior Debt.
SECTION 10.08. RELATIVE RIGHTS.
This Article 10 defines the relative rights of Holders of Notes and
holders of Senior Debt. Nothing in this Indenture shall:
(1) impair, as between the Company and Holders of Notes, the obligation
of the Company, which is absolute and unconditional, to pay
principal of, premium, if any, and interest on the Notes in
accordance with their terms;
(2) affect the relative rights of Holders of Notes and creditors of the
Company other than their rights in relation to holders of Senior
Debt; or
(3) prevent the Trustee or any Holder of Notes from exercising its
available remedies upon a Default or Event of Default, subject to
the rights of holders and owners of Senior Debt to receive
distributions and payments otherwise payable to Holders of Notes.
If the Company fails because of this Article 10 to pay principal of,
premium, if any, or interest on a Note on the due date, the failure is
nevertheless a Default or an Event of Default.
SECTION 10.09. SUBORDINATION MAY NOT BE IMPAIRED BY COMPANY.
No right of any holder of Senior Debt to enforce the subordination of the
Indebtedness evidenced by the Notes shall be impaired by any act or failure to
act by the Company or any Holder or by the failure of the Company or any Holder
to comply with this Indenture.
SECTION 10.10. DISTRIBUTION OR NOTICE TO REPRESENTATIVE.
Whenever a distribution is to be made or a notice given to holders of
Senior Debt, the distribution may be made and the notice given to their
representative.
Upon any payment or distribution of assets of the Company referred to in
this Article 10, the Trustee and the Holders of Notes shall be entitled to rely
upon any order or decree made by any court of competent jurisdiction or upon any
certificate of such representative or of the liquidating trustee or agent or
other Person making any distribution to the Trustee or to the Holders of Notes
for the purpose of ascertaining the Persons entitled to participate in such
distribution, the holders of the Senior Debt and other Indebtedness of the
Company, the amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this Article 10.
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SECTION 10.11. RIGHTS OF TRUSTEE AND PAYING AGENT.
Notwithstanding the provisions of this Article 10 or any other provision
of this Indenture, the Trustee shall not be charged with knowledge of the
existence of any facts that would prohibit the making of any payment or
distribution by the Trustee, and the Trustee and the Paying Agent may continue
to make payments on the Notes, unless the Trustee shall have received at its
Corporate Trust Office at least five Business Days prior to the date of such
payment written notice of facts that would cause the payment of any Subordinated
Note Obligations to violate this Article 10. Only the Company or a
representative may give the notice. Nothing in this Article 10 shall impair the
claims of, or payments to, the Trustee under or pursuant to Section 7.07 hereof.
Trustee in its individual or any other capacity may hold Senior Debt with
the same rights it would have if it were not Trustee. Any Agent may do the same
with like rights.
SECTION 10.12. AUTHORIZATION TO EFFECT SUBORDINATION.
Each Holder of Notes, by the Holder's acceptance thereof, authorizes and
directs the Trustee on such Holder's behalf to take such action as may be
necessary or appropriate to effectuate the subordination as provided in this
Article 10, and appoints the Trustee to act as such Holder's attorney-in-fact
for any and all such purposes. If the Trustee does not file a proper proof of
claim or proof of debt in the form required in any proceeding referred to in
Section 6.09 hereof at least 30 days before the expiration of the time to file
such claim, a representative of Designated Senior Debt is hereby authorized to
file an appropriate claim for and on behalf of the Holders of the Notes.
ARTICLE 11
SATISFACTION AND DISCHARGE
SECTION 11.01. SATISFACTION AND DISCHARGE OF INDENTURE.
This Indenture shall be discharged and will cease to be of further effect
as to all Notes issued hereunder, when either
(a) all such Notes theretofore authenticated and delivered (except lost,
stolen or destroyed Notes which have been replaced or paid and Notes
for whose payment money has theretofore been deposited in trust and
thereafter repaid to the Company) have been delivered to the Trustee
for cancellation; or
(b) (i) all such Notes not theretofore delivered to such Trustee
for cancellation have become due and payable by reason of the
making of a notice of redemption or otherwise or will become
due and payable within one year and the Company or a
Guarantor, if any, has irrevocably deposited or caused to be
deposited with such Trustee as trust funds in trust an amount
of money sufficient to pay and discharge the entire
Indebtedness on such Notes not theretofore delivered to the
Trustee for cancellation for principal, premium, if any, and
accrued interest to the date of maturity or redemption;
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(ii) no Default or Event of Default with respect to this Indenture
or the Notes shall have occurred and be continuing on the date
of such deposit or shall occur as a result of such deposit and
such deposit will not result in a breach or violation of, or
constitute a default under, any other instrument to which the
Company or a Guarantor, if any, is a party or by which the
Company or a Guarantor, if any, is bound;
(iii) the Company or a Guarantor, if any, has paid or caused to be
paid all sums payable by it under this Indenture; and
(iv) the Company has delivered irrevocable instructions to the
Trustee under this Indenture to apply the deposited money
toward the payment of such Notes at maturity or the redemption
date, as the case may be.
In addition, the Company must deliver an Officers' Certificate and an
Opinion of Counsel to the Trustee stating that all conditions precedent to
satisfaction and discharge have been satisfied.
SECTION 11.02. APPLICATION OF TRUST MONEY.
Subject to the provisions of the last paragraph of Section 4.03, all
money deposited with the Trustee pursuant to Section 11.01 shall be held in
trust and applied by it, in accordance with the provisions of the Notes and this
Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as Paying Agent) as the Trustee may determine, to
Persons entitled thereto, of the principal (and premium, if any) and interest
for whose payment such money has been deposited with the Trustee.
If the Trustee or Paying Agent is unable to apply any money in accordance
with Section 11.01 by reason of any legal proceeding or by reason of any order
or judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, the Company's obligations under this
Indenture and the Notes shall be revived and reinstated as though such deposit
had occurred pursuant to Section 11.01; provided that if the Company has made
any payment of principal of, premium, if any, or interest on any Notes because
of the reinstatement of its obligations, the Company shall be subrogated to the
rights of the Holders of such Notes to receive such payment from the money held
by the Trustee or Paying Agent.
ARTICLE 12
SUBSIDIARY GUARANTEES
SECTION 12.01. SUBSIDIARY GUARANTEE.
Each of the Guarantors hereby, jointly and severally, unconditionally
guarantees to each Holder of a Note authenticated and delivered by the Trustee
and to the Trustee and its successors and assigns, irrespective of the validity
and enforceability of this Indenture, the Notes or the Obligations of the
Company hereunder or thereunder, that: (a) the principal of, premium, if any,
and interest and Liquidated Damages, if any, on the Notes will be promptly paid
in full when due, whether at maturity, by
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acceleration, redemption or otherwise, and interest on overdue principal,
premium, if any, and (to the extent permitted by law) interest on any interest,
if any, and Liquidated Damages, if any, on the Notes and all other obligations
of the Company to the Holders or the Trustee hereunder or thereunder will be
promptly paid in full or performed, all in accordance with the terms hereof and
thereof; and (b) in case of any extension of time of payment or renewal of any
Notes or any of such other obligations, that same will be promptly paid in full
when due or performed in accordance with the terms of the extension or renewal,
whether at stated maturity, by acceleration or otherwise. Failing payment when
due of any amount so guaranteed or any performance so guaranteed for whatever
reason, the Guarantors will be jointly and severally obligated to pay the same
immediately. The Guarantors hereby agree that their obligations hereunder shall
be unconditional, irrespective of the validity, regularity or enforceability of
the Notes or this Indenture, the absence of any action to enforce the same, any
waiver or consent by any Holder of the Notes with respect to any provisions
hereof or thereof, the recovery of any judgment against the Company, any action
to enforce the same or any other circumstance which might otherwise constitute a
legal or equitable discharge or defense of a Guarantor. Each Guarantor hereby
waives diligence, presentment, demand of payment, filing of claims with a court
in the event of insolvency or bankruptcy of the Company, any right to require a
proceeding first against the Company, protest, notice and all demands whatsoever
and covenant that this Subsidiary Guarantee will not be discharged except by
complete performance of the obligations contained in the Notes and this
Indenture. If any Holder or the Trustee is required by any court or otherwise to
return to the Company or any Guarantor, or any Custodian, Trustee, liquidator or
other similar official acting in relation to either the Company or any
Guarantor, any amount paid by either to the Trustee or such Holder, this
Subsidiary Guarantee, to the extent theretofore discharged, shall be reinstated
in full force and effect. Each Guarantor agrees that it shall not be entitled to
any right of subrogation in relation to the Holders in respect of any
obligations guaranteed hereby. Each Guarantor further agrees that, as between
such Guarantor, on the one hand, and the Holders and the Trustee, on the other
hand, (x) the maturity of the obligations guaranteed hereby may be accelerated
as provided in Article 6 for the purposes of this Subsidiary Guarantee,
notwithstanding any stay, injunction or other prohibition preventing such
acceleration in respect of the obligations guaranteed hereby, and (y) in the
event of any declaration of acceleration of such obligations as provided in
Article 6, such obligations (whether or not due and payable) shall forthwith
become due and payable by such Guarantor for the purpose of this Subsidiary
Guarantee.
Notwithstanding the foregoing, in the event that any Subsidiary Guarantee
hereunder would constitute or result in a violation of any applicable fraudulent
conveyance or similar law of any relevant jurisdiction, the liability of a
Guarantor under such Subsidiary Guarantee shall be reduced to the maximum amount
permissible under such fraudulent conveyance or similar law.
SECTION 12.02. EXECUTION AND DELIVERY OF SUBSIDIARY GUARANTEE.
To evidence its Subsidiary Guarantee set forth in Section 12.01, each
Guarantor hereby agrees that a notation of such Subsidiary Guarantee
substantially in the form of Exhibit E shall be endorsed by an officer of such
Guarantor on each Note authenticated and delivered by the Trustee and that this
Indenture shall be executed on behalf of such Guarantor by its President or one
of its Vice Presidents.
Each Guarantor hereby agrees that its Subsidiary Guarantee set forth in
Section 12.01 shall remain in full force and effect notwithstanding any failure
to endorse on each Note a notation of such Subsidiary Guarantee.
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If an Officer whose signature is on this Indenture or on the Subsidiary
Guarantee no longer holds that office at the time the Trustee authenticates the
Note on which a Subsidiary Guarantee is endorsed, the Subsidiary Guarantee shall
be valid nevertheless.
The delivery of any Note by the Trustee, after the authentication thereof
hereunder, shall constitute due delivery of the Subsidiary Guarantee set forth
in this Indenture on behalf of the Guarantors.
SECTION 12.03 GUARANTORS MAY CONSOLIDATE, ETC., ON CERTAIN TERMS.
Subject to Section 12.04, no Guarantor may consolidate or merge with or
into (whether or not such Guarantor is the surviving Person) another Person
unless:
(a) such Guarantor is the surviving Person or the Person formed by or
surviving any such consolidation or merger (if other than such Guarantor)
is a corporation organized or existing under the laws of the United
States, any state thereof or the District of Columbia and expressly
assumes all the Obligations of such Guarantor pursuant to a supplemental
indenture in form and substance reasonably satisfactory to the Trustee,
under the Notes and this Indenture;
(b) immediately after giving effect to such transaction no Default or
Event of Default exists;
(c) the Company would be permitted by virtue of the Company's pro forma
Fixed Charge Coverage Ratio, immediately after giving effect to such
transaction (on a pro forma basis), to incur at least $1.00 of additional
Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in
Section 4.12 hereof; and
(d) the Guarantor has delivered to the Trustee an Officers' Certificate
stating that such consolidation or merger and such supplemental indenture
complies with this Article and that all conditions precedent herein
provided for relating to such transaction have been complied with.
In case of any such consolidation or merger and upon the assumption by
the successor corporation, by supplemental indenture, executed and delivered to
the Trustee and satisfactory in form to the Trustee, of the Subsidiary Guarantee
endorsed upon the Notes and the due and punctual performance of all of the
covenants and conditions of this Indenture to be performed by the Guarantor,
such successor corporation shall succeed to and be substituted for the Guarantor
with the same effect as if it had been named herein as a Guarantor. Such
successor corporation thereupon may cause to be signed any or all of the
Subsidiary Guarantees to be endorsed upon all of the Notes issuable hereunder
which theretofore shall not have been signed by the Company and delivered to the
Trustee. All the Subsidiary Guarantees so issued shall in all respects have the
same legal rank and benefit under this Indenture as the Subsidiary Guarantees
theretofore and thereafter issued in accordance with the terms of this Indenture
as though all of such Subsidiary Guarantees had been issued at the date of the
execution hereof.
Except as set forth in Articles 4 and 5, nothing contained in this
Indenture shall prevent any consolidation or merger of a Guarantor with or into
the Company or another Guarantor or shall prevent any sale or conveyance of the
property of a Guarantor as an entirety or substantially as an entirety to the
Company or another Guarantor.
SECTION 12.04 RELEASES FROM SUBSIDIARY GUARANTEES.
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In the event of a sale or other disposition of all of the assets of any
Guarantor, by way of merger, consolidation or otherwise, or a sale or
disposition of all of the Capital Stock of any Guarantor, then such Guarantor
(in the event of a sale or other disposition, by way of such a merger,
consolidation or otherwise, of all of the Capital Stock of such Guarantor) or
the Person acquiring the property (in the event of a sale or other disposition
of all of the assets of such Guarantor) shall be released and relieved of its
obligations under its Subsidiary Guarantee or Section 12.03, as the case may be;
provided that in the event of an Asset Sale, the Net Proceeds from such sale or
other disposition are applied in accordance with the provisions of Section 4.10.
Upon delivery by the Company to the Trustee of an Officers' Certificate and an
Opinion of Counsel to the effect that such sale or other disposition was made by
the Company in accordance with the provisions of this Indenture, including
without limitation Section 4.10, the Trustee shall execute any documents
reasonably required in order to evidence the release of any Guarantor from its
obligations under its Subsidiary Guarantee. Any Guarantor not released from its
obligations under its Subsidiary Guarantee shall remain liable for the full
amount of principal of and interest on the Notes and for the other obligations
of any Guarantor under the Indenture as provided in this Article 12.
SECTION 12.05. LIMITATION ON GUARANTOR LIABILITY.
For purposes hereof, each Guarantor's liability shall be limited to the
lesser of (i) the aggregate amount of the Obligations of the Company under the
Notes and this Indenture and (ii) the amount, if any, which would not have (A)
rendered such Guarantor "insolvent" (as such term is defined in the United
States Bankruptcy Code and in the Debtor and Creditor Law of the State of New
York) or (B) left such Guarantor with unreasonably small capital at the time its
Subsidiary Guarantee of the Notes was entered into; provided that, it will be a
presumption in any lawsuit or other proceeding in which a Guarantor is a party
that the amount guaranteed pursuant to the Subsidiary Guarantee is the amount
set forth in clause (i) above unless any creditor, or representative of
creditors of such Guarantor, or debtor in possession or trustee in bankruptcy of
the Guarantor, otherwise proves in such a lawsuit that the aggregate liability
of the Guarantor is the amount set forth in clause (ii) above. In making any
determination as to solvency or sufficiency of capital of a Guarantor in
accordance with the previous sentence, the right of such Guarantor to
contribution from other Guarantors, and any other rights such Guarantor may
have, contractual or otherwise, shall be taken into account.
SECTION 12.06. SUBORDINATION OF SUBSIDIARY GUARANTEES.
The obligations of each Guarantor under its Subsidiary Guarantee pursuant
to this Article 12 shall be junior and subordinated to the prior payment in full
in cash, or at the option of the holders of Senior Debt, in Cash Equivalents of
all obligations in respect of Senior Debt of such Guarantor, whether outstanding
on the date hereof or thereafter incurred (including amounts for which the
Guarantors will be liable for under the Subsidiary Guarantees issued from time
to time with respect to Senior Debt of such Guarantor or the Company) on the
same basis as the Notes are junior and subordinated to Senior Debt. For the
purposes of the foregoing sentence, the Trustee and the Holders shall have the
right to receive and/or retain payments by any of the Guarantors only at such
times as they may receive and/or retain payments in respect of the Notes
pursuant to this Indenture, including Article 10 hereof.
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ARTICLE 13
MISCELLANEOUS
SECTION 13.01. CONFLICT OF ANY PROVISION OF INDENTURE WITH TIA.
If any provision of this Indenture limits, qualifies, or conflicts with
the duties imposed by TIA ss. 318(c), the imposed duties shall control.
SECTION 13.02. NOTICES.
Any notice or communication by the Company, any Guarantor or the Trustee
to the others is duly given if in writing and delivered in Person or mailed by
first class mail (registered or certified, return receipt requested), telecopier
or overnight air courier guaranteeing next day delivery, to the others' address:
If to the Company or any Guarantor:
Precise Technology, Inc.
501 Mosside Boulevard
North Versailles, Pennsylvania 15137-2553
Attention: Secretary
Facsimile: (412)823-4110
With, in the case of any notice of a Default or an Event of Default, a
copy to:
Winston & Strawn
200 Park Avenue, 42nd Floor
New York, New York 10166
Attention: Robert W. Ericson, Esq.
Facsimile: (212) 294-4700
and
Mentmore Holdings Corporation
1430 Broadway, 13th Floor
New York, New York 10018-3308
Attention: William L. Remley
Facsimile (212) 391-1393
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If to the Trustee:
Marine Midland Bank
140 Broadway, 12th Floor
New York, New York 10005
Attention: Corporate Trust Department -- Precise Technology, Inc.
Facsimile: (212) 658-6425
The Company, any Guarantor or the Trustee, by notice to the others may
designate additional or different addresses for subsequent notices or
communications.
All notices and communications (other than those sent to Holders) shall
be deemed to have been duly given: at the time delivered by hand, if personally
delivered; five Business Days after being deposited in the mail, postage
prepaid, if mailed; when receipt acknowledged, if telecopied; and the next
Business Day after timely delivery to the courier, if sent by overnight air
courier guaranteeing next day delivery.
Any notice or communication to a Holder shall be mailed by first class
mail, certified or registered, return receipt requested, or by overnight air
courier guaranteeing next day delivery to its address shown on the register kept
by the Registrar. Any notice or communication shall also be so mailed to any
Person described in TIA ss. 313(c), to the extent required by the TIA. Failure
to mail a notice or communication to a Holder or any defect in it shall not
affect its sufficiency with respect to other Holders.
If a notice or communication is mailed in the manner provided above
within the time prescribed, it is duly given, whether or not the addressee
receives it.
If the Company mails a notice or communication to Holders, it shall mail
a copy to the Trustee and each Agent at the same time.
SECTION 13.03. COMMUNICATION BY HOLDERS OF NOTES WITH OTHER HOLDERS OF NOTES.
Holders may communicate pursuant to TIA ss. 312(b) with other Holders
with respect to their rights under this Indenture or the Notes. The Company, any
Guarantor, the Trustee, the Registrar and anyone else shall have the protection
of TIA ss. 312(c).
SECTION 13.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.
Upon any request or application by the Company and/or any Guarantor to
the Trustee to take any action under this Indenture, the Company and/or any
Guarantor, as the case may be, shall furnish to the Trustee:
(a) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set
forth in Section 1.05 hereof) stating that, in the opinion of the
signers, all conditions precedent and covenants, if any, provided
for in this Indenture relating to the proposed action have been
satisfied; and
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(b) an Opinion of Counsel in form and substance reasonably satisfactory
to the Trustee (which shall include the statements set forth in
Section 1.05 hereof) stating that, in the opinion of such counsel,
all such conditions precedent and covenants have been satisfied.
SECTION 13.05. LEGAL HOLIDAYS.
In any case where any Interest Payment Date, any date established for
payment of Defaulted Interest pursuant to Section 2.12, or any Maturity with
respect to any Note shall not be a Business Day, then (notwithstanding any other
provisions of this Indenture, the Notes or any Subsidiary Guarantee) payment of
interest or principal (and premium, if any) need not be made on such date but
may be made on the next succeeding Business Day with the same force and effect
as if made on the Interest Payment Date or date established for payment of
Defaulted Interest pursuant to Section 2.12 or Maturity, and no interest shall
accrue with respect to such payment for the period from and after such Interest
Payment Date or date established for payment of Defaulted Interest pursuant to
Section 2.12 or Maturity, as the case may be, to the next succeeding Business
Day.
SECTION 13.06. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS,
EMPLOYEES AND STOCKHOLDERS.
No director, officer, employee, incorporator or stockholder of the Company
or a Guarantor, as such, shall have any liability for any obligations of the
Company or the Guarantors under the Notes, the Subsidiary Guarantees, if any, or
this Indenture or for any claim based on, in respect of, or by reason of such
obligations or their creation. Each Holder of the Notes by accepting a Note
waives and releases all such liability. The waiver and release are part of the
consideration for issuance of the Notes. Such waiver may not be effective to
waive liabilities under the federal securities laws and it is the view of the
SEC that such a waiver is against public policy.
SECTION 13.07. GOVERNING LAW; SUBMISSION TO JURISDICTION.
THIS INDENTURE, THE NOTES AND THE SUBSIDIARY GUARANTEES, SHALL BE,
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF
NEW YORK, WITHOUT REGARD TO THE CHOICE OF LAW RULES THEREOF. BY THE EXECUTION
AND DELIVERY OF THIS INDENTURE, EACH OF THE COMPANY AND THE GUARANTORS SUBMITS
TO THE JURISDICTION OF ANY FEDERAL OR STATE COURT IN THE STATE OF NEW YORK IN
ANY SUIT OR PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE.
SECTION 13.08. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.
This Indenture may not be used to interpret any other indenture, loan or
debt agreement of the Company or its Subsidiaries or of any other Person. Any
such indenture, loan or debt agreement may not be used to interpret this
Indenture.
SECTION 13.09. SUCCESSORS AND ASSIGNS.
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All covenants and agreements in this Indenture by the Company and the
Guarantors shall bind their respective successors and assigns, whether so
expressed or not. All covenants and agreements in this Indenture by the Trustee
shall bind its respective successors and assigns, whether so expressed or not.
SECTION 13.10. SEVERABILITY.
In case any provision in this Indenture or in the Notes shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
SECTION 13.11. COUNTERPART ORIGINALS.
The parties may sign any number of copies of this Indenture. Each signed
copy shall be an original, but all of them together represent the same
agreement.
SECTION 13.12. TABLE OF CONTENTS, HEADINGS, ETC.
The Table of Contents, Cross-Reference Table and Headings of the Articles
and Sections of this Indenture have been inserted for convenience of reference
only, are not to be considered a part of this Indenture and shall in no way
modify or restrict any of the terms or provisions hereof.
[Signatures on following page]
85
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed in New York, New York as of the day and year first above written.
PRECISE TECHNOLOGY, INC.
Dated: June 13, 1997 By: /s/ William L. Remley
-----------------------------
Name: William L. Remley
Title:
PRECISE TMP, INC.
Dated: June 13, 1997 By: /s/ William L. Remley
-----------------------------
Name: William L. Remley
Title:
MASSIE TOOL, MOLD & DIE, INC.
Dated: June 13, 1997 By: /s/ William L. Remley
-----------------------------
Name: William L. Remley
Title:
PRECISE POLESTAR, INC.
Dated: June 13, 1997 By: /s/ William L. Remley
-----------------------------
Name: William L. Remley
Title:
PRECISE TECHNOLOGY OF DELAWARE INC.
Dated: June 13, 1997 By: /s/ William L. Remley
-----------------------------
Name: William L. Remley
Title:
PRECISE TECHNOLOGY OF ILLINOIS INC.
Dated: June 13, 1997 By: /s/ William L. Remley
-----------------------------
Name: William L. Remley
Title:
MARINE MIDLAND BANK, as Trustee
Dated: June 13, 1997 By: /s/ Eileen M. Hughes
-----------------------------
Name: Eileen M. Hughes
Title: Assistant Vice President
<PAGE>
EXHIBIT A-1
(Face of Note)
11 1/8% Senior Subordinated Notes due 2007
No. CUSIP No:
PRECISE TECHNOLOGY, INC.
promises to pay to ______ or registered assigns, the principal sum of $________
_______________________________ Dollars on June 15, 2007.
Interest Payment Dates: June 15 and December 15
Record Dates: June 1 and December 1
Reference is made to the further provisions of this Note contained herein, which
will for all purposes have the same effect as if set forth at this place.
Dated: _______
PRECISE TECHNOLOGY, INC.
By:______________________________
Name:
Title:
By:______________________________
Name:
Title:
This is one of the 11 1/8% Senior Subordinated
Notes due 2007 referred to in the
within-mentioned Indenture:
Marine Midland Bank,
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as Trustee
By: _____________________________
Authorized Signature
A-1-2
<PAGE>
(Back of Note)
11 1/8% Senior Subordinated Notes due 2007
[Unless and until it is exchanged in whole or in part for Notes in definitive
form, this Note may not be transferred except as a whole by the Depository to a
nominee of the Depository or by a nominee of the Depository to the Depository or
another nominee of the Depository or by the Depository or any such nominee to a
successor Depository or a nominee of such successor Depository. Unless this
certificate is presented by an authorized representative of The Depository Trust
Company (55 Water Street, New York, New York) ("DTC") to the issuer or its agent
for registration of transfer, exchange or payment, and any certificate issued is
registered in the name of Cede & Co. or such other name as may be requested by
an authorized representative of DTC (and any payment is made to Cede & Co. or
such other entity as may be requested by an authorized representative of DTC),
ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY
PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an
interest herein.]1
"THIS SECURITY (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY
NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED STATES
OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS, EXCEPT AS SET FORTH IN
THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST
HEREIN, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL
BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) (A "QIB"), (B) IT IS
NOT A U.S. PERSON, IS NOT ACQUIRING THIS NOTE FOR THE ACCOUNT OR BENEFIT OF A
U.S. PERSON AND IS ACQUIRING THIS NOTE IN AN OFFSHORE TRANSACTION IN COMPLIANCE
WITH REGULATION S UNDER THE SECURITIES ACT OR (C) IT IS AN INSTITUTIONAL
"ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7) OF
REGULATION D UNDER THE SECURITIES ACT) (AN "IAI"), (2) AGREES THAT IT WILL NOT,
WITHIN THE TIME PERIOD REFERRED TO UNDER RULE 144(k) (TAKING INTO ACCOUNT THE
PROVISIONS OF RULE 144(d) UNDER THE SECURITIES ACT, IF APPLICABLE) UNDER THE
SECURITIES ACT AS IN EFFECT ON THE DATE OF THE TRANSFER OF THIS NOTE, RESELL OR
OTHERWISE TRANSFER THIS NOTE EXCEPT (A) TO THE COMPANY OR ANY SUBSIDIARY
THEREOF, (B) TO A PERSON WHOM THE HOLDER REASONABLY BELIEVES IS A QIB PURCHASING
FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QIB IN COMPLIANCE WITH RULE 144A
UNDER THE SECURITIES ACT, (C) OUTSIDE THE UNITED STATES IN AN OFFSHORE
TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (D) PURSUANT
TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT
(IF AVAILABLE), (E) TO AN IAI THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO THE
TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS
RELATING TO THE REGISTRATION OF TRANSFER OF THIS NOTE (THE FORM OF WHICH LETTER
CAN BE OBTAINED FROM
- -----------------------
1 This paragraph should be included only if the Note is a Global Note.
A-1-3
<PAGE>
THE TRUSTEE) AND, IF THE ISSUER SO REQUESTS, AN OPINION OF COUNSEL REASONABLY
ACCEPTABLE TO THE COMPANY THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE
SECURITIES ACT OR (F) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT AND, IN EACH CASE, IN ACCORDANCE WITH APPLICABLE STATE SECURITIES
LAWS, AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS NOTE OR AN
INTEREST HEREIN IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS
LEGEND. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND
"U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM BY RULE 902 OF REGULATION S UNDER
THE SECURITIES ACT. THE INDENTURE CONTAINS A PROVISION REQUIRING THE TRUSTEE TO
REFUSE TO REGISTER ANY TRANSFER OF THIS NOTE IN VIOLATION OF THE FOREGOING
RESTRICTIONS."
"THIS GLOBAL NOTE IS HELD BY THE DEPOSITORY (AS DEFINED IN THE INDENTURE
GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL
OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES
EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED
PURSUANT TO SECTION 2.07 OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE
EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE,
(III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT
TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO
A SUCCESSOR DEPOSITORY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY."
Capitalized terms used herein shall have the meanings assigned to them in the
Indenture referred to below.
1. INTEREST. Precise Technology, Inc., a Delaware corporation (the "Company"),
promises to pay interest on the principal amount of this Note at 111/8% per
annum from the Issuance Date until June 15, 2007 and shall pay the Liquidated
Damages, if any, payable pursuant to Section 5 of the Registration Rights
Agreement referred to below. The Company shall pay interest and Liquidated
Damages, if any, semi-annually in arrears on June 15 and December 15 of each
year (each an "Interest Payment Date"), or if any such day is not a Business
Day, on the next succeeding Business Day. Interest on the Notes will accrue from
the most recent date to which interest has been paid or, if no interest has been
paid, from the Issuance Date; provided that if there is no existing Default in
the payment of interest, and if this Note is authenticated between a record date
referred to on the face hereof and the next succeeding Interest Payment Date,
interest shall accrue from such next succeeding Interest Payment Date; provided,
further, that the first Interest Payment Date shall be December 15, 1997. The
Company shall pay interest (including post-petition interest in any proceeding
under any Bankruptcy Law) on overdue principal and premium, if any, from time to
time on demand at a rate equal to the per annum rate on the Notes then in
effect; it shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue installments of interest and
Liquidated Damages (without regard to any applicable grace periods) from time to
time on demand at the same rate to the extent lawful. Interest will be computed
on the basis of a 360-day year of twelve 30-day months.
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2. METHOD OF PAYMENT. The Company shall make payments in respect of Global Notes
(including principal, premium, if any, and interest and Liquidated Damages, if
any) by wire transfer of immediately available funds to the accounts specified
by the Note Custodian or, at the option of the Company, payment of interest and
Liquidated Damages, if any, may be made by check mailed to the Holders of the
Notes at their respective addresses set forth in the register of Holders of
Notes. Notwithstanding the foregoing, all payments with respect to the Notes
(the Holders of which have provided wire transfer instructions to the Company at
least ten Business Days prior to the applicable payment date), will be required
to be made by wire transfer of immediately available funds to the accounts
specified by the Holders thereof. Such payment shall be made in such coin or
currency of the United States of America as at the time of payment is legal
tender for the payment of public and private debts.
3. PAYING AGENT AND REGISTRAR. Initially, Marine Midland Bank, the Trustee under
the Indenture, will act as Paying Agent and Registrar. The Notes may be
presented for registration of transfer and exchange at the offices of the
Registrar. The Company may change any Paying Agent or Registrar without notice
to any Holder. The Company or any of its Subsidiaries may act in any such
capacity.
4. INDENTURE. The Company issued the Notes under an Indenture dated as of June
13, 1997 ("Indenture") between the Company and the Trustee. The terms of the
Notes include those stated in the Indenture and those made part of the Indenture
by reference to the Trust Indenture Act of 1939, as amended (15 U.S. Code ss.ss.
77aaa-77bbbb). The Notes are subject to all such terms, and Holders are referred
to the Indenture and such Act for a statement of such terms. The Notes are
general unsecured obligations of the Company limited to $200,000,000 in
aggregate principal amount.
5. OPTIONAL REDEMPTION.
Except as set forth in the following paragraphs, the Notes will not be
redeemable at the Company's option prior to June 15, 2002. On and after June 15,
2002, the Notes will be subject to redemption at the option of the Company, in
whole or in part, upon not less than 30 nor more than 60 days' written notice,
at the Redemption Prices (expressed as a percentage of principal amount) set
forth below, plus accrued and unpaid interest thereon, if any, to the applicable
Redemption Date, if redeemed during the twelve-month period beginning on June 15
of each of the years indicated below:
REDEMPTION
Year PRICE
-----
2002 ........................................... 105.563%
2003 ........................................... 103.708%
2004 ........................................... 101.854%
2005 and thereafter.............................. 100.000%
In addition, at any time prior to June 15, 2000, the Company may on any
one or more occasions redeem up to 33 1/3% of the aggregate principal amount of
Notes originally issued
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(including, for this purpose, one or more series of Notes issued under the
Indenture after the date of the Indenture) at a Redemption Price of 111.125% of
the principal amount thereof, plus accrued and unpaid interest and Liquidated
Damages, if any, thereon, to the Redemption Date, with the net cash proceeds of
one or more Public Equity Offerings; provided that at least 662/3% of the Notes
originally issued (including, for this purpose, one or more series of Notes
issued under the Indenture after the date of the Indenture) remain outstanding
immediately after the occurrence of such redemption and provided, that such
redemption occurs within 60 days of the date of the closing of each such Public
Equity Offering. The Trustee shall select the Notes to be purchased in the
manner described in the Indenture.
In addition, at any time prior to June 15, 2002, the Company may, at its
option, redeem the Notes, in whole or in part, at a Redemption Price equal to
100% of the principal amount thereof plus the applicable Make-Whole Premium.
6. MANDATORY REDEMPTION. Except as set forth in paragraph 8, the Company shall
not be required to make mandatory redemption or sinking fund payments with
respect to the Notes.
7. NOTICE OF REDEMPTION. Notice of redemption will be mailed by first class
mail, postage prepaid, at least 30 days but not more than 60 days before the
Redemption Date to each Holder of Notes to be redeemed at such Holder's
registered address. If any Note is to be redeemed in part only, any notice of
redemption that relates to such Note shall state the portion of the principal
amount thereof to be redeemed. On or after the Redemption Date, unless the
Company defaults in making the redemption payments, interest ceases to accrue on
the Notes or portions thereof called for redemption.
8. REPURCHASE AT OPTION OF HOLDERS. (a) Upon the occurrence of a Change of
Control, the Company shall make an offer (a "Change of Control Offer") to
purchase all or any part (equal to $1,000 or an integral multiple thereof) of
the Notes at a price in cash equal to 101% of the aggregate principal amount
thereof plus accrued and unpaid interest and Liquidated Damages, if any,
thereon, to the date of purchase (the "Change of Control Payment"). Prior to
complying with the provisions of Section 4.09 of the Indenture, but in any event
within 30 days following a Change of Control, the Company shall either repay in
full in cash all Indebtedness under the Credit Agreement (and terminate all
commitments thereunder) and all other Senior Debt the terms of which require
repayment upon a Change of Control or offer to repay in full in cash all
Indebtedness under the Credit Agreement (and terminate all commitments
thereunder) and all such other Senior Debt and to repay the Indebtedness owed to
(and terminate the commitments of) each lender which has accepted such offer or
obtain the requisite consents under the Credit Agreement and all such other
Senior Debt to permit the repurchase of the Notes. Within 30 days following any
Change of Control, the Company shall mail a notice to each Holder of Notes
issued under the Indenture, with a copy to the Trustee, containing the
information set forth in Section 4.09 of the Indenture. Holders of Notes that
are subject to an offer to purchase may elect to have such Notes purchased by
completing the form entitled "Option of Holder to Elect Purchase" on the reverse
side of this Note.
(b) When the aggregate amount of Excess Proceeds in connection with Asset
Sales by the Company exceeds $5.0 million, the Company shall make an offer to
all Holders of Notes (an
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<PAGE>
"Asset Sale Offer") to purchase the maximum principal amount of Notes that may
be purchased out of the Excess Proceeds, at an offer price in cash equal to 100%
of the principal amount thereof plus accrued and unpaid interest and Liquidated
Damages, if any, thereon to the date of purchase, in accordance with the
procedures set forth in Section 3.10 of the Indenture. The Company will commence
an Asset Sale Offer with respect to Excess Proceeds within ten Business Days
after the date that Excess Proceeds exceeds $5.0 million by mailing by first
class mail the notice required pursuant to the terms Section 3.10 of the
Indenture, with a copy to the Trustee. To the extent that the aggregate amount
of Notes tendered pursuant to an Asset Sale Offer is less than the Excess
Proceeds, the Company may use any remaining Excess Proceeds for general
corporate purposes. If the aggregate principal amount of Notes surrendered by
Holders thereof exceeds the amount of Excess Proceeds, the Trustee shall select
the Notes to be purchased on a pro rata basis. Upon completion of such offer to
purchase, the amount of Excess Proceeds shall be reset at zero. Holders of Notes
that are the subject of an offer to purchase will receive an Asset Sale Offer
from the Company prior to any related purchase date and may elect to have such
Notes purchased by completing the form entitled "Option of Holder to Elect
Purchase" on the reverse side of this Note.
9. DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in registered form without
coupons in minimum denominations of $1,000 and integral multiples of $1,000 in
excess thereof (subject to a minimum initial purchase requirement of $100,000
for Notes sold to institutional investors that qualify as accredited investors
as defined in Rule 501(a)(1), (2), (3) and (7) under the Securities Act other
than in reliance on Rule 144A or Regulation S). The transfer of Notes may be
registered and Notes may be exchanged only as provided in Article 2 of the
Indenture. The Registrar and the Trustee may require a Holder, among other
things, to furnish appropriate endorsements and transfer documents (including
legal opinions) and the Company may require a Holder to pay any taxes and fees
required by law or permitted by the Indenture. The Company need not exchange or
register the transfer of any Note or portion of a Note selected for redemption,
except for the unredeemed portion of any Note being redeemed in part. Also, it
need not exchange or register the transfer of any Notes for a period of 15 days
before a selection of Notes to be redeemed or during the period between a record
date and the corresponding Interest Payment Date.
10. PERSONS DEEMED OWNERS. The registered Holder of a Note may be treated as its
owner for all purposes.
11. SUBORDINATION. Each Holder by accepting a Note agrees that the payment (by
set-off or otherwise) of principal of, premium, if any, and interest and
Liquidated Damages, if any, on the Notes (including with respect to any
repurchases of the Notes) is subordinated in right of payment, to the extent and
in the manner provided in Article 10 of the Indenture, to the prior payment in
full in cash, or at the option of the holders of Senior Debt, in Cash
Equivalents of all obligations in respect of Senior Debt, whether outstanding on
the date of the Indenture or thereafter incurred.
12. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain exceptions, the
Indenture, the Notes or any Subsidiary Guarantee may be amended or supplemented
with the consent of the Holders of at least a majority in principal amount of
the then outstanding Notes (including, without limitation, consents obtained in
connection with a purchase of, or tender offer or exchange offer for, the
Notes), and, subject to the terms of the Indenture and any applicable Subsidiary
Guarantee, any existing default or compliance with any provision of the
Indenture, the Notes or any Subsidiary
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Guarantee may be waived with the consent of the Holders of a majority in
principal amount of the then outstanding Notes (including consents obtained in
connection with a tender offer or exchange offer for the Notes). Without the
consent of any Holder of a Note, the Indenture, the Notes and any Subsidiary
Guarantee may be amended or supplemented to cure any ambiguity, defect or
inconsistency, to provide for uncertificated Notes in addition to or in place of
certificated Notes, to comply with Article 5 of the Indenture, to provide for
the assumption of the Company's or any Guarantor's obligations to Holders of the
Notes, to make any change that would provide any additional rights or benefits
to the Holders of the Notes or that does not adversely affect the legal rights
under the Indenture of any such Holder, to add covenants for the benefit of the
Holders or to surrender any right or power conferred upon the Company, to comply
with the requirements of the SEC in order to effect or maintain the
qualification of the Indenture under the TIA or to add a Guarantor under the
Indenture.
13. DEFAULTS AND REMEDIES. Each of the following constitutes an "Event of
Default": (a) default in payment when due (payable at maturity, upon redemption
or otherwise), of principal of or premium, if any, on the Notes (whether or not
such payment shall be prohibited by Article 10 of the Indenture); (b) default
for 30 days or more in the payment when due of interest on, or Liquidated
Damages, if any, with respect to the Notes (whether or not such payment shall be
prohibited by Article 10 of the Indenture; (c) failure by the Company to comply
with Sections 4.09, 4.10 and 5.01 of the Indenture; (d) failure by the Company
for 30 days after receipt of written notice to comply with any of its other
agreements in the Indenture or the Notes; (e) default under any mortgage,
indenture or instrument under which there may be issued or by which there may be
secured or evidenced any Indebtedness for money borrowed by the Company or any
of its Restricted Subsidiaries (or the payment of which is guaranteed by the
Company or any of its Restricted Subsidiaries) whether such Indebtedness or
guarantee now exists, or is created after the date of the Indenture, which
default (1) is caused by the failure to pay principal of or premium, if any, or
interest on such Indebtedness prior to the expiration of the grace period
provided in such Indebtedness on the date of such default (a "Payment Default")
at its stated final maturity (after giving effect to any applicable grace
periods) or (2) results in the acceleration of such Indebtedness prior to its
express maturity and, in each case, the principal amount of any such
Indebtedness, together with the principal amount of any other such Indebtedness
under which there has been a Payment Default or the maturity of which has been
so accelerated, aggregates $5.0 million or more; (f) failure by the Company or
any of its Restricted Subsidiaries to pay final and non-appealable judgments
aggregating in excess of $5.0 million, which judgments are not paid, discharged
or stayed for a period of 60 days; (g) the Company or any Restricted Subsidiary
that is a Significant Subsidiary pursuant to or within the meaning of any
Bankruptcy Law: (i) commences a voluntary case, (ii) consents to the entry of an
order for relief against it in an involuntary case in which it is the debtor,
(iii) consents to the appointment of a Custodian of it or for all or
substantially all of its property, (iv) makes a general assignment for the
benefit of its creditors, or (v) admits in writing its inability generally to
pay its debts as the same become due; (h) a court of competent jurisdiction
enters an order or decree under any Bankruptcy Law that: (i) is for relief
against the Company or any Restricted Subsidiary that is a Significant
Subsidiary in an involuntary case in which it is the debtor, (ii) appoints a
Custodian of the Company or any Restricted Subsidiary that is a Significant
Subsidiary or for all or substantially all of the property of the Company or any
Restricted Subsidiary that is a Significant Subsidiary; or (iii) orders the
liquidation of the Company or any Restricted Subsidiary that is a Significant
Subsidiary, and the
A-1-8
<PAGE>
order or decree contemplated in clauses (i), (ii) or (iii) of this clause (h),
remains unstayed and in effect for 60 consecutive days; or (i) except as
permitted by the Indenture, any Subsidiary Guarantee shall be held in any
judicial proceeding to be unenforceable or invalid and such judgment has become
final or non-appealable or shall cease for any other reason to be in full force
and effect or any Guarantor, or any Person acting on behalf of any Guarantor
shall deny or disaffirm its obligations under its Subsidiary Guarantee.
If any Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount of the then outstanding Notes may
declare all the Notes to be due and payable immediately by notice in writing to
the Company and the Trustee; provided that so long as any Indebtedness permitted
to be incurred pursuant to the Credit Agreement shall be outstanding, such
acceleration shall not be effective until the earlier of (i) an acceleration of
any such Indebtedness under the Credit Agreement or (ii) five Business Days
after receipt by the Company and the Agent of written notice of such
acceleration. Notwithstanding the foregoing, in the case of an Event of Default
arising from certain events of bankruptcy or insolvency, with respect to the
Company, any Significant Subsidiary that is a Restricted Subsidiary or any group
of Restricted Subsidiaries that, taken together, would constitute a Significant
Subsidiary, all outstanding Notes will become due and payable without further
action or notice. Holders of the Notes may not enforce the Indenture or the
Notes except as provided in the Indenture. Subject to certain limitations,
Holders of a majority in principal amount of the then outstanding Notes may
direct the Trustee in its exercise of any trust or power. The Trustee may
withhold from Holders of the Notes notice of any continuing Default or Event of
Default (except a Default or Event of Default relating to the payment of
principal or interest) if it determines that withholding notice is in their
interest.
14. TRUSTEE DEALINGS WITH COMPANY. The Trustee, in its individual or any other
capacity, may become the owner or pledgee of Notes and may otherwise deal with
the Company with the same rights it would have if it were not the Trustee.
15. NO RECOURSE AGAINST OTHERS. A director, officer, employee or stockholder, as
such, of the Company shall not have any liability for any obligations of the
Company under these Notes or the Indenture or for any claim based on, in respect
of or by reason of such obligations or their creation. Each Holder by accepting
any of these Notes waives and releases all such liability.
16. AUTHENTICATION. This Note shall not be valid until authenticated by the
manual signature of the Trustee.
17. ABBREVIATIONS. Customary abbreviations may be used in the name of a Holder
or an assignee, such as: TEN COM (= tenants in common), TENANT (= tenants by the
entireties), JT TEN (= joint tenants with right of survivorship and not as
tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors
Act).
18. ADDITIONAL RIGHTS OF HOLDERS OF TRANSFER RESTRICTED SECURITIES. In addition
to the rights provided to Holders of the Notes under the Indenture, Holders of
Transferred Restricted Securities (as defined in the Registration Rights
Agreement) shall have all the rights set forth in the
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<PAGE>
Registration Rights Agreement, dated as of the date hereof, among the Company,
the Guarantors and the Initial Purchaser (the "Registration Rights Agreement").
19. SUBSIDIARY GUARANTEES. Payment of principal, premium, if any, and interest
(including interest on overdue principal and overdue interest, if lawful) and
Liquidated Damages, if any, is unconditionally guaranteed by certain
subsidiaries of the Company. Such guaranties are junior and subordinated to the
guaranties of such subsidiaries on the same basis as the Notes are junior and
subordinated to Senior Debt.
20. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the Committee on
Uniform Security Identification Procedures, the Company have caused CUSIP
numbers to be printed on the Notes and the Trustee may use CUSIP numbers in
notices of redemption as a convenience to Holders. No representation is made as
to the accuracy of such numbers either as printed on the Notes or as contained
in any notice of redemption and reliance may be placed only on the other
identification numbers placed thereon.
The Company shall furnish to any Holder upon written request and without
charge a copy of the Indenture and/or the Registration Rights Agreement.
Requests may be made to:
Precise Technology, Inc.
501 Mosside Boulevard
North Versailles, Pennsylvania 15137-2553
Attention: Secretary
Facsimile: (412)823-4110
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<PAGE>
ASSIGNMENT FORM
To assign this Note, fill in the form below: (I) or (we) assign and
transfer this Note to
- --------------------------------------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. no.)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint__________________________________________________ to
transfer this Note on the books of the Company. The agent may substitute another
to act for him.
- --------------------------------------------------------------------------------
Date: __________
Your Signature:___________________
(Sign exactly as your name appears on the
face of this Note)
Signature Guarantee.
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<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Company pursuant
to Section 4.09 or 4.10 of the Indenture, check the box below:
|_| Section 4.09 |_| Section 4.10
If you want to elect to have only part of the Note purchased by the
Company pursuant to Section 4.09 or Section 4.10 of the Indenture, state the
amount you elect to have purchased:
$_____________
Date: __________
Your Signature:___________________
(Sign exactly as your name appears on the
face of this Note)
Tax Identification No.:
Signature Guarantee.
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<PAGE>
SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE2
The following exchanges of a part of this Global Note for an interest in
another Global Note or for a Definitive Note, or exchanges of a part of another
Global Note or Definitive Note for an interest in this Global Note, have been
made:
Principal
Amount of Amount of Amount
decrease in increase in of this
Principal Principal Global Note Signature of
Amount Amount following such authorized officer
of this of this decrease of Trustee or
Date of Exchange Global Note Global Note (or increase) Note Custodian
- ---------------- ----------- ----------- ------------- --------------
- ---------------------
2 This should be included only if the Note is a Global Note.
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<PAGE>
EXHIBIT A-2
(Face of Regulation S Temporary Global Note)
11 1/8% Senior Subordinated Notes due 2007
No. CUSIP No:
PRECISE TECHNOLOGY, INC.
promises to pay to Cede & Co. or registered assigns, the principal sum of
_______________________________ Dollars on __________, 2007.
Interest Payment Dates: June 15 and December 15
Record Dates: June 1 and December 1
Reference is made to the further provisions of this Note contained herein, which
will for all purposes have the same effect as of set forth at this place.
Dated: __________
PRECISE TECHNOLOGY, INC.
By:______________________________
Name:
Title:
By:______________________________
Name:
Title:
This is one of the 11 1/8% Senior Subordinated
Notes due 2007 referred to in the
within-mentioned Indenture:
Marine Midland Bank,
As Trustee
By: _____________________________
Authorized Signature
A-2-1
<PAGE>
(Back of Regulation S Temporary Global Note)
11 1/8% Senior Subordinated Notes due 2007
THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL NOTE, AND THE
CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR CERTIFICATED NOTES, ARE AS
SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN). NEITHER THE HOLDER NOR THE
BENEFICIAL OWNERS OF THIS REGULATION S TEMPORARY GLOBAL NOTE SHALL BE ENTITLED
TO RECEIVE CASH PAYMENTS OF INTEREST DURING THE PERIOD WHICH SUCH HOLDER HOLDS
THIS NOTE. NOTHING IN THIS LEGEND SHALL BE DEEMED TO PREVENT INTEREST FROM
ACCRUING ON THIS NOTE.
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN DEFINITIVE
FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITORY TO A
NOMINEE OF THE DEPOSITORY OR BY A NOMINEE OF THE DEPOSITORY TO THE DEPOSITORY OR
ANOTHER NOMINEE OF THE DEPOSITORY OR BY THE DEPOSITORY OR ANY SUCH NOMINEE TO A
SUCCESSOR DEPOSITORY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITORY. UNLESS THIS
CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY (55 WATER STREET, NEW YORK, NEW YORK) ("DTC") TO THE COMPANY OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS MAY BE
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR SUCH OTHER ENTITY AS MAY BE REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
"THIS SECURITY (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY
NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED STATES
OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS, EXCEPT AS SET FORTH IN
THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST
HEREIN, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL
BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) (A "QIB"), (B) IT IS
NOT A U.S. PERSON, IS NOT ACQUIRING THIS NOTE FOR THE ACCOUNT OR BENEFIT OF A
U.S. PERSON AND IS ACQUIRING THIS NOTE IN AN OFFSHORE TRANSACTION IN COMPLIANCE
WITH REGULATION S UNDER THE SECURITIES ACT OR (C) IT IS AN INSTITUTIONAL
"ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7) OF
REGULATION D UNDER THE SECURITIES ACT) (AN "IAI"), (2) AGREES THAT IT WILL NOT,
WITHIN THE TIME PERIOD REFERRED TO UNDER RULE 144(k) (TAKING INTO
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<PAGE>
ACCOUNT THE PROVISIONS OF RULE 144(d) UNDER THE SECURITIES ACT, IF APPLICABLE)
UNDER THE SECURITIES ACT AS IN EFFECT ON THE DATE OF THE TRANSFER OF THIS NOTE,
RESELL OR OTHERWISE TRANSFER THIS NOTE EXCEPT (A) TO THE COMPANY OR ANY
SUBSIDIARY THEREOF, (B) TO A PERSON WHOM THE HOLDER REASONABLY BELIEVES IS A QIB
PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QIB IN COMPLIANCE WITH
RULE 144A UNDER THE SECURITIES ACT, (C) OUTSIDE THE UNITED STATES IN AN OFFSHORE
TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (D) PURSUANT
TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT
(IF AVAILABLE), (E) TO AN IAI THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO THE
TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS
RELATING TO THE REGISTRATION OF TRANSFER OF THIS NOTE (THE FORM OF WHICH LETTER
CAN BE OBTAINED FROM THE TRUSTEE) AND, IF THE ISSUER SO REQUESTS, AN OPINION OF
COUNSEL REASONABLY ACCEPTABLE TO THE COMPANY THAT SUCH TRANSFER IS IN COMPLIANCE
WITH THE SECURITIES ACT OR (F) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT AND, IN EACH CASE, IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS, AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS
NOTE OR AN INTEREST HEREIN IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT
OF THIS LEGEND. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED
STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM BY RULE 902 OF
REGULATION S UNDER THE SECURITIES ACT. THE INDENTURE CONTAINS A PROVISION
REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS NOTE IN
VIOLATION OF THE FOREGOING RESTRICTIONS."
Capitalized terms used herein shall have the meanings assigned to them in the
Indenture referred to below.
1. INTEREST. Precise Technology, Inc., a Delaware corporation (the "Company"),
promises to pay interest on the principal amount of this Note at 111/8% per
annum from the Issuance Date until June 15, 2007 and shall pay the Liquidated
Damages, if any, payable pursuant to Section 5 of the Registration Rights
Agreement referred to below. The Company shall pay interest and Liquidated
Damages, if any, semi-annually in arrears on June 15 and December 15 of each
year (each an "Interest Payment Date"), or if any such day is not a Business
Day, on the next succeeding Business Day. Interest on the Notes will accrue from
the most recent date to which interest has been paid or, if no interest has been
paid, from the Issuance Date; provided that if there is no existing Default in
the payment of interest, and if this Note is authenticated between a record date
referred to on the face hereof and the next succeeding Interest Payment Date,
interest shall accrue from such next succeeding Interest Payment Date; provided,
further, that the first Interest Payment Date shall be December 15, 1997. The
Company shall pay interest (including post-petition interest in any proceeding
under any Bankruptcy Law) on overdue principal and premium, if any, from time to
time on demand at a rate equal to the per annum rate on the Notes then in
effect; it shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue installments of interest and
Liquidated Damages (without regard to any applicable grace periods) from time to
time on demand at the same rate to the extent lawful. Interest will be computed
on the basis of a 360-day year of twelve 30-day months.
A-2-3
<PAGE>
2. METHOD OF PAYMENT. The Company shall make payments in respect of Global Notes
(including principal, premium, if any, and interest and Liquidated Damages, if
any) by wire transfer of immediately available funds to the accounts specified
by the Note Custodian or, at the option of the Company, payment of interest and
Liquidated Damages, if any, may be made by check mailed to the Holders of the
Notes at their respective addresses set forth in the register of Holders of
Notes. Notwithstanding the foregoing, all payments with respect to the Notes
(the Holders of which have provided wire transfer instructions to the Company at
least ten Business Days prior to the applicable payment date), will be required
to be made by wire transfer of immediately available funds to the accounts
specified by the Holders thereof. Such payment shall be made in such coin or
currency of the United States of America as at the time of payment is legal
tender for the payment of public and private debts.
3. PAYING AGENT AND REGISTRAR. Initially, Marine Midland Bank, the Trustee under
the Indenture, will act as Paying Agent and Registrar. The Notes may be
presented for registration of transfer and exchange at the offices of the
Registrar. The Company may change any Paying Agent or Registrar without notice
to any Holder. The Company or any of its Subsidiaries may act in any such
capacity.
4. INDENTURE. The Company issued the Notes under an Indenture dated as of June
13, 1997 ("Indenture") between the Company and the Trustee. The terms of the
Notes include those stated in the Indenture and those made part of the Indenture
by reference to the Trust Indenture Act of 1939, as amended (15 U.S. Code ss.ss.
77aaa-77bbbb). The Notes are subject to all such terms, and Holders are referred
to the Indenture and such Act for a statement of such terms. The Notes are
general unsecured obligations of the Company limited to $200,000,000 in
aggregate principal amount.
5. OPTIONAL REDEMPTION.
Except as set forth in the following paragraphs, the Notes will not be
redeemable at the Company's option prior to June 15, 2002. On and after June 15,
2002, the Notes will be subject to redemption at the option of the Company, in
whole or in part, upon not less than 30 nor more than 60 days' written notice,
at the Redemption Prices (expressed as a percentage of principal amount) set
forth below, plus accrued and unpaid interest thereon, if any, to the applicable
Redemption Date, if redeemed during the twelve-month period beginning on June 15
of each of the years indicated below:
Year REDEMPTION
PRICE
-----
2002 .................................... 105.563%
2003 .................................... 103.708%
2004 .................................... 101.854%
2005 and thereafter............................... 100.000%
In addition, at any time prior to June 15, 2000, the Company may on any
one or more occasions redeem up to 331/3% of the aggregate principal amount of
Notes originally issued (including, for this purpose, one or more series of
Notes issued under the Indenture after the date of the Indenture) at a
Redemption Price of 111.125% of the principal amount thereof, plus accrued and
unpaid interest and Liquidated Damages, if any, thereon, to the Redemption Date,
with the net cash proceeds of one or more Public Equity Offerings; provided that
at least 66 2/3%
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<PAGE>
of the Notes originally issued (including, for this purpose, one or more series
of Notes issued under the Indenture after the date of the Indenture) remain
outstanding immediately after the occurrence of such redemption and provided,
that such redemption occurs within 60 days of the date of the closing of each
such Public Equity Offering. The Trustee shall select the Notes to be purchased
in the manner described in the Indenture.
In addition, at any time prior to June 15, 2002, the Company may, at its
option, redeem the Notes, in whole or in part, at a Redemption Price equal to
100% of the principal amount thereof plus the applicable Make-Whole Premium.
6. MANDATORY REDEMPTION. Except as set forth in paragraph 8, the Company shall
not be required to make mandatory redemption or sinking fund payments with
respect to the Notes.
7. NOTICE OF REDEMPTION. Notice of redemption will be mailed by first class
mail, postage prepaid, at least 30 days but not more than 60 days before the
Redemption Date to each Holder of Notes to be redeemed at such Holder's
registered address. If any Note is to be redeemed in part only, any notice of
redemption that relates to such Note shall state the portion of the principal
amount thereof to be redeemed. On or after the Redemption Date, unless the
Company defaults in making the redemption payments, interest ceases to accrue on
the Notes or portions thereof called for redemption.
8. REPURCHASE AT OPTION OF HOLDERS. (a) Upon the occurrence of a Change of
Control, the Company shall make an offer (a "Change of Control Offer") to
purchase all or any part (equal to $1,000 or an integral multiple thereof) of
the Notes at a price in cash equal to 101% of the aggregate principal amount
thereof plus accrued and unpaid interest and Liquidated Damages, if any,
thereon, to the date of purchase (the "Change of Control Payment"). Prior to
complying with the provisions of Section 4.09 of the Indenture, but in any event
within 30 days following a Change of Control, the Company shall either repay in
full in cash all Indebtedness under the Credit Agreement (and terminate all
commitments thereunder) and all other Senior Debt the terms of which require
repayment upon a Change of Control or offer to repay in full in cash all
Indebtedness under the Credit Agreement (and terminate all commitments
thereunder) and all such other Senior Debt and to repay the Indebtedness owed to
(and terminate the commitments of) each lender which has accepted such offer or
obtain the requisite consents under the Credit Agreement and all such other
Senior Debt to permit the repurchase of the Notes. Within 30 days following any
Change of Control, the Company shall mail a notice to each Holder of Notes
issued under the Indenture, with a copy to the Trustee, containing the
information set forth in Section 4.09 of the Indenture. Holders of Notes that
are subject to an offer to purchase may elect to have such Notes purchased by
completing the form entitled "Option of Holder to Elect Purchase" on the reverse
side of this Note.
(b) When the aggregate amount of Excess Proceeds in connection with Asset
Sales by the Company exceeds $5.0 million, the Company shall make an offer to
all Holders of Notes (an "Asset Sale Offer") to purchase the maximum principal
amount of Notes that may be purchased out of the Excess Proceeds, at an offer
price in cash equal to 100% of the principal amount thereof plus accrued and
unpaid interest and Liquidated Damages, if any, thereon to the date of purchase,
in accordance with the procedures set forth in Section 3.10 of the Indenture.
The Company will commence an Asset Sale Offer with respect to Excess Proceeds
within ten Business Days after the date that Excess Proceeds exceeds $5.0
million by mailing by first class mail the notice required pursuant to the terms
Section 3.10 of the Indenture, with a copy to the Trustee. To the extent that
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<PAGE>
the aggregate amount of Notes tendered pursuant to an Asset Sale Offer is less
than the Excess Proceeds, the Company may use any remaining Excess Proceeds for
general corporate purposes. If the aggregate principal amount of Notes
surrendered by Holders thereof exceeds the amount of Excess Proceeds, the
Trustee shall select the Notes to be purchased on a pro rata basis. Upon
completion of such offer to purchase, the amount of Excess Proceeds shall be
reset at zero. Holders of Notes that are the subject of an offer to purchase
will receive an Asset Sale Offer from the Company prior to any related purchase
date and may elect to have such Notes purchased by completing the form entitled
"Option of Holder to Elect Purchase" on the reverse side of this Note.
9. DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in registered form without
coupons in minimum denominations of $1,000 and integral multiples of $1,000 in
excess thereof (subject to a minimum initial purchase requirement of $100,000
for Notes sold to institutional investors that qualify as accredited investors
as defined in Rule 501(a)(1), (2), (3) and (7) under the Securities Act other
than in reliance on Rule 144A or Regulation S). The transfer of Notes may be
registered and Notes may be exchanged only as provided in Article 2 of the
Indenture. The Registrar and the Trustee may require a Holder, among other
things, to furnish appropriate endorsements and transfer documents (including
legal opinions) and the Company may require a Holder to pay any taxes and fees
required by law or permitted by the Indenture. The Company need not exchange or
register the transfer of any Note or portion of a Note selected for redemption,
except for the unredeemed portion of any Note being redeemed in part. Also, it
need not exchange or register the transfer of any Notes for a period of 15 days
before a selection of Notes to be redeemed or during the period between a record
date and the corresponding Interest Payment Date.
10. PERSONS DEEMED OWNERS. The registered Holder of a Note may be treated as its
owner for all purposes.
11. SUBORDINATION. Each Holder by accepting a Note agrees that the payment (by
set-off or otherwise) of principal of, premium, if any, and interest and
Liquidated Damages, if any, on the Notes (including with respect to any
repurchases of the Notes) is subordinated in right of payment, to the extent and
in the manner provided in Article 10 of the Indenture, to the prior payment in
full in cash, or at the option of the holders of Senior Debt, in Cash
Equivalents of all obligations in respect of Senior Debt, whether outstanding on
the date of the Indenture or thereafter incurred.
12. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain exceptions, the
Indenture, the Notes or any Subsidiary Guarantee may be amended or supplemented
with the consent of the Holders of at least a majority in principal amount of
the then outstanding Notes (including, without limitation, consents obtained in
connection with a purchase of, or tender offer or exchange offer for, the
Notes), and, subject to the terms of the Indenture and any applicable Subsidiary
Guarantee, any existing default or compliance with any provision of the
Indenture, the Notes or any Subsidiary Guarantee may be waived with the consent
of the Holders of a majority in principal amount of the then outstanding Notes
(including consents obtained in connection with a tender offer or exchange offer
for the Notes). Without the consent of any Holder of a Note, the Indenture, the
Notes and any Subsidiary Guarantee may be amended or supplemented to cure any
ambiguity, defect or inconsistency, to provide for uncertificated Notes in
addition to or in place of certificated Notes, to comply with Article 5 of the
Indenture, to provide for the assumption of the Company's or any Guarantor's
obligations to Holders of the Notes, to make any change that would provide any
additional rights or benefits to the Holders of the Notes or that does not
adversely affect the legal rights under the Indenture of any such Holder, to add
covenants for the benefit of the Holders or to surrender any right or power
conferred upon the Company, to comply with the requirements
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<PAGE>
of the SEC in order to effect or maintain the qualification of the Indenture
under the TIA or to add a Guarantor under the Indenture.
13. DEFAULTS AND REMEDIES. Each of the following constitutes an "Event of
Default": (a) default in payment when due (payable at maturity, upon redemption
or otherwise), of principal of or premium, if any, on the Notes (whether or not
such payment shall be prohibited by Article 10 of the Indenture); (b) default
for 30 days or more in the payment when due of interest on, or Liquidated
Damages, if any, with respect to the Notes (whether or not such payment shall be
prohibited by Article 10 of the Indenture; (c) failure by the Company to comply
with Sections 4.09, 4.10 and 5.01 of the Indenture; (d) failure by the Company
for 30 days after receipt of written notice to comply with any of its other
agreements in the Indenture or the Notes; (e) default under any mortgage,
indenture or instrument under which there may be issued or by which there may be
secured or evidenced any Indebtedness for money borrowed by the Company or any
of its Restricted Subsidiaries (or the payment of which is guaranteed by the
Company or any of its Restricted Subsidiaries) whether such Indebtedness or
guarantee now exists, or is created after the date of the Indenture, which
default (1) is caused by the failure to pay principal of or premium, if any, or
interest on such Indebtedness prior to the expiration of the grace period
provided in such Indebtedness on the date of such default (a "Payment Default")
at its stated final maturity (after giving effect to any applicable grace
periods) or (2) results in the acceleration of such Indebtedness prior to its
express maturity and, in each case, the principal amount of any such
Indebtedness, together with the principal amount of any other such Indebtedness
under which there has been a Payment Default or the maturity of which has been
so accelerated, aggregates $5.0 million or more; (f) failure by the Company or
any of its Restricted Subsidiaries to pay final and non-appealable judgments
aggregating in excess of $5.0 million, which judgments are not paid, discharged
or stayed for a period of 60 days; (g) the Company or any Restricted Subsidiary
that is a Significant Subsidiary pursuant to or within the meaning of any
Bankruptcy Law: (i) commences a voluntary case, (ii) consents to the entry of an
order for relief against it in an involuntary case in which it is the debtor,
(iii) consents to the appointment of a Custodian of it or for all or
substantially all of its property, (iv) makes a general assignment for the
benefit of its creditors, or (v) admits in writing its inability generally to
pay its debts as the same become due; (h) a court of competent jurisdiction
enters an order or decree under any Bankruptcy Law that: (i) is for relief
against the Company or any Restricted Subsidiary that is a Significant
Subsidiary in an involuntary case in which it is the debtor, (ii) appoints a
Custodian of the Company or any Restricted Subsidiary that is a Significant
Subsidiary or for all or substantially all of the property of the Company or any
Restricted Subsidiary that is a Significant Subsidiary; or (iii) orders the
liquidation of the Company or any Restricted Subsidiary that is a Significant
Subsidiary, and the order or decree contemplated in clauses (i), (ii) or (iii)
of this clause (h), remains unstayed and in effect for 60 consecutive days; or
(i) except as permitted by the Indenture, any Subsidiary Guarantee shall be held
in any judicial proceeding to be unenforceable or invalid and such judgment has
become final or non-appealable or shall cease for any other reason to be in full
force and effect or any Guarantor, or any Person acting on behalf of any
Guarantor shall deny or disaffirm its obligations under its Subsidiary
Guarantee.
If any Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount of the then outstanding Notes may
declare all the Notes to be due and payable immediately by notice in writing to
the Company and the Trustee; provided that so long as any Indebtedness permitted
to be incurred pursuant to the Credit Agreement shall be outstanding, such
acceleration shall not be effective until the earlier of (i) an acceleration of
any such Indebtedness under the Credit Agreement or (ii) five Business Days
after receipt by the Company and the Agent
A-2-7
<PAGE>
of written notice of such acceleration. Notwithstanding the foregoing, in the
case of an Event of Default arising from certain events of bankruptcy or
insolvency, with respect to the Company, any Significant Subsidiary that is a
Restricted Subsidiary or any group of Restricted Subsidiaries that, taken
together, would constitute a Significant Subsidiary, all outstanding Notes will
become due and payable without further action or notice. Holders of the Notes
may not enforce the Indenture or the Notes except as provided in the Indenture.
Subject to certain limitations, Holders of a majority in principal amount of the
then outstanding Notes may direct the Trustee in its exercise of any trust or
power. The Trustee may withhold from Holders of the Notes notice of any
continuing Default or Event of Default (except a Default or Event of Default
relating to the payment of principal or interest) if it determines that
withholding notice is in their interest.
14. TRUSTEE DEALINGS WITH COMPANY. The Trustee, in its individual or any other
capacity, may become the owner or pledgee of Notes and may otherwise deal with
the Company with the same rights it would have if it were not the Trustee.
15. NO RECOURSE AGAINST OTHERS. A director, officer, employee or stockholder, as
such, of the Company shall not have any liability for any obligations of the
Company under these Notes or the Indenture or for any claim based on, in respect
of or by reason of such obligations or their creation. Each Holder by accepting
any of these Notes waives and releases all such liability.
16. AUTHENTICATION. This Note shall not be valid until authenticated by the
manual signature of the Trustee.
17. ABBREVIATIONS. Customary abbreviations may be used in the name of a Holder
or an assignee, such as: TEN COM (= tenants in common), TENANT (= tenants by the
entireties), JT TEN (= joint tenants with right of survivorship and not as
tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors
Act).
18. ADDITIONAL RIGHTS OF HOLDERS OF TRANSFER RESTRICTED SECURITIES. In addition
to the rights provided to Holders of the Notes under the Indenture, Holders of
Transferred Restricted Securities (as defined in the Registration Rights
Agreement) shall have all the rights set forth in the Registration Rights
Agreement, dated as of the date hereof, among the Company, the Guarantors and
the Initial Purchaser (the "Registration Rights Agreement").
19. SUBSIDIARY GUARANTEES. Payment of principal, premium, if any, and interest
(including interest on overdue principal and overdue interest, if lawful) and
Liquidated Damages, if any, is unconditionally guaranteed by certain
subsidiaries of the Company. Such guaranties are junior and subordinated to the
guaranties of such subsidiaries on the same basis as the Notes are junior and
subordinated to Senior Debt.
20. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the Committee on
Uniform Security Identification Procedures, the Company have caused CUSIP
numbers to be printed on the Notes and the Trustee may use CUSIP numbers in
notices of redemption as a convenience to Holders. No representation is made as
to the accuracy of such numbers either as printed on the Notes or as contained
in any notice of redemption and reliance may be placed only on the other
identification numbers placed thereon.
The Company shall furnish to any Holder upon written request and without
charge a copy of the Indenture and/or the Registration Rights Agreement.
Requests may be made to:
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<PAGE>
Precise Technology, Inc.
501 Mosside Boulevard
North Versailles, Pennsylvania 15137-2553
Attention: Secretary
Facsimile: (412) 823-4110
A-2-9
<PAGE>
ASSIGNMENT FORM
To assign this Note, fill in the form below: (I) or (we) assign and
transfer this Note to
- --------------------------------------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. no.)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint__________________________________________________ to
transfer this Note on the books of the Company. The agent may substitute another
to act for him.
- --------------------------------------------------------------------------------
Date: __________
Your Signature:___________________
(Sign exactly as your name appears on the
face of this Note)
Signature Guarantee.
A-2-10
<PAGE>
SCHEDULE OF EXCHANGES OF REGULATION S TEMPORARY GLOBAL NOTE
The following exchanges of a part of this Regulation S Temporary Global Note for
an interest in another Global Note, or of other Restricted Global Notes for an
interest in this Regulation S Temporary Global Note, have been made:
Principal
Amount of Amount of Amount
decrease in increase in of this
Principal Principal Global Note Signature of
Amount Amount following such authorized officer
of this of this decrease of Trustee or
Date of Exchange Global Note Global Note (or increase) Note Custodian
- ---------------- ----------- ----------- ------------- --------------
A-2-11
<PAGE>
EXHIBIT A-3
(Face of Unrestricted Note)
111/8% Senior Subordinated Notes due 2007
No. CUSIP No.
PRECISE TECHNOLOGY, INC.
promises to pay to Cede & Co. or registered assigns, the principal sum of
_______________________________ Dollars on __________, 2007.
Interest Payment Dates: June 15 and December 15
Record Dates: June 1 and December 1
Reference is made for the further provisions of this Note contained herein,
which will for all purposes have the same effect as if set forth at this place.
Dated: ____________
PRECISE TECHNOLOGY, INC.
By:______________________________
Name:
Title:
By:______________________________
Name:
Title:
This is one of the 11 1/8% Senior Subordinated
Notes due 2007 referred to in the
within-mentioned Indenture:
Marine Midland Bank,
as Trustee
By: _____________________________
Authorized Signature
A-3-1
<PAGE>
(Back of Unrestricted Note)
11 1/8% Senior Subordinated Notes due 2007
[Unless and until it is exchanged in whole or in part for Notes in definitive
form, this Note may not be transferred except as a whole by the Depository to a
nominee of the Depository or by a nominee of the Depository to the Depository or
another nominee of the Depository or by the Depository or any such nominee to a
successor Depository or a nominee of such successor Depository. Unless this
certificate is presented by an authorized representative of The Depository Trust
Company (55 Water Street, New York, New York) ("DTC") to the issuer or its agent
for registration of transfer, exchange or payment, and any certificate issued is
registered in the name of Cede & Co. or such other name as may be requested by
an authorized representative of DTC (and any payment is made to Cede & Co. or
such other entity as may be requested by an authorized representative of DTC),
ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY
PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an
interest herein.]1
"THIS GLOBAL NOTE IS HELD BY THE DEPOSITORY (AS DEFINED IN THE INDENTURE
GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL
OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES
EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED
PURSUANT TO SECTION 2.07 OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE
EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE,
(III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT
TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO
A SUCCESSOR DEPOSITORY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY."
Capitalized terms used herein shall have the meanings assigned to them in the
Indenture referred to below.
1. INTEREST. Precise Technology, Inc., a Delaware corporation (the "Company"),
promises to pay interest on the principal amount of this Note at 111/8% per
annum from the Issuance Date until June 15, 2007 and shall pay the Liquidated
Damages, if any, payable pursuant to Section 5 of the Registration Rights
Agreement referred to below. The Company shall pay interest and Liquidated
Damages, if any, semi-annually in arrears on June 15 and December 15 of each
year (each an "Interest Payment Date"), or if any such day is not a Business
Day, on the next succeeding Business Day. Interest on the Notes will accrue from
the most recent date to which interest has been paid or, if no interest has been
paid, from the Issuance Date; provided that if there is no existing Default in
the payment of interest, and if this Note is authenticated between a record date
referred to on the face hereof and the next succeeding Interest Payment Date,
interest shall accrue from such next succeeding Interest Payment Date; provided,
further, that the first Interest Payment Date shall be December 15, 1997. The
Company shall pay interest (including post-petition interest in any proceeding
under any Bankruptcy Law) on overdue principal and premium, if any, from time to
time on demand at a rate equal to the per annum rate on the Notes then in
effect; it shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on
- --------------------
1. This paragraph should be included only if the Note is a Global Note.
A-3-2
<PAGE>
overdue installments of interest and Liquidated Damages (without regard to any
applicable grace periods) from time to time on demand at the same rate to the
extent lawful. Interest will be computed on the basis of a 360-day year of
twelve 30-day months.
2. METHOD OF PAYMENT. The Company shall make payments in respect of Global Notes
(including principal, premium, if any, and interest and Liquidated Damages, if
any) by wire transfer of immediately available funds to the accounts specified
by the Note Custodian or, at the option of the Company, payment of interest and
Liquidated Damages, if any, may be made by check mailed to the Holders of the
Notes at their respective addresses set forth in the register of Holders of
Notes. Notwithstanding the foregoing, all payments with respect to the Notes
(the Holders of which have provided wire transfer instructions to the Company at
least ten Business Days prior to the applicable payment date), will be required
to be made by wire transfer of immediately available funds to the accounts
specified by the Holders thereof. Such payment shall be made in such coin or
currency of the United States of America as at the time of payment is legal
tender for the payment of public and private debts.
3. PAYING AGENT AND REGISTRAR. Initially, Marine Midland Bank, the Trustee under
the Indenture, will act as Paying Agent and Registrar. The Notes may be
presented for registration of transfer and exchange at the offices of the
Registrar. The Company may change any Paying Agent or Registrar without notice
to any Holder. The Company or any of its Subsidiaries may act in any such
capacity.
4. INDENTURE. The Company issued the Notes under an Indenture dated as of June
13, 1997 ("Indenture") between the Company and the Trustee. The terms of the
Notes include those stated in the Indenture and those made part of the Indenture
by reference to the Trust Indenture Act of 1939, as amended (15 U.S. Code ss.ss.
77aaa-77bbbb). The Notes are subject to all such terms, and Holders are referred
to the Indenture and such Act for a statement of such terms. The Notes are
general unsecured obligations of the Company limited to $200,000,000 in
aggregate principal amount.
5. OPTIONAL REDEMPTION.
Except as set forth in the following paragraphs, the Notes will not be
redeemable at the Company's option prior to June 15, 2002. On and after June 15,
2002, the Notes will be subject to redemption at the option of the Company, in
whole or in part, upon not less than 30 nor more than 60 days' written notice,
at the Redemption Prices (expressed as a percentage of principal amount) set
forth below, plus accrued and unpaid interest thereon, if any, to the applicable
Redemption Date, if redeemed during the twelve-month period beginning on June 15
of each of the years indicated below:
Year REDEMPTION
PRICE
2002 .................................... 105.563%
2003 .................................... 103.708%
2004 .................................... 101.854%
2005 and thereafter............................... 100.000%
In addition, at any time prior to June 15, 2000, the Company may on any
one or more occasions redeem up to 331/3% of the aggregate principal amount of
Notes originally issued (including, for this purpose, one or more series of
Notes issued under the Indenture after
A-3-3
<PAGE>
the date of the Indenture) at a Redemption Price of 111.125% of the principal
amount thereof, plus accrued and unpaid interest and Liquidated Damages, if any,
thereon, to the Redemption Date, with the net cash proceeds of one or more
Public Equity Offerings; provided that at least 662/3% of the Notes originally
issued (including, for this purpose, one or more series of Notes issued under
the Indenture after the date of the Indenture) remain outstanding immediately
after the occurrence of such redemption and provided, that such redemption
occurs within 60 days of the date of the closing of each such Public Equity
Offering. The Trustee shall select the Notes to be purchased in the manner
described in the Indenture.
In addition, at any time prior to June 15, 2002, the Company may, at its
option, redeem the Notes, in whole or in part, at a Redemption Price equal to
100% of the principal amount thereof plus the applicable Make-Whole Premium.
6. MANDATORY REDEMPTION. Except as set forth in paragraph 8, the Company shall
not be required to make mandatory redemption or sinking fund payments with
respect to the Notes.
7. NOTICE OF REDEMPTION. Notice of redemption will be mailed by first class
mail, postage prepaid, at least 30 days but not more than 60 days before the
Redemption Date to each Holder of Notes to be redeemed at such Holder's
registered address. If any Note is to be redeemed in part only, any notice of
redemption that relates to such Note shall state the portion of the principal
amount thereof to be redeemed. On or after the Redemption Date, unless the
Company defaults in making the redemption payments, interest ceases to accrue on
the Notes or portions thereof called for redemption.
8. REPURCHASE AT OPTION OF HOLDERS. (a) Upon the occurrence of a Change of
Control, the Company shall make an offer (a "Change of Control Offer") to
purchase all or any part (equal to $1,000 or an integral multiple thereof) of
the Notes at a price in cash equal to 101% of the aggregate principal amount
thereof plus accrued and unpaid interest and Liquidated Damages, if any,
thereon, to the date of purchase (the "Change of Control Payment"). Prior to
complying with the provisions of Section 4.09 of the Indenture, but in any event
within 30 days following a Change of Control, the Company shall either repay in
full in cash all Indebtedness under the Credit Agreement (and terminate all
commitments thereunder) and all other Senior Debt the terms of which require
repayment upon a Change of Control or offer to repay in full in cash all
Indebtedness under the Credit Agreement (and terminate all commitments
thereunder) and all such other Senior Debt and to repay the Indebtedness owed to
(and terminate the commitments of) each lender which has accepted such offer or
obtain the requisite consents under the Credit Agreement and all such other
Senior Debt to permit the repurchase of the Notes. Within 30 days following any
Change of Control, the Company shall mail a notice to each Holder of Notes
issued under the Indenture, with a copy to the Trustee, containing the
information set forth in Section 4.09 of the Indenture. Holders of Notes that
are subject to an offer to purchase may elect to have such Notes purchased by
completing the form entitled "Option of Holder to Elect Purchase" on the reverse
side of this Note.
(b) When the aggregate amount of Excess Proceeds in connection with Asset
Sales by the Company exceeds $5.0 million, the Company shall make an offer to
all Holders of Notes (an "Asset Sale Offer") to purchase the maximum principal
amount of Notes that may be purchased out of the Excess Proceeds, at an offer
price in cash equal to 100% of the principal amount thereof plus accrued and
unpaid interest and Liquidated Damages, if any, thereon to the date of purchase,
in accordance with the procedures set forth in Section 3.10 of the Indenture.
The Company will
A-3-4
<PAGE>
commence an Asset Sale Offer with respect to Excess Proceeds within ten Business
Days after the date that Excess Proceeds exceeds $5.0 million by mailing by
first class mail the notice required pursuant to the terms Section 3.10 of the
Indenture, with a copy to the Trustee. To the extent that the aggregate amount
of Notes tendered pursuant to an Asset Sale Offer is less than the Excess
Proceeds, the Company may use any remaining Excess Proceeds for general
corporate purposes. If the aggregate principal amount of Notes surrendered by
Holders thereof exceeds the amount of Excess Proceeds, the Trustee shall select
the Notes to be purchased on a pro rata basis. Upon completion of such offer to
purchase, the amount of Excess Proceeds shall be reset at zero. Holders of Notes
that are the subject of an offer to purchase will receive an Asset Sale Offer
from the Company prior to any related purchase date and may elect to have such
Notes purchased by completing the form entitled "Option of Holder to Elect
Purchase" on the reverse side of this Note.
9. DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in registered form without
coupons in minimum denominations of $1,000 and integral multiples of $1,000 in
excess thereof (subject to a minimum initial purchase requirement of $100,000
for Notes sold to institutional investors that qualify as accredited investors
as defined in Rule 501(a)(1), (2), (3) and (7) under the Securities Act other
than in reliance on Rule 144A or Regulation S). The transfer of Notes may be
registered and Notes may be exchanged only as provided in Article 2 of the
Indenture. The Registrar and the Trustee may require a Holder, among other
things, to furnish appropriate endorsements and transfer documents (including
legal opinions) and the Company may require a Holder to pay any taxes and fees
required by law or permitted by the Indenture. The Company need not exchange or
register the transfer of any Note or portion of a Note selected for redemption,
except for the unredeemed portion of any Note being redeemed in part. Also, it
need not exchange or register the transfer of any Notes for a period of 15 days
before a selection of Notes to be redeemed or during the period between a record
date and the corresponding Interest Payment Date.
10. PERSONS DEEMED OWNERS. The registered Holder of a Note may be treated as its
owner for all purposes.
11. SUBORDINATION. Each Holder by accepting a Note agrees that the payment (by
set-off or otherwise) of principal of, premium, if any, and interest and
Liquidated Damages, if any, on the Notes (including with respect to any
repurchases of the Notes) is subordinated in right of payment, to the extent and
in the manner provided in Article 10 of the Indenture, to the prior payment in
full in cash, or at the option of the holders of Senior Debt, in Cash
Equivalents of all obligations in respect of Senior Debt, whether outstanding on
the date of the Indenture or thereafter incurred.
12. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain exceptions, the
Indenture, the Notes or any Subsidiary Guarantee may be amended or supplemented
with the consent of the Holders of at least a majority in principal amount of
the then outstanding Notes (including, without limitation, consents obtained in
connection with a purchase of, or tender offer or exchange offer for, the
Notes), and, subject to the terms of the Indenture and any applicable Subsidiary
Guarantee, any existing default or compliance with any provision of the
Indenture, the Notes or any Subsidiary Guarantee may be waived with the consent
of the Holders of a majority in principal amount of the then outstanding Notes
(including consents obtained in connection with a tender offer or exchange offer
for the Notes). Without the consent of any Holder of a Note, the Indenture, the
Notes and any Subsidiary Guarantee may be amended or supplemented to cure any
ambiguity, defect or inconsistency, to provide for uncertificated Notes in
addition to or in place of certificated Notes, to comply with Article 5 of the
Indenture, to provide for the assumption of the Company's or any Guarantor's
obligations to Holders of the Notes, to make any change that would provide any
additional rights or benefits to the Holders of the Notes or that does not
adversely affect the legal
A-3-5
<PAGE>
rights under the Indenture of any such Holder, to add covenants for the benefit
of the Holders or to surrender any right or power conferred upon the Company, to
comply with the requirements of the SEC in order to effect or maintain the
qualification of the Indenture under the TIA or to add a Guarantor under the
Indenture.
13. DEFAULTS AND REMEDIES. Each of the following constitutes an "Event of
Default": (a) default in payment when due (payable at maturity, upon redemption
or otherwise), of principal of or premium, if any, on the Notes (whether or not
such payment shall be prohibited by Article 10 of the Indenture); (b) default
for 30 days or more in the payment when due of interest on, or Liquidated
Damages, if any, with respect to the Notes (whether or not such payment shall be
prohibited by Article 10 of the Indenture; (c) failure by the Company to comply
with Sections 4.09, 4.10 and 5.01 of the Indenture; (d) failure by the Company
for 30 days after receipt of written notice to comply with any of its other
agreements in the Indenture or the Notes; (e) default under any mortgage,
indenture or instrument under which there may be issued or by which there may be
secured or evidenced any Indebtedness for money borrowed by the Company or any
of its Restricted Subsidiaries (or the payment of which is guaranteed by the
Company or any of its Restricted Subsidiaries) whether such Indebtedness or
guarantee now exists, or is created after the date of the Indenture, which
default (1) is caused by the failure to pay principal of or premium, if any, or
interest on such Indebtedness prior to the expiration of the grace period
provided in such Indebtedness on the date of such default (a "Payment Default")
at its stated final maturity (after giving effect to any applicable grace
periods) or (2) results in the acceleration of such Indebtedness prior to its
express maturity and, in each case, the principal amount of any such
Indebtedness, together with the principal amount of any other such Indebtedness
under which there has been a Payment Default or the maturity of which has been
so accelerated, aggregates $5.0 million or more; (f) failure by the Company or
any of its Restricted Subsidiaries to pay final and non-appealable judgments
aggregating in excess of $5.0 million, which judgments are not paid, discharged
or stayed for a period of 60 days; (g) the Company or any Restricted Subsidiary
that is a Significant Subsidiary pursuant to or within the meaning of any
Bankruptcy Law: (i) commences a voluntary case, (ii) consents to the entry of an
order for relief against it in an involuntary case in which it is the debtor,
(iii) consents to the appointment of a Custodian of it or for all or
substantially all of its property, (iv) makes a general assignment for the
benefit of its creditors, or (v) admits in writing its inability generally to
pay its debts as the same become due; (h) a court of competent jurisdiction
enters an order or decree under any Bankruptcy Law that: (i) is for relief
against the Company or any Restricted Subsidiary that is a Significant
Subsidiary in an involuntary case in which it is the debtor, (ii) appoints a
Custodian of the Company or any Restricted Subsidiary that is a Significant
Subsidiary or for all or substantially all of the property of the Company or any
Restricted Subsidiary that is a Significant Subsidiary; or (iii) orders the
liquidation of the Company or any Restricted Subsidiary that is a Significant
Subsidiary, and the order or decree contemplated in clauses (i), (ii) or (iii)
of this clause (h), remains unstayed and in effect for 60 consecutive days; or
(i) except as permitted by the Indenture, any Subsidiary Guarantee shall be held
in any judicial proceeding to be unenforceable or invalid and such judgment has
become final or non-appealable or shall cease for any other reason to be in full
force and effect or any Guarantor, or any Person acting on behalf of any
Guarantor shall deny or disaffirm its obligations under its Subsidiary
Guarantee.
If any Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount of the then outstanding Notes may
declare all the Notes to be due and payable immediately by notice in writing to
the Company and the Trustee; provided that so long as any Indebtedness permitted
to be incurred pursuant to the Credit Agreement shall be outstanding, such
acceleration shall not be effective until the earlier of (i) an acceleration of
any such Indebtedness
A-3-6
<PAGE>
under the Credit Agreement or (ii) five Business Days after receipt by the
Company and the Agent of written notice of such acceleration. Notwithstanding
the foregoing, in the case of an Event of Default arising from certain events of
bankruptcy or insolvency, with respect to the Company, any Significant
Subsidiary that is a Restricted Subsidiary or any group of Restricted
Subsidiaries that, taken together, would constitute a Significant Subsidiary,
all outstanding Notes will become due and payable without further action or
notice. Holders of the Notes may not enforce the Indenture or the Notes except
as provided in the Indenture. Subject to certain limitations, Holders of a
majority in principal amount of the then outstanding Notes may direct the
Trustee in its exercise of any trust or power. The Trustee may withhold from
Holders of the Notes notice of any continuing Default or Event of Default
(except a Default or Event of Default relating to the payment of principal or
interest) if it determines that withholding notice is in their interest.
14. TRUSTEE DEALINGS WITH COMPANY. The Trustee, in its individual or any other
capacity, may become the owner or pledgee of Notes and may otherwise deal with
the Company with the same rights it would have if it were not the Trustee.
15. NO RECOURSE AGAINST OTHERS. A director, officer, employee or stockholder, as
such, of the Company shall not have any liability for any obligations of the
Company under these Notes or the Indenture or for any claim based on, in respect
of or by reason of such obligations or their creation. Each Holder by accepting
any of these Notes waives and releases all such liability.
16. AUTHENTICATION. This Note shall not be valid until authenticated by the
manual signature of the Trustee.
17. ABBREVIATIONS. Customary abbreviations may be used in the name of a Holder
or an assignee, such as: TEN COM (= tenants in common), TENANT (= tenants by the
entireties), JT TEN (= joint tenants with right of survivorship and not as
tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors
Act).
18. ADDITIONAL RIGHTS OF HOLDERS OF TRANSFER RESTRICTED SECURITIES. In addition
to the rights provided to Holders of the Notes under the Indenture, Holders of
Transferred Restricted Securities (as defined in the Registration Rights
Agreement) shall have all the rights set forth in the Registration Rights
Agreement, dated as of the date hereof, among the Company, the Guarantors and
the Initial Purchaser (the "Registration Rights Agreement").
19. SUBSIDIARY GUARANTEES. Payment of principal, premium, if any, and interest
(including interest on overdue principal and overdue interest, if lawful) and
Liquidated Damages, if any, is unconditionally guaranteed by certain
subsidiaries of the Company. Such guaranties are junior and subordinated to the
guaranties of such subsidiaries on the same basis as the Notes are junior and
subordinated to Senior Debt.
20. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the Committee on
Uniform Security Identification Procedures, the Company have caused CUSIP
numbers to be printed on the Notes and the Trustee may use CUSIP numbers in
notices of redemption as a convenience to Holders. No representation is made as
to the accuracy of such numbers either as printed on the Notes or as contained
in any notice of redemption and reliance may be placed only on the other
identification numbers placed thereon.
The Company shall furnish to any Holder upon written request and without
charge a copy of the Indenture and/or the Registration Rights Agreement.
Requests may be made to:
A-3-7
<PAGE>
Precise Technology, Inc.
501 Mosside Boulevard
North Versailles, Pennsylvania 15137-2553
Attention: Secretary
Facsimile: (412) 823-4110
A-3-8
<PAGE>
EXHIBIT B
FORM OF CERTIFICATE OF TRANSFER
Precise Technology, Inc.
501 Mosside Boulevard
North Versailles, Pennsylvania 15137-2553
Marine Midland Bank
140 Broadway, 12th Floor
New York, New York 10005
Re: 11 1/8% Senior Subordinated Notes due 2007
Reference is hereby made to the Indenture, dated as of June 13, 1997 (the
"Indenture"), between Precise Technology, Inc., as issuer (the "Company"), and
Marine Midland Bank, as trustee. Capitalized terms used but not defined herein
shall have the meanings given to them in the Indenture.
______________, (the "Transferor") owns and proposes to transfer the
Note[s] or interest in such Note[s] specified in Annex A hereto, in the
principal amount of $___________ in such Note[s] or interests (the "Transfer"),
to __________ (the "Transferee"), as further specified in Annex A hereto. In
connection with the Transfer, the Transferor hereby certifies that:
[CHECK ALL THAT APPLY]
1.|_|Check if Transferee will take delivery of a beneficial interest in the 144A
Global Note or a Restricted Definitive Note Pursuant to Rule 144A. The Transfer
is being effected pursuant to and in accordance with Rule 144A under the United
States Securities Act of 1933, as amended (the "Securities Act"), and,
accordingly, the Transferor hereby further certifies that the beneficial
interest or Restricted Definitive Note is being transferred to a Person that the
Transferor reasonably believed and believes is purchasing the beneficial
interest or Restricted Definitive Note for its own account, or for one or more
accounts with respect to which such Person exercises sole investment discretion,
and such Person and each such account is a "qualified institutional buyer"
within the meaning of Rule 144A in a transaction meeting the requirements of
Rule 144A and such Transfer is in compliance with any applicable blue sky
securities laws of any state of the United States. Upon consummation of the
proposed Transfer in accordance with the terms of the Indenture, the transferred
beneficial interest or Restricted Definitive Note will be subject to the
restrictions on transfer enumerated in the Private Placement Legend printed on
the 144A Global Note and/or the Restricted Definitive Note and in the Indenture
and the Securities Act.
2.|_|Check if Transferee will take delivery of a beneficial interest in the
Temporary Regulation S Global Note, the Regulation S Global Note or a Restricted
Definitive Note pursuant to Regulation S. The Transfer is being effected
pursuant to and in accordance with Rule 903 or Rule 904 under the Securities Act
and, accordingly, the Transferor hereby further certifies that (i) the Transfer
is not being made to a person in the United States and (x) at the time the buy
order was originated, the Transferee was outside the United States or such
Transferor and any Person acting
B-1
<PAGE>
on its behalf reasonably believed and believes that the Transferee was outside
the United States or (y) the transaction was executed in, on or through the
facilities of a designated offshore securities market and neither such
Transferor nor any Person acting on its behalf knows that the transaction was
prearranged with a buyer in the United States, (ii) no directed selling efforts
have been made in contravention of the requirements of Rule 903(b) or Rule
904(b) of Regulation S under the Securities Act, (iii) the transaction is not
part of a plan or scheme to evade the registration requirements of the
Securities Act and (iv) if the proposed transfer is being made prior to the
expiration of the Restricted Period, the transfer is not being made to a U.S.
Person or for the account or benefit of a U.S. Person (other than an Initial
Purchaser). Upon consummation of the proposed transfer in accordance with the
terms of the Indenture, the transferred beneficial interest or Restricted
Definitive Note will be subject to the restrictions on Transfer enumerated in
the Private Placement Legend printed on the Regulation S Global Note, the
Temporary Regulation S Global Note and/or the Definitive Note and in the
Indenture and the Securities Act.
3.|_|Check and complete if Transferee will take delivery of a Restricted
Definitive Note pursuant to any provision of the Securities Act other than Rule
144A or Regulation S. The Transfer is being effected in compliance with the
transfer restrictions applicable to Restricted Definitive Notes and pursuant to
and in accordance with the Securities Act and any applicable blue sky securities
laws of any state of the United States, and accordingly the Transferor hereby
further certifies that (check one):
(a)|_|such Transfer is being effected pursuant to and in accordance with
Rule 144 under the Securities Act;
or
(b)|_|such Transfer is being effected to the Company or a Subsidiary
thereof;
or
(c)|_|such Transfer is being effected pursuant to an effective
registration statement under the Securities Act and in compliance with the
prospectus delivery requirements of the Securities Act;
or
(d)|_|such Transfer is being effected to an Accredited Investor and
pursuant to an exemption from the registration requirements of the Securities
Act other than Rule 144A, Rule 144 or Rule 904, and the Transferor hereby
further certifies that the Transfer complies with the transfer restrictions
applicable to Restricted Definitive Notes and the requirements of the exemption
claimed, which certification is supported by (1) a certificate executed by the
Transferee in the form of Exhibit D to the Indenture and (2) if the Company so
requests, an Opinion of Counsel reasonably acceptable to the Company provided by
the Transferor or the Transferee (a copy of which the Transferor has attached to
this certification), to the effect that such Transfer is in compliance with the
Securities Act. Upon consummation of the proposed transfer in accordance with
the terms of the Indenture, the transferred beneficial interest or Restricted
Definitive Note will be subject to the restrictions on transfer enumerated in
the Private Placement Legend printed on the Restricted Definitive Notes and in
the Indenture and the Securities Act.
B-2
<PAGE>
4.|_|Check if Transferee will take delivery of a beneficial interest in an
Unrestricted Global Note or of an Unrestricted Definitive Note.
(a)|_|Check if Transfer is pursuant to Rule 144. (i) The Transfer is being
effected pursuant to and in accordance with Rule 144 under the Securities Act
and in compliance with the transfer restrictions contained in the Indenture and
any applicable blue sky securities laws of any state of the United States and
(ii) the restrictions on transfer contained in the Indenture and the Private
Placement Legend are not required in order to maintain compliance with the
Securities Act. Upon consummation of the proposed Transfer in accordance with
the terms of the Indenture, the transferred beneficial interest or Unrestricted
Definitive Note will no longer be subject to the restrictions on transfer
enumerated in the Private Placement Legend printed on the Restricted Global
Notes, on Restricted Definitive Notes and in the Indenture.
(b)|_|Check if Transfer is Pursuant to Regulation S. (i) The Transfer is
being effected pursuant to and in accordance with Rule 903 or Rule 904 under the
Securities Act and in compliance with the transfer restrictions contained in the
Indenture and any applicable blue sky securities laws of any state of the United
States and (ii) the restrictions on transfer contained in the Indenture and the
Private Placement Legend are not required in order to maintain compliance with
the Securities Act. Upon consummation of the proposed Transfer in accordance
with the terms of the Indenture, the transferred beneficial interest or
Unrestricted Definitive Note will no longer be subject to the restrictions on
transfer enumerated in the Private Placement Legend printed on the Restricted
Global Notes, on Restricted Definitive Notes and in the Indenture.
(c)|_|Check if Transfer is Pursuant to Other Exemption. (i) The Transfer
is being effected pursuant to and in compliance with an exemption from the
registration requirements of the Securities Act other than Rule 144, Rule 903 or
Rule 904 and in compliance with the transfer restrictions contained in the
Indenture and any applicable blue sky securities laws of any State of the United
States and (ii) the restrictions on transfer contained in the Indenture and the
Private Placement Legend are not required in order to maintain compliance with
the Securities Act. Upon consummation of the proposed Transfer in accordance
with the terms of the Indenture, the transferred beneficial interest or
Unrestricted Definitive Note will not be subject to the restrictions on transfer
enumerated in the Private Placement Legend printed on the Restricted Global
Notes or Restricted Definitive Notes and in the Indenture.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company.
---------------------------
[Insert Name of Transferor]
By:
------------------------
Name:
Title:
Dated: ,
------------------ ----
B-3
<PAGE>
ANNEX A TO CERTIFICATE OF TRANSFER
1. The Transferor owns and proposes to transfer the following:
|_|a beneficial interest in the:
(i) |_| 144A Global Note (QIB Global Note) (CUSIP No. 74018P AA7),
or
(ii) 144A Global Note |_| (Accredited Investor Global Note) (CUSIP
No. 74018P AB5).
2. After the Transfer, the Transferee will hold:
[CHECK ONE]
(a)|_|a beneficial interest in the:
(i) |_| 144A Global Note (QIB Global Note) (CUSIP No. 74018P AA7),
or
(ii) |_| 144A Global Note (Accredited Investor Global Note) (CUSIP
No. 74018P AB5), or
(iii) |_| Unrestricted Global Note (CUSIP_); or
(b)|_|a Restricted Definitive Note; or
(c)|_|an Unrestricted Definitive Note,
in accordance with the terms of the Indenture.
B-4
<PAGE>
EXHIBIT C
FORM OF CERTIFICATE OF EXCHANGE
Precise Technology, Inc.
501 Mosside Boulevard
North Versailles, Pennsylvania 15137-2553
Marine Midland Bank
140 Broadway, 12th Floor
New York, New York 10005
Re: 11 1/8% Senior Subordinated Notes due 2007 (CUSIP )
----------------------------------------------------------------------
Reference is hereby made to the Indenture, dated as of June 13, 1997 (the
"Indenture"), between Precise Technology, Inc., as issuer (the "Company"), and
Marine Midland Bank, as trustee. Capitalized terms used but not defined herein
shall have the meanings given to them in the Indenture.
_________________, (the "Owner") owns and proposes to exchange the Note[s]
or interest in such Note[s] specified herein, in the principal amount of
$____________ in such Note[s] or interests (the "Exchange"). In connection with
the Exchange, the Owner hereby certifies that:
1. Exchange of Restricted Definitive Notes or Beneficial Interests in a
Restricted Global Note for Unrestricted Definitive Notes or Beneficial Interests
in an Unrestricted Global Note
(a)|_|Check if Exchange is from beneficial interest in a Restricted Global
Note to beneficial interest in an Unrestricted Global Note. In connection with
the Exchange of the Owner's beneficial interest in a Restricted Global Note for
a beneficial interest in an Unrestricted Global Note in an equal principal
amount, the Owner hereby certifies (i) the beneficial interest is being acquired
for the Owner's own account without transfer, (ii) such Exchange has been
effected in compliance with the transfer restrictions applicable to the
Restricted Global Notes and pursuant to and in accordance with the United States
Securities Act of 1933, as amended (the "Securities Act"), (iii) the
restrictions on transfer contained in the Indenture and the Private Placement
Legend are not required in order to maintain compliance with the Securities Act
and (iv) the beneficial interest in an Unrestricted Global Note is being
acquired in compliance with any applicable blue sky securities laws of any state
of the United States.
(b)|_|Check if Exchange is from beneficial interest in a Restricted Global
Note to Unrestricted Definitive Note. In connection with the Exchange of the
Owner's beneficial interest in a Restricted Global Note for an Unrestricted
Definitive Note, the Owner hereby certifies (i) the Definitive Note is being
acquired for the Owner's own account without transfer, (ii) such Exchange has
been effected in compliance with the transfer restrictions applicable to the
Restricted Global Notes and pursuant to and in accordance with the Securities
Act, (iii) the restrictions on transfer contained in the Indenture and the
Private Placement Legend are not required in order to maintain compliance with
the Securities Act and (iv) the Unrestricted Definitive Note is being acquired
in compliance with any applicable blue sky securities laws of any state of the
United States.
C-1
<PAGE>
(c)|_|Check if Exchange is from Restricted Definitive Note to beneficial
interest in an Unrestricted Global Note. In connection with the Owner's Exchange
of a Restricted Definitive Note for a beneficial interest in an Unrestricted
Global Note, the Owner hereby certifies (i) the beneficial interest is being
acquired for the Owner's own account without transfer, (ii) such Exchange has
been effected in compliance with the transfer restrictions applicable to
Restricted Definitive Notes and pursuant to and in accordance with the
Securities Act, (iii) the restrictions on transfer contained in the Indenture
and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act and (iv) the beneficial interest is being
acquired in compliance with any applicable blue sky securities laws of any state
of the United States.
(d)|_|Check if Exchange is from Restricted Definitive Note to Unrestricted
Definitive Note. In connection with the Owner's Exchange of a Restricted
Definitive Note for an Unrestricted Definitive Note, the Owner hereby certifies
(i) the Unrestricted Definitive Note is being acquired for the Owner's own
account without transfer, (ii) such Exchange has been effected in compliance
with the transfer restrictions applicable to Restricted Definitive Notes and
pursuant to and in accordance with the Securities Act, (iii) the restrictions on
transfer contained in the Indenture and the Private Placement Legend are not
required in order to maintain compliance with the Securities Act and (iv) the
Unrestricted Definitive Note is being acquired in compliance with any applicable
blue sky securities laws of any state of the United States.
2. Exchange of Restricted Definitive Notes or Beneficial Interests in Restricted
Global Notes for Restricted Definitive Notes or Beneficial Interests in
Restricted Global Notes
(a)|_|Check if Exchange is from beneficial interest in a Restricted Global
Note to Restricted Definitive Note. In connection with the Exchange of the
Owner's beneficial interest in a Restricted Global Note for a Restricted
Definitive Note with an equal principal amount, the Owner hereby certifies that
the Restricted Definitive Note is being acquired for the Owner's own account
without transfer. Upon consummation of the proposed Exchange in accordance with
the terms of the Indenture, the Restricted Definitive Note issued will continue
to be subject to the restrictions on transfer enumerated in the Private
Placement Legend printed on the Restricted Definitive Note and in the Indenture
and the Securities Act.
(b)|_|Check if Exchange is from Restricted Definitive Note to beneficial
interest in a Restricted Global Note. In connection with the Exchange of the
Owner's Restricted Definitive Note for a beneficial interest in the [CHECK ONE]
|_| 144A Global Note or |_| Regulation S Global Note, with an equal principal
amount, the Owner hereby certifies (i) such Owner acquired such Restricted
Definitive Note in a transaction pursuant to Rule 144A or Regulation S, (ii) the
beneficial interest is being acquired for the Owner's own account without
transfer and (iii) such Exchange has been effected in compliance with the
transfer restrictions applicable to the Restricted Global Notes and pursuant to
and in accordance with the Securities Act, and in compliance with any applicable
blue sky securities laws of any state of the United States. Upon consummation of
the proposed Exchange in accordance with the terms of the Indenture, the
beneficial interest issued will be subject to the restrictions on transfer
enumerated in the Private Placement Legend printed on the relevant Restricted
Global Note and in the Indenture and the Securities Act.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company.
C-2
<PAGE>
[Insert Name of Owner]
By:
----------------------------
Name:
Title:
Dated: ,
---------------- ----
C-3
<PAGE>
EXHIBIT D
FORM OF CERTIFICATE FROM
ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR
Precise Technology, Inc.
501 Mosside Boulevard
North Versailles, Pennsylvania 15137-2553
Marine Midland Bank
140 Broadway, 12th Floor
New York, New York 10005
Re: 11 1/8% Senior Subordinated Notes due 2007
Reference is hereby made to the Indenture, dated as of June 13, 1997 (the
"Indenture"), between Precise Technology, Inc., as issuer (the "Company"), and
First Trust of New York, National Association, as trustee. Capitalized terms
used but not defined herein shall have the meanings given to them in the
Indenture.
In connection with our proposed purchase of $____________ aggregate
principal amount of Restricted Definitive Notes we confirm that:
1. We understand that any subsequent transfer of the Notes or any interest
therein is subject to certain restrictions and conditions set forth in the
Indenture and the undersigned agrees to be bound by, and not to resell, pledge
or otherwise transfer the Notes or any interest therein except in compliance
with, such restrictions and conditions and the United States Securities Act of
1933, as amended (the "Securities Act").
2. We understand that the Notes have not been registered under the
Securities Act, and that the Notes and any interest therein may not be offered
or sold except as permitted in the following sentence. We agree, on our own
behalf and on behalf of each account for which we acquire any Notes (for which
are acting as hereinafter stated), that such Notes may be offered, resold,
pledged or otherwise transferred only (i) to a person whom we reasonably believe
to be a "qualified institutional buyer" (as defined in Rule 144A under the
Securities Act) in a transaction meeting the requirements of Rule 144A, in a
transaction meeting the requirements of Rule 144 under the Securities Act,
outside the United States in a transaction meeting the requirements of Rule 904
under the Securities Act, or in accordance with another exemption from the
registration requirements of the Securities Act (and based upon an Opinion of
Counsel if the Company so Requests), (ii) to the Company or (iii) pursuant to an
effective registration statement, and, in each case, in accordance with any
applicable securities laws of any State of the United States or any other
applicable jurisdiction. We further agree to provide to any person purchasing
the Definitive Note or a beneficial interest in a Global Note from us in a
transaction meeting the requirements of (i) or (ii) of this paragraph a notice
advising such purchaser that resales thereof are restricted as stated herein.
D-1
<PAGE>
3. We understand that, on any proposed resale of the Notes or beneficial
interest therein, we will be required to furnish to you and the Company such
certifications, legal opinions and other information as you and the Company may
reasonably require to confirm that the proposed sale complies with the foregoing
restrictions. We further understand that the Notes purchased by us will bear a
legend to the foregoing effect. We further understand that any subsequent
transfer by us of the Notes or beneficial interest therein acquired by us must
be effected through one of the Placement Agents.
4. We are an institutional "accredited investor" (as defined in Rule
501(a)(1),(2),(3) or(7) of Regulation D under the Securities Act) and have such
knowledge and experience in financial and business matters as to be capable of
evaluating the merits and risks of our investment in the Notes, and we and any
accounts for which we are acting are each able to bear the economic risk of our
or its investment.
5. We are acquiring the Notes without a view to distribution thereof in
violation of the Securities Act for our own account or for one or more accounts
(each of which is an institutional "accredited investor") as to each of which we
exercise sole investment discretion.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby.
------------------------------------
[Insert Name of Accredited Investor]
------------------------------------
By:
Name:
Title:
Dated: ,
----------------- ----
D-2
<PAGE>
EXHIBIT E
SUBSIDIARY GUARANTEE
Each Guarantor hereby, jointly and severally, unconditionally guarantees
to each Holder of a Note authenticated and delivered by the Trustee and to the
Trustee and its successors and assigns, irrespective of the validity and
enforceability of the Indenture, the Notes and the Obligations of the Company
under the Notes or under the Indenture, that: (a) the principal of, premium, if
any, interest and Liquidated Damages, if any, on the Notes will be promptly paid
in full when due, subject to any applicable grace period, whether at maturity,
by acceleration, redemption or otherwise, and interest on overdue principal,
premium, if any, (to the extent permitted by law) interest on any interest, if
any, and Liquidated Damages, if any, on the Notes and all other payment
Obligations of the Company to the Holders or the Trustee under the Indenture or
under the Notes will be promptly paid in full and performed, all in accordance
with the terms thereof; and (b) in case of any extension of time of payment or
renewal of any Notes or any of such other payment Obligations, the same will be
promptly paid in full when due or performed in accordance with the terms of the
extension or renewal, subject to any applicable grace period, whether at stated
maturity, by acceleration, redemption or otherwise. Failing payment when so due
of any amount so guaranteed for whatever reason, the Guarantors will be jointly
and severally obligated to pay the same immediately.
The obligations of the Guarantor to the Holders and to the Trustee
pursuant to this Subsidiary Guarantee and the Indenture are expressly set forth
in Article 12 of the Indenture, and reference is hereby made to such Indenture
for the precise terms of this Subsidiary Guarantee. The terms of Article 12 of
the Indenture are incorporated herein by reference. This Subsidiary Guarantee is
subject to release as and to the extent provided in Section 12.04 of the
Indenture.
This is a continuing Subsidiary Guarantee and shall remain in full force
and effect and shall be binding upon each Guarantor and its respective
successors and assigns to the extent set forth in the Indenture until full and
final payment of all of the Company's Obligations under the Notes and the
Indenture and shall inure to the benefit of the successors and assigns of the
Trustee and the Holders and, in the event of any transfer or assignment of
rights by any Holder or the Trustee, the rights and privileges herein conferred
upon that party shall automatically extend to and be vested in such transferee
or assignee, all subject to the terms and conditions hereof. This is a
Subsidiary Guarantee of payment and not a guarantee of collection.
This Subsidiary Guarantee shall not be valid or obligatory for any purpose
until the certificate of authentication on the Note upon which this Subsidiary
Guarantee is noted shall have been executed by the Trustee under the Indenture
by the manual signature of one of its authorized officers.
For purposes hereof, each Guarantor's liability shall be limited to the
lesser of (i) the aggregate amount of the Obligations of the Company under the
Notes and the Indenture and (ii) the amount, if any, which would not have (A)
rendered such Guarantor "insolvent" (as such term is defined in the Bankruptcy
Law and in the Debtor and Creditor Law of the State of New York) or (B) left
such Guarantor with unreasonably small capital at the time its Subsidiary
Guarantee of the Notes was entered into; provided that, it will be a presumption
in any lawsuit or other proceeding in which a Guarantor is a party that the
amount guaranteed pursuant to the Subsidiary Guarantee is the amount set forth
in clause (i) above unless any creditor, or representative of creditors of such
Guarantor, or debtor in possession or trustee in bankruptcy of such Guarantor,
otherwise proves in such a lawsuit that the aggregate liability of the Guarantor
is limited to the amount set forth in clause (ii) above. The Indenture provides
that, in making any determination as to the solvency or sufficiency of capital
of a Guarantor in accordance with the previous
<PAGE>
sentence, the right of such Guarantors to contribution from other Guarantors and
any other rights such Guarantors may have, contractual or otherwise, shall be
taken into account.
Capitalized terms used herein have the same meanings given in the
Indenture unless otherwise indicated.
<PAGE>
PRECISE TMP, INC.
By:
-----------------------------
Name:
Title:
MASSIE TOOL, MOLD & DIE, INC.
By:
-----------------------------
Name:
Title:
PRECISE POLESTAR, INC.
By:
-----------------------------
Name:
Title:
PRECISE TECHNOLOGY OF DELAWARE INC.
By:
-----------------------------
Name:
Title:
PRECISE TECHNOLOGY OF ILLINOIS INC.
By:
-----------------------------
Name:
Title:
<PAGE>
SCHEDULE I
Term Loans:
Delaware State Loan $112,604.00
Concord Comm. Corp. (Phg tool EDM) $186,339.21
Concord Comm. Corp. (TMP EDM) $171,942.12
-----------
SUBTOTAL: $470,885.33
Cap Leases:
Phoenixcor (Del Presses) $1,184,237.24
Heller Financial (LAF Presses) $778,009.22
TM Acceptance (PGH Presses) $2,519,605.18
US Bancorp. (Polestar Presses) $382,964.99
Concord Comm. Corp. (TMP S. Graf.) $408,317.06
Pencader Assoc. (Del) $118,102.47
OTHER CAPITAL LEASES:
Vision Fin. (PGH fork trk) $3,031.51,
Iron & Glass Bank (Eng Software) $40,081.00
Concord Capital Lease (Various Equip) $271,014.89
Concord Comm. (Pgh tooling grinder) $57,701.18
Concord Comm. (Unity Tooling EDM) $118,908.64
Concord Comm. (PHG Tool CNC) $145,262.01
Concord Comm. (Massie Grinder $223,410.00
-------------
$6,250,645.39
-------------
Totals $6,721,530.72
<PAGE>
EXHIBIT I
SUBSIDIARY GUARANTEE
Each Guarantor hereby, jointly and severally, unconditionally guarantees
to each Holder of a Note authenticated and delivered by the Trustee and to the
Trustee and its successors and assigns, irrespective of the validity and
enforceability of the Indenture, the Notes and the Obligations of the Company
under the Notes or under the Indenture, that: (a) the principal of, premium, if
any, interest and Liquidated Damages, if any, on the Notes will be promptly paid
in full when due, subject to any applicable grace period, whether at maturity,
by acceleration, redemption or otherwise, and interest on overdue principal,
premium, if any, (to the extent permitted by law) interest on any interest, if
any, and Liquidated Damages, if any, on the Notes and all other payment
Obligations of the Company to the Holders or the Trustee under the Indenture or
under the Notes will be promptly paid in full and performed, all in accordance
with the terms thereof; and (b) in case of any extension of time of payment or
renewal of any Notes or any of such other payment Obligations, the same will be
promptly paid in full when due or performed in accordance with the terms of the
extension or renewal, subject to any applicable grace period, whether at stated
maturity, by acceleration, redemption or otherwise. Failing payment when so due
of any amount so guaranteed for whatever reason, the Guarantors will be jointly
and severally obligated to pay the same immediately.
The obligations of the Guarantor to the Holders and to the Trustee
pursuant to this Subsidiary Guarantee and the Indenture are expressly set forth
in Article 12 of the Indenture, and reference is hereby made to such Indenture
for the precise terms of this Subsidiary Guarantee. The terms of Article 12 of
the Indenture are incorporated herein by reference. This Subsidiary Guarantee is
subject to release as and to the extent provided in Section 12.04 of the
Indenture.
This is a continuing Subsidiary Guarantee and shall remain in full force
and effect and shall be binding upon each Guarantor and its respective
successors and assigns to the extent set forth in the Indenture until full and
final payment of all of the Company's Obligations under the Notes and the
Indenture and shall inure to the benefit of the successors and assigns of the
Trustee and the Holders and, in the event of any transfer or assignment of
rights by any Holder or the Trustee, the rights and privileges herein conferred
upon that party shall automatically extend to and be vested in such transferee
or assignee, all subject to the terms and conditions hereof. This is a
Subsidiary Guarantee of payment and not a guarantee of collection.
This Subsidiary Guarantee shall not be valid or obligatory for any purpose
until the certificate of authentication on the Note upon which this Subsidiary
Guarantee is noted shall have been executed by the Trustee under the Indenture
by the manual signature of one of its authorized officers.
For purposes hereof, each Guarantor's liability shall be limited to the
lesser of (i) the aggregate amount of the Obligations of the Company under the
Notes and the Indenture and (ii) the amount, if any, which would not have (A)
rendered such Guarantor "insolvent" (as such term is defined in the Bankruptcy
Law and in the Debtor and Creditor Law of the State of New York) or (B) left
such Guarantor with unreasonably small capital at the time its Subsidiary
Guarantee of the Notes was entered into; provided that, it will be a presumption
in any lawsuit or other proceeding in which a Guarantor is a party that the
amount guaranteed pursuant to the Subsidiary Guarantee is the amount set forth
in clause (i) above unless any creditor, or representative of creditors of such
Guarantor, or debtor in possession or trustee in bankruptcy of such Guarantor,
otherwise proves in such a lawsuit that the aggregate liability of the Guarantor
is limited to the amount set forth in clause (ii) above. The Indenture provides
that, in making any determination as to the solvency or sufficiency of capital
of a Guarantor in accordance with the previous
<PAGE>
sentence, the right of such Guarantors to contribution from other Guarantors and
any other rights such Guarantors may have, contractual or otherwise, shall be
taken into account.
Capitalized terms used herein have the same meanings given in the
Indenture unless otherwise indicated.
<PAGE>
PRECISE TMP, INC.
By:
-----------------------------
Name:
Title:
MASSIE TOOL, MOLD & DIE, INC.
By:
-----------------------------
Name:
Title:
PRECISE POLESTAR, INC.
By:
-----------------------------
Name:
Title:
PRECISE TECHNOLOGY OF DELAWARE INC.
By:
-----------------------------
Name:
Title:
PRECISE TECHNOLOGY OF ILLINOIS INC.
By:
-----------------------------
Name:
Title:
<PAGE>
EXHIBIT J
EXECUTION COPY
================================================================================
PRECISE TECHNOLOGY, INC.
PRECISE TMP, INC.
MASSIE TOOL, MOLD & DIE, INC.
PRECISE POLESTAR, INC.
PRECISE TECHNOLOGY OF DELAWARE INC.
PRECISE TECHNOLOGY OF ILLINOIS INC.
11 1/8% SENIOR SUBORDINATED NOTES DUE 2007
REGISTRATION RIGHTS AGREEMENT
June 13, 1997
BEAR, STEARNS & CO. INC.
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
================================================================================
<PAGE>
This Registration Rights Agreement (this "Agreement") is made and entered
into as of June 13, 1997 by and among Precise Technology, Inc., a Delaware
corporation (the "Company"), Precise TMP, Inc., a Virginia corporation, Massie
Tool, Mold & Die, Inc., a Florida corporation, Precise Polestar, Inc., a
Virginia corporation, Precise Technology of Delaware Inc., a Delaware
corporation, and Precise Technology of Illinois Inc., a Delaware corporation
(collectively, the "Guarantors"), Bear, Stearns & Co. Inc. and Merrill Lynch,
Pierce, Fenner & Smith Incorporated (each a "Purchaser" and, collectively, the
"Purchasers"), each of whom has agreed to purchase the Company's 11 1/8% Senior
Subordinated Notes due 2007 (the "Notes") pursuant to the Purchase Agreement (as
defined below).
This Agreement is made pursuant to the Purchase Agreement, dated June 10,
1997 (the "Purchase Agreement"), by and among the Company, the Guarantors and
the Purchasers. In order to induce the Purchasers to purchase the Notes, the
Company has agreed to provide the registration rights set forth in this
Agreement. The execution and delivery of this Agreement is a condition to the
obligations of the Purchasers set forth in Sections 2 and 3 of the Purchase
Agreement.
The parties hereby agree as follows:
SECTION 1. DEFINITIONS
As used in this Agreement, the following capitalized terms shall have the
following meanings:
Act: The Securities Act of 1933, as amended.
Broker-Dealer: Any broker or dealer registered under the Exchange Act.
Broker-Dealer Transfer Restricted Securities: New Notes that are acquired
by a Broker-Dealer in the Exchange Offer in exchange for Notes that such
Broker-Dealer acquired for its own account as a result of market making
activities or other trading activities (other than Notes acquired directly from
the Company or any of its affiliates).
Closing Date: The date of this Agreement.
Commission: The Securities and Exchange Commission.
Consummate: A Registered Exchange Offer shall be deemed "Consummated" for
purposes of this Agreement upon the occurrence of (i) the filing and
effectiveness under the Act of the Exchange Offer Registration Statement
relating to the New Notes to be issued in the Exchange Offer, (ii) the
maintenance of such Registration Statement continuously effective and the
keeping of the Exchange Offer open for a period not less than the minimum period
required pursuant to Section 3(b) hereof, and (iii) the delivery by the Company
to the Registrar under the Indenture of New Notes in the same aggregate
principal amount as the aggregate principal amount of Notes that were tendered
by Holders thereof pursuant to the Exchange Offer.
Damages Payment Date: With respect to the Notes, each Interest Payment
Date.
Effectiveness Target Date: As defined in Section 5.
Exchange Act: The Securities Exchange Act of 1934, as amended.
<PAGE>
Exchange Offer: The registration by the Company under the Act of the New
Notes pursuant to a Registration Statement pursuant to which the Company offers
the Holders of all outstanding Transfer Restricted Securities the opportunity to
exchange all such outstanding Transfer Restricted Securities held by such
Holders for New Notes in an aggregate principal amount equal to the aggregate
principal amount of the Transfer Restricted Securities tendered in such exchange
offer by such Holders.
Exchange Offer Registration Statement: The Registration Statement relating
to the Exchange Offer, including the related Prospectus.
Exempt Resales: The transactions in which the Purchasers propose to sell
the Notes to (i) certain "qualified institutional buyers," as such term is
defined in Rule 144A under the Act, (ii) certain institutional "accredited
investors," as such term is defined in Rule 501(a)(1), (2), (3) or (7) of
Regulation D under the Act ("Accredited Institutions") and (iii) non-U.S.
persons permitted to purchase the Notes in offshore transactions in reliance
upon Regulation S under the Act.
Holders: As defined in Section 2(b) hereof.
Indenture: The Indenture, dated as of June 13, 1997, between the Company,
the Guarantors and Marine Midland Bank, as trustee (the "Trustee"), pursuant to
which the Subordinated Notes are to be issued, as such Indenture is amended or
supplemented from time to time in accordance with the terms thereof.
Interest Payment Date: As defined in the Indenture and the Subordinated
Notes.
NASD: National Association of Securities Dealers, Inc.
New Notes: The Company's 11 1/8% New Senior Subordinated Notes due 2007 to
be issued pursuant to the Indenture in the Exchange Offer.
Person: An individual, partnership, corporation, trust or unincorporated
organization, or a government or agency or political subdivision thereof.
Prospectus: The prospectus included in a Registration Statement, as amended
or supplemented by any prospectus supplement and by all other amendments
thereto, including post-effective amendments, and all material incorporated by
reference into such Prospectus.
Purchasers: As defined in the preamble hereto.
Record Holder: With respect to any Damages Payment Date relating to Notes,
each Person who is a Holder of Notes on the record date with respect to the
Interest Payment Date on which such Damages Payment Date shall occur.
Registration Default: As defined in Section 5 hereof.
Registration Statement: Any registration statement of the Company relating
to (a) an offering of New Notes pursuant to an Exchange Offer or (b) the
registration for resale of Transfer Restricted Securities pursuant to the Shelf
Registration Statement, which is filed pursuant to the provisions of this
Agreement, in each case, including the Prospectus included therein, all
amendments and supplements thereto (including post-effective amendments) and all
exhibits and material incorporated by reference therein.
<PAGE>
Restricted Broker-Dealer: Any Broker-Dealer which holds Broker-Dealer
Transfer Restricted Securities.
Shelf Filing Deadline: As defined in Section 4 hereof.
Shelf Registration Statement: As defined in Section 4 hereof.
Subordinated Notes: The Notes and the New Notes.
TIA: The Trust Indenture Act of 1939 (15 U.S.C. Section 77aaa-77bbbb) as in
effect on the date of the Indenture.
Transfer Restricted Securities: Each Note, until the earliest to occur of
(a) the date on which such Note is exchanged in the Exchange Offer and entitled
to be resold to the public by the Holder thereof without complying with the
prospectus delivery requirements of the Act, (b) the date on which such Note has
been effectively registered under the Act and disposed of in accordance with a
Shelf Registration Statement and (c) the date on which such Note is distributed
to the public pursuant to Rule 144 under the Act or by a Restricted
Broker-Dealer pursuant to the "Plan of Distribution" contemplated by the
Exchange Offer Registration Statement (including delivery of the Prospectus
contained therein).
Underwritten Registration or Underwritten Offering: A registration in which
securities of the Company are sold to an underwriter for reoffering to the
public.
SECTION 2. SECURITIES SUBJECT TO THIS AGREEMENT
(a) Transfer Restricted Securities. The securities entitled to the benefits
of this Agreement are the Transfer Restricted Securities.
(b) Holders of Transfer Restricted Securities. A Person is deemed to be a
holder of Transfer Restricted Securities (each, a "Holder") whenever such Person
owns Transfer Restricted Securities.
SECTION 3. REGISTERED EXCHANGE OFFER
(a) Unless the Exchange Offer shall not be permissible under applicable law
or Commission policy (after the procedures set forth in Section 6(a) below have
been complied with), the Company and the Guarantors shall (i) cause to be filed
with the Commission as soon as practicable after the Closing Date, but in no
event later than 45 days after the Closing Date, a Registration Statement under
the Act relating to the New Notes and the Exchange Offer, (ii) use their best
efforts to cause such Registration Statement to become effective at the earliest
possible time, but in no event later than 150 days after the Closing Date, (iii)
in connection with the foregoing, file (A) all pre-effective amendments to such
Registration Statement as may be necessary in order to cause such Registration
Statement to become effective, (B) if applicable, a post-effective amendment to
such Registration Statement pursuant to Rule 430A under the Act and (C) cause
all necessary filings, if any, in connection with the registration and
qualification of the New Notes to be made under the Blue Sky laws of such
jurisdictions as are necessary to permit Consummation of the Exchange Offer, and
(iv) promptly following the effectiveness of such Registration Statement,
commence the Exchange Offer. The Exchange Offer shall be on the appropriate form
permitting registration of the
<PAGE>
New Notes to be offered in exchange for the Transfer Restricted Securities and
to permit sales of Broker-Dealer Transfer Restricted Securities by Restricted
Broker-Dealers as contemplated by Section 3(c) below.
(b) The Company shall use its best efforts to cause the Exchange Offer
Registration Statement to be effective continuously and shall keep the Exchange
Offer open for a period of not less than the minimum period required under
applicable federal and state securities laws to Consummate the Exchange Offer;
provided, however, that in no event shall such period be less than 20 business
days. The Company shall cause the Exchange Offer to comply with all applicable
federal and state securities laws. Without the consent of the Purchasers, no
securities other than the Subordinated Notes and the Subsidiary Guarantees shall
be included in the Exchange Offer Registration Statement. The Company shall use
its best efforts to cause the Exchange Offer to be Consummated on the earliest
practicable date after the Exchange Offer Registration Statement has become
effective, but in no event later than 30 business days thereafter.
(c) The Company shall indicate in a "Plan of Distribution" section
contained in the Prospectus contained in the Exchange Offer Registration
Statement that any Restricted Broker-Dealer who holds Notes that are Transfer
Restricted Securities and that were acquired for its own account as a result of
market-making activities or other trading activities (other than Transfer
Restricted Securities acquired directly from the Company or an affiliate of the
Company), may exchange such Notes pursuant to the Exchange Offer; however, such
Restricted Broker-Dealer may be deemed to be an "underwriter" within the meaning
of the Act and must, therefore, deliver a prospectus meeting the requirements of
the Act in connection with any resales of the New Notes received by such
Restricted Broker-Dealer in the Exchange Offer, which prospectus delivery
requirement may be satisfied by the delivery by such Restricted Broker-Dealer of
the Prospectus contained in the Exchange Offer Registration Statement. Such
"Plan of Distribution" section shall also contain all other information with
respect to such sales of Broker-Dealer Transfer Restricted Securities by
Restricted Broker-Dealers that the Commission may require in order to permit
such sales pursuant thereto, but such "Plan of Distribution" shall not name any
such Restricted Broker-Dealer or disclose the amount of Notes held by any such
Restricted Broker-Dealer, except to the extent required by the Commission as a
result of a change in policy after the date of this Agreement.
The Company and the Guarantors shall use their best efforts to keep the
Exchange Offer Registration Statement continuously effective, supplemented and
amended as required by the provisions of Section 6(c) below to the extent
necessary to ensure that it is available for sales of Broker-Dealer Transfer
Restricted Securities by Restricted Broker-Dealers, and to ensure that it
conforms with the requirements of this Agreement, the Act and the policies,
rules and regulations of the Commission as announced from time to time, for a
period of one year from the date on which the Exchange Offer Registration
Statement is declared effective.
The Company shall provide sufficient copies of the latest version of such
Prospectus to such Restricted Broker-Dealers promptly upon request at any time
during such one-year period in order to facilitate such resales.
SECTION 4. SHELF REGISTRATION
(a) Shelf Registration. If (i) the Company is not required to file an
Exchange Offer Registration Statement or to consummate the Exchange Offer
because, in the reasonable determination of the Company, the Exchange Offer is
not permitted by applicable law or Commission policy (after the procedures set
forth in Section 6(a) below have been complied with) or (ii) any Holder of
Transfer Restricted Securities shall notify the Company within 20 business days
of the Consummation of the Exchange Offer, in its reasonable
<PAGE>
discretion, (A) that such Holder is prohibited by applicable law or Commission
policy from participating in the Exchange Offer, or (B) that such Holder may not
resell the New Notes acquired by it in the Exchange Offer to the public without
delivering a prospectus and that the Prospectus contained in the Exchange Offer
Registration Statement is not appropriate or available for such resales by such
Holder, or (C) that such Holder is a Broker-Dealer and holds Notes acquired
directly from the Company or one of its affiliates, then the Company and the
Guarantors shall
(x) cause to be filed a shelf registration statement pursuant to Rule
415 under the Act, which may be an amendment to the Exchange Offer
Registration Statement (in either event, the "Shelf Registration
Statement") on or prior to the earliest to occur of (1) the 30th day after
the date on which the Company determines that it is not required to file
the Exchange Offer Registration Statement, (2) the 30th day after the date
on which the Company receives notice from a Holder of Transfer Restricted
Securities as contemplated by clause (ii) above, and (3) the 60th day after
the Closing Date (such earliest date being the "Shelf Filing Deadline"),
which Shelf Registration Statement shall provide for resales of all
Transfer Restricted Securities the Holders of which shall have provided the
information required pursuant to Section 4(b) hereof; and
(y) use their best efforts to cause such Shelf Registration Statement
to be declared effective by the Commission on or before the 60th day after
the Shelf Filing Deadline.
The Company and the Guarantors shall use their best efforts to keep such Shelf
Registration Statement continuously effective, supplemented and amended as
required by the provisions of Sections 6(b) and (c) hereof to the extent
necessary to ensure that it is available for resales of Notes by the Holders of
Transfer Restricted Securities entitled to the benefit of this Section 4(a), and
to ensure that it conforms with the requirements of this Agreement, the Act and
the policies, rules and regulations of the Commission as announced from time to
time, for a period of two years following the Closing Date, or such shorter
period ending when (i) all Notes covered by the Shelf Registration Statement
have been sold in the manner set forth therein or (ii) a subsequent Shelf
Registration Statement relating to the Notes has been declared effective under
the Act. Notwithstanding the foregoing, the Company shall not be required to
file a Shelf Registration Statement with respect to the Notes of any Holder
(other than Notes of a Purchaser) as a result of such Holder not being able to
make the representations required by Section 6(a) in connection with the
Exchange Offer.
(b) Provision by Holders of Certain Information in Connection with the
Shelf Registration Statement. No Holder of Transfer Restricted Securities may
include any of its Transfer Restricted Securities in any Shelf Registration
Statement pursuant to this Agreement unless and until such Holder furnishes to
the Company in writing, within 20 business days after receipt of a request
therefor, such information as the Company may reasonably request for use in
connection with any Shelf Registration Statement or Prospectus or preliminary
Prospectus included therein. No Holder of Transfer Restricted Securities shall
be entitled to Liquidated Damages pursuant to Section 5 hereof unless and until
such Holder shall have provided all such reasonably requested information. Each
Holder as to which any Shelf Registration Statement is being effected agrees to
furnish promptly to the Company all information required to be disclosed in
order to make the information previously furnished to the Company by such Holder
not materially misleading.
<PAGE>
SECTION 5. LIQUIDATED DAMAGES
If (i) any of the Registration Statements required by this Agreement is not
filed with the Commission on or prior to the date specified for such filing in
this Agreement, (ii) any of such Registration Statements has not been declared
effective by the Commission on or prior to the date specified for such
effectiveness in this Agreement (the "Effectiveness Target Date"), (iii) the
Exchange Offer has not been Consummated within 30 business days after the
Effectiveness Target Date with respect to the Exchange Offer Registration
Statement or (iv) any Registration Statement required by this Agreement is filed
and declared effective but shall thereafter cease to be effective or fail to be
usable for its intended purpose without being succeeded immediately by a
post-effective amendment to such Registration Statement that cures such failure
and that is itself immediately declared effective (each such event referred to
in clauses (i) through (iv), a "Registration Default"), the Company and the
Guarantors hereby jointly and severally agree to pay liquidated damages
("Liquidated Damages") to each Holder of Transfer Restricted Securities with
respect to the first 90-day period immediately following the occurrence of such
Registration Default, in an amount equal to $.05 per week per $1,000 principal
amount of Transfer Restricted Securities held by such Holder for each week or
portion thereof that the Registration Default continues. The amount of the
Liquidated Damages shall increase by an additional $.05 per week per $1,000 in
principal amount of Transfer Restricted Securities with respect to each
subsequent 90-day period until all Registration Defaults have been cured, up to
a maximum amount of Liquidated Damages of $.50 per week per $1,000 principal
amount of Transfer Restricted Securities. All accrued Liquidated Damages shall
be paid to the affected Record Holders by the Company by wire transfer of
immediately available funds or by federal funds check on each Damages Payment
Date, as provided in the Indenture. Following the cure of all Registration
Defaults relating to any particular Transfer Restricted Securities, the accrual
of Liquidated Damages with respect to such Transfer Restricted Securities will
cease. Notwithstanding the foregoing, the Company may issue a notice that the
Shelf Registration Statement is unusable pending the announcement of a material
corporate transaction and may issue any notice suspending the use of the Shelf
Registration Statement required under applicable securities laws to be issued
and, in the event that the aggregate number of days in any consecutive
twelve-month period for which all such notices are issued and effective does not
exceed 45 days in the aggregate, then Liquidated Damages will not be payable as
described above as a result of such suspension.
All obligations of the Company and the Guarantors set forth in the
preceding paragraph that are outstanding with respect to any Transfer Restricted
Security at the time such security ceases to be a Transfer Restricted Security
shall survive until such time as all such obligations with respect to such
Security shall have been satisfied in full. If the Company has complied with the
provisions of Sections 3, 4 and 6 hereof, the accrual and payment of Liquidated
Damages, as set forth above, shall be the sole and exclusive remedy of the
Holders against the Company and the Guarantors for the events constituting a
Registration Default.
SECTION 6. REGISTRATION PROCEDURES
(a) Exchange Offer Registration Statement. In connection with the Exchange
Offer, the Company and the Guarantors shall comply with all of the provisions of
Section 6(c) below, shall use their best efforts to effect such exchange to
permit the sale of Transfer Restricted Securities being sold in accordance with
the intended method or methods of distribution thereof, and shall comply with
all of the following provisions:
<PAGE>
(i) If in the reasonable opinion of counsel to the Company there is a
question as to whether the Exchange Offer is permitted by applicable law,
the Company and the Guarantors hereby agree, to the extent reasonably
practicable, to seek a no-action letter or other favorable decision from
the Commission allowing the Company and the Guarantors to Consummate an
Exchange Offer for Notes. The Company and the Guarantors each hereby agrees
to pursue the issuance of such a decision to the Commission staff level but
shall not be required to take commercially unreasonable action to effect a
change of Commission policy. The Company and the Guarantors each hereby
agrees, however, to (A) participate in telephonic conferences with the
Commission, (B) deliver to the Commission staff an analysis prepared by
counsel to the Company setting forth the legal bases, if any, upon which
such counsel has concluded that such an Exchange Offer should be permitted
and (C) diligently pursue a resolution (which need not be favorable) by the
Commission staff of such submission.
(ii) As a condition to its participation in the Exchange Offer
pursuant to the terms of this Agreement, each Holder of Transfer Restricted
Securities shall furnish, upon the request of the Company, prior to the
Consummation thereof, a written representation to the Company (which may be
contained in the letter of transmittal contemplated by the Exchange Offer
Registration Statement) to the effect that (A) it is not an affiliate,
directly or indirectly, of the Company, (B) it is not engaged in, and does
not intend to engage in, and has no arrangement or understanding with any
person to participate in, a distribution of the New Notes to be issued in
the Exchange Offer, (C) it is acquiring the New Notes in its ordinary
course of business and (D) it is not acting on behalf of any Person who
could not make the foregoing representations. Such Holder shall also make
such other representations as may be required to comply with applicable law
or policy of the Commission with respect to the Exchange Offer. In
addition, all such Holders of Transfer Restricted Securities shall
otherwise cooperate in the Company's preparations for the Exchange Offer.
Each Holder hereby acknowledges and agrees that any Restricted
Broker-Dealer and any such Holder using the Exchange Offer to participate
in a distribution of the securities to be acquired in the Exchange Offer
(1) could not under Commission policy as in effect on the date of this
Agreement rely on the position of the Commission enunciated in Morgan
Stanley and Co., Inc. (available June 5, 1991) and Exxon Capital Holdings
Corporation (available May 13, 1988), as interpreted in the Commission's
letter to Shearman & Sterling dated July 2, 1993, and similar no-action
letters (including, if applicable, any no-action letter obtained pursuant
to clause (i) above), and (2) must comply with the registration and
prospectus delivery requirements of the Act in connection with a secondary
resale transaction and that such a secondary resale transaction should be
covered by an effective registration statement containing the selling
security holder information required by Item 507 or 508, as applicable, of
Regulation S-K if the resales are of New Notes obtained by such Holder in
exchange for Notes acquired by such Holder directly from the Company. The
Company shall not be required to register the Notes of any Holder (other
than Notes of a Purchaser) that fails to furnish the representations
required by the first sentence of this paragraph.
(iii) Prior to effectiveness of the Exchange Offer Registration
Statement, the Company and the Guarantors shall provide a supplemental
letter to the Commission (A) stating that the Company and the Guarantors
are registering the Exchange Offer in reliance on the position of the
Commission enunciated in Exxon Capital Holdings Corporation (available May
13, 1988), Morgan Stanley and Co., Inc. (available June 5, 1991) and, if
applicable, any no-action letter obtained pursuant to clause (i) above and
(B) including a representation that neither the Company nor any of the
Guarantors has entered into any arrangement or understanding with any
Person to distribute the New Notes to be received in the Exchange Offer and
that, to the best of the Company's information and belief, each Holder
participating in the Exchange Offer is acquiring the New Notes in its
ordinary course of
<PAGE>
business and has no arrangement or understanding with any Person to
participate in the distribution of the New Notes received in the Exchange
Offer.
(b) Shelf Registration Statement. In connection with the Shelf Registration
Statement, the Company and the Guarantors shall comply with all the provisions
of Section 6(c) below and shall use their best efforts to effect such
registration to permit the sale of the Transfer Restricted Securities being sold
in accordance with the intended method or methods of distribution thereof (as
indicated in the information furnished to the Company pursuant to Section 4(b)
hereof), and pursuant thereto the Company will as expeditiously as possible (in
accordance with Section 4 hereof) prepare and file with the Commission a
Registration Statement relating to the registration on any appropriate form
under the Act, which form shall be available for the sale of the Transfer
Restricted Securities in accordance with the intended method or methods of
distribution thereof.
(c) General Provisions. In connection with any Registration Statement and
any related Prospectus required by this Agreement to permit the sale or resale
of Transfer Restricted Securities (including, without limitation, any Exchange
Offer Registration Statement and the related Prospectus, to the extent that the
same are required to be available to permit sales of Broker-Dealer Transfer
Restricted Securities by Restricted Broker-Dealers), the Company shall:
(i) use its best efforts to keep such Registration Statement
continuously effective and provide all requisite financial statements
(including, if required by the Act or any regulation thereunder, financial
statements of the Guarantors) for the period specified in Section 3 or 4 of
this Agreement, as applicable; upon the occurrence of any event that would
cause any such Registration Statement or the Prospectus contained therein
(A) to contain a material misstatement or omission or (B) not to be
effective and usable for resale of Transfer Restricted Securities during
the period required by this Agreement, the Company shall, upon becoming
aware thereof, file promptly an appropriate amendment to such Registration
Statement, in the case of clause (A), correcting any such misstatement or
omission, and, in the case of either clause (A) or (B), use its best
efforts to cause such amendment to be declared effective and such
Registration Statement and the related Prospectus to become usable for
their intended purpose(s) as soon as practicable thereafter;
(ii) prepare and file with the Commission such amendments and
post-effective amendments to the Registration Statement as may be necessary
to keep the Registration Statement effective for the applicable period set
forth in Section 3 or 4 hereof, as applicable, or such shorter period as
will terminate when all Transfer Restricted Securities covered by such
Registration Statement have been sold or a subsequent Registration
Statement has been declared effective; cause the Prospectus to be
supplemented by any required Prospectus supplement, and as so supplemented
to be filed pursuant to Rule 424 under the Act, and to comply fully with
the applicable provisions of Rules 424 and 430A under the Act in a timely
manner; and comply with the provisions of the Act with respect to the
disposition of all securities covered by such Registration Statement during
the applicable period in accordance with the intended method or methods of
distribution by the sellers thereof set forth in such Registration
Statement or supplement to the Prospectus;
(iii) in the event that a Shelf Registration Statement is filed or a
Restricted Broker-Dealer would be required to deliver a Prospectus
contained in an Exchange Offer Registration Statement, advise the managing
underwriter(s), if any, and selling Holders promptly and, if requested by
such Persons, to confirm such advice in writing, (A) when the Prospectus or
any Prospectus supplement or post-effective amendment has been filed, and,
with respect to any Registration Statement or any post-effective amendment
thereto, when the same has become effective, (B) of any request by the
<PAGE>
Commission for amendments to the Registration Statement or amendments or
supplements to the Prospectus or for additional information relating
thereto, (C) of the issuance by the Commission of any stop order suspending
the effectiveness of the Registration Statement under the Act or of the
suspension by any state securities commission of the qualification of the
Transfer Restricted Securities for offering or sale in any jurisdiction, or
the initiation of any proceeding for any of the preceding purposes, (D) of
the existence of any fact or the happening of any event that makes any
statement of a material fact made in the Registration Statement, the
Prospectus, any amendment or supplement thereto, or any document
incorporated by reference therein untrue, or that requires the making of
any additions to or changes in the Registration Statement or the Prospectus
in order to make the statements therein not misleading. If at any time the
Commission shall issue any stop order suspending the effectiveness of the
Registration Statement, or any state securities commission or other
regulatory authority shall issue an order suspending the qualification or
exemption from qualification of the Transfer Restricted Securities under
state securities or Blue Sky laws, the Company and the Guarantors shall use
their reasonable best efforts to obtain the withdrawal or lifting of such
order at the earliest possible time;
(iv) in the event that a Shelf Registration Statement is filed or a
Restricted Broker-Dealer would be required to deliver a Prospectus
contained in an Exchange Offer Registration Statement, furnish to each of
the selling Holders specifically named in or covered by any Registration
Statement or Prospectus and each of the managing underwriter(s) in
connection with such sale, if any, before filing with the Commission,
copies of any Registration Statement or any Prospectus included therein or
any amendments or supplements to any such Registration Statement or
Prospectus (including all documents incorporated by reference after the
initial filing of such Registration Statement), which documents will be
subject to the review of such Holders and underwriter(s) in connection with
such sale, if any, for a period of at least five business days, and the
Company will not file any such Registration Statement or Prospectus or any
amendment or supplement to any such Registration Statement or Prospectus
(including all such documents incorporated by reference) to which selling
Holders of 25% or more in aggregate principal amount of Transfer Restricted
Securities covered by such Registration Statement or the managing
underwriter(s) in connection with such sale, if any, shall reasonably
object within five business days after the receipt thereof. A selling
Holder or managing underwriter, if any, shall be deemed to have reasonably
objected to such filing if such Registration Statement, amendment,
Prospectus or supplement, as applicable, as proposed to be filed, contains
a material misstatement or omission;
(v) in the event that a Shelf Registration Statement is filed or a
Restricted Broker-Dealer would be required to deliver a Prospectus
contained in an Exchange Offer Registration Statement, prior to 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 selling
Holders covered by such Registration Statement and to the managing
underwriter(s) in connection with such sale, if any, make the Company's
representatives available (and representatives of the Guarantors) for
discussion of such document and other customary due diligence matters on
reasonable prior notice, and include such information in such document
prior to the filing thereof as such selling Holders or managing
underwriter(s), if any, reasonably may request within five business days of
the receipt of the proposed filing;
(vi) in the event that a Shelf Registration Statement is filed or a
Restricted Broker-Dealer would be required to deliver a Prospectus
contained in an Exchange Offer Registration Statement, make available at
reasonable times, and at the offices where normally kept, for inspection by
the selling Holders, any underwriter participating in any disposition
pursuant to such Registration
<PAGE>
Statement, and any attorney or accountant retained by such selling Holders
or any of the underwriter(s), all financial and other records, pertinent
corporate documents and properties of the Company and the Guarantors and
cause the Company's and the Guarantors' officers, directors and employees,
as applicable, to supply all information reasonably requested by any such
Holder, underwriter, attorney or accountant in connection with such
Registration Statement subsequent to the filing thereof and prior to its
effectiveness, in each case to the extent reasonably necessary to enable
them to exercise any applicable due diligence responsibilities;
(vii) in the event that a Shelf Registration Statement is filed, if
requested by any selling Holders covered by such Registration Statement or
the underwriter(s) in connection with such sale, if any, as promptly as
practicable incorporate in any Registration Statement or Prospectus,
pursuant to a supplement or post-effective amendment if necessary, such
information as such selling Holders and underwriter(s), if any, may
reasonably request to have included therein, including, without limitation,
information relating to the "Plan of Distribution" of the Transfer
Restricted Securities, information with respect to the principal amount of
Transfer Restricted Securities being sold to such underwriter(s), the
purchase price being paid therefor and any other terms of the offering of
the Transfer Restricted Securities to be sold in such offering; and make
all required filings of such Prospectus supplement or post-effective
amendment as soon as practicable after the Company is notified of the
matters to be incorporated in such Prospectus supplement or post-effective
amendment; provided that, if any such Holder or underwriter had the
opportunity to review a filing pursuant to clause (iv) or clause (v) above
and the information proposed to be included was available at the time of
and could have been included in such earlier filing, all costs relating to
the inclusion of such information pursuant to a supplement or
post-effective amendment to such Registration Statement shall be paid for
by the party(ies) requesting such inclusion;
(viii) use its best efforts to cause the Transfer Restricted
Securities covered by the Registration Statement to be rated with the
appropriate rating agencies, if so requested by the Holders of a majority
in aggregate principal amount of Subordinated Notes covered thereby or the
underwriter(s), if any;
(ix) in the event that a Shelf Registration Statement is filed,
furnish to each selling Holder covered by such Registration Statement, on
request, and each of the managing underwriter(s) in connection with such
sale, if any, without charge, at least one copy of the Registration
Statement, as first filed with the Commission, and of each amendment
thereto, including all documents incorporated by reference therein and all
exhibits (including exhibits incorporated therein by reference);
(x) in the event that a Shelf Registration Statement is filed or a
Restricted Broker-Dealer would be required to deliver a Prospectus
contained in an Exchange Offer Registration Statement, deliver to each
selling Holder and each of the underwriter(s), if any, without charge, as
many copies of the Prospectus (including each preliminary prospectus) and
any amendment or supplement thereto as such Persons reasonably may request;
the Company and the Guarantors hereby consent to the use of the Prospectus
and any amendment or supplement thereto by each of the selling Holders and
each of the underwriter(s), if any, in connection with the offering and the
sale of the Transfer Restricted Securities covered by the Prospectus or any
amendment or supplement thereto provided that the Company has not advised
such Persons otherwise pursuant to Section 6(c)(iii);
(xi) in the event that a Shelf Registration Statement is filed or a
Restricted Broker-Dealer would be required to deliver a Prospectus
contained in an Exchange Offer Registration Statement, enter into, and
cause the Guarantors to enter into, such customary agreements (including an
<PAGE>
underwriting agreement), and make, and cause the Guarantors to make, such
customary representations and warranties, and take all such other
reasonable actions in connection therewith in order to expedite or
facilitate the disposition of the Transfer Restricted Securities pursuant
to any Registration Statement contemplated by this Agreement, all to such
extent as may be reasonably requested by any Holder of Transfer Restricted
Securities or managing underwriter in connection with any sale or resale
pursuant to any Registration Statement contemplated by this Agreement; and
whether or not an underwriting agreement is entered into and whether or not
the registration is an Underwritten Registration, the Company and the
Guarantors shall:
(A) furnish to each selling Holder and each managing underwriter,
if any, upon the effectiveness of the Shelf Registration Statement and
to each Restricted Broker-Dealer upon Consummation of the Exchange
Offer:
(1) such representations and warranties with respect to the
business of the Company and the Guarantors and the Registration
Statement, Prospectus and documents, if any, incorporated by
reference therein, in each case, as are customarily made by
issuers to underwriters in primary underwritten offerings of debt
securities similar to the Subordinated Notes, and confirm the
same if and when requested;
(2) an opinion, dated the date of Consummation of the
Exchange Offer or the date of effectiveness of the Shelf
Registration Statement, as the case may be, of counsel for the
Company and the Guarantors, covering the matters customarily
covered in opinions requested in underwritten offerings of debt
securities similar to the Subordinated Notes and such other
matters as such parties may reasonably request, and in any event
including a statement to the effect that such counsel has
participated in conferences with officers and other
representatives of the Company, representatives of the
independent public accountants for the Company, the Purchasers'
representatives and the Purchasers' counsel in connection with
the preparation of such Registration Statement and the related
Prospectus and have considered the matters required to be stated
therein and the statements contained therein, although such
counsel has not independently verified the accuracy, completeness
or fairness of such statements; and that such counsel advises
that, on the basis of the foregoing (relying as to materiality to
a large extent upon facts provided to such counsel by officers
and other representatives of the Company and without independent
check or verification), no facts came to such counsel's attention
that caused such counsel to believe that the applicable
Registration Statement, at the time such Registration Statement
or any post-effective amendment thereto became effective, and, in
the case of the Exchange Offer Registration Statement, as of the
date of Consummation, contained an untrue statement of a material
fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not
misleading, or that the Prospectus contained in such Registration
Statement as of its date and, in the case of the opinion dated
the date of Consummation of the Exchange Offer, as of the date of
Consummation, contained an untrue statement of a material fact or
omitted to state a material fact necessary in order to make the
statements therein, in light of the circumstances under which
they were made, not misleading. Without limiting the foregoing,
such counsel may state further that such counsel assumes no
responsibility for, and has not independently verified, the
accuracy, completeness or fairness of the financial statements,
notes and schedules and other financial data included in any
Registration Statement contemplated by this Agreement or the
related Prospectus; and
<PAGE>
(3) provided that the requesting Holders, underwriter(s), if
any, or other such financial intermediary furnish the undertaking
required in SAS 72, if required, a customary comfort letter in
form and substance reasonably satisfactory to the requesting
Holders, underwriter(s), if any, or other financial intermediary,
dated as of the date of Consummation of the Exchange Offer or the
date of effectiveness of the Shelf Registration Statement, as the
case may be, from the Company's independent accountants, in the
customary form and covering matters of the type customarily
covered in comfort letters to underwriters in connection with
primary underwritten offerings;
(B) set forth in full or incorporate by reference in the
underwriting agreement, if any, the indemnification provisions and
procedures of Section 8 hereof with respect to all parties to be
indemnified pursuant to said Section; and
(C) deliver such other documents and certificates as may be
reasonably requested by such parties to evidence compliance with
clause (A) above and with any customary conditions contained in the
underwriting agreement or other agreement entered into by the Company
pursuant to this clause (xi), if any.
If at any time the representations and warranties of the Company and the
Guarantors contemplated in clause (A)(1) above cease to be true and correct, the
Company or the Guarantors shall so advise the Purchasers and the underwriter(s),
if any, each selling Holder and Restricted Broker-Dealers, if any, promptly and,
if requested by such Persons, shall confirm such advice in writing;
(xii) prior to any public offering of Transfer Restricted Securities
provided for under this Agreement, cooperate with, and cause the Guarantors
to cooperate with, the selling Holders, the underwriter(s), if any, and
their respective counsel in connection with the registration and
qualification of the Transfer Restricted Securities under the state
securities or Blue Sky laws of such domestic jurisdictions as the selling
Holders or underwriter(s), if any, may reasonably request in writing and do
any and all other acts or things necessary or advisable to enable the
disposition in such jurisdictions of the Transfer Restricted Securities
covered by the Shelf Registration Statement; provided, however, that
neither the Company nor any of the Guarantors shall be required to register
or qualify as a foreign corporation where it is not now so qualified or to
take any action that would subject it to the service of process in suits or
to taxation, other than as to matters and transactions relating to the
Registration Statement, in any jurisdiction where it is not now so subject;
(xiii) in the event that a Shelf Registration Statement is filed,
shall issue, upon the request of any Holder of Notes covered by the Shelf
Registration Statement contemplated by this Agreement, Notes not bearing
legends restricting their transfer, having an aggregate principal amount
equal to the aggregate principal amount of Notes surrendered to the Company
by such Holder in exchange therefor or being sold by such Holder; such New
Notes to be registered in the name of such Holder or in the name of the
purchaser(s) of such Subordinated Notes, as the case may be; in return, the
Notes held by such Holder shall be surrendered to the Company for
cancellation;
(xiv) in the event that a Shelf Registration Statement is filed, in
connection with any sale of Transfer Restricted Securities that will result
in such securities no longer being Transfer Restricted Securities,
cooperate with, and cause the Guarantors to cooperate with, the selling
Holders and the underwriter(s), if any, to facilitate the timely
preparation and delivery of certificates representing Transfer Restricted
Securities to be sold and not bearing any restrictive legends; and enable
such Transfer Restricted Securities to be in such denominations and
registered in such names as the Holders
<PAGE>
or the underwriter(s), if any, may reasonably request at least two business
days prior to any sale of Transfer Restricted Securities made by such
underwriter(s);
(xv) use its best efforts to cause the Transfer Restricted Securities
covered by the Registration Statement to be registered with or approved by
such other governmental agencies or authorities as may be necessary to
enable the seller or sellers thereof or the underwriter(s), if any, to
consummate the disposition of such Transfer Restricted Securities, except
as may be required solely as a consequence of the nature of such seller's
business and subject to the proviso contained in clause (xii) above;
(xvi) in the event that a Shelf Registration Statement is filed or a
Restricted Broker-Dealer would be required to deliver a Prospectus
contained in an Exchange Offer Registration Statement, if any fact or event
contemplated by clause 6(c)(iii)(D) hereof shall exist or have occurred,
prepare a supplement or post-effective amendment to the Registration
Statement or related Prospectus or any document incorporated therein by
reference or file any other required document so that, as thereafter
delivered to the purchasers of Transfer Restricted Securities, the
Prospectus will not contain an untrue statement of a material fact or omit
to state any material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading;
(xvii) provide a CUSIP number for all Transfer Restricted Securities
not later than the effective date of the first Registration Statement
required by this Agreement and provide the Trustee under the Indenture with
printed certificates for the Transfer Restricted Securities which are in a
form eligible for deposit with The Depositary Trust Company;
(xviii) cooperate and assist in any filings required to be made with
the NASD and in the performance of any due diligence investigation by any
underwriter (including any "qualified independent underwriter") that is
required to be retained in accordance with the rules and regulations of the
NASD, and use its reasonable best efforts to cause such Registration
Statement to become effective and approved by such governmental agencies or
authorities as may be necessary to enable the Holders selling Transfer
Restricted Securities to consummate the disposition of such Transfer
Restricted Securities;
(xix) otherwise use its best efforts to comply with all applicable
rules and regulations of the Commission, and make generally available to
its security holders, as soon as practicable, a consolidated earnings
statement meeting the requirements of Rule 158 (which need not be audited)
for the twelve-month period (A) commencing at the end of any fiscal quarter
in which Transfer Restricted Securities are sold to underwriters in a firm
or best efforts Underwritten Offering or (B) if not sold to underwriters in
such an offering, beginning on the first day of the Company's first fiscal
quarter commencing after the effective date of the Registration Statement;
(xx) cause the Indenture to be qualified under the TIA not later than
the effective date of the first Registration Statement required by this
Agreement, and, in connection therewith, cooperate, and cause the
Guarantors to cooperate, with the Trustee and the Holders of Subordinated
Notes to effect such changes to the Indenture as may be required for such
Indenture to be so qualified in accordance with the terms of the TIA; and
execute, and cause the Guarantors to execute, and use its best efforts to
cause the Trustee to execute, all documents that may be required to effect
such changes and all other forms and documents required to be filed with
the Commission to enable such Indenture to be so qualified in a timely
manner; and
<PAGE>
(xxi) use its best efforts to cause all Transfer Restricted Securities
covered by the Registration Statement to be listed on each securities
exchange on which similar securities issued by the Company are then listed
if requested by the Holders of a majority in aggregate principal amount of
Notes or the managing underwriter(s), if any.
Each Holder agrees by acquisition of a Transfer Restricted Security that,
upon receipt of any notice from the Company of the existence of any fact of the
kind described in Section 6(c)(iii)(D) hereof, such Holder will forthwith
discontinue disposition of Transfer Restricted Securities pursuant to the
applicable Registration Statement until such Holder's receipt of the copies of
the supplemented or amended Prospectus contemplated by Section 6(c)(xvi) hereof,
or until it is advised in writing (the "Advice") by the Company that the use of
the Prospectus may be resumed, and has received copies of any amendments or
supplements thereto. If so directed by the Company, each Holder will deliver to
the Company (at the Company's expense) all copies, other than permanent file
copies then in such Holder's possession, of the Prospectus covering such
Transfer Restricted Securities that was current at the time of receipt of such
notice. In the event the Company shall give any such notice, the time period
regarding the effectiveness of such Registration Statement set forth in Section
3 or 4 hereof, as applicable, shall be extended by the number of days during the
period from and including the date of the giving of such notice pursuant to
Section 6(c)(iii)(D) hereof to and including the date when each selling Holder
covered by such Registration Statement shall have received the copies of the
supplemented or amended Prospectus contemplated by Section 6(c)(xvi) hereof or
shall have received the Advice.
SECTION 7. REGISTRATION EXPENSES
(a) All expenses incident to the Company's or the Guarantors performance of
or compliance with this Agreement will be borne by the Company or the
Guarantors, regardless of whether a Registration Statement becomes effective,
including without limitation: (i) all registration and filing fees and expenses
(including filings made by any Purchaser or Holder with the NASD (and, if
applicable, the fees and expenses of any "qualified independent underwriter" and
its counsel that may be required by the rules and regulations of the NASD));
(ii) all fees and expenses of compliance with federal securities and state Blue
Sky or securities laws; (iii) all expenses of printing (including printing
certificates for the New Notes to be issued in the Exchange Offer and printing
of Prospectuses), messenger and delivery services and telephone; (iv) all fees
and disbursements of counsel for the Company, the Guarantors and, subject to
Section 7(b) below, the Holders of Transfer Restricted Securities; (v) all
application and filing fees in connection with listing Subordinated Notes on a
national securities exchange or automated quotation system pursuant to the
requirements hereof; and (vi) all fees and disbursements of independent
certified public accountants of the Company and the Guarantors (including the
expenses of any special audit and comfort letters required by or incident to
such performance).
The Company will, in any event, bear its and the Guarantor's internal
expenses (including, without limitation, all salaries and expenses of its
officers and employees performing legal or accounting duties), the expenses of
any annual audit and the fees and expenses of any Person, including special
experts, retained by the Company.
(b) In connection with any Registration Statement required by this
Agreement (including, without limitation, the Exchange Offer Registration
Statement and the Shelf Registration Statement), the Company will reimburse the
Holders of Transfer Restricted Securities being tendered in the Exchange Offer
and/or resold pursuant to the "Plan of Distribution" contained in the Exchange
Offer Registration Statement or registered pursuant to the Shelf Registration
Statement, as applicable, for the reasonable fees
<PAGE>
and disbursements of not more than one counsel, who shall be Latham & Watkins or
such other counsel as may be chosen by the Holders of a majority in principal
amount of the Transfer Restricted Securities for whose benefit such Registration
Statement is being prepared. The Company and the Guarantors shall not have any
obligation to pay any underwriting fees, discounts or commissions attributable
to the sale of any New Notes pursuant to this Agreement.
SECTION 8. INDEMNIFICATION
(a) The Company and the Guarantors, jointly and severally, agree to
indemnify and hold harmless (i) each Holder, (ii) each person, if any, who
controls any Holder within the meaning of Section 15 of the Act or Section 20(a)
of the Exchange Act and (iii) the respective officers, directors, partners,
employees, representatives and agents of any Holder or any controlling person
(each a "Participant") to the fullest extent lawful, from and against any and
all losses, liabilities, claims, damages and expenses whatsoever (including but
not limited to attorneys' fees and any and all expenses whatsoever incurred in
investigating, preparing or defending against any investigation or litigation,
commenced or threatened, or any claim whatsoever, and any and all amounts paid
in settlement of any claim or litigation), joint or several, to which they or
any of them may become subject under the Act, the Exchange Act or otherwise,
insofar as such losses, liabilities, claims, damages or expenses (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement or
the Prospectus, or in any supplement thereto or amendment thereof, 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, in the light of the circumstances under which they were made, not
misleading; provided, however, that the Company and the Guarantors will not be
liable in any such case to the extent, but only to the extent, that (i) any such
loss, liability, claim, damage or expense arises out of or is based upon any
such untrue statement or alleged untrue statement or omission or alleged
omission made therein in reliance upon and in conformity with written
information furnished to the Company or the Guarantors by or on behalf of any
Holder, underwriter or other Purchaser expressly for use therein and (ii) the
foregoing indemnity with respect to any untrue statement contained in or omitted
from a Registration Statement or the Prospectus shall not inure to the benefit
of any Holder (or any person controlling such Holder), from whom the person
asserting any such loss, liability, claim, damage or expense purchased any of
the Subordinated Notes which are the subject thereof if it is finally judicially
determined that such loss, liability, claim, damage or expense resulted solely
from the fact that the Holder sold Subordinated Notes to a person to whom there
was not sent or given, at or prior to the written confirmation of such sale, a
copy of the Registration Statement and the Prospectus, as amended or
supplemented, and (x) the Company shall have previously and timely furnished
sufficient copies of the Registration Statement or Prospectus, as so amended or
Supplemented, to such Holder in accordance with this Agreement and (y) the
Registration Statement or Prospectus, as so amended or supplemented, would have
corrected such untrue statement or omission of a material fact. This indemnity
agreement will be in addition to any liability which the Company and the
Guarantors may otherwise have, including, under this Agreement.
(b) Each Participant (and each underwriter in an underwritten offering
pursuant to a Shelf Registration Statement) will be required to agree (and each
Holder hereby agrees), severally and not jointly, to indemnify and hold harmless
the Company, the Guarantors and each person, if any, who controls the Company or
the Guarantors within the meaning of Section 15 of the Act or Section 20(a) of
the Exchange Act, against any losses, liabilities, claims, damages and expenses
whatsoever (including but not limited to attorneys' fees and any and all
expenses whatsoever incurred in investigating, preparing or defending against
any investigation or litigation, commenced or threatened, or any claim
whatsoever and
<PAGE>
any and all amounts paid in settlement of any claim or litigation), to which
they or any of them may become subject under the Act, the Exchange Act or
otherwise, insofar as such losses, liabilities, claims, damages or expenses (or
actions in respect thereof) arise out of or are based upon any untrue statement
or alleged untrue statement of a material fact contained in the Registration
Statement or the Prospectus, or in any amendment thereof 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, in the light of the circumstances under which they were
made, not misleading, in each case to the extent, but only to the extent, that
any such loss, liability, claim, damage or expense arises out of or is based
upon any untrue statement or alleged untrue statement or omission or alleged
omission made therein in reliance upon and in conformity with written
information furnished to the Company or the Guarantors by or on behalf of such
Participant expressly for use therein. This indemnity will be in addition to any
liability which a Holder may otherwise have, including under this Agreement. In
no event, however, shall the liability of any selling Holder hereunder be
greater in amount than the dollar amount of the proceeds received by such Holder
upon its sale of the Transfer Restricted Securities giving rise to such
indemnification obligation.
(c) Promptly after receipt by an indemnified party under subsection (a) or
(b) above of notice of the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying
party under such subsection, notify each party against whom indemnification is
to be sought in writing of the commencement thereof (but the failure so to
notify an indemnifying party shall not relieve it from any liability which it
may have under this Section 8 except to the extent that it has been prejudiced
in any material respect by such failure or from any liability which it may
otherwise have). In case any such action is brought against any indemnified
party, and it notifies an indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate therein, and to the extent it
may elect by written notice delivered to the indemnified party promptly after
receiving the aforesaid notice from such indemnified party, to assume the
defense thereof with counsel reasonably satisfactory to such indemnified party.
Notwithstanding the foregoing, the indemnified party or parties shall have the
right to employ its or their own counsel in any such case, but the fees and
expenses of such counsel shall be at the expense of such indemnified party or
parties unless (i) the employment of such counsel shall have been authorized in
writing by the indemnifying parties in connection with the defense of such
action, (ii) the indemnifying parties shall not have employed counsel to take
charge of the defense of such action within a reasonable time after notice of
commencement of the action, or (iii) such indemnified party or parties shall
have been advised in writing that there may be defenses available to it or them
which are different from or additional to those available to one or all of the
indemnifying parties (in which case the indemnifying party or parties shall not
have the right to direct the defense of such action on behalf of the indemnified
party or parties), in any of which events such fees and expenses of counsel
shall be borne by the indemnifying parties; provided, however, that the
indemnifying party under subsection (a) or (b) above, shall only be liable for
the legal expenses of one counsel (in addition to any local counsel) for all
indemnified parties in each jurisdiction in which any claim or action is
brought; provided, however, that the indemnifying party shall be liable for
separate counsel for any indemnified party in a jurisdiction, if counsel to the
indemnified party or parties shall have reasonably concluded in writing that
there may be defenses available to such indemnified party that are different
from or additional to those available to one or more of the other indemnified
parties and that separate counsel for such indemnified party is prudent under
the circumstances. Anything in this subsection to the contrary notwithstanding,
an indemnifying party shall not be liable for any settlement of any claim or
action effected without its prior written consent; provided, however, that such
consent was not unreasonably withheld.
(d) In order to provide for contribution in circumstances in which the
indemnification provided for in this Section 8 is for any reason held to be
unavailable to an indemnified party or is insufficient to
<PAGE>
hold harmless a party indemnified thereunder, the Company, the Guarantors and
each Participant (or other indemnifying person) shall contribute to the
aggregate losses, claims, damages, liabilities and expenses of the nature
contemplated by such indemnification provision (including any investigation,
legal and other expenses incurred in connection with, and any amount paid in
settlement of, any action, suit or proceeding or any claims asserted, but after
deducting in the case of losses, claims, damages, liabilities and expenses
suffered by the Company, any contribution received by the Company from Persons,
other than the Holders, who may also be liable for contribution, including
Persons who control the Company within the meaning of Section 15 of the Act or
Section 20(a) of the Exchange Act) to which the Company and any Participant (or
other indemnifying person) may be subject, in such proportion as is appropriate
to reflect the relative benefits received by the Company and any Participant
from their sale of Transfer Restricted Securities or, if such allocation is not
permitted by applicable law or indemnification is not available as a result of
the indemnifying party not having received notice as provided in this Section 8,
in such proportion as is appropriate to reflect not only the relative benefits
referred to above but also the relative fault of the Company and the Guarantors,
on the one hand, and the Participants (or other indemnifying person), on the
other hand, in connection with the statements or omissions which resulted in
such losses, claims, damages, liabilities or expenses, as well as any other
relevant equitable considerations. The relative benefits received by the Company
and any Participant shall be deemed to be in the same proportion as (x) the
total proceeds from the offering (net of discounts but before deducting
expenses) of the Subordinated Notes received by the Company and (y) the total
proceeds received by such Participant upon its sale of Subordinated Notes which
would otherwise give rise to the indemnification obligation, respectively. The
relative fault of the Company and the Guarantors and of the Participant (or
other indemnifying person) shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company or the Participants and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Company, the Guarantors and each Holder agree that it
would not be just and equitable if contribution pursuant to this Section 8 were
determined by pro rata allocation or by any other method of allocation which
does not take into account the equitable considerations referred to above.
Notwithstanding the provisions of this Section 8, (i) no Holder shall be
required to contribute, in the aggregate, any amount in excess of the amount by
which the total value of the Subordinated Notes held by such Holder exceeds the
amount of any damages which such Holder has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission and (ii) no Person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. For purposes of
this Section 8, (A) each person, if any, who controls a Holder within the
meaning of Section 15 of the Act or Section 20(a) of the Exchange Act and (B)
the respective officers, directors, partners, employees, representatives and
agents of a Holder or any controlling Person shall have the same rights to
contribution as such Holder, and each Person, if any, who controls the Company
within the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act
shall have the same rights to contribution as the Company, subject in each case
to clauses (i) and (ii) of this Section 8(d). Any party entitled to contribution
will, promptly after receipt of notice of commencement of any action, suit or
proceeding against such party in respect of which a claim for contribution may
be made against another party or parties under this Section 8, notify such party
or parties from whom contribution may be sought, but the failure to so notify
such party or parties shall not relieve the party or parties from whom
contribution may be sought from any obligation it or they may have under this
Section 8 or otherwise (except to the extent it has been prejudiced in any
material respect by such failure). No party shall be liable for contribution
with respect to any action or claim settled without its prior written consent;
provided, however, that such written consent was not unreasonably withheld.
<PAGE>
SECTION 9. RULE 144A
Unless the Company is then subject to Section 13 or 15(d) of the Exchange
Act, the Company hereby agrees with each Holder, for so long as any Transfer
Restricted Securities remain outstanding, to make available, upon request, to
any Holder or beneficial owner of Transfer Restricted Securities in connection
with any sale thereof and any prospective purchaser of such Transfer Restricted
Securities from such Holder or beneficial owner, the information required by
Rule 144A(d)(4) under the Act in order to permit resales of such Transfer
Restricted Securities pursuant to Rule 144A.
SECTION 10. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS
No Holder may participate in any Underwritten Registration hereunder unless
such Holder (a) agrees to sell such Holder's Transfer Restricted Securities on
the basis provided in any underwriting arrangements approved by the Persons
entitled hereunder to approve such arrangements and (b) completes and executes
all reasonable questionnaires, powers of attorney, indemnities, underwriting
agreements, lock-up letters and other documents required under the terms of such
underwriting arrangements, which, in any event, shall be reasonably satisfactory
to the Company and customary in connection with underwritten securities
offerings.
SECTION 11. SELECTION OF UNDERWRITERS
The Holders of Transfer Restricted Securities covered by the Shelf
Registration Statement who desire to do so may sell such Transfer Restricted
Securities in an Underwritten Offering. In any such Underwritten Offering, the
investment banker or investment bankers and manager or managers that will
administer the offering will be selected by the Holders of a majority in
aggregate principal amount of the Transfer Restricted Securities included in
such offering; provided, that such investment bankers and managers must be
reasonably satisfactory to the Company. Except as expressly provided for herein,
neither the Company nor the Guarantors shall be responsible for any fees, costs
or expenses of such bankers or managers or their respective advisors or
representatives.
SECTION 12. MISCELLANEOUS
(a) Remedies. The Company and the Guarantors agree that monetary damages
(including the Liquidated Damages contemplated hereby) would not be adequate
compensation for any loss incurred by reason of a breach by it of the provisions
of this Agreement and hereby agree to waive the defense in any action for
specific performance that a remedy at law would be adequate; provided, however,
if the Company has complied with the provisions of Sections 3, 4 and 6 hereof,
the accrual and payment of Liquidated Damages, as set forth in Section 5 above,
shall be the sole and exclusive remedy of the Holders against the Company and
the Guarantors for the events constituting a Registration Default.
(b) No Inconsistent Agreements. The Company will not, and will cause the
Guarantors not to, on or after the date of this Agreement enter into any
agreement with respect to its securities that is inconsistent with the rights
granted to the Holders in this Agreement or otherwise conflicts with the
provisions hereof. Neither the Company nor any of the Guarantors has previously
entered into any agreement granting any registration rights with respect to its
securities to any Person which would permit such Person to (i) include its
securities in any Registration Statement or (ii) participate in any Underwritten
Registration or Underwritten
<PAGE>
Offering. The rights granted to the Holders hereunder do not in any way conflict
with and are not inconsistent with the rights granted to the holders of the
Company's securities under any agreement in effect on the date hereof.
(c) Adjustments Affecting the Subordinated Notes. The Company and the
Guarantors will not take any action with respect to the Subordinated Notes that
would materially and adversely affect the ability of the Holders to Consummate
any Exchange Offer.
(d) Amendments and Waivers. The provisions of this Agreement may not be
amended, modified or supplemented, and waivers or consents to or departures from
the provisions hereof may not be given, unless the Company has obtained the
written consent of Holders of a majority of the outstanding principal amount of
Transfer Restricted Securities. Notwithstanding the foregoing, a waiver or
consent to departure from the provisions hereof that relates exclusively to the
rights of Holders whose securities are sold or exchanged pursuant to a
Registration Statement and that does not affect directly or indirectly the
rights of other Holders whose securities are not being tendered pursuant to such
Exchange Offer may be given by the Holders of a majority of the outstanding
principal amount of Transfer Restricted Securities being sold or exchanged
pursuant to such Registration Statement.
(e) Notices. All notices and other communications provided for or permitted
hereunder shall be made in writing by hand-delivery, first-class mail
(registered or certified, return receipt requested), telex, telecopier, or air
courier guaranteeing overnight delivery:
(i) if to a Holder, at the address set forth on the records of the
Registrar under the Indenture, with a copy to the Registrar under the
Indenture; and
(ii) if to the Company:
Precise Technology, Inc.
501 Mosside Boulevard
North Versailles, Pennsylvania 15137
Telecopier No.: (412) 823-4110
Attention: Secretary
With a copy to:
Mentmore Holdings Corporation
1430 Broadway
13th Floor
New York, New York 10018-3308
Telecopier No.: (212) 391-1393
Attention: William L. Remley
and
Winston & Strawn
200 Park Avenue
New York, New York 10166
Telecopier No.: (212) 294-4700
Attention: Robert W. Ericson, Esq.
<PAGE>
(iii) notice to the Company shall be deemed notice to any and every
Guarantor.
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five business
days after being deposited in the mail, postage prepaid, if mailed; when
answered back, if telexed; when receipt acknowledged, if telecopied; and on the
next business day, if timely delivered to an air courier guaranteeing overnight
delivery.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee at the
address specified in the Indenture.
(f) Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the successors and assigns of each of the parties, including
without limitation and without the need for an express assignment, subsequent
Holders of Transfer Restricted Securities; provided, however, that this
Agreement shall not inure to the benefit of or be binding upon a successor or
assign of a Holder unless and to the extent such successor or assign acquired
Transfer Restricted Securities from such Holder.
(g) 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 be an original and all of which taken
together shall constitute one and the same agreement.
(h) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(i) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE
CONFLICT OF LAW RULES THEREOF.
(j) 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.
(k) Entire Agreement. This Agreement together with the other Operative
Documents (as defined in the Purchase 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. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein
with respect to the registration rights granted by the Company with respect to
the Transfer Restricted Securities. This Agreement supersedes all prior
agreements and understandings between the parties with respect to such subject
matter.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
Precise Technology, Inc.
By: /s/ William L. Remley
-----------------------------
Name:
Title:
Precise TMP, Inc.
By: /s/ William L. Remley
-----------------------------
Name:
Title:
Massie Tool, Mold & Die, Inc.
By: /s/ William L. Remley
-----------------------------
Name:
Title:
Precise Polestar, Inc.
By: /s/ William L. Remley
-----------------------------
Name:
Title:
Precise Technology of Delaware Inc.
By: /s/ William L. Remley
-----------------------------
Name:
Title:
Precise Technology of Illinois Inc.
By: /s/ William L. Remley
-----------------------------
Name:
Title:
<PAGE>
Bear, Stearns & Co. Inc.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
By: Bear, Stearns & Co. Inc.
By: /s/ J. Andrew Bugas
-----------------------------
Name: J. Andrew Bugas
Title: Senior Managing Director
<PAGE>
CONSENT AGREEMENT
This Consent Agreement is entered into as of the 13th day of June, 1997 by
and among Precise Technology, Inc., a Delaware corporation (the "Company"),
Precise Holding Corporation, a Delaware corporation ("Parent"), Sunderland
Industrial Holdings Corporation, a Delaware corporation ("Sunderland"), Hamilton
Holdings Ltd. Corporation, a Texas corporation ("Hamilton"), John Hancock Mutual
Life Insurance Company, a Massachusetts mutual life insurance company ("John
Hancock"), Rice Partners II, L.P., a Delaware limited partnership ("Rice"),
Delaware State Employees' Retirement Fund, a Delaware corporation ("Delaware"),
Declaration of Trust for Defined Benefit Plans of Zeneca Holdings Inc., a
Delaware corporation ("Zeneca"), and Declaration of Trust for Defined Benefit
Plans of ICI American Holdings Inc., a Delaware corporation ("ICI"). Capitalized
terms used in this Consent Agreement and not otherwise defined herein are as
defined in the Note Agreement (as hereinafter defined).
WITNESSETH
WHEREAS, the Company, John Hancock and Rice are parties to that certain
Note Purchase Agreement dated as of March 29, 1996 (the "Note Agreement");
WHEREAS, Parent, John Hancock, Rice and Pecks are parties to that certain
Warrant Purchase Agreement dated as of March 29, 1996 (the "Warrant Agreement");
WHEREAS, Parent, Sunderland, Hamilton, Pecks, John Hancock and Rice are
parties to that certain Shareholder Agreement dated as of March 29, 1996 (the
"Shareholder Agreement");
WHEREAS, Parent, the Company and Pecks are parties to that certain
Securities Purchase Agreement dated as of March 29, 1996 (the "Securities
Purchase Agreement");
WHEREAS, the Company is contemplating prepayment of the Senior Debt,
prepayment of the Senior Subordinated Notes, redemption of the Pecks Preferred
Stock, redemption of the Seller Preferred Stock, repurchase of 124 shares of
Common Stock from Parent, and making an approximate $6.4 million distribution to
Parent;
WHEREAS, Parent is contemplating redemption of the Hamilton Preferred Stock
(as defined in the Shareholder Agreement) and declaration and payment of a
dividend;
WHEREAS, in order to fund the foregoing transactions, the Company intends
to enter into a $30 million revolving credit facility with Fleet National Bank,
as agent (the "New Senior Debt") and issue $75 million of Senior Subordinated
Notes due 2007 (the "New Subordinated Notes");
WHEREAS, in connection with the foregoing transactions, the Company is also
contemplating amendment of the Management Agreement, payment of investment
banking fees to Mentmore in connection with the entering into of the New Senior
Debt and issuance of the
<PAGE>
New Subordinated Notes, amendment of the Warrant Agreement and Shareholder
Agreement, and termination of the Note Agreement.
NOW, THEREFORE, in consideration of the premises and covenants contained
herein and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
1. Consent to Transactions by the Company. To the extent that any
agreement, consent, or notice is required under the Note Agreement, Warrant
Agreement, Shareholder Agreement or Securities Purchase Agreement, or under any
other ancillary document to which the parties hereto, or one or more of them,
are parties or by which they are governed, the parties hereto hereby consent and
agree to, and waive any required notice of, the following transactions by the
Company:
a. Prepayment of the entire outstanding principal amount of the Senior
Debt, plus (i) accrued unpaid interest on the principal amount so
prepaid, plus (ii) the amount of any loss incurred by the Senior
Lender as provided in Section 2.15 of the Senior Loan Agreement, plus
(iii) any other amounts due the Senior Lender under the Senior Loan
Documents, in accordance with the terms of the Senior Loan Documents;
b. Prepayment of the entire outstanding principal amount of the Senior
Subordinated Notes, plus (i) accrued unpaid interest on the principal
amount so prepaid, plus (ii) the aggregate amount of all other Senior
Subordinated Obligations, if any, plus (iii) the applicable Prepayment
Fee, in accordance with the terms of the Note Agreement, and
termination of the Note Agreement;
c. Redemption of 575 shares of Pecks Preferred Stock for a redemption
price of $10,000 per share, plus an amount equal to all dividends
accrued thereon and unpaid;
d. Redemption of 250 shares of Seller Preferred Stock for a redemption
price of $10,000 per share, plus an amount equal to all dividends
thereon accrued and unpaid;
e. Repurchase of 124 shares of Common Stock from Parent for an aggregate
price of approximately $3,315,000;
f. Distribution of approximately $6,441,000 to Parent;
g. Execution, delivery and performance of the Credit Agreement and other
documents related to the New Senior Debt and all other related
documents, including the granting of any security interest in
connection therewith and the entering into by any of the Company's
subsidiaries of any guarantee of such New Senior Debt;
2
<PAGE>
h. Issuance of the New Subordinated Notes and execution, delivery and
performance of the Purchase Agreement, Registration Rights Agreement,
and Indenture in connection therewith and any related documents,
including the entering into by any of the Company's subsidiaries of
any guarantee of such New Subordinated Notes;
i. Amendment and restatement of the Management Agreement, in the form
attached hereto as Exhibit A and payment of an investment banking fee
to Mentmore in the amount of $500,000;
j. Amendment of the Warrant Agreement, in the form attached hereto as
Exhibit B;
k. Amendment of the Shareholder Agreement, in the form attached hereto as
Exhibit C.
2. Consent to Transactions by Parent. To the extent that any agreement,
consent, or notice is required under the Note Agreement, Warrant Agreement,
Shareholder Agreement or Securities Purchase Agreement, or under any other
ancillary document to which the parties hereto, or one or more of them, are
parties or by which they are governed, the parties hereto hereby consent and
agree to, and waive any required notice of, the following transactions by
Parent:
a. Redemption of 331.46 shares of Hamilton Preferred Stock for a
redemption price of $10,000 per share, plus an amount equal to all
dividends thereon accrued and unpaid;
b. Upon formal action of Parent's Board of Directors, declaration and
payment of a dividend on the common stock (and the related Dilution
Dividend (as defined in the Shareholder Agreement)) in an aggregate
amount of approximately $6.0 million (subject to reduction for
appropriate provision for payment of any taxes for which Parent may be
liable on such dividend), payable (subject to any withholding
obligations) as follows:
% of Total
To In Respect Of Dividend
- -- ------------- --------
Sunderland 8,035 shares of common stock 80.3500%
NAP & Company, as nominee 167.67 shares of common stock 1.6767%
for Delaware
Fuelship & Company, as 33.33 shares of common stock 0.3333%
nominee for Zeneca
Northman & Co., as nominee 49 shares of common stock 0.4900%
for ICI
3
<PAGE>
NAP & Company, as nominee Warrants to purchase 385 shares of 3.8500%
for Delaware common stock
Fuelship & Company, as Warrants to purchase 77 shares of 0.7700%
nominee for Zeneca common stock
Northman & Co., as Nominee Warrants to purchase 113 shares of 1.1300%
for ICI common stock
John Hancock Warrants to purchase 371 shares of 3.7100%
common stock
John Hancock Warrants to purchase 199 shares of 1.9900%
common stock
Rice Warrants to purchase 570 shares of 5.7000%
common stock
c. Sale of 124 shares of Common Stock of the Company to the Company for
an aggregate price of $3,315,000;
d. Execution, delivery and performance of the Credit Agreement and other
documents related to the New Senior Debt and all other related
documents to be entered into by Parent, including the granting of any
security interest in Common Stock of the Company held by Parent and
the entering into by Parent of any guarantee of such New Senior Debt;
e. Amendment of the Warrant Agreement, in the form attached hereto as
Exhibit B;
f. Amendment of the Shareholder Agreement, in the form attached hereto as
Exhibit C.
3. The effectiveness of this Consent Agreement is conditioned upon
consummation of the Refinancing Transactions, as that term is defined in the
Preliminary Offering Memorandum, dated May 19, 1997, relating to the New
Subordinated Notes.
4. The parties acknowledge the terms of the Registration Rights Agreement
between the Company, the subsidiaries of the Company and the Initial Purchasers
named therein in the offering of the New Subordinated Notes, and waive any
rights to participate or have securities registered under, or to receive notice
of or consent rights to, any Registration Statement filed with the Securities
and Exchange Commission pursuant thereto.
5. This Consent Agreement shall be construed in accordance with and
governed by the laws of the State of New York, without regard to its conflict of
laws provisions.
4
<PAGE>
IN WITNESS WHEREOF, the undersigned, through their duly authorized
representatives, have set hereunto their hands as of the date first above
written.
PRECISE TECHNOLOGY, INC.
By: /s/ William L. Remley
---------------------------------------
Its:
---------------------------------------
PRECISE HOLDING CORPORATION
By: /s/ William L. Remley
---------------------------------------
Its:
---------------------------------------
SUNDERLAND INDUSTRIAL HOLDINGS
CORPORATION
By: /s/ William L. Remley
---------------------------------------
Its:
---------------------------------------
HAMILTON HOLDINGS LTD.
CORPORATION
By: /s/ William L. Remley
---------------------------------------
Its:
---------------------------------------
JOHN HANCOCK MUTUAL LIFE
INSURANCE COMPANY
By: /s/ Sandeep Alva
---------------------------------------
Sandeep Alva, Senior Investment Officer
5
<PAGE>
RICE PARTNERS II, L.P.
By: Rice Capital Group IV, L.P., its
general partner
By: RMC Fund Management, L.P., its general
partner
By: Rice Mezzanine Corporation, its
general partner
By: /s/ James P. Wilson
------------------------------
James P. Wilson,
Managing Director
DELAWARE STATE EMPLOYEES' RETIREMENT
FUND
By: Pecks Management Partners, Ltd., its
investment advisor
By: /s/ Robert J. Cresci
---------------------------------------
Robert J. Cresci, Managing Director
DECLARATION OF TRUST FOR DEFINED BENEFIT
PLANS OF ZENECA HOLDINGS, INC.
By: Pecks Management Partners, Ltd., its
investment advisor
By: /s/ Robert J. Cresci
---------------------------------------
Robert J. Cresci, Managing Director
DECLARATION OF TRUST FOR DEFINED BENEFIT
PLANS OF ICI AMERICAN HOLDINGS INC.
By: Pecks Management Partners, Ltd., its
investment advisor
By: /s/ Robert J. Cresci
---------------------------------------
Robert J. Cresci, Managing Director
6
<PAGE>
EXECUTION COPY
================================================================================
PRECISE HOLDING CORPORATION
Common Stock
PRECISE TECHNOLOGY, INC.
Cumulative Exchangeable Preferred Stock
-----------------------------
SECURITIES PURCHASE AGREEMENT
-----------------------------
Dated as of March 29, 1996
================================================================================
<PAGE>
TABLE OF CONTENTS
Page No.
--------
1. AUTHORIZATION OF ISSUE OF SECURITIES......................................1
1A. Common Stock.....................................................1
1B. Cumulative Exchangeable Preferred Stock..........................1
2. PURCHASE AND SALE OF SECURITIES...........................................1
2A. Purchase and Sale................................................1
2B. Closing..........................................................2
3. CONDITIONS OF CLOSING.....................................................2
3A. Opinion of Counsel to Holdings and the Company...................2
3B. Representations and Warranties...................................2
3C. Certificate of Incorporation and By-laws.........................3
3D. Purchase Permitted by Applicable Laws............................3
3E. Shareholder Agreement............................................3
3F. Compliance with Securities Laws..................................3
3G. Proceeding.......................................................4
3H. No Adverse U.S. Legislation, Action or Decision..................4
3I. Approval and Consents............................................4
3J. Material Changes.................................................4
3K. Board Nominee....................................................5
3L. Use of Proceeds..................................................5
3M. Warrants.........................................................5
3N. Acquisition Agreements...........................................5
3O. Debt Financing...................................................5
3P. Certificate of Designation.......................................5
4. COVENANTS.................................................................6
4A. Financial Statement..............................................6
4B. Use of Proceeds..................................................7
4C. Inspection of Property...........................................7
4D. Books and Records................................................8
4E. Additional Covenant Pending the Closing..........................8
4F. Stock to Be Reserved.............................................8
4G. Compliance With Laws, etc........................................8
4H. ERISA............................................................9
4I. Corporate Existence; Maintenance of Properties..................10
4J. Insurance.......................................................10
4K. Further Assurances..............................................10
4L. Filing of Reports Under the Exchange Act........................10
4M. Securities Act Registration Statements..........................11
4N. Notices of Certain Events.......................................12
4O. Board Nominee...................................................12
4P. Special Purpose Corporation.....................................13
4Q. Environmental Laws..............................................13
4R. Confidentiality.................................................14
5. REPRESENTATIONS AND WARRANTIES OF HOLDINGS AND THE COMPANY...............15
5A. Organization, Qualification and Authority.......................15
5B. Financial Statements............................................16
5C. Capital Stock and Related Matters...............................16
(i)
<PAGE>
5D. Actions Pending.................................................17
5E. Outstanding Debt; Defaults......................................17
5F. Title to Properties.............................................18
5G. Taxes...........................................................18
5H. Conflicting Agreements..........................................18
5I. Offering of Securities..........................................19
5J. Broker's or Finder's Commissions................................19
5K. Regulation G, etc...............................................19
5L. Environmental Matters...........................................19
5M. ERISA...........................................................20
5N. Possession of Franchises, Licenses, etc.........................21
5O. Patents, etc....................................................21
5P. Holding Company and Investment Company Status...................21
5Q. Governmental Consents...........................................21
5R. Insurance Coverage..............................................22
5S. Subsidiaries....................................................22
5T. Disclosure......................................................22
5U. Registration Rights.............................................22
5V. Absence of Foreign or Enemy Status..............................23
5W. Agreements With Affiliates......................................23
5X. Equity of Holdings..............................................23
6. REPRESENTATIONS AND WARRANTIES OF THE INVESTORS..........................23
7. DEFINITIONS..............................................................24
8. MISCELLANEOUS............................................................28
8A. Home Office Payment.............................................28
8B. Indemnification.................................................29
8C. Consent to Amendments...........................................29
8D. Provisions Applicable if any of the Securities
are Sold......................................................30
8E. Restrictive Legends.............................................30
8F. Survival of Representations and Warranties......................31
8G. Successors and Assigns..........................................31
8H. Notices.........................................................31
8I. Descriptive Headings............................................32
8J. GOVERNING LAW: CONSENT TO JURISDICTION..........................32
8K. Delay Fees......................................................33
8L Remedies........................................................33
8M. Entire Agreement................................................34
8N. Severability....................................................34
8O. Amendments......................................................34
8P. WAIVER OF TRIAL BY JURY.........................................34
8Q. Counterparts....................................................34
(ii)
<PAGE>
EXHIBITS
Exhibit A Form of Certificate of Designation
Exhibit B-1 Form of Opinion of Counsel to Holdings and the
Company
Exhibit B-2 Form of Opinion of Special New York Counsel to
Holdings and the Company
Exhibit C Form of Warrant Purchase Agreement
Exhibit D Form of Shareholder Agreement
(iii)
<PAGE>
PRECISE HOLDING CORPORATION
and
PRECISE TECHNOLOGY, INC.
SECURITIES PURCHASE AGREEMENT
---------------
Dated as of
March 29, 1996
---------------
To the Investors named on the signature pages hereto:
Each of the undersigned, PRECISE HOLDING CORPORATION ("Holdings"), a
Delaware corporation, and PRECISE TECHNOLOGY, INC. (the "Company"), a Delaware
corporation, and each of the investors named on the signature pages hereto (the
"Investors"), hereby agree as follows:
1. AUTHORIZATION OF ISSUE OF SECURITIES.
1A. Common Stock. Holdings will authorize the issuance, sale and delivery
to the Investors of 250 shares of its common stock, without par value (herein
called the "Common Stock", representing 2.5% of the Fully Diluted Outstanding
Shares of Common Stock.
1B. Cumulative Exchangeable Preferred Stock. The Company will authorize the
issuance, sale and delivery to the Investors of 575 shares of its Cumulative
Exchangeable Preferred Stock (herein called the "Exchangeable Preferred Stock"
and together with the Common Stock referred to herein collectively as the
"Securities"). The powers, designations, preferences and relative participating,
optional or other special rights, and the qualifications, limitations or
restrictions thereof, of the Exchangeable Preferred Stock are set forth in the
Certificate of Designation of the Exchangeable Preferred Stock in the form of
Exhibit A attached hereto (the "Certificate of Designation").
2. PURCHASE AND SALE OF SECURITIES.
2A. Purchase and Sale. Holdings and the Company hereby agree to sell to the
Investors and, subject to the terms and conditions herein set forth, the
Investors severally agree to purchase from Holdings and the Company, the
Securities set forth opposite the name of each of the Investors on the signature
pages hereof. The purchase price of the shares of Common Stock purchased and
sold hereunder and for the issuance of the Warrants to the Investors shall be
$750,000. The purchase price of each share of Exchangeable Preferred Stock
purchased and sold hereunder shall be $10,000 per share.
1
<PAGE>
2B. Closing. The purchase and delivery of the Securities to be purchased by
the Investors shall take place at a closing (the "Closing") at the offices of
Willkie Farr & Gallagher, One Citicorp Center, 153 East 53rd Street, New York,
New York 10022, at 10:00 a.m., local time, on March 29, 1996 (or at such other
time and place or on such other Business Day thereafter as the parties hereto
shall agree) (herein called the "Closing Date"). On the Closing Date, Holdings
and the Company will deliver the Securities to be purchased by the Investors
payable to or registered in the names of the Investors and/or the Investors'
nominees or other designees specified on the signatures pages hereof in the
amounts set forth opposite the name of the Investors on the signature pages
hereof, against receipt of the purchase price therefor by wire transfer to
NationsBank, N.A., Dallas Texas, ABA #: 111-000-012, Account #: 375-0637717, in
the case of Holdings, and 375-0637364, in the case of the Company. If at the
Closing, the Company shall, in breach of this Agreement, fail to tender to the
Investors any of the Securities to be purchased by them or if any of the
conditions specified in Section 3 hereof shall not have been satisfied or waived
by the Investors, the Investors shall, at their election, be relieved of all
further obligations under this Agreement without thereby waiving any ocher
rights they may have by reason of such failure or such non-fulfillment.
Notwithstanding anything to the contrary, the obligation of Holdings and the
Company to deliver any Securities to any Investor at the Closing shall be
conditioned on their concurrent receipt of the purchase price of all of the
Securities from the Investors.
3. CONDITIONS OF CLOSING. The Investors' obligation to purchase and pay for
the Securities to be purchased by them hereunder is subject to the satisfaction,
on or before the Closing Date, of the following conditions:
3A. Opinion of Counsel to Holdings and the Company. The Investors shall
have received an opinion, dated the Closing Date (a) from Kelly, McCann &
Livingstone, counsel to Holdings and the Company, substantially in the form of
Exhibit B-1 attached hereto and (b) from Winston & Strawn, special New York
counsel to Holdings and the Company, substantially in the form of Exhibit B-2
attached hereto. Such opinions shall also cover such other matters incident to
the matters herein contemplated as the Investors may reasonably request,
including the form of all papers and the validity of all proceedings.
3B. Representations and Warranties. The representations and warranties
contained in Section 5 hereof and those otherwise made in writing by or on
behalf of Holdings or the Company and contained in any document, certificate or
other written statement provided to the Investors, in connection with the
transactions contemplated by this Agreement shall be true and correct in all
material respects when made and on and as of the
2
<PAGE>
Closing Date, except to the extent of changes caused by the transactions herein
contemplated; all of the covenants and obligations of Holdings and the Company
hereunder to be performed or observed on or prior to the Closing shall have been
duly performed or observed; and Holdings and the Company shall have delivered to
the Investors an Officer's Certificate, dated the Closing Date, to the foregoing
effects.
3C. Certificate of Incorporation and By-laws. The Investors shall have
received certificates, dated the Closing Date, from each of the Assistant
Secretary of Holdings and its Subsidiaries attaching (i) true and complete
copies of the Certificate of Incorporation of Holdings and its Subsidiaries as
filed with the appropriate state officials of its jurisdiction of incorporation
with all amendments thereto, (ii) true and complete copies of the By-laws of
Holdings and its Subsidiaries in effect as of such date, (iii) copies of
certificates of good standing of the appropriate officials of the jurisdiction
of incorporation of Holdings and its Subsidiaries and of each state in which
each of Holdings and its Subsidiaries is required to be qualified to do business
as a foreign corporation, (iv) resolutions of the Board of Directors of each of
Holdings and the Company authorizing (a) the execution, delivery and performance
of the Related Documents, as necessary, (b) the issuance and delivery of the
Securities and (c) in the case of Holdings, the reservation for issuance of a
sufficient number of shares of Common Stock subject to the Warrants to permit
the exercise of such Warrants and (v) certificates as to the incumbency of the
officers of Holdings and the Company executing this Agreement or any other
Related Document.
3D. Purchase Permitted by Applicable Laws. The purchase of and payment for
the Securities shall not be prohibited by any applicable law or governmental
regulation (including, without limitation, Regulations G, T and X of the Board
of Governors of the Federal Reserve System) and shall not subject the Investors
to any tax, penalty, liability or other onerous condition under or pursuant to
any applicable law or governmental regulation, and the Investors shall have
received such certificates or other evidence as they may request to establish
compliance with this condition.
3E. Shareholder Agreement. The Investors shall have received a fully
executed counterpart of the Shareholder Agreement and such Shareholder Agreement
shall be in full force and effect and no term or condition thereof shall have
been amended, modified or waived.
3F. Compliance with Securities Laws. The offering and sale of the
Securities under this Agreement shall have complied with all applicable
requirements of federal and state securities laws, and the Investors shall have
received evidence of such compliance in form and substance reasonably
satisfactory to them.
3
<PAGE>
3G. Proceeding. All required corporate and other proceedings taken or
required to be taken in connection with the transactions contemplated hereby and
all documents incident thereto shall be reasonably satisfactory in form and
substance to the Investors and their counsel, and the Investors and their
counsel shall have received all such counterpart originals or certified or other
copies of such documents as they may reasonably request.
3H. No Adverse U.S. Legislation, Action or Decision. No legislation, order,
rule, ruling or regulation shall have been enacted or made by or on behalf of
any governmental body, department or agency of the United States, nor shall any
legislation have been introduced and favorably reported for passage to either
House of Congress by any committee of either such House to which such
legislation has been referred for consideration, nor shall any decision of any
court of competent jurisdiction within the United States have been rendered
which, in the Investors' reasonable judgment, would materially and adversely
affect their investment in the Securities. There shall be no action, suit,
investigation or proceeding, pending or threatened, against or affecting
Holdings, its Subsidiaries or any of their respective properties or rights, or
any of their respective affiliates, associates, officers or directors, before
any court, arbitrator or administrative or governmental body which (i) seeks to
restrain, enjoin, prevent the consummation of or otherwise affect the
transactions contemplated by any of the Related Documents or (ii) questions the
validity or legality of any such transaction or seeks to recover damages or to
obtain other relief in connection with any such transaction, and there shall be
no valid basis for any such action, proceeding or investigation.
3I. Approval and Consents. Each of Holdings and the Company shall have duly
received all authorizations, consents, approvals, licenses, franchises, permits
and certificates by or of all federal, state and local governmental authorities
necessary or advisable for the issuance of the Securities and the consummation
of the transactions contemplated hereby and by the Related Documents, and all
thereof shall be in full force and effect at the time of the Closing. Each of
Holdings and the Company shall have delivered to the Investors an Officer's
Certificate, dated the Closing Date, to such effect.
3J. Material Changes. Since December 31, 1995 there shall not have been any
changes in the business of the Company or any of its Subsidiaries which have or
could reasonably be expected to, individually or in the aggregate, have a
Material Adverse Effect, nor shall there have been any development or discovery
or any material contingency or other liability which could have such effect.
Except as set forth on Schedule 3J hereto, there shall exist no material
defaults under the provisions of any instrument evidencing Indebtedness of
Holdings or any of its Subsidiaries and Holdings shall have delivered to
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the Investors an Officer's Certificate, dated the Closing Date, to such effect.
3K. Board Nominee. The Board of Directors of Holdings shall be constituted
as contemplated by Section 4.11 of the Warrant Purchase Agreement and Sections
10.01 and 10.02 of the Shareholder Agreement and the nominee designated by the
Investors shall have been appointed to the Board of Directors effective upon the
Closing.
3L. Use of Proceeds. The Investors shall have received evidence in form and
substance reasonably satisfactory to them with respect to the use of proceeds by
Holdings and the Company in accordance with paragraph 4B.
3M. Warrants. Each Investor shall have received warrants ("Warrants") to
purchase Common Stock of Holdings, which if exercised on the Closing Date would
represent 5.75% of the Fully Diluted Outstanding Shares of Common Stock of
Holdings, pursuant to a Warrant Purchase Agreement substantially in the form of
Exhibit C attached hereto.
3N. Acquisition Agreements. The Company shall have executed all agreements
necessary to consummate the purchase of all of the outstanding capital stock of
Tredegar Molded Products Company (the "Acquisition"), and all of the conditions
precedent to such purchase shall have been satisfied or waived to the reasonable
satisfaction of the Investors.
3O. Debt Financing. The Company and each other party thereto shall have
executed(i) the Credit Agreement, dated as of March 28, 1996, between the
Company, certain lenders and NationsBank, N.A., as agent (as amended from time
to time, the "Senior Credit Agreement") and all the conditions set forth in
Section 4.01 thereof shall have been satisfied or waived to the reasonable
satisfaction of the Investors and (ii) the Note Purchase Agreement dated March
29, 1996 (the "Note Purchase Agreement") and all other agreements necessary to
consummate the sale of $20,000,000 of the Company's 12.25% Senior Subordinated
Notes, due 2006 (the "Subordinated Debt"), and all of the conditions precedent
to such sale shall have been satisfied or waived to the reasonable satisfaction
of the Investors.
3P. Certificate of Designation. The Certificate of Designation shall have
been filed with the Secretary of State of the State of Delaware and the
Investors shall have received a certificate, dated the Closing Date, of the
Assistant Secretary of the Company attaching a true and complete copy of the
Certificate of Designation as filed with the Secretary of State of the State of
Delaware.
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4. COVENANTS.
4A. Financial Statement. From and after the date hereof, Holdings shall
deliver to each of the Investors so long as such Investor owns any Securities:
(i) as soon as practicable and in any event within 45 days after the
end of each month in each fiscal year commencing with March 31, 1996,
unaudited management reports of the Company and its Subsidiaries setting
forth the financial, operational and other performance data of the Company
and its Subsidiaries in reasonable detail and reasonably satisfactory to
the Investors, which shall include at least a consolidated statement of
operations, a consolidated statement of cash flows and a consolidated
balance sheet for or as at the end of such month, and to the extent
available, comparable information from the same month in the preceding
fiscal year and management's budget;
(ii) as soon as practicable and in any event within 45 days after the
end of each quarterly period in each fiscal year, consolidated and
consolidating statements of income, changes in stockholders' equity and
cash flow of the Company and its Subsidiaries for such quarterly period and
for the period from the beginning of the current fiscal year to the end of
such quarterly period and a consolidated and consolidating balance sheet of
the Company and its Subsidiaries as at the end of the most recent year and
at the end of such quarterly period, setting forth in each case in
comparative form figures for the corresponding period in the preceding
fiscal year, all in reasonable detail and reasonably satisfactory in scope
to the holders of Securities and prepared in accordance with GAAP on a
basic consistent with past practice and certified by the chief financial
officer or chief executive officer of the Company as fairly presenting the
financial condition of the Company and its Subsidiaries, subject to the
changes resulting from audit and year-end adjustments;
(iii) as soon as practicable and in any event within 90 days after the
end of each fiscal year, consolidated and consolidating statements of
income, changes in stockholders' equity and cash flow of the Company and
its Subsidiaries for such year, and a consolidated and consolidating
balance sheet of the Company and its Subsidiaries as at the end of such
year, setting forth in each case in comparative form corresponding figures
from the preceding annual audit, all in reasonable detail and reasonably
satisfactory in scope to the holders of Securities, and in each case
audited by Ernst & Young or such other independent public accountants of
recognized national standing selected by the Company, and reasonably
satisfactory to the holders of Securities, whose report in each case shall
state that such consolidated financial statements present fairly the
results of
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operations and cash flows of the Company and its Subsidiaries, in
accordance with GAAP on a basic consistent with prior years and that the
examination by such accountants has been made in accordance with generally
accepted auditing standards then in effect in the United States;
(iv) as soon as practicable and in any event by the end of each fiscal
year beginning with fiscal year 1996, a budget for the Company and its
Subsidiaries, as approved by the Board of Directors of the Company and each
Subsidiary, for the following fiscal year setting forth in comparative form
corresponding figures from the preceding fiscal year, in reasonable detail
and certified as to its good-faith preparation by the chief financial
officer or chief executive officer of the Company and the Company;
(v) promptly upon transmission thereof, copies of all financial
statements, information circulars, proxy statements and reports as the
Company or any Subsidiary shall send to its stockholders that are material
to the business of the Company and its Subsidiaries, taken as a whole and
copies of all registration statements and prospectuses and all reports
which it or any of its officers or directors file with the Commission (or
any governmental body or agency succeeding to the functions of the
Commission) or with any securities exchange on which any of its securities
are listed or with NASDAQ, and copies of all press releases and other
statements made available generally by the Company or its Subsidiaries to
the public concerning material developments in the business of the Company
and its Subsidiaries;
(vi) promptly upon receipt thereof, a copy of each other report
submitted to the Company or any of its Subsidiaries by independent
accountants in connection with any annual, interim or special audit made by
them of the books of the Company or any of its Subsidiaries; and
(vii) with reasonable promptness, such other financial and/or
operating data as the holders of Securities may reasonably request.
4B. Use of Proceeds. The proceeds of the sale of the Securities shall be
used solely (a) to fund the purchase price for the Acquisition on the Closing
Date, (b) to pay fees and expenses incurred in connection with the Acquisition
and (c) to refinance existing indebtedness of the Company and its Subsidiaries.
4C. Inspection of Property. As long as an Investor owns at least 100 shares
of Exchangeable Preferred Stock, Holdings will, upon reasonable advance notice,
permit any Person representing such Investor and designated in writing by such
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Investor, at such Investor's expense, to visit and inspect any of the properties
of Holdings and its Subsidiaries during normal business hours in a manner which
does not unduly interrupt the normal course of business, to examine the
corporate, financial and operating records of Holdings or any of its
Subsidiaries and make copies thereof or extracts therefrom and to discuss the
affairs, finances and accounts of any of such corporations with the directors,
officers and independent accountants of Holdings and its Subsidiaries, all at
such reasonable times and as often as such Investor may reasonably request.
Notwithstanding the foregoing, no visitation and/or inspection of any of the
properties of Holdings and its Subsidiaries will be permitted if such visitation
and/or inspection would violate any federal or state laws.
4D. Books and Records. Holdings will keep, and will cause each of its
Subsidiaries to keep, proper books of record and account in which full, true and
correct entries in conformity in all material respects with GAAP shall be made
of all material dealings and transactions in relation to their business and
activities.
4E. Additional Covenant Pending the Closing. Pending the Closing, neither
Holdings nor the Company will, without the prior written consent of the
Investors, take any action which would result (i) in any of the representations
or warranties contained in this Agreement not being true and correct in all
material respects at and as of the time immediately after such action or (ii) in
any of the covenants contained in this Agreement becoming incapable of
performance. Pending the Closing, Holdings and the Company will promptly advise
the Investors of any action or event of which either becomes aware which has the
effect of making incorrect, in any material respect, any of such representations
or warranties or which has the effect of rendering any of such covenants
incapable of performance. Holdings and the Company will duly perform, in all
material respects, all of its respective obligations required to be performed
under each of the Related Documents to which it is a party.
4F. Stock to Be Reserved. Holdings covenants that all shares of Common
Stock that may be issued upon exercise of the Warrants will, upon issuance, be
validly issued, fully paid and nonassessable and free from all taxes, liens and
charges with respect to the issuance thereof. Holdings further covenants that
during the period within which Warrants are outstanding, Holdings will at all
times have authorized and reserved a sufficient number of shares of Common Stock
to permit the exercise of all of the outstanding Warrants.
4G. Compliance With Laws, etc. Holdings will, and will cause each of its
Subsidiaries to, comply with the requirements of all applicable laws, rules,
regulations and orders of any Governmental Authority, and obtain and maintain in
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good standing all licenses, permits and approvals from any and all governments,
governmental commissions, boards or agencies of jurisdictions in which they
carry on business required in respect of the operations of Holdings and its
Subsidiaries, except for those with which the failure to comply or maintain
would not have a Material Adverse Effect.
4H. ERISA. Promptly (and in any event within 30 days) after Holdings or any
of its Subsidiaries knows or has reason to know that a Reportable Event with
respect to any Pension Plan has occurred, that any Pension Plan is or may be
terminated, reorganized, partitioned or declared insolvent under Title IV of
ERISA or that Holdings or any of its Subsidiaries will or may incur any
liability to or on account of a Pension Plan under Sections 4062, 4063, 4064,
4201 or 4204 of ERISA or promptly upon becoming aware of the occurrence of any
(i) event requiring Holdings or any of its Subsidiaries to provide security to a
Pension Plan under Section 401(a)(29) of the Code, (ii) "prohibited
transaction", as such term is defined in Section 4975 of the Code or in Section
406 of ERISA, in connection with any Pension Plan or any trust created
thereunder for which a statutory or administrative exemption is not available,
(iii) notice of intent to terminate a Pension Plan or Pension Plans having been
filed under Title IV of ERISA by Holdings or any of its Subsidiaries, any
Pension Plan administrator or any combination of the foregoing, (iv) institution
of proceedings by the PBGC to terminate or to cause a trustee to be appointed to
administer any Pension Plan, (v) partial or complete withdrawal by Holdings or a
Subsidiary from any multiemployer Pension Plan, (vi) institution of proceedings
by a fiduciary of any Pension Plan against Holdings or any of its Subsidiaries
to enforce Section 515 of ERISA and such proceeding shall not have been
dismissed within 30 days thereafter, (vii) failure of Holdings or a Subsidiary
to make a required installment under Section 412(m) of the Code or any other
payment required under Section 412 of the Code or to pay any amount which it
shall have become liable to pay to the PBGC or to a Pension Plan under Title IV
of ERISA on or before the due date, (viii) application by Holdings or a
Subsidiary for a waiver of the minimum funding standard under Section 412 of the
Code or Section 302 of ERISA, or (ix) "reorganization" (as defined in Section
418 of the Code or Title IV of ERISA) of any Pension Plan which is a
multiemployer Pension Plan, Holdings will deliver to each holder of Securities,
a certificate of the chief financial officer of Holdings, setting forth
information as to such occurrence and what action, if any, Holdings is required
or proposes to take with respect thereto, together with any notices concerning
such occurrences which are (a) required to be filed by Holdings or the plan
administrator of any such Pension Plan controlled by Holdings or any of its
Subsidiaries with the PBGC, or (b) received by Holdings or any of its
Subsidiaries from any plan administrator of a multiemployer or other Pension
Plan not under their control. Holdings shall furnish to each holder of
Securities a copy of each annual report (Form 5500 Series) of any Pension Plan
received or prepared by it
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or any of its Subsidiaries. Each annual report and any notice required to be
delivered hereunder shall be delivered no later than 30 days after the later of
the date such report or notice is filed with the Internal Revenue Service or the
PBGC or the date such report or notice is received by Holdings or any of its
Subsidiaries, as the case may be.
4I. Corporate Existence; Maintenance of Properties. Holdings (i) will do or
cause to be done all things reasonably necessary to preserve and keep in full
force and effect its corporate existence, rights and franchises and the
corporate existence, rights and franchises of its Subsidiaries, (ii) will cause
its material properties and the material properties of its Subsidiaries to be
maintained and kept in good condition, repair and working order (ordinary wear
and tear excepted) and will cause to be made all necessary repairs, renewals,
replacements, betterments and improvements thereto, and (iii) will, and will
cause each of its Subsidiaries to, qualify and remain qualified to conduct
business in each jurisdiction where the nature of the business of or ownership
of property by Holdings or such Subsidiary may require such qualification,
except where the failure to so qualify would not have a Material Adverse Effect.
Notwithstanding the foregoing, (x) any Wholly owned Subsidiary of the Company
may merge into the Company in a transaction in which the Company is the
surviving corporation, (y) any Wholly owned Subsidiary of the Company may merge
into or consolidate with any other Wholly owned Subsidiary of the Company in a
transaction in which the surviving entity is a Wholly owned Subsidiary and (z)
Holdings shall not be required to preserve the existence of any of its
Subsidiaries which have less than $10,000 in assets and which are not engaged in
any activities relating to Holdings' business.
4J. Insurance. Holdings will maintain, and will cause each of its
Subsidiaries to maintain, with financially sound and reputable insurance
companies, funds or underwriters, insurance for itself and its Subsidiaries of
the kinds, covering the risks and in the relative proportionate amounts usually
carried by companies conducting business activities similar to those of Holdings
and its Subsidiaries. From and after a Public Offering, Holdings will use its
best efforts to obtain and maintain directors and officers liability insurance
similar to the insurance usually carried by companies conducting business
activities similar to those of Holdings and its Subsidiaries.
4K. Further Assurances. Holdings and the Company shall cooperate with any
of the Investors and execute such further instruments and documents as the
Investors shall reasonably request to carry out to the satisfaction of such
Investors the transactions contemplated by this Agreement.
4L. Filing of Reports Under the Exchange Act. Holdings shall, and shall
cause each of its Subsidiaries to, give prompt notice to each Investor of the
filing of any registration
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statement (an "Exchange Act Registration Statement") pursuant to the Exchange
Act relating to any class of securities of Holdings or any of its Subsidiaries
and the effectiveness of such Exchange Act Registration Statement and, with
respect to equity securities, the number of shares of such class o(pound) equity
security outstanding as reported in such Exchange Act Registration Statement. If
and for so long as Holdings or any of its Subsidiaries has a class of equity
securities required to be registered under the Exchange Act, Holdings and such
Subsidiaries shall (i) comply in all material respects with the reporting
requirements of the Exchange Act, and (ii) comply in all material respects with
all other public information reporting requirements of the Commission that are a
condition to the availability of an exemption from the Securities Act (under
Rule 144 thereof, as amended from time to time, or successor rule thereto or
otherwise) for the sale of shares of Common Stock by any Investor. Holdings
shall, and shall cause each of its Subsidiaries to, cooperate with each Investor
in supplying such information as may be reasonably necessary for such Investor
to complete and file any information reporting forms presently or hereafter
required by the Commission as a condition to the availability of an exemption
from the Securities Act (under Rule 144 thereunder or otherwise) for the sale of
shares of Common Stock by any Investor.
4M. Securities Act Registration Statements. Holdings covenants that it
shall not, and shall cause each of its Subsidiaries not to, file any
registration statement under the Securities Act covering any securities unless
it shall first have given to each Investor 20 days written notice thereof.
Holdings further covenants that each Investor shall have the right, at any time
when it may reasonably be deemed by such Investor or Holdings or any of its
Subsidiaries to be a controlling person of Holdings or any of its Subsidiaries,
to participate in the preparation of such registration statement (regardless of
whether or not an Investor will be a selling security holder in connection with
such registration statement) and to request the insertion therein of material
furnished to Holdings or any of its Subsidiaries in writing which in such
Investor's reasonable judgment should be included. In connection with any
registration statement referred to in this paragraph 4M, Holdings will indemnify
each Investor, its partners, officers and directors and each person, if any, who
controls such Investor within the meaning of Section 15 of the Securities Act
(collectively, the "Investor Parties"), against all losses, claims, damages,
liabilities and expenses caused by any untrue statement or alleged untrue
statement of a material fact contained in any registration statement or
prospectus or any preliminary prospectus or any amendment thereof or supplement
thereto or caused by any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, except insofar as such losses, claims, damages,
liabilities or expenses are caused by any untrue statement or alleged untrue
statement or omission or
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alleged omission contained in written information furnished to Holdings or any
of its Subsidiaries by such Investor Parties expressly for use in such
registration statement. If, in connection with any such registration statement,
such Investor Parties shall furnish written information to Holdings or any of
its Subsidiaries expressly for use in the registration statement, such Investor
will indemnify Holdings, its directors, each of its officers who signs such
registration statement and each person, if any, who controls Holdings within the
meaning of the Securities Act against all losses, claims, damages, liabilities
and expenses caused by any untrue statement or alleged untrue statement of a
material fact or any omission or alleged omission of a material fact required to
be stated in the registration statement or prospectus or any preliminary
prospectus or any amendment thereof or supplement thereto or necessary to make
the statements therein not misleading, but only to the extent that such untrue
statement or alleged untrue statement or such omission or alleged omission is
contained in information so furnished in writing by such Investor for use
therein. The provisions of this paragraph 4M are in addition to, and not in
limitation of, the provisions of the Shareholder Agreement.
4N. Notices of Certain Events. Holdings shall promptly give notice to each
holder of Securities (i) of any default or event of default under any
contractual obligation of Holdings or any of its Subsidiaries if such default or
event of default, individually or in the aggregate, relates to a contractual
obligation equal to or in excess of $250,000 or (ii) of any pending or
threatened litigation, investigation or proceeding to which Holdings or any of
its Subsidiaries is or is threatened to be a party which, if such pending or
threatened litigation, investigation or proceeding were adversely determined,
would create a liability of Holdings or its Subsidiaries equal to or in excess
of $250,000 that is not fully covered by insurance held by Holdings or its
Subsidiaries. Any notice delivered pursuant to this paragraph 4N shall be
accompanied by an Officer's Certificate specifying the details of the occurrence
referred to therein and stating what action Holdings proposes to take with
respect thereto.
4O. Board Nominee. As long as the Investors as a group hold either (i)
fifteen percent (15%) of the sum of (A) the shares of Common Stock issued to
them on the Closing Date and (B) the Warrants and/or the underlying shares of
Common Stock issued to them on the Closing Date or (ii) twenty five percent
(25%) of the shares of Exchangeable Preferred Stock issued to them on the
Closing Date, then the Investors shall collectively have the right to designate
one (1) member to the Board of Directors of Holdings. Any director designated by
the Investors shall receive (A) all materials distributed to the Board of
Directors of Holdings whether provided to directors in advance of, during or
after, any meeting of the applicable Board of Directors, regardless of whether
such director shall be in attendance at any such meeting, (B) the same
compensation other
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outside members of the Board of Directors of Holdings shall receive in his or
her capacity as a director and (C) reimbursement of the reasonable out-of-pocket
expenses of such director incurred in attending the meetings of the Board of
Directors of Holdings. For purposes of this paragraph, the term "Investors"
shall mean the Investors on the Closing Date.
4P. Special Purpose Corporation. Holdings will not engage in any activity,
issue any securities, incur any Indebtedness for borrowed money or incur any
other material liability, or create or permit to exist any Lien on its assets,
other than the ownership of the Common Stock and related de minimus activities
incidental thereto. Notwithstanding the foregoing sentence, Holdings may (i)
engage in any activity incidental to the maintenance of the corporate existence
of Holdings and compliance with applicable law, (ii) enter into and perform the
obligations of Holdings under the Related Documents (including without
limitation the incurrence of any Indebtedness pursuant to the Shareholder
Agreement), (iii) enter into (or issue, as applicable), perform the obligations
of Holdings under and exercise the rights of Holdings under the Hamilton
Preferred Stock and stock options exercisable for common stock of Holdings or
Sunderland Industrial Holdings Corporation granted to employees of the Company
and (iv) issue additional shares of Common Stock, so long as 100% of the net
cash proceeds of any such issuance are contributed by Holdings to the capital of
the Company or are used to repay any Indebtedness incurred pursuant to the
Shareholder Agreement.
4Q. Environmental Laws. (i) Holdings will comply with, and will cause each
of its Subsidiaries to comply with, and use its reasonable best efforts to
ensure compliance by all tenants and subtenants and with respect to all of its
assets with, all licenses, permits and other authorizations required under all
applicable laws, regulations and other lawful requirements of Governmental
Authorities relating to pollution or to the protection of the environment (the
"Environmental Laws") and obtain and comply with and maintain, and use its best
efforts to ensure that all tenants and subtenants obtain and comply with and
maintain, any and all licenses, approvals, registrations or permits required by
Environmental Laws, except to the extent that failure to so comply or to obtain
and comply with and maintain such licenses, approvals, registrations and permits
does not have, and could not reasonably be expected to result in, a Material
Adverse Effect.
(ii) Holdings will, and will cause each of its Subsidiaries to, conduct and
complete all investigations, studies, sampling and testing, and all remedial,
removal and other actions, required under Environmental Laws and timely comply
with all lawful orders and directives of all Governmental Authorities with
respect to Environmental Laws, except to the extent that the same are being
contested in good faith by appropriate proceedings and the pendency of such
proceedings
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would not have a Material Adverse Effect.
(iii) Holdings will, and will cause each of its Subsidiaries to, notify the
holders of the Securities of any of the following that is reasonably likely to
have a Material Adverse Effect:
(a) any claim with respect to any Environmental Law that Holdings or
any of its Subsidiaries receives, including one to take or pay for any
remedial, removal, response or cleanup or other action with respect to any
hazardous substance, hazardous waste, contaminant, pollutant or toxic
substance (as such terms are defined in any applicable Environmental Law)
(collectively, "Hazardous Substances") contained on or generated from any
property owned or leased by Holdings or any of its Subsidiaries;
(b) any notice of any alleged violation of or knowledge by Holdings or
any of its Subsidiaries of a condition that might reasonably result in a
violation of any Environmental Law; and
(c) any commencement of or receipt of written intent to commence any
judicial or administrative proceeding or investigation alleging a violation
or potential violation of any requirement of any Environmental Law by
Holdings or any of its Subsidiaries.
(b) Without limiting the generality of paragraph 8B, Holdings will, and
will cause each of its Subsidiaries to, indemnify the Investors and each holder
from time to time of the Securities and each of their respective directors,
officers, employees, agents, partners and Affiliates (each such person being
called an "Indemnitee" and collectively, the "Indemnitees") against, and hold
each Indemnitee harmless from, any claims, demands, penalties, fines,
liabilities, settlements, damages, costs and expenses (including reasonable
counsel fees, charges and disbursements) of whatever kind or nature arising out
of, or in any way relating to, the violation of, noncompliance with or liability
under any Environmental Laws applicable to the operations of Holdings or any
orders, requirements or demands of Governmental Authorities related thereto,
including, without limitation, attorneys' and consultants' fees, investigation
and laboratory fees, Response Costs (as such term is defined in CERCLA), court
costs and litigation expenses, except to the extent that any of the foregoing
are found by a final and nonappealable decision of a court of competent
jurisdiction to have resulted from the gross negligence or willful misconduct of
the Indemnitee seeking indemnification therefor.
4R. Confidentiality. As to so much of the information and other material
furnished under or in connection with this Agreement (whether furnished before,
on or after the date hereof, including without limitation information furnished
pursuant to
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paragraphs 4A and 4C hereof) as constitutes or contains confidential business,
financial or other information of Holdings and its Subsidiaries, each of the
Investors covenants for itself and its directors, officers and partners that it
will use due care to prevent its officers, directors, partners, employees,
counsel, accountants and other representatives from disclosing such information
to Persons other than their respective authorized employees, counsel,
accountants, stockholders, partners, limited partners and other authorized
representatives; provided, however, that each Investor may disclose or deliver
any information or other material disclosed to or received by it should such
Investor be advised by its counsel that such disclosure or delivery is required
by law, regulation or judicial or administrative order. For purposes of this
paragraph 4Q, "due care" means at least the same level of care that such
Investor would use to protect the confidentiality of its own sensitive or
proprietary information.
5. REPRESENTATIONS AND WARRANTIES OF HOLDINGS AND THE COMPANY. Each of
Holdings and the Company represents and warrants to each Investor, in each case
after giving effect to the Acquisition, that:
5A. Organization, Qualification and Authority. Each of Holdings and its
Subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation and is duly
qualified to do business as a foreign corporation and in good standing in each
jurisdiction in which the character of its properties or the nature of its
business makes such qualification necessary, except where the failure to so
qualify would not have a Material Adverse Effect. Each of Holdings and its
Subsidiaries has the corporate power to own its properties and to carry on its
business as now being conducted. Each of Holdings and the Company has all
requisite corporate power and authority to enter into this Agreement and to
issue and sell its respective Securities hereunder. Holdings has all requisite
corporate power and authority to enter into the Warrant Purchase Agreement and
the Shareholder Agreement and to issue and sell its Warrants under the Warrant
Purchase Agreement. The Company has all requisite corporate power and authority
to file the Certificate of Designation with the Secretary of State of the State
of Delaware. Holdings has the requisite corporate power and authority to issue
the shares of Common Stock upon exercise of the Warrants. Each of Holdings and
the Company has the requisite corporate power and authority to carry out the
transactions contemplated hereby and thereby to be performed by it, and the
execution, delivery and performance hereof and thereof have been duly authorized
by all necessary corporate action. This Agreement constitutes, and each other
agreement (including the Warrant Purchase Agreement and the Shareholder
Agreement) or instrument (including the Securities) executed and delivered by
Holdings and the Company pursuant hereto or thereto or in connection herewith or
therewith will constitute, legal, valid and binding obligations of Holdings and
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the Company enforceable against Holdings and the Company in accordance with
their respective terms, except as such enforceability may be limited by (a)
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting the enforcement of creditors' rights generally and (b) general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law).
5B. Financial Statements.
(i) The Company has furnished the Investors with the audited balance sheet
of the Company and its Subsidiaries as of December 31, 1995, together with the
related statements of income, changes in stockholders' equity and cash flow of
the Company and its Subsidiaries for such period. Such financial statements
(including any related schedules and notes) have been prepared in accordance
with GAAP consistently applied throughout the period in question and show all
material liabilities, except as set forth on Schedule 5B hereto, direct or
contingent, required to be shown in accordance with GAAP consistently applied
throughout the period in question and fairly present, in all material respects,
the financial condition of the Company and its Subsidiaries.
(ii) The Company has furnished the Investors with the unaudited balance
sheet of the Company and its Subsidiaries as of the Closing Date, after giving
pro forma effect to the Acquisition. Such pro forma balance sheet has been
prepared by the Company in good faith, based upon assumptions used to prepare
the pro forma financial information contained in the Confidential Information
Memorandum (which assumptions are believed by the Company on the date hereof and
on the Closing Date to be reasonable), is based on the best information
available to the Company as of the date of delivery thereof, accurately reflects
all material adjustments required to be made to give effect to the Acquisition
and presents fairly on a pro forma basis the estimated consolidated financial
position of the Company and its Subsidiaries as of December 31, 1995, assuming
that the Acquisition had actually occurred on that date. The Company has no
reason to believe that such pro forma balance sheet is misleading in any
material respect in light of the circumstances existing at the time of the
preparation thereof.
(iii) There has been no material adverse change in the business, condition
(financial or other), assets, properties, rights, operations or prospects of the
Company and its Subsidiaries, taken as a whole, since December 31, 1995.
5C. Capital Stock and Related Matters. As of the Closing Date, and after
giving effect to the transactions contemplated hereby and pursuant to the
Related Documents, the capitalization of Holdings and each of its Subsidiaries
is set forth on Schedule 5C. All issued and outstanding shares of
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Holdings and the Company shall have been duly and validly issued, fully paid and
non-assessable and no shares of capital stock of Holdings will be owned or held
by or for the account of Holdings or any of its Subsidiaries.
Except as set forth on Schedule 5C hereto, (i) neither Holdings nor any of
its Subsidiaries will have outstanding any securities convertible into or
exchangeable for any shares of capital stock or any rights (either preemptive or
other) to subscribe for or to purchase, or any options for the purchase of, or
any agreements providing for the issuance (contingent or otherwise) of, or any
calls, commitments or claims of any other character relating to the issuance of,
any capital stock, or any stock or securities convertible into or exchangeable
for any capital stock and (ii) neither Holdings nor any of its Subsidiaries will
be subject to any obligation (contingent or otherwise) to repurchase or
otherwise acquire or retire any shares of its capital stock or warrants or
options to purchase shares of its capital stock.
Neither Holdings nor any of its Subsidiaries (i) is a party to any
agreement (other than this Agreement and the Shareholder Agreement) restricting
the transfer of any shares of its capital stock except as set forth on Schedule
5C hereto or (ii) will have filed or be required to file, pursuant to Section 12
of the Exchange Act, a registration statement relating to any class of debt or
equity securities as of the date hereof.
5D. Actions Pending. Except as set forth on Schedule 5D hereto, there is no
action, suit, investigation or proceeding upon which service of process or other
actual notice has been received that is pending or, to the knowledge of Holdings
or the Company, threatened against Holdings or any of its respective
Subsidiaries or any of their properties or rights, by or before any court,
arbitrator or administrative or governmental body, which if adversely decided,
could have a Material Adverse Effect.
5E. Outstanding Debt; Defaults. Except as set forth on Schedule 5E hereto,
neither Holdings nor any of its Subsidiaries (i) is in default under the
provisions of any instrument evidencing Indebtedness or of any agreement
relating thereto, (ii) is in default under its Certificate of Incorporation (as
amended to date) or By-laws, (iii) is in violation of or in default under or
with respect to any indenture, mortgage, lease or any other contract or
agreement to which it is a party or by which it or any of its property is bound
or affected in any respect which could have a Material Adverse Effect or (iv) is
in material default with respect to any order, writ, injunction or decree of any
court or any Federal, state, municipal or other domestic or foreign governmental
department, commission, board, bureau, agency or instrumentality, and there
exists no condition, event or act which constitutes, or which after notice,
lapse of time, or both, would constitute, such a violation or default under any
of the foregoing.
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5F. Title to Properties. Each of Holdings and its Subsidiaries has (i)
marketable, sufficient and legal title to its real property (other than real
properties which it leases from others) and (ii) good title to all of its other
properties and assets (other than properties and assets which it leases from
others), in both cases subject to no Lien of any kind except Liens permitted
pursuant to Section 6.02 of the Senior Credit Agreement. Each of Holdings and
its Subsidiaries enjoys peaceful and undisturbed possession under all leases
necessary in any material respect for the operation of its properties and assets
and all such leases are valid and subsisting and in full force and effect.
5G. Taxes. Each of Holdings and its Subsidiaries has filed all Federal,
state and other income tax returns which are required to be filed, and each has
paid all taxes as shown on said returns and on all assessments received by it to
the extent that such taxes have become due, or except such as any of the
foregoing are being contested in good faith by appropriate proceedings for which
adequate reserves have been established in accordance with GAAP; and no tax lien
has been filed and no claim is being asserted with respect to any tax or other
similar charge. To the extent (and only to the extent) that the foregoing
representations of this paragraph 5G apply to liabilities related to the
Acquired Companies, which liabilities constitute "Retained Liabilities" under
the Stock Purchase Agreement, dated March 11, 1996, by and between Tredegar
Investments, Inc. and Precise Technology, Inc., such representations are made to
the knowledge of Holdings and the Company and shall not be deemed violated by
any matter that would not have a Material Adverse Effect, notwithstanding the
express terms of such representations.
5H. Conflicting Agreements. Except as set forth on Schedule 5H hereto,
neither the execution or delivery of the Related Documents nor the offering,
issuance and sale of the Securities or the shares of Common Stock issuable upon
exercise of the Warrants, nor fulfillment of or compliance with the terms and
provisions hereof and thereof, will conflict in any material respect with, or
result in a material breach of the terms, conditions or provisions of, or
constitute a material default under, or result in any material violation of, or
result in the creation of any material Lien upon any of the properties or assets
of Holdings or any of its Subsidiaries pursuant to (i) the Certificate of
Incorporation or By-laws of Holdings or any of its Subsidiaries, or (ii) any
award of any arbitrator or any material agreement (including any agreement with
stockholders), instrument, order, judgment, decree, statute, law, rule or
regulation to which Holdings or any of its Subsidiaries is subject. Except as
set forth on Schedule 5H hereto, neither Holdings nor any of its Subsidiaries is
a party to, or otherwise subject to any provision contained in, any instrument
evidencing Indebtedness of Holdings or any of its Subsidiaries, any material
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agreement relating thereto or any other contract or agreement (including its
Certificate of Incorporation and By-laws) which contains dividend or redemption
limitations on any capital stock of Holdings or any of its Subsidiaries, except
for the Related Documents.
5I. Offering of Securities. The offer, sale and issuance of the Securities
pursuant to this Agreement and the issuance of the Common Stock upon exercise of
the Warrants, do not require registration of such securities under the
Securities Act or registration or qualification under any applicable state "blue
sky" or securities laws (or if so required, has been so registered or
qualified). Neither Holdings nor the Company have taken any action which would
subject the issuance or sale of any of the Securities to the provisions of
Section 5 of the Securities Act or violate the provisions of any securities or
"blue sky" law of any applicable jurisdiction.
5J. Broker's or Finder's Commissions. Except for the fee to be paid to
Donaldson, Lufkin & Jenrette Securities Corporation for services rendered by it
as placement agent, no broker's or finder's fee or commission will be payable by
Holdings or any of its Subsidiaries with respect to the issuance and sale of the
Securities or the transactions contemplated hereby or under the Related
Documents.
5K. Regulation G, etc. Neither Holdings nor any of its Subsidiaries owns or
has any present intention of acquiring, any "margin stock" as defined in
Regulation G (12 CFR Part 207) of the Board of Governors of the Federal Reserve
System (herein called a "margin stock"). None of the proceeds resulting from the
sale of the Securities will be used, directly or indirectly, for the purpose of
purchasing or carrying any margin stock or for the purpose of reducing or
retiring any indebtedness which was originally incurred to purchase or carry
margin stock or for any other purpose which might constitute this transaction a
"purpose credit" within the meaning of Regulation G. Neither Holdings nor any of
its Subsidiaries nor any agent acting on its behalf has taken or will take any
action which might cause this Agreement or the Securities to violate Regulation
G, Regulation T, Regulation X or any other regulation of the Board of Governors
of the Federal Reserve System or to violate the Exchange Act, in each case as in
effect now or as the same may hereafter be in effect.
5L. Environmental Matters. Except as set forth on Schedule 5L hereto, to
the best knowledge of Holdings or the Borrower:
(i) Holdings and each of its Subsidiaries is in compliance with all
licenses, permits and other authorizations required under all Environmental
Laws, with the exceptions of instances that will not in the aggregate result in
any Material Adverse Effect.
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(ii) Neither Holdings nor any of its Subsidiaries has received written
notice of any failure to comply with any applicable Environmental Law that has
not been fully satisfied so as to bring the subject property into material
compliance with, all Environmental Laws.
(iii) All licenses, permits or registrations (or any extensions thereof)
required under any Environmental Law for the business of Holdings or any of its
Subsidiaries have been obtained and Holdings and its Subsidiaries will be in
compliance therewith, except in such instances as will not in the aggregate
result in a Material Adverse Effect.
(iv) Neither Holdings nor any of its Subsidiaries is in noncompliance with,
breach of or default under any applicable writ, order, judgment, injunction or
decree where such noncompliance, breach or default would materially and
adversely affect the ability of Holdings or any of its Subsidiaries to operate
any real property owned or leased by them and no event has occurred and is
continuing that, with the passage of time or the giving of notice or both, would
constitute such noncompliance, breach or default thereunder.
(v) Except in such instances that will not in the aggregate result in a
Material Adverse Effect, (A) no Hazardous Substance has been Released (as such
term is defined in CERCLA) (and no oral or written notification of such Release
has been filed) (whether or not in a reportable or threshold planning quantity)
at, on or under any property owned or leased by Holdings or any of its
Subsidiaries, or to be acquired or leased by Holdings or any of its
Subsidiaries, during the period of Holdings' or any of its Subsidiaries'
ownership or lease of such property, or to the knowledge of holdings at any time
previous to such ownership or lease, under conditions that require remedial
action under applicable Environmental Laws and (B) no property now or previously
owned or leased by Holdings or any of its Subsidiaries has, directly or
indirectly, transported or arranged for the transportation of any Hazardous
Substances to any site listed, or proposed for listing, on the National
Priorities List promulgated pursuant to CERCLA, on CERCLIS (as defined in
CERCLA) or on any similar Federal, state or foreign list of sites requiring
investigation or cleanup. Neither Holdings nor any of its Subsidiaries is aware
of any event, condition or circumstance involving environmental pollution or
contamination, or employee safety or health relating to the use or handling of,
or exposure to, Hazardous Substances, that could result in a Material Adverse
Effect.
5M. ERISA. Each of Holdings and its Subsidiaries has fulfilled their
respective obligations under the minimum funding standards of ERISA and the Code
with respect to each Pension Plan and is in compliance in all material respects
with the provisions of ERISA and the Code. Neither Holdings nor any of its
Subsidiaries has incurred any liability to the PBGC (other than
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annual premiums due to the PBGC) or a Pension Plan under Title IV of ERISA. The
execution and delivery by Holdings and the Company of this Agreement and the
purchase and delivery of the Securities will not involve any prohibited
transaction within the meaning of ERISA or Section 4975 of the Code for which a
statutory or administrative exemption is not available. Holdings has delivered
to the Investors a complete list and accurate description of each Pension Plan
or ocher employee benefit plan covered by ERISA maintained or contributed to by
Holdings and each of its Subsidiaries.
5N. Possession of Franchises, Licenses, etc. Holdings and each of its
Subsidiaries possesses all franchises, certificates, licenses, permits and other
authorizations from governmental political subdivisions or regulatory
authorities, that are necessary for the ownership, maintenance and operation of
its properties and assets, except where the failure to be in such compliance
would not have a Material Adverse Effect, and Holdings and each of its
Subsidiaries is not in violation of any thereof in any material respect.
5O. Patents, etc. Holdings and each of its Subsidiaries owns or has the
right to use all patents, trademarks, service marks, trade names, copyrights,
industrial designs, licenses and other rights, free from non-customary
burdensome restrictions, which are necessary for the operation of its business
substantially as presently conducted. No product, process, method, substance,
part or other material presently sold by or employed by Holdings in connection
with its business may infringe any patent, trademark, service mark, trade name,
copyright, industrial design, license or other right owned by any other Person.
No claim or litigation is pending or threatened against or affecting Holdings or
any of its Subsidiaries contesting their right to sell or use any such product,
process, method, substance, part or other material which would prevent, inhibit
or render obsolete the production or sale of any products of, or substantially
reduce the projected revenues of, Holdings or any of its Subsidiaries, or
otherwise have a Material Adverse Effect.
5P. Holding Company and Investment Company Status. Neither Holdings nor any
of its Subsidiaries is a "holding company", or a "subsidiary company" of a
"holding company", or an "affiliate" of a "holding company" or of a "subsidiary
company" of a "holding company", or a "public utility", within the meaning of
the Public Utility Holding Company Act of 1935, as amended, or a "public
utility" within the meaning of the Federal Power Act, as amended. Neither
Holdings nor any of its Subsidiaries is an "investment company" or a company
"controlled" by an "investment company" within the meaning of the Investment
Company Act of 1940, as amended, or an "investment adviser" within the meaning
of the Investment Advisers Act of 1940, as amended.
5Q. Governmental Consents. Neither the nature of
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Holdings or any of its Subsidiaries nor any of their businesses or properties,
nor any relationship between Holdings or any of its Subsidiaries and any other
Person, nor any circumstance in connection with the offer, issue, sale or
delivery of the Securities being purchased by the Investors hereunder is such as
to require on behalf of Holdings or any of its Subsidiaries any consent,
approval or other action by or any notice to or filing with any court or
administrative or governmental body in connection with the execution, delivery
and performance of this Agreement, the other Related Documents, the offer,
issue, sale or delivery of the Securities being purchased hereunder, the
issuance of the shares of Common Stock upon exercise of the Warrants or
fulfillment of or compliance with the terms and provisions hereof or the
Securities being purchased hereunder, except (i) for such filings or consents
all of which have been heretofore made or obtained and (ii) any filings that may
be required in connection with the registration of the Securities under federal
and state securities laws in connection with any transfer of Securities after
the Closing Date.
5R. Insurance Coverage. The business and properties of Holdings and each of
its Subsidiaries are insured for the benefit of Holdings, each of its
Subsidiaries and the lenders party from time to time to the Senior Credit
Agreement in amounts deemed adequate by Holdings' management against risks
usually insured against by Persons operating businesses similar to those of
Holdings and each of its Subsidiaries in the localities where such properties
are located.
5S. Subsidiaries. Schedule 5S hereto sets forth as of the Closing Date a
list of all the Subsidiaries (including the Acquired Companies) after giving
effect to the Acquisition and the respective jurisdictions of organization
thereof. All the outstanding shares of stock of such Subsidiaries have been
validly issued and are fully paid and non-assessable and are owned directly or
indirectly by Holdings free and clear of any Lien or claim, subject to the
pledge by Holdings of all of the Common Stock of the Company and its
Subsidiaries pursuant to the Senior Credit Agreement.
5T. Disclosure. This Agreement and the other Related Documents, and the
other documents, certificates and written statements furnished to the Investors
by or on behalf of Holdings in connection herewith or therewith do not contain
any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements contained herein and therein not
misleading.
5U. Registration Rights. Except as contemplated by the Shareholder
Agreement and the Pledge Agreement, dated March 28, 1996, between Holdings and
NationsBank, N.A., no Person has the right to cause Holdings or any of its
Subsidiaries to effect the registration under the Securities Act of any shares
of Common Stock or any other securities (including debt securities) of
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Holdings or any of its Subsidiaries.
5V. Absence of Foreign or Enemy Status. Neither Holdings nor any of its
Subsidiaries is (i) a "national" of a foreign country designated in Executive
Order No. 8389, as amended, or of any "designated enemy country" as defined in
Executive Order No. 9193, as amended, of the President of the United States of
America within the meaning of said Executive Orders, as amended, or of any
regulation issued thereunder, or a "national" of any "designated foreign
country" within the meaning of the Foreign Assets Control regulations, 31 CFR,
Part 500, as amended, or of the Cuban Assets Control Regulations, 31 CFR, Part
515, as amended, of the United States Treasury Department; or (ii) an "Iranian
entity" or a "person subject to the jurisdiction of the United States" in which
an "Iranian entity" has any "interest" within the meaning of the Iranian Assets
Control Regulations, 31 CFR, Part 535, as amended.
5W. Agreements With Affiliates. Except as set forth on Schedule 5W hereto,
neither Holdings nor any of its Subsidiaries is a party to any contract or
agreement with, or any other commitment to, an Affiliate of Holdings or any of
its Subsidiaries.
5X. Equity of Holdings. As of the Closing Date, the shares of Common Stock
purchased pursuant hereto together with the shares of Common Stock obtained
through such exercise of the Warrants would represent in the aggregate the
percentage of the Fully Diluted Outstanding Shares of Holdings' Common Stock set
forth on Schedule 5X hereto.
6. REPRESENTATIONS AND WARRANTIES OF THE INVESTORS. Each Investor
represents and warrants that it is an "accredited investor," as such term is
defined in Regulation D under the Securities Act and that it is acquiring the
Securities to be purchased by it hereunder for its own account for the purpose
of investment and not with a view to or for sale in connection with any
distribution thereof in violation of the Securities Act; provided, however, that
nothing herein contained shall prevent the Investors from selling or
transferring any Securities (i) pursuant to Rule 144 of the Commission
promulgated under the Securities Act (or any similar rule or rules then in
force) if such rule is available or (ii) in any other transaction that, in the
opinion of Willkie Farr & Gallagher (or such other special counsel selected by
the Investors and reasonably acceptable to Holdings) addressed to Holdings and
the Company, is exempt from the registration provisions of the Securities Act
and applicable state securities laws. The fees and expenses of counsel in
connection with any such opinion shall be borne by Holdings. In addition, each
Investor represents and warrants that it has full power and authority to enter
into and perform its obligations under this Agreement and that this Agreement
has been duly authorized, executed and delivered by a Person authorized to do
so.
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7. DEFINITIONS. For the purpose of this Agreement, and in addition to terms
defined elsewhere in this Agreement, the following terns shall have the
following meanings. In addition, all terms of an accounting character not
specifically defined herein shall have the meanings assigned thereto by
accounting principles generally accepted in the United States of America.
"Acquired Companies" shall mean Tredegar Molded Products Company, a
Virginia corporation, and its direct and indirect subsidiaries.
"Affiliate" shall mean, with respect to any Person, a Person directly or
indirectly controlling, controlled by, or under direct or indirect common
control with, such Person. A Person shall be deemed to control a corporation if
such Person possesses, directly or indirectly, the power to direct or cause the
direction of the management and policies of such corporation, whether through
the ownership of voting securities, by contract or otherwise. The Investors
shall not be deemed to be an Affiliate of Holdings or any of its Subsidiaries.
"Business Day" shall mean any day (other than a day which is a Saturday,
Sunday or legal holiday in the State of North Carolina, New York or
Pennsylvania) on which banks are open for business in Charlotte, North Carolina,
New York City and Pittsburgh.
"CERCLA" shall mean the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended (42 U.S.C. ss.ss. 9601 et seq.) and any
regulations promulgated thereunder.
"Certificate of Designation" shall have the meaning set forth in paragraph
1B.
"Closing" shall have the meaning specified in paragraph 2B.
"Closing Date" shall have the meaning specified in paragraph 2B.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Commission" shall mean the United States Securities and Exchange
Commission.
"Common Stock" shall have the meaning specified in paragraph 1A.
"Company" shall have the meaning specified in the preamble.
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"Confidential Information Memorandum" shall mean the Confidential
Information Memorandum, dated February 1996, delivered to the Investors by the
Company's agent, Donaldson, Lufkin & Jenrette Securities Corporation.
"Current Indebtedness" means any obligation for borrowed money (including
notes payable and drafts accepted representing extensions of credit whether or
not representing obligations for borrowed money) payable on demand or within a
period of one year from the date of creation thereof; provided that any
obligation shall be treated as Funded Indebtedness, regardless of its term, if
such obligation is renewable pursuant to the terms thereof or of a revolving
credit or similar agreement effective for more than one year after the date of
the creation of such obligation, or may be payable out of the proceeds of a
similar obligation pursuant to the terms of such obligation or of any such
agreement. Any obligation secured by a Lien on, or payable out of the proceeds
of production from, property of the Corporation or any Subsidiary shall be
deemed to be Funded or Current Indebtedness, as the case may be, of the
Corporation or such Subsidiary even though such obligation shall not be assumed
by the Corporation or such Subsidiary.
"Environmental Laws" shall have the meaning specified in paragraph 4P.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time. Section references to ERISA are to ERISA as in effect
at the date of this Agreement and any subsequent provisions of ERISA amendatory
thereof, supplemental thereto or substituted therefor.
"ERISA Affiliate" shall mean each trade or business (whether or not
incorporated) which together with Holdings or a Subsidiary would be deemed to be
a "single employer" within the meaning of Section 4001 of ERISA immediately
following the Closing.
"Exchange Act" shall mean the United States Securities Exchange Act of
1934, as amended.
"Exchange Act Registration Statement" shall have the meaning specified in
paragraph 4L.
"Exchangeable Preferred Stock" shall have the meaning specified in
paragraph 1B.
"Fully Diluted Outstanding Shares" shall mean, when used with reference to
Common Stock on any date of determination, all shares of Common Stock of
Holdings Outstanding at such date and all shares of Common Stock of Holdings
issuable in respect of the Warrants issued pursuant to the Warrant Purchase
Agreement and any other warrants, options or convertible securities.
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"Funded Indebtedness" shall mean and include without duplication any
obligation payable more than one year from the date of the creation thereof
(including the current portion of Funded Indebtedness), which under generally
accepted accounting principles is shown on the balance sheet as a liability
(including, without limitation, capitalized lease obligations and excluding
reserves for deferred income taxes and other reserves to the extent that such
reserves do not constitute an obligation).
"GAAP" shall mean generally accepted accounting principles consistently
applied throughout the period or periods in question.
"Governmental Authority" shall mean any governmental agency, authority,
instrumentality or regulatory body, other than a court or other tribunal, in
each case whether federal, state, local or foreign.
"Hamilton Preferred Stock" means the 331.46 shares of 9- 1/2% Preferred
Stock, $10,000 per share stated value, of Holdings issued to Hamilton Holdings
Ltd. Corporation.
"Hazardous Substances" shall have the meaning specified in paragraph 4P.
"Indebtedness" shall mean Funded Indebtedness and/or Current Indebtedness.
"Indemnitee" shall have the meaning specified in paragraph 4P.
"Investor Parties" shall have the meaning set forth in paragraph 4M.
"Investors" shall have the meaning set forth in the preamble.
"Lien" shall mean any mortgage, pledge, security interest, encumbrance,
lien or charge of any kind, including, without limitation, any agreement to give
any of the foregoing, any conditional sale or other title retention agreement,
any lease in the nature thereof and the filing of or agreement to file any
financing statement under the Uniform Commercial Code of any jurisdiction.
"margin stock" shall have the meaning set forth in paragraph 5K.
"Material Adverse Effect" shall mean (i) a material adverse effect on the
business, condition (financial or other), assets, properties, rights, operations
or prospects of Holdings and its Subsidiaries taken as a whole or (ii) any
effect which could materially adversely affect the ability of Holdings or the
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Company to perform their respective obligations under any of the Related
Documents.
"Note Purchase Agreement" shall have the meaning set forth in paragraph 3O.
"Officer's Certificate" of a Person shall mean a certificate of the
President, one of the Vice Presidents or the Treasurer or Controller of such
Person.
"Outstanding" shall mean, when used with reference to Common Stock, at any
date as of which the number of shares thereof is to be determined, all issued
shares of Common Stock.
"PBGC" shall mean the Pension Benefit Guaranty Corporation established
pursuant to Section 4002 of ERISA, or any successor entity thereto.
"Pension Plan" shall mean any single-employer plan, as defined in Section
4001 of ERISA and subject to Title IV of ERISA, which is maintained or
contributed to (or previously maintained or contributed to during the five
calendar years preceding the Closing) for employees of Holdings, any of its
Subsidiaries or any ERISA Affiliates.
"Person" shall mean and include an individual, a partnership, a joint
venture, a corporation, a trust, an unincorporated organization and a government
or any department or agency thereof.
"Property" shall mean any interest in any kind of property or asset,
whether real, personal or mixed, or tangible or intangible.
"Public Offering" shall mean the closing of a public offering of securities
pursuant to a registration statement declared effective under the Securities
Act, except that a Public Offering shall not include an offering made in
connection with a business acquisition or an employee benefit plan.
"Related Documents" shall mean this Agreement, the Certificate of
Designation, the Warrant Purchase Agreement, the Shareholder Agreement, the Note
Purchase Agreement and the Senior Credit Agreement.
"Released" shall have the meaning set forth in paragraph 5L.
"Reportable Event" shall mean an event described in Section 4043(b) of
ERISA with respect to which the 30-day notice requirement has not been waived by
the PBGC.
"Securities" shall have the meaning set forth in paragraph 1B.
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"Securities Act" shall mean the United States Securities Act of 1933, as
amended.
"Senior Credit Agreement" shall have the meaning set forth in paragraph 3O.
"Shareholder Agreement" shall mean the Shareholder Agreement between
Holdings, certain shareholders thereof and the Investors in the form of Exhibit
E hereto.
"Subordinated Debt" shal1 have the meaning specified in paragraph 3O.
"Subsidiary" as to any Person shall mean a corporation or other entity of
which shares or similar stock having ordinary voting power to elect a majority
of the board of directors or other managers of such corporation or entity are at
the time owned, directly or indirectly, through one or more intermediaries, by
such Person. Except as otherwise expressly indicated herein, references to
Subsidiaries shall mean any Subsidiaries of Holdings.
"Warrants" shall have the meaning set forth in paragraph 3M.
"Wholly owned" shall mean with respect to any designated Person that all of
the shares or similar stock having ordinary voting power to elect the board of
directors and Indebtedness in respect of borrowing of such Person is owned by
the specified Person or by one or more wholly owned subsidiaries of such
specified Person, or both.
8. MISCELLANEOUS.
8A. Home Office Payment. Holdings and the Company agree that, so long as
the Investors shall hold any Exchangeable Preferred Stock and/or Warrants, all
payments of dividends of redemption or otherwise shall be made not later than
12:00 noon, New York time, on the date such payment is due, by transfer of
immediately available funds for credit to the Investors. Such payments shall be
made to the account of the Investors specified on the attachments to the
signature pages hereto or such other account in the United States as the
Investors may designate in writing, notwithstanding any contrary provision
contained herein or in the Certificate of Incorporation of Holdings or the
Company with respect to the place of payment. Dividends on the shares of Common
Stock shall be paid to the holders thereof at the registered address of such
holders as shown on the records of Holdings. Each of Holdings and the Company
agrees to afford the benefits of this paragraph 8A to any institutional investor
of recognized standing which is the direct or indirect transferee of any
Security.
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8B. Indemnification. Holdings and the Company agree, whether or not the
transactions hereby contemplated shall be consummated, to pay, and save the
Indemnitees harmless against liability for the payment of, all reasonable
out-of-pocket expenses arising in connection with the transactions and other
agreements and instruments contemplated by this Agreement, including all taxes,
together in each case with interest and penalties, if any, and any income tax
payable by the Indemnitees in respect of any reimbursement of amounts payable
pursuant to this paragraph 8B (but not if such income tax is payable by an
Indemnitee solely because it has deducted from income the expenses so reimbursed
to it), which may be payable in respect of the execution and delivery of this
Agreement including reasonable fees, expenses and disbursement of counsel
incurred in connection with the preparation and negotiation of this Agreement,
any other agreement or instrument to be executed and delivered in connection
with this Agreement, any subsequent modification hereof or thereof or consent
hereunder or thereunder (regardless of whether any such modifications or consent
becomes effective) or the execution, delivery or acquisition of capital stock
issued under or pursuant to this Agreement, printing, reproduction and similar
costs, and the reasonable cost and expenses, including reasonable attorneys'
fees, incurred by any Indemnitee in enforcing any of its rights hereunder or
thereunder, including without limitation reasonable costs and expenses incurred
in any bankruptcy case (including reasonable fees and expenses of the
Indemnitee's counsel in connection with such bankruptcy case). The fees of
counsel to the Investors incurred in connection with the preparation and
negotiation of this Agreement shall be paid at the Closing. Each of Holdings and
the Company agrees jointly and severally to indemnify the Indemnitees and hold
them harmless from and against any and all liabilities, losses, damages, costs
and expenses of any kind (including, without limitation, the reasonable fees and
disbursements of the Indemnitees' counsel in connection with any investigative,
administrative or judicial proceeding, whether or not the Indemnitees be
designated a party thereto) which may be incurred by the Indemnitees, relating
to or arising out of this Agreement or the Securities or any actual or proposed
use of the proceeds of the sale of Securities hereunder, provided that no
Indemnitee shall have the right to be indemnified hereunder for its own gross
negligence or willful misconduct as finally determined by a court of competent
jurisdiction. The obligations of Holdings and the Company under this paragraph
8B shall survive the transfer of any Security or shares of Common Stock issuable
upon exercise of any Warrant and the redemption and/or exchange of shares of
Exchangeable Preferred Stock. The indemnification required by this paragraph 8B
shall be made by periodic payments of the amount thereof during the course of
the investigation or defense, as and when bills are received or expense, loss,
damage or liabilities are incurred.
8C. Consent to Amendments. This Agreement may be amended and the observance
of any term of this Agreement may be
29
<PAGE>
waived with (and only with) the written consent of Holdings, the Company and the
holders of at least 66-2/3% of each of the outstanding Exchangeable Preferred
Stock and Warrants (voting as a separate class); provided that this Agreement
may be amended and the observance of any terms of this Agreement may be waived
solely with respect to the holders of either the Exchangeable Preferred Stock or
Warrants, as the case may be, with (and only with) the written consent of
Holdings, the Company and the holders of at least 66-2/3% of the outstanding
Exchangeable Preferred Stock or Warrants, as applicable.
8D. Provisions Applicable if any of the Securities are Sold. The parties
acknowledge that, subject to compliance with applicable securities laws, the
Investors shall be free to transfer the Securities without restriction. In the
event that the Investors should sell or otherwise transfer any of the Securities
or any part thereof to any Person other than Holdings or the Company, if any
Security shall have been transferred to another holder and such holder shall
have designated in writing the address to which communications with respect to
Security shall be mailed, all notices, certificates, requests, statements and
other documents required to be delivered to the Investors by any provision
hereof by reason of the holding of the transferred Security shall also be
delivered to such holder at such address.
8E. Restrictive Legends. Each Security and any security issued in exchange
therefore shall bear the following (or substantially equivalent) legend on the
face or reverse side thereof:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND NOT WITH A VIEW TO OR FOR SALE IN CONNECTION WITH THE
DISTRIBUTION HEREOF. THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), OR ANY STATE SECURITIES LAWS, AND MAY NOT BE PLEDGED, SOLD, OFFERED
FOR SALE, TRANSFERRED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF (A)
REGISTRATION UNDER OR EXEMPTION FROM THE ACT AND ALL APPLICABLE STATE
SECURITIES LAWS AND THE RESPECTIVE RULES AND REGULATIONS THEREUNDER AND (B)
UNDER CERTAIN CIRCUMSTANCES, IF REQUESTED BY [PRECISE HOLDING
CORPORATION/PRECISE TECHNOLOGY, INC.] (THE "COMPANY"), AN OPINION OF
COUNSEL, WHICH COUNSEL SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY, TO
THE EFFECT THAT SUCH TRANSFER DOES NOT VIOLATE THE ACT OR ANY APPLICABLE
STATE SECURITIES LAWS.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS AND
PROVISIONS (INCLUDING TRANSFER RESTRICTIONS) OF A [SECURITIES PURCHASE
AGREEMENT, DATED AS OF MARCH 29, 1996, BY AND
30
<PAGE>
AMONG PRECISE HOLDING CORPORATION, PRECISE TECHNOLOGY, INC. AND CERTAIN
INVESTORS IDENTIFIED THEREIN/SECURITIES PURCHASE AGREEMENT, DATED AS OF
MARCH 29, 1996, BY AMONG PRECISE HOLDING CORPORATION, PRECISE TECHNOLOGY,
INC. AND THE INVESTORS IDENTIFIED THEREIN AND/OR A WARRANT PURCHASE
AGREEMENT, DATED AS OF MARCH 29, 1996, BY AND AMONG PRECISE HOLDING
CORPORATION AND CERTAIN OTHER PARTIES IDENTIFIED THEREIN][AND A SHAREHOLDER
AGREEMENT, DATED AS OF MARCH 29, 1996, BY AND AMONG PRECISE HOLDING
CORPORATION AND CERTAIN OTHER PARTIES IDENTIFIED THEREIN] (AS SUCH
AGREEMENTS MAY BE SUPPLEMENTED, MODIFIED, AMENDED, OR RESTATED FROM TIME TO
TIME, THE "AGREEMENTS"). COPIES OF THE AGREEMENTS ARE AVAILABLE AT THE
EXECUTIVE OFFICES OF THE COMPANY."
In addition, the shares of Common Stock issuable upon exercise of the Warrants
shall bear at the time of issuance a legend in substantially the form set forth
above and any legend required by the state securities or "blue sky" laws of any
state in which a registered holder thereof is resident, unless such shares have
been registered under the Securities Act.
8F. Survival of Representations and Warranties. All representations and
warranties contained herein shall survive the execution and delivery of this
Agreement, regardless of any investigation made by the Investors or on their
behalf. All statements contained in any certificate or other instrument
delivered by or on behalf of Holdings or the Company pursuant to this Agreement
shall be deemed representations and warranties of Holdings and the Company under
this Agreement.
8G. Successors and Assigns. Except as otherwise provided herein, all
covenants and agreements in this Agreement contained by or on behalf of the
parties hereto shall bind and inure to the benefit of the respective successors,
transferees and assigns of the parties hereto whether so expressed or not and
for greater certainty, a purchaser of Exchangeable Preferred Stock or Warrants
from any holder thereof will be entitled to the benefits of this Agreement and
Holdings and the Company shall be deemed to have received express notice in
writing of any such assignment by a request for registration of the Exchangeable
Preferred Stock or Warrants, as the case may be, in the name of a subsequent
purchaser.
8H. Notices. All communications provided for hereunder shall be sent by
first class mail, overnight courier or by fax with hard copy by first class mail
or overnight courier and,
(i) if to the Investors, addressed to the Investors in the manner (except
as otherwise provided in paragraph 8A with respect to payments) in which its
address appears on the
31
<PAGE>
signature page hereof, with a copy to William J. Grant, Jr., Esq., at Willkie
Farr & Gallagher, One Citicorp Center, 153 East 53rd Street, New York, New York
10022-4677, telecopy number (212) 821-8111;
(ii) if to Holdings, addressed to it care of Mentmore Holdings Corporation
at 1430 Broadway, 13th Floor, New York, New York 10018-3308, telecopy number
(212) 391-1393, Attention William L. Remley, with a copies to Richard C.
Hoffman, P.C., at 1430 Broadway, 13th Floor, New York, New York 10018-3308 and
Michael D. Schenker, Esq., at Kelley, McCann & Livingstone, BP America Building,
35th Floor, 200 Public Square, Cleveland, Ohio 44114- 2302, telecopy number
(216) 241-3707;
(iii) if to the Company, addressed to it at 501 Mosside Boulevard, North
Versailles, Pennsylvania 15137, telecopy number (412) 823-4110, Attention John
R. Weeks, with copies to Mentmore Holdings Corporation at 1430 Broadway, 13th
Floor, New York, New York 10018-3308, telecopy number (212) 391-1393, Attention
William L. Remley, Richard C. Hoffman, P.C., at 1430 Broadway, 13th Floor, New
York, New York 10018-3308 and Michael D. Schenker, Esq., at Kelley, McCann &
Livingstone, BP America Building, 35th Floor, 200 Public Square, Cleveland, Ohio
441142302, telecopy number (216) 241-3707;
or to such other address with respect to any party as such party shall notify
the other in writing, and (unless otherwise specified herein) shall be deemed
received 24 hours after it is sent if sent via facsimile with receipt confirmed)
or overnight courier; provided, however, that any such communication to Holdings
or the Company may also, at the option of the Investors, be delivered to any
corporate officer of Holdings.
8I. Descriptive Headings. The descriptive headings of the several Sections
and paragraphs of this Agreement are inserted for convenience only and do not
constitute a part of this Agreement.
8J. GOVERNING LAW: CONSENT TO JURISDICTION. THIS AGREEMENT IS BEING
DELIVERED AND IS INTENDED TO BE PERFORMED IN THE STATE OF NEW YORK, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL
BE GOVERNED BY, THE LAW OP SUCH STATE WITHOUT GIVING EFFECT TO THE CHOICE OF LAW
OR CONFLICTS OF LAW PRINCIPLES THEREOF. THIS AGREEMENT IS EFFECTIVE ONLY WHEN
DELIVERED AND ENTERED INTO BY THE INVESTORS IN NEW YORK. ANY LEGAL ACTION OR
PROCEEDING WITH RESPECT TO THIS AGREEMENT MAY BE BROUGHT IN THE COURTS OF THE
STATE OF NEW YORK OR OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT
OF NEW YORK, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, HOLDINGS HEREBY
ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS. EACH OF HOLDINGS AND
THE COMPANY IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE
AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE
32
<PAGE>
MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO
HOLDINGS OR THE COMPANY AT THEIR RESPECTIVE ADDRESSES SET FORTH IN PARAGRAPH 8J,
SUCH SERVICE TO BECOME EFFECTIVE 30 DAYS AFTER SUCH MAILING. NOTHING HEREIN
SHALL AFFECT THE RIGHT OF THE INVESTORS OR ANY HOLDER OF A SECURITY TO .0SERVE
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR
OTHERWISE PROCEED AGAINST HOLDINGS OR THE COMPANY IN ANY OTHER JURISDICTION.
8K. Delay Fees. If the Closing shall not actually occur on any date on
which the Closing is scheduled to occur, and Holdings or the Company shall have
failed to notify each Investor prior to 10:00 A.M. local time, in the place in
which an Investor is located, on the day prior to such scheduled Closing that
such Closing has been postponed, Holdings or the Company shall pay to each
Investor (as compensation for such Investors loss of fund and administrative
costs) an amount equal to interest on the purchase price for the Securities to
have been purchased by each such Investor on such scheduled date at such
Closing, at the rate per annum equal to the annual dividend rate on the
Exchangeable Preferred Stock, for each day from and including such scheduled
date of Closing to but not including the earlier of the date on which such
Closing actually occurs or the date on which the amount to be paid by each such
Investor as said purchase price is available to such Investor for reinvestment,
but in any case not less than one day's interest; provided, however, that
neither Holdings nor the Company shall owe any Investor any amount under this
paragraph 8K if Holdings and the Company have fulfilled all of their obligations
under this Agreement and such Investor is not willing or able to fulfill its
obligations on the scheduled date of Closing.
8L. Remedies. In case any one or more of the covenants and/or agreements
set forth in this Agreement shall have been breached by Holdings, the Company or
any holder of Securities, then Holdings, the Company or any holder of Securities
(or any of them), as applicable, may proceed to protect and enforce its or their
rights either by suit in equity and/or by action at law, including, but not
limited to, an action for damages as a result of any such breach and/or an
action for specific performance of any such covenant or agreement contained in
this Agreement. Notwithstanding the foregoing or anything else to the contrary
contained herein, if, and to the extent, any Indebtedness is outstanding under
the Senior Credit Agreement, then in the event that any claim by a holder of
Securities against Holdings or the Company is reduced to a cash judgment, such
Investor agrees to assign its rights to such cash judgment to the lenders from
time to time party to the Senior Credit Agreement. The foregoing provision is
intended for the express benefit of, and shall be enforceable by, the lenders
from time to time party to the Senior Credit Agreement. Holdings, the Company or
an Investor acting pursuant to this paragraph 8L, shall be indemnified against
all liability, loss or damage, together with all reasonable costs and expenses
related thereto (including
33
<PAGE>
reasonable legal and accounting fees and expenaes) in accordance with paragraph
8B.
8M. Entire Agreement. This Agreement, the other Related Documents and the
other writings referred to herein or delivered pursuant hereto contain the
entire agreement among the parties with respect to the subject matter hereof and
supersede all prior and contemporaneous arrangements or understandings with
respect thereto.
8N. Severability. Any provision of this Agreement that 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, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
8O. Amendments. This Agreement may not be changed orally, but (subject to
the provisions of paragraph 8C) only by an agreement in writing signed by the
party against whom enforcement of any waiver, change, modification or discharge
is sought.
8P. WAIVER OF TRIAL BY JURY. EACH OF HOLDINGS AND THE COMPANY HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES (TO THE EXTENT PERMITTED BY
APPLICABLE LAW) ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY OF ANY DISPUTE ARISING
UNDER OR RELATING TO THIS AGREEMENT OR ANY OTHER AGREEMENT OR DOCUMENT REFERRED
TO HEREIN AND AGREES THAT ANY SUCH DISPUTE SHALL, AT THE OPTION OF ANY INVESTOR
AS THE CASE MAY BE, BE TRIED BEFORE A JUDGE SITTING WITHOUT A JURY.
8Q. Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original, and it shall not be necessary in making proof
of this Agreement to produce or account for more than one such counterpart.
34
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
and delivered by their respective officers thereunto duly authorized as of the
date first above written.
PRECISE HOLDING CORPORATION
By: /s/ William L. Remley
------------------------------
Name:
Title: President
PRECISE TECHNOLOGY, INC.
By:/s/ William L. Remley
------------------------------
Name:
Title: Vice Chairman
35
<PAGE>
INVESTORS:
The foregoing Agreement is
hereby accepted as of the
date first above written.
DELAWARE STATE EMPLOYEES'
RETIREMENT FUND
c/o Pecks Management Partners Ltd.
One Rockefeller Plaza
New York, New York 10020
Attention: Robert J. Cresci
By: Pecks Management Partners Ltd.,
Its Investment Adviser
By: /s/ Robert J. Cresci
----------------------------
Robert J. Cresci 167.67 shares of
Managing Director Common Stock
Purchase Price for Common
Stock and Warrants: $503,000
385 shares of Cumulative
Exchangeable Preferred Stock
Purchase Price: $3,850,000
Tax ID Number: 516-00-0279
Nominee: NAP & COMPANY
Bank: Mercantile Safe Deposit & Trust Company
2 Hopkins Plaza
Baltimore, MD 21201
Attn: Isabelle Corbett
ABA Routing Number: 052-000618
Account Number: 214380-8 for State of Delaware account
Physical Delivery: Mercantile Safe Deposit & Trust Company
2 Hopkins Plaza
Baltimore, MD 21201
Attn: Connie Philpot
<PAGE>
INVESTORS:
The foregoing Agreement is
hereby accepted as of the
date first above written.
DECLARATION OF TRUST
FOR DEFINED BENEFIT PLANS
OF ZENECA HOLDINGS INC.
c/o Pecks Management Partners Ltd.
One Rockefeller Plaza
New York, New York 10020
Attention: Robert J. Cresci
By: Pecks Management Partners Ltd.,
Its Investment Adviser
By: /s/ Robert J. Cresci
----------------------------
Robert J. Cresci 33.33 shares of
Managing Director Common Stock
Purchase Price for Common
Stock and Warrants: $100,000
77 shares of Cumulative
Exchangeable Preferred Stock
Purchase Price: $770,000
Tax ID Number: 042-809861
Nominee: FUELSHIP COMPANY
Bank: State Street Bank & Trust Company
One Enterprise Drive
Solomon Willard Building, 4A
North Quincy, MA 02171
ABA Routing Number: 0110-00028
Account Number: JG10 DDA 34758508
for Master Trust/State Street
Bank & Trust Company
Boston, MA 02101
BNF: Zeneca Holdings
Physical Delivery
Via Federal Express: State Street Bank & Trust Company
225 Franklin Street
Incoming Securities, Concourse Level
Boston, MA 02101
Attn: David Kay
Account Name: Zeneca Holdings
Acct.# JG10
<PAGE>
The foregoing Agreement is
hereby accepted as of the
date first above written.
DECLARATION OF TRUST
FOR DEFINED BENEFIT PLANS
OF ICI AMERICAN HOLDINGS INC.
c/o Pecks Management Partners Ltd.
One Rockefeller Plaza
New York, New York 10020
Attention: Robert J. Cresci
By: Pecks Management Partners Ltd.,
Its Investment Adviser
By: /s/ Robert J. Cresci
----------------------------
Robert J. Cresci 49 shares of
Managing Director Common Stock
Purchase Price for Common
Stock and Warrants: $147,000
113 shares of Cumulative
Exchangeable Preferred Stock
Purchase Price: $1,130,000
Tax ID Number: 043-171-204
Nominee: NORTHMAN & CO
Bank: State Street Bank & Trust Company
One Enterprise Drive
Solomon Willard Building, 4A
North Quincy, MA 02171
ABA Routing Number: 0110-00028
Account Number: I510 DDA 34758649
for Master Trust/State Street
Bank Trust Company
Boston, MA 02101
BNF: ICI Americas
Physical Delivery
Via Federal Express: State Street Bank & Trust Company
225 Franklin Street
Incoming Securities, Concourse Level
Boston, MA 02101
Attn: David Kay
Account Name: ICI Americas
Acct.# I510
<PAGE>
SECURITIES PURCHASE AGREEMENT
SCHEDULE 3J
MATERIAL CHANGES
1. The transactions contemplated by the Senior Loan Documents may result in a
breach of or constitute a default under the Master Equipment Lease dated
June 26, 1995 by and between Iron and Glass Bank and the Company, and the
License Agreement by and between Parametric Technology Corporation and the
Company in connection therewith. In the Company's judgment, this Equipment
Lease is not maternal but is included herein for informational purposes
only.
2. The transactions contemplated by the Senior Loan Documents may result in a
breach of or constitute a default under each of the Master Equipment Leases
620-003789-000 and 620- 000583-000 by and between Siemens Credit
Corporation and the Company, for the lease of two ROLM phone systems with
phonemail. In the Company's judgment, these Equipment Leases are not
material but are included herein for informational purposes only.
3. The transactions contemplated by the Senior Loan Documents may constitute a
default under a Security Agreement dated as of March, 1996 by and between
Concord Commercial, Division of Marine Midland Business Loans and the
Company in connection with the purchase of one Charmilles Roboform 2000 EDM
Machining Center. In the Company's judgment, this Agreement is not material
but is included herein for informational purposes only.
<PAGE>
SECURITIES PURCHASE AGREEMENT
SCHEDULE 5B
FINANCIAL STATEMENTS
1. In December, 1995, based upon a complaint received from Mentholatum,
Tredegar Molded Products Company ("Tredegar") became aware of a potential
screw back-out problem with respect to the 1/2" stick being produced at its
Graham, NC plant. In January, 1996, as Tredegar was still in the process of
investigating the nature and extent of the potential problem, it received
two complaints from a second customer, Kaufman Containers, a distributor.
Kaufman Containers indicated that one of its customers, Accupack, had
experienced some instances of the screw backing out of the assembly during
filling. During January, 1996, Tredegar identified the source of the
problem. Corrective action was immediately taken. The body mold was pulled
from production and modified at the end of January.
Tredegar sold approximately 7.2 million sticks prior to correcting the
mold. An additional 1 million sticks held in inventory have been destroyed.
With respect to Kaufman Containers' complaints, it appears that the screw
back-out problems arose when the sticks were filled with material of a waxy
consistency. Approximately 3,842,000 sticks with the potential back-out
problem were shipped to Kaufman Containers. The problems encountered by
Kaufman Containers' other customers have not been significant enough to
prompt a product return. The majority of this product is sold to Bonnie
Bell. The consistency of Bonnie Bell's product is soft. Repeated internal
testing and testing of customer filled samples indicated screw back-out to
be minimal to non-existent. (Mentholatum was only provided product samples
for testing and did not purchase any of the sticks).
On February 27, 1996, Tredegar received a complaint from Kato Laboratories
citing a screw back-out problem. Kato Laboratories has requested a product
return of all 50,000 sticks (order no. 0278255) shipped to it from the
Graham plant during the period in question. The Company has provided
replacement product to Kato Laboratories that has been accepted by Kato
Laboratories. Kato Laboratories has released the Company from any losses
resulting from that order (order no. 0278255).
2. Tredegar encountered certain assembly problems with a new Hoppman machine
(SO3) at Tredegar's Graham, NC plant. Hoppman personnel were brought in to
address the problems. Tredegar attributes the problems to the Hoppman
equipment and considers the work conducted by the Hoppman personnel within
the parameters of the purchase price of the equipment. Nonetheless, Hoppman
has billed Tredegar approximately $70,000 for the work. Tredegar is
reviewing the charges and has not yet paid the bill.
<PAGE>
3. Any liability arising under the following litigation, all of which are more
fully described on Schedule 5D: (a) Robert M. Smith v. Unity Mold
Corporation, Cook County Illinois Circuit Court, Case No. 94L08051, (b)
June Garcia v. Unity Mold Corporation, Cook County Illinois Circuit Court,
Case No. 94L16848, (c) Sandra van Etten v. Ferdinand Soto and Tredegar
Molded Products Company, Worcester County, Massachusetts Superior Court,
Case No., 95-2022, and (d) United States of America v. Fairchild
Industries, Inc., et al., Case No. JFM-88-2933, United States District
Court for the District of Maryland.
4. The Company has been identified as a potentially responsible party in two
adjacent New York waste sites, the Envirotek II Superfund Site and the
Roblin Steel Site. The Envirotek II Site is a U.S. EPA-lead site. As a "de
minimis" party, the Company has entered into an Administrative Order on
Consent with U.S. EPA and a "PRP Participation and Funding Agreement" with
other site PRPs, and has performed its obligations thereunder. The clean-
up at the site is reported to be complete. Because of its involvement as a
PRP in the Envirotek II Site, the State of New York has identified the
Company as a PRP at the adjacent Roblin Steel Site, with respect to any
contamination that may have migrated to the Roblin Steel Site from the
Envirotek II Site. The Company has joined with other PRPs in a
participation agreement and believes that any potential liability at this
site will be apportioned to the Company as a "de minimis" party.
5. In 1991, Tredegar sold injection-molding assets and real estate located in
Chicago, Illinois to the assignees of Inhalation Plastics, Inc. Tredegar's
contract indemnification obligations are limited to claims "arising or
accruing" prior to two years after the closing date, except for matters
disclosed in an environmental report delivered at closing, for which there
is no time limit on Tredegar's indemnification obligations. To the
Company's knowledge, no claims have been made pertaining thereto.
6. In May, 1994, Tredegar sold real estate and an injection-molding facility
located in LaGrange, Kentucky. Significant site assessment and remediation
activities were conducted before closing. Tredegar indemnified the buyer
from all costs and liabilities resulting from on-site contamination
existing as of closing, with no time or dollar limitations. To the
Company's knowledge, no claims have been made pertaining thereto.
7. Any environmental liabilities, product claims and indemnification
liabilities retained by Tredegar in the agreement governing the sale of its
former beverage closure assets and business to Crown Cork & Seal Company,
Inc. To the Company's knowledge, no claims have been made pertaining
thereto.
EXCLUDED FROM THIS SCHEDULE 5B ARE ANY LIABILITIES WHICH MIGHT BE CONTINGENT
LIABILITIES BUT WHICH ARE "RETAINED LIABILITIES" UNDER SECTION 1.33 OF THE
PURCHASE AGREEMENT.
<PAGE>
SECURITIES PURCHASE AGREEMENT
SCHEDULE 5C
CAPITAL STOCK AND RELATED MATTERS
Capital Stock
- -------------
<TABLE>
<CAPTION>
Holders of Holdings
- -------------------
<S> <C>
Sunderland 8,035 shares of common stock
Delaware State Employees' 167.67 shares of common stock
Retirement Fund Warrants to purchase 385 shares of common stock
Declaration of Trust for Defined 33.33 shares of common stock
Benefit Plans of Zeneca Holdings, Inc. Warrants to purchase 77 shares of common stock
Declaration of Trust for Defined 49 shares of common stock
Benefit Plans of ICI American Warrants to purchase 113 shares of common stock
Holdings, Inc.
John Hancock Mutual Life Warrants to purchase 570 shares of common stock
Insurance Company
Rice Partners II, L.P. Warrants to purchase 570 shares of common stock
Hamilton Holdings Ltd. Corporation 331.46 shares of 9 1/2% preferred stock, no par,
$10,000 per share stated value
Holders of the Company
- ----------------------
Holdings 125 shares of common stock
Delaware State Employees' 385 shares of Series A Cumulative Exchangeable
Retirement Fund Preferred Stock
Declaration of Trust for Defined 77 shares of Series A Cumulative Exchangeable
Benefits Plans of Zeneca Holdings Preferred Stock
Inc.
Declaration of Trust for Defined 113 shares of Series A Cumulative Exchangeable
Benefits Plans of ICI American Preferred Stock
Holdings Inc.
</TABLE>
<PAGE>
<TABLE>
<S> <C>
Tredegar Investments, Inc. 250 shares of Series B Cumulative Redeemable
Preferred Stock
</TABLE>
Subsidiaries
- ------------
1,000 shares of common stock of Precise Technology of Delaware, Inc. held by the
Company
100 shares of common stock of Precise Technology of Illinois, Inc. held by the
Company
1,000 shares of common stock of Tredegar Molded Products Company held by the
Company
1,000 shares of common stock of Unity Mold Corporation held by Precise
Technology of Illinois, Inc. held by the Company
10 shares of common stock of Polestar Plastics Manufacturing Company held by
Tredegar Molded Products Company
10 shares of common stock of Massie Tool, Mold & Die, Inc.
Related Matters
- ---------------
1. The rights, obligations and restrictions pertaining to the Common Stock,
Exchangeable Preferred Stock, and the Warrants contained in the Related
Documents.
2. The rights, obligations and restrictions pertaining to the Series B
Cumulative Redeemable Preferred Stock of the Company.
3. The rights, obligations and restrictions contained in the Senior Credit
Agreement and the other documents and agreements to be delivered
thereunder, including, but not limited to the Pledge Agreement and the
Pledge & Security Agreement.
4. The rights, obligations and restrictions pertaining to the 9 1/2% Preferred
Stock of Holdings.
<PAGE>
SECURITIES PURCHASE AGREEMENT
SCHEDULE 5D
ACTIONS PENDING
1. Robert M. Smith v. Unity Mold Corporation, Cook County Illinois Circuit
Court, Case No. 94L08051, a retaliatory discharge action.
2. June Garcia v. Unity Mold Corporation, Cook County Illinois Circuit Court,
Case No. 94L16848, a retaliatory discharge action.
3. Sandra van Etten v. Ferdinand Soto and Tredegar Molded Products Company,
Worcester County, Massachusetts Superior Court, Case No. 95-2022, a
personal injury action arising out of a motor vehicle accident.
4. United States of America v. Fairchild Industries, Inc. et al., Case No.
JFM-88-2933, United States District Court for the District of Maryland, a
cost recovery action against the Company under CERCLA; the Company has
signed a comprehensive Settlement Agreement and is awaiting its dismissal
from the action.
5. The Company has been identified as a potentially responsible party in two
adjacent New York waste sites, the Envirotek II Superfund Site and the
Roblin Steel Site. The Envirotek II Site is a U.S. EPA-lead site. As a "de
minimis" party, the Company has entered into an Administrative Order on
Consent with U.S. EPA and a "PRP Participation and Funding Agreement" with
other site PRPs, and has performed its obligations thereunder. The clean-
up at the site is reported to be complete. Because of its involvement as a
PRP in the Envirotek II Site, the State of New York has identified the
Company as a PRP at the adjacent Roblin Steel Site, with respect to any
contamination that may have migrated to the Roblin Steel Site from the
Envirotek II Site. The Company has joined with other PRPs in a
participation agreement and believes that any potential liability at this
site will be apportioned to the Company as a "de minimis" party.
6. Lawrence Ramey v. Tredegar Molded Products Company and Polestar Plastics
Manufacturing Company, Case No. 4:95-CV-1150, United States District Court
for the Middle District of Pennsylvania, an action alleging violations of
the Fair Labor Standards Act. A Settlement Agreement and Release of Claims
dated as of February 7, 1996 has been entered into by the parties.
7. Pending litigation and claims within the definition of "Retained
Liabilities" under Section 1.33 of the Purchase Agreement.
8. The reported contamination, releases and environmental issues referenced in
the Phase I Initial Site Investigation Report dated January, 1996, and
supplemental reports and
<PAGE>
test data, prepared by O'Brien & Gere Engineers, Inc. with respect to
Tredegar Molded Products Company's South Grafton, Massachusetts facility.
<PAGE>
SECURITIES PURCHASE AGREEMENT
SCHEDULE 5E
OUTSTANDING DEBT; DEFAULTS
See Schedules 3J and 5B.
<PAGE>
SECURITIES PURCHASE AGREEMENT
SCHEDULE 5H
CONFLICTING AGREEMENTS
See Schedule 3J and Related Matters on Schedule 5C.
<PAGE>
SECURITIES PURCHASE AGREEMENT
SCHEDULE 5S
SUBSIDIARIES
Precise Technology, Inc., a Delaware corporation
Precise Technology of Delaware, Inc., a Delaware corporation (wholly owned
by the Company)
Precise Technology of Illinois, Inc., a Delaware corporation (wholly owned
by the Company)
Unity Mold Corporation, an Illinois corporation (wholly owned by Precise
Technology of Illinois, Inc.)
Tredegar Molded Products Company, a Virginia corporation (wholly owned by
the Company)
Polestar Plastics Manufacturing Company, a Virginia corporation (wholly
owned by Tredegar Molded Products Company)
Massie Tool, Mold & Die, Inc., a Florida corporation (wholly owned by
Tredegar Molded Products Company)
All of the common stock of all of the Subsidiaries, except the Company, is
subject to pledges to NationsBank, N.A. under that certain Pledge and Security
Agreement dated as of the Closing Date.
<PAGE>
SECURITIES PURCHASE AGREEMENT
SCHEDULE 5L
ENVIRONMENTAL MATTERS
1. See Schedule 5B, item 7.
2. See Schedule 5D, items 4, 5 and 8.
3. Preliminary soil sample test results have identified total petroleum
hydrocarbon soil contamination of 200 mg/kg at the location of the septic
system leach field at the Company's West Lafayette, Indiana facility.
4. Oil-discolored soil at the Company's West Lafayette, Indiana facility, as
evidenced by 1986 correspondence to and from the Indiana Department of
Environmental Management.
5. In 1991, Tredegar sold injection-molding assets and real estate located in
Chicago, Illinois to the assignees of Inhalation Plastics, Inc. Tredegar's
contract indemnification obligations are limited to claims "arising or
accruing" prior to two years after the closing date, except for matters
disclosed in an environmental report delivered at closing, for which there
is no time limit on Tredegar's indemnification obligations.
6. In May, 1994, Tredegar sold real estate and an injection-molding facility
located in LaGrange, Kentucky. Significant site assessment and remediation
activities were conducted before closing. Tredegar indemnified the buyer
from all costs and liabilities resulting from on-site contamination
existing as of closing, with no time or dollar limitations.
7. Environmental-related claims, liabilities, losses and expenses which are
"Retained Liabilities" under Section 1.33(i) of the Purchase Agreement.
<PAGE>
SECURITIES PURCHASE AGREEMENT
SCHEDULE 5X
EQUITY OF HOLDINGS
Delaware State Employees' Retirement Fund 5.5267%
Declaration of Trust for Defined Benefit Plans 1.1033%
of Zeneca Holdings, Inc.
Declaration of Trust for Defined Benefit Plans 1.6200%
of ICI American
<PAGE>
SECURITIES PURCHASE AGREEMENT
SCHEDULE 5W
AGREEMENT WITH AFFILIATES
1. After the Closing Date, the Company will be a party to a Management
Agreement with Mentmore Holdings Corporation.
2. The Company is party to certain employment arrangements with John R. Weeks
and Michael M. Farrell, who may be deemed to be Shareholders.
3. On or before the Closing Date, Sunderland's unrecorded junior mortgage on
the Company's North Versailles, Pennsylvania facility, in the approximate
principal amount of $300,000, will be satisfied.
4. On the Closing Date, the $3,000,000 deposit under the Purchase Agreement
made on behalf of the Company by Trinity Investment Corp. will be returned
to Trinity.
5. Certain out of pocket expenses, including travel expenses, advanced or
incurred by Mentmore Holdings Corporation in connection with the
Acquisition, will be paid on Closing.
<PAGE>
10.4
NOTE PURCHASE AGREEMENT
This Note Purchase Agreement (this "Agreement"), dated as of March 29,
1996, is by and among PRECISE TECHNOLOGY, INC., a Delaware corporation (the
"Company"), JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY, a Massachusetts mutual
life insurance company ("John Hancock"), and RICE PARTNERS II, L.P., a Delaware
limited partnership ("Rice") (John Hancock and Rice are individually and
collectively referred to herein as the "Purchaser"). Capitalized terms used in
this Agreement and not otherwise defined herein are defined in Section 11.1.
To induce Purchaser to purchase the Senior Subordinated Notes from the
Company, and for $10.00 and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto, intending
to be legally bound, agree as follows.
I. DESCRIPTION OF SENIOR SUBORDINATED NOTES AND COMMITMENT
1.1 Description of Senior Subordinated Notes. The Company will authorize
the issuance and sale of the Senior Subordinated Notes which shall be dated the
Closing Date, shall be in the aggregate original principal amount of $20,000,000
and shall bear interest at a fixed rate of twelve and one-quarter of one percent
(12.25%) per annum; provided, however, that upon the occurrence of any Event of
Default, and during the continuation thereof, the unpaid principal amount of the
Senior Subordinated Notes shall bear interest at a fixed rate of fourteen and
one-quarter of one percent (14.25%) per annum. Interest on the Senior
Subordinated Notes shall be computed on the basis of the actual number of days
elapsed over a three hundred sixty (360) day year. The Senior Subordinated Notes
shall be substantially in the forms attached hereto as Exhibits A-1 and A-2.
1.2 Funding.
(a) Subject to the terms and conditions hereof and on the basis of the
representations and warranties hereinafter set forth, the Company agrees to
issue and sell to each Purchaser, and each Purchaser agrees to purchase from the
Company, one or more Senior Subordinated Notes in the aggregate original
principal amount set forth beneath the name of such Purchaser on the signature
page of this Agreement. Each Senior Subordinated Note will be delivered to each
respective Purchaser in fully registered form, and shall be issued in each
Purchaser's name or the name of its respective nominee.
(b) On the Closing Date the Company shall deliver to each Purchaser
one or more Senior Subordinated Notes in the aggregate original principal amount
set forth beneath the name of such Purchaser on the signature page of this
Agreement, and upon receipt thereof, each Purchaser shall disburse one hundred
percent (100%) of such aggregate principal amount in immediately available funds
to such Persons as the Company shall designate in writing.
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1.3 Use of Proceeds. The proceeds from the sale of the Senior Subordinated
Notes shall be used solely to (a) finance a portion of the purchase price of the
Acquisition, (b) pay fees and expenses incurred by the Company in connection
with the Acquisition, (c) refinance existing Indebtedness of the Company
(including the Acquired Companies), and (d) pay fees and expenses payable by the
Company to the Purchaser and the Senior Lender under this Agreement and the
Senior Loan Agreement.
II. PAYMENT AND PREPAYMENT OF SENIOR
SUBORDINATED OBLIGATIONS
2.1 Principal and Interest Payments. Principal and interest on the Senior
Subordinated Notes shall be due and payable as follows:
(a) Unless otherwise accelerated pursuant to the terms hereof, the
principal amount of the Senior Subordinated Notes shall be due and payable as
follows: (i) $6,666,666.66 of the principal amount of the Senior Subordinated
Notes shall be due and payable on March 31, 2004, (ii) $6,666,666.66 of the
principal amount of the Senior Subordinated Notes shall be due and payable on
March 31, 2005, and (iii) the remaining unpaid principal amount of the Senior
Subordinated Notes shall be due and payable on the Termination Date.
(b) Interest on the Senior Subordinated Notes shall be due and payable
(i) quarterly in arrears on the last day of each calendar quarter (or, if any
such day is not a Business Day, on the next succeeding Business Day), commencing
June 30, 1996, and (ii) on the Termination Date.
2.2 Optional Prepayments. At the Company's option, upon notice given as
provided below, the Company may, at any time and from time to time, prepay all
or any part of the principal amount of the Senior Subordinated Notes, by payment
to the Holders of the principal amount to be prepaid, plus (a) accrued unpaid
interest on the principal amount so prepaid, plus (b) any expenses for which
each Purchaser may be entitled to receive payment or reimbursement hereunder or,
if the Senior Subordinated Notes are being prepaid in full, the aggregate amount
of all other Senior Subordinated Obligations, plus (c) a premium equal to the
percentage of the principal amount of the Senior Subordinated Notes so prepaid
which is applicable in accordance with the following table based on the date on
which such prepayment is made (a "Prepayment Fee")
Prepayment Date Premium
--------------- -------
Closing Date through March 31, 1997 12.25%
April 1, 1997 through March 31, 1998 10.89%
April 1, 1998 through March 31, 1999 9.53%
April 1, 1999 through March 31, 2000 8.17%
April 1, 2000 through March 31, 2001 6.81%
April 1, 2001 through March 31, 2002 5.44%
April 1, 2002 through March 31, 2003 4.08%
2
<PAGE>
April 1, 2003 through March 31, 2004 2.72%
April 1, 2004 through March 31, 2005 1.36%
April 1, 2005 and thereafter 0.00%
In the case of each partial prepayment of the Senior Subordinated Notes,
the principal amount of such prepayment shall be paid pro-rata to each Purchaser
in accordance with the unpaid principal amount of the Senior Subordinated Notes
held by them immediately prior to such prepayment. Each partial prepayment under
this Section 2.2 shall be in a principal amount of not less than $250,000 or, if
greater than $250,000, then in integral multiples of $50,000. Each prepayment
under this Section 2.2 shall be applied first to accrued interest on the
principal amount prepaid, second to any applicable Prepayment Fee, third to
installments of principal in the inverse order of their maturities, and fourth
to any expenses for which each Purchaser may be entitled. The amount of any such
prepayment may not be reborrowed by the Company. The Company shall give notice
of any optional prepayment to Purchaser not less than thirty (30) days nor more
than sixty (60) days before the date of prepayment, specifying in each such
notice the date upon which prepayment is to be made and the principal amount
(together with accrued interest and any applicable Prepayment Fee) to be prepaid
on such date. Notice of prepayment having been so given, the applicable
prepayment amount shall become due and payable on the specified prepayment date.
The Company shall have no right to prepay the Senior Subordinated Notes except
as provided in this Section 2.2 or in Section 2.3.
2.3 Mandatory Prepayments. Any prepayment under this Section 2.3 shall be
applied first to accrued interest, second to any applicable Prepayment Fee,
third to installments of principal in the inverse order of their maturities, and
fourth to any expenses for which each Purchaser may be entitled. The amount of
any such mandatory prepayment may not be reborrowed by the Company. The Company
shall make mandatory prepayments, together with a premium equal to the
Prepayment Fee, in each of the following circumstances:
(a) In the event of any public or private offering by the Company or
Parent of any of the Company's or Parent's debt or equity securities, the
Company shall prepay the Senior Subordinated Obligations in an amount equal to
the lesser of (i) the net cash proceeds of any such public or private offering
(after any mandatory payments and prepayments in permanent reduction of the
Senior Debt required under the Senior Loan Agreement are made with respect
thereto), or (ii) the aggregate amount of all Senior Subordinated Obligations
(including any applicable Prepayment Fee), such prepayment and Prepayment Fee to
be made within five (5) Business Days of receipt of such net proceeds. A
refinancing or replacement of the Senior Debt which is permitted under Section
7.1(c) hereof shall not obligate the Company to prepay the Senior Subordinated
Notes pursuant to this Section 2.3(a).
(b) In the event of any sale or other disposition of any property or
properties of the Company or any Subsidiary of the Company (other than a sale or
disposition which is (i) not deemed to be an Asset Sale, (ii) permitted by
Section 7.3, or (iii) governed by Section 2.3(c) below), the Company shall
prepay the Senior Subordinated Obligations in an amount equal to the lesser of
(i) the aggregate net cash proceeds of such sales or other dispositions (after
any mandatory payments and prepayments in permanent reduction of the Senior Debt
required under
3
<PAGE>
the Senior Loan Agreement are made with respect thereto) or (ii) the aggregate
amount of all Senior Subordinated Obligations (including any applicable
Prepayment Fee), such prepayment and Prepayment Fee to be made within five (5)
Business Days of receipt of such net proceeds.
(c) In the event of any sale or other disposition of all or
substantially all of the stock or assets of the Company or any Subsidiary of the
Company (other than a sale or disposition permitted by Section 7.3) in a single
transaction or series of transactions, the Company shall prepay the Senior
Subordinated Obligations in an amount equal to the lesser of (i) the aggregate
net cash proceeds of such sales or dispositions (after any mandatory payments
and prepayments in permanent reduction of the Senior Debt required under the
Senior Loan Agreement are made with respect thereto) or (ii) the aggregate
amount of all Senior Subordinated Obligations (including any applicable
Prepayment Fee), such prepayment and Prepayment Fee to be made within five (5)
Business Days of receipt of such net proceeds.
2.4 Additional Pavements. Except as otherwise provided herein or in the
Other Agreements, all Senior Subordinated Obligations, other than principal,
premium and interest on the Senior Subordinated Notes, shall be due and payable
by the Company to the Holders within thirty (30) days of written demand
therefor, and shall bear interest from the date due until paid at the rate of
interest then applicable under Section 1.1. Payment of reasonable fees and
expenses due and payable on the Closing Date to Purchaser and Purchaser's legal
counsel shall be paid in full on the Closing Date.
2.5 Liquidated Damages. Any Prepayment Fee payable pursuant to Section 2.2
or Section 2.3 shall be payable as liquidated damages for loss of the
opportunity to recover loan origination expenses and profits over the balance of
the term of this Agreement and not as a penalty.
2.6 Direct Payment. The Company will pay all sums becoming due hereunder
and on the Senior Subordinated Notes to each Purchaser at the address specified
for each Purchaser on Annex I hereto, by wire transfer in U.S. Dollars of
Federal Reserve Funds or other immediately available funds, to the account
specified for such Purchaser on Annex I, or at such other address or in such
other form as such Purchaser shall have designated by notice to the Company at
least five (5) Business Days prior to the date of any payment, in each case
without presentment and without notations being made thereon. All payments by
the Company shall be made without set-off or counterclaim. Any wire transfer
shall identify such payment as "Precise Technology, Inc. 12.25% Senior
Subordinated Note" and shall identify the payment as principal, premium,
interest and/or reimbursement of costs and expenses, together with the
applicable date or period to which it relates.
2.7 Payments Payable on Business Days. Payments of all amounts due
hereunder or under the Senior Subordinated Notes shall be made on a Business
Day. Any payment due on a day that is not a Business Day shall be made on the
next Business Day, together with all interest (if any) accrued in the interim.
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<PAGE>
2.8 Interest Laws. Notwithstanding any provision to the contrary contained
in this Agreement or any Other Agreement, the Company shall not be required to
pay, and Purchaser shall not be permitted to contract for, take, reserve, charge
or receive, any compensation which constitutes interest under applicable law in
excess of the maximum amount of interest permitted by law ("Excess Interest").
If any Excess Interest is provided for or determined by a court of competent
jurisdiction to have been provided for in this Agreement or in any Other
Agreement or otherwise contracted for, taken, reserved, charged or received,
then in such event: (a) the provisions of this Section 2.8 shall govern and
control; (b) the Company shall not be obligated to pay any Excess Interest; (c)
any Excess Interest that Purchaser may have contracted for, taken, reserved,
charged or received hereunder shall be, at Purchaser's option, (i) applied as a
credit against the outstanding principal balance of the Senior Subordinated
Obligations or accrued and unpaid interest (not to exceed the maximum amount
permitted by law), (ii) refunded to the payor thereof, or (iii) any combination
of the foregoing; (d) the interest provided for shall be automatically reduced
to the maximum lawful rate allowed from time to time under applicable law (the
"Maximum Rate"), and this Agreement and the Other Agreements shall be deemed to
have been, and shall be, reformed and modified to reflect such reduction; and
(e) the Company shall have no action against Purchaser for any damages arising
due to any Excess Interest. Notwithstanding the foregoing, if for any period of
time interest on any Senior Subordinated Obligations is calculated at the
Maximum Rate rather than the applicable rate specified under this Agreement, and
thereafter such applicable rate becomes less than the Maximum Rate, the rate of
interest payable on such Senior Subordinated Obligations shall remain at the
Maximum Rate until Purchaser shall have received the amount of interest which
Purchaser would have received during such period on such Senior Subordinated
Obligations had the applicable rate of interest not been limited to the Maximum
Rate during such period. All sums paid or agreed to be paid hereunder or under
the Other Agreements for the use, forbearance or detention of sums due shall, to
the extent permitted by applicable law, be amortized, pro-rated, allocated and
spread throughout the full term of the Senior Subordinated Obligations until
payment in full so that the rate or amounts of interest on account of the Senior
Subordinated Obligations does not exceed the Maximum Rate. The terms of this
Section 2.8 shall be deemed incorporated into each Other Agreement and any other
document or instrument between the Company and any Purchaser or directed to the
Company by any Purchaser, whether or not specific reference to this Section 2.8
is made.
2.9 Certain Rights and Obligations Among Holders. The provisions of this
Section 2.9 are solely for the benefit of the Holders, and neither the Company
nor any other Person shall have any rights with respect to or be entitled to
enforce this Section 2.9.
(a) Sharing of Payments. If, at any time or times, a Holder shall not
have received a payment on its Senior Subordinated Note(s), then it shall notify
the other Holders of such fact, the amount of such nonpayment, the date or
period to which it relates and, subject to the terms of the Senior Subordination
Agreement, such other Holders which have received such payments shall remit to
the unpaid Holder such amount as is necessary to allocate the aggregate amount
of such payments pro rata among all Holders. The amount of any such remittance
shall be credited to the Senior Subordinated Note(s) of the Holder to whom it is
remitted, and shall not be credited to the Senior Subordinated Note(s) of the
remitting Holder.
5
<PAGE>
(b) Sharing of Prepayments. Subject to the terms and provisions of the
Senior Subordination Agreement, if, at any time or times, a Holder shall receive
a prepayment on its Senior Subordinated Note(s), it shall notify the other
Holders of the amount and date of such prepayment. If all other Holders shall
not have received a pro rata prepayment as agreed, the Holder giving such notice
shall remit to the other Holders such amount as is necessary to distribute such
prepayment pro rata among all Holders. The amount of any such remittance shall
be credited to the Senior Subordinated Note(s) of the Holder to whom it is
remitted, and shall not be credited to the Senior Subordinated Note(s) of the
remitting Holder.
III. REPRESENTATIONS AND WARRANTIES OF PURCHASER
3.1 Representations and Warranties of the Purchaser. Each Purchaser
severally and not jointly represents and warrants to the Company as follows:
(a) Existence. It is a limited partnership or corporation, as the case
may be, duly organized, validly existing and in good standing under the laws of
the jurisdiction of its organization.
(b) Authority. It has the right and power and authority to enter into,
execute, deliver and perform its obligations under this Agreement, and its
partners, officers or agents executing and delivering this Agreement are duly
authorized to do so. This Agreement has been duly and validly executed and
delivered and constitutes the legal, valid and binding obligation of such
Purchaser, enforceable in accordance with its terms.
(c) Investor Status. It (i) is an "accredited investor," as that term
is defined in Regulation D under the Securities Act of 1933, as amended, and
(ii) has such knowledge, skill, sophistication and experience in business and
financial matters, based on actual participation, that it is capable of
evaluating the merits and risks of the purchase of its Senior Subordinated
Note(s) from the Company and the suitability thereof for such Purchaser.
(d) Investment for own Account. Except as otherwise contemplated by
this Agreement, such Purchaser is acquiring its Senior Subordinated Note(s) for
investment for its own account and not with a view to any distribution thereof
in violation of applicable securities laws.
(e) Legend on Notes. Its Senior Subordinated Note(s) will bear the
appropriate legends referencing restrictions on transfer and will not be
offered, sold or transferred in the absence of registration or exemption under
applicable securities laws.
3.2 Representations and Warranties of John Hancock. John Hancock represents
and warrants to the Company that, with respect to each source of funds to be
used by it to purchase its Senior Subordinated Notes and its Warrants
(respectively, the "Source"), at least one of the following statements is
accurate as of the Closing Date:
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<PAGE>
(a) The Source is an "insurance company general account," as such term
is defined in Section V(e) of Prohibited Transaction Class Exemption 95-60
(issued July 12, 1995) (PTE 95-60), and the purchase is exempt under the
provisions of PTE 95-60;
(b) The Source is a "governmental plan" as defined in Title I, Section
3(32) of ERISA;
(c) The Source is either (i) an insurance company pooled separate
account, and the purchase is exempt in accordance with Prohibited Transaction
Exemption 90-1 (issued January 29, 1990), or (ii) a bank collective investment
fund, in which case the purchase is exempt in accordance with PTE 91-38 (issued
July 12, 1991);
(d) The Source is an "investment fund" managed by a "qualified
professional asset manager" or "QPAM" (as defined in Part V of PTE 84-14, issued
March 13, 1984) which QPAM has been identified in writing, and the purchase is
exempt under PTE 84-14 provided that no other party to the transaction described
in this Agreement and no "affiliate" of such other party (as defined in Section
V(c) of PTE 84-14) has at this time, and has not exercised at any time during
the immediately preceding year, the authority to appoint or terminate said QPAM
as manager of the assets of any "plan" identified in writing pursuant to this
paragraph (d) or to negotiate the terms of said QPAM's management agreement on
behalf of any such identified "plans"; or
(e) The Source is one or more "plans" or a separate account or trust
fund comprised of one or more "plans," each of which has been identified in
writing pursuant to this paragraph (e).
As used in this Article III, "plan" or "plans" shall have the meaning set
forth in Title I, Section 3(3) of ERISA.
IV. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
To induce each Purchaser to enter into this Agreement, the Company
represents and warrants to each Purchaser that the following statements are, and
after giving effect to the Acquisition will be, true, correct and complete:
4.1 Corporate Existence and Authority. The Company and each of its
Subsidiaries (including the Acquired Companies) (a) is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization; (b) has all requisite corporate power and
authority to own its assets and carry on its business as now conducted; and (c)
is qualified to do business in all jurisdictions in which the nature of its
business makes such qualification necessary and where failure to be so qualified
would have a Material Adverse Effect. The Company has the corporate power and
authority to execute, deliver, and perform its obligations under this Agreement,
the Acquisition Documents, the Senior Loan Documents, and all Other Agreements
to which it is or in connection with the transactions contemplated hereby, may
become, a party. Each of the Company's Subsidiaries has the corporate power and
authority
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<PAGE>
to execute, deliver, and perform its obligations under the Other Agreements to
which it is or in connection with the transactions contemplated hereby, may
become, a party.
4.2 Financial Statements Undisclosed Liabilities. (a) The Company has
heretofore furnished to Purchaser (i) its consolidated balance sheets and
statements of operations and cash flows as of and for the fiscal years ended
December 31, 1993, 1994 and 1995 audited by and accompanied by the unqualified
opinion of, in the case of the 1995 statements, Ernst & Young L.L.P. and, in the
case of the 1993 and 1994 statements, Grant Thorton, independent public
accountants and (ii) the consolidated balance sheets and statements of
operations and cash flows of the Acquired Companies as of and for the fiscal
years ended December 31, 1994 and 1995, audited by and accompanied by the
unqualified opinion of Coopers & Lybrand, independent public accountants (the
financial statements referred to in clauses (i) and (ii) above, collectively,
the "Financial Statements"). The Financial Statements present fairly in
accordance with GAAP, the consolidated financial position and the consolidated
results of operations and cash flows of the Company and its Consolidated
Subsidiaries or the consolidated financial position and the consolidated results
of operations and cash flows of the Acquired Companies, as applicable, as of
such dates and for such periods. Except as disclosed on Schedule 4.2(a), the
balance sheets and the notes thereto included in the Financial Statements
disclose all material liabilities, actual or contingent, of the Company and its
Consolidated Subsidiaries or, to the knowledge of the Company, of the Acquired
Companies, as applicable, as of the dates thereof. The Financial Statements were
prepared in accordance with GAAP applied on a consistent basis during the
periods involved (except as may be indicated in the notes thereto). The
Financial Statements are consistent in all material respects with the
information included in the Confidential Information Memorandum. Attached hereto
as Schedule 4.2(b) are earnings projections of the Company for the period
beginning on January 1, 1996 through December 31, 2001, together with a written
statement of the assumptions underlying them. Such earnings projections have
been prepared in good faith based on estimates and assumptions believed by the
Company to be reasonable as of the date such projections were prepared.
(b) The Company has heretofore delivered to Purchaser its unaudited
consolidated balance sheet as of the Closing Date, prepared on a pro forma basis
after giving effect to the Acquisition. Such pro forma balance sheet has been
prepared in good faith by the Company, based on the assumptions used to prepare
the pro forma financial information contained in the Confidential Information
Memorandum (which assumptions are believed by the Company on the date hereof and
on the Closing Date to be reasonable), is based on the best information
available to the Company as of the date of delivery thereof, accurately reflects
all material adjustments required to be made to give effect to the Acquisition
and presents fairly on a pro forma basis the estimated consolidated financial
position of the Company and its Consolidated Subsidiaries as of December 31,
1995, assuring that the Acquisition had actually occurred on that date. The
Company has no reason to believe that such pro forma balance sheet is misleading
in any material respect in light of the circumstances existing at the time of
the preparation thereof.
4.3 Default. Except as disclosed on Schedule 4.3, neither the Company nor
any of its Subsidiaries is in violation of any material provision under any
material loan agreement,
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indenture, mortgage, security agreement, lease, franchise, permit, license or
other agreement or obligation to which it is a party or by which any of its
properties is bound, which violation or violations could reasonably be expected
to have, either individually or in the aggregate, a Material Adverse Effect. The
Company and each of its Subsidiaries is paying its Indebtedness as it becomes
due.
4.4 Authorization: Governmental Consents and Approvals. The execution,
delivery and performance by each of the Company and its Subsidiaries (including
the Acquired Companies) of this Agreement, the Acquisition Documents, the Senior
Loan Documents and the Other Agreements to which it is or will be a party
(including the exercise of remedies thereunder) and the consummation of the
Acquisition (a) have been duly authorized by all requisite corporate and, if
required, stockholder action and (b) will not (i) violate in any material
respect any provision of law, statute, rule or regulation or any order of any
Governmental Authority, (ii) violate any provision of the certificate of
incorporation or other constitutive documents or by-laws of the Company and its
Subsidiaries (including the Acquired Companies), (iii) violate in any material
respect any provision of any indenture, material agreement or other material
instrument to which the Company or any of its Subsidiaries (including the
Acquired Companies) is a party or by which any of them or any of their property
is or may be bound, except as set forth on Schedule 4.4, (iv) except as set
forth on Schedule 4.4, be in conflict in any material respect with, result in a
breach in any material respect of or constitute (alone or with notice or lapse
of time or both) a material default or give rise to material increased,
additional, accelerated or guaranteed rights of any Person under any such
indenture, material agreement or other material instrument or (v) except for the
Liens in favor of the Senior Lender arising out of the Senior Loan Documents,
result in the creation or imposition of any Lien upon or with respect to any
property or assets now owned or hereafter acquired by the Company or any of its
Subsidiaries (including the Acquired Companies). No action, consent or approval
of, registration or filing with, or any other action by any Governmental
Authority is or will be required in connection with the Acquisition or the
performance by the Company or any of its Subsidiaries (including the Acquired
Companies) of this Agreement, the Acquisition Documents, the Senior Loan
Documents and the Other Agreements to which it is or will be a party, except (a)
in each case, such as have been made or obtained and are in full force and
effect and (b) for transfers of immaterial local permits and other similar
ministerial matters that will be properly addressed promptly after the Closing
Date.
4.5 Environmental Condition of the Property. To the best of the Company's
knowledge, except as disclosed on Schedule 4.5 and except for matters that could
not reasonably be expected to have, either individually or in the aggregate, a
Material Adverse Effect:
(a) The location, construction, occupancy, operation and use of the
Property do not violate in any material respect any material applicable law,
statute, ordinance, rule, regulation, order or determination of any governmental
authority or other body exercising similar functions, or any restrictive
covenant or deed restriction (recorded or otherwise) affecting the Property in
any material way, including, without limitation, all applicable zoning
ordinances, flood disaster, occupational health and safety laws and
Environmental Laws and regulations (hereinafter sometimes collectively called
"applicable laws");
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(b) Without limitation of paragraph (a) above, neither the Company nor
the Property is subject to any existing, pending or threatened material
investigation or inquiry by any governmental authority or subject to any
remedial obligations due to violations of applicable laws;
(c) Neither the Company nor any of its Subsidiaries is subject to any
material liability or obligation relating to (i) the environmental conditions
on, under or about the Property, including, without limitation, the soil and
ground water conditions at the Property, or (ii) the use, management, handling,
transport, treatment, generation, storage, disposal, release or discharge of any
Polluting Substance;
(d) There is no Polluting Substance that currently poses any material
risk to human safety or health on, under or about the Property;
(e) Each of the Company and its Subsidiaries has taken reasonable
steps to determine and hereby represents and warrants that no Polluting
Substances have been disposed of or otherwise released on, onto, into, or from
the Property in an amount which would require remedial action under applicable
Environmental Laws; and
(f) Each of the Company and its Subsidiaries has been issued all
material required federal, state and local licenses, certificates or permits
relating to the Property, and each of the Company's and its Subsidiaries'
facilities, business, assets, leaseholds and equipment are all in compliance in
all material respects with all applicable federal, state and local laws, rules
and regulations relating to, air emissions, water discharge, noise emissions,
solid or liquid waste disposal, Polluting Substances, or other environmental,
health or safety matters.
4.6 Solvency. After giving effect to the Acquisition and the transactions
contemplated by the Senior Loan Agreement, this Agreement and the Other
Agreements, the Company will be solvent, able to pay its debts as they mature,
have capital reasonably sufficient to carry on its business and all businesses
in which it is about to engage, and
(a) the assets of the Company, at a fair valuation, exceed the total
liabilities (including contingent, subordinated, unmatured and unliquidated
liabilities) of the Company;
(b) current projections which are based on underlying assumptions
which provide a reasonable basis for the projections and which reflect the
Company's judgment based on present circumstances, the most likely set of
conditions and the Company's most likely course of action for the period
projected, demonstrate that the Company will have sufficient cash flow to enable
it to pay its debts as they mature; and
(c) the Company does not have an unreasonably small capital base with
which to engage in its anticipated business.
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For purposes of paragraph (a) of this Section 4.6, the "fair valuation" of
the assets of the Company shall be determined on the basis of the amount which
may be realized within a reasonable time, either through collection or sale of
such assets at market value, deeming the latter as the amount which could be
obtained for the property in question within such period by a capable and
diligent businessman from an interested buyer who is willing to purchase under
ordinary selling conditions.
4.7 Litigation and Judgments. Except as disclosed on Schedule 4.7, there is
no action, suit, proceeding or investigation before any court, governmental
authority or arbitrator pending for which service of process or other written
notice has been received, or to the knowledge of the Company threatened, against
or affecting the Company or any of its Subsidiaries, this Agreement, the
Acquisition Documents, the Senior Loan Documents and/or the Other Agreements.
Except as disclosed on Schedule 4.7, there are no outstanding judgments against
the Company or any of its Subsidiaries. None of the matters listed on Schedule
4.7 could reasonably be expected to have, either individually or in the
aggregate, a Material Adverse Effect.
4.8 Rights in Properties; Liens. Each of the Company and its Subsidiaries
has good and indefeasible title to all properties and assets reflected on its
balance sheets (except for (a) minor defects in title that do not interfere with
its ability to conduct its business as currently conducted or to utilize such
properties and assets for their intended purposes, and (b) the rights of its
equipment lessors under its capitalized leases identified as such on such
balance sheets), and none of such properties or assets is subject to any Liens,
except Permitted Liens. Each of the Company and its Subsidiaries enjoys peaceful
and undisturbed possession under all leases necessary for the operation of its
other properties, assets, and businesses and all such leases are valid and
subsisting and are in full force and effect. There exists no default by the
Company or any of its Subsidiaries under any provision of any lease which would
permit the lessor thereunder to terminate any such lease or to exercise any
rights under such lease which, individually or together with all other such
defaults, could have a Material Adverse Effect. Each of the Company and its
Subsidiaries has the exclusive right to use all of the Intellectual Property
necessary or desirable to its business as presently conducted, and, to the best
of the Company's knowledge, neither the Company's nor any of its Subsidiaries'
use of the Intellectual Property infringes on the rights of any other Person. To
the best of the Company's knowledge, no other Person is infringing the rights of
the Company or any of its Subsidiaries in any of the Intellectual Property.
4.9 Enforceability. This Agreement, the Acquisition Documents, the Senior
Loan Documents and the Other Agreements to which the Company or any of its
Subsidiaries (including the Acquired Companies) is a party, when delivered,
shall constitute the legal, valid and binding obligations of such Person
enforceable against such Person in accordance with their respective terms,
except to the extent that such enforceability may be limited by (a) bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the
enforceability of creditors' rights generally, or (b) general principles of
equity.
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4.10 Indebtedness. Neither the Company nor any of its Subsidiaries has any
Indebtedness, except Permitted Indebtedness. All Indebtedness owed by the
Company and its Subsidiaries to any Affiliate is set forth on Schedule 4.10.
4.11 Tax Returns. Each of the Company and its Subsidiaries (including the
Acquired Companies) has filed or caused to be filed all Federal, state and local
tax returns required to be filed by it and has paid or caused to be paid all
taxes shown to be due and payable on such returns or on any assessments received
by it, except taxes that are being contested in good faith by appropriate
proceedings and for which adequate reserves in accordance with GAAP have been
set aside on its financial statements. No election under Section 338 of the Code
will be made with respect to the Acquisition. Except for matters that are
immaterial, the Company knows of no pending investigation of the Company by any
taxing authority or pending but unassessed tax liability of the Company or any
of its Subsidiaries. Neither the Company nor any of its Subsidiaries has made a
presently effective waiver of any applicable statute of limitations or request
for an extension of time to file a tax return, and neither the Company nor any
of its Subsidiaries is a party to any tax-sharing agreement. To the extent (and
only to the extent) that the foregoing representations of this Section 4.11
apply to liabilities related to the Acquired Companies, which liabilities
constitute "Retained Liabilities" under the Purchase Agreement, such
representations are made to the knowledge of the Company and shall not be deemed
violated by any matter that would not have a Material Adverse Effect,
notwithstanding the express terms of such representations.
4.12 Use of Proceeds; Margin Securities. The Company is not engaged
principally, or as one of its important activities, in the business of extending
credit for the purpose of purchasing or carrying margin stock (within the
meaning of Regulations G, T, U or X of the Board of Governors of the Federal
Reserve System), and no part of the proceeds of any extension of credit under
this Agreement will be used to purchase or carry any such margin stock or to
extend credit to others for the purpose of purchasing or carrying margin stock.
Neither the Company, any of its Subsidiaries, nor any Person acting on their
behalf has taken any action that might cause the transactions contemplated by
this Agreement, the Acquisition Documents, the Senior Loan Documents or any
Other Agreements to violate Regulations G, T, U or X or to violate the
Securities Exchange Act of 1934, as amended.
4.13 Employee Benefit Plans. (a) After giving effect to the Acquisition,
each of the Company and the Commonly Controlled Entities will be in compliance
in all material respects with the applicable provisions of ERISA and the
regulations and published interpretations thereunder. Neither a Reportable Event
nor an "accumulated funding deficiency"(within the meaning of Section 412 of the
Code or Section 302 of ERISA) has occurred within the five years prior to the
Closing Date with respect to any Plan, and each Plan has complied in all
material respects with the applicable provisions of ERISA and the Code. Except
as set forth in Schedule 4.13, no termination of a Single Employer Plan has
occurred or is contemplated and no Lien in favor of the PBGC or a Plan has
arisen during the five years prior to the Closing Date. No prohibited
transaction under ERISA or the Code has occurred with respect to any
Multiemployer Plan or Single Employer Plan which could have a Material Adverse
Effect.
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(b) The present value of all accrued benefits under each Single
Employer Plan in which the Company or any Commonly Controlled Entity is a
participant (based on those assumptions used to fund the Plans) did not, as of
the last annual valuation date prior to the most recent date on which this
representation is made or deemed made, exceed the value of the assets of such
Plan allocable to such accrued benefits, except to the extent that such excess
amounts for all such underfunded Plans equal no more than $250,000 in the
aggregate at any time outstanding.
(c) Neither the Company nor any Commonly Controlled Entity has had a
complete or partial withdrawal from any Multiemployer Plan, and neither the
Company nor any Commonly Controlled Entity would become subject to any liability
under ERISA if the Company or any such Commonly Controlled Entity were to
withdraw completely from all Multiemployer Plans as of the last valuation date
prior to the Closing Date.
(d) No such Multiemployer Plan is in "reorganization" or "insolvent,"
within the meaning of such terms as used in ERISA.
(e) Neither the Company nor any Commonly Controlled Entity has any
liability for post retirement benefits to be provided to its current and former
employees.
(f) To the extent (and only to the extent) that the foregoing
representations in this Section 4.13 apply to liabilities related to the
Acquired Companies, which liabilities constitute "Retained Liabilities" under
the Purchase Agreement, such representations are made to the knowledge of the
Company and shall not be deemed violated by any matter that would not have a
Material Adverse Effect, notwithstanding the express terms of such
representations.
(g) Neither (i) the execution and delivery of this Agreement by the
Company, (ii) the offer, issuance, sale and delivery by the Company to John
Hancock of its Senior Subordinated Notes and Warrants, (iii) the acquisition of
the Senior Subordinated Notes and Warrants by John Hancock, (iv) the application
by the Company of the proceeds of the sale of the Senior Subordinated Notes and
Warrants nor (v) the consummation of any of the other transactions contemplated
by this Agreement will result in a "prohibited transaction" as described in
Section 406(a) of ERISA or a tax under Section 4975 of the Code. The
representation by the Company in the preceding sentence is made in reliance upon
the representations made by John Hancock in Section 3.2 hereof as to the Source
to be used by John Hancock to purchase its Senior Subordinate Notes and
Warrants.
4.14 Delivery of Acquisition Documents. Purchaser has received complete
copies of the Acquisition Documents and all documents executed in connection
with the Acquisition (including all exhibits, schedules and disclosure letters
referred to therein or delivered pursuant thereto, if any) and all amendments
thereto, waivers relating thereto and other side letters or agreements affecting
the terms thereof. None of such documents and agreements has been amended or
supplemented, nor have any of the provisions thereof been waived, except
pursuant to a written agreement or instrument which has heretofore been
delivered to Purchaser.
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4.15 Disclosure. No representation or warranty made by the Company in this
Agreement, the Senior Loan Documents, the Acquisition Documents or any Other
Agreement to which the Company is a party contains any untrue statement of
material fact or omits to state any material fact necessary to make the
statements herein or therein not misleading. There is no fact known to the
Company which the Company has determined has a Material Adverse Effect, or which
the Company has determined could have a Material Adverse Effect, that has not
been disclosed in writing to Purchaser.
4.16 Subsidiaries and Capitalization. Schedule 4.16 sets forth as of the
Closing Date a list of all Subsidiaries of the Company (including the Acquired
Companies) and the respective jurisdictions of organization thereof. All the
issued and outstanding shares of Capital Stock of the Company and its
Subsidiaries are duly authorized, validly issued, fully paid and nonassessable.
The capitalization of the Company and its Subsidiaries on the Closing Date is
set forth on Schedule 4.16. No violation of any preemptive rights of
shareholders of the Company has occurred by virtue of the transactions
contemplated under this Agreement, the Acquisition Documents, the Senior Loan
Documents or any Other Agreement. There are no outstanding contracts, options,
warrants, instruments, documents or agreements binding upon the Company or any
of its Subsidiaries granting to any Person or group of Persons any right to
purchase or acquire shares of the Company's or any of its Subsidiaries' Capital
Stock.
4.17 Current Locations. Schedule 4.17 identifies (a) each of the Company's
and its Subsidiaries' principal place of business and chief executive office,
(b) all the locations where each of the Company and its Subsidiaries maintains
any books or records relating to any of its assets, (c) all other locations
where the Company and its Subsidiaries has a place of business, and (d) each
address where any of the Company's or its Subsidiaries' assets are located.
Schedule 4.17 accurately indicates whether each such location is owned or
leased, and, if leased, identifies the owner of such location. No Person other
than the Company has possession of any material amount of the assets of the
Company except as disclosed on Schedule 4.17.
4.18 Investment Company Act. Neither the Company, any of its Subsidiaries,
nor any company controlling the Company or any of its Subsidiaries is required
to be registered as an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.
4.19 Public Utility Holding Company Act. Neither the Company nor any of its
Subsidiaries is a "holding company" or a "subsidiary company" of a "holding
company" or an "affiliate" of a "holding company" or a "public utility" within
the meaning of the Public Utility Holding Company Act of 1935, as amended.
4.20 No Burdensome Restrictions. Neither the Company nor any of its
Subsidiaries is a party to, or bound by any agreement, condition, contract or
arrangement which has, or which the Company reasonably expects in the future
will have, a Material Adverse Effect.
4.21 Securities Laws. The Company has complied with or is exempt from the
registration and/or qualification requirements of all federal and state
securities or blue sky laws applicable to the issuance or sale of the Senior
Subordinated Notes.
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4.22 No Labor Disputes. Neither the Company nor any of its Subsidiaries is
involved in any labor dispute. There are no strikes or walkouts or union
organization of any of the Company's or any of its Subsidiaries employees
threatened or in existence and, except as set forth on Schedule 4.22, no labor
contract is scheduled to expire during the term of this Agreement. Each of the
Company and its Subsidiaries is in compliance with all laws, rules, regulations,
orders and decrees applicable to it and its properties, except for instances of
noncompliance which, individually or in the aggregate, will not have a Material
Adverse Effect.
4.23 Brokers. Neither the Company nor any of its shareholders has dealt
with any broker, finder, commission agent or other Person in connection with the
Acquisition or other transactions referenced in or contemplated by this
Agreement, nor is the Company or any of its shareholders under any obligation to
pay any broker's fee or commission in connection with such transactions, except
as set forth on Schedule 4.23.
4.24 Insurance. The amount and types of insurance carried by each of the
Company and its Subsidiaries, and the terms and conditions thereof, are
substantially similar to the coverage maintained by companies in the same or
similar business as the Company and its Subsidiaries, respectively and similarly
situated, and include, without limitation, property and casualty insurance,
general liability insurance, business interruption insurance and other insurance
in the amounts and of the types described in Section 6.12 hereof.
4.25 Conduct of Business. On the Closing Date, the Company and its
Subsidiaries are engaged only in businesses of the type described on Schedule
4.25.
4.26 Senior Debt. Simultaneously with the issuance of the Senior
Subordinated Notes, the Senior Lender will provide the Company with a revolving
loan facility in an amount not to exceed $13,000,000 and a term loan facility in
an amount not to exceed $40,000,000, each pursuant to the Senior Loan Agreement.
The Company expects that a total of approximately $45,000,000 of the Senior Debt
will be advanced by the Senior Lender to the Company on the Closing Date.
V. CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER
Each Purchaser's obligations hereunder shall be subject to (a) the
performance by the Company of its obligations hereunder which by the terms
hereof are to be performed on or prior to delivery of the Senior Subordinated
Notes, and (b) the satisfaction of the following conditions on or before the
Closing Date:
5.1 Effectiveness of Senior Loan Documents. The Senior Loan Documents shall
have been duly executed and delivered by the parties thereto and shall be on
terms and conditions reasonably satisfactory to Purchaser. On the Closing Date,
the Senior Loan Documents shall not have been amended or modified, nor any
condition thereof waived by the Company in a manner adverse in any material
respect to the rights or interests of the Purchaser, without the prior written
consent of the Purchaser.
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5.2 Effectiveness of Senior Subordination Agreement. The Senior
Subordination Agreement shall have been duly executed and delivered by the
parties thereto, and shall be on terms and conditions which are satisfactory to
Purchaser.
5.3 Minimum Availability. The Company shall have available cash and
immediately accessible availability under the Senior Debt in an amount equal to
not less than $7,000,000 on the Closing Date after giving affect to the payment
of (a) prior Indebtedness of the Company and the Acquired Companies, (b) all
fees payable to Purchaser under the terms of this Agreement, and (c) all costs
and expenses arising as a result of the transactions contemplated by this
Agreement, the Acquisition Documents, the Senior Loan Documents and any Other
Agreement to which the Company, Parent and/or either of their Subsidiaries is a
party, and Purchaser shall have received satisfactory evidence thereof.
5.4 Stockholders Equity. Stockholders equity of the Company shall be not
less than $14,250,000 on the Closing Date, and Purchaser shall have received
satisfactory evidence thereof.
5.5 Preferred and Common Stock. The (a) Company shall receive,
simultaneously with the issuance of the Senior Subordinated Notes, not less than
$5,750,000 in cash from Pecks in exchange for the issuance to Pecks of the Pecks
Preferred Stock, (b) Company shall issue to Tredegar Investments, simultaneously
with the issuance of the Senior Subordinated Notes, the Seller Preferred Stock
as partial consideration for the purchase price of the Acquisition, and (c)
Parent shall receive, simultaneously with the issuance of the Senior
Subordinated Notes, not less than $750,000 in cash from Pecks in exchange for
the issuance to Pecks of 250 shares of common stock of Parent and warrants to
purchase 575 shares of common stock of Parent all of the foregoing on terms
reasonably satisfactory to Purchaser, and Purchaser shall receive satisfactory
evidence thereof.
5.6 Limitation on Fees and Expenses. No fees shall have been paid by the
Company to Mentmore or any of its Affiliates or any Affiliate of the Company
(other than reasonable legal fees payable to Richard C. Hoffman, counsel to
Mentmore) relating to the closing of the financing contemplated by this
Agreement. The aggregate amount of reimbursable expenses payable by the Company
to Mentmore or any of its Affiliates relating to the closing of the financing
contemplated by this Agreement shall not exceed $300,000, and the Company shall
have provided the Purchaser with a detailed listing of such reimbursable
expenses on Schedule 5.6 hereto.
5.7 Acquisition. The Acquisition. Documents shall have been duly executed
and delivered by the parties thereto and shall be on terms and conditions
satisfactory to Purchaser. On the Closing Date, the Acquisition Documents shall
not have been altered, amended or otherwise changed or supplemented or any
condition therein waived in a manner adverse in any material respect to the
rights or interests of Purchaser, without the prior written consent of
Purchaser, including, but not limited to, the amount or type of consideration to
be paid in connection with the Acquisition and the contents of all disclosure
schedules and exhibits.
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5.8 Due Diligence. The results of Purchaser's due diligence regarding the
Company and the Acquisition shall be satisfactory to Purchaser, and Purchaser
shall be satisfied with the assets and books and records and the business and
financial condition of the Company, after giving effect to the Acquisition.
5.9 Approval. Each Purchaser's investment committee shall have approved the
purchase of its Senior Subordinated Notes on the terms set forth herein and in
the Other Agreements.
5.10 No Litigation; Consummation of Transactions. No injunction,
preliminary injunction, or temporary restraining order shall be threatened or
shall exist which prohibits or may prohibit the transactions contemplated herein
or any other related transaction, and no litigation or similar proceeding
(including, without limitation, any litigation or other proceeding seeking
injunctive or similar relief) shall be threatened or shall exist with respect to
the transactions contemplated herein, which, if adversely determined, could in
the judgment of Purchaser have a Material Adverse Effect.
5.11 Documents. Purchaser shall have received the following, each in form
and substance satisfactory to Purchaser:
(a) Senior Subordinated Notes. The Senior Subordinated Notes issued in
the name of each Purchaser duly executed by the Company;
(b) Warrant and Warrant Documents. The Warrants, duly issued by Parent
to each Purchaser in the denominations specified on Annex I hereto, along with
the other fully executed Warrant Documents and all other documents and
instruments required pursuant thereto;
(c) Junior Subordination Agreements. A junior subordination agreement
duly executed in favor of Purchaser by each Affiliate to whom the Company owes
Indebtedness;
(d) Other Agreements. The Other Agreements, duly executed by the
parties thereto;
(e) Insurance. Certificates of insurance with respect to all insurance
policies and endorsements thereto required by Section 6.12, together with a
certificate from an insurance broker acceptable to Purchaser, confirming that
the amount of such insurance coverage and the terms and conditions thereof are
substantially similar to policies maintained by companies similarly situated to
the Company and engaged in the same or a similar business;
(f) Approvals and Consents. Copies, certified by the Company of all
material consents, authorizations, filings, licenses and approvals, if any,
required in connection with the consummation of the Acquisition, the execution,
delivery and performance by the Company, or the validity and enforceability of,
this Agreement, the Senior Loan Documents, the Acquisition Documents or the
Other Agreements to which the Company is a party;
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(g) Opinion of Counsel to the Company. The written legal opinion of
Kelley, McCann & Livingstone, general counsel to the Company and Parent, and
Winston & Strawn, special New York counsel to the Company and Parent, each of
which shall be satisfactory in form and substance to the Purchaser; and written
permission from each other legal counsel issuing a legal opinion to the Company,
Parent or the Senior Lender in connection with the Acquisition Documents or
Senior Loan Documents (other than local legal counsel to the Senior Lender),
authorizing the Purchaser to rely on such opinion.
(h) General Certificate of the Company's Assistant Secretary. A
certificate of the Assistant Secretary of the Company together with true,
correct and complete copies of the following:
(i) Certificate of Incorporation. The Certificate of
Incorporation of the Company, including all amendments thereto,
certified by the Secretary of State of the state of its incorporation
and dated within thirty (30) days prior to the Closing Date;
(ii) Bylaws. The Bylaws of the Company, including all amendments
thereto;
(iii) Resolutions. The resolutions of the Board of Directors of
the Company authorizing the execution, delivery and performance of
this Agreement, the Acquisition Documents, the Senior Loan Documents,
and the Other Agreements to which the Company is a party and
authorizing the issuance of the Pecks Preferred Stock and the Seller
Preferred Stock;
(iv) Existence and Good Standing Certificates. Certificates of
the appropriate government officials of the state of incorporation of
the Company as to its existence and good standing, and certificates of
the appropriate government officials in each state where the Company
does business and where failure to qualify as a foreign corporation
would have a Material Adverse Effect, as to its good standing and due
qualification to do business in such state, each dated within sixty
(60) days prior to the Closing Date; and
(v) Incumbency. The names of the officers of the Company
authorized to sign this Agreement and the Other Agreements to be
executed by the Company, together with a sample of the true signature
of each such officer;
(i) General Certificate of Parent's Assistant Secretary. A certificate
of the Assistant Secretary of Parent together with true and correct copies of
the following:
(i) Certificate of Incorporation. The Certificate of
Incorporation of Parent, including all amendments thereto, certified
by the Secretary of State of the state of its incorporation and dated
within thirty (30) days prior to the Closing Date;
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(ii) Bylaws. The Bylaws of Parent, including all amendments
thereto;
(iii) Resolutions. The resolutions of the Board of Directors of
Parent authorizing the execution, delivery and performance of the
Other Agreements to which Parent is a party and authorizing the
issuance of the Warrants;
(iv) Existence and Good Standing Certificates. Certificates of
the appropriate government officials of the state of incorporation of
Parent as to its existence and good standing, and certificates of the
appropriate government officials in each state where Parent does
business and where failure to qualify as a foreign corporation would
have a Material Adverse Effect, as to its good standing and due
qualification to do business in such state, each dated within sixty
(60) days prior to the Closing Date; and
(v) Incumbency. The names of the officers of Parent authorized to
sign the Other Agreements to be executed by Parent, together with a
sample of the true signature of each such officer;
(j) General Certificate of each Subsidiary's Assistant Secretary. A
certificate of the Assistant Secretary of each Subsidiary of the Company
together with true and correct copies of the following:
(i) Certificate of Incorporation. The Articles/Certificate of
Incorporation of such Subsidiary, including all amendments thereto,
certified by the Assistant Secretary of such Subsidiary and dated
within thirty (30) days prior to the Closing Date;
(ii) Bylaws. The Bylaws of such Subsidiary, including all
amendments thereto;
(iii) Resolutions. The resolutions of the Board of Directors of
such Subsidiary authorizing the execution, delivery and performance of
the Other Agreements to which such Subsidiary is a party;
(iv) Existence and Good Standing Certificates. Certificates of
the appropriate government officials of the state of incorporation of
such Subsidiary as to its existence and good standing, and
certificates of the appropriate government officials in each state
where such Subsidiary does business and where failure to qualify as a
foreign corporation would have a Material Adverse Effect, as to its
good standing and due qualification to do business in such state, each
dated within sixty (60) days prior to the Closing Date; and
(v) Incumbency. The names of the officers of such Subsidiary
authorized to sign the Other Agreements to be executed by such
Subsidiary, together with a sample of the true signatures of each such
officer;
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(k) Senior Loan Documents. Copies of the Senior Loan Documents and
each document relating thereto, and a certificate of the President or the
Controller of the Company certifying that the attached documents are a true,
correct and complete set of the Senior Loan Documents, that all conditions
precedent to funding of the Senior Debt have been met or waived, and that those
transactions are being consummated simultaneously with the sale of the Senior
Subordinated Notes;
(l) Acquisition Documents. Copies of the Acquisition Documents and
each document relating thereto, and a certificate of the President or the
Controller of the Company certifying that the attached documents are a true,
correct and complete set of the Acquisition Documents, that all conditions
precedent to funding to the Acquisition have been met or waived, and that those
transactions are being consummated simultaneously with the sale of the Senior
Subordinate Notes;
(m) Solvency Certificate. A certificate regarding the solvency of the
Company, which includes a pro forma balance sheet and cash flow projections and
analyses for the Company, executed by the President or the Controller of the
Company;
(n) Sources and Uses Certificate. A certificate executed by the
President or the Controller of the Company, setting forth in reasonable detail
the sources and uses of funds in the transactions contemplated herein, in the
Senior Loan Documents and in the Other Agreements;
(o) Communication with Accountants. Purchaser shall have received a
copy of a letter from the Company addressed to its accountants authorizing such
accountants to disclose to Purchaser such financial information concerning the
Company and its Subsidiaries as the Purchaser may reasonably request to assist
Purchaser in determining compliance by the Company with any of the financial
covenants contained in Article VII hereof;
(p) Inducement Letter. Letter agreements in the form and substance of
Exhibit B hereto executed by each of Parent, Pecks and Mentmore in favor of
Purchaser.
(q) Transaction Certificate. A certificate of the President or the
Controller of the Company that, to the best of their knowledge after due
investigation, all conditions precedent to the effectiveness of this Agreement
have been satisfied or waived;
(r) Environmental Reports. Environmental reports of an independent
environmental consulting firm satisfactory to the Purchaser with respect to the
Property and all improvements, fixtures and equipment located thereon, which
reports shall be addressed to the Purchaser and which shall evidence no material
violation of Environmental Laws or any actual or potential material liability
relating to Polluting Substances which is unacceptable to Purchaser in its sole
discretion;
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(s) Guaranties. A guaranty executed by (i) Parent guarantying the
Indebtedness of the Company to the Purchaser, and (ii) each of the Subsidiaries
of the Company guarantying the indebtedness of the Company to the Purchaser; and
(t) Additional Information, Other Documents and Agreements. Such other
information, documents, agreements, commitments and undertakings as Purchaser or
Purchaser's counsel shall reasonably request.
5.12 Material Adverse Change. For the period from December 31, 1995 to the
Closing Date, and except for the transactions contemplated by this Agreement,
the Other Agreements, and the Senior Loan Documents, there shall have been (a)
no occurrence or event which, in Purchaser's opinion, has or could have a
Material Adverse Effect, and (b) no occurrence or event which would lead the
Company or Purchaser to believe that the Company would fail to meet the cash
flow projections delivered to Purchaser pursuant to Section 4.2, except as
disclosed on Schedule 5.12.
5.13 Fees. All fees then payable pursuant to this Agreement which are due
on or prior to the Closing Date (including the fees, expenses and disbursements
of the Purchaser's counsel) shall have been paid to Purchaser (or such counsel,
as applicable).
5.14 No Event of Default. No Event of Default or Potential Default shall
have occurred and be continuing.
5.15 Representations and Warranties. All representations and warranties
contained in this Agreement and the Other Agreements shall be true and correct
in all material respects on the Closing Date.
5.16 Private Placement Number. The CUSIP Service Bureau of Standard &
Poor's Ratings Group shall have assigned private placement numbers to the Senior
Subordinated Notes and Warrants issued to John Hancock and evidence thereof
shall have been delivered to John Hancock and John Hancock's special counsel.
5.17 Legality. The Senior Subordinated Notes and Warrants shall qualify as
a legal investment for the Purchaser under all applicable laws (without resort
to any so-called "basket clause" of any such law) and the Purchaser's purchase
thereof shall not cause the Purchaser to be subject to any onerous or burdensome
legal requirement or penalty.
VI. AFFIRMATIVE COVENANTS
The Company covenants and agrees that, from the date hereof and until the
Senior Subordinated Obligations have been finally and irrevocably paid in full
in accordance with the terms hereof and thereof:
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6.1 Financial Statements. The Company will furnish to Purchaser:
(a) As soon as available, and in any event within ninety (90) days
after the end of each fiscal year of the Company, beginning with the fiscal year
ending December 31, 1996, (i) a copy of the consolidated and consolidating
financial statements of the Company for such fiscal year containing a balance
sheet, statement of income, statement of stockholders' equity, and statement of
cash flow as at the end of such fiscal year and for the fiscal year then ended,
in each case setting forth in comparative form the figures for the preceding
fiscal year, all in reasonable detail and audited and certified by Ernst &
Young, L.L.P. or any other firm of independent certified public accountants of
national recognized standing acceptable to Purchaser to the effect that such
financial statements have been prepared in accordance with GAAP; (ii) a
certificate by such independent certified public accountants confirming the
calculations set forth in the officers' certificate delivered simultaneously
therewith in accordance with Section 6.2(a); and (iii) a comparison of the
actual results during such fiscal year to those originally budgeted by the
Company prior to the beginning of such fiscal year, along with management's
discussion and analysis of variances, as well as, variances between actual
results for such fiscal year and actual results for the previous fiscal year.
The annual audit report required hereby shall not be qualified or limited.
(b) As soon as available, and in any event within thirty (30) days
after the end of each calendar month, a copy of an unaudited consolidated and
consolidating financial statements of the Company as of the end of such calendar
month and for the portion of the fiscal year then ended, containing balance
sheets, statements of income, statements of retained earnings and statements of
cash flow, in each case setting forth in comparative form the figures for the
corresponding period of the preceding fiscal year, all in reasonable detail,
including, without limitation, a comparison of the actual results for such
period to those originally budgeted by the Company prior to the beginning of
such fiscal period and for the fiscal year to date.
(c) Simultaneously with the delivery of financial information pursuant
to Section 6.1(b) in respect of any month which is the last month of any fiscal
quarter, management's discussion and analysis of variances between the results
for the portion of the current fiscal year ended on the last day of such fiscal
quarter and the corresponding period of the preceding fiscal year.
(d) On or before thirty (30) days prior to the beginning of each
fiscal year of the Company, an annual budget or business plan for such fiscal
year, including a projected consolidated and consolidating balance sheet, income
statement, and cash flow statement for such year, and, promptly during each
fiscal year, all revisions thereto approved by the Board of Directors of the
Company.
6.2 Certificates; Other Information. The Company will furnish to Purchaser
all of the following:
(a) Concurrently with the delivery of each of the financial statements
referred to in Sections 6.1(a) and 6.1(b), a certificate of an authorized
officer of the Company in the form
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of the officer's certificate attached hereto as Exhibit C (i) stating that no
Potential Default or Event of Default has occurred and is continuing or, if such
officer has knowledge of a Potential Default or Event of Default, the nature
thereof and specifying the steps taken or proposed to remedy such matter, (ii)
showing in reasonable detail the calculations showing compliance with Sections
7.9 and 7.10, (iii) stating that the financial statements attached have been
prepared in accordance with GAAP and fairly and accurately present (subject to
year-end audit adjustments, for the annual certificates) the financial condition
and results of operations of the Company at the date and for the period
indicated therein, (iv) containing summaries of accounts payable agings,
accounts receivable agings, and inventory (provided that such information shall
be required only in connection with the delivery of the financial statements
referred to in Section 6.1 (b) in respect of any month which is the last month
of a fiscal quarter of the Company), and (v) containing a schedule of the
outstanding Indebtedness for borrowed money of the Company and its Subsidiaries
describing in reasonable detail each such debt issue or loan outstanding and the
principal amount and amount of accrued and unpaid interest with respect to each
such debt issue or loan (provided that such information shall be required only
in connection with the delivery of the financial statements referred to in
Section 6.1(b) in respect of any month which is the last month of a fiscal
quarter of the Company).
(b) As soon as available, (i) a copy of each financial statement,
report, notice or proxy statement sent by the Company or any of its Subsidiaries
to their respective stockholders in their capacity as stockholders, (ii) a copy
of each regular, periodic or special report, registration statement, or
prospectus filed by the Company or any of its Subsidiaries with any securities
exchange or the Securities and Exchange Commission or any successor agency,
(iii) any material order issued by any court, governmental authority, or
arbitrator in any material proceeding to which the Company or any of its
Subsidiaries is a party, (iv) copies of all press releases and other statements
made available generally by the Company or any of its Subsidiaries to the public
generally concerning material developments in the Company's or such Subsidiary's
business, and (v) a copy of all notices and other correspondence sent by the
Company to the Senior Lender pertaining to the occurrence of any default or
event of default under the Senior Loan Documents.
(c) Promptly, such additional information concerning the Company or
any of its Subsidiaries as Purchaser may reasonably request.
6.3 Books and Records. The Company shall, and shall cause each of its
Subsidiaries to, keep (a) proper books of record and account in which full, true
and correct entries will be made of all dealings or transactions of or in
relation to its business and affairs; (b) set up on its books accruals with
respect to all taxes, assessments, charges, levies and claims; and (c) on a
reasonably current basis set up on its books from its earnings allowances
against doubtful receivables, advances and investments and all other proper
accruals (including, without limitation, by reason of enumeration, accruals for
premiums, if any, due on required payments and accruals for depreciation,
obsolescence, or amortization of properties), which should be set aside from
such earnings in connection with its business. All determinations pursuant to
this subsection shall be made in accordance with, or as required by, GAAP
consistently applied.
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6.4 Financial Disclosure. The Company hereby irrevocably authorizes and
directs all accountants and auditors employed by it at any time during the term
of this Agreement to exhibit and deliver to Purchaser copies of any of the
Company's financial statements, trial balances or other accounting records of
any sort in the accountant's or auditor's possession, and to disclose to
Purchaser any information they may have concerning the Company's or any of its
Subsidiaries' financial status and business operations. The Company hereby
irrevocably authorizes all federal, state and municipal authorities to furnish
to Purchaser copies of reports or examinations relating to the Company or any of
its Subsidiaries, whether made by the Company, any of its Subsidiaries or
otherwise.
6.5 Disclosure of Material Matters. The Company will, and will cause each
of its Subsidiaries to, immediately upon learning thereof, report to Purchaser
(a) all matters materially affecting the value, enforceability or collectibility
of any material portion of the its assets including, without limitation, changes
to significant contracts, schedules of equipment. changes of significant
equipment or real property, the reclamation or repossession of, or the return to
the Company or any of its Subsidiaries of, a material amount of goods and
material claims or disputes asserted by any customer or other obligor, which
matters could have a Material Adverse Effect, and (b) any material adverse
change in the relationship between the Company and any of its suppliers or
customers or its Subsidiaries and any of their respective suppliers or customers
which could have a Material Adverse Effect.
6.6 Performance of Obligations. The Company will, and will cause each of
its Subsidiaries to, duly and punctually pay and perform its obligations under
this Agreement and the Other Agreements to which it is a party.
6.7 Preservation of Existence and Conduct of Business. The Company will,
and will cause each of its Subsidiaries to, preserve and maintain (a) its
corporate existence and (b) all of its material leases, privileges, franchises,
qualifications and rights that are necessary or useful in the ordinary conduct
of its business (if the failure to so maintain such leases, privileges,
franchises, qualifications and rights would, individually or in the aggregate,
have a Material Adverse Effect), and conduct its business as presently conducted
in an orderly and efficient manner in accordance with good business practices
(if the failure to so conduct its business would have a Material Adverse
Effect); provided, however, the Company shall not be obligated to preserve the
existence of any Inactive Subsidiary.
6.8 Maintenance of Properties. The Company will, and will cause each of its
Subsidiaries to, operate and maintain in good condition and repair (ordinary
wear and tear excepted) and replace as necessary, all of its assets and
properties which are necessary or useful in accordance with sound business
practices in the proper conduct of its business so that the value and operating
efficiency of its assets and properties are maintained and preserved (if the
failure to so operate, maintain or replace any such assets or properties would
have, either individually or in the aggregate, a Material Adverse Effect). The
Company will, and will cause each of its Subsidiaries to, at all times maintain
the Intellectual Property in full force and effect, and will defend and protect
the Intellectual Property against all adverse claims, except to the
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extent that the failure to so maintain, defend or protect such Intellectual
Property would not have a Material Adverse Effect.
6.9 Payment of Taxes and Claims. The Company will, and will cause each of
its Subsidiaries to, pay or discharge, at or before maturity or before becoming
delinquent (a) all taxes, levies, assessments, vault, water and sewer rents,
rates, charges, levies, permits, inspection and license fees and other
governmental and quasi-governmental charges and any penalties or interest for
nonpayment thereof, heretofore or hereafter imposed or which may become a Lien
upon any property owned by the Company or its Subsidiaries or arising with
respect to the occupancy, use, possession or leasing thereof (collectively the
"Impositions") and (b) all lawful claims for labor, material, and supplies,
which, if unpaid, might become a Lien upon any of its property; provided,
however, neither the Company nor any of its Subsidiaries will be required to pay
or discharge any claim for labor, material, or supplies or any Imposition which
is being contested in good faith by appropriate actions or proceedings
diligently pursued, and for which adequate reserves in conformity with GAAP with
respect thereto have been established.
6.10 Compliance with Laws. The Company shall, and shall cause each of its
Subsidiaries to, comply with all acts, rules, regulations and orders of any
legislative, administrative or judicial body or official applicable to the
operation of the Company's or any Subsidiary's business if noncompliance with
such acts, rules, regulations or orders could have a Material Adverse Effect;
provided, however, each of the Company and its Subsidiaries may contest or
dispute any acts, rules, regulations, orders and directions of those bodies or
officials in any reasonable manner, provided that adequate reserves with respect
thereto are established in accordance with GAAP.
6.11 Payment of Leasehold Obligations. The Company shall, and shall cause
each of its Subsidiaries to, at all times pay, when and as due, its rental
obligations under all material leases under which it is a tenant or lessee, and
shall otherwise comply, in all material respects, with all other terms of such
leases and keep them in full force and effect and, at the request of Purchaser,
will provide evidence of its having done so. Each of the Company and its
Subsidiaries may, however, contest or dispute its obligations under such
material leases, provided that adequate reserves with respect thereto are
established in accordance with GAAP. Each of the Company and its Subsidiaries
shall also comply in all respects with all provisions of all agreements,
indentures, mortgages, deeds of trust or other agreements binding on it or
affecting its properties or business (other than the Senior Loan Documents)
(after giving effect to applicable grace periods contained therein, if any)
where the failure to so comply would have a Material Adverse Effect.
6.12 Insurance. The Company will, and will cause each of its Subsidiaries
to, maintain, with financially sound, reputable and solvent companies, insurance
policies (a) insuring its assets and business against loss by fire, explosion,
theft, business interruption and other risks and casualties as are customarily
insured against by companies engaged in the same or a similar business, and (b)
insuring it against liability for personal injury and property damages relating
to its assets, such policies to be in such amounts and covering such risks as
are usually insured against by companies engaged in the same or a similar
business and use. All
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general liability policies shall be endorsed in favor of Purchaser as an
additional insured, and shall provide that any amounts payable thereunder to
Purchaser is subordinate in right of payment to the Senior Debt. The Company
shall, and shall cause each of its Subsidiaries to, (a) deliver copies of all
such policies to Purchaser within 30 days after the Closing Date, and from time
to time thereafter upon request, (b) pay, or cause to be paid, all premiums for
such insurance before such premiums become due, (c) furnish to Purchaser
satisfactory proof of the timely making of such payments, and (d) cause such
policies to require the insurer to give notice to Purchaser of termination of
any such policy at least 30 days before such termination is to be effective.
6.13 Inspection Rights. At any time and from time to time during normal
business hours and upon two Business Days prior notice, the Company will, and
will cause each of its Subsidiaries to, permit representatives of Purchaser to
examine and make copies of the books and records of, and visit and inspect the
properties of, the Company and its Subsidiaries, and to discuss the business,
operations, and financial condition of the Company and its Subsidiaries with
their respective officers and with their respective independent certified public
accountants. In accordance with the terms of Section 12.1 hereof, the Company
will, and will cause each of its Subsidiaries to, promptly reimburse Purchaser
for all expenses incurred by representatives of Purchaser in connection with
such inspections.
6.14 Notices. The Company will promptly, but in any event within five (5)
Business Days after first becoming aware thereof, notify Purchaser in writing
of:
(a) the commencement of any action, suit, or proceeding against the
Company or any of its Subsidiaries that, in its reasonable judgment, if
determined adversely to the Company, would have a Material Adverse Effect; or
(b) any other matter that has had or, in the reasonable judgment of
the Company, is likely to have, a Material Adverse Effect; or
(c) the occurrence of a Potential Default or an Event of Default,
which notice shall specify the nature of such event, condition or default and
what action the Company has taken or is taking or proposes to take with respect
thereto.
Any notification required by this Section 6.14 shall be accompanied by a
certificate of the President or the Controller of the Company setting forth the
details of the specified events and the action which the Company or its
Subsidiary proposes to take with respect thereto.
6.15 Additional Notices. Immediately upon receipt by the Company, the
Company shall provide Purchaser with copies of all notices (including notices of
default), statements and financial information, including notices of default,
received from the Senior Lender under the Senior Loan Agreement and any other
creditor or lessor with respect to the acceleration of the maturity of any item
of Indebtedness for borrowed money which, if not paid, could give rise to an
Event of Default under Section 8.1(b) or the repossession of material property
from the Company or any of its Subsidiaries.
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6.16 Senior Loan Document Amendments. The Company shall promptly provide
Purchaser with copies of all proposed amendments to the Senior Loan Documents
and of all other material loan agreements to which the Company or any of its
Subsidiaries is a party.
6.17 Further Assurances. Each of the Company and the Holders shall, and
shall cause each of their respective Subsidiaries to, execute and deliver, from
time to time, upon the reasonable request of the other party, such supplemental
agreements, statements, assignments and transfers, or instructions on documents
as may be necessary in order that the full intent of the parties to this
Agreement and the Other Agreements may be carried into effect.
6.18 Compliance with ERISA and the Code. The Company will, and will cause
each of its Subsidiaries to, comply, and will cause each other member of any
Commonly Controlled Entity to comply, with all minimum funding requirements, and
all other material requirements, of ERISA and the Code, if applicable, to any
Plan it or they sponsor or maintain, so as not to give rise to any liability
thereunder. The Company will, and will cause each of its Subsidiaries to, pay
and will cause each other member of any Commonly Controlled Entity to pay when
due any amount payable by it to the PBGC. Promptly after the filing thereof, the
Company shall, and shall cause each of its Subsidiaries to, furnish to Purchaser
with regard to each Plan, copies of each annual report required to be filed
pursuant to Section 104 of ERISA in connection with each such Plan for each Plan
Year.
6.19 Compliance with Regulations G. T. U and X. Neither the Company nor any
Person acting on its behalf will, nor will the Company permit any of its
Subsidiaries to, take any action which might cause this Agreement, the Senior
Subordinated Notes, the Warrant Documents, the Senior Loan Documents or any
Other Agreements to violate, and the Company will, and will cause each of its
Subsidiaries to, take all actions necessary to cause compliance with,
Regulations G, T, U and X of the Board of Governors of the Federal Reserve
System and the Securities Exchange Act of 1934, in each case as now in effect or
as the same may hereafter be in effect.
6.20 Fiscal Year. The Company will cause its fiscal year to be the twelve
month period ending on December 31 of each year.
6.21 Board of Directors. In addition to any rights under this Agreement,
the Company will cause Parent to deliver to Purchaser (a) a certified copy of
all materials distributed at or prior to all meetings of Parent's board of
directors, certified as true and accurate by the Secretary of Parent, promptly
following each such meeting and (b) a certified copy of the minutes of each of
the meetings of Parent's board of directors, certified as true and accurate by
the secretary of Parent, as soon as available but in any event promptly
following the end of the next subsequent regular meeting of Parent's board of
directors. The Company will cause Parent to (a) permit Rice, at all times during
which Rice is a Holder or owns any stock, warrants or other equity interest in
Parent, to designate one (1) Person to attend all meetings of Parent's board of
directors and shareholders as an observer, (b) permit John Hancock, at all times
during which John Hancock is a Holder or owns any stock, warrants or other
equity interest in Parent, to designate
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one (1) Person to attend all meetings of Parent's board of directors and
shareholders as an observer. The Company will cause Parent to provide such
designees not less than twenty-one (21) calendar days actual notice of all
regular meetings and not less than seven (7) calendar days actual notice of all
special meetings of Parent's board of directors and shareholders (unless any
such special meeting of Parent's board of directors is an emergency meeting, in
which case Parent shall provide such designees with the same calendar days
actual notice as provided to the members of Parent's board of directors). Such
board of directors meetings shall be held in person at least quarterly.
Purchaser may change its designees by written notice to Parent. Parent shall
reimburse Purchaser for all reasonable expenses incurred in traveling to and
from such meetings and attending such meetings by such observers.
6.22 Environmental Costs.
(a) The Company hereby indemnifies and holds Purchaser harmless from
and against any liability, loss, damage, suit, action or proceeding pertaining
to solid or hazardous waste materials or other waste-like or toxic substances,
including, but not limited to, claims of any federal, state or municipal
government or quasi-governmental agency or any third person, whether arising
under any federal, state or municipal law or regulation, or tort, contract or
common law that relates to the Company or any of its Subsidiaries.
(b) To the extent the laws of the United States or any state in which
the Company or any of its Subsidiaries leases or owns property provide that a
Lien upon the property of the Company or any of its Subsidiaries may be obtained
for the removal of Polluting Substances which have been released, no later than
sixty (60) days after notice is given by Purchaser to the Company or any of its
Subsidiaries, the Company shall, and shall cause each of its Subsidiaries to,
deliver to Purchaser a report issued by a qualified, third party environmental
consultant selected by the Company and approved by Purchaser certifying as to
the existence of any Polluting Substances located upon or beneath the specified
property, leased or owned. To the extent any such Polluting Substance is located
therein or thereunder that either (i) subjects the property to Lien or (ii)
requires removal to safeguard the health of any Person, the Company shall, and
shall cause each of its Subsidiaries to, remove, or cause to be removed, such
Lien and such Polluting Substance at the Company's expense.
6.23 Future Guaranties. The Company agrees to cause all Subsidiaries
acquired or created by it to execute guaranties in favor of Purchaser in respect
of all Senior Subordinated Obligations now or hereafter owing by the Company to
the Purchaser. Nothing contained in this Section 6.23 shall be construed as a
consent by Purchaser to the formation or acquisition by the Company of any
Subsidiaries in contravention of Section 7.3.
VII. NEGATIVE COVENANTS
The Company covenants and agrees that from the date hereof until the Senior
Subordinated Obligations have been finally and irrevocably paid in full in
accordance with the terms hereof and thereof:
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7.1 Indebtedness. The Company will not, and will not cause or permit any of
its Subsidiaries to, create, incur, issue, assume, guarantee or otherwise become
liable for any Indebtedness except (a) Permitted Indebtedness; and (b) any
extension, renewal or refinancing of any Permitted Indebtedness (other than the
Senior Debt) on such terms and conditions as are, on the whole, no more onerous
than the terms and conditions of such Permitted Indebtedness on the date of such
extension, renewal or refinancing; and (c) any replacement or refinancing of the
Senior Debt; provided that (i) the interest rate margin on such refinancing
shall be no greater than the Applicable Margin provided for in the Senior Loan
Agreement as in effect on the date hereof, (ii) the amortization of principal on
such refinancing shall be for no shorter period, and for no greater annual
amounts, than the amortization provided for in the Senior Loan Agreement as in
effect on the date hereof, (iii) the maximum principal amount outstanding under
the Senior Debt as so replaced or refinanced does not exceed the maximum
principal amount permitted to be outstanding under the Senior Loan Agreement as
in effect on the date of such replacement or refinancing, and (iv) the other
terms and conditions of such replacement or refinancing, taken as a whole, are
not materially more onerous to the Company than the terms of the Senior Loan
Agreement as in effect on the date hereof. Any Permitted Indebtedness which is
subordinated to the Senior Subordinated Obligations shall continue to be
subordinated to the Senior Subordinated Obligations on terms and conditions
satisfactory to Purchaser.
7.2 Limitation on Liens. The Company will not, and will not cause or permit
any of its Subsidiaries to, incur, create, assume, or permit to exist any Lien
upon any of its property, assets, or revenues, including, but not limited to,
its shares of Capital Stock of each of its Subsidiaries, whether now owned or
hereafter acquired, except Permitted Liens.
7.3 Merger, Acquisition, Dissolution and Sale of Assets. (a) The Company
will not, and will not cause or permit any of its Subsidiaries to, (i) merge
into or consolidate with any other Person, (ii) permit any other Person to merge
into or consolidate with it, (iii) sell, transfer, lease or otherwise dispose of
(in one transaction or in a series of transactions) all or any part of its
assets whether now owned or hereafter acquired) or (iv) issue, sell, transfer,
lease or otherwise dispose of any Capital Stock of the Company or any Subsidiary
to, or accept any capital contribution from, any Person, except that:
(A) the Company and any of its Subsidiaries may sell inventory in the
ordinary course of business;
(B) the Company and any of its Subsidiaries may sell damaged, worn out
or obsolete tangible assets in the ordinary course of business and in
commercially reasonable manner, so long as the Net Cash Proceeds of any
such disposition are applied as required by Section 2.11(e) of the Senior
Loan Agreement;
(C) the Company or any of its Subsidiaries may dispose of assets
consisting of machinery, equipment or facilities which will be replaced or
upgraded with machinery, equipment or facilities put to a similar use and
owned by it; provided that (i) such replacement or upgraded machinery,
equipment or facilities are acquired (or a firm order thereof is placed)
within ninety (90) days after such disposition), and (ii) the fair
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market value of all property disposed of pursuant to this clause (C) does
not exceed $1,500,000 in the aggregate during any fiscal year of the
Company;
(D) If at the time thereof, and immediately after giving effect
thereto, no Potential Default or Event of Default shall have occurred and
be continuing, (i) any Wholly Owned Subsidiary may merge into the Company
in a transaction in which the Company is the surviving corporation and (ii)
any Wholly Owned Subsidiary may merge into or consolidate with any other
Wholly Owned Subsidiary in a transaction in which (x) the surviving entity
is a Wholly Owned Subsidiary and (y) no Person other than the Company or a
Wholly Owned Subsidiary receives any consideration;
(E) the Company may issue to Pecks the Pecks Preferred Stock;
(F) the Company may liquidate Cash Equivalents for its account;
(G) the Company may issue to Tredegar Investments the Seller Preferred
Stock;
(H) the Company or any of its Subsidiaries may sell, lease, transfer,
assign or otherwise dispose of assets (other than in connection with any
Casualty or Condemnation) to the Company, Tredegar or any other Wholly
Owned Subsidiary, so long as (i) the fair market value of all property
disposed of by the Company after the Closing Date pursuant to this clause
(H) does not exceed $5,000,000 in the aggregate, and (ii) the fair market
value of all property disposed of by Wholly Owned Subsidiaries to other
Wholly Owned Subsidiaries after the Closing Date pursuant to this clause
(H) does not exceed $5,000,000 in the aggregate;
(I) the foregoing shall not be deemed violated by any Casualty or
Condemnation affecting assets of the Company or any Subsidiary, so long as
the Net Cash Proceeds thereof are applied as required by Section 2.11(e) of
the Senior Loan Agreement and the Company and its Subsidiaries are in
compliance with all applicable provisions of Section 5.13 of the Senior
Loan Agreement;
(J) the Company or any of its Subsidiaries may sell, lease, transfer,
assign or otherwise dispose of assets (other than in connection with any
Casualty or Condemnation) of the Company of any of its Subsidiaries to any
Person (other than the Company or any of its Subsidiaries) to the extent
that the aggregate Net Cash Proceeds from such sale, lease, transfer,
assignment or other disposition do not exceed $500,000, so long as (i) the
fair market value of all property disposed of pursuant to this clause (J)
does not exceed $1,000,000 in the aggregate during any fiscal year of the
Company, (ii) such disposition is made for cash at fair market value and
(iii) the Net Cash Proceeds of such disposition are applied as required by
Section 2.11(e) of the Senior Loan Agreement as in effect on the Closing
Date (unless no Senior Loan Agreement is then in effect, in which case,
such Net Cash Proceeds shall be applied as a mandatory prepayment of the
Senior Subordinated Notes in accordance with Sections 2.3(b) and/or (c));
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(K) the Company or any of its Subsidiaries may sell equipment to a
customer of the Company or any of its Subsidiaries approved by the
Purchaser pursuant to terms that are (i) ancillary to an agreement to
supply such customer with products of the Company or any of its
Subsidiaries which is entered into after the Closing Date on an arm-length
basis and (ii) commercially reasonable in the context of such supply
agreement, so long as (x) the equipment sold is used in the production of
such products for such customer and (y) the fair market value of all
property disposed of pursuant to this clause (K) after the Closing Date
does not exceed $1,500,000 in the aggregate; and
(L) the Company may accept contributions to its capital from Parent
made in cash (including Qualifying Capital Contributions), so long as (i)
Parent shall receive no consideration therefor (other than additional
shares of Common Stock) and (ii) 100% of the Net Cash Proceeds thereof are
applied as required by Section 2.11(e) of the Senior Loan Agreement as in
effect on the Closing Date (unless no Senior Loan Agreement is then in
effect, in which case, such Net Cash Proceeds shall be applied as a
mandatory prepayment of the Senior Subordinated Notes).
(b) The Company will not, and will not cause or permit any of its
Subsidiaries to, purchase, lease or otherwise acquire (in one transaction or a
series of transactions) all or any substantial part of the assets of any other
Person, except that the Company and any of its Subsidiaries may purchase
inventory in the ordinary course of business.
(c) The Company will not form, acquire or permit the existence of any
Subsidiary or Subsidiaries of the Company other than the Subsidiaries listed on
Schedule 4.16.
7.4 Dividends Distributions and Other Restricted Payments. The Company will
not, and will not cause or permit any of its Subsidiaries to, (a) declare or
pay, directly or indirectly, any dividend or make any other distribution (by
reduction of capital or otherwise and including any tax sharing payments),
whether in cash, property, securities or a combination thereof, with respect to
any Capital Stock of the Company or any of its Subsidiaries, (b) directly or
indirectly redeem, purchase, retire or otherwise acquire for value, any Capital
Stock of the Company or any of its Subsidiaries (including the Pecks Preferred
Stock and the Seller Preferred Stock), whether such acquisition is made at the
option of the Company or such Subsidiary or at the option of the holder of such
Capital Stock and whether or not such acquisition is required under the terms
and conditions applicable to such Capital Stock or set aside any amount for any
such purpose, (c) release, cancel, compromise or forgive in whole or in part the
Indebtedness evidenced by the Intercompany Notes or (d) directly or indirectly
redeem, purchase, prepay, retire, defease or otherwise acquire for value any
Indebtedness which is subordinate in right of payment or of equal payment
priority to the Senior Subordinated Notes, whether such acquisition is made at
the option of the Company or such Subsidiary or at the option of the holder of
such Indebtedness and whether or not such acquisition is required under the
terms and conditions applicable to such Indebtedness, or set aside any amount
for any such purpose, except for repayments of principal of any such
Indebtedness (other than Indebtedness which is subordinate in right of payment
to
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the Senior Subordinated Notes) in accordance with the scheduled amortization
thereof; provided, however, that:
(i) any of the Company's Subsidiaries may declare and pay dividends or
make other distributions to the Company;
(ii) the Company may make Permitted Tax Distributions;
(iii) the Company may fund purchases by Parent or Sunderland of the
common stock of Parent or Sunderland held by an employee of the Company upon the
termination of such individual's employment with the Company; provided that (A)
the Company shall give prior written notice thereof to the Purchaser, (B) the
aggregate amount of all such repurchases made after the Closing Date shall not
exceed $3,000,000, (C) the aggregate amount of all such repurchases made during
any fiscal year of the Company shall not exceed $1,000,000 and (D) no such
repurchase shall be made if any Potential Default or Event of Default shall have
occurred and be continuing (or would occur after giving effect thereto);
(iv) the Company may redeem and retire the Seller Preferred Stock for
consideration consisting solely of the release and satisfaction of Tredegar
Investment's obligations to make indemnification payments in a total amount not
exceeding the aggregate liquidation preference (including accrued dividends) of
the shares of Seller Preferred Stock so redeemed and retired;
(v) so long as no Potential Default or Event of Default shall have
occurred and be continuing or would occur as a result thereof, the Company may
declare and pay accrued regular dividends on the Pecks Preferred Stock and the
Seller Preferred Stock in accordance with the terms thereof as in effect on the
Closing Date; provided that such dividends shall not exceed, in the case of the
Pecks Preferred Stock, 11.25% per annum of the liquidation preference thereof
and, in the case of the Seller Preferred Stock, 7.00% per annum of the
liquidation preference thereof;
(vi) so long as no Potential Default or Event of Default shall have
occurred and be continuing or would occur as a result thereof, the Company may
make distributions to Parent to permit Parent to pay regular dividends on the
Hamilton Preferred Stock in accordance with the terms thereof as in effect on
the Closing Date: provided that (A) such dividends shall not exceed 9 1/2% per
annum of the liquidation preference thereof and (B) any such funding by the
Company shall be immediately applied by Parent to the payment of such accrued
regular dividends;
(vii) so long as no Potential Default or Event of Default shall have
occurred and be continuing or would occur as the result thereof, the Company may
make distributions to Parent to permit Parent to (A) purchase the Warrants upon
exercise of the Put Option (as defined in the Warrant documents) by the holders
of the Warrants and (B) pay the principal balance of, or any scheduled interest
payments due on, any promissory notes issued by Parent to the holders of the
Warrants in accordance with the terms of the Shareholders Agreement; and
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(viii) the Company may redeem and retire the Pecks Preferred Stock in
connection with the exchange of such stock for unsecured Indebtedness of the
Company, but only if such Indebtedness would constitute Permitted Indebtedness
under clause (g) of the definition of Permitted Indebtedness.
7.5 Loans and Investments. Except for Permitted Investments, the Company
will not, and will not cause or permit any of its Subsidiaries to, make any
advance, loan, extension of credit, or capital contribution to or investment in,
or purchase any stock, bonds, notes, debentures, or other securities of any
Person.
7.6 Transactions with Affiliates and Shareholders. The Company will not,
and will not cause or permit any of its Subsidiaries to, sell or transfer any
property or assets to, or purchase or acquire any property or assets from, or
otherwise enter into or maintain any other transactions with, any of its
Affiliates or Shareholders, except that so long as no Event of Default or
Potential Default shall have occurred and be continuing, the Company or any of
its Subsidiaries may enter into any of the foregoing transactions in the
ordinary course of business at prices and on terms and conditions that are (a)
set forth in writing and delivered to Purchaser and (b) as favorable to the
Company or such Subsidiary as would be obtainable at the time in a comparable
transaction on an arm's-length basis from an unrelated third party. The
provisions of this Section 7.6 shall not prohibit (i) any payment expressly
permitted under Section 7.4 or 7.5, (ii) any transaction entered into and
maintained among the Company and any Wholly Owned Subsidiaries or among Wholly
Owned Subsidiaries, (iii) commencing with the fiscal quarter of the Company
ended June 30, 1997, the payment of fees of up to $75,000 per fiscal quarter
pursuant to the Management Agreement, provided that (A) the Leverage Ratio as of
the last day of such fiscal quarter is less than 3.50:1.00 and the Interest
Coverage Ratio as of the last day of such fiscal quarter is greater than
3.00:1.00 and (B) no Event of Default or Potential Default shall have occurred
and be continuing or would occur as a result thereof, (iv) the payment of
reasonable out-of-pocket expenses by the Company to Mentmore pursuant to the
Management Agreement, (v) the payment of compensation to employees in the
ordinary course of business and (vi) the execution and delivery by the Company,
Parent and Sunderland of a tax sharing agreement consistent with Section 7.4 and
the definition of Permitted Tax Distributions. The Company will not, and will
not cause or permit any of the Subsidiaries to, enter into any management,
employment, consulting or similar agreement or arrangement with, or otherwise
pay any consideration to, the Permitted Holders, any members of their families
or any Affiliates of the Permitted Holders or such other Persons, except for
payments pursuant to the Management Agreement permitted under clauses (iii) and
above.
7.7 Nature of Business. The Company will not, and will not cause or permit
any of its Subsidiaries to, engage in any business other than the businesses
conducted by it on the Closing Date (after giving effect to the Acquisition), or
any business reasonably related thereto.
7.8 Modification of Senior Loan Agreement. The Company will not, without
the prior written consent of Purchaser, agree or consent to any modification,
amendment or waiver of
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any of the terms or provisions of the Senior Loan Agreement that is prohibited
under Section 5.02 of the Senior Subordination Agreement.
7.9 Capital Expenditures. (a) The Company will not permit Capital
Expenditures for any period set forth below to be more than the sum of (i) the
amount set forth below opposite such period (without giving effect to any carry
over from any prior period), (ii) commencing with 1997, the amount of Excess
Cash Flow for the immediately preceding calendar year not required to be paid to
the Senior Lender pursuant to Section 2.11(f) of the Senior Loan Agreement, if
any, and (iii) commencing with 1997, the excess, if any, of the amount set forth
below opposite the immediately preceding period (without giving effect to any
carry over from any prior period) over the actual amount of Capital Expenditures
for such immediately preceding period:
Period Amount
------ ------
Nine calendar months ended December 31, 1996 $4,500,000
Calendar year ended December 31, 1997 $8,025,000
Calendar year ended December 31, 1998 $6,725,000
Each calendar year thereafter $3,800,000
(b) The Company will not permit Cash Capital Expenditures for any
period set forth below to be more than the sum of (i) the amount set forth below
opposite such period (without giving effect to any carry over from any prior
period), (ii) commencing with 1997, the amount of Excess Cash Flow for the
immediately preceding calendar year not required to be paid to the Senior Lender
pursuant to Section 2.11 (f) of the Senior Loan Agreement, if any, and (iii)
commencing with 1997, the excess, if any, of the amount set forth below opposite
the immediately preceding period (without giving effect to any carry over from
any prior period) over the actual amount of Cash Capital Expenditures for such
immediately preceding period:
Period Amount
------ ------
Nine calendar months ended December 31, 1996 $1,800,000
Calendar year ended December 31, 1997 $2,300,000
Calendar year ended December 31, 1998 $1,900,000
Each calendar year thereafter $2,300,000
7.10 Financial Covenants. (a) Interest Coverage. The Company will not
permit the ratio, for the one-fiscal-quarter period ending June 30, 1996, the
two-fiscal-quarter period ending September 30, 1996, the three-fiscal-quarter
period ending December 31, 1996 or any subsequent four-fiscal-quarter period
(any such period, a "measurement period") ending on a date falling in any period
set forth below (the "applicable period"), of (i) EBITDA for such measurement
period to (ii) Cash Interest Expense for such measurement period to be less than
the ratio set forth below for such applicable period:
From and including To and Including Ratio
------------------ ---------------- -----
April 1, 1996 June 30, 1996 1.10 to 1.00
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April 1, 1996 September 30, 1996 1.25 to 1.00
April 1, 1996 December 31, 1996 1.80 to 1.00
January 1, 1997 March 31, 1997 2.00 to 1.00
April 1, 1997 June 30, 1997 2.20 to 1.00
July 1, 1997 December 31, 1997 2.50 to 1.00
January 1, 1998 June 30, 1998 2.75 to 1.00
July 1, 1998 December 31, 1998 3.00 to 1.00
January 1, 1999 March 31, 2006 3.00 to 1.00
(b) Fixed Charge Coverage. The Company will not permit the ratio, for
any four-fiscal-quarter period (any such period, a "measurement period") ending
on a date falling in any period set forth below (the "applicable period"), of
(i) (A) EBITDA for such measurement period, less (B) Cash Capital Expenditures
for such measurement period, less (C) Cash Preferred Dividends for such
measurement period to (ii) (A) Cash Interest Expense for such measurement
period, plus (B) Scheduled Principal Payments for such measurement period to be
less than the ratio set forth below for such applicable period:
From and including To and Including Ratio
------------------ ---------------- -----
January 1, 1997 March 31, 1997 1.00 to 1.00
April 1, 1997 September 30, 1997 1.00 to 1.00
October 1, 1997 December 31, 1997 1.10 to 1.00
January 1, 1998 June 30, 1998 1.20 to 1.00
July 1, 1998 March 31, 2006 1.25 to 1.00
(c) Leverage Ratio. The Company will not permit the ratio, for any
four-fiscal quarter period (any such period, a "measurement period") ending on a
date falling in any period set forth below (an "applicable period"), of (i)
Total Funded Debt as of the end of such measurement period (after giving effect
to any Qualifying Capital Contribution made after such fiscal quarter) to (ii)
EBITDA for such measurement period to be greater than the ratio set forth below
for such applicable period:
From and including To and Including Ratio
------------------ ---------------- -----
January 1, 1997 September 30, 1997 5.00 to 1.00
October 1, 1997 December 31, 1997 4.00 to 1.00
January 1, 1998 December 31, 1998 3.75 to 1.00
January 1, 1999 March 31, 2006 3.50 to 1.00
(d) Minimum Net Worth. The Company will not permit its Net Worth as of
the last day of any fiscal quarter of the Company (after giving effect to any
Qualifying Capital Contribution made after such fiscal quarter) to be less than
the "Minimum Compliance Level". The Minimum Compliance Level shall be $1,500,000
on the Closing Date, and shall be increased as of the last day of each fiscal
quarter of the Company ending after the Closing Date, commencing with the fiscal
quarter ending on June 30, 1996, by an amount equal to 50% of Net Income (if
positive) for such fiscal quarter and 100% of the Net Cash Proceeds of any
Equity
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Issuance (other than a Qualifying Capital Contribution) by the Company
during such fiscal quarter. The foregoing increases in the Minimum Compliance
Level shall be fully cumulative and no reduction in the Minimum Compliance Level
shall be made to reflect negative Net Income for any period. For purposes of
this Section 7.10(d) only, Net Income shall be determined without regard to
clauses (d) and of the proviso in the definition thereof.
(e) Total Funded Debt. The Company will not permit Total Funded Debt
at any time on or prior to March 31, 1997 to exceed $75,000,000.
(f) Rental Expense. The Company will not permit Rental Expense for any
fiscal year of the Company to be greater than $3,250,000.
VIII. EVENTS OF DEFAULT AND REMEDIES THEREFOR
8.1 Events of Default. The occurrence of any one or more of the following
events shall constitute an "Event of Default":
(a) The (i) Company shall fail to pay any scheduled interest payment
when due under the Senior Subordinated Notes, and such failure is not cured
within five (5) Business Days after the occurrence thereof (additional interest
shall accrue at the rate set forth in Section 1.l on any such unpaid interest
until fully paid), (ii) Company or any of its Subsidiaries shall fail to pay
when due (whether upon acceleration or otherwise) any principal or Prepayment
Fee payable under or with respect to the Senior Subordinated Notes, this
Agreement or any of the Other Agreements, or (iii) the Company or any of its
Subsidiaries shall fail to pay when due any other sums payable pursuant to
Section 2.4 (after giving effect to the notice and grace period set forth
therein);
(b) The Company shall fail to pay when due (following the expiration
of applicable notice and cure periods, if any), whether upon acceleration or
otherwise, any Indebtedness, individually or in the aggregate, having an unpaid
principal amount in excess of $750,000;
(c) (i) The Company shall fail to perform or observe any agreement,
covenant, term or condition contained in (A) Sections 6.7(a), 6.13 or 6.14
or in Article VII of this Agreement or (B) the second and fourth sentences
of Section 6.21; or
(ii) The Company shall fail to perform or observe any agreement,
covenant, term or condition contained in Sections 6.1 or 6.2 of this
Agreement, and such default is not remedied or waived within ten (10) days
after the occurrence thereof; or
(iii) The Company shall fail to perform or observe any agreement,
covenant, term or condition contained in this Agreement (excluding the
specific Sections and Article referred to in Sections 8.1(c)(i) and (ii)
above), and such default is not remedied or waived within forty-five (45)
days after the date any such default becomes known to a Responsible
Officer;
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(d) The Company and/or any of its Subsidiaries shall fail to comply
with any Other Agreement to which it is a party, and such default is not
remedied or waived within forty-five (45) days after the date any such default
becomes known to a Responsible Officer;
(e) Any representation or warranty whatsoever made or provided by the
Company and/or its Subsidiaries to the Purchaser in connection with this
Agreement or any Other Agreement was incorrect or misleading in any material
respect, when made;
(f) The Company or any of its Subsidiaries (other than an Inactive
Subsidiary) shall become subject to an Event of Bankruptcy;
(g) Any judgment or order for payment of money shall be rendered
against the Company or any of its Subsidiaries (or any combination thereof)
which exceeds $750,000 and either (i) enforcement proceedings shall have been
commenced by any creditor upon such judgment or order, or (ii) there shall be a
period of thirty (30) consecutive days during which a stay of enforcement of
such judgment or order, by reason of a pending appeal or otherwise, shall not be
in effect;
(h) This Agreement or any Other Agreement to which the Company or any
of its Subsidiaries is a party or any material portion thereof applicable to the
Company or any of its Subsidiaries shall be declared by any Governmental
Authority to be invalid or unenforceable in whole or in part or shall for any
reason not be, or shall be asserted by the Company and/or any of its
Subsidiaries not to be, in full force and effect and enforceable in accordance
with its terms;
(i) The Parent Guaranty or any Guaranty Agreement shall for any reason
not be, or shall be asserted by Parent or any Subsidiary not to be, in full
force and effect and enforceable in accordance with its terms (other than, with
respect to the Parent Guaranty, the failure of the Parent Guaranty to be
enforceable as the result of an Event of Bankruptcy involving only Parent);
(j) Any Material Contract shall be declared by any Governmental
Authority to be invalid or unenforceable in whole or in part or shall for any
reason not be, or shall be asserted by the Company or any of its Subsidiaries
not to be, in full force and effect and enforceable in accordance with its terms
and such event or condition, together with all other such events or conditions,
if any, could reasonably be expected to have a Material Adverse Effect;
(k) The occurrence or existence of any event of default under the
Senior Loan Documents together with an act of acceleration of the Senior Debt;
or
(l) The occurrence of a Change in Control.
8.2 Remedies of Holders upon Occurrence of Event of Default. When any Event
of Default described in Section 8.1 above, other than any Event of Default
described in clause (f) thereof, has occurred and is continuing, any Purchaser
may, in addition to any other right, power
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or remedy permitted by law, declare the entire amount of the Senior Subordinated
Obligations owing to it, including, without limitation, the entire principal,
premium (if any) and all interest accrued then outstanding under its Senior
Subordinated Obligations, to be, and the same shall thereupon become, forthwith
due and payable, together with an amount equal to the Prepayment Fee, without
any presentment, demand, protest, notice of default, notice of intention to
accelerate, notice of acceleration or other notice of any kind, all of which are
hereby expressly waived, and in such event the Company shall (subject to the
terms of the Senior Subordination Agreement) forthwith pay to such Purchaser an
amount equal to one hundred percent (100%) of the amount thereof. When any Event
of Default described in clause (f) of Section 8.1 above shall occur, all of the
Senior Subordinated Obligations, including, without limitation, the entire
principal, premium (if any) and all accrued interest then outstanding under the
Senior Subordinated Notes, shall thereupon be forthwith due and payable, without
any presentment, demand, protest, notice of default, notice of intention to
accelerate, notice of acceleration or other notice of any kind (including any
notice by Purchaser), all of which are hereby expressly waived by the Company,
and the Company will (subject to the terms of the Senior Subordination
Agreement) forthwith pay to Purchaser an amount equal to 100% of the amount
thereof.
8.3 Annulment of Acceleration. The provisions of the foregoing Section 8.2
are subject to the condition that, if any Purchaser has declared all or any part
of its Senior Subordinated Obligations immediately due and payable (or if any
Purchaser's Senior Subordinated Obligations have otherwise become immediately
due and payable) by reason of the occurrence of any Event of Default, such
Purchaser may, by written instrument delivered to the Company (an "Annulment
Notice"), rescind and annul such declaration and the consequences thereof as to
its Senior Subordinated Obligations, provided that (a) at the time such
Annulment Notice is delivered no judgment or decree has been entered for the
payment of any monies due pursuant to such Senior Subordinated Obligations in
connection therewith, and (b) all arrears of interest and all other sums payable
on such Senior Subordinated Obligations in connection therewith (except any
principal, interest or premium which has become due and payable solely by reason
of such declaration under Section 8.2 hereof) shall have been duly paid or
deferred by the Holder of the Senior Subordinated Obligations agreeing to such
rescission and annulment; and provided further, that no such rescission and
annulment shall extend to or affect any other Purchaser or any subsequent Event
of Default or impair any right consequent thereto, and shall not be deemed a
waiver of the Event of Default giving rise to the acceleration unless
specifically waived in writing by the Purchaser agreeing to such rescission or
annulment.
8.4 Payment of Senior Subordinated Obligations. Subject to the terms of the
Senior Subordination Agreement, Purchaser shall have the right, which is
absolute and unconditional, to receive payment of the principal of and interest
on such Senior Subordinated Notes and payment of all other Senior Subordinated
Obligations on the date when due and, upon the occurrence and continuance of an
Event of Default, to institute suit against the Company for the enforcement of
any such payment. Such rights shall not be impaired without Purchaser's prior
written consent.
8.5 Remedies. Subject to the terms of the Senior Subordination Agreement,
if any Event of Default shall occur and be continuing, may exercise any right or
remedy it has at law, in equity or under this Agreement or any Other Agreement.
No right or remedy conferred upon or
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reserved to Purchaser under this Agreement or any Other Agreement is intended to
be exclusive of any other right or remedy, and every right and remedy shall be
cumulative and in addition to every other right or remedy given hereunder or now
or hereafter existing under any applicable law. Every right and remedy given by
this Agreement or by applicable law to Purchaser may be exercised from time to
time and as often as may be deemed expedient by Purchaser.
8.6 Conduct No Waiver. No course of dealing on the part of any Purchaser,
nor any delay or failure on the part of any Purchaser to exercise any of its
rights, shall operate as a waiver of such right or otherwise prejudice any
Purchaser's rights, powers and remedies. If the Company fails to pay when due,
the principal of, the premium (if any) or the interest on, the Senior
Subordinated Notes, or fails to comply with any other provision of this
Agreement, the Company shall pay to Purchaser, to the extent permitted by law,
on demand, such further amounts as shall be sufficient to cover the cost and
expenses, including, but not limited to, reasonable attorney's fees incurred by
Purchaser in collecting any sums due on the Senior Subordinated Notes or in
otherwise enforcing any of Purchaser's rights.
IX. SUBORDINATION RIGHTS
Notwithstanding any provision in this Agreement to the contrary, the
Indebtedness evidenced by the Senior Subordinated Notes shall be subordinate in
right of payment to all regularly scheduled payments of principal and interest
with respect to Senior Debt, and Purchaser's rights and remedies hereunder shall
be subordinate to the rights and remedies of the Senior Lender, all in
accordance with the terms of the Senior Subordination Agreement. Nothing
contained in this Article IX or elsewhere in this Agreement, in the Senior
Subordinated Notes or the Senior Subordination Agreement is intended to or shall
impair, as between the Company and Purchaser, the obligations of the Company,
which are absolute and unconditional, to pay to Purchaser the principal of, the
premium (if any) and interest on the Senior Subordinated Notes and all other
Senior Subordinated Obligations as and when the same shall become due and
payable in accordance with their terms, or is intended to or shall affect the
relative rights of Purchaser and creditors of the Company other than the holders
of the Senior Debt, nor shall anything herein or therein prevent Purchaser from
exercising all remedies otherwise permitted by applicable law upon an Event of
Default under this Agreement.
X. FORM OF SENIOR SUBORDINATED NOTES. REGISTRATION, TRANSFER AND
REPLACEMENT
10.1 Form of Senior Subordinated Notes. The Senior Subordinated Notes
initially delivered under this Agreement will be fully registered notes in the
forms attached hereto as Exhibits A-1 and A-2. The Senior Subordinated Notes are
issuable only in fully registered form in such denominations as are requested by
each Purchaser.
10.2 Senior Subordinated Note Register. The Company shall cause to be kept
at its principal business office a register for the registration and transfer of
the Senior Subordinated Notes. The names and addresses of the Holders of the
Senior Subordinated Notes, the transfer
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thereof and the name and address of the transferees of such Senior Subordinated
Notes shall be recorded in such register.
10.3 Issuance of New Senior Subordinated Notes upon Exchange or Transfer.
Upon surrender for exchange or registration of transfer of a Senior Subordinated
Note at the office of the Company designated for notices in accordance with
Section 12.3 hereof, the Company shall execute and deliver, at its expense, one
or more new Senior Subordinated Notes of any authorized denomination requested
by the Holder of the surrendered Senior Subordinated Note, each dated the date
to which interest has been paid on the Senior Subordinated Note so surrendered
(or, if no interest has been paid, the date of such surrendered Senior
Subordinated Note), but in the same aggregate unpaid principal amount as such
surrendered Senior Subordinated Note, and registered in the name of such Person
or Persons as shall be designated in writing by such Holder. Every Senior
Subordinated Note surrendered for registration of transfer shall be duly
endorsed, or be accompanied by a written instrument of transfer duly executed,
by the Holder of such Senior Subordinated Note or by his attorney duly
authorized in writing.
10.4 Replacement of Senior Subordinated Notes. Upon receipt of evidence
satisfactory to the Company of the loss, theft, mutilation or destruction of any
Senior Subordinated Note and, in the case of any such loss, theft or
destruction, upon delivery of a bond of indemnity in such form and amount as
shall be reasonably satisfactory to the Company or, in the event of such
mutilation upon surrender and cancellation of such Senior Subordinated Note, the
Company, without charge to the Holder thereof, will make and deliver a new
Senior Subordinated Note of like tenor and the same series in lieu of such lost,
stolen, destroyed or mutilated Senior Subordinated Note. If any such lost,
stolen or destroyed Senior Subordinated Note is owned by any Purchaser or any
other Holder whose credit is satisfactory to the Company, then the affidavit of
an authorized officer of such owner setting forth the fact of loss, theft or
destruction and of its ownership of such Senior Subordinated Note at the time of
such loss, theft or destruction shall be accepted as satisfactory evidence
thereof, and no further indemnity shall be required as a condition to the
execution and delivery of a new Senior Subordinated Note.
XI. INTERPRETATION OF AGREEMENT
11.1 Certain Terms Defined. When used in this Agreement, the terms set
forth below are defined as follows:
"Acquired Companies" means Tredegar, and its direct and indirect
subsidiaries.
"Acquisition" means the transactions pursuant to which the Company
acquired all of the outstanding Capital Stock of Tredegar, all pursuant to the
transactions evidenced by the Acquisition Documents.
"Acquisition Documents" means the Purchase Agreement and the
agreements, documents and instruments executed in connection therewith or
contemplated thereby, and all amendments thereto.
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"Additional Approved Director" shall mean (a) with respect to the
Board of Directors of Parent, a Person nominated by the Permitted Holders to
serve as a director of Parent, so long as the Permitted Holders retain the right
to remove such Person from his or her directorship with or without cause at any
time and to replace such Person with a successor nominated by the Permitted
Holders and (b) with respect to the Board of Directors of the Company, a Person
nominated by Parent to serve as a director of the Company, so long as Parent
retains the right to remove such Person from his or her directorship with or
without cause at any time and to replace such Person with a successor nominated
by Parent.
"Affiliate" means any Person directly or indirectly controlling,
controlled by, or under common control with, the Person in question. A Person
shall be deemed to control a corporation if such Person possesses, directly or
indirectly, the power to direct or cause the direction of the management and
policies of such corporation, whether through the ownership of voting
securities, by contract, or otherwise.
"Agreement" means this Note Purchase Agreement, including all
schedules and exhibits hereto, as the same may be modified, supplemented,
extended and/or amended from time to time.
"Annulment Notice" is defined in Section 8.3.
"Applicable Margin" means whichever is applicable, the Applicable ABR
Margin or the Applicable Eurodollar Margin, both as defined in the Senior Loan
Agreement.
"Asset Sale" shall mean any sale, lease, transfer, assignment, loss,
damage or destruction (in the case of loss, damage or destruction, to the extent
covered by insurance) or other disposition of assets (including trademarks and
other intangibles), business units, individual business assets or property of
the Company or any of its Subsidiaries, including the sale, transfer or
disposition of any Capital Stock or real property; provided, however, that none
of the following shall be deemed to be an Asset Sale: (a) the sale of inventory
in the ordinary course of business; or (b) the sale, lease, transfer, assignment
or other disposition of assets (other than in connection with any Casualty or
Condemnation) of the Company or any of its Subsidiaries (i) to the Company or
any Wholly Owned Subsidiary, (ii) to any other Person to the extent that the
aggregate Net Cash Proceeds from such sale, lease, transfer, assignment or other
disposition do not exceed $50,000, so long as the fair market value of all
property disposed of pursuant to this clause (ii) does not exceed $250,000 in
the aggregate in any fiscal year, (iii) in connection with the liquidation for
the account of the Company of Cash Equivalents, (iv) if the assets disposed of
consist of machinery or equipment of the Company or any of its Subsidiaries
which will be replaced or upgraded with machinery and equipment put to a similar
use and owned by it, provided that such replacement or upgraded machinery and
equipment is acquired (or a firm order therefor is placed) within 90 days after
such disposition or (v) to the extent that such assets consist of damaged, worn
out or obsolete tangible assets, so long as the fair market value of all
property disposed of pursuant to this clause (v) does not exceed $250,000 in the
aggregate in any
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fiscal year; provided that the foregoing definition shall not be deemed to imply
that any such Asset Sale is permitted under this Agreement.
"Business Day" means any day (other than a day which is a Saturday,
Sunday or legal holiday in the State of North Carolina, New York or
Pennsylvania) on which banks are open for business in Charlotte, North Carolina,
New York City and Pittsburgh, Pennsylvania.
"Capital Expenditures" means, for any period, the sum of (a) all
expenditures (whether paid in cash or other consideration or accrued as a
liability) which would, in accordance with GAAP, be included on a consolidated
statement of cash flows of the Company and its Consolidated Subsidiaries for
such period as additions to property, plant and equipment, Capital Lease
Obligations or similar items and (b) to the extent not covered by clause (a)
hereof, all expenditures (whether paid in cash or other consideration or accrued
as a liability) of the Company and its Consolidated Subsidiaries for such period
to acquire by purchase or otherwise the business, property or fixed assets of,
or stock or other evidences of beneficial ownership of, any other Person (other
than the portion of such expenditures allocable in accordance with GAAP to net
current assets); provided that the foregoing shall exclude all such expenditures
to the extent made with Insurance Proceeds or Condemnation Proceeds pursuant to
Section 5.13 of the Senior Loan Agreement.
"Capital Lease Obligations" of any Person shall mean the obligations
of such Person to pay rent or other amounts under any lease of (or other
arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such Person under GAAP
and, for the purposes of this Agreement, the amount of such obligations at any
time shall be the capitalized amount thereof at such time determined in
accordance with GAAP.
"Capital Stock" of any Person means any and all shares, partnership
and other interests, rights to purchase, warrants, options, participations or
other equivalents of or interests in (however designated) the equity of such
Person.
"Cash Capital Expenditures" shall mean, for any period, all Capital
Expenditures paid in cash during such period.
"Cash Equivalents" shall mean:
(a) direct obligations of, or obligations the principal of and
interest on which are unconditionally guaranteed by, the United States of
America (or by any agency thereof to the extent such obligations are backed by
the full faith and credit of the United States of America), in each case
maturing within 180 days from the date of acquisition thereof;
(b) investments in commercial paper maturing within 180 days from the
date of acquisition thereof and having, at such date of acquisition, the highest
credit rating obtainable from Standard & Poor's Corporation or from Moody's
Investors Service, Inc., respectively;
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(c) investments in certificates of deposit, banker's acceptances and
time deposits maturing within 180 days from the date of acquisition thereof and
overnight repurchase agreements issued or guaranteed by or placed with, and
money market deposit accounts issued or offered by, any domestic office of any
Senior Lender or any commercial bank organized under the laws of the United
States of America or any State thereof which has a combined capital and surplus
and undivided profits of not less than $500,000,000;
(d) money market funds substantially all of whose assets are comprised
of securities of the types described in (a) through (c) above;
(e) cash deposits in any Deposit Account covered by a Lockbox
Agreement or in any cash collateral account with the Senior Lender required by,
and maintained in accordance with, the Senior Loan Documents; and
(f) other investment instruments approved in writing by the Senior
Lender and offered by financial institutions which have a combined capital and
surplus and undivided profits of not less than $500,000,000.
"Cash Interest Expense" shall mean, for any period, the gross amount
of interest expense of the Company and its Consolidated Subsidiaries, determined
on a consolidated basis in accordance with GAAP, during such period, including
(a) the portion of any payments or accruals with respect to Capital Lease
Obligations that are allocable to interest expense in accordance with GAAP, (b)
all amounts paid (net of any amounts received) pursuant to Interest Rate
Protection Agreements during such period and (c) all fees, charges, discounts
and other costs paid in respect of Indebtedness during such period, but, in each
case, excluding non-cash interest expense.
"Cash Preferred Dividends" means, for any period, the aggregate amount
of dividends paid in cash during such period as permitted by clause (v) of
Section 7.4 of this Agreement.
"Cash Tax Expense" shall mean, for any period, the amount of expense
for Federal, state, local and other income taxes of the Company and its
Consolidated Subsidiaries, determined on a consolidated basis in accordance with
GAAP (assuming the Company was deemed to be the common parent of an affiliated
group (within the meaning of Section 1504 of the Code) of which only the Company
and the Subsidiaries were members), for such period, but excluding deferred tax
expense.
"Casualty" means any casualty or other damage or defect.
"Change in Control" means the occurrence of any of the following:
(a) the failure by Parent to own 100% of the outstanding Common Stock;
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(b) the failure at any time after the Closing Date of a majority of
the seats (including vacant seats) of the board of directors of the Company to
be occupied by William L. Remley, Richard Kramer and, if Parent so elects (but
only if such Person's service as a director of the Company is in addition to
service as a director of the Company by both William L. Remley and Richard
Kramer, and not in substitution of such service by either of them), one
Additional Approved Director (provided, however, that in the event of the death,
total disability or total incapacitation of either William L. Remley or Richard
Kramer, no "Change in Control" under this clause (b) shall result if a majority
of the seats of the board of directors shall be occupied by (i) William L.
Remley or Richard Kramer (whichever of them is not deceased, disabled or
incapacitated, the "Surviving Director"), (ii) one Person nominated by the
Surviving Director with the approval of the Senior Lender and the Purchaser;
provided that any such approval by the Purchaser shall not be unreasonably
withheld (the "Surviving Director's Nominee") and (iii) if Parent so elects (but
only if such Person's service as a director is in addition to service by both
the Surviving Director and the Surviving Director's Nominee), one Additional
Approved Director;
(c) any Person or Persons (other than the Permitted Holders) (i) shall
own (beneficially or of record), in the aggregate, more than 25% of the
outstanding Voting Stock of Parent or (ii) shall, whether through the ownership
of securities, by contract or otherwise, directly or indirectly Control Parent;
or
(d) the failure at any time after the Closing Date of a majority of
the seats (including vacant seats) of the board of directors of Parent to be
occupied by William L. Remley, Richard Kramer and, if the Permitted Holders so
elect (but only if such Person's service as a director of Parent is in addition
to service as a director of Parent by both William L. Remley and Richard Kramer,
and not in substitution of such service by either of them), one Additional
Approved Director (provided, however, that in the event of the death, total
disability or total incapacitation of either William L. Remley or Richard
Kramer, no "Change in Control" under this clause (d) shall result if a majority
of the seats of the board of directors shall be occupied by (i) William L.
Remley or Richard Kramer (whichever of them is not deceased, disabled or
incapacitated, the "Surviving Director"), (ii) one Person nominated by the
Surviving Director with the approval of the Senior Lender and the Purchaser;
provided that any such approval by the Purchaser shall not be unreasonably
withheld (the "Surviving Director's Nominee") and (iii) if the Permitted Holders
so elect (but only if such Person's service as a director is in addition to
service by both the Surviving Director and the Surviving Director's Nominee),
one Additional Approved Director.
"Closing Date" means the date on which all of the conditions stated in
Article V of this Agreement have been met to Purchaser's satisfaction and the
purchase price for the Senior Subordinated Notes has been paid, but in any event
not later than March 29, 1996.
"Code" means the Internal Revenue Code of 1986, as amended and in
effect from time to time, and the regulations promulgated thereunder.
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"Common Stock" shall mean the Common Stock, no par value, of the
Company, any other Capital Stock of the Company into which such Common Stock
shall be reclassified or otherwise changed and any other Capital Stock of the
Company which is not Preferred Stock.
"Commonly Controlled Entity" shall mean an entity, whether or not
incorporated, which is under common control with the Company within the meaning
of Section 4001 of ERISA or is part of a group which includes the Company and
which is treated as a single employer under Section 414 of the Code.
"Company" means Precise Technology, Inc., a Delaware corporation.
"Condemnation" means the institution of any action or proceeding for
the taking of any Mortgaged Property (as defined in the Senior Loan Agreement),
or any part thereof or interest therein, for public or quasi-public use under
the power of eminent domain by reason of any public improvement or condemnation
proceeding, or, in any other manner.
"Condemnation Proceeds" means the proceeds of any Condemnation or
transfer in lieu thereof.
"Confidential Information Memorandum" means the Confidential
Information Memorandum of the Company dated February, 1996.
"Consolidated Subsidiaries" means for any Person, all subsidiaries of
such Person that should be consolidated with such Person for financial reporting
purposes in accordance with GAAP.
"Control" shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of a
Person, whether through the ownership of voting securities, by contract or
otherwise, and "Controlling" and "Controlled" shall have meanings correlative
thereto.
"Current Assets" shall mean, as of any date, all assets which would,
in accordance with GAAP, be included on a consolidated balance sheet of the
Company and its Consolidated Subsidiaries as of such date as current assets.
"Current Liabilities" shall mean, as of any date, all liabilities
which would, in accordance with GAAP, be included on a consolidated balance
sheet of the Company and its Consolidated Subsidiaries as of such date as
current liabilities.
"Deposit Account" means any demand, time, savings, passbook,
collection, operating, investment or other like type of account relating in any
way to the assets or business of the Company or any of its Subsidiaries.
"Disqualified Stock" of any Person shall mean (a) in the case of the
Company, the Permitted Preferred Stock and the Seller Preferred Stock, (b) any
Capital Stock of such Person
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which by its terms (or by the terms of any security into which it is convertible
or for which it is exchangeable or exercisable), upon the happening of any event
or otherwise (i) matures or is mandatorily redeemable or subject to any
mandatory repurchase requirement, pursuant to a sinking fund obligation or
otherwise, (ii) is convertible into or exchangeable or exercisable for
Indebtedness or Disqualified Stock or (iii) is redeemable or subject to any
mandatory repurchase requirement at the option of the holder thereof, in whole
or in part, in each case on or prior to the Termination Date and (c) if such
Person is a Subsidiary, any Preferred Stock of such Person.
"EBITDA" shall mean, for any period, (a) Net Income for such period,
p1us, (b) the following to the extent deducted in computing such Net Income: (i)
interest expense, (ii) tax expense, (iii) depreciation and amortization of
tangible and intangible assets, and (iv) other non-cash charges or non-cash
losses, in each case for the Company and its Consolidated Subsidiaries,
determined on a consolidated basis in accordance with GAAP, minus (c) the
following to the extent added in computing such Net Income: (i) interest income
and (ii) any non-cash income or non-cash gains, in each case for the Company and
its Consolidated Subsidiaries, determined on a consolidated basis in accordance
with GAAP.
"Environmental Laws" means all federal, state, or local laws,
ordinances, rules, regulations and orders of courts or administrative agencies
or authorities relating to pollution or protection of the environment
(including, without limitation, ambient air, surface water, ground water, land
surface, and subsurface strata), and other laws relating to (a) Polluting
Substances or (b) the manufacture, processing, distribution, use, treatment,
handling, storage, disposal, or transportation of Polluting Substances.
"Equity Issuance" shall mean the issuance of any Capital Stock (other
than the Permitted Preferred Stock and Seller Preferred Stock) or receipt of any
capital contribution by the Company or any of its Subsidiaries, provided that
the foregoing definition shall not be deemed to imply that any such Equity
Issuance is permitted under this Agreement.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended and in effect from time to time, and the regulations promulgated
thereunder.
"Event of Bankruptcy" with respect to any Person, means any of (a) the
filing by such Person of a voluntary petition in bankruptcy under any provision
of any bankruptcy law or a petition to take advantage of any insolvency act, (b)
the admission in writing by the Company of its inability to pay its debts
generally as they become due, (c) the appointment of a receiver or receivers for
all or a material part of such Person's assets with the consent of such Person,
(d) the filing of any bankruptcy, arrangement or reorganization petition by or,
with the consent of such Person, against such Person under any provision of any
bankruptcy law, (e) a receiver, liquidator or trustee of such Person or a
substantial part of its assets shall be appointed pursuant to the Federal
Bankruptcy Code by the order of a court of competent jurisdiction which shall
not be dismissed or stayed within sixty (60) days, or (f) an involuntary
petition to reorganize or liquidate a Person pursuant to the Federal Bankruptcy
Code shall be filed against such Person and shall not be dismissed or stayed
within 60 days.
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"Event of Default" is defined in Section 8.1.
"Excess Cash Flow" shall mean, for any period, the excess of (a) the
sum, without duplication, of (i) EBITDA for such period, (ii) extraordinary cash
income, if any, business interruption insurance proceeds, if any, and cash gains
attributable to sales of assets out of the ordinary course of business, if any,
during such period to the extent that any such extraordinary cash income, such
insurance proceeds or such cash gain (A) is not included in EBITDA for such
period and (B) is not required to be utilized in connection with a payment made
(or to be made) by the Company pursuant to Section 2.11(e) of the Senior Loan
Agreement, (iii) the amount, if any, by which Working Capital decreased during
such period over (b) the sum, without duplication, of (i) Cash Tax Expense for
such period, (ii) Cash Interest Expense paid during such period, (iii) Cash
Capital Expenditures made during such period, (iv) Scheduled Principal Payments
made during such period, (v) optional and mandatory prepayments of the principal
of the Senior Debt during such period, but only to the extent that such
prepayments by their terms cannot be reborrowed or redrawn, and (vi) the amount,
if any, by which Working Capital increased during such period.
"Excess Interest" is defined in Section 2.8.
"Financial Officer" of any corporation shall mean the chief financial
officer, principal accounting officer or similar officer of such corporation.
"Financial Statements" is defined in Section 4.2.
"GAAP" means generally accepted accounting principles, applied on a
consistent basis.
"Governmental Authority" means any federal, state, local or foreign
governmental department, commission, board, bureau, authority, agency, court,
instrumentality or judicial or regulatory body or entity.
"Guaranty Agreement" means, with respect to each of the Company's
Subsidiaries, the Guaranty Agreement dated as of the Closing Date executed by
each such Subsidiary in favor of the Purchaser.
"Hamilton Preferred Stock" shall mean the 331.46 shares of 9 1/2%
Preferred Stock, stated value $10,000 per share, of Parent issued by Parent to
Hamilton Holdings Ltd. Corporation, a Texas corporation, on the Closing Date.
"Holders" when used in reference to the Senior Subordinated Notes
and/or the Senior Subordinated Obligations, means the Person or Persons who, at
the time of determination, is the lawful owner of all or a portion of the Senior
Subordinated Notes or an obligee of all or a portion of the Senior Subordinated
Obligations.
"Impositions" is defined in Section 6.9.
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"Inactive Subsidiary" means any Subsidiary of the Company that has
less than $10,000 in assets (whether computed by book value, market value or any
other method) and that is not engaged in any activities relating to the
Company's business.
"Indebtedness" of any Person shall mean, without duplication, (a) all
obligations of such Person for borrowed money or with respect to deposits or
advances of any kind made with or to such Person, (b) all obligations of such
Person evidenced by bonds, debentures, notes or similar instruments, including
certificates issued in connection with an asset securitization, (c) all
obligations of such Person upon which interest charges are customarily paid, (d)
all obligations of such Person under conditional sale or other title retention
agreements relating to property or assets purchased by such Person, (e) all
obligations of such Person issued or assumed as the deferred purchase price of
property or services, (f) all Indebtedness of others secured by (or for which
the holder of such Indebtedness has an existing right, contingent or otherwise,
to be secured by) any Lien on property owned or acquired by such Person, whether
or not the obligations secured thereby have been assumed, (g) all guarantees by
such Person of Indebtedness of others, (h) all Capital Lease Obligations of such
Person, (i) all obligations of such Person in respect of Interest Rate
Protection Agreements, (j) all obligations of such Person, contingent or
otherwise, as an account party in respect of letters of credit and bankers'
acceptances and (k) all obligations of such Person to contribute money or other
property to any other Person. The Indebtedness of any Person shall include,
without duplication, the Indebtedness of any partnership in which such Person is
a general partner and of any trust or other entity formed or utilized in
connection with a securitization of assets of such Person. Notwithstanding the
foregoing, the term "Indebtedness" shall exclude (x) all trade accounts payable
by any Person arising in the ordinary course of business and (y) the Pecks
Preferred Stock.
"Insurance Proceeds" means collectively all insurance proceeds (other
than business interruption proceeds), damages, awards, claims and rights of
action with respect to any Casualty.
"Intellectual Property" means all patents, patent rights, patent
applications, licenses, inventions, trade secrets, know-how, proprietary
techniques (including processes and substances), trademarks, service marks,
trade names and copyrights.
"Intercompany Notes" shall mean the promissory notes issued as
contemplated by the definition of Permitted Investments, in the form attached
hereto as Exhibit D.
"Interest Coverage Ratio" as of any date shall mean the ratio of (a)
EBITDA for the Reference Period with respect to such date to (b) Cash Interest
Expense for such Reference Period.
"Interest Rate Protection Agreement" shall mean any interest rate
swap, collar, cap, foreign currency exchange agreement or other arrangement
requiring payments contingent upon interest or exchange rates.
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"Letter of Credit" shall mean any Standby Letter of Credit or Trade
Letter of Credit issued pursuant to the Senior Loan Agreement.
"Leverage Ratio" as of any date shall mean the ratio of (a) Total
Funded Debt as of the end of the Reference Period with respect to such date to
(b) EBITDA for such Reference Period.
"Lien" means any lien, mortgage, security interest, tax lien, pledge,
encumbrance, financing statement, or conditional sale or title retention
agreement, or any other interest in property designed to secure the repayment of
Indebtedness or any other obligation, whether arising by agreement, operation of
law, or otherwise.
"Lockbox Agreement" shall mean a lockbox agreement among the Company,
NationsBank, N.A., as agent for Senior Lender, and a financial institution in
which the Company maintains a deposit account, in substantially the form
attached to the Senior Loan Agreement as Exhibit F, as amended from time to
time.
"Management Agreement" shall mean tile Management Agreement dated as
of March 15, 1996, to be effective as of April 1, 1996, between the Company and
Mentmore.
"Material Adverse Effect" means (a) a material adverse effect upon the
business, operations, properties, assets or condition (financial or otherwise)
of the Company and its Subsidiaries, taken as a whole or (b) the material
impairment of the ability of any party to perform its obligations under this
Agreement or any of the Other Agreements to which it is a party or of Purchaser
to enforce or collect any of the Senior Subordinated Obligations. In determining
whether any individual event would result in a Material Adverse Effect,
notwithstanding that such event does not of itself have such effect, a Material
Adverse Effect shall be deemed to have occurred if the cumulative effect of such
event and all other then existing events would result in a Material Adverse
Effect.
"Material Contracts" means each agreement, contract, lease, license,
commitment or other instrument to which the Company or any of its Subsidiaries
is a party or by which they or any of their respective properties or assets are
or may be bound as of the Closing Date, after giving effect to the application
of proceeds thereof on the Closing Date, the loss of which could, individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect.
"Maximum Rate" is defined in Section 2.8.
"Mentmore" means Mentmore Holdings Corporation, a Delaware
corporation.
"Minimum Compliance Level" shall have the meaning assigned to such
term in Section 7.10(d).
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"Multiemployer Plan" shall mean a Plan which is a multiemployer plan
as defined in Section 4001(a)(3) of ERISA.
"Net Cash Proceeds" shall mean: (a) with respect to any Asset Sale,
(i) the gross amount of cash proceeds (including in each fiscal year of the
Company the amount of condemnation awards and insurance settlements, except
business interruption insurance proceeds, in such fiscal year in excess of Set
Aside Amounts (it being understood that Set Aside Amounts shall not be included
in the term "Net Cash Proceeds" and may be retained by the Company or a
Subsidiary, as applicable, for the purposes described in Section 5.13 of the
Senior Loan Agreement unless and until any such amount shall cease to be a Set
Aside Amount as a result of any failure to meet any of the criteria set forth in
such Section 5.13 of the Senior Loan Agreement)) actually paid to or actually
received by the Company or any of its Subsidiaries in respect of such Asset Sale
(including cash proceeds subsequently received in respect of such Asset Sale in
respect of non-cash consideration initially received or otherwise), less (ii)
the sum of (A) the amount, if any, of all taxes (other than income taxes) and
the Company's good-faith best estimate of all income taxes (to the extent that
such amount shall have been set aside for the purpose of paying such taxes when
due), and customary fees, brokerage fees, commissions, costs and other expenses
(other than those payable to the Company, any of its Subsidiaries or any
Affiliate of the Company) that are incurred in connection with such Asset Sale
and are payable by the seller or the transferor of the assets or property to
which such Asset Sale relates (or, in the case of income taxes in respect of the
period during which the Company is consolidated with Parent and Sunderland for
the purposes of the payment of such income taxes, payable by Sunderland,
provided that the Company is permitted to fund the payment of such income taxes
under Section 7.4 at such time), but only to the extent not already deducted in
arriving at the amount referred to in clause (a) above, (B) appropriate amounts
that must be set aside as a reserve in accordance with GAAP against any
liabilities associated with such Asset Sale and (C) if applicable, the amount of
Indebtedness secured by a Permitted Lien that has been repaid or refinanced as
required in accordance with its terms with the proceeds of such Asset Sale; and
(b) with respect to any Equity Issuance, the gross amount of cash proceeds paid
to or received by the Company or any Subsidiary in respect of such Equity
Issuance, net of underwriting discounts and commissions or placement fees,
investment banking fees, legal fees, consulting fees, accounting fees and other
customary fees and expenses directly incurred by the Company or any of its
Subsidiaries in connection therewith.
"Net Income" shall mean, for any period, net income (or loss) of the
Company and its Consolidated Subsidiaries for such period, determined on a
consolidated basis in accordance with GAAP; provided that there shall be
excluded from such calculation of net income (or loss) (a) the income of any
Person in which any other Person (other than the Company or any of its
Subsidiaries) has any interest, except to the extent of the amount of dividends
or other distributions actually paid to the Company or any Wholly Owned
Subsidiary by such Person during such period, (b) the income (or loss) of any
Person accrued prior to the date it becomes a Subsidiary of the Company or is
merged into or consolidated with the Company or any of its Subsidiaries or the
date such Person's assets are acquired by the Company or any of its
Subsidiaries, (c) the income of any of its Subsidiaries to the extent that the
declaration or payment of dividends or similar distributions by such Subsidiary
of that income is
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not at the time permitted by operation of the terms of its charter or any
agreement, instrument, judgment, decree, order, statute, rule or governmental
regulation applicable to such Subsidiary, (d) any after-tax gains or losses
attributable to sales of assets out of the ordinary course of business and (e)
(to the extent not included in clauses (a) through (d) above) any non-cash
extraordinary gains or non-cash extraordinary losses.
"Net Worth" shall mean, as of any date, the total of all amounts which
would in accordance with GAAP be included on a consolidated balance sheet of the
Company and its Consolidated Subsidiaries as of such date as (a) the par or
stated value of all outstanding Capital Stock of the Company, (b) paid in
capital or capital surplus relating to such Capital Stock and (c) any retained
earnings or earned surplus less (i) any accumulated deficit and (ii) any amounts
attributable to Disqualified Stock.
"Other Agreements" means (a) the Senior Subordinated Notes and all
other agreements, instruments and documents (including, without limitation,
notes, guarantees, powers of attorney, consents, assignments, contracts,
notices, subordination agreements and all other written matter), and all
renewals, modifications and extensions thereof, whether heretofore, now or
hereafter executed by or on behalf of the Company and/or any of its Subsidiaries
and delivered to and for the benefit of Purchaser or any Person participating
with Purchaser in the Senior Subordinated Notes with respect to this Agreement
or any of the transactions contemplated by this Agreement and (b) the Parent
Guaranty.
"Parent" means Precise Holding Corporation, a Delaware corporation.
"Parent Guaranty" means the Guaranty Agreement dated as of the Closing
Date executed by Parent in favor of the Purchaser.
"PBGC" means the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA or any successor thereto.
"Pecks" means, collectively, Delaware State Employees' Retirement
Fund, Declaration of Trust for Defined Benefit Plans of Zeneca Holdings Inc. and
Declaration of Trust for Defined Benefit Plans of ICI American Holdings Inc.
"Pecks Preferred Stock" shall mean the Series A Cumulative
Exchangeable Preferred Stock of the Company in the aggregate liquidation
preference of $5,750,000 issued to Pecks pursuant to that certain Securities
Purchase Agreement dated the date hereof by and among Parent, the Company and
Pecks.
"Permitted Holder" shall mean (a) William L. Remley and his relatives,
(b) Richard Kramer and his relatives (such Persons referred to in clauses (a)
and (b) being referred to for purposes of this definition as the "relatives"),
(c) any trust, other estate, corporation or other entity through which any
relatives have a beneficial interest, directly or indirectly, through one or
more intermediaries, in the Capital Stock of Parent, so long as no Persons other
than relatives have any beneficial interest in any such trust, other estate,
corporation or other entity and (d) any
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other Affiliate of William L. Remley and/or Richard Kramer, so long as such
other Affiliate is reasonably acceptable to the Purchaser.
"Permitted Indebtedness" means
(a) Indebtedness existing on the Closing Date, to the extent set forth
on Schedule 11.1 (a) (but not any extension, renewal or refinancing thereof);
(b) Indebtedness in favor of the Purchaser under this Agreement and/or
the Other Agreements and created pursuant thereto;
(c) Interest Rate Protection Agreements entered into by the Company as
part of its interest rate management program;
(d) the Senior Debt and the Senior Guarantee Obligations;
(e) Capital Lease Obligations in an aggregate amount of up to
$12?000,000 outstanding at any time;
(f) Indebtedness (excluding Capital Lease Obligations) issued to
finance the payment of all or part of the purchase price of any assets acquired
after the Closing Date; provided, however, that such Indebtedness is issued and
any Liens securing such Indebtedness are created at the time of, or within 90
days after, the acquisition of such assets and such Indebtedness is not secured
by a Lien on any other assets; and provided further, that the aggregate
principal amount of all such Indebtedness outstanding at any time shall not
exceed $2,000,000;
(g) unsecured Indebtedness in favor of Pecks arising from the exchange
by Pecks of the Pecks Preferred Stock (pursuant to and in accordance with the
terms of the Certificate of Designation for the Company's Series A Cumulative
Exchangeable Preferred Stock, as in effect on the Closing Date), but only if (i)
no Potential Default or Event of Default has occurred and is continuing or would
occur as a result of any such exchange, and (ii) the ratio of the Company's
Indebtedness to EBITDA is not greater than 2.5 to 1.0 both before and after
giving effect to any such exchange; and
(h) other unsecured Indebtedness incurred in the ordinary course of
business in an aggregate principal amount of up to $2,000,000 outstanding at any
time.
"Permitted Investments" means the following:
(a) investments existing on the Closing Date, to the extent set forth
on Schedule 11.11(b), by the Company in its Subsidiaries;
(b) loans and advances made after the Closing Date by the Company or
any of its Subsidiaries to Wholly Owned Subsidiaries or by any of the Wholly
Owned Subsidiaries to
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the Company; provided that, (I) any such loan or advance is evidenced by an
Intercompany Note and (II) any such loan or advance to or by any Wholly Owned
Subsidiary shall be permitted only so long as such Person remains a Wholly Owned
Subsidiary;
(c) Cash Equivalents;
(d) trade accounts receivable (and related notes and instruments)
arising in the ordinary course of business; and
(e) advances to employees for moving and travel expenses in the
ordinary course of business.
"Permitted Liens" means:
(a) Liens existing on the Closing Date, to the extent set forth on
Schedule 11.1(c), provided that such Liens secure only those obligations which
they secure on the Closing Date;
(b) Liens arising under the Senior Loan Documents;
(c) Liens for taxes, assessments, governmental charges and levies not
yet due or which are being contested in compliance with Section 6.9;
(d) carriers', warehousemen's, mechanic's, materialmen's, repairmen's
or other like Liens arising in the ordinary course of business and securing
obligations that are not due or which are being contested in compliance with
Section 6.9;
(e) Liens incurred and deposits made in the ordinary course of
business in compliance with workmen's compensation, unemployment insurance and
other social security laws or regulations;
(f) Liens or deposits to secure the performance of bids, trade
contracts (other than for Indebtedness), leases (other than Capital Lease
Obligations), statutory obligations, surety and appeal bonds, performance bonds
and other obligations of a like nature incurred in the ordinary course of
business;
(g) zoning restrictions, easements, restrictive covenants,
rights-of-way, restrictions on use of real property and other similar
encumbrances incurred in the ordinary course of business which, in the
aggregate, are not substantial in amount and do not materially detract from the
value of the property subject thereto or interfere with the ordinary conduct of
the business of the Company or any of the Subsidiaries;
(h) Liens constituting the interest of any lessor of property subject
to Capital Lease Obligations permitted hereunder; provided that such Liens do
not extend to any other property;
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(i) Liens securing purchase money Indebtedness permitted hereunder;
provided that such Liens do not extend to any assets other than the assets
purchased with the proceeds of such Indebtedness; and
(j) other Liens (not included in clauses (a) through (i) above)
securing obligations in the ordinary course of business in an aggregate
principal amount of up to $500,000 outstanding at any time.
"Permitted Tax Distributions" shall mean distributions to Parent up to
the amount that the Company would have been required to pay for federal, state,
local or other taxes on income if it were deemed to be the common parent of an
affiliated group (within the meaning of Section 1504 of the Code) of which only
the Company and its Subsidiaries were members (and assuming for such purposes
that such group had the benefit of any losses of the Company and the
Subsidiaries previously used by Parent, Sunderland or any of their other
Affiliates); provided that (A) such distributions may be made only in respect of
the period during which the Company is consolidated with Parent and Sunderland
for purposes of the payment of such taxes and, (B) no such distribution shall be
made earlier than 10 days before the date on which the payment by such
affiliated group of such federal, state, local or other taxes on income,
including any estimated payment, would be due.
"Person" means any individual, sole proprietorship, corporation,
business trust, unincorporated organization, association, company, partnership,
joint venture, governmental authority (whether a national, federal, state,
county, municipality or otherwise, and shall include without limitation any
instrumentality, division, agency, body or department thereof), or other entity.
"Plan" means at a particular time, any employee benefit plan which is
covered by ERISA and in respect of which the Company or a Commonly Controlled
Entity is (or, if such plan were terminated at such time, would under Section
4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5) of
ERISA.
"Polluting Substances" means all pollutants, contaminants, chemicals,
or industrial, toxic or hazardous substances or wastes and shall include,
without limitation, any flammable explosives, radioactive materials, oil,
hazardous materials, hazardous or solid wastes, hazardous or toxic substances or
related materials defined in the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, the Superfund Amendments and
Reauthorization Act of 1986, the Resource Conservation and Recovery Act of 1976,
the Hazardous and Solid Waste Amendments of 1984, and the Hazardous Materials
Transportation Act, as any of the same are hereafter amended, and in the
regulations adopted and publications promulgated thereto; provided, in the event
any of the foregoing Environmental Laws is amended so as to broaden the meaning
of any term defined thereby, such broader meaning shall apply subsequent to the
effective date of such amendment and, provided, further, to the extent that the
applicable laws of any state establish a meaning for "hazardous substance,"
"hazardous
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waste," "hazardous material," "solid waste," or "toxic substance" which is
broader than that specified in any of the foregoing Environmental Laws, such
broader meaning shall apply.
"Potential Default" means the occurrence of any condition or event
which, with the passage of time or giving of notice or both, would constitute an
Event of Default.
"Preferred Stock", as applied to the Capital Stock of any corporation,
shall mean Capital Stock of any class or classes (however designated) which is
preferred as to the payment of dividends, or as to the distribution of assets
upon any voluntary or involuntary liquidation or dissolution of such
corporation, over shares of Capital Stock of any other class of such
corporation.
"Prepayment Fee" is defined in Section 2.2.
"Principal Amount" is defined in Section 1.2(b).
"Property" means all real property owned or leased by the Company or
any of its Subsidiaries.
"Purchase Agreement" means the Stock Purchase Agreement dated as of
March 11, 1996, among the Company and Tredegar Investments.
"Purchaser" means individually and collectively Rice and John Hancock,
together with all of their respective transferees, successors and assigns of all
or any portion of the Senior Subordinated Notes or the Senior Subordinated
Obligations and any nominees on whose behalf any of the foregoing purchase or
otherwise acquire any of such Indebtedness of the Company, and shall include,
but not be limited to, each and every "Holder" as defined herein. With respect
to any right or action to be taken by Purchaser under this Agreement (other than
under Sections 8.2 or 8.3) the term Purchaser means Holders representing a
majority in interest of the Senior Subordinated Obligations.
"Qualifying Capital Contribution" made after any fiscal quarter of the
Company shall mean a contribution to capital of the Company made by Parent in
cash; provided that (a) Parent shall receive no consideration therefor (other
than additional shares of Common Stock), (b) such capital contribution shall be
made prior to delivery to the Purchaser of the financial statements delivered
pursuant to Section 6.1 for such fiscal quarter, (c) 100% of the Net Cash
Proceeds thereof shall be applied by the Company in accordance with Section
7.3(L) of this Agreement and (d) the amount of such Qualifying Capital
Contribution for purposes of this Agreement shall be the amount of Net Cash
Proceeds thereof applied in accordance with Section 7.3(L) of this Agreement.
"Reference Period" with respect to any date shall mean the period of
four consecutive fiscal quarters of the Company immediately preceding such date
or, if such date is the last day of a fiscal quarter, ending on such date.
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"Rental Expense" shall mean for any period, the aggregate amount of
fixed and contingent rental obligations payable by the Company and its
Consolidated Subsidiaries, determined on a consolidated basis in accordance with
GAAP, for such period under leases of real and/or personal property (net of
income from sub-leases thereof), excluding, however, Capital Lease Obligations.
"Reportable Event" means any of the events set forth in Section
4043(c) of ERISA, other than those events as to which the PBGC has waived either
the 30-day notice period or the penalty for failure to give notice.
"Responsible Officer" means, with respect to the Company, its
president, its chief executive officer, its chief operating officer, any
financial officer, any vice president or its general counsel.
"Revolving Loans" shall mean the revolving loans made by the Senior
Lender to the Company pursuant to the Senior Loan Agreement.
"Scheduled Principal Payments" shall mean, for any period, without
duplication, (i) the aggregate principal amount of Term Loans (as defined in the
Senior Loan Agreement) paid during such period pursuant to Sections 2.11(a)
and/or (b) of the Senior Loan Agreement and (ii) the aggregate principal amount
of all scheduled principal payments on Indebtedness (other than the Senior Debt)
of the Company and its Consolidated Subsidiaries made during such period,
determined on a consolidated basis in accordance with GAAP, including any
discount or premium relating to such Indebtedness, whether expensed or
capitalized.
"Seller Preferred Stock" shall mean the preferred equity financing
provided by Tredegar Investments as contemplated by Section 5.5 of this
Agreement to finance $2,500,000 of the purchase price of the Acquisition;
provided that (i) such financing shall consist of Preferred Stock of the
Company, (ii) such Preferred Stock shall provide for terms and conditions
reasonably satisfactory to the Purchaser and (iii) the aggregate liquidation
preference of such Seller Preferred Stock shall not exceed $2,500,000.
"Senior Debt" shall have the meaning ascribed to it in the Senior
Subordination Agreement.
"Senior Guarantee Obligations" shall have the meaning ascribed to it
in the Senior Subordination Agreement.
"Senior Lender" means NationsBank, N.A., a national banking
association, and any other financial institution a party to the Senior Loan
Agreement, and their respective successors and assigns, and any Person who
replaces or refinances the Senior Debt under the terms set forth in Section
7.1(c).
"Senior Loan Agreement" means the Credit Agreement, dated as of March
28, 1996, by and among Parent, the Company, NationsBank, N.A., as Agent and
Issuing Bank, and
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each of the other financial institutions a party thereto, as the same may be
modified, amended, waived, supplemented or otherwise changed from time to time,
all documents and instruments delivered pursuant thereto in connection with the
loans and advances made thereunder, and all agreements, documents and
instruments executed by the Company and any Person who replaces or refinances
the Senior Debt under the terms set forth in Section 7.1(c).
"Senior Loan Documents" means the Senior Loan Agreement and the
agreements, documents and instruments executed in connection therewith or
contemplated thereby, and all amendments, modifications, waivers, renewals,
extensions, substitutions, increases or replacements thereof.
"Senior Subordinated Notes" means the term promissory notes issued by
the Company to Purchaser pursuant to this Agreement, together with all renewals,
modifications, extensions, substitutions and replacements thereof.
"Senior Subordinated Obligations" means and includes any and all
Indebtedness and/or liabilities of the Company and/or its Subsidiaries to
Purchaser of every kind, nature and description, direct or indirect, secured or
unsecured, joint, several, joint and several, absolute or contingent, due or to
become due, now existing or hereafter arising, under this Agreement or any Other
Agreement to which the Company or any of its Subsidiaries is a party (regardless
of how such Indebtedness or liabilities arise or by what agreement or instrument
they may be evidenced or whether evidenced by any agreement or instrument) and
all obligations of the Company and/or its Subsidiaries to Purchaser to perform
acts or refrain from taking any action under any of the aforementioned
documents, together with all renewals, modifications, extensions, increases,
substitutions or replacements of any of such Indebtedness.
"Senior Subordination Agreement" means that certain Senior
Subordination Agreement, dated as of March 28, 1996, by and between Purchaser
and NationsBank, N.A., as Agent for the Senior Lender, and acknowledged by
Parent and the Company, pursuant to which the relative priorities of the Senior
Lender and Purchaser with respect to the repayment of Senior Debt and the Senior
Subordinated Obligations are established, and all amendments and modifications
thereto.
"Set Aside Amounts" shall mean, in respect of any Condemnation
Proceeds or Insurance Proceeds actually received by the Company or any of its
Subsidiaries, the portion thereof, if any, not required to be used to prepay
either the Senior Debt pursuant to Section 5.13 of the Senior Loan Agreement,
including Section 5.13(e) of the Senior Loan Agreement, or the Senior
Subordinated Obligations.
"Shareholder" shall mean, as of any date, any Person or "group"
(within the meaning of Rule 13d-5 under the Exchange Act) (a) which beneficially
owns as of such date Capital Stock of the Company (or of any Person Controlling
the Company) representing 5% or more of the aggregate ordinary voting power of
all the outstanding Capital Stock of the Company (or of such Person Controlling
the Company) and (b) of which the Company has knowledge.
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"Shareholder Agreement" means the Shareholder Agreement dated as of
the Closing Date executed by Parent, the Purchaser, Pecks and the other Persons
a signatory thereto, as the same may be amended, modified or restated from time
to time.
"Single Employer Plan" shall mean any Plan which is covered by Title
IV of ERISA, but which is not a Multiemployer Plan.
"Source" is defined in Section 3.2.
"Standby Letter of Credit" means an irrevocable standby letter of
credit for the account of the Company and for the benefit of any holder of
obligations of the Company or any of its Subsidiaries incurred in the ordinary
course of business.
"Subsidiary" means any Person of which or in which the Company and/or
Parent and their other Subsidiaries own directly or indirectly 50% or more of
(a) the combined voting power of all classes having general voting power under
ordinary circumstances to elect a majority of the board of directors or
equivalent body of such Persons, if it is a corporation, (b) the capital
interest or profits interest of such Person, if it is a partnership, joint
venture or similar entity, or (c) the beneficial interest of such Person if it
is a trust, association or other unincorporated organization.
"Sunderland" shall mean Sunderland Industrial Holdings Corporation, a
Delaware corporation, and its successors.
"Termination Date" means the earliest to occur of (a) March 28, 2006,
(b) the date on which the Senior Subordinated Notes are accelerated pursuant to
Article VIII, and (c) the date on which the Senior Subordinated Obligations are
paid in full.
"Total Funded Debt" shall mean, as of any date, without duplication,
(a) the aggregate amount of Indebtedness (other than Indebtedness with respect
to interest rate protection agreements) of the Company and its Consolidated
Subsidiaries as of such date which has a final maturity more than one year after
such date or which is extendible or renewable at the option of the Company or
any of its Consolidated Subsidiaries to a time more than one year after such
date (whether or not renewed or extended), including any current installment
thereof due within one year after such date, determined on a consolidated basis
in accordance with GAAP, (b) the aggregate undrawn amount on all outstanding
letters of credit (including Letters of Credit) as to which the Company or any
of its Consolidated Subsidiaries is the account party and (c) the aggregate
principal amount of outstanding loans constituting Senior Debt as of such date.
"Trade Letter of Credit" means a trade or commercial letter of credit
issued for the account of the Company and for the benefit of any holder of
obligations of the Company or any of its Subsidiaries incurred in the ordinary
course of business.
"Transfer" is defined in Section 12.5 hereof.
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"Transferee" means any Person to whom a Transfer is made.
"Tredegar" means Tredegar Molded Products Company, a Virginia
corporation.
"Tredegar Investments" means Tredegar Investments, Inc., a Virginia
corporation.
"Voting Stock" shall mean, with respect to any Person, (a) shares of
such Person's voting Capital Stock that have ordinary voting power (other than
shares or interests having such power only by reason of the occurrence of a
contingency) to vote in the election of directors of such Person and (b) all
warrants, options and other rights to purchase, or exchange securities for or
convert securities into, such shares.
"Warrants" mean the warrants to purchase up to seventeen and fifteen
one-hundredths percent (17.15%) of Parent's common stock (on a fully diluted
basis), as the same may be amended from time to time.
"Warrant Documents" means, collectively, (a) the Warrants, (b) the
Warrant Purchase Agreement dated as of the Closing Date executed by and among
Parent, the Purchaser and Pecks, with respect to the issuance to Purchaser and
Pecks of the Warrants, and (c) the Shareholders Agreement.
"Wholly Owned Subsidiary" shall mean, at any time, any Subsidiary all
the Capital Stock of which is at such time directly or indirectly owned by the
Company.
"Working Capital" shall mean, as of any date of determination, an
amount equal to (a) Current Assets as of such date, but excluding cash and Cash
Equivalents described under clauses (a) through (f) of the definition thereof,
minus (b) Current Liabilities as of such date, but excluding the current portion
of payments on long-term Indebtedness and payments with respect to Revolving
Loans. Working Capital as of any date may be a positive or negative number.
Working Capital increases when it becomes more positive or less negative and
decreases when it becomes less positive or more negative, and all such increases
and decreases for any period shall be determined in a manner consistent with
that used in preparing the Company's consolidated statements of cash flows for
the same period in accordance with GAAP.
Terms which are defined in other Sections of this Agreement shall have
the meanings specified therein. All other terms contained in this Agreement
shall have, when the context so indicates, the meanings provided for by the
Uniform Commercial Code as adopted and in force in the State of New York, as
from time to time in effect.
11.2 Accounting Terms and Definitions. Unless otherwise defined or
specified herein all accounting terms used in this Agreement shall be construed
in accordance with GAAP, applied on a basis consistent in all material respects
with the financial statements delivered by Company to Purchaser on or before the
Closing Date. All accounting determinations for purposes of determining
compliance with the financial covenants contained in Section 6.20 shall be made
in accordance with GAAP as in effect on the Closing Date and applied on a basis
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consistent in all material respects with the audited financial statements
delivered to Purchaser by Company on or before the Closing Date. The financial
statements required to be delivered hereunder from and after the Closing Date,
and all financial records, shall be maintained in accordance with GAAP as in
effect at the time of deliverance of such financial statements. If GAAP shall
change from the basis used in preparing the audited financial statements
delivered to Purchaser by Company on or before the Closing Date, the
certificates required to be delivered pursuant to Section 6.2 demonstrating
compliance with the covenants contained herein shall include, at the election of
Company or upon the request of Purchaser, calculations setting forth the
adjustments necessary to demonstrate how Company is in compliance with the
financial covenants based upon GAAP as in effect on the Closing Date.
11.3 Directly or Indirectly. Where any provision in this Agreement refers
to action to be taken by any Person, or which such Person is prohibited from
taking, such provision shall be applicable whether the action in question is
taken directly or indirectly by such Person.
XII. MISCELLANEOUS
12.1 Expenses. The Company agrees to pay (a) all out-of-pocket expenses of
Purchaser (including reasonable fees, expenses and disbursements of Purchaser's
counsel and the allocated costs of staff counsel) in connection with the
preparation, negotiation, enforcement, operation and administration of this
Agreement, the Senior Subordinated Notes, the Other Agreements, or any documents
executed in connection therewith, or any waiver, modification or amendment of
any provision hereof or thereof; and (b) if an Event of Default occurs, all
court costs and costs of collection, including, without limitation, reasonable
fees, expenses and disbursements of counsel employed in connection with any and
all collection efforts. The attorneys' fees arising from such services,
including those of any appellate proceedings, and all expenses, costs, charges
and other fees incurred by such counsel or Purchaser in any way or respect
arising in connection with or relating to any of the events or actions described
in this Article XII shall be payable by the Company to Purchaser, on demand, and
shall be additional Senior Subordinated Obligations. Without limiting the
generality of the foregoing, such expenses, costs, charges and fees may include:
recording costs, appraisal costs, paralegal fees, costs and expenses;
accountants' fees, costs and expenses; court costs and expenses; photocopying
and duplicating expenses; court reporter fees, costs and expenses; long distance
telephone charges; air express charges, telegram charges; facsimile charges;
secretarial overtime charges; and expenses for travel, lodging and food paid or
incurred in connection with the performance of such legal services. The Company
agrees to indemnify Purchaser from and hold it harmless against any documentary
taxes, assessments or charges made by any governmental authority by reason of
the execution and delivery by the Company or any other Person of this Agreement,
the Other Agreements, and any documents executed in connection therewith.
12.2 Indemnification. IN ADDITION TO AND NOT IN LIMITATION OF THE OTHER
INDEMNITIES PROVIDED FOR HEREIN OR IN ANY OTHER AGREEMENTS, THE COMPANY HEREBY
INDEMNIFIES AND AGREES TO HOLD HARMLESS PURCHASER AND ANY OTHER HOLDERS, AND
EVERY AFFILIATE OF ANY OF THE FOREGOING, AND THEIR RESPECTIVE OFFICERS,
DIRECTORS, EMPLOYEES AND
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AGENTS, FROM ANY CLAIMS, ACTIONS, DAMAGES, COSTS, ATTORNEYS' FEES AND EXPENSES
(INCLUDING ANY OF THE SAME ARISING OUT OF THE SOLE OR CONTRIBUTORY NEGLIGENCE OF
THE PERSON TO BE INDEMNIFIED) TO WHICH ANY OF THEM MAY BECOME SUBJECT, INSOFAR
AS SUCH LOSSES, LIABILITIES, CLAIMS, ACTIONS, DAMAGES, COSTS AND EXPENSES ARISE
FROM OR RELATE TO THIS AGREEMENT OR THE OTHER AGREEMENTS, OR ANY OF THE
TRANSACTIONS CONTEMPLATED THEREBY, OR FROM ANY INVESTIGATION, LITIGATION, OR
OTHER PROCEEDING, INCLUDING, WITHOUT LIMITATION, ANY THREATENED INVESTIGATION,
LITIGATION OR OTHER PROCEEDING RELATING TO ANY OF THE FOREGOING, OR FROM ANY
VIOLATION OR CLAIM OF VIOLATION OF ANY APPLICABLE ENVIRONMENTAL LAWS WITH
RESPECT TO ANY REAL OR PERSONAL PROPERTY, OR FROM ANY GOVERNMENTAL OR JUDICIAL
CLAIM, ORDER OR JUDGMENT WITH RESPECT TO ANY REAL OR PERSONAL PROPERTY OF THE
COMPANY, OR FROM ANY BREACH OF THE WARRANTIES, REPRESENTATIONS OR COVENANTS
CONTAINED IN THIS AGREEMENT OR THE OTHER AGREEMENTS. THE FOREGOING
INDEMNIFICATION INCLUDES ANY SUCH CLAIMS, ACTIONS, DAMAGES, COSTS, AND EXPENSES
INCURRED BY REASON OF THE SOLE OR CONTRIBUTORY NEGLIGENCE OF THE PERSON TO BE
INDEMNIFIED, BUT EXCLUDES ANY OF THE SAME INCURRED BY REASON OF SUCH PERSON'S
GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.
12.3 Notices. Except as otherwise expressly provided herein, all
communications provided for hereunder shall be in writing and delivered or
mailed by the United States mails, certified mail, return receipt requested, (a)
if to Purchaser, addressed to Purchaser at the address specified on Annex I
hereto or to such other address as Purchaser may in writing designate, (b) if to
any other Holder, addressed to such Holder at such address as such Holder may in
writing designate, and (c) if to the Company, addressed to the Company at the
address set forth next to its name on the signature pages hereto or to such
other address as the Company may in writing designate. Notices shall be deemed
to have been validly served, given or delivered (and "the date of such notice"
or words of similar effect shall mean the date) five (5) days after deposit in
the United States mails, certified mail, return receipt requested, with proper
postage prepaid, or upon actual receipt thereof (whether by noncertified mail,
telecopy, telegram, facsimile, express delivery or otherwise), whichever is
earlier.
12.4 Reproduction of Documents. This Agreement and all documents relating
hereto, including, without limitation (a) consents, waivers and modifications
which may hereafter be executed, (b) documents received by Purchaser at the
closing of the purchase of the Senior Subordinated Note, and (c) financial
statements, certificates and other information previously or hereafter furnished
to Purchaser, may be reproduced by Purchaser by any photographic, photostatic,
microfilm, microcard, miniature photographic or other similar process and
Purchaser may destroy any original document so reproduced. The Company agrees
and stipulates that any such reproduction which is legible shall be admissible
in evidence as the original itself in any judicial or administrative proceeding
(whether or not the original is in existence and whether or not such
reproduction was made by you in the regular course of business) and that any
enlargement, facsimile or further reproduction of such reproduction shall
likewise be admissible
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in evidence; provided that nothing herein contained shall preclude the Company
from objecting to the admission of any reproduction on the basis that such
reproduction is not accurate, has been altered, is otherwise incomplete or is
otherwise inadmissible.
12.5 Assignment, Sale of Interest. The Company may not sell, assign or
transfer this Agreement, or the Other Agreements or any portion thereof,
including, without limitation, the Company's rights, title, interests, remedies,
powers and/or duties hereunder or thereunder. The Company hereby consents to
Purchaser's participation, sale, assignment, transfer or other disposition
(collectively, a "Transfer"), at any time or times hereafter, of this Agreement,
or the Other Agreements to which the Company is a party, or of any portion
hereof or thereof, including, without limitation, Purchaser's rights, title,
interests, remedies, powers and/or duties hereunder or thereunder. In connection
with any Transfer, the Company agrees to cooperate fully with Purchaser and any
potential Transferee. Such cooperation shall include, but is not limited to,
cooperating with any audits or other due diligence investigation undertaken by
any potential Transferee.
12.6 Successors and Assigns. This Agreement will inure to the benefit of
and be binding upon the parties hereto and their respective successors and
assigns.
12.7 Headings. The headings of the sections and subsections of this
Agreement are inserted for convenience only and do not constitute a part of this
Agreement.
12.8 Counterparts. This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original, and it shall not
be necessary in making proof of this Agreement to produce or account for more
than one such counterpart or reproduction thereof permitted by Section 12.4.
12.9 Reliance on and Survival Provisions. All covenants, representations
and warranties made by the Company herein and in any certificates delivered
pursuant hereto, whether or not in connection with a closing, (a) shall be
deemed to be material and to have been relied upon by Purchaser, notwithstanding
any investigation heretofore or hereafter made by Purchaser or on Purchaser's
behalf, and (b) shall survive the delivery of this Agreement and the Senior
Subordinated Notes until all obligations of the Company under this Agreement
shall have been satisfied.
12.10 Integration and Severability. This Agreement embodies the entire
agreement and understanding between Purchaser and the Company, and supersedes
all prior agreements and understandings relating to the subject matter hereof.
In case any one or more of the provisions contained in this Agreement or in any
Senior Subordinated Notes, or any application thereof, shall be invalid, illegal
or unenforceable in any respect, the validity, legality and enforceability of
the remaining provisions contained herein and therein, and any other application
thereof, shall not in any way be affected or impaired thereby.
12.11 Law Governing. THIS AGREEMENT HAS BEEN SUBSTANTIALLY NEGOTIATED AND
IS BEING EXECUTED, DELIVERED, AND ACCEPTED, AND IS
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INTENDED TO BE PERFORMED, IN PART IN THE STATE OF NEW YORK. ALL OBLIGATIONS,
RIGHTS AND REMEDIES HEREUNDER, SHALL BE GOVERNED BY AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. THE SENIOR
SUBORDINATED NOTES SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH THE LAWS OF THE STATE SPECIFIED THEREIN. PURCHASER RETAINS ALL
RIGHTS UNDER THE LAWS OF THE UNITED STATES OF AMERICA, INCLUDING THOSE RELATING
TO THE CHARGING OF INTEREST.
12.12 Waivers; Modification. NO PROVISION OF THIS AGREEMENT MAY BE WAIVED,
CHANGED, AMENDED OR MODIFIED, OR THE DISCHARGE THEREOF ACKNOWLEDGED, ORALLY, BUT
ONLY BY AN AGREEMENT IN WRITING SIGNED BY THE COMPANY AND THE HOLDERS OF
SIXTY-SIX AND TWO-THIRDS PERCENT (66 2/3%) OF THE OUTSTANDING PRINCIPAL AMOUNT
OF THE SENIOR SUBORDINATED NOTES.
12.13 Waiver of Jury Trial. TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW, THE COMPANY AND PURCHASER HEREBY IRREVOCABLY AND EXPRESSLY WAIVE ALL RIGHT
TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED UPON
CONTRACT, TORT, OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE
SENIOR SUBORDINATED NOTES OR ANY DOCUMENTS ENTERED INTO IN CONNECTION THEREWITH
OR THE TRANSACTIONS CONTEMPLATED THEREBY OR THE ACTIONS OF PURCHASER IN THE
NEGOTIATION, ADMINISTRATION, OR ENFORCEMENT THEREOF.
12.14 Other Business. It is understood and accepted that Purchaser and
their Affiliates have interests in other business ventures that may be in
conflict with the activities of the Company and that nothing in this Agreement
will limit the current or future activities of Purchaser and that nothing in
this Agreement will limit the current or future business activities of Purchaser
whether or not such activities are competitive with those of the Company.
12.15 Confidentiality. Each Holder agrees to keep confidential any
information delivered by the Company to such Holder under this Agreement that
the Company clearly indicates in writing to be confidential information;
provided, however, that nothing in this Section 12.15 will prevent such Holder
from disclosing such information, upon giving notice to the Company where
practicable (a) to any Affiliate of such Holder or any actual or potential
purchaser, participant, assignee, or transferee of such Holder's rights or
obligations hereunder that agrees to be bound by the terms of this Section
12.15, (b) upon order of any court or administrative agency, (c) upon the
request or demand of any regulatory agency or authority having jurisdiction over
such Holder, (d) that is in the public domain, (e) that has been obtained from
any Person that is not a party to this Agreement or an Affiliate of any such
party without breach by such Person of a confidentiality obligation known to
such Holder, (f) in connection with the exercise of any remedy under this
Agreement, (g) to the certified public accountants for such Holder, or (h) to
any governmental, quasi-governmental or industry regulator having
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authority over such Holder. The Company agrees that such Holder will be presumed
to have met its obligations under this Section 12.15 to the extent that it
exercises the same degree of care with respect to information provided by the
Company as it exercises with respect to its own information of similar
character.
[REMAINDER OF PAGE INTENTIONALLY BLANK]
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IN WITNESS WHEREOF, the Company and Purchaser have caused this Agreement to
be executed and delivered by their respective officers hereunto duly authorized.
COMPANY:
PRECISE TECHNOLOGY, INC.
By: /s/ John R. Weeks
----------------------------------
John R. Weeks
President
Company's Address for Notices:
501 Mosside Boulevard
North Versailles, Pennsylvania 15137
Attn: Mr. John R. Weeks
Facsimile: (412) 829-4121
with copies to:
Precise Holding Corporation
c/o Mentmore Holdings Corporation
1430 Broadway, 13th Floor
New York, New York 10018-3308
Attn: Mr. William L. Remley
Facsimile: (212) 391-1393
Richard C. Hoffman, P.C.
1430 Broadway, 13th Floor
New York, New York 10018-3308
Facsimile: (212) 391-1393
Kelley, McCann & Livingstone
200 Public Square, 35th Floor
BP America Building
Cleveland, Ohio 44114-2302
Attn: Michael D. Schenker
Facsimile: (216) 241-3707
<PAGE>
RICE:
RICE PARTNERS II, L.P.,
By: Rice Capital Group IV, L.P.,
its general partner
By: RMC Fund Management, L.P.,
its general partner
By: Rice Mezzanine Corporation,
its general partner
By: /s/ James P. Wilson
--------------------------
James P. Wilson
Managing Director
Amount of Senior Subordinated Note:
$10,000,000
JOHN HANCOCK:
JOHN HANCOCK MUTUAL LIFE INSURANCE
COMPANY
By: /s/ Sandeep Alva
----------------------------------
Sandeep Alva
Senior Investment Officer
Amount of Senior Subordinated Notes:
$10,000,000
<PAGE>
Annex I
to
Note Purchase Agreement
Information Concerning Purchaser
Rice: Rice Partners II, L.P.
Principal Amount of
Senior Subordinated Note: $ 10,000,000
Denomination of Warrants: Shares representing 5.7% of the common
stock of Parent on a fully diluted basis
Address for notices Rice Partners II, L.P.
to Rice: c/o Rice Capital Group IV, L.P.
5847 San Felipe, Suite 4350
Houston, Texas 77057
Attn: James P. Wilson
Facsimile: (713) 783-9750
and with a copy to:
Hughes & Luce, L.L.P.
1717 Main Street, Suite 2800
Dallas, Texas 75201
Attn: Larry A. Makel, Esq.
Facsimile: (214) 939-6100
John Hancock: John Hancock Mutual Life Insurance Company
Principal Amount of
Senior Subordinated Notes: $10,000,000
Denomination of Warrants: Shares representing 5.7% of the common
stock of Parent on a fully diluted basis
Address for all notices
with respect to payments
due John Hancock: John Hancock Mutual Life Insurance Company
John Hancock Place
200 Clarendon Street
Boston, Massachusetts 02117
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Attn: Securities Accounting Division T-10
Facsimile: (617) ___________________
Address for all other notices
or communications to
John Hancock: John Hancock Mutual Life Insurance Company
John Hancock Place
200 Clarendon Street
Boston, Massachusetts 02117
Attn: Bond and Corporate Finance Dept. T-57
Facsimile: (617) __________________
Payments to Rice to be
made by wire transfer to: Southwest Bank of Texas, N.A.
Houston, Texas
ABA Routing #113011258
Accounting #9048545
For the Account of:
Rice Partners II, L.P.
Money Market Account #9020012
re: Precise Technology, Inc.
12.25% Senior Subordinated Note
Payments to John
Hancock to be made
by wire transfer to: The First National Bank of Boston
ABA No. 011000390
Boston, Massachusetts 02110
For the Account of:
John Hancock Mutual Life
Insurance Company Private Placement
Collection Account
Account Number: 541-55417
On Order of: Precise Technology, Inc.
12.25% Senior Subordinated Notes
PPN No.74018# AA 9
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<PAGE>
10.5
WARRANT PURCHASE AGREEMENT
WARRANT PURCHASE AGREEMENT (the "Agreement") made as of March 29, 1996, by
and among PRECISE HOLDING CORPORATION, a Delaware corporation (the "Company"),
RICE PARTNERS II, L.P., a Delaware limited partnership ("Rice"), JOHN HANCOCK
MUTUAL LIFE INSURANCE COMPANY, a Massachusetts mutual life insurance company
("John Hancock"), DELAWARE STATE EMPLOYEES' RETIREMENT FUND, a Delaware
corporation ("Delaware"), DECLARATION OF TRUST FOR DEFINED BENEFIT PLANS OF
ZENECA HOLDINGS INC., a Delaware corporation ("Zeneca"), and DECLARATION OF
TRUST FOR DEFINED BENEFIT PLANS OF ICI AMERICAN HOLDINGS INC., a Delaware
corporation ("ICI") (Delaware, Zeneca, and ICI are collectively referred to
herein as "Pecks").
W I T N E S S E T H:
WHEREAS, the Company owns beneficially and of record all of the issued and
outstanding common stock of Precise Technology, Inc., a Delaware corporation
("Precise");
WHEREAS, Precise, Rice and John Hancock have entered into a Note Purchase
Agreement (the "Note Agreement") dated of even date with this Agreement;
WHEREAS, the Company, Precise and Pecks have entered into a Securities
Purchase Agreement (the "Pecks Securities Purchase Agreement") dated of even
date with this Agreement;
WHEREAS, the Company, the Shareholder and Rice, John Hancock and Pecks
(individually and collectively, the "Purchaser") have entered into a Shareholder
Agreement (the "Shareholder Agreement") dated of even date with this Agreement;
WHEREAS, the Company is issuing the Warrants to Rice and John Hancock to
induce them to (i) enter into the Note Agreement and (ii) lend Precise
$20,000,000 in the aggregate in exchange for the sale by Precise of Senior
Subordinated Notes (as defined in the Note Agreement);
WHEREAS, the Company is issuing the Warrants to Pecks in consideration of
and pursuant to the terms of the Pecks Securities Purchase Agreement; and
WHEREAS, Rice and John Hancock are willing to enter into and consummate the
transactions contemplated by the Note Agreement, and Pecks is willing to enter
into and consummate the transactions contemplated by the Pecks Securities
Purchase Agreement, only if, among other things, (i) the Company enters into,
and performs under, this Agreement, and (ii) the Company and the Shareholder
enter into, and perform under, the Shareholder Agreement.
NOW, THEREFORE, in consideration of the foregoing, the mutual covenants
contained in this Agreement, and other good and valuable consideration, the
receipt and sufficiency of
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which are hereby acknowledged, the Purchaser and the Company, intending to be
legally bound, agree as follows:
Article I
Definitions
As used in this Agreement, the following terms have the following
respective meanings:
Actual Consideration. The aggregate consideration received by the Company
in respect of an Actual Issuance of Common Stock.
Actual Issuance of Common Stock or Actual Issuance. An issuance by the
Company of any shares of Common Stock other than pursuant to the Exercise
of a Right or a Convertible.
Act. The Securities Act of 1933 located at 15 U.S.C. 77a et seq.
Adjustment Public Offering. Each primary public offering of shares of any
class of Capital Stock pursuant to a registration statement filed with the
Commission.
Affiliate. With respect to any Person, a Person that, directly or
indirectly or through one or more intermediaries, controls, is controlled
by, or is under common control with, such Person. The term "control" as
used with respect to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management
or policies of such Person, whether through the ownership of voting
securities, by contract, or otherwise.
Aggregate Consideration. The Actual Consideration received by the Company
in respect of an Actual Issuance of Common Stock or the Deemed
Consideration received and/or deemed received by the Company in respect of
a Deemed Issuance of Common Stock.
Agreement. This term is defined in the preamble.
Appraised Value. The value determined in accordance with the following
procedures. For a period of 30 days after the date of a Valuation Event
(the "Negotiation Period"), each party to this Agreement agrees to
negotiate in good faith with each other party to reach agreement upon the
Appraised Value of the securities or property at issue, as of the date of
the Valuation Event, which will be the fair market value of such securities
or property, without premium for control or discount for minority
interests, illiquidity, or restrictions on transfer. In the event that the
parties are unable to agree upon the Appraised Value of such securities or
other property by the end of the Negotiation Period, then the Appraised
Value of such securities or property will be determined for purposes of
this Agreement by a recognized appraisal or investment banking firm
mutually agreeable to the Holders and the Company (the "Appraiser"). If the
Holders and the Company cannot agree on an Appraiser within fifteen (15)
days after the end of the
2
<PAGE>
Negotiation Period, the Company, on the one hand, and the Holders, on the
other hand, shall each select an Appraiser within twenty-one (21) days
after the end of the Negotiation Period and those two Appraisers shall
select within twenty-five (25) days after the end of the Negotiation Period
an independent Appraiser to determine the fair market value of such
securities or property, without premium for control or discount for
minority interests. Such independent Appraiser shall be directed to
determine fair market value of such securities or property as soon as
practicable, but in no event later than thirty (30) days from the date of
its selection. The determination by an Appraiser of the fair market value
will be conclusive and binding on all parties to this Agreement. Appraised
Value of each share of Common Stock at a time when (i) the Company is not a
reporting company under the Exchange Act and (ii) the Common Stock is not
traded in the organized securities markets, will, in all cases, be
calculated by determining the Appraised Value of the entire Company taken
as a whole (after deducting any liquidation distributions payable with
respect to the Hamilton Preferred Stock) and dividing that value by the sum
of (x) the number of shares of Common Stock then outstanding plus (y) the
number of shares of Common Stock Equivalents, without premium for control
or discount for minority interests, illiquidity, or restrictions on
transfer. The costs of the Appraiser will be borne by the Company. In no
event will the Appraised Value of the Common Stock or Other Securities be
less than the per share consideration received or receivable with respect
to the Common Stock or securities or property of the same class as the
Other Securities, as the case may be, in connection with a pending
transaction involving a sale, merger, recapitalization, reorganization,
consolidation, or share exchange, dissolution of the Company, sale or
transfer of all or a majority of its assets or revenue or income generating
capacity, or similar transaction. The prevailing market prices for any
security or property will not be dispositive of the Appraised Value
thereof.
Appraiser. This term is defined in the definition of Appraised Value.
Average Market Value. The average of the Closing Prices for the security in
question for the thirty (30) trading days immediately preceding the date of
determination.
Board Dividend Adjustment Event. The failure of Precise to declare or pay
when due any two (2) quarterly dividend payments on the Pecks Preferred
Stock (whether consecutive or not), but only so long as such dividend
payments remain unpaid.
Board Non-Payment Adjustment Event. The (a) occurrence and continuance of
an "Event of Default", as defined under any instrument evidencing any
Indebtedness of Precise having an outstanding principal amount in excess of
$2,500,000 or (b) occurrence and continuance of a failure by Precise to
maintain, at any time, Consolidated Net Worth (as defined in Precise's
Certificate of Designation for its Series A Cumulative Exchangeable
Preferred Stock, as in effect on the date hereof) in an amount equal to the
sum of (i) $700,000 plus (ii) ten percent (10%) of Precise's Consolidated
Net Income (as defined in Precise's Certificate of Designation for its
Series A Cumulative Exchangeable Preferred Stock, as in effect on the date
hereof), if positive, for each fiscal year of Precise commencing with the
fiscal year ending December 31, 1997.
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<PAGE>
Book Value. With respect to shares of Common Stock, an amount equal to the
quotient determined by dividing (a) the sum of (x) the total consolidated
assets of the Company shown on the consolidated balance sheet of the
Company as of the last day of the month preceding the date of the Valuation
Event in question minus (y) the (i) total consolidated liabilities of the
Company as shown on the consolidated balance sheet of the Company as of the
last day of the month preceding the date of the Valuation Event and (ii)
any liquidation distributions payable with respect to the Hamilton
Preferred Stock by (b) the aggregate number of shares of Common Stock and
Common Stock Equivalents as of the date of the Valuation Event. For the
purposes of this Agreement, the Book Value of the shares of Common Stock
will be determined by the independent certified public accountants then
retained by the Company as described in Section 4.06.
Business Day. Each day of the week except Saturdays, Sundays, and days on
which banking institutions are authorized by law to close in the States of
New York, North Carolina or Pennsylvania.
Buyer. This term is defined in Section 6.02(a)(ii) of the Shareholder
Agreement.
Call Option. This term is defined in Section 5.01 of the Shareholder
Agreement.
Call Option Closing. This term is defined in Section 5.04 of the
Shareholder Agreement.
Call Option Period. This term is defined in Section 5.01 of the Shareholder
Agreement.
Capital Stock. As to any Person, its common stock and any other capital
stock of such Person authorized from time to time, and any other shares,
options, interests, participations, or other equivalents (however
designated) of or in such Person, whether voting or nonvoting, including,
without limitation, common stock, options, warrants, preferred stock,
phantom stock, stock appreciation rights, convertible notes or debentures,
stock purchase rights, and all agreements, instruments, documents, and
securities convertible, exercisable, or exchangeable, in whole or in part,
into any one or more of the foregoing.
Closing Date. March 29, 1996.
Closing Price.
(a) If the primary market for the security in question is a national
securities exchange registered under the Exchange Act, the National
Association of Securities Dealers Automated Quotation System -- National
Market System, or other market or quotation system in which last sale
transactions are reported on a contemporaneous basis, the last reported
sales price, regular way, of such security for such day, or, if there has
not been a sale on such trading day, the highest closing or last bid
quotation therefor on such
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<PAGE>
trading day (excluding, in any case, any price that is not the result of
bona fide arm's length trading); or
(b) If the primary market for such security is not an exchange or
quotation system in which last sale transactions are contemporaneously
reported, the highest closing or last bona fide bid or asked quotation by
disinterested Persons in the over-the-counter market on such trading day as
reported by the National Association of Securities Dealers through its
Automated Quotation System or its successor or such other generally
accepted source of publicly reported bid quotations as the Holders
designate from time to time.
Common Stock. The common stock, no par value, of the Company.
Common Stock Equivalent. Any option, warrant, right, or similar security
exercisable into, exchangeable for, or convertible to Common Stock.
Commission. The Securities and Exchange Commission and any successor
federal agency having similar powers.
Company. Precise Holding Corporation and any successor or assign.
Consideration Per Share. With respect to any Issuance, shall mean an amount
equal to (x) the Actual Consideration with respect to any Actual Issuance
of Common Stock divided by the number of shares of Common Stock issued, or
(y) the Deemed Consideration with respect to any Deemed Issuance of Common
Stock divided by the Shares Deemed Issued as a result of such Deemed
Issuance.
Convertible. Any stock (other than Non-Voting Stock), note or other
security or instrument convertible into or exchangeable for Common Stock, a
Right or another Convertible without the payment of any consideration,
whether or not the right of conversion or exchange is presently exercisable
and whether or not the right of conversion or exchange expires or
terminates on any specific date in the future.
Current Market Price. (Per share of Common Stock at any date) the average
of the daily market prices over a period of twenty (20) consecutive
business days before such date. The market price for each such business day
shall be the last sale price on such day on the principal securities
exchange on which the Common Stock is then listed or admitted to trading,
or, if no sale takes place on such day on any such exchange, the average of
the closing bid and asked prices on such day as officially quoted on any
such exchange, or if the Common Stock is not then listed or admitted on any
stock exchange, the market price for each such business day shall be the
last sale price on such day, or, if no sale takes place on such day, the
average of the closing bid and asked prices on such day in the
over-the-counter market, in either case as reported through NASDAQ, or, if
such prices are not at the time so reported, as furnished by any member of
the National Association of Securities Dealers, Inc. selected by the
Company. If and so long as there shall be no
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<PAGE>
exchange or over-the-counter market for the Common Stock during the 20-day
period prior to the date on which Current Market Price is to be determined,
the Current Market Price shall be deemed to be the Fair Market Value of the
Common Stock; provided, however, that in case the Company makes an
underwritten public offering of shares of Common Stock, for purposes of the
adjustment, if any, pursuant to Section 2.08 hereof, the Current Market
Price with respect to such shares shall be deemed to be the price to the
public shown in the final prospectus used in connection with such public
offering.
Current Warrant Price. (Per share of Common Stock at any date) the price at
which one share of Common Stock may be purchased hereunder at any time;
initially $.01; provided, however, that the Current Warrant Price shall not
at any time exceed an amount equal to the result of dividing (i) $100 by
(ii) the original aggregate number of Shares Purchasable upon an exercise
of all of the Warrants (1715) adjusted in a manner reflecting all
adjustments to Shares Purchasable pursuant to Section 2.08 hereof from the
Closing Date through and including such time (which would be the aggregate
number of Shares Purchasable at such time upon the exercise of all of the
Warrants originally issued if no Warrants had been exercised or repurchased
by the Company at or prior to such time).
Deemed Consideration. The aggregate consideration received and deemed to be
received by the Company in respect of a Deemed Issuance of Common Stock,
determined by adding (x) the aggregate amount, if any, received or
receivable by the Company as consideration in respect of the Issuance of
Rights or Convertibles constituting such Deemed Issuance of Common Stock
and (y) the minimum aggregate amount of additional consideration, if any,
payable to the Company upon the Full Exercise of all Rights or Convertibles
necessary in order to obtain the Shares Deemed Issued in such Deemed
Issuance of Common Stock.
Deemed Issuance of Common Stock or Deemed Issuance. An issuance by the
Company of a Right or a Convertible.
Exchange Act. The Securities Exchange Act of 1934, as amended, and the
rules and regulations thereunder.
Exercise. The (x) purchase of or subscription for Common Stock, a
Convertible and/or another Right pursuant to the terms of a Right or (y)
the conversion or exchange of a Convertible for Common Stock, a Right
and/or another Convertible pursuant to the terms of a Convertible.
Exercise Price. The price per share specified in Section 2.03 as adjusted
from time to time pursuant to the provisions of this Agreement.
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Fair Market Value.
(a) As to securities regularly traded in the organized securities
markets, the Average Market Value; and
(b) As to all securities (including, without limitation, the Issuable
Warrant Shares) not regularly traded in the securities markets and other
property, the fair market value of such securities or property as
determined in good faith by the board of directors of the Company at the
time it authorizes the transaction (a "Valuation Event") requiring a
determination of Fair Market Value under this Agreement; provided, however,
that, at the election of the Holders, the Fair Market Value of such
securities and other property will be the Appraised Value.
Full Exercise. The Exercise of each Right or Convertible received in a
Deemed Issuance of Common Stock and the Exercise of any Rights or
Convertibles purchased or received upon such Exercise so that the maximum
number of shares of Common Stock which may ultimately be obtained as a
result of such Deemed Issuance of Common Stock are issued.
Fully Diluted Basis. As of any date, with respect to calculations involving
the Common Stock of the Company (or an individual class or series thereof),
making the assumption that all securities of the Company then outstanding
which are convertible into such Common Stock (or shares of such class or
series, as the case may be) were converted on such date and that all
outstanding options, warrants and similar rights to acquire shares of
Common Stock of the Company (or shares of such class or series) were
exercised on such date.
Hamilton. Hamilton Holdings Ltd. Corporation, a Texas corporation.
Hamilton Preferred Stock. The three hundred thirty-one and forty-six one
hundredths (331.46) shares of 9.5% Preferred Stock, $10,000 per share
stated value, of the Company beneficially owned by Hamilton on the Closing
Date.
Holders. The Purchaser, and all Persons holding Registrable Securities,
except that neither the Company nor any Shareholder (other than Pecks with
respect to its Registrable Securities) nor any Affiliate of the Company or
any Shareholder will at any time be a Holder. Unless otherwise provided in
this Agreement, in each instance that the Holders are required to request
or consent to an action, the Holders will be deemed to have requested or
consented to such action if (a) so long as all of the Initial Holders are
Holders, the Holders of seventy percent (70%) or more of the Registrable
Securities so request or consent and (b) so long as two (2) or more (but
less than all) of the Initial Holders are Holders, the Holders of sixty-six
and two-thirds percent (66 2/3%) or more of the Registrable Securities so
request or consent. ln the event that only one (1) or none of the Initial
Holders is a Holder, in each instance that the Holders are required to
request or consent to an action, the Holders will be deemed to have
requested or consented to such
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action if the Holders of a majority-in-interest of the Registrable
Securities so request or consent.
Inactive Subsidiary. Any Subsidiary that has less than $10,000 in assets
and that is not engaged in any activities relating to the business of the
Company or Precise.
Included in such Deemed Issuance of Common Stock or Included in such Deemed
Issuance. With respect to any Right or Convertible, shall mean that the
Exercise of such Right or Convertible is required to be taken account of in
determining the Shares Deemed Issued in a Deemed Issuance of Common Stock
(for example, in the case of a Deemed Issuance which consists of the
issuance of a Convertible which may be exchanged for a Right which may, in
turn, be exercised for Common Stock, the issuance of the Convertible is a
Deemed Issuance of Common Stock and the Exercise of the Convertible and the
Right are Included in such Deemed Issuance).
Indebtedness. This term is defined in Section 11.1 of the Note Agreement.
Indemnified Party. This term is defined in Section 6.01 hereof and in
Section 11.01 of the Shareholder Agreement.
Initial Holders. Rice, John Hancock, Pecks and any Affiliate of Rice, John
Hancock or Pecks to which any of the Warrants or any part of or interest in
the Warrants is assigned.
Initial Public Offering. The first firm commitment underwritten public
offering of Common Stock to not less than 200 members of the general public
(none of which shall be an Affiliate of another) under the Securities Act
completed by the Company and resulting in proceeds (before underwriting
discounts and commissions) to the Company of at least $25,000,000.
Intellectual Property. This term is defined in Section 3.01(g).
Issuable Warrant Shares. Shares of Common Stock or Other Securities
issuable on exercise of the Warrants.
Issuance of Common Stock or Issuance. An Actual Issuance of Common Stock or
a Deemed Issuance of Common Stock.
Issued Warrant Shares. Shares of Common Stock or Other Securities issued on
exercise of the Warrants.
Material Adverse Effect. (a) A material adverse effect upon the business,
operations, properties, assets or condition (financial or otherwise) of the
Company and its Subsidiaries taken as a whole or (b) the material
impairment of the ability of any party to perform its obligations under
this Agreement or the Shareholder Agreement or (c) the impairment of the
validity of this Agreement or the Shareholder Agreement. In
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determining whether any individual event would result in a Material Adverse
Effect, notwithstanding that such event does not of itself have such
effect, a Material Adverse Effect shall be deemed to have occurred if the
cumulative effect of such event and all other then existing events would
result in a Material Adverse Effect.
Negotiation Period. This term is defined in the definition of Appraised
Value.
New Securities. Any Capital Stock other than (a) the Warrant Shares, (b)
Permitted Stock and (c) Capital Stock issued in an Adjustment Public
Offering.
Note Agreement. This term is defined in the preamble and includes the Note
Purchase Agreement of even date with this Agreement by and among Precise,
Rice and John Hancock and all documents evidencing Indebtedness thereunder
or otherwise related to the Note Agreement as the same may be amended from
time to time, and any refinancing, refunding, or replacements of the
Indebtedness under the Note Agreement.
Notice of Acceptance. This term is defined in Section 2.07.2(c) hereof.
Notice of Intent. This term is defined in Section 2.07.2(a) hereof.
Notice of Sale. This term is defined in Section 6.02(a) of the Shareholder
Agreement.
Offer Notice. This term is defined in Section 2.07.2(b) hereof.
Offer Price. This term is defined in Section 2.07.2(b) hereof.
Offered Securities. This term is defined in Section 2.07.2(a) hereof.
Other Convertible Conversion Rate. This term is defined in Section
2.08.2(b)(ii) hereof.
Other Securities. Any stock (other than Common Stock) and any other
securities of the Company or any other person (corporate or otherwise)
which the holders of the Warrants at any time shall be entitled to receive,
or shall have received, upon the exercise of Warrants in lieu of or in
addition to Warrant Shares, or which at any time shall be issuable or shall
have been issued in exchange for or in replacement of Common Stock (or
Other Securities) pursuant to Section 2.08 or otherwise.
Pecks Preferred Stock. This term is defined in Section 11.1 of the Note
Agreement.
Pecks Common Stock. The two hundred fifty (250) shares of Common Stock
issued to Pecks on the Closing Date pursuant to the terms of the Pecks
Securities Purchase Agreement.
Pecks Securities Purchase Agreement. This term is defined in the preamble.
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Permitted Stock. This term means (a) Common Stock or options or warrants to
acquire Common Stock, constituting, in the aggregate, five percent (5%) or
less of the outstanding Common Stock, issued or reserved for issuance to
present and future key management of Precise pursuant to a management
incentive program and (b) the Hamilton Preferred Stock. In no event will
the number of shares of Permitted Stock (with respect to clause (a) above)
issued or reserved for issuance, in the aggregate, exceed the lesser of the
number of shares constituting five percent (5%) of the outstanding Common
Stock on (a) the date of this Agreement or (b) the date issued.
Person. This term will be interpreted broadly to include any individual,
sole proprietorship, partnership, joint venture, trust, unincorporated
organization, association, corporation, company, institution, entity,
party, or government (whether national, federal, state, county, city,
municipal, or otherwise, including, without limitation, any
instrumentality, division, agency, body, or department of any of the
foregoing).
Public Sale. Any sale of Capital Stock pursuant to an offering pursuant to
the Act.
Pull Along Sale. This term is defined in Section 6.04 of the Shareholder
Agreement.
Pull Along Sale Date. This term is defined in Section 6.04 of the
Shareholder Agreement.
Pull Along Sale Notice. This term is defined in Section 6.04 of the
Shareholder Agreement.
Purchaser. This term is defined in the preamble.
Put Option. This term is defined in Section 4.01 of the Shareholder
Agreement.
Put Option Closing. This term is defined in Section 4.05 of the Shareholder
Agreement.
Put Option Period. This term is defined in Section 4.01 of the Shareholder
Agreement.
Put Price. This term is defined in Section 4.02 of the Shareholder
Agreement.
Put Shares. The Warrant Shares plus any other shares of Capital Stock owned
from time to time by a Holder (other than the Pecks Common Stock).
"Register," "registered," and "registration" refer to a registration
effected by preparing and filing a registration statement in compliance
with the Securities Act, and the declaration or ordering of the
effectiveness of such registration statement.
Registrable Securities. (a) the Issuable Warrant Shares, (b) the Issued
Warrant Shares and (c) the Pecks Common Stock that have not been previously
sold to the public.
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Related Party. A Subsidiary of a Selling Shareholder or one or more Related
Parties; any Affiliate of the Shareholders a party to this Agreement on the
Closing Date; and any member of the immediate family of any such Person.
Right. Any right to purchase or subscribe for, or any option, warrant or
other security or instrument (other than a Convertible) conferring on the
holder thereof a right to purchase or subscribe for, Common Stock, another
Right or a Convertible, in one transaction or in a series of transactions,
whether or not such right is presently exercisable and whether or not such
right expires or terminates on any specific date in the future.
Securities Act. The Securities Act of 1933, as amended, and the rules and
regulations thereunder.
Senior Lender. This term is defined in Section 11.1 of the Note Agreement.
Senior Loan Documents. This term is defined in Section 11.1 of the Note
Agreement.
Senior Subordinated Obligations. This term is defined in Section 11.1 of
the Note Agreement.
Senior Subordination Agreement. This term is defined in Section 11.1 of the
Note Agreement.
Shareholder. This term is defined in the preamble of the Shareholder
Agreement.
Shareholder Agreement. This term is defined in the preamble and includes
the Shareholder Agreement dated as of the Closing Date between the Company,
the Purchaser and the Shareholder in substantially the form attached to
this Agreement as Annex A and incorporated in this Agreement by reference.
Shares Deemed Issued. With respect to a Deemed Issuance of Common Stock,
the maximum aggregate number of shares of Common Stock issuable upon the
Full Exercise of the Rights or Convertibles the issuance of which
constitutes such Deemed Issuance of Common Stock.
Shares of Common Stock Deemed Outstanding and Shares Deemed Outstanding. At
any time, the sum of (x) the number of shares of Common Stock actually
issued and outstanding at such time and (y) the aggregate number of Shares
Deemed Issued in all Deemed Issuances of Common Stock effected between the
Closing Date and such time.
Shares Purchasable. This term is defined in Section 2.08.
Subsidiary. Each Person of which or in which the Company or its other
Subsidiaries own directly or indirectly fifty-one percent (51%) or more of
(i) the combined voting power of all classes of stock having general voting
power under ordinary circumstances to elect a
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majority of the board of directors or equivalent body of such Person, if it
is a corporation or similar person; (ii) the capital interest or profits
interest of such Person, if it is a partnership, joint venture, or similar
entity; or (iii) the beneficial interest of such Person, if it is a trust,
association, or other unincorporated organization.
Third Party. This term is defined in Section 2.07.2(a) hereof.
Transfer. This term is defined in Section 2.07.2(a) hereof.
Transfer Closing Date. This term is defined in Section 2.07.2(c) hereof.
Valuation Event. This term is defined in the definition of Fair Market
Value.
Voting Stock. With respect to a corporation, the stock of such corporation
the holders of which are ordinarily, in the absence of contingencies,
entitled to elect members of the board of directors (or other governing
body) of such corporation.
Warrant Agreement. This term is defined in the preamble to the Shareholder
Agreement and includes this Agreement and all documents related to this
Agreement as this Agreement may be amended from time to time.
Warrants. The Warrants referred to in Section 2.01, dated as of the Closing
Date, issued to Initial Holders, and all Warrants issued upon the transfer
or division of, or in substitution for, such Warrants.
Warrant Shares. The Issued Warrant Shares and the Issuable Warrant Shares.
Article II
The Warrants
2.01 The Warrants. On the Closing Date, Rice and John Hancock severally
agree to purchase from the Company at the purchase price set forth beneath their
respective names on the signature page of this Agreement, and the Company agrees
to issue to Rice and John Hancock, one or more Warrants in substantially the
form attached to this Agreement as Annex B and incorporated in this Agreement by
reference to purchase the aggregate number of shares of Common Stock set forth
beneath their respective names on the signature page of this Agreement, all in
accordance with the terms and conditions of this Agreement. On the Closing Date,
Pecks agrees to purchase from the Company at the purchase price set forth in the
Pecks Securities Purchase Agreement, and the Company agrees to issue to Pecks,
one or more Warrants in substantially the form attached to this Agreement as
Annex B and incorporated in this Agreement by reference to purchase the
aggregate number of shares of Common Stock set forth beneath its name on the
signature page of this Agreement, all in accordance with the terms and
conditions of this Agreement and the Pecks Securities Purchase Agreement.
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2.02 Legend. The Company will deliver to each Purchaser on the Closing Date
one or more certificates representing the Warrant purchased by such Purchaser in
such denominations as such Purchaser requests. Such certificates will be issued
in each of the Purchasers' respective names or in the name or names of their
respective designee or designees, as the case may be. It is understood and
agreed that the certificates evidencing the Warrants will bear the following
legend:
"THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE BEEN
ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO OR FOR SALE IN CONNECTION
WITH THE DISTRIBUTION HEREOF. THIS WARRANT AND THE SECURITIES ISSUABLE UPON
EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAWS, AND MAY NOT BE
PLEDGED, SOLD, OFFERED FOR SALE, TRANSFERRED, OR OTHERWISE DISPOSED OF IN
THE ABSENCE OF (A) REGISTRATION UNDER OR EXEMPTION FROM THE ACT AND ALL
APPLICABLE STATE SECURITIES LAWS, AND (B) UNDER CERTAIN CIRCUMSTANCES, IF
REQUESTED BY PRECISE HOLDING CORPORATION (THE "COMPANY"), AN OPINION OF
COUNSEL, WHICH COUNSEL SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY, TO
THE EFFECT THAT SUCH TRANSFER DOES NOT VIOLATE THE ACT OR ANY APPLICABLE
STATE SECURITIES LAWS."
"THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF ARE SUBJECT
TO THE TERMS AND PROVISIONS (INCLUDING TRANSFER RESTRICTIONS) OF A WARRANT
PURCHASE AGREEMENT, DATED AS OF MARCH 29, 1996, BY AND AMONG THE COMPANY
AND RICE PARTNERS II L.P., JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY,
DELAWARE STATE EMPLOYEES' RETIREMENT FUND, DECLARATION OF TRUST FOR DEFINED
BENEFIT PLANS OF ZENECA HOLDINGS INC. AND DECLARATION OF TRUST FOR DEFINED
BENEFIT PLANS OF ICI AMERICAN HOLDINGS INC. (COLLECTIVELY, THE "PURCHASER")
AND A SHAREHOLDER AGREEMENT, DATED AS OF MARCH 29, 1996, BY AND AMONG THE
COMPANY, THE PURCHASER AND THE OTHER PARTIES LISTED ON THE SIGNATURE PAGES
THERETO (AS SUCH AGREEMENTS MAY BE SUPPLEMENTED, MODIFIED, AMENDED, OR
RESTATED FROM TIME TO TIME, THE "AGREEMENTS"). COPIES OF THE AGREEMENTS ARE
AVAILABLE AT THE EXECUTIVE OFFICES OF THE COMPANY."
2.03 Exercise Price. The Exercise Price per share will be $.01 for each
share of Common Stock covered by the Warrants; provided, however, that in no
event will the aggregate Exercise Price for all of the shares of Common Stock
covered by all Warrants exceed $100.00, whether as a result of any change in the
par value of the Common Stock or Other Securities, as a result of any change in
the number of shares purchasable as provided in this Article II, or otherwise;
provided, further, that such limitation of the aggregate Exercise Price will
have no
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effect whatsoever upon the amount or number of Warrant Shares for which
the Warrants may be exercised.
2.04 Exercise.
(a) Each of the Warrants may be exercised at any time or from time to
time on or after the Closing Date until the tenth (10th) anniversary of the
date of this Agreement, on any day that is a Business Day, for all or any
part of the number of Issuable Warrant Shares purchasable upon its
exercise. In order to exercise any Warrant, in whole or in part, the Holder
will deliver to the Company at the address designated by the Company
pursuant to Section 6.06, (i) a written notice of such Holder's election to
exercise its Warrant, which notice will specify the number of Issuable
Warrant Shares to be purchased pursuant to such exercise, (ii) payment of
the Exercise Price, in an amount equal to the aggregate purchase price for
all Issuable Warrant Shares to be purchased pursuant to such exercise, and
(iii) the Warrant. Such notice will be substantially in the form of the
Subscription Form appearing at the end of the Warrants. Upon receipt of
such notice, the Company will, as promptly as practicable, and in any event
within three (3) Business Days, execute, or cause to be executed, and
deliver to such Holder a certificate or certificates representing the
aggregate number of full shares of Common Stock and Other Securities
issuable upon such exercise, as provided in this Agreement. The stock
certificate or certificates so delivered will be in such denominations as
may be specified in such notice and will be registered in the name of such
Holder, or such other name as designated in such notice. A Warrant will be
deemed to have been exercised, such certificate or certificates will be
deemed to have been issued, and such Holder or any other Person so
designated or named in such notice will be deemed to have become a holder
of record of such shares for all purposes, as of the date that such notice,
together with payment of the Exercise Price and the Warrant, is received by
the Company. If the Warrant has been exercised in part, the Company will,
at the time of delivery of such certificate of certificates, deliver to
such Holder a new Warrant evidencing the rights of such Holder to purchase
a number of Issuable Warrant Shares with respect to which the Warrant has
not been exercised, which new Warrant will, in all other respects, be
identical with the Warrants, or, at the request of such Holder, appropriate
notation may be made on the Warrant and the Warrant returned to such
Holder.
(b) Payment of the Exercise Price will be made, at the option of the
Holder, by (i) company or individual check or certified or official bank
check, (ii) cancellation of any debt owed by the Company to the Holder or
(iii) cancellation of Warrants, valued at Fair Market Value. If the Holder
surrenders a combination of cash or cancellation of any debt owed by the
Company to the Holder of Warrants, the Holder will specify the respective
number of shares of Common Stock to be purchased with each form of
consideration, and the foregoing provisions will be applied to each form of
consideration with the same effect as if the Warrant were being separately
exercised with respect to each form of consideration; provided, however,
that a Holder may designate that any cash to be remitted to a Holder in
payment of debt be applied, together with other monies, to the exercise of
the portion of the Warrant being exercised for cash.
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2.05 Taxes. The issuance of any Common Stock or Other Securities upon the
exercise of the Warrant will be made without charge to any Holder for any tax,
other than income taxes assessed on such Holder, in respect of such issuance.
2.06 Warrant Register. The Company will, at all times while any of the
Warrants remain outstanding and exercisable, keep and maintain at its principal
office a register in which the registration, transfer, and exchange of the
Warrants will be provided for. The Company will not at any time, except upon the
dissolution, liquidation, or winding up of the Company, close such register so
as to result in preventing or delaying the exercise or transfer of any Warrant.
2.07 Transfer and Exchange.
2.07.1 General. Subject to Section 2.07.2 hereof, the Warrants and all
options and rights under the Warrants are transferable, as to all or any
part of the number of Issuable Warrant Shares purchasable upon exercise, by
the Holders of the Warrants, in person or by duly authorized attorney, on
the books of the Company upon surrender of the Warrants at the principal
offices of the Company, together with (i) the form of transfer
authorization attached to the Warrants duly executed and (ii) if requested
by the Company, an opinion of counsel of Hughes & Luce, L.L.P., Willkie
Farr & Gallagher or other counsel reasonably acceptable to the Company, to
the effect that such transfer does not violate the registration
requirements of the Securities Act (provided that (i) the cost of any such
opinion shall be borne by the Company, (ii) any such opinion shall be
deliverable on or within thirty (30) days of any such transfer, and (iii)
no such opinion shall be required if such transfer is being made pursuant
to Rule 144 under the Securities Act, as such rule may be amended from time
to time, or any similar rule or regulation adopted by the Commission);
provided, however, such transfers will be made only (x) to commercial
banking or financial institutions or (y) to other Persons that the
transferor in good faith believes to be an "accredited investor" as such
term is defined in Regulation D under the Act. Absent any such transfer and
subject to the Shareholder Agreement, the Company may deem and treat the
registered Holders of the Warrants at any time as the absolute owners of
the Warrants for all purposes and will not be affected by any notice to the
contrary. If any Warrant is transferred in part, the Company will, at the
time of surrender of such Warrant, issue to the transferee a Warrant
covering the number of Issuable Warrant Shares transferred and to the
transferor a Warrant covering the number of Issuable Warrant Shares not
transferred.
2.07.2 Certain Rights of the Company Prior to Transfer.
(a) If any Holder of the Warrants desires to sell, convey or
transfer ("Transfer") its Warrant, the related Warrant Shares and/or
any portion thereof, to any Person other than an Affiliate of such
Holder (a "Third Party") prior to the consummation of an Initial
Public Offering, such Holder shall give written notice (a "Notice of
Intent") to the Company (i) stating, that such Holder desires to make
such Transfer, and (ii) setting forth the Warrants or the related
Warrant Shares (or
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portions thereof) proposed to be transferred, and, if applicable, (a)
with respect to Rice or John Hancock, the principal amount of Senior
Subordinated Notes (which, for purposes of this Section 2.07.2, shall
be an amount equal to or greater than $5,000,000) proposed to be
transferred by Rice or John Hancock, as the case may be, and (B) with
respect to Pecks, the number of shares of Pecks Preferred Stock
(which, for purposes of this Section 2.07.2, shall be a number of
shares having an aggregate stated value of $1,000,000 or more)
proposed to be transferred by Pecks (any such Warrants, Warrant
Shares, Senior Subordinated Notes or Pecks Preferred Stock proposed to
be so transferred are hereinafter referred to as, the "Offered
Securities").
(b) The Company or its designee may elect to treat the Notice of
Intent as an irrevocable offer to sell to the Company the Offered
Securities proposed to be sold to the Third Party and, within fifteen
(15) days of receipt of the Notice of Intent, the Company may deliver
or cause to be delivered a written notice (the "Offer Notice") to the
Holder of the Offered Securities, stating (i) that the Company or its
designee elects to purchase all of the Offered Securities and the cash
price that the Company proposes to pay for such Offered Securities
(the "Offer Price"), and (ii) that such election is irrevocable.
(c) The Holder of the Offered Securities may elect to treat the
Offer Notice as an irrevocable offer to sell to the Company the
Offered Securities proposed to be sold on the same terms and
conditions as stated in the Offer Notice. Such offer will remain open
for a period of fifteen (15) days from delivery to the Holder of the
Offer Notice. Within such fifteen (15) day period, the Holder may
elect to accept such offer in whole or in part by delivering to the
Company written notice of its irrevocable election to accept such
offer (the "Notice of Acceptance"). If the Holder irrevocably accepts
such offer, (i) the Company shall deliver to the Holder, within thirty
(30) days of receipt of the Notice of Acceptance, a written notice
identifying the source of financing for such purchase by the Company,
and (ii) the closing of the purchase and sale shall occur on or before
the forty-fifth (45th) Business Day following delivery of the Notice
of Acceptance on such date as mutually agreed by the Company or its
designee and the Holder of the Offered Securities (the "Transfer
Closing Date"). The closing shall be held at 10:00 a.m., local time,
on the Transfer Closing Date at the principal office of the Company,
or at such other time or place as the parties to such transaction
mutually agree. At such closing, the Company will deliver to the
Holder the cash purchase price of such Offered Securities, against
delivery by the Holder of the Offered Securities being so purchased,
such Offered Securities being free and clear of all liens, claims, and
encumbrances, other than this Agreement and the Shareholder Agreement,
endorsed in good form for transfer to the Company or its designees.
(d) If the Holder does not deliver a Notice of Acceptance to the
Company within the fifteen (15) day period specified in Section
2.07.2(c) above,
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the Company's offer to such Holder will be deemed to have been
rejected, and the Holder will be free to sell or transfer such Offered
Securities to a Third Party within one hundred twenty (120) days of
the expiration of such fifteen (15) day period.
(e) If the Company or its designee fails to deliver an Offer
Notice within the fifteen (15) day period specified in Section
2.07.2(b) above, then the Holder of the Offered Securities may, within
a period of one hundred twenty (120) days following the expiration of
such fifteen (15) day period, Transfer (or enter into a written
agreement to Transfer as soon as practicable, provided that such
Transfer is consummated not later than one hundred twenty (120) days
following the expiration of the fifteen (15) day period specified in
Section 2.07.2(b) all Offered Securities to one or more Third Parties,
on terms acceptable to such Holder.
(f) If the Holder of the Offered Securities shall not have
Transferred or entered into a written agreement to Transfer the
Offered Securities to any Third Party prior to the expiration of the
one hundred twenty (120) day period specified in Section 2.07.2(d) or
(e) above, as applicable, the right of first offer under this Section
2.07.2 shall again apply in connection with any subsequent Transfer by
the Holder of its Warrant or the related Warrant Shares (or any
portion thereof).
(g) If any Holder of the Offered Securities delivers a Notice of
Acceptance to the Company within the time period specified in Section
2.07.2(c) above and the Company fails to purchase the Offered
Securities within the time period specified in Section 2.07.2(c) the
right of first offer under this Section 2.07.2 shall not apply to any
subsequent transfer by such Holder of its Warrants or related Warrant
Shares (or any portion thereof).
(h) The Company shall keep confidential the terms of any proposed
Transfer contained in any Notice of Intent or Offer Notice, except as
otherwise required by law or as necessary to finance the purchase of
the Offered Securities subject to such proposed Transfer.
(i) All rights of the Company pursuant to this Section 2.07.2
shall survive the exercise of the Warrants, and shall expire upon the
consummation of an Initial Public Offering.
2.08 Adjustments to Number of Shares Purchasable.
The number of Warrant Shares purchasable upon exercise of the Warrants (the
"Shares Purchasable") shall be subject to adjustment from time to time as
hereinafter provided in this Section 2.08. Upon each adjustment of the Shares
Purchasable, the Holders of the Warrants shall be entitled to purchase the
adjusted Shares Purchasable hereunder at the Current Warrant Price.
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The provisions of this Section 2.08 shall govern the adjustment from time to
time of the Shares Purchasable hereunder.
2.08.1 Basic Adjustment Formula. In case the Company shall at any time
or from time to time after the date of this Agreement effect any Issuance
of Common Stock for a Consideration Per Share less than the Fair Market
Value in effect immediately prior to such Issuance, then and in each such
case the Shares Purchasable hereunder shall be increased, effective
concurrently with such Issuance, to the number of Shares Purchasable after
the Issuance (calculated to the nearest one hundred thousandth of one share
(.00001) and rounded to the nearest ten thousandth of one share (.0001)),
determined by multiplying the Shares Purchasable immediately prior to such
Issuance by a fraction of which:
(a) the numerator shall be the Shares of Common Stock Deemed
Outstanding immediately after and giving effect to such Issuance; and
(b) the denominator shall be the sum of (i) the Shares of Common
Stock Deemed Outstanding immediately prior to such Issuance and (ii)
the number of shares of Common Stock which the Aggregate Consideration
for such Issuance would purchase at such Current Market Price.
2.08.2 Special Applications of Basic Formula. Notwithstanding the
provisions of Section 2.08.1 hereof, the following provisions shall govern
the application of the adjustment formula set forth in said Section 2.08.1
in the circumstances described below:
(a) Deemed Issuances of Common Stock. Whenever an adjustment is
made in the Shares Purchasable hereunder pursuant to Section 2.08.1
hereof based upon a Deemed Issuance of Common Stock, except as
provided in paragraphs (b) and (c) of this Section 2.08.1, no further
adjustment of the Shares Purchasable hereunder shall be made upon the
subsequent actual issuance of shares of Common Stock which were Shares
Deemed Issued in such Deemed Issuance, nor shall the Exercise of any
Right or Convertible Included in such Deemed Issuance constitute an
Issuance.
(b) Change in Exercise Price or Conversion Rate. If, subsequent
to any Deemed Issuance of Common Stock, there is a change (other than
a change required by anti-dilution provisions of any Right or
Convertible intended to serve the same general purpose as the
provisions of Section 2.08) in (i) the purchase or exercise price
provided for in any Right Included in such Deemed Issuance (an "Other
Right Exercise Price") or (ii) the conversion price or exchange ratio
(an "Other Convertible Conversion Rate") of any Convertible Included
in such Deemed Issuance, such that the changed Other Right Exercise
Price or Other Convertible Conversion Rate, as the case may be, had it
been in effect at the time of such Deemed Issuance, would have
resulted in an increase in the Shares Deemed Issued in such Deemed
Issuance and/or a decrease in the Deemed
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Consideration with respect to such Deemed Issuance, then (A) such
Shares Deemed Issued and/or Deemed Consideration shall be recalculated
and the Shares Purchasable hereunder then in effect shall forthwith be
readjusted to such Shares Purchasable as would have been in effect at
such time had all of such Rights or Convertibles which remain
outstanding at the time of such change (or which may be issued upon
the Exercise of any Right or Convertible Included in such Deemed
Issuance and which then remain outstanding) provided for such changed
Other Right Exercise Price or Other Convertible Conversion Rate, as
the case may be, at the time of such Deemed Issuance and (B) each
other adjustment, if any, made to the Shares Purchasable hereunder
subsequent to such Deemed Issuance based on subsequent Issuances shall
be recalculated, utilizing for such purpose the Shares Deemed Issued,
Deemed Consideration and the Shares Purchasable as recalculated or as
readjusted pursuant to clause (A) of this paragraph (b).
(c) Expiration of Right on Conversion Privilege. With respect to
any Deemed Issuance of Common Stock, effective at the close of
business on the first Business Day on which no share of Common Stock
may thereafter be issued upon an Exercise of a Right or Convertible
Included in such Deemed Issuance (whether by reason of (x) the Full
Exercise of all Rights and/or Convertibles Included in such Deemed
Issuance or (y) the expiration or termination of any right to Exercise
any Rights and/or Convertibles Included in such Deemed Issuance which
have not theretofore been Exercised and/or (z) the purchase by the
Company and cancellation or retirement of some or all Rights and/or
Convertibles Included in such Deemed Issuance which have not
theretofore been exercised), the Shares Purchasable then in effect
shall be adjusted by (i) recalculating pursuant to Section 2.08.1
hereof the adjustment of the Shares Purchasable as in effect
immediately prior to such Deemed Issuance, basing such recalculation
on (A) each issuance of shares of Common Stock upon an Exercise of a
Right or Convertible Included in such Deemed Issuance, rather than the
Shares Deemed Issued on which the original calculation was based and
(B) Actual Consideration in an amount equal to the sum of (I) the
consideration actually paid to the Company for the Rights and/or
Convertibles Included in such Deemed Issuance and (II) the
consideration actually paid to the Company upon the Exercise of all
Rights and/or Convertibles Included in such Deemed Issuance which were
exercised, less (III) the consideration paid by the Company upon any
purchase by the Company of Rights and/or Convertibles Included in such
Deemed Issuance, rather than the Deemed Consideration on which the
original calculation was based and (ii) recalculating each other
adjustment, if any, made to the Shares Purchasable subsequent to such
Deemed Issuance based on subsequent Issuances, utilizing the Shares
Purchasable as adjusted pursuant to clause (i) of this paragraph (c)
and including in Shares Deemed Outstanding for such purpose only the
shares of Common Stock actually issued upon the Exercise of Rights
and/or Convertibles Included in such Deemed Issuance in place of the
Shares Deemed Issued in respect of such Deemed Issuance as utilized in
the original calculations of those adjustments.
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(d) Stock Dividends. In case at any time the Company shall
declare a dividend or make any other distribution upon any class or
series of its stock payable in shares of Common Stock, Rights or
Convertibles, (i) any issuance of shares of Common Stock shall be
treated as an Actual Issuance of Common Stock, (ii) any issuance of
Rights or Convertibles shall be treated as a Deemed Issuance of Common
Stock and (iii) any shares of Common Stock, Rights or Convertibles, as
the case may be, issuable in payment of such dividend or distribution
shall be deemed to have been issued or sold without consideration
(that is, the Actual Consideration or Deemed Consideration in respect
of such Actual Issuance or Deemed Issuance, as the case may be, shall
be zero).
(e) Purchase of New Securities Pursuant to Article II of the
Shareholder Agreement. Notwithstanding any other provision of this
Section 2.08, neither the granting of any preemptive rights pursuant
to Article II of the Shareholder Agreement hereof nor the issuance of
New Securities upon the exercise thereof shall be treated as an
Issuance of Common Stock for the purposes of this Section 2.08 or give
rise to any adjustment of the Shares Purchasable pursuant to Section
2.08.1 hereof. No shares of Common Stock which would have been, but
for the foregoing provisions of this Section 208.2(e) deemed issued as
a result of such grant or actually issued as a result of such exercise
shall be included in Shares Deemed Outstanding for any calculation of
an adjustment in the Shares Purchasable pursuant to Section 2.08.1
hereof or for any other purpose of this Section 2.08.
2.08.3 Principals in Applying Basic Formula. The following provisions
shall be applicable for the purpose of calculations utilizing the
adjustment formula set forth in Section 2.08.1 hereof and otherwise, as
appropriate, for the purposes of this Section 2.08:
(a) Consideration for Shares, Rights and Convertibles. In case at
any time any shares of Common Stock, Rights or Convertibles shall be
issued or sold for cash, the consideration received therefor shall be
deemed to be the amount received by the Company therefor in the form
of such cash, without deduction of any expenses incurred or any
underwriting commissions, discounts or concessions paid or allowed by
the Company in connection therewith. In case at any time any shares of
Common Stock, Rights or Convertibles shall be issued or sold for a
consideration other than cash, the amount of the consideration other
than cash received by the Company shall be deemed to be the fair value
of such consideration at the time of such issuance as determined
reasonably and in good faith by the board of directors of the Company,
without deduction of any expenses incurred or any underwriting
commissions, discounts or concessions paid or allowed by the Company
in connection therewith. In case at any time any shares of Common
Stock, Rights or Convertibles shall be issued in connection with any
merger or consolidation in which the Company is the surviving
corporation (other than a transaction to which Section 2.08.4(c)
hereof shall be applicable), the
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amount of consideration received therefor shall be deemed to be the
fair value as determined reasonably and in good faith by the board of
directors of the Company of such portion of the assets and business of
the non-surviving entity as the board of directors of the Company may
determine to be attributable to such shares of Common Stock, Rights or
Convertibles, as the case may be. In case at any time any Rights or
Convertibles shall be issued in connection with the issue and sale of
other securities of the Company, together comprising one integral
transaction in which no allocation of consideration is made between
such Rights or Convertibles and such other securities by the parties
thereto, such Rights or Convertibles shall be deemed to have been
issued for an amount of consideration equal to the fair value thereof
as determined reasonably and in good faith by the board of directors
of the Company. Notwithstanding any other provisions of this Section
2.08.3(a), in case any shares of Common Stock, Rights or Convertibles
shall be issued or sold to an Affiliate of the Company for
consideration other than cash and fifty percent (50%) or more of the
shares of Common Stock to be issued or sold (including for this
purpose any shares of Common Stock issuable upon exercise of any
Rights to be issued or sold and/or any shares of Common Stock issuable
upon conversion of any Convertibles to be issued or sold) are to be
issued or sold to an Affiliate of the Company, then the Holders shall
have the right to demand, upon written notice to the Company given
within ten (10) days after receipt of the determination of fair value
pursuant to this Section 2.08.3(a) by the board of directors of the
Company, and in lieu thereof, a determination of fair value of such
consideration to be made by appraisal, by Appraisers as described in
the definition of Fair Market Value.
(b) Record Date. In case the Company shall take a record of the
holders of Common Stock or the holders of Voting Stock for the purpose
of entitling them (i) to receive a dividend or other distribution
payable in shares of Common Stock, Rights or Convertibles, or (ii) to
subscribe for or purchase shares of Common Stock, Rights or
Convertibles, then such record date shall be deemed to be the date of
the Issuance or Deemed Issuance of the shares of Common Stock issued
or deemed issued as a result of the declaration of such dividend or
the making of such other distribution or the granting of such right of
subscription or purchase, as the case may be.
(c) Treasury Shares. The number of Shares Deemed Outstanding at
any given time shall not include shares of Common Stock owned or held
by or for the account of the Company or any Subsidiary. The
disposition of any such shares shall be considered an Actual Issuance
of Common Stock for the purpose of determining any adjustment of the
Shares Purchasable required pursuant to Section 2.08.1 hereof, unless
such shares are issued upon the Exercise of any Right or Convertible
the grant or sale of which constituted a Deemed Issuance of Common
Stock which resulted in an adjustment of the Shares Purchasable
pursuant to Section 2.08.1 hereof.
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2.08.4 Adjustments Not Governed by the Basic Formula. Notwithstanding
any other provision of this Section 2.08, under the circumstances set forth
in this Section 2.08.4, no adjustment in the Shares Purchasable shall be
made pursuant to Section 2.08.1 hereof (except as expressly otherwise
provided in this Section 2.08.4) and any adjustment or other provision to
protect the right of the Holders to exercise Warrants for shares of Common
Stock shall be made only in the manner provided below:
(a) Extraordinary Dividends and Distributions. In case the
Company at any time or from time to time shall declare, order, pay or
make a dividend or other distribution (including, without limitation,
any distribution of other or additional stock or other securities or
property or options by way of dividend or similar corporate
rearrangement) on the Common Stock, other than (i) a dividend payable
in shares of Common Stock, Rights or Convertibles or (ii) a dividend
declared on or after the Closing Date which is permitted by this
Agreement, then, and in each such case, subject to the last sentence
of Section 2.08.2 hereof, the Shares Purchasable in effect immediately
prior to the close of business on the record date fixed for the
determination of holders of any class of securities entitled to
receive such dividend or distribution shall be increased, effective as
of the close of business on such record date, to an adjusted Shares
Purchasable determined by multiplying such Shares Purchasable by a
fraction, (x) the numerator of which shall be the Current Market Price
in effect on such record date or, if the Common Stock trades on an
ex-dividend basis, on the date prior to the commencement of
ex-dividend trading, and (y) the denominator of which shall be such
Current Market Price, less the aggregate amount of such dividend or
distribution (as determined in good faith by the board of directors of
the Company) applicable to one share of Common Stock.
(b) Subdivision or Combination of Stock. In case the Company
shall at any time subdivide its outstanding shares of Common Stock
into a greater number of shares, the Shares Purchasable in effect
immediately prior to such subdivision shall be proportionately
increased, and conversely, in case the outstanding shares of Common
Stock shall be combined into a smaller number of shares, the Shares
Purchasable in effect immediately prior to such combination shall be
proportionately reduced.
(c) Adjustments for Consolidation. Merger. Sale of Assets.
Reorganization etc. In case the Company (i) shall consolidate with or
merge into any other Person and shall not be the continuing or
surviving corporation of such consolidation or merger, (ii) shall
permit any other Person to consolidate with or merge into the Company
and the Company shall be the continuing or surviving Person but, in
connection with such consolidation or merger, the Common Stock shall
be changed into or exchanged for stock or other securities of any
other Person or cash or any other property, (iii) shall transfer all
or substantially all of its properties or assets to any other Person,
or (iv) shall effect a capital reorganization or reclassification of
the Common Stock other than a capital
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reorganization or reclassification resulting in the issue of
additional shares of Common Stock for which adjustment in the Shares
Purchasable is provided in this Section 2.08, then, and in each such
case, proper provision shall be made so that, upon the basis and the
terms and in the manner provided in this Agreement, the Holders, upon
the exercise hereof at any time after the consummation of such
consolidation, merger, transfer, reorganization or reclassification,
shall be entitled to purchase (at the price described in Section 2.03
in effect at the time of such consummation), in lieu of the Common
Stock for which the Warrants could have been exercised immediately
prior to such consummation, the stock and other securities, cash and
property which such Holder would have been entitled to receive upon
such consummation if such Holder had exercised its Warrant for such
Common Stock immediately prior thereto, subject to adjustments
(subsequent to such corporate action) as nearly equivalent as possible
to the adjustments provided for in this Section 2.08. Nothing
contained in this Section 2.08.4(c) or otherwise herein shall be
deemed to authorize the Company to enter into any transaction not
otherwise permitted by this Agreement or the Shareholder Agreement.
(d) Certain Other Events. If any event occurs as to which the
other provisions of this Section 2.08 are not strictly applicable or
if strictly applicable would not fairly protect the rights of the
Holders in accordance with the essential intent and principles of such
provisions, then the board of directors of the Company shall appoint
its regular independent auditors or another firm of independent public
accountants acceptable to the Holders, which shall give their opinion
upon the adjustment, if any, on a basis consistent with such essential
intent and principles, necessary to preserve, without dilution, the
rights of the Holders. Upon receipt of such opinion, the board of
directors of the Company shall forthwith make the adjustments
described therein; provided, however, that no such adjustment shall
have the effect of reducing the Shares Purchasable as otherwise
determined pursuant to this Section 2.08 except as contemplated in
Section 2.08.2(b) or (c) or Section 2.08.4(b) hereof.
2.08.5 Notice of Adjustment. Upon the occurrence of any event
requiring an adjustment of the Shares Purchasable or effecting a material
change in the rights of the holder hereof, then and in each such case the
Company shall promptly prepare a schedule setting forth the adjusted Shares
Purchasable hereunder and the Current Warrant Price, or specifying the
Other Securities or property and the amount thereof receivable as a result
of such change in rights, and setting forth in reasonable detail the method
of calculation and the facts upon which such calculation is based. The
Company shall promptly mail a copy of such schedule to the registered
holder of this Warrant.
2.08.6 Prohibition of Certain Articles. The Company will not, by
amendment of its Certificate of Incorporation or through any
reorganization, transfer of assets, consolidation, merger, dissolution,
issue or sale of securities or any other voluntary action, avoid or seek to
avoid the observance or performance of any of the terms to be
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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
2.08 and in the taking of all such action as may reasonably be requested by
the Holders in order to protect the rights of the Holders to exercise their
Warrants for Common Stock against dilution or other impairment, consistent
with the terms and provisions of this Agreement.
2.08.7 Other Securities. If and to the extent that, pursuant to the
provisions of this Agreement and the Shareholder Agreement, any Capital
Stock other than the Common Stock shall be issuable (or stock or other
securities of any person other than the Company or cash or any other
property shall be deliverable) upon the exercise of this Warrant in lieu of
or in addition to any shares of Common Stock that initially would have been
issuable upon such exercise, each provision of this Section 2.08 relating
to (i) the issuance of shares of Common Stock, (ii) the adjustment of the
Shares Purchasable, (iii) the rights of a Holder intended to protect its
right to exercise for shares of Common Stock and as a potential holder of
shares of Common Stock and (iv) the restrictions on the Company intended to
protect such rights shall be deemed to relate to (and/or convey the
comparable rights and impose comparable restrictions with respect to) such
other Capital Stock (or such stock or other securities of such Person other
than the Company or cash or other property).
2.08.8 Determinations by Board of Directors. All determinations which
this Agreement specifically provides are to be made by the board of
directors of the Company under this Agreement shall be made in good faith
with due regard to the interests of the Holders and the other holders of
securities of the Company and in accordance with good financial practice,
and all valuations made by the board of directors of the Company under the
terms of this Agreement must be made with due regard to any market
quotations of securities involved in, or related to, the subject of such
valuation.
2.09 Lost, Stolen, Mutilated, or Destroyed Warrants. Upon receipt of
evidence reasonably satisfactory to the Company of the loss, theft, mutilation,
or destruction of a Warrant, and, in the case of any such loss, theft, or
destruction, upon delivery of a bond of indemnity in such form and amount as is
reasonably satisfactory to the Company or, in the event of such mutilation upon
surrender and cancellation of the Warrant, the Company, without charge to the
Holder, will make and deliver a new Warrant of like tenor in lieu of such lost,
stolen, destroyed, or mutilated Warrant. If any such lost, stolen, or destroyed
Warrant is owned by an Initial Holder or any other Holder whose credit is
satisfactory to the Company, then the affidavit of an authorized officer of such
owner setting forth the fact of loss, theft, or destruction and of its ownership
of the Warrant at the time of such loss, theft, or destruction will be accepted
as satisfactory evidence, and no further indemnity will be required as a
condition to the execution and delivery of a new Warrant, other than a written
agreement of such owner (in form reasonably satisfactory to the Company) to
indemnify the Company.
2.10 Stock Legend. The Warrants and the Warrant Shares have not been
registered under the Securities Act or qualified under applicable state
securities laws. Accordingly, unless there is an effective registration
statement and qualification respecting the Warrants and the
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Warrant Shares under the Securities Act or under applicable state securities
laws at the time of exercise of a Warrant, any stock certificate issued pursuant
to the exercise of a Warrant will bear the following (or substantially
equivalent) legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND NOT WITH A VIEW TO OR FOR SALE IN CONNECTION WITH THE
DISTRIBUTION HEREOF. THE SHARES REPRESENTED BY THIS CERTIFICATE (A) HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), OR ANY STATE SECURITIES LAWS, AND MAY NOT BE PLEDGED, SOLD, OFFERED
FOR SALE, TRANSFERRED, OR OTHERWISE DISPOSED OF IN THE ABSENCE OF (I)
REGISTRATION UNDER OR EXEMPTION FROM THE ACT AND ALL APPLICABLE STATE
SECURITIES LAWS, AND (II) UNDER CERTAIN CIRCUMSTANCES, IF REQUESTED BY
PRECISE HOLDING CORPORATION (THE "COMPANY"), AN OPINION OF COUNSEL, WHICH
COUNSEL SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY, TO THE EFFECT THAT
SUCH TRANSFER DOES NOT VIOLATE THE ACT OR ANY APPLICABLE STATE SECURITIES
LAWS, AND (B) ARE SUBJECT TO THE TERMS AND PROVISIONS (INCLUDING TRANSFER
RESTRICTIONS) OF A WARRANT PURCHASE AGREEMENT, DATED AS OF MARCH 29, 1996,
BY AND AMONG THE COMPANY AND RICE PARTNERS II, L.P., JOHN HANCOCK MUTUAL
LIFE INSURANCE COMPANY, DELAWARE STATE EMPLOYEES' RETIREMENT FUND,
DECLARATION OF TRUST FOR DEFINED BENEFIT PLANS OF ZENECA HOLDINGS INC. AND
DECLARATION OF TRUST FOR DEFINED BENEFIT PLANS OF ICI AMERICAN HOLDINGS
INC. (COLLECTIVELY, THE "PURCHASER") AND A SHAREHOLDER AGREEMENT, DATED AS
OF MARCH 29, 1996, BY AND AMONG THE COMPANY, THE PURCHASER AND THE OTHER
PARTIES LISTED ON THE SIGNATURE PAGES THERETO (AS SUCH AGREEMENTS MAY BE
SUPPLEMENTED, MODIFIED, AMENDED, OR RESTATED FROM TIME TO TIME, THE
"AGREEMENTS"). COPIES OF THE AGREEMENTS ARE AVAILABLE AT THE EXECUTIVE
OFFICES OF THE COMPANY."
In addition, until such time as this Agreement is no longer in effect, the
Company will cause any stock certificate evidencing any Capital Stock of the
Company to bear the legend set forth above (or a substantially equivalent
legend).
Article III
Representations and Warranties
3.01 Representations and Warranties of the Company. The Company represents
and warrants to the Purchaser that:
(a) The Company and each of its Subsidiaries is a corporation duly
organized and existing and in good standing under the laws of its state of
incorporation and is
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qualified or licensed to do business in all other jurisdictions the laws of
which require it to be so qualified or licensed and where the failure to be
so qualified or licensed would have a Material Adverse Effect. The Company
has no Subsidiaries (other than Precise and the other entities listed on
Schedule 4.16 to the Note Agreement) or debt or equity investment in any
Person. The Shareholder owns 100% of the issued and outstanding Capital
Stock of the Company free and clear of all liens, claims, and encumbrances,
except those arising pursuant to the Warrants. The Company owns 100% of the
issued and outstanding common stock of Precise free and clear of all liens,
claims, and encumbrances, except those in favor of the Senior Lender
arising under the Senior Loan Documents. No Person other than the
Purchaser, the Shareholders and the holders of Permitted Stock have any
rights, whether granted by the Company or any other Person, to acquire any
portion of the equity interest of the Company.
(b) The Company has, and at all times that this Agreement is in force
will have, the right and power, and is duly authorized, to enter into,
execute, deliver, and perform this Agreement, the Shareholder Agreement and
the Warrants, and the officers of Company executing and delivering this
Agreement, the Shareholder Agreement, and the Warrants are duly authorized
to do so. This Agreement, the Shareholder Agreement and the Warrants have
been duly and validly executed, issued, and delivered and constitute the
legal, valid, and binding obligations of the Company, enforceable in
accordance with their respective terms, except to the extent that such
enforceability may be limited by (a) bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the
enforceability of creditors' rights generally, or (b) general principles of
equity.
(c) The execution, delivery, and performance of this Agreement, the
Shareholder Agreement and the Warrants will not, by the lapse of time, the
giving of notice, or otherwise, constitute a violation of any applicable
provision contained in the charter, bylaws, or organizational documents of
the Company or contained in any material agreement, instrument, or document
to which the Company is a party or by which it is bound.
(d) As of the Closing Date (after giving effect to the Acquisition (as
defined in the Note Purchase Agreement), the authorized capital stock of
the Company consists of (i) 10,000 shares of Common Stock, no par value, of
which 8,285 shares are issued and outstanding and (ii) 1,000 shares of 9.5%
preferred stock of which 331.46 shares are issued and outstanding. 1,715
shares of Common Stock are reserved for issuance on exercise of the
Warrants. All such issued and outstanding shares have been duly authorized
and validly issued, are fully paid and nonassessable, and have been
offered, issued, sold, and delivered by Company free from preemptive
rights, rights of first refusal, or similar rights and in compliance with
applicable federal and state securities laws. Except pursuant to this
Agreement, the Shareholder Agreement and the Pecks Securities Purchase
Agreement, the Company is not obligated to issue or sell any Capital Stock,
and except pursuant to this Agreement, the Shareholder Agreement, the Pecks
Securities Purchase Agreement and the Senior Loan Agreement, the Company is
not party to, or otherwise bound by, any agreement affecting the voting of
any of its Capital
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Stock. Except for the Shareholder Agreement, the Company is not, nor will
it be, a party to, or otherwise bound by, any agreement obligating it to
register any of its Capital Stock.
(e) The shares of Common Stock and other consideration issuable on
exercise of the Warrants have been duly and validly authorized and reserved
for issuance and, when issued in accordance with the terms of the Warrants,
will be validly issued, fully paid, and nonassessable and free of
preemptive rights, rights of first refusal, or similar rights except those
arising under the Shareholder Agreement.
(f) The Company and each of its Subsidiaries has good, indefeasible,
merchantable, and marketable title to, and ownership of, all of its assets
free and clear of all liens, pledges, security interests, claims, or other
encumbrances except those arising pursuant to or permitted under the Senior
Loan Documents or pursuant to or permitted under the Note Agreement.
(g) There is not now, and at no time during the term of this Agreement
or the Shareholder Agreement will there be, any agreement, arrangement, or
understanding involving the Company, other than this Agreement, the
Shareholder Agreement, the Pecks Securities Purchase Agreement and the
Senior Loan Agreement, and the documents contemplated hereby and thereby,
modifying, restricting, or in any way affecting the rights of any security
holder to vote securities of the Company.
(h) Each of the representations and warranties made by the Company
pursuant to the Note Agreement and the Shareholder Agreement is true and
correct in all material respects.
(i) None of the documents, instruments, or other information furnished
to the Purchaser by the Company, contains any untrue statement of a
material fact or omits to state any material fact necessary in order to
make any statements made therein not misleading. No representation,
warranty, or statement made by the Company in this Agreement, the Note
Agreement, or the Shareholder Agreement, or in any document, certificate,
exhibit or schedule attached hereto or thereto or delivered in connection
herewith or therewith, contains or will contain any untrue statement of a
material fact, or omits or will omit to state a material fact necessary to
make any statements made herein or therein not misleading. To the best of
the Company's knowledge, there is no fact that materially and adversely
affects the condition (financial or otherwise), results of operations,
business, properties, or prospects of the Company or any of its
Subsidiaries that has not been disclosed in the documents provided to the
Purchaser.
3.02 Representations and Warranties of the Purchaser. Each Purchaser,
severally and not jointly, represents and warrants to the Company with respect
to itself and not with respect to any other Purchaser:
(a) It is a corporation or limited partnership duly organized and
existing and in good standing under the laws of the state of its
organization.
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(b) It has the right and power and is duly authorized to enter into,
execute, deliver, and perform this Agreement and the Shareholder Agreement,
and its officers or agents executing and delivering this Agreement and the
Shareholder Agreement are duly authorized to do so. This Agreement and the
Shareholder Agreement have been duly and validly executed, issued, and
delivered and constitute the legal, valid, and binding obligation of the
Purchaser, enforceable in accordance with their terms.
(c) It (i) is an "accredited investor," as that term is defined in
Regulation D under the Securities Act; and (ii) except with respect to
Pecks, has such knowledge, skill, and experience in business and financial
matters, based on actual participation, that it is capable of evaluating
the merits and risks of an investment in the Company and the suitability
thereof as an investment for the Purchaser.
(d) Except as otherwise contemplated by this Agreement and the
Shareholder Agreement, the Purchaser is acquiring its Warrant and any
securities issuable upon exercise of the Warrant for investment for its own
account and not with a view to any distribution thereof in violation of
applicable securities laws.
(e) It agrees that the certificates representing its Warrant and any
Issued Warrant Shares will bear the legends referenced in this Agreement,
and such Warrant or securities issuable upon exercise of the Warrant and
pursuant to the Shareholder Agreement, as the case may be, will not be
offered, sold, or transferred in the absence of registration or exemption
under applicable securities laws.
Article IV
Covenants
The Company covenants and agrees as follows:
4.01 Financial Statements. The Company will cause Precise to keep books of
account and prepare financial statements and will cause to be furnished to the
Purchaser and each other Holder (all of the foregoing and following to be kept
and prepared in accordance with United States generally accepted accounting
principles applied on a consistent basis):
(a) As soon as available, and in any event within ninety (90) days
after the end of each fiscal year of Precise, beginning with the fiscal
year ending December 31, 1996, (i) a copy of the consolidated and
consolidating financial statements of Precise for such fiscal year
containing a balance sheet, statement of income, statement of stockholders'
equity, and statement of cash flow as at the end of such fiscal year and
for the fiscal year then ended and in each case setting forth in
comparative form the figures for the preceding fiscal year, all in
reasonable detail and audited and certified by Ernst & Young L.L.P., or
other independent certified public accountants of recognized national
standing selected by Precise and consented to by the Holders to the effect
that such statements have been prepared in accordance with generally
accepted accounting
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principles and (ii) a comparison of the actual results during such fiscal
year to those originally budgeted by Precise prior to the beginning of such
fiscal year, along with management's discussion and analysis of variances,
as well as, variances between actual results for such fiscal year and
actual results for the previous fiscal year. The annual audit report
required by this Agreement will not be qualified or limited
(b) As soon as available, and in any event within thirty (30) days
after the end of each calendar month, a copy of unaudited consolidated and
consolidating financial statements of Precise as of the end of such
calendar month and for the portion of the fiscal year then ended,
containing balance sheets, statements of income, statement of retained
earnings and statements of cash flow, in each case setting forth in
comparative form the figures for the corresponding period of the preceding
fiscal year, all in reasonable detail, including, without limitation, a
comparison of actual results for such period to those originally budgeted
by Precise prior to the beginning of such fiscal period and for the fiscal
year to date.
(c) On or before thirty (30) days prior to the beginning of each
fiscal year of Precise, an annual budget or business plan for such fiscal
year, including a projected consolidated and consolidating balance sheet,
income statement, and cash flow statement for such year, and, promptly
during each fiscal year, all revisions thereto approved by the board of
directors of Precise.
(d) Concurrently with the delivery of each of the financial statements
referred to in Section 4.01(a) and 4.01(b), a certificate of an authorized
officer of Precise in form and substance satisfactory to the Holders (i)
stating that no Potential Default (as defined in the Note Agreement) or
Event of Default (as defined in the Note Agreement) has occurred or is
continuing or, if such officer has knowledge of a Potential Default or
Event of Default, the nature thereof and specifying the steps taken or
proposed to remedy such matter, (ii) showing in reasonable detail the
calculations showing compliance with Section 7.9 and 7.10 of the Note
Agreement, (iii) stating the financial statements have been prepared in
accordance with generally accepted accounting principles and fairly and
accurately present (subject to year-end audit adjustments, for the annual
certificate) the financial condition and results of operations of Precise
at the date and for such period indicated therein, (iv) containing
summaries of accounts payable agings, accounts receivable agings, and
inventory (provided that such information shall be required only in
connection with the delivery of the financial statements referred to in
Section 6.1(b) in respect of any month which is the last month of a fiscal
quarter of Precise), and (v) containing a schedule of the outstanding
Indebtedness for borrowed money of Precise and its Subsidiaries describing
in reasonable detail each such debt issue or loan outstanding and the
principal amount and amount of accrued and unpaid interest with respect to
each such debt issue or loan (provided that such information shall be
required only in connection with the delivery of the financial statements
referred to in Section 6.1(b) in respect of any month which is the last
month of a fiscal quarter of Precise.)
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(e) As soon as available, (i) a copy of each financial statement,
report, notice, or proxy statement sent by the Company, Precise or any of
their Subsidiaries to their respective shareholders, (ii) a copy of each
regular, periodic or special report, registration statement, or prospectus
filed by the Company, Precise or any of their Subsidiaries with any
securities exchange or the Securities and Exchange Commission or any
successor agency, (iii) any material order issued by any court,
governmental authority, or arbitrator in any material proceeding to which
the Company, Precise or any of their Subsidiaries is a party, (iv) copies
of all press releases and other statements made available generally by the
Company, Precise or any of their Subsidiaries to the public generally
concerning material developments in the Company's, Precise's or any such
Subsidiary's business, and (v) a copy of all notices and other
correspondence sent by the Company or Precise to the Senior Lender
pertaining to the occurrence of any default or event of default under the
Senior Loan Documents.
(f) Promptly, such additional information concerning the Company or
any of its Subsidiaries as any Holder may request, including, without
limitation, auditor management reports and audit "waive" lists.
4.02 Laws. The Company will, and the Company will cause each of its
Subsidiaries to, comply in all material respects with all applicable statutes,
regulations, and orders of the United States, domestic and foreign states, and
municipalities, agencies, and instrumentalities of the foregoing applicable to
the Company and its Subsidiaries, the failure of which would have a Material
Adverse Effect.
4.03 Inspection. The Company will, and the Company will cause each of its
Subsidiaries to, permit any representative designated by the Holders at any time
and from time to time during normal business hours and upon two (2) Business
Days prior notice to (a) visit and inspect any of the properties of the Company
and its Subsidiaries; (b) examine the corporate and financial records of the
Company and its Subsidiaries and make copies thereof or extracts therefrom; and
(c) discuss the affairs, finances, and accounts of the Company and its
Subsidiaries with the directors, officers, and independent accountants of the
Company and its Subsidiaries.
4.04 Certain Actions. Without the prior written consent of the Holders,
which consent may be withheld in the sole discretion of the Holders, the Company
will not, and the Company will not permit any of its Subsidiaries to:
(a) permit to occur any amendment, alteration or modification of its
Articles of Incorporation, Bylaws or other charter or organizational
documents, as constituted on the date of this Agreement, the effect of
which, in the reasonable credit judgment of the Holders, would be to alter,
impair, or affect adversely, either the rights and benefits of the Holders
or the duties and obligations of Company under this Agreement, the
Warrants, or the Shareholder Agreement;
(b) declare or make any dividends or distributions of its cash, stock,
property, or assets (other than (i) dividends and distributions which are
permitted pursuant to the
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terms of the Note Agreement and (ii) regularly scheduled dividends on the
Hamilton Preferred Stock, subject to the restrictions set forth in Section
4.04 of the Shareholder Agreement) or redeem, retire, purchase, or
otherwise acquire, directly or indirectly, any of its Capital Stock or
Capital Stock or securities of any Affiliate of the Company, or any
securities convertible or exchangeable into Capital Stock or Capital Stock
or securities of any Affiliate of the Company;
(c) effect any sale, lease, assignment, transfer, or other conveyance
of any portion of the assets or operations or the revenue or income
generating capacity of the Company or any Subsidiary (other than sales,
leases, assignments, transfers and other conveyances which are permitted
pursuant to the terms of the Note Agreement) or to take any such action
that has the effect of the foregoing;
(d) except for Permitted Stock or pursuant to this Agreement, the
Shareholder Agreement, the Note Agreement or the Pecks Securities Purchase
Agreement, issue or sell, or otherwise dispose of any Capital Stock, or
dissolve or liquidate (except that any Inactive Subsidiary may be dissolved
or liquidated), or effect any consolidation or merger involving the Company
or any Subsidiary (except that any Subsidiary of Precise may be merged with
and into (i) Precise, provided that Precise is the surviving corporation or
(ii) any other Subsidiary of Precise) or any reclassification, corporate
reorganization, stock split or reverse stock split, or other change of any
class of Capital Stock;
(e) enter into any business that the Company or Precise is not
conducting on the date of this Agreement or acquire any substantial
business operation or assets (through a stock or asset purchase or
otherwise);
(f) except for Permitted Stock or as otherwise permitted in the Note
Agreement, enter into any transaction or transactions with any director,
officer, or shareholder of the Company or the Shareholder, or any Affiliate
or relative of the foregoing except upon terms that are disclosed in
writing to the Holders and are (i) in the opinion of the Holders, fair and
reasonable and (ii) in any event, at least as favorable as would result in
a comparable arm's-length transaction with a Person not a director,
officer, employee, shareholder, or Affiliate of the Company or the
Shareholder or any Affiliate or related party of the foregoing, or advance
any monies to any such Persons, except for travel advances in the ordinary
course of business;
(g) increase the amount of benefits payable under any benefit plan in
the aggregate, or increase the aggregate amount of professional,
management, consulting or similar fees paid or accrued by the Company or
its Subsidiaries during any fiscal year to or for the direct or indirect
benefit of any of its officers, directors, or security holders or
Affiliates beyond the amounts permitted under the Note Agreement;
(h) acquire any debt or equity interest in any Person or establish or
acquire a Subsidiary (other than any Subsidiary existing on the date
hereof) or, except as otherwise permitted under the Note Agreement, make
any additional capital contribution or
31
<PAGE>
purchase any additional equity in any Subsidiary or, except as otherwise
permitted under the Note Agreement, make any advances or loans to any
Subsidiary or transfer any technology or assets to any Subsidiary;
(i) allow the aggregate par value of the Capital Stock subject to the
Warrants from time to time to exceed the price payable on exercise of the
Warrants, as adjusted from time to time; or
(j) obligate itself or otherwise agree to take, permit or enter into
any of the events described in subsections (a) through (i) above.
4.05 Records. The Company and each of its Subsidiaries will keep books and
records of account in which full, true, and correct entries will be made of all
dealings and transactions in relation to its business and affairs in accordance
with generally accepted accounting principles applied on a consistent basis.
4.06 Accountants. The Company will retain independent public accountants
who will certify the consolidated and consolidating financial statements of
Precise at the end of each fiscal year, and in the event that the services of
the independent public accountants so selected, or any firm of independent
public accounts hereafter employed by Company, are terminated, the Company will
promptly thereafter notify each Holder. The Company will not terminate the
employment of Precise's independent public accountants unless such termination
is authorized by the board of directors of Precise and the Company.
4.07 Existence. The Company will maintain, and will cause each of its
Subsidiaries (other than Inactive Subsidiaries) to maintain, in full force and
effect its corporate existence and all rights, franchises and licenses necessary
to the conduct of its business.
4.08 Notice.
(a) In the event of (i) any setting by the Company of a record date
with respect to the holders of any class of Capital Stock for the purpose
of determining which of such holders are entitled to dividends, repurchases
of securities or other distributions, or any right to subscribe for,
purchase or otherwise acquire any shares of Capital Stock or other property
or to receive any other right; or (ii) any capital reorganization of the
Company or any of its Subsidiaries, or reclassification or recapitalization
of the Capital Stock or any transfer of all or a majority of the assets,
business, or revenue or income generating capacity of the Company or any of
its Subsidiaries, or consolidation, merger, share exchange, reorganization,
or similar transaction involving the Company or any of its Subsidiaries; or
(iii) any voluntary or involuntary dissolution, liquidation, or winding up
of the Company or any of its Subsidiaries; or (iv) any proposed issue or
grant by the Company or any of its Subsidiaries of any Capital Stock, or
any right or option to subscribe for, purchase, or otherwise acquire any
Capital Stock (other than the issue of Issuable Warrant Shares upon
exercise of the Warrants or Permitted Stock), then, in each such event, the
Company will deliver or cause to be delivered to the Holders a notice
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<PAGE>
specifying, as the case may be, (A) the date on which any such record is to
be set for the purpose of such dividend, distribution, or right, and
stating the amount and character of such dividend, distribution, or right;
(B) the date as of which the holders of record will be entitled to vote on
any reorganization, reclassification, recapitalization, transfer,
consolidation, merger, share exchange, conveyance, dissolution,
liquidation, or winding up; (C) the date on which any such reorganization,
reclassification, recapitalization, transfer, consolidation, merger, share
exchange, conveyance, dissolution, liquidation, or winding-up is to take
place and the time, if any is to be fixed, as of which the holders of
record of any class of Capital Stock will be entitled to exchange their
shares of Capital Stock for securities or other property deliverable upon
such event; (D) the amount and character of any Capital Stock, property, or
rights proposed to be issued or granted, the consideration to be received
therefor, and, in the case of rights or options, the exercise price
thereof, the date of such proposed issue or grant and the Persons or class
of Persons to whom such proposed issue or grant will be offered or made;
and (E) such other information as the Holders may reasonably request. Any
such notice will be deposited in the United States mail, postage prepaid,
at least fifteen (15) days prior to the date therein specified, and
notwithstanding anything in this Agreement or the Warrants to the contrary
the Holders may exercise the Warrants within fifteen (15) days from the
receipt of such notice.
(b) If there is any adjustment as provided above in Article II, or if
any Other Securities become issuable in lieu of shares of such Common Stock
upon exercise of the Warrants, the Company will immediately cause written
notice thereof to be sent to each Holder, which notice will be accompanied
by a certificate of the independent public accountants of the Company
setting forth in reasonable detail the basis for the Holders' becoming
entitled to receive such Other Securities, the facts requiring any such
adjustment in the number of shares receivable after such adjustment, or the
kind and amount of any Other Securities so purchasable upon the exercise of
the Warrants, as the case may be. At the request of any Holder and upon
surrender of the Warrant of such Holder, the Company will reissue the
Warrant of such Holder in a form conforming to such adjustments.
4.09 Taxes. The Company will, and will cause each of its Subsidiaries to,
file all required tax returns, reports, and requests for refunds on a timely
basis and will pay on a timely basis all taxes imposed on either of it or upon
any of its assets, income, or franchises, except as contested in good faith by
appropriate action promptly initiated and diligently conducted, so long as
adequate cash reserves have been established on its books in accordance with
generally accepted accounting principles.
4.10 Warrant Rights. The Company covenants and agrees that during the term
of this Agreement and so long as any Warrant is outstanding, (a) the Company
will at all times have authorized and reserved a sufficient number of shares of
Common Stock and Other Securities, to provide for the exercise in full of the
rights represented by the Warrants and the exercise in full of the rights of the
Holders under the Shareholder Agreement; (b) the Company will not increase or
permit to be increased the par value per share or stated capital of the Issuable
Warrant Shares
33
<PAGE>
or the consideration receivable upon issuance of its Issuable Warrant Shares;
and (c) in the event that the exercise of the Warrant would require the payment
by the Holder of consideration for the Common Stock or Other Securities
receivable upon such exercise of less than the par or stated value of such
Issuable Warrant Shares, the Company and the Shareholder will promptly take such
action as may be necessary to change the par or stated value of such Issuable
Warrant Shares to an amount less than or equal to such consideration.
4.11 Board of Directors. In addition to any rights under this Agreement,
the Company will deliver to Purchaser (i) a copy of all materials distributed at
or prior to all meetings of the Company's board of directors, certified as true
and accurate by the Secretary of the Company, promptly following each such
meeting and (ii) a copy of the minutes of each of the meetings of the Company's
board of directors, certified as true and accurate by the secretary of the
Company, as soon as available but in any event promptly following the end of the
next subsequent regular meeting of the Company's board of directors. The Company
will (a) permit Rice, at all times during which Rice is a Holder or owns any
Capital Stock, Warrants or other equity interest in the Company, to designate
one (1) Person to attend all meetings of the Company s board of directors and
shareholders as an observer, (b) permit John Hancock, at all times during which
John Hancock is a Holder or owns any Capital Stock, Warrants or other equity
interest in the Company, to designate one (1) Person to attend all meetings of
the Company's board of directors and shareholders as an observer, (c) permit
Pecks, at all times during which Pecks owns either (A) fifteen percent (15%) or
more of the sum of all Warrant Shares and Pecks Common Stock owned by it on the
Closing Date or (B) twenty-five percent (25%) or more of the shares of Pecks
Preferred Stock owned by it on the Closing Date, to designate (i) prior to the
occurrence of either a Board Dividend Adjustment Event or Board Non-Payment
Adjustment Event, one (1) Person to serve as a member of the Company's board of
directors, and (ii) after the occurrence and during the continuance of either a
Board Dividend Adjustment Event or Board Non-Payment Adjustment Event, two (2)
Persons to serve as members of the Company's board of directors (provided that
Pecks' right to designate two (2) Persons to serve as members of the Company's
board of directors and the term of office of the Persons so designated shall
automatically terminate as soon as the Board Dividend Adjustment Event or Board
Non-Payment Adjustment Event giving rise to such right has ceased to exist or
has been cured), and (d) provide such designees not less than twenty-one (21)
calendar days actual notice of all regular meetings and not less than seven (7)
calendar days actual notice of all special meetings of the Company's board of
directors and shareholders (unless any such special meeting of the Company's
board of directors is an emergency meeting, in which case the Company shall
provide such designees with the same calendar days actual notice as provided to
the members of the Company's board of directors). Such board of directors
meetings shall be held in person at least quarterly. The Purchaser may change
its designees by written notice to the Company. The Company shall reimburse
Purchaser for all reasonable expenses incurred in traveling to and from such
meetings and attending such meetings.
Notwithstanding anything to the contrary contained in this Article IV, in
the event that any covenant contained herein (other than Section 4.11) conflicts
with, or is more restrictive than, a substantially similar covenant contained in
the Note Agreement, then, in such event, the covenant contained in the Note
Agreement shall govern and control; provided, however, that the
34
<PAGE>
foregoing governance provision shall apply only (a) for so long as the Note
Agreement is in effect and (b) with respect to those covenants that relate to
Precise and its Subsidiaries (as opposed to those covenants that relate only to
the Company).
Article V
Conditions
The obligations of the Purchaser to effect the transactions contemplated by
this Agreement are subject to the following conditions precedent:
5.01 Opinion. The Purchaser will have received favorable opinions, dated
the Closing Date, from Kelley, McCann & Livingstone, general counsel to the
Company, and Winston & Strawn, special New York counsel to the Company, covering
matters raised by this Agreement, the Shareholder Agreement, and such other
matters as the Purchaser or its counsel may reasonably request, and otherwise in
form and substance satisfactory to the Purchaser and its counsel.
5.02 Note Agreement Conditions. All of the conditions precedent to the
obligations of the Purchaser under the Note Agreement will have been satisfied
in full.
5.03 Material Change. There will have occurred no material adverse change
in the business, prospects, results, operations, or condition, financial or
otherwise, of the Company.
5.04 Shareholder Agreement. The Company and the Shareholder will have
entered into the Shareholder Agreement with Purchaser.
5.05 Representations and Agreements. Each representation and warranty of
the Company set forth in this Agreement will be true and correct in all material
respects when made and as of the Closing Date, and the Company will have fully
performed all its covenants and agreements set forth in this Agreement.
5.06 Proceedings; Consents. All proceedings taken in connection with the
transactions contemplated by this Agreement, and all documents necessary to the
consummation of this Agreement, will be satisfactory in form and substance to
the Purchaser and its counsel, and the Purchaser and its counsel will have
received certificates of compliance and copies (executed or certified as may be
appropriate) of all documents, instruments, and agreements that the Purchaser or
such counsel may request in connection with the consummation of such
transactions. All consents of any Person necessary to the consummation of the
transactions contemplated by this Agreement and the Shareholder Agreement will
have been received, be in full force and effect, and not be subject to any
onerous condition.
35
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Article VI
Miscellaneous
6.01 Indemnification. In addition to any other rights or remedies to which
the Purchaser and the Holders may be entitled, the Company agrees to and will
indemnify and hold harmless the Purchaser, the Holders, and their Affiliates and
their respective successors, assigns, officers, directors, employees, attorneys
and agents (individually and collectively, an "Indemnified Party") from and
against any and all losses, claims, obligations, liabilities, deficiencies,
diminutions in value, penalties, causes of action, damages, costs, and expenses
(including, without limitation, costs of investigation and defense, attorneys'
fees, and expenses), including, without limitation, those arising out of the
sole or contributory negligence (but excluding those arising out of the gross
negligence or willful misconduct of such Indemnified Party) of any Indemnified
Party, that the Indemnified Party may suffer, incur, or be responsible for,
arising or resulting from any misrepresentation, breach of warranty, or
nonfulfillment of any covenant or agreement on the part of the Company under
this Agreement, the Shareholder Agreement, or under any other agreement to which
the Company is a party in connection with this transaction, or from any
misrepresentation in or omission from any certificate or other instrument
furnished or to be furnished to the Purchaser or the Holders under this
Agreement.
6.02 Default. It is agreed that a violation by any party of the terms of
this Agreement cannot be adequately measured or compensated in money damages,
and that any breach or threatened breach of this Agreement by a party to this
Agreement would do irreparable injury to the nondefaulting party. It is,
therefore, agreed that in the event of any breach or threatened breach by a
party to this Agreement of the terms and conditions set forth in this Agreement,
the nondefaulting party will be entitled, in addition to any and all other
rights and remedies that it may have in law or in equity, to apply for and
obtain injunctive relief requiring the defaulting party to be restrained from
any such breach or threatened breach or to refrain from a continuation of any
actual breach.
6.03 Integration. This Agreement and the Shareholder Agreement constitute
the entire agreement between the parties with respect to the subject matter
hereof and thereof and supersede all previous written, and all previous or
contemporaneous oral, negotiations, understandings, arrangements, and
agreements. This Agreement may not be amended or supplemented except by a
writing signed by Company and each Holder.
6.04 Headings. The headings in this Agreement are for convenience and
reference only and are not part of the substance of this Agreement. References
in this Agreement to Sections and Articles are references to the Sections and
Articles of this Agreement unless otherwise specified.
6.05 Severability. The parties to this Agreement expressly agree that it is
not the intention of any of them to violate any public policy, statutory or
common law rules, regulations, or decisions of any governmental or regulatory
body. If any provision of this Agreement is judicially or administratively
interpreted or construed as being in violation of any such policy, rule,
regulation, or decision, the provision, section, sentence, word, clause, or
combination
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<PAGE>
thereof causing such violation will be inoperative (and in lieu thereof there
will be inserted such provision, sentence, word, clause, or combination thereof
as may be valid and consistent with the intent of the parties under this
Agreement) and the remainder of this Agreement, as amended, will remain binding
upon the parties, unless the inoperative provision would cause enforcement of
the remainder of this Agreement to be inequitable under the circumstances.
6.06 Notices. Whenever it is provided herein that any notice, demand,
request, consent, approval, declaration, or other communication be given to or
served upon any of the parties by another, such notice, demand, request,
consent, approval, declaration, or other communication will be in writing and
will be deemed to have been validly served, given or delivered (and "the date of
such notice" or words of similar effect will mean the date) five (5) days after
deposit in the United States mails, certified mail, return receipt requested,
with proper postage prepaid, or upon receipt thereof (whether by non-certified
mail, telecopy, telegram, express delivery, or otherwise), whichever is earlier,
and addressed to the party to be notified as follows:
If to the Purchaser, at: Address of such Purchaser
beneath the name of such Purchaser on the
signature pages of this Agreement
with courtesy copies to: Hughes & Luce, L.L.P.
1717 Main Street
Suite 2800
Dallas, Texas 75201
Attn: Larry A. Makel, Esq.
FAX: (214) 939-6100
Willkie Farr & Gallagher
One Citicorp Center
153 East 53rd Street
New York, New York 10022-4677
Attn: William J. Grant, Jr.
FAX: (212) 821-8111
If to the Company, at: Precise Holding Corporation
c/o Mentmore Holdings Corporation
1430 Broadway, 13th Floor
New York, New York 10018-3308
Attn: William L. Remley
FAX: (212) 391-1393
with courtesy copies to: Richard C. Hoffman, P.C.
1430 Broadway, 13th Floor
New York, New York 10018-3308
FAX: (212) 391-1393
37
<PAGE>
Kelley, McCann & Livingstone
200 Public Square, 35th Floor
BP America Building
Cleveland, Ohio 44114-2302
Attn: Michael D. Schenker
FAX: (216) 241-3707
or to such other address as each party may designate for itself by like notice.
Notice to any Holder other than the Purchaser will be delivered as set forth
above to the address shown on the stock transfer books of the Company or the
Warrant Register unless such Holder has advised the Company in writing of a
different address to which notices are to be sent under this Agreement.
Failure or delay in delivering courtesy copies of any notice, demand,
request, consent, approval, declaration, or other communication to the persons
designated above to receive copies of the actual notice will in no way adversely
affect the effectiveness of such notice, demand, request, consent, approval,
declaration, or other communication.
No notice, demand, request, consent, approval, declaration or other
communication will be deemed to have been given or received unless and until it
sets forth all items of information required to be set forth therein pursuant to
the terms of this Agreement.
6.07 Successors. This Agreement will be binding upon and inure to the
benefit of the parties and their respective successors and assigns.
6.08 Remedies. The failure of any party to enforce any right or remedy
under this Agreement, or promptly to enforce any such right or remedy, will not
constitute a waiver thereof, nor give rise to any estoppel against such party,
nor excuse any other party from its obligations under this Agreement. Any waiver
of any such right or remedy by any party must be in writing and signed by the
party against which such waiver is sought to be enforced.
6.09 Survival. All warranties, representations, and covenants made by any
party in this Agreement or in any certificate or other instrument delivered by
such party or on its behalf under this Agreement will be considered to have been
relied upon by the party to which it is delivered and will survive the Closing
Date, regardless of any investigation made by such party or on its behalf. All
statements in any such certificate or other instrument will constitute
warranties and representations under this Agreement.
6.10 Fees. Any and all fees, costs, and expenses, of whatever kind and
nature, including attorneys' fees and expenses, incurred by the Holders in
connection with the defense or prosecution of any actions or proceedings arising
out of or in connection with this Agreement will be borne and paid by the
Company within ten (10) days of demand by the Holders.
6.11 Counterparts. This Agreement may be executed in any number of
counterparts, which will individually and collectively constitute one agreement.
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<PAGE>
6.12 Other Business. It is understood and accepted that the Purchaser, the
Holders, and their Affiliates have interests in other business ventures that may
be in conflict with the activities of the Company and that nothing in this
Agreement will limit the current or future business activities of such parties
whether or not such activities are competitive with those of the Company. The
Company agrees that all business opportunities in any field substantially
related to the business of custom injection molding of plastic products will be
pursued exclusively through the Company.
6.13 CHOICE OF LAW. THIS AGREEMENT HAS BEEN EXECUTED, DELIVERED, AND
ACCEPTED BY THE PARTIES IN NEW YORK, NEW YORK, WILL BE DEEMED TO HAVE BEEN MADE
IN THE STATE OF NEW YORK, AND WILL BE INTERPRETED AND THE RIGHTS OF THE PARTIES
DETERMINED IN ACCORDANCE WITH THE LAWS OF THE UNITED STATES APPLICABLE THERETO
AND THE INTERNAL LAWS OF THE STATE OF NEW YORK APPLICABLE TO AN AGREEMENT
EXECUTED, DELIVERED AND PERFORMED THEREIN WITHOUT GIVING EFFECT TO THE
CHOICE-OF-LAW RULES THEREOF OR ANY OTHER PRINCIPLE THAT COULD REQUIRE THE
APPLICATION OF THE SUBSTANTIVE LAW OF ANY OTHER JURISDICTION.
6.14 Duties Among Holders. Each Holder agrees that no other Holder will by
virtue of this Agreement be under any fiduciary or other duty to give or
withhold any consent or approval under this Agreement or to take any other
action or omit to take any action under this Agreement, and that each other
Holder may act or refrain from acting under this Agreement as such other Holder
may, in its discretion, elect.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
39
<PAGE>
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
as of the date first above written.
COMPANY:
PRECISE HOLDING CORPORATION
By: /s/ William L. Remley
---------------------------------
William L. Remley, President
PURCHASER:
JOHN HANCOCK MUTUAL LIFE
INSURANCE COMPANY
By: /s/ Sandeep Alva
---------------------------------
Sandeep Alva, Senior Investment
Officer
John Hancock Tower
200 Clarendon Street
Boston, Massachusetts 02117
Attn: Mr. Sandeep Alva
Fax: (617)572-1606
Number of Warrant Shares: 570
Purchase Price: $5.70
---------------------------------
<PAGE>
RICE PARTNERS II, L.P.
By: Rice Capital Group IV, L.P.,
its general partner
By: RMC Fund Management, L.P., its
general partner
By: Rice Mezzanine Corporation,
its general partner
By: /s/ James P. Wilson
---------------------
James P. Wilson
Vice President
5847 San Felipe
Suite 4350
Houston, Texas 77057
Attn: James P. Wilson
Fax: (713)783-9750
Number of Warrant Shares: 570
Purchase Price: $5.70
<PAGE>
FIRST AMENDMENT TO WARRANT PURCHASE AGREEMENT
This First Amendment to Warrant Purchase Agreement (this "Amendment"),
dated as of June 13, 1997, is entered into by and among PRECISE HOLDING
CORPORATION, a Delaware corporation (the "Company"), RICE PARTNERS II, L.P., a
Delaware limited partnership ("Rice"), JOHN HANCOCK MUTUAL LIFE INSURANCE
COMPANY, a Massachusetts mutual life insurance company ("John Hancock"),
DELAWARE STATE EMPLOYEES' RETIREMENT FUND, a Delaware corporation ("Delaware"),
DECLARATION OF TRUST FOR DEFINED BENEFIT PLANS OF ZENECA HOLDINGS INC., a
Delaware corporation ("Zeneca"), and DECLARATION OF TRUST FOR DEFINED BENEFIT
PLANS OF ICI AMERICAN HOLDINGS INC., a Delaware corporation ("ICI") (Delaware,
Zeneca, and ICI are collectively referred to herein as "Pecks").
RECITALS
A. The Company, Rice, John Hancock and Pecks have entered into that certain
Warrant Purchase Agreement dated as of March 29, 1996 (the "Warrant Agreement").
B. The Company owns beneficially and of record all of the issued and
outstanding common stock of Precise Technology, Inc., a Delaware corporation
("Precise").
C. Precise desires to issue up to $75,000,000 of 11 1/8% Senior
Subordinated Notes due 2007 on the terms described in that certain Offering
Memorandum dated June 10, 1997 furnished by the Company to Rice, John Hancock
and Pecks (the "Public Notes").
D. The Company, Rice, John Hancock and Pecks desire to amend the Warrant
Agreement and the Shareholder Agreement to allow and provide for the issuance of
the Public Notes and to allow and provide for certain other matters, all as
hereinafter set forth.
AGREEMENT
NOW, THEREFORE, in consideration of the premises herein contained and other
good and valuable consideration, the sufficiency of which is hereby
acknowledged, the parties hereto, intending to be legally bound, agree as
follows:
1. DEFINITIONS. All capitalized terms used but not otherwise defined in this
Amendment shall have the meanings ascribed to them in the Warrant Agreement.
2. AMENDMENTS. The Warrant Agreement is hereby amended as follows:
2.1. Amendment to Article I; Addition of Certain Definitions. Article I of
the Warrant Agreement is hereby amended by adding thereto in alphabetical order
the following definitions:
1
<PAGE>
"Disqualified Stock. This term is defined in Section 1.01 of the
Indenture."
"Fixed Charge Coverage Ratio. This term is defined in Section 1.01 of
the Indenture."
"Indenture. The Indenture, to be dated as of June 13, 1997, between
Precise and Marine Midland Bank, as trustee, as in effect on June 13,
1997."
"Management Agreement. The Management Agreement (Amended and Restated)
originally made and entered into March 15, 1996, amended and restated as of
June 13, 1997, but effective as of April 1, 1996, between the Company and
Mentmore, as in effect on June 13, 1997."
"Mentmore. Mentmore Holdings Corporation, a Delaware corporation."
"Public Notes. The 11 1/8% Senior Subordinated Notes due 2007 issued
by Precise pursuant to the terms of the Indenture."
"Senior Loan Agreement. The Credit Agreement, dated as of June 13,
1997, by and among the Company, Precise, certain Subsidiaries of Precise,
Fleet National Bank, as Agent, Issuing Bank and as a lender, and each of
the other financial institutions a party thereto, as the same may be
modified, amended, waived, supplemented or otherwise changed from time to
time, and all documents and instruments delivered pursuant thereto in
connection with the loans and advances made thereunder."
"Sunderland. Sunderland Industrial Holdings Corporation, a Delaware
corporation."
2.2. Amendment to Article I; Deletion of Certain Definitions. Article I of
the Warrant Agreement is hereby amended by deleting therefrom the definitions
for "Board Dividend Adjustment Event", "Board Non-Payment Adjustment Event" and
"Senior Subordination Agreement".
2.3. Amendment to Article I; Amendment of Certain Definitions. Article I of
the Warrant Agreement is hereby amended by deleting therefrom the definitions
for "Senior Lender" and "Senior Loan Documents" and substituting the following
in lieu thereof:
"Senior Lender. Fleet National Bank, a national banking association,
and any other financial institution a party to the Senior Loan Agreement,
and their respective successors and assigns."
"Senior Loan Documents. The Senior Loan Agreement and the agreements,
documents and instruments executed in connection therewith or contemplated
thereby,
2
<PAGE>
and all amendments, modifications, waivers, renewals, extensions,
substitutions, increases or replacements thereof."
2.4. Amendment to Section 4.01(d). Section 4.01(d) of the Warrant Agreement
is hereby deleted in its entirety and the following substituted in lieu thereof:
"(d) Concurrently with the delivery of each of the financial
statements referred to in Section 4.01(a) and 4.01(b), a certificate of an
authorized officer of Precise in form and substance satisfactory to the
Holders (i) stating the financial statements have been prepared in
accordance with generally accepted accounting principles and fairly and
accurately present (subject to year-end audit adjustments, for the annual
certificate) the financial condition and results of operations of Precise
at the date and for such period indicated therein, (ii) containing
summaries of accounts payable agings, accounts receivable agings, and
inventory (provided that such information shall be required only in
connection with the delivery of the financial statements referred to in
Section 4.01(b) in respect of any month which is the last month of a fiscal
quarter of Precise), and (iii) containing a schedule of the outstanding
Indebtedness for borrowed money of Precise and its Subsidiaries describing
in reasonable detail each such debt issue or loan outstanding and the
principal amount and amount of accrued and unpaid interest with respect to
each such debt issue or loan (provided that such information shall be
required only in connection with the delivery of the financial statements
referred to in Section 4.01(b) in respect of any month which is the last
month of a fiscal quarter of Precise)."
2.5. Amendment to Section 4.04. Section 4.04 of the Warrant Agreement is
hereby deleted in its entirety and the following substituted in lieu thereof:
"4.04 Certain Actions. Without the prior written consent of the Holders,
which consent may be withheld in the sole discretion of the Holders, the Company
will not, and the Company will not permit any of its Subsidiaries to:
(a) permit to occur any amendment, alteration or modification of its
Articles of Incorporation, Bylaws or other charter or organizational
documents, as constituted on the date of this Agreement, the effect of
which, in the reasonable credit judgment of the Holders, would be to alter,
impair, or affect adversely, either the rights and benefits of the Holders
or the duties and obligations of Company under this Agreement, the
Warrants, or the Shareholder Agreement;
(b) declare or make any dividends or distributions of its cash, stock,
property, or assets or redeem, retire, purchase, or otherwise acquire,
directly or indirectly, any of its Capital Stock or Capital Stock or
securities of any Affiliate of the Company, or any securities convertible
or exchangeable into Capital Stock or Capital Stock or securities of any
Affiliate of the Company; provided, however, that (i) any Subsidiary of
Precise may declare and pay dividends or make other distributions to
Precise, (ii) any Subsidiary of Precise may declare and pay dividends or
make other distributions to any other wholly-owned Subsidiary of Precise,
(iii) Precise may declare and pay dividends to the Company
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to enable the Company to pay franchise taxes and other ordinary course
operating expenses in an amount not to exceed $25,000 in any twelve-month
period, (iv) Precise may fund purchases by the Company or Sunderland of the
common stock of the Company or Sunderland held by an employee of the
Company upon the termination of such individual's employment with the
Company (so long as (A) the Company shall give prior written notice thereof
to the Purchaser, (B) the aggregate amount of all such repurchases made
after the Closing Date does not exceed $3,000,000, (C) the aggregate amount
of all such repurchases made during any fiscal year of the Company does not
exceed $1,000,000 and (D) no default or event of default shall have
occurred and be continuing under this Agreement or the Shareholder
Agreement, or would occur after giving effect thereto), (v) Precise may
make distributions to the Company to permit the Company to (A) purchase the
Warrants upon exercise of the Put Option by the Holders of the Warrants and
(B) pay the principal balance of, or any scheduled interest payments due
on, any promissory notes issued by the Company to the Holders of the
Warrants in accordance with the terms of the Shareholder Agreement, (vi)
Precise or any Subsidiary of Precise may make and pay regularly scheduled
dividends on, and may make any scheduled redemption or repurchase of, any
Disqualified Stock, subject to the restrictions set forth in the Indenture
and in Section 4.04 of the Shareholder Agreement, (vii) the Company,
Precise and any Subsidiary of Precise may make and pay any distribution
permitted under Section 4.04(g) hereof, and (viii) Precise or any
Subsidiary of Precise may redeem, repurchase, retire or otherwise acquire
any Disqualified Stock in exchange for, or out of the net cash proceeds of
the substantially concurrent sale (other than to a Subsidiary of the
Company) of, other Disqualified Stock, subject to the restrictions set
forth in Section 4.04(d)(iii) hereof;
(c) effect any sale, lease, assignment, transfer, or other conveyance
of any portion of the assets or operations or the revenue or income
generating capacity of the Company or any Subsidiary (other than sales,
leases, assignments, transfers and other conveyances which are permitted
pursuant to the terms of the Indenture) or to take any such action that has
the effect of the foregoing;
(d) issue or sell, or otherwise dispose of any Capital Stock;
provided, however, that (i) the Company may issue or sell Permitted Stock,
(ii) the Company may issue or sell any Capital Stock required or permitted
to be issued to the Holders pursuant to this Agreement, the Shareholder
Agreement or the Pecks Securities Purchase Agreement, (iii) Precise or any
Subsidiary of Precise may issue or sell any Disqualified Stock (other than
Common Stock) if such issuance or sale is permitted pursuant to the terms
of the Indenture, including, without limitation, if applicable, the Fixed
Charge Coverage Ratio test set forth in Section 4.12 of the Indenture
(except that, for purposes of determining whether any such sale or issuance
is permitted pursuant to the terms of this Agreement (as opposed to the
Indenture), the Fixed Charge Coverage Ratio test shall be 3.0 to 1.0 rather
than 2.0 to 1.0), and (iv) the Company may effect an Initial Public
Offering, subject to the terms of this Agreement and the Shareholder
Agreement;
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(e) dissolve or liquidate, or effect any consolidation or merger
involving the Company or any Subsidiary, or any reclassification, corporate
reorganization, stock split or reverse stock split, or other change of any
class of Capital Stock; provided, however, that (i) any Inactive Subsidiary
may be dissolved or liquidated, (ii) any wholly-owned Subsidiary of Precise
may be merged with and into (A) Precise, provided that Precise is the
surviving corporation or (B) any other wholly-owned Subsidiary of Precise,
(iii) Precise may effect any consolidation or merger permitted pursuant to
the terms of the Indenture if, in addition to the requirements set forth in
the Indenture, (A) all of the Capital Stock (other than Disqualified Stock)
of the entity or Person formed by or surviving any such consolidation or
merger (if other than Precise) will, immediately after giving effect to
such transaction, be directly owned and controlled by the Company and (B)
except in the case of a merger of Precise with or into a wholly-owned
Subsidiary of Precise, Precise or the entity or Person formed by or
surviving any such consolidation or merger (if other than Precise) will, if
required under the terms of the Indenture, at the time of such transaction
and after giving pro-forma effect thereto as if such transaction had
occurred at the beginning of the applicable four-quarter period, be
permitted to incur at least $1.00 of additional Indebtedness pursuant to
the Fixed Charge Coverage Ratio test set forth in Section 5.01 of the
Indenture (except that, for purposes of determining whether any such
consolidation or merger is permitted pursuant to the terms of this
Agreement (as opposed to the Indenture), the Fixed Charge Coverage Ratio
test shall be 3.0 to 1.0 rather than 2.0 to 1.0), and (iv) any Subsidiary
of Precise may effect any consolidation or merger permitted pursuant to the
terms of the Indenture if, in addition to the requirements set forth in the
Indenture, (A) all of the Capital Stock (other than Disqualified Stock) of
the entity or Person formed by or surviving any such consolidation or
merger (if other than such Subsidiary) will, immediately after giving
effect to such transaction, be directly or indirectly owned and controlled
by Precise and (B) except in the case of a merger of a Subsidiary of
Precise with or into another wholly-owned Subsidiary of Precise, such
Subsidiary or the entity or Person formed by or surviving any such
consolidation or merger (if other than such Subsidiary) will, if required
under the terms of the Indenture, at the time of such transaction and after
giving pro-forma effect thereto as if such transaction had occurred at the
beginning of the applicable four-quarter period, be permitted to incur at
least $1.00 of additional Indebtedness pursuant to the Fixed Charge
Coverage Ratio test set forth in Section 4.12 of the Indenture (except
that, for purposes of determining whether any such consolidation or merger
is permitted pursuant to the terms of this Agreement (as opposed to the
Indenture), the Fixed Charge Coverage Ratio test shall be 3.0 to 1.0 rather
than 2.0 to 1.0);
(f) enter into any business that the Company or Precise is not
conducting on the date of this Agreement;
(g) sell, lease, transfer or otherwise dispose of any of its
properties or assets to, or purchase any property or assets from or enter
into or make or amend any transaction, contract, agreement, understanding,
loan, advance or guarantee with, or for the benefit of, any director,
officer, or shareholder of the Company or the Shareholder, or any Affiliate
or relative of the foregoing (each of the foregoing, an "Affiliate
5
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Transaction"), unless (i) such Affiliate Transaction is on terms that are
no less favorable to the Company or the relevant Subsidiary than those that
would have been obtained in a comparable transaction by the Company or such
Subsidiary with an unrelated Person and (ii) the Company delivers to the
Holders (a) with respect to any Affiliate Transaction or series of related
Affiliate Transactions involving aggregate consideration in excess of $1.0
million, a resolution of the Board of Directors set forth in an Officers'
Certificate certifying that such Affiliate Transaction complies with clause
(i) above and that such Affiliate Transaction has been approved by a
majority of the Board of Directors and (b) with respect to any Affiliate
Transaction or series of related Affiliate Transactions involving aggregate
consideration in excess of $5.0 million, an opinion as to the fairness to
the Holders of such Affiliate Transaction from a financial point of view
issued by an accounting, appraisal or investment banking firm of national
standing; provided, however, that (r) the application of the proceeds of
the Public Notes offering and the transactions entered into in connection
therewith in the manner contemplated in "Use of Proceeds" section set forth
in the Indenture, (s) payments under the Management Agreement in an amount
not to exceed $300,000 in any twelve-month period, (t) the payment of
$500,000 by the Company or any of its Subsidiaries to Mentmore and/or its
Affiliates made for financial advisory services in respect of the Public
Notes offering, (u) payments under the tax sharing agreement by and among
the Company, Precise, any Subsidiaries of Precise and Sunderland, to the
extent that, in the case of Precise and its Subsidiaries, such payments do
not otherwise exceed the tax liability that Precise and its Subsidiaries
would have had were it not part of a consolidated group, (v) any employment
agreement, compensation agreement or employee benefit arrangement entered
into by the Company or any of its Subsidiaries in the ordinary course of
business, (w) transactions between or among the Company, Precise and/or
their Subsidiaries, (x) the payment of reasonable out-of-pocket expenses by
Precise to Mentmore pursuant to the Management Agreement, (y) any capital
contributions, advances, loans or other investments made by Precise or any
of its wholly-owned Subsidiaries to any wholly-owned Subsidiary of Precise,
and (z) any dividend or distribution permitted under Section 4.04(b)
hereof, in each case, shall not be deemed Affiliate Transactions;
(h) increase the aggregate amount of management, consulting or similar
fees paid or accrued by the Company or its Subsidiaries during any fiscal
year to or for the direct or indirect benefit of any of its officers,
directors, security holders or Affiliates, or pay any financial advisory,
investment banking or similar fees to or for the direct or indirect benefit
of any of its officers, directors, security holders or Affiliates;
(i) acquire any substantial business operation or assets (through a
stock or asset purchase or otherwise), or acquire any debt or equity
interest in any Person, or establish or acquire a Subsidiary (other than
any Subsidiary existing on the date hereof), or make any additional capital
contribution or purchase any additional equity in any Subsidiary; provided,
however, that Precise and its Subsidiaries may effect any of the foregoing
transactions if such transaction is permitted pursuant to the terms of the
Indenture, including, without limitation, if applicable, the Fixed Charge
Coverage Ratio test set forth in Section 4.12 of the Indenture (except
that, for purposes of determining
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whether any such sale or issuance is permitted pursuant to the terms of
this Agreement (as opposed to the Indenture), the Fixed Charge Coverage
Ratio test shall be 3.0 to 1.0 rather than 2.0 to 1.0);
(j) allow the aggregate par value of the Capital Stock subject to the
Warrants from time to time to exceed the price payable on exercise of the
Warrants, as adjusted from time to time;
(k) amend, modify or waive any of the terms or provisions of the
Senior Loan Documents if such amendment, modification or waiver (i) is
prohibited by the terms of the Indenture or (ii) would extend the final
maturity date of the Senior Loans beyond June 30, 2002; or
(l) obligate itself or otherwise agree to take, permit or enter into
any of the events described in subsections (a) through (k) above.
Notwithstanding anything to the contrary contained in this Agreement, this
Section 4.04 shall terminate and be of no further force and effect after the
occurrence of an Initial Public Offering and after such time as all shares of
Capital Stock issuable in respect of such Purchaser's Warrant are released from
the terms and provisions of any holdback agreement contemplated by Section 7.07
of the Shareholder Agreement and are registered or otherwise freely
transferable."
2.6. Amendment to Section 4.11. Section 4.11 of the Warrant Agreement is
hereby deleted in its entirety and the following substituted in lieu thereof:
"4.11 Board of Directors. In addition to any rights under this Agreement,
the Company will deliver to Purchaser (i) a copy of all materials distributed at
or prior to all meetings of the Company's board of directors, certified as true
and accurate by the Secretary of the Company, promptly following each such
meeting and (ii) a copy of the minutes of each of the meetings of the Company's
board of directors, certified as true and accurate by the secretary of the
Company, as soon as available but in any event promptly following the end of the
next subsequent regular meeting of the Company's board of directors. The Company
will (a) permit Rice, at all times during which Rice is a Holder or owns any
Capital Stock, Warrants or other equity interest in the Company, to designate
one (1) Person to attend all meetings of the Company's board of directors and
shareholders as an observer, (b) permit John Hancock, at all times during which
John Hancock is a Holder or owns any Capital Stock, Warrants or other equity
interest in the Company, to designate one (l) Person to attend all meetings of
the Company's board of directors and shareholders as an observer, (c) permit
Pecks, at all times during which Pecks owns fifteen percent (15%) or more of the
sum of all Warrant Shares and Pecks Common Stock owned by it on the Closing
Date, to designate one (l) Person to serve as a member of the Company's and
Precise's board of directors, and (d) provide such designees not less than
twenty-one (21) calendar days actual notice of all regular meetings and not less
than seven (7) calendar days actual notice of all special meetings of the
Company's board of directors and shareholders (unless any such special meeting
of the Company's board of directors is an emergency meeting, in which case the
Company shall provide such designees with the same calendar days actual
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<PAGE>
notice as provided to the members of the Company's board of directors). Such
board of directors meetings shall be held in person at least quarterly. The
Purchaser may change its designees by written notice to the Company. The Company
shall reimburse Purchaser for all reasonable expenses incurred in traveling to
and from such meetings and attending such meetings.
Notwithstanding anything to the contrary contained in this Agreement, this
Section 4.11 shall terminate and be of no further force and effect after the
occurrence of an Initial Public Offering and after such time as all shares of
Capital Stock issuable in respect of such Purchaser's Warrant are released from
the terms and provisions of any holdback agreement contemplated by Section 7.07
of the Shareholder Agreement and are registered or otherwise freely
transferable."
2.7. Amendment to Section 6.06. Section 6.06 of the Warrant Agreement is
hereby amended by deleting therefrom the notice addresses for the Company and
substituting the following in lieu thereof:
"If to the Company, at: Precise Holding Corporation
c/o Mentmore Holdings Corporation
1430 Broadway, 13th Floor
New York, New York 10018-3308
Attn: William L. Remley
FAX: (212)391-1393
with courtesy copies to: Michael D. Schenker
c/o Mentmore Holdings Corporation
1430 Broadway, 13th Floor
New York, New York 10018-3308
FAX: (212)382-1559
Kelley, McCann & Livingstone
200 Public Square, 35th Floor
BP America Building
Cleveland, Ohio 44114-2302
Attn: Bruce L. Waterhouse
FAX: (216)241-3707"
3. CONDITIONS TO EFFECTIVENESS. The effectiveness of this Amendment is subject
to the satisfaction of the following conditions precedent, unless specifically
waived in writing by the Purchaser:
3.1 Each Purchaser shall have received on its behalf:
(a) this Amendment, duly executed by the Company; and
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(b) such additional documents, instruments and information as such
Purchaser or its legal counsel may request.
3.2 No default or event of default shall have occurred and be continuing
under either the Warrant Agreement or the Shareholder Agreement, unless such
default or event of default has been specifically waived in writing by
Purchaser.
3.3 All corporate proceedings taken in connection with the transactions
contemplated by this Amendment and all documents, instruments and other legal
matters incident thereto shall be satisfactory to each Purchaser and their
respective legal counsel.
3.4 The Public Notes shall have been issued on the terms described in the
Offering Memorandum dated June 10, 1997 furnished by the Company to Purchaser.
3.5 The Senior Subordinated Notes (as defined in the Note Agreement),
together with all accrued interest and any applicable Prepayment Fee (as defined
in the Note Agreement), shall have been paid in full utilizing a portion of the
proceeds of the Public Notes.
3.6 The Pecks Preferred Stock, together with all accrued and unpaid
dividends thereon, shall have been redeemed and/or paid utilizing a portion of
the proceeds of the Public Notes.
4. RATIFICATIONS, REPRESENTATIONS AND WARRANTIES.
4.1. The terms and provisions set forth in this Amendment shall modify and
supersede all inconsistent terms and provisions set forth in the Warrant
Agreement (including, without limitation, all representations, warranties and
covenants contained therein) and all other agreements, instruments and documents
related thereto, and, except as expressly modified and superseded by this
Amendment, the terms and provisions of the Warrant Agreement and all other
agreements, instruments and documents related thereto are ratified and confirmed
and shall continue in full force and effect. The Company and Purchaser agree
that the Warrant Agreement and all other agreements, instruments and documents
related thereto, in each case as amended hereby, shall continue to be legal,
valid, binding and enforceable in accordance with their respective terms.
4.2. The Company hereby represents and warrants to Purchaser that (a) the
execution, delivery and performance of this Amendment and any and all other
agreements executed and/or delivered in connection herewith have been authorized
by all requisite corporate action on the part of the Company and will not
violate the Certificate of Incorporation or Bylaws of the Company; (b) the
Company is in material compliance with all covenants and agreements contained in
the Warrant Agreement, as amended hereby, and all other agreements, instruments
and documents related thereto; and (c) the Company has not amended its
Certificate of Incorporation or its Bylaws since March 29, 1996, except for such
amendments, if any, as have been delivered to Purchaser on the date hereof.
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5. MISCELLANEOUS.
5.1. Reference to Warrant Agreement. Each of the Warrant Agreement and all
other agreements, certificates and documents related thereto, and any and all
other agreements, documents or instruments now or hereafter executed and
delivered pursuant to the terms hereof or pursuant to the terms of the Warrant
Agreement, as amended hereby, are hereby amended so that any reference in the
Warrant Agreement and such agreements, instruments and documents related thereto
to the Warrant Agreement shall mean a reference to the Warrant Agreement as
amended hereby.
5.2. Headings. The headings of the sections and subsections of this
Amendment are inserted for convenience only and do not constitute a part of this
Amendment.
5.3. Counterparts. This Amendment may be executed in any number of
counterparts, which shall collectively constitute one agreement.
5.4. Law Governing. THIS AMENDMENT HAS BEEN EXECUTED, DELIVERED, AND
ACCEPTED BY THE PARTIES IN NEW YORK, NEW YORK, WILL BE DEEMED TO HAVE BEEN MADE
IN THE STATE OF NEW YORK, AND WILL BE INTERPRETED AND THE RIGHTS OF THE PARTIES
DETERMINED IN ACCORDANCE WITH THE LAWS OF THE UNITED STATES APPLICABLE THERETO
AND THE INTERNAL LAWS OF THE STATE OF NEW YORK APPLICABLE TO AN AGREEMENT
EXECUTED, DELIVERED AND PERFORMED THEREIN WITHOUT GIVING EFFECT TO THE
CHOICE-OF-LAW RULES THEREOF OR ANY OTHER PRINCIPLE THAT COULD REQUIRE THE
APPLICATION OF THE SUBSTANTIVE LAW OF ANY OTHER JURISDICTION.
5.5. Final Agreement. The Warrant Agreement and the Shareholder Agreement,
in each case as amended, constitute the entire agreement among the parties with
respect to the subject matter hereof and thereof and supersede all previous
written, and all previous or contemporaneous oral, negotiations, understandings,
arrangements, and agreements. The Warrant Agreement, as amended hereby, may not
be amended or supplemented except by a writing signed by Company and each
Holder.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties have caused this Amendment to be executed
and delivered as of the date first above written.
COMPANY:
PRECISE HOLDING CORPORATION
By: /s/ William L. Remley
---------------------------------------
William L. Remley, President
PURCHASER:
JOHN HANCOCK MUTUAL LIFE
INSURANCE COMPANY
By: /s/ Sandeep Alva
---------------------------------------
Sandeep Alva, Senior Investment Officer
RICE PARTNERS II, L.P.
By: Rice Capital Group IV, L.P.,
its general partner
By: RMC Fund Management, L.P.,
its general partner
By: Rice Mezzanine Corporation,
its general partner
By: /s/ James P. Wilson
------------------------------
James P. Wilson
Managing Director
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DELAWARE STATE EMPLOYEES'
RETIREMENT FUND
By: Pecks Management Partners, Ltd.,
Its Investment Advisor
By: /s/ Robert J. Cresci
---------------------------------
Robert J. Cresci
Managing Director
DECLARATION OF TRUST FOR
DEFINED BENEFIT PLANS OF
ZENECA HOLDINGS INC.
By: Pecks Management Partners, Ltd.,
Its Investment Advisor
By: /s/ Robert J. Cresci
---------------------------------
Robert J. Cresci
Managing Director
DECLARATION OF TRUST FOR
DEFINED BENEFIT PLANS OF
ICI AMERICAN HOLDINGS INC.
By: Pecks Management Partners, Ltd.,
Its Investment Advisor
By: /s/ Robert J. Cresci
---------------------------------
Robert J. Cresci
Managing Director
12
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10.7
SHAREHOLDER AGREEMENT
SHAREHOLDER AGREEMENT (the "Agreement") made as of March 29, 1996, by and
among PRECISE HOLDING CORPORATION, a Delaware corporation (the "Company"), and
SUNDERLAND INDUSTRIAL HOLDINGS CORPORATION, a Delaware corporation
("Sunderland"), HAMILTON HOLDINGS LTD. CORPORATION, a Texas corporation
("Hamilton"), DELAWARE STATE EMPLOYEES' RETIREMENT FUND, a Delaware corporation
("Delaware"), in its capacity as a shareholder, DECLARATION OF TRUST FOR DEFINED
BENEFIT PLANS OF ZENECA HOLDINGS INC., a Delaware corporation ("Zeneca"), in its
capacity as a shareholder, and DECLARATION OF TRUST FOR DEFINED BENEFIT PLANS OF
ICI AMERICAN HOLDINGS INC., a Delaware corporation ("ICI"), in its capacity as a
shareholder (individually and collectively, the "Shareholder"), and RICE
PARTNERS II, L.P., a Delaware limited partnership ("Rice"), JOHN HANCOCK MUTUAL
LIFE INSURANCE COMPANY, a Massachusetts mutual life insurance company ("John
Hancock"), DELAWARE, in its capacity as a warrantholder, ZENECA, in its capacity
as a warrantholder, and ICI, in its capacity as a warrantholder (individually
and collectively, the "Purchaser") (Delaware, Zeneca and ICI are collectively
referred to herein as "Pecks").
W I T N E S S E T H:
WHEREAS, the Shareholder owns beneficially and of record all of the issued
and outstanding capital stock of the Company;
WHEREAS, the Company owns beneficially and of record all of the issued and
outstanding common stock of Precise Technology, Inc., a Delaware corporation
("Precise");
WHEREAS, Precise has entered into a Note Purchase Agreement (the "Note
Agreement") dated of even date with this Agreement with Rice and John Hancock;
WHEREAS, the Company, Precise and Pecks have entered into a Securities
Purchase Agreement (the "Pecks Securities Purchase Agreement") dated of even
date with this Agreement;
WHEREAS, the Company has entered into a Warrant Purchase Agreement (the
"Warrant Agreement") dated of even date with this Agreement with the Purchaser;
WHEREAS, Rice and John Hancock are willing to enter into and consummate the
transactions contemplated by the Note Agreement, and Pecks is willing to enter
into and consummate the transactions contemplated by the Pecks Securities
Purchase Agreement, only if, among other things, the Company and the Shareholder
enter into, and perform under, this Agreement and the Company enters into, and
performs under, the Warrant Agreement.
NOW, THEREFORE, in consideration of the foregoing, the mutual covenants
contained in this Agreement, and other good and valuable consideration, the
receipt and sufficiency of
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which are hereby acknowledged, the Purchaser, the Shareholder, and the Company,
intending to be legally bound, agree as follows:
Article I
Definitions
1.01 Definitions. As used in this Agreement, the following terms shall have
the following respective meanings:
Act. The Securities Act of 1933 located at 15 U.S.C. 77a et seq.
Adjustment Event. Any event in which (a) the Company issues any shares of
Capital Stock in an Adjustment Public Offering for consideration per share that
exceeds the amount received per share by any Holder in connection with the
exercise of the Call Option with respect to such Holder; (b) any Shareholder
sells, transfers, pledges or otherwise disposes of any Capital Stock for
consideration per share that exceeds the amount received per share by any Holder
in connection with the exercise of the Call Option with respect to such Holder;
(c) any Person acquires Capital Stock in connection with the acquisition of the
beneficial ownership of more than fifty percent (50%) of the voting securities
of the Company, or acquires Capital Stock and the right to elect a majority of
the members of the Company's board of directors for a consideration per share or
unit that exceeds the amount received per share by any such Holder in connection
with the exercise of such Call Option; (d) the Company sells all or a majority
of its assets or revenue or income generating capacity for such amount of
consideration that, if the Company were liquidated on the date that such sale is
consummated, the holders of any class of Capital Stock would receive per share
distributions exceeding the amount received per share by any such Holder in
connection with the exercise of such Call Option; or (e) the Company
participates in any merger, consolidation, reorganization, share exchange,
recapitalization, or similar transaction or series of related transactions
involving a change of control of the Company or disposition of all or a majority
of its assets or revenue or income generating capacity, directly or indirectly,
in which the holders of any class of Capital Stock receive per share
consideration for, or distributions with respect to, their shares in an amount
that exceeds the amount received per share by such Holder in connection with the
exercise of such Call Option.
Adjustment Public Offering. Each primary public offering of shares of any
class of Capital Stock pursuant to a registration statement filed with the
Commission.
Affiliate. With respect to any Person, a Person that, directly or
indirectly or through one or more intermediaries, controls, is controlled by, or
is under common control with, such Person. The term "control" as used with
respect to any Person, means the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of such
Person, whether through the ownership of voting securities, by contract, or
otherwise.
Agreement. This term is defined in the preamble.
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Appraised Value. The value determined in accordance with the following
procedures. For a period of 30 days after the date of a Valuation Event (the
"Negotiation Period"), each party to this Agreement agrees to negotiate in good
faith with each other party to reach agreement upon the Appraised Value of the
securities or property at issue, as of the date of the Valuation Event, which
will be the fair market value of such securities or property, without premium
for control or discount for minority interests, illiquidity, or restrictions on
transfer. In the event that the parties are unable to agree upon the Appraised
Value of such securities or other property by the end of the Negotiation Period,
then the Appraised Value of such securities or property will be determined for
purposes of this Agreement by a recognized appraisal or investment banking firm
mutually agreeable to the Holders and the Company (the "Appraiser"). If the
Holders and the Company cannot agree on an Appraiser within fifteen (15) days
after the end of the Negotiation Period, the Company, on the one hand, and the
Holders, on the other hand, shall each select an Appraiser within twenty-one
(21) days after the end of the Negotiation Period and those two Appraisers shall
select within twenty-five (25) days after the end of the Negotiation Period an
independent Appraiser to determine the fair market value of such securities or
property, without premium for control or discount for minority interests. Such
independent Appraiser shall be directed to determine fair market value of such
securities or property as soon as practicable, but in no event later than thirty
(30) days from the date of its selection. The determination by an Appraiser of
the fair market value will be conclusive and binding on all parties to this
Agreement. Appraised Value of each share of Common Stock at a time when (i) the
Company is not a reporting company under the Exchange Act and (ii) the Common
Stock is not traded in the organized securities markets, will, in all cases, be
calculated by determining the Appraised Value of the entire Company taken as a
whole (after deducting any liquidation distributions payable with respect to the
Hamilton Preferred Stock) and dividing that value by the sum of (x) the number
of shares of Common Stock then outstanding plus (y) the number of shares of
Common Stock Equivalents, without premium for control or discount for minority
interests, illiquidity, or restrictions on transfer. The costs of the Appraiser
will be borne by the Company. In no event will the Appraised Value of the Common
Stock or Other Securities be less than the per share consideration received or
receivable with respect to the Common Stock or securities or property of the
same class as the Other Securities, as the case may be, in connection with a
pending transaction involving a sale, merger, recapitalization, reorganization,
consolidation, or share exchange, dissolution of the Company, sale or transfer
of all or a majority of its assets or revenue or income generating capacity, or
similar transaction. The prevailing market prices for any security or property
will not be dispositive of the Appraised Value thereof.
Appraiser. This term is defined in the definition of Appraised Value.
Average Market Value. The average of the Closing Prices for the security in
question for the thirty (30) trading days immediately preceding the date of
determination.
Book Value. With respect to shares of Common Stock, an amount equal to the
quotient determined by dividing (a) the sum of (x) the total consolidated assets
of the Company shown on the consolidated balance sheet of the Company as of the
last day of the month preceding the date of the Valuation Event in question
minus (y) the (i) total consolidated liabilities of the Company as shown on the
consolidated balance sheet of the Company as of the last day of the month
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preceding the date of the Valuation Event and (ii) any liquidation distributions
payable with respect to the Hamilton Preferred Stock by (b) the aggregate number
of shares of Common Stock and Common Stock Equivalents as of the date of the
Valuation Event. For the purposes of this Agreement, the Book Value of the
shares of Common Stock will be determined by the independent certified public
accountants then retained by the Company as described in Section 4.06 of the
Warrant Agreement.
Business Day. Each day of the week except Saturdays, Sundays, and days on
which banking institutions are authorized by law to close in the States of New
York, North Carolina or Pennsylvania.
Buyer. This term is defined in Section 6.02(a)(ii) of this Agreement.
Call Option. This term is defined in Section 5.01 of this Agreement.
Call Option Closing. This term is defined in Section 5.04 of this
Agreement.
Call Option Period. This term is defined in Section 5.01 of this Agreement.
Capital Stock. As to any Person, its common stock and any other capital
stock of such Person authorized from time to time, and any other shares,
options, interests, participations, or other equivalents (however designated) of
or in such Person, whether voting or nonvoting, including, without limitation,
common stock, options, warrants, preferred stock, phantom stock, stock
appreciation rights, convertible notes or debentures, stock purchase rights, and
all agreements, instruments, documents, and securities convertible, exercisable,
or exchangeable, in whole or in part, into any one or more of the foregoing.
Closing Date. March 29, 1996.
Closing Price.
(a) If the primary market for the security in question is a national
securities exchange registered under the Exchange Act, the National Association
of Securities Dealers Automated Quotation System -- National Market System, or
other market or quotation system in which last sale transactions are reported on
a contemporaneous basis, the last reported sales price, regular way, of such
security for such day, or, if there has not been a sale on such trading day, the
highest closing or last bid quotation therefor on such trading day (excluding,
in any case, any price that is not the result of bona fide arm's length
trading); or
(b) If the primary market for such security is not an exchange or quotation
system in which last sale transactions are contemporaneously reported, the
highest closing or last bona fide bid or asked quotation by disinterested
Persons in the over-the-counter market on such trading day as reported by the
National Association of Securities Dealers through its Automated Quotation
System or its successor or such other generally accepted source of publicly
reported bid quotations as the Holders designate from time to time.
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Common Stock. The common stock, no par value, of the Company.
Common Stock Equivalent. Any option, warrant, right, or similar security
exercisable into, exchangeable for, or convertible to Common Stock.
Commission. The Securities and Exchange Commission and any successor
federal agency having similar powers.
Company. Precise Holding Corporation and any successor or assign.
Co-Sell Shares. This term is defined in Section 6.02(c) of this Agreement.
Co-Sellers. This term is defined in Section 6.02(c) of this Agreement.
Dilution Dividend. This term is defined in Article III of this Agreement.
Election Notice. This term is defined in Section 6.02(b) of this Agreement.
Excess Consideration. The amount that a Holder would have realized
following the Adjustment Event had the Call Option not been exercised by such
Holder until such time, minus the amount that such Holder realized due to the
exercise of the Call Option, provided, however, that the amount of Excess
Consideration will in all events be deemed to be at least zero.
Excess Interest. This term is defined in Section 11.17 of this Agreement.
Exchange Act. The Securities Exchange Act of 1934, as amended, and the
rules and regulations thereunder.
Exercise Price. The price per share specified in Section 2.03 of the
Warrant Agreement as adjusted from time to time pursuant to the provisions of
the Warrant Agreement.
Fair Market Value.
(a) As to securities regularly traded in the organized securities markets,
the Average Market Value; and
(b) As to all securities (including, without limitation, the Issuable
Warrant Shares) not regularly traded in the securities markets and other
property, the fair market value of such securities or property as determined in
good faith by the board of directors of the Company at the time it authorizes
the transaction (a "Valuation Event") requiring a determination of Fair Market
Value under this Agreement; provided, however, that, at the election of the
Holders, the Fair Market Value of such securities and other property will be the
Appraised Value.
Hamilton. Hamilton Holdings Ltd. Corporation, a Texas corporation.
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Hamilton Preferred Stock. Three hundred thirty-one and forty-six one
hundredths (331.46) shares of 9.5% Preferred Stock, $10,000 per share stated
value, of the Company beneficially owned by Hamilton on the Closing Date.
Holders. The Purchaser, and all Persons holding Registrable Securities,
except that neither the Company nor any Shareholder (other than Pecks with
respect to its Registrable Securities) nor any Affiliate of the Company or any
Shareholder will at any time be a Holder. Unless otherwise provided in this
Agreement, in each instance that the Holders are required to request or consent
to an action, the Holders will be deemed to have requested or consented to such
action if (a) so long as all of the Initial Holders are Holders, the Holders of
seventy percent (70%) or more of the Registrable Securities so request or
consent and (b) so long as two (2) or more (but less than all) of the Initial
Holders are Holders, the Holders of sixty-six and two-thirds percent (66 2/3%)
or more of the Registrable Securities so request or consent. In the event that
only one (1) or none of the Initial Holders is a Holder, in each instance that
the Holders are required to request or consent to an action, the Holders will be
deemed to have requested or consented to such action if the Holders of a
majority-in-interest of the Registrable Securities so request or consent.
Indemnified Party. This term is defined in Section 11.01 of this Agreement.
Initial Holders. Rice, John Hancock, Pecks and any Affiliate of Rice, John
Hancock or Pecks to which any of the Warrants or any part of or interest in the
Warrants is assigned.
Initial Public Offering. The first firm commitment underwritten public
offering of Common Stock to not less than 200 members of the general public
(none of which shall be an Affiliate of another) under the Securities Act
completed by the Company and resulting in proceeds (before underwriting
discounts and commissions) to the Company of at least $25,000,000.
Issuable Warrant Shares. Shares of Common Stock or Other Securities
issuable on exercise of the Warrants.
Issued Warrant Shares. Shares of Common Stock or Other Securities issued on
exercise of the Warrants.
Material Adverse Effect. (a) A material adverse effect upon the business,
operations, properties, assets or condition (financial or otherwise) of the
Company and its Subsidiaries taken as a whole or (b) the material impairment of
the ability of any party to perform its obligations under this Agreement or the
Warrant Agreement or (c) the impairment of the validity of this Agreement or the
Warrant Agreement. In determining whether any individual event would result in a
Material Adverse Effect, notwithstanding that such event does not of itself have
such effect, a Material Adverse Effect shall be deemed to have occurred if the
cumulative effect of such event and all other then existing events would result
in a Material Adverse Effect.
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Maximum Rate. This term is defined in Section 11.17 of this Agreement.
Negotiation Period. This term is defined in the definition of Appraised
Value.
New Securities. Any Capital Stock other than (a) the Warrant Shares, (b)
Permitted Stock and (c) Capital Stock issued in an Adjustment Public Offering.
Note Agreement. This term is defined in the preamble and includes the Note
Purchase Agreement of even date with this Agreement by and among Precise, Rice
and John Hancock and all documents evidencing indebtedness thereunder or
otherwise related to the Note Agreement as the same may be amended from time to
time, and any refinancing, refunding, or replacements of the indebtedness under
the Note Agreement.
Notice of Sale. This term is defined in Section 6.02(a) of this Agreement.
Other Holder Call Option Period. This term is defined in Section 5.01 of
this Agreement.
Other Securities. Any stock (other than Common Stock) and any other
securities of the Company or any other person (corporate or otherwise) which the
holders of the Warrants at any time shall be entitled to receive, or shall have
received, upon the exercise of Warrants in lieu of or in addition to Common
Stock, or which at any time shall be issuable or shall have been issued in
exchange for or in replacement of Common Stock (or Other Securities) pursuant to
Section 2.08 of the Warrant Agreement or otherwise.
Pecks Call Option Period. This term is defined in Section 5.01 of this
Agreement.
Pecks Common Stock. This term is defined in Article I of the Warrant
Agreement.
Pecks Preferred Stock. This term is defined in Section 11.1 of the Note
Agreement.
Permitted Stock. This term means (a) Common Stock or options or warrants to
acquire Common Stock, constituting, in the aggregate, five percent (5%) or less
of the outstanding Common Stock, issued or reserved for issuance to present and
future key management of the Company pursuant to a management incentive program
and (b) the Hamilton Preferred Stock. In no event will the number of shares of
Permitted Stock (with respect to clause (a) above) issued or reserved for
issuance, in the aggregate, exceed the lesser of the number of shares
constituting five percent (5%) of the outstanding Common Stock on (a) the date
of this Agreement or (b) the date issued.
Person. This term will be interpreted broadly to include any individual,
sole proprietorship, partnership, joint venture, trust, unincorporated
organization, association, corporation, company, institution, entity, party, or
government (whether national, federal, state, county, city, municipal, or
otherwise, including, without limitation, any instrumentality, division, agency,
body, or department of any of the foregoing).
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Precise. This term is defined in the preamble of this Agreement.
Public Sale. Any sale of Capital Stock pursuant to an offering pursuant to
the Act.
Pull Along Sale. This term is defined in Section 6.04 of this Agreement.
Pull Along Sale Date. This term is defined in Section 6.04 of this
Agreement.
Pull Along Sale Notice. This term is defined in Section 6.04 of this
Agreement.
Purchaser. This term is defined in the preamble of this Agreement.
Put Option. This term is defined in Section 4.01 of this Agreement.
Put Option Closing. This term is defined in Section 4.05 of this Agreement.
Put Option Period. This term is defined in Section 4.01 of this Agreement.
Put Price. This term is defined in Section 4.02 of this Agreement.
Put Shares. The Warrant Shares plus any other shares of Capital Stock of
the Company owned from time to time by a Holder (other than the Pecks Common
Stock).
"Register," "registered," and "registration" refer to a registration
effected by preparing and filing a registration statement in compliance with the
Securities Act, and the declaration or ordering of the effectiveness of such
registration statement.
Registrable Securities. (a) the Issuable Warrant Shares, (b) the Issued
Warrant Shares and (c) the Pecks Common Stock that have not been previously sold
to the public.
Related Party. A Subsidiary of a Selling Shareholder or one or more Related
Parties; any Affiliate of the Shareholders a party to this Agreement on the
Closing Date; and any member of the immediate family of any such Person.
Securities Act. The Securities Act of 1933, as amended, and the rules and
regulations thereunder.
Securityholders. Any Person other than the Company that is a party to this
Agreement on the Closing Date and, thereafter, any Person other than the Company
that is or becomes a party to this Agreement; provided, however, that a Person
will cease to be a Securityholder hereunder at such time as such Person ceases
to hold any Common Stock or Common Stock Equivalents.
Selling Shareholder. This term is defined in Section 6.02 of this
Agreement.
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Senior Lender. This term is defined in Section 11.1 of the Note Agreement.
Senior Loan Documents. This term is defined in Section 11.1 of the Note
Agreement.
Senior Subordinated Obligations. This term is defined in Section 11.1 of
the Note Agreement.
Senior Subordination Agreement. This term is defined in Section 11.1 of the
Note Agreement.
Shareholder. This term is defined in the preamble.
Subsidiary. Each Person of which or in which the Company or its other
Subsidiaries own directly or indirectly fifty-one percent (51%) or more of (i)
the combined voting power of all classes of stock having general voting power
under ordinary circumstances to elect a majority of the board of directors or
equivalent body of such Person, if it is a corporation or similar person; (ii)
the capital interest or profits interest of such Person, if it is a partnership,
joint venture, or similar entity; or (iii) the beneficial interest of such
Person, if it is a trust, association, or other unincorporated organization.
Valuation Event. This term is defined in the definition of Fair Market
Value.
Voting Stock. With respect to a corporation, the stock of such corporation
the holders of which are ordinarily, in the absence of contingencies, entitled
to elect members of the board of directors (or other governing body) of such
corporation.
Warrant Agreement. This term is defined in the preamble to this Agreement
and includes all documents related thereto as any or all of the same may be
amended from time to time.
Warrants. This term is defined in the Warrant Agreement.
Warrant Shares. The Issued Warrant Shares and the Issuable Warrant Shares.
Article II
Holders' Preemptive Rights
2.01 Preemptive Right. The Company will not issue or sell any New
Securities without first complying with this Article II. The Company hereby
grants to each Holder and each Shareholder (without duplication) the preemptive
right to purchase, pro rata, all or any part of the New Securities that the
Company may, from time to time, propose to sell or issue. In the event New
Securities are offered or sold as part of a unit with other New Securities, the
preemptive right granted by this Article II will apply to such units and not to
the individual New Securities composing such units. Each Holder's pro rata share
for purposes of Article II is the ratio that the number of shares of Common
Stock issuable to such Holder upon exercise of its Warrant plus the number of
shares of Common Stock that are Issued Warrant Shares owned by
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such Holder immediately prior to the issuance of the New Securities, bears to
the sum of (x) the total number of shares of Common Stock then outstanding, plus
(y) the number of shares of Common Stock issuable upon exercise of all Warrants
then outstanding.
2.02 Notice to Holders. In the event the Company proposes to issue or sell
New Securities, it will give each Holder and each Shareholder written notice of
its intention, describing the type of New Securities and the price and terms
upon which the Company proposes to issue or sell the New Securities. The Company
agrees to provide each Holder and each Shareholder with such information they
may reasonably request to facilitate their investment decision. Each Holder and
each Shareholder will have fifteen (15) days from the date of receipt of any
such notice to agree to purchase up to its respective pro rata share of the New
Securities for the price (valued at Fair Market Value for any noncash
consideration) and upon the terms specified in the notice by giving written
notice to the Company stating the quantity of New Securities agreed to be
purchased.
2.03 Allocation of Unsubscribed New Securities. In the event a Holder or a
Shareholder fails to exercise such preemptive right within such fifteen (15) day
period, the other Holders and Shareholders, if any, will have an additional five
(5) day period to purchase such Holder's or such Shareholder's portion not so
agreed to be purchased in the same proportion in which such other Holders or
Shareholders were entitled to purchase the New Securities (excluding for such
purposes such nonpurchasing Holder or Shareholder). Thereafter, the Company will
have ninety (90) days to sell the New Securities not elected to be purchased by
the Holders and Shareholders at the same price and upon the same terms specified
in the Company's notice described in Section 2.02. In the event the Company has
not sold the New Securities within such ninety (90) day period, the Company will
not thereafter issue or sell any New Securities without first offering such
securities in the manner provided above.
Article III
Dilution Dividend
In the event that, during the term of the Warrants, the Company pays any
cash dividend or makes any cash distribution to any holder of any class of its
Capital Stock (other than the payment of the dividends or distributions
described in Sections 7.4(ii), (iii) or (vi) of the Note Agreement) with respect
to such Capital Stock, each Holder of the Warrants will be entitled to receive
in respect of its Warrant a dilution dividend in cash (the "Dilution Dividend")
on the date of payment of such dividend or distribution, which Dilution Dividend
will be equal to (a) the highest amount per share paid to any class of Capital
Stock times (i) the number of Issued Warrant Shares then owned by such Holder
plus (ii) the number of Issuable Warrant Shares then owned by such Holder, less
(b) the amount of such dividend or distribution otherwise paid to such Holder as
a result of its ownership of Issued Warrant Shares.
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Article IV
Put Option
4.01 Grant of Option. The Company hereby grants to each Holder an option to
sell to the Company, and the Company is obligated to purchase from each Holder
under such option (the "Put Option"), all (or such portion as is designated by
any such Holder) of the Put Shares. The Put Option will be effective (i) at any
time or times after the fifth anniversary of the date of this Agreement;
provided, however, that no Holder may exercise its Put Option on more than one
(1) occasion during any calendar quarter, or (ii) at any time or times after the
occurrence of any of the following events, and until the occurrence of an
Initial Public Offering (the "Put Option Period"):
(a) a change in control of the Company (for purposes of this subsection a
"change in control" will include, without limitation, (i) the Shareholder
ceasing to own, directly or through its Subsidiaries, a number of shares of
issued and outstanding voting stock of the Company (without giving effect to the
issuance of any shares of Common Stock under the Warrants) to allow the
Shareholder to effect all corporate actions or (ii) the Shareholder ceasing to
have the legal right or ability, directly or through its Subsidiaries, to elect
a majority of the members of the board of directors of the Company) or (iii) the
Company ceasing to own, beneficially and of record, all of the issued and
outstanding common stock of Precise; or
(b) a merger, consolidation, share exchange, or similar transaction
involving the Company or sale in one or more related transactions of all or a
majority of the assets, business, or revenue or income generating operations of
the Company or any substantial change in the type of business conducted by the
Company; or
(c) after the occurrence and during the continuance of acceleration of the
Senior Subordinated Obligations under the Note Agreement; provided, however,
that the Put Option Period will continue with respect to such event, even after
such default giving rise to such acceleration has been cured, if notice of
exercise is provided pursuant to this Article IV prior to such cure.
4.02 Put Price. In the event that any Holder exercises the Put Option, the
price (the "Put Price") to be paid to each such Holder pursuant to this
Agreement will be cash in the sum of the amount determined by multiplying the
higher of (a) Book Value or (b) the Fair Market Value per share of Common Stock
(valued as of the end of the month immediately preceding the date notice is
given of the exercise of the Put Option pursuant to Section 4.03) times the
number of shares of Common Stock for which the Put Option is being exercised by
such Holder plus the higher of (a) Book Value or (b) the Fair Market Value of
the Other Securities issuable upon exercise of the portion of the Warrant
subject to the Put Option.
4.03 Exercise of Put Option. The Put Option may be exercised during the Put
Option Period with respect to all or any portion of the Put Shares, by such
Holder giving notice to the Company and each other Holder during the Put Option
Period of the Holder's election to exercise the Put Option, and the date of the
Put Option Closing, which will be not less than
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fifteen (15) nor more than forty five (45) days after the date of such notice.
The Company will provide each Holder desiring to exercise its Put Option the
name and address of each other Holder. Notwithstanding the foregoing, if a
Holder receives such notice of another Holder's exercise of such other Holder's
Put Option, the Holder receiving such notice may elect to exercise its Put
Option and designate a Put Option Closing simultaneous and pari passu with that
of such other Holder.
4.04 Certain Remedies. In the event that (i) the Company defaults in its
obligation to purchase all or any portion of the Put Shares in cash upon
exercise of the Put Option, (ii) any Holder exercises the Put Option at a time
when the Put Price is not permitted to be paid in cash to such Holder pursuant
to applicable law, (iii) any Holder exercises the Put Option at a time when the
Senior Loan Documents or the Note Agreement prohibit Precise from paying a
dividend to the Company in order to fund the payment of the Put Price in cash,
and the Company fails to obtain a waiver of such default from the Senior Lender
(with respect to the occurrence of a default under the Senior Loan Documents) or
Rice and John Hancock (with respect to the occurrence of a default under the
Note Agreement), as the case may be, or (iv) any Holder exercises the Put Option
at a time when payment of all or any portion of the Put Price in cash would,
after giving effect to such payment, result in Precise's available cash plus
availability under the Senior Loan Documents being less than $5,000,000 in the
aggregate, then, in any such event, the Company will (a) pay such portion of the
Put Price in cash as is not prohibited by clauses (i), (ii), (iii) or (iv)
above, (b) upon the request of any Holder and to the extent any portion of the
Put Price is not paid in cash under this Section 4.04, execute and deliver to
such Holder a promissory note (a "Put Note") in form and substance satisfactory
to such Holder evidencing such remaining Put Price, and (c) not declare or make
any dividends or distributions of its cash or redeem, retire, purchase, or
otherwise acquire, directly or indirectly, any of its Capital Stock or capital
stock or securities of any Affiliate of the Company, or any securities
convertible or exchangeable into Capital Stock or capital stock or securities of
any Affiliate of the Company until the Put Price has been paid in full in cash.
Any Put Note issued pursuant to the terms and conditions of this Section 4.04
will (a) be substantially in the form of Exhibit A attached hereto, (b) mature
on April 2, 2006 and (c) bear interest at the following rates per annum: (i) 14%
per annum for the twelve month period immediately following the date of issuance
of such promissory note, (ii) 16% per annum for the next succeeding twelve month
period and (iii) 18% per annum thereafter. In addition to the right to request
the issuance of a Put Note, any Holder may, upon the failure of the Company to
pay any portion of the Put Price not prohibited by clauses (ii), (iii) or (iv)
above, exercise all rights or remedies available to such Holder (whether at law
or in equity) against the Company, and, in addition thereto, such Holder shall
be entitled to liquidated damages in the amount specified in Section 11.02 of
this Agreement.
4.05 Put Option Closing. The closing for the purchase and sale of all or
such portion of the Put Shares as to which the Holder has notified the Company
of its intention to exercise the Put Option, will take place at the office of
the Company on the date specified in such notice of exercise (a "Put Option
Closing"). At any Put Option Closing, to the extent applicable, the Holder of
the Put Shares will deliver the certificate or certificates evidencing the Put
Shares being purchased, duly endorsed in blank. In consideration therefor, the
Company will deliver to
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the Holder the Put Price, which will be payable in cash (subject to the terms of
Section 4.04 hereof).
Article V
Call Option
5.01 Grant of Option. Each Holder hereby severally grants to the Company an
option to require such Holder to sell to the Company, and each Holder is
obligated to sell to the Company under this option (the "Call Option"), all of
its Warrant and its Warrant Shares. The Call Option granted by Pecks will be
effective after the later to occur of (i) the redemption of all outstanding
shares of the Pecks Preferred Stock and (ii) the sixth (6th) anniversary of the
date of this Agreement, but shall terminate for all purposes upon the closing of
an Initial Public Offering (the "Pecks Call Option Period"). The Call Option
granted by each other Holder will be effective after the sixth (6th) anniversary
of the date of this Agreement, but shall terminate for all purposes upon the
closing of an Initial Public Offering (the "Other Holder Call Option Period",
and together with the Pecks Call Option Period, the "Call Option Period").
5.02 Call Price. In the event that the Company exercises the Call Option,
the exercise price to be paid in cash to each Holder will be equal to the Put
Price determined in accordance with Section 4.02, except that the Call Option
will be exercised with respect to the entire Warrant and all Warrant Shares, and
will be increased by an amount in cash equal to any Excess Consideration
received within one hundred eighty (180) days following the exercise of the Call
Option due to an Adjustment Event.
5.03 Exercise of Call Option. The Call Option may be exercised during the
Call Option Period with respect to all of the Warrant and the Warrant Shares of
all Holders, by the Company giving notice to each Holder (including Pecks,
irrespective of whether such notice occurs during the Peck Call Option Period)
during the Call Option Period of the election of the Company to exercise the
Call Option, and the date of the Call Option Closing, which in all events will
be within at least sixty (60) days after the date of such notice. If such notice
does not occur during the Pecks Call Option Period, Pecks shall have the option
to participate pro rata with each other Holder in respect of the exercise of any
such Call Option.
5.04 Call Option Closing. The closing for the purchase and sale of all of
the Warrant and Warrant Shares that the Company has elected to purchase under
this Agreement, will take place at the office of the Company, on the date
specified in such notice of exercise (the "Call Option Closing"). At the Call
Option Closing, the Holders of the Warrants will deliver the Warrants and the
certificate or certificates representing the Warrant Shares, duly endorsed in
blank. In consideration therefor, the Company will deliver to each Holder the
purchase price, which will be payable in immediately available funds.
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Article VI
Co-Sale Rights
6.01 Rights of Co-Sale. In the event that the Shareholder intends to sell
or transfer, directly or indirectly, any shares of any class of Capital Stock of
the Company held by it to any Person, each Holder will have the right to
participate in such sale or transfer on the terms set forth in this Article VI;
provided, however, none of the provisions of this Article VI will apply to (i)
any sale by the Shareholder of shares of Capital Stock in a bona fide
underwritten public offering under the Securities Act, so long as all Holders
have had an opportunity to participate in such offering pursuant to the
registration rights under this Agreement or (ii) any sale of the Hamilton
Preferred Stock or the Pecks Common Stock.
6.02 Method of Electing Sale; Allocation of Sales. No sale or transfer by
the Shareholder of any shares of Capital Stock will be valid unless the
transferee of such Capital Stock will first agree in writing to be bound by the
same terms and conditions that apply to the Shareholder under this Agreement and
the Warrant Agreement. In addition, before any shares of Capital Stock held,
directly or indirectly, by the Shareholder may be sold or transferred to a
Person other than a Related Party, the Shareholder (as such, the "Selling
Shareholder") will comply with Section 6.04 or the following provisions:
(a) The Selling Shareholder will deliver or cause to be delivered a written
notice (the "Notice of Sale") to each Holder at least thirty (30) days prior to
making any such sale or transfer. The Company agrees to provide the Selling
Shareholder with a list of the names and addresses of each such Holder for such
purpose. The Notice of Sale will include (i) a statement of the Selling
Shareholder's bona fide intention to sell or transfer; (ii) the name of the and
address of the prospective transferee (the "Buyer"); (iii) the number of shares
of Capital Stock of the Company to be sold or transferred; (iv) the terms and
conditions of the contemplated sale or transfer; (v) the purchase price in cash
that the Buyer will pay for such shares of Capital Stock; (vi) the expected
closing date of the transaction; and (vii) such other information as the Holders
may reasonably request to facilitate their decision as to whether or not to
exercise the rights granted by this Article VI.
(b) Any Holder receiving the Notice of Sale may elect to participate in the
contemplated sale or transfer by exercising its right to co-sell its Capital
Stock pursuant to Section 6.02(c). Such right may be exercised in the sole
discretion of the Holder by delivering a written notice (an "Election Notice")
to the Company and the Selling Shareholder within thirty (30) days after receipt
of such Notice of Sale stating the election of the Holder to exercise its right
of co-sale pursuant to Section 6.02(c).
(c) Each Holder may elect to sell or transfer in the contemplated
transaction up to the total of the number of shares of Capital Stock then held
by it (including the Issuable Warrant Shares). Promptly after the receipt of an
Election Notice exercising such right, the Selling Shareholder will use its best
efforts to cause the Buyer to amend its offer so as to provide for the Buyer's
purchase, upon the same terms and conditions as those contained in the Notice of
Sale, of all of the shares of Capital Stock (including the Issuable Warrant
Shares) elected to be sold
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(the "Co-Sell Shares") in such Election Notices. In the event that the Buyer is
unwilling to amend its offer to purchase all of the Co-Sell Shares in addition
to the shares of Capital Stock described in the related Notice of Sale, if the
Selling Shareholder desires to proceed with the sale, the total number of shares
that such Buyer is willing to purchase will be allocated to the Selling
Shareholder and each Holder having given an Election Notice exercising its right
pursuant to this Section 6.02(c) (the "Co-Sellers") in proportion to the
aggregate number of shares of Capital Stock (including Issuable Warrant Shares)
held by each such Person; provided, however, that no such Person will be so
allocated a number of shares greater than the number of shares that it has
sought to sell to such Buyer in the related Notice of Sale or Election Notice.
All Capital Stock sold or transferred by the Selling Shareholder and the
Co-Sellers with respect to a single Notice of Sale under Section 6.02(b) will be
sold or transferred to the Buyer in a single closing on the terms described in
such Notice of Sale, and each such share will receive the same per share
consideration.
6.03 Sales to Related Parties. No sale or transfer of shares of Capital
Stock by the Shareholder to a Related Party will be subject to the provisions of
Section 6.02; provided, however, that such Related Party first agrees to assume
the obligations of the Shareholder (without relieving the Shareholder of any
obligations under this Agreement) under this Agreement with respect to the
shares of Capital Stock thereby acquired by it and to be bound by the same terms
and conditions that apply to the Shareholder under this Agreement and the
Warrant Agreement in a written instrument in a form and substance reasonably
satisfactory to the Holders.
6.04 Pull-Along Right. Prior to an Initial Public Offering, if
Securityholders of at least sixty-six and two-thirds percent (66-2/3%) of the
issued and outstanding Common Stock and Common Stock Equivalents at the time
elect to sell such Common Stock or Common Stock Equivalents in a bona fide sale
to a third party that is not an Affiliate of the Company or the Securityholders
in a transaction that is not a Public Sale, then all Securityholders shall be
obligated to sell any Common Stock or Common Stock Equivalents then held by such
Securityholders in such sale so long as all other Securityholders sell all of
their Common Stock and Common Stock Equivalents in such sale (a "Pull-Along
Sale"); provided, however, that not less than thirty (30) days prior to the date
such Pull-Along Sale is to take place (the "Pull-Along Sale Date"), the
Securityholders initiating such Pull-Along Sale shall deliver a written notice
(a "Pull-Along Sale Notice") to each of the Company and all other
Securityholders specifying that a Pull-Along Sale is to take place, the identity
of the prospective transferee(s) and the terms of the proposed Pull-Along Sale
(including the date of the proposed Transfer and the price to be paid for the
Common Stock). On the Pull-Along Sale Date, at the time and place designated in
the Pull-Along Sale Notice, each Securityholder shall deliver to the purchaser
the share certificate(s) and/or warrants representing the Common Stock and
Common Stock Equivalents of the Company then held by them, each such certificate
or warrant to be properly endorsed for transfer, against payment therefor by
certified check or bank draft payable to the order of such Securityholder, or,
at the election of such Securityholder, by wire transfer of immediately
available funds to such account of such Securityholder as has been specified in
a written notice to such purchaser at least three (3) days prior to such date of
purchase; provided, however, that the purchase price of each Issuable Warrant
Share represented by an unexercised Warrant so
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delivered by a Holder shall be equal to the per share price paid in such
transaction for a share of Common Stock, less the then current per share
Exercise Price of such Warrant.
6.05 Lock-Up. Notwithstanding anything to the contrary contained in this
Article VI, Sunderland hereby agrees that it will not sell or transfer any
shares of the Company's Capital Stock owned by it on the Closing Date until such
time as Precise shall have redeemed for cash all of the shares of the Pecks
Preferred Stock now or hereafter owned by Pecks or its Affiliates.
Article VII
Liquidity
7.01 Required Registration. At any time after the Company has consummated
an Initial Public Offering, each Holder may, on not more than (2) occasions,
make a written request to the Company requesting that the Company effect the
registration of Registrable Securities. Following receipt of any such request,
the Company shall be obligated to use its best efforts to effect the
registration under the Act of Registrable Securities in accordance with the
provisions of this Section 7.01. Whenever the Company shall be requested by a
Holder, pursuant to this Section 7.01, to effect the registration of any
Registrable Securities, the Company shall promptly give written notice of such
proposed registration under the Act to all Holders and thereupon shall, as
expeditiously as possible, use its best efforts to effect the registration under
the Act of:
(a) the Registrable Securities which the Company has been requested to
register pursuant to the preceding sentence, and
(b) all other Registrable Securities which the Holders have, within thirty
(30) days after the Company has given such written notice, requested the Company
to register, all to the extent required to permit the disposition by the Holders
of the Registrable Securities so registered. Such registration shall be
underwritten, if requested by the Holders holding a majority of the Registrable
Securities, by an underwriter or underwriters named by them and reasonably
approved by the Company. No other person shall have any right to have securities
included in such registration, except (i) with the prior written consent of the
Holders holding a majority of the Registrable Securities or (ii) if the offering
is underwritten, the Company; provided, however, that securities not held by
Holders may only be included in such registration pursuant to clause (i) or (ii)
above if, in the opinion of the underwriter or underwriters managing the
offering, the total amount of the securities to be so registered, when added to
the total amount of Registrable Securities to be registered, will not exceed the
maximum amount of securities of the Company which can then be successfully
marketed (1) at a price reasonably related to their then current market value,
and (2) without otherwise materially and adversely affecting the entire
offering; and provided, further, that the Company shall not have the right to
have any securities included in the registration pursuant to clause (ii) above
if such inclusion would require that the offering be registered on a
registration statement form which would entail a significantly more extensive
textual disclosure in the prospectus than would be required by the registration
statement form which would be available if no securities were included in the
registration at the request of the Company (as, for example, in a case in which
the offering could be registered on current registration statement Form S-3, but
for the inclusion of securities to be sold for the account of
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the Company, which would require the use of registration statement Form S-1 or
Form S-2). To the extent that the amount of securities to be registered must be
reduced in order to obtain the opinion referred to in the preceding sentence,
such reduction shall be achieved by first eliminating from the registration some
or all of the securities to be offered by the Company and, if such reduction is
not sufficient, then by eliminating from the registration some or all of the
securities to be offered by any other persons pursuant to clause (i) or (ii)
above.
7.02 Incidental Registration. (a) If the Company at any time proposes to
register any of its equity securities (as defined in the Act), other than
securities which are convertible into shares of Common Stock, under the Act on
Forms S-1, S-2 or S-3 (but not Form S-4 or S-8) or on any other form upon which
may be registered securities similar to the Registrable Securities (or the
Warrants to the extent necessary to be registered in connection with the
registration of the underlying Registrable Securities) and other than pursuant
to Section 7.01 above, it will at each such time give written notice at least
thirty (30) days prior to the filing of the registration statement to all
Holders of its intention so to do. Such notice shall specify the proposed date
of the filing of the registration statement and advise each Holder of its right
to participate therein. Upon the written request of any Holder given not less
than ten (10) days prior to the proposed date of filing set forth in such
notice, the Company will use its best efforts to cause each Registrable Security
which the Company has been requested to register by such Holder to be registered
under the Act, all to the extent requisite to permit the sale or other
disposition by such Holder of the Registrable Securities so registered.
(b) If, in the opinion of the underwriter or underwriters managing the
public offering which is the subject of a registration pursuant to clause (a) of
this Section 7.02 (or in the event that such distribution shall not be
underwritten, in the opinion of an investment banking firm of recognized
standing reasonably acceptable to the Holders), and after discussion between
such underwriter or underwriters and the Holders, which discussion (but not
necessarily the results thereof) shall be reasonably satisfactory to the
Holders, the total amount of the securities to be so registered, when added to
the total amount of Registrable Securities which the Holders have requested to
be registered pursuant to said clause (a), will exceed the maximum amount of
securities of the Company which can be successfully marketed (i) at a price
reasonably related to their then current market value, or (ii) without otherwise
materially and adversely affecting the entire offering, then the Company shall
have the right to exclude from such registration on a pro rata basis such number
of Registrable Securities which it would otherwise be required to register
pursuant to said clause (a) as is necessary to reduce the total amount of
securities to be so registered to the maximum amount of securities which can, in
the reasonable opinion of the underwriter or such investment banking firm, be so
successfully marketed; provided, however, that if the securities (other than the
Registrable Securities) to be so registered for sale are to be offered for the
account of the Company and others, the Company may only exclude Registrable
Securities pro rata with the securities held by such other persons (it being
agreed that in the case where such registration is to be effected as a result of
the exercise by a holder of the Company's securities of such holder's right to
cause such securities to be so registered, such pro rata exclusion shall include
the Company and exclude such holder).
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7.03 Form S-3 Registrations. In addition to the registration rights
provided in Sections 7.01 and 7.02 above, if at any time the Company is eligible
to use Form S-3 (or any successor form) for registration of secondary sales of
Registrable Securities, any Holder of Registrable Securities may request in
writing that the Company register shares of Registrable Securities on such form.
Upon receipt of such request, the Company will promptly notify all Holders of
Registrable Securities in writing of the receipt of such request and each such
Holder may elect (by written notice sent to the Company within thirty (30) days
of receipt of the Company's notice) to have its Registrable Securities included
in such registration pursuant to this Section 7.03. Thereupon, the Company will,
as soon as practicable, use its best efforts to effect the registration on Form
S-3 of all Registrable Securities that the Company has so been requested to
register by such Holder for sale. The Company will use its best efforts to
qualify and maintain its qualification for eligibility to use Form S-3 for such
purposes.
7.04 Registration Procedures. In connection with any registration of
Registrable Securities under this Article VII, the Company will, as soon as
practicable:
(a) prepare and file with the Commission a registration statement with
respect to such Registrable Securities and use its best efforts to cause such
registration statement to become and remain effective until the earlier of such
time as all Registrable Securities subject to such registration statement have
been disposed of or the expiration of two hundred seventy (270) days;
(b) prepare and file with the Commission such amendments and supplements to
such registration statement and the prospectus used in connection therewith as
may be necessary to keep such registration statement effective and to comply
with the provisions of the Securities Act with respect to the sale or other
disposition of all Registrable Securities covered by such registration statement
until the earlier of such time as all of such Registrable Securities have been
disposed of or the expiration of two hundred seventy (270) days (except with
respect to registrations effected on Form S-3 or any successor form, as to which
no such period shall apply);
(c) furnish to each Holder such number of copies of the registration
statement and prospectus (including, without limitation, a preliminary
prospectus) in conformity with the requirements of the Securities Act (in each
case including all exhibits) and each amendment or supplement thereto, together
with such other documents as any Holder may reasonably request;
(d) use its reasonable best efforts to register or qualify the Registrable
Securities covered by such registration statement under such other securities or
blue sky laws of such jurisdictions within the United States and Puerto Rico as
each Holder reasonably requests, and do such other acts and things as may be
reasonably required of it to enable such holder to consummate the disposition in
such jurisdiction of the securities covered by such registration statement;
(e) otherwise use its best efforts to comply with all applicable rules and
regulations of the Commission, and make available to its securities holders, as
soon as practicable, an earnings statement covering the period of at least
twelve months beginning with the first month after the
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effective date of such registration statement, which earnings statement will
satisfy the provisions of Section 11 (a) of the Securities Act;
(f) provide and cause to be maintained a transfer agent and registrar for
Registrable Securities covered by such registration statement from and after a
date not later than the effective date of such registration statement;
(g) if requested by the underwriters for any underwritten offering of
Registrable Securities on behalf of a Holder of Registrable Securities pursuant
to a registration requested under Section 7.01, the Company will enter into an
underwriting agreement with such underwriters for such offering, such agreement
to contain such representations and warranties by the Company and such other
terms and provisions as are customarily contained in underwriting agreements
with respect to secondary distributions, including, without limitation,
provisions with respect to indemnities and contribution as are reasonably
satisfactory to such underwriters and the Holders; the Holders on whose behalf
Registrable Securities are to be distributed by such underwriters will be
parties to any such underwriting agreement and the representations and
warranties by, and the other agreements on the part of, the Company to and for
the benefit of such underwriters, will also be made to and for the benefit of
such Holders of Registrable Securities; and no Holder of Registrable Securities
will be required by the Company to make any representations or warranties to or
agreements with the Company or the underwriters other than reasonable and
customary representations, warranties, or agreements regarding such Holder, such
Holder's Registrable Securities, such Holder's intended method or methods of
disposition, and any other representation required by law;
(h) furnish, at the written request of any Holder, on the date that such
Registrable Securities are delivered to the underwriters for sale pursuant to
such registration, or, if such Registrable Securities are not being sold through
underwriters, on the date that the registration statement with respect to such
Registrable Securities becomes effective, (i) an opinion in form and substance
reasonably satisfactory to such Holders, and addressing matters customarily
addressed in underwritten public offerings, of the counsel representing the
Company for the purposes of such registration (who will not be an employee of
the Company and who will be reasonably satisfactory to such Holders), addressed
to the underwriters, if any, and to the selling Holders; and (ii) a letter (the
"comfort letter") in form and substance reasonably satisfactory to such Holders,
from the independent certified public accountants of the Company, addressed to
the underwriters, if any, and to the selling Holders making such request (and,
if such accountants refuse to deliver the comfort letter to such Holders, then
the comfort letter will be addressed to the Company and accompanied by a letter
from such accountants addressed to such Holders stating that they may rely on
the comfort letter addressed to the Company); and
(i) during the period when the registration statement is required to be
effective, notify each selling Holder of the happening of any event as a result
of which the prospectus included in the registration statement contains an
untrue statement of a material fact or omits to state any material fact required
to be stated therein or necessary to make the statements therein not misleading,
and prepare a supplement or amendment to such prospectus so that, as thereafter
delivered to the purchasers of such Registrable Securities, such prospectus will
not contain an
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untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein not misleading.
It will be a condition precedent to the obligation of the Company to take
any action pursuant to this Article VII in respect of the Registrable Securities
that are to be registered at the request of any Holder of Registrable Securities
that such Holder furnish to the Company such information regarding the
Registrable Securities held by such Holder and the intended method of
disposition thereof as is legally required in connection with the action taken
by the Company. The managing underwriter or underwriters, if any, for any
offering of Registrable Securities to be registered pursuant to Section 7.01 or
7.03 will be selected by the Holders of a majority of the Registrable Securities
being so registered.
7.05 Allocation of Expenses. Except as provided in the following sentence,
the Company will bear all expenses arising or incurred in connection with any of
the transactions contemplated by this Article VII, including, without
limitation, (a) all expenses incident to filing with the National Association of
Securities Dealers, Inc.; (b) registration fees; (c) printing expenses; (d)
accounting and legal fees and expenses; (e) expenses of any special audits or
comfort letters incident to or required by any such registration or
qualification; and (f) expenses of complying with the securities or blue sky
laws of any jurisdictions in connection with such registration or qualification.
Each Holder will severally bear the expense of its underwriting fees, discounts,
or commissions relating to its sale of Registrable Securities.
7.06 Listing on Securities Exchange. If the Company lists any shares of
Capital Stock on any securities exchange or on the National Association of
Securities Dealers, Inc. Automated Quotation System or similar system, it will,
at its expense, list thereon, maintain and, when necessary, increase such
listing of, all Registrable Securities.
7.07 Holdback Agreements.
(a) If any registration pursuant to Section 7.02 is in connection with an
underwritten public offering, each Holder of Registrable Securities agrees, if
so required by the managing underwriter, not to effect any public sale or
distribution of Registrable Securities (other than as part of such underwritten
public offering) during the period beginning seven (7) days prior to the
effective date of such registration statement and ending on the forty-fifth
(45th) day after the effective date of such registration statement; provided,
however, that the Shareholder and each Person that is an officer, director or
beneficial owner of five percent (5%) or more of the outstanding shares of any
class of Capital Stock enters into such an agreement.
(b) The Company and the Shareholder (other than Pecks) agree (i) not to
effect any public sale or distribution during the period seven (7) days (or such
longer period as may be prescribed by Rule 10b-6 under the Exchange Act) prior
to the effective date of the registration statement employed in any underwritten
public offering and ending on the one hundred eightieth (180th) day after any
such registration statement contemplated by Sections 7.01 or 7.03 has become
effective, except as part of such underwritten public offering pursuant to such
registration statement and except pursuant to securities registered on Forms S-4
or S-8 of the
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Commission or any successor forms, (ii) use their best efforts to cause each
holder of its equity securities or any securities convertible into or
exchangeable or exercisable for any of such securities, in each case purchased
from the Company at any time after the date of this Agreement (other than in a
public offering), to agree not to effect any such public sale or distribution of
such securities during such period, and (iii) if the Company makes a good faith
determination that the filing of a registration statement in connection with any
registration statement contemplated by this Article VII would interfere with or
adversely affect any material transaction then under consideration by the
Company's board of directors, the Company may postpone the filing of such
registration for an additional period not to exceed ninety (90) days, provided
that it gives each Holder of the Warrant and Warrant Shares prompt prior written
notice of such postponement, and provided further, that the aggregate number of
days the Company has postponed filing of one or more registration statements
under this clause (iii) does not exceed ninety (90) days in any period of 365
consecutive days.
7.08 Rule 144. At all times following completion by the Company of an
Adjustment Public Offering, the Company will take such action as any Holder may
reasonably request, all to the extent required from time to time to enable such
Holder to sell shares of Registrable Securities without registration pursuant to
and in accordance with (a) Rule 144 under the Securities Act, as such Rule may
be amended from time to time, or (b) any similar rule or regulation adopted by
the Commission. Upon the request of any Holder of Registrable Securities, the
Company will deliver to such Holder a written statement as to whether it has
complied with such requirements.
7.09 Rule 144A. The Company agrees that, upon the request of any Holder or
any prospective purchaser of a Warrant or Warrant Shares designated by a Holder,
the Company will promptly provide (but in any case within fifteen (15) days of a
request) to such Holder or potential purchaser, the following information:
(a) a brief statement of the nature of the business of the Company and any
Subsidiaries and the products and services they offer;
(b) the most recent consolidated balance sheets and profit and losses and
retained earnings statements and similar financial statements of the Company for
such part of the two preceding fiscal years prior to such request as the Company
has been in operation (such financial information will be audited, to the extent
reasonably available); and
(c) such other information about the Company, any Subsidiaries, and their
business, financial condition and results of operations as the requesting Holder
or purchaser of such Warrants requests in order to comply with Rule 144A, as
amended, and the antifraud provisions of the federal and state securities laws.
The Company hereby represents and warrants to any such requesting Holder and any
prospective purchaser of Warrants or Warrant Shares from such Holder that the
information provided by the Company pursuant to this Section 7.09 will not
contain any untrue statement of a material fact or
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omit to state a material fact necessary in order to make the statements made, in
light of the circumstances under which they were made, not misleading.
7.10 Limitations on Subsequent Registration Rights. From and after the date
of this Agreement, the Company will not, without the prior written consent of
the Holders of a majority of the outstanding Registrable Securities, enter into
any agreement with any holder or prospective holder of any securities of the
Company that would allow such holder or prospective holder (a) to include such
securities in any registration filed under Section 7.01, unless under the terms
of such agreement, such holder or prospective holder may include such securities
in any such registration only to the extent that the inclusion of its securities
will not reduce the amount of the Registrable Securities of the Holders that is
included or (b) to make a demand registration that could result in such
registration statement being declared effective prior to the effectiveness of
the first registration statement effected under Section 7.01 or within one
hundred twenty (120) days of the effective date of any registration effected
pursuant to Section 7.01.
7.11 Other Rights. The Company will not grant to any person any
registration rights without the consent of the Holders.
Article VIII
Representations and Warranties; Covenants
8.01 Representations and Warranties and Covenants of the Company. Each of
the representations and Warranties set forth in Section 3.01 of the Warrant
Agreement and each of the covenants set forth in Article IV of the Warrant
Agreement are hereby restated and incorporated by reference in this Agreement as
though set forth in this Agreement, and is made by the Company as made in the
Warrant Agreement for the benefit of each Purchaser. By execution of this
Agreement, the Company agrees to be bound by Section 6.21 of the Note Agreement,
and, for so long as the Note Agreement is in effect, the Company will at all
times take such action as is reasonably necessary to provide Rice and John
Hancock with the board observation rights and benefits contemplated by Section
6.21 of the Note Agreement.
8.02 Representations and Warranties of the Shareholders. Each Shareholder
severally and not jointly represents and warrants to the Purchaser that:
(a) Such Shareholder is either (i) an individual or (ii) a corporation or
limited partnership, duly organized and existing and in good standing under the
laws of its state of organization and is qualified or licensed to do business in
all other states and jurisdictions the laws of which require it to be so
qualified or licensed and where the failure to be so qualified or licensed would
have a Material Adverse Effect on such Shareholder's obligations under this
Agreement and/or the transactions contemplated hereby. Such Shareholder owns
100% of its equity interest in the Company free and clear of all liens, claims,
and encumbrances, except those arising pursuant to the Warrant. No Person other
than Purchaser and the holders of Permitted Stock have any rights, whether
granted by the Company or any other Person, to acquire any portion of the equity
interest of the Company.
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(b) Such Shareholder has, and at all times that this Agreement is in force
will have, the right and power, and is duly authorized, to enter into, execute,
deliver, and perform this Agreement, and if such Shareholder is not an
individual, its officers or agents executing and delivering this Agreement are
duly authorized to do so. This Agreement has been duly and validly executed,
issued, and delivered and constitutes a legal, valid, and binding obligation of
such Shareholder, enforceable in accordance with its terms.
(c) The execution, delivery, and performance of this Agreement will not, by
the lapse of time, the giving of notice, or otherwise, constitute a violation of
any applicable provision contained in any agreement, instrument, or document to
which such Shareholder is a party or by which such Shareholder is bound.
(d) There is not now, and at no time during the term of this Agreement will
there be, any agreement, arrangement, or understanding involving such
Shareholder other than this Agreement, the Senior Loan Agreement and the
documents contemplated hereby, modifying, restricting, or in any way affecting
the rights of such Shareholder to vote securities of the Company.
(e) None of the documents, instruments, or other information furnished to
the Purchaser by such Shareholder contains any untrue statement of a material
fact or omits to state any material fact necessary in order to make any
statements made therein not misleading. No representation, warranty, or
statement made by such Shareholder in this Agreement or in any document,
certificate, exhibit or schedule attached hereto or delivered in connection
herewith, contains or will contain any untrue statement of a material fact, or
omits or will omit to state a material fact necessary to make any such
statements made herein or therein not misleading. To the knowledge of such
Shareholder, in its capacity as such, there is no fact that materially and
adversely affects the condition (financial or otherwise), results of operations,
business, properties, or prospects of the Company or any of its Subsidiaries
that has not been disclosed in the documents provided by such Shareholder to the
Purchaser. Pecks makes no representation with respect to this paragraph (e).
8.03 Representations and Warranties of the Purchaser. Each of the
representations and warranties of the Purchaser set forth in Section 3.02 of the
Warrant Agreement is hereby restated and incorporated by reference in this
Agreement as though set forth in this Agreement, and is made severally and not
jointly by each Purchaser for the benefit of the Company and the Shareholder.
Article IX
Conditions
The obligations of the Purchaser to effect the transactions contemplated by
this Agreement are subject to the following conditions:
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9.01 Note Agreement and Warrant Agreement Conditions. All of the conditions
precedent to the obligations of the Purchaser under the Note Agreement and the
Warrant Agreement will have been satisfied in full or waived.
9.02 Proceedings. All proceedings taken in connection with the transactions
contemplated by this Agreement, and all documents necessary to the consummation
thereof, will be reasonably satisfactory in form and substance to the Purchaser
and its counsel, and the Purchaser and its counsel will have received copies
(executed or certified as may be appropriate) of all documents, instruments, and
agreements that the Purchaser or its counsel may request in connection with the
consummation of such transactions.
Article X
Directors
10.01 Voting Agreement. To ensure compliance with this Article X, the
Shareholders hereby irrevocably covenant and agree to vote, or give or withhold
consent with respect to, all shares of Capital Stock now owned or later acquired
by it, all in accordance with the terms of this Article X. The agreement to vote
contained in this Article X will expire on the earlier to occur of (a) the day
prior to maximum period permitted under applicable law or (b) the date that
Pecks is no longer entitled to designate a Person to serve on the Company's
board of directors in accordance with the terms and conditions of the Warrant
Agreement. A counterpart of this Agreement will be deposited with the Company at
its principal place of business or registered office and will be subject to the
same right of examination by a shareholder of the Company, in person or by agent
or attorney, as are the books and records of the Company.
10.02 Board of Directors. So long as the agreement to vote set forth in
Section 10.01 remains in effect, each Shareholder will, at the request of Pecks,
vote, or give or withhold consent with respect to, all shares of Capital Stock
now owned or later acquired by such Shareholder so that at all times the
individuals designated as directors by Pecks or its respective designee in
accordance with the terms and conditions of the Warrant Agreement will be
directors of the Company; provided, however, that Pecks will not have any
obligation to designate or cause any individual to serve on the board of
directors of the Company. No director designated by Pecks or its designee may be
removed without the consent of Pecks unless such designee breaches its/his/her
fiduciary duties to the Company and/or the Company's shareholders under
applicable law, and in any such case, such designee may be removed only if the
Company shall have appointed another individual designated by Pecks to serve on
the Company's board of directors. Pecks may, at any time, terminate its rights
under this Article X by providing written notice of such termination to the
Company.
Article XI
Miscellaneous
11.01 Indemnification. In addition to any other rights or remedies to which
the Purchaser and the Holders may be entitled, the Company and the Shareholder
jointly and severally agree to and will indemnify and hold harmless the
Purchaser, the Holders, their
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Affiliates and their respective successors, assigns, officers, directors,
employees, attorneys, and agents (individually and collectively, an "Indemnified
Party") from and against any and all losses, claims, obligations, liabilities,
deficiencies, diminutions in value, penalties, causes of action, damages,
out-of-pocket costs, reasonable attorneys' fees, and expenses (including,
without limitation, costs of investigation and defense, attorneys' fees, and
expenses) including, without limitation, those arising out of the sole or
contributory negligence of any Indemnified Party, that the Indemnified Party may
suffer, incur, or be responsible for, arising or resulting from any
misrepresentation, breach of warranty, or nonfulfillment of any agreement on the
part of the Company, or the Shareholder under this Agreement, the Warrant
Agreement, or under any other agreement to which the Company or the Shareholder
is a party in connection with the transactions contemplated by this transaction,
or from any misrepresentation in or omission from any certificate or other
instrument furnished or to be furnished by the Company to the Purchaser or the
Holders under this Agreement. The foregoing indemnification includes any such
claims, actions, damages, costs and expenses incurred by reason of the sole or
contributory negligence of the Person to be indemnified, but excludes any of the
same incurred by reason of such Person's gross negligence or willful misconduct.
11.02 Default. It is agreed that a violation by any party of the terms of
this Agreement cannot be adequately measured or compensated in money damages,
and that any breach or threatened breach of this Agreement by a party to this
Agreement would do irreparable injury to the nonbreaching party. It is,
therefore, agreed that in the event of any breach or threatened breach by a
party to this Agreement of the terms and conditions set forth in this Agreement,
the nondefaulting party will be entitled, in addition to any and all other
rights and remedies that it may have in law or in equity, to apply for and
obtain injunctive relief requiring the defaulting party to be restrained from
any such breach, or threatened breach or to refrain from a continuation of any
actual breach. In addition to the foregoing, if the Company knowingly and
intentionally defaults in the performance or observance of any agreement,
covenant, term or condition contained in this Agreement (including, without
limitation, the Company's obligation to pay any portion of the Put Price upon
exercise of the Put Option at a time when the payment of such portion of the Put
Price is not prohibited under the circumstances described in clauses (ii), (iii)
or (iv) of Section 4.04 hereof) and such default is not cured within five (5)
Business Days from and after the giving of notice by the Purchaser to the
Company of such default, the Company shall pay to the Holders in cash, as
liquidated damages and not as a penalty, an aggregate amount equal to $25,000
per day until such time as such default has been waived in writing or cured to
the satisfaction of the Holders. At the request of any Holder, the Company will
issue to such Holder a promissory note evidencing the liquidated damages owing
by the Company to such Holder. Any such promissory note will be substantially in
the form of Exhibit A attached hereto, but shall not bear interest of any kind
or amount.
11.03 Integration. This Agreement and the Warrant Agreement constitute the
entire agreement among the parties with respect to the subject matter hereof and
thereof and supersede all previous written, and all previous or contemporaneous
oral, negotiations, understandings, arrangements, and agreements. This Agreement
may not be amended or supplemented except by a writing signed by Company, the
Shareholder, and each Holder.
25
<PAGE>
11.04 Headings. The headings in this Agreement are for convenience and
reference only and are not part of the substance of this Agreement. References
in this Agreement to Sections and Articles are references to the Sections and
Articles of this Agreement unless otherwise specified.
11.05 Severability. The parties to this Agreement expressly agree that it
is not their intention to violate any public policy, statutory or common law
rules, regulations, or decisions of any governmental or regulatory body. If any
provision of this Agreement is judicially or administratively interpreted or
construed as being in violation of any such policy, rule, regulation, or
decision, the provision, section, sentence, word, clause, or combination thereof
causing such violation will be inoperative (and in lieu thereof there will be
inserted such provision, sentence, word, clause, or combination thereof as may
be valid and consistent with the intent of the parties under this Agreement) and
the remainder of this Agreement, as amended, will remain binding upon the
parties to this Agreement, unless the inoperative provision would cause
enforcement of the remainder of this Agreement to be inequitable under the
circumstances.
11.06 Notices. Whenever it is provided herein that any notice, demand,
request, consent, approval, declaration, or other communication be given to or
served upon any of the parties by another, such notice, demand, request,
consent, approval, declaration, or other communication will be in writing and
will be deemed to have been validly served, given, or delivered (and "the date
of such notice" or words of similar effect will mean the date) five (5) days
after deposit in the United States mails, certified mail, return receipt
requested, with proper postage prepaid, or upon receipt thereof (whether by
non-certified mail, telecopy, telegram, express delivery, or otherwise),
whichever is earlier, and addressed to the party to be notified as follows:
If to the Purchaser, at: Address of the Purchaser beneath the name of
the Purchaser on the signature pages of this
Agreement
with courtesy copies to:
Hughes & Luce, L.L.P.
1717 Main Street
Suite 2800
Dallas, Texas 75201
Attn: Larry A. Makel, Esq.
Fax: (214)939-6100
Willkie Farr & Gallagher
One Citicorp Center
153 East 53rd Street
New York, New York 10022-4677
Attn: William J. Grant, Jr.
Fax: (212)821-8211
26
<PAGE>
If to the Company, at:
Precise Holdings Corporation
c/o Mentmore Holdings Corporation
1430 Broadway, 13th Floor
New York, New York 10018-3308
Attn: Richard C. Hoffman
Fax: (212)391-1393
with courtesy copies to:
Richard C. Hoffman, P.C.
1430 Broadway, 13th Floor
New York, New York 10018-3308
Fax: (212)391-1393
Kelley, McCann & Livingstone
200 Public Square, 35th Floor
BP America Building
Cleveland, Ohio 44114-2302
Attn: Michael D. Schenker
Fax: (216)241-3707
If to the Shareholder, at:
Sunderland Industrial Holdings Corporation
Hamilton Holdings Ltd. Corporation
1430 Broadway, 13th Floor
New York, New York 10018-3308
Attn: William L. Remley
Fax: (212)391-1393
Delaware State Employees' Retirement Fund
Declaration of Trust for Defined Benefit Plans
of Zeneca Holdings Inc.
Declaration of Trust for Defined Benefit Plans
of ICI American Holdings Inc.
c/o Pecks Management Partners Ltd
One Rockefeller Plaza
New York, New York 10020
Attn: Robert J. Cresci
Fax: (212)332-1334
27
<PAGE>
with courtesy copies to:
Richard C. Hoffman, P.C.
1430 Broadway, 13th Floor
New York, New York 10018-3308
Fax: (212)391-1393
Kelley, McCann & Livingstone
200 Public Square, 35th Floor
BP America Building
Cleveland, Ohio 44114-2302
Attn: Michael D. Schenker
Fax: (216)241-3707
Willkie Farr & Gallagher
One Citicorp Center
153 East 53rd Street
New York, New York 10022-4677
Attn: William J. Grant, Jr.
Fax: (212)821-8211
or to such other address as each party may designate for itself by like notice.
Notice to any Holder other than the Purchaser will be delivered as set forth
above to the address shown on the stock transfer books of the Company or the
Warrant Register unless such Holder has advised the Company in writing of a
different address to which notices are to be sent under this Agreement.
Failure or delay in delivering the courtesy copies of any notice, demand,
request, consent, approval, declaration, or other communication to the persons
designated above to receive copies of the actual notice will in no way adversely
affect the effectiveness of such notice, demand, request, consent, approval,
declaration, or other communication.
No notice, demand, request, consent, approval, declaration, or other
communication will be deemed to have been given or received unless and until it
sets forth all items of information required to be set forth therein pursuant to
the terms of this Agreement.
11.07 Successors. This Agreement will be binding upon and inure to the
benefit of the parties and their respective successors and permitted assigns.
11.08 Remedies. The failure of any party to enforce any right or remedy
under this agreement, or to enforce any such right or remedy promptly, will not
constitute a waiver thereof, nor give rise to any estoppel against such party,
nor excuse any other party from its obligations under this Agreement. Any waiver
of any such right or remedy by any party must be in writing and signed by the
party against which such waiver is sought to be enforced.
28
<PAGE>
11.09 Survival. All warranties, representations, and covenants made by any
party in this Agreement or in any certificate or other instrument delivered by
such party or on its behalf under this Agreement will be considered to have been
relied upon by the party to which it is delivered and will survive the Closing
Date, regardless of any investigation made by such party or on its behalf. All
statements in any such certificate or other instrument will constitute
warranties and representations under this Agreement.
11.10 Fees. Any and all fees, costs, and expenses, of whatever kind and
nature, including attorneys' fees and expenses, incurred by the Holders in
connection with the defense or prosecution of any actions or proceedings arising
out of or in connection with this Agreement will, to the extent provided in this
Agreement, be borne and paid by the Company or the Shareholder within ten (10)
days of demand by the Holders.
11.11 Counterparts. This Agreement may be executed in any number of
counterparts, which will individually and collectively constitute one agreement.
11.12 Other Business. It is understood and accepted that the Purchaser, the
Holders, and their Affiliates have interests in other business ventures that may
be in conflict with the activities of the Company and that nothing in this
Agreement will limit the current or future business activities of such parties
whether or not such activities are competitive with those of the Company. The
Company and Sunderland agree that all business opportunities in any field
substantially related to the business of custom injection molding of plastic
products will be pursued exclusively through the Company.
11.13 Choice of Law. THIS AGREEMENT HAS BEEN EXECUTED, DELIVERED, AND
ACCEPTED BY THE PARTIES IN WILL BE DEEMED TO HAVE BEEN MADE IN NEW YORK, NEW
YORK AND WILL BE INTERPRETED AND THE RIGHTS OF THE PARTIES DETERMINED IN
ACCORDANCE WITH THE LAWS OF THE UNITED STATES APPLICABLE THERETO AND THE
INTERNAL LAWS OF THE STATE OF NEW YORK APPLICABLE TO AN AGREEMENT EXECUTED,
DELIVERED AND PERFORMED THEREIN WITHOUT GIVING EFFECT TO THE CHOICE-OF-LAW RULES
THEREOF OR ANY OTHER PRINCIPLE THAT COULD REQUIRE THE APPLICATION OF THE
SUBSTANTIVE LAW OF ANY OTHER JURISDICTION.
11.14 Nominees for Beneficial Owners. In the event that any Registrable
Securities are held by a nominee for the beneficial owner of such Registrable
Securities, the beneficial owner of Registrable Securities may, at its election,
be treated as the Holder of such Registrable Securities for purposes of any
request or other action by any Holder or Holders of Registrable Securities
pursuant to this Agreement or any determination of any number or percentage of
shares of Registrable Securities held by any Holder or Holders of Registrable
Securities contemplated by this Agreement. If the beneficial owner of any
Registrable Securities so elects, the Company may require assurances reasonably
satisfactory to it of such owner's beneficial ownership of such Registrable
Securities. In no event will a Holder be required to exercise the Warrant as a
condition to the registration of such Warrant or Registrable Securities
thereunder.
29
<PAGE>
11.15 Fiduciary Duties. The Company acknowledges and agrees that, for so
long as any Warrant is outstanding and regardless of whether the Holder has
exercised any portion of this its Warrant, (a) the officers and directors of the
Company will owe the same duties (fiduciary and otherwise) to the Holder as are
owed to a stockholder of the Company and (b) the Holder will be entitled to all
rights and remedies with respect to such duties or that are otherwise available
to a stockholder of the Company under the Delaware General Corporation Law, as
amended from time to time.
11.16 Legend. The Company and the Shareholder acknowledge and agree that
for so long as this Agreement is in effect, all shares of Capital Stock of the
Company will be subject to this Agreement and will bear a legend to such effect.
The aforementioned legend shall be in the form set forth in Section 2.10 of the
Warrant Agreement (or shall be in a substantially equivalent form).
11.17 Interest Laws. Notwithstanding any provision to the contrary
contained in this Agreement or the Warrant Agreement, the Company shall not be
required to pay, and Purchaser shall not be permitted to contract for, take,
reserve, charge or receive, any compensation which constitutes interest under
applicable law in excess of the maximum amount of interest permitted by law
("Excess Interest"). If any Excess Interest is provided for or determined by a
court of competent jurisdiction to have been provided for in this Agreement or
in the Warrant Agreement or otherwise contracted for, taken, reserved, charged
or received, then in such event: (a) the provisions of this Section 11.17 shall
govern and control; (b) the Company shall not be obligated to pay any Excess
Interest; (c) any Excess Interest that Purchaser may have contracted for, taken,
reserved, charged or received hereunder shall be, at Purchaser's option, (i)
applied as a credit against the outstanding principal balance of any Put Note or
accrued and unpaid interest (not to exceed the maximum amount permitted by law),
(ii) refunded to the payor thereof, or (iii) any combination of the foregoing;
(d) the interest provided for shall be automatically reduced to the maximum
lawful rate allowed from time to time under applicable law (the "Maximum Rate"),
and this Agreement and the Warrant Agreement shall be deemed to have been, and
shall be, reformed and modified to reflect such reduction; and (e) the Company
shall have no action against Purchaser for any damages arising due to any Excess
Interest. Notwithstanding the foregoing, if for any period of time interest on
any Put Note is calculated at the Maximum Rate rather than the applicable rate
specified under this Agreement, and thereafter such applicable rate becomes less
than the Maximum Rate, the rate of interest payable on such Put Note shall
remain at the Maximum Rate until Purchaser shall have received the amount of
interest which Purchaser would have received during such period on such Put Note
had the applicable rate of interest not been limited to the Maximum Rate during
such period. All sums paid or agreed to be paid hereunder or under the Warrant
Agreement for the use, forbearance or detention of sums due shall, to the extent
permitted by applicable law, be amortized, pro-rated, allocated and spread
throughout the full term of any Put Note until payment in full so that the rate
or amounts of interest on account of any Put Note does not exceed the Maximum
Rate. The terms of this Section 11.17 shall be deemed incorporated into the
Warrant Agreement and any other document or instrument between the Company and
any Purchaser or directed to the Company by any Purchaser, whether or not
specific reference to this Section 11.17 is made.
30
<PAGE>
11.18 Confidentiality. Each Holder agrees to keep confidential any
information delivered by the Company to such Holder under this Agreement that
the Company clearly indicates in writing to be confidential information, upon
notice to the Company where practicable; provided, however, that nothing in this
Section 11.18 will prevent such Holder from disclosing such information (a) to
any Affiliate of such Holder or any actual or potential purchaser, participant,
assignee, or transferee of such Holder's rights or obligations hereunder that
agrees to be bound by the terms of this Section 11.18, (b) upon order of any
court or administrative agency, (c) upon the request or demand of any regulatory
agency or authority having jurisdiction over such Holder, (d) that is in the
public domain, (e) that has been obtained from any Person that is not a party to
this Agreement or an Affiliate of any such party without breach by such Person
of a confidentiality obligation known to such Holder, (f) in connection with the
exercise of any remedy under this Agreement, (g) to the certified public
accountants for such Holder, or (h) to any governmental, quasi-governmental or
industry regulator having authority over such Holder. The Company agrees that
such Holder will be presumed to have met its obligations under this Section
11.18 to the extent that it exercises the same degree of care with respect to
information provided by the Company as it exercises with respect to its own
information of similar character.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
31
<PAGE>
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
as of the date first above written.
COMPANY:
PRECISE HOLDINGS, INC.
By: /s/ William L. Remley
------------------------------------
William L. Remley, President
SHAREHOLDER:
SUNDERLAND INDUSTRIAL HOLDINGS
CORPORATION
By: /s/ William L. Remley
------------------------------------
William L. Remley, President
HAMILTON HOLDINGS LTD. CORPORATION
By: /s/ William Remley
------------------------------------
Name: William Remley
Title: President
DELAWARE STATE EMPLOYEES'
RETIREMENT FUND
By: Pecks Management Partners, Ltd.
Its Investment Advisor
By: /s/ Robert J. Cresci
--------------------------------
Robert J. Cresci
Managing Director
<PAGE>
c/o Pecks Management Partners Ltd.
One Rockefeller Plaza
New York, New York 10020
Attention: Robert J. Cresci
Fax: (212)332-1334
DECLARATION OF TRUST FOR DEFINED
BENEFIT PLANS OF ZENECA HOLDINGS INC.
By: Pecks Management Partners, Ltd.,
Its Investment Advisor
By: /s/ Robert J. Cresci
--------------------------------
Robert J. Cresci
Managing Director
c/o Pecks Management Partners Ltd.
One Rockefeller Plaza
New York, New York 10020
Attention: Robert J. Cresci
Fax: (212)332-1334
PURCHASER:
JOHN HANCOCK MUTUAL LIFE
INSURANCE COMPANY
By: /s/ Sandeep Alva
------------------------------------
Sandeep Alva, Senior Investment
Officer
John Hancock Tower
200 Clarendon Street
Boston, Massachusetts 02117
Attn: Mr. Sandeep Alva
Fax: (617)572-1606
<PAGE>
RICE PARTNERS II, L.P.
By: Rice Capital Group IV, L.P.,
its general partner
By: RMC Fund Management, L.P.,
its general partner
By: Rice Mezzanine Corporation,
its general partner
By: /s/ James P. Wilson
------------------------------
James P. Wilson
Managing Director
5847 San Felipe, Suite 4350
Houston, Texas 77057
Attn: James P. Wilson
Fax: (713)783-9750
<PAGE>
FIRST AMENDMENT TO SHAREHOLDER AGREEMENT
This First Amendment to Shareholder Agreement (this "Amendment"), dated as
of June 13, 1997, is entered into by and among PRECISE HOLDING CORPORATION, a
Delaware corporation (the "Company"), and SUNDERLAND INDUSTRIAL HOLDINGS
CORPORATION, a Delaware corporation ("Sunderland"), HAMILTON HOLDINGS LTD.
CORPORATION, a Texas corporation ("Hamilton"), DELAWARE STATE EMPLOYEES'
RETIREMENT FUND, a Delaware corporation ("Delaware"), in its capacity as a
shareholder, DECLARATION OF TRUST FOR DEFINED BENEFIT PLANS OF ZENECA HOLDINGS
INC., a Delaware corporation ("Zeneca"), in its capacity as a shareholder, and
DECLARATION OF TRUST FOR DEFINED BENEFIT PLANS OF ICI AMERICAN HOLDINGS INC., a
Delaware corporation ("ICI"), in its capacity as a shareholder (individually and
collectively, the "Shareholder"), and RICE PARTNERS II, L.P., a Delaware limited
partnership ("Rice"), JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY, a
Massachusetts mutual life insurance company ("John Hancock"), DELAWARE, in its
capacity as a warrantholder, ZENECA, in its capacity as a warrantholder, and
ICI, in its capacity as a warrantholder (individually and collectively, the
"Purchaser") (Delaware, Zeneca and ICI are collectively referred to herein as
"Pecks").
RECITALS
A. The Company, the Shareholder and the Purchaser have entered into that
certain Shareholder Agreement dated as of March 29, 1996 (the "Shareholder
Agreement").
B. The Company owns beneficially and of record all of the issued and
outstanding common stock of Precise Technology, Inc., a Delaware corporation
("Precise").
C. Precise desires to issue up to $75,000,000 of 11 1/8% Senior
Subordinated Notes due 2007 on the terms described in that certain Offering
Memorandum dated June 10, 1997 furnished by the Company to Rice, John Hancock
and Pecks (the "Public Notes").
D. The Company, the Shareholder and the Purchaser desire to amend the
Shareholder Agreement to allow and provide for the issuance of the Public Notes
and to allow and provide for certain other matters, all as hereinafter set
forth.
AGREEMENT
NOW, THEREFORE, in consideration of the premises herein contained and other
good and valuable consideration, the sufficiency of which is hereby
acknowledged, the parties hereto, intending to be legally bound, agree as
follows:
1. DEFINITIONS. All capitalized terms used but not otherwise defined in this
Amendment shall have the meanings ascribed to them in the Shareholder Agreement.
1
<PAGE>
2. AMENDMENTS. The Shareholder Agreement is hereby amended as follows:
2.1 Amendment to Article I; Addition of Certain Definitions. Article I of
the Shareholder Agreement is hereby amended by adding thereto in alphabetical
order the following definitions:
"Indenture. The Indenture, to be dated as of June 13, 1997, between
Precise and Marine Midland Bank, as trustee, as in effect on June 13,
1997."
"Public Notes. The 11 1/8% Senior Subordinated Notes due 2007 issued
by Precise pursuant to the terms of the Indenture."
"Senior Loan Agreement. The Credit Agreement, dated as of June 13,
1997, by and among the Company, Precise, certain Subsidiaries of Precise,
Fleet National Bank, as Agent, Issuing Bank and as a lender, and each of
the other financial institutions a party thereto, as the same may be
modified, amended, waived, supplemented or otherwise changed from time to
time, and all documents and instruments delivered pursuant thereto in
connection with the loans and advances made thereunder."
2.2 Amendment to Article I; Deletion of Certain Definitions. Article I of
the Shareholder Agreement is hereby amended by deleting therefrom the definition
for "Senior Subordination Agreement".
2.3 Amendment to Article I; Amendment of Certain Definitions. Article I of
the Shareholder Agreement is hereby amended by deleting therefrom the
definitions for "Senior Lender" and "Senior Loan Documents" and substituting the
following in lieu thereof:
"Senior Lender. Fleet National Bank, a national banking association,
and any other financial institution a party to the Senior Loan Agreement,
and their respective successors and assigns."
"Senior Loan Documents. The Senior Loan Agreement and the agreements,
documents and instruments executed in connection therewith or contemplated
thereby, and all amendments, modifications, waivers, renewals, extensions,
substitutions, increases or replacements thereof."
2.4 Amendment to Section 4.04. Section 4.04 of the Shareholder Agreement is
hereby deleted in its entirety and the following substituted in lieu thereof:
"4.04. Certain Remedies. In the event that (i) the Company defaults in
its obligation to purchase all or any portion of the Put Shares in cash
upon exercise of the Put Option, (ii) any Holder exercises the Put Option
at a time when the Put Price is not permitted to be paid in cash to such
Holder pursuant to applicable law, (iii) any Holder exercises the Put
Option at a time when the Senior Loan Documents or the Indenture prohibit
Precise from paying a dividend to the Company in order to fund the payment
of
2
<PAGE>
the Put Price in cash, and the Company fails to obtain a waiver of such
default from the Senior Lender (with respect to the occurrence of a default
under the Senior Loan Documents) or the holders of the Public Notes (with
respect to the occurrence of a default under the Indenture), as the case
may be, or (iv) any Holder exercises the Put Option at a time when payment
of all or any portion of the Put Price in cash would, after giving effect
to such payment, result in Precise's available cash plus availability under
the Senior Loan Documents being less than $5,000,000 in the aggregate,
then, in any such event, the Company will (a) pay such portion of the Put
Price in cash as is not prohibited by clauses (i), (ii), (iii) or (iv)
above, (b) upon the request of any Holder and to the extent any portion of
the Put Price is not paid in cash under this Section 4.04, execute and
deliver to such Holder a promissory note (a "Put Note") in form and
substance satisfactory to such Holder evidencing such remaining Put Price,
and (c) not declare or make any dividends or distributions of its cash or
redeem, retire, purchase, or otherwise acquire, directly or indirectly, any
of its Capital Stock or capital stock or securities of any Affiliate of the
Company, or any securities convertible or exchangeable into Capital Stock
or capital stock or securities of any Affiliate of the Company until the
Put Price has been paid in full in cash. Any Put Note issued pursuant to
the terms and conditions of this Section 4.04 will (a) be substantially in
the form of Exhibit A attached hereto, (b) mature on April 1, 2006 (unless
sooner accelerated pursuant to the terms of the Put Note) and (c) bear
interest at the following rates per annum: (i) 14% per annum for the twelve
month period immediately following the date of issuance of such promissory
note, (ii) 16% per annum for the next succeeding twelve month period and
(iii) 18% per annum thereafter. In addition to the right to request the
issuance of a Put Note, any Holder may, upon the failure of the Company to
pay any portion of the Put Price not prohibited by clauses (ii), (iii) or
(iv) above, exercise all rights or remedies available to such Holder
(whether at law or in equity) against the Company, and, in addition
thereto, such Holder shall be entitled to liquidated damages in the amount
specified in Section 11.02 of this Agreement."
2.5. Amendment to Section 11.06. Section 11.06 of the Shareholder Agreement
is hereby amended by deleting therefrom the notice addresses for the Company and
the Shareholder and substituting the following in lieu thereof:
"If to the Company, at: Precise Holding Corporation
c/o Mentmore Holdings Corporation
1430 Broadway, 13th Floor
New York, New York 10018-3308
Attn: William L. Remley
FAX: (212)391-1393
with courtesy copies to: Michael D. Schenker
c/o Mentmore Holdings Corporation
1430 Broadway, 13th Floor
New York, New York 10018-3308
FAX: (212)382-1559
3
<PAGE>
Kelley, McCann & Livingstone
200 Public Square, 35th Floor
BP America Building
Cleveland, Ohio 44114-2302
Attn: Bruce L. Waterhouse
FAX: (216)241-3707
If to the Shareholder, at:
Sunderland Industrial Holdings Corporation
Hamilton Holdings Ltd. Corporation
1430 Broadway, 13th Floor
New York, New York 10018-3308
Attn: William L. Remley
Fax: (212)391-1393
Delaware State Employees' Retirement Fund
Declaration of Trust for Defined Benefit Plans
of Zeneca Holdings Inc.
Declaration of Trust for Defined Benefit Plans
of ICI American Holdings Inc.
c/o Pecks Management Partners Ltd.
One Rockefeller Plaza
New York, New York 10020
Attn: Robert J. Cresci
Fax: (212)332-1334
with courtesy copies to:
Michael D. Schenker
c/o Mentmore Holdings Corporation
1430 Broadway, 13th Floor
New York, New York 10018-3308
Fax: (212)391-1393
Kelley, McCann & Livingstone
200 Public Square, 35th Floor
BP America Building
Cleveland, Ohio 44114-2302
Attn: Bruce L. Waterhouse
Fax: (216)241-3707
4
<PAGE>
Willkie Farr & Gallagher
One Citicorp Center
153 East 53rd Street
New York, New York 10022-4677
Attn: William J. Grant, Jr.
Fax: (212)821-8211"
3. CONDITIONS TO EFFECTIVENESS. The effectiveness of this Amendment is subject
to the satisfaction of the following conditions precedent, unless specifically
waived in writing by the Purchaser:
3.1 Each Purchaser shall have received on its behalf:
(a) this Amendment, duly executed by the Company; and
(b) such additional documents, instruments and information as such
Purchaser or its legal counsel may request.
3.2 No default or event of default shall have occurred and be continuing
under either the Warrant Agreement or the Shareholder Agreement, unless such
default or event of default has been specifically waived in writing by
Purchaser.
3.3 All corporate proceedings taken in connection with the transactions
contemplated by this Amendment and all documents, instruments and other legal
matters incident thereto shall be satisfactory to each Purchaser and their
respective legal counsel.
3.4 The Public Notes shall have been issued on the terms described in the
Offering Memorandum dated June 10, 1997 furnished by the Company to Purchaser.
3.5 The Senior Subordinated Notes (as defined in the Note Agreement),
together with all accrued interest and any applicable Prepayment Fee (as defined
in the Note Agreement), shall have been paid in full utilizing a portion of the
proceeds of the Public Notes.
3.6 The Pecks Preferred Stock, together with all accrued and unpaid
dividends thereon, shall have been redeemed and/or paid utilizing a portion of
the proceeds of the Public Notes.
4. RATIFICATIONS, REPRESENTATIONS AND WARRANTIES.
4.1. The terms and provisions set forth in this Amendment shall modify and
supersede all inconsistent terms and provisions set forth in the Shareholder
Agreement (including, without limitation, all representations, warranties and
covenants contained therein) and all other agreements, instruments and documents
related thereto, and, except as expressly modified and superseded by this
Amendment, the terms and provisions of the Shareholder Agreement and all other
agreements, instruments and documents related thereto are ratified and confirmed
and shall
5
<PAGE>
continue in full force and effect. The Company and Purchaser agree that the
Shareholder Agreement and all other agreements, instruments and documents
related thereto, in each case as amended hereby, shall continue to be legal,
valid, binding and enforceable in accordance with their respective terms.
4.2. The Company hereby represents and warrants to Purchaser that (a) the
execution, delivery and performance of this Amendment and any and all other
agreements executed and/or delivered in connection herewith have been authorized
by all requisite corporate action on the part of the Company and will not
violate the Certificate of Incorporation or Bylaws of the Company; (b) the
Company is in material compliance with all covenants and agreements contained in
the Shareholder Agreement, as amended hereby, and all other agreements,
instruments and documents related thereto; and (c) the Company has not amended
its Certificate of Incorporation or its Bylaws since March 29, 1996, except for
such amendments, if any, as have been delivered to Purchaser on the date hereof.
5. MISCELLANEOUS.
5.1. Reference to Shareholder Agreement. Each of the Shareholder Agreement
and all other agreements, certificates and documents related thereto, and any
and all other agreements, documents or instruments now or hereafter executed and
delivered pursuant to the terms hereof or pursuant to the terms of the
Shareholder Agreement, as amended hereby, are hereby amended so that any
reference in the Shareholder Agreement and such agreements, instruments and
documents related thereto to the Shareholder Agreement shall mean a reference to
the Shareholder Agreement as amended hereby.
5.2. Headings. The headings of the sections and subsections of this
Amendment are inserted for convenience only and do not constitute a part of this
Amendment.
5.3. Counterparts. This Amendment may be executed in any number of
counterparts, which shall collectively constitute one agreement.
5.4. Law Governing. THIS AMENDMENT HAS BEEN EXECUTED, DELIVERED, AND
ACCEPTED BY THE PARTIES IN NEW YORK, NEW YORK, WILL BE DEEMED TO HAVE BEEN MADE
IN THE STATE OF NEW YORK, AND WILL BE INTERPRETED AND THE RIGHTS OF THE PARTIES
DETERMINED IN ACCORDANCE WITH THE LAWS OF THE UNITED STATES APPLICABLE THERETO
AND THE INTERNAL LAWS OF THE STATE OF NEW YORK APPLICABLE TO AN AGREEMENT
EXECUTED, DELIVERED AND PERFORMED THEREIN WITHOUT GIVING EFFECT TO THE
CHOICE-OF-LAW RULES THEREOF OR ANY OTHER PRINCIPLE THAT COULD REQUIRE THE
APPLICATION OF THE SUBSTANTIVE LAW OF ANY OTHER JURISDICTION.
5.5. Final Agreement. The Warrant Agreement and the Shareholder Agreement,
in each case as amended, constitute the entire agreement among the parties with
respect to the subject matter hereof and thereof and supersede all previous
written, and all previous or
6
<PAGE>
contemporaneous oral, negotiations, understandings, arrangements, and
agreements. The Shareholder Agreement, as amended hereby, may not be amended or
supplemented except by a writing signed by Company and each Holder.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
7
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Amendment to be executed
and delivered as of the date first above written.
COMPANY:
PRECISE HOLDING CORPORATION
By: /s/ William L. Remley
---------------------------------------
William L. Remley, President
SHAREHOLDER:
SUNDERLAND INDUSTRIAL HOLDINGS
CORPORATION
By: /s/ William L. Remley
---------------------------------------
William L. Remley, President
HAMILTON HOLDINGS LTD.
CORPORATION
By: /s/ William L. Remley
---------------------------------------
Name:
Title:
PURCHASER:
JOHN HANCOCK MUTUAL LIFE
INSURANCE COMPANY
By: /s/ Sandeep Alva
---------------------------------------
Sandeep Alva, Senior Investment Officer
8
<PAGE>
RICE PARTNERS II, L.P.
By: Rice Capital Group IV, L.P.,
its general partner
By: RMC Fund Management, L.P.,
its general partner
By: Rice Mezzanine Corporation,
its general partner
By: /s/ James P. Wilson
-------------------------
James P. Wilson
Managing Director
DELAWARE STATE EMPLOYEES'
RETIREMENT FUND, as a
Shareholder and as a Purchaser
By: Pecks Management Partners, Ltd.,
Its Investment Advisor
By: /s/ Robert J. Cresci
---------------------------------------
Robert J. Cresci
Managing Director
9
<PAGE>
DECLARATION OF TRUST FOR
DEFINED BENEFIT PLANS OF
ZENECA HOLDINGS INC., as a
Shareholder and as a Purchaser
By: Pecks Management Partners, Ltd.,
Its Investment Advisor
By: /s/ Robert J. Cresci
---------------------------------------
Robert J. Cresci
Managing Director
DECLARATION OF TRUST FOR
DEFINED BENEFIT PLANS OF
ICI AMERICAN HOLDINGS INC.,
as a Shareholder and as a Purchaser
By: Pecks Management Partners, Ltd.,
Its Investment Advisor
By: /s/ Robert J. Cresci
---------------------------------------
Robert J. Cresci
Managing Director
10
<PAGE>
TAX ALLOCATION AND INDEMNITY AGREEMENT
Agreement dated as of June 11, 1997 and retroactively applied to the
calendar year ended December 31, 1996 by and among, Sunderland Industrial
Holding Corporation, a Delaware corporation ("Parent"), Precise Holding Corp.
("Precise Holding") and Precise Technology, Inc. and its direct and indirect
subsidiaries ("Precise Group").
WITNESSETH
WHEREAS, the parties hereto are members of an affiliated group (the
"Affiliated Group") as defined in section 1504(a) of the Internal Revenue Code
of 1986, as amended (the "Code"); and
WHEREAS, an affiliated group as defined in Code section 1504(a) of which
Parent is the common parent has filed consolidated Federal income tax returns
for prior taxable years, and the Affiliated Group will be required to file a
consolidated Federal income tax return for its taxable year ending December 31,
1996 and for subsequent taxable years; and
WHEREAS, it is the intent of the parties hereto that an agreement be
entered into (i) to allocate the consolidated Federal income tax liability of
the Affiliated Group between the Parent, Precise Holding and the Precise Group
pursuant to a method specified in regulations of the Treasury Department that
would impose on Parent, Precise Holding and Precise Group, for the period
beginning January 1, 1996 through December 31, 1996 and for subsequent periods,
liability for an amount that approximates the liability that Parent, Precise
Holding and Precise Group each would incur if they filed Federal income tax
returns as separate affiliated groups; and (ii) to provide that Parent, Precise
Holding and Precise Group each shall bear its appropriate portion of the
liability of the Affiliated Group for consolidated Federal income tax in respect
of prior periods.
NOW THEREFORE, in consideration of the mutual covenants and promises
contained herein, the parties hereto agree as follows:
1. Filing of Consolidated Returns. A consolidated Federal income tax return
shall be filed by Parent for the taxable year ending December 31, 1996, and for
each subsequent taxable period in respect of which this Agreement is in effect
and for which the Affiliated Group is required or permitted to file a
consolidated Federal income tax return.
2. Historical and Future Taxable Periods. For the taxable year of the
Affiliated Group ending December 31, 1996 and for each taxable period
thereafter, the Affiliated Group shall be divided into three separate groups,
one consisting of Parent, one consisting of Precise Holding, and the third and
final group consisting of Precise Group. The consolidated Federal income tax
liability of the Affiliated Group shall be allocated among the three groups in
accordance with the method set forth in Treasury regulation
<PAGE>
sections 1.1552-1(a)(2) and 1.1502-33(d)(3) (using a fixed percentage of 100%)
by considering each group as a separate affiliated group except that (i)
modifications to the separate taxable income will be made in accordance with
Treasury regulation section 1.1552- l(a)(2)(ii)(a) through (i) in the same
manner as if all corporations were members of a single affiliated group, and
(ii) carryforwards and carrybacks of losses and credits shall be taken into
account, and to the extent of any reduction of tax liability of any separate
group member to which the losses or credits did not arise, the amount of tax
credit utilized will be remitted to the separate group member to which the
losses or credits were generated. The corporate surtax exemption shall be
allocated to Parent. Any liability of the Affiliated Group for alternative
minimum tax, environmental tax or any other Federal income tax imposed on the
Affiliated Group on a consolidated basis by any section of the Code other than
Code section 11 shall be allocated in accordance with any reasonable method that
is consistent with the principles of this Agreement and the provisions of any
governing Treasury regulations or other administrative pronouncements of the
Internal Revenue Service. In any event, no individual party to this tax
allocation agreement shall pay more income tax in any period of one or more
taxable years than it would have paid for the same period if it had filed a
separate Federal income tax return, and any taxes not paid by reason of this
limitation shall be paid by Parent.
3. Payments. Precise Holding and the Precise Group shall pay to Parent
installments, of estimated tax, computed pursuant to the principles set forth in
section 2 above, no later than ten days after the due dates for payments of
estimated tax by the Affiliated Group. Any payments of estimated tax by Precise
Holding or Precise Group to Parent shall be taken into account in determining
the payment due from Precise Holding or Precise Group pursuant to section 2, and
any overpayment of estimated tax shall be refunded to Precise Holding or Precise
Group. A refund or payment of tax, calculated on the basis of the amount of tax
payable for the taxable year as calculated by Parent as of the due date (without
regard to extensions) for the Federal income tax return of the Affiliated Group,
shall be paid within ten days of that due date, and any adjustment to the amount
of refund or payment of tax, calculated on the basis of the amount of tax
payable for that taxable year as shown on the Federal income tax return of the
Affiliated Group as of the due date (with regard to extensions), shall be paid
within ten days of that due date.
4. Adjustments to Tax Liability. If the consolidated Federal income tax
liability of the Affiliated Group is adjusted for any taxable period, whether by
means of an amended return or claim for refund or after an audit by the Internal
Revenue Service, the Federal income tax liability of Precise Holding or Precise
Group pursuant to section 2 or section 4 of this Agreement shall be recomputed,
if necessary, to give effect to those adjustments as if they had been part of
the original computation pursuant to section 2 or section 4. The obligation to
make any payment of additional Federal income tax or the right to receive any
refund of Federal income tax shall be allocated between Parent, Precise Holding
and Precise Group accordingly. Any additional tax that Precise Holding or
Precise Group is obligated to pay shall be paid to Parent, and any refund of tax
to which Precise Holding or Precise Group is entitled to receive shall be paid
by Parent,
2
<PAGE>
within ten days of, respectively, the date Precise Holding or Precise Group
receives notice from Parent or the date Parent receives the refund from the
Treasury Department.
5. Appointment of Parent as Agent. Parent shall prepare and file the
consolidated Federal income tax returns of the Affiliated Group and any other
returns, documents or statements required to be filed with the Internal Revenue
Service. In its sole discretion, Parent shall have the right in connection with
any of those returns, documents or statements to determine (i) the manner in
which the return, document or statement shall be prepared and filed, including,
without limitation, the manner in which any item of income, gain, loss,
deduction, credit or any other item shall be reported, (ii) whether any
extension shall be requested and (iii) the elections that will be made by the
Affiliated Group or any members thereof. Each member of the Affiliated Group
shall execute and file those consents, elections, appointments, powers of
attorney and other documents that Parent determines may be necessary or
appropriate for the proper filing of those returns, documents or statements.
Each member of the Affiliated Group shall provide Parent or any other member of
the Affiliated Group any data necessary for the proper and timely filing of
returns, documents or statements and otherwise shall cooperate as necessary to
carry out the purposes of this Agreement.
6. New Members. If during any taxable period Parent or any other members of
the Affiliated Group acquires or organizes another corporation that is required
to be included in the consolidated Federal income tax return of the Affiliated
Group, that corporation shall join in and be bound by this Agreement.
7. Indemnification.
a. General Principles. It is the intent of this Agreement that Parent,
Precise Holding and Precise Group each be liable for an amount in respect of
Federal income tax of the Affiliated Group as that amount is determined pursuant
to this Agreement and that Parent, Precise Holding and Precise Group each
receive its respective share, as so allocated, of any reduction in Federal
income tax liability of the Affiliated Group.
b. Indemnification. The Parent shall be responsible for, and shall protect,
defend, indemnify and hold harmless Precise Holding and Precise Group from, any
amount in respect of Federal income tax allocable to Parent pursuant to this
Agreement. Precise Holding and Precise Group, jointly and severally, shall be
responsible for, and shall protect, defend, indemnify and hold harmless the
Parent from, any amount in respect of Federal income tax allocable to Precise
Holding or Precise Group pursuant to this Agreement.
8. Retention of Books and Records. No member of the Affiliated Group shall
destroy or permit the destruction of any books, records or files pertaining to
any other member of the Affiliated Group without first having offered in writing
to deliver those books, records and files to the other member, and the other
member shall have the
3
<PAGE>
right upon prior notice to inspect and to copy the same at any time during
business hours for any proper purpose
9. Other Income and Franchise Taxes. The liability of Parent, Precise
Holding and Precise Group in respect of state, local and foreign income and
franchise taxes that are computed pursuant to provisions applicable to
affiliated, combined, unitary or other groups shall be determined and paid in a
manner consistent with the provisions of this Agreement used to determine the
liability of Parent, Precise Holding, and Precise Group in respect of Federal
income tax. Calculation of the separate liability of Parent, Precise Holding,
and Precise Group for these other taxes shall conform to the appropriate state,
local and foreign income and franchise tax provisions governing affiliated,
combined, unitary or other groups. Notwithstanding the foregoing, the credit
against Florida corporate income tax for Florida intangible tax shall not be
computed on a separate company basis to the extent a computation on that basis
would disentitle any member of the Affiliated Group to a credit that is
available to that member by reason of joining in the filing of a consolidated
return of Florida corporate income tax with any member of the Affiliated Group.
10. Entire Understanding. This Agreement constitutes the entire agreement
of the parties concerning the subject matter hereof and, effective as of the
date hereof and for the taxable periods to which this Agreement applies,
supersedes all other agreements. This Agreement shall allocate the tax
liabilities of the Affiliated Group for the period January 1, 1996 through
December 31, 1996, and all subsequent taxable years unless Parent, Precise
Holding and Precise Group mutually agree to terminate this Agreement.
Notwithstanding its termination, this Agreement shall continue in effect with
respect to any payment or refunds due for all taxable periods prior to
termination.
11. Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of any successor, whether by statutory merger, acquisition of
assets or otherwise, to any of the parties hereto, to the same extent as if the
successor had been an original party to the Agreement.
12. Expenses. Parent, Precise Holding and Precise Group each shall bear any
and all expenses that arise from its obligations under this Agreement.
13. Notices. All notices and other communications hereunder shall be in
writing and shall be delivered by hand or mailed by registered or certified mail
(return receipt requested) to the parties at the following addresses (or at such
other addresses for a party as shall be specified by like notice) and shall be
deemed given on the date on which the notice is received.
4
<PAGE>
If to Parent:
1430 Broadway, 13th Floor
New York, New York 10018
If to Precise Holding:
1430 Broadway, 13th Floor
New York, New York 10018
If to Precise Group:
501 Mosside Boulevard
North Versailles, Pennsylvania 15137-2553
14. Resolution of Dispute. Any dispute between the parties with respect to
this Agreement shall be resolved by a public accounting firm or a law firm
reasonably satisfactory to Parent, Precise Holding and Precise Group or pursuant
to an alternative dispute arrangement agreed to by the parties.
15. Legal Enforceability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall be ineffective as to that
jurisdiction to the extent of that prohibition or unenforceability without
invalidating the remaining provisions hereof. Any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable that provision in any other jurisdiction. Without prejudice to any
rights or remedies otherwise available to any party hereto, each party hereto
acknowledges that damages would be an inadequate remedy for any breach of the
provisions of this Agreement and agrees that the obligations of the parties
hereunder shall be specifically enforceable.
16. Controlling Law. This Agreement shall be governed by the laws of the
State of New York.
5
<PAGE>
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be
executed by their duly authorized representatives as of the date first written
above.
Sunderland Industrial Holding Corporation
by /s/ William L. Remley
-------------------------------------------
its President
Precise Holding Corporation
by /s/ William L. Remley
-------------------------------------------
its President
Precise Technology, Inc.
by /s/ John R. Weeks
-------------------------------------------
its President
Precise Technology of Illinois, Inc.
by /s/ John R. Weeks
-------------------------------------------
its President
Precise Technology of Delaware, Inc.
by /s/ John R. Weeks
-------------------------------------------
its President
Precise TMP, Inc.
by /s/ John R. Weeks
-------------------------------------------
its President
6
<PAGE>
Precise Polestar, Inc.
by /s/ John R. Weeks
-------------------------------------------
its President
Massie Tool, Mold & Die, Inc.
by /s/ John R. Weeks
-------------------------------------------
its President
Darlene B. Deffenbaugh 9/12/97
- --------------------------------------------
[Notarial Seal]
Darlene B. Deffenbaugh, Notary Public
North Versailles Twp., Allegheny County
My Commission Expires Sept. 25, 2000
Member, Pennsylvania Association of Notaries
- --------------------------------------------
7
<PAGE>
MANAGEMENT AGREEMENT
(Amended and Restated)
THIS MANAGEMENT AGREEMENT (this "Agreement"), originally made and entered
into the 15th day of March, 1996, amended and restated as of June 13, 1997, but
effective for all purposes and in all respects as of the 1st day of April, 1996
(the "Effective Date"), by and between PRECISE TECHNOLOGY, INC., a Delaware
corporation ("Precise"), and MENTMORE HOLDINGS CORP., a Delaware corporation
("Mentmore").
Recitals
A. WHEREAS, Precise desires to engage Mentmore to perform management
advisory and consulting services under the terms and conditions set forth in
this Agreement; and
B. WHEREAS, Mentmore desires to be engaged by Precise to perform management
advisory and consulting services under the terms and conditions set forth in
this Agreement.
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
1. Engagement. Precise hereby engages Mentmore to provide the management
advisory and consulting services described in paragraph 3 hereof, and Mentmore
hereby accepts such engagement.
2. Term. The term of this Agreement shall commence as of the Effective Date
and shall continue until March 31, 2006, which term shall be automatically
extended for an additional year as of April 1 of each year, commencing April 1,
1997, unless either party shall have previously notified the other in writing
that the term of this Agreement shall not be further extended (the "Term"), it
being the intent of the parties that this Agreement shall have a rolling
"evergreen" term of ten (10) years. To illustrate, if neither party has notified
the other in writing before April 1, 1997 that the term of this Agreement shall
not be further extended, as of such date the term of this Agreement shall
continue until March 31, 2007. As used herein, "term of this Agreement" shall
include all extensions. Upon the expiration of the final term of this Agreement,
all unpaid amounts due and owing to Mentmore shall be paid in full by Precise.
3. Termination.
(a) Notwithstanding the terms of Section 2 above, Mentmore may
terminate this Agreement upon ninety (90) days' prior written notice to
Precise.
(b) Notwithstanding the terms of Section 2 above, Precise may
terminate this Agreement "for cause" upon the occurrence of: (i) the
commission of a felony,
1
<PAGE>
embezzlement, or any act of material dishonesty by any individual providing
services to Precise hereunder on behalf of Mentmore which causes material
harm to Precise, or (ii) a material failure of Mentmore to provide the
services contemplated hereunder and the failure of Mentmore to cure the
same within ninety (90) days following the date of receipt of written
notice thereof setting forth in detail the nature of such failure.
(c) In the event of the termination of this Agreement by Precise "for
cause," Mentmore shall receive payment in full of all amounts due and
payable hereunder through the effective date of such termination and during
the period of any judicial appeal of such termination, and in no event
shall the effective date of termination be earlier than the date of
expiration of the ninety (90) day cure period specified in Section 3 (b)
above. In the event of any termination of this Agreement, amounts payable
pursuant to Articles 5 and 6 below shall be prorated based upon the ratio
of the number of days during the year of the Term during which Mentmore
shall be deemed hereunder to have provided such services to two hundred
fifty (250). All such amounts shall be paid by Precise to Mentmore in cash
or its equivalent within a reasonable period of time, not to exceed thirty
(30) days, following such termination.
(d) In the event of the termination of this Agreement, Mentmore will
cooperate and assist Precise in order to effectuate a smooth and orderly
transition in the management of Precise.
4. Duties. During the Term, Mentmore shall provide to Precise and its
subsidiaries such management advisory and consulting services with respect to
Precise's business and with respect to such other matters as Precise may
reasonably request from time to time, including, but not limited to, strategic
planning, financial planning, business acquisition and general business
development services. Such services shall be provided through the use of
Mentmore employees who Mentmore reasonably deems to be qualified to provide such
services. The manner in which Mentmore shall perform such services shall be
determined by Mentmore in its sole discretion.
5. Management Fees. As compensation for Mentmore's performance of its
duties hereunder, Mentmore shall earn management fees (the "Management Fees")
from Precise in the annual amount of $300,000 for each year during the Term.
Precise shall pay the Management Fees to Mentmore and such fees shall be due
monthly in arrears, commencing with the month ended June 30, 1997, in the amount
of Twenty Five Thousand Dollars ($25,000.00) for each month, or portion thereof,
during the Term. If Precise is unable to pay any Management Fees earned by
Mentmore hereunder for any reason, then such Management Fees shall nevertheless
be accrued.
6. Expenses. Precise shall promptly reimburse Mentmore for all reasonable
and customary out-of-pocket business expenses incurred by Mentmore at any time
during the Term in connection with the performance of its duties hereunder,
provided that:
2
<PAGE>
(a) Each such expenditure is incurred by Mentmore in accordance with
the policies and procedures reasonably established by Precise's board of
directors from time to time;
(b) Each such expenditure is of a nature qualifying it as a proper
deduction on Precise's federal, state and local income tax returns, as
applicable; and
(c) Mentmore furnishes to Precise such records and documentary
evidence as may be required by applicable statutes and regulations for the
substantiation of Precise's deduction of each such expenditure on such
income tax returns.
7. Indemnification. Each of Mentmore and Precise agrees to indemnify,
defend and hold the other harmless from and against any and all losses,
liabilities, damages, costs, fines, expenses of counsel and agents, including,
but not limited to, any costs involved in the course of enforcing this paragraph
7 (hereinafter referred to in this paragraph 7 as "Losses"), which may be
sustained, suffered or incurred by the indemnified party as a result of, arising
from or in connection with any material failure by the indemnifying party to
comply with or perform any term or covenant of this Agreement. In furtherance of
and not in limitation of the foregoing, Precise agrees to indemnify, defend and
hold Mentmore harmless from and against any and all Losses which may be
sustained, suffered or incurred by Mentmore as a result of, arising from or in
connection with Mentmore's performance of its obligations under this Agreement.
8. Arbitration. If any dispute arises between the parties with respect to
the subject matter of this Agreement, and if such dispute is not resolved within
fourteen (14) days after it arises, then either party may submit the dispute to
the New York City office of the American Arbitration Association (the "AAA") for
resolution by one (1) arbitrator in accordance with the AAA's commercial
arbitration rules then in effect. The arbitrator may award any relief which he
or she deems proper under the circumstances, without regard to the relief which
would otherwise be available to a prevailing party in a court of law or equity.
The decision of the arbitrator, unless obtained by fraud, shall be final and
binding on all parties, enforceable in any court of competent jurisdiction. All
filing fees. arbitrator's fees, court reporter's fees and transcript costs shall
be allocated between the parties as determined by the arbitrator.
9. Governing Law. This Agreement shall be governed in all respects by the
law of the State of New York without regard to its principles of conflicts of
laws.
10. Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the parties and their respective successors and assigns.
11. Entire Agreement; No Waiver. This Agreement and the other documents
described herein constitute the full and entire understanding and agreement
among the parties with regard to the subject matter contained herein and
supersede all prior written or oral agreements, understandings, representations
and warranties made with respect thereto. No
3
<PAGE>
amendment, supplement or modification of this Agreement, nor any waiver of any
provision hereof, shall be effective unless the same is in writing and executed
by the party against whom enforcement of such amendment, supplement or
modification is sought.
12. Miscellaneous. Any Management Fees, if not paid when due hereunder,
shall thereafter bear interest at the lesser of: (a) the rate of twelve percent
(12%) per annum, or (b) the maximum rate allowed by law until such time as such
Management Fees may be paid.
13. Notices. Any notice or other communication required or permitted
hereunder shall be in writing and personally delivered, mailed by registered or
certified mail (return receipt requested and postage prepaid), sent by telegram
(with messenger service specified), or sent by prepaid overnight courier
service, and addressed to the relevant party at its current business address, or
at such other address as such party may, by written notice, designate as its
address for purposes of notice hereunder. If mailed, notice shall be deemed to
be given five (5) days after being sent, or if sent by personal delivery or by
prepaid courier or telegraph service, notice shall be deemed to be given when
delivered.
14. Severability. If any term, covenant or condition of this Agreement, or
the application of such term, covenant or condition to any party or circumstance
shall be found by a court of competent jurisdiction to be, to any extent,
invalid or unenforceable, the remainder of this Agreement and the application of
such term, covenant, or condition to parties or circumstances other than those
as to which it is held invalid or unenforceable, shall not be affected thereby,
and each term, covenant or condition shall be valid and enforced to the fullest
extent permitted by law. Upon determination that any such term is invalid,
illegal or unenforceable, the parties hereto shall amend this Agreement so as to
effect the original intent of the parties as closely as possible in an
acceptable manner.
15. Interpretation. No provision of this Agreement or any agreement
ancillary hereto shall be interpreted or construed against any party because
that party or its legal representative drafted that provision. The titles of the
paragraphs of this Agreement are for convenience of reference only and are not
intended to be considered in construing this Agreement. Any pronoun used in this
Agreement shall be deemed to include the singular and plural and the masculine,
feminine and neuter gender, as the case may be or as the context otherwise
requires. The words "herein," "hereof," and "hereunder" shall be deemed to refer
to this entire Agreement, except as the context otherwise requires.
16. No Waiver. No waiver by any party hereto of any one or more defaults by
the other party in the performance of any of the provisions of this Agreement
shall operate or be construed as a waiver of any future default or defaults,
whether of a like or different nature. No failure or delay on the part of any
party in exercising any right, power or remedy hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right,
power or remedy preclude any other or further exercise thereof or the exercise
of any other right, power or
4
<PAGE>
remedy. The remedies provided for herein are cumulative and are not exclusive of
any remedies that may be available to any party hereto at law, in equity or
otherwise.
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
executed under seal as of the date first set forth above.
WITNESS/ATTEST: PRECISE TECHNOLOGY, INC.,
a Delaware corporation
/s/ Darlene B. Deffenbaugh By: /s/ John Weeks
- ------------------------------ ----------------------------------
John Weeks, President
WITNESS/ATTEST: MENTMORE HOLDINGS CORPORATION,
a Delaware corporation
/s/ [ILLEGIBLE] By: /s/ William L. Remley
- ------------------------------ ----------------------------------
William L. Remley, President
5
9/12/97
--------------------------------------------
Notarial Seal
Darlene B. Deffenbaugh, Notary Public
North Versailles Twp., Allegheny County
My Commission Expires Sept. 25, 2000
--------------------------------------------
Member, Pennsylvania Association of Notaries
<PAGE>
SUNDERLAND INDUSTRIAL HOLDINGS CORPORATION
1997 Key Employee Nonqualified Stock Option Plan
This is the 1997 Key Employee Nonqualified Stock Option Plan (the "Plan")
of SUNDERLAND INDUSTRIAL HOLDINGS CORPORATION, a Delaware corporation (the
"Company"), effective as of April 24, 1997.
1. Purpose of Plan. The purpose of the Plan is to advance the interests of
the Company and its shareholders by (i) providing an incentive to certain key
employees of the Company and its subsidiaries, (ii) encouraging stock ownership
by certain key employees of the Company and its subsidiaries so that such key
employees may acquire or increase their proprietary interest in the success of
the Company and its subsidiaries, and (iii) encouraging certain key employees to
remain in the employ of the Company and its subsidiaries.
2. Shares Under the Plan. The shares of stock subject to any option granted
pursuant to the Plan shall be shares of common stock, par value $.01 per share,
of the Company ("Stock"). The aggregate number of shares of Stock which may be
subject to, and issued under, options granted pursuant to the Plan shall not
exceed 15% of issued and outstanding shares; provided, however, that whatever
number of shares that remain reserved for issuance pursuant to the Plan at the
time of any stock split, stock dividend, or other change in the Company's
capitalization shall be appropriately and proportionately adjusted in accordance
with paragraph 6(g) hereof to reflect such stock split, stock dividend, or other
change in capitalization. Any Stock issued upon exercise of options granted
under the Plan may be shares of Stock held by the Company in its treasury. In
the event that any outstanding option under the Plan expires, is terminated, or
(with the consent of the Optionee) is canceled, those shares of Stock allocable
to the unused portion of such option may thereafter be subject to new options
granted pursuant to the Plan.
3. Administration. The Plan shall be administered by the Board of Directors
of the Company (the "Board"). The Board shall have authority to make all
determinations that in the judgment of the Board are necessary or desirable for
interpretation of the Plan, including but not limited to the authority to
construe and interpret the Plan; to establish, amend or rescind appropriate
rules relating to the Plan; to select participants in the Plan; to determine the
number of shares of Stock subject to each option, the date on which each option
is to be granted and the provisions of each agreement covering the options; and
to take any other steps deemed necessary or advisable to administer the Plan.
All actions by the Board under the provisions of this Section shall be
conclusive for all purposes.
<PAGE>
4. Eligible Employees. The persons who shall be eligible to be granted
options under the Plan shall be such employees of the Company and its
subsidiaries as the Board shall select in the Board's sole discretion
("Optionees").
5. Effective Date of Plan. The Plan shall be effective upon adoption of the
Plan by the Board and the shareholders of the Company as of the April 24, 1997
effective date specified above. Any options granted under the Plan prior to the
date of approval by said shareholders shall be void if such approval is not
obtained.
6. Terms and Conditions of Options. Each option granted pursuant to the
Plan shall be evidenced by a written option agreement (the "Option Agreement")
between an Optionee and the Company in such form as the Board shall from time to
time approve. The Option Agreement shall contain such terms and conditions as
the Board shall deem appropriate, including, but not limited to, the terms and
conditions set forth below:
(a) Number of Shares. The Option Agreement shall set forth the number
of shares of Stock subject to the option or options granted to the Optionee
pursuant to the Plan.
(b) No Obligation to Exercise. The Option Agreement shall provide that
there is no obligation on the Optionee to exercise any option.
(c) Option Price. The Option Agreement shall set forth the option
price per share of Stock for each option as determined by the Board.
(d) Period of Exercise. The Option Agreement shall set forth the
period for exercise of each option.
(e) Medium and Time of Payment. The Option Agreement shall set forth
the method of payment required under each option, as well as the period
within which such payment must be made.
(f) Exercise of Options. The Option Agreement shall provide for (and
may limit or restrict) the date or dates and the conditions on which the
options may be exercised. The Option Agreement may provide for exercise of
the options in installments on such terms and conditions as the Board may
determine.
(g) Adjustment. The Option Agreement may contain such provisions as
the Board considers appropriate to adjust the number of shares of Stock
subject to an option in the event of a stock split, stock dividend, or
other change in the Company's capitalization. Such adjustments shall be
made by the Board, whose determination in that respect shall be final,
binding, and conclusive upon the Company and all Optionees. The grant of an
option pursuant to the Plan shall not affect the right or power of the
Company to make adjustments, reclassifications, reorganizations, or changes
of its capital
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<PAGE>
or business structure, or to merge, consolidate, dissolve, liquidate, or
sell or transfer all or any part of its business or assets.
(h) Put. The Option Agreement may, but shall not be required to,
provide for the right of the Optionee to cause the Company to repurchase at
a price determined under the Option Agreement all shares of Stock purchased
by the Optionee under the Plan at any time after the termination of such
Optionee's employment with the Company or its subsidiaries for any reason.
(i) Call. The Option Agreement may, but shall not be required to,
provide for the Company's right to repurchase at a price determined under
the Option Agreement some or all of the shares of Stock purchased by an
Optionee under the Plan upon specified events or circumstances.
(j) Transferability. The Option Agreement shal1 specify whether or not
and to the extent to which each option and the shares of Stock issued
pursuant to the exercise of each option shall be transferable.
7. Rights as a Shareholder. An Optionee shall have no rights as a
shareholder with respect to any shares of Stock subject to such option until the
date of the issuance of a stock certificate to such Optionee for such shares of
Stock
8. Modification, Extension and Renewal of Options. Subject to the terms and
conditions and within the limitations of the Plan, the Board may modify, extend
or renew outstanding options granted under this Plan, or accept the surrender of
outstanding options and authorize the granting of new options in substitution
therefor. Notwithstanding the foregoing, however, no modification of an option
shall, without the consent of the Optionee, alter or impair any rights or
obligations under any option theretofore granted to the Optionee under the Plan.
9. Amendment, Suspension, or Termination of Plan. The Board may, with
respect to any shares of Stock not subject to options at such time, suspend,
terminate, revise or amend the Plan in any respect for any purpose which it may
deem advisable; provided, however, that, except as provided in paragraph 6(g)
hereof, the Board shall not, without the approval of the shareholders of the
Company, increase the aggregate number of shares of Stock subject to the Plan,
or change the designation of the class of employees eligible for participation
in the Plan.
10. Application of Funds. The proceeds received by the Company from the
sale of shares of Stock pursuant to options granted under the Plan shall be used
for general corporate purposes.
11. Name of Plan. The Plan shall be known as the Sunderland Industrial
Holdings Corporation 1997 Key Employee Nonqualified Stock Option Plan.
12. Unfunded Plan. This Plan shall be unfunded and the Company shall be
under no obligation to segregate or reserve any Stock, funds or other assets for
purposes relating to this Plan
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<PAGE>
and no Optionee shall have any rights whatsoever in or with respect to any
Stock, funds or assets of the Company.
13. Delaware Law to Apply. The place of administration of the Plan shall be
conclusively deemed to be within the State of Delaware, and the validity,
construction, interpretation, administration, and effect of the Plan and the
rights of any person having or claiming to have an interest therein or
thereunder shall be governed by and determined exclusively and solely in
accordance with the laws of the State of Delaware.
SUNDERLAND INDUSTRIAL HOLDINGS
CORPORATION
By: /s/ William L. Remley
-------------------------------------
Title:
-------------------------------------
Date:
-------------------------------------
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<PAGE>
Exhibit 10.12
SUNDERLAND INDUSTRIAL HOLDINGS CORPORATION
Nonqualified Stock Option Agreement
This Nonqualified Stock Option Agreement (the "Agreement") is entered into
as of April 24, 1997 ("Grant Date"), between SUNDERLAND INDUSTRIAL HOLDINGS
CORPORATION, a Delaware corporation (the "Company"), and JOHN R. WEEKS, an
executive employee of the Company's indirect subsidiary, Precise Technology,
Inc. (the "Optionee").
1. Grant of Options. Pursuant to the Company's 1997 Key Employee
Nonqualified Stock Option Plan, a copy of which is attached hereto (the "Plan"),
and authorization by the Board of Directors of the Company ("Board"), the
Company hereby grants to the Optionee (i) an option (the "First Option") to
purchase 1,200 shares of the Company's common stock, par value $.01 per share
("Stock"); and (ii) an option (the "Second Option") to purchase 225 shares of
Stock, at the prices and on such other terms and conditions as are hereinafter
provided. Such options to purchase Stock shall hereinafter be collectively
referred to as the "Options." The Options shall not constitute an "incentive
stock option" as that term is used in Section 422 of the Internal Revenue Code
of 1986, as amended ("Code"). The Optionee agrees that as holder of the Options
such Optionee shall have no rights of or as a shareholder or otherwise in
respect of any of the shares of Stock as to which the Options shall not have
effectively been exercised as herein provided.
2. Option Price. The Options shall be exercisable at a price of $1,500.00
per share of Stock.
3. Exercise Period.
A. Except as provided in Paragraph 13, the First Option may be exercised by
the Optionee, in whole or in part, prior to the earlier of (i) the termination
of the Optionee's employment with the Company or any of its subsidiaries for any
reason, or (ii) January 31, 2005, in accordance with the following schedule:
40% commencing on the Grant Date
60% commencing April 1, 1998
80% commencing April 1, 1999
100% commencing April l, 2000
B. Except as provided in Paragraph 13, the Second Option may be exercised
by the Optionee, in whole or in part, prior to the earlier of (i) the
termination of the Optionee's employment with the Company or any of its
subsidiaries for any reason, or (ii) January 31, 2005, as follows:
<PAGE>
25% of the Second Option shall become exercisable 90 days after the Board's
determination of the "EBITDA" (i.e., earnings before interest, taxes,
depreciation and amortization as conclusively determined by the Board in
its sole discretion) of the Company for the year ended December 31, 1997 if
such EBITDA shall exceed $16.4MM.
25% of the Second Option shall become exercisable 90 days after the Board's
determination of the EBITDA of the Company for the year ended December 31,
1998 if such EBITDA shall exceed the "1998 Target."
25% of the Second Option shall become exercisable 90 days after the Board's
determination of the EBITDA of the Company for the year ended December 31,
1999 if such EBITDA shall exceed the "1999 Target."
25% of the Second Option shall become exercisable 90 days after the Board's
determination of the EBITDA of the Company for the year ended December 31,
2000 if such EBITDA shall exceed the "2000 Target."
In each year, if any, in which the EBITDA requirements, as set forth above,
shall not have been met, twenty-five percent (25%) of the Second Option shall be
immediately canceled and of no further force and effect. The 1998, 1999, and
2000 Targets shall be determined by the Board in its reasonable business
discretion on or before April 1 of each respective year.
4. Exercise of the Option. The Options shall be exercised by delivery to
the Company of a written statement in the form attached hereto entitled
"Nonqualified Stock Option Exercise Form." At the time of exercise of the
Options by such delivery, the Optionee shall pay such amount as required under
Paragraph 5 herein together with an amount in cash equal to the amount of all
applicable withholding taxes (or, in the Board's sole discretion, a withholding
authorization acceptable to the Board). Upon receipt of such payment for the
Stock being purchased and compliance by the Optionee with the terms and
conditions hereunder, the Company shall cause certificates for such Stock to be
delivered to the Optionee within ten (10) business days after the Company's
receipt of such payment.
5. Payment of Option Price.
A. At the time of exercise of the Options, the Optionee shall pay to the
Company either: (i) the full Option Price for the Stock being purchased in cash,
or, (ii) with the consent of the Company in the sole discretion of the Board, a
minimum of ten percent (10%) of the Option Price for the Stock being purchased
in cash together with delivery of a promissory note and
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<PAGE>
pledge of the Optionee's Stock in forms acceptable to the Board, in the Board's
sole discretion, providing for the payment of the balance of the Option Price.
B. Notwithstanding the foregoing, Optionee may elect to exercise the
Options, in whole or in part, to the extent the Options are then exercisable, by
receiving shares of Stock equal to the value (as herein determined) of the
portion of such Options then being exercised after deduction of the exercise
price, in which event the Company shall issue to Optionee the number of shares
of stock determined by using the following formula:
X = Y (A-B) x (100% - C)
A
where: X = The number of shares of Stock to be issued
Paragraph 5.
Y = The number of shares of Stock that would
otherwise be issued upon such exercise.
A = The Fair Market Value (as hereinafter
defined) of one share of Stock.
B = The exercise price of the Options specified
in Paragraph 2.
C = Applicable income tax withholding rate.
Fair Market Value Defined. As used in this Agreement, "Fair Market Value"
shall mean (i) if the Stock is publicly traded, the average closing market
price (or if no shares of Stock are traded on any date within such period,
the average of the closing bid and asked price on such date) for the twenty
business days immediately prior to the date on which such value is to be
determined, or (ii) if the Stock is not publicly traded, the fair market
value, on the applicable date, of the shares of Stock then being valued as
determined in good faith by the Board of Directors.
6. Compliance With Securities Laws. The exercise of the Options and the
issuance of Stock pursuant thereto shall be contingent upon either the prior
registration of the Stock under the Securities Act of 1933, as amended (the
"Securities Act") and such federal and state laws, rules, and regulations as may
be applicable or promulgated thereunder, or a determination by the Company that
the issuance of such Stock will be a transaction exempt from such registration.
The Company anticipates that shares of Stock, when and if issued to the
Optionee, will be "restricted securities" as that term is defined in Rule 144
under the Securities Act and, accordingly, such shares of Stock must be held
indefinitely unless they are subsequently registered under the Securities Act or
an exemption from registration is available. The Optionee understands and agrees
that the Company is not under any obligation to register shares of Stock or to
comply with Regulation A or any other exemption under the Securities Act. As a
condition to the grant and/or
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<PAGE>
exercise of the Options, the Optionee agrees to execute one or more
undertakings, in the form prescribed by the Board, that the Stock is being
acquired for investment only and without any present intention of resale or
other distribution, or that the Stock will not be offered for sale or other
distribution otherwise and pursuant to such condition or conditions as the Board
approves. The Company shall have the right to place upon any certificate or
certificates evidencing shares of Stock any such legends as the Board may -3-
prescribe, including legends providing that the shares are subject to
registration requirements under the Securities Act and state securities laws and
that the shares are subject to the terms of this Agreement and the Plan.
7. Non-transferability and Termination of Options. Except as otherwise
provided in Paragraph 8, the Options shall not be transferable or assignable
and, during the Optionee's lifetime, shall be exercisable solely by the
Optionee. Except as otherwise provided in Paragraph 8, the Options shall
terminate upon termination of the Optionee's employment with the Company or its
subsidiaries for any reason or any attempted sale, transfer or assignment of any
such Options, whether voluntarily or involuntarily. A transfer of employment
between and among the Company and its subsidiaries shall be considered as
continuing employment and shall not be a termination of employment for purposes
of this Agreement. In addition, temporary interruptions in employment caused by
sickness or other approved leave of absence shall not constitute termination of
employment for purposes of this Agreement.
8. Retirement, Disability of Optionee or Death. If the Optionee retires on
or after the attainment of age 65, becomes permanently and totally disabled
within the meaning of Section 22(e)(3) of the Code or dies while in the employ
of the Company or one of its subsidiaries, the Options may be exercised during
the time period from the date of the Optionee's retirement, permanent and total
disability, or death until the expiration of one year after the date of the
Optionee's retirement, permanent and total disability, or death by the Optionee
or by the deceased Optionee's personal representative, as applicable, or by any
person who acquired the Options by bequest or inheritance as a result of the
death of the Optionee, subject to the terms and conditions set forth herein.
9. Call. At any time after a "Call Event" (as hereafter defined) the
Company shall have the irrevocable right, but not the obligation, at its sole
discretion to repurchase some or all of the Stock Optionee purchased under the
Plan and this Agreement. The purchase price in connection with a Call Event
defined in paragraphs (1) and (2) below shall be the Fair Market Value per share
and the purchase price in connection with a Call Event defined in paragraphs (3)
through (8) below shall be seventy-five percent (75%) of the Fair Market Value
per share. Such purchase price shall be payable in the discretion of the Board
either (i) in cash within ninety (90) days of the date of purchase, or (ii) by
the Company's delivery of a promissory note providing for equal annual
installments of principal payments over a period of up to five (5) years with
interest on the unpaid balance at a rate determined by the Board in its sole
discretion; provided, however, that in the event any life insurance on
Optionee's life is obtained by the Company pursuant to paragraph l5.c., below,
and as a result of Optionee's death, proceeds of such life insurance are paid to
the Company, the Company shall use such proceeds (up to the purchase price) as
and for a cash payment hereunder, with the balance of the purchase price, if
any, payable in the discretion of the
-4-
<PAGE>
Board as specified herein. As used herein, the term "Call Event" shall mean any
one or more of the following:
(1) The termination of the Optionee's employment with the Company and its
subsidiaries for any reason;
(2) The proposed or attempted voluntary sale, assignment, transfer,
conveyance or other disposition, mortgage, pledge, grant of security
interest in or other encumbrance of, any or all shares of Stock by the
Optionee;
(3) The Optionee making an assignment for the benefit of creditors;
(4) The Optionee instituting, or having instituted against him, any
bankruptcy, insolvency, reorganization, arrangement, debt adjustment,
liquidation or receivership proceedings in which he is alleged to be
insolvent or unable to pay his debts as they mature, and the Optionee
shall consent thereto or admit in writing the material allegations of
the petitions filed in said proceedings, or said proceedings shall
remain undismissed after ninety (90) days;
(5) The attachment of the Optionee's shares of Stock for any reason and
such attachment remains undismissed after ninety (90) days;
(6) The rendering of a final judgment against the Optionee in any legal or
equitable proceeding which (i) purports to or attempts to sell,
assign, transfer, convey or otherwise dispose of, mortgage, pledge,
grant a security interest in or otherwise encumber, any or all shares
of Stock or (ii) otherwise affects any of the foregoing;
(7) The institution of any execution process against the Optionee's shares
of Stock; or
(8) The existence of any other situation or legal proceeding involving the
Optionee such that the Optionee's shares of Stock may be involuntarily
sold, transferred, assigned, or otherwise disposed of.
In the event the Company undertakes an initial public offering or sells all
or substantially all of its stock or assets within the six (6) month period
following such purchase, the Company shall pay to the Optionee (a) in the case
of a purchase in connection with a Call Event defined in paragraphs (1) or (2),
above, the difference between the purchase price and the Fair Market Value of
the Stock on the date of such transaction and (b) in the case of a purchase in
connection with a Call Event defined in paragraphs (3) through (8) above,
seventy-five percent
-5-
<PAGE>
(75%) of the difference between the purchase price and the Fair Market Value of
the Stock on the date of such transaction.
Notwithstanding the provisions of this Agreement to the contrary, in the
event the Optionee proposes to dispose of any or all of his shares of Stock
acquired as a result of the Optionee's exercise of the Options (the "Offered
Shares"), pursuant to a bona fide offer therefor from a third party (the
"Purchase Offer"), the Optionee shall give written notice to the Company (the
"Offer Notice"), stating that he has received the Purchase Offer, the terms
thereof (the "Purchase Offer Terms"), and the identity of the third party who
made the Purchase Offer. The Company shall have the right to purchase the
Offered Shares by delivering to the Optionee a written notice of its intention
to do so (a "Purchase Notice") within forty-five (45) days of having received
the Offer Notice. In such Purchase Notice, the Company shall advise the Optionee
as to whether it elects to purchase the shares of Stock on the Purchase Offer
Terms or for an amount equal to the Fair Market Value of such shares of Stock
and the Optionee shall sell such shares of Stock to the Company for such
consideration within two (2) days of the Optionee's receipt of such Purchase
Notice, with payment by the Company of such purchase price to be as specified in
the first paragraph of this Paragraph 9.
10. Adjustment for Stock Dividend, Stock Split or Capital Contribution. In
the event that a stock dividend is hereafter paid on outstanding Stock, or in
the event that the number of outstanding shares of Stock is hereafter increased
as a result of a stock split, and the Option is then unexercised, the number of
shares of Stock subject to the Option shall thereupon be increased by that
number of shares of Stock which would have been distributed with respect to the
Stock subject to the Option if the Stock subject to the Option had been
outstanding at the time of the dividend or stock split and the Option price per
share shall be adjusted to reflect such increased number of shares of Stock
subject to the Option. If any shareholder of the Company or any other person
should make a contribution to the capital of the Company without receiving any
securities of the Company in exchange therefor, then, and in such event, the
Option price per share shall be increased by an amount which is equal to the
amount of such contribution to the capital of the Company divided by the number
of issued and outstanding shares of common stock of the Company at the time of
such contribution.
11. Additional Adjustments. In the event that there is any change in the
number of outstanding shares of Stock (other than issuance of Stock for
consideration approved by the Board) for which an adjustment is not provided by
Paragraph 10 of this Agreement, and the Option is then unexercised, the Board
may, in its sole discretion, require an adjustment in the number or kind of
shares of Stock subject to the Option and the option price and such adjustment
shall be binding and effective for all purposes hereof.
12. Elimination of Fractional Shares. Any addition or adjustment provided
for in Paragraphs 10 and 11 hereof may be limited to the extent necessary to
prevent fractions of shares of Stock from becoming available under the Option.
-6-
<PAGE>
13. Termination Upon Reorganization or Merger. In the event that
outstanding shares of Stock are hereafter changed into or exchanged for a
different number or kind of shares of stock or securities of another corporation
or corporations, whether as a result of a reorganization, recapitalization,
reclassification, merger, consolidation or otherwise, or in the event all or
substantially all of the Stock or assets of the Company are sold to a third
party (any such event being a "Change in Control"), and any portion of the First
Option is not yet exercisable, then all of the First Option shall immediately
become exercisable and the Company shall give at least ten (10) business days'
prior notice of such Change in Control to the Optionee. The Optionee shall have
ten (10) business days from the date of receipt of said notice to exercise the
First Option. In the event any portion of the First Option is not exercised
within the above-referenced ten (10) day period, such portion of the First
Option shall automatically be canceled. In the event of a Change in Control,
then the Optionee shall have ten (10) business days from receipt of the notice
provided above to exercise that portion of the Second Option which is already
exercisable and that portion of the Second Option which is not yet exercisable
shall automatically be canceled. In the event that any portion of the Second
Option so exercisable is not exercised within the above-referenced ten (10) day
period, such portion of the Second Option shall also automatically be canceled.
Upon cancellation of all of the Options, this Agreement shall terminate.
14. Optionee Bound by the Plan. The Optionee hereby agrees to be bound by
all applicable provisions of the Plan. If any of the terms and provisions of
this Agreement are inconsistent or in conflict with the terms and provisions of
the Plan, the Plan shall supersede and prevail over such inconsistent provisions
hereof. The Board shall have authority, subject to the express provisions of the
Plan and this Agreement, to establish, amend, and rescind rules and regulations
relating to the Plan, and to make all other determinations in the judgment of
the Board necessary or desirable for the administration of the Plan. The Board
may correct any defect or supply any omission or reconcile any inconsistency in
the Plan or in this Agreement in the manner and to the extent it shall deem
expedient to carry the Plan into effect and it shall be the sole and final judge
of such expediency. All actions by the Board under the provisions of this
Paragraph 14 shall be conclusive for all purposes.
15. Miscellaneous.
a. No Shareholder Rights. The Optionee shall not, by virtue of holding
the Option, be entitled to any rights of a shareholder of the Company or
any of its subsidiaries.
b. Lock-Up. The Optionee agrees that in connection with an initial
public offering of the Stock he will, if required by the Board, agree to
such restrictions on the resale of his Stock as shall be agreed to by other
members of management in connection therewith.
c. Life Insurance. The Optionee understands that the Company may, but
shall not be required to, obtain a life insurance policy on Optionee's life
in order to enable the Company to comply with its obligations under the
Agreement and Optionee hereby agrees to cooperate with the Company in
obtaining any such insurance including submitting applications and
submitting to physical examinations in connection therewith.
-7-
<PAGE>
d. Continued Employment. Nothing herein shall be deemed to create any
employment agreement or guaranty of continued employment or limit in any
way the Company's or any subsidiary's right to terminate the Optionee's
employment at any time.
e. Legend. The certificates for the shares of Stock issued pursuant to
exercise of the Options shall bear the following legend:
The shares represented by this certificate have not been registered
under the Securities Act of 1933, as amended, or under any state
securities laws, and may not be sold or otherwise disposed of until
the sale shall have been registered under said Act and any applicable
state securities laws, or until the Corporation shall have received an
opinion of counsel satisfactory to it that such shares may be legally
sold or otherwise transferred without such registration. The shares
represented by this certificate have been issued pursuant to the
exercise of an option to purchase such shares and are subject to
certain restrictions on transfer contained in the Corporation's 1997
Key Employee Nonqualified Stock Option Plan and a Nonqualified Stock
Option Agreement entered into pursuant to such Plan.
f. Entire Agreement. This Agreement, together with the Plan,
constitutes the entire agreement of the Company and its subsidiaries and
the Optionee regarding the subject matter of this Agreement and the Plan;
and all prior or contemporaneous agreements, understandings,
representations and statements, written or oral, are hereby merged herein.
g. Binding Effect. This Agreement shall be binding upon the parties
hereto, their successors, heirs and permitted assigns.
16. Headings. The headings of the sections of this Agreement are inserted
for convenience only and shall not be deemed to be part hereof.
17. Delaware Law to Apply. The place of administration of the Plan and this
Agreement shall be conclusively deemed to be within the State of Delaware, and
the validity, construction, interpretation, administration, and effect of the
Plan and this Agreement and the rights of any person having or claiming to have
an interest therein or thereunder shall be governed by and determined
exclusively and solely in accordance with the laws of the State of Delaware.
18. Counterparts. This Agreement may be executed in multiple counterparts;
each such counterpart hereof shall be deemed to be an original instrument, but
all such counterparts together shall constitute but one agreement.
-8-
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed.
OPTIONEE SUNDERLAND INDUSTRIAL HOLDINGS
CORPORATION
/s/ John R. Weeks /s/William L. Remley
- ------------------------------- ------------------------------
JOHN R. WEEKS Title:
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<PAGE>
SUNDERLAND INDUSTRIAL HOLDINGS CORPORATION
NONQUALIFIED STOCK OPINION EXERCISE FORM
The undersigned holder of an option to purchase shares of common stock, par
value $.01 per share, of Sunderland Industrial Holdings Corporation (the
"Company") under a Nonqualified Stock Option Agreement with the Company dated
hereby exercises his [First/Second] Option to purchase shares of such common
stock of the Company at the option price of $______ per share in accordance with
the terms and conditions of such Nonqualified Stock Option Agreement.
- --------------------------------------- -------------------------------------
Date of Exercise Signature of Person
Exercising Option
Please type or print legibly your name as you want it to appear on your
stock certificate, your address and your social security number in the space
provided below.
Name:___________________________________________________________________________
Address:________________________________________________________________________
(Street)
________________________________________________________________________
(City) (State) (Zip Code)
Social Security Number:
-10-
<PAGE>
SUNDERLAND INDUSTRIAL HOLDINGS CORPORATION
Nonqualified Stock Option Agreement
This Nonqualified Stock Option Agreement (the "Agreement") is entered into
as of April 24, 1997 ("Grant Date"), between SUNDERLAND INDUSTRIAL HOLDINGS
CORPORATION, a Delaware corporation (the "Company"), and MICHAEL M. FARRELL, an
executive employee of the Company's indirect subsidiary, Precise Technology,
Inc. (the "Optionee").
1. Grant of Options. Pursuant to the Company's 1997 Key Employee
Nonqualified Stock Option Plan, a copy of which is attached hereto (the "Plan"),
and authorization by the Board of Directors of the Company ("Board"), the
Company hereby grants to the Optionee (i) an option (the "First Option") to
purchase 400 shares of the Company's common stock, par value $.01 per share
("Stock"); and (ii) an option (the "Second Option") to purchase 75 shares of
Stock, at the prices and on such other terms and conditions as are hereinafter
provided. Such options to purchase Stock shall hereinafter be collectively
referred to as the "Options." The Options shall not constitute an "incentive
stock option" as that term is used in Section 422 of the Internal Revenue Code
of 1986, as amended ("Code"). The Optionee agrees that as holder of the Options
such Optionee shall have no rights of or as a shareholder or otherwise in
respect of any of the shares of Stock as to which the Options shall not have
effectively been exercised as herein provided.
2. Option Price. The Options shall be exercisable at a price of $1,500.00
per share of Stock.
3. Exercise Period.
A. Except as provided in Paragraph 13, the First Option may be exercised by
the Optionee, in whole or in part, prior to the earlier of (i) the termination
of the Optionee's employment with the Company or any of its subsidiaries for any
reason, or (ii) January 31, 2005, in accordance with the following schedule:
40% commencing on the Grant Date
60% commencing April 1, 1998
80% commencing April 1, 1999
100% commencing April 1, 2000
B. Except as provided in Paragraph 13, the Second Option may be exercised
by the Optionee, in whole or in part, prior to the earlier of (i) the
termination of the Optionee's employment with the Company or any of its
subsidiaries for any reason, or (ii) January 31, 2005, as follows:
<PAGE>
25 % of the Second Option shall become exercisable 90 days
after the Board's determination of the "EBITDA" (i.e.,
earnings before interest, taxes, depreciation and
amortization as conclusively determined by the Board in its
sole discretion) of the Company for the year ended December
31, 1997 if such EBITDA shall exceed $16.4MM.
25% of the Second Option shall become exercisable 90 days
after the Board's determination of the EBITDA of the Company
for the year ended December 31, 1998 if such EBITDA shall
exceed the "1998 Target."
25% of the Second Option shall become exercisable 90 days
after the Board's determination of the EBITDA of the Company
for the year ended December 31, 1999 if such EBITDA shall
exceed the "1999 Target."
25% of the Second Option shall become exercisable 90 days
after the Board's determination of the EBITDA of the Company
for the year ended December 31,2000 if such EBITDA shall
exceed the "2000 Target."
In each year, if any, in which the EBITDA requirements, as set forth above,
shall not have been met, twenty-five percent (25%) of the Second Option shall be
immediately canceled and of no further force and effect. The 1998, 1999, and
2000 Targets shall be determined by the Board in its reasonable business
discretion on or before April l of each respective year.
4. Exercise of the Option. The Options shall be exercised by delivery to
the Company of a written statement in the form attached hereto entitled
"Nonqualified Stock Option Exercise Form." At the time of exercise of the
Options by such delivery, the Optionee shall pay such amount as required under
Paragraph 5 herein together with an amount in cash equal to the amount of all
applicable withholding taxes (or, in the Board's sole discretion, a withholding
authorization acceptable to the Board). Upon receipt of such payment for the
Stock being purchased and compliance by the Optionee with the terms and
conditions hereunder, the Company shall cause certificates for such Stock to be
delivered to the Optionee within ten (10) business days after the Company's
receipt of such payment.
5. Payment of Option Price.
A. At the time of exercise of the Options, the Optionee shall pay to the
Company either (i) the full Option Price for the Stock being purchased in cash,
or, (ii) with the consent of the Company in the sole discretion of the Board, a
minimum of ten percent (10%) of the Option Price for the Stock being purchased
in cash together with delivery of a promissory note and
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<PAGE>
pledge of the Optionee's Stock in forms acceptable to the Board, in the Board's
sole discretion, providing for the payment of the balance of the Option Price.
B. Notwithstanding the foregoing, Optionee may elect to exercise the
Options, in whole or in part, to the extent the Options are then exercisable, by
receiving shares of Stock equal to the value (as herein determined) of the
portion of such Options then being exercised after deduction of the exercise
price, in which event the Company shall issue to Optionee the number of shares
of stock determined by using the following formula:
X = Y (A-B) x (100% - C)
A
where: X = The number of shares of Stock to be issued to
Optionee under the provisions of this
Paragraph 5.
Y = The number of shares of Stock that would
otherwise be issued upon such exercise.
A = The Fair Market Value (as hereinafter
defined) of one share of Stock.
B = The exercise price of the Options specified
in Paragraph 2.
C = Applicable income tax withholding rate.
Fair Market Value Defined. As used in this Agreement, "Fair
Market Value" shall mean (i) if the Stock is publicly
traded, the average closing market price (or if no shares
of Stock are traded on any date within such period, the
average of the closing bid and asked price on such date)
for the twenty business days immediately prior to the date
on which such value is to be determined, or (ii) if the
Stock is not publicly traded, the fair market value, on the
applicable date, of the shares of Stock then being valued
as determined in good faith by the Board of Directors.
6. Compliance With Securities Laws. The exercise of the Options and the
issuance of Stock pursuant thereto shall be contingent upon either the prior
registration of the Stock under the Securities Act of 1933, as amended (the
"Securities Act") and such federal and state laws, rules, and regulations as may
be applicable or promulgated thereunder, or a determination by the Company that
the issuance of such Stock will be a transaction exempt from such registration.
The Company anticipates that shares of Stock, when and if issued to the
Optionee, will be "restricted securities" as that term is defined in Rule 144
under the Securities Act and, accordingly, such shares of Stock must be held
indefinitely unless they are subsequently registered under the Securities Act or
an exemption from registration is available. The Optionee understands and agrees
that the Company is not under any obligation to register shares of Stock or to
comply with Regulation A or any other exemption under the Securities Act. As a
condition to the grant and/or
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<PAGE>
exercise of the Options, the Optionee agrees to execute one or more
undertakings, in the form prescribed by the Board, that the Stock is being
acquired for investment only and without any present intention of resale or
other distribution, or that the Stock will not be offered for sale or other
distribution otherwise and pursuant to such condition or conditions as the Board
approves. The Company shall have the right to place upon any certificate or
certificates evidencing shares of Stock any such legends as the Board may
prescribe, including legends providing that the shares are subject to
registration requirements under the Securities Act and state securities laws and
that the shares are subject to the terms of this Agreement and the Plan.
7. Non-transferability and Termination of Options. Except as otherwise
provided in Paragraph 8, the Options shall not be transferable or assignable
and, during the Optionee's lifetime, shall be exercisable solely by the
Optionee. Except as otherwise provided in Paragraph 8, the Options shall
terminate upon termination of the Optionee's employment with the Company or its
subsidiaries for any reason or any attempted sale, transfer or assignment of any
such Options, whether voluntarily or involuntarily. A transfer of employment
between and among the Company and its subsidiaries shall be considered as
continuing employment and shall not be a termination of employment for purposes
of this Agreement. In addition, temporary interruptions in employment caused by
sickness or other approved leave of absence shall not constitute termination of
employment for purposes of this Agreement.
8. Retirement, Disability of Optionee or Death. If the Optionee retires on
or after the attainment of age 65, becomes permanently and totally disabled
within the meaning of Section 22(e)(3) of the Code or dies while in the employ
of the Company or one of its subsidiaries, the Options may be exercised during
the time period from the date of the Optionee's retirement, permanent and total
disability, or death until the expiration of one year after the date of the
Optionee's retirement, permanent and total disability, or death by the Optionee
or by the deceased Optionee's personal representative, as applicable, or by any
person who acquired the Options by bequest or inheritance as a result of the
death of the Optionee, subject to the terms and conditions set forth herein.
9. Call. At any time after a "Call Event" (as hereafter defined) the
Company shall have the irrevocable right, but not the obligation, at its sole
discretion to repurchase some or all of the Stock Optionee purchased under the
Plan and this Agreement. The purchase price in connection with a Call Event
defined in paragraphs (1) and (2) below shall be the Fair Market Value per share
and the purchase price in connection with a Call Event defined in paragraphs (3)
through (8) below shall be seventy-five percent (75%) of the Fair Market Value
per share. Such purchase price shall be payable in the discretion of the Board
either (i) in cash within ninety (90) days of the date of purchase, or (ii) by
the Company's delivery of a promissory note providing for equal annual
installments of principal payments over a period of up to five (5) years with
interest on the unpaid balance at a rate determined by the Board in its sole
discretion; provided, however, that in the event any life insurance on
Optionee's life is obtained by the Company pursuant to paragraph 15.c., below,
and as a result of Optionee's death, proceeds of such life insurance are paid to
the Company, the Company shall use such proceeds (up to the purchase price) as
and for a cash payment hereunder, with the balance of the purchase price, if
any, payable in the discretion of the
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<PAGE>
Board as specified herein. As used herein, the term "Call Event" shall mean any
one or more of the following:
(1) The termination of the Optionee's employment with the Company and its
subsidiaries for any reason;
(2) The proposed or attempted voluntary sale, assignment, transfer,
conveyance or other disposition, mortgage, pledge, grant of security
interest in or other encumbrance of, any or all shares of Stock by the
Optionee;
(3) The Optionee making an assignment for the benefit of creditors;
(4) The Optionee instituting, or having instituted against him, any
bankruptcy, insolvency, reorganization, arrangement, debt adjustment,
liquidation or receivership proceedings in which he is alleged to be
insolvent or unable to pay his debts as they mature, and the Optionee
shall consent thereto or admit in writing the material allegations of
the petitions filed in said proceedings, or said proceedings shall
remain undismissed after ninety (90) days;
(5) The attachment of the Optionee's shares of Stock for any reason and
such attachment remains undismissed after ninety (90) days;
(6) The rendering of a final judgment against the Optionee in any legal or
equitable proceeding which (i) purports to or attempts to sell,
assign, transfer, convey or otherwise dispose of, mortgage, pledge,
grant a security interest in or otherwise encumber, any or all shares
of Stock or (ii) otherwise effects any of the foregoing;
(7) The institution of any execution process against the Optionee's shares
of Stock; or
(8) The existence of any other situation or legal proceeding involving the
Optionee such that the Optionee's shares of Stock may be involuntarily
sold, transferred, assigned, or otherwise disposed of.
In the event the Company undertakes an initial public offering or sells all
or substantially all of its stock or assets within the six (6) month period
following such purchase, the Company shall pay to the Optionee (a) in the case
of a purchase in connection with a Call Event defined in paragraphs (1) or (2),
above, the difference between the purchase price and the Fair Market Value of
the Stock on the date of such transaction and (b) in the case of a purchase in
connection with a Call Event defined in paragraphs (3) through (8) above,
seventy-five percent
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<PAGE>
(75%) of the difference between the purchase price and the Fair Market Value of
the Stock on the date of such transaction.
Notwithstanding the provisions of this Agreement to the contrary, in the
event the Optionee proposes to dispose of any or all of his shares of Stock
acquired as a result of the Optionee's exercise of the Options (the "Offered
Shares"), pursuant to a bona fide offer therefor from a third party (the
"Purchase Offer"), the Optionee shall give written notice to the Company (the
"Offer Notice"), stating that he has received the Purchase Offer, the terms
thereof (the "Purchase Offer Terms"), and the identity of the third party who
made the Purchase Offer. The Company shall have the right to purchase the
Offered Shares by delivering to the Optionee a written notice of its intention
to do so (a "Purchase Notice") within forty-five (45) days of having received
the Offer Notice. In such Purchase Notice, the Company shall advise the Optionee
as to whether it elects to purchase the shares of Stock on the Purchase Offer
Terms or for an amount equal to the Fair Market Value of such shares of Stock
and the Optionee shall sell such shares of Stock to the Company for such
consideration within two (2) days of the Optionee's receipt of such Purchase
Notice, with payment by the Company of such purchase price to be as specified in
the first paragraph of this Paragraph 9.
10. Adjustment for Stock Dividend, or Stock Split or Capital Contribution.
In the event that a stock dividend is hereafter paid on outstanding Stock, or in
the event that the number of outstanding shares of Stock is hereafter increased
as a result of a stock split, and the Option is then unexercised, the number of
shares of Stock subject to the Option shall thereupon be increased by that
number of shares of Stock which would have been distributed with respect to the
Stock subject to the Option if the Stock subject to the Option had been
outstanding at the time of the dividend or stock split and the Option price per
share shall be adjusted to reflect such increased number of shares of Stock
subject to the Option. If any shareholder of the Company or any other person
should make a contribution to the capital of the Company without receiving any
securities of the Company in exchange therefor, then, and in such event, the
Option price per share shall be increased by an amount which is equal to the
amount of such contribution to the capital of the Company divided by the number
of issued and outstanding shares of common stock of the Company at the time of
such contribution.
11. Additional Adjustments. In the event that there is any change in the
number of outstanding shares of Stock (other than issuance of Stock for
consideration approved by the Board) for which an adjustment is not provided by
Paragraph 10 of this Agreement, and the Option is then unexercised, the Board
may, in its sole discretion, require an adjustment in the number or kind of
shares of Stock subject to the Option and the option price and such adjustment
shall be binding and effective for all purposes hereof.
12. Elimination of Fractional Shares. Any addition or adjustment provided
for in Paragraphs 10 and 11 hereof may be limited to the extent necessary to
prevent fractions of shares of Stock from becoming available under the Option.
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<PAGE>
13. Termination Upon Reorganization or Merger. In the event that
outstanding shares of Stock, are hereafter changed into or exchanged for a
different number or kind of shares of stock or securities of another corporation
or corporations, whether as a result of a reorganization, recapitalization,
reclassification, merger, consolidation or otherwise, or in the event all or
substantially all of the Stock or assets of the Company are sold to a third
party (any such event being a "Change in Control"), and any portion of the First
Option is not yet exercisable, then all of the First Option shall immediately
become exercisable and the Company shall give at least ten (l0) business days'
prior notice of such Change in Control to the Optionee. The Optionee shall have
ten (10) business days from the date of receipt of said notice to exercise the
First Option. In the event any portion of the First Option is not exercised
within the above-referenced ten (10) day period, such portion of the First
Option shall automatically be canceled. In the event of a Change in Control,
then the Optionee shall have ten (10) business days from receipt of the notice
provided above to exercise that portion of the Second Option which is already
exercisable and that portion of the Second Option which is not yet exercisable
shall automatically be canceled. In the event that any portion of the Second
Option so exercisable is not exercised within the above-referenced ten (10) day
period, such portion of the Second Option shall also automatically be canceled.
Upon cancellation of all of the Options, this Agreement shall terminate.
14. Optionee Bound by the Plan. The Optionee hereby agrees to be bound by
all applicable provisions of the Plan. If any of the terms and provisions of
this Agreement are inconsistent or in conflict with the terms and provisions of
the Plan, the Plan shall supersede and prevail over such inconsistent provisions
hereof. The Board shall have authority, subject to the express provisions of the
Plan and this Agreement, to establish, amend, and rescind rules and regulations
relating to the Plan, and to make all other determinations in the judgment of
the Board necessary or desirable for the administration of the Plan. The Board
may correct any defect or supply any omission or reconcile any inconsistency in
the Plan or in this Agreement in the manner and to the extent it shall deem
expedient to carry the Plan into effect and it shall be the sole and final judge
of such expediency. All actions by the Board under the provisions of this
Paragraph 14 shall be conclusive for all purposes.
15. Miscellaneous.
a. No Shareholder Rights. The Optionee shall not, by virtue of holding the
Option, be entitled to any rights of a shareholder of the Company or any of its
subsidiaries.
b. Lock-Up. The Optionee agrees that in connection with an initial public
offering of the Stock he will, if required by the Board, agree to such
restrictions on the resale of his Stock as shall be agreed to by other members
of management in connection therewith.
c. Life Insurance. The Optionee understands that the Company may, but shall
not be required to, obtain a life insurance policy on Optionee's life in order
to enable the Company to comply with its obligations under the Agreement and
Optionee hereby agrees to cooperate with the Company in obtaining any such
insurance including submitting applications and submitting to physical
examinations in connection therewith.
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<PAGE>
d. Continued Employment. Nothing herein shall be deemed to create any
employment agreement or guaranty of continued employment or limit in any way the
Company's or any subsidiary's right to terminate the Optionee's employment at
any time.
e. Legend. The certificates for the shares of Stock issued pursuant to
exercise of the Options shall bear the following legend:
The shares represented by this certificate have not been registered
under the Securities Act of 1933, as amended, or under any state
securities laws, and may not be sold or otherwise disposed of until
the sale shall have been registered under said Act and any applicable
state securities laws, or until the Corporation shall have received an
opinion of counsel satisfactory to it that such shares may be legally
sold or otherwise transferred without such registration. The shares
represented by this certificate have been issued pursuant to the
exercise of an option to purchase such shares and are subject to
certain restrictions on transfer contained in the Corporation's 1997
Key Employee Nonqualified Stock Option Plan and a Nonqualified Stock
Option Agreement entered into pursuant to such Plan.
f. Entire Agreement. This Agreement, together with the Plan,
constitutes the entire agreement of the Company and its subsidiaries
and the Optionee regarding the subject matter of this Agreement and
the Plan; and all prior or contemporaneous agreements, understandings,
representations and statements, written or oral, are hereby merged
herein.
g. Binding Effect. This Agreement shall be binding upon the
parties hereto, their successors, heirs and permitted assigns.
16. Headings. The headings of the sections of this Agreement are
inserted for convenience only and shall not be deemed to be part
hereof.
17. Delaware Law to Apply. The place of administration of the
Plan and this Agreement shall be conclusively deemed to be within the
State of Delaware, and the validity, construction, interpretation,
administration, and effect of the Plan and this Agreement and the
rights of any person having or claiming to have an interest therein or
thereunder shall be governed by and determined exclusively and solely
in accordance with the laws of the State of Delaware.
18. Counterparts. This Agreement may be executed in multiple
counterparts; each such counterpart hereof shall be deemed to be an
original instrument, but all such counterparts together shall
constitute but one agreement.
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<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be
duly executed.
OPTIONEE SUNDERLAND INDUSTRIAL HOLDINGS
CORPORATION
/s/ Michael M. Farrell /s/ William L. Remley
- ---------------------------------- -------------------------------------------
MICHAEL M. FARRELL Title:
-----------------------------------
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<PAGE>
SUNDERLAND INDUSTRIAL HOLDINGS CORPORATION
NONQUALIFIED STOCK OPTION EXERCISE FORM
The undersigned holder of an option to purchase shares of common
stock, par value $.01 per share, of Sunderland Industrial Holdings
Corporation (the "Company") under a Nonqualified Stock Option
Agreement with the Company dated ___________________ hereby exercises
his [First/Second] Option to purchase ________ shares of such common
stock of the Company at the option price of $ _______________ per
share in accordance with the terms and conditions of such Nonqualified
Stock Option Agreement.
- ---------------------------------- -------------------------------------
Date of Exercise Signature of Person
Exercising Option
Please type or print legibly your name as you want it to appear
on your stock certificate, your address and your social security
number in the space provided below.
Name: __________________________________________________________________________
Address:________________________________________________________________________
(Street)
________________________________________________________________________
(City) (State) (Zip Code)
Social Security Number:_________________________________________________________
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<PAGE>
Procter & Gamble
- --------------------------------------------------------------------------------
The Procter & Gamble Company
Sharon Woods Technical Center
11520 Reed Hartman Highway, Cincinnati, Ohio 45241-2422
MEMORANDUM OF AGREEMENT
Fabric Care Purchases
Sharon Woods Technical Center
11520 Reed Hartman Highway
Cincinnati, Ohio 45241
(1) Buyer: The Procter & Gamble Manufacturing Company
(2) Seller: Tredegar Molded Products Company
1100 Boulders Parkway
Richmond, Virginia 23225
(3) Commodity: The Fabric Care & Conditioners product ("FCC
Product") is Downy Liquid Fabric Conditioner Collars
and Cups. Specification numbers are included on
attachment titled "Specification Numbers."
The Automatic Downy Dispenser product parts ("ADD
Parts") are components of the Downy Liquid Dispensing
unit. Specification numbers are included on
attachment titled "Specification Numbers."
The Hard Surface Cleaners product ("HSC Product") is
Comet Powder Sifter Caps. Specification numbers are
included on attachment titled "Specification
Numbers."
"Products" are the FCC Products, ADD Parts, and HSC
Products.
(4) Quantity: 100% of Buyer's requirements, estimated at
[_____]* FCC Products per year, [_____]* ADD Parts
per year, and [_____]* HSC Parts per year, for the
period of this agreement.
(5) Quality:
(a) Products are to be equal to or superior to Buyer's applicable
general and individual specifications and other written quality
standards, including any subsequent additions or alterations agreeable
to Buyer and Seller. The quality throughout the Agreement Period shall
equal or surpass that of commercially available competitive products.
(b) Seller will work with Buyer to continuously improve the quality of
the products Seller provides to Buyer. Quality targets will include,
but will not be limited to, zero short shipments and zero contamination
of the Product. Further quality performance targets will be developed
jointly by Buyer and Seller to ensure superior products.
- ---------------
* Confidential portion omitted and filed separately with the Securities and
Exchange Commission.
<PAGE>
Page 2 of 8
(5) Quality (continued):
(c) Seller, at its own expense, will clean, inspect, and perform all
routine maintenance on all equipment and tooling required to
manufacture the Products on a regular basis, such as replacement of
leader pin bushings, leader pins, standard ejector pins, and heater
bands (if a hot runner system). Buyer will be responsible for
performing all other maintenance on the tools required to manufacture
the Products, including repair or replacement of components, provided
that Buyer may ask Seller to perform such maintenance at Buyers
expense.
(6) Period:
The contract will commence on July 1, 1995 and terminate on September
30, 1998.
(7) Price:
(a) Base Pricing
Products' base pricing will be as per Attachment 1. Seller's obligation
to price Products in accordance with Attachment 1 is contingent on
Buyer's annual purchases of the volume estimates set forth in Paragraph
4, plus or minus fifteen (15) percent. If Buyer's annual purchases of
any of the Products falls outside this range (noted on Table 1 below),
either Buyer or Seller has the option to open discussion of price
changes.
Table 1
Minimum Amount Maximum Amount
-------------- --------------
FCC Product [_____]* [_____]*
ADD Parts [_____]* [_____]*
HSC Parts [_____]* [_____]*
(b) (De)escalation Factors
The base price is based on Polypropylene ("PP") and High Density
Polyethylene ("HDPE") prices as of June 1, 1995. Seller has the right
to escalate and the obligation to de-escalate the price of the Products
based on actual changes in Seller's resin costs. Price changes on HDPE
and PP will be subject to the attached policy dated July 18, 1994 and
titled "Procter & Gamble Injection-Molding Resin Price Change Policy".
(De)escalation factors for Products will be as per Attachment 2.
- ---------------
* Confidential portion omitted and filed separately with the Securities and
Exchange Commission.
<PAGE>
Page 3 of 8
(7) Price (continued):
(c) Non-Material Price Increases
Both parties agree that non-material price increases (understood to be
all increases not related to resin, colorant, or other packaging
materials) will be negotiated annually (on September 30, 199X) with a
maximum of a [_____]* increase each year.
This provision is independent of any volume-related price change that
may occur under the provisions of Paragraph 7(a).
(8) Shipments:
From time to time as Buyer may request on specific purchase orders or
releases.
(9) Terms:
Seller agrees to invoice Buyer for Products and applicable freight
charges at the time of Products' shipment by Seller to Buyer or Buyer's
designee.
Invoice payment is due net thirty (30) days from Buyers receipt of
invoice.
(I0) Environmental Compliance:
Seller warrants that all goods comply in all respects with the
applicable requirements of the Canadian Environmental Protection Act,
the US Toxic Substance Control Act, including all Regulations under
said Acts and all other relevant legislation.
Seller warrants that all substances it provides to Buyer will
accurately correspond to Buyer's specification(s) and that it will
notify Buyer in advance of any proposed change in the substance(s)
specified and supplied hereunder which could alter or add to any of the
Chemical Abstract (CAS) number(s) for those substances which are listed
in the Raw Material Specification(s) cited herein. Any such changes
must be mutually agreed upon by Buyer and Seller prior to shipment to
Buyer.
Seller agrees to indemnify and hold harmless Buyer and its affiliates
from all damages and liability resulting from a breach of these
warranties by Seller.
- ---------------
* Confidential portion omitted and filed separately with the Securities and
Exchange Commission.
<PAGE>
Page 4 of 8
(11) Termination
Should Buyer by reason of package redesign, product reformulation,
process change or similar good faith commercial reason deem it
necessary to reduce or discontinue its usage of any item covered by
this Agreement, Buyer shall have the right to reduce or discontinue
Seller's shipments hereunder. Any such reduction or discontinuance will
be in the same proportion as applied by Buyer to other suppliers, if
any, supplying this material to Buyer, and provided further, that Buyer
has given Seller not less than thirty (30) days' notice of such
reduction or discontinuance, with the understanding that Buyer will
give Seller as much notice as is possible for the given circumstances,
and provided further that Buyer agrees to purchase from Seller
commercially reasonable quantities of its inventory (whether finished
goods or raw materials) designated for the manufacture of Products or
readied for shipment to Buyer that cannot be used elsewhere by Seller.
For safety or health-related reductions or discontinuances, Seller
agrees to discontinue production immediately upon receipt of written
notice and justification from Buyer.
(12) Releases
To enable Buyer to maintain inventory control, Products are to be
manufactured by Seller only upon receipt of specific authority,
including releases from the Procter & Gamble Lima, OH Plant ("Lima"),
Owens-Brockway - Findlay, OH Plant ("Owens"), or the Procter & Gamble -
St. Louis, MO Plant ("St. Louis"). Products are to be released and
shipped by Seller in accordance with the Lima's, Owens', or St. Louis'
instructions. Seller may not accrue storage charges for Buyer's account
unless specifically authorized to do so in writing by Buyer.
(13) Specification Changes:
(a) If at any time during the period of the Agreement, Buyer and Seller
are unable to agree on any portion of Buyer's specifications, and Buyer
can purchase material meeting said specifications from another
supplier(s), Buyer shall notify Seller and Seller shall have the
opportunity to meet said specifications. If Seller fails to do so
within thirty (30) days from said notification, with the understanding
that Buyer will give Seller as much notice as is possible for the given
circumstances, Buyer shall have the right to purchase elsewhere the
quantities required for consumption for the balance of the contract
period.
(b) If Buyer desires to make minor changes in the specifications of any
of the materials covered herein during the period of this Agreement, it
shall be Buyer's privilege to do so, and Seller shall have the right to
change prices accordingly, provided that any changes in price shall be
based only upon any increase or decrease in the cost of material and
labor involved in producing materials under the revised specifications
provided any changes do not materially affect Seller's production speed
or efficiency. If Seller is unable to produce the materials in
quantities required by Buyer, in accordance with the new specifications
established by Buyer, with thirty (30) days notice, and at a price
acceptable by both parties, Buyer shall have the option of purchasing
such materials from another source and terminating its obligations
under this Agreement for the item involved.
<PAGE>
Page 5 of 8
(14) Warranty:
(a) In the event of any failure or defect in Products produced
hereunder resulting from Seller's failure to comply with the terms of
this Agreement, including but not limited to Buyers specifications,
Seller agrees, if Buyer so requests, to rework and/or scrap any
defective product, or authorizes Buyer to do so, and Seller shall, at
Buyer's option, replace any defective Products or credit Buyer for
total cost thereof, including, to the extent undertaken by Buyer at
Sellers request, the cost of inspecting, sorting, reworking, and
scrapping. In addition, Seller shall be responsible for claims by third
parties against Buyer for loss or damage to the extent such loss or
damage is the result of Seller's failure to produce Products of
merchantable quality.
(b) By acceptance of this Agreement and in consideration thereof,
Seller warrants and agrees that it will defend any suit that may arise
against the Buyer or any subsidiary or affiliated company thereof for
alleged infringement of any patents relating to any Products, article
or articles furnished hereunder, and that the Seller will indemnify and
save harmless the Buyer and any subsidiary or affiliated company
thereof, against any loss. including damages, costs and expenses,
including attorneys' fees, which may be incurred by the assertion of
any patent rights by other persons. Buyer agrees to hold Seller
harmless with respect to liability for infringement of a design patent
by reason of making or furnishing to Buyer hereunder, any article or
articles the ornamental appearance of which was specified by Buyer and
not offered by Seller as an option.
(c) Seller warrants that Products will conform to the provisions of
Paragraph 5.
(d) Seller makes no other warranties, express or implied, regarding the
Products other than as expressly set forth in this Agreement.
(15) Trial Orders:
Buyer reserves the right to place trial orders outside of this
Agreement for any materials included herein if this becomes necessary
in the process of qualifying new suppliers. Such trial orders will be
limited in size and/or frequency so that the intent of Paragraph 4 is
not violated.
(16) Cost Savings:
Buyer and Seller agree to engage in cost savings projects to improve
and/or reduce costs of the Products. Buyer and Seller will negotiate
the sharing of net cost savings from such projects on a case by case
basis.
(17) Confidentiality:
Seller agrees to take all reasonable precautions to ensure the
confidentiality of Buyer's Products and/or confidential information
related to all materials necessary to make Buyer's Products. If this
confidentiality is breached, Buyer shall have the right to terminate
this Agreement immediately.
<PAGE>
Page 6 of 8
(18) Transferability:
This Agreement shall not be transferred or assigned by a party to any
third party without prior consent of Buyer. Buyer at its sole
discretion may terminate this Agreement without further obligation if
there is a change in controlling ownership of Seller.
(19) Robinson-Patman Act:
Seller warrants that the prices set forth in this Agreement are valid
under the provisions of the Robinson-Patman (Price Discrimination) Act
and all other pertinent laws, orders and regulations.
(20) Meet Or Release:
If at any time during the period of this Agreement Buyer can purchase
Products of like quality and like quantity at a price which will result
in a delivered cost to Buyer that is lower than the delivered cost of
the material purchased hereunder, Buyer may notify Seller of such a
delivered cost and Seller shall have an opportunity of pricing material
hereunder on such a basis as to result in the same delivered cost to
Buyer within forty-five (45) days of said notification. If Seller fails
to do so or cannot legally do so, Buyer may purchase from the supplier
of the lower delivered cost material, and any purchase so made shall be
held to apply on this Agreement, and the obligation of Buyer and Seller
shall be reduced accordingly. The spirit of this Paragraph is to
protect Buyer from being disadvantaged by manufacturing breakthroughs
in Seller's industry, If such breakthroughs would enable Buyer to
achieve superior value by purchasing any of the Products covered by
this agreement from another source, it will be Buyer's right to do so.
(21) Favored Nations:
If, during the life of this Agreement, the Seller sells any products or
articles substantially the same as those listed herein at prices,
including applicable freight equalization terms, lower than the prices
then effective under this Agreement, said lower price shall apply on
all goods thereafter shipped under this Agreement during the period of
sale at such lower price to others, provided Seller can legally extend
such lower price to Buyer.
(22) Freight:
On goods bought "delivered" or "F.O.B. destination," Seller should
prepay freight or other transportation charges. On goods bought "F.O.B.
point of origin" or 'F.O.B. Sellers Plant," on which Seller prepays
freight and invoices Buyer, invoice including transportation charges
must show weight of shipment, freight rate charged, and name of
carrier, or be accompanied by a copy of the prepaid freight bill: Buyer
may withhold payment of freight portion of Seller's invoice until date
that this condition has been fulfilled. The "non-recourse" clause an
the bill of lading covering the shipments must not be signed, and any
over-charges which may accrue will be for Seller's account.
<PAGE>
Page 7 of 8
(23) Force Majeure:
Fire, flood, strikes, lock-out, epidemic, accident, shortage of
customarily used transportation equipment (or suitable substitute), or
other causes beyond the reasonable control of the parties, which
prevent Seller from delivering or Buyer receiving and/or using the
Products covered by this Agreement, shall operate to reduce or suspend
deliveries during the period required to remove such cause. In the
event of reduced deliveries by Seller under the provisions of this
paragraph, Seller shall allocate its available supply of Products,
component raw materials, and related manufacturing facilities among
purchasers and Seller's divisions, departments, and affiliates on such
basis that Buyer's percentage reduction will not be greater than the
overall percentage reduction in total quantity of Products, component
raw materials, and related manufacturing facilities Seller has
available for supply. Any deliveries suspended under this paragraph
shall be canceled without liability, and the Agreement quantity shall
be reduced by the quantities so omitted.
In the event non-availability of raw materials causes Seller to reduce
shipments to Buyer, Seller agrees to give Buyer the option to provide
such raw materials to Seller at a price not to exceed Buyer's market
place. If Buyer provides such raw materials to Seller at such price,
Seller will increase deliveries of Products to Buyer by the amount
produced with the raw materials supplied by Buyer up to the quantity
specified in the Agreement.
(24) Compliance With Other Laws:
Whether this Agreement refers to manufactured items or to work, Seller
warrants and agrees that it has complied, and will comply, with (1)
applicable employment laws of the U.S., including without limitation
Social Security, unemployment compensation, unemployment insurance,
workers' compensation laws and the Fair Labor Standards Act as amended,
(Each invoice must bear the following certification: "Materials or work
covered by this invoice were produced in conformity with the Fair Labor
Standards Act as amended.") and (2) all other applicable U.S. laws,
codes, regulations, rules, and orders, and all other applicable
Canadian laws, codes, regulations, rules and orders to Seller's
knowledge. Seller agrees to indemnify Buyer and save Buyer harmless
from any damage to Buyer resulting from Seller's failure to comply with
the foregoing, and in the event of such failure Buyer may, in addition,
cancel this Agreement.
(25) Headings:
Paragraph headings or titles are intended for ease of reading and are
not intended to have any legal meaning.
<PAGE>
Page 8 of 8
(26) U.S. Government Contract:
Some of the material or services covered by this Agreement is to be
used on a contract with the Federal Government to which the provisions
of Section 202 of Executive Order 11246, Section 402 of The Vietnam Era
Veterans Readjustment Act of 1974 and Section 503 of The Rehabilitation
Act of 1973 apply, and consequently the provisions of Section 202,
Section 402 and 503 will become binding upon the Seller upon acceptance
of this Agreement, if this Agreement exceeds $10,000 or applies against
a contract exceeding $10,000 in one year with respect to Sections 202
and 402, and $2,500 with respect to Section 503. Regulations under the
Executive Order, The Vietnam Era Veteran's Readjustment Act and the
Rehabilitation Act may require Seller to develop an Affirmative Action
Compliance Program, to file an Employee Information Report EEO-1 or
other reports as prescribed, and to certify that its facilities are not
segregated on the basis of race, color, religion, or national origin.
(See 41.CFR 60.)
(27) Jurisdiction:
The parties hereto agree that all of the provisions of this contract
and any questions concerning the interpretations and enforcement shall
be governed by the internal laws of the state of Ohio, U.S.A.
The Procter & Gamble Manufacturing Company Tredegar Molded Products
BUYER SELLER
BY: /s/ J.M. Kelly BY /s/ David Reed
---------------------------------- -------------------------------
(Signature) (Signature)
J.M. Kelly David Reed
- ------------------------------------- ----------------------------------
TITLE: Purchasing Director TITLE: General Manager-Molded
Products Division
------------------------------- ----------------------------
DATE: 8/8/85 DATE: 8/4/95
------------------------------- ----------------------------
<PAGE>
Specification Numbers
Production Description Spec. Number
---------------------- ------------
FCC Products
3X Collar - Blue (World Color) 1862226
3X Cap - Pink (AF) 1862234
3X Cap - Yellow (SR) 1863034
3X Cap - Green (MS) 1863042
3X Cap - White (FR) 1863059
1 X Collar - Blue (AF) 1864248
1X Cap - Pink (AF) 1864192
ADD Products
Valve 1451616
Weight 1451608
Chain 1451624
Collar 1451632
HSC Product
Red Sifter Cap 1860071-2
<PAGE>
Procter & Gamble
July 18, 1994
PROCTER & GAMBLE INJECTION-MOLDING RESIN PRICE CHANGE POLICY
This document outlines Procter & Gamble's policy regarding resin-based price
changes for all resins used in the production of Procter & Gamble's
injection-molded products. This policy is in effect as of July, 1994 and applies
to all items not previously covered by a written price escalation/de-escalation
clause in a Memorandum of Agreement or purchase order.
BACKGROUND
Procter & Gamble is pursuing several objectives with this policy. Our company is
working very hard to manage and improve all aspects of product cost, so as to
deliver greater value to the consumer. Plastic resin across all packaging forms
is a huge cost category for our company and, specifically, it is a major cost
component for injection-molded parts. Historically, P&G has taken a "hands-off"
approach to the Purchase of resin, allowing our suppliers to purchase these
commodities directly on our behalf. However, in most of our commercial
arrangements, P&G has assumed the risk of resin market fluctuations by allowing
cent-for-cent direct price change pass-throughs from molders when increases or
decreases occurred in the market. Net, we have borne the impact of resin changes
with little involvement in, or verification of, the process.
As we work to better manage our costs, however, it has become clear to us that
resin is an area that deserves more attention. First, we intend to gain a better
understanding of resin attributes and markets, so that we can play a more
proactive role in developing technical and commercial synergy in this area
across our businesses. We obviously want to work with our key suppliers in this
effort. Second, we want to better understand how well our suppliers manage the
resin costs that go into the final price that we pay. We plan to keep track of
each supplier's resin-based price change history which P&G. Companies that
aggressively and professionally manage resin costs on our behalf will be better
positioned to grow their business with us in the future. Third. recent movements
in resin markets and the way that they have been implemented lead us to feel
that verification of the resin prices used in our products is a key step it we
are to better manage costs.
POLICY PROVISIONS
These objectives have led us to implement the following resin price change
policy:
1 ) All communication concerning resin-based price change requests - increases
or decreases should be directed to a single contact within P&G. For all
injection-molding resins, with the exception of HDPE, SAN, and ABS, that contact
will be Lynne Keister, Associate Director, Procter & Gamble Purchases. The
contact for HDPE changes will be Karen Eller, Associate Director, Procter &
Gamble Purchases, and the contact for SAN/ABS will be John Lown, Purchasing
Manager, P&G Cosmetics & Fragrances Purchases. These three contacts will be
responsible for communicating the fact that a supplier has made a price change
request to the pertinent buyers within P&G. If a supplier wishes, they may
communicate a requested change to the individual buyers at the same time that
the change is communicated to the resin contact person specified above, but the
single notification contact - and single contact for providing P&G's official
response - will be the three individuals previously identified. Addresses for
Ms. Eller, Ms. Keister and Mr. Lown are attached.
Once we have indicated official acceptance of a change, price change sheets for
individual parts should be sent to the appropriate buyer - you do not need to
send these via Ms. Eller, Ms. Keister or Mr. Lown.
<PAGE>
2 ) P&G will continue to assume the risk for resin market moves via direct price
change pass-through if a supplier so desires, as we have in the past. However,
we will be requesting verification of resin price changes that the supplier is
seeking to pass on to our company. We are defining verification as the
submission of copies of resin invoices to P&G that the molder has received from
its resin vendor "before" and "after" the resin price change. The set of
invoices should demonstrate the magnitude of the change and the effective date
to the molder of the change. There should be a set of invoices for each product
code on which a change is being requested.
Increases
- - P&G will accept any reasonable resin-based price increase that a supplier may
request in its entirety if the supplier provides us with a set of "before" and
"after" resin invoices that demonstrate the increase magnitude and timing that
the molder has accepted from its resin suppliers. These invoices should be
provided by resin product code and should be sent to Ms. Eller, Ms. Keister or
Mr. Lown, depending on the resin involved. If the invoices verify the request
that is being made, the increase will be effective 30 days from the date of
receipt of the invoices, to reflect standard customer notification timing.
Requests for increases from suppliers who verify can be made at anytime.
Suppliers that can work to keep costs flat or declining over time will hold
particular value for P&G.
- - Suppliers that decline to submit invoices verifying increase requests are
subject to the following. Increase requests may be made once a quarter and must
be submitted no later than the first day of the month preceding the start of the
calendar quarter, if they are to be considered for implementation the following
quarter. For example, an increase request must be received by September 1st for
the increase to become effective October 1st. It the September 1st deadline is
missed, the supplier would not have the opportunity to realize a resin-based
price increase until the following quarter or January 1st. Suppliers choosing
not to verify will be granted the average of the increase requests made by the
suppliers that verify for that quarter. The average will be calculated across
the number of vendors that sell us parts using the resin in question, to include
"zeros" for suppliers that have not requested an increase for that quarter. For
example, if there are ten suppliers selling P&G LDPE parts, the average would
include the verified requests for that quarter, including zeros for the
suppliers not requesting increases and the sum would be divided by ten to get
the average. The quarterly system is aimed at simplifying the execution and is
effective immediately.
- - Our long-term vision for this system is to ultimately eliminate the averaging
mechanism and offer suppliers two options: either quote on our business with
verified direct increase pass-throughs or submit quotations that do not call for
resin escalation over the life of the agreement ("flat" pricing proposals). We
expect to implement this vision in the second phase of our team's supply base
consolidation efforts, in 1-2 years.
To emphasize the point, no supplier will be disadvantaged if they use the
verification mechanism.
Decreases
- - P&G will accept all resin-based decreases - those resulting from broad market
moves and more narrow supplier negotiations - at any time. We will expect to
receive all market decreases that are reported by reliable industry trade
publications like Plastics News and ChemData and that are legal and in
compliance with the Robinson-Patman Act.
- - P&G will monitor market news as we do now, and when a decrease is reported, we
will notify molders of our read on the decrease in question, both in terms of
magnitude and timing (a hypothetical example - "we believe that prices decreased
$.01/lb. in August"). We would expect to receive the decrease per our read on
the market, unless a supplier informs us that they have not realized the
decrease either on the same timing or in the same magnitude as we have
<PAGE>
suggested. If the supplier can verify via "before" and "after" invoices that
there is, in fact, a different set of circumstances in their situation they
will, of course, be honored. If P&C's view of the market decrease cannot be
disproved, we would expect to receive the decrease per our notification.
Again, no supplier will be disadvantaged if they verify their individual
circumstances with invoices.
3) All resin price information disclosed via the invoice system will be
quarantined with the single point contact (Ms. Eller, Ms. Keister or Mr. Lown).
We will monitor each supplier's resin-based price change history and how
competitively suppliers purchase resin will be used as one factor in business
awards. However, no supplier's individual resin price will be shared within P&G.
Today, some suppliers choose to discuss their resin pricing with individual
buyers. Suppliers may continue that practice it they wish to but we would like
to have an idea of where this is happening so that we can maintain the integrity
of the confidentiality that we have promised in this situation.
To repeat, our goals are to work to more carefully manage our resin costs, to
develop a better understanding of resin market issues and to use resin
purchasing effectiveness as an element of value in future sourcing decisions. We
believe that this modification to our "pass-through" policy meets our objectives
and still affords the supplier every opportunity to pass the risk for resin
movements onto P&G, it they are verified.
L. D. Keister
for the P&G North American
Injection-Molded Parts Strategy Team
<PAGE>
RESIN CONTACTS
Mr. John R. Lown - SAN/ABS
Purchasing Manager
The Procter & Gamble Cosmetics & Fragrances Company
11050 York Road
Hunt Valley, Maryland 21030
Phone: (410) 527-5857
FAX: (410) 785-4661
Ms. Karen A. Eller - HDPE
Associate Director
The Procter & Gamble Company
1 Procter & Gamble Plaza
Cincinnati, Ohio 45202
Phone: (513) 945-9284
FAX: (513) 945-9547
Ms. Lynne D. Keister - for all other resins
Associate Director
The Procter & Gamble Company
Sharon Woods Technical Center
11520 Reed Hartman Highway
Cincinnati, Ohio 45241-2422
Phone: (513) 626-3520
FAX : (5l3) 626-4155
<PAGE>
ATTACHMENT 1
Base Pricing
Product Description Price (Per M)
Downy 3X Cup - Red
Spec. #1862234 [_____]*
Downy 3X Cup - Green
Spec. #1863042 [_____]*
Downy 3X Cup - Yellow
Spec. #1863034 [_____]*
Downy 3X Cup - white
Spec- #1863059 [_____]*
Downy 3X Collar - Blue
Spec. 11862226 [_____]*
Downy 1X Cup - Pink
Spec. 11864198 [_____]*
Spec. 0270081310.1 (Canadian) [_____]*
Downy 1X Collar - Blue
Spec. #1864206 [_____]*
Comet Powder Sifter Cap - Red
Spec. #1860071 [_____]*
- ---------------
* Confidential portion omitted and filed separately with the Securities and
Exchange Commission.
<PAGE>
ATTACHMENT 1 (continued)
Base Pricing
Downy Ball (ADD)
Annual Volume Below 5.5mm Units
Description Price (Molding only)
ADD Valve [_____]*
ADD Weight [_____]*
ADD Collar [_____]*
ADD Chain [_____]*
Assembly [_____]*
Building Lease [_____]*
Annual Volume Above 5.5mm Units
Description Price (Molding only)
ADD Assembly [_____]*
ADD Valve [_____]*
ADD Weight [_____]*
ADD Collar [_____]*
ADD chain [_____]*
Building Lease [_____]*
Freight - F.O.B. Seller's Plant
- ---------------
* Confidential portion omitted and filed separately with the Securities and
Exchange Commission.
<PAGE>
Attachment 2
Resin (De)Escalation Factors
Product Factor (per $.01/lb change)
Downy 1X Cup [_____]*
Downy 3X Cup [_____]*
Downy 1X Collar [_____]*
Downy 3X Collar [_____]*
ADD Valve [_____]*
ADD Weight [_____]*
ADD Collar [_____]*
ADD Chain [_____]*
Comet Sifter Cap [_____]*
- ---------------
* Confidential portion omitted and filed separately with the Securities and
Exchange Commission.
<PAGE>
EXHIBIT 12.1
PRECISE TECHNOLOGY, INC. AND SUBSIDIARIES
RATIO OF EARNINGS TO FIXED CHARGES
FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996 AND
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995, 1994, 1993 AND 1992
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Unaudited Three
Months ended Unaudited
Year ended December 31, March 31, Pro Forma
-------------------------------------------------------- ------------------ Year Ended
December 31
1992 1993 1994 1995 1996 1996 1997 1996
------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Earnings before fixed charges:
Net income (loss) $ 409 $ 421 $ 950 $1,275 $ 466 $ 287 $ 150 $ (423)
Provision for income taxes -- 66 574 941 1,265 245 304 578
------ ------ ------ ------ ------ ------ ------ ------
Income before income taxes 409 487 1,524 2,216 1,731 532 454 155
Interest expense 703 706 956 810 5,559 261 1,690 9,897
Interest portion of rental
expenses 75 88 124 103 304 76 84 304
Current period interest
amortization of interest
capitalized in prior periods -- -- -- 2 2 -- -- 2
------ ------ ------ ------ ------ ------ ------ ------
Earnings before fixed charges 1,187 1,281 2,604 3,131 7,596 869 2,228 10,358
------ ------ ------ ------ ------ ------ ------ ------
Fixed charges
Interest expense 703 706 956 810 5,559 261 1,690 9,897
Interest portion of rental
expenses 75 88 124 103 304 76 84 304
Interest capitalized during
the period -- -- 17 -- -- -- -- --
------ ------ ------ ------ ------ ------ ------ ------
Total fixed charges 778 794 1,097 913 5,863 337 1,774 10,201
Excess of earnings to fixed
charges $ 409 $ 487 $1,507 $2,218 $1,733 $ 532 $ 454 $ 157
===== ====== ====== ====== ====== ====== ====== ======
Ratio of Earnings to fixed
charges 1.5x 1.6x 2.4x 3.4x 1.3x 2.6x 1.3x 1.0x
====== ====== ====== ===== ====== ====== ====== =======
</TABLE>
<PAGE>
Exhibit 21.1
SUBSIDIARIES OF THE REGISTRANTS
Subsidiaries of Precise Technology, Inc.
Precise Technology of Delaware, Inc. (Delaware)
Precise Technology of Illinois, Inc. (Delaware)
Precise TMP, Inc. (Virginia)
-- Precise Polestar, Inc. (Virginia)
-- Massie Tool, Mold & Die, Inc. (Florida)
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" and to
the use of our report dated March 14, 1997 (except Note 16, as to which the date
is April 14, 1997) in the Registration Statement (Form S-4) and the related
Prospectus of Precise Technology, Inc. for the registration of $75,000,000 of
its Series B 11 1/8% Senior Subordinated Notes due 2007.
Ernst & Young LLP
Pittsburgh, Pennsylvania
July 22, 1997
<PAGE>
Exhibit 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We have issued our report dated February 10, 1995 accompanying the December 31,
1994 consolidated statements of income, stockholder's equity and cash flows of
Precise Technology, Inc. and subsidiaries contained in the Registration
Statement on form S-4 and Prospectus. We consent to the use of the
aforementioned report in the Registration Statement and Prospectus and to the
use of our name as it appears under the caption "Experts".
GRANT THORNTON LLP
Chicago, Illinois
July 21, 1997
<PAGE>
Exhibit 23.3
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in this registration statement on Form S-4 of
Precise Technology, Inc. of our report dated February 26, 1996 on our audits of
the consolidated financial statements of Tredegar Molded Products Company and
Subsidiaries as of December 31, 1995 and 1994 and for each of the two years in
the period ended December 31, 1995. We also consent to the references to our
firm under the caption "Experts."
Coopers & Lybrand L.L.P.
Richmond, Virginia
July 22, 1997
<PAGE>
Conformed Copy
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST
INDENTURE ACT OF 1939 OF A CORPORATION
DESIGNATED TO ACT AS TRUSTEE
-----------
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2)
-----------
Marine Midland Bank
(Exact name of trustee as specified in its charter)
New York 16-1057879
(Jurisdiction of incorporation (I.R.S. Employer
or organization if not a U.S. Identification No.)
national bank)
140 Broadway, New York, N.Y. 10005-1180
(212) 658-1000 (Zip Code)
(Address of principal executive offices)
Charles E. Bauer
Vice President
Marine Midland Bank
140 Broadway
New York, New York 10005-1180
Tel: (212) 658-1792
(Name, address and telephone number of agent for service)
PRECISE TECHNOLOGY, INC.
(Exact name of obligor as specified in its charter)
Delaware 25-1205268
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
501 Mosside Blvd.
North Versailles, Pennsylvania 15137-2553
(412) 823-2100 (Zip Code)
(Address of principal executive offices)
<PAGE>
Precise Technology of Delaware, Inc.
Precise Technology of Illinois, Inc.
Precise TMP, Inc.
Precise Polestar, Inc.
Massie Tool, Mold & Die, Inc.
(Exact name of registrants as specified in their respective charters)
Delaware 51-0351451
Delaware 36-4068725
Virginia 54-1253743
Virginia 54-1675114
Florida 54-1683716
Series B 11 1/8% Senior Subordinated Notes due
2007 Guarantees of Series B 11 1/8% Senior
Subordinated Notes due 2007
(Title of Indenture Securities)
<PAGE>
Item 1. General Information.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervisory authority to
which it is subject.
State of New York Banking Department.
Federal Deposit Insurance Corporation, Washington, D.C.
Board of Governors of the Federal Reserve System,
Washington, D.C.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
Item 2. Affiliations with Obligor.
If the obligor is an affiliate of the trustee, describe each
such affiliation.
None
<PAGE>
Item 16. List of Exhibits.
Exhibit
T1A(i) * - Copy of the Organization Certificate of
Marine Midland Bank.
T1A(ii) * - Certificate of the State of New York
Banking Department dated December 31,
1993 as to the authority of Marine Midland
Bank to commence business.
T1A(iii) - Not applicable.
T1A(iv) * - Copy of the existing By-Laws of Marine
Midland Bank as adopted on January 20,
1994.
T1A(v) - Not applicable.
T1A(vi) * - Consent of Marine Midland Bank required
by Section 321(b) of the Trust Indenture
Act of 1939.
T1A(vii) - Copy of the latest report of condition of
the trustee (March 31, 1997), published
pursuant to law or the requirement of its
supervisory or examining authority.
T1A(viii) - Not applicable.
T1A(ix) - Not applicable.
* Exhibits previously filed with the Securities and Exchange
Commission with Registration No. 33-53693 and incorporated
herein by reference thereto.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, the Trustee,
Marine Midland Bank, a banking corporation and trust company organized under the
laws of the State of New York, has duly caused this statement of eligibility to
be signed on its behalf by the undersigned, thereunto duly authorized, all in
the City of New York and State of New York on the 23rd day of July, 1997.
MARINE MIDLAND BANK
By: /s/Eileen M. Hughes
------------------------
Eileen M. Hughes
Assistant Vice President
<PAGE>
Exhibit T1A (vii)
Board of Governors of the Federal Reserve System
OMB Number: 7100-0036
Federal Deposit Insurance Corporation
OMB Number: 3064-0052
Office of the Comptroller of the Currency
OMB Number: 1557-0081
Federal Financial Institutions Examination Council Expires March 31, 1999
- --------------------------------------------------------------------------------
1
This financial information has not been reviewed, or confirmed
for accuracy or relevance, by the Federal Reserve System.
Please refer to page i, Table of Contents,
for the required disclosure of estimated
burden.
- --------------------------------------------------------------------------------
Consolidated Reports of Condition and Income for
A Bank With Domestic and Foreign Offices--FFIEC 031
(950630)
Report at the close of business March 31, 1997 ----------
(RCRI 9999)
This report is required by law; 12 U.S.C. ss.324 (State member
banks); 12 U.S.C. ss. 1817 (State nonmember banks); and 12
U.S.C. ss.161 (National banks).
This report form is to be filed by banks with branches and
consolidated subsidiaries in U.S. territories and possessions,
Edge or Agreement subsidiaries, foreign branches, consoli-
dated foreign subsidiaries, or International Banking Facilities.
- --------------------------------------------------------------------------------
NOTE: The Reports of Condition and Income must be signed by an authorized
officer and the Report of Condition must be attested to by not less than two
directors (trustees) for State nonmember banks and three directors for State
member and National Banks.
I, Gerald A. Ronning, Executive VP & Controller
--------------------------------------------
Name and Title of Officer Authorized to Sign Report
of the named bank do hereby declare that these Reports of Condition and Income
(including the supporting schedules) have been prepared in conformance with the
instructions issued by the appropriate Federal regulatory authority and are true
to the best of my knowledge and believe.
/s/ Gerald A. Ronning
- -----------------------------------------------
Signature of Officer Authorized to Sign Report
4/28/97
- -----------------------------------------------
Date of Signature
The Reports of Condition and Income are to be prepared in accordance with
Federal regulatory authority instructions. NOTE: These instructions may in some
cases differ from generally accepted accounting principles.
We, the undersigned directors (trustees), attest to the correctness of this
Report of Condition (including the supporting schedules) and declare that it has
been examined by us and to the best of our knowledge and belief has been
prepared in conformance with the instructions issued by the appropriate Federal
regulatory authority and is true and correct.
/s/ James H. Cleave
- -----------------------------------------------
Director (Trustee)
/s/ Bernard J. Kennedy
- -----------------------------------------------
Director (Trustee)
/s/ Malcom Burnett
- -----------------------------------------------
Director (Trustee)
- --------------------------------------------------------------------------------
For Banks Submitting Hard Copy Report Forms:
State Member Bank: Return the original and one copy to the appropriate Federal
Reserve District Bank.
State Nonmember Banks: Return the original only in the special return address
envelope provided. If express mail is used in lieu of the special return address
envelope, return the original only to the FDIC, c/o Quality Data Systems, 2127
Espey Court, Suite 204, Crofton, MD 21114.
National Banks: Return the original only in the special return address envelope
provided. If express mail is used in lieu of the special return address
envelope, return the original only to the FDIC, c/o Quality Data Systems, 2127
Espey Court, Suite 204, Crofton, MD 21114.
- --------------------------------------------------------------------------------
FDIC Certificate Number 0 0 5 8 9
-------------------
(RCRI 9030)
<PAGE>
NOTICE
This form is intended to assist institutions with state publication
requirements. It has not been approved by any state banking authorities. Refer
to your appropriate state banking authorities for your state publication
requirements.
REPORT OF CONDITION
Consolidating domestic and foreign subsidiaries of the
Marine Midland Bank of Buffalo
Name of Bank City
in the state of New York, at the close of business
March 31, 1997
ASSETS
Thousands
of dollars
Cash and balances due from depository institutions:
Noninterest-bearing balances
currency and coin .............................. $ 1,026,267
Interest-bearing balances ...................... 2,219,196
Held-to-maturity securities .................... 0
Available-for-sale securities .................. 3,728,393
Federal funds sold and securities purchased
under agreements to resell ..................... 1,830,419
Loans and lease financing receivables:
Loans and leases net of unearned
income ......................................... 21,110,911
LESS: Allowance for loan and lease
losses ......................................... 441,315
LESS: Allocated transfer risk reserve .......... 0
Loans and lease, net of unearned
income, allowance, and reserve ................. 20,669,596
Trading assets ................................. 1,005,199
Premises and fixed assets (including
capitalized leases) ............................ 217,027
Other real estate owned ........................... 18,586
Investments in unconsolidated
subsidiaries and associated companies ............. 0
Customers' liability to this bank on
acceptances outstanding ........................... 21,351
Intangible assets ................................. 495,502
Other assets ...................................... 709,342
Total assets ...................................... 31,940,878
LIABILITIES
Deposits:
In domestic offices ............................ 20,236,232
Noninterest-bearing ............................ 4,166,679
<PAGE>
Interest-bearing ............................... 16,069,553
In foreign offices, Edge, and Agreement
subsidiaries, and IBFs ............................ 2,639,327
Noninterest-bearing ............................ 0
Interest-bearing ............................... 2,639,327
Federal funds sold and securities purchased
under agreements to resell ..................... 3,281,586
Demand notes issued to the U.S. Treasury .......... 197,415
Trading Liabilities ............................... 267,837
Other borrowed money:
With a remaining maturity of one year
or less ........................................ 1,800,280
With a remaining maturity of more than
one year ....................................... 371,195
Bank's liability on acceptances
executed and outstanding .......................... 21,351
Subordinated notes and debentures ................. 497,585
Other liabilities ................................. 525,585
Total liabilities ................................. 29,838,393
Limited-life preferred stock and
related surplus ................................... 0
EQUITY CAPITAL
Perpetual preferred stock and related
surplus ........................................... 0
Common Stock ...................................... 205,000
Surplus ........................................... 1,983,378
Undivided profits and capital reserves ............ (76,867)
Net unrealized holding gains (losses)
on available-for-sale securities .................. (9,026)
Cumulative foreign currency translation
adjustments ....................................... 0
Total equity capital .............................. 2,102,485
Total liabilities, limited-life
preferred stock, and equity capital ............... 31,940,878
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM (1) THE
CONSOLIDATED UNAUDITED INTERIM FINANCIAL STATEMENTS OF PRECISE TECHNOLOGY, INC.
AS OF MARCH 31, 1997 AND FOR THE THREE MONTHS THEN ENDED AND (2) THE
CONSOLIDATED FINANCIAL STATEMENTS OF PRECISE TECHNOLOGY, INC. AS OF DECEMBER 31,
1996 AND FOR THE YEAR THEN ENDED AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 12-MOS
<FISCAL-YEAR-END> MAR-31-1997 DEC-31-1996
<PERIOD-END> MAR-31-1997 DEC-31-1996
<CASH> 525 1,311
<SECURITIES> 0 0
<RECEIVABLES> 13,294 13,182
<ALLOWANCES> 223 60
<INVENTORY> 9,369 9,856
<CURRENT-ASSETS> 25,527 27,125
<PP&E> 51,165 49,927
<DEPRECIATION> 9,161 7,864
<TOTAL-ASSETS> 97,215 99,059
<CURRENT-LIABILITIES> 20,888 21,766
<BONDS> 0 0
8,250 8,250
0 0
<COMMON> 3,316 3,316
<OTHER-SE> 3,582 3,637
<TOTAL-LIABILITY-AND-EQUITY> 97,215 99,059
<SALES> 26,325 93,289
<TOTAL-REVENUES> 26,325 93,289
<CGS> 21,613 76,477
<TOTAL-COSTS> 24,184 86,024
<OTHER-EXPENSES> (4) (25)
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 1,690 5,559
<INCOME-PRETAX> 454 1,731
<INCOME-TAX> 304 1,265
<INCOME-CONTINUING> 150 466
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 150 466
<EPS-PRIMARY> 0.0 0.0
<EPS-DILUTED> 0.0 0.0
</TABLE>
<PAGE>
LETTER OF TRANSMITTAL
To Tender for Exchange
11 1/8% Senior Subordinated Notes due 2007
of
PRECISE TECHNOLOGY, INC.
Pursuant to the Prospectus Dated , 1997
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
, 1997 UNLESS EXTENDED.
To: Marine Midland Bank, The Exchange Agent
By Registered or Certified Mail; By Facsimile:
By Overnight Courier; or By Hand: (212) 658-2292
Attention: Corporate Trust Services
140 Broadway -- Level A
New York, New York 10005-1180 Confirm by Telephone:
Attention: Corporate Trust Services (212) 658-5931
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR
TRANSMISSION OF THIS INSTRUMENT VIA A FACSIMILE NUMBER OTHER THAN THE ONE LISTED
ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
<PAGE>
The undersigned acknowledges receipt of the Prospectus, dated, 1997 (the
'Prospectus') of Precise Technology, Inc. (the 'Company') and this Letter of
Transmittal (the 'Letter of Transmittal'), which together describe the Company's
offer (the 'Exchange Offer') to exchange $1,000 principal amount of its Series B
11 1/8% Senior Subordinated Notes due 2007 (the 'Exchange Notes'), which have
been registered under the Securities Act of 1933, as amended (the 'Securities
Act'), pursuant to a Registration Statement, for each $1,000 principal amount of
its outstanding 11 1/8% Senior Subordinated Notes due 2007 (the 'Notes'), of
which $75,000,000 principal amount is outstanding. The term 'Expiration Date'
shall mean 5:00 p.m., New York City time, on , 1997, unless the Company,
in its sole discretion, extends the Exchange Offer, in which case the term shall
mean the latest date and time to which the Exchange Offer is extended. The term
'Holder' with respect to the Exchange Offer means any person in whose name Notes
are registered on the books of the Company or any other person who has obtained
a properly completed bond power from the registered holder. Capitalized terms
used but not defined herein have the respective meanings set forth in the
Prospectus.
This Letter of Transmittal is to be used by holders of Notes if (i)
certificates representing the Notes are to be physically delivered to the
Exchange Agent herewith, (ii) tender of the Notes is to be made by book entry
transfer to the Exchange Agent's account at The Depository Trust Company (the
'Book-Entry Transfer Facility') pursuant to the procedures set forth in the
Prospectus under the caption 'The Exchange Offer--Procedures for Tendering' by
any financial institution that is a participant in the Book-Entry Transfer
Facility and whose name appears on a security position listing as the owner of
Notes (such participants acting on behalf of holders, are referred to herein,
together with such holders, as 'Authorized Holders') or (iii) tender of the
Notes is to be made according to the guaranteed delivery procedures described in
the Prospectus under the caption 'The Exchange Offer -- Guaranteed Delivery
Procedures.' See Instruction 2. Delivery of documents to the Book-Entry Transfer
Facility does not constitute delivery to the Exchange Agent.
The undersigned has completed, executed and delivered this Letter of
Transmittal to indicate the action the undersigned desires to take with respect
to the Exchange Offer. Holders who wish to tender their Notes must complete this
letter in its entirety.
2
<PAGE>
/ / CHECK HERE IF TENDERED NOTES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH THE BOOK-ENTRY
TRANSFER FACILITY AND COMPLETE THE FOLLOWING:
Name of Tendering Institution: ____________________________________________
Account Number: ___________________________________________________________
Transaction Code Number: __________________________________________________
Principal Amount of Tendered Notes: _______________________________________
If Holders desire to tender Notes pursuant to the Exchange Offer and (i)
time will not permit this Letter of Transmittal, certificates representing Notes
or other required documents to reach the Exchange Agent prior to the Expiration
Date, or (ii) the procedures for book-entry transfer cannot be completed prior
to the Expiration Date, such Holders may effect a tender of such Notes in
accordance with the guaranteed delivery procedures set forth in the Prospectus
under the caption 'The Exchange Offer -- Guaranteed Delivery Procedures.' See
Instruction 2 below.
/ / CHECK HERE IF TENDERED NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY DELIVERED TO THE EXCHANGE AGENT AND COMPLETE THE
FOLLOWING (See Instruction 2):
Name of Registered or Authorized Holder(s): _______________________________
Window Ticket No. (if any): _______________________________________________
Date of Execution of Notice of Guaranteed Delivery: _______________________
Name of Eligible Institution
that Guaranteed Delivery: _________________________________________________
If Delivered by Book-Entry
Transfer, the Account Number: _____________________________________________
Transaction Code Number: __________________________________________________
/ / CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL
COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS
THERETO.
PLEASE NOTE: THE COMPANY HAS AGREED THAT, FOR A PERIOD OF ONE YEAR AFTER THE
EXCHANGE OFFER EFFECTIVENESS DATE, IT WILL MAKE COPIES OF THE PROSPECTUS
AVAILABLE TO ANY PARTICIPATING BROKER-DEALER FOR USE IN CONNECTION WITH
RESALES OF THE EXCHANGE NOTES.
Name: _____________________________________________________________________
Address: __________________________________________________________________
Attention: ________________________________________________________________
List below the Notes to which this Letter of Transmittal relates. If the
space provided below is inadequate, the certificate numbers and principal amount
of Notes should be listed on a separate signed schedule affixed hereto.
PLEASE READ THIS ENTIRE LETTER OF TRANSMITTAL
CAREFULLY BEFORE COMPLETING THE BOXES
3
<PAGE>
<TABLE>
<CAPTION>
BOX 1 - DESCRIPTION OF 11 1/8% SENIOR SUBORDINATED NOTES DUE 2007*
PRINCIPAL AMOUNT
TENDERED (MUST BE
NAME(S) AND ADDRESS(ES) OF AGGREGATE PRINCIPAL AN INTEGRAL
REGISTERED HOLDER(S) CERTIFICATE AMOUNT REPRESENTED MULTIPLE
(PLEASE FILL IN, IF BLANK) NUMBER(S) BY CERTIFICATE(S) OF $1,000**)
<S> <C> <C> <C>
------------------ ------------------- -------------------
------------------ ------------------- -------------------
------------------ ------------------- -------------------
------------------ ------------------- -------------------
------------------ ------------------- -------------------
TOTAL
------------------ ------------------- -------------------
</TABLE>
* Need not be completed by Holders tendering by book-entry transfer.
** Unless indicated in the column labeled 'Principal Amount Tendered,' any
tendering Holder of 11 1/8% Senior Subordinated Notes due 2007 will be deemed to
have tendered the entire aggregate principal amount represented by the column
labeled 'Aggregate Principal Amount Represented by Certificate(s).' If the space
provided above is inadequate, list the certificate numbers and principal amounts
on a separate signed schedule and affix the list to this Letter of Transmittal.
The minimum permitted tender is $1,000 in principal amount of 11 1/8% Senior
Subordinated Notes due 2007. All other tenders must be in integral multiples of
$1,000.
4
<PAGE>
BOX 2
SPECIAL REGISTRATION INSTRUCTIONS
(SEE INSTRUCTIONS 4, 5 AND 6)
To be completed ONLY if certificates for Notes in a principal amount not
tendered, or Exchange Notes issued in exchange for Notes accepted for exchange,
are to be issued in the name of someone other than the undersigned.
Issue certificate(s) to:
Name ___________________________________________________________________________
(PLEASE PRINT)
Address ________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(INCLUDE ZIP CODE)
________________________________________________________________________________
(TAX IDENTIFICATION OR SOCIAL SECURITY NUMBER)
BOX 3
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 4, 5 AND 6)
To be completed ONLY if certificates for Notes in a principal amount not
tendered, or Exchange Notes issued in exchange for Notes accepted Notes accepted
for exchange, are to be sent to someone other than the undersigned, or to the
undersigned at an address other than that shown above.
Deliver certificate(s) to:
Name ___________________________________________________________________________
(PLEASE PRINT)
Address ________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(INCLUDE ZIP CODE)
________________________________________________________________________________
(TAX IDENTIFICATION OR SOCIAL SECURITY NUMBER)
BOX 4
BROKER-DEALER STATUS
/ / Check this box if the Beneficial Owner of the Notes is a Participating
Broker-Dealer and such Participating Broker-Dealer acquired the Notes for
its own account as a result of market-making activities or other trading
activities. IF THIS BOX IS CHECKED, PLEASE SEND A COPY OF THIS LETTER OF
TRANSMITTAL TO JOHN R. WEEKS, PRESIDENT AND CHIEF EXECUTIVE OFFICER OF THE
COMPANY, VIA FACSIMILE: (412) 823-4110.
5
<PAGE>
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ ACCOMPANYING INSTRUCTIONS CAREFULLY
LADIES AND GENTLEMEN:
Subject to the terms and conditions of the Exchange Offer, the undersigned
hereby tenders to Precise Technology, Inc. (the 'Company') the principal amount
of Notes indicated above.
Subject to and effective upon the acceptance for exchange of the principal
amount of Notes tendered in accordance with this Letter of Transmittal, the
undersigned sells, assigns and transfers to, or upon the order of, the Company
all right, title and interest in and to the Notes tendered hereby. The
undersigned hereby irrevocably constitutes and appoints the Exchange Agent its
agent and attorney-in-fact (with full knowledge that the Exchange Agent also
acts as the agent of the Company) with respect to the tendered Notes with the
full power of substitution to (i) present such Notes and all evidences of
transfer and authenticity to, or transfer ownership of, such Notes on the
account books maintained by the Book-Entry Transfer Facility to, or upon the
order of, the Company, (ii) deliver certificates for such Notes to the Company
and deliver all accompanying evidences of transfer and authenticity to, or upon
the order of, the Company and (iii) present such Notes for transfer on the books
of the Company and receive all benefits and otherwise exercise all rights of
beneficial ownership of such Notes, all in accordance with the terms of the
Exchange Offer.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the Notes tendered
hereby and that the Company will acquire good, valid and unencumbered title
thereto, free and clear of all liens, restrictions, charges and encumbrances and
not subject to any adverse claims, when the same are acquired by the Company.
The undersigned hereby further represents that any Exchange Notes acquired in
exchange for Notes tendered hereby will have been acquired in the ordinary
course of business of the person receiving such Exchange Notes, whether or not
such person is the undersigned, that neither the undersigned nor any other such
person has any arrangement or understanding with any person to participate in
the distribution of such Exchange Notes and that neither the undersigned nor any
such other person is an 'affiliate,' as defined in Rule 405 under the Securities
Act, of the Company. In addition, the undersigned and any such person
acknowledge that (a) any person participating in the Exchange Offer for the
purpose of distributing the Exchange Notes must, in the absence of an exemption
therefrom, comply with the registration and prospectus delivery requirements of
the Securities Act in connection with a secondary resale of the Exchange Notes
and cannot rely on the position of the Staff of the Securities and Exchange
Commission enunciated in no-action letters and (b) failure to comply with such
requirements in such instance could result in the undersigned or such person
incurring liability under the Securities Act for which the undersigned or such
person is not indemnified by the Company. The undersigned will, upon request,
execute and deliver any additional documents deemed by the Exchange Agent or the
Company to be necessary or desirable to complete the assignment, transfer and
purchase of the Notes tendered hereby. If the undersigned is not a
broker-dealer, the undersigned represents that it is not engaged in and does not
intend to engage in, a distribution of Exchange Notes. If the undersigned is a
broker-dealer that will receive Exchange Notes for its own account in exchange
for Notes that were acquired as a result of market-making activities or other
trading activities, it acknowledges that it will deliver a Prospectus in
connection with any resale of such Exchange Notes, however, by so acknowledging
and by delivering a Prospectus, the undersigned will not be deemed to admit that
it is an 'underwriter' within the meaning of the Securities Act. Unless
otherwise notified in accordance with the instructions set forth herein in Box 4
under 'Broker-Dealer Status,' the Company will assume that the undersigned is
not a Participating Broker-Dealer.
For purposes of the Exchange Offer, the Company shall be deemed to have
accepted validly tendered Notes when, as and if the Company has given oral or
written notice thereof to the Exchange Agent.
If any Notes tendered herewith are not accepted for exchange pursuant to
the Exchange Offer for any reason, certificates for any such unaccepted Notes
will be returned, without expense, to the undersigned at the address shown below
or to a different address as may be indicated herein in Box 3 under 'Special
Delivery Instructions' as promptly as practicable after the Expiration Date.
All authority conferred or agreed to be conferred by this Letter of
Transmittal shall survive the death, incapacity or dissolution of the
undersigned, and every obligation of the undersigned under this Letter of
Transmittal shall be binding upon the undersigned's heirs, personal
representative, successors and assigns.
6
<PAGE>
The undersigned understands that tenders of Notes pursuant to the
procedures described under the caption 'The Exchange Offer -- Procedures for
Tendering' in the Prospectus and in the instructions hereto will constitute a
binding agreement between the undersigned and the Company upon the terms and
subject to the conditions of the Exchange Offer, subject only to withdrawal of
such tenders on the terms set forth in the Prospectus under the caption 'The
Exchange Offer -- Withdrawal of Tenders.'
Unless otherwise indicated in Box 2 under 'Special Registration
Instructions,' please issue the certificates (or electronic transfers)
representing the Exchange Notes issued in exchange for the Notes accepted for
exchange and any certificates (or electronic transfers) for Notes not tendered
or not exchanged, in the name(s) of the undersigned. Similarly, unless otherwise
indicated in Box 3 under 'Special Delivery Instructions,' please send the
certificates, if any, representing the Exchange Notes issued in exchange for the
Notes accepted for exchange and any certificates for Notes not tendered or not
exchanged (and accompanying documents, as appropriate) to the undersigned at the
address shown below in the undersigned's signature(s). In the event that both
'Special Registration Instructions' and 'Special Delivery Instructions' are
completed, please issue the certificates representing the Exchange Notes issued
in exchange for the Notes accepted for exchange in the name(s) of, and return
any certificates for Notes not tendered or not exchanged to, the person(s) so
indicated. The undersigned understands that the Company has no obligation
pursuant to the 'Special Registration Instructions' and 'Special Delivery
Instructions' to transfer any Notes from the name of the registered Holder(s)
thereof if the Company does not accept for exchange any of the Notes so
tendered.
Holders who wish to tender their Notes and (i) whose Notes are not
immediately available or (ii) who cannot deliver the Notes, this Letter of
Transmittal or any other documents required hereby to the Exchange Agent prior
to the Expiration Date, may tender their Notes according to the guaranteed
delivery procedures set forth in the Prospectus under the caption 'The Exchange
Offer -- Guaranteed Delivery Procedures.' See Instruction 2 regarding the
completion of this Letter of Transmittal printed below.
7
<PAGE>
The below lines must be signed by the registered holder(s) exactly as their
name(s) appear(s) on the Notes or by a participant in the Book-Entry Transfer
Facility, exactly as such participant's name appears on a security position
listing as the owner of the Notes, or by person(s) authorized to become
registered holder(s) by a properly completed bond power from the registered
holder(s), a copy of which must be transmitted with this Letter of Transmittal.
If Notes to which this Letter of Transmittal relate are held of record by two or
more joint holders, then all such holders must sign this Letter of Transmittal.
PLEASE SIGN HERE WHETHER OR NOT
NOTES ARE BEING PHYSICALLY TENDERED HEREBY
X Date:
------------------------------------ ---------------------------------
X Date:
------------------------------------ ---------------------------------
Area Code and Telephone Number:
----------------------------------------------
If signature is by a trustee, executor, administrator, guardian,
attorney-in-fact, officer of a corporation or other person acting in a fiduciary
or representative capacity, then such person must (i) set forth his or her full
title below and (ii) submit evidence satisfactory to the Company of such
person's authority so to act. See Instruction 5 regarding the completion of this
Letter of Transmittal printed below.
Name(s):
----------------------------------------------------------------------
(Please Print)
Capacity:
----------------------------------------------------------------------
Address:
----------------------------------------------------------------------
(Include Zip Code)
MEDALLION SIGNATURE GUARANTEE
(IF REQUIRED BY INSTRUCTION 5)
CERTAIN SIGNATURES MUST BE GUARANTEED BY AN ELIGIBLE INSTITUTION
Signature(s) Guaranteed by
an Eligible Institution:
------------------------------------------------------
(Authorized Signature)
- -------------------------------------------------------------------------------
(Title)
- -------------------------------------------------------------------------------
(Name of Firm)
- -------------------------------------------------------------------------------
(Address, Include Zip Code)
- -------------------------------------------------------------------------------
(Area Code and Telephone Number)
Dated:
-------------------------------------------------------------------------
8
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER
1. DELIVERY OF THIS LETTER OF TRANSMITTAL AND CERTIFICATES FOR NOTES OR
BOOK-ENTRY CONFIRMATIONS. Certificates representing the tendered Notes (or a
confirmation of book-entry transfer into the Exchange Agent's account with the
Book-Entry Transfer Facility for tendered Notes transferred electronically), as
well as a properly completed and duly executed copy of this Letter of
Transmittal (or facsimile thereof), a Substitute Form W-9 (or facsimile thereof)
and any other documents required by this Letter of Transmittal must be received
by the Exchange Agent at its address set forth herein prior to the Expiration
Date. The method of delivery of certificates for Notes and all other required
documents is at the election and sole risk of the tendering holder and delivery
will be deemed made only when actually received by the Exchange Agent. If
delivery is by mail, registered mail with return receipt requested, properly
insured, is recommended. As an alternative to delivery by mail, the holder may
wish to use an overnight or hand delivery service. In all cases, sufficient time
should be allowed to assure timely delivery. Neither the Company nor the
Exchange Agent is under an obligation to notify any tendering holder of the
Company's acceptance of tendered Notes prior to the completion of the Exchange
Offer.
2. GUARANTEED DELIVERY PROCEDURES. Holders who wish to tender their Notes
but whose Notes are not immediately available and who cannot deliver their
certificates for Notes (or comply with the procedures for book-entry transfer
prior to the Expiration Date), the Letter of Transmittal and any other documents
required by the Letter of Transmittal to the Exchange Agent prior to the
Expiration Date must tender their Notes according to the guaranteed delivery
procedures set forth below. Pursuant to such procedures:
(i) such tender must be made by or through a firm which is a member of a
registered national securities exchange or of the National Association of
Securities Dealers, Inc., or a commercial bank or trust company having an office
or correspondent in the United States (an 'Eligible Institution');
(ii) prior to the Expiration Date, the Exchange Agent must have received
from the holder and the Eligible Institution a properly completed and duly
executed Notice of Guaranteed Delivery (by facsimile transmission, mail, or hand
delivery) setting forth the name and address of the holder, the certificate
number or numbers of the tendered Notes, and the principal amount of tendered
Notes and stating that the tender is being made thereby and guaranteeing that,
within three New York Stock Exchange trading days after the Expiration Date, the
Letter of Transmittal (or facsimile thereof), together with the tendered Notes
(or a confirmation of book-entry transfer into the Exchange Agent's account with
the Book-Entry Transfer Facility for Notes transferred electronically) and any
other required documents will be deposited by the Eligible Institution with the
Exchange Agent; and
(iii) such properly completed and executed Letter of Transmittal and
certificates representing the tendered Notes in proper form for transfer (or a
confirmation of book-entry transfer into the Exchange Agent's account with the
Book-Entry Transfer Facility for Notes transferred electronically) must be
received by the Exchange Agent within three New York Stock Exchange trading days
after the Expiration Date.
Any holder who wishes to tender Notes pursuant to the guaranteed delivery
procedures described above must ensure that the Exchange Agent receives the
Notice of Guaranteed Delivery relating to such Notes prior to the Expiration
Date. Failure to complete the guaranteed delivery procedures outlined above will
not, of itself, affect the validity or effect a revocation of any Letter of
Transmittal form properly completed and executed by a Holder who attempted to
use the guaranteed delivery person.
3. TENDER BY HOLDER. Only a holder of Notes may tender such Notes in the
Exchange Offer. Any beneficial owner of Notes who is not the registered holder
and who wishes to tender should arrange with such holder to execute and deliver
this Letter of Transmittal on such owner's behalf or must, prior to completing
and executing this Letter of Transmittal and delivering such Notes, either make
appropriate arrangements to register ownership of the Notes in such owner's name
or obtain a properly completed bond power from the registered holder.
4. PARTIAL TENDERS. Tenders of Notes will be accepted only in integral
multiples of $1,000 in principal amount. If less than the entire principal
amount of Notes is tendered, the tendering holder should fill in the principal
amount tendered in the column labeled 'Aggregate Principal Amount Tendered' of
the box entitled 'Description of Notes' (Box 1) above. The entire principal
amount of Notes delivered to the Exchange Agent
9
<PAGE>
will be deemed to have been tendered unless otherwise indicated. If the entire
principal amount of Notes is not tendered, Notes for the principal amount of
Notes not tendered and Exchange Notes exchanged for any Notes tendered will be
sent to the holder at his or her registered address (or transferred to the
account of the Book-Entry Facility designated above), unless a different address
(or account) is provided in the appropriate box on this Letter of Transmittal,
as soon as practicable following the Expiration Date.
5. SIGNATURES ON THE LETTER OF TRANSMITTAL; BOND POWERS AND ENDORSEMENTS;
MEDALLION GUARANTEE OF SIGNATURES. If this Letter of Transmittal is signed by
the registered holder(s) of the Notes tendered herewith, the signatures must
correspond with the name(s) as written on the face of the tendered Notes without
alteration, enlargement, or any change whatsoever. If this Letter of Transmittal
is signed by a participant in the Book-Entry Transfer Facility, the signature
must correspond with the name as it appears on the security position listing as
the owner of the Notes.
If any of the tendered Notes are owned of record by two or more joint
owners, all such owners must sign this Letter of Transmittal. If any tendered
Notes are held in different names on several Notes, it will be necessary to
complete, sign, and submit as many separate copies of the Letter of Transmittal
documents as there are names in which tendered Notes are held.
If this Letter of Transmittal is signed by the registered holder or
Authorized Holder, and Exchange Notes are to be issued and any untendered or
unaccepted principal amount of Notes are to be reissued or returned to the
registered holder or Authorized Holder, then, the registered holder or
Authorized Holder need not and should not endorse any tendered Notes nor provide
a separate bond power. In any other case, the registered holder or Authorized
Holder must either properly endorse the Notes tendered or transmit a properly
completed separate bond power with this Letter of Transmittal (in either case,
executed exactly as the name(s) of the registered holder(s) appear(s) on such
Notes, and, with respect to a participant in the Book-Entry Transfer Facility
whose name appears on a security position listing as the owner of Notes, exactly
as the name(s) of the participant(s) appear(s) on such security position
listings), with the signature(s) on the endorsement or bond power guaranteed by
an Eligible Institution unless such certificates or bond powers are signed by an
Eligible Institution.
If this Letter of Transmittal or any Notes or bond powers are signed by
trustees, executors, administrators, guardians, attorneys-in-fact, officers of
corporations, or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing and evidence satisfactory to the Company
of their authority to so act must be submitted with this Letter of Transmittal.
No medallion signature guarantee is required if (i) this Letter of
Transmittal is signed by the registered holder(s) of the Notes tendered herewith
(or by a participant in the Book-Entry Transfer Facility whose name appears on a
security position listing as the owner of the Tendered Notes) and the issuance
of Exchange Notes (and any Notes not tendered or not accepted) are to be issued
directly to such registered holder(s) (or, if signed by a participant in the
Book-Entry Transfer Facility, any Exchange Notes or Notes not tendered or not
accepted are to be deposited to such participant's account at such Book-Entry
Transfer Facility) and neither the 'Special Delivery Instructions' (Box 3) nor
the 'Special Registration Instructions' (Box 2) has been completed, or (ii) such
Notes are tendered for the account of an Eligible Institution. In all other
cases, all signatures on this Letter of Transmittal must be guaranteed by an
Eligible Institution.
6. SPECIAL REGISTRATION AND DELIVERY INSTRUCTIONS. Tendering holders should
indicate, in the applicable box, the name and address (or account at the
Book-Entry Transfer Facility) in which the Exchange Notes and/or substitute
Notes for principal amounts not tendered or not accepted for exchange are to be
sent (or deposited), if different from the name and address or account of the
person signing this Letter of Transmittal. In the case of issuance in a
different name, the employer identification number or social security number of
the person named must also be indicated and the indicated and the tendering
holders should complete the applicable box.
If no such instructions are given, the Exchange Notes (and any Notes not
tendered or not accepted) will be issued in the name of and sent to the
Authorized Holder of the Notes or deposited at such Authorized Holders' account
at the Book-Entry Transfer Facility.
7. TRANSFER TAXES. The Company will pay all transfer taxes, if any,
applicable to the sale and transfer of Notes to it or its order pursuant to the
Exchange Offer. If, however, a transfer tax is imposed for any reason other
10
<PAGE>
than the transfer and sale of Notes to the Company or its order pursuant to the
Exchange Offer, then the amount of any such transfer taxes (whether imposed on
the registered holder or on any other person) will be payable by the tendering
holder. If satisfactory evidence of payment of such taxes or exemption from
taxes therefrom is not submitted with this Letter of Transmittal, the amount of
transfer taxes will be billed directly to such tendering holder.
Except as provided in this Instruction 7, it will not be necessary for
transfer tax stamps to be affixed to the Notes listed in this Letter of
Transmittal.
8. TAX IDENTIFICATION NUMBER. Federal income tax law required that a holder
of any Notes which are accepted for exchange must provide the Company (as payor)
with its correct taxpayer identification number ('TIN'), which, in the case of a
holder who is an individual, is his or her social security number. If the
Company is not provided with the correct TIN, the Holder may be subject to a $50
penalty imposed by Internal Revenue Service. (If withholding results in an
over-payment of taxes, a refund may be obtained.) Certain holders (including,
among other, all corporations and certain foreign individuals) are not subject
to these backup withholding and reporting requirements. See the enclosed
'Guidelines for Certification of Taxpayer Identification Number on Substitute
Form W-9' for additional instructions.
To prevent backup withholding, each tendering holder must provide such
holder's correct TIN by completing the Substitute Form W-9 set forth herein,
certifying that the TIN provided is correct (or that such holder is awaiting a
TIN), and that (i) the holder has not been notified by the Internal Revenue
Service that such holder is subject to backup withholding as a result of failure
to report a interest or dividends or (ii) the Internal Revenue Service has
notified the holder that such holder is no longer subject to backup withholding.
If the Notes are registered in more than one name or are not in the name of the
actual owner, see the enclosed 'Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9' for information on which TIN to
report.
The Company reserves the right in its sole discretion to take whatever
steps are necessary to comply with the Company's obligation regarding backup
withholding.
9. VALIDITY OF TENDERS. All questions as to the validity, form, eligibility
(including time of receipt), and acceptance of tendered Notes will be determined
by the Company in its sole discretion, which determination will be final and
binding. The Company reserves the absolute right to reject any and all Notes not
properly tendered or any Notes the Company's acceptance of which would, in the
opinion of the Company or its counsel, be unlawful. The Company also reserves
the right in its sole discretion to waive any conditions of the Exchange Offer
or defects or irregularities in tenders of Notes as to any ineligibility of any
holder who seeks to tender Notes in the Exchange Offer. The interpretation of
the terms and conditions of the Exchange Offer (including this Letter of
Transmittal and the instructions hereto) by the Company shall be final and
binding on all parties. Unless waived, any defects or irregularities in
connection with tenders of Notes must be cured within such time as the Company
shall determine. The Company will use reasonable efforts to give notification of
defects or irregularities with respect to tenders of Notes, but shall not incur
any liability for failure to give such notification. Tenders of Notes will not
be deemed to have been made until such defects or irregularities have been cured
or waived.
10. WAIVER OF CONDITIONS. The Company reserves the absolute right to amend,
waive, or modify specified conditions in the Exchange Offer in the case of any
tendered Notes.
11. NO CONDITIONAL TENDER. No alternative, conditional, irregular, or
contingent tender of Notes on transmittal of this Letter of Transmittal will be
accepted.
12. MUTILATED, LOST, STOLEN, OR DESTROYED NOTES. Any tendering holder whose
Notes have been mutilated, lost, stolen, or destroyed should contact the
Exchange Agent at the address indicated above for further instruction.
13. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions and requests
for assistance and requests for additional copies of the Prospectus may be
directed to the Exchange Agent at the address specified in the Prospectus.
Holders may also contact their broker, dealer, commercial bank, trust company,
or other nominee for assistance concerning the Exchange Offer.
11
<PAGE>
14. ACCEPTANCE OF TENDERED NOTES AND ISSUANCE OF EXCHANGE NOTES; RETURN OF
NOTES. Subject to the terms and conditions of the Exchange Offer, the Company
will accept for exchange all validly tendered Notes as soon as practicable after
the Expiration Date and will issue Exchange Notes therefor as soon as
practicable thereafter. For purposes of the Exchange Offer, the Company shall be
deemed to have accepted tendered Notes when, as and if the Company has given
written and oral notice thereof to the Exchange Agent. If any tendered Notes are
not exchanged pursuant to the Exchange Offer for any reason, such unexchanged
Notes will be returned, without expense, to the undersigned at the address shown
above (or credited to the undersigned's account at the Book-Entry Transfer
Facility designated above) or at a different address as may be indicated under
'Special Delivery Instructions.'
15. WITHDRAWAL. Tenders may be withdrawn only pursuant to the limited
withdrawal rights set forth in the Prospectus under the caption 'The Exchange
Offer -- Withdrawal of Tenders.'
12
<PAGE>
PAYOR'S NAME: PRECISE TECHNOLOGY, INC.
Name (if joint names, list first and circle the name of the person or entity
whose number you enter in Part I below. See instructions if your name has
changed.)
------------------------------------------------------------------------------
Address ______________________________________________________________________
City, State and ZIP Code _____________________________________________________
List account number(s) here (optional) _______________________________________
<TABLE>
<S> <C> <C>
PART 1 -- PLEASE PROVIDE YOUR TAXPAYER ---------------------------
SUBSTITUTE IDENTIFICATION NUMBER ('TIN') IN THE BOX AT RIGHT Social Security Number
FORM W-9 AND CERTIFY BY SIGNING AND DATING BELOW or TIN
DEPARTMENT OF THE PART 2 -- Check the box if you are NOT subject to PART 3 --
TREASURY INTERNAL backup withholding under the provisions of section Awaiting TIN / /
REVENUE SERVICE 3408(a)(1)(C) of the Internal Revenue Code because
(1) you have not been notified that you are
subject to backup withholding as a result of
failure to report all interest of dividends or (2)
the Internal Revenue Service has notified you that
you are no longer subject to backup withholding.
/ /
PAYER'S REQUEST FOR CERTIFICATION -- Under the penalties of perjury, I certify that the information
TAXPAYER IDENTIFICATION provided on this form is true, correct and complete.
NUMBER (TIN)
SIGNATURE DATE
---------------------------- ----------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE EXCHANGE OFFER. PLEASE
REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
13
<PAGE>
NOTICE OF GUARANTEED DELIVERY
WITH RESPECT TO
PRECISE TECHNOLOGY, INC.
11 1/8% SENIOR SUBORDINATED NOTES DUE 2007
This form must be used by a holder of 11 1/8% Senior Subordinated Notes due
2007 (the 'Notes') of Precise Technology, Inc. (the 'Company'), who wishes to
tender Notes to the Exchange Agent pursuant to the guaranteed delivery
procedures described in the 'The Exchange Offer -- Guaranteed Delivery
Procedures' of the Prospectus, dated (the 'Prospectus'), and in
Instruction 2 to the related Letter of Transmittal. Any holder who wishes to
tender Notes pursuant to such guaranteed delivery procedures must ensure that
the Exchange Agent receives this Notice of Guaranteed Delivery prior to the
Expiration Date of the Exchange Offer. Capitalized terms not defined herein have
the meanings ascribed to them in the Prospectus or the Letter of Transmittal.
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME,
ON , UNLESS EXTENDED (THE 'EXPIRATION DATE').
To: Marine Midland Bank
(the 'Exchange Agent')
By Facsimile: (212) 658-2292
Confirmation by Telephone: (212) 658-5931
By Mail, Overnight Courier or Hand Delivery:
140 Broadway -- Level A
New York, New York 10005-1180
Attn: Corporate Trust Services
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS, OR TRANSMISSION VIA FACSIMILE,
OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE VALID DELIVERY.
This form is not to be used to guarantee signatures. If a signature on the
Letter of Transmittal is required to be guaranteed by an 'Eligible Institution'
under the instructions thereto, such signature guarantee must appear in the
applicable space provided in the signature box on the Letter of Transmittal.
LADIES AND GENTLEMEN:
The undersigned hereby tenders to the Company, upon the terms and subject
to the conditions set forth in the Prospectus and the related Letter of
Transmittal, receipt of which is hereby acknowledged, the principal amount of
Notes set forth below pursuant to the guaranteed delivery procedures set forth
in the Prospectus and in Instruction 2 of the Letter of Transmittal.
The undersigned hereby tenders the Notes listed below:
<TABLE>
<CAPTION>
CERTIFICATE NUMBER(S) AGGREGATE PRINCIPAL AGGREGATE PRINCIPAL
(IF KNOWN) OF NOTES AMOUNT REPRESENTED AMOUNT TENDERED
OR ACCOUNT NUMBER
AT THE BOOK-ENTRY
FACILITY
<S> <C> <C>
- ------------------------------ ---------------------------------- ------------------------
- ------------------------------ ---------------------------------- ------------------------
- ------------------------------ ---------------------------------- ------------------------
- ------------------------------ ---------------------------------- ------------------------
- ------------------------------ ---------------------------------- ------------------------
- ------------------------------ ---------------------------------- ------------------------
- ------------------------------ ---------------------------------- ------------------------
</TABLE>
<PAGE>
PLEASE SIGN AND COMPLETE
Signatures of Registered Holder(s) or
Date: , 1997
Authorized Signatory: __________________________________________________________
Address: _______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
Area Code and Telephone No.: ___________________________________________________
Name of Registered Holder(s): __________________________________________________
This Notice of Guaranteed Delivery must be signed by the Holder(s) exactly
as their name(s) appear on certificates for Notes or on a security position
listing as the owner of Notes, or by person(s) authorized to become Holder(s) by
endorsements and documents transmitted with this Notice of Guaranteed Delivery.
If signature is by a trustee, executor, administrator, guardian,
attorney-in-fact, officer or other person acting in a fiduciary or
representative capacity, such person must provide the following information.
Please print name(s) and address(es)
Name(s): _______________________________________________________________________
Capacity: ______________________________________________________________________
Address(es): ___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
<PAGE>
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a firm which is a member of a registered national
securities exchange or of the National Association of Securities Dealers, Inc.,
or is a commercial bank or trust company having an office or correspondent in
the United States, or is otherwise an 'eligible guarantor institution' within
the meaning of Rule 17Ad-15 under the Securities Exchange Act of 1934, as
amended, guarantees deposit with the Exchange Agent of the Letter of Transmittal
(or facsimile thereof), together with the Notes tendered hereby in proper form
for transfer (or confirmation of the book-entry transfer of such Notes into the
Exchange Agent's account at Book-Entry Transfer Facility described in the
Prospectus under the caption 'The Exchange Offer -- Guaranteed Delivery
Procedures' and in the Letter of Transmittal) and any other required documents,
all by 5:00 p.m., New York City time, on the third New York Stock Exchange
trading day following the Expiration Date.
<TABLE>
<S> <C>
Name of Firm:
--------------------------------------- ---------------------------------------------------------
Authorized Signature
Address:
-------------------------------------------
Area Code and Telephone No.: Name:
----------------------- ---------------------------------------------------
Title:
---------------------------------------------------
Date: , 1997
--------------------------------------------
</TABLE>
DO NOT SEND NOTES WITH THIS FORM. ACTUAL SURRENDER OF NOTES MUST BE MADE
PURSUANT TO, AND BE ACCOMPANIED BY, AN EXECUTED LETTER OF TRANSMITTAL.
<PAGE>
INSTRUCTIONS FOR NOTICE OF GUARANTEED DELIVERY
1. Delivery of this Notice of Guaranteed Delivery. A properly completed and
duly executed copy of this Notice of Guaranteed Delivery and any other documents
required by this Notice of Guaranteed Delivery must be received by the Exchange
Agent at its address set forth herein prior to the Expiration Date. The method
of delivery of this Notice of Guaranteed Delivery and any other required
documents to the Exchange Agent is at the election and sole risk of the holder,
and the delivery will be deemed made only when actually received by the Exchange
Agent. If delivery is by mail, registered mail with return receipt requested,
properly insured, is recommended. As an alternative to delivery by mail, the
holders may wish to consider using an overnight or hand delivery service. In all
cases, sufficient time should be allowed to assure timely delivery. For a
description of the guaranteed delivery procedures, see Instruction 2 of the
Letter of Transmittal.
2. Signatures on this Notice of Guaranteed Delivery. If this Notice of
Guaranteed Delivery is signed by the registered holder(s) of the Notes referred
to herein, the signature must correspond with the name(s) written on the face of
the Notes without alteration, enlargement, or any change whatsoever. If this
Notice of Guaranteed Delivery is signed by a participant of the Book-Entry
Transfer Facility whose name appears on a security position listing as the owner
of Notes, the signature must correspond with the name shown on the security
position listing as the owner of the Notes.
If this Notice of Guaranteed Delivery is signed by a person other than the
registered holder(s) of any Notes listed or a participant of the Book-Entry
Transfer Facility, this Notice of Guaranteed Delivery must be accompanied by
appropriate bond powers, signed as the name of the registered holder(s) appears
on the Notes or signed as the name of the participant shown on the Book-Entry
Transfer Facility's security position listing.
If this Notice of Guaranteed Delivery is signed by a trustee, executor,
administrator, guardian, attorney-in-fact, officer of a corporation, or other
person acting in a fiduciary or representative capacity, such person should so
indicate when signing and submit with the Letter of Transmittal evidence
satisfactory to the Company of such person's authority to so act.
3. Requests for Assistance or Additional Copies. Questions and requests for
assistance and requests for additional copies of the Prospectus may be directed
to the Exchange Agent at the address specified in the Prospectus. Holders may
also contact their broker, dealer, commercial bank, trust company, or other
nominee for assistance concerning the Exchange Offer.
<PAGE>
INSTRUCTIONS TO REGISTERED HOLDER AND/OR
BOOK-ENTRY TRANSFER FACILITY PARTICIPANT
FROM BENEFICIAL OWNER OF
PRECISE TECHNOLOGY, INC.
11 1/8% SENIOR SUBORDINATED NOTES DUE 2007
To Registered Holder and/or Participant of the Book-Entry Transfer
Facility:
The undersigned hereby acknowledges receipt of the Prospectus, dated
(the 'Prospectus'), of Precise Technology, Inc. (the
'Company'), and the accompanying Letter of Transmittal (the 'Letter of
Transmittal'), that together constitute the Company's offer (the 'Exchange
Offer'). Capitalized terms used but not defined herein have the meanings
ascribed to them in the Prospectus.
This will instruct you, the registered holder and/or book-entry transfer
facility participant, as to the action to be taken by you relating to the
Exchange Offer with respect to the 11 1/8% Senior Subordinated Notes due 2007
(the 'Notes') held by you for the account of the undersigned.
The aggregate face amount of the Notes held by you for the account of the
undersigned is (FILL IN AMOUNT): $ of the 11 1/8% Senior
Subordinated Notes due 2007.
With respect to the Exchange Offer, the undersigned hereby instructs you
(CHECK APPROPRIATE BOX):
/ / TO TENDER the following Notes held by you for the account of the
undersigned (INSERT PRINCIPAL AMOUNT OF NOTES TO BE TENDERED, IF ANY):
$ .
/ / NOT TO TENDER any Notes held by you for the account of the undersigned.
If the undersigned instructs you to tender the Notes held by you for the
account of the undersigned, it is understood that you are authorized (a) to
make, on behalf of the undersigned (and the undersigned, by its signature below,
hereby makes to you), the representations and warranties contained in the Letter
of Transmittal that are to be made with respect to the undersigned as a
beneficial owner, including but not limited to the representations that (i) the
undersigned's principal residence is in the state of (fill in state)
, (ii) the undersigned is acquiring the Exchange Notes in the
ordinary course of business of the undersigned, (iii) the undersigned is not
participating, does not intend to participate, and has no arrangement or
understanding with any person to participate in the distribution of the Exchange
Notes, (iv) the undersigned acknowledges that any person participating in the
Exchange Offer for the purpose of distributing the Exchange Notes must comply
with the registration and prospectus delivery requirements of the Securities Act
of 1933, as amended (the 'Act'), in connection with a secondary resale
transaction of the Exchange Notes acquired by such person and cannot rely on the
position of the Staff of the Securities and Exchange Commission set forth in no-
action letters that are discussed in the section of the Prospectus entitled 'The
Exchange Offer -- Resales of the New Notes,' and (v) the undersigned is not an
'affiliate,' as defined in Rule 405 under the Act, of the Company; (b) to agree,
on behalf of the undersigned, as set forth in the Letter of Transmittal; and (c)
to take such other action as necessary under the Prospectus or the Letter of
Transmittal to effect the valid tender of such Notes.
/ / Check this box if the Beneficial Owner of the Notes is a Participating
Broker-Dealer and such Participating Broker-Dealer acquired the Notes
for its own account as a result of market-making activities or other
trading activities. IF THIS BOX IS CHECKED, PLEASE SEND A COPY OF THESE
INSTRUCTIONS TO JOHN R. WEEKS, PRESIDENT AND CHIEF EXECUTIVE OFFICER OF
THE COMPANY, VIA FACSIMILE: (412) 823-4110.
<PAGE>
SIGN HERE
Name of beneficial owner(s): ___________________________________________________
Signature(s): __________________________________________________________________
Name (please print): ___________________________________________________________
Address: _______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
Telephone number: ______________________________________________________________
Taxpayer Identification or Social Security Number: _____________________________
Date: __________________________________________________________________________
2
