<PAGE>
DRAFT OF OCTOBER 11, 1997
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 16, 1997
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-1
CVC, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 35633821 16-1383279
(STATE OR OTHER JURISDICTION (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
</TABLE>
525 LEE ROAD
ROCHESTER, NEW YORK 14606
(716) 458-2550
(Address, including zip code and telephone number, including
area code, of registrant's principal executive offices)
CHRISTINE B. WHITMAN
CHAIRMAN OF THE BOARD, PRESIDENT AND
CHIEF EXECUTIVE OFFICER
CVC, INC.
525 LEE ROAD
ROCHESTER, NEW YORK 14606
(716) 458-2550
(Name, address, including zip code, and telephone number, including
area code, of agent for service)
------------------------
COPIES TO:
<TABLE>
<S> <C>
FREDERICK W. KANNER, ESQ. JOHN HESSION, ESQ.
DEWEY BALLANTINE LLP TESTA, HURWITZ & THIBEAULT, LLP
1301 AVENUE OF THE AMERICAS 125 HIGH STREET
NEW YORK, NEW YORK 10019 BOSTON, MASSACHUSETTS 02110
(212) 259-8000 (617) 248-7000
</TABLE>
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
AS SOON AS PRACTICABLE AFTER THIS REGISTRATION STATEMENT BECOMES EFFECTIVE.
IF ANY OF THE SECURITIES BEING REGISTERED ON THIS FORM ARE TO BE OFFERED ON
A DELAYED OR CONTINUOUS BASIS PURSUANT TO RULE 415 UNDER THE SECURITIES ACT OF
1933, CHECK THE FOLLOWING BOX: / /
IF THIS FORM IS FILED TO REGISTER ADDITIONAL SECURITIES FOR AN OFFERING
PURSUANT TO RULE 462(B) UNDER THE SECURITIES ACT, PLEASE CHECK THE FOLLOWING BOX
AND LIST THE SECURITIES ACT REGISTRATION STATEMENT NUMBER OF THE EARLIER
EFFECTIVE REGISTRATION STATEMENT FOR THE SAME OFFERING. / / ______________
IF THIS FORM IS A POST-EFFECTIVE AMENDMENT FILED PURSUANT TO RULE 462(C)
UNDER THE SECURITIES ACT, CHECK THE FOLLOWING BOX AND LIST THE SECURITIES ACT
REGISTRATION STATEMENT NUMBER OF THE EARLIER EFFECTIVE REGISTRATION STATEMENT
FOR THE SAME OFFERING. / / ______________
IF THIS FORM IS A POST-EFFECTIVE AMENDMENT FILED PURSUANT TO RULE 462(D)
UNDER THE SECURITIES ACT, CHECK THE FOLLOWING BOX AND LIST THE SECURITIES ACT
REGISTRATION STATEMENT NUMBER OF THE EARLIER EFFECTIVE REGISTRATION STATEMENT
FOR THE SAME OFFERING. / / ______________
IF DELIVERY OF THE PROSPECTUS IS EXPECTED TO BE MADE PURSUANT TO RULE 434,
PLEASE CHECK THE FOLLOWING BOX. / /
------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED(1) PER SHARE(2) PRICE (2) REGISTRATION FEE
<S> <C> <C> <C> <C>
Common Stock ($.01 par value) 4,485,000 shs. $14.00 $62,790,000 $19,027.00
</TABLE>
(1) Includes 585,000 shares that the Underwriters have the option to purchase to
cover any over-allotments.
(2) Estimated solely for the purpose of calculating the registration fee.
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 THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
SUBJECT TO COMPLETION,
OCTOBER 16, 1997
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 REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
3,900,000 SHARES
[LOGO]
COMMON STOCK
-----------
Of the 3,900,000 shares of common stock offered hereby (the "Common Stock"),
3,000,000 shares are being sold by CVC, Inc. ("CVC" or the "Company") and
900,000 shares are being sold by a Selling Stockholder. See "Principal and
Selling Stockholders." The Company will not receive any proceeds from the sale
of the shares by the Selling Stockholder. Prior to this offering, there has been
no public market for the Common Stock. It is currently estimated that the
initial public offering price will be between $12.00 and $14.00 per share. See
"Underwriting" for a discussion of the factors considered in determining the
initial public offering price. Application has been made to list the Common
Stock on the Nasdaq National Market under the symbol "CVCI."
--------------
THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" BEGINNING ON PAGE 6.
-------------
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.
<TABLE>
<CAPTION>
PRICE UNDERWRITING PROCEEDS PROCEEDS
TO DISCOUNTS AND TO TO SELLING
PUBLIC COMMISSIONS(1) COMPANY(2) STOCKHOLDER
<S> <C> <C> <C> <C>
Per Share..................... $ $ $ $
Total(3)...................... $ $ $ $
</TABLE>
(1) The Company and the Selling Stockholder have agreed to indemnify the
Underwriters against certain liabilities under the Securities Act of 1933,
as amended. See "Underwriting."
(2) Before deducting estimated expenses payable by the Company of $750,000.
(3) The Company has granted to the Underwriters a 30-day option to purchase up
to 585,000 additional shares of Common Stock solely to cover
over-allotments, if any. To the extent that such option is exercised, the
Underwriters will offer the additional shares at the Price to Public shown
above. If such option is exercised in full, the total Price to Public,
Underwriting Discounts and Commissions, Proceeds to Company and Proceeds to
Selling Stockholder will be $ , $ , $ and $ ,
respectively. See "Underwriting."
--------------
The shares of Common Stock are offered by the several Underwriters, subject
to prior sale, when, as and if delivered to and accepted by them, and subject to
the right of the Underwriters to reject any order in whole or in part. It is
expected that delivery of the shares of Common Stock will be made at the offices
of BT Alex. Brown Incorporated, Baltimore, Maryland, on or about ,
1997.
BT ALEX. BROWN
HAMBRECHT & QUIST
PAINEWEBBER INCORPORATED
THE DATE OF THIS PROSPECTUS IS , 1997
<PAGE>
[OUTSIDE FLAP]
CVC MAKES THE CONNEXION-REGISTERED TRADEMARK-
CVC's Connexion-Registered Trademark- Cluster Tool offers data storage and
semiconductor customers an integrated thin film process solution using Physical
Vapor Deposition (PVD), Metal-Organic Chemical Vapor Deposition (MOCVD) and
Rapid Thermal Chemical Vapor Deposition (RTCVD).
[Upper Right-hand Corner] Graphic of laptop computer with (i) magnified graphic
of semiconductor chip with accompanying text reading "Advanced semiconductors
for semiconductor industry"; and (ii) magnified graphics of magnetic recording
head and recording head reading/writing to disk drive with accompanying text
reading "MR and GMR read/write heads for data storage industry."
[Left Margin] Photo of two persons operating Connexion-Registered Trademark-800
cluster tool with accompanying text reading "Front view of Connexion-Registered
Trademark-800 with dual load-lock doors."
[Lower Right-hand Corner] Graphic representing overhead view of
Connexion-Registered Trademark-800 Cluster Tool with accompanying text reading
"Connexion-Registered Trademark-800 Cluster Tool configured for MOCUD process."
CONNEXION-TM- is a registered trademark of the Company. OPEN CONNEXION-TM-
and INFINITY-TM- are trademarks of the Company.
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK,
INCLUDING OVER-ALLOTMENT, STABILIZING AND SHORT-COVERING TRANSACTIONS IN SUCH
SECURITIES AND THE IMPOSITION OF A PENALTY BID, DURING AND AFTER THE OFFERING.
SEE "UNDERWRITING."
[INSIDE FRONT COVER GATE #1]
<PAGE>
CVC PROVIDES WORLDWIDE SERVICE AND SUPPORT
CVC operates advanced product development, systems engineering, applications
engineering, customer service and technical support centers in New York,
California, Minnesota, Texas, Europe and Asia.
[Upper Right-hand Corner] Graphic of Connexion-Registered Trademark-800 Central
Wafer Handler with accompanying text reading "Connexion-Registered Trademark-800
Central Wafer Handler supports six process modules and a high throughput robot."
[Upper-Middle Left margin] Software image graphic of overhead view of
Connexion-Registered Trademark-800' cluster tool with accompanying text reading
"CVC Open Connexion-Registered Trademark-Plug and Play Software Application."
[Middle of Page] Graphic of globe with sites of CVC, Inc.'s manufacturing
facilities highlighted.
[Lower-Middle Left Margin] Graphic of semiconductor chip on transport
superimposed over a bed of semiconductor chips.
[Lower Left-hand Corner] Graphic depicting Fremont, California facilities with
accompanying text reading "Fremont, California Facilities."
[Lower-Middle Right Margin] Graphic depicting rows of cluster tool modules in
process of assembly with accompanying text reading "Manufacturing facilities --
sub-assembly."
[Lower Right-hand Corner] Graphic depicting CVC headquarters in Rochester, New
York with accompanying text reading "CVC headquarters in Rochester, NY."
[INSIDE FRONT COVER GATE #2]
We deliver thin film
CVC's Connexion-Registered Trademark- Cluster Tool Technology for Semiconductor
Integrated Circuits and Advanced Metal Interconnect Processes
[Upper Left Hand Corner] Graphic representing wafer.
[Center of Page] Graphic representing MOCVD .13 micro meter 10:1 Aspect Ratio
Copper Gap Fill SEM with accompanying text reading "MOCVD .13 micro meter 10:1
Aspect Ratio Copper Gap Fill SEM."
[Lower-Middle Left Margin] Graphic representing side view of
Connexion-Registered Trademark-MOCVD copper process module with accompanying
text reading "Connexion-Registered Trademark-MOCVD copper process module, side
view."
[Lower Left-hand Corner] Graphic representing semiconductor chip.
[Lower Right-hand Corner] Graphic representing Connexion-Registered
Trademark-800 with attached process modules with accompanying text reading
"Connexion-Registered Trademark-800 accommodates six process modules and two
load-locks."
[INSIDE BACK COVER]
Process Solutions
CVC's Connexion-Registered Trademark- Cluster Tool Technology for Data Storage
MR and GMR Head Thin Film Deposition
[Upper Right-hand Corner] Graphic of Connexion-Registered Trademark-GMR process
module with six 12-inch [cathodes] with accompanying text reading
"Connexion-Registered Trademark-GMR process module with six 12-inch [cathodes]."
<PAGE>
[Middle Left Margin] Graphic of Connexion-Registered Trademark-GMR multi-station
process module with 12-inch targets with accompanying text reading
"Connexion-Registered Trademark-GMR multi-station process modules with 12-inch
targets."
[Middle Right Margin] Graphic of Connexion-Registered Trademark-600 with
attached process modules with accompanying text reading "Connexion 600
accommodating process modules and two load locks."
[Lower Left] Graphic of magnetoresistive head with accompanying text reading
"Magnetoresistive Head."
[Lower Right-hand Corner] Graphic of recording head and hard disk drive.
[Lower Center] Graphic of Infinity-Registered Trademark-Magnetron Plasma with
accompanying text reading "Infinity-Registered Trademark-Magnetron Plasma."
<PAGE>
PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED
INFORMATION, INCLUDING THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES THERETO,
APPEARING ELSEWHERE IN THIS PROSPECTUS.
THE COMPANY
CVC is a leading worldwide supplier of deposition equipment for the
fabrication of thin film recording heads for the data storage industry. The
Company also has made significant advances in the development and initial
delivery of copper deposition equipment for the semiconductor industry. The
Company has leveraged key innovations in integrated process development, vacuum
technology, materials science, chemical and physical vapor deposition
technologies, and software applications to develop process equipment solutions
for the manufacture of both disk drive recording heads and advanced
semiconductor devices. These integrated solutions are optimized for the precise,
highly uniform, repetitive steps required for the deposition of thin film
materials.
The fabrication of disk drive recording heads and semiconductor devices
involves a sequential series of complex but, in many cases, similar processing
steps. Both recording heads and semiconductor devices are formed by building up
a succession of extremely thin, uniform layers of conducting or insulating films
onto substrates or wafers. The need to increase storage density and boost
performance of disk drives has led to the development of smaller device features
and the transition to more advanced recording heads with multiple layers of
different materials and surface structures. In order to increase speed and
performance of semiconductor devices, semiconductor manufacturers are shrinking
the geometries and line widths of integrated circuits, while at the same time
adding multiple, thin film layers of insulating or conducting materials. These
developments in disk drive recording heads and semiconductor devices are being
made possible in large part by significant advancements in the equipment and
processes involved in the deposition of thin films.
The Company's principal product offerings are its CONNEXION Cluster Tool
system and integrated process modules for depositing thin film materials on
substrates. CVC's CONNEXION Cluster Tool is a modular system with positions for
locating up to six process modules around a central wafer handling system. Each
module is equipped to deposit materials using specified deposition methods and
processes in a precise, integrated, vacuum-controlled environment. The Company
currently offers advanced process modules for physical vapor deposition,
metal-organic chemical vapor deposition, inductively coupled plasma soft clean
and rapid thermal processing. CVC's CONNEXION Cluster Tool utilizes a
distributed open architecture design platform and industry-standard
specifications which enable the integration of either Company-supplied or
third-party process modules. Principal applications for the Company's systems
include advanced, magnetoresistive ("MR") and giant magnetoresistive ("GMR")
thin film recording heads for the data storage industry, and high performance,
multi-level interconnect technology for semiconductor device fabrication. The
Company believes that its cluster-oriented approach offers its customers a low
cost of ownership with optimal manufacturing process control, and the
flexibility to extend, with enhanced process capabilities, various deposition
methods across multiple generations of fabrication technologies.
The Company's strategy is to continue its leadership in thin film process
solutions for the data storage industry by focusing its resources on the
advancement of integrated thin film process technology that enables the
fabrication of advanced recording heads used in hard disk drives. The Company
intends to leverage its strategic partnerships with industry-leading data
storage and semiconductor manufacturing customers and research and development
centers. In addition, the Company is targeting copper and other advanced
metallization opportunities in the semiconductor industry. The Company is
committed to providing worldwide customer service and support as it expands its
existing sales and service activities to address on a global basis the advanced
device manufacturing priorities of its customers.
3
<PAGE>
The Company sells its products in the United States and Europe through a
direct sales force supported by its marketing and sales organization. In Japan,
Malaysia, Singapore and Thailand, the Company utilizes a foreign distributor to
sell and service its products, and markets its products in China, Korea and
Taiwan through independent sales representatives. Among the Company's most
significant customers are many of the leading manufacturers of thin film
recording heads for the data storage industry, including Applied Magnetics,
Fujitsu, IBM, Quantum, Read-Rite, Seagate Technology, Inc. ("Seagate
Technology") and TDK, as well as manufacturers of semiconductor devices,
including Analog Devices, General Semiconductor, Sharp and Texas Instruments.
Seagate Technology is the Company's largest customer, representing approximately
46% of the Company's revenues for the nine months ended June 30, 1997, and is
also the Company's largest stockholder, holding approximately 40% of the
Company's voting stock prior to this offering.
The Company was incorporated in 1990 in connection with its acquisition of
CVC Products, Inc. CVC Products, Inc. was founded in 1934 as the experimental
vacuum processing group of Eastman Kodak. In 1997, the Company changed its name
to CVC, Inc. The Company's executive offices are located at 525 Lee Road,
Rochester, New York 14606, and its telephone number at that location is (716)
458-2550.
RISK FACTORS
The Common Stock offered hereby involves a high degree of risk. See "Risk
Factors."
THE OFFERING
<TABLE>
<S> <C>
Common Stock offered by the Company................ 3,000,000 shares
Common Stock offered by the Selling Stockholder.... 900,000 shares
Common Stock to be outstanding after the
offering......................................... 11,947,410 shares(1)
For general corporate purposes,
including working capital, capital
expenditures and repayment of debt. See
"Use of Proceeds."
Use of proceeds....................................
Proposed Nasdaq National Market symbol............. CVCI
</TABLE>
- ------------------------
(1) Includes shares of Common Stock to be issued upon conversion of outstanding
shares of Series A and Series B Convertible Preferred Stock concurrently
with the consummation of the offering. See "Principal and Selling
Stockholders." Excludes 2,630,160 shares issuable upon exercise of
outstanding stock options with a weighted average exercise price of $1.46
per share and 1,186,140 shares issuable upon the exercise of outstanding
warrants at an exercise price of $3.72 per share as of September 30, 1997.
4
<PAGE>
SUMMARY CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
NINE
MONTHS
ENDED
YEAR ENDED SEPTEMBER 30, JUNE 30,
----------------------------------------------------- ---------
1992 1993 1994 1995 1996 1996
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues.................................................. $ 11,680 $ 12,851 $ 13,915 $ 21,358 $ 48,378 $ 34,622
Cost of goods sold........................................ 8,801 8,239 11,795 15,630 33,755 24,516
--------- --------- --------- --------- --------- ---------
Gross margin.............................................. 2,879 4,612 2,120 5,728 14,623 10,106
Operating expenses
Research and development................................ 316 909 1,271 1,214 4,345 3,175
Sales and marketing..................................... 1,786 2,342 2,354 2,924 4,777 3,141
General and administrative.............................. 1,522 1,459 1,248 1,447 2,124 1,679
--------- --------- --------- --------- --------- ---------
Total................................................... 3,624 4,710 4,873 5,585 11,246 7,995
--------- --------- --------- --------- --------- ---------
Income (loss) from operations............................. (745) (98) (2,753) 143 3,377 2,111
Net interest income (expense)............................. (382) (430) (533) (559) (197) (154)
--------- --------- --------- --------- --------- ---------
Income (loss) before income taxes......................... (1,127) (528) (3,286) (416) 3,180 1,957
Income taxes (benefit).................................... (462) 4 36 (546) -- --
--------- --------- --------- --------- --------- ---------
Net income (loss)......................................... $ (665) $ (532) $ (3,322) $ 130 $ 3,180 $ 1,957
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
Pro forma net income per share(1)......................... $ 0.02 $ 0.29 $ 0.18
Weighted average common and common equivalent shares
outstanding(1)(2)....................................... 8,502 11,217 11,165
<CAPTION>
1997
---------
<S> <C>
STATEMENT OF OPERATIONS DATA:
Revenues.................................................. $ 44,640
Cost of goods sold........................................ 29,947
---------
Gross margin.............................................. 14,693
Operating expenses
Research and development................................ 6,543
Sales and marketing..................................... 4,107
General and administrative.............................. 1,883
---------
Total................................................... 12,533
---------
Income (loss) from operations............................. 2,160
Net interest income (expense)............................. (431)
---------
Income (loss) before income taxes......................... 1,729
Income taxes (benefit).................................... 738
---------
Net income (loss)......................................... $ 991
---------
---------
Pro forma net income per share(1)......................... $ 0.09
Weighted average common and common equivalent shares
outstanding(1)(2)....................................... 11,362
</TABLE>
<TABLE>
<CAPTION>
JUNE 30, 1997
----------------------
<S> <C> <C>
AS
ACTUAL ADJUSTED(3)
--------- -----------
BALANCE SHEET DATA:
Cash and cash equivalents................................................................. $ 105 $ 24,271
Working capital........................................................................... 5,873 32,393
Total assets.............................................................................. 35,079 66,445
Current portion of long and short-term debt............................................... 5,855 3,501
Long-term debt, less current portion...................................................... 2,485 685
Total stockholders' equity................................................................ 10,330 45,850
</TABLE>
- ------------------------
(1) Pro forma historical earnings per share has been omitted for each of the
fiscal years ended September 30, 1992, 1993 and 1994 since net losses
existed in each of those years and, therefore, pro forma earnings per share
information is not considered meaningful in light of the conversion of
outstanding preferred stock which would have a material anti-dilutive effect
on pro forma earnings per share in such years. See Notes to Consolidated
Financial Statements for further discussion of the computation of pro forma
earnings per share.
(2) See Notes to Consolidated Financial Statements for information concerning
weighted average common and common equivalent shares used in computing pro
forma earnings per share.
(3) Adjusted to give effect to the sale of the 3,000,000 shares of Common Stock
offered by the Company hereby (at an assumed initial public offering price
of $13.00 per share) and the application of the estimated net proceeds
thereof as set forth under "Use of Proceeds."
------------------------------
EXCEPT AS OTHERWISE INDICATED, ALL INFORMATION IN THIS PROSPECTUS (I) GIVES
RETROACTIVE EFFECT TO AN INCREASE IN THE NUMBER OF AUTHORIZED SHARES OF THE
COMPANY'S COMMON STOCK ON OCTOBER 15, 1997 AND A 3-FOR-1 SPLIT OF THE COMPANY'S
COMMON STOCK ON OCTOBER 31, 1997 AND (II) ASSUMES NO EXERCISE OF THE
UNDERWRITERS' OVER-ALLOTMENT OPTION. SEE "UNDERWRITING."
5
<PAGE>
RISK FACTORS
IN ADDITION TO THE OTHER INFORMATION INCLUDED IN THIS PROSPECTUS, THE
FOLLOWING RISK FACTORS SHOULD BE CONSIDERED CAREFULLY IN EVALUATING AN
INVESTMENT IN THE SHARES OF COMMON STOCK OFFERED BY THIS PROSPECTUS. CERTAIN
STATEMENTS IN THIS PROSPECTUS ARE FORWARD-LOOKING STATEMENTS WITHIN THE MEANING
OF SECTION 27A OF THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
AND SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED (THE
"EXCHANGE ACT"). SUCH FORWARD-LOOKING STATEMENTS MAY BE FOUND IN THE MATERIAL
SET FORTH UNDER THE HEADINGS "PROSPECTUS SUMMARY," "MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS" AND "BUSINESS," AS
WELL AS ELSEWHERE IN THIS PROSPECTUS. THE COMPANY'S ACTUAL RESULTS COULD DIFFER
MATERIALLY FROM THOSE ANTICIPATED IN SUCH FORWARD-LOOKING STATEMENTS AS A RESULT
OF CERTAIN FACTORS, INCLUDING THOSE DISCUSSED BELOW AND ELSEWHERE IN THIS
PROSPECTUS. ANY FORWARD-LOOKING STATEMENTS ARE MADE AS OF THE DATE OF THIS
PROSPECTUS AND THE COMPANY ASSUMES NO OBLIGATION TO UPDATE ANY SUCH
FORWARD-LOOKING STATEMENTS OR TO UPDATE THE FACTORS WHICH COULD CAUSE ACTUAL
RESULTS TO DIFFER MATERIALLY FROM THOSE ANTICIPATED IN SUCH FORWARD-LOOKING
STATEMENTS.
FLUCTUATIONS IN OPERATING RESULTS. The Company derives a substantial
portion of its revenue from a relatively small number of systems which typically
range in price from approximately $1.0 million to $3.0 million. As a result, the
timing of significant orders or a reduction in the number of systems shipped in
a quarter could have a material effect on the Company's revenue and results of
operations for that quarter. The Company's quarterly and annual results have in
the past significantly varied and may in the future vary significantly due to a
number of factors, including: market acceptance of the Company's products; the
timing, seasonality, cancellation or delay of customer orders; the loss of a
significant customer; increased research, development or marketing expenses
associated with new product introductions, and the Company's ability to
introduce new products and technologies successfully and on a timely basis; the
introduction of new products or enhancements by competitors; changes in the
Company's pricing policies or those of its competitors; customer order deferrals
in anticipation of upgrades and new products; the level of utilization of the
Company's production capacity; the ability of the Company to manufacture, test
and deliver products in a timely and cost-effective manner; the sufficiency of
personnel and capital resources to support operations; the publication of
opinions by industry analysts about the Company and its products, or its
competitors or their products; and other factors, such as levels of expenses
relative to revenue levels, personnel changes and general conditions in the data
storage and semiconductor industries. Due to all of the foregoing factors, in
some future quarter the Company's operating results may be below the
expectations of public market analysts and investors. In such event, the price
of the Common Stock would likely be materially adversely affected. The impact of
these and other factors on the Company's revenues and operating results in any
future period cannot be forecasted with certainty.
The Company's expense levels are based, in part, on its expectations as to
future revenues. Because the Company's sales are generally made pursuant to
purchase orders that are subject to cancellation, modification, quantity
reduction or rescheduling on short notice and without significant penalties, the
Company's backlog as of any particular date may not be indicative of sales for
any future period, and such changes could cause the Company's net sales to fall
below expected levels. If revenue levels are below expectations, operating
results are likely to be materially and adversely affected. Net income, if any,
and gross margins may be disproportionately affected by a reduction in net sales
because a proportionately smaller amount of the Company's expenses varies with
its revenues.
Due to potential fluctuations in quarterly operating results, the Company
believes that quarter-to-quarter comparisons of its results of operations should
not be relied upon as indicators of future performance.
DEPENDENCE ON DATA STORAGE AND SEMICONDUCTOR MARKETS. The Company's
business depends upon the capital expenditures of manufacturers of data storage
systems and semiconductors which, in turn, depend upon the current and
anticipated market demand for computer disk drives and for products utilizing
semiconductor devices. Those markets are highly cyclical and have historically
experienced periodic
6
<PAGE>
downturns which have had a material adverse effect on the demand for the type of
capital equipment and process technology offered by the Company. In addition,
the need for continued investment in research and development, substantial
capital equipment requirements and extensive ongoing customer service and
support requirements worldwide will limit the Company's ability to reduce
expenses in response to any such downturn or slowdown. The Company's revenue,
gross margins and results of operations would likely be materially and adversely
affected if downturns or slowdowns in the rate of capital investment in the data
storage or semiconductor industries occur in the future. Moreover, although the
data storage and semiconductor industries may experience growth that causes
significant growth in the data storage and semiconductor capital equipment
industries, there can be no assurance that such growth can be sustained or that
the Company will be positioned to benefit from such growth. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations."
DEPENDENCE ON THE COMPANY'S CONNEXION CLUSTER TOOL SYSTEM. The Company's
principal product is a line of capital equipment, known as the CONNEXION Cluster
Tool, which together with its associated process modules is used to manufacture
disk drive recording heads and semiconductor devices. Through September 30,
1997, the Company had shipped more than 60 of such tools, along with over 200
such modules. The Company's CONNEXION Cluster Tool systems accounted for 45%,
71% and 84% of its net sales for fiscal 1995, 1996 and for the nine months ended
June 30, 1997, respectively. The Company believes that its future growth depends
in large part upon its ability to gain customer acceptance of its CONNEXION
Cluster Tool and related technology. Market acceptance of the Company's
CONNEXION Cluster Tool system depends upon numerous factors, including cost of
ownership, throughput, process flexibility, performance and reliability and
availability of customer support. The Company intends periodically to develop
and introduce enhanced versions of its CONNEXION Cluster Tool system. Failure to
enhance continually the Company's CONNEXION Cluster Tool system may impact its
future market acceptance. There can be no assurance that the Company will be
successful in obtaining broad market acceptance of the CONNEXION Cluster Tool
system or any future enhanced version of the system. Any technical or
manufacturing difficulties with the CONNEXION Cluster Tool (or subsequent
enhancements of the CONNEXION Cluster Tool system), or the failure to gain
customer acceptance thereof, would have a material adverse effect on the
Company's business, financial condition and results of operations. See
"Business--Competition."
RAPID TECHNOLOGICAL CHANGE; DEPENDENCE ON NEW PRODUCTS AND PROCESSES. The
data storage and semiconductor equipment manufacturing industries are subject to
rapid technological change and new product introductions, as well as evolving
industry standards. The development of more complex data storage systems and
semiconductor devices and the increased overall demand for such products has
driven the need for new facilities, equipment and processes to produce such
systems and devices at an acceptable cost. As a result of these factors, the
Company believes that data storage systems and semiconductor device
manufacturers are increasingly relying on equipment manufacturers like the
Company to design and develop more efficient equipment, design and implement
improved processes, and integrate their equipment with that of other equipment
manufacturers. Therefore, the Company believes that its future success will
depend, in part, upon its ability to continue to meet such evolving industry
standards by enhancing its existing products and their process capabilities and
by designing and developing new technologies, processes and products which
compete effectively on the basis of price and performance and which adequately
address customer requirements.
There can be no assurance that the Company will be successful in the
introduction and volume manufacture of new products or that the Company will be
able to develop and introduce, in a timely manner, new products or enhancements
to its existing products and processes which satisfy customer needs or achieve
market acceptance. The failure of the Company to accomplish any of the above
would adversely affect the Company's business, financial condition and results
of operations. The success of the Company in developing, introducing and selling
new and enhanced equipment depends upon a variety of factors, including product
selection, timely and efficient completion of product design and development,
timely
7
<PAGE>
and efficient implementation of manufacturing and assembly processes, product
performance in the field and effective sales and marketing.
The Company has committed significant resources to the development of
advanced copper deposition technology for high performance integrated circuit
fabrication for the semiconductor market. The development of this technology is
emerging and highly complex. Recently, several semiconductor device
manufacturers have announced that they have made advancements in copper-based
technology, and other competitors with substantially greater resources than the
Company's can be expected to invest in research and development of similar
technologies. There can be no assurance that the Company's efforts in this area
will be technologically successful or, even if technologically successful, will
be commercially accepted by the marketplace. Failure by the Company to achieve
commercial success in its pursuit of copper-based technology for the
semiconductor industry could have a material adverse effect on the Company's
prospects. See "Business--Industry Background," "Business--Strategy," and
"Business--Research, Development and Engineering."
CONCENTRATION OF CUSTOMERS. The Company's customer base is highly
concentrated among a limited number of large customers, primarily because the
data storage and the semiconductor industries are dominated by a limited number
of large companies. In fiscal 1995, 1996 and for the nine months ended June 30,
1997, revenues from the Company's five largest customers represented
approximately 72%, 81% and 84%, respectively, of the Company's total revenues.
In fiscal year 1995 and for the nine months ended June 30, 1997, three customers
each accounted for more than 10% of the Company's revenues, and in fiscal year
1996, two customers each accounted for more than 10% of the Company's revenues.
The Company generally does not have continuing purchase agreements with its
customers and does not have any written agreements that require customers to
purchase fixed minimum quantities of products. The Company's sales to specific
customers tend to vary significantly from year to year depending upon customers'
budgets for capital expenditures and new product introductions. The Company
anticipates that its revenue will continue to depend on a limited number of
major customers, although the companies considered to be major customers and the
percentage of the Company's revenue represented by each major customer may vary
from quarter to quarter.
The loss of, or reduced demand for products or related services from, any of
the Company's major customers could have a material adverse effect on the
Company's business, financial condition and results of operations. The Company's
future success will depend, in part, upon its ability to obtain orders from new
customers, as well as the financial condition of its customers and industry
conditions in the data storage and semiconductor markets. See
"Business--Customers" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations."
RELATIONSHIP WITH SEAGATE TECHNOLOGY. A significant portion of the
Company's revenues for the last two years and for the nine months ended June 30,
1997 has been attributable to one customer, Seagate Technology. In fiscal 1995,
1996 and for the nine months ended June 30, 1997, revenues derived from sales of
products to Seagate Technology accounted for 27%, 57% and 46%, respectively, of
the Company's total revenues. The Company has no marketing, distribution,
technology licensing, guaranteed purchase or any other type of collaborative
agreement or commitment with Seagate Technology. The loss of Seagate Technology
as a customer, any material reduction in orders by Seagate Technology, including
reductions due to market or competitive conditions or the determination by
Seagate Technology not to adopt the Company's next generation of products, would
have a material adverse effect on the Company's business, financial condition
and results of operations.
Seagate Technology is also the Company's largest stockholder and two of its
representatives are members of the Company's Board of Directors. Following
completion of the offering being made hereby (the "Offering"), Seagate
Technology will own shares representing approximately 30.4% of the Company's
outstanding Common Stock (29.0% of such stock if the Underwriters'
over-allotment option is exercised in full). In addition, pursuant to a warrant
acquired by Seagate Technology in 1995, Seagate Technology has
8
<PAGE>
the right to acquire 1,186,140 shares of Common Stock at an exercise price of
$3.72 per share. Assuming full exercise of such warrant (and no other change in
the Company's outstanding Common Stock), Seagate Technology would own an
aggregate of approximately 36.7% of the Company's outstanding Common Stock
(35.1% of such stock if the Underwriters' over-allotment option is exercised in
full). As a result, Seagate Technology may be in a position to influence the
election of the Company's directors and the outcome of corporate actions. This
concentration of ownership may have the effect of delaying or preventing a
change in control of the Company and of influencing the business and affairs of
the Company. See "Business--Relationship with Seagate Technology," "Management"
and "Certain Transactions."
HIGHLY COMPETITIVE INDUSTRIES. The data storage and semiconductor equipment
industries are highly competitive. The Company faces substantial competition in
the markets in which it competes from both established competitors and potential
new entrants. In the data storage market, principal competitors for the
Company's products include Balzers Process Systems ("Balzers"), Sputtered Films,
Inc. ("Sputtered Films"), Nordiko Ltd. ("Nordiko") and Veeco Instruments. In the
semiconductor market, the Company's competitors include Applied Materials and
Novellus Systems ("Novellus"). Certain of the Company's major competitors have
more experience with high volume manufacturing, have broader product lines and
name recognition, have substantially larger customer bases and greater customer
service capabilities and have substantially greater financial and marketing
resources than the Company. The Company may also face future competition from
new market entrants.
The Company expects its competitors to continue to improve the design and
performance of their products. There can be no assurance that the Company's
competitors will not develop enhancements to, or future generations of,
competitive products that will offer superior price or performance features. In
addition, a substantial investment is required by customers to install and
integrate capital equipment into a production line. As a result, once a
manufacturer has selected a particular supplier's capital equipment, the Company
believes that the manufacturer will be generally reliant upon that equipment for
the specific production line application. Accordingly, the Company may
experience difficulty in selling a product to a particular customer for a
significant period of time if that customer selects a competitor's product.
Increased competitive pressure could lead to lower prices for the Company's
products, thereby adversely affecting the Company's operating results. There can
be no assurance that the Company will be able to compete successfully in the
future. See "Business--Competition."
LENGTHY SALES CYCLE. Sales of the Company's systems depend, in significant
part, upon the decision of a prospective customer to add new manufacturing
capacity or to expand existing manufacturing capacity, both of which typically
involve a significant capital commitment. The Company may experience delays in
finalizing system sales following initial system qualification while the
customer evaluates and receives approvals for the initial purchase of the
Company's systems and completes a sales cycle of 12 to 18 months, during which
the Company may expend substantial funds and management effort. Lengthy sales
cycles subject the Company to a number of significant risks, including inventory
obsolescence and fluctuations in operating results over which the Company has
little or no control. See "Business--Marketing, Sales and Service."
DEPENDENCE ON CERTAIN SUPPLIERS. Certain of the components and
subassemblies included in the Company's systems are purchased from a limited
number of suppliers. Although the Company seeks to reduce its dependence on
these suppliers, disruption or termination of certain of these sources could
occur and such disruptions could have at least a temporary adverse effect on the
Company's operations. A prolonged inability to obtain certain components could
have a material adverse effect on the Company's business and results of
operations. See "Business--Manufacturing."
RISKS ASSOCIATED WITH INTERNATIONAL SALES. In fiscal 1995, 1996 and the
nine months ended June 30, 1997, sales to customers located outside of the
United States accounted for 13%, 19% and 28%, respectively, of the Company's
revenues in each such period. The Company intends to expand its operations
outside the United States and enter additional international markets, which will
require
9
<PAGE>
significant management attention and financial resources. The Company's
international business may be affected by factors such as the risk of
government-financed competition, changes in trade policies, tariff regulations
and difficulties in obtaining U.S. export licenses.
Most international sales are made through several independent sales
representatives and a third party distributor. There can be no assurance that
they will continue to market and distribute the Company's products successfully.
The implementation of new distribution and sales arrangements could result in
delays and disruptions in the Company's international sales and customer support
efforts, which could reduce sales and have a material adverse effect on the
Company's business, financial condition and results of operations. There can be
no assurance that these factors will not have a material adverse effect on the
Company's future international sales and, consequently, on the Company's
business, financial condition and results of operations. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations,"
"Business--Strategy" and "Business--Marketing, Sales and Service."
DEPENDENCE ON KEY PERSONNEL. The Company's future operating results depend
in significant part upon the continued contributions of its officers and
personnel, many of whom would be difficult to replace. Many of the Company's
employees are not bound by noncompetition agreements, and competitors may
attempt to recruit the Company's key employees. The loss of its officers or
other key personnel, who are critical to the Company's success, could have a
material adverse effect on the business, financial condition and results of
operations of the Company. Among the competitive factors in attracting personnel
are compensation and benefits, equity incentives and geographic location. There
can be no assurance that the Company will be successful in attracting or
retaining such personnel. The loss of the services of existing personnel, as
well as the failure to recruit additional personnel, could materially and
adversely affect the Company's business, financial condition and results of
operations. See "Business--Employees," "Management--Directors and Executive
Officers," and "Management--Key Employees."
MANAGEMENT OF GROWTH. The Company is experiencing a period of rapid growth
and expansion which has placed, and is expected to continue to place,
significant demands on the Company's resources. The management of such growth
will require the Company to continue to improve and expand its management,
operational and financial systems, manufacturing procedures and controls, and
other internal management systems, quality control, production and service
capabilities. The failure to manage growth effectively, including delays or
difficulties in implementing new products, procedures and controls in a timely
manner and without disruption of the Company's operations, could have a material
adverse effect on the Company's business, financial condition and results of
operations.
The recent growth in the Company's product offerings has required the
Company to invest in additional equipment, personnel, physical facilities and
other infrastructure to meet current and anticipated manufacturing demands. The
Company has hired, and expects that it will need to continue to hire, a number
of new employees, particularly personnel with technical backgrounds for the
Company's engineering and technical support staffs. The future success of the
Company also will depend on its ability to attract and retain qualified
technical, marketing and management personnel, particularly highly skilled
design, process and test engineers, for whom competition is intense. In
particular, the current availability of qualified engineers is limited, and
competition among companies for experienced engineering personnel is very
strong. The market for such personnel has become increasingly competitive,
particularly in California where there has been a significant increase in the
business activities of other companies in the data storage and semiconductor
manufacturing sectors. Because of this competition for qualified labor, the
Company has occasionally experienced delays in meeting its staffing
requirements. Protracted inability of the Company to recruit and train adequate
numbers of qualified personnel on a timely basis could adversely affect the
Company's ability to manufacture, sell and support its products. The Company has
significantly expanded its infrastructure to support increased revenues,
including the hiring of additional personnel, and has made and expects to
continue to make substantial investments in research, development and
engineering, sales and marketing and business information systems. There can be
no assurance that the Company will be able to achieve a rate of growth or level
of sales in any future period commensurate with its
10
<PAGE>
increased level of expenses. There can be no assurance that the Company will be
able to adequately increase its manufacturing facilities and capacity to meet
demand for its products or that, in the event of a downturn or slowdown in such
demand, the Company will be able to reduce its production activities or absorb
its increased overhead and outsourcing costs. The Company expects that its
operating expenses will continue to increase. There can be no assurance that the
Company's future sales will increase in an amount necessary to cover planned
increases in operating expenses. Continued expansion of the Company's operations
could significantly strain the Company's management, financial and other
resources. See "Business--Marketing, Sales and Service" and
"Business--Employees."
PATENTS AND OTHER INTELLECTUAL PROPERTY. The Company believes that the
success of its business depends more on such factors as the technical expertise
and innovative skills of its employees than on patents, copyrights, trade
secrets or other intellectual property rights. Nevertheless, the success of the
Company may depend in part on patents. As of September 30, 1997, the Company had
obtained two U.S. patents and had 15 U.S. patent applications pending on its
behalf. In addition, the Company has eight foreign patent applications pending
on its behalf. The Company's U.S. patents expire at various times from 2012 to
2015. There can be no assurance that the Company's pending patent applications
or any future applications will be approved, that any patents will provide it
with competitive advantages or will not be challenged by third parties, or that
the patents of others will not have an adverse effect on the Company's ability
to do business. Because foreign patents may afford less protection under foreign
law than is available under U.S. patent law, there can be no assurance that any
such patents issued to the Company will adequately protect the Company's
proprietary information. There can be no assurance that others will not
independently develop similar products, duplicate the Company's products or, if
patents are issued to the Company, design around the patents issued to the
Company. In addition to patent protection, the Company also relies upon trade
secret protection, employee and third-party nondisclosure agreements and other
intellectual property protection methods to protect its confidential and
proprietary information. Despite these efforts, there can be no assurance that
others will not independently develop substantially equivalent proprietary
information and techniques or otherwise gain access to the Company's trade
secrets or disclose such technology or that the Company can meaningfully protect
its trade secrets.
There has been substantial litigation regarding patent and other
intellectual property rights in the semiconductor, data storage and related
industries. The Company has in the past been, and may in the future be, notified
of allegations that it may be infringing intellectual property rights possessed
by others. No assurance can be given that infringement claims by third parties
will not be asserted. In the future, protracted litigation may be necessary to
defend the Company against alleged infringement of third party rights. Any such
litigation, even if ultimately successful in defense of the Company, could
result in substantial cost and diversion of time and effort by management, which
by itself could have a material adverse effect on the Company's business,
financial condition and results of operations. Adverse determinations in such
litigation could result in the Company's loss of proprietary rights, subject the
Company to significant liabilities (including treble damages under certain
circumstances), require the Company to seek licenses from third parties, or
prevent the Company from manufacturing or selling its products, any of which
could have a material adverse effect on the Company's business, financial
condition and results of operations. Further, there can be no assurance that any
such third party license will be available on reasonable terms or at all. See
"Business--Patents and Other Proprietary Rights."
ENVIRONMENTAL REGULATION. The Company is subject to a variety of
governmental regulations related to the use, storage, handling, discharge or
disposal of toxic, volatile or otherwise hazardous chemicals used in the
manufacturing process. The Company believes that it is currently in compliance
in all material respects with these regulations and that it has obtained all
necessary environmental permits to conduct its business, which permits generally
relate to the discharge of hazardous waste. Any failure by the Company to comply
with regulations or to control the use, disposal or storage of, or adequately
restrict the discharge of, hazardous substances could subject the Company to
future liabilities. See "Business--Manufacturing."
11
<PAGE>
ABSENCE OF PUBLIC MARKET; VOLATILITY OF STOCK PRICE. Prior to the Offering,
there has been no public market for the Common Stock and there can be no
assurance that an active trading market will develop or be sustained upon the
completion of the Offering, or that the market price of the Common Stock will
not decline below the initial public offering price. The initial public offering
price of the Common Stock offered hereby has been determined by negotiations
among the Company, the Selling Stockholder and the Underwriters. The market
price for shares of the Common Stock may be highly volatile depending on news
announcements of the Company, its competitors, customers or other entities
related to quarterly operating results or other matters, general trends in the
Company's industry, changes in general market conditions and other factors. In
addition, in recent years the stock market in general and the market for shares
of small capitalization and semiconductor industry-related companies in
particular, have experienced extreme price fluctuations which have often been
unrelated to the operating performance of affected companies. Any such
fluctuations in the future could adversely affect the market price of the
Company's Common Stock. See "Underwriting."
DILUTION. The public offering price is substantially higher than the book
value per share of the currently outstanding Common Stock. Investors purchasing
shares of Common Stock in the Offering will therefore suffer immediate and
substantial dilution of $9.14 per share in the net tangible book value of the
Common Stock from the initial public offering price. See "Dilution."
ANTI-TAKEOVER EFFECT OF CERTAIN CHARTER PROVISIONS. The Company's Restated
Certificate of Incorporation and Restated By-laws, as well as the Delaware
General Corporation Law, contain provisions that may make it more difficult for
a third-party to acquire, or may discourage acquisition bids for, the Company.
These provisions could limit the price that certain investors might be willing
to pay in the future for shares of the Common Stock. In addition, shares of the
Company's preferred stock may be issued in the future without further
stockholder approval and upon such terms and conditions, and having such rights,
privileges and preferences, as the Board of Directors may determine. The rights
of the holders of Common Stock will be subject to, and may be materially and
adversely affected by, the rights of any holders of preferred stock that may be
issued in the future, including preferential rights with respect to voting,
payment of dividends or distributions upon liquidation. The issuance of
preferred stock, while providing desirable flexibility in connection with
possible acquisitions and other corporate purposes, could have the effect of
making it more difficult for a third party to acquire, or discourage a third
party from acquiring, a majority of the outstanding voting stock of the Company.
The Company has no present plans to issue any shares of preferred stock. See
"Description of Capital Stock."
SHARES ELIGIBLE FOR FUTURE SALE. Upon consummation of the Offering, there
will be 11,947,410 outstanding shares of Common Stock. The shares sold in the
Offering will be freely tradable without restriction under the Securities Act,
except to the extent acquired by affiliates of the Company. The executive
officers, directors and certain employees of the Company, and certain
stockholders, who in the aggregate will hold approximately 8,848,935 shares of
Common Stock, have agreed that for a period of 180 days following the date of
this Prospectus, they will not offer, pledge, sell, contract to sell, or
otherwise transfer or dispose of, Common Stock without the prior written consent
of BT Alex. Brown Incorporated. Upon expiration of the 180-day period, at least
7,852,260 shares of Common Stock will be eligible for sale pursuant to Rule 144
under the Securities Act, subject in some cases to compliance with Rule 144
volume limitations, of which 6,665,460 shares are held by officers, directors
and affiliates of the Company. Sales of a substantial amount of such shares, or
the perception that such sales will occur, could have a significant adverse
effect on the market price of the Common Stock. See "Shares Eligible for Future
Sale."
CONTROL BY EXISTING STOCKHOLDERS. The Company's principal stockholders and
the Company's executive officers and directors will beneficially own
approximately 63.9% of the Company's outstanding shares of Common Stock (67.2%
if Seagate Technology exercises in full its warrant to purchase Common Stock)
immediately following this Offering (assuming no exercise of currently
exercisable stock options). Accordingly, these stockholders will be able to
elect all of the Company's directors, control the management and
12
<PAGE>
affairs of the Company and determine the outcome of corporate actions requiring
stockholder approval, such as mergers and acquisitions, regardless of how other
stockholders of the Company may vote. Such a concentration of ownership by such
persons or entities may have a significant effect in delaying, deferring or
preventing a change in control of the Company and may adversely affect the
voting and other rights of other holders of Common Stock. See
"Management--Executive Officers and Directors," "Certain Transactions" and
"Principal and Selling Stockholders."
ABSENCE OF DIVIDENDS. The Company has never paid cash dividends on its
Common Stock. The Company currently intends to retain earnings to finance the
growth and development of its business and does not anticipate paying cash
dividends in the foreseeable future. In addition, the Company is currently
restricted under the terms of certain of its credit agreements from paying any
dividends to stockholders without the prior written consent of the lenders. See
"Dividend Policy."
13
<PAGE>
THE COMPANY
The Company's principal executive offices are located at 525 Lee Road,
Rochester, New York 14606, and its telephone number at that address is (716)
458-2550. References in this Prospectus to the "Company" refer collectively to
CVC, Inc. and its subsidiary, CVC Products, Inc. ("CVC Products"). The Company's
operations are conducted through such subsidiary.
USE OF PROCEEDS
The net proceeds from the sale of the 3,000,000 shares of Common Stock being
sold by the Company hereby (assuming an initial public offering price of $13.00
per share) are estimated to be $35.5 million ($42.6 million if the Underwriters'
over-allotment option is exercised in full), after deducting the underwriting
discounts and commissions and estimated offering expenses. The Company will not
receive any proceeds from the sale of shares by the Selling Stockholder. See
"Principal and Selling Stockholders."
The principal purposes of the Offering are to increase the Company's equity
capital, to create a public market for the Common Stock and to facilitate future
access by the Company to public equity markets. The Company intends to use the
proceeds of the Offering for general corporate purposes, including approximately
$7.2 million for capital expenditures relating to facility expansion and
manufacturing and demonstration equipment, $4.2 million for the repayment of
debt and the balance for additional working capital. The amounts actually
expended by the Company for working capital purposes will vary significantly
depending upon a number of factors, including future revenue growth, the amount
of cash generated by the Company's operations and the progress of the Company's
product development efforts.
A portion of the net proceeds may also be used for the acquisition of
businesses, products and technologies that are complementary to those of the
Company. The Company has no plans, commitments or agreements with respect to any
such acquisition as of the date of this Prospectus. The Company has not yet
identified specific uses for such proceeds and will have discretion over their
use and investment. Pending such uses, the Company intends to invest the net
proceeds from the Offering in short-term, investment grade, interest-bearing
securities.
DIVIDEND POLICY
The Company has never paid or declared cash dividends on its Common Stock.
The Company currently intends to retain all future earnings for its business and
does not anticipate paying cash dividends in the foreseeable future. The Company
is currently restricted under the terms of certain of its credit agreements from
paying any dividends to stockholders without the prior written consent of the
lenders. Future dividends, if any, will depend on, among other things, the
Company's results of operations, capital requirements, restrictions in loan
agreements and on such other factors as the Company may, in its discretion,
consider relevant.
14
<PAGE>
CAPITALIZATION
The following table sets forth as of June 30, 1997 (i) the capitalization of
the Company and (ii) such capitalization, as adjusted to reflect the issuance
and sale of 3,000,000 shares of Common Stock by the Company, at an assumed
initial public offering price of $13.00 per share, and after deducting
underwriting discounts and commissions and estimated offering expenses, and the
application of the estimated net proceeds thereof as set forth under "Use of
Proceeds," as well as the conversion of all the outstanding shares of the
Company's Series A and Series B Preferred Stock into an aggregate of 7,673,520
shares of Common Stock upon consummation of the Offering. This table should be
read in conjunction with the Company's Consolidated Financial Statements and the
Notes thereto and Management's Discussion and Analysis of Financial Condition
and Results of Operations included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
JUNE 30, 1997
-------------------------
<S> <C> <C>
ACTUAL AS ADJUSTED(2)
--------- --------------
<CAPTION>
(IN THOUSANDS)
<S> <C> <C>
Short-term debt and current portion of long-term debt.................................. $ 5,855 $ 3,501
Long-term debt, less current portion(1)................................................ 2,485 685
Stockholders' equity:
Preferred stock, $.01 par value, 102,500 shares authorized; shares issued and
outstanding:
Series A - 1,685 shares (none as adjusted)........................................... 1,685 --
Series B - 60,492 shares (none as adjusted).......................................... 8,355 --
Common stock, $.01 par value per share; 50,000,000 shares authorized; 1,213,890
shares issued and outstanding; 11,887,410 shares issued and outstanding (as
adjusted).......................................................................... 4 119
Additional paid-in capital........................................................... 477 45,922
Accumulated deficit.................................................................. (105) (105)
Minimum pension liability............................................................ (86) (86)
--------- -------
Total stockholders' equity........................................................... 10,330 45,850
--------- -------
Total capitalization............................................................... $ 18,670 $ 50,036
--------- -------
--------- -------
</TABLE>
- ------------------------
(1) For information concerning the Company's long-term debt, see "Management's
Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources" and Notes to Consolidated
Financial Statements.
(2) Gives effect as of June 30, 1997 to the increase in authorized shares of
Common Stock and the issuance of Common Stock as a dividend to effect a
3-for-1 split of the Common Stock on October 31, 1997. See Notes to
Consolidated Financial Statements.
15
<PAGE>
DILUTION
The net tangible book value of the Company, as of June 30, 1997, was
$10,330,157, or $1.16 per share of Common Stock. Net tangible book value per
share represents the amount of total tangible assets of the Company reduced by
the amount of its total liabilities divided by the total number of shares of
Common Stock outstanding (which assumes the conversion of Series A and Series B
Convertible Preferred Stock upon consummation of the Offering). Without taking
into account any other change in such net tangible book value after June 30,
1997, other than to give effect to the receipt by the Company of the estimated
net proceeds of $35,520,000 (assuming an initial public offering price of $13.00
per share) from the sale of the 3,000,000 shares of Common Stock offered by the
Company hereby (after deducting the estimated underwriting discounts and
commissions and estimated offering expenses), the pro forma net tangible book
value of the Company as of June 30, 1997, would have been $45,850,157, or $3.86
per share. This represents an immediate increase in such net tangible book value
of $2.70 per share to existing stockholders and an immediate dilution of $9.14
per share to new investors purchasing shares in this Offering. The following
table illustrates this per share dilution:
<TABLE>
<S> <C> <C>
Assumed initial public offering price per share........... $ 13.00
Net tangible book value per share before this
Offering.............................................. $ 1.16
Increase per share attributable to new investors........ 2.70
-----------
Pro forma net tangible book value per share after this
Offering................................................ 3.86
---------
Dilution per share to new investors....................... $ 9.14
---------
---------
</TABLE>
The following table sets forth on a pro forma basis, as of June 30, 1997,
the number of shares of Common Stock purchased from the Company, the total
consideration paid to the Company and the average price per share paid by the
existing stockholders (which assumes the conversion of Series A and Series B
Convertible Preferred Stock upon consummation of the Offering) and by the
purchasers of the shares of Common Stock offered by the Company hereby (before
deduction of estimated underwriting discounts and commissions and estimated
offering expenses), assuming an initial public offering price of $13.00 per
share.
<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION
------------------------- -------------------------- AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Existing stockholders(1)........................... 8,887,410 74.8% $ 11,700,000 23.1% $ 1.32
New investors...................................... 3,000,000 25.2 39,000,000 76.9 13.00
------------ ----- ------------- -----
Total............................................ 11,887,410 100.0% $ 50,700,000 100.0%
------------ ----- ------------- -----
------------ ----- ------------- -----
</TABLE>
- ------------------------
(1) The sale by the Selling Stockholder in this Offering will reduce the number
of shares held by existing stockholders to 7,987,410 shares, or 67% of the
total number of shares of Common Stock to be outstanding after the Offering
and will increase the number of shares held by the new investors to
3,900,000 shares, or 33% of the total number of shares of Common Stock to be
outstanding after the Offering. See "Principal and Selling Stockholders."
The foregoing discussion and tables assume no exercise of any outstanding
stock options or warrants. As of June 30, 1997, an aggregate of 2,426,760 shares
of Common Stock were issuable upon the exercise of outstanding options to
purchase Common Stock at a weighted average exercise price of $1.16 per share
(of which options to purchase 1,418,760 shares were then exercisable). At that
date, there were outstanding warrants to purchase 19,769 shares of the Company's
Series B Convertible Preferred Stock at an exercise price of $223.17 per share.
Upon completion of the Offering, such warrants will be converted into warrants
to purchase 1,186,140 shares of Common Stock at an exercise price of $3.72 per
share. To the extent such options and warrants are exercised, there will be
further dilution to the new investors.
16
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
The following table sets forth selected financial data of the Company for
and as of the fiscal years ended September 30, 1992, 1993, 1994, 1995 and 1996,
as of the nine months ended June 30, 1997 and for the nine months ended June 30,
1996 and 1997. The selected financial data as of September 30, 1995 and 1996 and
for the three years ended September 30, 1996 have been derived from the
Company's audited consolidated financial statements which appear elsewhere in
this Prospectus. The selected financial data as of September 30, 1992, 1993 and
1994 and for the two years ended September 30, 1993 have been derived from the
Company's consolidated financial statements. The selected financial data as of
June 30, 1997 and for the nine months ended June 30, 1996 and 1997 have been
derived from the unaudited consolidated financial statements appearing elsewhere
in this Prospectus and which, in the opinion of the management of the Company,
include all adjustments, consisting only of normal recurring adjustments,
necessary for a fair presentation of the financial position and the results of
operations for these periods. Operating results for the nine months ended June
30, 1997 are not necessarily indicative of the results to be expected for the
entire fiscal year. The selected financial data should be read in conjunction
with Management's Discussion and Analysis of Financial Condition and Results of
Operations and the Consolidated Financial Statements and Notes thereto included
elsewhere in this Prospectus.
<TABLE>
<CAPTION>
NINE
MONTHS
ENDED
YEAR ENDED SEPTEMBER 30, JUNE 30,
----------------------------------------------------- ---------
<S> <C> <C> <C> <C> <C> <C>
1992 1993 1994 1995 1996 1996
--------- --------- --------- --------- --------- ---------
<CAPTION>
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues.................................................. $ 11,680 $ 12,851 $ 13,915 $ 21,358 $ 48,378 $ 34,622
Cost of goods sold........................................ 8,081 8,239 11,795 15,630 33,755 24,516
--------- --------- --------- --------- --------- ---------
Gross margin.............................................. 2,879 4,612 2,120 5,728 14,623 10,106
Operating expenses:
Research and development................................ 316 909 1,271 1,214 4,345 3,175
Sales and marketing..................................... 1,786 2,342 2,354 2,924 4,777 3,141
General and administrative.............................. 1,522 1,459 1,248 1,447 2,124 1,679
--------- --------- --------- --------- --------- ---------
Total................................................... 3,624 4,710 4,873 5,585 11,246 7,995
--------- --------- --------- --------- --------- ---------
Income (loss) from operations............................. (745) (98) (2,753) 143 3,377 2,111
Net interest income (expense)............................. (382) (430) (533) (559) (197) (154)
--------- --------- --------- --------- --------- ---------
Income (loss) before income taxes......................... (1,127) (528) (3,286) (416) 3,180 1,957
Income taxes (benefit).................................... (462) 4 36 (546) -- --
--------- --------- --------- --------- --------- ---------
Net income (loss)......................................... $ (665) $ (532) $ (3,322) $ 130 $ 3,180 $ 1,957
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
Pro forma net income (loss) per share(1).................. $ 0.02 $ 0.29 $ 0.18
Weighted average common and common equivalent shares
outstanding(1)(2)....................................... 8,502 11,217 11,165
<CAPTION>
<S> <C>
1997
---------
<S> <C>
STATEMENT OF OPERATIONS DATA:
Revenues.................................................. $ 44,640
Cost of goods sold........................................ 29,947
---------
Gross margin.............................................. 14,693
Operating expenses:
Research and development................................ 6,543
Sales and marketing..................................... 4,107
General and administrative.............................. 1,883
---------
Total................................................... 12,533
---------
Income (loss) from operations............................. 2,160
Net interest income (expense)............................. (431)
---------
Income (loss) before income taxes......................... 1,729
Income taxes (benefit).................................... 738
---------
Net income (loss)......................................... $ 991
---------
---------
Pro forma net income (loss) per share(1).................. $ 0.09
Weighted average common and common equivalent shares
outstanding(1)(2)....................................... 11,362
</TABLE>
<TABLE>
<CAPTION>
JUNE 30,
SEPTEMBER 30, 1997
----------------------------------------------------- ---------
<S> <C> <C> <C> <C> <C> <C>
1992 1993 1994 1995 1996 ACTUAL
--------- --------- --------- --------- --------- ---------
BALANCE SHEET DATA:
Cash and cash equivalents............................. $ 514 $ 505 $ 2 $ 3,157 $ 730 $ 105
Working capital....................................... 2,790 1,259 (2,312) 5,429 8,816 5,873
Total assets.......................................... 11,797 14,635 11,425 23,554 31,837 35,079
Current portion of long and short-term debt........... 1,437 2,489 2,229 188 894 5,855
Long-term debt, less current portion.................. 4,344 4,117 3,935 3,528 5,635 2,485
Total stockholders' equity............................ 1,546 933 (2,363) 6,183 9,319 10,330
<CAPTION>
<S> <C>
AS
ADJUSTED(3)
-----------
BALANCE SHEET DATA:
Cash and cash equivalents............................. $ 24,271
Working capital....................................... 32,393
Total assets.......................................... 66,445
Current portion of long and short-term debt........... 3,501
Long-term debt, less current portion.................. 685
Total stockholders' equity............................ 45,850
</TABLE>
- ------------------------
(1) Pro forma historical earnings per share has been omitted for each of the
fiscal years ended September 30, 1992, 1993 and 1994 since net losses
existed in each of those years and therefore, pro forma earnings per share
information is not considered meaningful in light of the conversion of
outstanding preferred stock which would have a material anti-dilutive effect
on pro forma earnings per share in such years. See Notes to Consolidated
Financial Statements for further discussion of the computation of pro forma
earnings per share.
(2) See Notes to Consolidated Financial Statements for information concerning
weighted average common and common equivalent shares used in computing pro
forma earnings per share.
(3) Adjusted to give effect to the sale of the shares of Common Stock offered
hereby (at an assumed initial public offering price of $13.00 per share) and
the application of the estimated net proceeds thereof as set forth under
"Use of Proceeds."
17
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
In 1990, the Company acquired CVC Products, Inc. in a transaction (the
"Acquisition") led by the current Chief Executive Officer of the Company,
Christine Whitman. CVC Products, Inc. had been founded in 1934 in Rochester, New
York as the experimental vacuum processing group of Eastman Kodak. Since the
Acquisition, the management of the Company has restructured the operations
formerly conducted by CVC Products and refocused its product direction on
development of the CONNEXION Cluster Tool system for the thin film recording
head equipment market and semiconductor device market. The Company established a
commercial production equipment research, development and engineering ("RD&E")
effort with the goal of creating a modular, multi-process, single wafer cluster
tool deposition system designed for commercial production of thin film recording
heads and semiconductor devices. The result of this effort was the 1993
introduction of CVC's CONNEXION Cluster Tool system. In order to accelerate its
growth, in 1995 the Company acquired additional equity capital through a private
placement to one of its major customers, Seagate Technology.
Since the introduction of the CONNEXION Cluster Tool, the Company has
invested aggressively in the introduction of new systems and technologies.
Specifically, the Company has developed a number of process modules, including
physical vapor deposition ("PVD"), metal-organic chemical vapor deposition
("MOCVD"), inductively-coupled-plasma soft clean ("ICP"), and rapid thermal
process/rapid thermal chemical vapor deposition ("RTP/RTCVD").
During the past fiscal year approximately 75% of the Company's revenue was
derived from sales made to thin film recording head manufacturers, approximately
15% from sales to manufacturers of semiconductor devices, with the remainder of
the revenue derived from ancillary products and services. The Company derives a
substantial portion of its revenue from a relatively small number of high value
orders for Company systems. These orders range in price from approximately $1.0
million to $3.0 million. As a result, the timing of significant orders or a
reduction in the number of systems shipped in a quarter could have a material
effect on the Company's revenue and results of operations for that quarter. See
"Risk Factors-- Fluctuations in Operating Results."
Since 1993, the Company has invested in RD&E at a rate of approximately 6%
to 15% of its annual revenues. The Company funds its RD&E requirements through a
combination of internal funds, U.S. government contracts and joint development
programs with certain of its customers. The Company's RD&E efforts have
benefited in the past from the receipt of research and development program
grants from the U.S. Department of Defense Advanced Research Project Agency
("DARPA"). In 1994, the Company was awarded a two-year, $3.6 million RD&E
program from the DARPA to refine its universal thermal and plasma modules and to
establish advanced metallization and silicide formation cluster tool products
for state-of-the-art semiconductor technologies.
The Company also derives ancillary revenues from sales of vacuum gauges,
vacuum pump fluids and its thin film coating services to magnetic head
producers, and sales of its HYGE shock testing systems used in the automobile
industry for non-destructive vehicle testing.
18
<PAGE>
RESULTS OF OPERATIONS
The following table sets forth the percentage of revenues for certain items
in the Company's consolidated statement of operations data for the years ended
September 30, 1994, 1995, 1996 and the nine months ended June 30, 1996 and 1997.
<TABLE>
<CAPTION>
YEAR ENDED NINE MONTHS
SEPTEMBER 30, ENDED JUNE 30,
------------------------------- --------------------
1994 1995 1996 1996 1997
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Revenues................................................... 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of goods sold......................................... 84.8 73.2 69.8 70.8 67.1
--------- --------- --------- --------- ---------
Gross margin............................................... 15.2 26.8 30.2 29.2 32.9
Operating expenses
Research and development................................. 9.1 5.7 9.0 9.2 14.7
Sales and marketing...................................... 16.9 13.7 9.9 9.1 9.2
General and administrative............................... 9.0 6.8 4.4 4.8 4.2
--------- --------- --------- --------- ---------
Total.................................................... 35.0 26.2 23.3 23.1 28.1
Income (loss) from operations.............................. (19.8) 0.6 6.9 6.1 4.8
Net interest income (expense).............................. (3.8) (2.6) (0.4) (0.4) (1.0)
--------- --------- --------- --------- ---------
Income (loss) before income taxes.......................... (23.6) (2.0) 6.5 5.7 3.9
Income taxes (benefit)..................................... 0.3 (2.6) 0.0 0.0 1.7
--------- --------- --------- --------- ---------
Net income (loss).......................................... (23.9) 0.6 6.5 5.7 2.2
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
</TABLE>
NINE MONTHS ENDED JUNE 30, 1997 COMPARED TO NINE MONTHS ENDED JUNE 30, 1996
REVENUES. Revenues increased by 28.9% to $44.6 million for the nine months
ended June 30, 1997 from $34.6 million for the nine months ended June 30, 1996.
The increase in revenues is attributable to a 62.0% increase in cluster tool
revenues due to higher volumes shipped in both the United States and overseas
data storage markets, as well as an initial launch into the semiconductor
market. This increase was offset, in part, by reduced sales of 600 Series
systems and HYGE shock testing systems.
GROSS MARGIN. Gross margin increased to 32.9% in the nine months ended June
30, 1997 from 29.2% in the nine months ended June 30, 1996. This margin
improvement was attributable to manufacturing efficiencies driven by higher
volumes of cluster tools and cost reductions resulting from improved processes
in the 1997 period, offset, in part, by the initial sale to SEMATECH (a
non-profit research and development consortium of 11 major U.S. semiconductor
manufacturers and the U.S. Government) of an advanced copper MOCVD CONNEXION
Cluster Tool for research and development purposes.
RESEARCH AND DEVELOPMENT. Research and development expenses increased to
$6.5 million in the nine months ended June 30, 1997 from $3.2 million in the
nine months ended June 30, 1996, an increase of 106.1%. As a percentage of
revenues, research and development expenses increased to 14.7% for the 1997
period compared to 9.2% in the 1996 period. This increase was driven by hiring a
significant number of experienced engineers in fiscal 1997 and the fourth
quarter of fiscal 1996 to support technological advancements in the data storage
market for next generation magnetic recording heads, as well as the Company's
commitment to advanced copper deposition technology for high performance
semiconductor device fabrication. The Company believes that research and
development expenditures are essential to maintaining its competitive position
in the data storage and semiconductor equipment market and expects these
expenditure levels to increase in terms of absolute dollars for the foreseeable
future.
19
<PAGE>
SALES AND MARKETING. Sales and marketing expenses increased to $4.1 million
in the nine months ended June 30, 1997 from $3.1 million in the nine months
ended June 30, 1996, an increase of 30.8%. As a percentage of revenues, sales
and marketing remained relatively unchanged from period to period at
approximately 9.0%. Functions directly related to revenue, such as sales and
field service, grew at a combined pace of 47%, on a consistent basis with the
rate of revenue growth in this period. Marketing expenses increased 7.6%, as a
result of additional staffing requirements to support new market opportunities.
The Company expects expenditure levels to support the growth of its worldwide
sales and support organizations to continue for the foreseeable future at or
above current levels reflecting the Company's commitment to further penetrate
both U.S. and international markets.
GENERAL AND ADMINISTRATIVE. General and administrative expenses increased
by 12.2% to $1.9 million in the nine months ended June 30, 1997 from $1.7
million in the nine months ended June 30, 1996. This increase in general and
administrative expenses is a result of increased personnel to support the rate
of revenue growth in this period. As a percentage of revenues, general and
administrative expenses remained relatively unchanged from period to period.
NET INTEREST INCOME (EXPENSE). Net interest expense increased to $0.4
million for the nine months ended June 30, 1997 from $0.2 million for the
comparable 1996 period, reflecting an increase in borrowings on a credit line
and a $3.0 million term loan obtained in September 1996. Reduced interest income
resulted from lower available cash balances.
INCOME TAXES (BENEFIT). Income tax expense amounted to $0.7 million for
the nine months ended June 30, 1997, compared to no such expense for the nine
months ended June 30, 1996. During 1996, net operating loss carryforwards and
state investment tax credits were recognized as a result of the Company's return
to profitability and management's assessment that the realizability of these
loss carryforwards was more likely than not. No similar benefits were available
in fiscal 1997 as the net operating loss benefits had been previously recognized
in fiscal 1996. The effective tax rate of 42.7% for the nine months ended June
30, 1997 is more representative of the expected tax rate for the Company in
future periods.
YEAR ENDED SEPTEMBER 30, 1996 COMPARED TO YEAR ENDED SEPTEMBER 30, 1995
REVENUES. Revenues increased by 126.5% to $48.4 million in fiscal 1996 from
$21.4 million in fiscal 1995. The increase in revenues is primarily attributable
to a 256.0% increase in cluster tool sales which were the result of higher
volumes shipped for customers in the data storage market. Higher sales volumes
for 600 Series systems also contributed to the increase in revenues. These
increases were offset, in part, by a decline in revenue resulting from the
completion of the DARPA contract in fiscal 1995 and lower revenues from sales of
HYGE shock testing systems.
GROSS MARGIN. Gross margin increased to 30.2% in fiscal 1996 from 26.8% in
fiscal 1995. This margin improvement was attributable to manufacturing
efficiencies resulting from higher volumes of cluster tools and increased sales
volumes of higher margin spare parts. Also contributing to the improvement in
gross margin was the completion of a lower margin DARPA contract in fiscal 1995.
RESEARCH AND DEVELOPMENT. Research and development expenses increased to
$4.3 million in fiscal 1996 from $1.2 million in fiscal 1995, an increase of
258%. As a percentage of revenues, research and development expenses increased
to 9.0% in fiscal 1996 compared to 5.7% in fiscal 1995. The increase in research
and development expense was primarily attributable to increased salaries and
related employee benefits due to significant increases in the engineering staff
to support the development of new technologies. Also contributing to the
increase was the costs of engineers dedicated to new product development in
fiscal 1996 who previously had been assigned to the DARPA contract in fiscal
1995.
SALES AND MARKETING. Sales and marketing expenses increased to $4.8 million
in fiscal 1996 from $2.9 million in fiscal 1995, an increase of 63.4%. As a
percentage of revenues, sales and marketing expenses decreased to 9.9% in fiscal
1996 from 13.7% in fiscal 1995. Functions more directly related to revenues such
as sales and field service increased at an aggregate rate of 73.6% over fiscal
1995 due to
20
<PAGE>
increased salaries, commissions and travel expenses. Marketing expenses
increased 49.3% due to increased salary costs and costs to develop marketing
programs for new product introductions.
GENERAL AND ADMINISTRATIVE. General and administrative expenses increased
by 46.8% to $2.1 million in fiscal 1996 from $1.4 million in fiscal 1995. As a
percentage of revenues, general and administrative expenses decreased to 4.4% in
fiscal 1996 compared to 6.8% in fiscal 1995, as revenue growth exceeded the
increase in administrative costs.
NET INTEREST INCOME (EXPENSE). Net interest expense decreased to $0.2
million in fiscal 1996 from $0.6 million in fiscal 1995, reflecting lower
average outstanding debt balances during fiscal 1996 as compared to fiscal 1995.
Higher interest income in fiscal 1996 compared to fiscal 1995 is the result of
higher average balances of cash and cash equivalents during fiscal 1996. Both
the lower debt balance and the higher average cash balance results from the
funds received upon the sale of convertible preferred stock in May 1995.
INCOME TAXES (BENEFIT). During fiscal 1996 and 1995, benefits for net
operating loss carryforwards were recognized based upon management's assessment
as to the extent to which it was more likely than not that the Company would be
able to realize these net operating losses for each of the respective years.
Management expects that the effective tax rate in the future will be more
consistent with a normalized combined US federal and state tax rate.
YEAR ENDED SEPTEMBER 30, 1995 COMPARED TO YEAR ENDED SEPTEMBER 30, 1994
REVENUES. Revenues increased by 53.5% to $21.4 million in fiscal 1995 from
$13.9 million in fiscal 1994. The increase in revenues was attributable to an
increase in cluster tool sales to customers in the data storage market, sales of
HYGE shock testing systems, and a $2.7 million increase in contract revenues as
a result of the full year impact of the DARPA contract which began late in 1994.
This increase was offset by reduced sales of the Company's 600 Series systems.
GROSS MARGIN. Gross margin increased to 26.8% in fiscal 1995 from 15.2% in
fiscal 1994. This margin improvement was attributable to manufacturing
efficiencies driven by higher volumes of cluster tool shipments, cost
efficiencies resulting from more stable product designs, and higher margins on
the Company's 600 Series systems. This increase was offset, in part, by lower
margins on HYGE shock testing systems and lower margins resulting from the full
year impact of the DARPA contract.
RESEARCH AND DEVELOPMENT. Research and development expenses decreased to
$1.2 million in fiscal 1995 from $1.3 million in fiscal 1994. As a percentage of
revenues, research and development expenses decreased to 5.7% in fiscal 1995
compared to 9.1% in fiscal 1994. Despite an increase in the number of engineers
in 1995, a significant portion of the increased research and development staff
were being utilized on the DARPA contract in fiscal 1995.
SALES AND MARKETING. Sales and marketing expenses increased to $2.9 million
in fiscal 1995 from $2.4 million in fiscal 1994, an increase of 24.2%. As a
percentage of revenues, sales and marketing expenses decreased to 13.7% in
fiscal 1995 from 16.9% in fiscal 1994. The increase in sales and marketing
expenses was primarily attributable to increased personnel to support the rate
of revenue growth.
GENERAL AND ADMINISTRATIVE. General and administrative expenses increased by
15.9% to $1.4 million in fiscal 1995 from $1.2 million in fiscal 1994, primarily
due to additional personnel in general and administrative areas. As a percentage
of revenues, general and administrative expenses decreased to 6.8% in fiscal
1995 compared to 9.0% in fiscal 1994.
NET INTEREST INCOME (EXPENSE). Net interest expense increased to $0.6
million in fiscal 1995 from $0.5 million in fiscal 1994, reflecting the relative
timing of the addition and retirement of debt.
INCOME TAXES (BENEFIT). In fiscal 1995, net operating loss carryforwards
were recognized as a result of the return to profitability in the fourth quarter
of 1995 and management's assessment that the ability to realize a portion of the
loss carryforwards was more likely than not. During fiscal 1994 the valuation
21
<PAGE>
allowance was increased as a result of the uncertainty surrounding the ability
to realize the current year's net operating loss.
QUARTERLY OPERATING RESULTS
The following tables set forth the Company's operating results for each of
the eight quarters ended June 30, 1997. The information for each of these
quarters is unaudited but has been prepared on the same basis as the audited
consolidated financial statements appearing elsewhere in this Prospectus and
includes all adjustments, consisting only of normal recurring adjustments, that
the Company considers necessary to present fairly this information when read in
conjunction with the Company's annual audited consolidated financial statements
and notes thereto and Management's Discussion and Analysis of Financial
Condition and Results of Operations included elsewhere in this Prospectus. The
Company's operating results for any one quarter are not necessarily indicative
of results for any future period.
<TABLE>
<CAPTION>
QUARTER ENDED
----------------------------------------------------------------------------------------
SEPT. 30, DEC. 31, MAR. 31, JUNE 30, SEPT. 30, DEC. 31, MAR. 31, JUNE 30,
1995 1995 1996 1996 1996 1996 1997 1997
----------- --------- --------- --------- --------- --------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS:
Revenues.............................. $ 9,499 $ 8,303 $ 13,402 $ 12,917 $ 13,755 $ 13,403 $ 14,713 $ 16,524
Cost of goods sold.................... 6,406 6,116 9,722 8,679 9,239 8,972 10,401 10,574
----------- --------- --------- --------- --------- --------- --------- ---------
Gross margin.......................... 3,093 2,187 3,680 4,238 4,516 4,431 4,312 5,950
Operating expenses
Research and development............ 426 1,080 801 1,294 1,171 1,878 2,095 2,570
Sales and marketing................. 871 773 1,022 1,346 1,636 1,278 1,314 1,516
General and administrative.......... 304 410 642 626 445 587 581 715
----------- --------- --------- --------- --------- --------- --------- ---------
Total............................... 1,602 2,263 2,465 3,266 3,252 3,743 3,990 4,801
----------- --------- --------- --------- --------- --------- --------- ---------
Income (loss) from operations......... 1,491 (76) 1,215 972 1,264 688 322 1,149
Net interest income (expense)......... (128) (49) (73) (32) (42) (146) (147) (138)
----------- --------- --------- --------- --------- --------- --------- ---------
Income (loss) before income taxes..... 1,363 (125) 1,142 940 1,222 542 175 1,011
Income taxes (benefit)................ (546) -- -- -- -- 232 75 431
----------- --------- --------- --------- --------- --------- --------- ---------
Net income (loss)..................... $ 1,909 $ (125) $ 1,142 $ 940 $ 1,222 $ 310 $ 100 $ 580
----------- --------- --------- --------- --------- --------- --------- ---------
----------- --------- --------- --------- --------- --------- --------- ---------
</TABLE>
22
<PAGE>
<TABLE>
<CAPTION>
QUARTER ENDED
----------------------------------------------------------------------------
SEPT. 30, DEC. 31, MAR. 31, JUNE 30, SEPT. 30, DEC. 31,
1995 1995 1996 1996 1996 1996
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
PERCENTAGE OF REVENUE:
Revenues.................................... 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Gross margin................................ 32.6 26.3 27.5 32.8 32.8 33.1
Operating expenses
Research and development.................. 4.5 13.0 6.0 10.0 8.5 14.0
Sales and marketing....................... 9.2 9.3 7.6 10.4 11.9 9.5
General and administrative................ 3.2 4.9 4.8 4.8 3.2 4.4
----- ----- ----- ----- ----- -----
Total..................................... 16.9 27.2 18.4 25.2 23.6 27.9
----- ----- ----- ----- ----- -----
Income (loss) from operations............... 15.7 (0.9) 9.1 7.6 9.2 5.2
Net interest income (expense)............... (1.3) (0.6) (0.5) (0.2) (0.3) (1.1)
Net Income (loss)........................... 20.1 (1.5) 8.5 7.3 8.9 2.4
----- ----- ----- ----- ----- -----
----- ----- ----- ----- ----- -----
<CAPTION>
MAR. 31, JUNE 30,
1997 1997
----------- -----------
<S> <C> <C>
PERCENTAGE OF REVENUE:
Revenues.................................... 100.0% 100.0%
Gross margin................................ 29.3 36.0
Operating expenses
Research and development.................. 14.2 15.6
Sales and marketing....................... 8.9 9.2
General and administrative................ 3.9 4.3
----- -----
Total..................................... 27.0 29.1
----- -----
Income (loss) from operations............... 2.3 6.9
Net interest income (expense)............... (1.0) (0.8)
Net Income (loss)........................... 0.7 3.5
----- -----
----- -----
</TABLE>
The Company's quarterly and annual operating results are affected by a wide
variety of factors that could materially and adversely affect net sales and
profitability from period to period, including: competitive pressures on selling
prices; the timing and cancellation of customer orders; changes in product mix;
the Company's ability to introduce new products and process technologies on a
timely basis; introduction of products and technologies by the Company's
competitors; market acceptance of the Company's and its customers' products; the
level of orders received which can be shipped in a quarter; the timing of
investments in research and development, process improvements and production
capability; and the cyclical nature of the data storage and semiconductor
industries. Because the Company is continuing to increase its operating expenses
for personnel and new product development and for inventory in anticipation of
increasing sales levels, operating results would be adversely affected if
increased sales are not achieved. In addition, the Company is limited in its
ability to reduce costs quickly in response to any revenue shortfalls.
Historically, the Company has also experienced quarterly fluctuations in net
sales and gross profit, principally arising from the amount and timing of
orders. Should sales of products decline more rapidly than the Company
anticipates in the near future, such decline could have the effect of causing
further fluctuations in quarterly or annual operating results. As a result of
the foregoing or other factors, the Company may experience material fluctuations
in future operating results on a quarterly or annual basis which could
materially and adversely affect its business, financial condition and results of
operations. See "Risk Factors--Fluctuations in Operating Results."
Due to potential quarterly fluctuations in operating results, the Company
believes that quarter-to-quarter comparisons of its results of operations should
not be relied upon as indicators of future performance. Further, in the event
that in some future quarter the Company's net sales or operating results were to
be below the expectations of public market securities analysts and investors,
the price of the Company's Common Stock would likely be materially adversely
affected.
LIQUIDITY AND CAPITAL RESOURCES
As of June 30, 1997, the Company had working capital of $5.9 million,
including cash and cash equivalents of $0.1 million, compared to working capital
of $8.8 million at September 30, 1996, including $0.7 million of cash and cash
equivalents. Despite net income of $1.0 million for the nine months ended June
30, 1997, net cash used by operating activities was $1.0 million, primarily as a
result of the need to finance higher levels of accounts receivable, which was
driven by increased revenues.
During the nine months ended June 30, 1997, the Company invested $1.7
million in capital expenditures. The capital expenditures primarily consisted of
$0.6 million for facilities, machinery and equipment, $0.4 million for computers
and for related equipment, and $0.6 million for demonstration system tools.
Although the Company currently has no significant capital commitments, it
expects to spend in excess of $7.2 million on capital expenditures over the next
12 months.
23
<PAGE>
As of June 30, 1997, the Company's principal sources of liquidity consisted
of $0.1 million in cash, cash equivalents and short-term investments, and a $5.0
million line of credit from Manufacturers and Traders Trust Company under which
there were $2.5 million in borrowings. On September 30, 1997, the Company
increased this line of credit to $10.0 million at a rate of prime plus 1/2%. At
June 30, 1997, the Company also had indebtedness of $2.5 million in promissory
notes that require quarterly interest payments. In August 1997, the Company
renegotiated $1.0 million of such notes and extended the term to November 1998.
At June 30, 1997, borrowings associated with amounts due former stockholders of
CVC Products, Inc., which require annual interest payments of 9%, amounted to
$0.2 million. Borrowings associated with a term loan from a commercial bank as
of June 30, 1997 amounted to $2.6 million. Such loan requires monthly payments
of principal and interest at prime plus 1/2%. During fiscal years 1995 and 1996,
the Company financed its operations and capital expenditures primarily through
the net proceeds of $8.4 million from the sale of Series B Convertible Preferred
Stock and warrants in 1995 to Seagate Technology and a $3.0 million 5-year term
bank loan in 1996.
The Company intends to use the proceeds of the Offering for general
corporate purposes, including approximately $7.2 million for capital
expenditures relating to facility expansion and manufacturing and demonstration
equipment, $4.2 million for repayment of debt and the balance for additional
working capital. See "Use of Proceeds." The Company believes that cash from
operations, and bank borrowings, together with the net proceeds of the sale of
Common Stock by the Company in this Offering, will be adequate to fund
operations for at least the next 12 months.
The Company's long-term capital requirements will be affected by many
factors, including the success of the Company's current product offerings, the
Company's ability to enhance its current products and to develop and introduce
new products that keep pace with technological developments and general trends
in the data storage and semiconductor industries. The Company plans to finance
its long-term capital needs with the net proceeds of the Offering, together with
borrowings and cash flow from operations. To the extent that such funds are
insufficient to finance the Company's activities, the Company will have to raise
additional funds through the issuance of additional equity or debt securities or
through other means. There can be no assurance that additional financing will be
available on acceptable terms.
RECENTLY ENACTED ACCOUNTING PRONOUNCEMENTS
In February 1997, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 128, "Earnings per
Share," which established standards for computing and presenting earnings per
share. The new standard replaces the presentation of primary earnings per share
prescribed by Accounting Principles Board Opinion No. 15, "Earnings per Share"
(APB 15), with a presentation of basic earnings per share and also required dual
presentation of basic and diluted earnings per share on the face of the
statement of operations for all entities with complex capital structures. Basic
earnings per share excludes dilution and is computed by dividing income
available to common stockholders by the weighted-average number of common shares
outstanding for the period. Diluted earnings per share is computed similarly to
fully diluted earnings per share pursuant to APB 15. The Company will be
required to implement SFAS 128 in the first quarter of fiscal 1998 and to
restate all prior periods. The Company believes that adoption of the statement
will not have a significant impact on its earnings per share disclosures.
In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive Income"
and SFAS No. 131, "Disclosures about Segments of an Enterprise and Related
Information." The Company will implement SFAS 130 and SFAS 131 as required in
fiscal 1999, which will require the Company to report and display certain
information related to comprehensive income and operating segments,
respectively. Adoption of SFAS 130 and SFAS 131 will not impact the Company's
financial position or results of operations.
24
<PAGE>
BUSINESS
INTRODUCTION
CVC is a leading worldwide supplier of deposition equipment for the
fabrication of thin film recording heads for the data storage industry. The
Company also has made significant advances in the development and initial
delivery of copper deposition equipment for the semiconductor industry. The
Company has leveraged key innovations in integrated process development, vacuum
technology, materials science, chemical and physical vapor deposition
technologies, and software applications to develop process equipment solutions
for the manufacture of both disk drive recording heads and advanced
semiconductor devices. These integrated solutions are optimized for the precise,
highly uniform, repetitive steps required for the deposition of thin film
materials.
INDUSTRY BACKGROUND
The worldwide markets for magnetic disk drives and semiconductor devices
have experienced rapid growth in recent years and are expected to continue to
experience significant growth. For example, according to International Data
Corporation ("IDC") worldwide shipments of hard disk drives were 105 million
units in 1996 and are projected to be 223 million units in 2000. Growth in unit
volume of disk drives is being accompanied by rapid advancement in data storage
densities. Mean storage capacity per disk drive has increased from 213 megabytes
in 1993 to 2.7 gigabytes in 1997. At the same time, the market for semiconductor
devices is expected to grow from $138 billion in 1996 to over $343 billion in
2001, according to VLSI Research Inc.
This growth is due in large part to the ability of disk drive and
semiconductor manufacturers to deliver these devices with consistently enhanced
performance characteristics and functionality, improved reliability, higher
memory capacity and reduced size, weight, power consumption and cost. The rapid
advancement in the performance characteristics of disk drive recording heads and
of semiconductor devices has been made possible by significant advancements in
the fabrication processes involved in depositing the successive layers of thin
film materials on substrates and wafers.
The fabrication of magnetic recording heads and semiconductor devices
involves a sequential series of complex but, in many cases, similar processing
steps including deposition. During deposition, both recording heads and
semiconductor devices are formed by building up a succession of extremely thin,
uniform layers of conducting, semiconducting and insulating films onto patterned
and unpatterned substrates. The basic deposition process consists of many
interrelated precise steps and requires a clean, vacuum environment. Minor
deviations in the process, minute impurities in materials used or particulate
contamination will result in product defects and manufacturing yield losses.
Precise surface and microstructure measurement devices, known as metrology
systems, are used to monitor the accuracy of the deposition process by measuring
critical dimensions and other physical, electrical and magnetic properties of
the various layers. These thin film layers can range from one-thousandth to
one-millionth of a millimeter in thickness. The composition, atomic scale
microstructure and surface/interface properties of these layers and the
subsequent patterning of the layered materials determine the magnetic and
electrical properties of the disk drive recording heads and electrical
properties of semiconductor devices. Different material layers produce different
performance characteristics and necessitate particular processes to deposit the
thin film layer.
The need to increase the storage capacity of disk drives has led to the
development of smaller device features and the transition from inductive
recording ("IR") heads towards more advanced magneto-resistive ("MR") and giant
magnetoresistive ("GMR") heads. MR heads consist of separate read and write
elements formed over each other and sharing common material layers. The write
element is a thin-film inductive head while the read element consists of an
alloy magneto resistive thin film that significantly improves performance. A
typical MR head may have 18 to 22 structured thin-film layers of several
25
<PAGE>
differing materials and surface structures which enable enhanced storage
capacity, while GMR heads can consist of 22 to 28 thin-film layers.
In addition, the market for non-volatile memory ("NVM") devices is expanding
in response to the growing consumer demand for consumer electronic equipment
that retain stored information in the absence of externally provided (E.G.,
battery) power sources. Although NVM technologies currently comprise only 4% of
the memory market, NVM technologies' share of such market should grow as
technologies emerge which eliminate the need for memory that is refreshed by an
external source of power. Electronic devices containing magnetoresistive random
access memory ("MRAM") data storage cells, which incorporate NVM technologies,
are considered by the industry to be superior to devices incorporating
conventional electrically programmable read only memory ("EPROM") cells with
respect to data storage memory requirements as EPROM storage cells have only a
limited number of write cycles.
In order to increase speed and performance, semiconductor device
manufacturers have continued to shrink geometries and line widths of
semiconductor devices, while at the same time adding multiple metal layers.
Semiconductor devices currently being manufactured use aluminum or aluminum
alloys as the interconnect, the "wires" that connect the integrated circuit
devices. However, manufacturers are beginning to consider other interconnect
metal conductor materials, such as copper, which provide less resistance to
electron flow and thus can provide increased circuit speed and performance. The
reduced resistance of copper may enable a fewer number of interconnect levels
and simpler fabrication process, resulting in improved performance and a
reduction in manufacturing cost. However, copper degrades the physical
properties of silicon and must, therefore, be completely isolated from the
transistors embedded in the silicon by use of a barrier layer. These critical
barrier layers are formed using similar deposition equipment and processes.
THE CVC SOLUTION
CVC has developed broad, technical expertise in thin film deposition
processes and technologies that enable the production of advanced thin film
heads and semiconductor devices in both the data storage and semiconductor
industries. Specifically, the Company has leveraged key innovations in
integrated process vacuum technology, materials science, chemical and physical
vapor deposition technologies and software applications to develop process
equipment solutions for data storage and semiconductor manufacturers. CVC's
solutions are optimized for the highly uniform, repetitive steps required for
both MR and GMR head manufacture, MRAM data storage cells and fabrication of
advanced semiconductor devices. The Company's principal product offerings are
its CONNEXION Cluster Tool and integrated process modules.
The CONNEXION Cluster Tool is an integrated modular system with stations for
locating up to six process modules clustered around a central wafer handling
system. Each module is equipped to deposit a thin film layer of material on a
substrate using a specified deposition method and process in an integrated,
vacuum controlled environment. CVC's Cluster Tool and process solutions employ
distributed control software applications which facilitate "plug and play"
reconfigurability, extensions to next generation cluster tool process solutions,
and integration with third-party fabrication technologies. The combination of
CVC's Cluster Tool system and multi-station process modules provide a number of
advanced process solutions which are rapidly transferable from research and
development to production across a range of applications. Based on this flexible
process module strategy, the Company has also developed an advanced process
module for deposition of copper and barrier layers for semiconductor device
manufacturing. The Company believes that this cluster-integrated approach offers
its customers optimal manufacturing process control, flexibility, extendibility
across multiple generations of fabrication technologies, and enhanced process
capabilities and manufacturing yields.
26
<PAGE>
STRATEGY
CVC is a leading provider of deposition equipment for the fabrication of
thin film magnetic recording heads for the data storage industry. The Company
believes that it has also made significant advances in the development and
initial delivery of cluster-integrated copper deposition technologies for the
semiconductor industry. The Company's objective is to become one of the leading
suppliers of advanced thin film process solutions to both the data storage and
semiconductor industries. To meet this objective, the Company is pursuing the
following strategies:
EXTEND LEADERSHIP IN THIN FILM PROCESS SOLUTIONS FOR THE DATA STORAGE
INDUSTRY. Since 1990, the Company has focused on the advancement of integrated
thin film process technology that enables the fabrication of MR and
next-generation GMR recording heads used in hard disk drives. The Company
intends to continue to combine its expertise in thin film processing with the
open architecture, modular design of its CONNEXION Cluster Tool. The Company
believes that its CONNEXION Cluster Tool offers a high degree of operational
reliability, repeatability and throughput, as well as the ability to migrate
seamlessly from research and development to production using the same tool. The
Company intends to continue to broaden its product offerings with third-party
ion beam etch and deposition modules integrated with CVC's CONNEXION Cluster
Tool. The Company also plans to develop cluster-integrated metrology
capabilities that will allow precise measurement and testing functions to take
place in a process module without disrupting the production process and without
disturbing the tightly controlled vacuum environment.
LEVERAGE STRATEGIC PARTNERSHIPS WITH MARKET LEADERS. The Company has
established joint development programs and strategic relationships with a number
of industry-leading data storage and semiconductor manufacturing customers, as
well as research and development centers. By teaming with industry leaders in
the research and development stage, CVC can identify and develop customized
integrated process solutions that more precisely fit the customers' exact
requirements. Having met the specific needs of market leaders with innovative
integrated process solutions, the Company is then able to leverage the
experience gained to create product families that will meet the demands of an
expanded set of customers. The Company's ability to implement new process
solutions also helps the Company meet its customers' time-to-market demands and
advances the Company's goal of having products designed early into its
customers' planning cycles.
MAINTAIN AND LEVERAGE TECHNOLOGICAL LEADERSHIP. The Company has developed
expertise in the deposition of uniform layers of many different types of
materials over a wide range of material layer thicknesses on either planar or
patterned topography surfaces. The Company is committed to continuing its
investment in advanced engineering, research and development activities,
particularly in the development of thin film deposition processes for magnetic
data storage products and advanced metallization technologies for
next-generation data storage and semiconductor products. The Company intends to
continue to enhance and expand upon its technical expertise, proprietary
processes and equipment design to develop increasingly efficient and
cost-effective integrated process solutions for existing and new customers.
TARGET ADVANCED METALLIZATION OPPORTUNITIES IN THE SEMICONDUCTOR
INDUSTRY. The Company believes that as semiconductor manufacturing geometries
continue to shrink, copper will replace aluminum interconnect in many device
applications, offering improved performance and reliability with lower
manufacturing costs. Since 1993, the Company has committed significant resources
to the development of advanced copper deposition technology for high-performance
integrated circuit fabrication. The Company believes that its proprietary
metal-organic chemical vapor deposition ("MOCVD") and integrated barrier
technologies represent significant progress toward realization of the
opportunities that copper-based technology offer the semiconductor industry. The
Company has recently delivered integrated barrier and MOCVD copper deposition
tools, including one to SEMATECH (a non-profit research and development
consortium of 11 major U.S. semiconductor manufacturers and the U.S.
Government), which is being
27
<PAGE>
tested by members of the consortium. The Company has also delivered an
integrated MOCVD barrier and MOCVD copper tool to one of its strategic
customers. The Company intends to continue to address opportunities in the area
of emerging advanced metallization technology.
CONTINUE TO EMPHASIZE WORLDWIDE CUSTOMER SERVICE AND SUPPORT. The Company's
dedicated service staff and affiliated distributors in Japan, East Asia and
Europe provide timely and efficient customer service and support worldwide. The
Company believes that its worldwide sales and service organization is an
important competitive advantage. Approximately 28% of the Company's revenues for
the nine months ended June 30, 1997 were from customers outside the United
States, while revenues from such customers for fiscal 1995 and 1996 were 13% and
19%, respectively. The Company intends to continue to focus on expanding its
existing sales and service activities on a global basis to address the current
and emerging manufacturing priorities of its customers.
PRODUCTS
The Company's principal product line is its CONNEXION Cluster Tool system,
including its integrated process modules used in the manufacture of disk drive
recording heads and semiconductor devices. Since the Company began delivering
its CONNEXION Cluster Tool in 1993, the Company has shipped more than 60
systems. Depending on the configuration, the process modules sell for
approximately $400,000 to $1.3 million each, and individual system sales range
from $1.0 million for substrate handling and stand-alone modules to in excess of
$3.0 million for fully integrated systems equipped with extensive process
controls. The Company believes its CONNEXION Cluster Tool configured with the
basic central wafer handling platform and one process module allows a customer
to purchase an advanced cluster tool system at a lower entry cost. The CONNEXION
Cluster Tool system incorporates the Company's thin film process technology and
provides improved process control and flexibility designed to result in lower
cost of ownership.
28
<PAGE>
CONNEXION CLUSTER TOOL SYSTEM
The CONNEXION Cluster Tool utilizes a distributed open architecture design
and standard specifications established by the Modular Equipment Standards
Committee ("MESC") of the Semiconductor Equipment and Materials International
("SEMI"), the semiconductor industry's primary standard-setting organization.
This open platform design enables the use of either Company-supplied process
modules or other MESC-compatible process modules supplied by third parties and
allows for easy upgrades as process and throughput requirements change over
time. The integrated, modular design enables the deposition of several thin film
layers, using a different deposition technique in each process module, without
breaking vacuum. The CONNEXION Cluster Tool uses a standard wafer handling robot
and one or two cassette elevator loaders.
[LOGO]
The Company believes that the competitive advantages provided by its
CONNEXION Cluster Tool technology include the following:
OPTIMAL PROCESS SOLUTIONS. Thin film deposition places a premium on the
ability of the deposition equipment to ensure tight uniformity and quality, as
well as on the control of the composition materials, atomic microstructures and
surface/interface properties. The Company has developed an array of process
energy sources and components, such as its proprietary INFINITY direct-current
("DC") magnetron, radio frequency ("RF") magnetron and RF diode sputtering
sources, gas showerheads and substrate heating and cooling accessories to ensure
this uniformity and film properties over a wide range of substrate materials and
sizes, thereby enabling the fabrication of data storage MR and GMR heads, MRAM
devices and semiconductor devices.
IMPROVED PROCESS CONTROL. The Company's CONNEXION Cluster Tool system
offers the precision, repeatability and reliability required by the Company's
customers. Substrates and wafers are sequentially processed in a controlled,
integrated vacuum environment which enables improved manufacturing yields,
enhanced tool uptime and device reliability and performance. The cluster tools
employ a distributed control software application called OPEN CONNEXION which
facilitates "plug and play" for cluster tool reconfigurability, and as
extensions to new generations of cluster tool products and integration with
third-party modules.
29
<PAGE>
FLEXIBILITY. CVC's CONNEXION Cluster Tool's open architecture, modular
SEMI/MESC-compatible substrate handling platforms and process modules offer an
integrated process solution that can include a variety of process modules on the
same platform. Various RF and DC energy sources, substrate cooling and heating
accessories, and gas distribution methods are available as standard options. The
tool is designed for handling silicon wafers up to 200 millimeters or thin film
head substrates up to six inch square or eight inch round. New processes may be
developed on a stand-alone basis on a single process module and easily
integrated onto a production tool at any time. The Company is planning to
introduce in 1998 a tool capable of handling 300 millimeter wafers.
Selected applications and materials for data storage and semiconductor
markets deposited by CVC's CONNEXION Cluster Tool:
<TABLE>
<CAPTION>
DATA STORAGE (MR, GMR, MRAM)
APPLICATION SPECIFIC MATERIALS
<S> <C> <C>
Conductors Copper Molybdenum
Tantalum Gold
Chromium
Magnetic Materials Nickel Iron Cobalt Platinum
Nickel Iron Rhodium Cobalt Chromium Platinum
Aluminum Silicon Iron Cobalt Iron
Iron Tantalum Nitride Iron Manganese
Cobalt Zirconium Iridium Manganese
Tantalum Nickel Manganese
Cobalt Zirconium Niobium
Insulators Aluminum Oxide Silicon Nitride
Aluminum Oxynitride Silicon Carbide
Silicon Dioxide Diamond-Like-Carbon
<CAPTION>
SEMICONDUCTOR DEVICES
<S> <C> <C>
<CAPTION>
APPLICATION SPECIFIC MATERIALS
<S> <C> <C>
Conductors Copper Nickel
Titanium Silicide Aluminum
Titanium Tungsten
Cobalt
Barrier/Liner/Glue/Layers Titanium Tantalum Nitride
Titanium Nitride Titanium Silicon Nitride
Tantalum Tantalum Silicon Nitride
High-k dielectrics Barium Strontium Tantalum Pentoxide
Titinate
Other Specialty Tantalum Nitride Nickel Chromium
Materials Silicon Chromium Blue Phosphor
</TABLE>
30
<PAGE>
CVC PROCESS MODULES
The combination of CVC's CONNEXION cluster platform, single-wafer products
and multi-station modules and low-cost stand-alone handler provide a number of
advanced process solutions which are rapidly transferable from research and
development to production across a wide range of applications. The Company
currently offers modules for PVD, MOCVD, ICP soft clean and RTP/RTCVD, based on
its developed equipment and advanced process technologies.
PHYSICAL VAPOR DEPOSITION MODULE
PVD is used to deposit materials such as aluminum alloys, titanium, cobalt
alloys, nickel iron, and a wide range of magnetic, conductive and insulating
materials on various substrates and different topographies. PVD is performed in
a high vacuum chamber by applying a strong DC or RF electric field to create a
plasma of inert gas, usually argon. The electrically charged ions are
accelerated toward a target made of the material which is to be deposited. When
the ions hit the target, atoms are physically knocked off the target and are
scattered on the wafer or substrate, slowly building up a thin film layer.
CVC offers single-wafer and multi-station modules with improved vacuum
integrity and process capabilities for data storage and semiconductor
applications. The Company's MESC-compatible single wafer PVD modules provide
capabilities for RF and DC sputtering, collimation, substrate heating and
cooling, substrate bias and magnetic orientation. Standard process recipes are
available for a wide range of materials. The Company also offers multi-station
PVD modules for sequential deposition of various materials within a single
module.
METAL-ORGANIC CHEMICAL VAPOR DEPOSITION MODULE
CVD is used to deposit insulators such as silicon dioxide and silicon
nitride and conductors such as copper and tungsten. The CVD process causes
heated gases that contain atoms of the material to be deposited to react at the
wafer surface resulting in the formation of the thin film layer of material on
the substrate or silicon wafer. In order for the chemical reactions to occur,
the CVD process can use either elevated temperatures as in thermal CVD and/or
electro-magnetic energy as in plasma enhanced CVD. Some of these methods require
a vacuum environment. MOCVD uses a metal organic compound to provide the
materials to be deposited. MOCVD technology is being considered for highly
conformal deposition of copper layers in complex, structured topographies to
form fully embedded copper interconnect structures in advanced semiconductor
devices. The use of copper instead of aluminum should improve the overall chip
reliability and reduce manufacturing costs due to a reduction in the required
number of multi-level interconnect process steps. The Company currently offers
advanced MOCVD process modules for deposition of copper and barrier layers for
semiconductor device manufacturing.
INDUCTIVELY-COUPLED PLASMA SOFT CLEAN MODULE
The Company offers a multi-zone inductively-coupled-plasma or MZ-ICP soft
clean module for surface preparation prior to material depositions. CVC's MZ-ICP
module technology employs the design features of the ICP system licensed by the
Company from Texas Instruments and enhanced by the Company through internal
developments. The MZ-ICP module design provides the capability for damage-free
cleaning of semiconductor surfaces in order to enable formation of low
resistivity interconnect structures such as with copper metallization and with
controlled device interfaces for enhanced interconnect reliability and
performance.
RAPID THERMAL PROCESS/RAPID THERMAL CHEMICAL VAPOR DEPOSITION MODULE
The Company's multi-zone axisymmetric RTP module with multi-zone temperature
control optimizes temperature and process uniformity and repeatability control.
The Company's RTP module has been designed for various thermal processing
applications including anneal, oxidation, and CVD processes. The Company plans
to offer its advanced RTP technology for integrated processing applications
(silicide deposition and thermal treatment) using a CONNEXION Cluster Tool.
31
<PAGE>
600 SERIES PHYSICAL VAPOR DEPOSITION SYSTEMS
Introduced in 1988, the 610 and 611 products are automated sputter
deposition systems, handling up to 6-inch diameter substrates. Systems sell for
$400,000 to $750,000, depending on configuration. The 611 system is equipped
with a loadlock and eight work stations which accept combinations of RF
magnetron, RF diode and DC magnetron planar sputtering cathodes enabling up to
eight materials to be deposited with sequential or co-sputter deposition
processes. The CVC 600 Series system is the basic design with many 611 features
but without the loadlock and less automated process control. A soft clean ion
source can be installed in any work station for low damage cleaning of
semiconductor surfaces.
OTHER PRODUCTS
Ancillary products of the Company include manufacturing and distributing a
line of vacuum gauges and vacuum pump fluids. In addition, the Company is a
leading manufacturer of shock testing systems used in the automotive industry
for non-destructive vehicle testing. Collectively, these products generated
revenues of $1.7 million, or 4%, of the Company's gross revenues for the nine
months ended June 30, 1997.
CUSTOMERS
The Company's customers include most of the leading manufacturers of thin
film recording heads for the data storage industry and certain manufacturers of
semiconductor devices in the United States and abroad. During the past fiscal
year, approximately 75% of the Company's revenues were derived from sales made
to thin film recording head manufacturers and approximately 15% of the Company's
revenues were derived from sales made to semiconductor device manufacturers.
Representative customers of the Company include the following:
<TABLE>
<CAPTION>
DATA STORAGE SEMICONDUCTOR
- ------------------------- -------------------------
<S> <C>
Alps Analog Devices
Applied Magnetics Bourns
DAS Devices General Semiconductor
Fujitsu SEMATECH
IBM Sharp Microelectronics
Quantum SRI
Read-Rite Texas Instruments
Samsung Electronics Viking
Sanyo
Seagate Technology
TDK
</TABLE>
Historically, a few large customers have accounted for a substantial portion
of the Company's revenues, primarily due to the fact that the data storage and
semiconductor industries are dominated by a limited number of large companies.
In fiscal 1995, 1996 and for the nine months ended June 30, 1997, revenues from
the Company's five largest customers represented approximately 72%, 81% and 84%,
respectively, of the Company's total revenues. In fiscal 1995 and for the nine
months ended June 30, 1997, three customers each accounted for more than 10% of
the Company's revenues and in 1996, two customers each accounted for more than
10% of the Company's revenues. The Company has experienced and expects to
continue to experience fluctuations in its customer mix. The Company believes
that sales to relatively few customers will continue to account for a high
percentage of the Company's revenues in future periods. None of the Company's
customers has entered into long-term purchase agreements with the Company. The
loss of or a substantial reduction or delay in orders from any significant
customer could have a material adverse effect on the Company's business,
financial condition or results of operations. See "Risk Factors--Concentration
of Customers."
32
<PAGE>
RELATIONSHIP WITH SEAGATE TECHNOLOGY
Seagate Technology, which provides products for storing, managing and
accessing digital information on computers and data communications systems, is
the Company's largest customer. For fiscal 1995, 1996 and for the nine months
ended June 30, 1997, Seagate Technology accounted for 27%, 57% and 46%,
respectively, of total Company revenues. The Company and Seagate Technology
currently are not parties to any licensing, development, technology sharing,
guaranteed purchase or any other type of collaborative agreements. In addition,
Seagate Technology is the Company's largest stockholder. In 1995, Seagate
Technology made an equity investment of approximately $9.0 million in the
Company. In connection with such investment, Seagate Technology obtained the
right to elect two members of the Company's Board of Directors. That right will
terminate upon consummation of the Offering. See "Risk Factors--Relationship
with Seagate Technology," "Shares Eligible for Future Sale" and "Certain
Transactions."
Following completion of the Offering, Seagate Technology will own shares
representing approximtely 30.4% of the Company's outstanding Common Stock (29.0%
of such stock if the Underwriters' over-allotment option is exercised in full).
In addition, pursuant to a warrant acquired by Seagate Technology in 1995,
Seagate Technology has the right to acquire 1,186,140 shares of Common Stock at
an exercise price of $3.72 per share. Assuming full exercise of such warrant
(and no other change in the Company's outstanding Common Stock), Seagate
Technology would own an aggregate of approximately 36.7% of the Company's
outstanding Common Stock (35.1% of such stock if the Underwriters'
over-allotment option is exercised in full).
BACKLOG
At September 30, 1997, the Company's backlog was approximately $26.7
million, as compared to a backlog of $24.0 million at September 30, 1996. The
Company schedules production based on firm customer commitments and anticipated
orders during the planning cycle. The Company includes in its backlog only those
customer orders for which it has accepted written purchase orders against which
it expects to ship within the following 12 months. All orders are subject to
cancellation or rescheduling by the customer with limited or no penalty. The
Company's backlog at any particular date is not necessarily a reliable indicator
of actual sales for any succeeding period.
MARKETING, SALES AND SERVICE
The Company sells its products in the United States and Europe through its
direct sales force that is supported by its 12-person marketing and sales
organization. In Japan, Malaysia, Singapore and Thailand, the Company utilizes a
distributor, Nikko Tecno, to distribute its product and markets its products in
China, Korea and Taiwan through independent sales representatives. International
sales accounted for 28% of the Company's total revenues for the nine months
ended June 30, 1997 and 13% and 28% of the Company's total revenues for fiscal
years 1995 and 1996, respectively. The Company's sales and marketing
organization employs a consultative sales process, working closely with
customers to understand and define their deposition process and equipment needs
and to determine that those needs are addressed by the Company's process
technologies, as well as complementary technologies offered by other equipment
providers. The Company works closely with the senior management and research and
development personnel of its existing customer base to gain insight of their
industries and to focus on selling new process technologies tailored to their
customers' requirements
The sales cycles for the Company's systems vary depending upon whether the
system is an initial purchase or a repeat order. New customer sales cycles are
typically 12 to 18 months, whereas repeat order sales cycles are typically four
to six months. The sales cycle for a new customer begins with the generation of
a sales lead, which is followed by qualification of the lead, an analysis of the
customer's particular applications needs and problems, one or more presentations
to the customer, frequently including
33
<PAGE>
extensive participation by the Company's senior management, two to three product
sample demonstrations, followed by customer testing of the results and extensive
negotiations regarding the equipment's process and reliability specifications.
New customer sales cycles are monitored closely by senior management for correct
strategy approach and prioritization. See "Risk Factors--Lengthy Sales Cycles."
Prompt and effective field service and support is critical to the Company's
sales efforts, due to the substantial commitments made by customers that
purchase the Company's equipment. As of September 30, 1997, the Company had 26
full-time employees dedicated to customer service and support. The Company's
strategy of supporting its installed base through both customer support and
research and development groups has served to encourage the use of the Company's
equipment and process technologies in customer production applications. The
Company's process engineers and field support personnel work closely with
customers to help define their production and process requirements, and
customers often collaborate in trial production runs at the Company's Fremont,
California and Rochester, New York research and demonstration facilities. The
Company believes that its marketing efforts are enhanced by the technical
expertise of its process engineers who also provide customer process support and
participate in industry forums, conferences and user groups.
The Company generally warrants its new systems for 15 months from shipment.
Installation is included in the price of the system. The Company's field service
engineers provide customers with call-out repair and maintenance services for a
fee. Customers may also enter into repair and maintenance service contracts,
covering the Company's systems. For a fee, the Company trains its customers'
service engineers to perform routine services, and, in addition, the Company
provides its customers with 24-hour a day, seven day a week, telephone
consultation services. The Company has customer support centers located in New
York, California, Texas, Minnesota, Northern Ireland and Japan.
RESEARCH, DEVELOPMENT AND ENGINEERING
The data storage and semiconductor manufacturing industries are
characterized by rapid technological change and requirements for new product
introductions and enhancements. The Company's ability to remain competitive in
this market will depend in part upon its ability to develop new and enhanced
systems and to introduce these systems at competitive prices and on a timely and
cost-effective basis. Accordingly, the Company devotes a significant portion of
its personnel and financial resources to research, development and engineering
programs and seeks to maintain close relationships with its customers to remain
responsive to their equipment needs. The Company continuously conducts R&D
efforts in existing products to extend performance and process capabilities as
well as on next generation products. In the data storage market, the Company is
developing an advanced cluster-integrated metrology module to enable precise,
real-time measurements during the production process of thin film structures for
MR and GMR heads and MRAM storage devices. The Company is also enhancing its
magnetic orientation energy source to achieve more accurate and programmable
characteristics of magnetic thin films. In the area of advanced interconnect
technologies, the Company is developing programmable electrical collimation
capability for its PVD process module for tightly-controlled deposition of liner
and barrier layers and enhanced temperature and process controls. In addition,
the Company has already established state-of-the-art class 100 clean room
process development and applications engineering facilities in New York and
California with process and metrology capabilities for data storage thin film
head and semiconductor technologies.
As of September 30, 1997, the Company had 69 full-time employees dedicated
to its research, development and engineering programs. In fiscal years 1995,
1996 and for the nine months ended June 30, 1997, the Company expended $1.2
million, $4.3 million and $6.5 million on these programs, constituting 6%, 9%
and 15% of revenues during those periods, respectively. Research and development
expenditures consist primarily of salaries, project materials and other costs
associated with the Company's ongoing research and development efforts. The
Company expects in future years that research, development and engineering
expenditures will continue to represent a substantial percentage of revenues.
The Company augments its internal technology development efforts by licensing
technology from others and establishing
34
<PAGE>
strategic R&D relationships with universities and various major customers. See
"Risk Factors--Rapid Technological Change; Dependence on New Products and
Processes."
Trade, industry standards and development consortia organizations, such as
the SEMI, SEMATECH and SEMI/SEMATECH, help to define the methods, measurement
parameters, manufacturing requirements and specifications influencing commercial
transactions within the semiconductor industry. Christine Whitman, the Chief
Executive Officer of the Company, sits on the Board of Directors of SEMI/
SEMATECH. The Company believes that its involvement with such organizations has
helped to ensure that the Company's new products conform to industry standards
and emerging requirements.
MANUFACTURING
The Company's manufacturing activities consist primarily of assembling and
testing components and subassemblies which are acquired from third party
suppliers and then integrated by the Company into finished systems. The
manufacturing operations are conducted in the Company's 90,000 square foot
headquarters facility in Rochester, New York. As of September 30, 1997, the
Company had 119 full-time employees dedicated to its manufacturing efforts. The
Company manufactures its systems in controlled clean environments which are
similar to the clean rooms used by data storage and semiconductor manufacturers.
All final assembly and systems tests are performed within the Company's
manufacturing facilities. Quality control is maintained at the suppliers through
incoming verification of components, in-process inspection during equipment
assembly, and final inspection and operation of all manufactured equipment prior
to shipment. The Company's customers frequently participate in systems testing
during the final assembly and inspection process. The Company's manufacturing
facilities recently were awarded designation as ISO 9001 certified.
The Company procures components and subassemblies included in its products
from a limited group of suppliers, and occasionally from a single source. The
Company does not maintain long-term supply contracts with its key suppliers but
believes that alternative suppliers could be found if necessary. A prolonged
inability to obtain components or subassemblies, as well as difficulties or
delays shifting to alternative sources, could have a material adverse effect on
the Company's operations and could result in damage to existing customer
relationships.
The Company is subject to a variety of governmental regulations related to
the use, storage, handling, discharge or disposal of toxic, volatile or
otherwise hazardous chemicals used in the manufacturing process. The Company
believes that it is currently in compliance with these regulations and that it
has obtained all necessary environmental permits to conduct its business, which
permits generally relate to the discharge of hazardous wastes. Any failure by
the Company to comply with regulations or the use, disposal or storage of
hazardous substances could subject the Company to future liabilities. See "Risk
Factors-- Environmental Regulation."
COMPETITION
The data storage and semiconductor manufacturing equipment industries are
highly competitive. A substantial investment is required to install and
integrate capital equipment into a data storage or semiconductor production
line. The Company believes that once a device manufacturer has selected a
particular supplier's capital equipment, that manufacturer generally relies upon
that supplier's equipment for the specific production line application and, to
the extent possible, subsequent generations of similar systems. Accordingly, it
may be extremely difficult to achieve significant sales to a particular customer
once another supplier's manufacturing equipment has been selected by that
customer, unless there are compelling reasons to do so, such as significant
performance or cost advantages. Increased competitive pressure could lead to
lower prices for the Company's products, thereby adversely affecting the
Company's operating results.
35
<PAGE>
The Company believes that its ability to compete in the data storage and
semiconductor manufacturing equipment markets depends on a number of factors,
including the ability to develop and introduce new products rapidly, product
innovation, product quality and reliability, product performance, breadth of its
product line, price, technical service and support, adequacy of manufacturing
quality and capacity and sources of raw materials, efficiency of production,
delivery capabilities and protection of the Company's products by intellectual
property laws. The Company competes in the data storage and semiconductor
manufacturing markets based on differentiated value-added process technologies,
system performance, customer support and the cost of ownership of its equipment.
In the data storage market, the Company's current competitors include
Balzers, Sputtered Films, Nordiko and Veeco Instruments. In the semiconductor
market, the Company's competitors include Applied Materials and Novellus.
Certain of the Company's competitors have substantially greater financial
resources, more extensive engineering, manufacturing, marketing and customer
service and support capabilities, larger installed bases of semiconductor
capital equipment and broader semiconductor process equipment offerings as well
as greater name recognition than the Company.
The Company expects its competitors in the data storage and semiconductor
process equipment industries to continue to improve the design and performance
of their current systems and processes and to introduce new systems and
processes with improved price and performance characteristics. No assurance can
be given that the Company will be able to compete successfully in the United
States or worldwide. See "Risk Factors--Highly Competitive Industries."
PATENTS AND OTHER PROPRIETARY RIGHTS
The Company relies on a combination of patent, copyright, trademark and
trade secret laws and non-disclosure agreements to protect its proprietary
process technology. While the Company believes that these patents may have
significant value, CVC also believes that due to the rapid technological changes
that characterize the data storage and semiconductor equipment industries, the
innovative skills, technical expertise and know-how of its personnel may be more
important than patent protection. As of September 30, 1997, the Company had
obtained two U.S. patents and had 15 U.S. patent applications pending on its
behalf. In addition, the Company has eight foreign patent applications pending
on its behalf. The Company's U.S. patents expire at various times from 2012 to
2015.
There can be no assurance that the Company's pending patent applications
will be approved, that any patents will provide it with competitive advantages
or will not be challenged by third parties, or that the patents of others will
not have an adverse effect on the Company's business. There can be no assurance
that others will not independently develop similar products, duplicate the
Company's products or, if patents are issued to the Company, design around the
patents issued to the Company.
The Company also relies upon trade secret protection and employee and
third-party nondisclosure agreements to protect its confidential and proprietary
information. Despite these efforts, there can be no assurance that others will
not independently develop substantially equivalent proprietary information and
techniques or otherwise gain access to the Company's trade secrets or disclose
such technology or that the Company can meaningfully protect its trade secrets.
The data storage and semiconductor industries are characterized by frequent
litigation regarding patent and other intellectual property rights. Although the
Company is not aware of any pending or threatened patent litigation, there can
be no assurance that third parties will not assert claims against the Company
with respect to existing or future products or technologies. In the event of
litigation to determine the validity of any third-party claims, such litigation,
whether or not determined in favor of the Company, could result in significant
expense to the Company and divert the efforts of the Company's technical and
management personnel from productive tasks. In the event of an adverse ruling in
such litigation, the Company might be required to discontinue the use of certain
processes, cease the manufacture, use and sale of infringing products, expend
significant resources to develop non-infringing technology, or obtain
36
<PAGE>
licenses to the infringing technology. In the event of a successful claim
against the Company and the Company's failure to develop or license a substitute
technology at a reasonable cost, the Company's business, financial condition and
results of operations would be materially and adversely affected. See "Risk
Factors--Patents and Other Intellectual Property."
EMPLOYEES
As of September 30, 1997, the Company had a total of 263 full-time employees
at all of its locations, consisting of 119 in manufacturing, 69 in research and
development, 22 in marketing and sales, 26 in customer service and support, 23
in administration and four in facilities maintenance.
Management believes that the Company's ongoing success depends in part on
its continued ability to attract and retain highly skilled employees, especially
employees with extensive technological backgrounds. This is particularly
important in the areas of product design and development, where competition for
skilled personnel is intense. There can be no assurance that the Company will be
successful in attracting or retaining such personnel.
As of September 30, 1997, 55 employees at the Company's site in Rochester,
New York were members of Local 342 of the International Union of Electronic,
Electrical, Salaried, Machine & Furniture Workers union and covered by a
collective bargaining agreement scheduled to expire in October 1998. The Company
believes that its relations with its employees, and the bargaining unit which
represents certain of them, are good.
FACILITIES
The Company's principal office is located in Rochester, New York and
consists of 90,000 square feet used for manufacturing, research and development
and administration. The Company entered into a financing agreement with the
County of Monroe Industrial Development Agency (the "Agency") in 1974 under
which such agency's bond proceeds were used to purchase the land and construct
such Rochester facility for lease to the Company. On September 29, 1997, the
Company entered into an amended lease agreement with the Agency that extended
the term of the original lease from the year 2000 to December 31, 2007. Upon the
expiration of such amended lease, the Company is obligated to purchase the
Rochester facility from the Agency for nominal consideration.
In addition, the Company leases 16,000 square feet in Fremont, California
for research and process development, product engineering and as a base for
regional sales and field service for the West Coast of the United States and
5,000 square feet in Dallas, Texas for engineering, equipment design, process
development, sales and customer support. The Company also leases space in
Minneapolis, Minnesota; Austin, Texas; Japan, Northern Ireland, Singapore and
Taiwan for sales and customer support. Although the Company believes that its
current facilities are adequate to meet its current requirements for the near
term, it may seek to lease or acquire additional facilities in the future.
LEGAL PROCEEDINGS
In the ordinary course of business, the Company may be involved in legal
proceedings from time to time. As of the date of this Prospectus, there are no
material legal proceedings pending against the Company.
37
<PAGE>
MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
The executive officers and directors of the Company are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ------------------------------------------------- ----------- -------------------------------------------------------
<S> <C> <C>
Christine B. Whitman............................. 46 President, Chief Executive Officer and Chairman
Mehrdad M. Moslehi, Ph.D......................... 37 Senior Vice President and Chief Technical Officer
Christopher J. Mann.............................. 39 Senior Vice President, Data Storage Products
Emilio O. DiCataldo.............................. 46 Senior Vice President and Chief Financial Officer
Richard J. Chicotka, Ph.D........................ 56 Vice President, Operations
Robert C. Fink................................... 62 Director
James Geater..................................... 64 Director
Brendan C. Hegarty, Ph.D......................... 54 Director
Victor E. Mann................................... 72 Director
Seiya Miyanishi.................................. 51 Director
Andrew Peskoe.................................... 40 Director
Donald Waite..................................... 64 Director
</TABLE>
Ms. Whitman joined CVC Products in 1978 and has served as President, Chief
Executive Officer and Chairman of the Company since its acquisition of CVC
Products in 1990. Ms. Whitman received a BA from Syracuse University and is a
member and Secretary of the Board of Directors of SEMI/SEMATECH. She also serves
as a member of the Board of Directors of Rochester Telephone Corp. and The M&T
Bank Rochester Advisory Council. Ms. Whitman serves on the Executive Committee
of the Board of Directors of the Industrial Management Council, the Board of
Trustees for the Greater Rochester Chamber of Commerce, the United Way Board of
Directors, the New York State International Business Council and is a member of
the Board of Trustees of Rochester Institute of Technology.
Dr. Moslehi joined the Company in 1994 as Senior Vice President and Chief
Technical Officer. From 1988 to 1994, Dr. Moslehi served in various positions at
Texas Instruments, a semiconductor manufacturer, most recently as Branch Manager
in their Semiconductor Process and Design Center where he developed process and
equipment technologies such as RTP, PVD and photochemical cleaning. Dr. Moslehi
is named as an inventor on over 50 US patents and in 1993 he earned the American
Electronics Association's Technologist/Inventor of the Year. Dr. Moslehi
received a BS in Electrical Engineering at Arya-Mehr University of Technology
and a Ph.D in Electrical Engineering from Stanford University. Dr. Moslehi also
serves on the consulting faculty of Stanford University.
Mr. Christopher Mann joined CVC Products in 1979 and now serves as Senior
Vice President, Data Storage Products. Mr. Mann has previously held the
positions of Field Service Manager, Engineering Services Manager and Vice
President, Marketing at the Company and CVC Products prior to the acquisition.
Prior to joining CVC in 1979, Mr. Mann worked for CVC Scientific Products, Ltd.
in the United Kingdom.
Mr. DiCataldo joined the Company in 1995 as Senior Vice President and Chief
Financial Officer. From 1991 to 1995, Mr. DiCataldo served as Senior Vice
President, Finance and Administration of MedImmune, Inc., a therapeutic and
vaccine company. Prior to his employment at MedImmune, Mr. DiCataldo held Vice
President-level positions at Bausch & Lomb, Inc. and Praxis Biologics and was a
member of the firm of Price Waterhouse LLP. Mr. DiCataldo is a Certified Public
Accountant and holds a BS in Accounting from St. John Fisher College.
Dr. Chicotka joined the Company in 1995 as Vice President, Operations. From
1994 to 1995, Dr. Chicotka served as Director of Development Engineering of
Conner Peripherals, a manufacturer of disk drives. From 1993 to 1994, Dr.
Chicotka served as Director of Process Engineering of Seagate
38
<PAGE>
Magnetics, a division of Seagate Technology. From 1962 to 1992, Dr. Chicotka
served in various positions at IBM, most recently as Manager of Head Process
Manufacturing and Engineering of Storage Products Development and Manufacturing
in San Jose, California. Dr. Chicotka received a BS and MS in Metallurgical
Engineering and a Ph.D in Materials Science from Polytechnic Institute of
Brooklyn.
Mr. Fink has been a director of the Company since 1997. In 1993, Mr. Fink
joined Lam Research Corporation, a manufacturer of semiconductor processing
equipment, and served as Vice President and Chief Operating Officer, following
the Company's acquisition of Drytek, Inc. Mr. Fink served as Drytek's President
for five years. Prior to Drytek, Mr. Fink spent four years with ITT
Corporation's Semiconductor Division as Director of VLSI Operations for North
America and 12 years with General Instrument Corporation's Microelectronics
Division as Director of Worldwide Manufacturing Resources. Mr. Fink's career
also includes 13 years with General Electric Corporation. He received a BS
degree in Metallurgical Engineering from Polytechnical Institute of New York.
Mr. Geater has been a director of the Company since 1990. Since 1992, Mr.
Geater has served as President of Geater Associates, a management consulting
firm. He previously held the position of General Business Manager at Eastman
Kodak and was a faculty member of the Wm. E. Simon Graduate School of Business
Administration at the University of Rochester. Mr. Geater received a BA in
Economics from Miami University and an MBA from the University of Rochester.
Dr. Hegarty has been a director of the Company since 1995. Since 1989, Dr.
Hegarty has served in various positions for Seagate Technology, most recently as
Executive Vice President and Chief Operating Officer--Recording Heads. Dr.
Hegarty received a Ph.D in Solid State Physics from the University of Sussex in
England.
Mr. Victor Mann has been a director of the Company since 1990. Since 1990,
Mr. Mann has been a self-employed consultant to small and medium sized
businesses in Britain as well as to the British Government. Mr. Mann has also
served as a Director of GEC Plessey.
Mr. Miyanishi has been a director of the Company since 1990. Since 1987, Mr.
Miyanishi has served as president and Chief Executive Officer of Nikko Tecno
Co., Inc., a company dealing in the import and export of capital equipment,
which was founded in 1946. Mr. Miyanishi has served as owner, president and
Chief Executive Officer of several other companies in Japan. Mr. Miyanishi
received a BS of managerial economics from Keio University.
Mr. Peskoe has been a director of the Company since 1990. Mr. Peskoe joined
the law firm of Golenbock, Eiseman, Assor & Bell in 1986, and currently serves
as a partner of such firm, concentrating on corporate finance and securities
matters. Such firm has from time to time provided legal services to the Company.
Mr. Peskoe received his undergraduate degree from Harvard College and a JD from
Harvard Law School.
Mr. Waite has been a director of the Company since 1995. Since 1983, Mr.
Waite has served in various positions for Seagate Technology, most recently as
Chief Administrative Officer, Chief Financial Officer and Executive Vice
President. Mr. Waite received a BS in Accounting from Creighton University and a
JD from Georgetown University Law Center. Mr. Waite is a Certified Public
Accountant.
All directors hold office until the next annual meeting of the stockholders
and until their successors have been elected and qualified. Executive Officers
of the Company are elected by the Board of Directors on an annual basis and
serve until their successors are duly elected and qualified. There are no family
relationships among any of the executive officers or directors of the Company
(except for Victor Mann, a director, whose son Christopher Mann is Senior Vice
President, Data Storage Products).
39
<PAGE>
KEY EMPLOYEES
Certain key employees of the Company are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---------------------------------------------------- ----------- ----------------------------------------------------
<S> <C> <C>
Brian Chadwick, Ph.D................................ 42 Vice President, Semiconductor Sales
Philip Chapados, Ph.D............................... 35 Director of Control Systems Engineering
Judd C. Prozeller................................... 46 Director of Quality
Boris Relja......................................... 48 Director of Semiconductor Marketing
William Starks...................................... 56 Director of Systems Engineering
</TABLE>
Dr. Chadwick joined the Company in 1997 as Vice President, Semiconductor
Sales. From 1991 to 1997, Dr. Chadwick served in various positions at MRC, a
division of Sony and a manufacturer of fabrication equipment for semiconductor
products, most recently as Director of Global Strategic Accounts. Dr. Chadwick
received a BS and MS in Metallurgical Engineering and a Ph.D in Materials
Science and Engineering from the University of Washington.
Dr. Chapados joined the Company in 1994, and currently serves as Director of
Control Systems Engineering. From 1985 to 1994, Dr. Chapados served in various
positions at Texas Instruments, most recently as a member of the Technical Staff
of the Semiconductor Process Development Center in Dallas, Texas. Dr. Chapados
received a BS in Electrical Engineering and Computer Science from The Johns
Hopkins University, an MS in Electrical Engineering from Southern Methodist
University and a Ph.D in Electrical Engineering from Southern Methodist
University.
Mr. Prozeller joined the Company in 1995 and currently serves as a Director
of Quality. From 1990 to 1995, Mr. Prozeller served as the Senior Program
Director for the Department of Training and Professional Development at the
Rochester Institute of Technology. From 1990 to 1995, Mr. Prozeller also served
as a total quality consultant for a number of large institutional clients. From
1979 to 1988, Mr. Prozeller served various positions at the Xerox Corporation,
most recently as a Total Quality Consultant, providing consulting services to
various suppliers. Mr. Prozeller received a BS from New York State University at
Brockport, an MEd from Nazareth College of Rochester, and an MBA from Rochester
Institute of Technology.
Mr. Relja joined the Company in 1997 and currently serves as Director of
Semiconductor Marketing. From February 1990 to December 1993 and from July 1994
to 1997, Mr. Relja served in a number of positions with Varian Associates, most
recently as Product Marketing Manager, where he focused on process development
and marketing strategy. From January 1994 to June 1994, Mr. Relja served as
Director, Total Equipment Solutions, of MRC. Mr. Relja received a BS in Material
Science from IHK Munich.
Mr. Starks joined the Company in 1996 and currently serves as Director of
Systems Engineering. From 1971 to 1996, Mr. Starks served in various positions
at Varian Associates, most recently as Chief Technical Architect for Varian's
Thin Film Systems division. Mr. Starks received a BS in Electrical Engineering
from Iowa State University and an MS in Electrical Engineering from the
Massachusetts Institute of Technology.
DIRECTOR COMMITTEES AND COMPENSATION
DIRECTOR COMMITTEES
The Audit Committee consists of Messrs. Mann and Waite. The Audit Committee
reviews with the Company's independent accountants the scope and timing of their
audit services and any other services they are asked to perform, the
accountants' report on the Company's Consolidated Financial Statements following
completion of their audit and the Company's policies and procedures with respect
to internal accounting and financial controls. In addition, the Audit Committee
makes annual recommendations to the Board of Directors for the appointment of
independent accountants for the ensuing year.
40
<PAGE>
The Compensation Committee consists of Messrs. Fink, Geater and Peskoe. The
Compensation Committee reviews and evaluates the compensation and benefits of
all officers of the Company, reviews general policy matters relating to
compensation and benefits of employees of the Company and makes recommendations
concerning these matters to the Board of Directors. The Compensation Committee
will also administer the Company's 1997 Nonemployee Directors' Stock Option Plan
(the "Directors' Plan") and 1997 Stock Option Plan (the "Plan"). See "--Stock
Plans."
DIRECTOR COMPENSATION
Directors who are employees of the Company will receive no additional
compensation for their services as members of the Board of Directors or as
members of Board committees. Directors who are not employees of the Company will
be paid an annual retainer of $8,000, payable in shares of Common Stock, as well
as additional fees of $1,500 for each meeting of the Board and $500 for each
meeting of a Board committee attended by such Director. The Company's Directors
are reimbursed for their out-of-pocket expenses incurred in connection with
their service as Directors, including travel expenses.
The Company's Directors' Plan contains provisions pursuant to which options
for 10,000 shares of Common Stock are granted to each nonemployee director upon
commencement of service on the Board, and options for 3,000 shares of Common
Stock are granted to each nonemployee director on March 31 of each year of
continued service on the Board. The Company has authorized and reserved 250,000
shares of Common Stock for issuance under the Plan. At the time Mr. Fink was
elected to the Board of Directors in October 1997, he was granted an option to
purchase 10,000 shares of Common Stock pursuant to the Plan, subject to
consummation of the Offering. The exercise price of such option is equal to the
initial public offering price.
41
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth the total compensation for fiscal 1997 of the
Chief Executive Officer and each of the other four most highly compensated
executive officers of the Company whose total salary and bonus for fiscal 1997
exceeded $100,000 (each a Named Executive Officer, and collectively, the "Named
Executive Officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
-------------
ANNUAL COMPENSATION NUMBER OF
----------------------------------------- SECURITIES
OTHER UNDERLYING ALL
ANNUAL OPTIONS OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS(1) COMPENSATION(2) /SARS COMPENSATION(3)
- ----------------------------------------- --------- ---------- ----------- ---------------- ------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
Christine B. Whitman..................... 1997 $ 167,250 -- -- 51,000 $ 2,325
President, Chief Executive Officer and
Chairman
Mehrdad M. Moslehi....................... 1997 140,078 -- -- 12,000 1,905
Senior Vice President and
Chief Technology Officer
Christopher J. Mann...................... 1997 122,406 -- $ 31,962(4) 22,500 2,506
Senior Vice President,
Data Storage Products
Emilio O. DiCataldo...................... 1997 142,551 -- 46,930(5) 48,000 1,330
Senior Vice President and
Chief Financial Officer
Richard J. Chicotka...................... 1997 127,266 -- -- 18,000 887
Vice President, Operations
</TABLE>
- ------------------------
(1) Bonus Compensation for the fiscal year ended September 30, 1997 has not yet
been determined. Bonuses for fiscal 1996 were as follows: Ms. Whitman,
$46,000; Dr. Moslehi, $29,100; Mr. Mann, $28,500; Mr. DiCataldo, $34,400;
and Dr. Chicotka, $27,300.
(2) In accordance with the rules of the Securities and Exchange Commission,
other compensation in the form of perquisites and other personal benefits
has been omitted in those instances where such perquisites and other
personal benefits constituted less than the lesser of $50,000 or 10% of the
total annual salary and bonus for the Named Executive for the fiscal year.
(3) Represents matching contributions made by the Company on behalf of the Named
Executive to the Company's 401(k) Plan.
(4) Represents auto allowance of $10,488 and commission of $21,474.
(5) Represents relocation expense of $17,500, relocation allowance of $26,670
and dues of $2,760.
42
<PAGE>
OPTION GRANTS
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
VALUE AT ASSUMED
PERCENT OF ANNUAL RATES OF STOCK
NUMBER OF TOTAL OPTIONS PRICE APPRECIATION FOR
SECURITIES GRANTED TO EXERCISE OR OPTION TERM
UNDERLYING EMPLOYEES IN BASE PRICE EXPIRATION -----------------------
NAME OPTIONS FISCAL 1997 ($/SHARE) DATE 5% 10%
- ------------------------------------------- ----------- --------------- ----------- ----------- ----------- ----------
Christine B. Whitman....................... 36,000 4.22% $ 2.46 12/06/01 $ 113,027 $ 142,627
15,000 1.76 3.82 8/26/02 73,131 92,282
Mehrdad M. Moslehi......................... 12,000 1.40 3.82 8/26/02 58,505 73,826
Christopher J. Mann........................ 10,500 1.23 2.46 12/06/01 32,966 41,599
12,000 1.40 3.82 8/26/02 58,505 73,826
Emilio O. DiCataldo........................ 24,000 2.81 2.46 12/06/01 75,352 95,085
24,000 2.81 3.82 8/26/02 117,009 147,652
Richard J. Chicotka........................ 6,000 0.70 2.46 12/06/01 18,838 23,771
12,000 1.40 3.82 8/26/02 58,505 73,826
</TABLE>
YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
SEPTEMBER 30, 1997
---------------------------------------------------------
<S> <C> <C> <C> <C>
NUMBER OF VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
AT FISCAL YEAR-END AT FISCAL YEAR-END(1)
---------------------------- ---------------------------
<CAPTION>
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------------------------------------- ------------- ------------- ------------ -------------
<S> <C> <C> <C> <C>
Christine B. Whitman................................... 510,000 51,000 $ 6,417,500 $ 517,190
Mehrdad M. Moslehi..................................... 240,000 12,000 3,020,000 110,200
Christopher J. Mann.................................... 300,000 22,500 3,775,000 220,870
Emilio O. DiCataldo.................................... 155,000 88,000 1,782,644 908,416
Richard J. Chicotka.................................... 80,000 58,000 870,144 608,496
</TABLE>
- ------------------------
(1) The value of the unexercised, in-the-money options on September 30, 1997 is
based on the difference between the assumed initial public offering price of
the Common Stock ($13.00 per share), and the per share option exercise
price, multiplied by the number of shares of Common Stock underlying the
options.
STOCK OPTION PLANS
The Board of Directors of the Company has adopted and the stockholders of
the Company have approved the Company's 1997 Stock Option Plan (the "Plan"),
under which stock options may be granted to employees of the Company and its
subsidiaries. The Plan permits the grant of stock options that qualify as
incentive stock options ("ISOs") under Section 422 of the Internal Revenue Code,
and nonqualified stock options ("NSOs"), which do not so qualify. The Company
has authorized and reserved 1,250,000 shares of the Common Stock for issuance
under the Plan. As of September 30, 1997, no options had been granted under the
Plan. The shares may be unissued shares or treasury shares. If an option expires
or
43
<PAGE>
terminates for any reason without having been exercised in full, the unpurchased
shares subject to such option will again be available for grant under the Plan.
The Plan is administered by the Compensation Committee of the Board of
Directors (the "Committee"). Subject to the limitations set forth in the Plan,
the Committee has the authority to determine the persons to whom options will be
granted, the time at which options will be granted, the number of shares subject
to each option, the exercise price of each option, the time or times at which
the options will become exercisable and the duration of the exercise period. The
Committee may provide for the acceleration of the exercise period of an option
at any time prior to its termination or upon the occurrence of specified events,
subject to limitations set forth in the Plan. The Committee has the authority to
cancel and replace stock options previously granted with new options for the
same or a different number of shares and having a higher or lower exercise
price, and may amend the terms of any outstanding stock option to provide for an
exercise price that is higher or lower than the current exercise price.
All officers, employees and consultants of the Company and its subsidiaries
are eligible to receive grants of stock options under the Plan, as selected by
the Committee. The exercise price of shares of Common Stock subject to options
granted under the Plan may not be less than 100 percent of the fair market value
of the Common Stock on the date of grant. The maximum term of options granted
under the Plan is ten years from the date of grant. Options granted under the
Plan will generally become vested and exercisable over a five-year period in
equal annual installments, unless the Committee specifies a different vesting
schedule. In the event of a "change in control" of the Company (as defined in
the Plan), each option that was not then vested will become fully and
immediately vested and exercisable, unless such options are assumed by the
acquiring party in such transaction.
All options granted under the Plan are nontransferable by the optionee,
except for transfers approved by the Committee to certain permitted transferees
(such as immediate family members of the optionee and charitable institutions)
and transfers upon the optionee's death in accordance with his will or
applicable law. In the event of an optionee's death or permanent and total
disability, outstanding options that have become exercisable will remain
exercisable for a period of one year, and the Committee will have the discretion
to determine the extent to which any unvested options shall become vested and
exercisable in connection with death or disability. In the case of any other
termination of employment, outstanding options that have previously become
vested will remain exercisable for a period of 90 days, except for a termination
"for cause" (as defined in the Plan), in which case all unexercised options will
be immediately forfeited. Under the Plan, the exercise price of an option is
payable in cash or, in the discretion of the Committee, in Common Stock or a
combination of cash and Common Stock. An optionee must satisfy all applicable
tax withholding requirements at the time of exercise.
The Plan has a term of ten years, subject to earlier termination or
amendment by the Board of Directors, and all options granted under the Plan
prior to its termination remain outstanding until they have been exercised or
are terminated in accordance with their terms. The Board may amend the Plan at
any time.
The Board of Directors of the Company has also adopted and the stockholders
of the Company have also approved the Directors' Plan, under which stock options
are granted to each member of the Company's Board of Directors who is not an
employee of the Company. See "--Director Committees and Compensation" and
"--Director Compensation."
PENSION PLAN
The Company maintains a defined benefit retirement plan for its employees
which provides retirement benefits based upon a formula that takes into account
the employees' compensation and length of service with the Company as well as
benefits employees may be entitled to receive under certain prior plans of the
Company. Such plan was frozen effective September 30, 1991 and no further
benefits will be
44
<PAGE>
accrued under such plan. Mr. Christopher Mann and Ms. Christine Whitman will
receive $157.68 and $394.28, respectively, on a monthly basis commencing at
retirement at attainment of age 65.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The current members of the Compensation Committee of the Board of Directors
are Messrs. Fink, Geater and Peskoe. Neither of these directors was at any time
during the fiscal year ended September 30, 1997, nor at any other time within
the past five years, an officer or employee of the Company. No executive officer
of the Company serves as a member of the board of directors or compensation
committee of any entity which has one or more executive officers serving as a
member of the Company's Board of Directors or the Compensation Committee.
EMPLOYMENT AGREEMENTS
The Company intends to enter into employment agreements (the "Agreements")
with each of its Named Executive Officers. The Agreements provide that the
employees will serve the Company in the respective offices listed in the Summary
Compensation Table for a term of three years (with automatic one-year renewals),
subject to earlier termination as provided in the Agreements. The Agreements set
forth the minimum base salary of each employee during the term of the
Agreements, subject to possible increase at the sole discretion of the
Committee. Each employee is also eligible to receive, at the sole discretion of
the Committee, an annual bonus based on the contribution of its employee towards
achievement of the annual business goals of the Company. Under the Agreements,
the employees are entitled to participate in the employee benefit plans of the
Company and are eligible for the grant of stock options, in the sole discretion
of the Committee.
The Agreements include provisions that are effective upon the termination of
employment of the employees under certain circumstances. In general, the
employees are entitled to severance upon termination by the Company without
"cause" or termination by the employee for "good reason" following a "change in
control" (each such term as defined in the Agreements). The severance shall be
for a specified number of months (24 months for Ms. Whitman, 18 months for Mr.
DiCataldo, and 12 months for Messrs. Moslehi, Christopher Mann and Chicotka) of
the employee's base salary as in effect immediately prior to the termination.
Upon a "change in control," all options to purchase shares of Common Stock held
by the employees that were not then vested will become fully and immediately
vested and exercisable, unless such options are assumed by the acquiring party
in such transaction. An employee terminated after a "change in control" shall
retain the right to exercise any options to purchase shares of Company stock
until the 12 months following the date of such termination (or, if earlier, the
expiration of the term of the option).
The Agreements include certain restrictive covenants for the benefit of the
Company relating to non-disclosure by the employee of the Company's confidential
business information, the Company's right to inventions and technical
improvements of the employee and noncompetition by the employee with the
Company's business for a period of one year following termination of employment.
45
<PAGE>
CERTAIN TRANSACTIONS
Seagate Technology, a Delaware corporation, is a principal stockholder and
major customer of the Company. Mr. Waite, a director of the Company, is the
Executive Vice President, Chief Administrative Officer and Chief Financial
Officer of Seagate Technology. Dr. Hegarty, a director of the Company, is the
Executive Vice President and Chief Operating Officer for the Components division
of Seagate Technology. See "Principal and Selling Stockholders."
In May 1995, the Company sold 60,492 shares of Series B Convertible
Preferred Stock for a price of $148.78 per share and warrants to purchase 19,769
shares of Series B Convertible Preferred Stock (the "Warrants") to Seagate
Technology in a private placement. The Warrants are exercisable by Seagate
Technology for $223.17 per share during the seven-year period commencing on the
warrant issuance date (May 22, 1995). Following the closing of the Offering, the
Warrants will become exercisable for 1,186,140 shares of Common Stock at an
exercise price of $3.72 per share of Common Stock. See "Description of Capital
Stock."
In connection with such issuance, the Company also entered into a
Registration Rights Agreement with Seagate Technology which grants certain
demand and piggy-back registration rights with respect to shares of Common Stock
issuable upon conversion of all outstanding shares of the Series B Convertible
Preferred Stock. See "Shares Eligible for Future Sale--Registration Rights."
Nikko Tecno Co., Inc. ("Nikko Tecno"), a Japanese corporation, is a
principal stockholder and a distributor of the Company's products in Japan. Mr.
Miyanishi, a director of the Company, is the President of Nikko Tecno. See
"Principal and Selling Stockholders." At June 30, 1997, the Company had
borrowings of $2.5 million from Nikko Tecno. Of the $2.5 million, the Company
borrowed $1.5 million in November of 1990 and the remaining $1.0 million in
November of 1991. These notes, which are unsecured, require quarterly interest
payments calculated at an annual rate of 9%. The principal of the $1.0 million
note is due in November of 1997; the principal of the $1.5 million note is due
in November 1998. See Notes to Consolidated Financial Statements.
In connection with the private placement of Series B Convertible Preferred
Stock to Seagate Technology, the Company entered into an Amended and Restated
Stockholders' Agreement with Seagate Technology, Nikko Tecno, certain executive
officers and stockholders of the Company providing for voting and pre-emptive
rights with respect to the acquisition and sale of shares by the Company and
certain matters affecting corporate governance. These rights will terminate when
the Series A and Series B Convertible Preferred Stock is converted into Common
Stock upon the consummation of this Offering.
Andrew Peskoe, a director of the Company, is a partner in the law firm of
Golenbock, Eiseman, Assor & Bell, which has provided legal services to the
Company in connection with a variety of business and organizational matters.
46
<PAGE>
PRINCIPAL AND SELLING STOCKHOLDERS
The following table sets forth certain information regarding the beneficial
ownership of the Common Stock as of September 30, 1997, assuming conversion of
all shares of the Company's Preferred Stock into Common Stock upon the closing
of this Offering and giving effect to the issuance of shares of Common Stock as
a dividend to effect a 3-for-1 split of the Company's Common Stock on October
31, 1997, by (i) each person or entity known to the Company to own beneficially
more than 5% of the outstanding shares of Common Stock, (ii) each of the
Company's directors and officers, (iii) the Selling Stockholder and (iv) all
directors and executive officers as a group. Unless otherwise indicated below,
to the knowledge of the Company, all persons listed below have sole voting and
investment power with respect to their shares of Common Stock, except to the
extent authority is shared by spouses under applicable law.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY SHARES BENEFICIALLY
OWNED PRIOR TO THE SHARES TO OWNED AFTER THE
OFFERING(1)(2) BE OFFERING(1)(2)
------------------------ SOLD IN THE ------------------------
BENEFICIAL OWNER NUMBER PERCENT OFFERING NUMBER PERCENT
- --------------------------------------------------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Seagate Technology(3).............................. 4,815,660 47.5% -- 4,815,660 19.4%
920 Disc Drive
Scotts Valley, CA 95066-4544
Nikko Tecno(4)..................................... 2,112,000 23.6 -- 2,112,000 8.9
P.O. Box 139
Central Tokyo, Japan
Anne G. Whitman(5)................................. 1,836,000 20.5 900,000 936,000 4.0
Christine B. Whitman(5)............................ 1,062,000 11.2 -- 1,062,000 4.4
Mehrdad M. Moslehi(5).............................. 456,000 5.0 -- 456,000 1.9
Christopher J. Mann................................ 383,940 4.2 -- 383,940 1.6
Emilio O. DiCataldo................................ 154,920 1.7 -- 154,920 *
Richard Chicotka................................... 79,920 * -- 79,920 *
Robert C. Fink..................................... 0 * -- 0 *
James Geater....................................... 50,475 * -- 50,475 *
Brendan C. Hegarty(6).............................. 4,818,135 47.5 -- 4,818,135 19.4
Victor E. Mann..................................... 26,475 * -- 26,475 *
Seiya Miyanishi(7)................................. 2,114,475 23.6 -- 2,114,475 8.9
Andrew Peskoe(8)................................... 197,475 2.2 -- 197,475 *
Donald Waite(9).................................... 4,818,135 47.5 -- 4,818,135 19.4
All directors and executive officers as
a group (12 persons)............................. 2,247,630 22.0 -- 2,247,630 17.0
</TABLE>
- ------------------------
* Less than one percent.
(1) The number of shares of Common Stock shown in the table above as
beneficially owned includes shares issuable pursuant to options and warrants
that may be exercised within 60 days after September 30, 1997. Shares
issuable pursuant to such options and warrants are deemed outstanding for
computing the percentage of beneficial ownership of the person holding such
options and warrants but are not deemed outstanding for computing the
percentage of beneficial ownership of any other person.
(2) Includes shares of Common Stock issuable upon exercise of options, as
follows: Christine B. Whitman--510,000 shares; Mehrdad M. Moslehi--240,000
shares; Christopher J. Mann--300,000 shares; Emilio O. DiCataldo--154,920
shares; Richard Chicotka--79,920 shares; and Andrew Peskoe--75,000 shares.
47
<PAGE>
(3) Includes 3,629,520 shares of Common Stock issuable upon conversion of
outstanding shares of Series B Convertible Preferred Stock and 1,186,140
additional shares of Common Stock issuable upon exercise of the Warrants.
See "Certain Transactions."
(4) Includes 2,088,000 shares of Common Stock issuable upon conversion of Series
A Convertible Preferred Stock.
(5) The stockholders' address is: c/o CVC, Inc., 525 Lee Road, Rochester, New
York, 14606.
(6) Includes 4,815,660 shares of Common Stock beneficially owned by Seagate
Technology. Mr. Hegarty is an executive officer and stockholder of Seagate
Technology. Mr. Hegarty disclaims beneficial ownership of the shares of
Common Stock owned by Seagate Technology except to the extent of his
pecuniary interest therein as a stockholder of Seagate Technology.
(7) Includes 2,112,000 shares of Common Stock beneficially owned by Nikko Tecno.
Mr. Miyanishi is a director, officer and stockholder of Nikko Tecno. Mr.
Miyanishi disclaims beneficial ownership of the shares of Common Stock owned
by Nikko Tecno except to the extent of his pecuniary interest therein as a
stockholder of Nikko Tecno.
(8) Includes 96,000 shares of Common Stock, and 75,000 additional shares of
Common Stock issuable upon exercise of an option, beneficially owned by
Julie Peskoe, Mr. Peskoe's wife, as to which Mr. Peskoe disclaims beneficial
ownership.
(9) Includes 4,815,660 shares beneficially owned by Seagate Technology. Mr.
Waite is an executive officer and stockholder of Seagate Technology. Mr.
Waite disclaims beneficial ownership of the shares of Common Stock owned by
Seagate Technology except to the extent of his pecuniary interest therein as
a stockholder of Seagate Technology.
- ------------------------
Anne G. Whitman is not related to Christine B. Whitman.
48
<PAGE>
DESCRIPTION OF CAPITAL STOCK
AUTHORIZED STOCK; ISSUED AND OUTSTANDING SHARES
Upon the completion of this Offering, the authorized capital stock of the
Company will consist of 50,000,000 shares of Common Stock, par value $0.01 per
share, and 5,000,000 shares of new Preferred Stock, par value $0.01 per share.
As of September 30, 1997, 1,273,890 shares of Common Stock, 1,685 shares of
Series A Convertible Preferred Stock and 60,492 shares of Series B Convertible
Preferred Stock were outstanding. Simultaneously with the closing of this
Offering, the outstanding shares of Series A and Series B Convertible Preferred
Stock will automatically be converted into an aggregate of 7,673,520 shares of
Common Stock.
COMMON STOCK
Assuming conversion of all outstanding Series A and Series B Convertible
Preferred Stock, at September 30, 1997 there were 8,947,410 shares of Common
Stock outstanding held by approximately 22 stockholders of record. Holders of
Common Stock are entitled to one vote for each share held of record on any
matters voted upon by stockholders and do not have any cumulative voting rights.
Subject to preferences that may be applicable to any outstanding Preferred
Stock, holders of Common Stock are entitled to receive ratably such dividends as
may be declared by the Board of Directors out of funds legally available
therefor. In the event of a liquidation, dissolution or winding up of the
Company, holders of Common Stock are entitled to share ratably in all assets
remaining after payment of liabilities and the liquidation preferences of any
outstanding Preferred Stock. Holders of Common Stock have no preemptive rights
and no right to convert their Common Stock into any other securities. There are
no redemption or sinking fund provisions applicable to the Common Stock. All
outstanding shares of Common Stock are, and all shares of Common Stock to be
outstanding upon completion of this Offering will be, validly issued, fully paid
and nonassessable. The rights, preferences and privileges of holders of Common
Stock are subject to, and may be adversely affected by, the rights of the
holders of shares of any series of Preferred Stock which the Company may
designate and issue in the future.
PREFERRED STOCK
Upon the closing of this Offering, the conversion of the outstanding Series
A and Series B Convertible Preferred Stock and the filing of a Certificate of
Amendment to the Company's Restated Certificate of Incorporation removing the
designation of those series, the Company's Restated Certificate of Incorporation
will authorize the issuance of up to 5,000,000 shares of new Preferred Stock,
and none of those shares will be outstanding or designated into any series.
Under the terms of the Restated Certificate of Incorporation, the Board of
Directors is authorized, subject to any limitations prescribed by law, further
without stockholder approval, to issue such shares of Preferred Stock in one or
more series. Each such series of Preferred Stock shall have such rights,
preferences, privileges and restrictions, including voting rights, dividend
rights, conversion rights, redemption privileges and liquidation preferences, as
shall be determined by the Board of Directors.
The purpose of authorizing the Board of Directors to issue Preferred Stock
and determine its rights and preferences is to eliminate delays associated with
a stockholder vote on specific issuances. The issuance of Preferred Stock, while
providing desirable flexibility in connection with possible acquisitions and
other corporate purposes, could have the effect of making it more difficult for
a third party to acquire, or of discouraging a third party from acquiring, a
majority of the outstanding voting stock of the Company. The Company has no
present plans to issue any shares of Preferred Stock.
49
<PAGE>
WARRANTS
The Company has issued the Warrants to purchase 19,769 shares of Series B
Convertible Preferred Stock at an exercise price of $223.17 per share of Series
B Convertible Preferred Stock during the seven-year period commencing on the
warrant issuance date (May 22, 1995). Upon the consummation of this Offering,
the Warrants will become exercisable for 1,186,140 shares of Common Stock at an
exercise price of $3.72 per share of Common Stock.
SECTION 203 OF THE DELAWARE GENERAL CORPORATION LAW
The Company is subject to the provisions of Section 203 of the Delaware
General Corporation Law ("Section 203"). Under Section 203, certain "business
combinations" between a Delaware corporation whose stock generally is publicly
traded or held of record by more than 2,000 stockholders and an "interested
stockholder" are prohibited for a three-year period following the date that such
a stockholder became an interested stockholder, unless (i) the corporation has
elected in its original certificate of incorporation not to be governed by
Section 203 (the Company did not make such an election); (ii) the business
combination was approved by the Board of Directors of the corporation before the
other party to the business combination became an interested stockholder; (iii)
upon consummation of the transaction that made it an interested stockholder, the
interested stockholder owned at least 85% of the voting stock of the corporation
outstanding at the commencement of the transaction (excluding voting stock owned
by directors who are also officers or held in employee benefit plans in which
the employees do not have a confidential right to tender or vote stock held by
the plan); or (iv) the business combination was approved by the Board of
Directors of the corporation and ratified by two-thirds of the voting stock
which the interested stockholder did not own. The three-year prohibition also
does not apply to certain business combinations proposed by an interested
stockholder following the announcement or notification of certain extraordinary
transactions involving the corporation and a person who had not been an
interested stockholder during the previous three years or who became an
interested stockholder with the approval of the majority of the corporation's
directors. The term "business combination" is defined generally to include
mergers or consolidations between a Delaware corporation and an interested
stockholder, transactions with an interested stockholder involving the assets or
stock of the corporation or its majority-owned subsidiaries and transactions
which increase an interested stockholder's percentage ownership of stock. The
term "interested stockholder" is defined generally as a stockholder who,
together with affiliates and associates, owns (or, within three years prior, did
own) 15% or more of a Delaware corporation's voting stock. Section 203 could
prohibit or delay a merger, takeover or other change in control of the Company
and therefore could discourage attempts to acquire the Company.
50
<PAGE>
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of this Offering, the Company will have 11,947,410 shares of
Common Stock outstanding. Of these shares, the 3,900,000 shares of Common Stock
sold in this Offering will be freely tradable without restriction under the
Securities Act, except that any shares purchased by "affiliates" of the Company
("Affiliates"), as that term is defined in Rule 144 ("Rule 144") under the
Securities Act, generally may be sold only in compliance with the limitations of
Rule 144 described below.
SALES OF RESTRICTED SECURITIES
The remaining shares of Common Stock outstanding upon completion of this
Offering are deemed "Restricted Shares" under Rule 144. Of the Restricted
Shares, up to 1,186,800 shares will be eligible for sale in the public market
after Offering pursuant to Rule 144(k) under the Securities Act; 1,186,800 of
these shares are subject to the 180-day Lock-up Agreements described below, but
will be eligible for sale in the public market beginning 180 days after the
closing of this Offering. An additional 1,784,301 Restricted Shares will be
eligible for sale in the public market in accordance with Rule 701 under the
Securities Act beginning 90 days after the date of this Prospectus; 1,557,003 of
these shares are subject to the 180-day Lock-up Agreements. Of the remaining
Restricted Shares outstanding, 6,665,460 shares will be eligible for resale
under Rule 144 commencing 90 days after the date of this Prospectus; 6,566,715
of these shares are subject to the 180-day Lock-up Agreements.
In general, under Rule 144 as currently in effect, a holder of Restricted
Shares who beneficially owns shares that were not acquired from the Company or
an Affiliate within the previous two years would be entitled to sell within any
three-month period a number of shares that does not exceed the greater of one
percent of the then outstanding shares of Common Stock (approximately 119,474
shares immediately after this Offering) or the average weekly trading volume of
the Common Stock in the over-the-counter market during the four calendar weeks
preceding the date on which notice of the sale is filed with the Securities and
Exchange Commission. Sales under Rule 144 are subject to certain manner of sale
provisions, notice requirements and the availability of current public
information about the Company. A person who is not deemed an affiliate of the
Company at any time during the three months preceding a sale and who
beneficially owns shares that were not acquired from the Company or an Affiliate
within the previous two years is entitled to sell such shares under Rule 144(k)
without regard to volume limitations, manner of sale provisions, notice
requirements or the availability of current public information concerning the
Company.
Any employee, officer or director of or consultant to the Company who
received his or her shares pursuant to a written compensatory plan or contract
is entitled to rely on the resale provisions of Rule 701, which, beginning 90
days after the date of this Prospectus, permit persons, other than Affiliates,
to sell their Rule 701 shares without having to comply with the
public-information, holding period, volume limitation or notice provisions of
Rule 144 and permit Affiliates to sell their Rule 701 shares without having to
comply with Rule 144's holding-period restrictions.
OPTIONS
Upon completion of this Offering, 1,784,301 shares of Common Stock issuable
upon exercise of stock options will become eligible for sale in the public
market subject to compliance with Rule 701 beginning 90 days after this
Offering; 1,557,003 of these shares underlying these options are subject to the
180-day Lock-up Agreements. An additional 1,490,000 shares of Common Stock are
available for future grants under the Company's Stock Option Plans.
The Company intends to file one or more registration statements on Form S-8
under the Securities Act to register all shares of Common Stock subject to
outstanding stock options and Common Stock issuable pursuant to the Company's
stock option plans that do not qualify for an exemption under Rule 701 from the
registration requirements of the Securities Act. The Company has agreed with the
Underwriters
51
<PAGE>
not to file these registration statements earlier than 180 days following the
date of this Prospectus, and any such registration statements are expected to
become effective upon filing. Shares covered by these registration statements
will thereupon be eligible for sale in the public markets, subject to the
Lock-up Agreements, to the extent applicable.
REGISTRATION RIGHTS
The holders of 8,909,235 shares of Common Stock (the "Registrable
Securities") are entitled to certain rights with respect to the registration of
such shares under the Securities Act. Those registration rights have been waived
with respect to this Offering. Under the terms of an agreement between the
Company and the holders of the Registrable Securities, if the Company proposes
to register any of its securities under the Securities Act, either for its own
account or the account of other security holders exercising registration rights,
those holders are entitled to notice of registration and are entitled to include
shares of Registrable Securities in the Offering, provided that the managing
underwriters have the right to limit the number of such shares included in the
registration. Holders of 3,629,520 Registrable Securities may also require the
Company to file a registration statement under the Securities Act at its expense
with respect to their Registrable Securities, and the Company is required to use
its best efforts to effect that registration, subject to, among other things,
the right of the Company not to effect any registration within the earlier of
May 22, 1998 or six months following the Offering made hereby. Further,
stockholders may require the Company to file additional registration statements
on Form S-3 when such form becomes available to the Company, subject to certain
conditions and limitations. All expenses incurred in connection with such
registrations must be borne by the Company, other than underwriting discounts
and commissions.
EFFECT OF SALES OF SHARES
No prediction can be made as to the effect, if any, that future sales of
shares of Common Stock or the availability of shares for future sale will have
on the prevailing market price for the Common Stock. Sales of substantial
amounts of Common Stock, or the perception that such sales could occur, could
adversely affect prevailing market prices for the Common Stock and could impair
the Company's future ability to raise capital through an Offering of equity
securities.
52
<PAGE>
UNDERWRITING
Subject to the terms and conditions of the Underwriting Agreement, the
Underwriters named below (the "Underwriters"), through their Representatives BT
Alex. Brown Incorporated, Hambrecht & Quist LLC and PaineWebber Incorporated,
have severally agreed to purchase from the Company and the Selling Stockholder
the following respective number of shares of Common Stock at the initial public
offering price less the underwriting discounts and commissions set forth on the
front cover of this Prospectus:
<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITERS SHARES
- --------------------------------------------------------------------------------- ----------
<S> <C>
BT Alex. Brown Incorporated......................................................
Hambrecht & Quist LLC............................................................
PaineWebber Incorporated.........................................................
----------
Total.......................................................................... 3,900,000
----------
----------
</TABLE>
The Underwriting Agreement provides that the obligations of the Underwriters
are subject to certain conditions precedent, and that the Underwriters will
purchase all shares of Common Stock offered hereby, if any such shares are
purchased.
The Company and the Selling Stockholder have been advised by the
Representatives of the Underwriters that the Underwriters propose to offer the
shares of Common Stock to the public at the initial public offering price set
forth on the cover page of this Prospectus and to certain other dealers at such
price less a concession not in excess of $ per share. The Underwriters
may allow, and such dealers may reallow, a concession not in excess of
$ per share to certain other dealers. After the public offering, the
public offering price and other selling terms may be changed by the
Representatives of the Underwriters.
The Company has granted the Underwriters an option, exercisable not later
than 30 days after the date of this Prospectus, to purchase up to 585,000
additional shares of Common Stock at the initial public offering price less the
underwriting discounts and commissions set forth on the cover page of this
Prospectus. To the extent such option is exercised, each of the Underwriters
will have a firm commitment, to purchase approximately the same percentage
thereof that the number of shares of Common Stock to be purchased shown in the
above table bears to 3,900,000 and the Company will be obligated, pursuant to
the option, to sell such shares to the Underwriters. The Underwriters may
exercise such option only to cover over-allotments made in connection with the
sale of Common Stock hereby. If purchased, the Underwriters will offer such
additional shares on the same terms as those on which the 3,900,000 shares are
being offered.
The Company and the Selling Stockholder have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act.
The Company, the Selling Stockholder and all executive officers, directors
and certain employees of the Company, and certain stockholders, who in the
aggregate will hold approximately 8,848,935 shares of Common Stock, have agreed
that for a period of 180 days following the date of this Prospectus, they will
not offer, pledge, sell, contract to sell, grant any option to purchase,
purchase any option to sell, or otherwise transfer or dispose of, directly or
indirectly, any shares of Common Stock without the prior written consent of BT
Alex. Brown Incorporated.
In connection with the Offering, the Underwriters may purchase and sell
Common Stock in the open market. These transactions may include over-allotment
and stabilizing transactions and purchases to cover syndicate short positions
created in connection with the Offering. The Underwriters also may impose
53
<PAGE>
penalty bids, whereby selling concessions allowed to syndicate members or other
broker-dealers in respect of the Common Stock sold in the Offering for their
account may be reclaimed by the syndicate if such securities are repurchased by
the syndicate in stabilizing or short-covering transactions. These activities
may stabilize, maintain or otherwise affect the market price of Common Stock,
which may be higher than the price that might otherwise prevail in the open
market. These transactions may be effected on the Nasdaq National Market or
otherwise and these activities, if commenced, may be discontinued at any time.
The Representatives have advised the Company that the Underwriters do not
intend to confirm sales to any accounts over which they exercise discretionary
authority.
Prior to this Offering, there has been no public market for the Common
Stock. Consequently, the initial public offering price was determined through
negotiation among the Company, representatives of the Selling Stockholder and
the Representatives of the Underwriters. Among the factors considered in such
negotiations were the prevailing market conditions, the results of operations of
the Company in recent periods, the market capitalizations and stages of
development of other companies that the Company, the Selling Stockholder and the
Representatives of the Underwriters believe to be comparable to the Company,
estimates of the business potential of the Company, the present state of the
Company's development and other factors deemed relevant.
LEGAL MATTERS
The validity of the shares of Common Stock offered hereby will be passed
upon for the Company by Dewey Ballantine LLP, New York, New York and for the
Underwriters by Testa, Hurwitz & Thibeault, LLP, Boston, Massachusetts.
EXPERTS
The consolidated financial statements as of September 30, 1996 and 1995 and
for the two years in the period ended September 30, 1996 included in this
Prospectus have been so included in reliance on the report of Price Waterhouse
LLP, independent accountants, given on the authority of said firm as experts in
auditing and accounting. The consolidated statements of operations,
stockholders' equity and of cash flows for the year ended September 30, 1994,
included in this Prospectus have been so included in reliance on the report of
Chapman, Collins, Agostinelli & Shaw, P.C., independent accountants, given on
the authority of said firm as experts in accounting and auditing.
The statements in this Prospectus relating to patent matters under the
captions "Risk Factors-- Patents and Other Intellectual Property" and
"Business--Patents and Other Proprietary Rights", have been reviewed by the
Company's patent counsel, Baker & Botts, L.L.P. The statements included herein
are made in reliance upon the review and approval by such firm as experts in
patent law.
ADDITIONAL INFORMATION
The Company has filed with the Securities and Exchange Commission,
Washington, D.C. 20549, a Registration Statement on Form S-1 under the
Securities Act with respect to the shares of Common Stock offered hereby. This
Prospectus does not contain all of thc information set forth in the Registration
Statement and the exhibits and schedules thereto. For further information with
respect to the Company and the Common Stock offered hereby, reference is made to
the Registration Statement and the exhibits and schedules filed therewith.
Statements contained in this Prospectus as to the contents of any contract or
any other document referred to are not necessarily complete, and in each
instance reference is made to the copy of such contract or other document filed
as an exhibit to the Registration Statement, each such statement being qualified
in all respects by such reference. A copy of the Registration Statement may be
inspected without charge at the offices of the Commission in Washington, D.C.
20549, and copies of all or any part of the Registration Statement may be
obtained from the Public Reference Section of the Commission, Washington, D.C.
20549 upon the payment of the fees prescribed by the Commission.
54
<PAGE>
CVC, INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<S> <C>
Reports of Independent Accountants.................................................... F-2
Consolidated Balance Sheets........................................................... F-4
Consolidated Statements of Operations................................................. F-5
Consolidated Statements of Stockholders' Equity....................................... F-6
Consolidated Statements of Cash Flows................................................. F-7
Notes to Consolidated Financial Statements............................................ F-8
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and
Stockholders of CVC, Inc.
The stock split described in Note 1 to the consolidated financial statements
has not been consummated at October 16, 1997. When it has been consummated, we
will be in a position to furnish the following report:
"In our opinion, the accompanying consolidated balance sheets and the
related consolidated statements of operations, stockholders' equity and of
cash flows present fairly, in all material respects, the financial position
of CVC, Inc. (the "Company") and its subsidiary at September 30, 1996, and
1995, and the results of their operations and their cash flows for the years
then ended in conformity with generally accepted accounting principles.
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 of these statements
in accordance with generally accepted auditing standards which 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, assessing the accounting principles
used and significant estimates made by management, and evaluating the
overall financial statement presentation. We believe that our audits provide
a reasonable basis for the opinion expressed above.
As discussed in Note 1, the Company adopted the provisions of Statement
of Financial Accounting Standards No. 106, "Accounting for Postretirement
Benefits Other than Pensions," in 1996."
Price Waterhouse LLP
Rochester, NY
November 15, 1996
F-2
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and
Stockholders of CVC, Inc.
We have audited the accompanying consolidated statements of operations,
stockholders' equity and of cash flows for the year ended, September 30, 1994 of
CVC, Inc. and its subsidiary. 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 consolidated financial statements audited by us present
fairly, in all material respects, the results of operations and cash flows of
CVC, Inc. and its subsidiary for the year ended September 30, 1994, in
conformity with generally accepted accounting principles.
Chapman, Collins, Agostinelli & Shaw, P.C.
Rochester, NY
November 15, 1996
F-3
<PAGE>
CVC, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
SEPTEMBER 30,
---------------------- JUNE 30, PRO FORMA
1995 1996 1997 (NOTE 1)
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
(UNAUDITED)
ASSETS
Current assets:
Cash and cash equivalents................................... $3,157,074 $ 729,882 $ 104,949 $ 104,949
Accounts receivable:
Trade (includes related party receivables of $360,100 and
$2,223,800 in 1995 and 1996, respectively and $4,383,700
at June 30, 1997 which is unaudited), less allowance for
doubtful accounts of $50,000, $92,000 and $105,000 in
1995, 1996 and at June 30, 1997, respectively).......... 4,303,076 4,882,233 8,232,234 8,232,234
Inventories................................................. 9,870,804 16,303,652 16,777,152 16,777,152
Deferred income taxes....................................... 494,900 1,693,200 734,600 734,600
Other current assets........................................ 581,188 338,213 813,991 813,991
---------- ---------- ---------- ----------
18,407,042 23,947,180 26,662,926 26,662,926
Property, plant and equipment, net............................ 5,015,460 7,885,518 8,387,806 8,387,806
Other assets.................................................. 131,608 4,293 28,122 28,122
---------- ---------- ---------- ----------
Total assets............................................ $23,554,110 $31,836,991 $35,078,854 $35,078,854
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt (includes related party
notes of $2,500,000 at June 30, 1997, which is
unaudited)................................................ 187,719 893,564 5,854,553 5,854,553
Accounts payable............................................ 2,238,954 5,437,408 6,656,851 6,656,851
Advances from customers (includes related party advances of
$3,463,000 and $3,817,000 in 1995 and 1996, respectively
and $1,913,000 at June 30, 1997 which is unaudited)....... 8,202,291 5,616,616 5,596,939 5,596,939
Other current liabilities................................... 2,349,492 3,183,175 2,681,875 2,681,875
---------- ---------- ---------- ----------
12,978,456 15,130,763 20,790,218 20,790,218
Long-term debt (includes related party notes of $2,500,000 in
1995 and 1996, respectively)................................ 3,528,227 5,635,201 2,484,606 2,484,606
Deferred income taxes......................................... 767,500 1,482,600 1,143,600 1,143,600
Other liabilities............................................. 97,033 269,547 330,273 330,273
---------- ---------- ---------- ----------
Total liabilities....................................... 17,371,216 22,518,111 24,748,697 24,748,697
Commitments
Stockholders' equity:
Preferred stock, $.01 par value per share; 102,500 shares
authorized; shares issued and outstanding:
Series A--1,685 shares in 1995, 1996 and 1997 (liquidation
preference of $1,685,000)............................... 1,685,000 1,685,000 1,685,000 --
Series B--60,492 shares in 1995, 1996 and 1997
(liquidation preference of $9,000,000).................. 8,354,829 8,354,829 8,354,829 --
Common stock, $.01 par value per share; 7,500,000 shares
authorized in 1995, 1996 and 1997, 1,102,740 shares issued
and outstanding in 1995 and 1996 and 1,213,890 in 1997.... 3,676 3,676 4,046 29,624
Additional paid-in capital.................................. 456,460 456,460 477,313 10,491,564
Accumulated deficit......................................... (4,274,555) (1,095,048) (104,994) (104,994)
Minimum pension liability................................... (42,516) (86,037) (86,037) (86,037)
---------- ---------- ---------- ----------
Total stockholders' equity.............................. 6,182,894 9,318,880 10,330,157 10,330,157
---------- ---------- ---------- ----------
Total liabilities and stockholders' equity.............. $23,554,110 $31,836,991 $35,078,854 $35,078,854
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE>
CVC, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED SEPTEMBER 30, JUNE 30,
------------------------------------------- ----------------------------
<S> <C> <C> <C> <C> <C>
1994 1995 1996 1996 1997
------------- ------------- ------------- ------------- -------------
<CAPTION>
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenues
Trade (includes sales to related party of
$4,202,000, $5,827,000 and $27,795,000 in
1994, 1995, and 1996, respectively, and
$22,464,000 and $20,498,000 for the nine
months ended June 30, 1996 and 1997,
respectively, which is unaudited)............ $ 13,425,615 $ 18,200,177 $ 48,377,701 $ 34,621,862 $ 44,639,955
Contract....................................... 489,753 3,158,264 -- -- --
------------- ------------- ------------- ------------- -------------
13,915,368 21,358,441 48,377,701 34,621,862 44,639,955
Cost of goods sold
Trade (includes cost of goods sold to related
party of $2,829,000, $4,002,000 and
$16,162,000 in 1994, 1995 and 1996,
respectively and $12,889,000 and $12,126,000
for the nine months ended June 30, 1996 and
1997, respectively, which is unaudited)...... 11,326,148 13,089,390 33,755,133 24,516,595 29,947,060
Contract....................................... 468,438 2,540,757 -- -- --
------------- ------------- ------------- ------------- -------------
11,794,586 15,630,147 33,755,133 24,516,595 29,947,060
------------- ------------- ------------- ------------- -------------
Gross margin..................................... 2,120,782 5,728,294 14,622,568 10,105,267 14,692,895
Operating expenses
Research and development....................... 1,271,095 1,214,221 4,345,567 3,174,607 6,542,866
Sales and marketing............................ 2,353,839 2,923,565 4,776,972 3,141,510 4,107,365
General and administrative..................... 1,248,435 1,447,338 2,124,298 1,678,341 1,882,896
------------- ------------- ------------- ------------- -------------
4,873,369 5,585,124 11,246,837 7,994,458 12,533,127
------------- ------------- ------------- ------------- -------------
Income (loss) from operations.................... (2,752,587) 143,170 3,375,731 2,110,809 2,159,768
Interest income.................................. 13,789 86,404 102,399 92,982 11,387
Interest expense................................. (547,176) (645,305) (298,623) (246,662) (442,701)
------------- ------------- ------------- ------------- -------------
Income (loss) before income taxes................ (3,285,974) (415,731) 3,179,507 1,957,129 1,728,454
Income taxes (benefit)........................... 36,000 (546,000) -- -- 738,400
------------- ------------- ------------- ------------- -------------
Net income (loss)................................ $ (3,321,974) $ 130,269 $ 3,179,507 $ 1,957,129 $ 990,054
------------- ------------- ------------- ------------- -------------
------------- ------------- ------------- ------------- -------------
Pro forma net income per share (unaudited)....... $ -- $ 0.02 $ 0.29 $ 0.18 $ 0.09
------------- ------------- ------------- ------------- -------------
------------- ------------- ------------- ------------- -------------
Weighted average common and common equivalent
shares......................................... -- 8,501,522 11,216,861 11,165,438 11,361,890
------------- ------------- ------------- ------------- -------------
------------- ------------- ------------- ------------- -------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE>
CVC, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
SERIES A PREFERRED STOCK SERIES B PREFERRED STOCK COMMON STOCK
----------------------------------- ----------------------------------- --------------------
NUMBER PAR PAID-IN NUMBER PAR PAID-IN NUMBER PAR
OF SHARES VALUE CAPITAL OF SHARES VALUE CAPITAL OF SHARES VALUE
----------- ----- --------- ----------- ----- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at October 1, 1993...... 1,685 $ 17 $1,684,983 791,940 $ 2,640
----- --- --------- ----------- ----- --------- --------- ---------
Issuance of common stock........ 120,000 400
Minimum pension liability.......
Net loss........................
----- --- --------- ----------- ----- --------- --------- ---------
Balance at September 30, 1994... 1,685 17 1,684,983 911,940 3,040
Issuance of common stock........ 190,800 636
Issuance of Series B preferred
stock......................... 60,492 $ 605 $8,354,224
Minimum pension liability.......
Net income......................
----- --- --------- ----------- ----- --------- --------- ---------
Balance at September 30, 1995... 1,685 17 1,684,983 60,492 605 8,354,224 1,102,740 3,676
Minimum pension liability.......
Net income......................
----- --- --------- ----------- ----- --------- --------- ---------
Balance at September 30, 1996... 1,685 17 1,684,983 60,492 605 8,354,224 1,102,740 3,676
(UNAUDITED)
Issuance of common stock........ 111,150 370
Net income......................
----- --- --------- ----------- ----- --------- --------- ---------
Balance at June 30, 1997........ 1,685 $ 17 $1,684,983 60,492 $ 605 $8,354,224 1,213,890 $ 4,046
----- --- --------- ----------- ----- --------- --------- ---------
----- --- --------- ----------- ----- --------- --------- ---------
<CAPTION>
MINIMUM
PAID-IN ACCUMULATED PENSION
CAPITAL DEFICIT LIABILITY
--------- ------------ -----------
<S> <C> <C> <C>
Balance at October 1, 1993...... $ 327,996 $(1,082,850)
--------- ------------ -----------
Issuance of common stock........ 49,600
Minimum pension liability....... $ (23,333)
Net loss........................ (3,321,974)
--------- ------------ -----------
Balance at September 30, 1994... 377,596 (4,404,824) (23,333)
Issuance of common stock........ 78,864
Issuance of Series B preferred
stock.........................
Minimum pension liability....... (19,183)
Net income...................... 130,269
--------- ------------ -----------
Balance at September 30, 1995... 456,460 (4,274,555) (42,516)
Minimum pension liability....... (43,521)
Net income...................... 3,179,507
--------- ------------ -----------
Balance at September 30, 1996... 456,460 (1,095,048) (86,037)
(UNAUDITED)
Issuance of common stock........ 20,853
Net income...................... 990,054
--------- ------------ -----------
Balance at June 30, 1997........ $ 477,313 $ (104,994) $ (86,037)
--------- ------------ -----------
--------- ------------ -----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-6
<PAGE>
CVC, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED SEPTEMBER 30, JUNE 30,
---------------------------------- ----------------------
<S> <C> <C> <C> <C> <C>
1994 1995 1996 1996 1997
---------- ---------- ---------- ---------- ----------
<CAPTION>
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net income (loss).............................. $(3,321,974) $ 130,269 $3,179,507 $1,957,129 $ 990,054
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation and amortization.................. 410,988 430,584 936,680 565,739 907,867
Provision for deferred taxes................... 32,112 (561,000) (451,700) -- 619,600
Changes in operating assets and liabilities-
Accounts receivable (including related
party)................................... 1,662,339 (2,978,308) (579,157) (733,716) (3,350,001)
Inventories................................ 1,513,471 (5,757,556) (6,432,848) (5,287,627) (473,500)
Other assets............................... (682,261) (265,028) 211,921 101,450 (499,607)
Accounts payable........................... 334,672 (823,348) 3,198,454 2,352,549 1,219,443
Advances from customers (including related
party)................................... 176,751 6,397,205 (2,585,675) 2,075,167 (19,677)
Other liabilities.......................... 612,503 1,280,723 1,004,237 720,923 (440,574)
---------- ---------- ---------- ---------- ----------
Total adjustments........................ 4,060,575 (2,276,728) (4,698,088) (205,515) (2,036,449)
---------- ---------- ---------- ---------- ----------
Net cash provided (used) by operating
activities............................. 738,601 (2,146,459) (1,518,581) 1,751,614 (1,046,395)
---------- ---------- ---------- ---------- ----------
Cash flows from investing activities:
Capital expenditures........................... (638,393) (524,264) (3,679,927) (2,252,157) (1,689,542)
---------- ---------- ---------- ---------- ----------
Net cash used in investing activities.... (638,393) (524,264) (3,679,927) (2,252,157) (1,689,542)
---------- ---------- ---------- ---------- ----------
Cash flows from financing activities:
Proceeds from line of credit................... -- -- -- -- 2,461,089
Proceeds from notes payable (including related
party)....................................... 913,234 1,050,000 -- -- --
Payments on notes payable (including related
party)....................................... (813,619) (3,200,004) -- --
Proceeds from long-term debt................... -- -- 3,000,000 -- --
Payments on long-term debt and capital lease
obligations.................................. (253,128) (458,141) (228,684) (138,133) (650,695)
Proceeds from issuance of common stock and sale
of preferred stock........................... 50,000 8,434,329 -- -- 21,223
Disposal of Assets............................. -- -- -- -- 279,387
---------- ---------- ---------- ---------- ----------
Net cash provided (used) by financing
activities............................. (103,513) 5,826,184 2,771,316 (138,133) 2,111,004
Net (decrease) increase in cash and cash
equivalents...................................... (3,305) 3,155,461 (2,427,192) (638,676) (624,933)
Cash and cash equivalents, beginning of period..... 4,918 1,613 3,157,074 3,157,074 729,882
---------- ---------- ---------- ---------- ----------
Cash and cash equivalents, end of period........... $ 1,613 $3,157,074 $ 729,882 $2,518,398 $ 104,949
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
</TABLE>
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED SEPTEMBER 30, JUNE 30,
---------------------------------- ----------------------
<S> <C> <C> <C> <C> <C>
1994 1995 1996 1996 1997
---------- ---------- ---------- ---------- ----------
<CAPTION>
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash paid during the year for:
Interest....................................... $ 439,468 $ 589,500 $ 346,200 $ 207,002 $ 371,826
Income taxes................................... $ 5,362 $ 3,300 $ 146,700 $ 52,218 $ 607,000
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-7
<PAGE>
CVC, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1--NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
THE COMPANY
In 1990, CVC, Inc. (CVC or the Company) acquired CVC Products, Inc. (CVC
Products) at which time the Company was incorporated under the laws of the State
of Delaware. CVC Products had been originally founded in 1934 in Rochester, New
York as the experimental vacuum processing group of Eastman Kodak Company. The
Company maintains offices in Rochester, New York, Fremont, California, Dallas,
Texas and Minneapolis, Minnesota. Technical support and sales offices are
located in Europe and Japan.
CVC is engaged in the design, development, manufacturing and marketing of
thin film fabrication and processing equipment for the data storage and
semiconductor industries worldwide. The Company's products are focused on the
thin film recording head equipment market and semiconductor integrated circuit
market. In particular, the Company designs and manufactures modular,
multi-process, single wafer cluster tool deposition systems for commercial
production of thin film recording heads and semiconductor integrated circuits.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements of the Company include its subsidiary,
CVC Products, after elimination of all significant intercompany balances and
transactions.
UNAUDITED PRO FORMA BALANCE SHEET
The Company's Series A and Series B Non-Cumulative Convertible Preferred
Stock automatically convert into Common Stock concurrent with the closing of an
initial public offering (Note 9). Accordingly, the unaudited pro forma balance
sheet has been presented on a basis to give effect to the automatic conversion
of such stock as of the closing date of the initial public offering which is
assumed to have been converted as of June 30, 1997.
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 reported amounts of assets and liabilities at
year-end as well as the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
CONCENTRATION OF CREDIT RISK
Financial instruments which potentially expose the Company to significant
concentrations of credit risk consist principally of bank deposits, temporary
investments and accounts receivable (including receivables from related
parties--Note 10). Cash is placed primarily in high quality short-term interest
bearing financial instruments.
The Company performs ongoing credit evaluations of its customers' financial
condition and the Company maintains an allowance for uncollectible accounts
receivable based upon the expected collectibility of all accounts receivable.
F-8
<PAGE>
CVC, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 1--NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amount of the Company's financial instruments, including cash
and cash equivalents and accounts receivable approximates their fair value at
September 30, 1996 and 1995 as the maturity of these instruments are all
short-term. Due to differences in the stated interest rates on certain short and
long-term debt obligations compared to prevailing rates, the fair value of these
instruments does vary from their carrying amounts; however, such differences are
immaterial.
REVENUE RECOGNITION
Trade revenue from the sale of equipment is recognized upon shipment. A
provision for estimated product warranty cost is recorded at the time revenue is
recognized. Amounts received from customers in advance of product shipment are
classified as advances from customers. Contract revenue for a research and
development program is recognized as services are performed in accordance with
such cost-plus-fixed-fee arrangement.
CASH AND CASH EQUIVALENTS
Cash equivalents consist of highly liquid debt instruments with original
maturities of three months or less.
INVENTORIES
Inventories, which include materials, labor and overhead, are recorded at
the lower of cost, determined by the first-in, first-out method, or market
value.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are stated at cost. Depreciation is provided
on a straight-line basis over the estimated useful lives of 3 to 10 years for
equipment, furniture and fixtures and 40 years for buildings. Building
improvements are depreciated over the shorter of 10 years or the remaining life
of the building or the useful life of the improvement. Maintenance and repairs
are expensed as incurred. Improvements which extend the useful life of property,
plant and equipment are capitalized. Upon retirement or disposal of an asset,
the asset and the related accumulated depreciation are eliminated from the
accounts with gains and losses recorded in the statement of operations.
RESEARCH AND DEVELOPMENT
Research and development costs are expensed as incurred.
ADVERTISING
Advertising costs are expensed as incurred and included in sales and
marketing expenses. Advertising expenses amounted to $136,697, $241,613 and
$462,490 in 1994, 1995 and 1996, respectively.
F-9
<PAGE>
CVC, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 1--NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
INCOME TAXES
The Company accounts for income taxes using the asset and liability approach
which requires recognition of deferred tax liabilities and assets for the
expected future tax consequences of temporary differences between the carrying
amounts and the tax basis of such assets and liabilities.
This method utilizes enacted statutory tax rates in effect for the year in
which the temporary differences are expected to reverse and gives immediate
effect to changes in income tax rates upon enactment. Deferred tax assets are
recognized, net of any valuation allowance, for deductible temporary differences
and net operating loss and tax credit carryforwards.
CHANGE IN ACCOUNTING ESTIMATE
Effective October 1, 1995, the Company decreased the estimated service lives
of certain depreciable assets. The Company believes that the revised lives more
accurately reflect the estimated period of benefit of such assets. The change
resulted in a decrease in pre-tax income of $191,000 for the year ended
September 30, 1996.
CHANGE IN ACCOUNTING PRINCIPLE
As discussed in Note 8, the Company adopted the provisions of Statement of
Financial Accounting Standards (SFAS) No. 106, "Employers' Accounting for
Postretirement Benefits Other Than Pensions," as of October 1, 1995. As
permitted under SFAS No. 106, the Company has elected to amortize the unfunded
accrued postretirement benefit obligation at adoption over a 20 year period.
NEW ACCOUNTING STANDARDS
SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of," must be adopted in 1997. The standard
requires that impairment losses be recognized when the carrying value of an
asset exceeds its fair value. The Company regularly assesses all of its
long-lived assets for impairment and, therefore, does not believe the adoption
of the standard will have a material effect on its financial position or results
of operations.
SFAS No. 123, "Accounting for Stock-Based Compensation," must be adopted in
1997. This standard encourages, but does not require, recognition of
compensation expense based on the fair value of equity instruments granted to
employees. The Company does not plan to record compensation for equity
instruments granted to employees. Therefore, the adoption of this statement will
have no impact on the Company's financial position or results of operations.
PRO FORMA EARNINGS PER SHARE (UNAUDITED)
Pro forma earnings per share is computed using the weighted average number
of common and common equivalent shares outstanding during the period. Common
equivalent shares consist of stock options, stock warrants and non-cumulative
convertible preferred stock as computed using the modified treasury stock
method. Except as discussed below, pursuant to the Securities and Exchange
Commission Staff Accounting Bulletin, common and common equivalent shares issued
by the Company during the twelve month period prior to the initial filing of the
registration statement relating to the initial public
F-10
<PAGE>
CVC, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 1--NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
offering through the effective date, have been included in the computation using
the treasury stock method, as if they were outstanding for all periods prior to
the initial public offering.
Pro forma historical earnings per share has been omitted for the fiscal year
ended September 30, 1994 since a net loss existed in that year and, therefore,
pro forma earnings per share data is not considered meaningful in light of the
automatic conversion of non-cumulative convertible preferred stock (Note 9)
being a common equivalent share which would have a material anti-dilutive effect
on pro forma earnings per share in 1994.
STOCK SPLIT
On October 14, 1997 the Company declared a 3-for-1 stock split, effective
October 31, 1997, in the form of a stock dividend to stockholders of record at
the close of business on October 15, 1977. This increased the number of common
shares outstanding by 809,260. All references in the consolidated financial
statements referring to share prices, conversion rates, per share amounts, stock
option plans and common shares issued and outstanding have been adjusted
retroactively for the 3-for-1 stock split.
INTERIM RESULTS (UNAUDITED)
The interim financial data as of June 30, 1997 and for the nine months ended
June 30, 1996 and 1997 is unaudited; however, in the opinion of the Company, the
interim data includes all adjustments, consisting only of normal recurring
adjustments, necessary for a fair statement of the financial position and
results of operations for the interim periods. The operating results for the
nine months ended June 30, 1997 are not necessarily indicative of the results to
be expected for the full year ending September 30, 1997.
RECLASSIFICATIONS
Certain prior year amounts have been reclassified to conform with the
current year presentation.
NOTE 2--INVENTORIES
<TABLE>
<CAPTION>
JUNE 30,
1995 1996 1997
------------ ------------- -------------
<S> <C> <C> <C>
(UNAUDITED)
Component parts.................................. $ 3,985,856 $ 10,961,573 $ 7,036,427
Work-in-process.................................. 3,158,184 4,838,187 8,745,264
Finished goods................................... 3,226,764 953,892 1,410,438
------------ ------------- -------------
10,370,804 16,753,652 17,192,129
Less--Reserve for obsolescence................. (500,000) (450,000) (414,977)
------------ ------------- -------------
$ 9,870,804 $ 16,303,652 $ 16,777,152
------------ ------------- -------------
------------ ------------- -------------
</TABLE>
F-11
<PAGE>
CVC, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 3--PROPERTY, PLANT AND EQUIPMENT
<TABLE>
<CAPTION>
1995 1996
------------ -------------
<S> <C> <C>
Land............................................................. $ 625,000 $ 625,000
Buildings and improvements....................................... 2,910,125 3,924,142
Machinery and equipment.......................................... 2,473,200 5,139,110
------------ -------------
6,008,325 9,688,252
Less--Accumulated depreciation................................. (992,865) (1,802,734)
------------ -------------
$ 5,015,460 $ 7,885,518
------------ -------------
------------ -------------
</TABLE>
Fixed assets include $2,441,900 and $2,325,900 of buildings and equipment
held under capital lease agreements at September 30, 1995 and 1996,
respectively. Related accumulated amortization at September 30, 1995 and 1996
was $308,600 and $338,700, respectively.
Total depreciation and amortization expense on fixed assets was $186,700,
$218,800 and $726,800 in 1994, 1995 and 1996, respectively. Total depreciation
expense on assets under capital leases was $ 67,806 in 1994 and 1995 and $83,122
in 1996.
NOTE 4--OTHER CURRENT LIABILITIES
<TABLE>
<CAPTION>
1995 1996
------------ ------------
<S> <C> <C>
Accrued payroll and benefits...................................... $ 356,112 $ 1,132,744
Other current liabilities......................................... 1,993,380 2,050,431
------------ ------------
$ 2,349,492 $ 3,183,175
------------ ------------
------------ ------------
</TABLE>
NOTE 5--NOTES PAYABLE AND LONG-TERM DEBT
In August 1974, the Company entered into an agreement with a local
government agency under which the agency's bond proceeds of $2,400,000 were used
to purchase land and construct an operating facility for lease to the Company.
The lease term extends to 2000, at which time title to the property passes to
the Company. The industrial revenue bond obligation requires monthly payments of
principal and interest at 8% of approximately $18,500. The obligation is secured
by certain land and buildings with a net book value of $1,936,680 at September
30, 1996.
In December 1990, the Company borrowed $254,000 from former stockholders of
CVC Products, Inc. The obligation requires annual interest payments at 9%
through December 1997. Principal is due in two equal installments in December
1996 and 1997.
In November 1990, the Company borrowed $1,500,000 from a company whose
president is a director and shareholder of the Company. In November 1991, the
Company borrowed an additional $1,000,000 from this company. The notes, which
are unsecured, require quarterly interest payments at 9%. Principal is due in
November 1997. In August 1997, the Company renegotiated the $1,500,000 note and
extended the term to November 1998. Interest expense on these notes totaled
$225,000 in 1994 and 1995 and $226,000 in 1996.
F-12
<PAGE>
CVC, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 5--NOTES PAYABLE AND LONG-TERM DEBT (CONTINUED)
In September 1996, the Company borrowed $3,000,000 from a commercial bank.
The five year term loan requires monthly payments of principal and interest at
prime plus 1/2% through October 1, 2001. The obligation is secured by certain
equipment and capital assets with a net book value of $2,999,000 at September
30, 1996.
The term loan contains financial covenants requiring the Company to maintain
certain debt to equity, capital, and current ratios, as well as certain customer
order, income, and operating cash flow levels. The agreement also imposes
limitations on the incurrence of additional debt. The Company is in compliance
with all covenants at September 30, 1996.
In connection with this term loan, the Company entered into an interest rate
cap contract in October 1996 to hedge the risk associated with rising interest
rates and capping the rate on this loan at 10 1/2%. The cost of the contract was
$29,000, which is being amortized over the term of the loan.
Bank lines of credit at September 30, 1996 aggregated $2,500,000. As of June
30, 1997, such lines of credit were increased to $5,000,000. On September 30,
1997, such lines of credit were increased to $10,000,000. Borrowings under the
agreements are at an interest rate of prime plus 1/2%. There were no borrowings
outstanding under the lines of credit at September 30, 1996.
A summary of the notes payable and long-term debt outstanding is as follows:
<TABLE>
<CAPTION>
1995 1996
------------ ------------
<S> <C> <C>
Term loan......................................................... -- $ 3,000,000
Notes payable due former stockholders............................. $ 254,000 254,000
Notes payable due related party................................... 2,500,000 2,500,000
Industrial revenue bond........................................... 928,029 774,665
Capital lease obligations......................................... 33,917 100
------------ ------------
3,715,946 6,528,765
Less--Current portion........................................... 187,719 893,564
------------ ------------
$ 3,528,227 $ 5,635,201
------------ ------------
------------ ------------
</TABLE>
The aggregate maturities for all long-term debt and capital lease
obligations for the next five years as of September 30, 1996 are as follows:
1997--$893,564, 1998--$3,407,401, 1999--$795,200, 2000--$811,400 and
2001--$621,200.
F-13
<PAGE>
CVC, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 6--INCOME TAXES
The components of the provision (benefit) for income taxes are as follows:
<TABLE>
<CAPTION>
1994 1995 1996
--------- ------------- -----------
<S> <C> <C> <C>
Current:
Federal.............................................. -- -- $ 145,000
State................................................ $ 4,000 $ 15,000 306,700
--------- ------------- -----------
4,000 15,000 451,700
Deferred:
Federal.............................................. -- (873,400) (145,000)
State................................................ 32,000 (129,200) (306,700)
--------- ------------- -----------
32,000 (1,002,600) (451,700)
--------- ------------- -----------
Benefit of acquired loss carryforwards used to reduce
goodwill............................................. -- 441,600 --
--------- ------------- -----------
$ 36,000 $ (546,000) --
--------- ------------- -----------
--------- ------------- -----------
</TABLE>
The significant components of deferred tax assets and liabilities are as
follows:
<TABLE>
<CAPTION>
1995 1996
------------- -------------
<S> <C> <C>
Deferred tax assets:
Net operating loss carryforwards.............................. $ 2,704,000 $ 1,382,100
Inventories................................................... 187,800 230,300
State and federal tax credits................................. 36,500 176,200
Allowance for doubtful accounts............................... 18,800 36,900
Accrued compensation and benefits............................. 51,000 116,500
Inventory reserves in excess of tax........................... 276,600 187,700
------------- -------------
3,274,700 2,129,700
------------- -------------
Deferred tax liabilities:
Tax LIFO reserve in excess of book............................ (1,142,100) (1,006,900)
Property, plant and equipment................................. (790,800) (757,200)
------------- -------------
(1,932,900) (1,764,100)
------------- -------------
Deferred tax asset valuation allowance.......................... (1,614,400) (155,000)
------------- -------------
Net deferred tax asset (liability).............................. $ (272,600) $ 210,600
------------- -------------
------------- -------------
</TABLE>
F-14
<PAGE>
CVC, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 6--INCOME TAXES (CONTINUED)
The differences between the provision (benefit) for income taxes at the U.S.
statutory rate and the effective rate are summarized as follows:
<TABLE>
<CAPTION>
1994 1995 1996
------------- ----------- -------------
<S> <C> <C> <C>
Provision (benefit) at federal statutory rate.......................... $ (1,118,000) $ (141,300) $ 1,081,000
State taxes, net of federal benefit.................................... 36,000 (11,400) 228,000
Meals and entertainment................................................ -- 22,000 31,000
Other.................................................................. -- 17,200 119,300
Recognition of loss carry forwards..................................... -- (432,500) (1,459,400)
Operating losses for which no benefit was recognized................... 1,118,000 -- --
------------- ----------- -------------
$ 36,000 $ (546,000) --
------------- ----------- -------------
------------- ----------- -------------
</TABLE>
During 1996, the valuation allowance, which relates to net operating loss
carryforwards and state investment tax credits, was reduced by $1,459,400.
During 1995, the valuation allowance was reduced by $874,100. This recognition
of the net operating loss was accounted for as a reduction of the remaining
$441,600 of goodwill recorded on the acquisition of CVC Products by CVC, Inc.
and a reduction of income tax expense of $432,500. During 1994, the valuation
allowance was increased by $1,118,000 as a result of the uncertainty surrounding
the realization of the current year's net operating loss.
The net operating loss carryforwards of approximately $3.5 million expire at
various times through 2010. Approximately $700,000 of the net operating loss
carryforwards existing at the date CVC Products was acquired by CVC, Inc. remain
at September 30, 1996. Their use is limited to approximately $135,000 per year;
however, the annual limitation may be increased by any unused amount from the
prior year.
NOTE 7--EMPLOYEE BENEFIT PLANS
The Company maintains a 401(k) profit sharing plan covering substantially
all employees who meet certain age and length of service requirements. The
Company contributes a percentage of the amount of salary deferral contributions
made by each participating employee. Any additional contributions by the Company
are discretionary. The amounts charged to expense related to this plan were
approximately $25,500, $34,400 and $79,600 for 1994, 1995 and 1996,
respectively.
The Company had a noncontributory defined benefit pension plan. The Company
froze this plan effective September 30, 1991 at which time all benefits became
fully vested. Benefits were based on historical compensation levels and years of
service. The Company's funding policy is to contribute annually an amount, based
on actuarial computations, which would satisfy the Internal Revenue Service's
funding standards.
Net pension expense includes the following components:
<TABLE>
<CAPTION>
1994 1995 1996
----------- ----------- -----------
<S> <C> <C> <C>
Service cost........................................... $ 22,770 $ 10,375 $ 10,375
Interest cost on projected benefit obligation.......... 139,035 145,906 147,545
Actual return on plan assets........................... (147,925) (142,627) (143,819)
Net amortization and deferral.......................... 5,415 (10,380) (6,225)
----------- ----------- -----------
Net pension expense.................................... $ 19,295 $ 3,274 $ 7,876
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
F-15
<PAGE>
CVC, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 7--EMPLOYEE BENEFIT PLANS (CONTINUED)
The funded status of the Plan was as follows:
<TABLE>
<CAPTION>
1995 1996
------------ ------------
<S> <C> <C>
Actuarial present value of benefit obligations:
Accumulated benefit obligation.................................. $ 2,049,302 $ 2,049,841
------------ ------------
Projected benefit obligation...................................... 1,997,456 2,023,569
Plan assets at fair value......................................... 1,952,294 1,900,665
------------ ------------
Projected benefit obligation in excess of plan assets............. (45,162) (122,904)
Unrecognized net loss............................................. (70,452) (18,804)
Unrecognized net transition asset................................. 86,822 77,176
Minimum pension liability......................................... (68,216) (143,252)
------------ ------------
Accrued pension liability......................................... $ (97,008) $ (170,176)
------------ ------------
------------ ------------
</TABLE>
The projected benefit obligation at September 30, 1995 and 1996 was
determined using a discount rate of 7.5%. The expected long-term rate of return
on plan assets was 8.5% in 1995 and 1996. Plan assets are maintained in group
annuity contracts with an insurance company.
The unamortized transition asset is being amortized over the remaining
service lives of the participants which approximates eight years.
The Company has recorded an additional minimum pension liability
representing the excess of the unfunded accumulated benefit obligation over plan
assets. The additional minimum liability was charged to shareholders' equity,
net of income taxes.
NOTE 8--POSTRETIREMENT HEALTH CARE BENEFITS
The Company provides health care benefits to all retirees and life insurance
benefits to retired hourly employees. Details of costs for retiree benefits are
as follows:
<TABLE>
<CAPTION>
1996
----------
<S> <C>
Service cost for benefits earned.................................................. $ 31,514
Interest cost on benefit obligation............................................... 80,540
Amortization...................................................................... 55,549
----------
Retiree health care cost.......................................................... $ 167,603
----------
----------
</TABLE>
An analysis of amounts shown in the consolidated balance sheet is as
follows:
<TABLE>
<CAPTION>
1996
-------------
<S> <C>
Accumulated postretirement benefit obligation:
Retirees..................................................................... $ 878,761
Active participants.......................................................... 272,187
-------------
1,150,948
Unrecognized transition obligation............................................. (1,055,438)
-------------
Retirement benefit liability................................................... $ 95,510
-------------
-------------
</TABLE>
F-16
<PAGE>
CVC, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 8--POSTRETIREMENT HEALTH CARE BENEFITS (CONTINUED)
The funding policy for retiree health care and life insurance benefits is
generally to pay covered expenses as they are incurred.
The actuarial calculation assumes a health care average inflation assumption
of 9% in 1996 and grades down uniformly to 5% in 2008 and remains level
thereafter. The health care cost trend rate has an effect on the amounts
reported. Increasing the health care inflation rate by 1% would increase the
September 30, 1996 accumulated postretirement benefit obligation by $121,243,
and the 1996 net postretirement health care cost by $20,100. The weighted
average rate of compensation increase and discount rate used in determining the
accumulated postretirement benefit obligation was 3% and 7.5%, respectively.
NOTE 9--STOCKHOLDERS' EQUITY
In 1990, the Company issued 1,685 shares of 8% Series A Non-Cumulative
Convertible Preferred Stock (Series A Preferred Stock). The Series A Preferred
Stock is convertible at any time at the option of the holder into common stock
at the rate of 2,400 shares of common stock for each share of Series A Preferred
Stock. The liquidation preference of each share of Series A Preferred Stock is
$1,000 and all declared but unpaid dividends. Preferred voting rights are one
vote for each share of common stock into which the preferred shares may be
converted. Each share of Series A Preferred Stock will be automatically
converted to 4,044,000 shares of common stock upon the closing of an initial
public offering with a net price per share in excess of $8.33 and aggregate
gross proceeds of $10,000,000.
In May 1995, the Company issued 60,492 shares of Series B Non-Cumulative
Convertible Preferred Stock (Series B Preferred Stock). The Series B Preferred
Stock is convertible at any time at the option of the holder into common stock
at the rate of 60 shares of common stock for each share of Series B Preferred
Stock. Preferred voting rights are one vote for each share of common stock into
which the preferred shares may be converted. Each share of Series B Preferred
Stock will be automatically converted to 3,629,520 shares of common stock upon
the closing of an initial public offering with a net price per share in excess
of $8.33 and aggregate gross proceeds of $10,000,000.
In connection with the issuance of Series B Preferred Stock, the holder was
granted a seven-year warrant to purchase 19,769 shares of Series B Preferred
Stock, at an exercise price of $223.17 per share of Series B Preferred Stock.
Expenses directly associated with this issuance of approximately $645,000 were
netted against proceeds. The liquidation preference of each share of Series B
Preferred Stock is $148.78 and all declared but unpaid dividends. Upon the
automatic conversion of the Company's then outstanding shares of Series B
Preferred Stock coincident to the closing of an initial public offering, the
Company will execute a new warrant to the holder, with terms similar to the
original Series B warrant, to purchase 1,186,140 shares of the Company's Common
Stock at an exercise price of $3.72 per share in lieu of Series B Preferred
Stock.
In connection with the initial public offering, the Company has filed a
Certificate of Amendment to the Certificate of Incorporation which will increase
authorized common stock to 50,000,000 shares, $.01 par value, and authorize
5,000,000 shares of new Preferred Stock, $.01 par value.
The Company grants options to key employees to purchase its common stock,
generally at fair market value as of the date of grant, based upon valuations
obtained contemporaneously from an independent appraiser. Such valuations have
been obtained by the Company, primarily on a quarterly basis, since
F-17
<PAGE>
CVC, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 9--STOCKHOLDERS' EQUITY (CONTINUED)
June 30, 1995. Options vest over a 3 to 5 year period and expire after 10 years
from the date of grant. There were 342,000 shares available for grant at
September 30, 1996. Stock option activity is as follows:
<TABLE>
<CAPTION>
NUMBER OF PRICE PER
SHARES SHARE
---------- --------------
<S> <C> <C>
Outstanding at September 30, 1994................................ 1,868,760 $0.42
Granted.......................................................... 414,000 $0.42--$2.12
Canceled......................................................... 120,000 $0.42
----------
Outstanding at September 30, 1995................................ 2,162,760 $0.42--$2.12
Granted.......................................................... 291,300 $2.69
Canceled......................................................... 76,500 $0.42--$2.69
----------
Outstanding at September 30, 1996................................ 2,377,560 $0.42--$2.69
----------
Granted.......................................................... 301,500 $2.46--$3.23
Canceled......................................................... 132,000 $2.46
Exercised........................................................ 120,300 $0.42--$2.69
----------
Outstanding at June 30, 1997 (unaudited)......................... 2,426,760 $0.42--$3.23
----------
</TABLE>
At September 30, 1996, and at June 30, 1997, options for 1,676,700 and
1,418,760 (unaudited) shares respectively, were exercisable.
NOTE 10--TRANSACTIONS WITH RELATED PARTIES
At September 30, 1995 and 1996, the Company had borrowings of $2,500,000
from a company whose president is a director and shareholder of the Company
(Note 5). In addition to these borrowings, the Company borrowed and subsequently
repaid approximately $1,000,000 at 9% from this company during 1995. Borrowings
from this related party are reported as such in the balance sheets.
Seagate Technology (Seagate), which provides products for storing, managing
and accessing digital information on computers and data communications systems,
is the Company's largest customer (Note 11) and a significant shareholder. In
1995, the Company sold 60,492 shares of its Series B Preferred Stock to Seagate,
a previously unrelated party (Note 9). Revenues, cost of goods sold, accounts
receivable and customer advances associated with transactions between the
Company and Seagate are reported as related party in the statements of
operations and balance sheets. Management believes the selling prices and sales
terms of such transactions are substantially consistent with those for unrelated
third parties.
NOTE 11--SIGNIFICANT CUSTOMERS AND GEOGRAPHIC INFORMATION
For the year ended September 30, 1994, sales to the Company's largest
customer comprised 30% of revenues. For the year ended September 30, 1995, sales
to the Company's three largest customers comprised 27%, 15% and 15% of revenues,
respectively. For the year ended September 30, 1996 sales to the Company's two
largest customers comprised 57% and 13% of revenues, respectively.
F-18
<PAGE>
CVC, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 11--SIGNIFICANT CUSTOMERS AND GEOGRAPHIC INFORMATION (CONTINUED)
Export sales to customers (including related party sales) outside the United
States represent 19%, 13%, and 19% of the Company's revenues for the years ended
September 30, 1994, 1995 and 1996, respectively. These export sales were made to
the following geographic regions:
<TABLE>
<CAPTION>
EUROPE ASIA-PACIFIC CANADA TOTAL
------------ ------------ --------- ------------
<S> <C> <C> <C> <C>
1994..................................... $ 741,716 $ 1,794,424 $ 15,332 $ 2,551,472
1995..................................... 890,000 1,775,000 19,000 2,684,000
1996..................................... 6,238,000 3,013,000 23,000 9,274,000
</TABLE>
NOTE 12--COMMITMENTS
The Company is required to pay $200,000 in 1997 pursuant to a license
agreement entered into during 1993.
The Company leases various equipment and facilities under operating lease
agreements. Rental expense under operating lease agreements was approximately
$88,000, $98,600, and $237,300 in 1994, 1995 and 1996, respectively. The future
minimum lease payments under non-cancelable lease agreements are $206,300 in
1997, $187,900 in 1998, $179,300 in 1999, $165,100 in 2000 and $51,300 in 2001.
F-19
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO PERSON IS AUTHORIZED IN CONNECTION WITH ANY OFFERING MADE HEREBY TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS,
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY, THE SELLING STOCKHOLDER OR ANY
UNDERWRITER. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY ANY SECURITY OTHER THAN THE COMMON SHARES
OFFERED HEREBY, NOR DOES IT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF ANY
OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY TO ANY PERSON IN ANY
JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH AN OFFER OR SOLICITATION.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER
ANY CIRCUMSTANCES CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN
IS CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE HEREOF.
--------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
Prospectus Summary..............................
Risk Factors....................................
The Company.....................................
Use of Proceeds.................................
Dividend Policy.................................
Capitalization..................................
Dilution........................................
Selected Consolidated Financial Data............
Management's Discussion and Analysis of
Financial Condition and Results of
Operations....................................
Business........................................
Management......................................
Certain Transactions............................
Principal and Selling
Stockholders..................................
Description of Capital Stock....................
Shares Eligible for Future Sale.................
Underwriting....................................
Legal Matters...................................
Experts.........................................
Additional Information..........................
Index to Consolidated Financial
Statements.................................... F-1
</TABLE>
--------------
UNTIL , 1997 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL
DEALERS EFFECTING TRANSACTIONS IN THE REGISTERED SECURITIES, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS 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.
3,900,000 SHARES
[LOGO]
COMMON STOCK
--------------
PROSPECTUS
--------------
BT ALEX. BROWN
HAMBRECHT & QUIST
PAINEWEBBER INCORPORATED
, 1997
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following is an itemized statement of the estimated amounts of all
expenses payable by the Registrant in connection with the registration of the
Common Stock offered hereby, other than underwriting discounts and commissions:
<TABLE>
<S> <C>
Registration Fee--Securities and Exchange Commission.............. $ 19,027
NASD Filing Fee................................................... 50,000
Blue Sky fees and expenses........................................ 10,000
Accountants' fees and expenses.................................... 160,000
Legal fees and expenses........................................... 200,000
Printing and engraving expenses................................... 120,000
Transfer agent and registrar fees................................. 10,000
Miscellaneous..................................................... 180,973
---------
Total......................................................... $ 750,000
---------
---------
</TABLE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145(a) of the General Corporation Law of the State of Delaware (the
"DGCL") provides that a Delaware corporation may 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 or
investigative (other than an action by or in the right of the corporation) by
reason of the fact that he 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 or enterprise,
against expenses, judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with such action, suit or proceeding if
he acted in good faith and 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 cause to believe his conduct was unlawful.
Section 145(b) of the DGCL provides that a Delaware corporation may
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that such
person acted in any of the capacities set forth above, against expenses actually
and reasonably incurred by him in connection with the defense or settlement of
such action or suit if he acted under similar standards, except that no
indemnification may 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 in which such action or suit was brought shall
determine that despite the adjudication of liability, such person is fairly and
reasonably entitled to be indemnified for such expenses which the court shall
deem proper.
Section 145 of the DGCL further provides that to the extent a director or
officer of a corporation has been successful in the defense of any action, suit
or proceeding referred to in subsections (a) and (b) or in the defense of any
claim, issue, or matter therein, he shall be indemnified against any expenses
actually and reasonably incurred by him in connection therewith; that
indemnification provided for by Section 145 shall not be deemed exclusive of any
rights to which the indemnified party may be entitled; and that the corporation
may purchase and maintain insurance on behalf of a director or officer of the
corporation against any liability asserted against him or incurred by him in any
such capacity or arising out of his status
II-1
<PAGE>
as such whether or not the corporation would have the power to indemnify him
against such liabilities under Section 145.
Section 102(b)(7) of the DGCL provides that a corporation in its original
certificate of incorporation or an amendment thereto validly approved by
stockholders may eliminate or limit personal liability of members of its board
of directors or governing body for breach of a director's fiduciary duty.
However, no such provision may eliminate or limit the liability of a director
for breaching his duty of loyalty, failing to action good faith, engaging in
intentional misconduct or knowingly violating a law, paying a dividend or
approving a stock repurchase which was illegal, or obtaining an improper
personal benefit. A provision of this type has no effect on the availability of
equitable remedies, such as injunction or rescission, for breach of fiduciary
duty. The Company's Restated Certificate of Incorporation contains such a
provision.
The Company's Certificate of Incorporation and By-Laws provide that the
Company shall indemnify officers and directors and, to the extent permitted by
the Board of Directors, employees and agents of the Company, to the full extent
permitted by and in the manner permissible under the laws of the State of
Delaware. In addition, the By-Laws permit the Board of Directors to authorize
the Company to purchase and maintain insurance against any liability asserted
against any director, officer, employee or agent of the Company arising out of
his capacity as such.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
During the past three years, the Registrant has issued securities to a
limited number of persons, as described below. No underwriter or underwriting
discounts or commissions were involved. There was no public offering in such
transaction and the Company believes that such transaction was exempt from the
registration requirements of the Securities Act of 1933, as amended (the
"Securities Act"), by reason of Section 4(2) thereof based on the private nature
of the transactions and the sophistication of the purchasers, all of whom had
access to information concerning the Registrant and acquired the securities for
investment and not with a view to the distribution thereof.
In May 1995, the Company issued and sold 60,492 shares of Series B
Convertible Preferred Stock to Seagate Technology, Inc. for a price of $148.78
per share. Upon completion of the Offering, these shares are convertible into
3,629,520 shares of such Common Stock. The Company also sold to Seagate
Technology warrants to purchase 19,769 shares of Series B Convertible Preferred
Stock at an exercise price of $223.17 per share of Series B Convertible
Preferred Stock during the seven-year period commencing on the warrant issuance
date (May 22, 1995). Upon consummation of this Offering, the warrants will
become exercisable for 1,186,140 shares of Common Stock at an exercise price of
$3.72 per share of Common Stock. See "Certain Transactions" and "Description of
Capital Stock."
II-2
<PAGE>
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
<TABLE>
<S> <C>
1.1 -- Underwriting Agreement*
3.1 -- Restated Certificate of Incorporation of the Registrant*
3.2 -- Restated By-Laws of the Registrant*
4.1 -- Specimen Certificate for Common Stock of the Registrant*
5.1 -- Opinion of Dewey Ballantine LLP*
10.1 -- 1997 Stock Option Plan*
10.3 -- Nonemployee Directors' Stock Option Plan*
10.4 -- Form of Employment Agreement*
10.5 -- Union Agreement, dated August 25, 1995, between the Registrant and Local 342,
International Union of Electronic, Electrical, Salaried, Machine & Furniture
Workers
10.6 -- Securities Purchase Agreement, dated May 22, 1995, between the Registrant and
Seagate Technology, Inc.
10.7 -- Registration Rights Agreement, dated May 22, 1995, among the Registrant, Seagate
Technology, Inc. and certain stockholders of the Registrant
10.8 -- Series B Preferred Stock Purchase Warrant, dated May 22, 1995, between the
Registrant and Seagate Technology, Inc.
10.9 -- U.S. $1,000,000 Subordinated Promissory Note, dated November 14, 1990, between the
Registrant and Nikko Tecno Co., Inc.
10.10 -- U.S. $500,000 Subordinated Promissory Note, dated November 14, 1990, between the
Registrant and Nikko Tecno Co., Inc.
10.11 -- Letter extending repayment of U.S. $1,000,000 and U.S. $500,000 Subordinated
Promissory Notes, dated August 18, 1997, by Nikko Tecno Co., Inc.
10.12 -- Mortgage Note, dated September 29, 1997, between Registrant and M&T Real Estate,
Inc.
10.13 -- Mortgage, dated September 29, 1997, between Registrant and M&T Real Estate, Inc.
10.14 -- Continuing Guaranty, dated September 29, 1997, between Registrant and M&T Real
Estate, Inc.
10.15 -- General Assignment of Rights, dated September 29, 1997, between Registrant and M&T
Real Estate, Inc.
10.16 -- Amendment No. 1 to General Security Agreement, dated September 29, 1997, by and
among the Registrant, M&T Trust Company and M&T Real Estate, Inc.
10.17 -- Amended and Restated Lease Agreement, dated September 29, 1997, between Registrant
and M&T Real Estate, Inc.
10.18 -- Bill of Sale, dated September 29, 1997, executed by Registrant
10.19 -- Lease Agreement, dated October 19, 1995, between Registrant and SCI Limited*
Partnership - I
10.20 -- $3,000,000 Term Loan Note Agreement, dated September 30, 1996, by Registrant and
M&T Company
10 .21 -- Letter of Credit Reimbursement Agreement
</TABLE>
II-3
<PAGE>
<TABLE>
<S> <C>
10.22 -- Continuing Guaranty of CVC Holdings, dated September 30, 1996, by Registrant
10.23 -- Continuing Guaranty of CVC Products, dated February 2, 1996, by Registrant
10.24 -- General Security Agreement of CVC Products, dated September 30, 1996, by
Registrant
10.25 -- General Security Agreement of CVC Holdings, dated September 30, 1996, by
Registrant
11.0 -- Computation of Earnings Per Share
21.1 -- List of Subsidiary
23.1 -- Consent of Price Waterhouse LLP
23.2 -- Consent of Chapman, Collins, Agostinelli & Shaw, P.C.
23.3 -- Consent of Dewey Ballantine LLP (contained in Exhibit 5.1)
23.4 -- Consent of Baker & Botts
24.1 -- Power of Attorney (included on page II-5)
27.1 -- Financial Data Schedule
</TABLE>
- ------------------------
* To be filed by amendment.
(b) Consolidated Financial Statement Schedules
All schedules have been omitted because they are not required or because the
required information is given in the Consolidated Financial Statements or Notes
thereto.
ITEM 17. UNDERTAKINGS
The undersigned Registrant hereby undertakes to provide to the underwriters,
at the closing specified in the underwriting agreement, certificates in such
denominations and registered in such names as required by the underwriters to
permit prompt delivery to each purchaser.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has 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 Registrant 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, the 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.
The undersigned Registrant hereby undertakes that:
(1) 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 Registrant 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.
(2) 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 the
time shall be deemed to be the initial bona fide offering thereof.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Rochester, State of New
York, on October 16, 1997.
CVC, INC.
By: /s/ CHRISTINE B. WHITMAN
-----------------------------------------
Christine B. Whitman
Chairman of the Board, President
and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each of the persons whose names
appear below appoint and constitute Christine B. Whitman and Emilio O.
DiCataldo, and each of them, his true and lawful attorney-in-fact and agent,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities, to execute any and all amendments to
the within Registration Statement, and to sign any and all registration
statements relating to the same offering of securities as this Registration
Statement that are filed pursuant to Rule 462(b) of the Securities Act of 1933,
as amended, and to file the same, together with all exhibits thereto, with the
Securities and Exchange Commission, the National Association of Securities
Dealers, Inc., and such other agencies, offices and persons as may be required
by applicable law, granting unto each said attorney-in-fact and agent, 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 each said attorney-in-fact and agent 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 on October 16,
1997 in the capacities indicated:
SIGNATURE TITLE DATE
- ------------------------------ --------------------------- -------------------
Chairman of the Board, October 16, 1997
/s/ CHRISTINE B. WHITMAN Chief Executive Officer and
- ------------------------------ President (principal
Christine B. Whitman executive officer)
Senior Vice President and October 16, 1997
/s/ EMILIO O. DICATALDO Chief Financial Officer
- ------------------------------ (principal accounting and
Emilio O. DiCataldo financial officer)
Director October , 1997
- ------------------------------
Robert C. Fink
/s/ JAMES GEATER Director October 16, 1997
- ------------------------------
James Geater
/s/ BRENDAN C. HEGARTY Director October 16, 1997
- ------------------------------
Brendan C. Hegarty
II-5
<PAGE>
SIGNATURE TITLE DATE
- ------------------------------ --------------------------- -------------------
Director October , 1997
- ------------------------------
Victor E. Mann
/s/ SEIYA MIYANISHI Director October 16, 1997
- ------------------------------
Seiya Miyanishi
/s/ ANDREW C. PESKOE Director October 16, 1997
- ------------------------------
Andrew C. Peskoe
Director October , 1997
- ------------------------------
Donald L. Waite
II-6
<PAGE>
EXHIBIT 10.5
CVC Confidential Ratified 8/24/95
Agreement
Between
CVC Products; Inc.
And
Local 342, IUE
[LOGO]District Three IUE, AFL-CIO
[GRAPHIC OMITTED]
The CONNEXION(TM) Cluster Tool
<PAGE>
CVC Confidential Ratified 8/24/95
Table Of Contents
Topic
Page
I. Agreement 1
Intent 1
Validity 1
II. Union Security 1
Recognition. 1
Union Shop. 1
Check-Off Of Union Membership Dues 2
Authorization For Check-Off Dues 2
Assignment & Authorization 3
III. Mutual Rights And Responsibilities. 4
Management Responsibilities 4
Management Working 5
Union Responsibility 5
Strikes, Stoppage, Slowdowns, & Lockouts 5
IV. Wages. 5
General Wage Increase 5
Wage Rate Schedule. 6
Facilities, Level I Personnel 6
Labor Grades 7
Tool Purchases 8
Cost Of Living Allowance
(1967 C.P.I-W Base = 100) 8
V. Hours Of Work, Overtime, Reporting & Call Back Pay 9
Hours Of Work And Overtime. 9
Straight Time 9
Time And One Half 9
Double Time 10
Assignment Of Overtime Work. 10
Reporting Pay 12
Call Back Pay 12
VI. Grievance Procedure & Arbitration 12
Grievance Procedure. 12
Steps One 12
Step Two 13
Step Three 13
Arbitration 14
<PAGE>
CVC Confidential Ratified 8/24/95
VII. Discipline And Discharge. 15
VIII. Holidays, Vacations And Paid Absence 17
Holiday Pay 17
Vacations 17
Paid Absence Allowance Credit 18
IX. Probation And Seniority 20
Probationary Period 20
Seniority 20
Loss Of Seniority 20
Application Of Seniority 21
Layoff 21
Inventory Assignment 22
Bump 22
Recall 23
Transfers Out Of Bargaining Unit 24
Flexibility Of Work Assignments 24
X. Shift Preference & Premium 24
Shift Preference. 24
Shift Premium 25
XI. Absence And Leaves Of Absence 25
Absence 25
Report Of Absence 25
Leave Of Absence 25
XII. New Jobs, Promotions 27
New Job 27
Promotion 28
General Provision 28
Definitions 28
Filling Openings 28
Job Posting And Bidding 29
Job Promotion Applications 29
XIII. Bulletin Boards, Safety & Health, Anti-Discrimination 30
Bulletin Boards 30
Safety And Health 30
Anti-Discrimination 30
XIV. Bereavement Pay, Jury Duty, Rest Periods, Wash-Up Time 31
Bereavement Pay 31
Jury Duty Service 31
<PAGE>
CVC Confidential Ratified 8/24/95
XIV. Cont'd
Rest Periods 31
Wash-Up And Clean-Up Time 32
XV. Representation. 32
XV. Short-Term Military Pay 34
XVII. Duration Of Agreement 34
XVIII. Company Benefits 35
Health Insurance 35
Severance Pay 35
Signatures Of Agreement 37
Appendix A Disability Coverage 38
Blue Cross/Blue Shield 38
Prescription Drug 38
Dental Plan 38
Life Insurance 38
Pension Plan 39
401(k) Plan 39
Retirement Benefits 39
Appendix B Lay-off Procedure 40
Appendix C Disciplinary Actions 41
Appendix D Leave of Absence Forms 43
Appendix E PAA/Vacation Request Form 45
Appendix F Union Time Request Form 46
Appendix G Disciplinary Action Form 47
Appendix H Promotion Application 48
Appendix I Bump and Recall Form 49
Appendix J CAR Policy 50
Appendix K Safety Guidelines 51
<PAGE>
CVC Confidential Ratified 8/24/95
I. Agreement:
1. This Agreement is entered into on August 25, 1995 between CVC Products, Inc..
located at 525 Lee Road, Rochester, New York, its successor and/or assignees,
hereinafter referred to as the Company and Local 342 of the International Union
of Electronic, Electrical, Salaried, Machine & Furniture Workers, AFL-CIO,
hereinafter referred to as the Union.
2. Intent: It is the intent of both the Union and the Company to conduct all
matters in accordance with the terms of this Agreement and to maintain a
harmonious relationship among all persons who have duties and responsibilities
in the administration of the Collective Bargaining Agreement. It is the further
intent that the provisions of the Agreement be carried out with fairness on the
part of both the Union and the Company.
3. Validity: if any provisions of the Agreement is declared invalid by a court
of competent jurisdiction, the validity of the remainder of this Agreement shall
not be affected thereby.
4. This Agreement is subject to all applicable Federal and State laws and any
rules and regulations issued pursuant thereto.
II. Union Security
5. Recognition: The Company recognizes the International Union of Electronic,
Electrical, Salaried, Machine & Furniture Workers AFL-CIO and its affiliate,
Local 342, as the exclusive representative for all production and maintenance
employees including model shop and glass shop employees at its Rochester, New
York operation for the purposes of collective bargaining with respect to wages,
hours and other conditions of employment in accordance with the terms of this
Agreement.
6. Should the Company relocate all, or any part of bargaining unit work, to
within a (50) mile radius of its present location, it will recognize the Union
as exclusive bargaining agent for the production and maintenance employees
listed above. This provision shall not be applicable to the acquisition of
another company or division by CVC Products.
7. It is mutually agreed that, for the purposes of this Agreement, the term
"employee" shall not include office and factory clerical employees, technicians,
draftsmen, timekeepers, professional employees, guards and supervisory or other
employees with the authority to hire, promote, discharge, discipline or
otherwise effect changes in the status of employees or effectively recommend
such action.
8. Union Shop: Any employee of the Company who is a member of the Union on the
effective date of the Agreement shall continue to remain a member as a
continuing condition of employment, provided that nothing herein shall be
interpreted to cause a violation of the Labor Management Relations Act of 1947
or any other applicable law.
1
<PAGE>
CVC Confidential Ratified 8/24/95
9. Any employee hired on or after the effective date of the Agreement and
covered by the terms of this Agreement shall either become a Member of the Union
within thirty-one (31) days after the effective date of the Agreement or his/her
hire date, whichever is later or, if the employee chooses not to become a
member, must agree to pay dues to the Union as a continuing condition of
employment provided that nothing herein shall be interpreted to cause a
violation of the Labor Management Relations Act of 1947 or any other applicable
law.
10. Check-off of Union Dues: Dues are not a deductible charitable contribution
for Federal income tax purposes but may qualify as a deductible business expense
subject to IRS restrictions.
a) The Company agrees to deduct Union membership dues levied by the
International Union or Local Union in accordance with the Constitution and
By-Laws of the Union from the pay of each employee who is or who becomes a
member of the Union within the scope of the bargaining unit and covered by this
Agreement and who in writing, in accordance with the Authorization for Check-Off
of Dues form set forth below, has voluntarily authorized the Company to do so
for the period covered thereby.
b) The company will remit once each month to the International Union, the
District Union Office and Local Union, their respective portions of the dues
that have been collected by the Company in accordance with the Agreement. It
shall be the responsibility of the Union to advise the Company of the
apportioning to be used and the names and addresses of financial officers to
whom the remittance is to be made.
c) The Company shall remit each week to the designated Financial Officer
of the Union the amount of deductions made for the particular week together with
a list of employees for whom such deductions have been made, as well as the
amount of each employee's deductions.
11. Thereafter, on the first day of each succeeding pay period, the Local Union
shall furnish management with any additional executed Authorization of Check-Off
of Dues forms under which Union membership dues are to be deducted.
12. A properly executed Authorization For Check-Off Of Dues form for each
employee for whom Union membership dues are to be deducted hereunder, shall be
delivered to the Company before any payroll thereafter, only when such forms
have been properly executed and are in effect. Any such forms which are
incomplete or in error will be returned to the Union by the Company.
Date Employee No.
To: CVC Products, Inc.
525 Lee Road
Rochester, New York
To: (Employer)
I hereby assign, from my earnings now or hereafter payable to me from the
Employer, to Local
2
<PAGE>
CVC Confidential Ratified 8/24/95
No. 342 of the International Union of Electronic, Electrical, Salaried, Machine
and Furniture Workers, AFL-CIO, a sum equal to Union membership dues and, if
owing by me, an initiation fee, as certified to the Employer by the Local.
13. This Assignment and Authorization is voluntarily made in consideration of
the costs of representation and collective bargaining and is not contingent upon
my membership in the Union. Pursuant to this assignment and irrespective of my
present or future membership status in the Union, I authorize and direct you to
deduct, while I am employed in the represented bargaining unit of the Employer,
such a sum equal to membership dues and, if owing by me, an initiation fee, as
certified to the Employer by the Local. Regardless of my membership status, this
Assignment and Authorization shall be irrevocable until a date one year from its
effective date, or until the date on which the current collective bargaining
agreement between the Employer and the Union is terminated, whichever is
earlier. I agree and direct that this Assignment and Authorization shall be
automatically renewed, and shall be irrevocable for successive periods of one
(1) year each from its effective date, or for the period of each succeeding
applicable collective bargaining agreement between the Employer and the Union,
whichever, period is sooner. This Assignment and Authorization may only be
revoked by written notice by individual registered or certified mail, given by
me to the Employer and the Union, postmarked not more than twenty (20) days and
not less than ten (10) days prior to the expiration date of each one-year
period, or the termination date of each applicable collective bargaining
agreement between the Employer and the Union, whichever date is earlier. This
authorization and assignment supersedes all previous authorizations and
assignments.
14. Deductions shall be made in accordance with the provision of the Check-Off
of Union Membership Dues section from each weekly pay on a uniform weekly basis
for the life of this Agreement, but only in the event the employee has
sufficient net earnings in that particular pay period to cover the Union
membership dues. If the employee's earnings for the above defined pay period are
insufficient to permit the deduction, deduction shall be made from the next pay
received by the employee, providing the employee has sufficient net earnings to
cover the deduction.
15. In cases where a deduction is made which duplicates a payment already made
to the Union by an employee, or where a deduction is not in conformity with the
provisions of the Union Constitution and By-Laws, refunds to the employee will
be made by the local Union.
16. In the event any employee shall register a complaint with the Company
involving the matter of a properly revoked Authorization for Check-Off of Dues
form, the Company will make no further deductions of the employee's dues. Such
dispute shall then be reviewed with the employee by a representative of the
Union and a representative of the Company. Should this review fail to result in
a satisfactory settlement between the Company and the Union of the matter, the
dispute may be referred to the arbitrator, in accordance with the arbitration
provisions of the Agreement and his decision shall be final and binding on the
employee, the Union, and the Company.
17. The Company shall not be liable to the International Union or the Local
union by reason of the requirements of this section of the Agreement, for the
remittance of payment of any sum
3
<PAGE>
CVC Confidential Ratified 8/24/95
other than that constituting actual deductions made from employee wages earned.
18. The Union shall indemnify and hold harmless the Company against any and all
liability which may arise by reason of the Check-Off by the Company of Union
initiation fee and membership dues from employee wages in accordance with this
Agreement.
19. The Union agrees that there shall be no collection of dues at any time on
Company property.
20. Consistent with applicable State or Federal laws, deductions shall be made
only in accordance with the provisions of said Authorization of Check-Off Dues,
together with the provisions of this section of the Agreement.
21. Any employee whose seniority is broken by death, quit, discharge, or
layoffs, or who is transferred to a position outside of the scope of the
bargaining unit, shall cease to be subject to check-off deductions beginning
with the week immediately following that in which such death, quit, discharge,
layoff, or transfer occurred.
III. Mutual Rights And Responsibilities
22. Management Responsibilities: The management of the Company and the direction
of the working forces including but not limited to the right to hire, promote,
transfer, establish rules of conduct, and to maintain discipline and efficiency,
and the right to relieve employees from duty because of lack of work, or for
other legitimate reasons are the sole and exclusive rights and responsibilities
of the Company, provided that this will not be used for the purposes of
discrimination against any member of the Union, and is in accordance with the
terms and provisions of this Agreement.
23. a) The Company shall have the right to assign work to outside contractors
after due consideration by the Company to the interests of regular employees.
Due consideration to the interest of regular employees includes, but is not
limited to, recall of employees on layoff and projected overtime availability.
b) CVC will make every effort to encourage and allow cross training of
bargaining unit employees when requested by the employee. Such cross-training
will be documented (as to the type and length of training) and placed in the
appropriate employee file; a copy will be given to the Area Steward. It is
understood and agreed that cross-training will be accomplished as production
schedules allow and will not circumvent the hiring of full-time employees.
24. In addition, the products to be manufactured, the locations of plants, the
schedules of production and hours and shifts, the opening and closing of the
plant, the methods, processes, and means of manufacture are solely and
exclusively the responsibility of the Company except as otherwise provided in
this Agreement.
4
<PAGE>
CVC Confidential Ratified 8/24/95
25. Management Working: Employees outside the bargaining unit shall not perform
the regular work of bargaining unit employees, except for the purposes of
instruction, participating in training programs (as part of CVC's
TQM/Sponsorship program), assisting when requested by bargaining unit employees,
test & integration, verifying processes, performing experiments, material
handling, checking inventory status, and in emergencies when bargaining unit
employees are not available. Test & Integration activities are defined as
beginning upon completion of module docking and the initial hook-up of external
pumps, gases and utilities. Material handling activities are limited to those
actions not requiring the use of a fork lift truck. It is agreed that material
handling activities will not result in loss of employment for bargaining unit
employees and that flagrant abuse of this clause will be addressed by
management.
26. Annual goals and objectives will be mutually developed between department
managers and employee, with mutually agreed upon Union Representation. Managers
are responsible for implementing and properly controlling the Performance
Appraisal Plan. In addition to management's' responsibilities to properly
develop these goals and objectives, management also has the responsibility to
hire and retain qualified employees. An individual's qualifications for a job
opening will be the most important factor in determining who is most qualified
for that job.
27. Union Responsibility: The Union recognizes the responsibilities imposed upon
it as the exclusive bargaining agent of the employees covered by this Agreement.
The Union recognizes that in order to provide maximum opportunities for
continuing employment, good working conditions, and fair, equitable wages, the
Company must be in a strong competitive position, must produce efficiently and
at a competitive cost consistent with fair labor standards. To that end, the
Union agrees that it and its members will whole-heartedly cooperate with the
Company in the introduction of new improvements and that it will do everything
within its power to cause the employees covered by this Agreement, individually
and collectively, to perform and render efficient work and service.
28. Strikes, Stoppages, Slowdowns: The Union agrees that there shall be no
strikes, stoppages, or slowdowns of operations during the life of this
Agreement.
29. Lockouts: The Company agrees that there shall be no lockouts during the life
of this Agreement.
IV. Wages
30. Employees will be paid on Thursday of each week. All hourly rated employees
coming under the scope of this Agreement will be granted general wage increases
beginning with the first full week following the schedule below:
Effective Date Percentage of increase
10/31/95 3%
10/31/96 3%
10/31/97 3%
5
<PAGE>
CVC Confidential Ratified 8/24/95
31. Wage Rate Schedule: Effective per the schedule in paragraph 31. Please note
that the amounts below include the COLA distribution of $.12/year; the actual
wage may be adjusted downward if the COLA distribution is less than the maximum.
Labor Grade FY 1996 FY 1997 FY 1993
4 $7.96 $8.32 $8.69
5 $8.51 $8.89 $9.28
6 $9.08 $9.47 $9.87
7 $9.65 $10.06 $10.48
8 $10.20 $10.63 $11.07
9 $13.05 $13.56 $14.09
10 $13.37 $13.89 $14.43
11 $13.41 $13.93 $14.47
12 $14.43 $14.98 $15.55
13 $14.74 $15.30 $15.88
14 $14.99 $15.56 $16.15
15 $15.26 $15.84 $16.44
16 $15.49 $16.07 $16.67
17 $15.78 $16.37 $16.98
18 $16.00 $16.60 $17.22
19 $16.23 $16.84 $17.47
20 $16.46 $17.07 $17.70
32. Personnel assigned to Facilities, Level I in Wage Grade 4 will not
accumulate any seniority or share in any benefits other than holidays as spelled
out in the contract. Every attempt will be made to hire full time students who
are children of CVC employees.
33. An employee whose base rate is in excess of the established maximum of his
job classification shall retain the rate for as long as he works in that
particular job classification. If the employee is transferred to another
classification his rate of pay shall be governed by the established rate range
for the new classification. If the employee returns to the former job
classification in which he received the rate in excess of the established
maximum, that former rate shall be reinstated.
6
<PAGE>
CVC Confidential Ratified 8/24/95
34. Labor Grades, Classifications and Levels within the scope of this agreement:
Labor Grade Classification Level
1 2 3 4 5 6 7 8 9
- --------------------------------------------------------------------------------
4 Facilities I
- --------------------------------------------------------------------------------
5 Facilities II
- --------------------------------------------------------------------------------
6 Inventory I
- --------------------------------------------------------------------------------
7 Facilities III
- --------------------------------------------------------------------------------
8 Metal Prep & Weld I
- --------------------------------------------------------------------------------
9 Facilities IV
- --------------------------------------------------------------------------------
10 Inventory II
- --------------------------------------------------------------------------------
Assembly I
- --------------------------------------------------------------------------------
11 Inventory III
- --------------------------------------------------------------------------------
Metal Prep & Weld II
- --------------------------------------------------------------------------------
Assembly II
- --------------------------------------------------------------------------------
Quality Control I
- --------------------------------------------------------------------------------
Machining I
- --------------------------------------------------------------------------------
12 Metal Prep & Weld III
- --------------------------------------------------------------------------------
Assembly III
- --------------------------------------------------------------------------------
13 Assembly IV
- --------------------------------------------------------------------------------
Quality Control IV
- --------------------------------------------------------------------------------
Inventory IV
- --------------------------------------------------------------------------------
Metal Prep & Weld IV
- --------------------------------------------------------------------------------
14 Facilities V
- --------------------------------------------------------------------------------
Machining II
- --------------------------------------------------------------------------------
15 Facilities VI
- --------------------------------------------------------------------------------
Inventory V
- --------------------------------------------------------------------------------
Assembly V
- --------------------------------------------------------------------------------
Machining III
- --------------------------------------------------------------------------------
16 Facilities VII
- --------------------------------------------------------------------------------
Metal Prep & Weld V
- --------------------------------------------------------------------------------
17 Assembly VI
- --------------------------------------------------------------------------------
Facilities VIII
- --------------------------------------------------------------------------------
18 Machining IV
- --------------------------------------------------------------------------------
Assembly VII
- --------------------------------------------------------------------------------
19 Machining V
- --------------------------------------------------------------------------------
7
<PAGE>
CVC Confidential Ratified 8/24/95
- --------------------------------------------------------------------------------
Metal Prep & Weld VI
- --------------------------------------------------------------------------------
19 Assembly VIII
- --------------------------------------------------------------------------------
20 Machining VI
- --------------------------------------------------------------------------------
Assembly IX
- --------------------------------------------------------------------------------
Metal Prep & Weld VII
- --------------------------------------------------------------------------------
35. Employees may buy job related tools and equipment through the Company with
the following repayment schedule: Please note that repayments will be made in
$25-$35 increments.
-----------------------------------------------
Dollar amount of purchase Maximum
repayment period
-----------------------------------------------
to $50 2 weeks
-----------------------------------------------
$51 to $100 4 weeks
-----------------------------------------------
$101 to $200 6 weeks
-----------------------------------------------
$201 and over 8 weeks
-----------------------------------------------
36. Cost Of Living Allowance (1967 C.P.I.-W Base = 100)
a) Effective with the first full pay period beginning after February 1,
1996, and thereafter, during the, period of this agreement a Cost-of Living
adjustment, if applicable, shall be made quarterly with the first full pay
period beginning on or after February 1, May 1, and August 1. Such adjustment
shall be based on changes, if any, in the C.P.I.-W above as of the prior
September 15, January 15, March 15, and July 15 respectively.
b) The Cost-of-Living allowance shall be adjusted so that all employees
shall receive an allowance of one cent per hour for each .3 by which the
C.P.I.-W exceeds the September 1976 index of 172.6.
c) If, after the Cost-of-Living adjustment has been in effect pursuant to
the foregoing provision, it shall be found that as of March, June, and September
of any year during the life off this agreement the C.P.I.-W has decreased during
the preceding 3 months, then one cent shall be deducted from the Cost-of-Living
allowance for each full .3 decrease in the C.P.I.-W below the level which the
C.P.I.-W was required to reach in order to earn previous amount of allowance.
d) The Maximum Amount of Cost-of-Living Allowance the Company will pay
shall not exceed twelve (12) cents per hour in any one year.
e) The Cost of-Living allowance when earned will be paid on the following
schedule: The September 1991 index when compared to the December 1995 index
released in January 1996 will determine the amount to be paid on the first full
work week in February 1996.
8
<PAGE>
CVC Confidential Ratified 8/24/95
The next payoff date will be determined by the March 1996 index that will be
released in April 1996 for pay-off, if any, on the first full work week in May
of 1996. The index values of June 1996 and September 1996 will determine the
amount of pay out, if any on the first full weeks of August 1996 and November
1996 respectively. Subsequent payments for the balance of the contract will
follow the same pattern.
f) In the event the members of the Union did receive in any one of the
contract years any increase in Cost-of-Living allowance up to and including the
twelve (12) cents, such allowance will be incorporated into the basic wage rate
and cannot be deducted in any succeeding contract year from the basic wage
structure.
V. Hours of Work, Overtime, Reporting & Call Back Pay
37. Hours Of Work And Overtime For the purposes of this Agreement, the
employee's work week will begin 12:01 a.m. Saturday, and will end the following
Friday at 12:00 a.m. For purposes of this Agreement, the first (A) shift is that
shift which starts nearest 7:00 a.m., the second (B) shift follows the first
shift, and the third (C) shift follows the second shift. On all three (3)
shifts, the regular days work shall consist of either eight (8) hours or ten
(10) hours of work and an unpaid lunch period on one-half (1/2) hour. Refer to
Article X paragraph 96.
38. The hours of work are normally from 7:00 AM to 3:30 PM for the 1st shift,
3:00 PM to 11:30 PM for the 2nd shift, and 11:00 PM to 7:30 AM for the 3rd
shift. During periods of schedules overtime employees working the 1st shift may,
with prior permission from their immediate supervisor, begin work at 6:00 AM. On
all three (3) shifts, the regular day's work shall consist of eight (8) hours of
work and an unpaid lunch period of one-half (1/2) hour. However, employees will
be allowed to fulfill their 8 hour shift by written mutual agreement between the
employee and the company (to be copied to the steward) through working four
10-hour days instead of five 8-hour days. Holidays which fall during an
employee's four day week schedule will only be paid at straight time pay for 8
hours.
39. Employees covered by this Agreement will be compensated for hours worked as
follows:
a) Straight Time: For the first eight (8) hours or for the first ten (10)
hours, in those situations where the employee and the company have mutually
agreed in writing to a four 10 hour day work week, worked in any continuous
twenty-four hour period beginning with the starting time of the employee's
shift. Straight time is also paid for the regular working hours worked on any
shift that starts on the day before and continues into Saturday or a specified
holiday
b). Time And One-Half: For all hours worked in excess of eight (8) hours
per day in any continuous twenty-four (24) hour period beginning with the
starting time of the employee's shift. In those situations when an employee by
mutual written agreement with the company is working ten (10) hour shifts, time
and one-half shall be paid for all hours worked in excess of ten (10) hours per
day in any continuous twenty-four (24) hour period beginning with
9
<PAGE>
CVC Confidential Ratified 8/24/95
the starting time of the employee's shift. Time and one-half shall also be paid
for all hours worked on any shift on the first day worked during a weekend
(Saturday or Sunday)
c) Double Time: For all hours worked on any shift on the second
consecutive day worked during a weekend (Sunday) and the recognized holidays as
listed in Article VIII. In the event that an unscheduled emergency overtime
situation is declared by the VP of Operations all employees required to work on
Sunday will be paid at the double time rate. Notification of such a situation
shall be documented and provided to the Human Resource department to ensure
accurate payroll.
40. Employees working in necessary continuous seven (7) day operations are not
subject to the overtime provisions covering work on Saturdays and Sundays as
such. Employees in these occupations shall be paid time and one-half for all
work performed on the sixth day worked in the employee's work week and double
time for all work performed on the seventh day worked in the employee's work
week. Such employees will be paid double time for hours worked during the
regular working hours of any shift that start on any of the holidays defined in
the Holiday Pay Section.
41. The Company will pay an employee the greater of one hour overtime or half
the scheduled overtime if the scheduled overtime is not canceled 24 hours in
advance except for acts of God, machine breakdown, power failure or labor
disputes. By agreement, the term 24 hours in advance means that the overtime is
canceled before the employee leaves the plant the day before the overtime is to
take place.
42. Assignment Of Overtime Work
a) When overtime is required in a given classification, it will be the
policy and intent of the Company to offer overtime opportunities to employees in
the classification. However, in the event no employee desires to work overtime,
it shall be the prerogative of the Company to require employees in the
classification to perform a reasonable amount of overtime work or the company
may, at its discretion, have the work performed by employees in another
classification. A reasonable amount of overtime is defined to be not more than 8
hours in any one week. In the event an emergency situation occurs, as declared
by the Vice President of Operations or the Manager of Manufacturing, and having
exhausted all options as stated in 42 a.), the company will follow 42 i.) of
this paragraph.
b) When overtime work is required, the company will earnestly endeavor to
provide an equitable distribution of overtime work among employees in the same
classification within the department and on the shift involved. If any employee
is loaned to another department to work overtime, the first 8 hours per week
worked in the other department will not be charged. WGLs are excluded from
equalization of overtime distribution. The Company will, whenever feasible, try
to equalize the future distribution of overtime within the same classification
between shifts.
c) A weekly record of overtime hours worked shall be maintained and posted
by the department supervisor and the union will be advised weekly as to the
identities of the employees
10
<PAGE>
CVC Confidential Ratified 8/24/95
scheduled for daily, Saturday, Sunday or Holiday overtime. Overtime notification
will be provided as far in advance as possible and except in instances of
emergencies, such as those caused by customer requirements, every effort will be
made to provide such notification at least four hours in advance; when feasible
the union will be notified of emergencies.
d) Overtime distribution shall be made on an annual basis from January 1st
to December 31st. Any grievances regarding distribution may be filed only during
the last ten (10) working days of March, June, September and December, when in
the opinion of the employee he/she has not shared in the overtime during that
quarter as provided herein.
e) When an employee has not shared in the overtime as provided herein, he
shall be afforded the next overtime available for which he/she is qualified, or
such other remedy as may be available, within the same year period as defined
above.
f) When overtime is required within the department, job classification and
shift, no probationary employee shall be scheduled for overtime until all other
employees involved are afforded the opportunity to work the overtime.
g) When an employee has completed the probationary period or has been
transferred to a different job classification, department or shift, the employee
shall then commence to share equitably in the distribution of future overtime
without regard to the previous overtime status of the employee or the other
employees involved. The individual employee will be immediately assigned the
amount of overtime equal the highest level of overtime within the
classification, shift of his/her new department. From that point overtime will
be equalized as per 42 b.).
h) Any employee who is offered overtime and refused shall be considered to
have worked such overtime for the purpose of overtime distribution.
i) In the event of a breakdown or failure of a system occurs after regular
scheduled working hours (i.e.: Saturday, Sunday, Holidays or evenings) or an
emergency situation is declared as outlined in 42a), the Company will follow the
procedure listed below:
1) The Vice President of Operations and/or department supervisor
must be notified immediately.
2) The VP of Operations and/or supervisor will make an assessment as
to the nature of the problem and whether the problem involves other
departments.
3) The supervisor will utilize appropriate bargaining unit personnel
as determined in step 2, who may be currently within the facility.
4) If no bargaining unit personnel are present then phone contact
should be made with the personnel working on that specific equipment
to discuss the necessity of bringing an individual into the plant on
a "call-in" basis.
5) If no bargaining unit personnel can be contacted the Union
President or Chief
11
<PAGE>
CVC Confidential Ratified 8/24/95
Steward will be informed and the VP of Operations and/or supervisor will utilize
any other employee as appropriate.
43.. Reporting Pay: An employee who reports for work on his regular shift
without having been notified prior to reporting that no work is available shall
receive four (4) hours work beginning with the regular starting of the
employee's shift. If no work is available, he shall receive four (4) hours pay
at his straight time hourly rate in lieu thereof beginning with the regular
starting time of the employee's shift, except in case of labor dispute. When
notifying employees not to report for work, the Company shall be entitled to
rely upon the latest address shown on the employee's personnel record. Radio and
television announcements which commence at least two hours prior to the start of
the employees shift concerning the plant being closed will constitute notice
which will nullify the four hour reporting pay.
44. Call-Back Pay: An employee who is called back to the plant to perform
emergency work after having completed his regular shift, or who is called to
perform emergency work on a day when he has not scheduled to work shall receive
a minimum of four (4) hours work, or four (4) hours pay at his straight time
hourly rate in lieu thereof if work is not available.
VI. Grievance Procedure and Arbitration
45. Grievance Procedure: If a grievance or dispute should arise between the
Company and the Union or between the Company and an employee or a group of
employees with respect to rates of pay, wages, hours of employment or other
conditions of employment as specified under the terms of this Agreement and its
written supplements, such grievance or dispute shall be taken up in accordance
with the procedure outlined herein.
46. No complaint or grievance will be considered which is not submitted to the
immediate Supervisor under Step 1 within twenty (20) working days after the
employee was aware of the occurrence. Retroactive monetary claims shall be
limited to thirty (30) day period prior to the date the grievance was first
submitted in writing to the Company.
47. Grievances regarding discharge or disciplinary layoffs must be filed within
three (3) working days from the date of discharge or the commencement date of
the layoff.
48. It is agreed that no grievance shall be valid unless appealed within the
time limits established within each step of the Grievance Procedure and that
these time limits may, by mutual agreement of the parties, be extended in any
step.
49. Step One:
a) An employee having a complaint shall, either alone, in company with, or
through either his or her Steward, take up the complaint with the Supervisor.
The Steward will encourage the employee who has the complaint to meet with the
supervisor and try to resolve the
12
<PAGE>
CVC Confidential Ratified 8/24/95
complaint.
b) If the complaint is not resolved through oral discussions within two
(2) working days, the Steward shall reduce the complaint to writing on a form
provided by the company and submit a grievance signed by the Steward to the
immediate Supervisor. The Supervisor shall render his decision on the grievance
form in writing within two (2) working days, mark the grievance not accepted,
sign the grievance form and submit it to Step 2.
50. Step Two
a) In the event a satisfactory settlement is not reached in Step One, the
Steward shall present the written grievance to the Chief Steward who shall
request and schedule a meeting with the next higher level of CVC management to
discuss the grievance. Such meeting shall be requested within five (5) working
days of the appeal from Step One and shall take place within five (5) working
days of the request for the meeting. The Manager will render his decision in
writing on the grievance from within five (5) working days of the date of which
the meeting occurs. If the answer is accepted, the Chief Steward shall sign the
acceptance. If it is not accepted, the Chief Steward shall, within an additional
five (5) working days mark the grievance not accepted, sign the grievance and
submit it to Step Three.
51. Step Three
a) In the event a satisfactory settlement is not reached in Step Two (2)
the Chief Steward who shall request and receive an appointment with the VP of
Operations and the Director of Human Resources to discuss the grievance. Such
meeting shall be requested within five (5) working days of the appeal from Step
Two (2) and shall take place within five (5) working days of the request for the
meeting. At this meeting, the Union shall be represented by the President of the
local Union, the Chief Steward and the Steward involved on the grievance. The
International Representative may also attend such meeting if his attendance is
requested and Company notified in advance by the Union. The Director of Human
Resources shall render the company decision in writing on the grievance form
within five (5) working days of the date on which such meeting occurs. If the
answer is accepted, the Chief Steward and the Director of Human Resources shall
sign the acceptance.
52. The decision of the Company in any step of the grievance procedure shall be
final and binding and the grievance shall be considered settled on the basis of
the Company's last answer, unless notice of appeal to succeeding steps,
including arbitration, is filed with the Company within five (5) working days
after the Company has rendered its decision.
53. It is understood that the Union or the Company may call the aggrieved
employee as a witness in the Third Step meeting provided for herein. The
requesting party will give advanced notice to the other party that the aggrieved
employee may be called as a witness.
54. The Union may on its own, initiate and process a grievance of a policy
nature. Such grievance may be submitted at step three of the Grievance
Procedure.
13
<PAGE>
CVC Confidential Ratified 8/24/95
55. Arbitration: Any grievance or dispute falling within the scope of this
Agreement which is not settled in the final step of the Grievance Procedure
provided for herein may be submitted to an impartial arbitrator.
56. Arbitration proceedings may be instituted by either the Company or the
Union. Within thirty (30) days after the effective date of this Agreement, the
parties shall request from the Federal Mediation and Conciliation Service a list
of fifteen (15) names, from which list a permanent arbitrator and first and
second alternate arbitrator shall be selected for the life of this Agreement.
The list of proposed arbitrators shall be made up of people within a reasonable
distance from Rochester, New York. These people should also know that they are
expected to give a quick response on discharge cases.
57. Selection of the permanent arbitrators shall be as follows:
a) The Union and the Company shall alternately strike out a total of
fourteen (14) names from the list furnished by the Federal Mediation and
Conciliation Service.
b) The remaining name shall become the permanent arbitrator.
c) The fourteenth name struck out will be the first alternate arbitrator
d) The thirteenth name struck out will be the second alternate arbitrator.
58. Unless otherwise agreed to by the parties, arbitration proceedings shall be
held within thirty (30) days after the grievance or dispute has been submitted
to arbitration. In all cases, the permanent arbitrator will be given first
notice. However, if he is not available within the thirty (30) days, the first
alternate arbitrator will then be called. The second alternate arbitrator will
be called if the first alternate arbitrator is not available within thirty (30)
days.
59. The permanent arbitrator shall be notified by the parties of the time and
place for the hearing, which time and place shall be mutually agreed to. Each
party may submit pre and post hearing briefs to the arbitrator which state the
position of the parties and furnish to the arbitrator any arguments, in support
thereof. If either party submits briefs or other written arguments to the
arbitrator following the hearing, the other party will be furnished copies of
such material simultaneously with its being furnished to the arbitrator. Any
post-hearing submittal by either party shall be submitted within seven (7) days
of the conclusion of the hearing.
60. The arbitrator shall have no power to add to, subtract from or modify any of
the terms of this Agreement, or any other terms of this Agreement, or any other
terms made supplemental hereto, or to arbitrate any matter not specifically
provided for by this Agreement. The arbitrator's authority is to interpret and
apply provisions of the Agreement. It is further understood and agreed that the
arbitrator shall not rule on proposed amendments or proposed modifications of
this Agreement or its extension or renewal.
61. The arbitrator shall render a decision, in writing, to both parties. The
hearing shall be considered closed when arguments are concluded or when the
transcript of the proceedings, if
14
<PAGE>
CVC Confidential Ratified 8/24/95
any, is received by the arbitrator or upon submission of the post-hearing briefs
of the parties. After a case on which the arbitrator is empowered to rule has
been submitted to arbitration, it may not be withdrawn by either party except by
mutual agreement.
62. There shall be no appeal from the arbitrator's decision, which shall be
final and binding on the Company, the Union and the employees involved.
63. Regardless of the outcome of any matter submitted to arbitration, the costs
thereof shall be shared equally by the Union and the Company. Such costs shall
be limited to the arbitrator's fees and expenses. The cost of any additional
services required by either party shall be borne by the party requesting these
additional services.
64. In disciplinary layoff and discharge cases, the arbitrator shall have the
power to adjudge the guilt or innocence of the employee involved and review any
penalties imposed on employees and modify or amend penalties, if in his judgment
the penalty is too severe. If the arbitrator shall adjudge the employee innocent
of the offense for which he was disciplined or discharged and so orders the
Company shall reinstate the employee in full with accumulated seniority, and in
case the employee was penalized by loss of working time, will pay him back wages
less any time during the period the employee was off wherein the plant was not
operating on a standard work week resulting from shorter hours, shutdowns for
any reason, including emergency and inventory, and less any money the employee
received from other employment during the period he was off, including
self-employment, Unemployment Compensation or Workman's Compensation.
65. Either party may, however, upon thirty (30) days written notice to the other
party dismiss the permanent arbitrator and the parties will then, by the above
procedure, select another permanent arbitrator.
VII. Discipline And Discharge
66. The Company may discipline, suspend or discharge any employee for good and
sufficient cause. Good and sufficient cause includes, but is not limited to,
multiple (three) infractions of CVC policies and rules.
a) Disciplinary action will take the following steps:
1. Oral reprimand
2. Written reprimand #1
3. Written reprimand #2
4. Three days without pay
5. Discharge
b) Infractions such as, but not limited to the following may lead to
immediate discharge
1. Physical abuse
15
<PAGE>
CVC Confidential Ratified 8/24/95
2. Theft
3. Use of or sale of drugs on Company premises, other than
prescribed medications.
4. Drinking alcoholic beverages on the Company premises or
coming to work drunk.
5. Flagrant infractions of Safety and/or Clean Room Practices;
refer to Appendices J and K.
c) Cases other than those involving disciplinary layoff or discharge may
be contested through the normal grievance procedure.
67. In the event of any disciplinary action, whether it is a formal reprimand or
a complaint of the employee's work attitude and performance, the Area Steward
will be informed before the disciplinary action takes place:
a) The employee will be informed of his union representation rights in the
presence of the Area Steward before disciplinary action takes place. If the
employee does not wish union representation at the meeting, he or she must sign
a waiver (copy to Union) to that effect in the presence of the member mentioned
above. The disciplinary action will not take place before a waiver is signed, if
such a waiver is the wish of the employee.
b) In the event that disciplinary action involves suspension or discharge, the
Union President, Chief Steward and Area Steward must be present before such
action takes place.
c) In case of disciplinary layoff or discharge, a member of the grievance
committee shall introduce the employee's complaint into Step Three of the
Grievance Procedure. This will be done within three (3) working days of such
action. A meeting will be held within two (2) working days unless an extension
is mutually agreed to by the parties. The Union may request a postponement, not
to exceed fifteen (15) days, with the understanding that the Company shall not
be obligated to pay any award beyond the date set for the original meeting
unless the case is referred to arbitration. In no case is a delay caused by the
Union to cause a loss to the Company by reason of the delay. Upon request, the
Company will furnish the Union the employee's most recent address as shown on
the employment record.
d) The decision of the Company in any step will be final unless notice of
appeal to succeeding steps, including arbitration, is filed with the Company
within five (5) working days after the Company has rendered its decision.
68. A copy of any disciplinary action or record of oral reprimand shall be given
to the employee, the Area Steward, and the Chief Steward at the time of
discipline, or as soon as possible thereafter.
16
<PAGE>
CVC Confidential Ratified 8/24/95
VII. Holidays, Vacations And Paid Absence
69. Holiday Pay: CVC observes 11 paid holidays each year. These include New
Year's Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving
Day, the day after Thanksgiving, December 24th, Christmas Day, and December
31st; the eleventh day is a floating holiday and is available as an additional
vacation day; use of this day is subject to proper notification to the Company
per Paragraph 79. These holidays are available to all employees as of date of
hire. Holidays which fall during an employee's four day week schedule will only
be paid at straight time pay for 8 hours.
70. If a holiday occurs on a Saturday or Sunday, CVC observes that holiday on
Friday or Monday respectively. The particular holidays to be observed are
communicated annually. Any exceptions to the above will be mutually agreed to by
the employee and the company.
71. Company holidays falling within an employee's scheduled vacation are counted
as holidays, not vacation days.
72. Employees cannot reschedule a holiday because of sickness or injury.
73. Employees receive holiday pay equivalent to 8 hours pay. Shift premium is
included in the holiday pay only if this premium is regularly received.
74. To receive holiday pay an employee must be in a paid status (working day,
vacation day, PAA day or mutually agreed to excused absence) the work day before
and the work day after the holiday.
75. If an employee is required to work on a CVC holiday, he will receive holiday
pay at straight time equivalent to 8 hours pay plus overtime at the regular
overtime rate for all hours worked on the holiday. As an option the employee may
elect to receive only the regular overtime rate, and then be credited with one
(1) additional vacation day.
76. Vacations: The vacation year is defined as the twelve (12) month period from
hire date or anniversary of hire date.
a) Vacation allowances are as follows:
Length of Service Vac. Pay Allowance Physical Vacation
------------------------------------------------------------------------
6 months to < 12 mos. 40 hours 5 days
------------------------------------------------------------------------
12 months to < 3 years 80 hours 10 days
------------------------------------------------------------------------
3 years to < 7 years 100 hours 12.5 days
------------------------------------------------------------------------
7 years to < 10 years 120 hours 15 days
------------------------------------------------------------------------
10 years to < 15 years 140 hours 17.5 days
------------------------------------------------------------------------
15 years to < 20 years 160 hours 20 days
------------------------------------------------------------------------
20 years + l80 hours 22.5 days
------------------------------------------------------------------------
17
<PAGE>
CVC Confidential Ratified 8/24/95
77. Employees who lose seniority, as provided in Paragraph 87 of this Agreement,
prior to the end of the anniversary year of the particular vacation year are
eligible for a vacation with pay except that payment for a vacation allowance to
which an employee would otherwise have been entitled shall not be denied because
of separation of the employee from the payroll by death or retirement under the
Pension Plan prior to the end of the anniversary year. Employees with less than
six month service are not eligible for vacation allowance.
78. All employees, if eligible, will be required to take a minimum of two (2)
weeks physical vacation time off and are urged to take the full vacation period.
79. Employees may, with proper notice given, take vacation at a time requested
by the employee, production requirements and seniority permitting. All employees
are required to provide a minimum of one (1) week's notice for vacation periods
of less than five (5) days and are further required to provide a minimum of one
(1) month's notice for vacation periods of five (5) days or longer. For
seniority to govern, this request for physical time off must be made by March
31st each year.
80. Employees may carry over their vacation time which exceeds 80 hours into the
following vacation year, not to exceed 80 hours carry-over.
81. Vacation pay allowance will be based on the employee's current straight time
hourly rate. The vacation pay allowance will be paid to the employee as physical
time-off is scheduled and taken.
82. An employee who is placed on lay-off shall receive his/her vacation time and
pay as originally scheduled.
83. In the event an employee does not take physical time off equivalent to
his/her total vacation allowance, that differential will be paid at the end of
the anniversary year at the request of the employee. In the case of a laid off
employee this will be paid either at the anniversary date or earlier upon the
employee's request.
84. Paid Absence Allowance Credit: CVC recognizes that any one of us may
occasionally be away from work because of minor illness or the need to attend to
pressing personal business which cannot be addressed during non-work time. While
receiving a pay check from CVC, bargaining unit employees will receive an
allotment of hours which may be used for incidental personal and sicktime. The
use of this time is described below. The hours are paid at the employee's
regular hourly rate and are credited to the employee on the anniversary of the
a) PAA benefits are provided according to your length of service as
outlined in the following table:
Length of Service Sick Days (hours) Personal Days (hours)
- ---------------------------------------------------------------------------
O to 6 months 0 0
6 months < 1 year 2(16 hours) 2(16 hours)
1 year + 5(40 hours) 3(24 hours)
18
<PAGE>
CVC Confidential Ratified 8/24/95
b) Employees not earning a CVC paycheck (e.g. on disability or leave),
will not earn PAA time for each month of work missed (1/12 of your annual PAA
time per month of completed service).
c) When an employee is sick and unable to report for work at the regularly
scheduled time he/she must notify CVC as instructed in Paragraph 99. Proper
notification is necessary to ensure that CVC's management can effectively
maintain a smooth work flow during the absence.
d) Employees are responsible for calling in at the beginning of each work
day when sick and uncertain from day to day as to when they will be able to
return. If the duration of an absence is known, you must advise the Human
Resource Department accordingly.
e) Personal and sick time is measured from one anniversary of the date of
hire to the next. You may use the personal time for any purpose when proper
notification has been supplied to the Company by submitting a Personal Time
Request; refer to Appendix E. You may use personal time before or after a
company holiday or with vacation if you receive your immediate supervisor's
written approval in advance. Personal days may also be used for personal reasons
all at one time with prior written permission from your immediate supervisor.
f) Although illness is not predictable, the use of personal time usually
is. Personal days must be scheduled a minimum of one (1) week in advance with
your immediate supervisor.
g) Employee with less than ten years of service may carry over a maximum
of 32 hours of sicktime over to the following year; employees with ten years or
more may carry over a maximum of 40 hours sicktime.
h) On your anniversary date, you have the option of cashing in any or all
of your accumulated personal time and sicktime for pay. You must cash in all
personal time and any sicktime over the maximum number of hours which you are
allowed to carry over (refer to Paragraph 84 g above).
i) PAA time must be used in increments of at least one hour. Personal
absences which are not preapproved will not be paid. If you have used all of
your PAA time and must miss work, the absence will be considered unexcused. The
exception to this is if a previously approved unpaid day is taken immediately
before or after a holiday, you will still be eligible for the holiday with pay.
j) If you leave CVC due to indefinite lay-off, retirement or death PAA
time will be paid according to the schedule in Appendix B. The time which you
are accruing for service in your current anniversary year will be paid on a
prorated basis which is based on the number of months of completed service since
your last anniversary (1/12 of your annual PAA time per month of completed
service). If you leave CVC due to a voluntary quit or discharge PAA time will
not be paid.
k) As an individual you are important in the performance of your work and
our
19
<PAGE>
CVC Confidential Ratified 8/24/95
plans are based on the expectation that you will be at work on a daily basis.
Therefore unexcused absence is grounds for disciplinary action.
IX Probation and Seniority
85. Probationary Period:
a) Any employee who has been in the employment of the Company for sixty
(60) consecutive days in labor grades 4 through 12 or ninety (90) days in labor
grades 13 through 20, without a break in service, shall be considered a regular
employee of the Company and granted seniority from their hire date. Until
receiving seniority, employees shall be subject to layoff, discipline or
discharge at the sole discretion of the Company. Upon completion of the
probationary period an employee shall be credited with seniority as of their
start date. Probationary employees who are terminated and are rehired within
fifteen (15) working days after being terminated, shall be considered to have
been continuously employed.
b) All probationary employees will be reviewed by management on a
bi-weekly basis as to their job performance. The Union Steward, Chief Steward or
President will be present during such reviews.
c) If, in the opinion of the Company, an employee has not satisfactorily
completed their probationary period, the Company may extend the probationary
period for not more than an additional forty-five (45) days.
86. Seniority
a) Seniority shall be defined as the length of service of the employee
with the Company or its predecessors in the bargaining unit beginning with the
starting date of initial employment or the starting date of re-employment,
whichever is later.
b) When employees have the same starting date, seniority order shall be
established by the lower of their individual social security numbers.
c) On all employees covered by the Agreement, the Company shall maintain
seniority records, a copy of which will be furnished to the Union each month.
d) After completion of the Probationary period, an employee will
accumulate seniority continuously except as provided in Paragraph 87.
87. Loss Of Seniority
a) Seniority shall be lost for the following reasons:
1.) Voluntary quitting.
2.) Discharge for good and sufficient cause.
20
<PAGE>
CVC Confidential Ratified 8/24/95
3.) Failure on the part of the laid-off employee to return to work
within three (3) working days after receipt of notification by the
Company, by registered letter to the employee's last known address,
that the employee is to return to work. When an employee, for valid
reasons, is unable to return to work or to notify the Company within
three (3) working days, they shall, upon presenting proof to the
Company of their inability to return to work or to so notify the
Company, be reinstated on the job. When the Company has recalled an
employee from layoff, a delay by the employee in reporting to work
shall not preclude the Company from working another employee,
including a junior recalled employee, in the recalled employee's job
pending the reporting to work of the recalled employee.
4.) Exceeding leave of absence without giving a satisfactory reason.
5.) Employees on layoff out of the plant shall have recall rights
for a period equal to their seniority from date of hire but not to
exceed eighteen (18) months. Employees on layoff in classifications
within the plant shall have unlimited recall rights subject to the
other provisions of this Agreement.
6.) An employee who fails to notify the Company on the third day of
absence shall be deemed to have quit. Notice herein referred to
shall be made to the Human Resource Department. An employee who
reports ill and remains away from work for more than three (3)
working days, will be responsible for requesting a leave of absence,
which leave shall be subject to revocation and the employee subject
to discharge upon failure to present satisfactory proof of illness.
88. Application Of Seniority: Seniority will be used only for purposes set forth
in this Agreement.
89. Layoffs
a) In all cases of temporary layoffs for periods not exceeding three (3)
working days or any extension mutually agreed to by the parties, seniority shall
govern, except that under no circumstances shall the Company be obligated in
such cases to change the job assignment of any employee involved which would
entail a familiarization period or to change the employee's present department
or shift.
b) The Company will not temporarily layoff an employee more than three (3)
working days in any thirty (30) day period nor eighteen (18) cumulative days in
any contract year unless agreed to by the employee. The Company will not
maintain records of temporary layoff for individual employees and it will be
incumbent upon the employee to point out to the supervisor whenever they have
reached the maximum days specified in Paragraph 89 a) and above. If the employee
does not contest the matter at the time of temporary layoff, it will be assumed
they are agreeable to accept the temporary layoff.
c) An indefinite layoff is a layoff expected to continue beyond three (3)
consecutive
21
<PAGE>
CVC Confidential Ratified 8/24/95
working days. An employee who is to be placed on indefinite layoff will be
entitled to exercise their seniority rights in accordance with the terms of this
Agreement.
d) Employees who are placed on indefinite layoff will be given 3 days pay,
and will not work those 3 days. In addition, the company will pay the monthly
premium for health benefits for the month following the month of layoff. Those
employees affected will be informed as a group if more than one employee is
involved. The Union President, Chief Steward and the respective Area Stewards
will be present. The procedure outlined in Appendix B will be followed.
e) On an indefinite layoff, the Company will layoff the least senior
employee in the classification, department, and shift affected. Seniority will
be determined by the employee's original date of hire.
f) When an indefinite layoff is to occur, the Company will, if at all
possible, notify the Union at least three (3) working days prior to such layoff
as to the classification, department and shifts to be affected. Such three (3)
working days notice will also be given those employees to be laid off where the
reduction is to take place. Employees bumped will be afforded as much advance
notice as possible but in no event less than one (1) working day.
90. Inventory: During period of physical inventory, seniority within the
department shall govern in the scheduling of employees to work within that
department if additional employees are required beyond those available from the
department, all employees will be considered and seniority honored in the
further selection provided the employee is qualified to perform the work
required. The Union will be given a minimum of two (2) days notice by the
Company of the employees that ores scheduled for inventory work outside their
department. In the event overtime is required during or on inventory, this
overtime shall not be charged in considering overtime distribution.
91. Bumps
a) An employee placed on indefinite layoff will report to the Human
Resources Department of the Company for an exit interview, at which time they
will complete a "Recall and Bump Form", two copies of which will be given to the
employee, one of which will be furnished to the Union by the Employee. The
positions listed on the "Bump and Recall Form" will not be taken lightly and the
employee involved should have a real conviction that he or she can perform the
jobs listed. Cross-training records will also be used to determine the
eligibility of employees to bump into another classification. There will be no
obligation on the part of the Company to return an employee to work other than
to their regular classification until they have completed the Bump and Recall
form.
b) When bumping, a qualified employee may bump into a classification of
their choice and on a shift of their choice. They may only bump in the same
labor grade of their regular classification or to a classification in a lower
paid labor grade. They may only bump an employee of lesser seniority and will be
required to bump the least senior employee of that classification on the shift
of his choice whose job they are qualified to perform. Seniority will be
22
<PAGE>
CVC Confidential Ratified 8/24/95
determined by the employee's original date of hire.
c) The determination of an employee's qualification to perform a job
entered on their "Recall and Bump Form" will be made following the exit
interview. If they are disqualified, the reasons for such disqualification will
be reduced to writing and given to the employees and the Area Steward.
d) In exercising bumping rights, an employee must first exhaust all
possibilities in the classification from which laid off or bumped, except that
they will not be required to change shifts.
e) When exercising bumping rights, an employee will not be trained to do
the job; however when an employee bumps into a classification of their choice as
provided in Paragraph 91 c. above, the Area Steward and a member of Management
will mutually agree on a specified period of time, during which the employee
will be given, with suitable orientation, an opportunity to demonstrate that
they can satisfactorily perform the job. If it is then found that they cannot
satisfactorily perform the job, they will be laid off and allowed to exercise
their seniority rights.
f) An employee who declines to bump at the time of layoff will so state on
his Recall and Bump form. They will then remain on layoff until recalled; refer
to Recalls, Paragraph 92.
92. Recall
a) Employees working out of their regular classifications and employees on
indefinite layoff will be recalled to their regular classification when their
services are needed, in seniority order. The same procedure will be used when
employees are recalled to positions listed on their Bump and Recall forms.
Seniority will govern in cases where an employee is competing in trying to
return to their regular classification with another employee who has such
classification listed on their Recall and Bump form; refer to Appendix I.
Seniority will be determined in accordance with Paragraph 86 of this Agreement.
b) An employee may be recalled only to a classification in the same or to
a lower paid labor grade.
c) On recall, an employee will not be trained to do the job, however, they
will be oriented and directed in such a manner as to provide an opportunity to
satisfactorily perform the job. If it is found that they cannot satisfactorily
perform the job, they will be disqualified and placed on layoff.
d) An employee who declines recall to their regular classification or any
other classification listed on their Recall and Bump form will be treated as a
voluntary quit, unless they have an adequate reason for such failure to return.
e) An employee on layoff who has completed a Recall and Bump form may
change
23
<PAGE>
CVC Confidential Ratified 8/24/95
such form by notifying the Human Resource Department in writing any time prior
to recall.
93. Transfers Out Of Bargaining Unit: Any employee who is transferred out of the
bargaining unit for any reason shall have no contractual right to return to the
bargaining unit in a classification in which employees are on layoff. Employees
transferred out of the bargaining unit shall continue to accumulate seniority
for a period of one (1) year. If returned to the bargaining unit within such
time period, an employee shall be returned to the job held prior to their
transfer out of the bargaining unit or to the classification now covering the
type of work they performed at the time of transfer out of the bargaining unit.
94. Flexibility Of Work Assignments
a) It is understood and agreed between the parties that irrespective of
job classification, employees may be assigned to perform work outside their
current job classification based on the understanding; of an acceptance by the
parties that work requirements vary from day to day based upon customer orders
and needs and production schedules. When such work assignments occur, the
employees involved shall not suffer a loss in base wages as a result of such
assignment. The provisions of this section shall not be applied in a
discriminatory or arbitrary manner. Nothing in this section shall be intended to
permit circumvention of the job promotion procedure outlined in the Agreement
Article XII or to deny full time employment to an employee on layoff status.
b) It is recognized and agreed that certain employees spend a portion of
their time in the classifications over which they serve. This principle is
applicable whether or not employees are on lay-off from the classifications over
which they serve.
X. Shift Preference & Premium
95. Shift Preference:
a) Management reserves the right to make any temporary shift transfers to
not exceed thirty (30) working days duration, in a calendar year, using
seniority, job skills, and business needs as the selection criteria. Personal
hardship cases will exempt individuals from shift change requirements. If you
work the majority (more than 50% ) of your straight time hours between the times
listed below, you will be paid the appropriate shift differential for all hours
worked on that shift.
b) Employees may request of their immediate supervisor, in writing, a
transfer to another shift. The shift change shall be limited to their present
job classification and department, and they must be able to perform the
available work. Employees shall be permitted upon the expiration of twenty (20)
working days, to displace the employee having the least amount of seniority on
the shift of their preference, provided the above qualification are met. All
employee requested shift changes will become effective on a mutually agreed upon
day.
24
<PAGE>
CVC Confidential Ratified 8/24/95
96. Shift Premium
Shift hours Shift title Shift premium
---------------------------------------------------------------
7:00 am to 3:30 PM
or A none
7:00 am to 5:30 PM
---------------------------------------------------------------
3:00 PM to 11:30 PM
or B 10% over base rate
3:00 PM to 1:30 am
---------------------------------------------------------------
11:00 PM to 7:30 am C 15% over base rate
---------------------------------------------------------------
97. If you regularly receive shift premium, your vacation and holiday pay will
also include shift premium.
XI. Absence And Leaves Of Absence
98. Absences: It is understood and agreed that a high standard of attendance is
essential to an efficient plant operation. The Union pledges that it will
cooperate fully and will encourage its members to cooperate fully with
Management, both in maintaining good attendance records and in prompt
notification when absence is necessary.
99. Report of Absence: On the day of an absence, employees must notify the
immediate supervisor or Human Resource Department between the hours of 8:00 AM
and 9:30 AM unless this absence has been previously approved. Voice mail
messages are not an acceptable form of notification; the employee must contact
the supervisor or Human Resource department directly. Such notification will be
waived in unique cases where it is physically impossible for the employee to
contact the above. In such cases, it is the employee's responsibility to contact
the Human Resource Department as soon after 9:30 as is physically possible and
to provide a written doctor's note upon return to work. The employee, upon
providing notice of an absence for personal business, shall specify the period
of and reason for the absence. Failure to notify the Company on the first day of
absence will result in appropriate disciplinary action.
100. Leave Of Absence: Limited leave of absence for sufficient cause will be
granted by the Company, upon application, to employees who have completed their
probationary period. Requests for leave of absence must be made in writing on
the form provided for that purpose, and must be approved by the employee's
immediate supervisor, VP of Operations and the Director of Human Resources.
Refer to Appendix D for Leave of Absence Forms.
101. Seniority shall continue to accumulate during the approved leave of
absence; however, all such leaves are without pay and an employee on leave shall
not be entitled to any other benefit provided by the terms of this Agreement
unless eligibility for such benefits is otherwise expressly provided for in the
Agreement. When an employee has been granted a leave of absence for a specific
period of time, it will be the employee's responsibility to request an
25
<PAGE>
CVC Confidential Ratified 8/24/95
extension of such leave if additional time is required.
102. Subject to the conditions stipulated on this section, leaves of absence may
be granted under the following guidelines:
a) Leave of absence for personal business or vacation may be granted to
employees when justification satisfactory to management is presented and when
work schedules permit. An approved leave of absence for personal business shall
not exceed thirty (30) calendar days and an employee requesting such a leave
shall make his request a minimum of (5) work days in advance of the effective
date of the leave. An approved leave of absence for vacation purposes will be
marked "Vacation". When granted a personal leave of absence, you will be
expected to utilize all unused vacation time at the commencement of your leave.
Depending on the remaining time in your anniversary year, and with your
manager's approval, this requirement may be modified.
b) Leave of absence for personal health reasons, in no event to exceed
twelve (12) calendar months or any extension thereof mutually agreed to by the
parties, will he granted to employees when supported by satisfactory medical
proof supported by the employee. A request for an extension shall not be
unreasonably denied. An employee requesting a leave of absence for medical
reasons shall be subject to examinations by the Company physician if the Company
determines such an examination to be necessary. A leave of absence which is
granted for personal health reasons, shall be considered to be continuous if the
employee is sequentially placed on another leave for the same general condition
after working less than thirty (30) working days following completion of the
previous leave of absence. A leave of absence for maternity reasons is
considered a leave of absence for personal health reasons.
c) An employee on leave of absence for personal health reasons may return
to work prior to or at the expiration of such leave upon the release of their
personal physician and subject to the approval of the Company's physician, if
required. Such examinations to occur no later than the day before the return
from leave,
d) Leave of absence for extended time duty with the Local, District or
International Union or to any appointed or elected public office may be granted
to employees, either appointed or elected to fill such positions, for a period
not to exceed twelve (12) calendar months. No more than two (2) employees shall
be granted a leave of absence for this purpose during the same period of time.
e) When leaves of absence are granted, the employee, upon return to active
employment, will be returned to a job of like classification, if such a job
still exists and provided his/her seniority standing entitles him/her to the
position. However, if circumstances have eliminated such comparable jobs, the
employee will be reclassified to the most nearly comparable job for which he/she
is qualified and to which his seniority standing will entitle him/her.
f) When an employee falls to return to work at the expiration of the
approved leave of absence or accepts gainful employment during the leave of
absence, the employee will be terminated.
26
<PAGE>
CVC Confidential Ratified 8/24/95
g) Leave of absence for compensable injury and legal occupational disease
cases will be granted automatically for the full period of legal temporary
disability and seniority will accumulate for the full period of such leave.
h) Any employee who enters into active service in the Armed Forces of the
United States, as defined below, will be given a leave of absence for and will
accumulate seniority during such a period of service, and upon termination of
such service, shall be offered re-employment in their previous position, in line
with their seniority, at the current rate of pay for such work, unless the
circumstances have so changed as to make it impossible or unreasonable to do so,
in which event he/she will be offered such employment as may be available in
line with their seniority, on work which is similar to that which he/she was
doing before he/she left, at the current rate of pay for such work, provided
he/she has been honorably discharged, is physically able to do the work, and
reports for work within ninety (90) days after their discharge. As used in this
section, entrance into active service is defined as limited to:
1.) Having entered into such service under the terms of the
Selective Service Act of 1940 as amended
2.) or Entering into service under the Selective Service Act of 1948
3.) or Entering into service under the Universal Military Training
Act of 1951, as a member of the United States Army, United States
Navy, or United States Air Forces
4.) or Whose service is subject to the jurisdiction of the United
States Air Force, and whose entrance into such service cannot be
terminated by voluntary resignation.
XII. New Job Promotions, Posting, Bidding, Promotions
103. New Jobs: When new jobs arise which cannot be properly placed in
classifications which have been established previously, the Company will
establish new job classification and place within or above the wage structure. A
copy of the new classification and rate range shall be furnished to the Union.
a) Thereafter, within thirty (30) days from the effective date of such new
job classification, the Union may request a review of the rate change being
established on the new classification. When the Company and the Union have
mutually agreed on a rate range for the new job, such rate range, if different
from the one originally established by the Company, shall be effective, and all
hours worked within such a new job classification shall be paid accordingly.
b) When the parties, after a period of thirty (30) days, cannot agree
where a new job is to be inserted, the issue of the proper slotting of the job
may be submitted by either party to arbitration.
27
<PAGE>
CVC Confidential Ratified 8/24/95
c) Any dispute arising as to the proper classification of an employee or
employees as the result of a grievance claiming that new work should be
performed by a new job classification, will be subject to the grievance
procedure, including arbitration. Conversely, where the Company has decided that
a new job exists and the Union claims that the work should be slotted into an
existing classification the dispute may be made the subject of a grievance which
may be processed through the grievance procedure, including arbitration. This
section shall in no way authorize the arbitrator to establish or act on wage
rates.
104 Promotion:
a.). General Provisions: Employees may only bid or apply for an opening in
the same or higher labor grade than the classification in which they are
currently assigned. An employee may however, apply for a lower labor grade in
certain extenuating circumstances such as for medical reasons. If an employee
has been granted a change of regular classification under the provisions of the
Article and is later found to be not qualified to perform the work, the employee
will be disqualified and returned to their last previous regular classification,
seniority permitting. If the employee lacks sufficient seniority to return to
such regular classification, then the employee may be laid off or exercise
seniority rights in accordance with this Agreement. The employee will not be
permitted to again bid or apply for a promotion for a period of six (6) months.
b) Definitions:
1.) Regular Classification- An employee's regular classification is
that job classification to which he/she was last assigned by a)
hire, b) a successful bid or application, or c) a change by the
Company with employee's consent.
2.) Initial Opening- An initial opening is one created by a quit,
discharge, retirement, death or the requirement for an addition to
the current total work force in an existing or a new job
classification. An initial opening does not exist, however, so long
as an employee is laid off or working out of their regular
classification due to a reduction in workforce who holds such
classification as their regular classification.
3.) Secondary Opening- A secondary opening is one created by a
successful bid or application, the termination of a probationary
employee, the change of an employee's vacancy not specifically
defined as an initial opening. A secondary opening does not exist,
however, so long as an employee is laid off or working out of their
regular classification due to a reduction in force who holds such
classification as their regular classification.
c) The Company need not act on applications if an opening ceases to
exist.
105. Filling Openings:
a) An Initial Opening will be filled by a qualified employee who has bid
or applied
28
<PAGE>
CVC Confidential Ratified 8/24/95
for such opening. If there are two (2) or more qualified employees, the more
senior employee shall be awarded the opening.
b) A Secondary Opening will be filled by a qualified employee who has
applied for such opening. If there are two (2) or more qualified employees, the
more senior employee shall be awarded the opening.
c) If an opening, whether initial or secondary, cannot be filled through
the provisions of this section, it may be filed by the individual consent of an
employee or at the discretion of the Company. In any event if the opening is not
filled within a six month period after posting, a new posting must be made.
d) After each promotion, a probationary period will be observed; sixty
days for labor grades 4 through 12 or ninety days for labor grades 13 through
20. Refer to Article IX, Paragraph 85.
e) The Company will determine the size and composition of its workforce
and will determine when an opening exists. The Company need not act on bids or
applications if an opening ceases to exist after posting.
104. Posting:
a) An initial opening will be posted on the shop bulletin boards for a
period of three (3) consecutive working days, excluding Saturdays, Sundays and
Holidays. Such posting shall indicate the department, labor grade, job
classification, shift and rate of pay.
b) A secondary posting will not be posted.
105. Bidding: Employees who have completed their probationary period who desire
to bid on initial openings may do so, in writing, on forms designed and supplied
by the Company. Only those bids submitted within the three (3) days posting
period will be considered.
106. Promotion Application:
a) Employees who have completed their probationary period may make
application for either an initial or secondary opening by properly filling out
an application form designed and supplied by the Company and submitting it to
the Human Resource Department; refer to Appendix H.
b) An employee may file a promotion application at any time. Applications
will remain on file until December 31 of each year, at which time they will
become inactive. Employees desiring to remaining in consideration for promotions
must file new applications after January 1. Applications may be withdrawn at any
time. Applications of file by any employee will not be considered if the
employee is present in the plant the three days that the job is posted.
29
<PAGE>
CVC Confidential Ratified 8/24/95
XIII. Bulletin Boards, Safety And Health, Anti-Discrimination, Bulletin Boards
107. Bulletin Boards:
a) The Company will provide bulletin boards which may be used exclusively
by the Union for posting notices approved by the designated Management
Representative and restricted to:
1.) Notices of Union recreational and social affairs.
2.) Notices of Union elections.
3.) Notices of Union appointments and results of Union elections.
4.) Notices of Union meetings.
5.) Notices of official Union business.
b) There shall be no other posting or distribution by employees of
pamphlets, advertising, political matter, notices, or any kind of literature
upon the Company's property other than as herein provided.
108. Safety And Health
a) The Union may at any time draw safety hazards to the attention of the
Management. The Company will not require employees to work under conditions
which are unsafe or injurious.
b) Refusal of an employee to follow safety rules and regulations or to use
available safety devices and equipment when instructed to, will subject him/her
to disciplinary action up to and including discharge.
c) The Company shall continue to make reasonable provisions for the safety
and health of the employees during the hours of their employment. Both the Union
and the Company agrees that they will cooperate with each other in all matters
concerning the health and safety of the employees. The Company shall provide
such protective equipment as it deems necessary to protect the employees from
injury and sickness.
d) Effective January 1, 1989 the wearing of safety shoes by all bargaining
unit employees is mandatory during working hours. The Company will pay the total
cost ($100.00 maximum) for the replacement of safety shoes as required (manager
approval) but not more often than every 18 months. Only MSI approved shoes will
be allowed and the company will provide a list of local stores where these shoes
are available.
e) A Safety Committee, with two representatives from the bargaining unit,
will meet quarterly to conduct safety audits of the manufacturing areas.
109. Anti-Discrimination: CVC and Local 342 agree they will not discriminate in
hiring or treatment of employees in their training, upgrading, promotion,
transfer, layoff, discipline, discharge, or otherwise because of race, color,
creed, national origin, sex, age, marital, handicapped, or Veteran status, or
membership in the Union.
30
<PAGE>
CVC Confidential Ratified 8/24/95
XVI Bereavement Pay, Jury Duty, Rest Periods, Wash-Up Time
110. Bereavement Pay
a) When death occurs in an employee's immediate family, defined as:
current spouse, parent, parents of current spouse, child, brother, sister,
step-children, step parents or any dependent person living in the employee's
home, the employee, on request, will be excused for any of the first three (3)
regularly scheduled working days (excluding Saturdays and Sundays); or in the
case of seven day operations, excluding the sixth and seventh work days of the
employee's scheduled work week immediately following the date of death.
b) In the case of the death of an employee's sister-in-law, brother-in-law
or grandparents, he/she will, on request, be excused for one (1) regularly
scheduled working day coincident with the day of the funeral.
c) After making written application, therefore, the employee shall receive
pay for any scheduled hours of work up to eight (8) per day for which the
employee is excused (excluding Saturdays and Sundays; or in the case of seven
day operations, employee's scheduled work week) provided he/she attends the
funeral and provides satisfactory evidence of their attendance to the Company.
d) Payment shall be made at the employee's regular straight time hourly
rate (excluding overtime and night shift premium) as of their last day worked.
Time thus paid will not be counted as hours worked for purposes of overtime.
111. Jury Duty Service
a) Any employee with one or more years of seniority who is called to and
reports for jury duty, shall be paid by the Company for each day partially or
wholly spent in performing jury duty; the employee otherwise would have been
scheduled to work for the Company and does not work, an amount equal to the
difference between the employee's regular straight time hourly rate exclusive of
shift premium, overtime premium and any other premiums for the number of hours
up to eight (8) that he/she otherwise would have been schedule to work and the
daily jury duty fee paid by the court (not including travel allowance or
reimbursement of expenses).
b) In order to receive payment under this section, an employee must give
the Company prior notice that he/she has been summoned for jury duty and must
furnish satisfactory evidence that jury duty was performed on the days for which
they claim such payment. The provisions of this section are not applicable to an
employee who, without being summoned volunteers for jury duty.
c) Employees working the second or third shift who are summoned and
perform jury duty and elect not to report to work those days, will receive jury
duty pay.
112. Rest Periods: There shall be two (2) fifteen (15) minute rest periods with
pay during each regular shift at a stated time as defined by the Company and
consistent with production
31
<PAGE>
CVC Confidential Ratified 8/24/95
requirements.
113. Wash Up And Clean-Up Time: There shall be two (2) five (5) minute wash-up
periods, one (1) before lunch period and one (1) before quitting time of each
shift for the purpose of personal wash up.
XV. Representation
114. The Union shall select a bargaining committee to be composed of not more
than four (4) employees, which will include the President and Chief Steward. The
duties of the bargaining committee shall be to negotiate the Collective
Bargaining Agreement with the Company.
115. The union shall also select stewards to represent the employees in the
bargaining unit. The number of stewards and the department steward assignments
shall be determined annually by mutual agreement of the parties. In the annual
determination of the number of stewards, the ratio of stewards to employees
shall not exceed one for each thirty (30) employees in the bargaining unit who
are actively at work. Such redetermination shall be completed sufficiently prior
to May 31 of each year to permit the Union to hold the necessary steward
elections and advise the Company of the new stewards by June 1 of each year. One
employee shall be designated by the Union as the Chief Steward, which position
is an elective office.
116. In the event a second (2nd) or third (3rd) shift is started, a steward will
be permitted for the shift even though less than thirty (30) employees may be
assigned to the shift. However, a second steward will not be provided until and
unless the ratio of one (1) steward to thirty (30) employees is present on the
shift.
117. All stewards and other union officials shall be selected from among the
employees in the bargaining unit. In conjunction with the grievance procedure,
each steward shall act only for the employees within their jurisdiction. It is
agreed that no probationary employee shall be eligible to serve as a Union
Representative in any capacity.
118. The names of the members of the bargaining committee and the names of the
Chief Steward and stewards shall be supplied to the Company President, VP of
Operations and Director of Human Resources at the time of their taking office,
and the Company shall recognize such personnel on the day after receipt of such
certification. The Company shall also be advised in writing of changes in such
officials.
119. Authorized non-employee representative of the Union shall be allowed access
to the Company's premises at reasonable times during business hours and subject
to reasonable restrictions against interference with production activities, for
the purpose of carrying on such Union business as from time to time may be
necessary. Such representatives shall request such access from the designated
Management Representative.
32
<PAGE>
CVC Confidential Ratified 8/24/95
120. Employees shall not leave their work stations to communicate with Union
representatives with reference to the purposes authorized by this Agreement
until they have obtained permission from their supervisor and identified the
purpose of their leaving their work stations.
121. Employees may be absent from work on Union business during their regular
shifts without pay when prior arrangements are made with the designated
Management Representative, in writing, by an officer of the union, with the
understanding that the total absence from work under this paragraph will not
exceed six (6) in number at any one time, or a number mutually agreed to by the
parties in each instance. Where the employee works a portion of their shift
before leaving the plant, a pass must be obtained and shall be granted.
122. The Chief Steward and the President shall each be allowed twentyfive (25)
hours per month, noncumulative, during working hours and without loss of pay,
for Union related business such as recording overtime schedules, consultation on
Union-Company related problems, and grievances. The stewards authorized shall
each be allowed twelve (12) hours per month, non-accumulative, during working
hours and without loss of pay, for Union related business such as recording
overtime schedules, consultation on the Union Company related problems, and
grievances. The Union Recording Secretary shall be allowed two (2) hours per
month, noncumulative, during working hours and without loss of pay for Union
related business such as posting notices, etc. The Union Financial Secretary
shall be allowed three (3) hours per month for Union related business.
123. Any time, by the Bargaining Committee, spent in meetings with Management
which are outside the normal negotiations and have been requested by the
Company, will be paid for by the Company.
124. Time spent in Step 3 of the Grievance Procedure by the President, Chief
Steward and the applicable steward shall be paid by the Company. Such time will
be held to the minimum necessary time required to settle or process the
grievance.
125. Any time spent on Union business by the representatives listed above, which
exceeds the pay limitations of the Company for such matters, shall be paid for
by the Union local.
126. Before leaving their work stations for purpose of the activities authorized
by this Agreement, the Stewards, Chief Steward and President shall request and
will receive a written pass for Union business from their supervisor authorizing
them to leave their work station. At the time of the request, they shall
identify to the supervisor the purpose for their leaving. They shall not,
however, be permitted to go on Union business until a substitute worker is
provided in their place, if one is required. No undue delay shall occur in
providing a substitute.
127. Upon entering a department other than their oven which they enter for
purposes of the activities authorized by this Agreement, they shall state the
reason for their business to the supervisor of the department and show him/her
their pass for Union business and obtain his signature on the pass before
talking with any employee in said department. The Union agrees to hold to a
minimum all time spent on Union business.
33
<PAGE>
CVC Confidential Ratified 8/24/95
128. The President and the Chief Steward shall have top seniority in the event
of a layoff for so long as they continue to hold such office. Area stewards
shall have top seniority in the areas under their jurisdiction in the event of
layoff and for so long as they continue to hold such office.
129. Members of the Union Bargaining Committee not already covered by top
seniority provisions will have top seniority in the event of a layoff four (4)
months prior to the expiration of the contract and such top seniority will
continue until the contract is ratified.
XVI. Short-Term Military Pay
130 An employee with one or more years of seniority who is called to and
performs short term active duty of thirty (30) days or less, including annual
active duty for training, as a member of the United States Armed Forces Reserve
or National Guard shall be paid by the Company for each day partially or wholly
spent in performing such duty, if the employee otherwise would have Been
scheduled to work for the Company and does not work, an amount equal to the
difference, if any, between (i) the employee's regular straight time hourly rate
on the last day worked, exclusive of shift, overtime and any other premiums for
the number of hours up to eight (8) that he/she otherwise would have been
scheduled to work and (ii) their daily military earnings (including all
allowances except for rations, subsistence and travel). The Company's obligation
to pay an employee for performance of military duty under this Article is
limited to a maximum of ten (10) scheduled working days in any calendar year.
131. In order to receive payment under this Article, an employee must give the
Company prior notice of such military duty, and upon their return to work, must
furnish the Company with a statement of their military pay while on such duty.
XVII Duration Of Agreement
132. From time to time issues may arise as a result of the changing nature of
work at CVC Products, Inc. which may best be addressed by negotiations between
CVC and the Union. The parties may mutually agree to open negotiations which
they deem appropriate under this Collective Bargaining Agreement.
133. The Company and the Union, for the life of this Agreement, agree that the
other shall not be obligated to bargain collectively with respect to any subject
of matter referred to or covered in this Agreement, even though such subject or
matter may not have been within the knowledge or contemplation of either or both
of the parties at the time that they negotiated or signed this Agreement.
134. This Agreement shall remain in full force and effect until midnight,
October 31,1998, and shall thereafter be continued in full force and effect from
year to year after October 31,1998 unless notice of termination or a desire to
modify or change this Agreement is given in writing by either party at least
sixty (60) days before the expiration date. Upon receipt of such notice, a
conference shall be arranged for within thirty (30) days. This provision shall
not be interpreted
34
<PAGE>
CVC Confidential Ratified 8/24/95
to require a meeting prior to sixty (60) days before the expiration date of this
Agreement.
XVIII Company Benefits
Memorandum Of Agreement Attached hereto (refer to Appendix A) are brief outlines
of the Health Insurance coverage, Life Insurance coverage and Pension Program
applicable to the bargaining unit employees at CVC Products, Inc.: it is not
intended that the entire contract language for all these programs be included,
however, the highlights of the various programs are provided:
135 Health Insurance:
a) Employees are covered by a health benefit plan, the particular plan
being chose by the employee (currently Blue Cross/Blue Shield with Full
Outpatient Rider and Preferred Blue Million, Blue Choice, Preferred Care, and
Genessee Valley Group Health Association). Coverage is effective the first of
the month following employment or thirty (30) days after employment if you are
hired at the end of the month. Coverage terminates the 1st of the second month
following termination unless you are eligible for COBRA. Refer to the Human
Resource Department for further details.
b) Employees hired after 11/7/91, are required to share the cost of
medical insurance by paying 50% of the premium; employees will also share 50% of
the cost of all future premiums. The Company pays 100% of the medical insurance
premiums for bargaining unit employees hired prior to 11/8/91.
136. Severance Pay
a) In the event the CVC Products plant is closed or in the event a product
line is discontinued at that plant or is transferred to another plant of the
Company which results in employees being laid off, the effected employees shall
be entitled to severance pay provided they meet the following eligibility
requirements.
1.) The employee has a minimum of 3 years seniority at the time of
layoff.
2.) The employee has exercised all his seniority rights under
paragraphs 91 through 92 of this Agreement.
3.) The employee must notify the Company in writing within three (3)
working days after notification of layoff of their election to take
severance pay.
b) Employees accepting severance pay shall forfeit all their seniority
rights and shall not be subject to recall by the company.
35
<PAGE>
CVC Confidential Ratified 8/24/95
c) Any employee who is 65 years or older at the time of layoff and is
eligible for retirement, shall not be eligible for severance pay. The severance
pay provided herein shall not be applicable to voluntary quits, discharge or
economic layoffs.
d) The severance payment referred to above shall be equal to the
employee's total years of seniority multiplied by $350.00.
36
<PAGE>
CVC Confidential Ratified 8/24/95
135 Signatures
In witness hereof the parties hereto have caused their names to be subscribed by
their duly authorized officers and representatives this day of , 1995.
For: For:
Local 342 International Union CVC Products, Inc.
of Electronic, Electrical, Rochester New York
Salaried, Machine & Furniture
Workers, AFL-CIO
/s/ Ernest Daniels /s/ Christine Whitman
- ---------------------- ----------------------
Ernest Daniels Christine Whitman
/s/ Robert Hemmerick /s/ Valerie Schultz
- ---------------------- ----------------------
Robert Hemmerick Valerie Schultz
/s/ Christopher Frank /s/ Richard Chicotka
- ---------------------- ----------------------
Christopher Frank Richard Chicotka
/s/ Robert Kimmel /s/ Phillip Hartman
- ---------------------- ----------------------
Robert Kimmel Phillip Hartman
For:
International Union of Electronic, Electrical, Salaried.
Machine & Furniture Workers, AFL-CIO
/s/ Jean Zimber
- ----------------------
Jean Zimber
37
<PAGE>
CVC Confidential Ratified 8/24/95
Appendix 1
Disability Coverage / Health Insurance
Short Term
Each employee is covered for disability arising from illness or accident for a
maximum of 26 weeks for each single cause of disability. Benefits are paid at
two-thirds of employee's base salary to a maximum of $400.00 per week.
Eligibility starts thirty days after hire. CVC follows New York State laws
pertaining to the waiting period on all types of disabilities.
Long Term
The long term plan will provide a base benefit for all employees of 60% of the
first $2500 of income up to a maximum of $1500 per month. The benefits will
begin after a 180 day waiting period and will run to age 65, if necessary. There
will be an optional plan where the employee can increase this income benefit at
a employee cost
Blue Cross/Blue Shield, Blue Choice/GVGHA, Preferred Care
Employees may enroll in one of the above medical insurance programs. Refer to
the Human Resource department for full details. Coverage begins 30 days after
your hire date. Coverage terminates on the last day worked, unless you are
eligible for COBRA. See the Human Resource department for further details.
Prescription Drug
Prescription drug purchases are covered under the chosen health/medical plan.
Dental Plan
The Company will provide each employee with dental coverage for a single plan.
If the employee wants dependent coverage, they must elect to pay an additional
amount currently at $2.88 per week. The dental plan will provide 100 percent for
preventive services, 80 percent for basic services, and 50 percent for major
services. There will be a $50 deductible, which will be waived for preventive
services. There will be a $1,000 calendar year maximum per participant and three
time the $50 deductible per family. This plan does not have orthodontic
coverage. Coverage begins 30 days after your hire date. Coverage terminates on
the last day worked, unless you are eligible for COBRA. See the Human Resource
department for further details.
Life Insurance
Each employee is provided with a $10,000 non-contributory group life insurance
coverage. This coverage may be increased by $8,000 for total coverage of
$18,000. The cost of the additional coverage is shared by the employee and the
Company. In addition, the plan provides for an accidental death and
dismemberment benefit which is equal to the amount of the coverage.
38
<PAGE>
CVC Confidential Ratified 8/24/95
Pension Plan For Hourly Employees Of CVC Products, Inc.
The pension plan for hourly employees was "frozen" effective September 30, 1991.
No future benefits will accrue to employees after that date. All benefits
accrued prior to October 1, 1991 remain intact and unchanged. The CVC Products,
Inc. hourly and salaried employees pension plans have been merged effective
September 30, 1991. The merged plan will continue in existence until it is fully
funded. The Company is responsible for the full funding of the plan. When the
plan is fully funded, it is expected that all benefits will be distributed or
transferred to another plan. The Company is responsible for the termination of
the pension plan, subject to the approval of the IRS and/or the Department of
Labor, and will hold the Union harmless for any action that the Company may take
which results in any type of protest which may be brought by any pension plan
participant.
401 (k) Plan: This language provides only a highlight of the 401(k) plan. The
plan document shall control in the event of any disputes. A copy of the plan can
be obtained in the Human Resource department for additional details about this
plan.
Effective October 1, 1991, the Company adopted a 401 (K) Profit Sharing Plan for
all employees. The plan will be administered by the Chief Financial Officer. A
401 (K) committee consisting of a minimum of 3 employees each from the
bargaining unit and the non-bargaining unit will meet quarterly to review any
changes or modifications to the plan which are not required by law.
Eligible employees can elect, through payroll deduction, to contribute up to 4%
of his/her pay into the basic savings portion of the plan. The Company will make
a matching contribution at a rate of $.25 on $1.00 on the first 4% that an
employee contributes. The matching contributions are made each pay period.
Any eligible employee may further elect to contribute an additional 11% of
his/her pay beyond the original 4% contribution (for a maximum of 15%). However,
he/she does not receive an employer match on the additional contributions
At the end of each fiscal year (September), the Company will determine the
amount, if any, of additional, discretionary contribution to be made to the plan
(refer to the official plan document). The CVC contributions to your 401(K)
account are subject to change The discretionary contribution, if any, will be
made by December 15 of the year.
Retirement Benefits
In addition to the pension, employees who retire on or before November 1, 1998,
will cost-share 35% of the medical insurance premium cost; the Company will pay
65%. Employees who retire after November 1, 1998 will cost-share the medical
insurance premium equally with the Company; each paying 50%. Additionally, the
Company will provide thirty-five hundred dollars ($3500.00) of life insurance at
no cost to the retiree.
39
<PAGE>
CVC Confidential Ratified 8/24/95
Appendix B
Lay-Off Procedure
The personnel affected will be informed as a group with the Union President,
Chief Steward and appropriate Area Steward present.
Exit interviews will be held on an individual basis with proper Union
representation present This exit interview will include:
1.) Completion of the Bump and Recall form.
2.) Scheduling of interviews for positions listed on the Bump and Recall
form.
3.) Interviews with the HR department for full explanations of COBRA, PAA,
vacation, etc.
When the Bump and Recall interviews are completed a copy of the result of the
interviews will be provided to the individual and the Area Steward.
Refer to the chart below for separation coverage:
Accrued Accrued Unused Unused Dental Medical
Type of Separation Vacation PAA Vacation PAA Ins. Ins.
- --------------------------------------------------------------------------------
Indefinite Lay-off yes* yes* yes yes COBRA** COBRA**
- --------------------------------------------------------------------------------
Retirement yes yes yes yes no 50%***
- --------------------------------------------------------------------------------
Death yes yes yes yes no no
- --------------------------------------------------------------------------------
Quit yes no yes no no no
- --------------------------------------------------------------------------------
Discharge no no yes no no no
- --------------------------------------------------------------------------------
* Unless otherwise requested accrued vacation and PAA will be paid on the
anniversary date. Employees laid off within 6 months of hire date are not
eligible for vacation and/or PAA allowances.
** COBRA is an elected benefit
*** CVC will provide 65% of the medical insurance premium to employees who
retire prior to 11/1/98.
40
<PAGE>
CVC Confidential Ratified 8/24/95
Appendix C
Disciplinary Actions: NOTE: Compliance with all present and future Corporate
policies is a condition of employment for all CVC employees. Adherence to
policies and procedures is mandatory; violation will result in the appropriate
disciplinary action.
Suspension pending discharge: The following actions, but not limited to these
offenses, will lead to immediate suspension pending discharge:
1.) Falsification of personnel or other records.
2.) Theft or misappropriation of property of other employees or of CVC.
3.) The use, possession, distribution, sale or offering for sale of illegal
drugs on CVC property.
4.) Sabotage, abuse, misuse, or deliberate destruction of the property, tools,
or equipment belonging to CVC or to other employees.
5.) Reporting to work while under the influence or in an unsafe condition.
Please note that substance abuse testing will be required after just
reason/cause is shown. Test expense will be paid by CVC.
6.) Physical abuse, assault or fighting.
7.) Insubordination-refusal to obey direct orders of Supervisory and/or
Management staff.
8.) Possession of weapons on CVC property without permission.
9.) Possession or consumption of any alcohol or controlled substance on CVC
property.
10.) Harassment; the use of abusive language, threats, intimidation or coercion
towards anyone on CVC property. This includes interfering with others by
distracting attention through unnecessary noise, throwing objects or other
means of disruption.
11.) Flagrant disregard for CVC Safety Rules, Clean Room Practices or other
industry standard safety practices. Refer also to Appendix J & K.
Oral Warning, 1st Written, 2nd Written, Suspension, Discharge: The following
offenses, but not limited to these offenses, will lead to disciplinary action
including Oral Warning, 1st Written, 2nd Written, Suspension, and Discharge:
12.) Failure to comply with current smoking and/or fire regulations.
13) Restriction of output, making unnecessary scrap or unauthorized use of
machines, tools or equipment.
41
<PAGE>
CVC Confidential Ratified 8/24/95
14.) Leaving CVC property without permission during work hours, wasting time or
loitering.
15.) Immoral or indecent conduct.
16.) The making of false or malicious statements concerning any individual at
CVC, the Company or its products.
17) Unauthorized use of Company phones or pay phones during work hours.
18.) Unauthorized distribution of literature or other printed matter of any
description on Company property.
19) Unauthorized posting of, or removal of notices, signs, or writing in any
form on bulletin boards or other Company property.
20.) Unauthorized absences
21.) Disregard for CVC Safety Rules, Clean Room Practices or other industry
standard safety practices. Refer also to Appendix J & K.
42
<PAGE>
CVC Confidential Ratified 8/24/95
Appendix D Bargaining Unit Employee Leave of Absence Form
- --------------------------------------------------------------------------------
Name: Reason for Request (check 1) Return Date:
- --------------------------------------------------------------------------------
Street Address: Personal Business Leave Date:
- --------------------------------------------------------------------------------
City, State, Zip: Personal Illness Hire Date:
- --------------------------------------------------------------------------------
Telephone: Personal Illness - extension Dept:
- --------------------------------------------------------------------------------
Employee No: Vacation - extension Classification:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Vacation time available:
- --------------------------------------------------------------------------------
Personal time available:
- --------------------------------------------------------------------------------
Employee Signature: _________________________________ Date: ______________
Management Approval/Denial:
- --------------------------------------------------------------------------------
Title Signature Approve Deny Date
- --------------------------------------------------------------------------------
Supervisor:
- --------------------------------------------------------------------------------
VP of Operations:
- --------------------------------------------------------------------------------
Director of HR:
- --------------------------------------------------------------------------------
General:
All Leaves of Absence are subject to the provisions of the collective bargaining
agreement and the conditions of this application.
Only employees who have completed the probationary period will be granted a
leave of absence. Applications for a Leave of Absence must be submitted for
approval a minimum of five (5) working days in advance of the requested leave
date.
Employees who fail to report to work at the expiration of the leave, or fails to
request an extension or accepts gainful employment during a leave will be
considered a voluntary quit.
Leaves of Absence and Extensions to Leaves of Absence must be requested by the
employee in writing, in advance per the above.
Personal Business Leaves shall not exceed thirty (30) days.
Vacation Leaves will not be granted until all available vacation allowance has
been utilized.
Personal Illness Leaves:
Medical statements covering the period of each Personal Illness Leave and each
Personal Illness Leave Extension must be provided to the Human Resource
department prior to final approval of such leaves. The employee must submit a
request for leave with these medical records; a statement from the doctor is not
sufficient to grant or extend such leaves.
Employees on Personal Illness Leave and/or Personal Illness Leave Extension may
return to work prior to the expiration of the leave only upon release by their
doctor and the approval of the Company doctor, if required. Employees returning
from Personal Illness Leave and/or Personal Illness Leave Extension must report
to the HR department prior to reporting to their supervisor for assignment of
duties. A release from the Company doctor is required for all absences in excess
of three days.
43
<PAGE>
CVC Confidential Ratified 8/24/95
Appendix D FMLA Absence Form
Employer response to Employee U.S. Department of Labor
Request for Family or Medical Leave Employment Standards Administration
(Optional use form - see 29 CFR Wage and Hour Division
ss.525.301(c))
(Family and Medical Leave Act of 1993)
(Date)
TO:
----------------------------------------------
(Employee's name)
FROM:
---------------------------------------------
(Name of appropriate employer representative)
SUBJECT: Request for Family/Medical Leave
On ________, you notified us of your need to take family/medical leave due to:
(date)
|_| the birth of a child, or the placement of a child for adoption or foster
care; or
|_| a serious health condition that you need care for; or
|_| a serious health condition affecting your |_| spouse, |_| child, |_| parent,
for which you need to provide care.
You notified us that you need this leave beginning on ____________ and that you
expect leave to continue until on or about __________. (date)
(date)
Except as explained below, you have a right under the FMLA for up to 12 weeks of
unpaid leave in a 12-month period for the reasons listed above. Also, your
health benefits must be maintained during any period of unpaid leave under the
same conditions as if you continued to work, and you must be reinstated to the
same or an equivalent job with the same pay, benefits, and terms and conditions
of employment on your return from leave. If you do not return to work following
FMLA leave for a reason other than: (1) the continuation, recurrence, or onset
of a serious health condition which would entitle you to FMLA leave; or (2)
other circumstances beyond your control, you may be required to reimburse us for
our share of the health insurance premiums paid on your behalf during your FMLA
leave.
This is to inform you that: (check appropriate boxes; explain where indicated)
1. You are |_| eligible |_| not eligible for leave under the FMLA.
2. The requested leave |_| will |_| will not be counted against your annual
FMLA leave entitlement.
3. You |_| will |_| will not be required to furnish medical certification of
a serious health condition. If required, you must furnish certification by
________ (insert date)(must be at least 15 days after you are notified of
this requirement) or we may delay the commencement of your leave until the
certification is submitted.
4. You may elect to substitute accrued paid leave for unpaid FMLA leave. We
|_| will |_| will not require that you substitute accrued paid leave for
unpaid FMLA leave. If paid leave will be used the following conditions
will apply: (Explain)
5.(a) If you normally pay a portion of the premiums for your health insurance,
these payments will continue during the period of FMLA leave. Arrangements
for payment have been discussed with you and it is agreed that you will
make premium payments as follows: (set forth dates, e.g., the 10th of each
month, or pay periods, etc. that specifically cover the agreements with
the employee.)
(b) You have a 30-day grace period in which to make the payment. If payment
has not been made timely, your group health insurance may be cancelled,
or, at our option, we may pay your share of the premiums during the FMLA
leave, and recover these premiums from you upon your return to work.
(c) We |_| will |_| will not pay your share of the premiums for your health
insurance while you are on leave.
(d) We |_| will |_| will not do the same with other benefits (e.g., life
insurance, disability insurance, etc.) while you are on FMLA leave. If we
do, when you return from leave you will be expected to reimburse us for
the payments made on your behalf.
6. You |_| will |_| will not be required to present a fitness-for-duty
certificate prior to being restored to employment. If such certification
is required but not received, your return to work may be delayed until
such certification is provided.
7(a). You |_| are |_| are not a "key employee" as described in ss.825.218 of the
FMLA regulations. If you are a "key employee," restoration to employment
may be denied following FMLA leave on the grounds that such restoration
will cause substantial and grievous economic harm to us. (Explain (a)
and/or (b) below.)
8. You |_| will |_| will not be required to furnish us with periodic reports
of your status and intent to return to work every 30 days while on FMLA
leave.
9. You |_| will |_| will not be required to furnish recertification every 30
days relating to a serious health condition. (Explain below, if
necessary.)
- --------------------------------------------------------------------------------
Form WH-381
October 1993
44
<PAGE>
CVC Confidential Ratified 8/24/95
Appendix E Employee PAA I Vacation Request Form
- --------------------------------------------------------------------------------
Name: Reason for Request (check 1) Return Date:
- --------------------------------------------------------------------------------
Street Address: Vacation 1st Absence Date:
- --------------------------------------------------------------------------------
City, State, Zip: Personal Time Hire Date:
- --------------------------------------------------------------------------------
Telephone: Dept:
- --------------------------------------------------------------------------------
Employee No: Classification:
- --------------------------------------------------------------------------------
Employee Signature: ___________________________________ Date: __________
- --------------------------------------------------------------------------------
Vacation time available:
- --------------------------------------------------------------------------------
Personal time available:
- --------------------------------------------------------------------------------
Management Approval/Denial:
- --------------------------------------------------------------------------------
Title Signature Approve Deny Date
- --------------------------------------------------------------------------------
Supervisor:
- --------------------------------------------------------------------------------
VP of Operations:
- --------------------------------------------------------------------------------
Director of HR:
- --------------------------------------------------------------------------------
45
<PAGE>
CVC Confidential Ratified 8/24/95
Appendix F Union Time Request Form
Date:
Time departing department:
- --------------------------------------------------------------------------------
Name:
- --------------------------------------------------------------------------------
Union Office held:
- --------------------------------------------------------------------------------
Request: provide department, individual to be consulted:
Supervisor's authorization # 1:
(supervisor of department union official works in)
Supervisor's authorization # 2:
(supervisor of department entered for consultation)
Time returning to department:
- --------------------------------------------------------------------------------
Union time available:
- --------------------------------------------------------------------------------
Union time used:
- --------------------------------------------------------------------------------
Union time remaining:
- --------------------------------------------------------------------------------
Original: HR Department
46
<PAGE>
CVC Confidential Ratified 8/24/95
Appendix G Disciplinary Action Form
Date:
Employee Name:
Description Of Infraction:
Level Of Discipline: Oral Warning
1st Written
2nd Written
3 Day Suspension Date: To Date:
Discharge:
Supervisor:
Retention: This disciplinary action will be held in the employee file for a
period of 24 months from the above date.
Original: Employee File
cc: VP Of Operations
Director Of HR
Supervisor
Employee
Steward
Chief Steward
47
<PAGE>
CVC Confidential Ratified 8/24/95
Appendix H Promotion Application
Employees wishing to apply for future promotional opportunities must submit
completed form with current resume to HR Department. Applications may be
submitted at any time and will expire on the last day of the calendar year;
employees are responsible for updates to all applications.
Name:
Department:
Position applied for:
Qualifications:
Education:
Documented Cross-training:
Experience:
48
<PAGE>
CVC Confidential Ratified 8/24/95
Appendix I Bump & Recall Form
- --------------------------------------------------------------------------------
Date: Seniority Date:
- --------------------------------------------------------------------------------
Name: Employee No.
- --------------------------------------------------------------------------------
Address: Classification:
- --------------------------------------------------------------------------------
Wage Grade:
- --------------------------------------------------------------------------------
Telephone: Shift:
- --------------------------------------------------------------------------------
Other: Layoff date:
- --------------------------------------------------------------------------------
Seniority rights are available to the following job classifications:
- --------------------------------------------------------------------------------
Classification Wage Grade Shift
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
I wish to exercise bumping rights or be recalled to the following positions,
(listed in order of preference):
- --------------------------------------------------------------------------------
Classification Wage Grade Shift
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
It is understood that if recalled to the regular classification or any other
classification listed on this form and refuse such recall or fail to respond
this action will be considered as a voluntary quit.
It is further understood that management has the responsibility of determining
the qualifications of individuals for all classifications and that records of
performance, interviews and/or tests may be used to determine the qualifications
for the above listed positions. If unable to meet the required qualifications a
layoff will occur.
It is further understood that the listed classifications may be amended by
submitting a new form to the HR department.
- --------------------------------------------------------------------------------
Employee signature:
- --------------------------------------------------------------------------------
Supervisor signature:
- --------------------------------------------------------------------------------
HR signature:
- --------------------------------------------------------------------------------
original: HR
cc: Employee, Supervisor, Chief Steward
49
<PAGE>
CVC Confidential Ratified 8/24/95
Appendix J CAR Policy
Compliance with this and other CVC policies is a condition of employment for all
employees. Failure to comply will lead to disciplinary action including
discharge.
Access:
Access is restricted to necessary personnel; those essential to the build and
test functions
Entry must be made through the gowning area
Gowning Requirements:
The following must be worn by all personnel entering the CAR:
Disposable shoe covers or clean room sneakers*
Disposable latex, powder-free gloves**
Disposable head covers
Lab coats
* Clean room sneakers must be removed when leaving the CAR to enter other parts
of the factory, to enter the office areas or to leave the building.
** Touching any vacuum surface with ungloved hands is considered a flagrant
violation of Clean Room Practices and is subject to suspension pending
discharge.
50
<PAGE>
CVC Confidential Ratified 8/24/95
Appendix K Safety & Health Rules
The personal safety and health of each employee of CVC Products, Inc., is of the
utmost importance. We maintain a health and safety program conforming to the
best practices of similar manufacturing environments and all pertinent
regulations.
To be successful, such a program must embody proactive attitudes toward injury
and illness prevention on the part of both management and employees. It also
requires cooperation in all health and safety matters; between managers and
employees and between co-workers. Through mutual cooperation CVC Products can
establish and maintain a safety record in the best interest of all.
Our objective is to provide a health and safety program that will minimizes
on-the-job-accidents and injuries. This health and safety program includes:
A program of health and safety inspections to eliminate unsafe working
conditions or practices; to correct any health hazards; and to comply fully with
the health safety standards for every function.
Providing mechanical and physical safeguards.
Providing health and safety training to all employees.
Providing necessary personal protective equipment and instructions for its use
and care.
Prompt and thorough investigation of every accident to determine what caused it
and to take corrective action to prevent recurrence.
Enforcement of the CVC Products Inc. health and safety rules
Health and Safety Rules
The Health and Safety Rules contained herein are supplementary to applicable
Federal, State and local statutes, regulations, laws and ordinances. In the
event of variance, the more strict requirement shall apply
General
All employees must know and understand all safety rules and procedures that are
applicable to their work and location
All employees are required to cooperate with these rules as a condition of
employment.
All employees are expected to use proper care in the performance of work.
All employees are expected to be watchful for the safety of others.
51
<PAGE>
CVC Confidential Ratified 8/24/95
All visitors to CVC Products, Inc. must sign in at the reception desk to obtain
a visitor's badge and must be accompanied at all times. Employees are expected
to direct all visitors to the reception area.
Injuries/Illness
Immediately report all injuries to your WGL and/or manager. All first aid
treatments performed must be followed up by a competent medical authority. This
responsibility lies with the injured person. If you feel ill or if you believe
someone working with you is ill, notify your manager immediately.
All accidents, injuries and illness' which require medical treatment by an
external facility must be reported to Payroll & Benefits within 1 working day.
Refer to CVC Employee Accident/Injury/Illness Report.
Wearing Apparel
Clothing appropriate to the work being performed will be worn at all times.
Shorts are not permitted in the manufacturing areas.
Gloves shall not be worn when operating machines with revolving spindles and/or
tools such as lathes, milling cutters and boring mills, drill presses, etc.
Loose or ragged clothing and chains will not be permitted around moving
machinery.
Safety shoes are to be worn by all manufacturing personnel and employees whose
regular job function requires them to be on the manufacturing floor.
Refer to the CVC Products, Inc. CAR Policy for gowning requirements within the
Clean Assembly Rooms
Eye Protection
It is mandatory for all employees of CVC Products Inc. to wear safety glasses
whenever they are in the manufacturing areas. The first pair of safety glasses
(plain) will be provided by the company; CVC Products Inc. is not responsible
for the cost of the eye examination. You must obtain an Empire Vision voucher
from the HR department to take with you when ordering safety glasses.
Housekeeping
Good housekeeping requires keeping all items in their proper place and not
allowing unnecessary articles to lie around. All employees are expected to
cooperate in this effort; remember, a clean work area is a safe area.
52
<PAGE>
CVC Confidential Ratified 8/24/95
Place refuse in the trash containers that are provided.
Recyclable materials must be placed in the appropriate containers.
Scrap metals must be placed in the provided containers.
Oil, grease, water or any other material that is spilled or collects on the
floor, stairs, walk ways, etc. must be cleaned up immediately; contact the
Facilities department for assistance.
All walkways, aisles, steps and emergency exits must be kept clean and
unobstructed.
Access to emergency devices, such as Fire Extinguishers, control valves,
electrical switchboxes, etc., must be kept open at all times and must not be
obstructed by any material.
Hearing Protection
All areas of our plant have been audibly analyzed. Those areas which have been
identified as potentially harmful to hearing have been designated with warning
signs which state CAUTION-- EAR PROTECTION MUST BE WORN WHILE WORKING IN THIS
AREA-- Employees working in any of these designated areas must wear hearing
protection devices.
Hearing protection devices are supplied by the company.
Radio headphones are not permitted on the company premises.
Radios are permitted in areas where they are not distracting to others; the
sound must not be audible from several feet away.
Emergency Situations
Emergency situations fall into three categories, personnel injury requiring
immediate medical attention, hazardous material spill or fire. In each case,
pick up the nearest telephone, dial 60 (to page), state what the problem is and
the location. Refer to the CVC Products, Inc. Contingency Plan for full details.
Smoking
CVC Products, Inc. is a no-smoking facility; smoking is restricted to the area
outside the employee entrance.
The no-smoking zone begins ten feet from the employee entrance.
Smoking by bargaining unit employees is restricted to the two 15-minute break
periods and the 30-minute lunch period.
53
<PAGE>
CVC Confidential Ratified 8/24/95
Inspection Of Machinery, Tools, Equipment, And Safety Apparel
Before using, employees are expected to inspect all tools, machines, pieces of
equipment, and safety apparel. If it is defective or in any way unsafe, do not
use it; report the condition to your manager immediately.
Machine guards and other safety devices are provided for protection and may not
be removed except for making repairs, lubricating, or cleaning.
Removal of protective guards must be done by authorized persons. Guards that
have been removed for routine maintenance anchor service must be replaced before
starting machinery.
Operation Of Lift Trucks
Only authorized employees are permitted to operate any piece of power-driven
equipment.
Authorization to operate mobile equipment will be issued to employees only after
the successful completion of the required training program.
No one shall ride on, or in, a vehicle unless they are properly seated. If the
vehicle is not equipped to seat passengers, then passengers are strictly
prohibited.
No person may ride on the fork of any fork lift truck.
Hazardous Materials
CVC Products, Inc. complies with the requirements of OSHA "Hazard Communication
Standard", 29CFR1910.1200. Refer to the CVC Products, Inc. Hazardous Materials
Communication for detail.
No CVC employee may put any hazardous materials into our drains:
Combustible Liquids; cutting, hydraulic, lubricating oils, etc.
Flammable Liquids; lacquer thinner, gasoline, kerosene, etc.
Toxic Materials; pesticides, concentrated lab chemical, etc.
Should an accidental spill of any of the above materials take place, every
effort must be made to keep the spill from entering the sewer. Our maintenance
personnel are trained to respond to such incidents and must be summoned.
The Hazardous Material Coordinator will determine the proper method and disposal
method for all spilled materials.
54
<PAGE>
CVC Confidential Ratified 8/24/95
Compressed Air
When compressed air is used, a safety nozzle must be in place and the pressure
must be kept at a minimum.
Under no circumstances may compressed air be used to clean clothing or any part
of the body.
Compressed air hoses or nozzles may never be pointed at yourself or any part of
another's body.
Compressed Gas Cylinders
Compressed gas cylinders should always be handled as if full.
Cylinders must be chained on a cart or chained to an immovable object.
The protective cap over the valve must be screwed in place when the cylinder is
not in use.
Cylinders should be stored where they will not be subject to excessive
variations in temperature.
Keep oxygen cylinder and fittings clean from oil or grease.
Hand Tools
Check the condition of all hand tools before you use them; if they are
defective, have them repaired or replaced.
Keep your tools in their storage place. Do not leave them where they present a
hazard to yourself or a co-worker.
Electrical Hazards
Unless you are an authorized electrician do not attempt any electrical repairs
or installations.
Treat all electric wires as live wires.
Do not touch any dangling wires that you may come across. Report them to your
manager.
If you find sparking or smoking motors or other electrical equipment,
immediately turn off the power and report the condition.
Extension cords are often the cause of electrical shock. Examine them carefully
for worn insulation and exposed strands of wire before you use them.
When removing a plug from an electrical socket pull out the plug instead of
yanking the cord,
Remember that voltages of less than 110 volts can cause death.
55
<PAGE>
CVC Confidential Ratified 8/24/95
All portable electric power tools (other than all insulated tools) must be
grounded. This is done automatically by three pronged plugs when the plug is
inserted into a grounded receptacle. These three wire cords and caps must never
be tampered with or removed.
Do not use portable electric equipment your hands are wet or you are standing on
wet ground.
Overhead Cranes
Periodic inspection procedures must be followed and apply to lifting straps,
hooks, bales and other associated equipment. The Facilities department is
responsible for monthly inspection.
Refueling Vehicles
New York State Laws mandates that, during the refueling of gas operated vehicle,
the engine must be shut off and no smoking is permitted.
Compliance
The management of CVC Products, Inc. values personnel's lives and property very
highly at CVC and see the need to ensure that these safety precautions and
procedures are complied with at all times. To this extent the previously
designated rules and regulations are required to be obeyed by all CVC employees.
Failure to follow these rules and regulations will result in appropriate
disciplinary action including discharge.
56
<PAGE>
EXHIBIT 10.6
CVC HOLDINGS, INC.
SECURITIES PURCHASE AGREEMENT
May 22, 1995
<PAGE>
TABLE OF CONTENTS
Page
SECTION 1 - Authorization and Sale of Series B Preferred Stock and Warrant . 1
1.1 Authorization .................................................. 1
1.2 Sale of the Securities ......................................... 1
SECTION 2 - The Closing .................................................... 1
2.1 Closing Date ................................................... 1
2.2 Delivery ....................................................... 1
SECTION 3 - Representations and Warranties of the Company and Sub .......... 2
3.1 Organization and Standing ...................................... 2
3.2 Subsidiaries ................................................... 2
3.3 Corporate Power ................................................ 2
3.4 Capitalization ................................................. 3
3.5 Authorization .................................................. 4
3.6 Compliance with Law and Other Instruments; None Burdensome ..... 4
3.7 Governmental Approvals and Filings ............................. 4
3.8 Litigation ..................................................... 5
3.9 Intellectual Property .......................................... 5
3.10 Financial Statements ........................................... 6
3.11 Brokers or Finders ............................................. 8
3.12 Material Contracts ............................................. 8
3.13 Agreements ..................................................... 8
3.14 Employee Agreements ............................................ 8
3.15 Employees ...................................................... 8
3.16 Disclosure ..................................................... 9
3.17 Registration Rights ............................................ 9
3.18 The to Property and Assets ..................................... 9
3.19 Tax Returns and Payments ....................................... 9
3.20 Environmental Matters .......................................... 10
3.21 Related-Party Transactions ..................................... 10
3.22 Insurance ...................................................... 11
-i
<PAGE>
TABLE OF CONTENTS
(continued)
Page
SECTION 4 - Representations and Warranties of Purchaser .................... 11
4.1 Experience ..................................................... 11
4.2 Investment ..................................................... 11
4.3 Rule 144 ....................................................... 12
4.4 No Public Market ............................................... 12
4.5 Access to Data ................................................. 12
4.6 Organization and Standing ...................................... 12
4.7 Corporate Power, Authorization ................................. 12
4.8 Government Approvals and Filings ............................... 12
SECTION 5 - Conditions to Closing of Purchaser ............................. 13
5.1 Representations and Warranties Correct ......................... 13
5.2 Covenants ...................................................... 13
5.3 Opinion of Company's Counsel ................................... 13
5.4 Consents ....................................................... 13
5.5 Blue Sky ....................................................... 13
5.6 Restated Certificate ........................................... 13
5.7 Legal Matters .................................................. 13
5.8 Registration Rights Agreement .................................. 13
5.9 Stockholders' Agreement ........................................ 13
5.10 Warrant ........................................................ 14
5.11 Board of Directors ............................................. 14
5.12. Participation Rights ........................................... 14
5.13 Certificates ................................................... 14
SECTION 6 - Conditions to Closing of Company ............................... 14
6.1 Representations ................................................ 14
6.2 Registration Rights Agreement .................................. 14
6.3 Stockholders' Agreement ........................................ 15
6.4 Consents ....................................................... 15
6.5 Blue Sky ....................................................... 15
6.6 Restated Certificate ........................................... 15
6.7 Warrant ........................................................ 15
6.8 Board of Directors ............................................. 15
6.9. Participation Rights ........................................... 15
-ii-
<PAGE>
TABLE OF CONTENTS
(continued)
Page
SECTION 7 - Covenants of the Company ....................................... 15
7.1 Basic Financial Information .................................... 15
7.2 Additional Information ......................................... 16
7.3 Employee Agreements ............................................ 17
7.4 Use of Proceeds ................................................ 17
7.5 Prompt Payment of Taxes, etc ................................... 17
7.6 Maintenance of Properties ...................................... 17
7.7 Insurance ...................................................... 17
7.8 Accounts and Records ........................................... 18
7.9 Maintenance of Corporate Existence, etc ........................ 18
7.10 Availability of Common Stock for Conversion .................... 18
7.11 Hirings ........................................................ 18
7.12 Adoption of Stock Option Plans and Issuance of Employee
Stock Options ................................................ 18
7.13 Incurrence of Indebtedness ..................................... 18
SECTION 8 - Miscellaneous .................................................. 19
8.1 Transfer of Certain Rights ..................................... 19
8.2 Governing Law .................................................. 19
8.3 Survival of Representations and Warranties ..................... 19
8.4 Successors and Assigns ......................................... 20
8.5 Entire Agreement; Amendment .................................... 20
8.6 Notices ........................................................ 20
8.7 Delays or Omissions ............................................ 21
8.8 California Qualification ....................................... 21
8.9 Fees of Purchaser's Counsel .................................... 21
8.10 Counterparts ................................................... 21
8.11 Severability ................................................... 21
8.12 Titles and Subtitles ........................................... 22
8.13 Brokers or Finders ............................................. 22
-iii-
<PAGE>
CVC HOLDINGS, INC.
SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT (the "Agreement") is made as of May 22,
1995, by and among CVC Holdings, Inc., a Delaware corporation ("Company"), CVC
Products, Inc., a Delaware corporation and a wholly owned subsidiary of the
Company ("Sub"), and Seagate Technology, Inc., a Delaware corporation
("Purchaser").
SECTION 1
Authorization and Sale of Series B Preferred Stock and Warrant
1.1 Authorization. The Company has authorized the sale and issuance to
Purchaser of 60,492 shares (the "Shares") of the Company's Series B
Non-Cumulative, Convertible Preferred Stock (the "Series B Preferred") and a
warrant (the "Warrant") exercisable for the purchase of shares of Series B
Preferred. The shares of Series B Preferred will have the rights, preferences,
privileges and restrictions as set forth in the Company's Restated Certificate
of Incorporation (the "Restated Certificate") in the form attached hereto as
Exhibit A, and the Warrant shall be in the form attached hereto as Exhibit B.
1.2 Sale of the Securities. Subject to the terms and conditions hereof,
the Company will issue and sell to Purchaser and Purchaser will buy from the
Company the Shares at a cash purchase price of $148.78 per Share, and the
Warrant exercisable for 19,769 shares of Series B Preferred (subject to
adjustment as provided in the Warrant), at a cash purchase price equal to $.0l
per share initially subject to the Warrant, for an aggregate purchase price of
$9,000,197.45 (the "Purchase Price"). The shares of Series B Preferred issuable
upon exercise of the Warrant shall be referred to as the "Warrant Shares." The
shares of common stock, par value $.01 per share, of the Company (the "Common
Stock") issuable upon the conversion of the Shares and the Warrant Shares shall
be referred to as the "Conversion Stock." The Shares, Warrant, Warrant Shares
and Conversion Stock shall be referred to as the "Securities."
SECTION 2
The Closing
2.1 Closing Date. The closing of the purchase and sale of the Shares and
the Warrant hereunder shall be held at the offices of Golenbock, Eiseman, Assor
& Bell, at 10:00 a.m., local time, on May 22, 1995 (the "Closing"), or at such
other time and place upon which the Company and Purchaser shall agree (the date
of the Closing is referred to as the "Closing Date").
2.2 Delivery. At the Closing, the Company will deliver to Purchaser a
certificate or certificates, registered in Purchaser's name, representing the
Shares to be purchased by Purchaser, together with the Warrant registered in the
Purchaser's name, against payment of the Purchase Price by certified or bank
check payable to the Company or by wire transfer of immediately available funds.
<PAGE>
SECTION 3
Representations and Warranties of the Company and Sub
Except as set forth on Exhibit C attached hereto which identifies by
section and subsection number any exception to a representation and warranty in
this Section 3 as well as the basis for any such exception (the "Disclosure
Schedule"), the Company and Sub, jointly and severally, represent and warrant to
Purchaser as follows:
3.1 Organization and Standing. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has all requisite corporate power and authority to own, lease and
operate its properties and to carry on its business as now being conducted, and
is duly qualified and in good standing to do business in each jurisdiction in
which the nature of its business or the ownership or leasing of its properties
makes such qualification necessary, other than where the failure to so qualify
could reasonably be expected to have a Material Adverse Effect (as defined
below). Sub is a corporation duly organized and validly existing under the laws
of Delaware and has all requisite corporate power and authority to own, lease
and operate its properties and to carry on its business as now being conducted,
and is duly qualified and in good standing to do business in each jurisdiction
in which the nature of its business or the ownership or leasing of its
properties makes such qualification necessary, other than where the failure to
so qualify could reasonably be expected to have a Material Adverse Effect. The
Company and Sub have each delivered to Purchaser complete and correct copies of
their respective Certificates of Incorporation and Bylaws, including all
amendments thereto. The minute books of the Company and Sub made available to
Purchaser's counsel for review contain a complete summary of all meetings of and
actions by directors and shareholders of the Company, from the time of
incorporation to the date hereof, and of Sub, from January 1, 1990 to the date
hereof, and reflect all transactions referred to in such minutes accurately in
all material respects.
As used in this Agreement "Material Adverse Effect" means any event,
change or effect that is materially adverse to the condition (financial or
otherwise), properties, assets, liabilities, businesses, operations, or results
of operations of the Company and Sub, taken as a whole.
3.2 Subsidiaries. There is no corporation or other entity, other than Sub
in the case of the Company, whose voting securities are owned or are otherwise
controlled directly or indirectly by the Company or Sub. Neither the Company nor
Sub owns, beneficially or of record, any capital stock or other equity
securities of any corporation, nor does it have any direct or indirect equity or
other ownership interest in any business or entity. The Company is the owner of
all outstanding shares of capital stock of Sub and all such shares are duly
authorized, validly issued and fully paid. All of the outstanding shares of
capital stock of Sub are owned by the Company free and clear of all liens,
charges, claims or encumbrances.
3.3 Corporate Power. The Company has all requisite corporate power and
authority to execute and deliver this Agreement, the Amended and Restated
Stockholders' Agreement attached hereto as Exhibit D (the "Stockholders'
Agreement"), the Registration Rights Agreement attached
-2-
<PAGE>
hereto as Exhibit E (the "Registration Rights Agreement") and the Warrant
(collectively, the "Other Agreements"); to sell and issue the Shares and the
Warrant hereunder; to sell and issue the Warrant Shares upon exercise of the
Warrant; to issue the Common Stock issuable upon conversion of the Preferred
Stock and the Warrant Shares and to carry out and perform its obligations under
the terms of this Agreement and the Other Agreements, and to consummate the
transactions contemplated hereby and thereby. Sub has all requisite corporate
power and authority to execute and deliver this Agreement and to carry out and
perform all of its obligations under the terms of this Agreement, and to
consummate the transactions contemplated hereby.
3.4 Capitalization. Immediately prior to the Closing, the authorized
capital stock of the Company will consist of (a) 1,500,000 shares of Common
Stock, of which 18,379 shares will be issued and outstanding; and (b) 102,500
shares of Preferred Stock (the "Preferred Stock"), of which 2,500 shares have
been designated 8% Non Cumulative Preferred Stock (the "Series A Preferred"),
1,685 of which are issued and outstanding, and 100,000 shares have been
designated Series B Preferred, none of which is issued or outstanding prior to
Closing. All of such issued and outstanding shares have been duly authorized and
validly issued, are fully paid and nonassessable and have been issued in
compliance with applicable securities laws. The Series B Preferred and the
Warrant to be issued and sold to the Purchaser have been duly authorized and
when issued in accordance with the terms of this Agreement and the Restated
Certificate, in the case of the Series B Preferred, will be validly issued,
fully paid and nonassessable. The Warrant Shares issuable upon exercise of the
Warrant and the Conversion Stock issuable upon conversion of the Warrant Shares
and the Shares have been duly and validly reserved and, when issued in
compliance with the provisions of this Agreement, the Warrant and the Restated
Certificate, will be validly issued, fully paid and nonassessable. The Company
has reserved (a) 100,000 shares of Common Stock for issuance upon conversion of
the authorized shares of Series A Preferred, (b) 60,492 shares of Series B
Preferred for issuance hereunder, (c) 19,769 shares of Series B Preferred for
issuance upon exercise of the Warrant and (d) 80,261 shares of Common Stock for
issuance upon conversion of the Shares and the Warrant Shares. The Company has
reserved 41,646 shares of its Common Stock for issuance pursuant to the exercise
of options granted or to be granted to employees, consultants or directors under
stock plans or arrangements approved by the Company's Board of Directors (the
"Board of Directors"), including 31,646 shares subject to currently outstanding
options. The Series A Preferred and the Series B Preferred have the rights,
preferences, privileges and restrictions set forth in the Restated Certificate.
Immediately prior to the Closing, the Company's issued and outstanding
securities (including its outstanding options) will be held by the persons and
in the amounts set forth in Section 3.4 of the Disclosure Schedule. Except as
set forth above or as contemplated by this Agreement and the Other Agreements,
there are not any options, warrants, calls, conversion rights, commitments or
agreements of any character to which the Company or Sub is a party or by which
any of them may be bound obligating the Company or Sub to issue, deliver or
sell, or cause to be issued, delivered or sold, additional shares of capital
stock of the Company or of Sub or obligating the Company or Sub to grant, extend
or enter into any such option, warrant, call, conversion right, commitment or
agreement. Except as contemplated by the Other Agreements, there are no voting
agreements or voting trusts among, or irrevocable proxies executed
-3-
<PAGE>
by, or other shareholder agreements between or among, the holders of the
Company's capital stock which are on file with the Company or of which the
Company has knowledge.
3.5 Authorization. All corporate action on the part of the Company, its
directors and stockholders necessary for the authorization, execution, delivery
and performance by the Company of this Agreement and the Other Agreements; the
authorization, sale, issuance and delivery of the Securities; the reservation of
the Common Stock issuable upon conversion of the Series B Preferred, the
reservation of the Series B Preferred issuable upon exercise of the Warrant and
the performance of all of the Company's obligations under the terms of this
Agreement and the Other Agreements has been taken. All corporate action on the
part of Sub, its directors and stockholders necessary for the authorization,
execution, delivery and the performance by Sub of this Agreement has been taken.
This Agreement is and the Other Agreements, when executed and delivered by the
Company and Sub, as applicable, shall constitute valid and binding obligations
of the Company and Sub, as applicable, enforceable in accordance with their
respective terms, subject to laws of general application relating to bankruptcy,
insolvency and the relief of debtors and rules of law governing specific
performance, injunctive relief or other equitable remedies, except for the
indemnification provisions of Section 5.7 of Registration Rights Agreement, the
enforcement of which may be against public policy. The Securities are not
subject to preemptive rights or rights of first refusal and will be free of
restrictions on transfer other than under applicable federal and state
securities laws, and as set forth in this Agreement and the Other Agreements.
The Securities, when issued in compliance with the terms of this Agreement, will
be free of any liens or encumbrances, other than liens and encumbrances created
by Purchaser. The Shares, the Warrant and the Warrant Shares will have been
issued in compliance with all applicable federal and state securities laws.
3.6 Compliance with Law and Other Instruments; None Burdensome. Neither
the Company nor Sub is (A) in violation, breach or default of any term or
provision of (x) its respective Certificate of Incorporation or Bylaws, (y) any
mortgage, indebtedness or indenture or (z) any contract, agreement, instrument
or judgment which violation, breach or default could reasonably be expected to
have a Material Adverse Effect, and (B) to the best of its knowledge in
violation of any order, writ, decree, statute, rule or regulation applicable to
the Company or Sub which violation could reasonably be expected to have a
Material Adverse Effect. The execution, delivery and performance of and
compliance with this Agreement, the Other Agreements, and the issuance by the
Company of the Securities have not resulted and will not result in any violation
of, or conflict with, or constitute, with or without the passage of time and
giving of notice, a default under the Certificate of Incorporation or Bylaws of
the Company or Sub or any agreements of Company or Sub, or result in the
creation of any mortgage, pledge, lien, encumbrance or charge upon any of the
properties or assets of the Company or Sub.
3.7 Governmental Approvals and Filings. No consent, approval or
authorization of, or designation, declaration or filing with, any governmental
authority on the part of the Company or Sub is required in connection with the
valid execution and delivery of this Agreement and the Other Agreements, the
offer, sale or issuance of the Securities, or the consummation of any other
transaction contemplated by this Agreement and the Other Agreements, other than
(i) qualification
-4-
<PAGE>
(or taking such action as may be necessary to secure an exemption from
qualification, if available) of the offer and sale of the Securities under the
Securities Act of 1933, as amended, the California Corporate Securities Law of
1968, as amended, and the other applicable state securities laws, which
qualifications or filings, if required, will be obtained or made and will be
effective within the time periods required, (ii) those which have been obtained
or permanently waived in writing or (iii) with respect to which the failure to
obtain or make could not reasonably be expected to have a Material Adverse
Effect.
3.8 Litigation. There are no actions, suits, investigations or proceedings
pending or, to the knowledge of the Company or Sub, threatened against the
Company or Sub or any of their respective properties before any court, tribunal,
government agency or instrumentality. To the knowledge of the Company or Sub,
there is no action, suit, investigation or proceeding pending against any
officer or key employee of the Company with respect to or which could effect the
Company's or Sub's business activities. Neither the Company nor Sub is a party
to or subject to the provisions of any order, writ, injunction, judgment or
decree of any court or government agency or instrumentality. There is no action,
suit, proceeding or investigation by the Company or Sub currently pending or
which the Company or Sub intends to initiate.
3.9 Intellectual Property.
(a) Each of the Company or Sub owns, or is licensed to use or
otherwise entitled to exercise rights to all patents, trademarks, trade names,
service marks, copyrights, trade secret rights and other intellectual property
rights, and any applications or registrations therefor, and all net lists,
schematics, technology, source code, know-how, computer software programs and
all other tangible and intangible information or material, that are necessary
for the business of the Company and Sub as now conducted and for projects
currently planned for production (collectively, the "Intellectual Property
Rights") and, to its knowledge, has not been and is not infringing upon or
otherwise acting adversely to the right or claimed right of any person under or
with respect to any of the foregoing.
(b) Section 3.9(b) of the Disclosure Schedule lists all of the
Company's or Sub's patents, registered copyrights, registered trademarks and
service marks, and any applications or registrations therefor, included in the
Intellectual Property Rights.
(c) Neither the Company nor Sub is, or as a result of the execution
and delivery of this Agreement or the Other Agreements, or the performance of
the Company's obligations hereunder and thereunder will be, in violation of, or
lose any rights granted pursuant to, any license or sublicense agreement.
(d) No claims with respect to the Intellectual Property Rights have
been asserted or, to the knowledge of the Company or Sub, are threatened by any
person, (i) to the effect that the manufacture, sale or use of any product as
now used or offered or proposed for use or sale by the Company or Sub infringes
any copyright, patent, trade secret, or other intellectual property right,
-5-
<PAGE>
(ii) against the use by the Company or Sub of any Intellectual Property Rights,
or (iii) challenging the ownership, validity or effectiveness of any of the
Intellectual Property Rights.
(e) To the knowledge of the Company or Sub, there has not been and
there is not now any unauthorized use, infringement or misappropriation of any
of the Intellectual Property Rights by any third party, including without
limitation any employee or former employee of the Company or Sub.
(f) No Intellectual Property Right is subject to any outstanding
order, judgment, decree, litigation stipulation or settlement agreement
restricting in any manner the licensing thereof by the Company or Sub. Neither
the Company nor Sub has entered into any agreement granting any third party the
right to bring infringement actions with respect to, or otherwise to enforce
rights with respect to, any Intellectual Property Right.
(g) Neither the Company nor Sub is aware that any of its respective
employees are obligated under contract (including licenses, covenants or
commitments of any nature) or other agreement, or subject to any judgment,
decree or order of any court or administrative agency, that would interfere with
their duties to the Company or Sub or that would conflict with the Company's or
Sub's businesses as proposed to be conducted. There is no action, suit,
proceeding or investigation pending or to the knowledge of the Company or Sub,
threatened involving the prior employment of any employees of the Company or
Sub, their use in connection with the businesses of the Company or Sub of any
information or techniques allegedly proprietary or proprietary to any of their
former employers or their obligations under any agreements with prior employers.
Neither the execution nor the delivery of this Agreement, nor the carrying on
of the businesses of the Company and Sub by the employees of the Company or Sub,
nor the conduct of the Company's or Sub's businesses as proposed, will to the
knowledge of the Company or Sub, conflict with or result in the breach of the
terms, conditions or provisions of, or constitute a default under, any material
contract, covenant or instrument under which any employee is obligated. Neither
the Company nor Sub believes that it is or will find it necessary for it to
utilize any inventions of any of its employees made prior to their employment by
the Company or Sub, except for inventions which have been assigned to or
licensed by the Company or Sub.
3.10 Financial Statements.
(a) Attached hereto as Exhibit F are copies of the Company's audited
consolidated balance sheet, audited consolidated statement of income and
retained earnings and audited consolidated statement of cash flows as of and for
the periods ending September 30, 1994 and 1993 and its unaudited balance sheet
as of March 31, 1995, and its unaudited statement of income and retained
earnings for the quarter ended March 31, 1995 (collectively, the "Financial
Statements"). The Financial Statements have been prepared in accordance with
generally accepted accounting principles (except for normal year end adjustments
and for the fact that the Company's unaudited balance sheet as at March 31,
1995, and its unaudited statement of income and retained earnings for the
quarter ended March 31, 1995, do not contain footnotes required by generally
accepted accounting
-6-
<PAGE>
principles). The Financial Statements present fairly the financial condition and
operating results of the Company and Sub as of the dates, and for the periods,
indicated therein. Except as set forth in the Financial Statements or in the
Disclosure Schedule, neither the Company nor Sub has liabilities, contingent or
otherwise, other than (i) liabilities incurred in the ordinary course of
business subsequent to March 31, 1995, which, individually or in the aggregate,
are not material to the financial condition or operating results of the Company
and Sub taken as a whole or (ii) liabilities not required to be disclosed in the
Financial Statements under generally accepted accounting principles.
(b) Since March 31, 1995, there has not been:
(i) any change in the assets, liabilities, financial condition
or operations of the Company or Sub from that reflected in the balance sheet at
March 31, 1995, included in the Financial Statements, except changes in the
ordinary course of business that have not had either individually or in the
aggregate a Material Adverse Effect;
(ii) any damage, destruction or loss, whether or not covered
by insurance, having or which could reasonably be expected to have a Material
Adverse Effect;
(iii) any waiver by the Company or Sub of a valuable right or
of a material debt owed to it;
(iv) any satisfaction or discharge of any lien, claim or
encumbrance or payment of any obligation by the Company or Sub, except in the
ordinary course of business and not having a Material Adverse Effect;
(v) any change or amendment to a material contract or
arrangement by which the Company or Sub, or any of the assets or properties of
the Company or Sub, is bound or to which the Company or Sub, or any of the
assets or properties of the Company or Sub, is subject;
(vi) any change in any compensation arrangement or agreement
with any employee of the Company or Sub earning more than $75,000 in salary and
bonus annually;
(vii) any labor organization activity affecting the Company or
Sub or any labor dispute involving the Company or Sub, or any of the Company's
or Sub's employees;
(viii) any declaration, setting aside or payment of any
dividend or other distribution with respect to the capital stock of the Company,
or any redemption, purchase or other acquisition by the Company of any of its
capital stock or options or other rights to acquire any such capital stock;
-7-
<PAGE>
(ix) any increase in indebtedness for borrowed money, purchase
commitments or capitalized lease obligations incurred by the Company or Sub,
except for liabilities, commitments and obligations incurred in the ordinary
course of business; or
(x) to the knowledge of the Company, any other event or
condition of any character that might have a Material Adverse Effect.
3.11 Brokers or Finders. Neither the Company nor Sub has retained or used
the services of any individual, firm or corporation other than Rodman & Renshaw,
Inc. in such a manner as to entitle such individual, firm or corporation to
compensation as a broker or finder as a result of the execution of this
Agreement or the Other Agreements or consummation of the transactions
contemplated hereby or thereby.
3.12 Material Contracts. The Company and Sub have delivered to Purchaser's
counsel copies of all material contracts, agreements and instruments of the
Company and Sub, which contracts are listed on Exhibit G attached hereto. Each
such contract, agreement and instrument listed on Exhibit G is valid and binding
on the Company or Sub, as applicable, and is in full force and effect.
3.13 Agreements.
(a) Except as set forth on Exhibit G, there are no agreements,
understandings or proposed transactions between the Company or Sub and any of
their respective officers, directors, affiliates or any affiliate thereof,
except for agreements explicitly contemplated by this Agreement, the
Stockholders' Agreement and the Registration Rights Agreement.
(b) Except as set forth on Exhibit G, there are no agreements,
understandings, instruments or contracts or commitments to which the Company or
Sub is a party or by which the Company or Sub is bound that involve (i)
obligations of, or payments to the Company or Sub in excess of, $50,000, or (ii)
the license of any patent, copyright, trade secret or other proprietary right to
or from the Company or Sub.
3.14 Employee Agreements. Each employee of the Company and Sub has entered
into an agreement with the Company or Sub, as applicable, regarding
confidentiality and proprietary information, and the form of such agreement has
been furnished to Purchaser's counsel.
3.15 Employees. Except as set forth in Section 3.15 of the Disclosure
Schedule, neither the Company nor Sub has any collective bargaining agreement
covering any of its employees. Except as set forth in Section 3.15 of the
Disclosure Schedule, neither the Company nor Sub has any deferred compensation,
pension, profit sharing, bonus, insurance, severance or any other similar
employee benefit plan or obligation covering any of the Company's or Sub's
employees. There are no asserted controversies or labor disputes pending, or to
the knowledge of the Company or Sub, threatened between the Company or Sub and
any of their respective employees. The Company and
-8-
<PAGE>
Sub have complied in all material respects with all applicable state and federal
equal employment opportunity and other laws related to employment and employee
benefit plans, programs and arrangements, and all employee benefit plans,
programs and arrangements have, to the knowledge of the Company or Sub, been
administered in compliance with their terms.
3.16 Disclosure. The Company has fully provided Purchaser with all the
information Purchaser has requested in deciding whether to acquire the Shares
and the Warrant. This Agreement (including the Disclosure Schedules), the Other
Agreements, and any other certificates delivered by the Company or Sub pursuant
hereto or thereto, do not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements herein or therein
not misleading. The Company's financial projections contained in the Rodman &
Renshaw, Inc. Confidential Private Placement Memorandum, dated November, 1994,
for the Company's fiscal years 1995 and 1996 were prepared by the Company based
on the assumptions set forth in such projections, which assumptions were made in
good faith by the Company and are reasonable.
3.17 Registration Rights. The Company has not granted or agreed to grant
any registration rights, including piggyback rights, to any person or entity,
except as set forth in the Registration Rights Agreement.
3.18 Title to Property and Assets; Condition of Equipment.
(a) The Company and Sub have good and marketable title to, or, in
the case of leased properties and assets, valid leasehold interests in, all of
their tangible properties and assets, real, personal and mixed, used in their
business, free and clear of any liens, charges, pledges, security interests or
other encumbrances, except as reflected in the Financial Statements or except
for such imperfections of title and encumbrances, if any, which are not
substantial in character, amount or extent, and which do not materially detract
from the value, or interfere with the present use, of the property subject
thereto or affected thereby.
(b) The equipment owned or leased by the Company or Sub is, taken as
a whole, (i) adequate for the conduct of the business of the Company and Sub
consistent with their past practice, (ii) suitable for the uses to which it is
currently employed, (iii) in good operating condition as necessary for the
conduct of the Company's and Sub's business, ordinary wear and tear excepted,
(iv) regularly and properly maintained as necessary for the conduct of the
Company's and Sub's business and (v) not obsolete, dangerous or in need of
renewal or replacement, as necessary for the conduct of the Company or Sub's
business.
3.19 Tax Returns and Payments. The Company and Sub have filed all foreign,
federal, state and local tax returns and reports as required by law. These
returns and reports are true and correct in all material respects. The Company
and Sub have paid all taxes and other assessments due. The provision for taxes
of the Company and Sub as shown in the Financial Statements is adequate for
taxes due or accrued as of the date thereof. All taxes and other assessments and
levies which the Company or Sub is required to withhold or collect have been
withheld or collected and
-9-
<PAGE>
have been paid over to the proper governmental authorities. There are no tax
audits pending or threatened, and to the knowledge of the Company or Sub, there
is no basis for an adjustment to the amount of taxable income shown on the tax
returns of the Company or Sub.
3.20 Environmental Matters.
(a) Except as set forth in Section 3.20(a) of the Disclosure
Schedule, no substance that is a Hazardous Material (as defined below) is
present in, on or under any real property that the Company or Sub has at any
time since December 21, 1990 owned, operated, occupied or leased. As used
herein, the term "Hazardous Material" means any substance that has been
designated by any court, administrative agency, commission, regulatory authority
or other governmental authority or instrumentality, domestic or foreign (a
"Governmental Entity") to be radioactive, toxic, hazardous or otherwise a danger
to health or the environment.
(b) Since December 21, 1990 neither the Company nor Sub has
transported, stored, used, manufactured, released or exposed its employees or
any other person to any Hazardous Material (a "Hazardous Material Activity") in
violation of any applicable statute, rule, regulation, order or law, except for
such violations which could not reasonably be expected to have Material Adverse
Effect.
(c) The Company and Sub have obtained all permits, licenses and
other authorizations ("Environmental Permits") required to be obtained by any of
them under the laws of any Governmental Entity relating to pollution or
protection of the environment (collectively, "Environmental Laws"), except to
the extent failure to obtain such Environmental Permits could reasonably be
expected to have a Material Adverse Effect. All Environmental Permits are in
full force and effect, except to the extent failure to maintain such
Environmental Permits in full force and effect could reasonably be expected to
have a Material Adverse Effect. The Company and Sub (i) are in compliance with
all terms and conditions of the Environmental Permits and (ii) are in compliance
with all other limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules and timetables contained in the
Environmental Laws or contained in any regulation, code, plan, order, decree,
judgment, notice or demand letter issued, entered, promulgated or approved
thereunder, except to the extent failure to so comply could reasonably be
expected to have a Material Adverse Effect. Neither the Company nor Sub has
received any notice or is aware of any past or present condition or practice of
the businesses conducted by the Company or Sub or the Company's former
subsidiaries (if any) that forms or could form the basis of any claim, action,
suit, proceeding, hearing or investigation against the Company or Sub, arising
out of the manufacture, processing, distribution, use, treatment, storage,
spill, disposal, transport, or handling, or the emission, discharge, release or
threatened release into the environment, of any Hazardous Material.
3.21 Related-Party Transactions. No employee, officer or director of the
Company or Sub and no immediate family member of any such employee, officer or
director is indebted to the Company or Sub, nor is the Company or Sub indebted
(or committed to make loans or extend or
-10-
<PAGE>
guarantee credit) to any of them except, in the case of employees, officers or
directors of the Company or Sub, for services rendered and expense
reimbursements in the ordinary course of business. To the knowledge of the
Company or Sub, none of such persons has any direct or indirect ownership in any
firm or corporation with which the Company or Sub is affiliated or with which
the Company or Sub has a material business relationship, or any firm or
corporation that competes with the Company or Sub, except that employees,
officers or directors of the Company or Sub and members of their immediate
families may own stock in publicly traded companies that may compete with the
Company or Sub. No officer or director of the Company or Sub or, to the
knowledge of the Company, any member of their immediate families is, directly or
indirectly, interested in any material contract with the Company or Sub.
3.22 Insurance. Each of the Company and Sub maintains adequate insurance,
by financially sound and reputable insurers on its properties of a character and
in such amounts and on such terms as customarily insured by corporations of the
same or similar size engaged in the same or a similar business against loss or
damage resulting from fire or other risks insured against by extended coverage
and of the kind customarily insured against by such corporations, and maintains
in full force and effect public liability insurance against claims for personal
injury, death or property damage occurring upon, in, about or in connection with
the use of any of its properties, and maintains such other insurance as may be
required by law or other agreements to which the Company or Sub, as the case may
be, is a party.
SECTION 4
Representations and Warranties of Purchaser
Purchaser hereby represents and warrants to the Company with respect to
the purchase of the Shares and the Warrant as follows:
4.1 Experience. Purchaser has substantial experience in evaluating and
investing in private placement transactions of securities in companies similar
to the Company; therefore, Purchaser is capable of evaluating the merits and
risks of its investment in the Company and has the capacity to protect its own
interests.
4.2 Investment. Purchaser is acquiring the Shares and the Warrant for
investment for its own account, not as a nominee or agent, and not with the view
to, or for resale in connection with, any distribution thereof. Purchaser
understands that the Shares and the Warrant to be purchased have not been, and
will not be, registered under the Securities Act of 1933, as amended (the
"Securities Act"), by reason of a specific exemption from the registration
provisions of the Securities Act, the availability of which depends upon, among
other things, the bona fide nature of the investment intent and the accuracy of
Purchaser's representations as expressed herein. Purchaser is an "accredited
investor" within the meaning of Regulation D, Rule 501(a), promulgated by the
Securities and Exchange Commission.
-11-
<PAGE>
4.3 Rule 144. Purchaser acknowledges that the Securities must be held
indefinitely unless subsequently registered under the Securities Act or unless
an exemption from such registration is available. Purchaser is aware of the
provisions of Rule 144 promulgated under the Securities Act that permit limited
resale of shares purchased in a private placement subject to the satisfaction of
certain conditions, including, among other things, the existence of a public
market for the shares, the availability of certain current public information
about the Company, the resale occurring not less than two years after a party
has purchased and paid for the security to be sold, the sale being effected
through a "broker's transaction" or in transactions directly with a "market
maker" and the number of shares being sold during any three-month period not
exceeding specified limitations and, that, Rule 144 is not now, and may not ever
be available for resales.
4.4 No Public Market. Purchaser understands that no public market now
exists for any of the securities issued by the Company and that the Company has
made no assurances that a public market will ever exist for the Company's
securities.
4.5 Access to Data. Purchaser has had an opportunity to discuss the
Company's business, management and financial affairs with the management of the
Company and the opportunity to review the Company's facilities. Purchaser has
also had an opportunity to ask questions of and seek information from the
Company, its officers and representatives. All such questions have been
answered, and all requests for information fulfilled, to Purchaser's
satisfaction. Purchaser acknowledges that it is relying solely upon the terms
and provisions of this Agreement, the Other Agreements, the certificates
delivered pursuant hereto and thereto, and the Financial Statements, in its
decision to enter into this Agreement and the Other Agreements and to consummate
the transactions contemplated hereby and thereby. The foregoing, however, does
not limit or modify the representations and warranties of Section 3 herein or
the right of the Purchaser to rely thereon.
4.6 Organization and Standing. Purchaser is a corporation duly organized,
valid and existing in good standing under the laws of the State of Delaware.
4.7 Corporate Power; Authorization. This Agreement when executed and
delivered by Purchaser, will constitute the valid and legally binding obligation
of Purchaser, enforceable in accordance with its terms, and subject to laws of
general application relating to bankruptcy, insolvency and the relief of debtors
and rules of law governing specific performance, injunctive relief or other
equitable remedies. The execution, delivery and performance of this Agreement
and the Other Agreements to which Purchaser is a party have been duly authorized
by all necessary corporate action. Purchaser has all requisite corporate power
and authority to execute this Agreement and the Other Agreements to which it is
a party and to consummate the transactions contemplated hereby and thereby.
4.8 Government Approvals and Filings. No consent, approval or
authorization of, or designation, declaration or filing with, any governmental
authority on the part of the Purchaser is required in connection with the valid
execution and delivery of this Agreement and any Other
-12-
<PAGE>
Agreements other than those the failure to obtain or make could not reasonably
be expected to have a material adverse effect on Purchaser.
SECTION 5
Conditions to Closing of Purchaser
Purchaser's obligation to purchase the Shares and the Warrant at the
Closing are, at the option of Purchaser, subject to the fulfillment of the
following conditions (any of which may be waived by Purchaser):
5.1 Representations and Warranties Correct. The representations and
warranties made by the Company in Section 3 hereof shall be true and correct as
of the date of this Agreement and as of the Closing Date.
5.2 Covenants. All covenants, agreements and conditions contained in this
Agreement and the Other Agreements to be performed by the Company on or prior to
the Closing Date shall have been performed or complied with, unless waived in
writing by the Purchaser.
5.3 Opinion of Company's Counsel. Purchaser shall have received from
Golenbock, Eiseman, Assor & Bell, counsel to the Company, an opinion addressed
to Purchaser, dated the Closing Date, in substantially the form attached hereto
as Exhibit H.
5.4 Consents. The Company shall have obtained all consents, permits and
waivers necessary or appropriate for the consummation of the transactions
contemplated by this Agreement and the Other Agreements which need to be
obtained prior to the Closing.
5.5 Blue Sky. The Company shall have obtained all necessary Blue Sky law
permits and qualifications, or have the availability of exemptions therefrom,
required by any state for the offer and sale of the Securities.
5.6 Restated Certificate. The Restated Certificate in the form attached
hereto as Exhibit A shall have been filed with the Delaware Secretary of State.
5.7 Legal Matters. All material matters of a legal nature which pertain to
this Agreement and the transactions contemplated hereby, shall have been
reasonably approved by Purchaser's counsel.
5.8 Registration Rights Agreement. The Registration Rights Agreement in
the form attached hereto as Exhibit E shall have been executed.
5.9 Stockholders' Agreement. The Stockholders' Agreement in the form
attached hereto as Exhibit D shall have been executed.
-13-
<PAGE>
5.10 Warrant. The Warrant in the form attached hereto as Exhibit B shall
have been executed.
5.11 Board of Directors. The Company's Bylaws shall have been amended in
the form attached hereto as Exhibit 1, and will be consistent with an initial
Board of seven directors, two of whom Purchaser shall have the right to elect.
As of the Closing, the Board of Directors of the Company will consist of
Christine Whitman, Seiya Miyanishi, James Geater, Victor Mann, Andrew Peskoe,
Brendan Hegarty and Donald Waite.
5.12. Participation Rights. The Company shall have received waivers from
all of its existing security holders entitled to Participation Rights under
Section 10 of the Stockholders' Agreement, dated as of December 21, 1990, as
amended by and among the Company and the stockholders of the Company.
5.13 Certificates.
(a) Each of the Company and Sub shall have delivered to the
Purchaser a certificate of its President dated as of the Closing Date,
certifying the fulfillment of the conditions specified in Sections 5.1, 5.2, 5.4
and 5.12 of this Agreement.
(b) Each of the Company and Sub shall have delivered a certificate
of its secretary, certifying as to (i) the incumbency of its officers executing
this Agreement and the Other Agreements and all other documents executed and
delivered in connection herewith and therewith, (ii) a copy of its By-laws, as
in effect on and as of the Closing Date, and (iii) the resolutions adopted by
its Board of Directors authorizing and approving the execution, delivery and
performance of this Agreement and the Other Agreements, all matters in
connection with this Agreement and the Other Agreements, and the transactions
contemplated hereby and thereby.
SECTION 6
Conditions to Closing of Company
The Company's obligation to sell and issue the Shares and the Warrant at
the Closing is subject to the fulfillment as of the Closing Date of the
following conditions (any of which may be waived by the Company):
6.1 Representations. The representations made by Purchaser in Section 4
hereof shall be true and correct as of the Closing Date.
6.2 Registration Rights Agreement. The Registration Rights Agreement in
the form attached hereto as Exhibit E shall have been executed and delivered by
all parties thereto.
-14-
<PAGE>
6.3 Stockholders' Agreement. The Stockholders' Agreement in the form
attached hereto as Exhibit D shall have been executed and delivered by all
parties thereto.
6.4 Consents. The Company shall have obtained all consents, permits and
waivers necessary or appropriate for the consummation of the transactions
contemplated by this Agreement and the Other Agreements which need to be
obtained prior to the Closing.
6.5 Blue Sky. The Company shall have obtained all necessary Blue Sky law
permits and qualifications, or have the availability of exemptions therefrom,
required by any state for the offer and sale of the Securities.
6.6 Restated Certificate. The Restated Certificate in the form attached
hereto as Exhibit A shall have been filed with the Delaware Secretary of State.
6.7 Warrant. The Warrant in the form attached hereto as Exhibit B shall
have been executed.
6.8 Board of Directors. The Company's Bylaws shall have been amended in
the form attached hereto as Exhibit I, and will be consistent with for an
initial Board of seven directors, two of whom Purchaser shall have the right to
elect. As of the Closing, the Board of Directors of the Company will consist of
Christine Whitman, Seiya Miyanishi, James Geater, Victor Mann, Andrew Peskoe,
Brendan Hegarty and Donald Waite.
6.9. Participation Rights. The Company shall have received waivers from
all of its existing security holders entitled to Participation Rights under
Section 10 of the Stockholders' Agreement, dated as of December 21, 1990, as
amended by and among the Company and the stockholders of the Company.
SECTION 7
Covenants of the Company
The Company hereby covenants and agrees, except as provided in Section
7.2(c), so long as at least 10,000 shares of Series B Preferred (subject to
adjustment for stock splits, stock dividends and the like) are outstanding, as
follows:
7.1 Basic Financial Information.
(a) As soon as practicable after the end of each fiscal year of the
Company, and in any event within 120 days thereafter, the Company will furnish
to Purchaser a consolidated balance sheet of the Company and Sub as at the end
of such fiscal year, and consolidated statements of income, consolidated
statement of cash flows and consolidated statements of changes in shareholders'
equity of the Company and Sub for such year, prepared in accordance with
generally accepted accounting principles consistently applied and setting forth
in each case in comparative
-15-
<PAGE>
form the figures for the previous fiscal year, all in reasonable detail and
audited by independent public accountants of national standing selected by the
Company, and a capitalization table in reasonable detail for such fiscal year.
7.2 Additional Information.
(a) The Company will permit representatives of Purchaser to visit,
at such Purchaser's expense, and inspect any of the properties of the Company
and Sub, including their books of account, and to discuss the affairs, finances
and accounts of the Company and Sub with the officers of the Company and Sub and
the Company's independent public accountants, all at such reasonable times and,
upon reasonable notice, as often as Purchaser may reasonably request. In
addition, the Company will deliver the reports described below in this Section
7.2 to Purchaser (provided, that, if any report of a similar nature as those
described below (which includes at least all the information required in clauses
(i) and (ii) below) is from time to time required to be delivered by the Company
to an institutional lender, such similar report may be substituted therefore):
(i) as soon as practicable after the end of each month and in
any event within 30 days thereafter, a consolidated balance sheet of the Company
and Sub as at the end of such month, and consolidated statements of income and
of sources and applications of funds of the Company and Sub for such month and
for the current fiscal year of the Company to date, prepared in accordance with
generally accepted accounting principles (other than for accompanying footnotes)
consistently applied, subject to changes resulting from year-end audit
adjustments, in reasonable detail and certified by the principal financial or
accounting officer of the Company; and
(ii) as soon as available (but in any event within 30 days
after the commencement of its fiscal year) a summary of the financial plan of
the Company for the fiscal year as contained in its operating plan approved by
the Company's Board of Directors, and any material changes in such financial
plan shall be delivered as promptly as practicable after such changes have been
approved by the Board of Directors.
(b) The provisions of this Section 7.2 shall not be in limitation of
any rights that Purchaser may have with respect to the books and records of the
Company and Sub, or to inspect their properties or discuss their affairs,
finances and accounts, under the laws of the jurisdictions in which they are
incorporated.
(c) The information rights of Purchaser set forth in this Section
7.2 shall terminate in all respects on the earlier of (i) the date of the
closing of an initial firm commitment underwritten public offering pursuant to
an effective registration statement under the Securities Act, covering the offer
and sale of the Company's Common Stock, and (ii) the date on which the Company
is first subject to the reporting requirements of Section 13 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act").
-16-
<PAGE>
(d) Notwithstanding anything to the contrary contained in this
Agreement or any Other Agreements, Purchaser will not request and agrees to
cause its directors, officers, shareholders, employees, agents, affiliates,
attorneys, accountants, advisers and representatives (collectively "Purchaser
Affiliates") not to request that the Company or Sub disclose, nor will the
Company or Sub or any of their respective directors, officers, shareholders,
employees, agents, affiliates, attorneys, accountants, advisers or
representatives be obligated to disclose any of the following non-public
information with respect to any competitor of Purchaser with whom the Company or
Sub conducts or contemplates conducting business: information with respect to
the production and sale of products currently marketed or planned for marketing,
technology, know-how, methods of operation, processes, projects, proprietary and
confidential matters and any other material non-public information related to
the business of such competitor. The provisions set forth in this Section 7.2(d)
shall in no way restrict Purchaser or any Purchaser Affiliates from requesting
or receiving customary information in its capacity as a customer of the Company.
7.3 Employee Agreements. Each person now or hereafter employed by the
Company or Sub will enter into an agreement with the Company or Sub, as
applicable, regarding confidentiality and proprietary information.
7.4 Use of Proceeds. Promptly after the Closing Date, and in any event
within 30 days of the Closing Date, the Company shall use the proceeds from the
sale of the Shares to pay off all the indebtedness of the Company and Sub listed
on Part I of Exhibit J hereto. Any remaining proceeds from the sale of the
Shares shall be used in accordance with Part II of Exhibit J hereto.
7.5 Prompt Payment of Taxes, etc. The Company will pay and discharge, or
cause to be paid and discharged, when due and payable, all lawful taxes,
assessments and governmental charges or levies imposed upon the income, profits,
property or business of the Company or any subsidiary; provided, however, that
any such tax, assessment, charge or levy need not be paid if the validity
thereof shall currently be contested in good faith by appropriate proceedings
and if the Company shall have set aside on its books adequate reserves with
respect thereto as required by generally accepted accounting principals
consistently applied; provided further, that the Company will pay all such
taxes, assessments, charges or levies forthwith upon the commencement of
proceedings to foreclose any lien which may have attached as security therefor.
7.6 Maintenance of Properties. Each of the Company and Sub will keep its
properties in good repair, working order and condition, reasonable wear and tear
excepted, and from time to time will make all needed and proper repairs,
renewals, and replacements.
7.7 Insurance. Each of the Company and Sub will keep its material assets
(individually or in the aggregate) which are of an insurable character insured
by financially sound and reputable insurers against loss or damage by fire,
explosion and other risks, and in such amounts as, customarily insured against
by corporations of similar size engaged in the same or similar business as the
Company and Sub. Each of the Company and Sub will maintain with financially
sound and
-17-
<PAGE>
reputable insurers, insurance against other hazards and risks and liability to
persons and property to the extent and in the manner customary for companies in
similar businesses similarly situated.
7.8 Accounts and Records. Each of the Company and Sub will keep true
records and books of account in which full, true and correct entries will be
made of all dealings or transactions in relation to its business and affairs in
accordance with generally accepted accounting principles applied on a consistent
basis.
7.9 Maintenance of Corporate Existence, etc. Each of the Company and Sub
shall maintain in full force and effect its corporate existence, rights and
franchises and use its best efforts to maintain in full force and effect all
licenses and other rights to use patents, processes, licenses, trademarks, trade
names or copyrights owned or possessed by it or any subsidiary and deemed by the
Company or Sub to be material to the conduct of their business.
7.10 Availability of Common Stock for Conversion. The Company will from
time to time, in accordance with the laws of the State of Delaware, increase the
authorized amount of Common Stock if at any time the number of shares of Common
Stock remaining unissued and available for issuance shall be insufficient to
permit conversion of all the then outstanding Shares and Warrant Shares.
7.11 Hirings. As soon as is practical after the Closing, the Company shall
use its best efforts to hire, after consultation with Purchaser, a highly
qualified Chief Financial Officer and a highly qualified Vice President of
Operations. In the event the Company determines to issue or agrees to grant or
issue upon the hiring of such officers stock options or any other equity
securities to such officers, it may only do so with the consent of Purchaser's
representatives to the Board of Directors.
7.12 Adoption of Stock Option Plans and Issuance of Employee Stock
Options. The Company shall not (i) adopt any stock option plan, stock purchase
plan or any other incentive plan for officers, directors, employees and
consultants of the Company or any of its subsidiaries (and shall not increase
the shares reserved for issuance under any stock plan existing on the date of
this Agreement or any other stock plan) or (ii) issue any options or warrants to
officers, directors, employees or consultants of the Company or any of its
subsidiaries outside of any such plan, in each case, without the written consent
of Purchaser.
7.13 Incurrence of Indebtedness. The Company will not and will not permit
any subsidiary of the Company to incur, guarantee, assume, create or in any way
become obligated with respect to any indebtedness for borrowed money except for
(x) the refinancing of any indebtedness existing after the proceeds from the
sale of the Shares are used by the Company to pay off the indebtedness of the
Company and Sub as contemplated by Section 7.4 (the "Remaining Indebtedness")
with provisions for interest not to exceed 10% on such Remaining Indebtedness
and (y) up to $3.0 million of additional indebtedness at any one time
outstanding for working capital purposes.
-18-
<PAGE>
SECTION 8
Miscellaneous
8.1 Transfer of Certain Rights.
(a) Subject to the terms and provisions of the Stockholders'
Agreement and the Registration Rights Agreement, the rights granted to the
Purchaser under this Agreement and the Warrant may only be transferred to:
(i) any majority-owned subsidiary or controlled affiliate of
the Purchaser (but only if and for so long as such subsidiary or affiliate
remains a majority owned subsidiary or controlled affiliate of the Purchaser
(except as otherwise provided in Section 8.1(a)(ii) below)), or
(ii) any transferee that acquires at least 14,000 shares of
Series B Preferred (subject to adjustment for stock splits, stock dividends and
the like), including shares of Series B Preferred issuable upon exercise of the
Warrant; provided, however, that the Company is given written notice by the
transferee at the time of such transfer stating the name and address of the
transferee and identifying the securities with respect to which such rights are
being assigned; provided, further, as a condition precedent to any such
transfer, the transferee agrees in writing to be bound by and subject to all
terms and conditions of this Agreement. The rights granted to the Purchaser set
forth in Sections 7.4, 7.11, 7.12 and 7.13 may not be transferred to a
transferee pursuant to this Section 8.1(a)(ii).
(b) A transferee to whom rights are transferred pursuant to this
Section may not again transfer such rights to any other person or entity, other
than as provided in paragraph (a) above.
(c) The restrictions contained in this Section 8.1 shall terminate
immediately prior to the closing of an initial firm commitment underwritten
public offering pursuant to an effective registration statement under the
Securities Act covering the offer and sale of the Company's Common Stock for the
account of the Company to the public at a price per share (determined without
regard to underwriter commissions and expenses) of not less than Five Hundred
Dollars $500.00 (as adjusted for stock splits, stock dividends,
recapitalizations and the like) and aggregate gross proceeds to the Company of
not less than Ten Million Dollars ($10,000,000), before deduction of
underwriting discounts and commissions and registration expenses.
8.2 Governing Law. This Agreement shall be governed and construed in
accordance with laws of the State of Delaware, without giving effect to the
conflicts of laws provisions thereof. The parties hereto agree to submit to the
non-exclusive jurisdiction of the federal and state courts of the State of
California with respect to the breach or interpretation of this Agreement or the
enforcement of any and all rights, duties, liabilities, obligations, powers and
other relations between the parties arising under this Agreement.
-19-
<PAGE>
8.3 Survival of Representations and Warranties. Except with respect to
fraud or willful or intentional efforts to deceive or mislead, all
representations and warranties made in Section 3 and Section 4 shall survive
until the later of January 30, 1997 or thirty (30) days after the date of
delivery to Purchaser of the Company's audited financial statements for the
fiscal year ending September 30, 1996, provided, that the representations and
warranties made herein by the Company and Sub with respect to tax returns and
payments shall survive the Closing of the transactions contemplated hereby for
three (3) years from the date of this Agreement.
8.4 Successors and Assigns. Except as otherwise provided herein, the
provisions hereof shall inure to the benefit of, and be binding upon, the
permitted successors and assigns, heirs, executors and administrators of the
parties hereto, provided, however, that the rights of Purchaser to purchase the
Shares and the Warrant shall not be assignable without the prior written consent
of the Company.
8.5 Entire Agreement; Amendment. This Agreement and the other documents
delivered pursuant hereto at the Closing constitute the full and entire
understanding and agreement among the parties with regard to the subjects hereof
and thereof, and no party shall be liable to any other party in any manner for
any warranties, representations or covenants except as specifically set forth
herein or therein. Except as expressly provided herein, neither this Agreement
nor any term hereof may be amended, waived, discharged or terminated other than
by a written instrument signed by the party against whom enforcement of any such
amendment, waiver, discharge or termination is sought.
8.6 Notices. All notices and other communications required or permitted
hereunder shall be in writing and shall be mailed by registered or certified
mail, postage prepaid, or other cause delivered by hand or by messenger, or sent
by facsimile and confirmed by mail addressed as follows:
If to Purchaser Seagate Technology, Inc.
920 Disc Drive
Scotts Valley, California 95066-4544
Attn: Stephen J. Luczo
Telephone: (408) 438-6550
Facsimile: (408) 438-0558
If to the Company CVC Holdings, Inc.
or Sub 525 Lee Road
Post Office Box 1886
Rochester, New York 14603
Attn: Christine B. Whitman
Telephone: (716) 458-2550
Facsimile: (716) 458-0424
-20-
<PAGE>
with a copy to Golenbock, Elseman, Assor & Bell
437 Madison Avenue, 35th Floor
New York, New York 10022
Attn: A. C. Peskoe, Esq.
Telephone: (212) 907-7300
Facsimile: (212) 754-0330
Each such notice or other communication shall for all purposes of
this Agreement be treated as effective or having been given when delivered if
delivered personally or sent by confirmed facsimile, or, if sent by mail, at the
earlier of its receipt or 72 hours after the same has been deposited in a
regularly maintained receptacle for the deposit of the United States mail,
addressed and mailed as aforesaid, or if sent by reputable overnight courier,
two days after delivery to such courier.
8.7 Delays or Omissions. Except as expressly provided herein, no delay or
omission to exercise any right, power or remedy accruing to any holder of any
Shares or the Warrant, upon any breach or default of the Company or Sub under
this Agreement, shall impair any such right, power or remedy of such holder nor
shall it be construed to be a waiver of any such breach or default, or an
acquiescence therein, or of or in any similar breach or default thereafter
occurring; nor shall any waiver of any single breach or default be deemed a
waiver of any other breach or default theretofore or thereafter occurring. Any
waiver, permit, consent or approval of any kind or character on the part of any
holder of any Securities of any breach or default under this Agreement, or any
waiver on the part of Purchaser of any provisions or conditions of this
Agreement, must be in writing and shall be effective only to the extent
specifically set forth in such writing. All remedies, either under this
Agreement or by law or otherwise afforded to Purchaser, shall be cumulative and
not alternative.
8.8 California Qualification. THE SALE OF THE SECURITIES WHICH ARE THE
SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH THE COMMISSIONER OF
CORPORATIONS OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF SUCH SECURITIES OR
THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION THEREFOR PRIOR TO SUCH
QUALIFICATION IS UNLAWFUL UNLESS THE SALE OF SECURITIES IS EXEMPT FROM
QUALIFICATION BY SECTION 25100, 25102, OR 25105 OF THE CALIFORNIA CORPORATIONS
CODE. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY CONDITIONED UPON
SUCH QUALIFICATION BEING OBTAINED, UNLESS THE SALE IS SO EXEMPT.
8.9 Fees of Purchaser's Counsel. At the Closing, the Company will pay the
reasonable fees (not to exceed $20,000) and reasonable expenses of Wilson,
Sonsini, Goodrich & Rosati, P.C., counsel to Purchaser, related to this
Agreement, the Other Agreements and the transactions contemplated hereby and
thereby.
-21-
<PAGE>
8.10 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be enforceable against the parties actually
executing such counterparts, and all of which together shall constitute one
instrument.
8.11 Severability. In the event that any provision of this Agreement
becomes or is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Agreement shall continue in full force and effect
without said provision; provided that no such severability shall be effective if
it materially changes the economic benefit of this Agreement to any party.
8.12 Titles and Subtitles. The titles and subtitles used in this Agreement
are used for convenience only and are not to be considered in construing or
interpreting this Agreement.
8.13 Brokers or Finders. The Company and Sub shall, jointly and severally,
hold harmless and indemnify Purchaser from and against any liability for
brokerage or finders' fees or agents' commissions or similar charges in
connection with this Agreement incurred, directly or indirectly, as a result of
action taken by the Company or Sub, and Purchaser shall hold harmless and
indemnify the Company and Sub from and against any liability for brokerage or
finders' fees or agents' commissions or similar charges in connection with this
Agreement incurred, directly or indirectly, as a result of action taken by
Purchaser.
-22-
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
"COMPANY"
CVC HOLDINGS, INC.
a Delaware corporation
By: /s/ [ILLEGIBLE]
-------------------------------------
"SUB"
CVC PRODUCTS, INC.
a Delaware corporation
By: /s/ [ILLEGIBLE]
-------------------------------------
"PURCHASER"
SEAGATE TECHNOLOGY, INC.
a Delaware corporation
By:
-------------------------------------
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
"COMPANY"
CVC HOLDINGS, INC.
a Delaware corporation
By:
-------------------------------------
"SUB"
CVC PRODUCTS, INC.
a Delaware corporation
By:
-------------------------------------
"PURCHASER"
SEAGATE TECHNOLOGY, INC.
a Delaware corporation
By:
-------------------------------------
<PAGE>
EXHIBIT A
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
(See Tab 4)
<PAGE>
EXHIBIT B
SERIES B PREFERRED STOCK PURCHASE WARRANT
(See Tab 6)
<PAGE>
EXHIBIT C
DISCLOSURE SCHEDULE TO REPRESENTATIONS AND WARRANTIES
<PAGE>
DISCLOSURE SCHEDULES
For purposes of these Disclosure Schedules, each disclosure applies
only to the particular section referenced unless a disclosure is specifically
cross referenced in a separate section or otherwise clearly applies to another
section.
Capitalized terms used in these Disclosure Schedules and not
otherwise defined herein shall have the meanings ascribed to them in the
Securities Purchase Agreement to which these Disclosure Schedules are attached.
<PAGE>
Schedule 3.1
Organization and Standing
Sub leases property in Towson, Maryland but is not qualified to do
business in the State of Maryland, however, such failure to be so qualified will
not result in a Material Adverse Effect.
Sub has an office in Garland, Texas but is not qualified to do
business in the State of Texas, however, such failure to be so qualified will
not result in a Material Adverse Effect.
2
<PAGE>
Schedule 3.4
Capitalization
Option Agreement, dated as of December 21, 1990, between Company and
Christine Whitman.
Option Agreement, dated as of December 21, 1990, between Company and
Christopher Mann.
Option Agreement, dated as of December 21, 1990, between Company and
Paul Ballentine, as assigned.
Option Agreement, dated as of January 24, 1992, between Company and
Keene Little (together with Employment Agreement, dated November 19, 1990,
between Keene Little and Sub, contemplating the grant of additional options).
Option Agreement, dated as of July 12, 1993, between Company and
Thomas Omstead.
Option Agreement, dated as of October 15, 1993, between Company and
Thomas Kandris.
Option Agreement, dated as of October 15, 1993, between Company and
Ahmad Kermani.
Option Agreement, dated as of February 1, 1994, between Company and
Mehrdad Moslehi.
Option Agreement, dated as of April 18, 1994, between Company and
Yong Jin Lee.
Option Agreement, dated as of August 15, 1994, between Company and
Philip Chapados.
Option Agreement, dated as of October 17, 1994, between Company and
Lino Velo.
Option Agreement, dated as of December 19, 1994, between Company and
Cecil Davis.
The holders of the 8% Non-cumulative Convertible Preferred Stock are
entitled to conversion rights as provided in Company's Certificate of
Incorporation, as amended.
Each signatory stockholder is entitled to participation rights
pursuant to Section 10 of the Stockholders' Agreement, dated as of December 21,
1990, as amended, among Company and the signatory stockholders. The Amended and
Restated Stockholders' Agreement dated as of the Closing Date among Company and
the
3
<PAGE>
signatory stockholders will not have such participation rights. Company has
received a waiver from each stockholder entitled to participation rights in
connection with the offering of the Shares and the sale of the Warrant. No
stockholder is entitled to participation rights with respect to any prior
transaction.
Voting agreements exist among the holders of Company's capital stock
pursuant to Section 2 of the Stockholders' Agreement, dated as of December 21,
1990, as amended, among Company and the signatory stockholders. The Amended and
Restated Stockholders' Agreement dated as of the Closing Date among Company and
the signatory stockholders will amend such voting agreements.
Immediately prior to the Closing, Company's outstanding securities
will be held as set forth in Exhibit 1 hereto.
4
<PAGE>
Schedule 3.6
Compliance with Law and Other Instruments; None Burdensome
Currently and from time to time, Sub has been in default under
certain covenants and obligations under and in connection with the Amended and
Restated Revolving Loan and Security Agreement, dated as of January 29, 1992, as
amended December 16, 1992, February 11, 1993 and August 12, 1994 (the "Loan and
Security Agreement"), with The Chase Manhattan Bank, N.A., as successor by
merger to Chase Lincoln First Bank, N.A. (the "Lender") , and related agreements
and documents, and Sub may from time to time be in default under certain
obligations to HYGE Partners (the former owners of Sub's capital stock),
however, such defaults, individually or in the aggregate, will not result in a
material additional liability to Company or Sub or adversely affect the
consummation of the transactions contemplated hereby.
5
<PAGE>
Schedule 3.8
Litigation
Company has provided to Purchaser copies of correspondence from its
customer Read Rite Corporation ("Read Rite") in connection with Read Rite's
assertion that an officer of Company disclosed proprietary information of Read
Rite. Neither Company nor Sub has received any further communication from Read
Rite with respect to this matter since February 17, 1995. There can be no
assurance that Read Rite will not, at a later date, choose to assert a claim.
Sub is subject to an Order on Consent issued by the New York State
Department of Environmental Conservation.
In June 1993, James E. Toal commenced an action against Sub in the
Untied States District Court, Western District of New York, based, inter alia,
on allegations that had formed the basis of his November 1991 complaint with the
New York State Division of Human Rights. The action alleged age discrimination,
discrimination based on disability and breach of Sub's contractual obligations
under its collective bargaining agreement, all in connection with Sub's layoff
of Mr. Toal in June 1991 and its denial of his applications for other employment
at Sub. This action was settled by the parties in July 1994 by Sub's payment to
Mr. Toal of $18,000 and Mr. Toal's release of Sub from all claims and actions.
This item is on this Disclosure Schedule for informational purposes only and the
Company and Sub do not anticipate any additional liability with respect to this
matter.
See Schedule 3.9(d).
6
<PAGE>
Schedule 3.9
Intellectual Property
b. "Connexion" - a registered trademark.
See Exhibits 2 and 3 attached hereto.
d. Luxtron Corporation ("Luxtron") has requested that Sub review the
applicability of various of Luxtron's patents to Sub's wafer monitoring
techniques to ensure that Sub does not infringe Luxtron's patent rights and, if
applicable, that Sub discuss with Luxtron the potential licensing of Luxtron's
patented technology. Neither Company nor Sub has received any further
communication from Luxtron with respect to this matter since November 4, 1994.
There can be no assurance that Luxtron will not, at a later date, choose to
assert an infringement claim.
Applied Materials has "reminded" an officer of Company, formerly
employed by Texas Instruments, of applicable non-disclosure obligations
regarding confidential information concerning wafer temperature measurement
received by such officer from an employee of Applied Material while such officer
was employed at Texas Instruments. Company believes that such officer is not
using such information improperly. Neither Company nor Sub has received any
further communication from Applied Materials with respect to this matter since
January 26, 1994. There can be no assurance that Applied Materials will not, at
a later date, choose to assert a claim with respect to the foregoing.
Company has provided to Purchaser copies of correspondence from its
customer Read Rite Corporation ("Read Rite") in connection with Read Rite's
assertion that an officer of Company disclosed proprietary information of Read
Rite. Neither Company nor Sub has received any further communication from Read
Rite with respect to this matter since February 17, 1995. There can be no
assurance that Read Rite will not, at a later date, choose to assert a claim.
e. It is Sub's opinion that Hitachi has copied Sub's 624 design
reportedly given to Hitachi by a customer of Sub.
g. Applied Materials has "reminded" an officer of Company, formerly
employed by Texas Instruments, of applicable non-disclosure obligations
regarding confidential information concerning wafer temperature measurement
received by such officer from an employee of Applied Material while such officer
was employed at Texas Instruments. Company believes that such officer is not
using such information improperly. Neither Company nor Sub has received any
further communication from Applied Materials with respect to this matter since
January 26, 1994. There can be no
7
<PAGE>
assurance that Applied Materials will not, at a later date, choose to assert a
claim with respect to the foregoing.
AG Associates has questioned the propriety and intent of Sub's
employment of former employees of AG Associates and/or its subsidiary, Rapro
Technology. Neither Company nor Sub has received any further communication from
AG Associates with respect to this matter since January 14, 1994.
Matters with respect to Phil Hartman as previously disclosed to
Purchaser.
It may be necessary to utilize inventions of Dr. Philip Chapados,
Mr. Cecil Davis, Dr. Yong Jin Lee, Dr. Mehrdad Moslehi, Dr. Thomas Omstead, Dr.
Ajit Paranjpe and Dr. Lino Velo, made prior to each such employee's employment
with Company or Sub, which inventions Company and Sub believe are within
Company's and/or Sub's rights to use. Company and/or Sub has received such
permission with respect to the grant of use of the foregoing inventions as they
deem necessary.
8
<PAGE>
Schedule 3.10
Financial Statements
a. During 1993, Company changed its method of accounting for certain
contracts from the completed contract method to the percentage of completion
method. Company, however, is contemplating returning to the completed contract
method.
b. (i) See Exhibit 4 attached hereto.
(iii) Company has not exercised any of its rights of refusal
pursuant to Section 4 of the Stockholders' Agreement, dated as of December 21,
1990, as amended, among Company and the signatory stockholders, with respect to
recent sales of stock and options to purchase common stock by Paul Ballentine
and David and Dianan Pefley.
(iv) See Exhibit 4 attached hereto.
(vi) Christopher Mann's will receive a standard relocation
adjustment (20% more than his Rochester salary) in connection with his
relocation to the California office as of May 16, 1995.
(ix) See Exhibit 4 attached hereto.
9
<PAGE>
Schedule 3.12
Material Contracts
Currently, and from time to time, Sub has been in default under
certain covenants in its Amended and Restated Revolving Loan and Security
Agreement, dated as of January 29, 1992, as amended December 16, 1992, February
11, 1993 and August 12, 1994, between Sub and the Lender, and Sub may from time
to time be in default under its agreements with HYGE Partners, however, such
defaults, individually or in the aggregate, will not result in a material
additional liability to Company or Sub or adversely affect the consummation of
the transactions contemplated hereby. The amounts outstanding under the
foregoing agreements will be paid off with the proceeds of the transactions
contemplated by this Securities Purchase Agreement within thirty days of the
Closing Date.
10
<PAGE>
Schedule 3.13
Agreements
b. A former affiliate of Company and Sub, CVC Scientific Products
Limited, has certain rights to use the name "CVC Scientific Products" and "CVC"
under stated terms and conditions. Company understands that CVC Scientific
Products Limited has ceased doing business.
Varian Associates, Inc. has a limited non-exclusive license to use
the names "CVC Products, Inc." and "CVC" in conjunction with the terms "-type"
or "-style" as described in the Asset Purchase and Sale Agreement, dated as of
September 30, 1993, among Company, Sub and Varian Associates, Inc.
11
<PAGE>
Schedule 3.15
Employees
Collective Bargaining Agreement:
Agreement between Sub and Local 342 of the International Union of
Electronic, Electrical, Salaried, Machine & Furniture Workers, AFL-CIO, dated
November 7, 1991, as extended.
The following information is with respect to salaried employees only:
Deferred Compensation:
Agreement, dated as of December 21, 1990, with respect to Deferred
Compensation Plan for Officers of Sub among Sub, Garfield, Morse, Anderson and
Wright.
Pension:
Defined Benefit Plan for the period from October 1, 1973 through
September 30, 1991. The plan was frozen on September 30, 1991.
Group Annuity Contracts provided by Mass Mutual Life Insurance
Company, 1295 State Street, Springfield, Massachusetts 01111. Empire
Professional Services, 77 Sully's Trail, Pittsford, New York 14534 serves as
actuary thereunder.
Profit Sharing:
Sub offers a qualified 401(k) pension plan to all permanent
employees (Contract No. 4-01135 instituted October 1, 1991). The plan trustee
and investment manager is the Principal Investment/Financial Group - Pen. Adm.
DC4, 711 High Street, Des Moines, Iowa 50392.
Health Insurance:
Insurance coverage is provided to Rochester, New York employees by
Blue Cross/Blue Shield of Rochester, Preferred Care or Genesee Valley Group
Health Association Insurance Program and Blue Choice of Rochester. Sub shares
the cost of health insurance by paying 50% of the health insurance premiums. The
employee is responsible for the remaining 50%. Each of the foregoing providers
also provides a prescription drug reimbursement program.
Insurance coverage is provided to Fremont, California employees by
Blue Cross/Blue Shield and John Alden Life Insurance
12
<PAGE>
Company. Sub shares the cost of health insurance by paying 50% of the health
insurance premiums. The employee is responsible for the remaining 50%. Blue
Cross/Blue Shield provides a prescription drug reimbursement program.
Sub pays 65% of medical insurance premiums for retirees who were
hourly employees. The retired employee is responsible for the remaining 35% of
such premium.
Sub pays 50% of medical insurance premiums for retirees who were
salaried employees. The retired employee is responsible for the remaining 50% of
such premium.
Dental Insurance:
Dental insurance coverage is an optional benefit which is provided
to Rochester, New York employees by Travelers Insurance Company and the Business
Council of New York State. Sub contributes 100% of the premium for individual
coverage and $18.60 per pay period for family dental coverage, the remainder of
which premium is paid by the employee.
Short-term Disability:
Short-term disability coverage is provided by CNA Insurance Company.
In addition, Rochester, New York employees are eligible for disability coverage
under New York State disability laws, and Fremont, California employees are
eligible for disability coverage under California disability laws.
Long-term Disability:
Long-term disability coverage for both Rochester, New York and
Fremont, California employees is provided by Travelers Insurance Company through
the Business Council of New York State. Sub pays all premiums for such coverage.
Employees have the option of purchasing additional long-term disability
coverage.
Life Insurance:
Life insurance coverage for both Rochester, New York and Fremont,
California employees is provided by Travelers Insurance Company through the
Business Council of New York State. The plan provides term insurance and
accidental death and dismemberment in an amount equal to one years' salary at no
cost to the employee.
Retirees who were hourly employees receive reduced life insurance in
the amount of $3,500
13
<PAGE>
Bonus Plan:
Management Bonus Plan for fiscal year 1994.
Bonus Plan for Non-Management Employees for fiscal year 1994.
No bonus plans have been developed or are in effect for fiscal year
1995.
Severance:
Severance payments are up to management discretion.
Flexible Benefit Program:
If elected, medical and dental premiums paid by the employee are
deducted from pre-tax dollars.
Other Employee Benefits:
Payroll savings and direct deposit plans - Employees may elect to
have a specific amount direct deposited in a savings and/or checking account
maintained with Rochester Community Savings Bank or Summit Federal Credit Union.
Credit union membership - Sub is a member of Summit Federal Credit
Union and employees may enroll for membership therein.
Savings bonds - Employees may elect payroll deductions for the
purchase of United States savings bonds.
Tuition reimbursement programs - - Employees are eligible for
tuition reimbursement for job related courses as approved by the Educational
Assistance Team based on department head recommendations.
Holidays - - Employees are paid for 11 paid holidays annually.
Vacation - - Employees are entitled to progressive vacation
benefits.
Absence allowance - - Employees are entitled to a paid absence
allowance for illness or personal business.
Safety shoes - - Company contributes $100 every two years to all
employees towards one pair of safety shoes.
Safety glasses - - All employees are eligible for one pair of safety
glasses every two years with a prescription.
14
<PAGE>
Employment Agreements:
Employment Agreement, dated as of December 21, 1990, between Company
and Christine Whitman.
Employment Agreement, dated as of October 25, 1993, between Sub and
Thomas Kandris.
Employment Agreement, dated as of October 25, 1993, between Sub and
Ahmad Kermani.
Labor Disputes:
Sub has been involved in labor disputes with union employees in the
past, including a strike by Local 342 of the International Union of Electronic,
Electrical, Salaried, Machine and Furniture Workers AFL-CIO in October through
November 1991. The original term of the agreement between Local 342 and Sub
entered into after the strike ended on October 30, 1994. The agreement was
extended for a period of twelve months, through October 30, 1995, by mutual
consent. This item is on this Disclosure Schedule for informational purposes
only.
15
<PAGE>
Schedule 3.18
Title to Property and Assets; Condition of Equipment
a. Liens in favor of the Lender pursuant to the Amended and Restated
Revolving Loan and Security Agreement, dated as of January 29, 1992, as amended
December 16, 1992, February 11, 1993 and August 12, 1994, between Sub and the
Lender.
Liens in favor of the Monroe Industrial Development Agency and
Manufacturers Hanover Trust (now known as Chemical Bank) in connection with the
525 Lee Road, Rochester, New York property financing documents listed below
(including a financing statement filed with respect to a North American 7-1/2
ton crane with Detroit 7-1/2 ton hoist including cross rails located at 525 Lee
Road, Rochester, New York).
Title to premises known as 525 Lee Road, City of Rochester, New
York, is vested in County of Monroe Industrial Development Agency, by deed
recorded September 17, 1974 in the Monroe County Clerk's Office in Liber 4723 of
Deeds, page 90, and is subject to terms, covenants, conditions and restrictions
contained in deed recorded in Liber 4299 of Deeds, page 177, and Declaration of
Restrictions contained in Liber 4469 of Deeds, page 13.
Memorandum of Lease executed by County of Monroe Industrial
Development Agency to Sub, dated September 16, 1974, and filed for record in the
Monroe County Clerk's Office on September 17, 1974, and recorded in Liber 4723
of Deeds, page 75; as assigned by Assignment of Lease from County of Monroe
Industrial Development Agency to Manufacturers Hanover Trust Company/Genesee
Region, dated August 1, 1974 and filed for record in the Monroe County Clerk's
Office on September 17, 1974 and recorded in Liber 4723 of Deeds, page 98:
Mortgage by County of Monroe Industrial Development Agency to
Manufacturers Hanover Trust Company/Genesee Region, which mortgage is given to
secure the sum of $2,400,000.00 and is dated August 1, 1974 and filed for record
in the Monroe County Clerk's Office on September 17, 1974 and recorded in Liber
3890 of Mortgages, page 65.
Easement granted by County of Monroe Industrial Development Agency
to Rochester Gas and Electric Corporation, dated January 14, 1975 and recorded
January 15, 1975 in Monroe County Clerk's Office in Liber 4782 of Deeds, page
36.
Terms, Covenants, Conditions and Restrictions contained in Deed
recorded in Liber 4299 of Deeds, page 177, and in Deed from UDC to County of
Monroe Industrial Development Agency recorded
16
<PAGE>
September 17, 1974 in Liber 4723 of Deeds, page 90 and Declaration of
Restrictions contained in Liber 4469 of Deeds, page 13.
Collateral Security Second Mortgage and Security Agreement made by
County of Monroe Industrial Development Agency to the Lender, which mortgage is
given to secure the sum of $500,000 and is dated September 1, 1988.
Security Agreement, dated September 1, 1988, as amended, by Sub in
favor of the Lender and UCC financing statements filed pursuant thereto.
Mortgage Modification and Extension Agreement, dated as of December
21, 1990, between County of Monroe Industrial Development Agency and the Lender.
Bond Purchase Agreement, dated as of August 1, 1974, between County
of Monroe Industrial Development Agency and Manufacturers Hanover Trust
Company/Genesee Region.
Fence owned by 515 Lee Rd. Associates, surrounding a concrete pad
and enclosing an electrical transformer, encroaches onto property by 2.5 feet by
approximately 11.25 feet.
Liquid nitrogen tank located on the northern exterior of the
building located at 525 Lee Road, Rochester, New York, owned by Air Products.
Financing statements (which do not evidence a security interest)
with respect to a cluster tool (together with related parts, components and
equipment) ordered by Storage Technolgy Corporation ("Storage") have been filed
by Storage to give notive that Sub is holding the foregoing items as a
consignee, bailee or agent for Storage. The majority of the purchase price for
the items has been paid by Storage. The items are being held at 525 Lee Road,
Rochester, New York, to be reconfigured for a different application than that
for which it was originally designed.
17
<PAGE>
Schedule 3.19
Tax Returns and Payments
All tax returns for fiscal year 1994 are on extension.
18
<PAGE>
Schedule 3.20
Environmental Matters
a. See Exhibit 5 attached hereto
Hydrocarbon oil storage tank, 8,000 gal. capacity, is located to the
west of the building located at 525 Lee Road, Rochester, New York. Fuel oil
storage tank, 10,000 gal. capacity, is located to the east of the building
located at 525 Lee Road, Rochester, New York. The 10,000 gal. capacity tank is
no longer in use. The registration certificate has been provided to Purchaser.
c. Sub has received a proposed license agreement from the City of
Rochester seeking permission to perform certain environmental tests on Sub's
property in order to support delisting petitions to be submitted by the City of
Rochester to the New York State Department of Environmental Conservation. The
delisting petition would seek to have Sub's property excluded from the outer
loop of the former Emerson Street hazardous waste dump site map. Sub has
received conflicting oral advice from New York State officials as to the
location of the dump site boundaries.
Sub is subject to an Order on Consent issued by the New York State
Department of Environmental Conservation, a copy of which has been provided to
Purchaser.
19
<PAGE>
Schedule 3.21
Related Party Transactions
Non-negotiable Limited Recourse Promissory Note, dated December 3,
1990, by Christine Whitman in favor of Nikko in the original principal amount of
$100,000.
Stockholders' Agreement, dated as of December 21, 1990, as amended,
among Company and the signatory stockholders, which is being amended and
restated as of the Closing Date.
Employment Agreement, dated as of December 21, 1990, between Company
and Christine Whitman.
Employment Agreement, dated as of October 25, 1993, between Sub and
Thomas Kandris.
Employment Agreement, dated as of October 25, 1993, between Sub and
Ahmad Kermani.
Option Agreement, dated as of December 21, 1990, between Company and
Christine Whitman.
Option Agreement, dated as of December 21, 1990, between Company and
Christopher Mann.
Option Agreement, dated as of December 21, 1990, between Company and
Paul Ballentine, as assigned.
Option Agreement, dated as of July 12, 1993, between Company and
Thomas Omstead.
Option Agreement, dated as of October 15, 1993, between Company and
Thomas Kandris.
Option Agreement, dated as of October 15, 1993, between Company and
Ahmad Kermani.
Option Agreement, dated as of February 1, 1994, between Company and
Mehrdad Moslehi.
Option Agreement, dated as of April 18, 1994, between Company and
Yong Jin Lee.
Option Agreement, dated as of August 15, 1994, between Company and
Philip Chapados.
Option Agreement, dated as of October 17, 1994, between Company and
Lino Velo.
Option Agreement, dated as of December 19, 1994, between
20
<PAGE>
Company and Cecil Davis.
Limited Guaranty of Collection, dated as of December 21 1990, by
Christine Whitman of Sub's obligations under the Deferred Compensation Agreement
in favor of Garfield, Morse, Anderson and Wright.
Guaranty of Collection, dated as of December 21, 1990, as confirmed
and amended as of January 29, 1992, by Christine Whitman of Sub's obligations to
the Lender.
Guarantee Agreement, dated December 16, 1992, by Christine Whitman
of Sub's obligations to the Lender.
Restated Individual Limited Guarantee Agreement, dated August 12,
1994, by Anne G. Whitman of Sub's obligations to the Lender.
Amended and Restated Pledge Security Agreement, dated December 27,
1993, by The Chase Manhattan Bank, N.A., as trustee of a trust for the benefit
of Anne G. Whitman, of Sub's obligations to the Lender.
Pledge Security Agreement, dated May 16, 1994, by Anne G. Whitman of
Sub's obligations to the Lender.
Subordinated Promissory Note, dated November 14, 1990, by Company in
favor of Nikko in the original principal amount of $1,000,000.
Subordinated Promissory Note, dated November 14, 1990, by Company in
favor of Nikko in the original principal amount of $500,000.
21
<PAGE>
CAPITALIZATION OF CVC HOLDINGS, INC.
<TABLE>
<CAPTION>
Shares of
8% Non- As Converted to
Cumulative Shares of Currently Options As Converted Common (including
Convertible Common Exercisable Subject to to Common Currently Exercisable
Preferred Stock Stock Options Vesting (Excluding Options) Options)
--------------- --------- ----------- ---------- ------------------- ---------------------
<S> <C> <C> <C> <C> <C> <C>
Nikko Tecno 870 400 0 0 35,200 35,200
Ms. A. Whitman 765 0 0 0 30,600 30,600
Ms. Diana N. and 50 0 0 0 2,000 2,000
Mr. David R. Pefley,
JTWROS
Ms. C. Whitman 0 9,200 9,750 0 9,200 18,950
Mr. C. Mann 0 1,399 5,000 0 1,399 6,399
Mr. A. Peskoe 0 400 0 0 400 400
Mr. K. Little 0 0 2,646 0 0 2,646
Ms. J. Peskoe 0 1,600 1,250 0 1,600 2,850
Mr. T. Kandris 0 400 667 1,333 400 1,067
Mr. J. Geater 0 800 0 0 800 800
Dr. M. Moslehi 0 1,600 3,000 3,000 1,600 4,600
Mr. V. Mann 0 400 0 0 400 400
Dr. L. Velo 0 480 0 500 480 480
Dr. Y. Lee 0 1,100 0 500 1,100 1,100
Dr. P. Chapados 0 400 0 500 400 400
Dr. T. Omstead 0 200 334 666 200 534
Mr. Ahmad Kermani 0 0 167 333 0 167
Mr. Cecil Davis 0 0 0 2,000 0 0
- -------------------------------------------------------------------------------------------------------------------------
1,685 18,379 22,814 8,832 85,779 108,593
</TABLE>
<PAGE>
CVC PRODUCTS, INC.
U.S. PATENT PORTFOLIO
APRIL 12, 1995
PATENTS
No. 5,248,402 - Issued 9/28/93
APPLE-SHAPED MAGNETRON FOR SPUTTERING SYSTEM
PENDING APPLICATIONS
No. 08/369,381 (CIP) - Filed 1/06/95
MAGNETIC ORIENTING DEVICE FOR THIN FILM DEPOSITION AND
METHOD OF USE
APPLICATIONS BEING PREPARED
METHOD AND APPARATUS FOR CENTRIFUGAL PROCESSING OF
MICROELECTRONIC WAFERS
Draft sent to CVC
WAFER HANDLER FOR MULTI-STATION TOOL
Draft sent to CVC
PROSPECTIVE APPLICATIONS
Magnetic Bearing and Rotor for Vacuum Processor
Coating Measurer for Magnetically Supported Wafers
Plasma-assisted Chemical Vapor Deposition Unit
Wafer Support for Enhanced Thermal Transfer
Plasma Confinement and Control System
<PAGE>
List of Disclosures and Patent Applications (4/30/95)(1) *
o CVC-0001: Rapid Thermal Processing High-Performance Multi-Zone Illuminator
for Wafer Backside Heating; by Mehrdad M. Moslehi (B&B 021208.0107; Filed
on 4/13/95; Pending Application).
o CVC-0002: Apparatus and Method for Multi-Zone High-Density
Inductive1y-Coupled Plasma Generation; by Mehrdad M. Moslehi (B&B
021208.0102; To be filed by 5/08/95).
o CVC-0003: Fabrication Process for High-Density Inductively Coupled Plasma
Source; by Mehrdad M. Moslehi (B&B 021208.0105; To be filed by 5/15/95)
o CVC-0004: Apparatus and Method for Ionized Physical-Vapor Deposition; by
Mehrdad M. Moslehi (B&B 021208.0103; To be Filed by 5/31/95).
o CVC-0005: Segmented-Target Cathode Apparatus and Method of Operation for
Ionized Physical-Vapor Deposition; by Mehrdad M. Moslehi (B&B 021208.
0104; To be Filed by 5/31/95).
o CVC-0006: Apparatus and Method for Programmable Multi-Zone Injection of
Process Gases and Vapors in Microelectronics Manufacturing Equipment; by
Mehrdad M. Moslehi, Tom Omstead, Yong Jin Lee, Scott McAllister, and Ahmad
Kermani (B&B 021208.0106; To be Filed by 5/31/95).
o CVC-0007: Sensor Apparatus and Method for Autocalibration of Temperature
Sensors in Rapid Thermal Processing Equipment, by Mehrdad M. Moslehi, and
Yong Jin Lee (B&B 021208.0107; To be filed by 5/31/95).
o CVC-0008: High-Magnetic-Flux Permanent Magnet Array Apparatus and Method
for High-Productivity Physical-Vapor Deposition; by Dorian Heimanson (B&B
021208.0108; To be Filed by 5/31/95).
o CVC-0009: High-Magnetic-Flux Cathode Apparatus and Method for
High-Productivity Physical-Vapor Deposition; by Tom Omstead, Mehrdad M.
Moslehi, Dorian Heimanson, and Cecil Davis (B&B 021208.0109; To be filed
by 5/31/95).
o CVC-0010: Ultra-High-Vacuum Cathode Apparatus and Method for
Physical-Vapor Deposition; by Mehrdad M. Moslehi, Dorian Heimanson, and
Tom Omstead (B&B 02l208.0110; To be filed by 5/31/95).
- ----------
(1) Mehrdad Moslehi; PAT_AP95.DOC; 4/30/95
* All "to be filed by dates" are subject to change
<PAGE>
o CVC-0011: High-Performance Stacked Robot Apparatus and Method for
Automated Substrate Handling in Microelectronics Manufacturing Equipment;
by Mehrdad M. Moslehi (Gene Stephens/NY; To be filed by 5/31/95).
o CVC-0012: Apparatus and Method for Programmable Ultraclean Support and
Rotation of Substrates in Microelectronics Manufacturing Equipment; by
Mehrdad M. Moslehi and Yong Jin Lee (Gene Stephens/NY; To be filed by
6/07/95).
o CVC-0013: Multi-Point Precision Pyrometry Sensors for Rapid Thermal
Processing Equipment; by Yong Jin Lee and Mehrdad M. Moslehi (B&B
021208.0111; To be filed by 6/07/95).
o CVC-00l4: Programmable Ultraclean Electromagnetic Substrate Rotation
Apparatus and Method for Microelectronics Manufacturing Equipment; by
Mehrdad M. Moslehi and Yong Jin Lee (B&B 021208.0112; To be filed by
6/07/95).
o CVC-0015: Temperature-Controlled Chuck for Single-Substrate Manufacturing
Equipment; by Mehrdad M. Moslehi (B&B 021208.0113; Provisional Application
to be filed on 6/08/95; Section 111A Application by 7/31/95).
o CVC-0016: Inductively-Heated Temperature-Controlled Rotating Chuck for
Single-Substrate Manufacturing Equipment; by Mehrdad M. Moslehi and Yong
Jin Lee (B&B 021208.0114; Provisional Application to be filed on 6/08/95;
Section 111A Application by 7/31/95).
o CVC-0017: Monolithic Electrostatic Chuck for Single-Substrate
Microelectronic Manufacturing Equipment; by Mehrdad M. Moslehi (B&B
021208.0115; Provisional Application to be filed on 6/08/95; Section 111A
Application by 7/31/95).
o CVC-0018: Multi-Target Physical-Vapor-Deposition Module Apparatus and
Method for Microelectronics Device Manufacturing Applications; by Mehrdad
M. Moslehi and Yong Jin Lee (B&B 021208.0116; Provisional Application to
be filed on 6/08/95; Section 111A Application by 8/31/95).
o CVC-0019: High-Productivity Automated Substrate Handler for
Microelectronics Manufacturing Equipment; by Mehrdad M. Moslehi (B&B
021208.0117; Provisional Application to be filed on 6/08/95; Section 111A
Application by 8/31/95).
o CVC-0020: Centrifugal Processing Apparatus and Method for Microelectronics
Device Manufacturing; by Mehrdad M. Moslehi (Gene
2
<PAGE>
Stephens/NY; Provisional Application to be filed on 6/08/95; Section 111A
Application by 8/31/95).
o CVC-0021: Low-Thermal-Mass Optical Window for Rapid Thermal Processing
Equipment; by Mehrdad M. Moslehi (B&B 021208.0118; Provisional Application
to be filed on 6/08/95; Section 111A Application by 8/31/95).
o CVC-0022: Centrifugal Substrate Clamping Apparatus and Method for
Microelectronics Manufacturing Equipment; by Mehrdad M. Moslehi (B&B
021208.0119; Provisional Application to be filed on 6/08/95; Section 111A
Application by 9/30/95).
o CVC-0023: Multi-Electrode Sheet Resistance Uniformity Sensor; by Mehrdad
M. Moslehi (B&B 021208.0120; Provisional Application to be filed on
6/08/95; Section 111A Application by 9/30/95).
o CVC-0024: Liquid Metal Contact for Rotating Wafer Electrical Bias; by
Mehrdad M. Moslehi (B&B 021208121; Provisional Application to be filed on
6/08/95; Section 111A Application filing to be determined).
o CVC-0025: Real-Time In-Situ Microbalance Film Thickness Sensor for
Microelectronics Manufacturing Equipment; by Mehrdad M. Moslehi (B&B
021208.0122; Provisional Application to be filed on 6/08/95; Section 111A
Application filing to be determined).
o CVC-0026: Real-Time Acoustic Temperature Mapping in Rapid Thermal
Processing Equipment with Wafer Rotation; by Mehrdad M. Moslehi and Yong
Jin Lee (B&B 021208.0123; Provisional Application to be filed on 6/08/95;
Section 111A Application by 10/31/95).
o CVC-0027: Magnetic Substrate Handling and Clamping for Microelectronics
Manufacturing Equipment; by Mehrdad M. Moslehi (B&B 021208.0124;
Provisional Application to be filed on 6/08/95; Section 111A Application
filing to be determined).
o CVC-0028: Multi-Zone Inductive Substrate Heating Energy Source for Rapid
Thermal Processing Equipment; by Mehrdad M. Moslehi (B&B 021208.0125;
Provisional Application to be filed on 6/08/95; Section 111A Application
by 10/31/95).
o CVC-0029: Apparatus and Method for In-Situ Substrate Degassing in
Inductive1y-Coupled Plasma Processing Equipment; by Mehrdad M. Moslehi
(B&B 021208.0126; Provisional Application to be filed on 6/08/95; Section
111A Application by 11/15/95).
o CVC-0030: Inductively Coupled Plasma Etching Using Pulsed Inductive Wafer
Heating; by Mehrdad M. Moslehi (B&B 021208.0127; Provisional
3
<PAGE>
Application to be filed on 6/08/95; Section 111A Application filing to be
determined).
o CVC-0031: Physical-Vapor Deposition Apparatus and Method for In-Situ
Refractory Metal Silicide Formation; Mehrdad M. Moslehi and Tom Omstead
(B&B 021208.0128; Provisional Application to be filed on 6/08/95; Section
111A Application by 11/30 Provisional Application to be filed on 6/08/95;
Section 111A Application by 11/15/95).
o CVC-0032: Emissivity-Compensated Pyrometry Sensors for Rapid Thermal
Processing Equipment; by Mehrdad M. Moslehi (B&B 021208.0129; Provisional
Application to be filed on 6/08/95; Section 111A Application by 11/30/95).
o CVC-0033: Improved Rapid Thermal Process Control Using
Temperature-Controlled Warm Optical Window; by Mehrdad M. Moslehi (B&B
021208.0130; Provisional Application to be filed on 6/08/95; Section 111A
Application by 11/30/95).
o CVC-0034: Thickness and Uniformity Control or Multilayer Material
Structures in Multi-Target Physical-Vapor Deposition Equipment; by Mehrdad
M. Moslehi, Yong Jin Lee, and Tom Omstead (B&B 021208.0131; Provisional
Application to be filed on 6/08/95; Section 111A Application by 12/15/95).
4
<PAGE>
CVC HOLDINGS, INC.
9/30/94 3/31/95 4/30/95 5/12/95
SUMMARY
Chase Bank
Line of Credit 327,315 0 0 0
Notes 1,000,000 1,000,000 1,000,000 1,000,000
2nd Mortgage 280,000 265,253 250,168 235,083
Sub-Total 1,607,315 1,265,253 1,250,168 1,235,083
HYGE Partners 565,603 802,252 823,330 823,330
Nikko 2,500,000 2,500,000 2,500,000 2,500,000
663,234 1,000,000 1,000,000 1,000,000
Chemical Bank (COMIDA) 1,069,187 999,617 987,753 975,883
Sub'd't'd Note-Shareholder 254,086 263,086 263,086 263,086
<PAGE>
APPENDIX I INVENTORY OF HAZARDOUS CHEMICALS
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
CVC Inventory Trade Name Supplier/Manufacturer HMIS Rating Location MSDS
Number on file
<S> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------
4X597-A Dayton Electric 2/4/0 Y
- --------------------------------------------------------------------------------------------------------
99.6% Pure Nitrogen 911
- --------------------------------------------------------------------------------------------------------
Acetone 1/3/2 All Y
- --------------------------------------------------------------------------------------------------------
Acetylene
- --------------------------------------------------------------------------------------------------------
Agitene, regular Gray Mills Corp
- --------------------------------------------------------------------------------------------------------
Alumina, basic McDanel Refractory 1/0/0 Y
- --------------------------------------------------------------------------------------------------------
Alumina, activated Monsanto 1/0/0
- --------------------------------------------------------------------------------------------------------
Aluminum putty Devcon 1/1/0 Y
- --------------------------------------------------------------------------------------------------------
Antioxidant #29 DuPont
- --------------------------------------------------------------------------------------------------------
Apiezon, Type L 911
- --------------------------------------------------------------------------------------------------------
Argon Gas 911
- --------------------------------------------------------------------------------------------------------
B44VA4 Sealer Sherwin Williams 911
- --------------------------------------------------------------------------------------------------------
Bendix Evaporation 911
Material- Cr, TiO
- --------------------------------------------------------------------------------------------------------
BF Goodrich A541B 911
- --------------------------------------------------------------------------------------------------------
Bismuth metal powder General Electric 0/0/1 - Y
- --------------------------------------------------------------------------------------------------------
Blue AD metallic enamel Whitiker Corp./Haynes Div.
APA 2424
- --------------------------------------------------------------------------------------------------------
Boat Armour Kits A & B 911
- --------------------------------------------------------------------------------------------------------
Bodine LO-30 Oil 911
- --------------------------------------------------------------------------------------------------------
Booth compound 6610 Calgon
- --------------------------------------------------------------------------------------------------------
Broma Heatmaster DAP Inc. Y
enamel 136 Aluminum
- --------------------------------------------------------------------------------------------------------
Butyl phosphate Bendix
- --------------------------------------------------------------------------------------------------------
CIM Tap II 911, 912
- --------------------------------------------------------------------------------------------------------
CVC-19 CVC Y
- --------------------------------------------------------------------------------------------------------
CVC-60 CVC Y
- --------------------------------------------------------------------------------------------------------
CVC-70 CVC Y
- --------------------------------------------------------------------------------------------------------
CVC-70/19 CVC Y
- --------------------------------------------------------------------------------------------------------
CVC DC-702 CVC Y
- --------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
APPENDIX I INVENTORY OF HAZARDOUS CHEMICALS
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
CVC Inventory Trade Name Supplier/Manufacturer HMIS Rating Location MSDS
Number on file
<S> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------
CVC DC-704 CVC Y
- --------------------------------------------------------------------------------------------------------
CVC DC-705 CVC Y
- --------------------------------------------------------------------------------------------------------
CVC/KRYTOX 1506 CVC Y
- --------------------------------------------------------------------------------------------------------
CVC/KRYTOX 1514 CVC Y
- --------------------------------------------------------------------------------------------------------
CVC/KRYTOX 1525 CVC Y
- --------------------------------------------------------------------------------------------------------
CVC/KRYTOX 1618 CVC Y
- --------------------------------------------------------------------------------------------------------
Caviclean #2 Turco Products 2/2/1 Y
- --------------------------------------------------------------------------------------------------------
Celite 545 Fisher
- --------------------------------------------------------------------------------------------------------
Cellose Ester Eastman 0/1/- Y
- --------------------------------------------------------------------------------------------------------
Celvacene CVC
- --------------------------------------------------------------------------------------------------------
Celvaseal 911
- --------------------------------------------------------------------------------------------------------
Chemax hardening Chemax Inactive
cement Tracet 600A
- --------------------------------------------------------------------------------------------------------
Chemtronics E-series 911
Ultrajet
- --------------------------------------------------------------------------------------------------------
Chlorothene VG Chemical Sales 1/1/1
- --------------------------------------------------------------------------------------------------------
0900-909-3100 Cimperial 1011 Cincinnati Milacron 2/1/2 Inactive
- --------------------------------------------------------------------------------------------------------
Convalex 10 CVC
- --------------------------------------------------------------------------------------------------------
Convoil 20 CVC
- --------------------------------------------------------------------------------------------------------
Cool-Amp silver plating 911
powder
- --------------------------------------------------------------------------------------------------------
Crown Dry Graphite 911
- --------------------------------------------------------------------------------------------------------
DP190 Epoxy Scotch-Weld 911
- --------------------------------------------------------------------------------------------------------
DSL Clearcut 140B Davis Howland
- --------------------------------------------------------------------------------------------------------
DSL Compound 1 Davis Howland
- --------------------------------------------------------------------------------------------------------
DSL regular 30 Davis Howland
- --------------------------------------------------------------------------------------------------------
DTE Oil 25 Mobil
- --------------------------------------------------------------------------------------------------------
Dayton Acrylic Enamel 911
- --------------------------------------------------------------------------------------------------------
Dexter Hysol #PC28 Dexter 911
STD
- --------------------------------------------------------------------------------------------------------
Devcon Aluminum Putty 911
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
APPENDIX I INVENTORY OF HAZARDOUS CHEMICALS
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
CVC Inventory Trade Name Supplier/Manufacturer HMIS Rating Location MSDS
Number on file
<S> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------
Diethyl Hexyl Phthalate Aristech Chem. Corp. 2/1/0
(PX-138)
- --------------------------------------------------------------------------------------------------------
Dioctyl Sebacate CP Hall Co. 1/1/1
- --------------------------------------------------------------------------------------------------------
Dixon's Graphite Flake 911
- --------------------------------------------------------------------------------------------------------
Dowanol EB Dow 2/2/0
- --------------------------------------------------------------------------------------------------------
Dow Corning 55 Dow Corning 911
- --------------------------------------------------------------------------------------------------------
Dow Corning 702 Dow Corning
- --------------------------------------------------------------------------------------------------------
Dow Corning 704 Dow Corning 911
- --------------------------------------------------------------------------------------------------------
Dow Corning 705 Dow Corning 911
- --------------------------------------------------------------------------------------------------------
Dow Corning 340 Dow Corning 911
- --------------------------------------------------------------------------------------------------------
Dow Corning "Z" Moly Dow Corning 911
Powder
- --------------------------------------------------------------------------------------------------------
Dow Corning Vac Dow Corning 911
Grease
- --------------------------------------------------------------------------------------------------------
Duo-Seal CVC
- --------------------------------------------------------------------------------------------------------
DuPont oil blue A Pylam
- --------------------------------------------------------------------------------------------------------
DuPont oil yellow liquid DuPont 2/3/0 Inactive Y
dye
- --------------------------------------------------------------------------------------------------------
Enerpar SE-52 BP Oil 0/1/0 - Y
- --------------------------------------------------------------------------------------------------------
Enthol 210 Enthone Inc. 2/0/0 Inactive Y
- --------------------------------------------------------------------------------------------------------
Ethyl Glycol Baker
- --------------------------------------------------------------------------------------------------------
Flat Black baking Sherwin-Williams 2/3/0
enamel
- --------------------------------------------------------------------------------------------------------
Franklin Vanguard 911
- --------------------------------------------------------------------------------------------------------
Freon 12 DuPont Inactive
- --------------------------------------------------------------------------------------------------------
Freon 22
- --------------------------------------------------------------------------------------------------------
Freon TC-7 Raeco 0/3/0 Y
- --------------------------------------------------------------------------------------------------------
Freon TE DuPont 0/3/0 Y
- --------------------------------------------------------------------------------------------------------
Gabriel creme Cleanser 911
- --------------------------------------------------------------------------------------------------------
Gougen West Epoxy 911
System
- --------------------------------------------------------------------------------------------------------
GRL cleaner #1190 Cello Corp 1/0/0 Y
- --------------------------------------------------------------------------------------------------------
Helium Gas 911
- --------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
APPENDIX I INVENTORY OF HAZARDOUS CHEMICALS
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
CVC Inventory Trade Name Supplier/Manufacturer HMIS Rating Location MSDS
Number on file
<S> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------
Hi-Tech 00747 solvent 911
& degreaser
- --------------------------------------------------------------------------------------------------------
Hydrochloric acid Fisher 3/0/2 Y
- --------------------------------------------------------------------------------------------------------
Hydrol 146 Raeco Inactive
- --------------------------------------------------------------------------------------------------------
Instapak parts cleaner 911
- --------------------------------------------------------------------------------------------------------
Isopropyl alcohol Shell 3/3/0 All Y
- --------------------------------------------------------------------------------------------------------
Isopropynol 911
- --------------------------------------------------------------------------------------------------------
Jon-Draw 722 SC Johnson 1/1/0 Y
- --------------------------------------------------------------------------------------------------------
Kerosene Raeco 0/2/0 Y
- --------------------------------------------------------------------------------------------------------
Kool Mist Formula 78
- --------------------------------------------------------------------------------------------------------
Krylon Crystal Clear Krylon 911
#1301 & 1302
- --------------------------------------------------------------------------------------------------------
Krylon Black Paint Krylon 911
- --------------------------------------------------------------------------------------------------------
Krylon interior/exterior Krylon 911
- --------------------------------------------------------------------------------------------------------
Krytox DuPont
- --------------------------------------------------------------------------------------------------------
LPS Instant Cleaner 911
- --------------------------------------------------------------------------------------------------------
LPS2 Lubricant 911
- --------------------------------------------------------------------------------------------------------
Liquid Nitrogen 911
- --------------------------------------------------------------------------------------------------------
Loctite liquid pipe -911
sealant w/Teflon
- --------------------------------------------------------------------------------------------------------
Loctite #271 911
- --------------------------------------------------------------------------------------------------------
Loctite 414 super bond 911
- --------------------------------------------------------------------------------------------------------
Loctite Solvent 911 -
- --------------------------------------------------------------------------------------------------------
Lubriplate # 107 911
- --------------------------------------------------------------------------------------------------------
Magnesium oxide Fisher
- --------------------------------------------------------------------------------------------------------
#10 Flushing fluid Baxter Scientific
- --------------------------------------------------------------------------------------------------------
#18 Flushing fluid Baxter Scientific
- --------------------------------------------------------------------------------------------------------
#19 Flushing fluid Baxter Scientific
- --------------------------------------------------------------------------------------------------------
Mercury Goldsmith Chemical 4/0/1 Y
- --------------------------------------------------------------------------------------------------------
Methanol Baker 3/3/1 Inactive Y
- --------------------------------------------------------------------------------------------------------
Milk of Magnesia Purepac 911
- --------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
APPENDIX I INVENTORY OF HAZARDOUS CHEMICALS
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
CVC Inventory Trade Name Supplier/Manufacturer HMIS Rating Location MSDS
Number on file
<S> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------
Mobil Velocite oil #10 Mobil
- --------------------------------------------------------------------------------------------------------
Molykote (R) grease Dow Corning 1/1/0
- --------------------------------------------------------------------------------------------------------
Mop/Strip #1121 Cello Corp. 3/0/0 Inactive Y
- --------------------------------------------------------------------------------------------------------
Mullite McDanel Refractory 1/0/0 Y
- --------------------------------------------------------------------------------------------------------
Nalclean 2568 nalco
- --------------------------------------------------------------------------------------------------------
Naptha VM+P Shell 2/3/0 Inactive Y
- --------------------------------------------------------------------------------------------------------
Nitric acid Allied Chemical 3/0/3 Inactive
- --------------------------------------------------------------------------------------------------------
0413-1120 Nitrogen Union Carbide 3/0/0 Y
- --------------------------------------------------------------------------------------------------------
Nylatron shapes Polymer 1/0/0 Inactive Y
- --------------------------------------------------------------------------------------------------------
0413-1203 Oakite 32 Oakite 3/0/2 Inactive Y
- --------------------------------------------------------------------------------------------------------
Oakite 33 Oakite 2/0/1 Y
- --------------------------------------------------------------------------------------------------------
Oakite 542NN Oakite 1/2/2 Y
- --------------------------------------------------------------------------------------------------------
Oakite bright Oakite 3/0/3 Y
- --------------------------------------------------------------------------------------------------------
Oakite bright keep Oakite 2/0/2 Y
- --------------------------------------------------------------------------------------------------------
0413-1202 Oakite deoxidizer Oakite 3/0/3 Inactive Y
- --------------------------------------------------------------------------------------------------------
Oakite Dispoz Aid Oakite 1/0/1 Y
- --------------------------------------------------------------------------------------------------------
0413-1200 Oakite Dynadet Oakite 3/0/1 Inactive Y
- --------------------------------------------------------------------------------------------------------
Oakite Enhance Oakite 1/1/0 - Y
- --------------------------------------------------------------------------------------------------------
Oakite Dynadet Oakite 1/1/0 Y
- --------------------------------------------------------------------------------------------------------
Octoil CVC Y
- --------------------------------------------------------------------------------------------------------
Octoil-S CVC Y
- --------------------------------------------------------------------------------------------------------
Oil, petroleum, NFO Corp.
lubricant A-90
- --------------------------------------------------------------------------------------------------------
Oxygen Union Carbide 3/0/0 Y
- --------------------------------------------------------------------------------------------------------
PTFE & TFE shapes Polymer 1/1/0 Y
- --------------------------------------------------------------------------------------------------------
Paratec Raeco 1/1/0 Y
- --------------------------------------------------------------------------------------------------------
Patchlin 964 Patchlin 3/2/2 Inactive Y
- --------------------------------------------------------------------------------------------------------
Peel Filmite Chemed Corp. Inactive
- --------------------------------------------------------------------------------------------------------
Permabond 015 911
- --------------------------------------------------------------------------------------------------------
Permagloss Plus Cello Corp. 1/0/0 Inactive Y
- --------------------------------------------------------------------------------------------------------
Permatex removeable 911
thread locker
- --------------------------------------------------------------------------------------------------------
Plasma-oil 80 CVC Y
- --------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
APPENDIX I INVENTORY OF HAZARDOUS CHEMICALS
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
CVC Inventory Trade Name Supplier/Manufacturer HMIS Rating Location MSDS
Number on file
<S> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------
Plasti-Dip 911
- --------------------------------------------------------------------------------------------------------
Precisionnaire 911
adhesive
- --------------------------------------------------------------------------------------------------------
OS-124 Polyphenyl Monsanto 0/1/0 Y
Ether Lubricant
- --------------------------------------------------------------------------------------------------------
Propane Bernzomatic 1/4/0 Y
- --------------------------------------------------------------------------------------------------------
RTV # 106 GE 911
- --------------------------------------------------------------------------------------------------------
Raeco 600 W gear oil Raeco Inactive
- --------------------------------------------------------------------------------------------------------
Refrigeration fluid Sun Oil
- --------------------------------------------------------------------------------------------------------
SAE 30 oil
- --------------------------------------------------------------------------------------------------------
SAF-SOL20/20 Certified Labs 3/4/1 Inactive Y
- --------------------------------------------------------------------------------------------------------
Safety Solvent #8060 Crown 3/0/1 913 Y
- --------------------------------------------------------------------------------------------------------
Saniwax 911
- --------------------------------------------------------------------------------------------------------
Silicone resin solution Davis Howland (GE)
SR-882M
- --------------------------------------------------------------------------------------------------------
Soda ash Allied 1/0/1 Inactive Y
- --------------------------------------------------------------------------------------------------------
Sodium silicate Diamond Shamrock 1/0/0 Inactive
- --------------------------------------------------------------------------------------------------------
Sodium silicate N Scobell Inactive
- --------------------------------------------------------------------------------------------------------
Solder Kester SN60 PB40 -911
- --------------------------------------------------------------------------------------------------------
Solder Rochester Lead Works 3/0/0 910 Y
- --------------------------------------------------------------------------------------------------------
Soldering flux #1636 Kester 910
- --------------------------------------------------------------------------------------------------------
Solvex-10 CVC
- --------------------------------------------------------------------------------------------------------
Solvolene, petroleum Raeco 2/3/0 Inactive Y
naptha
- --------------------------------------------------------------------------------------------------------
SS putty-resin Devcon 1/1/0 Inactive Y
- --------------------------------------------------------------------------------------------------------
SS brightener Diversey/Wyandotte 3/0/3 Inactive Y
DS-9-333
- --------------------------------------------------------------------------------------------------------
Stay Clean Flux Harris 910 Y
- --------------------------------------------------------------------------------------------------------
Sleet Ink, aerosol DoAll 4/3/0 Inactive Y
- --------------------------------------------------------------------------------------------------------
Slick wax #140 Johnson 0/0/0 Inactive Y
- --------------------------------------------------------------------------------------------------------
Sulfuric acid Baker 3/0/3 Y
- --------------------------------------------------------------------------------------------------------
Sure-Sol-200 Koch 2/3/0 Y
- --------------------------------------------------------------------------------------------------------
TW-4 CVC Y
- --------------------------------------------------------------------------------------------------------
TW-7 CVC Y
- --------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
APPENDIX I INVENTORY OF HAZARDOUS CHEMICALS
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
CVC Inventory Trade Name Supplier/Manufacturer HMIS Rating Location MSDS
Number on file
<S> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------
TW-Light CVC Y
- --------------------------------------------------------------------------------------------------------
Tetrochlorothene 3/0/1 Inactive
- --------------------------------------------------------------------------------------------------------
Thinner # 103 Kester Inactive Y
- --------------------------------------------------------------------------------------------------------
Toluene Baker 2/3/0 913 Y
- --------------------------------------------------------------------------------------------------------
Turbo T Oil 32 Shell Inactive
- --------------------------------------------------------------------------------------------------------
Trichloroethene 1,1,1 Chemical Sales 1/1/1 Inactive Y
- --------------------------------------------------------------------------------------------------------
Ultimate Self-polishing Scot Laboratories
Finish
- --------------------------------------------------------------------------------------------------------
Unocal multipurpose Unocal 0/1/0 Y
ATF
- --------------------------------------------------------------------------------------------------------
UPS lubricant #2 911
- --------------------------------------------------------------------------------------------------------
Vibracut compound Elliott Mfg. Inactive
- --------------------------------------------------------------------------------------------------------
Vistac Oil 68X Chevron Inactive
- --------------------------------------------------------------------------------------------------------
VOL Temproof 911
- --------------------------------------------------------------------------------------------------------
Waterless surface Rahn 0/1/0 Y
plate cleaner
- --------------------------------------------------------------------------------------------------------
Wax-cut concentrate Johnson 0/1/0 Inactive Y
#121
- --------------------------------------------------------------------------------------------------------
Way oil -
- --------------------------------------------------------------------------------------------------------
White spray booth Essex 2/3/2 Inactive Y
coating
- --------------------------------------------------------------------------------------------------------
Wicke's #205 911 Y
lubricating graphite
- --------------------------------------------------------------------------------------------------------
Xylene Shell 2/3/0 Inactive Y
- --------------------------------------------------------------------------------------------------------
Z Moly-Powdr Dow Corning 1/0/0 Y
- --------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
EXHIBIT D
STOCKHOLDERS' AGREEMENT
(See Tab 7)
<PAGE>
EXHIBIT E
REGISTRATION RIGHTS AGREEMENT
(See Tab 8)
<PAGE>
EXHIBIT G
MATERIAL CONTRACTS
<PAGE>
Exhibit G
Material Contracts
Agreement of Purchase and Sale of Stock, dated as of December 21,
1990, among Company and each of the seller of shares of capital stock of Sub
named therein.
Subordinated Promissory Note, dated December 21, 1990, by Company in
favor of Donald C. Anderson ("Anderson") in the original principal amount of
$45,360.
Subordinated Promissory Note, dated December 21, 1990, by Company in
favor of George Garfield ("Garfield") in the original principal amount of
$46,582.
Subordinated Promissory Note, dated December 21, 1990, of Company in
favor of Richard F. Morse ("Morse") in the original principal amount of $49,036.
Subordinated Promissory Note, dated December 21, 1990, by Company in
favor of Brian Wright ("Wright") in the original principal amount of $46,582.
Subordinated Promissory Note, dated December 21, 1990, by Company in
favor of Avstone & Company ("Avstone") in the original principal amount of
$12,440.
Subordinated Guaranty, dated as of December 21, 1990 (the
"Subordinated Guaranty"), by the Sub of Company's obligations under each of the
Subordinated Promissory Notes referred to above.
Subordination Agreement, dated December 21, 1990, among Sub,
Garfield, Morse, Wright, Anderson, Avstone and the Lender, with respect to
the Subordinated Guaranty.
Consulting and Sales Agreement, dated as of December 21, 1990, as
amended as of May 7, 1993, between Sub and HYGE Partners.
Agreement, dated as of May 4, 1994, between Sub and HYGE Partners.
Subordination Agreement, dated as of December 21, 1990, among HYGE,
Sub and The Chase Manhattan Bank, N.A., as successor to Chase Lincoln First
Bank, NA. (the "Lender"), with respect to the Consulting and Sales Agreement
referred to above.
Agreement with respect to Deferred Compensation Plan, dated as of
December 21, 1990, for Officers of Sub among Sub, Garfield, Morse, Anderson and
Wright.
<PAGE>
Subordinated Guaranty Agreement, dated as of December 21, 1990, by
Company of Sub's obligations under the Agreement with respect to Deferred
Compensation Plan for Officers of Sub referred to above.
Amended and Restated Revolving Loan and Security Agreement, dated as
of January 29, 1992, as amended December 16, 1992, February 11, 1993 and August
12, 1994, between Sub and the Lender.
Security Agreement, dated as of September 1, 1988, as amended,
between the Lender and Sub.
Amended and Restated Mortgage Note, dated December 21, 1990, as
amended, by Sub in favor of the Lender in the original principal amount of
$500,000.
Amended and Restated Promissory Note, dated August 12, 1994, as
extended February 17, 1995, by Sub in favor of the Lender in the original
principal amount of $500,000.
Amended and Restated Promissory Note, dated August 12, 1994, as
extended February 17, 1995, by Sub in favor of the Lender in the original
principal amount of $500,000.
Guaranty Agreement, dated as of December 21, 1990, by Company of
Sub's obligations to the Lender.
Assignment of Life Insurance Policy upon the life of Christine
Whitman, dated December 21, 1990, by Sub to the Lender.
Subordinated Promissory Note, dated December 21, 1990, by Sub in
favor of Company in the original principal amount of $1,500,000.
Stockholders' Agreement, dated as of December 21, 1990, as amended,
among Company and the signatory stockholders.
Subordinated Promissory Note, dated November 14, 1990, by Company in
favor of Nikko in the original principal amount of $1,000,000.
<PAGE>
Subordinated Promissory Note, dated November 14, 1990, by Company in
favor of Nikko in the original principal amount of $500,000.
Subordination Agreement, dated December 21, 1990, as supplemented,
among Company, Sub and the Lender.
Option Agreement, dated as of December 21, 1990, between Company and
Christine Whitman.
Option Agreement, dated as of December 21, 1990, between Company and
Christopher Mann.
Option Agreement, dated as of December 21, 1990, between Company and
Paul Ballentine, as assigned.
Option Agreement, dated as of January 24, 1992, between Company and
Keene Little (together with Employment Agreement, dated November 19, 1990,
between Keene Little and Sub, contemplating the grant of additional options).
Option Agreement, dated as of July 12, 1993, between Company and
Thomas Omstead.
Option Agreement, dated as of October 15, 1993, between Company and
Thomas Kandris.
Option Agreement, dated as of October 15, 1993, between Company and
Ahmad Kermani.
Option Agreement, dated as of February 1, 1994, between Company and
Mehrdad Moslehi.
Option Agreement, dated as of April 18, 1994, between Company and
Yong Jin Lee.
Option Agreement, dated as of August 15, 1994, between Company and
Philip Chapados.
Option Agreement, dated as of October 17, 1994, between Company and
Lino Velo.
Option Agreement, dated as of December 19, 1994, between Company and
Cecil Davis.
Various purchase orders for Sub's products made in the ordinary
course of business.
Agreement, dated August 27, 1993, between Sub and Texas Instruments
Incorporated.
<PAGE>
Agreement, dated January 1, 1989, between Sub and The BOC Group,
Inc.
Software Components Binary License Agreement, dated December 8,
1992, between Sub and Realtime Performance, Inc.
Purchase and License Quotation and Agreement, dated February 22,
1989, as amended, between Sub and Techware Systems Corporation.
Agreement for Purchase and Sale of Assets, dated as of September 30,
1992, between Sub and Process Products Corporation.
Asset Purchase and Sale Agreement, dated as of September 30, 1993,
among Company, Sub and Varian Associates, Inc.
Agreement, dated May 26, 1994, between Sub and New York State Energy
Research and Development Authority.
Lease, dated as of August 1, 1974, between Sub and County of Monroe
Industrial Development Agency, with respect to space in Rochester, New York; as
assigned by Assignment of Lease from County of Monroe Industrial Development
Agency to Manufacturers Hanover Trust Company/Genesee Region, dated August 1,
1974.
Guaranty, dated August 1, 1974, by Sub in favor of County of Monroe
Industrial Development Agency.
Agreement, dated September 16, 1974, among Sub, County of Monroe
Industrial Development Agency and Manufacturers Hanover Trust Company/Genesee
Region.
Lease, dated as of July 21, 1993, between Sub and Mission Falls
Corporation, with respect to space in Fremont, California.
Lease term sheet, dated June 18, 1993, between Sub and
Mercantile-Safe Deposit & Trust Company, as assignee of Mercantile-Towson Joint
Venture, with respect to space in Towson, Maryland.
Guaranteed Support Agreement, dated August 19, 1983, between Sub and
Empire Data Processing, Inc. (including End User License Agreement and End User
Guarantee of Payment annexed thereto).
Cooperation Agreement, dated December 1993, between Sub and
Interuniversitair Micro-Elektronica Centrum vzw.
<PAGE>
License Agreement, dated December 1993, between Sub and
Interuniversitair Micro-Elektronica Centrum vzw.
Sponsored Research Agreement, dated November 29, 1994, between Sub
and The Research Foundation of State University of New York.
Employment Agreement, dated as of December 21, 1990, between Sub and
Christine Whitman.
Employment Agreement, dated as of October 25, 1993, between Sub and
Thomas Kandris.
Employment Agreement, dated as of October 25, 1993, between Sub and
Ahmad Kermani.
Agreement between Sub and Local 342 of the International Union of
Electronic, Electrical, Salaried, Machine & Furniture Workers, AFL-CIO, dated
November 7, 1991, as extended.
(Planar) Agreement among the Government (Advanced Research Projects
Agency), Sub and the other Consortium members named therein.
Contract, dated September 15, 1994, between Sub and the Office of
Naval Research.
National Science Foundation Grant Letter, dated April 20, 1995, to
Sub for support of project entitled "Senior Fusion for Advanced Copper
Metallization Cluster Tool" (Proposal No. DMI-9461125).
Letter of Understanding and Agreement, dated August 25, 1994, as
amended, between Company and Rodman & Renshaw, Inc.
<PAGE>
EXHIBIT H
FORM OF LEGAL OPINION
(See Tab 10)
<PAGE>
EXHIBIT I
AMENDMENT TO BYLAWS
<PAGE>
CVC HOLDINGS, INC. BYLAW AMENDMENTS
(approved by Unanimous Consent
of the Board of Directors of CVC
Holdings, Inc. (the "Corporation"),
dated May 11, 1995)
Article II, Section 3 of the Bylaws of the Corporation were amended
by deleting the last sentence of such section and substituting the following
therefor:
"In the interim between annual meetings of stockholders or of
special meetings of stockholders called for the election of
directors and/or for the removal of one or more of the directors and
for the filling of any vacancy in that connection, newly created
directorships and any vacancies in the Board of Directors, including
vacancies resulting from the removal of directors for cause or
without casue, may be filled only by the vote or written consent in
lieu of meeting of the class of stockholders entitled to elect such
director. At any meeting held for the purpose of electing a director
or directors, the presence in person or by proxy of the holders of
the majority of shares then outstanding of the class entitled to
vote for the election of such director or directors shall constitute
a quorum for the purpose of electing a director or directors by the
stockholders of such class."
Article II, Section 5 of the Bylaws of the Corporation were amended
by deleting such section in its entirety and substituting the following
therefor:
"5. Removal of Directors. Except as may otherwise be provided by the
General Corporation Law or the Certificate of Incorporation, any or
all of the directors elected by a class of stockholders may only be
removed by the vote of the holders of not less than a majority of
the shares of such class voting thereon, provided, however, that in
case of the corporation having cumulative voting, no director may be
removed without cause if the votes against his removal would be
sufficient to elect him if voted cumulatively at an election of
directors at which the same number of votes were cast and the whole
Board were then being elected. At any meeting held for the purpose
of removing a director or directors, the presence in person or by
proxy of the holders of the majority of shares then outstanding of
the class entitled to vote for the removal of such director or
directors shall constitute a quorum for the purpose of removing a
director or directors by the stockholders of such class."
<PAGE>
EXHIBIT J
USE OF PROCEEDS
<PAGE>
EXHIBIT J
Part I.
Chase Manhattan Bank
All amounts outstanding under the following agreements:
Amended and Restated Mortgage Note, filed December 21, 1990, as
amended, by Sub in favor of Chase Manhattan Bank, N.A. (the
"Lender"). (Amount outstanding as of the Closing Date, approximately
$235,083)
Amended and Restated Revolving Loan and Security Agreement dated as
of January 29, 1992 as amended between Sub and Lender
Amended and Restated Promissory Notes by Sub in favor of Lender in
the original aggregate principal amount of $1,000,000. (Amount
outstanding as of Closing Date, approximately $1,000,000)
HYGE Partners
All amounts outstanding under the following agreements:
Consulting and Sales Agreement, dated as of December 21, 1990,
between Sub and HYGE Partners and all amendments, notes and related
agreements pursuant thereto, including the Agreement, dated as of
May 4, 1994, between Sub and HYGE Partners. (Amount outstanding as
of Closing Date, approximately $823,330, in the aggregate.)
Nikko Tecno Co., Inc.
$1,000,000 of the Company and Sub's outstanding indebtedness to
Nikko Tecno Co., Inc.
Part II.
Up to $2,207,000 for capital expenditures budgeted over the next 12
to 18 months and the remainder for general corporate purposes.
<PAGE>
EXHIBIT 10.7
================================================================================
CVC HOLDINGS, INC.
REGISTRATION RIGHTS AGREEMENT
May 22, 1995
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
1. Certain Definitions......................................................1
2. Restrictions on Transferability..........................................3
3. Restrictive Legend.......................................................3
4. Notice of Proposed Transfers.............................................4
5. Registration.............................................................5
5.1 Requested Registration.............................................5
5.2 Company Registration...............................................7
5.3 Registration on Form S-3...........................................9
5.4 Limitations on Subsequent Registration Rights.....................10
5.5 Expenses of Registration..........................................10
5.6 Registration Procedures...........................................10
5.7 Indemnification...................................................11
5.8 Information by Holders............................................12
5.9 Rule 144 Reporting................................................12
5.10 Transfer of Registration Rights...................................13
6. Standoff Agreement......................................................14
7. Right of First Offer....................................................14
7.1 Grant.............................................................14
7.2 Over-Allotment Option.............................................14
7.3 Pro Rata Share....................................................15
7.4 Notices...........................................................15
7.5 Failure to Exercise Right.........................................16
7.6 Termination.......................................................16
7.7 Assignment........................................................16
8. Miscellaneous...........................................................16
8.1 Amendment.........................................................16
8.2 Governing Law.....................................................17
8.3 Entire Agreement..................................................17
8.4 Notices, Etc......................................................17
8.5 Counterparts......................................................18
-i-
<PAGE>
CVC HOLDINGS, INC.
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement") is made as of May 22,
1995 by and among CVC Holdings, Inc., a Delaware corporation (the "Company"),
Seagate Technology, Inc., a Delaware corporation (the "Series B Purchaser") and
the stockholders of the Company listed on Exhibit A (the "Existing Purchasers")
The Series B Purchaser and the Existing Purchasers being collectively referred
to herein as the "Purchasers" and individually as a "Purchaser".
RECITALS
WHEREAS, the Series B Purchaser and the Company are entering into a
Securities Purchase Agreement (the "Purchase Agreement"), of even date herewith,
pursuant to which the Series B Purchaser is purchasing from the Company shares
of its Series B Preferred Stock and a Warrant exercisable for Series B Preferred
Stock of the Company;
WHEREAS, the Company and the Purchasers are parties to that certain
Amended and Restated Stockholders' Agreement dated as of May 22, 1995 (the
Stockholder's Agreement), pursuant to which agreement prior to such amendment
and restatement the Company had granted certain registration rights to the
Existing Purchasers and which right have been deleted as of the date hereof
pursuant to such amendment and restatement; and
WHEREAS, the obligations of the Company and the Series B Purchaser under
the Purchase Agreement are conditioned, among other things, upon the execution
and delivery of this Agreement by the Company, the Series B Purchaser and the
Existing Purchasers;
NOW, THEREFORE, in consideration of the mutual promises and covenants set
forth below, the Company, the Series B Purchaser, and the Existing Purchasers
agree as follows:
1. Certain Definitions.
As used in this Agreement, the following terms shall have the
following respective meanings:
"Commission" shall mean the Securities and Exchange Commission or
any other federal agency at the time administering the Securities Act.
"Common Stock" shall mean the Common Stock of the Company, par value
$.01 per share.
"Conversion Stock" means the Common Stock issued or issuable
pursuant to conversion of the Preferred Stock (including the Preferred Stock
issuable upon exercise of the Warrant).
<PAGE>
"Holders" shall mean (i) the Purchasers for so long as Purchasers
hold Registrable Securities, and (ii) any person holding Registrable Securities
to whom the rights of the Purchaser under this Agreement have been transferred
in accordance with Section 5.10.
"Initiating Holders" shall mean any Series B Holders who own in the
aggregate not less than 40% of the Registrable Securities held by all Series B
Holders.
"Large Holders" shall mean the Series B Purchaser, Nikko Tecno Co.,
Inc., Anne G. Whitman and Christine B. Whitman, and their permitted assignees
under Section 7.7.
"Non Series B Holders" shall mean Holders that are not Series B
Holders.
"Preferred Stock" shall mean the Series A Preferred and the Series B
Preferred.
"Registrable Securities" means outstanding Common Stock, the
Conversion Stock and any shares of Common Stock, (i) acquired by any Holder by
any means or (ii) issued or issuable in respect of shares of Common Stock
acquired by any Holder upon any stock split, stock dividend, recapitalization,
or similar event; provided, however, that Registrable Securities shall not
include shares of Common Stock that have previously been sold to or through a
broker or dealer or underwriter in a public distribution or a public securities
transaction.
The terms "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.
"Registration Expenses" shall mean all expenses, except as otherwise
stated below, incurred by the Company in complying with Sections 5.1, 5.2 and
5.3 hereof, including, without limitation, all registration, qualification and
filing fees, printing expenses, escrow fees, fees and disbursements of counsel
for the Company, blue sky fees and expenses, the expense of any special audits
incident to or required by any such registration (but excluding the compensation
of regular employees of the Company which shall be paid in any event by the
Company) and, in the case of the Series B Holders, the fees and disbursements of
counsel for the Series B Holders.
"Restricted Securities" shall mean the securities of the Company
required to bear the legend set forth in Section 3 hereof.
"Securities Act" shall mean the Securities Act of 1933, as amended,
or any similar federal statute and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
-2-
<PAGE>
"Selling Expenses" shall mean all underwriting discounts, selling
commissions and stock transfer taxes applicable to the securities registered by
the Holders and, except as set forth under "Registration Expenses", all fees and
disbursements of counsel for any Holder.
"Series A Preferred" shall mean the 8% Non-Cumulative Convertible
Preferred Stock of the Company.
"Series B Preferred" shall mean the Series B Non-Cumulative
Convertible Preferred Stock of the Company issued pursuant to the Securities
Purchase Agreement.
"Series B Holders" shall mean (i) the Series B Purchaser for so long
as the Series B Purchaser holds Registrable Securities, and (ii) any person
holding Registrable Securities to whom the rights under this Agreement have been
transferred from the Series B Purchaser or a transferee of the Series B
Purchaser in accordance with Section 5.10.
"Stockholders Agreement" shall mean the Amended and Restated
Stockholders Agreement dated as of the date hereof among the Company, the Series
B Purchaser and the Existing Purchasers, as it may be amended from time to time.
"Warrant" means the warrant to purchase Series B Preferred issued by
the Company to the Series B Purchaser pursuant to the Purchase Agreement.
2. Restrictions on Transferability. The shares of Preferred Stock and
Common Stock (i) acquired by any Holder and (ii) issued or issuable in respect
of shares of Preferred Stock or Common Stock acquired by any Holder upon any
stock split, stock dividend, recapitalization, merger, consolidation or similar
event, shall not be sold, assigned, transferred or pledged except upon the
conditions specified in this Agreement, which conditions are intended to ensure
compliance with the provisions of the Securities Act. Each Holder will cause any
proposed purchaser, assignee, transferee, or pledgee of any such shares held by
such Holder to agree to take and hold such securities subject to the provisions
and upon the conditions specified in this Agreement.
3. Restrictive Legend. Each certificate representing shares of Preferred
Stock and Common Stock (i) acquired by any Holder and (ii) issued or issuable in
respect of shares of Preferred Stock or Common Stock acquired by any Holder upon
any stock split, stock dividend, recapitalization, merger, consolidation or
similar event, shall (unless otherwise permitted by the provisions of Section 4
below) be stamped or otherwise imprinted with a legend in substantially the
following form (in addition to any legend required under applicable state
securities laws):
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED ("THE ACT"), AND HAVE
BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN
CONNECTION WITH, THE SALE OR
-3-
<PAGE>
DISTRIBUTION THEREOF. SUCH SHARES MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED OR HYPOTHECATED IN THE ABSENCE OF SUCH REGISTRATION UNLESS
(A) THE COMPANY RECEIVES AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO IT STATING THAT SUCH SALE OR TRANSFER IS EXEMPT FROM
THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SAID ACT,
(B) IT IS ESTABLISHED TO THE SATISFACTION OF THE COMPANY THAT SUCH
SALE OR TRANSFER IS IN A TRANSACTION WHICH IS EXEMPT UNDER, OR
OTHERWISE IN COMPLIANCE WITH, SUCH LAWS OR (C) THE COMPANY RECEIVES
A "NO ACTION" LETTER OR SIMILAR DECLARATION FROM THE SECURITIES AND
EXCHANGE COMMISSION TO THE EFFECT THAT SUCH SALE OR TRANSFER WITHOUT
REGISTRATION WILL NOT RESULT IN A RECOMMENDATION BY SAID COMMISSION
THAT ACTION BE TAKEN WITH RESPECT THERETO. COPIES OF THE AGREEMENTS
COVERING THE PURCHASE OF THESE SHARES AND RESTRICTING THEIR TRANSFER
MAY BE OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY THE HOLDER OF
RECORD OF THIS CERTIFICATE TO THE SECRETARY OF THE COMPANY AT THE
PRINCIPAL EXECUTIVE OFFICES OF THE COMPANY.
Each Holder consents to the Company making a notation on its records
and giving instructions to any transfer agent of the Preferred Stock or the
Common Stock in order to implement the restrictions on transfer established in
this Agreement.
4. Notice of Proposed Transfers. The holder of each certificate
representing Restricted Securities by acceptance thereof agrees to comply in all
respects with the provisions of this Section 4. Prior to any proposed sale,
assignment, transfer or pledge of any Restricted Securities (other than a
transfer not involving a change in beneficial ownership), unless there is in
effect a registration statement under the Securities Act covering the proposed
transfer, the holder thereof shall give written notice to the Company of such
holder's intention to effect such transfer, sale, assignment or pledge. Each
such notice shall describe the manner and circumstances of the proposed
transfer, sale, assignment or pledge in sufficient detail, and shall be
accompanied, at such holder's expense, by either (i) a written opinion of legal
counsel reasonably satisfactory to the Company addressed to the Company, to the
effect that the proposed sale or transfer of the Restricted Securities may be
effected without registration under the Securities Act, (ii) documentation which
establishes to the satisfaction of the Company that the proposed sale or
transfer is in a transaction which is exempt under, or otherwise in compliance
with, such laws, or (iii) a "no action" letter or similar declaration from the
Commission to the effect that the transfer of such securities without
registration will not result in a recommendation by the staff of the Commission
that action be taken with respect thereto, whereupon the holder of such
Restricted Securities shall, subject to compliance with the Stockholders
Agreement, be entitled to transfer such Restricted Securities in accordance with
the terms of the notice delivered by the
-4-
<PAGE>
holder to the Company. Each certificate evidencing the Restricted Securities
transferred as above provided shall bear the appropriate restrictive legend set
forth in Section 3 above, except that such certificate shall not bear such
restrictive legend if, in the opinion of counsel for such holder and the
Company, such legend is not required in order to establish compliance with any
provision of the Securities Act.
5. Registration.
5.1 Requested Registration.
(a) Request for Registration. In case the Company shall
receive from the Initiating Holders a written request that the Company effect
any registration, qualification or compliance with respect to shares of
Registrable Securities with an anticipated aggregate offering price, net of
underwriting discounts and commissions, of at least four million dollars
($4,000,000), the Company will:
(i) promptly give written notice of the proposed
registration, qualification or compliance to all other Series B Holders; and
(ii) as soon as practicable, use its best efforts
to effect such registration, qualification or compliance (including, without
limitation, appropriate qualification under applicable blue sky or other state
securities laws and appropriate compliance with applicable regulations issued
under the Securities Act and any other governmental requirements or regulations)
as may be so requested and as would permit or facilitate the sale and
distribution of all or such portion of such Registrable Securities as are
specified in such request, together with all or such portion of the Registrable
Securities of any Series B Holder joining in such request as are specified in a
written request received by the Company within 20 days after receipt of such
written notice from the Company.
(b) Notwithstanding the foregoing, the Company shall not be
obligated to take any action pursuant to this Section 5.1:
(i) In any particular jurisdiction in which the
Company would be required to execute a general consent to service of process in
effecting such registration, qualification or compliance, unless the Company is
already subject to service in such jurisdiction and except as may be required
under the Securities Act;
(ii) At any time prior to the earlier of (1) the
third anniversary of this Agreement and (2) six months after the date of the
closing of an initial firm commitment underwritten public offering pursuant to
an effective registration statement under the Securities Act covering the offer
and sale of the Company's Common Stock;
-5-
<PAGE>
(iii) After the Company has effected two such
registrations pursuant to this Section 5.1(a), and such registrations have been
declared or ordered effective, provided, however, that in the event that a
registration statement has been filed with the Commission pursuant to this
Section 5.1(a) and is subsequently withdrawn solely at the request of the
Initiating Holders and the request to withdraw the registration statement is not
in any way the result of any action or inaction by the Company adversely
affecting such registration or the result of an adverse change in the condition,
financial or otherwise, or in the earnings, business operations or prospects of
the Company since the date of the written request for registration by the
Initiating Holders, then such registration shall count as one of the two
registrations provided for under this clause (iii) unless the Holders
participating in such registration pay all Registration Expenses incurred by the
Company in connection with such withdrawn registration; or
(iv) If the Company shall furnish to the
Initiating Holders a certificate signed by the President of the Company stating
that in the good faith judgment of the Board of Directors it would be seriously
detrimental to the Company or its stockholders for a registration statement to
be filed in the near future, then the Company's obligation to use its best
efforts to register, qualify or comply under this Section 5.1 shall be deferred
for a period not to exceed 120 days from the date of receipt of written request
from the Initiating Holders, provided that the Company may not exercise this
deferral right more than once per twelve month period.
Subject to the foregoing clauses (i) through (iv), the
Company shall file a registration statement covering the Registrable Securities
so requested to be registered as soon as practicable after receipt of the
request or requests of the Initiating Holders.
(c) Piggyback Registration Rights. In the event the Company
shall receive from the Initiating Holders a written request to effect any
registration, qualification or compliance with respect to shares pursuant to
Section 5.1, the Company will (i) promptly give written notice thereof to all
Non Series B Holders; and (ii) subject to Section 5.1(d) below, include in such
registration (and any related qualification under blue sky laws or other
compliance), and in any underwriting involved therein, all the Registrable
Securities specified in a written request or requests, made within 20 days after
receipt of such written notice from the Company, by any Non Series B Holder. The
Company shall not be required to register pursuant to this Section 5.1 the
shares of a Non Series B Holder then eligible for sale pursuant to Rule 144
under the Securities Act (or similar successor provision) ("Rule 144") without
limitation as to volume.
(d) Underwriting. In the event of a registration pursuant to
Section 5.1, the Company shall advise the Holders as part of the notice given
pursuant to Sections 5.1(a)(i) and 5.1(c)(i) that the right of any Holder to
registration pursuant to Section 5.1 shall be conditioned upon such Holder's
participation in the underwriting arrangements required by this Section 5.1, and
the inclusion of such Holder's Registrable Securities in the underwriting to the
extent requested shall be limited to the extent provided herein.
-6-
<PAGE>
The Company shall (together with all Holders proposing
to distribute their securities through such underwriting) enter into an
underwriting agreement in customary form with the managing underwriter selected
for such underwriting by the Initiating Holders, but subject to the Company's
reasonable approval. Notwithstanding any other provision of this Section 5.1, if
the managing underwriter advises the Initiating Holders that marketing factors
require a limitation of the number of shares to be underwritten, then the
Company shall so advise all Holders of Registrable Securities and, in such case,
the number of shares of Registrable Securities that may be included in the
registration and underwriting shall be allocated first among all Series B
Holders. To the extent the managing underwriter has advised the Initiating
Holders that marketing factors require a limitation of the number of shares to
be underwritten to less than all of the shares that the Series B Holders have
requested registration under Section 5.1(a), (i) none of the shares of
Registrable Securities held by the Non Series B Holders will be included in such
Registration pursuant to Section 5.1(c) and (ii) the shares of Registrable
Securities of the Series B Holders that may be included in the registration and
underwriting shall be allocated among the Series B Holders as nearly as
practicable, to the respective amounts of Registrable Securities held by such
Series B Holders at the time of filing the Registration Statement. To the extent
that the managing underwriter advises the Initiating Holders that marketing
factors allow the Non Series B Holders to participate in the registration and
the underwriting and that marketing factors require a limitation of the number
of shares to be underwritten, then the Company shall so advise all Non Series B
Holders, and, in such case, the number of shares of Registrable Securities of
the Non Series B Holders that may be included in the registration and
underwriting shall (x) be limited to that number of shares which can be included
in the registration and underwriting after all the shares of Series B Holders
are included and (y) to the extent permitted by clause (x) of this sentence, be
allocated among all Non Series B Holders as nearly as practicable, to the
respective amounts of Registrable Securities held by such Non Series B Holders
at the time of filing the registration statement. Neither the Company, the Non
Series B Holders nor any other holders of registration rights may participate in
the proposed offering if any Series B Holders have been cut back pursuant to
this Section 5.1(d). No Registrable Securities excluded from the underwriting by
reason of the underwriter's marketing limitation shall be included in such
registration. To facilitate the allocation of shares in accordance with the
above provisions, the Company or the underwriters may round the number of shares
allocated to any Holder to the nearest 100 shares.
If any Holder of Registrable Securities disapproves of the
terms of the underwriting, such person may elect to withdraw therefrom by
written notice to the Company, the managing underwriter and the Initiating
Holder. The Registrable Securities and/or other securities so withdrawn shall
also be withdrawn from registration, and such Registrable Securities shall
continue to be subject to the terms of this Agreement, including the
restrictions set forth in Section 6, after the effective date of such
registration, or such other shorter period of time as the underwriters may
require.
5.2 Company Registration.
(a) Notice of Registration. If at any time or from time to
time the Company shall determine to register any of its equity securities,
either for its own account or the
-7-
<PAGE>
account of a security holder or holders, other than (i) a registration relating
solely to employee benefit plans, (ii) a registration relating solely to a Rule
145 transaction, (iii) a registration in which the only equity security being
registered is capital stock issuable upon conversion of convertible (or exchange
of exchangeable) debt securities which are also being registered or (iv) a
registration pursuant to Section 5.1 or Section 5.3 hereof, the Company will:
(i) promptly give to each Holder written notice
thereof; and
(ii) subject to Section 5.2(b) below, include in
such registration (and any related qualification under blue sky laws or other
compliance), and in any underwriting involved therein, all the Registrable
Securities specified in a written request or requests, made within 10 days after
receipt of such written notice from the Company, by any Holder.
(b) Underwriting. If the registration of which the Company
gives notice is for a registered public offering involving an underwriting, the
Company shall so advise the Holders as a part of the written notice given
pursuant to Section 5.2(a)(i). In such event, the right of any Holder to
registration pursuant to Section 5.2 shall be conditioned upon such Holder's
participation in such underwriting and the inclusion of Registrable Securities
in the underwriting shall be limited to the extent provided herein.
All Holders proposing to distribute their securities
through such underwriting shall (together with the Company and the other holders
distributing their securities through such underwriting) enter into an
underwriting agreement in customary form with the managing underwriter selected
for such underwriting by the Company. Notwithstanding any other provision of
this Section 5.2, if the managing underwriter determines that marketing factors
require a limitation of the number of shares to be underwritten, the managing
underwriter may exclude some or all of the Registrable Securities. The Company
shall so advise all Holders and other holders distributing their securities
through such underwriting and the number of shares of Registrable Securities
that may be included in the registration and underwriting shall be allocated
among all the Holders in proportion, as nearly as practicable, to the respective
amounts of Registrable Securities that each such Holder specified in the written
requests made to the Company pursuant to Section 5.2(a)(ii). To facilitate the
allocation of shares in accordance with the above provisions, the Company may
round the number of shares allocated to any Holder or holder to the nearest 100
shares. The Company shall not be required to register pursuant to this Section
5.2 the shares of a Holder then eligible for sale pursuant to Rule 144 without
limitation as to volume.
If any of the Holders disapproves of the terms of any
such underwriting, such Holder may elect to withdraw therefrom by written notice
to the Company and the managing underwriter. Any securities excluded or
withdrawn from such underwriting
-8-
<PAGE>
shall be withdrawn from such registration and shall continue to be subject to
the terms of this Agreement including the restrictions set forth in Section 6.
(c) Right to Terminate Registration. The Company shall have
the right, without liability therefore, to terminate or withdraw any
registration initiated by it under this Section 5.2 prior to the effectiveness
of such registration whether or not any Holder has elected to include securities
in such registration.
5.3 Registration on Form S-3.
(a) If any of the Series B Holders request that the Company
file a registration statement on Form S-3 (or any successor form to Form S-3)
for a public offering of shares of the Registrable Securities the reasonably
anticipated aggregate price to the public of which, net of underwriting
discounts and commissions would exceed $500,000, and the Company is a registrant
entitled to use Form S-3 to register the Registrable Securities for such an
offering, the Company shall use its best efforts to cause such Registrable
Securities to be registered for the offering on such form and to cause such
Registrable Securities to be qualified in such jurisdictions as such Holder or
Holders may reasonably request; provided, however, that the Company shall not be
required to effect more than one registration pursuant to this Section 5.3 in
any six (6) month period. The Company shall inform other Series B Holders of the
proposed registration and offer them the opportunity to participate. In the
event the registration is proposed to be part of a firm commitment underwritten
public offering, the substantive provisions of Section 5.1(d) shall be
applicable to each such registration initiated under this Section 5.3. The Non
Series B Holders may not include any of their Registrable Securities in a
registration effected pursuant to this Section 5.3. The Series B Holders are
entitled to an aggregated of two (2) registrations on Form S-3. The Company may
include for its own account other shares of Common Stock in any of the
registrations provided for in this Section 5.3, provided that such inclusion
will not interfere with the marketing of the Registrable Securities to be
registered by the Series B Holders.
(b) Notwithstanding the foregoing, the Company shall not be
obligated to take any action pursuant to this Section 5.3:
(i) in any particular jurisdiction in which the
Company would be required to execute a general consent to service of process in
effecting such registration, qualification or compliance, unless the Company is
already subject to service in such jurisdiction and except as may be required
under the Securities Act;
(ii) at any, time prior to the first anniversary
of the closing of an initial firm commitment underwritten public offering
pursuant to an effective registration statement under the Securities Act
covering the offer and sale of the Company's Common Stock;
(iii) during the period starting with the date
sixty (60) days prior to the Company's estimated date of filing of, and ending
on the date six (6) months
-9-
<PAGE>
immediately following, the effective date of any registration statement
pertaining to securities of the Company (other than a registration of securities
in a Rule 145 transaction or with respect to an employee benefit plan), provided
that the Company is actively employing in good faith all reasonable efforts to
cause such registration statement to become effective; or
(iv) if the Company shall furnish to such Series B
Holder or Series B Holders a certificate signed by the President of the Company
stating that in the good faith judgment of the Board of Directors it would be
seriously detrimental to the Company or its stockholders for registration
statements to be filed in the near future, then the Company's obligation to use
its best efforts to file a registration statement shall be deferred for a period
not to exceed 120 days from the receipt of the request to file such registration
by such Series B Holder or Series B Holders, provided that the Company may not
exercise this deferral right more than once per twelve month period.
5.4 Limitations on Subsequent Registration Rights. From and after
the Closing Date, the Company shall not enter into any agreement granting any
holder or prospective holder of any securities of the Company registration
rights with respect to such securities that are pari passu or superior to the
rights granted to the Series B Holders hereunder without the written consent of
the Series B Holders representing a majority in interest of all the shares of
Registrable Securities held by Series B Holders.
5.5 Expenses of Registration. Except as provided in Section
5.1(b)(iii), all Registration Expenses incurred in connection with the
registrations pursuant to Sections 5.1, 5.2 and 5.3 shall be borne by the
Company.
All Selling Expenses relating to securities registered on
behalf of the Holders shall be borne by the Holders of such securities pro rata
on the basis of the number of shares so registered by such Holders.
5.6 Registration Procedures. In the case of each registration,
qualification or compliance effected by the Company pursuant to this Agreement,
the Company will keep each of the Holders advised in writing as to the
initiation of each registration, qualification and compliance and as to the
completion thereof. At its expense the Company will:
(a) prepare and file with the Commission a registration
statement with respect to such securities and use its best efforts to cause such
registration statement to become and remain effective for at least one hundred
twenty (120) days or until the distribution described in the registration
statement has been completed, whichever first occurs;
(b) furnish to the Holders participating in such registration
and to the underwriters of the securities being registered such reasonable
number of copies of the registration statement, preliminary prospectus, final
prospectus and such other documents as such underwriters may reasonably request
in order to facilitate the public offering of such securities.
-10-
<PAGE>
5.7 Indemnification.
(a) The Company will indemnify each Holder, each of its
officers and directors and partners, and each person controlling such Holder
within the meaning of Section 15 of the Securities Act, with respect to which
registration, qualification or compliance has been effected pursuant to this
Agreement, and each underwriter, if any, and each person who controls any
underwriter within the meaning of Section 15 of the Securities Act, against all
expenses, claims, losses, damages or liabilities (or actions in respect
thereof), including any of the foregoing incurred in settlement of any
litigation, commenced or threatened, arising out of or based on any untrue
statement (or alleged untrue statement) of a material fact contained in any
registration statement, prospectus, offering circular or other document, or any
amendment or supplement thereto, incident to any such registration,
qualification or compliance, or based on 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, or any violation by the Company of the
Securities Act, the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), state securities law or any rule or regulation promulgated under such
laws applicable to the Company in connection with any such registration,
qualification or compliance, and the Company will reimburse each such Holder,
each of its officers and directors, and each person controlling such Holder,
each such underwriter and each person who controls any such underwriter, for any
legal and any other expenses reasonably incurred, as such expenses are incurred,
in connection with investigating, preparing or defending any such claim, loss,
damage, liability or action, provided that the Company will not be liable in any
such case to the extent that any such claim, loss, damage, liability or expense
arises out of or is based on any untrue statement or omission or alleged untrue
statement or omission, made in reliance upon and in conformity with written
information furnished to the Company by an instrument duly executed by such
Holder, controlling person or underwriter and stated to be specifically for use
therein.
(b) Each Holder will, if Registrable Securities held by such
Holder are included in the securities as to which such registration,
qualification or compliance is being effected, indemnify severally and not
jointly, the Company, each of its directors and officers, each underwriter, if
any, of the Company's securities covered by such a registration statement, each
person who controls the Company or such underwriter within the meaning of
Section 15 of the Securities Act, and each other such Holder, each of its
officers, directors and partners and each person controlling such Holder within
the meaning of Section 15 of the Securities Act, against all claims, losses,
expenses, damages and liabilities (or actions in respect thereof) including any
of the foregoing incurred in settlement of any litigation, commenced or
threatened, arising out of or based on any untrue statement (or alleged untrue
statement) of a material fact contained in any such registration statement,
prospectus, offering circular or other document, or any amendment or supplement
thereto incident to any such registration, qualification or compliance, or based
on 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,
or any violation by such Holder of the Securities Act, the Exchange Act, state
securities law or any rule or regulation promulgated under such laws applicable
to such Holder and will reimburse the Company, such Holders, such directors,
officers, persons, underwriters or control persons for
-11-
<PAGE>
any legal or any other expenses reasonably incurred, as such expenses are
incurred, in connection with investigating, preparing or defending any such
claim, loss, damage, liability or action, in each case to the extent, but only
to the extent, that such untrue statement (or alleged untrue statement) or
omission (or alleged omission) is made in such registration statement,
prospectus, offering circular or other document in reliance upon and in
conformity with written information furnished to the Company by an instrument
duly executed by such Holder and stated to be specifically for use therein.
Notwithstanding the foregoing, the liability of each Holder under this
subsection 5.7(b) shall be limited to an amount equal to the initial public
offering price (net of any underwriting discounts or commissions) of the shares
of Registrable Securities sold by such Holder in such registered offering.
(c) Each party entitled to indemnification under this Section
5.7 (the "Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom, provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or litigation, shall be
approved by the Indemnified Party (whose approval shall not unreasonably be
withheld), and the Indemnified Party may participate in such defense at such
party's expense, and provided further that the failure of any Indemnified Party
to give notice as provided herein shall not relieve the Indemnifying Party of
its obligations under this Agreement, unless the failure to give such notice is
materially prejudicial to an Indemnifying Party's ability to defend such action,
and provided further that the Indemnifying Party shall not assume the defense
for matters as to which there is a conflict of interest or separate and
different defenses. No Indemnifying Party, in the defense of any such claim or
litigation, shall, except with the consent of each Indemnified Party, consent to
entry of any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to such claim or
litigation.
5.8 Information by Holders. The Holder or Holders of Registrable
Securities included in any registration shall furnish to the Company such
information regarding such Holder or Holders, the Registrable Securities held by
them and the distribution proposed by such Holder or Holders as the Company may
request in writing and as shall be required in connection with any registration,
qualification or compliance referred to in this Agreement.
5.9 Rule 144 Reporting. With a view to making available the benefits
of certain rules and regulations of the Commission which may at any time permit
the sale of the Restricted Securities to the public without registration, after
such time as a public market exists for the Common Stock of the Company, the
Company agrees to use all reasonable efforts to:
(a) Make and keep public information available, as those terms
are understood and defined in Rule 144, at all times after the effective date
that the Company becomes subject to the reporting requirements of the Securities
Act or the Securities Exchange Act of 1934;
-12-
<PAGE>
(b) File with the Commission in a timely manner all reports
and other documents required of the Company under the Securities Act and the
Securities Exchange Act of 1934 (at any time after it has become subject to such
reporting requirements); and
(c) So long as any of the Holders owns any Restricted
Securities, to furnish to the Holders forthwith upon request a written statement
by the Company as to its compliance with the reporting requirements of Rule 144
(at any time after 90 days after the effective date of the first registration
statement filed by the Company for an offering of its securities to the general
public), and of the Securities Act and the Securities Exchange Act of 1934 (at
any time after it has become subject to such reporting requirements), a copy of
the most recent annual or quarterly report of the Company, and such other
reports and documents of the Company and other information in the possession of
or reasonably obtainable by the Company as the Holders may reasonably request in
availing itself of any rule or regulation of the Commission allowing the Holders
to sell any such securities without registration.
5.10 Transfer of Registration Rights.
(a) The rights to cause the Company to register securities
granted to the Series B Holders under Sections 5.1, 5.2 and 5.3 may be assigned
to a transferee or assignee in connection with any transfer or assignment of
Registrable Securities by the Series B Holders provided that (i) such transfer
may otherwise be effected in accordance with applicable securities laws, (ii)
such transfer is of at least 14,000 shares of Common Stock, whether in the form
of Common Stock or Preferred Stock convertible into Common Stock or the Warrant
exercisable for Preferred Stock and convertible into Common Stock, (subject to
adjustment for any stock split, stock dividend, recapitalization, substitution
or similar event with respect to such shares), (iii) written notice is promptly
given to the Company, (iv) such transferee agrees to be bound by the provisions
of this Agreement and (v) the Series B Holder complies with the terms of the
Stockholders' Agreement. Notwithstanding the foregoing, the rights granted to
the Series B Purchaser under Sections 5.1, 5.2 and 5.3 of this Agreement to
cause the Company to register securities may be assigned to any majority-owned
subsidiary or controlled affiliate of the Series B Purchaser (but only if and
for so long as such subsidiary or affiliate remains a majority-owned subsidiary
or controlled affiliate of the Series B Purchaser) provided written notice
thereof is promptly given to the Company and the transferee agrees to be bound
by the provisions of this Agreement.
(b) The rights granted to Non Series B Purchasers under
Sections 5.1 and 5.2 of this Agreement to cause the Company to register
securities may be assigned or transferred to a transferee or assignee in
connection with any permitted transfer or assignment of Registrable Securities
by the Non Series B Purchaser, provided that (i) such transfer may otherwise be
effected in accordance with applicable securities laws, (ii) such transfer is
the lesser of (x) at least 5,000 shares of Common Stock, whether in the form of
Common Stock or Preferred Stock convertible into Common Stock, (subject to
adjustment for any stock split, stock dividend, recapitalization, substitution
or similar event with respect to such shares) or (y) all the shares of Common
Stock and Preferred Stock then held by such Holder, (iii) written notice of the
transfer
-13-
<PAGE>
is promptly given to the Company, (iv) such transferee agrees to be bound by the
provisions of this Agreement and (v) such Non Series B Purchaser complies with
the requirements of the Stockholders Agreement.
6. Standoff Agreement. In connection with any public offering of the
Company's securities in connection with an effective registration statement
under the Securities Act, each Holder agrees, upon the request of the Company or
the underwriters managing any underwritten offering of the Company's securities,
not to sell, make any short sale of, loan, grant any option for the purchase of,
or otherwise dispose of any securities of the Company (other than those included
in the registration) without the prior written consent of the Company or such
underwriters, as the case may be, for such period of time (not to exceed one
hundred eighty (180) days after the effective date of such registration),
beginning ten (10) days prior to the effective date of such registration, as may
be requested by the underwriters, provided that the officers and directors of
the Company who own stock of the Company also agree to such restrictions. Each
Holder further agrees that the Company may instruct its transfer agent to place
stop-transfer notations in its records to enforce the provisions of this Section
6.
7. Right of First Offer.
7.1 Grant. The Company hereby grants to each of the Large Holders
the right of first offer with respect to its Pro Rata Share (as defined below)
of any proposed sale by the Company of New Securities; provided, however, that
the Large Holders will not have a right of first offer with respect to options
granted, whether or not exercised, after the date of this Agreement, to
officers, directors, employees and consultants of the Company or Sub if such
sale (or grant) is approved by the Company's Board of Directors.
For purposes of this Section, "New Securities" shall mean any
equity securities, including Common Stock and Preferred Stock, of the Company,
whether now authorized or not, and rights, options, or warrants to purchase such
equity securities, and securities of any type whatsoever that are, or may
become, convertible into or exercisable for equity securities of the Company;
provided, however, that "New Securities" does not include shares of the
Company's Common Stock (A) issued pursuant to conversion of Preferred Stock or
upon exercise of options or warrants, (B) issued to all holders of Common Stock
as a stock split or stock dividend or (C) issued in connection with a merger or
consolidation of the Company.
7.2 Over-Allotment Option. In the event that the Large Holders
together do not purchase all of the New Securities pursuant to the rights of
first offer granted in Section 7.1 hereof, then the Large Holders shall also
have the right to purchase up to all of the remaining New Securities (the
"Over-Allotment Option"), in addition to such New Securities as they shall
already have elected to purchase, if they shall have so elected as provided for
in Section 7.4 below. If more than one Holder elects to exercise its
Over-Allotment Option, and the aggregate number of shares of New Securities such
Large Holders elect to purchase exceeds the aggregate number of shares of New
Securities then remaining, then the shares of New Securities to be purchased
pursuant to the Over-Allotment Option shall be divided among such Large Holders
-14-
<PAGE>
according to their respective Pro Rata Share, or on such other basis as such
Large Holders electing their Over-Allotment Options may agree upon amongst
themselves in writing. Notwithstanding the foregoing, no Holder shall be
permitted to exercise its rights under this Section 7.2 to the extent the
purchase of such New Securities will subject the Company or any of its
subsidiaries to any substantial business risk under contracts or programs
restricting foreign ownership or control of the Company or any of its
subsidiaries as determined in good faith by the Board of Directors.
7.3 Pro Rata Share. Each Large Holder's "Pro Rata Share", for
purposes of this Article 7, is equal to the fraction obtained by dividing (a)
the sum of the total number of shares of any (i) Common Stock, (ii) Common Stock
issuable upon conversion of any Preferred Stock and (iii) Common Stock issuable
upon exercise of any options or warrants (including warrants to purchase
Preferred Stock) then held by such Large Holder by (b) the sum of the total
number of shares of (i) Common Stock, (ii) Common Stock issuable upon the
conversion of Preferred Stock and (iii) Common Stock issuable upon any exercise
of any options or warrants (including warrants to purchase Preferred Stock) then
outstanding and held by all of the Large Holders; provided, however, for the
purposes of the second sentence of Section 7.2, clause (b) of this Section 7.3
shall include only those shares held by the Large Holders electing their
Over-Allotment Option.
7.4 Notices.
(a) In the event the Company proposes to undertake an issuance
of New Securities, it shall give each Large Holder written notice (the "Notice")
of its intention, describing the type of New Securities, the price and the
principal terms upon which the Company proposes to issue the same, and such
Large Holder's Pro Rata Share of New Securities that such Large Holder is
eligible to purchase pursuant to this Section 7. Each Large Holder shall have
fifteen (15) days from the delivery date of any Notice to agree to purchase any
amount of the New Securities up to such Large Holder's Pro Rata Share of such
New Securities for the price and upon the terms specified in the Notice by
giving written notice (a "Right of First Offer Election Notice") to the Company
and stating therein the amount of New Securities to be purchased; provided,
however, that in the event the Notice provides for payment for such New
Securities other than in cash, each Large Holder shall have the option of paying
for the New Securities by the cash equivalent (discounted on a present value
basis) of the consideration described in the Notice as set forth in the Notice
and as determined in good faith by the Board of Directors.
(b) If the Company shall have received one or more Right of
First Offer Election Notices within fifteen (15) days from the date all the
Large Holders are deemed to have received the Notice, in which any of the Large
Holders have elected not to purchase their full Pro Rata Share of the New
Securities, the Company shall immediately give each Large Holder notice (the
"Over-Allotment Notice") indicating the aggregate amount of New Securities as to
which the Large Holders shall not have exercised their respective Rights of
First Offer. Each Large Holder shall have three (3) days from any delivery date
of the Over-Allotment
-15-
<PAGE>
Notice, to give notice (the "Over-Allotment Election Notice") to the Company
whether it elects to exercise its Over-Allotment Option granted in Section 7.2
hereof (and, if so, the maximum number of additional shares of New Securities it
elects to purchase pursuant thereto).
7.5 Failure to Exercise Right. In the event the Large Holders do not
exercise the right of first offer as to all of the New Securities that the Large
Holders are eligible to purchase pursuant to this Section 7 within the later of
fifteen (15) days from the delivery date of the Notice or three (3) days from
the delivery date of the Over-Allotment Notice, the Company shall have 90 days
thereafter to enter into an agreement (pursuant to which the sale of New
Securities covered thereby shall be closed, if at all, within 60 days from the
date of said agreement) to sell that number of New Securities respecting which
the Large Holder's right of first offer was not exercised, (i) at or above the
price and (ii) upon terms no more favorable taken as a whole to the terms
specified in the Notice given to the Large Holders. In the event the Company has
not sold the New Securities or entered into an agreement to sell the New
Securities within such 90-day period (or sold and issued such New Securities in
accordance with the foregoing within 60 days from the date of said agreement),
the Company shall not thereafter issue or sell any New Securities without first
offering such securities to the Large Holders in the manner provided above.
7.6 Termination. The right of first offer granted to the Large
Holders under this Section 7 shall expire upon the closing of the initial firm
commitment underwritten public offering pursuant to an effective registration
statement under the Securities Act covering the offer and sale of the Company's
Common Stock, provided that, with respect to a particular Large Holder, the
right of first offer shall expire on the date such Large Holder owns less than
8,900 shares of the Company's Common Stock, including shares of the Company's
capital stock convertible into Common Stock (adjusted for stock splits, stock
dividends and the like).
7.7 Assignment. The right of first refusal granted to the Large
Holders under this Section 7 may only be assigned by a Large Holder if the Large
Holder transfers (i) to a transferee more than five percent (5%) of the
Company's Common Stock on a fully diluted as converted basis on the date of
determination or (ii) all of capital stock of Company it owns to any majority
owned subsidiary or controlled affiliate of such Holder (but only for so long as
such subsidiary or affiliate remains a majority owned subsidiary or controlled
affiliate of such Holder).
8. Miscellaneous.
8.1 Amendment. Section 5 (other than Section 5.2) of this Agreement
may be amended or the observance thereof may be waived (either generally or in a
particular instance and either retroactively or prospectively), only with the
written consent of the Company and the holders of not less than one-half of the
Registrable Securities held by the Series B Holders then outstanding. Any
provision of Section 7 of this Agreement may be amended or the observance
thereof may be waived (either generally or in a particular instance and either
retroactively or prospectively), only with the written consent of the Company
and the holders of not less than
-16-
<PAGE>
80% of the Registrable Securities held by the Large Holders then outstanding.
Any of the provisions of this Agreement (other than Sections 5.1, 5.3, 5.4, 5.5,
5.6, 5.7, 5.8 and 5.9 and 7) may be amended or the observance thereof may be
waived (either generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company, the holders of not
less than a majority of the then outstanding Registrable Securities held by the
Series B Holders, and the holders of not less than a majority of the then
outstanding Registrable Securities held by all Holders. Any amendment or waiver
effected in accordance with this Section 8 shall be binding upon each Holder of
Registrable Securities at the time outstanding (including securities into which
such securities are convertible), each future holder of all such securities, and
the Company.
8.2 Governing Law. This Agreement and the legal relations between
the parties arising hereunder shall be governed by and construed with the laws
of the State of Delaware, without giving effect to the conflicts of laws
provisions thereof.
8.3 Entire Agreement. This Agreement constitutes the full and entire
understanding and agreement between the parties regarding the matters set forth
herein. Except as otherwise expressly provided herein, the provisions hereof
shall inure to the benefit of, and be binding upon the successors, assigns,
heirs, executors and administrators of the parties hereto.
8.4 Notices, Etc. All notices and other communications required or
permitted hereunder shall be in writing and shall be mailed by registered or
certified mail, postage prepaid, or delivered by hand or by messenger addressed
as follows: (a) if to the Series B Purchaser, at 920 Disc Drive, Scotts Valley,
California 95066-4544, to the attention of: Stephen J. Luczo, (b) if to the
Existing Purchasers, at the address of such Existing Purchaser set forth on
Exhibit A hereto or such other address as the Existing Purchasers shall have
furnished to the Company in writing in accordance with this Section 8.4 with a
copy addressed to Golenbock, Eiseman, Assor & Bell, 437 Madison Avenue, New
York, New York 10022-7302, to the attention of Andrew C. Peskoe, or (c) if to
the Company, at its principal office, to the attention of: Christine Whitman
with a copy addressed to Golenbock, Eiseman Assor & Bell, 437 Madison Avenue,
New York, New York 10022-7302, to the attention of Andrew C. Peskoe.
Each such notice or other communication shall for all purposes
of this Agreement be treated as effective or having been given when delivered if
delivered personally or, if sent by mail, at the earlier of its receipt or 72
hours after the same has been deposited in a regularly maintained receptacle for
the deposit of the United States mail, addressed and mailed as aforesaid, or if
sent by reputable overnight courier, two days after delivery to such courier.
-17-
<PAGE>
REGISTRATION RIGHTS AGREEMENT
8.5 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
The foregoing agreement is hereby executed as of the date first above
written.
"COMPANY"
CVC HOLDINGS, INC.
a Delaware corporation
By: /s/ Christine B. Whitman
---------------------------
Christine B. Whitman
President
"THE SERIES B PURCHASER"
SEAGATE TECHNOLOGY, INC.
a Delaware corporation
By:
---------------------------
Name:
-------------------------
Title:
------------------------
"THE EXISTING PURCHASERS"
------------------------------
Anne G. Whitman
/s/ Christine B. Whitman
------------------------------
Christine B. Whitman
<PAGE>
REGISTRATION RIGHTS AGREEMENT
8.5 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
The foregoing agreement is hereby executed as of the date first above
written.
"COMPANY"
CVC HOLDINGS, INC.
a Delaware corporation
By:
---------------------------
Christine B. Whitman
President
"THE SERIES B PURCHASER"
SEAGATE TECHNOLOGY, INC.
a Delaware corporation
By: /s/ [ILLEGIBLE]
---------------------------
Name:
-------------------------
Title:
------------------------
"THE EXISTING PURCHASERS"
------------------------------
Anne G. Whitman
------------------------------
Christine B. Whitman
<PAGE>
REGISTRATION RIGHTS AGREEMENT
8.5 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
The foregoing agreement is hereby executed as of the date first above
written.
"COMPANY"
CVC HOLDINGS, INC.
a Delaware corporation
By:
---------------------------
Christine B. Whitman
President
"THE SERIES B PURCHASER"
SEAGATE TECHNOLOGY, INC.
a Delaware corporation
By:
---------------------------
Name:
-------------------------
Title:
------------------------
"THE EXISTING PURCHASERS"
/s/ Anne G. Whitman
------------------------------
Anne G. Whitman
------------------------------
Christine B. Whitman
<PAGE>
/s/ David R. Pefley
------------------------------
David R. Pefley
------------------------------
Diana N. Pefley
------------------------------
Christopher Mann
------------------------------
Andrew Peskoe
------------------------------
Julie Peskoe
------------------------------
Mehrdad Moslehi
------------------------------
James Geater
------------------------------
Victor Mann
------------------------------
Thomas Kandris
------------------------------
Lino Velo
------------------------------
Yong Jin Lee
<PAGE>
------------------------------
David R. Pefley
/s/ Diana N. Pefley
------------------------------
Diana N. Pefley
------------------------------
Christopher Mann
------------------------------
Andrew Peskoe
------------------------------
Julie Peskoe
------------------------------
Mehrdad Moslehi
------------------------------
James Geater
------------------------------
Victor Mann
------------------------------
Thomas Kandris
------------------------------
Lino Velo
------------------------------
Yong Jin Lee
<PAGE>
------------------------------
David R. Pefley
------------------------------
Diana N. Pefley
/s/ Christopher Mann
------------------------------
Christopher Mann
------------------------------
Andrew Peskoe
------------------------------
Julie Peskoe
------------------------------
Mehrdad Moslehi
------------------------------
James Geater
------------------------------
Victor Mann
------------------------------
Thomas Kandris
------------------------------
Lino Velo
------------------------------
Yong Jin Lee
<PAGE>
------------------------------
David R. Pefley
------------------------------
Diana N. Pefley
------------------------------
Christopher Mann
/s/ Andrew Peskoe
------------------------------
Andrew Peskoe
/s/ Julie Peskoe
------------------------------
Julie Peskoe
------------------------------
Mehrdad Moslehi
------------------------------
James Geater
------------------------------
Victor Mann
------------------------------
Thomas Kandris
------------------------------
Lino Velo
------------------------------
Yong Jin Lee
<PAGE>
------------------------------
David R. Pefley
------------------------------
Diana N. Pefley
------------------------------
Christopher Mann
------------------------------
Andrew Peskoe
------------------------------
Julie Peskoe
/s/ Mehrdad Moslehi
------------------------------
Mehrdad Moslehi
------------------------------
James Geater
------------------------------
Victor Mann
------------------------------
Thomas Kandris
------------------------------
Lino Velo
------------------------------
Yong Jin Lee
<PAGE>
------------------------------
David R. Pefley
------------------------------
Diana N. Pefley
------------------------------
Christopher Mann
------------------------------
Andrew Peskoe
------------------------------
Julie Peskoe
------------------------------
Mehrdad Moslehi
/s/ James Geater
------------------------------
James Geater
------------------------------
Victor Mann
------------------------------
Thomas Kandris
------------------------------
Lino Velo
------------------------------
Yong Jin Lee
<PAGE>
------------------------------
David R. Pefley
------------------------------
Diana N. Pefley
------------------------------
Christopher Mann
------------------------------
Andrew Peskoe
------------------------------
Julie Peskoe
------------------------------
Mehrdad Moslehi
------------------------------
James Geater
/s/ Victor Mann
------------------------------
Victor Mann
------------------------------
Thomas Kandris
------------------------------
Lino Velo
------------------------------
Yong Jin Lee
<PAGE>
------------------------------
David R. Pefley
------------------------------
Diana N. Pefley
------------------------------
Christopher Mann
------------------------------
Andrew Peskoe
------------------------------
Julie Peskoe
------------------------------
Mehrdad Moslehi
------------------------------
James Geater
------------------------------
Victor Mann
/s/ Thomas Kandris
------------------------------
Thomas Kandris
------------------------------
Lino Velo
------------------------------
Yong Jin Lee
<PAGE>
------------------------------
David R. Pefley
------------------------------
Diana N. Pefley
------------------------------
Christopher Mann
------------------------------
Andrew Peskoe
------------------------------
Julie Peskoe
------------------------------
Mehrdad Moslehi
------------------------------
James Geater
------------------------------
Victor Mann
------------------------------
Thomas Kandris
/s/ Lino Velo
------------------------------
Lino Velo
------------------------------
Yong Jin Lee
<PAGE>
------------------------------
David R. Pefley
------------------------------
Diana N. Pefley
------------------------------
Christopher Mann
------------------------------
Andrew Peskoe
------------------------------
Julie Peskoe
------------------------------
Mehrdad Moslehi
------------------------------
James Geater
------------------------------
Victor Mann
------------------------------
Thomas Kandris
------------------------------
Lino Velo
/s/ Yong Jin Lee
------------------------------
Yong Jin Lee
<PAGE>
/s/ Phillip Chapados, Jr.
------------------------------
Phillip Chapados, Jr.
------------------------------
Thomas Omstead
NIKKO TECNO CO., INC.
a Japanese corporation
By:
---------------------------
Name:
-------------------------
Title:
------------------------
<PAGE>
------------------------------
Phillip Chapados, Jr.
/s/ Thomas Omstead
------------------------------
Thomas Omstead
NIKKO TECNO CO., INC.
a Japanese corporation
By:
---------------------------
Name:
-------------------------
Title:
------------------------
<PAGE>
------------------------------
Phillip Chapados, Jr.
------------------------------
Thomas Omstead
NIKKO TECNO CO., INC.
a Japanese corporation
By: /s/ Seiya Miyanishi
---------------------------
Name: Seiya Miyanishi
-------------------------
Title: President
------------------------
<PAGE>
EXHIBIT 10.8
SERIES B PREFERRED STOCK PURCHASE WARRANT
THIS WARRANT AND THE SHARES OF SERIES B PREFERRED STOCK WHICH MAY BE PURCHASED
PURSUANT TO THE EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND HAVE BEEN ACQUIRED FOR
INVESTMENT AND NOT WITH A VIEW TO OR IN CONNECTION WITH, THE SALE OR
DISTRIBUTION THEREOF. SUCH SECURITIES MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED
OR HYPOTHECATED IN THE ABSENCE OF SUCH REGISTRATION UNLESS (A) THE COMPANY
RECEIVES AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO IT STATING THAT SUCH
SALE OR TRANSFER IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY
REQUIREMENTS OF SAID ACT, (B) IT IS ESTABLISHED TO THE SATISFACTION OF THE
COMPANY THAT SUCH SALE OR TRANSFER IS IN A TRANSACTION WHICH IS EXEMPT UNDER, OR
OTHERWISE IN COMPLIANCE WITH, SUCH LAWS OR (C) THE COMPANY RECEIVES A "NO
ACTION" LETTER OR SIMILAR DECLARATION FROM THE SECURITIES AND EXCHANGE
COMMISSION TO THE EFFECT THAT SUCH SALE OR TRANSFER WITHOUT REGISTRATION WILL
NOT RESULT IN A RECOMMENDATION BY SAID COMMISSION THAT ACTION BE TAKEN WITH
RESPECT THERETO. COPIES OF THE AGREEMENTS COVERING THE PURCHASE OF THESE
SECURITIES AND RESTRICTING THEIR TRANSFER MAY BE OBTAINED AT NO COST BY WRITTEN
REQUEST MADE BY THE HOLDER OF RECORD OF THIS CERTIFICATE TO THE SECRETARY OF THE
COMPANY AT THE PRINCIPAL EXECUTIVE OFFICES OF THE COMPANY.
Void After May 22, 2002
CVC HOLDINGS, INC.
WARRANT TO PURCHASE SHARES OF SERIES B PREFERRED STOCK
Dated as of May 22, 1995
For value received, Seagate Technology, Inc. ("Seagate") or its permitted
transferees (the "Holder") is entitled to subscribe for and purchase 19,769
shares (the "Shares") (as adjusted Pursuant to Section 3 below) of the Series B
Non-Cumulative Convertible Preferred Stock, $0.01 par value ("Series B Preferred
Stock"), of CVC Holdings, Inc. (the "Company"), at the price of $223.17 per
share (the "Exercise Price") (as adjusted pursuant to Section 3 below), subject
to the provisions and upon the terms and conditions set forth below.
<PAGE>
1. Exercise and Payment.
1.1 Exercise. The purchase rights represented by this Warrant may be
exercised by the Holder, in whole or in part, by the surrender of this Warrant
(together with a duly executed exercise notice (the "Notice of Exercise") in the
form attached hereto as Exhibit A) at the principal office of the Company, and
by the payment to the Company, by wire transfer, of an amount equal to the
aggregate Exercise Price of the Shares being purchased.
1.2 Stock Certificates. In the event of the exercise of all or any
portion of this Warrant, certificates for the shares of Series B Preferred Stock
so purchased shall be delivered to the Holder within a reasonable time, which
shall in no event be later than ten (10) days thereafter and, unless this
Warrant has been fully exercised or has expired, a new Warrant representing the
Shares with respect to which this Warrant shall not have been exercised shall
also be issued to the Holder within such time.
2. Stock Fully Paid; Reservation of Shares. All of the Shares issuable
upon the exercise of this Warrant will, upon issuance and receipt of the
Exercise Price therefor, be fully paid and nonassessable, and free from all
taxes, liens and charges with respect to the issue thereof. During the period
within which this Warrant may be exercised, the Company shall at all times have
authorized and reserved for issuance sufficient shares of its Series B Preferred
Stock to provide for the exercise of the this Warrant and sufficient shares of
its Common Stock, par value .01 per share (the "Common Stock"), to provide for
the conversion of the shares of Series B Preferred Stock.
3. Adjustment of Exercise Price and Number of Shares. The number and kind
of securities purchasable upon the exercise of this Warrant and the Exercise
Price therefor shall be subject to adjustment from time to time upon the
occurrence of certain events, as follows:
3.1 Reclassification, Consolidation or Merger. In case of any
reclassification or change of the Series B Preferred Stock (other than a change
in par value, or as a result of a subdivision or combination), or in case of any
Merger Event (as defined in Section 4 below), the Company or the successor
corporation, as the case may be, shall execute a new warrant, providing that the
Holder shall have the right to exercise such new warrant, and procure upon such
exercise and payment of the same aggregate Exercise Price, in lieu of the shares
of Series B Preferred Stock theretofore issuable upon exercise of this Warrant,
the kind and amount of shares of stock, other securities, money and property
receivable upon such reclassification, change, or Merger Event by a holder of an
equivalent number of shares of Series B Preferred Stock. Such new warrant shall
provide for adjustments which shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Section 3.
3.2 Adjustment for Automatic Conversion of Series B Preferred Stock.
Upon the automatic conversion of the Company's then outstanding shares of Series
B Preferred Stock into shares of Common Stock as provided in the Company's
Restated Certificate of
-2-
<PAGE>
Incorporation, the Company shall execute a new warrant, providing that the
Holder shall have the right to exercise such new warrant, and procure upon such
exercise and payment of the same aggregate Exercise Price, in lieu of the shares
of Series B Preferred Stock theretofore issuable upon exercise of this Warrant,
the number of shares of the Company's Common Stock into which the shares of
Series B Preferred Stock subject to this Warrant immediately prior to such
automatic conversion would have been convertible. Such new warrant shall provide
for adjustments which shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Section 3.
3.3 Stock Splits, Dividends and Combinations. In the event that the
Company shall at any time subdivide the outstanding shares of Series B Preferred
Stock, or shall issue a Series B Preferred Stock dividend on its outstanding
shares of Series B Preferred Stock, the number of Shares issuable upon exercise
of this Warrant immediately prior to such subdivision or to the issuance of such
stock dividend shall be proportionately increased and the Exercise Price shall
be proportionately decreased so that the Holder of the Warrant after such time
shall be entitled to receive the number of shares of Series B Preferred Stock
which such Holder would have owned or been entitled to receive had such Warrant
been exercised immediately prior to such event, and in the event that the
Company shall at any time combine the outstanding shares of Series B Preferred
Stock, the number of Shares issuable upon exercise of this Warrant immediately
prior to such combination shall be proportionately decreased, and the Exercise
Price shall be proportionately increased so that the Holder of the Warrant after
such time shall be entitled to receive the number of shares of Series B
Preferred Stock which such Holder would have owned or been entitled to receive
had such Warrant been exercised prior to such event, in either case effective at
the close of business on the date of such subdivision, stock dividend or
combination, as the case may be.
4. Notice. In the event that: (i) the Company shall declare any dividend
or distribution upon its Series B Preferred Stock or Common Stock, whether in
cash, property, stock or other securities; (ii) the Company shall offer for
subscription pro rata to the holders of its Series B Preferred Stock any
additional shares of stock of any class or other rights; (iii) there shall be
any merger or consolidation of the Company with or into a third party pursuant
to which the Company's stockholders prior to the transaction own less than fifty
percent (50%) of the voting rights of the surviving entity or the sale of all or
substantially all of the assets of the Company (a "Merger Event"); or (iv) there
shall be any voluntary or involuntary dissolution, liquidation or winding up of
the Company; then, in connection with each such event, the Company shall send to
the Holder:
(a) At least ten (10) days prior written notice of the date on which
the books of the Company shall close or a record shall be taken for such
dividend, distribution, subscription rights (specifying the date on which the
holders of Series B Preferred Stock shall be entitled thereto) or for
determining rights to vote in respect of such Merger Event, dissolution,
liquidation or winding up; and
-3-
<PAGE>
(b) In the case of any such Merger Event, dissolution, liquidation
or winding up, at least ten (10) days prior written notice of the date when the
same shall take place (and specifying the date on which the holders of Series B
Preferred Stock shall be entitled to exchange their Series B Preferred Stock for
securities or other property deliverable upon such Merger Event, dissolution,
liquidation or winding up).
Each such written notice shall set forth, in reasonable detail, (i) the
event requiring the notice or adjustment, (ii) the amount of any adjustment,
(iii) the method by which such adjustment was calculated, (iv) the Exercise
Price, and (v) the number of shares subject to purchase hereunder after giving
effect to such adjustment, and shall be given by first class mail, postage
prepaid, addressed to the Holder, at the address as shown on the books of the
Company.
5. Fractional Shares. No fractional shares of Series B Preferred Stock
will be issued in connection with any exercise hereunder. In lieu of such
fractional shares the Company shall make a cash payment therefor based upon the
Exercise Price then in effect.
6. Restrictions on Transfer.
6.1 Restrictive Legend. Each certificate representing (i) the Shares
and (ii) any other securities issued in respect of the Shares upon any stock
split, stock dividend, recapitalization, merger, consolidation or similar event
(collectively, the "Restricted Securities"), shall at the option of the Company,
contain a legend, in form and substance satisfactory to the Company, restricting
the transfer of such Restricted Securities to sales or other dispositions exempt
from or registered under the requirements of the Act.
6.2 Transfer of the Warrant. Subject to Section 8.1 of the
Securities Purchase Agreement (the "Purchase Agreement"), dated as of May 22,
1995, among Seagate, the Company and CVC Products, Inc., this Warrant may be
transferred in whole or in part to one or more parties at the option of the
Holder, provided, however, that prior to any transfer of this Warrant, the
Holder shall give written notice to the Company of the Holder's intention to
effect such transfer. Each such notice shall describe the manner and
circumstances of the proposed transfer in sufficient detail, contain a
representation in writing from the proposed transferee that the Warrant is being
acquired for investment not with a view to any sale or distribution thereof and
shall be accompanied by the Assignment form attached hereto as Exhibit B duly
executed by the Holder. Upon transfer of the Warrant pursuant to this Section 6,
the Company shall at the request of Holder and upon surrender of the Warrant to
the Company, promptly issue new Warrants in the names and amounts requested by
the Holder to replace the surrendered Warrant.
7. No Rights of Stockholders. This Warrant does not entitle the Holder to
any voting rights as a stockholder of the Company prior to the exercise of the
Warrant.
-4-
<PAGE>
8. No Impairment. 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
observed or performed hereunder by the Company, but it will at all times in good
faith assist in the carrying out of all of the provisions of this Warrant and in
the taking of all such action as may be necessary or appropriate in order to
protect the rights of the holder of this Warrant against impairment.
9. Loss, Theft, Destruction or Mutilation of Warrant. Upon receipt by the
Company of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of this Warrant, and in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to it, and upon
surrender and cancellation of this Warrant, if mutilated, the Company will make
and deliver a new Warrant of like tenor and dated as of such cancellation, in
lieu of this Warrant.
10. Saturdays, Sundays, Holidays, etc. If the last or appointed day for
the taking of any action or the expiration of any right required or granted
herein shall be a Saturday or a Sunday or shall be a legal holiday, then such
action may be taken or such right may be exercised on the next succeeding day
not a Saturday or a Sunday or a legal holiday.
11. Expiration of Warrant. Notwithstanding any other provision of this
Warrant, this Warrant shall expire and shall no longer be exercisable at 2:00
p.m., California time, on May 22, 2002.
12. Miscellaneous.
12.1 Governing Law. This Warrant shall be governed by and construed
in accordance with the laws of the State of Delaware without giving effect to
the conflicts of laws provisions thereof.
12.2 Entire Agreement; Amendment. This Warrant constitutes the full
and entire understanding and agreement between the parties with regard to the
subjects hereof, except as may be provided in (i) the Amended and Restated
Stockholders' Agreement dated as of May 22, 1995, by and among the Company,
Seagate and certain stockholders of the Company, (ii) the Purchase Agreement and
(iii) the Registration Rights Agreement dated as of May 22, 1995, by and among
the Company, Seagate and certain stockholders of the Company. Neither this
Warrant nor any term hereof may be amended, waived, discharged, or terminated
other than by a written instrument signed by the party against whom enforcement
of any such amendment, waiver, discharge or termination is sought.
12.3 Successors and Assigns. Except as otherwise provided herein,
the provisions hereof shall inure to the benefit of, and be binding upon, the
permitted successors and assigns, heirs, executors, and administrators of the
Company and the Holder.
-5-
<PAGE>
12.4 Notices, etc.. All notices and other communications required or
permitted hereunder shall be in writing and shall be mailed by registered or
certified mail, postage prepaid, by overnight courier, or otherwise delivered by
hand or by messenger or sent by facsimile and confirmed by mail addressed (a) to
the Holder at the address listed on the signature page of this Warrant to the
attention of: Chief Financial Officer or at such other address as the Holder
shall have furnished to the Company, or (b) to the Company at the address listed
on the signature page of this Warrant to the attention of the President, or at
such other address as the Company shall have furnished to the Holder.
Each of such notice or other communication shall for all purposes of this
Warrant be treated as effective or having been given when delivered if delivered
personally or sent by confirmed facsimile, or, if sent by mail, at the earlier
of its receipt or 72 hours after the same has been deposited in a regularly
maintained receptacle for deposit of the United States mail as aforesaid, or if
sent by FedEx or other reputable overnight carrier, two days after delivery such
courier.
-6-
<PAGE>
Issued this 22nd day of May, 1995.
CVC HOLDINGS, INC.
By: /s/ [ILLEGIBLE]
-----------------------------------
Title: President
--------------------------------
Address: 525 Lee Road
Post Office Box 1886
Rochester, NY 14603-1886
WARRANT HOLDER:
SEAGATE TECHNOLOGY, INC.
By:
--------------------------
Title:
-----------------------
Address: 920 Disc Drive
Scotts Valley, CA 95066
<PAGE>
Issued this 22nd day of May, 1995.
CVC HOLDINGS, INC.
By:
-----------------------------------
Title:
--------------------------------
Address: 525 Lee Road
Post Office Box 1886
Rochester, NY 14603-1886
WARRANT HOLDER:
SEAGATE TECHNOLOGY, INC.
By: /s/ [ILLEGIBLE]
--------------------------
Title:
-----------------------
Address: 920 Disc Drive
Scotts Valley, CA 95066
<PAGE>
EXHIBIT A
NOTICE OF EXERCISE
TO: CVC HOLDINGS, INC.
525 Lee Road
Post Office Box 1886
Rochester, New York 14603-1886
Attention: President
1. The undersigned hereby elects to purchase _______________ shares of
Series B Preferred Stock of CVC HOLDINGS, INC. pursuant to the terms of this
Warrant, and tenders herewith payment of the purchase price of such shares in
full.
2. Please issue a certificate or certificates representing said shares of
Series B Preferred Stock in the name of the undersigned or in such other name as
is specified below:
--------------------------
(Name)
--------------------------
--------------------------
(Address)
3. The undersigned hereby represents and warrants that the aforesaid
shares of Series B Preferred Stock are being acquired for the account of the
undersigned for investment and not with a view to, or for resale, in connection
with the distribution thereof, and that the undersigned has no present intention
of distributing or reselling such shares.
---------------------------
(Signature)
Title:
---------------------
- -------------------
(Date)
<PAGE>
EXHIBIT B
ASSIGNMENT FORM
(To be signed only upon transfer of Warrant)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto __________________________________________________, whose address is
________________________________________________, the right represented by the
attached Warrant to purchase __________ shares of Series B Preferred Stock of
CVC HOLDINGS, INC., to which the attached Warrant relates.
Dated: ______________
-------------------------------
(Signature must conform in all
respects to name of Holder as
specified on the face of the
Warrant)
-------------------------------
(Address)
Signed in the presence of:
- -------------------------------
<PAGE>
EXHIBIT 10.9
SUBORDINATED PROMISSORY NOTE
U.S. $1,000,000 Nov 14, 1990
FOR VALUE RECEIVED, CVC Holdings, Inc., a Delaware corporation (the
"Maker"), having an address at 525 Lee Road, Rochester, New York 14603-1886,
hereby promises to pay to the order of Nikko Tecno Co., Inc. ("Payee"), or
assigns, on November , 1995 at such address in the United States or Japan as the
holder of this Note shall specify from time to time to the Maker, such principal
amounts as shall be loaned to the Maker by the holder of this Note from time to
time, such principal amount not to exceed in the aggregate at any one time One
Million U.S. Dollars (U.S. $1,000,000.00) and which shall then be outstanding
together with interest (computed on the basis of a 365 -day year) on the unpaid
balance of such principal from time to time commencing on the date hereof at the
rate of nine percent (9%) per annum, payable on each date when a payment of
principal is made and, commencing with and continuing after 1991, on each March
31, June 30 and September 30, December 31 of each year.
At the time of the making of each loan by the holder of this Note to
the Maker, and upon each payment of principal of any such loan the holder of
this Note shall, and is hereby authorized to, make a notation on the Grid
attached hereto and made a part hereof, of the date and the amount of such loan
or payment, as the case may be. The notations on the Grid shall constitute prima
facie evidence of the amount of loan principal outstanding under this Note from
time to time. Notwithstanding the foregoing, the failure to make a notation with
respect to any loan or payment shall not limit or otherwise affect the
obligation of the Maker hereunder with respect to any loan or payment Although
this Note is dated the date of issue, interest in respect hereof shall be
payable only for the periods during which the loans evidenced hereby are
outstanding and although the stated principal amount of this Note shall be
$1,000,000, this Note shall be enforceable, with respect to the extent of the
unpaid principal amount of the loans at the time evidenced hereby.
This Note may be prepaid in whole at any time or in part from time
to time without penalty. Each such prepayment shall be applied first to accrued,
but unpaid, interest, and then to principal.
If an Event of Default (as hereinafter defined) shall occur, then,
at the option of the holder hereof upon written notice thereof to the Maker,
this Note shall become immediately due and payable; provided, however, if an
Event of Default as defined in clause (d) or (e) of the next succeeding
paragraph
<PAGE>
shall occur, then this Note automatically shall become immediately due and
payable in its entirety.
An "Event of Default" shall be deemed to have occurred hereunder if
and only if (a) the Maker shall fail to make any payment under this Note in full
when due and such failure shall not be cured within 10 days following written
notice thereof to the Maker from the holder hereof; or (b) the Maker shall make
an assignment for the benefit of creditors, or approve of, consent to or
acquiesce in the appointment of a trustee, receiver, liquidator, custodian,
sequestrator or similar official (collectively, "Custodians") for itself or for
any substantial portion of its assets; or (C) a Custodian shall be appointed for
the Maker or any substantial subsidiary thereof without its consent, or for any
substantial portion of its assets, and such appointment shall not be terminated
or stayed within 60 days; or (d) any proceeding shall be commenced by the Maker,
as debtor, under any bankruptcy, reorganization, insolvency, readjustment of
debt, arrangement, receivership or liquidation law or statute of the federal or
any state government; or (e) any proceeding shall be commenced against the Maker
under any bankruptcy, reorganization, insolvency, readjustment of debt,
arrangement, receivership or government, and such proceeding shall continue and
not be dismissed or stayed within 60 days or not be timely controverted by the
Maker or an order for relief shall not be granted in such proceeding.
The indebtedness represented by this Note (including the interest
thereon) shall be subordinate and junior in right of full of all Senior
Indebtedness. "Senior Indebtedness" means (a) the principal of , premium, if
any, and interest on all Indebtedness whether outstanding on the date hereof or
hereafter created or incurred, unless, in the instrument creating or evidencing
the same or pursuant to which the same is outstanding, it is expressly provided
that such Indebtedness is not superior in right of payment to this Note; and (b)
any amendments, modifications, deferrals, renewals or extensions of any such
Senior Indebtedness, or debentures, notes or other evidences of indebtedness
issued in exchange for any such Senior Indebtedness. The term "Indebtedness" as
used in the foregoing sentence means any liability of the Maker (I) for money
borrowed from, or in respect of the factoring of receivables and /or the
issuance of letters of credit and other financial accommodations by, any bank,
factoring or other financial institution, or (ii) for any obligations of the
Maker or CVC Products, Inc., a Delaware corporation ("CVC"), which any holder of
Indebtedness referred to in clause (I) requires to be deemed Indebtedness for
purposes of
-2-
<PAGE>
this Note, or (iii) arising under an express written guaranty by the Maker of
the liability of another (including any subsidiary of the Maker) which is
outstanding on the date of this Note, or any such guaranty hereafter executed by
the Maker, in each case where the liability of the Maker arising thereunder is,
under the express provisions of such guaranty, superior in right of payment to
this Note.
By accepting delivery of this Note, the holder of this Note agrees
to enter into such customary subordination agreements as any holder(s) of Senior
Indebtedness shall deem necessary or appropriate to subordinate the indebtedness
represented by this Note to the Senior Indebtedness and if there shall be any
conflicts between the provisions of any such subordination agreement and the
provisions of this Note, the provisions of such subordination agreement shall
govern.
Subject to the payment in full of all Senior Indebtedness, the
holder of this Note shall be subrogated to the rights of the holders of Senior
Indebtedness to receive payments or distributions of cash, property or
securities of the Maker applicable to the Senior Indebtedness until all amounts
owing on this Note shall be paid in full, and, as between the Maker, its
creditors other than holders of Senior Indebtedness, and the holder of this
Note, no payment or distribution of cash, property or securities made to the
holders of Senior Indebtedness by virtue of the subordination provisions hereof
which otherwise would have been made to the holder of this Note shall be deemed
to be a payment by the Maker on account of the Senior Indebtedness, and no
payment or distribution of cash, property or securities made to the holder of
this Note by virtue of the subrogation provided for herein which otherwise would
have been made to the holder of Senior Indebtedness shall be deemed to be a
payment on account of the Note; it being understood that the provisions hereof
are, and are intended solely, for the purpose of defining the relative rights of
the holder of this Note, on the one hand, and holders of the Senior Indebtedness
on the other hand.
Nothing contained in this Note is intended to or shall impair, as
between the Maker, and holder of this Note, the obligations of the Maker, which
is absolute and unconditional, to pay to the holder of this Note the principal
of and interest on this Note and all other sums due in connection herewith as
and when the same shall become due and payable in accordance with the terms
hereof, nor shall anything in this Note prevent the holder of this Note from
exercising all remedies otherwise permitted by applicable law upon default
hereunder, subject to the rights of the holders of Senior Indebtedness.
-3-
<PAGE>
Any Note issued in replacement hereof or exchanged herefor shall
contain all of the provisions of this Note relating to the subordination of the
indebtedness represented by this Note to the Senior Indebtedness.
The maker agrees to pay all costs of collection upon default of any
amounts due hereunder when incurred, including without limitation, reasonable
attorneys' fees and expenses. Such costs shall be added to the balance of
principal then due.
The obligations hereunder shall be binding upon the successor sand
assigns of the Maker, provided that the Maker shall be permitted to assign all
of its obligations under this Note to CVC and upon CVC's assumption of the
Maker's obligations hereunder, the maker shall be released and relieved from
such obligations except to the extent the Maker shall agree in writing to
guaranty the performance or payment thereof. After any such assignment all
references to the "Maker" contained in this Note shall be deemed references to
CVC. The Maker, for itself and its successors and assigns, hereby waives
presentment for payment, notice of nonpayment or dishonor, protest, notice of
protest and all other notices in connection with delivery, acceptance,
performance or enforcement of this Note. The rights of any holder hereof shall
be subject to the right of the Maker to set off amounts due to it or CVC by the
Payee and/or such holder .
This Note shall be construed in accordance with and governed by the
laws of the State of New York applicable to contract executed, delivered and to
fully performed in new York without regard to its choice of law provisions.
This Note is being entered into for the benefit of the holders from
time to tome of the Senior Indebtedness and the provisions hereof may be
enforced by such holders. This Note may not be amended or modified in any manner
which will impair or adversely affect the rights of the holders of Senior
Indebtedness without the written consent of the holders of Senior Indebtedness.
CVC HOLDINGS, INC.
By:
-----------------------
Christine B. Whitman,
President
-4-
<PAGE>
EXHIBIT 10.10
SUBORDINATED PROMISSORY NOTE
U.S. $500,000 Nov 14, 1990
FOR VALUE RECEIVED, CVC Holdings, Inc., a Delaware corporation (the
"Maker"), having an address at 525 Lee Road, Rochester, New York 14603-1886,
hereby promised to pay to the order of Nikko Tecno Co., Inc. ("Payee"), or
assigns on November __, 1995 at such address in the United State or Japan as the
holder of this Note shall specify from time to time to the Maker., such
principal amounts as shall be loaned to the Maker by the holder of this Note
from time to time, such principal amount not to exceed in the aggregate at any
one time Five Hundred Thousand U.S. Dollars (U.S. $500,000.00), and which shall
then be outstanding together with interest (computed on the basis of a365-day
year) on the unpaid balance of such principal from time to time commencing on
the date hereof at the rate of nine percent(9%) per annum, payable on each date
when a payment of principal is made and, commencing with and continuing after
1991, on each March 31, June 30 and September 30, December 31 of each year.
At the time of the making of each loan by the holder of this Note to
the Maker, and upon each payment of principal of any such loan the holder of
this Note shall, and is hereby authorized to, make a notation on the Grid
attached hereto and made a part hereof, of the date and the amount of such loan
or payment, as prima facie evidence of the amount of loan principal outstanding
under this Note from time to time. Notwithstanding the foregoing, the failure to
make a notation with respect to any loan or payment shall not limit or otherwise
affect the obligation of the Maker hereunder with respect to any loan or
payment. Although this Note is dated the date of issue, interest in respect
hereof shall be payable only for the periods during which the loans evidenced
hereby are outstanding and although the stated principal amount of the Note
shall be $500,000, this Note shall be enforceable, with respect to the Maker's
obligation to pay the principal amount hereof, only to the extent of the unpaid
principal amount of the loans at the time evidenced hereby.
This Note may be prepaid in whole at any time o in part from time to
time without penalty. Each such prepayment shall be applied first to accrued,
but unpaid, interest, and then to principal.
If an Event of Default (as hereinafter defined) shall occur, the, at
the option of the holder hereof upon written notice thereof to the Maker, this
Note shall become immediately due and payable; provided, however, if an Event of
Default as defined in clause (d) or (e) of the next succeeding paragraph
<PAGE>
shall occur, then this Note automatically shall become immediately due and
payable in its entirety.
An "Event of Default" shall be deemed to have occurred hereunder if
and only if (a) the Maker shall fail to make any payment under this Note in full
when due and such failure shall not be cured within 10 days following written
notice thereof to the Maker from the holder hereof; or (b) the Maker shall make
an assignment for the benefit of creditors, or approve of, consent to or
acquiesce in the appointment of a trustee, receiver, liquidator, custodian,
sequestrator or similar official (collectively, "Custodians") for itself or for
any substantial portion of its assets; or (C) a Custodian shall be appointed for
the Maker or any substantial subsidiary thereof without its consent, or for any
substantial portion of its assets, and such appointment shall not be terminated
or stayed within 60 days; or (d) any proceeding shall be commenced by the Maker,
as debtor, under any bankruptcy, reorganization, insolvency, readjustment of
debt, arrangement, receivership or liquidation law or statute of the federal or
any state government; or (e) any proceeding shall be commenced against the Maker
under any bankruptcy, reorganization, insolvency, readjustment of debt,
arrangement, receivership or liquidation law or stature of the federal or any
state government, and such proceeding shall continue and not be dismissed or
stayed within 60 days or not be timely controverted by the Maker or an order for
relief shall not be granted in such proceeding.
The indebtedness represented by this Note (including the interest
thereon) shall be subordinate and junior in right of payment, to the extent set
forth herein, to the prior payment of full of all Senior Indebtedness. "Senior
Indebtedness" means (a) the principal of , premium, if any and interest on all
Indebtedness whether outstanding on the date hereof or hereafter created or
incurred, unless, in the instrument creating or evidencing the same or pursuant
to which the same is outstanding, it is expressly provided that such
Indebtedness is not superior in right of payment to this Note; and (b) any
amendments, modifications, deferrals, renewals or extensions of any such Senior
Indebtedness, or debentures, notes or other evidences of indebtedness issued in
exchange for any such Senior Indebtedness. The term "Indebtedness" as used in
the foregoing sentence means any liability of the Maker (I) for Money borrowed
from, or in respect of the factoring of receivables and/or the issuance of
letters of credit and other financial institution, or (ii) for any corporation
("CVC"), which any holder of Indebtedness referred to in clause (I) requires to
be deemed indebtedness for purposes of
-2-
<PAGE>
this Note, or (iii) rising under an express written guaranty by the Maker of the
liability of another (including any subsidiary of the Maker) which is
outstanding on the date of this Note, of any such guaranty hereafter executed by
the Maker, in each case where the liability of the Maker arising thereunder is,
under the express provisions of such guaranty, superior in right of payment to
this Note.
By accepting delivery of this Note, the holder of this Note agrees
to enter into such customary subordination agreements as any holder(s) of Senior
Indebtedness shall deem necessary or appropriate to subordinate the indebtedness
represented by this Note to the Senior Indebtedness and if there shall be any
conflicts between the provisions of any such subordination agreement and the
provisions of this note, the provisions of such subordination agreement shall
govern.
Subject to the payment in full of all Senior Indebtedness, the
holder of this Note shall be subrogated to the rights of the holders of Senior
Indebtedness to receive payments or distributions of cash, property of
securities of the Maker applicable to the Senior Indebtedness until all amounts
owing oaths note shall be paid in full, and, as between the Maker, its creditors
other than holders of Senior Indebtedness, and the holder of this Note, no
payment or distribution of cash, property or securities made to the holders of
Senior Indebtedness by virtue of the subordination provisions hereof which
otherwise would have been made to the holder of this note shall be deemed to be
a payment by the Maker on account of the Senior Indebtedness, and no payment or
distribution of cash, property or securities made to the holder of this note by
virtue of the subrogation provided for herein which otherwise would have been
made to the holders of Senior Indebtedness shall be deemed to be a payment on
account of this Note; it being understood that the provisions hereof are, and
are intended solely, for the purpose of defining the relative rights of the
holder of this Note, on the one hand, and the holders of the senior
Indebtedness, on the other hand.
Nothing contained in this Note is intended to or shall impair,
as between the maker, and the holder of this Note, the obligations of the maker,
which is absolute and unconditional, to pay to the holder of this Note the
principal of and interest on this Note and all other sums due in connection
herewith as and when the same shall become due and payable in accordance with
the terms hereof, nor shall anything in this note from exercising all remedies
otherwise permitted by applicable law upon default hereunder, subject to the
rights of the holders of Senior Indebtedness.
-3-
<PAGE>
Any Note issued in replacement hereof or exchanged herefor shall
contain all of the provisions of this Note relating to the subordination of the
indebtedness represented by this Note to the Senior Indebtedness.
The Maker agrees to pay all costs of collection upon default of any
amounts due hereunder when incurred, including, without limitation, reasonable
attorneys' fees and expenses. Such costs shall be added to the balance of
principal then due.
The obligations hereunder shall be binding upon the successors and
assigns of the maker, provided that the Maker shall be permitted to assign all
of its obligations under this note to CVC and upon CVC's assumption of the
maker's obligations hereunder, the Maker shall be released and relieved from
such obligations except to the extent the Maker shall agree in writing to
guaranty the performance or payment thereof. After any such assignment all
references to the "Maker" contained in this Note shall be deemed references to
CVC. The maker, for itself and its successors and assigns, hereby waives
presentment for payment, notice of nonpayment or dishonor, protest, notice of
protest and all other notices in connection with delivery, acceptance,
performance or enforcement of this Note. The rights of any holder hereof shall
be subject to the right of the Maker to set off amounts due to it or CVC by the
Payee and/or such holder.
This Note shall be construed in accordance with and governed by the
laws of the State of new York applicable to contracts executed, delivered and to
be fully performed in New York without regard to its choice of law provisions.
This note is being entered into for the benefit of the holders from
time to time of the Senior Indebtedness and the provisions hereof may be
enforced by such holders. This Note may not be amended or modified in any manner
which will impair or adversely affect the rights of the holders of Senior
Indebtedness without the written consent of the holders of Senior Indebtedness.
CVC Holdings, inc.
By: /s/ Christine B. Whitman
------------------------
Christine B. Whitman,
President
-4-
<PAGE>
GRID
LOAN AND PAYMENT SCHEDULE
Amount of Unpaid Name of
Date of Amount of Principal Paid Principal Person Making
Loan Advance or Prepaid Balance Notation
------- --------- -------------- --------- -------------
11/14/90 $200,000 C Whitman
11/27/90 $300,000 C Whitman
<PAGE>
EXHIBIT 10.11
[Letterhead of NIKKO TECNO CO., INC.]
TELEFAX
Osaka, August 18th 1997
C V C PRODUCTS INC., ROCHESTER
Attn: Mr. Emilio O. Dicataldo, CFO
cc.: Mrs. C. Whitman, President
Re: Loan Repayment Extension
We hereby confirm our agreement with the extension of repayment date of
the loan installments as indicated below;
Installment Current Revised
----------- ------- -------
1) USD 200,000.- Nov. 13, 1990 For 7 years To 8 years
2) USD 1,300,000.- Nov. 26, 1990 For 7 years To 8 years
We hope this extension would fulfill your request.
Regards
NIKKO TECNO CO., INC.
SEIYA MIYANISHI
PRESIDENT
<PAGE>
EXHIBIT 10.12
[LOGO] M&T Real Estate, Inc. MORTGAGE NOTE
Rochester, New York September 29, 1997 $ 2,000,000.00
BORROWER: CVC Products, Inc. a(n) |_| individual(s) |_| partnership
|X| corporation |_| trust |_| limited liability company |_| organized under the
laws of the State of Delaware Address of residence/chief executive office:
525 Lee Road, Rochester, New York 14603
LENDER: M&T REAL ESTATE, INC., One Fountain Plaza, Buffalo, New York 14203-2399,
Promises to Pay. For value received, the undersigned Borrower promises to pay to
the order of the Lender at its office identified above in lawful money of the
United States and in immediately available funds, the sum of Two Million and
00/100 DOLLARS ($2,000,000.00) (the "Principle Sum") plus interest on the unpaid
portion of the Principal Sum, all amounts if any required for an escrow against
taxes and other charges pursuant to the Mortgage defined below (the "Escrow"),
and all Expenses (defined below).
Interest. The Borrower shall pay to the Lender interest, calculated on the basis
of a 360-day year consisting of twelve (12) 30-day months, on the outstanding
Principal Sum from and including the date of this Note to, but not including,
the Maturity Date at a rate per year that on each day shall be
|_| _________% per annum.
|_| _________% above the rate in effect as the rate announced by
Manufacturers and Traders Trust Company, as its prime rate of
interest on the first day of the calendar month containing
such day.
|_| _________% above LIBOR for a |_| one month period, |_| two month
period, |_| three month period or |_| six month period. If no
period is specified, a one month period shall be used. LIBOR
is defined on Rider B attached hereto and made a part of this
Note by this reference.
|x| See Rider C attached hereto and made part of this Note by reference.
If no rate is specified, interest shall accrue at the Maximum Legal Rate defined
below, fixed as of the date of disbursement.
Maximum Legal Rate. It is the intent of the Lender and the Borrower that in no
event shall such interest be payable at a rate in excess of the maximum rate
permitted by applicable law (the "Maximum Legal Rate"). If this Note is for a
personal loan of less than $2,500,000 and is secured primarily by a one- to
four-family residence, the interest rate shall not exceed 16%. Solely to the
extent necessary to prevent interest under this Note from exceeding the Maximum
Legal Rate, any amount that would be treated as excessive under a final judicial
interpretation of applicable law shall be deemed to have been a mistake and
automatically cancelled and if received by the Lender shall be refunded to the
Borrower.
Default Rate. Upon and after the Maturity Date or the occurrence or existence of
an Event of Default under the Mortgage, the interest rate on the unpaid
Principal Sum shall be increased to 3% per year above the otherwise applicable
rate per year, effective as of the date of the default or maturity. No failure
to impose or delay in imposing this Default Rate shall be construed as a waiver
by the Lender of its right to collect interest at the Default Rate for the
period from the Maturity Date or the commencement of the default, as applicable,
to but not including the earlier of the date (a) the default is cured to the
satisfaction of the Lender in its sole discretion or (b) this Note is paid in
full.
Term. The term of this Note is 10 years from the date of issue. The Maturity
Date is October 1, 199__/2007.
Repayment of Principal and Interest The Borrower shall pay the Principal Sum and
interest owing pursuant to this Note to the Lender in installments as follows:
(1) one installment of interest payable on the date of this Note equal
in amount to the interest which will accrue during the period
beginning on the date of this Note and ending on the last calendar
day of the same month and year;
|_| (2) ______consecutive monthly installments of principal each in the
amount of $ _____________________ shall become due and payable on
the first day of each month commencing on ________________________ ,
199_; with an equal number of installments of interest in amounts
which may vary, which shall become due and payable on the first day
of each such month;
OR
|_| (2) ______consecutive level monthly installments consisting of both
principal and interest amortized over a period of ______ years, each
installment being in the amount of $ ________________ , shall become
due and payable on the first day of each month commencing on
__________________ , 199_. If the Borrower elects a variable
interest rate and there is a change in such interest rate, the
remaining consecutive level monthly installments consisting of both
principal and interest may be adjusted to reflect such change in the
interest rate.
OR
|X| (2) See Rider C attached hereto and made part of this Note by reference.
AND
(3) one final installment of principal, interest, premiums and Expenses
to become due on the Maturity Date and to be equal to the total of
the outstanding Principal Sum and all accrued and unpaid interest,
premiums and all other amounts owing pursuant to this Note and the
Mortgage and remaining unpaid.
Late Charge. If the Borrower fails to pay the whole or any installment of
principal or interest owing pursuant to this Note or Escrow payment owing
pursuant to the Mortgage within ten days of its due date, the Borrower shall
immediately pay to the Lender a late charge equal to six percent (6%) of the
delinquent amount.
Application of Payments. Each payment pursuant to this Note shall be applied
first to accrued and unpaid interest, next to Principal, next to the Escrow,
next to late charges, and finally to Expenses.
Prepayment. See Rider A attached to and made part of this Note by this
reference.
Events of Default; Acceleration. This Note is secured by a mortgage dated on or
about the date of this Note executed by the Borrower [and by the County of
Monroe Industrial Development Agency (if Mortgagor is not Borrower)] (the
"Mortgage") and is entitled to the benefits thereof. An Event of Default under
the Mortgage is an Event of Default under this Note. All amounts under this Note
shall become immediately due and payable without any notice, demand, presentment
or protest of any kind (each of which is waived by the Borrower) (a)
automatically, if the Borrower or Mortgagor or any guarantor commences any
bankruptcy or insolvency proceeding, if voluntary, and upon the lapse of 30 days
without dismissal if involuntary, (b) at the sole option of the Lender, upon and
during the continuance of any other event or condition specified in the Mortgage
as an Event of Default and the passage of any applicable grace period, and (c)
at the sole option of the Lender, upon or at any time after the Maturity Date,
regardless of whether the Lender has accepted any partial payments after the
Maturity Date.
Right of Setoff. If an Event of Default occurs, the Lender or its agents shall
have, in addition to its other rights, the right to set off against the amounts
owing under this Note any deposit account or other property held by the Lender,
its agents or affiliates in any capacity for the Borrower, Mortgagor or any
guarantor. Such right of setoff shall be deemed to have been exercised
immediately at the time of such election.
<PAGE>
[LOGO] M&T Real Estate, Inc. RIDER A TO MORTGAGE NOTE
Rider A to Mortgage Note dated September 29, 1997
in the Original Principal Amount of $2,000,000.00
and Executed by CVC Products, Inc.
Prepayment Premium. During the term of this Note, the Borrower shall have the
option of paying the Principal Sum to the Lender in advance of the Maturity
Date, in whole or in part, at any time and from time to time upon written notice
received by the Lender at least thirty (30) days prior to making such
prepayment; provided, however, that together with such prepayment, the Borrower
shall pay to the Lender a premium equal to the greater of (a) one percent (1%)
of the Principal Sum prepaid, or (b) an amount equal to (i) the difference
between the Note rate and the most recent yield on United States Treasury
Obligations adjusted to a constant maturity having a term most nearly
corresponding to the term remaining from the date of prepayment to the Maturity
Date, in effect two (2) business days prior to the prepayment date as published
by the Board of Governors of the Federal Reserve System in the Federal Reserve
Statistical Release H.15 (519), or by such other quoting service, index or
ommonly available source utilized by Manufacturers and Traders Trust Company
multiplied by (ii) a fraction, the numerator of which is the number of days
remaining in the Term and the denominator of which is 365, multiplied by (iii)
the Principal Sum so prepaid. Upon making any prepayment of the Principal Sum in
whole, the Borrower shall pay to the Lender all interest and Expenses owing
pursuant to this Note and remaining unpaid. Each partial prepayment of the
Principal Sum shall be applied in inverse order of maturity to the principal
included in the installments provided for in the paragraph of the Note captioned
"Repayment of Principal and Interest."
In the event the Maturity Date of this Note is accelerated following an Event of
Default, any tender of payment of the amount necessary to satisfy the entire
indebtedness made after such Event of Default shall be expressly deemed a
voluntary prepayment. In such a case, to the extent permitted by law, the Lender
shall be entitled to the amount necessary to satisfy the entire indebtedness,
plus the appropriate prepayment premium calculated in accordance with the
preceding paragraph.
CVC PRODUCTS, INC.
By: /s/ Emilio O. DiCataldo
-------------------------------------
Emilio O. DiCataldo, Senior Vice
President and Chief Financial Officer
<PAGE>
Rider C to $2,000,000.00 Mortgage Note
From
CVC Products, Inc. ("Borrower")
to
M&T Real Estate, Inc. ("Lender")
Dated September 29, 1997
This Rider is intended to supplement the preprinted terms of the
above-referenced Note and Rider A, however, in the event of a conflict between
the terms of this Rider and the terms of the Note and Rider A, the terms of this
Rider shall prevail.
Interest Rate
I. From and including the date of this Note to the earlier of (a) October
1, 1999 or (b) the date the Lender's participation in the Excelsior Linked
Deposit Program sponsored by the New York State Department of Economic
Development (the "Excelsior Program") terminates with respect to this Note, the
Borrower shall pay to the Lender interest on a portion of the Principal Sum in
the amount of $500,000.00 at the fixed rate of 5.29% per annum. From and
including the date of this Note to the earlier of (a) October 1, 1999 or (b) the
date the Lender's Excelsior Program terminates with respect to this Note, the
Borrower shall pay to the Lender interest on the remaining $1,500,000.00 of the
Principal Sum at the fixed rate of 8.29% per annum.
II. From either (a) or (b) above to October 1, 2002 (the "Adjustment
Date"), the Borrower shall pay to the Lender interest on the Principal Sum at
the fixed rate of 8.29% per annum.
III. From and including the Adjustment Date to but not including October
1, 2007 (the "Maturity Date"), the Borrower shall pay interest on the Principal
Sum at a rate per year which shall be either:
Option A (Fixed Rate):
The rate per year of such interest shall be a fixed rate equal to 225
basis points above the yield on United States Treasury Obligations adjusted to a
constant maturity of five (5) years in effect two (2) business days prior to the
Adjustment Date as published by the Board of Governors of the Federal Reserve
System in the Federal Reserve Statistical Release H.15 (519), or by such other
quoting system index or commonly available source utilized by the Lender.
<PAGE>
Option B (Variable Rate):
The rate per year of such interest shall be one-half percent (.50%) above
the rate announced by Manufacturers and Traders Trust Company as its prime rate
of interest on the first day of the calendar month containing such day (the
"Prime Rate").
Borrower shall select either Option A or Option B by written notice to
Lender not less than ten (10) days prior to the Adjustment Date. If no selection
is made, Option B shall be effective on the Adjustment Date.
Repayment of Principal and Interest
Commencing on November 1, 1997 and continuing monthly thereafter until the
Maturity Date, the Borrower shall pay the Principal Sum and interest owing
pursuant to this Note to the Lender in installments as follows:
A. For the two (2) year period beginning on November 1, 1997,
the Principal Sum shall be allocated to two (2) separate amounts for
purposes of repayment:
(1) Commencing on November 1, 1997, 24 installments of
principal and interest in the amount required to fully amortize
$500,000.00 of the Principal Sum at the rate of 5.29% over a twenty
(20) year period, each installment in the amount of $3,380.40, such
installments to become due on the first day of each succeeding
calendar month through and including October 1, 1999.
(2) Commencing on November 1, 1997, 24 installments of
principal and interest in the amount required to fully amortize the
remaining $1,500,000.00 of the Principal Sum at the rate of 8.29%
over a twenty (20) year period, each installment in the amount of
$12,818.67, such installments to become due on the first day of each
succeeding calendar month through and including October 1, 1999.
B. For the three (3) year period beginning on November 1,
1999:
(1) Commencing on November 1, 1999, 36 installments of
principal and interest in the amount required to fully amortize the
Principal Sum over an eighteen (18) year period, such installments
to become due on the first day of each succeeding calendar month
through and including October 1, 2002.
<PAGE>
If the Excelsior Program terminates prior to October 1, 1999,
the monthly installments provided for in this Subsection B(1) shall
commence on the first day of the month following such termination
and payments shall be based upon the remaining amortization period.
C. For the five (5) year period beginning on the Adjustment
Date whether the Variable Rate or Fixed Rate is effective:
(1) fifty-nine (59) installments of principal and interest in
the amount required to fully amortize the Principal Sum over a
fifteen (15) year period, with the first of such installments to
become due on the first day of the month following the Adjustment
Rate and one of such installments to become due on the first day of
each succeeding calendar month to the Maturity Date.
(2) one final installment of principal and interest to become
due on the Maturity Date and to be equal to the total of the
outstanding Principal Sum, and all interest, premiums, Expenses and
all other sums owing pursuant to this Note and remaining unpaid.
In the event the Prime Rate is increased or decreased while the
Variable Rate is effective, the Variable Rate will be increased or
decreased as of the first day of the next succeeding month following such
change, so that the Variable Rate shall at all times be one-half percent
(.50%) per annum higher than the Prime Rate. In the event of such change
in the Variable Rate, the monthly payments provided for in this paragraph
shall be adjusted so as to reflect the change in the Variable Rate, and
the installment of principal and interest required to fully amortize the
Principal Sum over the remaining amortization term at the increased or
decreased Variable Rate shall be effective as of the first day of the
second month following a change in the Prime Rate, provided that in the
event the Prime Rate changes on the first day of a month, the installment
of principal and interest required to fully amortize the Principal Sum
over the remaining amortization term at the increased or decreased
Variable Rate shall be effective as of the first day of the next
succeeding month following such change.
Prepayment
Notwithstanding the provisions of Rider A to this Note:
A. In the event the Variable Rate is in effect, the Borrower shall have
the option of paying the Principal Sum to the Lender in advance in full or
in part at any time and from time
3
<PAGE>
to time upon written notice received by the Lender at least 30 days prior
to making such payment, without premium.
B. In the event the Variable Rate is not in effect, the Borrower shall
have the option of paying the Principal Sum to the Lender in advance in
full or in part at any time and from time to time upon written notice
received by the Lender at least 30 days prior to making such payment in
accordance with Rider A attached, except that no prepayment premium shall
be due during the thirty (30) days immediately preceding the Adjustment
Date.
CVC PRODUCTS, INC.
By: /s/ Emilio O. DiCataldo
------------------------------------
Emilio O. DiCataldo,
Senior Vice President and Chief
Financial Officer
STATE OF NEW YORK )
COUNTY OF MONROE ) SS:
On this 29th day of September, 1997, before me, the subscriber,
personally appeared EMILIO 0. DiCATALDO, to me known, who, being by me duly
sworn, did depose and say that he resides in Rochester, New York, that he is a
Senior Vice President and Chief Financial Officer of CVC PRODUCTS, INC., the
corporation described in, and which executed the within Instrument, and that he
signed his name thereto by order of the Board of Directors.
/s/ Kevin V. Recchia
----------------------------------------
Notary Public
KEVIN V. RECCHIA
Notary Public, State of New York
No. 02RE5004856
Qualified in Monroe County
Certificate Filed in Monroe County
Commission Expires Nov. 23, 1998
4
<PAGE>
EXHIBIT 10.13
- --------------------------------------------------------------------------------
[LOGO] M&T Real Estate, Inc. MORTGAGE
- --------------------------------------------------------------------------------
This Mortgage is made as of the 29th day of September, 1997, between
County of Monroe Industrial Development Agency, a public benefit corporation
organized and existing under the laws of the State of New York, having its
principal office at 2 State Street, Suite 500, Rochester, NY 14614 ("Agency")
and CVC Products, Inc., a Delaware corporation authorized to do business in the
State of New York, having an office at 525 Lee Road, Rochester, NY 14604
("Borrower") (the Agency and the Borrower are herein collectively described as
the "Mortgagor") (individually and collectively "Mortgagor") and M&T REAL
ESTATE, INC., a New York corporation having its chief executive office at One
Fountain Plaza, Buffalo, New York 142O3-2399, Attention: Office of General
Counsel (the "Mortgagee").
WITNESSETH, to secure (a) the payment of an indebtedness in the
principal sum of Two Million and 00/100 Dollars ($2,000,000.00), lawful money
of the United States, together with interest thereon and other charges with
respect thereto, to be paid according to a certain bond, note or other
obligation dated on or about September 29, 1997, (i) made and delivered by each
Mortgagor to the Mortgagee or (ii) made and delivered by CVC Products, Inc.
XXXXXXXXXXX ("Debtor") to the Mortgagee (the "Note") and (b) if the Note is
guaranteed by each Mortgagor, to the extent of such principal sum and such
interest and other charges, such guaranty (the "Guaranty"), each Mortgagor
hereby mortgages to the Mortgagee, as continuing and collateral security for the
payment of any and all indebtedness, liabilities and obligations now existing or
which may hereafter arise by reason of the Note, the Guaranty, this Mortgage or
any amendments, renewals, extensions, modifications or substitutions of the
Note, the Guaranty or this Mortgage (collectively the "Indebtedness"), the
premises described on the attached Schedule A.
TOGETHER with all buildings, structures and other improvements now
or hereafter erected, constructed or situated upon said premises, and all
fixtures and equipment and other personal property now or hereafter affixed to,
or used in connection with, said premises and any and all replacements thereof
and additions thereto, all of which shall be deemed to be and remain and form a
part of said premises and are covered by the lien of this Mortgage (said
premises, buildings, structures, other improvements, fixtures and equipment and
other personal property being collectively referred to in this Mortgage as the
"Premises"),
TOGETHER with all strips and gores of land adjoining or abutting the
Premises,
TOGETHER with all right, title and interest of each Mortgagor in and
to all streets, alleys, highways, waterways and public places open or proposed
in front of, running through or adjoining the Premises, and all easements and
rights of way, public and private, now or hereafter used in connection with the
Premises,
TOGETHER with all tenements, hereditaments and appurtenances and all
the estate and rights of each Mortgagor in and to the Premises,
TOGETHER with all awards heretofore or hereafter made by any
federal, state, county, municipal or other governmental authority, or by
whomever made in any condemnation or eminent domain proceedings whatsoever, to
the present or subsequent owners of the Premises or any potion thereof, for the
acquisition for public purposes of the Premises or any portion thereof or any
interest therein or any use thereof, or for consequential damages on account
thereof, including, but not limited to, any award for any change of grade of
streets affecting the Premises or any portion thereof and any award for any
damage to the Premises or any portion thereof or any interest therein or any use
thereof.
EACH MORTGAGOR COVENANTS WITH THE MORTGAGEE SO LONG AS THIS MORTGAGE
IS IN EFFECT AS FOLLOWS:
1. PAY INDEBTEDNESS. The Indebtedness shall be paid as provided in
the Note or Guaranty, as the case maybe, and as provided herein.
2. INSURANCE. Each Mortgagor shall keep the Premises insured against
each risk to which the Premises may from time to time be subject (including, but
not limited to, fire, vandalism and other risks covered by all risk insurance;
if requested by the Mortgagee, earthquake; if the Premises or any portion
thereof are located in an area identified as an area having special flood
hazards and in which flood insurance has been made available, flood; and loss of
rents by reason of such risks) for the benefit of the Mortgagee. Such insurance
shall be provided in such amounts, for such periods, in such form, with such
special endorsements, on such terms and by such companies and against such risks
as shall be satisfactory to the Mortgagee. Without limiting the generality of
the preceding two sentences, each policy pursuant to which such insurance is
provided shall contain a mortgagee clause, in form and substance satisfactory to
the Mortgagee, (a) naming the Mortgagee as mortgagee and (b) providing that
(i) all moneys payable pursuant to such insurance shall be payable to the
Mortgagee, (ii) such insurance shall not be affected by any act or neglect of
any Mortgagor or the Mortgagee, any occupancy, operation or use of the Premises
or any portion thereof for purposes more hazardous than permitted by the terms
of such policy, any foreclosure or other proceeding or notice of sale relating
to the Premises or any portion thereof or any change in the title to or
ownership of the Premises or any portion thereof and (iii) such policy and such
mortgagee clause may not be cancelled or amended except upon thirty (30) days'
prior written notice to the Mortgagee. Each Mortgagor hereby assigns and shall
deliver each policy pursuant to which any such insurance is provided to the
Mortgagee. The acceptance by the Mortgagee of such policies from any Mortgagor
shall not be deemed or construed as an approval by the Mortgagee of the form,
sufficiency or amount of such insurance. The Mortgagee does not in any way
represent that such insurance, whether in scope or coverage or limits of
coverage, is adequate or sufficient to protect the business or interest of any
Mortgagor. In the event of the foreclosure of this Mortgage, or a transfer of
title to the Premises in extinguishment of the Indebtedness, all right, title
and interest of each Mortgagor in and to any such policies then in force shall
pass to the purchaser or grantee of the Premises. All the provisions of this
Section 2 and any other provisions of this Mortgage pertaining to insurance
which may be required under this Mortgage shall be construed with Section 254,
Subdivision 4 of the New York Real Property Law, but, said Section 254 to the
contrary notwithstanding, each Mortgagor consents that the Mortgagee may,
without qualification or limitation by virtue of said Section 254, retain and
apply the proceeds of any such insurance in satisfaction or reduction of the
Indebtedness, whether or not then due and payable, or it may pay the same,
wholly or in part, to any Mortgagor for the repair or replacement of the
Premises or for any other purpose satisfactory to the Mortgagee, without
affecting the lien of this Mortgage for the full amount of the Indebtedness
before the making of such payment.
3. ALTERATIONS, DEMOLITION OR REMOVAL. No building, structure, other
improvement, fixture or equipment or other personal property constituting any
portion of the Premises shall be removed, demolished or substantially altered
without the prior written consent of the Mortgagee.
4. WASTE AND CHANGE IN USE. No Mortgagor shall commit any waste on
the Premises or make any change in the use of the Premises which may in any way
increase any ordinary fire, environmental or other risk arising out of
construction or operation.
5. MAINTENANCE AND REPAIRS. Each Mortgagor shall keep and maintain
all buildings, structures, other improvements, fixtures and equipment and other
personal property constituting any portion of the Premises and the sidewalks and
curbs abutting the Premises in good order and rentable and tenantable condition
and state of repair. In the event that the Premises or any portion thereof shall
be damaged or destroyed by fire or any other casualty, or in the event of the
condemnation or taking of any portion of the Premises as a result of any
exercise of the power of eminent domain, each Mortgagor shall promptly restore,
replace, rebuild or alter the same as nearly as possible to the condition
immediately prior to such fire, other casualty, condemnation or taking without
regard to the adequacy of any proceeds of any insurance or award received. Each
Mortgagor shall give prompt written notice to the Mortgagee of any such damage
or destruction or of the commencement of any condemnation or eminent domain
proceeding affecting the Premises or any portion thereof.
6. EXISTENCE AND AUTHORITY. If Mortgagor is a corporation,
partnership or a limited liability company (i) so long as this Mortgage remains
in effect, Mortgagor will do all things necessary to preserve and keep in full
force and effect the existence, franchises, rights and privileges of Mortgagor
as a business or stock corporation, a partnership (limited or general) or as a
limited liability company, under the laws of the state of its organization and
(ii) if a corporation, warrants that neither its certificate of incorporation,
nor any amendment thereto, nor its by-laws, requires the consent of shareholders
to the execution and delivery of this Mortgage, and that the execution and
delivery of this Mortgage have been duly authorized by its Board of Directors;
(iii) if a limited liability company, warrants that the execution and delivery
of this Mortgage has been duly authorized by the members of the limited
liability company and no other action is required under its articles of
organization or the operating agreement and (iv) if a partnership, warrants that
the execution and delivery of this Mortgage has been duly authorized by its
partners and no other action is required under its partnership agreement.
Mortgagor shall take all necessary steps to preserve its corporate, partnership
or limited liability company existence (as the case maybe) and its right to
conduct business in all states in which the nature of its business or ownership
of its property requires such qualification. Mortgagor shall engage only in the
business conducted by it on the date of this Agreement.
Tax Account No.: 104.34-1-1.001
Tax Mailing Address: 525 Lee Road, Rochester, New York 14603
<PAGE>
7. TAXES AND ASSESSMENTS. Unless paid from an escrow established
pursuant to Section 8 of this Mortgage, each Mortgagor shall pay all taxes,
general and special assessments and other governmental impositions with respect
to the Premises before the end of any applicable grace period. Upon request by
the Mortgagee, each Mortgagor shall promptly deliver to the Mortgagee receipted
bills showing payment of all such taxes, assessments and impositions within the
applicable grace period.
8. ESCROW FOR TAXES, ASSESSMENTS AND INSURANCE. Upon request by the
Mortgagee after any default under the Loan Documents, each Mortgagor shall pay
(a) monthly to the Mortgagee on or before the first day of each and every
calendar month, until the Indebtedness is fully paid, a sum equal to one-twelfth
(1/12th) of the yearly taxes, general and special assessments, other
governmental impositions and other liens and charges with respect to the
Premises to be imposed for the ensuing year, as estimated by the Mortgagee in
good faith, and annual premiums for insurance on the Premises and (b) an initial
payment such that, when such monthly payments are added thereto, the total of
such payments will be sufficient to pay such taxes, assessments, impositions and
other liens and charges and such insurance premiums on or before the date when
they become due. So long as no Event of Default (as hereinafter defined) shall
have occurred or exists, the Mortgagee shall hold such payments in trust in an
account maintained with Manufacturers and Traders Trust Company without
obligation to pay interest thereon, except such interest as may be mandatory by
any applicable statute, regulation or other law, to pay, to the extent funds are
available, such taxes, assessments, impositions and other liens and charges and
such insurance premiums within a reasonable time after they become due;
provided, however, that upon the occurrence or existence of any Event of
Default, the Mortgagee may apply the balance of any such payments held to the
Indebtedness. If the total of such payments made by any Mortgagor shall exceed
the amount of such payments made by the Mortgagee, such excess shall be held or
credited by the Mortgagee for the benefit of each Mortgagor. If the total of
such payments made by any Mortgagor shall be less than the amount of such taxes,
assessments, impositions and other liens and charges and such insurance
premiums, then each Mortgagor shall pay to the Mortgagee any amount necessary to
make up the deficiency on or before the date when any such amount shall be due.
9. LEASES. Pursuant to the provisions of Section 291-f of the New
York Real Property Law, no Mortgagor shall (a) amend, cancel, abridge,
terminate, or otherwise modify any lease of the Premises or of any portion
thereof or (b) accept any prepayment of installments of rent to become due
thereunder for more than one month in advance, without the prior written consent
of the Mortgagee or its agents. No Mortgagor shall make any new lease in place
of or any lease renewal or extension of any lease of the Premises or any portion
thereof (other than those such Mortgagor as landlord may be required to grant by
the terms of an existing lease) without the prior written consent of the
Mortgagee or its agents. Upon request by the Mortgagee or its agents, each
Mortgagor shall promptly furnish to the Mortgagee a written statement containing
the names and mailing addresses of all lessees of the Premises or of any portion
thereof, the terms of their respective leases, the space occupied and the
rentals payable thereunder and copies of their respective leases and shall
cooperate in effecting delivery of notice of this covenant to each affected
lessee.
10. ASSIGNMENT OF LEASES AND RENTS. Each Mortgagor hereby assigns to
the Mortgagee all existing and future leases of the Premises or any portion
thereof (including, but not limited to, any amendments, renewals, extensions or
modifications thereof) and the rents, issues and profits of the Premises
including without limitation accounts receivable for use of the Premises for
hotel or lodging services ("Accounts"), as further security for the payment of
the Indebtedness, and each Mortgagor grants to the Mortgagee the right to enter
upon and to take possession of the Premises for the purpose of collecting the
same and to let the Premises or any portion thereof, and, after payment of each
cost and expense (including, but not limited to, each fee and disbursement of
counsel to the Mortgagee) incurred by the Mortgagee in such entry and
collection, to apply the remainder of the same to the Indebtedness, without
affecting its right to maintain any action theretofore instituted, or to bring
any action thereafter, to enforce the payment of the Indebtedness. In the event
the Mortgagee exercises such rights, it shall not thereby be deemed a mortgagee
in possession, and it shall not in any way be made liable for any act or
omission. This assignment and grant shall continue in effect until the
Indebtedness is fully paid. No Mortgagor shall assign such leases, rents, issues
or profits or any interest therein or grant any similar rights to any other
person without the Mortgagee's prior written consent. The Mortgagee hereby
waives the right to enter upon and to take possession of the Premises for the
purpose of collecting said rents, issues and profits, and each Mortgagor shall
be entitled to collect the same, until the occurrence or existence of any Event
of Default, but such right of each Mortgagor may be revoked by the Mortgagee
upon the occurrence or existence of any Event of Default. Upon the occurrence or
existence of any Event of Default, each Mortgagor shall pay monthly in advance
to the Mortgagee, or to any receiver appointed to collect said rents, issues and
profits, a fair and reasonable monthly rental value for the use and occupation
of the Premises, and upon default in any such payment shall vacate and surrender
the possession of the Premises to the Mortgagee or to such receiver, and in
default thereof may be evicted by summary proceedings pursuant to Article 7 of
the New York Real Property Actions and Proceedings Law. The rights and remedies
under this section and any separately recorded assignment of rents and/or leases
in favor of Mortgagee shall be cumulative. In the event of any irreconcilable
inconsistencies between such agreements and this section, the separately
recorded assignment of rents and/or leases shall control.
11. SECURITY AGREEMENT. This Mortgage constitutes a security
agreement under the New York Uniform Commercial Code and each Mortgagor hereby
grants to the Mortgagee a security interest in all fixtures, equipment and other
personal property now or hereafter owned and affixed to, used in connection with
any portion of or constituting any portion of the Premises and in the proceeds,
rents, issues, profits and Accounts arising therefrom, to secure the
Indebtedness. The Mortgagee shall have the right to file in any public office,
without the signature of any Mortgagor, each financing statement relating to
such fixtures and equipment and other personal property and proceeds, rents,
issues, profits and Accounts arising therefrom that the Mortgagee shall deem
necessary or desirable at the sole option of the Mortgagee. With respect to such
fixtures and equipment and other personal property and proceeds, the Mortgagee
shall have each applicable right and remedy of a secured party under the New
York Uniform Commercial Code and each applicable right and remedy pursuant to
any other statute, regulation or other law or pursuant to this Mortgage.
12. NO TRANSFER. No Mortgagor shall, without the Mortgagee's prior
written consent, sell, convey or transfer the Premises or any portion thereof or
any interest therein or contract to do so. If any Mortgagor, Debtor or any
endorser or guarantor of the Note (a "Guarantor") is a corporation, or if any
other person liable with respect to the Indebtedness or any portion thereof
other than any Mortgagor or any general partner of any Mortgagor, Debtor or any
Guarantor, is a corporation, any direct or indirect change in the beneficial
ownership or number of issued and outstanding shares of any class of stock of
such Mortgagor, such Debtor, such Guarantor or such general partner, whether by
operation of law or otherwise, after which the percentage of such shares
beneficially owned by any person or group of persons having beneficial ownership
of any such shares has changed by at least ten percent (10%) more or less than
it was on the date of this Mortgage shall be deemed a sale, conveyance or
transfer of the Premises within the meaning of this Section 12. If any
Mortgagor, Debtor or Guarantor is a partnership, including a limited liability
partnership, any change in the partnership interests of the general partners of
such Mortgagor, Debtor or Guarantor or in the composition of the general
partners of such Mortgagor, Debtor or Guarantor, whether by operation of law or
otherwise, shall be deemed a sale, conveyance or transfer of the Premises within
the meaning of this Section 12. If any Mortgagor, Debtor or Guarantor is a
limited liability company, any change in the direct or indirect membership
interest of any member or class of members of such Mortgagor, Debtor or
Guarantor, whether by operation of law or otherwise, after which the percentage
of such membership interest owned by any such member or class has changed by at
least ten percent (10%) more or less than it was on the date of this Mortgage
shall be deemed a sale, conveyance or transfer of the Premises within the
meaning of this Section 12.
13. NO SECONDARY FINANCING OR OTHER LIENS. No Mortgagor shall,
without the Mortgagee's prior written consent, mortgage, pledge, assign, grant a
security interest in or cause any other lien or encumbrance to be made or permit
any other lien or encumbrance to exist upon the Premises or any portion thereof
except for (a) taxes and assessments not yet delinquent and (b) any mortgage,
pledge, security interest, assignment or other lien or encumbrance to the
Mortgagee.
14. COMPLIANCE WITH LAWS. Each Mortgagor represents and warrants to
the Mortgagee, and continues to represent and warrant as long as this Mortgage
is in effect, as follows: (a) the buildings, structures and other improvements
now constituting any portion of the Premises are in full compliance with all
applicable statutes, regulations and other laws (including, without limitation,
all applicable zoning, building, fire and health codes and ordinances and the
Americans With Disabilities Act of 1990) and all applicable deed restrictions,
if any and is not and shall not be used for any illegal purpose; (b) such
compliance is based solely upon each Mortgagor's ownership of the Premises and
not upon title to or interest in any other property. Each Mortgagor shall comply
with or cause compliance with all statutes, regulations and other laws
(including, without limitation, all applicable zoning, building, fire and health
codes and ordinances and the Americans With Disabilities Acts of 1990), all
other requirements of all governmental authorities whatsoever having
jurisdiction over or with respect to the Premises or any portion thereof or the
use or occupation thereof and with all applicable deed restrictions, if any;
provided, however, that any Mortgagor may postpone such compliance if and so
long as the validity or legality of any such requirement or restriction shall be
contested by such Mortgagor, with diligence and in good faith, by appropriate
legal proceedings and the Mortgagee is satisfied that such non-compliance will
not impair or adversely affect the value of its security.
15. WARRANTY OF TITLE; TITLE INSURANCE. Each Mortgagor represents
and warrants to the Mortgagee, and continues to represent and warrant as long as
this Mortgage is in effect, good and marketable title in fee simple absolute to
the Premises. Upon request by the Mortgagee, each Mortgagor shall furnish to the
Mortgagee at such Mortgagor's own cost and expense a title insurance policy in
the then amount of the Indebtedness, (a) naming the Mortgagee as mortgagee, (b)
covering the lien on the Premises granted pursuant to this Mortgage, (c)
containing no exception not approved by the Mortgagee, (d) issued by a title
insurance company qualified to do business in the State of New York and
satisfactory to the Mortgagee and (e) otherwise in form and substance
satisfactory to the Mortgagee.
16. CERTAIN RIGHTS AND OBLIGATIONS.
(a) Mortgagee or its agents may take such action as Mortgagee
or its agents deem appropriate to protect the Premises or the status or priority
of the lien of this Mortgage, including, but not limited to: entry upon the
Premises to protect the Premises from deterioration or damage, or to cause the
Premises to be put in compliance with any governmental, insurance rating or
contract requirements; payment of amounts due on liens having priority over this
Mortgage; payment of any tax or charge for purposes of assuring the priority or
enforceability of this Mortgage; obtaining insurance on the Premises; or
commencement or defense of any legal action or proceeding to asset or protect
the validity or priority of the lien of this Mortgage. On demand, Mortgagor
shall reimburse Mortgagee or its agents for all expenses in taking any such
action, with interest, and the amount thereof shall be secured by this Mortgage
and shall, to the extent permitted by law, be in addition top the maximum amount
of the indebtedness evidenced by the Note.
(b) Mortgagor authorizes Mortgagee, without notice, demand
or any reservation of rights and without affecting this Mortgage, from time
to time: (i) to renew, extend, increase, accelerate or otherwise change the
time for payment of, the terms of or the interest on the Indebtedness
2
<PAGE>
or any part thereof; (ii) to accept from any person or entity and hold
additional collateral for the payment of the Indebtedness or any part thereof,
and to exchange, enforce or refrain from enforcing, or release such collateral
or any part thereof; (iii) to accept and hold any indorsement or guaranty of
payment of the Indebtedness or any part thereof, and to release or substitute
any such obligation of any such indorser or guarantor or any person or entity
who has given any collateral as security for the payment of the Indebtedness or
any part thereof, or any other person or entity in any way obligated to pay the
Indebtedness or any part thereof, and to enforce or refrain from enforcing, or
compromise or modify, the terms of any obligation of any such indorser,
guarantor, person or entity; (iv) to direct the order or manner of the
disposition of any and all collateral and the enforcement of any and all
Indorsements and guaranties relating to the Indebtedness or any part thereof as
Mortgagee, in its sole discretion, may determine; and (v) to determine the
manner, amount and time of application of payments and credits, if any, to be
made on all or any part of any component or components of the Indebtedness
(whether principal, interest, costs and expenses, or otherwise).
(c) If any default shall be made in the payment of any
Indebtedness, this Mortgage shall remain valid, binding and enforceable: (i)
without deduction by reason of any setoff, defense or counterclaim of Mortgagor,
Guarantor or Debtor; (ii) without requiring protest or notice of nonpayment or
notice of default to Mortgagor, to Guarantor, to Debtor, or to any other person;
(iii) without demand for payment or proof of such demand; (iv) without requiring
Mortgagee to resort first to Mortgagor or to any other guaranty or any
collateral which Mortgagee may hold; (v) without requiring notice of acceptance
hereof or assent hereto by Mortgagee; and (vi) without requiring notice that any
indebtedness has been incurred or of the reliance by Mortgagee upon this
Mortgage; all of which Mortgagor hereby waives.
(d) The enforceability of this Mortgage shall not be affected
by: (i) any failure to perfect or continue the perfection of any security
interest in or other lien on any collateral securing payment of the
Indebtedness; (ii) the invalidity, unenforceability, or loss or change in
priority of any such security interest or other lien; (iii) any failure to
protect, preserve or insure any such collateral; (iv) any defense arising by
reason of the cessation from any cause whatsoever of liability of Debtor or any
Guarantor; (v) any compromise of any obligation of a Mortgagor, Debtor or any
Guarantor; or (vi) the invalidity or unenforceability of any of the
Indebtedness; all of which Mortgagor hereby waives.
(e) If Mortgagee shall receive from or on behalf of Mortgagor
any sum less than the full amount when due and payable, Mortgagee may, but shall
not be obligated to, accept the same and, if it elects to accept any such
payment, it may without waiving any event of default: (i) apply such payment on
account of the Indebtedness or any amount payable hereunder, or (ii) hold same
or any part thereof, without liability for interest, in a special account and
from time to time apply same or any part thereof as specified in subsection (i)
of this subsection.
17. LIEN LAW COVENANT. Each Mortgagor shall receive the advances
secured by this Mortgage and shall hold the right to receive such advances as a
trust fund in accordance with the provisions of Section 13 of the New York Lien
Law.
18. APPLICATION OF AND INTEREST ON CONDEMNATION AWARD. Each
Mortgagor consents that the Mortgagee may retain and apply the proceeds of any
award by a condemning authority in satisfaction or reduction of the
Indebtedness, whether or not then due and payable, or it may pay the same,
wholly or in part, to any Mortgagor for the restoration or alteration of the
Premises or, for any other purpose satisfactory to the Mortgagee, without
affecting the lien of this Mortgage for the full amount of the Indebtedness
before the making of such payment. In the event of the condemnation or taking by
eminent domain of the Premises or any portion thereof, the Mortgagee shall not
be limited to the interest paid on the award by the condemning authority, but
shall be entitled to receive out of the award interest on the Indebtedness in
accordance with its terms.
19. APPOINTMENT OF RECEIVER. In addition to any other remedy, upon
the occurrence of any Event of Default, the Mortgagee, in any action to
foreclose this Mortgage, shall be entitled, without notice or demand and without
regard to the adequacy of any security for the Indebtedness or the solvency or
insolvency of any person liable for the payment thereof, to the appointment of a
receiver of the rents, issues and profits of the Premises.
20. SALE IN ONE OR MORE PARCELS. In case of a foreclosure sale, the
Premises may be sold in one or more parcels, any provision of any statute,
regulation or other law to the contrary notwithstanding.
21. ESTOPPEL STATEMENT. Upon request by the Mortgagee, each
Mortgagor shall furnish to the Mortgagee within five (5) days if such request is
made in person or within ten (10) days if such request is otherwise made a
written statement duly acknowledged of the amount of the Indebtedness and
whether any offsets or defenses exist against the Indebtedness.
22. RIGHT TO INSPECT AND EXAMINE. Upon request by the Mortgagee or
its agents, each Mortgagor shall immediately permit the Mortgagee and each
officer, employee, accountant, attorney and other agent of the Mortgagee to
enter and inspect the Premises and to examine, audit, copy and extract each
record of any Mortgagor relating to the Premises or any portion thereof.
23. FINANCIAL STATEMENTS. SEE RIDER ATTACHED HERETO.
24. AUTHORIZATION AND POWER OF ATTORNEY. The Mortgagee is
irrevocably and unconditionally authorized to take, and each Mortgagor
irrevocably and unconditionally appoints the Mortgagee as the attorney-in-fact
of such Mortgagor, with full power of substitution and of revocation, to take,
in the name of such Mortgagor or otherwise at the sole option of the Mortgagee,
each action relating to the Premises or any portion thereof that, subject to
this Mortgage, such Mortgagor could take in the same manner, to the same extent
and with the same effect as if such Mortgagor were to take such action;
provided, however, that the Mortgagee shall not have the right, pursuant to such
authorization or as such attorney-in-fact, to sell or otherwise dispose of the
Premises or any portion thereof. Such power of attorney is coupled with an
interest in favor of the Mortgagee, and shall not be terminated or otherwise
affected by the death, disability or incompetence of any Mortgagor.
25. FURTHER ASSURANCES. Promptly upon request by the Mortgagee, each
Mortgagor shall execute and deliver each writing, and take each other action,
that the Mortgagee shall deem necessary or desirable at the sole option of the
Mortgagee (a) to perfect or accomplish any lien or security interest granted, or
assignment made, pursuant to this Mortgage; (b) otherwise to accomplish any
purpose of this Mortgage; (c) in connection with any transaction contemplated by
this Mortgage; or (d) in connection with the Premises or any portion thereof.
26. ENVIRONMENTAL REPRESENTATIONS, WARRANTIES AND INDEMNIFICATION.
Each Mortgagor represents and warrants, * and continues to represent and warrant
as long as this Mortgage is in effect, to the Mortgagee that (a) each Mortgagor
and the Premises are in compliance with each statute, regulation or other law
and each judgment, order or award of any court, agency or other governmental
authority or of any arbitrator (individually an "Environmental Requirement")
relating to the protection of any water, water vapor, land surface or
subsurface, air, fish, wildlife, biota or other natural resources or governing
the use, storage, treatment, generation, transportation, processing, handling,
production or disposal of any chemical, natural or synthetic substance, waste,
pollutant or contaminant (collectively "Regulated Materials"), (b) no Mortgagor
has been charged with, or has received any notice that such Mortgagor is under
investigation for, the failure to comply with any Environmental Requirement, nor
has any Mortgagor received any notice that such Mortgagor has or may have any
liability or responsibility under any Environmental Requirement with respect to
the Premises or otherwise, (c) the Premises have never been used for (i) the
storage, treatment, generation, transportation, processing, handling, production
or disposal of Regulated Materials, except as permitted by law, (ii) a landfill
or other waste disposal site or (iii) military purposes, (d) no underground
storage tanks are located on the Premises, (e) the environmental media at the
Premises do not contain Regulated Materials beyond any legally permitted level,
(f) there has never been any release, threatened release, migration or
uncontrolled presence of any Regulated Materials on, at or from the Premises or,
to the knowledge of such Mortgagor, within the immediate vicinity of the
Premises and (g) no Mortgagor has received any notice of any such release,
threatened release, migration or uncontrolled presence. No Mortgagor shall cause
or permit the Premises to be used in any way that would result in any of the
representations and warranties contained in the preceding sentence to the false
or misleading at any future time. To the extent any such representation or
warranty at any time is or becomes false or misleading, each Mortgagor shall
promptly notify the Mortgagee thereof. Each Mortgagor shall, at such Mortgagor's
own cost and expense, conduct and complete all investigations, studies, sampling
and testing with respect to the Premises requested by the Mortgagee. Each
Mortgagor shall promptly furnish to the Mortgagee copies of all such
investigations, studies, samplings and tests. Each Mortgagor shall (a) conduct
and complete all such investigations, studies, samplings and testing, and all
remedial, removal and other actions necessary with respect to the Premises, in
accordance with all applicable Environmental Requirements and promptly furnish
to the Mortgagee copies of all documents generated in connection therewith and
(b) defend, reimburse, indemnify and hold harmless the Mortgagee, its employees,
agents, officers and directors, from and against any claims, demands, penalties,
fines, liabilities, settlements, damages, costs or expenses
* to the best of its knowledge and in reliance upon the Phase I
Environmental Audit conducted in connection with this transaction
<PAGE>
of whatever kind or nature, known or unknown, contingent or otherwise, arising
out of, or in any way related to, the violation of, or other liability or
responsibility under, any Environmental Requirements, or the release, threatened
release, migration or uncontrolled presence of any Regulated Materials on, at or
from the Premises including, without limitation, attorney and consultant fees,
investigation and laboratory fees, court costs and litigation expenses. In the
event this Mortgage is foreclosed, or the Mortgagors tender a deed in lieu of
foreclosure which the Mortgagee agrees to accept, each Mortgagor shall be
responsible to deliver the Premises to the Mortgagee free of any and all
Regulated Materials other than any that are (a) normally used in such
Mortgagor's business and (b) located and maintained thereon in compliance with
all applicable Environmental Requirements and in a condition that conforms with
all applicable Environmental Requirements. The provisions of this Section 26
shall be in addition to any and all other obligations and liabilities any
Mortgagor may have to the Mortgagee at common law or any other agreement with
Mortgagee, and shall survive the transactions contemplated in this Mortgage and
the termination of this Mortgage.
27. EVENTS OF DEFAULT.
(a) An event of default ("Event of Default") will have
occurred if: (i) any Mortgagor or Debtor fails to pay when due whether by
acceleration or otherwise the Indebtedness or any portion thereof or there
occurs any event which after notice or lapse of time will permit such
acceleration; (ii) any of any Mortgagor's debts or those of Debtor or any
Guarantor is accelerated or an event occurs which after notice or lapse of time
would permit such acceleration; (iii) any Mortgagor, Debtor or Guarantor
breaches or is in default under this Mortgage (including but not limited to any
default in the payment of any amount any Mortgagor is obligated to pay pursuant
to Sections 2, 6, 8 or 16 of this Mortgage or in the performance of any
obligation of any Mortgagor pursuant to Sections 23 or 26 of this Mortgage) or
under any other agreement with the Mortgagee or Mortgagee's affiliates
including, without limitation, Manufacturers and Traders Trust Company; (iv) any
Mortgagor, Debtor or Guarantor is dissolved, suspends his, her or its present
business, agrees to a merger or other absorption or to transfer or otherwise
dispose of substantially all of his, her or its assets, makes or sends notice of
a bulk sale, dies, becomes incompetent or insolvent (however such insolvency is
evidenced), generally fails to pay his, her or its debts as they become due,
fails to pay, withhold or collect any tax as required by law, has served or
filed against his, her or its assets any lien or has entered against him, her or
it or his, her or its assets any judgment, order or award; (v) a receiver or
similar trustee is appointed for any Mortgagor, Debtor or Guarantor or his, her
or its assets (with or without his, her or its consent), or any Mortgagor,
Debtor or Guarantor makes an assignment for the benefit of creditors or
commences or has commenced against him, her or it a proceeding pursuant to any
bankruptcy, insolvency, reorganization, arrangement, readjustment of debt,
dissolution or liquidation laws calling a meeting of creditors or offering a
composition or extension to creditors; (vi) any representation or warranty made
in this Mortgage or related documents or other statements provided by any
Mortgagor, Debtor, Guarantor or Material Lessee proves to have been incorrect or
misleading in any material respect; (vii) any pension plan of any Mortgagor,
Debtor or Guarantor fails to comply with applicable law or has vested unfunded
liabilities that, in the opinion of the Mortgagee, might have a material adverse
effect on any Mortgagor's, Debtor's or Guarantor's ability to repay his, her or
its debts; (viii) there occurs any change in the management of any Mortgagor,
Debtor or Guarantor which is, in the opinion of the Mortgagee, materially
adverse to its interest and which remains uncorrected for thirty (30) days after
the Mortgagee notifies any Mortgagor of its opinion; (ix) any Mortgagor, Debtor
or Guarantor fails to pay when due whether by acceleration or otherwise any
amount due to any person other than the Mortgagee; or (x) any Mortgagor or
Debtor is convicted of a felony. Automatically upon the occurrence or existence
of any Event of Default, the annual interest rate applicable to the Indebtedness
shall be increased by the greater of (a) the amount needed to equal any default
rate specified in the Note or other instrument evidencing the Indebtedness or
(b) three percent (3%).
(b) Mortgagee, at its sole election, may declare all or any
part of any Indebtedness not payable on demand to be immediately due and payable
without demand or notice of any kind upon the happening of any event of default,
or if Mortgagee in good faith believes that the prospect of payment of all or
any part of the Indebtedness or performance of Mortgagor's or Debtor's
obligations under this Mortgage or any other agreement now or hereafter in
effect between Mortgagor or Debtor and Mortgagee is impaired. All or any part of
any Indebtedness not payable on demand shall be immediately due and payable,
without demand or notice of any kind, upon the commencement of any Mortgagor's
or Debtor's bankruptcy if voluntary and upon the lapse of thirty (30) days
without dismissal if involuntary. The provisions of this paragraph are not
intended in any way to affect any rights of Mortgagee with respect to any
Indebtedness which may now or hereafter be payable on demand.
(c) Upon the happening of an Event of Default, whether or not
foreclosure proceedings have been instituted, Mortgagor shall, upon demand,
surrender possession of the Premises to Mortgagee. If Mortgagor remains in
possession of the Premises after the happening of an Event of Default, the
possession shall be as tenant of Mortgagee and Mortgagor agrees to pay in
advance upon demand to Mortgagee a reasonable monthly rental for the Premises or
portion so occupied. Mortgagee may dispossess, by summary proceedings or
otherwise, any tenant or Mortgagor defaulting in the payment of rent. If a
receiver is appointed, this covenant shall inure to the benefit of such
receiver. Notwithstanding any provision of law to the contrary, Mortgagee may,
at its option, foreclose this Mortgage subject to the rights of tenants of the
Premises which are subordinate to the lien of this Mortgage.
(d) If the indebtedness, as evidenced by a single note or
other written instrument shall exceed the amount secured by this Mortgage, or as
evidenced by a combination of same that singlulary or in part collectively may
be less than said secured amount but combined exceed said secured amount,
Mortgagee, in any foreclosure hereof, shall have the right to sue and collect
the excess in the same action as commenced for the foreclosure hereof, and
recover a money judgment for said excess with all the rights attendant thereto,
including, without limitation, the issuance of an execution to the Sheriff for
collection thereof, and Mortgagor hereby waives any defense based upon a claim
that in doing so, Mortgagee is splitting its cause of action if it seeks to
foreclose this Mortgage for part of the Indebtedness and recover at law for
another part.
(e) Upon the happening of an Event of Default, Mortgagee or
its agents may pursue, take or refrain from pursuing any remedy for collection
of the Indebtedness, including foreclosure of this Mortgage.
(f) Mortgagee may, either with or without entry or taking
possession of the Premises as provided in this Mortgage or otherwise, personally
or by its agents or attorneys, and without prejudice to the right to bring an
action of foreclosure, sell the Premises or any part thereof pursuant to any
procedures provided by applicable law including, without limitation, the
procedures set forth in Article 14 of the New York Real Property Actions and
Proceedings Law (and any amendments or substitute statutes in regard thereto),
and all estate, right, title interest, claim and demand therein, and right of
redemption thereof, at one or more sales as an entity or in parcels, and at such
time and place upon such terms and after such notice thereof as may be required
or permitted by applicable law. Any reference in this Mortgage to an action or
right of the Mortgagee in regard to or in connection with a "foreclosure
proceeding" shall be deemed to include a sale and/or proceeding under this
subsection.
28. EXPENSES. Each Mortgagor shall pay to the Mortgagee or its
agents on demand all costs and expenses (including but not limited to attorneys'
fees and disbursements whether for internal or outside counsel) incurred by the
Mortgagee or its agents in connection with the Indebtedness including without
limitation costs of collection, of preserving or exercising any right or remedy
of the Mortgagee or its agents under this Mortgage or any related security
agreement or guaranty, of workout or bankruptcy proceedings by or against any
Mortgagor, of defending against any claim asserted as a direct or indirect
result of the Indebtedness or of performing any obligation of any Mortgagor
pursuant to this Mortgage or otherwise (including but not limited to payment of
any amount any Mortgagor is obligated to pay pursuant to Sections 2, 6, 8 or 16
of this Mortgage and performance of any obligation of any Mortgagor pursuant to
Section 23 or 26 of this Mortgage). Costs and expenses shall accrue interest at
the highest legal rate from the date of demand until payment is actually
received by the Mortgagee. Each such cost and expense and any interest thereon
shall constitute part of the Indebtedness and be secured by this Mortgage and
may be added to the judgment in any suit brought by the Mortgagee or its agents
against any Mortgagor on this Mortgage.
29. NOTICES. Each notice to, and each demand upon, any Mortgagor by
the Mortgagee relating to his Mortgage may be oral or in writing and, if in
writing, may be served in person or by mail.
30. LITIGATION. Mortgagor shall promptly notify Mortgagee in writing
of any litigation, proceeding, or counterclaim against, or of any investigation
of, Mortgagor if: (i) the outcome of such litigation, proceeding, counterclaim,
or investigation may materially and adversely affect the finances or operations
of Mortgagor or title to, or the value of, any assets secured by the Mortgage or
(ii) such litigation, proceeding, counterclaim, or investigation questions the
validity of the Mortgage, the Note or any document executed in connection
therewith including any guaranties or any action taken, or to be taken, pursuant
to any such documents. Mortgagor shall furnish to Mortgagee such information
regarding any such litigation, proceeding, counterclaim, or investigation as
Mortgagee shall request.
31. NOTICE OF NON-COMPLIANCE. Mortgagor shall notify Mortgagee in
writing of any failure by Mortgagor to comply with any provision of the Note,
the Mortgagee or any document executed in connection therewith immediately upon
learning of such non-compliance, or if any representation, warranty or covenant
contained in such document is no longer true. Mortgagor shall also immediately
notify Mortgagee in writing if there is any material adverse change in any of
the information or financial statements supplied to Mortgagee or its agents to
induce Mortgagee to extend credit to Mortgagor or if such information or
financial statement is required under this Mortgage or any other document
executed in connection therewith.
32. COVENANTS SHALL RUN WITH THE LAND. The covenants contained in
this Mortgage shall run with the land and bind each Mortgagor; each heir, legal
representative, successor and assign of each Mortgagor and each subsequent
owner, encumbrancer, tenant and subtenant of the Premises or any portion
thereof, and shall inure to the benefit of, and be enforceable by, the Mortgagee
and each successor and assign of the Mortgagee.
33. NONWAIVER BY MORTGAGEE. All rights and remedies of the
Mortgagee under this Mortgage and its other agreements with Mortgagor are
cumulative, and no right or remedy shall be exclusive of any other right or
remedy. No single, partial or delayed exercise by the Mortgagee or its agents
of any right or remedy shall preclude full and timely exercise by the
Mortgagee or its agents at any time of any right or remedy of the Mortgagee
without notice or demand, at the Mortgagee's sole option. No course of
dealing or other conduct, no oral agreement or representation made by the
Mortgagee or its agents or usage of trade shall operate as a waiver of any
right or remedy of the Mortgagee. No waiver of any right or remedy of the
Mortgagee shall be effective unless made specifically in writing by the
Mortgagee.
34. RIGHT OF SETOFF. If an Event of Default occurs, the Mortgagee
and its agents and affiliates stall also have the right to set off against the
Indebtedness any property held in a deposit or other account or otherwise owing
by the Mortgagee or its agents or affiliates including, without limitation,
Manufacture's and Traders Trust Company and M&T Bank, National Association, in
any capacity to any Mortgagor, Debtor or Guarantor in any capacity whether or
not the Indebtedness or the obligation to pay such moneys owed by Mortgagee is
then due, and Mortgagee shall be deemed to have exercised such right of setoff
immediately at the time of such election.
4
<PAGE>
35. TERM; SURVIVAL. The term of this Mortgage shall continue until
the Indebtedness has been fully paid to the Mortgagee's satisfaction. Each
Mortgagor's obligation to pay the costs and expenses hereunder shall survive the
term of this Mortgage. Each of each Mortgagor's representations, warranties,
covenants and agreements shall survive during the term of this Mortgage and
shall be presumed to have been relied upon by the Mortgagee. If after receipt of
any payment of all or any part of the indebtedness, Mortgagee is for any reason
compelled to surrender such payment to any person or entity because such payment
is determined to be void or voidable as a preference, impermissible setoff, or a
diversion of trust funds, or for any other reason, this Mortgage shall continue
in full force notwithstanding any contrary action which may have been taken by
Mortgagee in reliance upon such payment, and any such contrary action so taken
shall be without prejudice to Mortgagee's rights under this Mortgage and shall
be deemed to have been conditioned upon such payment having become final and
irrevocable.
36. MISCELLANEOUS. This Mortgage is absolute and unconditional and
it along with the Note, the Guaranty and all collateral documents including
without limitation security agreements and guarantees contains the entire
agreement between the Mortgagee and each Debtor or Mortgagor with respect to the
Indebtedness, and supersedes every course of dealing, other conduct, oral
agreement and representation previously made by the Mortgagee and its agent in
their capacity as agent for Mortgagee. No change in this Mortgage shall be
effective unless made in a writing duly executed by the Mortgagee. This Mortgage
shall be governed by the laws of the State of New York, without regard to its
principles of conflict of laws. This Mortgage is a binding obligation
enforceable against each Mortgagor and his or her heirs and legal
representatives and his, her or its successors and assigns and shall inure to
the benefit of the Mortgagee and its successors and assigns. Any reference
herein to "Mortgagee" shall be deemed to include and apply to every subsequent
holder of this Mortgage and any reference herein to "Mortgagor" "Debtor" or
"Guarantor", as the case may be, shall be deemed to include and apply to every
subsequent owner of the Premises and every person liable upon the Indebtedness,
unless the language or circumstances clearly requires the contrary. Further, the
term "Debtor" "Mortgagor" and "Guarantor" shall include: (i) any successor
individual or individuals, association, partnership, limited liability company
or corporation to which all or substantially all of the business or assets of
Debtor, Mortgagor or Guarantor, as the case may be shall have been transferred;
(ii) in the case of a partnership Debtor, Mortgagor or Guarantor (as the case
may be) any new partnership which shall have been created by reason of the
admission of any new partner or partners therein, or by reason of the
dissolution of the existing partnership by voluntary agreement or the death,
resignation or other withdrawal of any partner; and (iii) in the case of a
corporate or limited liability company Debtor, Mortgagor or Guarantor (as the
case may be) any other entity into or with which Debtor, Mortgagor or Guarantor
(as the case may be) shall have been merged, consolidated, reorganized, or
absorbed. Each provision of this Agreement shall be interpreted as consistent
with existing law and shall be deemed amended to the extent necessary to comply
with any conflicting law. If a court deems any provision invalid, the remainder
of this Mortgage shall remain in effect. Section headings are for convenience
only. It is the intent of each Mortgagor and the Mortgagee that the provisions
of this Mortgage, other than those included in the New York statutory form of
mortgage, shall be construed as affording to the Mortgagee rights additional to,
and not exclusive of, the rights conferred under the provisions contained in
such statutory form. Without limiting the generality of any reference hereunder
to an agent of the Mortgagee, any right or remedy granted to the Mortgagee under
this Mortgage, including, without limitation, the right to be reimbursed for
expenses under Section 28, shall inure to the benefit of and be enforceable by
both the Mortgagee and its agents.
37. CONSENT TO JURISDICTION. In any action or other legal proceeding
relating to the Note, the Guaranty or this Mortgage, each Mortgagor (i) consents
to the personal jurisdiction of any State or federal court located in the State
of New York, (ii) waives objection to the laying of venue, and (iii) waives
personal service of process and subpoenas and consents to service of process and
subpoenas by registered mall directed to such Mortgagor at the last address
shown in the Mortgagee's records relating to this Mortgage, with such service to
be deemed completed five (5) days after mailing, or as otherwise provided by the
laws of the State of New York or the United States.
38. WAIVER OF JURY TRIAL. THE MORTGAGOR AND THE MORTGAGEE HEREBY
KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY EACH WAIVE ANY RIGHT TO TRIAL BY JURY
THEY MAY HAVE IN ANY ACTION OR PROCEEDING, IN LAW OR IN EQUITY, IN CONNECTION
WITH THIS MORTGAGE OR THE TRANSACTIONS RELATED THERETO. THE MORTGAGOR REPRESENTS
AND WARRANTS THAT NO REPRESENTATIVE OR AGENT OF THE MORTGAGEE HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT THE MORTGAGEE WILL NOT, IN THE EVENT OF LITIGATION,
SEEK TO ENFORCE THIS RIGHT TO JURY TRIAL WAIVER. THE MORTGAGOR ACKNOWLEDGES THAT
THE MORTGAGEE HAS BEEN INDUCED TO ACCEPT THIS MORTGAGE BY, AMONG OTHER THINGS,
THE PROVISIONS OF THIS SECTION.
IN WITNESS WHEREOF, this Mortgage has been duly executed by each
Mortgagor the day and year first above written.
9. RIDER. The Rider COUNTY OF MONROE INDUSTRIAL DEVELOPMENT AGENCY (L.S.)
attached hereto is -----------------------------------------------
made a part hereof. By: SIGNATURE ON ATTACHED RIDER (L.S.)
-----------------------------------------------
CVC PRODUCTS, INC. (L.S.)
-----------------------------------------------
By: /s/ Emi1io O. DiCataldo (L.S.)
-----------------------------------------------
Emi1io O. DiCataldo, Senior Vice
President and Chief Financial Officer
ACKNOWLEDGEMENT
STATE OF New York )
:SS.
COUNTY OF Monroe )
On the 29th day of September in the year 1997, before me personally came
- --------------------------------------------------------------------------------
Individual to me known and known to me to be the person(s) described in and who
executed the above instrument, and _he (they jointly and severally)
acknowledged to me that _he (they) executed the same.
Partnership to me known and known to me to be a member of the partnership
described in and which executed the above instrument, and _he duly
acknowledged to me that _he executed the above instrument for and on
behalf of said partnership.
Corporation to me known, who, being by me duly sworn, did depose and say that he
resides at ______________________________________________; that _he
is the ________________________________ of _________________________
the corporation described in and which executed the above
instrument; and that _he signed his (her) name thereto by order of
the board of directors of said corporation.
LLC to me known, who, being duly sworn, did depose and say that he
resides at _____________________________________; that _he is the
__________________ ______________________________ of the limited
liability company described in and which executed the above
instrument; and that _he signed his (her) name thereto by order of
the members/managers of said limited liability company.
----------------------------------------
Notary Public
ACKNOWLEDGEMENT
STATE OF New York )
:SS.
COUNTY OF Monroe )
On the 29th day of September in the year 1997, before me personally came
Emilio O. DiCataldo
Individual to me known and known to me to be the person(s) described in and who
executed the above instrument, and _he (they jointly and severally)
acknowledged to me that _he (they) executed the same.
Partnership to me known and known to me to be a member of the partnership
described in and which executed the above instrument, and _he duly
acknowledged to me that _he executed the above instrument for and on
behalf of said partnership.
Corporation to me known, who, being by me duly sworn, did depose and say that
_he resides at 11A Long Rd, Rochester, New York; that _he is the
Senior Vice President and CFO of CVC Products, Inc. the corporation
described in and which executed the above instrument; and that _he
signed his (her) name thereto by order of the board of directors of
said corporation.
LLC to me known, who, being duly sworn, did depose and say that _he
resides at _______________________________________; that _he is the
_________________ ______________________________ of the limited
liability company described in and which executed the above
instrument; and that _he signed his (her) name thereto by order of
the members/managers of said liability company.
/s/ Kevin V. Recchia
----------------------------------------
Notary Public
Kevin V. Recchia
Notary Public, State of New York
No. 02RE5004856
Qualified in Monroe County
Certified in Monroe County
Commission Expires Nov. 23, 1998
5
<PAGE>
MORTGAGE
================================================================================
To
M&T REAL ESTATE, INC.
================================================================================
Dated _____________________________, 19__
================================================================================
STATE OF NEW YORK
County of __________________________________SS.
RECORDED
On the
_____ day of _______, 19__
at ______ o'clock ______ M
In Liber ______ of Mortgages at Page ______ and examined.
----------------------------------
Clerk.
<PAGE>
SCHEDULE "A"
ALL THAT TRACT OR PARCEL OF LAND situate in the City of Rochester, County of
Monroe, State of New York and described as follows:
BEGINNING at an iron pin set at the intersection of the division line between
the property of Marvin J. Goldblatt (reputed owner) on the north and the
property of the County of Monroe Industrial Development Agency on the south with
the westerly boundary of Lee Road; thence along said boundary the following two
(2) courses and distances: (1) South 00' 23' 31" east, a distance of 268.32 feet
to a set iron pin and (2) south O0' 00' 30" west, a distance of 428.76 feet to a
set iron pin; thence south 89' 36' 51" west, a distance of 487.59 feet to an
iron pin set on the easterly boundary of the existing Rochester Outer Loop-New
York State Route I-390; thence along said boundary the following two (2) courses
and distances: (1) North 00'06'56" west, a distance of 489.31 feet to an
existing monument and (2) north 00'0l'31" east, a distance of 207.76 feet to an
existing concrete monument at its intersection with the southerly boundary of
said Rochester Outer Loop-New York State Route I-390; thence north 89'36'51"
east along the last mentioned boundary and also along the beforementioned
division line between the property of Marvin J. Goldblatt (reputed owner) on the
north and the property of the County of Monroe Industrial Development Agency on
the south, a distance of 486.71 feet to the point of beginning, containing 7.807
acres of land.
The above described parcel being more particularly shown on a survey made by
Denluck-Hyde, dated August 2, 1988 entitled "Map of a Survey Part of Town Lot
100, 20,000 Acre Tract, City of Rochester, Monroe County."
<PAGE>
of the Note and Mortgage and that a default exists hereunder to pay over to the
Mortgagee all rents, income and profits arising or accruing under the Agreement
or from the Premises and to continue so to do until otherwise notified by the
Mortgagee.
(5.) The Mortgagee may take or release other security for the
payment of the principal sum, interest and indebtedness, may release any party
primarily or secondarily liable therefore and may apply any other security held
by it to the satisfaction of such principal sum, interest or indebtedness
without prejudice to any of its rights under this Mortgage.
(6.) No act done or omitted by the Mortgagee pursuant to the powers
and rights granted it hereunder shall be deemed to be a waiver by the Mortgagee
of any of its other rights and remedies under the Mortgage. The right of the
Mortgagee to collect the principal sum, interest and indebtedness and to enforce
any other security therefore held by it may be exercised by the Mortgagee either
prior to, simultaneously with, or subsequent to any action taken by it
hereunder.
3. BORROWER'S COVENANTS REGARDING AGREEMENT
Borrower hereby agrees with Mortgagee (a) to pay directly to Mortgagee all
sums due and to become due to Mortgagee from the undersigned under the
Agreement, without setoff, counterclaim or deduction for any reason whatsoever;
(b) not to seek to recover from Mortgagee any monies properly paid to it
pursuant to the Agreement; (c) to perform for the benefit of Mortgagee all of
the duties and undertakings of the Borrower under the Agreement; (d) that
Mortgagee shall not be obligated to perform or be responsible for the
performance of any of the duties, undertakings or obligations of Agency under
the Agreement. Except as expressly set forth to the contrary, the foregoing
shall not be construed, however, as a waiver or release of any claims or rights
which the Borrower may at any time have against Agency or Mortgagee, and the
undersigned expressly reserves any such claims or rights and the right to pursue
the same at law or in equity.
4. ADDITIONAL COVENANTS OF BORROWER
Borrower shall be bound by and perform all the representations, covenants
and warranties in the Mortgage excepting only (1) those which relate solely to
the fee owner of the Premises during such time as the Agency is such fee owner,
and (2) Section 1 in the Rider to this Mortgage.
5. DAMAGE/CONDEMNATION
Notwithstanding Sections 5 and 18 of this Mortgage, the Premises must be
repaired or replaced following any damage or taking by eminent domain only if
Mortgagee makes the insurance proceeds or condemnation award available to
Mortgagor.
6. INSURANCE
Notwithstanding Section 2 of this Mortgage, all moneys payable pursuant to
such insurance shall be payable to Mortgagor if all of the following conditions
are satisfied: (1) there is no occurrence or continuance of an Event of Default
by the Mortgagor or Guarantor under the Loan Documents; (2) Mortgagee determines
in its reasonable discretion that the insurance proceeds are sufficient to
rebuild the Premises; and (3) that in the event Mortgagee determines that the
insurance proceeds are sufficient for rebuilding, an escrow account shall be
created for the insurance proceeds under the control of Mortgagee until the
rebuilding in completed.
4
<PAGE>
7. NO TRANSFER EXCEPTION
Notwithstanding Section 12 and 27(a)(iv) of the Mortgage, Mortgagee's
consent shall not be required for a transfer of Borrower's and/or Guarantor's
stock, provided that no single shareholder (other than Guarantor) at any time
holds more than forty-nine percent (49%) of Borrower's authorized and issued
shares and that no single shareholder at any time holds more than forty-nine
percent (49%) of Guarantor's authorized and issued shares.
8. FINANCIAL STATEMENTS
Section 23 of the Mortgage is deleted in its entirety and replaced with
the following:
Within one hundred twenty (120) days after the end of Borrower's fiscal
year, Borrower will provide Mortgagee with a consolidated fiscal year-end
financial statement of CVC Holdings, Inc. (which includes Borrower) audited by
an independent certified public accountant approved by Mortgagee. Borrower will
also furnish consolidated quarterly financial Statements of CVC Holdings, Inc.
(including Borrower) certified by an officer of CVC Holdings, Inc. within
forty-five (45) days after the end of each fiscal quarter of CVC Holdings, Inc.
Where applicable, such financial statements shall include a profit and loss
statement, balance sheet and rent roll for the Premises. All statements shall
have been prepared in accordance with generally accepted accounting principles
to present fairly the results of Borrower's operations and cash flows and its
financial position in conformity with such principles, and to be correct,
complete and in accordance with Borrower's records. Promptly upon the request of
the Mortgagee from time to time, Borrower shall supply all additional
information requested and permit Mortgagee's officers, employee's, accountants,
attorneys and other agents to (a) visit and inspect the Premises; (b) examine,
audit, copy and extract from Borrower's records; and (c) discuss Borrower's or
affiliates' business operations, assets, affairs, or condition (financial or
other) with its responsible officers and independent accountants.
9. EVENTS OF DEFAULT
Section 27 is modified to include the following events of default:
Paragraph (a)(ii) is deleted in its entirety and replaced as
follows: (ii) payment of any of Mortgagor's debts or those of
Guarantor which, either individually or together with all other debt
of the Mortgagor and Guarantor for which payment has been demanded
or accelerated, has unpaid principal of $100,000.00 or more or an
event occurs which after notice or lapse of time would permit such
acceleration.
Notwithstanding subparagraph (a)(iv) in the Mortgage, it shall not
be an Event of Default if the Borrower or Guarantor has any lien
involuntarily entered against its assets dismissed or removed within
forty-five (45) days after being entered or if any judgment, order
or award entered against Borrower or Guarantor is dismissed, vacated
or bonded within forty-five (45) days after such entry, provided
that in all such cases, the creditor is stayed from taking any
enforcement collection, execution, levy or foreclosure proceeding on
any such lien, judgment, order or award. It shall not be an Event of
Default if the lien is less than $50,000.00.
5
<PAGE>
Notwithstanding subparagraph (a)(v) in the Mortgage, it shall not be
an Event of Default if Borrower or Guarantor has commenced against
it any proceeding pursuant to the Bankruptcy Code and such
involuntary proceeding is dismissed within forty-five (45) days
after petition therefor has been filed with the bankruptcy court.
Automatically upon the commencement of Borrower's or Guarantor's
bankruptcy if voluntary and upon lapse of forty-five (45) days
without dismissal if involuntary, all amounts outstanding hereunder
shall become immediately due and payable. Upon the occurrence of an
Event of Default hereunder, at the Mortgagee's option, all amounts
hereunder shall become immediately due and payable.
(g) Any default by Borrower under all other existing or future
agreements between Borrower and Mortgagee and/or Borrower and
Manufacturers and Traders Trust Company (including, without
limitation, a certain Term Loan Agreement with Manufacturers and
Traders Trust Company dated September 30, 1996).
Borrower shall not be in default under Section 27(a)(i) of this
Mortgage until five (5) days after delivery of written notice by Mortgagee.
Notwithstanding any other provision of Section 27 to the contrary,
Mortgagee shall not be in breach or default of Sections 3 (except for removal or
demolition of the principal manufacturing building of the Premises), 4, 5, 14,
23 and 26 of this Mortgage until thirty (30) days after delivery to Borrower of
written notice from Mortgagee specifying the breach or default and Borrower's
failure to cure or commence expeditiously to cure, such breach or default.
10. ENVIRONMENTAL TESTING
Borrower shall conduct further testing of the site of the former
inground vapor degreaser as recommended by LaBella Associates in a Phase I
Environmental Assessment of the Premises dated September, 1997 and shall provide
Mortgagee with a written report of such testing not later than December 1, 1997.
If such report indicates further testing and or remediation is required by
Mortgagee, Borrower shall perform such testing or remediation expeditiously and
provide the Mortgagee with such written reports of its progress as the Mortgagee
may request. Failure to comply with the foregoing after fifteen (15) days
written notice from Mortgagee shall constitute an Event of Default. Reference is
also made to a certain Escrow Agreement between Borrower and Mortgagee dated
September 29, 1997 which is incorporated herein by reference.
6
<PAGE>
CVC PRODUCTS, INC.
By: /s/ Emilio O. DiCataldo,
------------------------------------
Emilio 0. DiCataldo,
Senior Vice President and
Chief Financial Officer
STATE OF NEW YORK)
COUNTY OF MONROE ) SS:
On this 29th day of September, 1997, before me, the subscriber, personally
appeared EMILIO 0. DiCATALDO, to me known, who, being by me duly sworn, did
depose and say that he resides in Rochester, New York, that he is a Senior Vice
President and Chief Financial Officer of CVC PRODUCTS, INC., the corporation
described in, and which executed the within Instrument, and that he signed his
name thereto by order of the Board of Directors.
/s/ Kevin V. Recchia
----------------------------------------
Notary Public
Keviin V. Recchia
Notary Public, State of New York
No. 02RE5004856
Qualified in Monroe County
Certified in Monroe County
Commission Expires Nov. 23, 1998
<PAGE>
COUNTY OF MONROE INDUSTRIAL
DEVELOPMENT AGENCY
By: /s/ Robert E. Morgan
------------------------------
Robert E. Morgan, Chairman
STATE OF NEW YORK )
COUNTY OF MONROE ) ss:
On this the 29th day of September, 1997, before me personally came
ROBERT E. MORGAN, to me known, who being by me duly sworn, did depose and say
that he resides at Mendon, New York; that he is the Chairman of the COUNTY OF
MONROE INDUSTRIAL DEVELOPMENT AGENCY, the public benefit corporation described
in and which executed the above instrument; and the he signed his name thereto
by order of the board of directors of said corporation
/s/ Michael J. Townsend
----------------------------------------
Notary Public
MICHAEL J. TOWNSEND
Notary Public State of New York
Qualified in Monroe County
Commission Expires May 31, 1999
7
<PAGE>
EXHIBIT 10.14
[LOGO] M&T Real Estate, Inc. CONTINUING GUARANTY
(Corporation or Partnership)
GUARANTOR: CVC Holdings, Inc.
---------------------------------------------------------------------
Name
525 Lee Road, Rochester, New York 14606
---------------------------------------------------------------------
Address of Chief Executive Office
a |x| corporation |_| general partnership |_| limited partnership,
|_| _______ organized under the laws of the State of Delaware
BORROWER: CVC Products, Inc.
---------------------------------------------------------------------
Name
525 Lee Road, Rochester, New York 14606
---------------------------------------------------------------------
Address
LENDER: M&T Real Estate, Inc., One Fountain Plaza, Buffalo, New York
14203-2399
1. Guaranty. (a) Guarantor guarantees to the Lender the full and immediate
payment and performance of all of Borrower's obligations to the Lender from time
to time of every kind and nature, now existing and hereafter incurred, direct
and contingent, liquidated and unliquidated, secured and unsecured, matured and
unmatured, including all accrued and unpaid interest and all Expenses (defined
below) even if such obligations were originally contracted with another lender
or jointly with other borrowers, even if not evidenced by a writing, and even if
periodically reduced and thereafter increased or extinguished and reincurred
(the "Obligations"). Guarantor will pay or perform its obligations under this
Guaranty upon demand. This is a guaranty of payment, not collection.
(b) Guarantor acknowledges the receipt of valuable consideration for this
Guaranty and acknowledges that the Lender is relying on the Guaranty in making a
financial accommodation to Borrower, whether a commitment to lend, extension,
modification or replacement of, or forbearance with respect to, any Obligation,
cancellation of another guaranty, purchase of Borrower's assets, or other
valuable consideration.
2. Continuing, Unconditional and Unlimited Guaranty. This Guaranty is
irrevocable, continuing, unconditional and general without any limitation unless
specified in the following blank: Guarantor's obligation under this Guaranty
shall be limited in amount to (1) $__________________ of the principal amount of
the Obligations plus (2) a proportionate share (i.e., in the same proportion as
the amount in (1) above bears to the total principal amount of the obligations)
of all accrued and unpaid interest, premiums and Expenses (as defined below).
3. Guarantor's Waivers. (a) Guarantor's obligations shall not be released,
impaired or affected in any way by (i) Borrower's bankruptcy, reorganization or
insolvency under any law or that of any other party, or by any action of a
trustee in any such proceeding; (ii) failure of any other party to perform its
obligations to the Lender; or (iii) any other circumstance that might constitute
a legal or equitable defense to Guarantor's obligations under this Guaranty,
including without limitation: (A) any new agreements or obligations of Borrower
with or to the Lender, amendments, changes in rate of interest, extensions of
time for payments, modifications, renewals or the existence of or waivers of
default as to any existing or future agreements of Borrower or any other party
with the Lender; (B) any adjustment, compromise or release of any Obligations of
Borrower, by the Lender or any other party; the existence or nonexistence or
order of any filings, exchanges, releases, impairment or sale of, any security
for the Obligations, or the order in which payments and proceeds of collateral
are applied; or acceptance by the Lender of any writing intended by any other
party to create an accord and satisfaction with respect to any of the
Obligations; (C) any delay in or failure to call for, take, hold, continue,
collect, preserve or protect, replace, assign, sell, lease, exchange, convert or
otherwise transfer or dispose of, perfect a security interest in, realize upon
or enforce any security interest in any security for the Obligations, regardless
of its value; (D) any exercise, delay in the exercise or waiver of, any failure
to exercise, or any forbearance or other indulgence relating to, any right or
remedy of the Lender against any Guarantor, Borrower or other person or relating
to the Obligations, to any portion thereof or to any security for the
Obligations; (E) any fictitiousness, incorrectness, invalidity or
unenforceability, for any reason, of any instrument or other agreement, or act
of commission or omission by the Lender or Borrower; (F) any composition,
extension, moratoria or other statutory relief granted to Borrower; or (G) any
interruption in the business relations between the Lender and Borrower, or any
dissolution or change in form of organization, name or ownership of Borrower or
Guarantor.
(b) Waivers of Notice, etc. The Guarantor waives acceptance, assent and
all rights of notice or demand including without limitation (i) notice of
acceptance of this Guaranty, of Borrower's default or nonpayment of any
Obligation, and of changes in Borrower's financial condition; (ii) presentment,
protest, notice of protest and demand for payment; and (iii) any other notice,
demand or condition to which Guarantor might otherwise be entitled prior to the
Lender's reliance on or enforcement of this Guaranty.
(c) Waiver of Subrogation. Guarantor hereby waives any claim, right or
remedy which Guarantor may now have or hereafter acquire against Borrower that
arises hereunder or from the performance by Guarantor hereunder including,
without limitation, any claim, remedy or right of subrogation, reimbursement,
exoneration, indemnification, contribution or participation in any claim, right
or remedy of Lender against Borrower or any security which Lender now has or
hereafter acquires, whether or not such claim, right or remedy arises in
equity, under contract, by statute, under common law or otherwise.
4. Termination; Reinstatement. This Guaranty can be terminated (a) only
with respect to Obligations not yet incurred, and (b) only by actual receipt by
the account officer responsible for the Obligations of written notice of
Guarantor's intent to terminate (or Guarantor's dissolution) plus (c) the lapse
of a reasonable time for Lender to act on such notice. This Guaranty cannot be
terminated with respect to any Obligations committed or contracted for or
outstanding at the time the Lender acts on such notice, or any prior or
subsequent modifications, renewals, extensions or replacements of or interest on
such Obligations, or related expenses. If any payment the Lender has received
prior to termination subsequently is declared fraudulent or preferential or for
any other reason required to be surrendered, Guarantor's obligations under this
Guaranty and any related security agreements shall be reinstated and remain in
effect until the Lender has actually received payment in full of the
Obligations.
5. Expenses. Guarantor agrees to reimburse the Lender on demand for all
the Lender's or its agents' expenses, costs, damages and losses of any kind or
nature, including without limitation actual attorney's fees and disbursements
whether for internal or external counsel incurred by the Lender or its agent in
attempting to enforce this Guaranty, collect or restructure any of the
Obligations, realize on any collateral, or for any other purpose related to the
Obligations including but not limited to costs of workout, negotiations,
redocumentation or bankruptcy or other legal proceedings or appeal
(collectively, "Expenses"). Expenses will accrue interest at the highest legal
rate until payment is actually received by the Lender.
6. Financial and Other Information. SEE RIDER A ATTACHED HERETO AND
INCORPORATED HEREIN.
<PAGE>
7. Security; Right of Setoff. As further security for payment of the
Obligations, Expenses and any other obligations of Guarantor to the Lender,
Guarantor hereby grants to the Lender a security interest in all money,
securities and other property of Guarantor in the actual or constructive
possession or control of the Lender or its agents including without limitation
all deposits and other accounts owing at any time by the Lender in any capacity
to Guarantor in any capacity (collectively, "Property"). The Lender shall have
the right to set off Guarantor's Property against any of Guarantor's
obligations to the Lenders and shall have all of the rights and remedies of a
secured party under the Uniform Commercial Code in addition to those under this
Guaranty and other agreements and applicable law.
8. No Transfer of Assets. Guarantor shall not transfer, reinvest or
otherwise dispose of its assets in a manner or to an extent that would or might
impair Guarantor's ability to perform its obligations under this Guaranty.
9. Nonwaiver by the Lender; Miscellaneous. This is the entire agreement
between Guarantor and the Lender with respect to the Guaranty. This Guaranty may
be assigned by the Lender, shall inure to the benefit of the Lender and its
successors and assigns, and shall be binding upon Guarantor and its successors
and assigns. All rights and remedies of the Lender are cumulative and no such
right or remedy shall be exclusive of any other right or remedy. This Guaranty
does not supersede any other guaranty or security granted to the Lender by
Guarantor or others (except as to Guarantor's Waiver of Subrogation rights
above). No single, partial or delayed exercise by the Lender of any right or
remedy shall preclude exercise by the Lender at any time at its sole option of
the same or any other right or remedy of the Lender without notice. No course of
dealing or other conduct, no oral agreement or representation made by the Lender
or usage of trade shall operate as a waiver of any right or remedy of the
Lender. No waiver or amendment of any right or remedy of the Lender or release
by the Lender shall be effective unless made specifically in writing by the
Lender. This Guaranty shall by governed by the laws of the State of New York,
without regard to its principles of conflict of laws. Each provision of this
Guaranty shall be interpreted as consistent with existing law and shall be
deemed amended to the extent necessary to comply with any conflicting law. If
any provision is nevertheless held invalid the other provisions shall remain in
effect. Captions are solely for convenience and are not part of the substance of
this Guaranty. Without limiting the generality of any reference hereunder to an
agent of the Lender, any right or remedy granted to the Lender under this
Guaranty, including, without limitation, the right to be reimbursed for expenses
under Section 5, shall inure to the benefit of and be enforcable by both the
Lender and its agents.
10. Joint and Several; Primary Obligation. If there is more than one
Guarantor, each Guarantor jointly and severally guarantees the payment and
performance in full of all obligations under this Guaranty and agrees that the
Lender need not seek payment from any source other than the undersigned
Guarantor. This Guaranty is a primary obligation. Guarantor's obligations
hereunder are separate and independent of Borrower's, and a separate action may
be brought against Guarantor whether or not action is brought or joined against
or with Borrower or any other party.
11. Authorization. Guarantor certifies that it is an entity in the form
described above duly organized and in good standing under the laws of the State
of its organization and duly authorized to do business in each State material to
the conduct of its business. Guarantor has determined that the execution of this
Guaranty will be in its best interests, to its direct benefit, incidental to its
powers, and in furtherance of its duly acknowledged purposes and objectives.
Execution of this Guaranty by the persons signing below has been authorized by
all necessary corporate action, including directors' and shareholders consent,
as evidenced by the attached certificates, or (as appropriate) is authorized by
its partnership agreement or governing instrument, a certified copy of which is
attached. Guarantor's chief executive office is located at the above address.
12. Guarantor's Consents. In any action or other legal proceeding relating
to this Guaranty, Guarantor (a) consents to the personal jurisdiction of any
State or federal court located in the State of New York and (b) agrees that in
any legal proceeding concerning this Guaranty, (i) a copy of this Guaranty kept
in the Lender's course of business may be admitted into evidence as an original,
and (ii) Guarantor will not interpose any counterclaims, setoff or defense of
any nature.
13. WAIVER OF JURY TRIAL. GUARANTOR AND THE LENDER EACH WAIVE ANY RIGHT TO
TRIAL BY JURY IN ANY ACTION WITH RESPECT TO THIS GUARANTY.
GUARANTOR:
DATE September 29, 1997 CVC HOLDINGS, INC
TIN # 16-1383279 By: /s/ Emilio O. DiCataldo
------------------------------------
Emilio O. DiCataldo, Senior Vice
President and Chief Financial Officer
ACKNOWLEDGMENT
STATE OF New York)
:SS.
COUNTY OF Monroe )
On the 29 day of September in the year 1997 before me personally came Emilio
O. DiCataldo
|_| Partnership to me known and known to me to be a general partner of the
partnership described in which executed the above instrument,
and _ he duly acknowledged to me that __ he executed the above
instrument for and on the behalf of said partnership.
|x| Corporation to me known, who, being by me duly sworn, did dispose and say
that __ he resided in_ 11 A [ILLEGIBLE] Rd, Rochester, New
York; that __ he is the Senior V.P. and CFO of CVC Holdings,
Inc., the corporation described in and which executed the
above instrument; and that__ he signed his (her) name thereto
by order of the board of directors of said corporation.
/s/ Kevin V. Recchia
-----------------------------------------
Notary Public
KEVIN V. RECCHIA
Notary Public, State of New York
NO.02RE5004856
Qualified in Monroe County
Certificate Filed in Monroe County
Commission Expires Nov. 23, 1998
FOR BANK USE ONLY
Authorization Confirmed:
/s/ [ILLEGIBLE]
- ------------------------
Signature
<PAGE>
I, Christopher Mann, Secretary of CVC Holdings, Inc. ( the "Corporation"), a
corporation duly organized and existing under laws of the State of Delaware, do
hereby certify that the following is a true, accurate and complete copy of
certain resolutions duly adopted by the Board of Directors of the corporation by
unanimous consent or at a meeting duly held on the 19th day of February 1997,
and still in full force and effect. The Resolution is attached hereto to Exhibit
A.
INCUMBENCY CERTIFICATE
I do further certify that the following are duly elected and acting officers of
the Corporation, and their respective signatures are as follows:
TITLE NAME SIGNATURE
Senior vice President and CFO Emilio O. DiCataldo /s/ Emilio O. DiCataldo
Secretary Christopher Mann /s/ Christopher Mann
|_| I further certify that I am sole owner of all the issued and outstanding
shares of the Corporation.
IN WITNESS WHEREOF, I have hereunto set my hand this 29th day of September,
1997.
/s/ Christopher Mann
-----------------------------
Christopher Mann Secretary
------------------------------
NOTE: If the Secretary is authorized to sign the Guaranty by the above
resolutions, this certificate should be attested by a second officer or director
of the Corporation, unless the Corporation is owned by a sole shareholder and
has no other officer or director.
<PAGE>
RIDER A
6. FINANCIAL AND OTHER INFORMATION
Section 6 of the Guaranty is deleted in its entirety and replaced with the
following:
Within one hundred twenty (120) days after the end of Guarantor's fiscal
year, Guarantor will provide Lender with a consolidated fiscal year-end
financial statement of CVC Holdings, Inc. (which includes Borrower) audited by
an independent certified public accountant approved by Lender. Guarantor will
also furnish consolidated quarterly financial Statements of CVC Holdings, Inc.
(including Borrower) certified by an officer of CVC Holdings, Inc. within
forty-five (45) days after the end of each fiscal quarter of CVC Holdings, Inc.
Where applicable, such financial statements shall include a profit and loss
statement, balance sheet and rent roll for the Premises. All statements shall
have been prepared in accordance with generally accepted accounting principles
to present fairly the results of Guarantor's operations and cash flows and its
financial position in conformity with such principles, and to be correct,
complete and in accordance with Guarantor's records. Promptly upon the request
of the Lender from time to time, Guarantor shall supply all additional
information requested and permit Lender's officers, employees, accountants,
attorneys and other agents to (a) visit and inspect the Premises; (b) examine,
audit, copy and extract from Guarantor's records; and (c) discuss Guarantor's or
affiliates' business operations, assets, affairs, or condition (financial or
other) with its responsible officers and independent accountants.
<PAGE>
EXHIBIT A
Meeting of the Board of Directors
of CVC Holdings, Inc..
February 19, 1997
The Meeting was called to order at 9:00 A.M. by Christine Whitman,
Chairman of the Board, in the Company's Fremont, California offices. Ms. Whitman
served as Chairman of the Meeting and requested that Andrew Peskoe serve as
Secretary. All of the Directors of Board were in attendance, including Ms.
Whitman, James Geater, Brendan Hegarty, Victor Mann, Seiya Miyanishi, Donald
Waite and Mr. Peskoe. Emilio DiCataldo was also in attendance at the request of
the Board.
The Chairman asked that the minutes for the prior meeting be
approved and they were unanimously adopted without revision. The Chairman then
confirmed the upcoming meeting schedule:
Wednesday, May 28, 1997 Bloomington, Minnesota (with
Compensation Committee Meeting)
Tuesday, August 26, 1997 Rochester, New York (with Audit
Committee Meeting)
Friday, December 12, 1997 Fremont, California (with Audit
Committee Meeting)
Tentative Dates for 1998 Meetings
Wednesday, March 4, 1998 Fremont, California (with Audit
Committee Meeting)
Tuesday, May 21, 1998 (Location to be determined) (with
Compensation Committee Meeting)
Thursday, August 20, 1998 Rochester, New York (with Audit
Committee Meeting)
Thursday, December 11, 1998 Fremont, California (with Compensation
Committee Meeting)
The Board approved the grants of qualified options to Duncan Harris
and Michael Meyers as set forth on Exhibit A at the current applicable fair
market value exercise price provided by the Empire Valuation Consultants.
Mr. Waite reviewed the proceedings of the Audit Committee. The Board
discussed at length the dispute with SUNY Albany regarding process technology
ownership.
Ms. Whitman presented organizational developments, including the
formation of program cross-functional teams for two key products: GMR
Productization and Interconnect/MOCVD Productization. The Chairman updated the
Board on system engineering
<PAGE>
improvements, ISO audit progress, key new hires and year-to-date progress
against fiscal year goals.
Mr. DiCataldo presented first quarter performance and cash flow
(against plan and fiscal year 1996 Q1), expense analyses, capital expense
summary and December 31, 1996 balance sheet (against operating plan). After
presentation of an inventory report, the Board approved the adjustment of
performance-incentive-plan targets for fiscal 1997 to utilize the corrected
months-on-hand target. Mr. DiCataldo then outlined performance against term loan
covenants, the proposed second mortgage on the Rochester facility and the
proposed increase in the current line of credit. The Board discussed at length
the proposed mortgage financing, and unanimously adopted the resolutions on
Exhibit B in connection therewith.
Mr. DiCataldo also presented projected cash flow for the next four
quarters and an analysis of APD expenses incurred against plan.
Mr. Peskoe summarized for the Board the discussion at the February
15, 1997 Executive Committee meeting, and the Chairman updated the Board on the
status of discussions with Veeco, MRC and Lam Research.
Ajit Paranjpe, Mehrdad Moslehi, Christopher Mann, Lino Velo, Tom
Kandris and David Lam joined the meeting. Mr. C. Mann and Mr. Paranjape
presented the Companies' MR and GMR strategy. Mr. Kandris and Mr. Velo presented
the Interconnect Strategy. Mr. Paranjpe, Mr. Moslehi, Mr. C. Mann, Mr. Velo and
Mr. Kandris departed.
Representatives from UBS Securities LLC joined the meeting (Timothy
Walsh, Kenneth Rivera, Mark FitzGerald and, by telephone, Michael Dorsey) and
set out their recommendations for corporate financing transactions. The Board
discussed these recommendations and then the UBS representatives departed, Mr.
Dorsey disconnected and Mr. Waite departed.
David Lam summarized his conclusions to the Board based on his
evaluation of Company strategies and market opportunities. The Board discussed
his conclusions.
There being no further business to come before the Meeting, on
motion duly made and seconded, the meeting was adjourned at 4:15 P.M.
/s/ Andrew C. Peskoe
---------------------------------
Andrew C. Peskoe,
Secretary of the Meeting
<PAGE>
Exhibit B
RESOLUTIONS OF
THE
BOARD OF DIRECTORS
OF
CVC HOLDINGS, INC.
RESOLVED, that the Corporation and its subsidiary CVC Products, Inc.
("Products", and together with the Corporation, the "Companies") shall be
authorized to increase the Companies' borrowings by an aggregate of not more
than $3 million, specifically to (i) increase the Companies' credit line with
M&T Bank ("M&T") by up to $2.5 million (to a total line of $5 million), and (ii)
enter into a mortgage credit facility with M&T Bank, State Street Bank & Trust,
Chase Manhattan Bank and/or such other lender or lenders which the President
shall select and approve (such lender or lenders being referred to herein as the
"Mortgage Lender" and together with M&T, the "Lenders") pursuant to which the
Companies would be authorized to borrow up to $2.0 million and to pledge,
mortgage, hypothecate and grant security interests in any and all of the
Companies' assets to secure such indebtedness to the Lenders, including granting
a second mortgage on the Companies' Rochester, New York facility, and in
connection with which the Companies shall execute and deliver such credit,
mortgage, loan, security and other agreements and such instruments as the
Lenders shall require, in such form and containing such terms as the officer
executing the same, in his or her sole discretion, may approve, his or her
execution thereof to be conclusive evidence of his or her approval thereof.
RESOLVED, that in connection with the credit facilities and
arrangements established by the Lenders in favor of any of the Companies, each
of the officers of the Companies hereby is authorized, in the name and on behalf
of the Companies:
(a) to borrow from the Lenders and/or to request that the Lenders
issue letters of credit for any of the Companies account at any time or from
time to time and to obtain from the Lenders other financial accommodations, in
such amounts and upon such terms as the Lenders may make available, and to
execute and deliver to the Lenders one or more promissory notes, in such form
and substance and with such changes thereto as the officer executing the same
shall approve, in each case to evidence such borrowings and financial
accommodations, such execution by any such officer to be deemed conclusive
evidence of the approval by the Companies of the terms, provisions and
conditions thereof and of such form, substance and changes;
(b) to pledge with, and/or assign and mortgage to, the Lenders
and/or to grant to the Lenders a security interest in, all accounts, contract
rights, general intangibles, securities, chattel paper, inventory, machinery,
equipment, fixtures, personal property, rights, real estate and improvements and
insurance policies and proceeds, whether now or hereafter existing or now owned
or hereafter acquired and all additions and accessions thereto, substitutions
and replacements therefor and products and proceeds thereof, and such other
assets and property of the Companies, as may now or hereafter be required or
requested by the Lenders as security for all indebtedness and obligations of the
Companies to the Lenders now existing or hereafter arising, and to execute and
deliver in connection therewith, such pledge agreements, assignments, mortgages
and/or security agreements as the Lenders shall
<PAGE>
require or request in order to effectuate such pledge, assignment or mortgage
(all such agreements, assignments and mortgages being referred to herein
together as "Security Documents"), in form and substance satisfactory to the
Lenders, and in such form and substance and with such changes thereto as the
officer executing the same shall approve, such execution of each Security
Document by any such officer or officers of the Companies to be deemed
conclusive evidence of the approval by the Companies of the terms, provisions
and conditions thereof and of such form, substance and changes;
(c) to make, execute and deliver to the Lenders any and all
financing statements, consents, certificates, documents, applications,
instruments, amendments, papers and writings as may be required or requested by
the Lenders in connection with or in furtherance of any of the transactions
heretofore described and/or contemplated thereby, including, without limitation,
letters of credit applications, the same to be in form and substance
satisfactory to the Lender, and in such form and substance and with such
changes thereto as the officer executing the same shall approve, and to do any
and all other acts deemed by any such officer to be necessary or appropriate or
convenient or desirable to effectuate the purposes and intent of these
resolutions, such execution and such acts by any officer or officers of the
Companies to be deemed conclusive evidence of the approval by the Companies of
the terms, provisions and conditions thereof and of such form, substance and
changes;
(d) to procure such insurance (naming the Lenders as beneficiary
thereof) as any such officer shall deem appropriate and as the Lenders shall
require or approve, the procurement of any such insurance policy by any such
officer of the Companies to be deemed conclusive evidence of the appropriateness
thereof and the approval by the Companies of the terms, provisions and
conditions thereof and to deliver to the Lenders such written instruments or
documents or assignments as the Lenders shall require or request in connection
with the foregoing; and further
(e) to cause any current or future, direct or indirect subsidiaries
of the Corporation as the Lenders shall require or request to execute the
guaranties, mortgages, security agreements, in such form and substance as shall
be required or requested by the Lenders, and with such changes thereto as the
officer, director or authorized signatory of the subsidiary executing the same
shall approve, such execution by such officer, director or authorized signatory
to be deemed conclusive evidence of the approval by the Companies of the terms,
provisions and conditions thereof, and of such form, substance and changes, and
such other documents, agreements and instruments in connection therewith, and of
affirmations with respect thereto, all as shall be required or requested, and in
such form and substance as shall be required or requested, by the Lender.
RESOLVED, that the Companies seek such consents of parties to any
and all loan agreements, mortgages and indentures of trust, leases, subleases,
and guaranty agreements and other agreements and instruments to which either
Company is a party or by which either Company is bound or affected, and enter
into such amendments, supplements and modifications, and take such actions, as
any of the officers of the Companies shall deem necessary or appropriate or
convenient or desirable in order to approve any of the other agreements and
instruments previously referred to in these resolutions and/or the transactions
contemplated thereby, and otherwise to carry out and effectuate the purposes and
intent of
-2-
<PAGE>
these resolutions; and that each of the officers of the Companies hereby is
authorized to execute and deliver, in the name and on behalf of the Companies,
any such amendment, supplement or modification in such form and substance, and
with such changes, as the officer executing the same shall approve, such
execution and the taking of any such action to be conclusive evidence of such
approval and of the necessity, appropriateness, convenience or desirability
thereof.
RESOLVED, that each of the officers of the Companies, hereby is
authorized to make, execute and deliver, or cause to be made, executed and
delivered, any notice, direction, instruction, authorization, order,
certificate, financing statement, mortgage, instrument, and other agreement or
document, and to do, or cause to be done, all such acts and things, in the name
and on behalf of the Companies and under the corporate seal of either or
otherwise, as any of the officers of the Companies may deem necessary or
appropriate or convenient or desirable to effect the complete consummation of
the transactions contemplated by the aforementioned agreements, certificate,
instruments and documents and to carry out the purposes and intent of each of
the foregoing resolutions; and, further, that the authority of any such officer
to execute and deliver any such document or to take any such action shall be
conclusively evidenced by his execution thereof or his taking thereof.
RESOLVED, that the form resolutions appended hereto as Annex 1 are
hereby adopted and approved as resolutions of Products.
RESOLVED, that the Secretary or any Assistant Secretary of either of
the Companies be and hereby is authorized to certify and deliver to the Lender,
under corporate seal, copies of these resolutions or of any portion thereof.
-3-
<PAGE>
Annex 1
RESOLUTIONS
OF THE
BOARD OF DIRECTORS
OF
CVC PRODUCTS, INC. (the "Corporation")
RESOLVED, that the Corporation be, and hereby is, authorized to
borrow from Manufacturers and Traders Trust Company (the "Lender") such amounts
as an Authorized Officer of the Corporation may deem appropriate, up to an
aggregate amount equal to $5,000,000, to be evidenced by, and bearing interest
and payable upon the terms contained in, the demand Grid Note, substantially in
the form previously submitted to the directors of the Corporation (the "Grid
Note") (which shall replace a $2,500,000 Grid Note previously executed in favor
of Lender on September 30, 1996) and that such Grid Note be, and the same hereby
is, in all respects, authorized and approved; and it is further
RESOLVED, that the form, terms and provisions of the proposed
Acknowledgement and Agreement, substantially in the form previously submitted to
the directors of the Corporation, pursuant to which the Corporation shall make
certain acknowledgements, representations and warranties to the Lender be, and
the same hereby is, in all respects, authorized and approved; and it is further
RESOLVED, that the form, terms and provisions of the Letter of
Credit Reimbursement Agreement to the Lender (the "Reimbursement Agreement"),
substantially in the form previously submitted to the directors of the
Corporation, pursuant to which the Corporation shall, among other things, agree
in favor of the Lender to reimburse the Lender for all draws on letters of
credit issued by Bank for the account of the Corporation, be, and the same
hereby is, in all respect authorized and approved; and it is further
RESOLVED, that any Authorized Officer be, and each of them is,
authorized on behalf of the Corporation to waive (via telephone or in writing)
discrepancies in documents submitted in connection with drawings under letters
of credit issued by Lender for the Corporation's account; and it is further
RESOLVED, that any Authorized Officer of the Corporation be, and
each hereby is, authorized and empowered, in the name and on behalf of the
Corporation, to execute and deliver to the Lender, the Grid Note, the
Reimbursement Agreement and the Acknowledgement Agreement, in each case with
such change or changes therein as the Authorized Officer or Officers executing
the same may approve and that the execution thereof, with such change or
changes, to be conclusive evidence of such approval; and it is further
RESOLVED, that the President and Senior Vice President of the
Corporation, and any person duly authorized to act in such capacity be, and each
of them hereby is, designated an "Authorized Officer" (also sometimes referred
to as an Authorized Person) for purposes of
<PAGE>
these resolutions, the Grid Note, the Reimbursement Agreement, the
Acknowledgement Agreement and any other documents and instruments necessary,
proper or convenient to implement or accomplish the transactions involved in, or
related to, any thereof; and it is further
RESOLVED. that the Authorized Officers of the Corporation be, and
each of them hereby is. authorized and empowered, in the name and on behalf of
the Corporation, to execute and deliver such certificates, documents,
agreements, agreements and instruments containing in each case such terms and
conditions, and to take such other action, as any such officer, in his or her
sole discretion, shall deem necessary or appropriate fully to effectuate and to
carry out the purposes and intent of the foregoing resolutions, the execution or
delivery of any of same or the taking of any such action to be conclusive
evidence of the necessary or appropriateness thereof; and it is further
RESOLVED, that the Lender may rely on these resolutions.
-2-
<PAGE>
EXHIBIT 10.15
Box 93 (SOT)
================================================================================
[LOGO] M&T Real Estate, Inc. GENERAL ASSIGNMENT OF RENTS
================================================================================
DUPLICATE
ORIGINAL
THIS AGREEMENT, made this 29 day of September, 1997, by CVC
Products, Inc. a Delaware corporation, doing business in New York having an
address of 525 Lee Road, Rochester, New York 14603 ("Assignor") to M&T Real
Estate, Inc., a New York corporation having its principal office at One Fountain
Plaza, Buffalo, New York 14203-2399 ("Assignee").
W I T N E S S E T H : That
FOR VALUE RECEIVED, Assignor hereby grants, transfers and assigns to
the Assignee, all of the Assignor's estate, right, title and interest in and to
any and all rents, issues, income and profits now due or to become due and
derived from or in connection with the premises described in Schedule A attached
hereto, which premises are hereinafter sometimes referred to as the "Premises",
or any portion thereof, including, but not limited to, any and all rents,
issues, income and profits now due or to become due under any lease, tenancy or
agreement concerning the Premises.
FOR THE PURPOSE OF SECURING:
1. Payment of the indebtedness evidenced by a certain Note in the
principal sum of Two Million and 00/100 Dollars ($ 2,000,000.00) made by the
Assignor, dated even date herewith, to the Assignee and any extensions,
renewals, replacements or modifications thereof (hereinafter called the "Note").
2. Payment of all advances and other sums with interest thereon
becoming due and payable to the Assignee under the provisions hereof or under
the provisions of the Note and of a mortgage, dated even date herewith, covering
the Premises, and any extensions, renewals, modifications or consolidations
thereof (hereinafter called the "Mortgage").
3. Performance and discharge of each and every obligation, covenant
and agreement of Assignor herein or arising from the Note and the Mortgage.
ASSIGNOR AGREES:
1. To faithfully abide by, perform and discharge each and every
obligation, covenant and agreement of any lease, tenancy or agreement by
Assignor to be performed; at the sole cost and expense of Assignor, to enforce
or use its best efforts to secure the performance of each and every obligation,
covenant, condition and agreement of any lease, tenancy or agreement by any
lessee, tenant or obligee to be performed; not to modify, extend or in any way
alter the terms of any lease, tenancy or agreement or accept a surrender
thereof; not to anticipate the rents, issues, income and profits thereunder, or
to waive, excuse, condone or in any manner release or discharge the lessee,
tenant obligee thereunder of or from the obligations, covenants, conditions and
agreements by said lessee, tenant or obligee to be performed including the
obligation to pay the rental or other payments called for thereunder in the
manner and at the place and time specified therein, and Assignor covenants,
pursuant to Section 291-f of the Real Property Law, not to cancel, abridge or
otherwise modify any lease, tenancy or agreement or to accept prepayments of
installments of rent to become due thereunder without the prior written consent
of Assignee.
2. At Assignor's sole cost and expense to appear in and defend any
action or proceeding arising under, growing out of or in any manner connected
with any lease, tenancy or agreement or the obligations, duties or liabilities
of Assignor and lessee, tenant or obligee thereunder, and to pay all costs and
expenses of Assignee, including attorney's fees in a reasonable sum in any
action or proceeding concerning any lease, tenancy or agreement in which
Assignee may appear.
3. That should the Assignor fail to make any payment or to do any
act as herein provided, then Assignee, but without any obligation so to do and
without notice to or demand on Assignor, and without releasing Assignor from any
obligation hereof, may make or do the same in such manner and to such extent as
Assignee may deem necessary to protect the security hereof, including
specifically, without limiting its general powers, the right to appear in and
defend any action or proceeding purporting to affect the security hereof or the
rights or powers of Assignee, and also the right to perform and discharge each
and every obligation, covenant and agreement of Assignor in any lease, tenancy
or agreement contained; and in exercising any such powers to pay necessary costs
and expenses, employ counsel and incur and pay reasonable attorney's fees.
4. To pay immediately upon demand all sums expended by Assignee
under the authority hereof, together with interest thereon at the highest rate
for which it is now lawful to contract.
MRE-022 (8/95)
<PAGE>
amended or modified except as set forth herein. Assignor further warrants that
no default exists in said leases, tenancies or agreements.
IN WITNESS WHEREOF, Assignor has executed this Assignment as of the
day and year first above written.
CVC PRODUCTS, INC.
-------------------------------------
By: /s/ Emilio O. DiCataldo
-------------------------------------
Emilio O. DiCataldo, Senior Vice
President and Chief Financial Officer
-------------------------------------
STATE OF NEW YORK )
:SS.
COUNTY OF Monroe )
On the 29th day of September in the year 1997, before me personally came Emilio
O. DiCataldo
|_| Individual(s) to me known and known to me to be the person(s) described in
and who executed the above instrument, and __he (they jointly
and severally) acknowledged to me that __he (they) executed
the same.
|_| Partnership to me known and known to me to be a general partner of the
partnership described in and which executed the above
instrument, and __he duly acknowledged to me that __he
executed the above instrument for and on behalf of said
partnership.
|X| Corporation to me known, who, being by me duly sworn, did depose and say
that __he resides at 11A Ling Rd., Rochester, New York; that
__he is the Senior Vice President and Chief Financial Officer
of CVC Products, Inc., the corporation described in and which
executed the above instrument; and that __he signed his(her)
name thereto by order of the board of directors of said
corporation.
/s/ Kevin V. Recchia
-----------------------
Notary Public
KEVIN V. RECCHIA
Notary Public, State of New York
No. 02RE5004856
Qualified in Monroe County
Certificate Filed in Monroe County
Commission Expires Nov. 23, 1998
3
<PAGE>
SCHEDULE "A"
All THAT TRACT OR PARCEL OF LAND situate in the City of Rochester, County of
Monroe, State of New York and described as follows:
BEGINNING at an iron pin set at the intersection of the division line between
the property of Marvin J. Goldblatt (reputed owner) on the north and the
property of the County of Monroe Industrial Development Agency on the south with
the westerly boundary of Lee Road; thence along said boundary the following two
(2) courses and distances: (1) South 00' 23' 31" east, a distance of 268.32 feet
to a set iron pin and (2) south 00' 00' 30" west, a distance of 428.76 feet to a
set iron pin; thence south 89' 36' 51" west, a distance of 487.59 feet to an
iron pin set on the easterly boundary of the existing Rochester Outer Loop-New
York State Route I-390; thence along said boundary the following two (2) courses
and distances: (1) North 00' 06' 56" west, a distance of 489.31 feet to an
existing monument and (2) north 00' 01' 31" east, a distance of 207.76 feet to
an existing concrete monument at its intersection with the southerly boundary of
said Rochester Outer Loop-New York State Route I-390; thence north 89' 36' 51"
east along the last mentioned boundary and also along the beforementioned
division line between the property of Marvin J. Goldblatt (reputed owner) on the
north and the property of the County of Monroe Industrial Development Agency on
the south, a distance of 486.71 feet to the point of beginning, containing 7.807
acres of land.
The above described parcel being more particularly shown on a survey made by
Denluck-Hyde, dated August 2, 1988 entitled "Map of a Survey Part of Town Lot
100,20,000 Acre Tract, City of Rochester, Monroe County."
<PAGE>
EXHIBIT 10.16
AMENDMENT NO. 1
TO GENERAL SECURITY AGREEMENT
WHEREAS:
A. CVC PRODUCTS, INC. ("CVC"), a Delaware corporation doing business in
the State of New York, with offices located at 525 Lee Road, Rochester, New York
14603, executed and delivered to MAAUFACTURERS AND TRADERS TRUST COMPANY, a New
York banking corporation, with its principal office located at One M&T Plaza,
Buffalo, New York 14240 ("M&T") a General Security Agreement ("Security
Agreement") dated February 2, 1996, regarding the premises and obligations
described in the Security Agreement and constituting additional security for
repayment of the indebtedness of CVC to M&T, which includes, but is not limited
to a $2,500,000.00 Demand Note and a $3,000,000.00 line of credit ("Prior
Indebtedness"). A copy of the Security Agreement and the UCC-1 filings are
attached hereto as Exhibit A.
B. CVC and COUNTY OF MONROE INDUSTRIAL DEVELOPMENT AGENCY ("COMIDA") wish
to amend the Security Agreement so that the obligations of CVC shall be extended
to M&T REAL ESTATE, INC., a New York corporation, with its principal office
located at One Fountain Plaza, Buffalo, New York 14203 ("Lender"), as additional
security for the repayment of the indebtedness of CVC to M&T Real Estate, Inc.
in the amount of $2,000,000.00 ("Indebtedness") which is secured by a Mortgage
executed by CVC and COMIDA covering property owned by COMIDA and leased to CVC.
C. M&T, CVC, COMIDA and Lender have agreed to modify the Security
Agreement to extend to all parties.
THEREFORE, in consideration of One Dollar ($1.00) and other good and
valuable consideration, the parties hereby agree to modify the following terms
as set forth in the Security Agreement:
1. The Security Agreement shall be amended to include in the definition of
"Secured Party" Lender and/or M&T.
2. CVC affirms that the Security Agreement secures both the Indebtedness
and the Prior Indebtedness without demand, offset or setoff of any kind.
3. M&T consents to the extension of the Security Agreement to Lender as
additional security for the Indebtedness.
<PAGE>
4. The attached Rider is made a part of this Amendment.
CVC PRODUCTS, INC.
By /s/ Emilio O. DiCataldo
-------------------------------
Emilio O. DiCataldo, Senior
Vice President and Chief
Financial Officer
MANUFACTURERS AND TRADERS TRUST
COMPANY
By: /s/ William E. Holston
------------------------------
William E. Holston
Vice President
M&T REAL ESTATE, INC.
BY: MANUFACTURERS AND TRADERS TRUST
COMPANY, ATTORNEY-IN FACT
By: /s/ William E. Holston
------------------------------
William E. Holston
Vice President
<PAGE>
STATE OF NEW YORK)
COUNTY OF MONROE ) SS:
On this 29th day of September, 1997, before me, the subscriber,
personally appeared EMILIO O. DiCATALDO, to me known, who, being by me duly
sworn, did depose and say that he resides in Rochester, New York, that he is a
Senior Vice President and Chief Financial Officer of CVC PRODUCTS, INC., the
corporation described in, and which executed the within Instrument, and that he
signed his name thereto by order of the Board of Directors.
/s/ Kevin V. Recchia
------------------------------
Notary Public
KEVIN V. RECCHIA
Notary Public, State of New York
No. 02RE5004856
Qualified in Monroe County
Certificate Filed in Monroe County
Commission Expires Nov. 23, 1998
STATE OF NEW YORK)
COUNTY OF MONROE ) SS:
On this 29th day of September, 1992, before me, the subscriber,
personally appeared WILLIAM E. HOLSTON, to me known, who, being by me duly
sworn, did depose and say that he resides in Rochester, New York, that he is a
Vice President of MANUFACTURERS AND TRADERS TRUST COMPANY, the corporation
described in, and which executed the within Instrument, and that he signed his
name thereto by order of the Board of Directors.
/s/ Kevin V. Recchia
------------------------------
Notary Public
KEVIN V. RECCHIA
Notary Public, State of New York
No. 02RE5004856
Qualified in Monroe County
Certificate Filed in Monroe County
Commission Expires Nov. 23, 1998
STATE OF NEW YORK)
COUNTY OF MONROE ) SS:
On this 29th day of September, 1997, before me personally appeared WILLIAM
E. HOLSTON, to me personally known, who, being by me duly sworn, did depose and
say that he resides in Rochester, New York; that he is a Vice President of
MANUFACTURERS AND TRADERS TRUST COMPANY, the corporation which executed the
within instrument on behalf of M&T REAL ESTATE, INC., by virtue of a Power of
Attorney recorded in the Monroe County Clerk's Office in Liber 8654 of Powers of
Attorney, at page 207.
/s/ Kevin V. Recchia
------------------------------
Notary Public
KEVIN V. RECCHIA
Notary Public, State of New York
No. 02RE5004856
Qualified in Monroe County
Certificate Filed in Monroe County
Commission Expires Nov. 23, 1998
<PAGE>
COUNTY OF MONROE INDUSTRIAL
DEVELOPMENT AGENCY
By: /s/ Robert E. Morgan
----------------------------
Robert E. Morgan, Chairman
STATE OF NEW YORK)
COUNTY OF MONROE ) SS:
On this the 29 day of September, 1997, before me personally came
ROBERT E MORGAN, to me known, who, being by me duly sworn, did depose and say
that he resides at Mendon; that he is the Chairman of the COUNTY OF MONROE
INDUSTRIAL DEVELOPMENT AGENCY, the public benefit corporation described in and
which executed the within Mortgage; and that he signed his name thereto by order
of the members of said public benefit corporation.
/s/ Michael J. Townsend
-------------------------------
Notary Public
MICHAEL J. TOWNSEND
Notary Public, State of New York
Qualified in Monroe County
Commission Expires May 31, 1999
<PAGE>
RIDER TO AMENDMENT NO. ONE TO
GENERAL SECURITY AGREEMENT
DATED AS OF SEPTEMBER 29, 1997
BY CVC PRODUCTS, INC AND
COUNTY OF MONROE INDUSTRIAL DEVELOPMENT AGENCY
TO
M&T REAL ESTATE, INC.
Monroe County Industrial Development Agency Special Obligations
This Amendment No. One is executed by the County of Monroe Industrial
Development Agency ("Agency") solely for the purpose of subjecting its ownership
of the Collateral to the lien of the Security Agreement and for no other
purpose. All representations, covenants and warranties of the Agency herein are
hereby deemed to have been made by CVC PRODUCTS, INC. and not by the Agency.
All obligations of the Agency hereunder shall constitute a special
obligation payable solely from the proceeds and other monies, if any, derived
from the Collateral, and neither the members of the Agency nor any person
executing this Security Agreement on its behalf shall be liable personally under
this Security Agreement. No recourse shall be had for the payment of the
principal of, or interest on the Note which this Security Agreement secures, or
for any claim based hereon, or otherwise in respect hereof, or based upon or in
respect of this Security Agreement, or any Security Agreement supplemental
hereto, against any past, present or future member, officer, agent, servant or
employee, as such, of the Agency or any successor Public Benefit Corporation or
political subdivision, either directly or through the Agency or any such
successor, all such liability of such members, officers, agents, servants and
employees being, to the extent permitted by law, expressly waived and released
by the acceptance hereof and as part of the consideration for the execution of
this Security Agreement and the Note it secures. Any judgment or decree shall be
enforceable against the Agency only to the extent of its interest in the
Collateral and any such judgment shall not be subject to execution on or by a
lien on assets of the Agency other than its interest in the Collateral.
This Section is for the benefit of the Agency only and does not in any way
impair the obligations of CVC PRODUCTS, INC.
<PAGE>
DOC GSA DATE 2-2-96
----- ---------
COM
------------------
[LOGO] GENERAL SECURITY AGREEMENT
MANUFACTURERS AND TRADERS TRUST COMPANY
Name(s) of Undersigned CVC Products, Inc. ("Borrower" or "undersigned")
---------------------------------------------------------
Address(es) of Undersigned 525 Lee Road, Rochester, NY 14606
-----------------------------------------------------
In consideration of Manufacturers and Traders Trust Company, a New York
banking corporation having its chief executive office at One M&T Plaza, Buffalo,
New York 14240, (the "Secured Party") heretofore or hereafter (1) granting any
loan, credit or other financial accommodation to, or in reliance upon any
guaranty, endorsement or other assurance of any of the undersigned or (2)
permitting any extension, renewal, refinancing, modification or replacement of
any indebtedness, liability or obligation arising as a direct or indirect result
of any such loan, credit or other financial accommodation, (3) surrendering or
releasing any guaranty, endorsement or other assurance, any collateral or other
security, or any subordination, directly or indirectly securing the payment of,
or otherwise directly or indirectly applicable to, any such indebtedness,
liability or obligation or (4) granting any waiver of, or any forbearance or
other indulgence relating to, any right or remedy relating to any such
indebtedness, liability or obligation, to any such guaranty, endorsement or
other assurance, to any such collateral or other security or to any such
subordination, and for other valuable consideration, the receipt of which is
acknowledged, each of the undersigned agrees with the Secured Party as follows:
1. Reference to Definitions.
a. For purposes of this Agreement, each of the following terms has the
meaning given it in Section 16 of this Agreement: (i) Bankruptcy Law, (ii)
Collateral, (iii) Debtor, (iv) Equipment, (v) Event of Default, (vi) General
Intangible, (vii) Goods, (viii) Inventory, (ix) Obligations, (x) Other
Collateral, (xi) Other Obligor, (xii) Permitted Lien, (xiii) Person, (xiv)
Primary Obligor, (xv) Security Interest and (xvi) Successor.
b. For purposes of this Agreement, each of the following terms has the
meaning given it for purposes of Article 9 of the Uniform Commercial Code of the
State of New York as in effect on the date of this Agreement: (i) Account, (ii)
Account Debtor, (iii) Chattel Paper, (iv) Consumer Goods, (v) Deposit Account,
(vi) Document, (vii) Farm Product, (viii) Fixture, (ix) Instrument, (x) Proceeds
and (xi) Products.
c. For purposes of this Agreement, "Uncertificated Security" has the
meaning given it for purposes of Article 8 of the Uniform Commercial Code of the
State of New York as in effect on the date of this Agreement.
2. Security Interest; Nature of Security Interest.
a. To secure the payment of the Obligations, each of the undersigned
grants to the Secured Party a security interest in, and assigns, pledges and
hypothecates to the Secured Party, the Collateral.
b. Each Security Interest (i) is unconditional, (ii) is independent of and
in addition to all Other Collateral, (iii) is a continuing security interest,
assignment, pledge or hypothecation, and (iv) shall continue in full force and
effect except insofar as this Agreement is terminated as provided in Section 12g
of this Agreement.
3. Reinstatement of Obligations. Each portion of the Obligations that is
(a) paid by any money received or applied by the Secured Party (including, but
not limited to, any such money constituting, or received or applied because of
the existence of, any of the Collateral or any Other Collateral) and later
returned by or otherwise recovered from the Secured Party as a direct or
indirect result of any claim, regardless of the basis or outcome thereof,
whether asserted affirmatively, as a counterclaim, setoff or defense or
otherwise and whether now existing or hereafter arising, for the return or for
any other recovery of such money (including, but not limited to, any such claim
based, in whole or in part, upon any allegation that (i) such money constituted
trust funds for purposes of the Lien Law of the State of New York or for
purposes of any similar statute, regulation or other law, (ii) the receipt or
application of such money constituted an impermissible setoff or (iii) the
receipt or application of such money, or the grant or perfection of any security
interest in, or of any other lien or encumbrance upon, any of the Collateral or
any Other Collateral, constituted a preference, fraudulent transfer or
fraudulent conveyance) or (b) satisfied by the Secured Party's retention of any
portion of the Collateral, or by the Secured Party's retention of any Other
Collateral, that is later returned by or otherwise recovered from the Secured
Party as a direct or indirect result of any claim, regardless of the basis or
outcome thereof, whether asserted affirmatively, as a counterclaim, setoff or
defense or otherwise and whether now existing or hereafter arising, for the
return or for any other recovery of such portion of the Collateral or Other
Collateral (including, but not limited to, any such claim based, in whole or in
part, upon any allegation that the grant or perfection of any security interest
in, or of any other lien or encumbrance upon, such portion of the Collateral or
Other Collateral constituted a preference, fraudulent transfer or fraudulent
conveyance) shall be reinstated as part of the Obligations for purposes of this
Agreement (including, but not limited to, Section 12g of this Agreement) as of
the date it originally arose and for purposes of each statute of limitations
with respect to any action or other legal proceeding by the Secured Party
against any Debtor relating to this Agreement as of the date of such return or
other recovery of such money, portion of the Collateral or Other Collateral.
4. Covenants.
a. Simultaneously with the execution and delivery to the Secured Party of
this Agreement, each of the undersigned shall execute and deliver to the Secured
Party each financing statement, notice of lien, instrument of assignment and
other writing, and take each other action, that the Secured Party shall deem
necessary or desirable at the sole option of the Secured Party to perfect or
accomplish any Security Interest.
b. Simultaneously with the execution and delivery to the Secured Party of
this Agreement, each of the undersigned shall deliver each presently existing
instrument included in the Collateral (except for any check or other draft) and
held by him, her or it to the Secured Party with each endorsement, instrument of
assignment and other writing that the Secured Party shall deem necessary or
desirable at the sole option of the Secured Party to accomplish the assignment
or other transfer of such instrument to the Secured Party. Until such delivery,
he, she or it shall hold such instrument in trust for the Secured Party.
c. Immediately upon receiving any instrument included in the Collateral
(except for, until (i) the occurrence or existence of any Event of Default or
(ii) any notice to the contrary shall be delivered, given or sent by the Secured
Party to any Debtor, any check or other draft), each Debtor shall deliver such
instrument to the Secured Party with each endorsement, instrument of assignment
and other writing that the Secured Party shall deem necessary or desirable at
the sole option of the Secured Party to accomplish the assignment or other
transfer of such instrument to the Secured Party. Until such delivery, such
Debtor shall hold such instrument in trust for the Secured Party.
1
<PAGE>
d. Each Debtor shall provide to the Secured Party, in form satisfactory to
the Secured Party, (i) if such Debtor is an individual, at least once during
each period of twelve consecutive months, a personal financial statement of such
Debtor for a year ending not more than sixty days earlier, in reasonable detail
and certified by such Debtor to be complete and accurate, (ii) if such Debtor is
not an individual, within sixty days after the end of each fiscal quarter of
each fiscal year of such Debtor, statements of income and of changes in
financial position of such Debtor for such fiscal quarter and for the period
from the beginning of such fiscal year to the end of such fiscal quarter and a
balance sheet of such Debtor as of the end of such fiscal quarter each in
reasonable detail and certified by an officer or member of such Debtor to be
complete and accurate, to be in accordance with the records of such Debtor and
to present fairly, subject to normal and nonmaterial year-end adjustments, the
results of the operations, and the changes in financial position, of such Debtor
for such fiscal quarter and for the period from the beginning of such fiscal
year to the end of such fiscal quarter, and the financial position of such
Debtor as of the end of such fiscal quarter, in conformity with generally
accepted accounting principles applied consistently with the application of such
principles with respect to the preceding fiscal quarter of such Debtor, (iii) if
such Debtor is not an individual, within ninety days after the end of each
fiscal year of such Debtor, statements of income and of changes in financial
position of such Debtor for such fiscal year and a balance sheet of such Debtor
as of the end of such fiscal year, each in reasonable detail and certified by an
independent certified public accountant acceptable to the Secured Party to
present fairly the results of the operations, and the changes in financial
position, of such Debtor for such fiscal year and the financial position of such
Debtor as of the end of such fiscal year, in conformity with generally accepted
accounting principles applied consistently with the application of such
principles with respect to the preceding fiscal year of such Debtor and to have
been based upon an audit by such accountant that was made in accordance with
generally accepted auditing standards and accordingly included such tests of
accounting records and such other auditing procedures as such accountant deemed
necessary in the circumstances, and (iv) promptly upon the request of the
Secured Party, all additional information relating to such Debtor or to such
Debtor's business, operations, assets, affairs or condition (financial or other)
that is so requested.
e. Each Debtor shall maintain accurate and complete records relating to
the Collateral (including, but not limited to, upon the request of the Secured
Party, a perpetual inventory record relating to inventory included in the
Collateral) in conformity with generally accepted accounting principles
consistently applied.
f. Before the end of any applicable grace period, each Debtor shall pay
each tax, assessment, fee and charge imposed by any government or political
subdivision upon any of the Collateral, upon the ownership, possession, use,
operation, sale or lease of any of the Collateral, upon this Agreement or upon
any instrument evidencing any of the Obligations.
g. Each Debtor shall obtain and maintain in full force and effect each
authorization, approval, permit, consent, franchise and license from any Person
necessary for the ownership, possession, use, operation, sale or lease of any of
the Collateral.
h. Each Debtor shall defend the Collateral against each demand, claim,
counterclaim, setoff and defense asserted by any Person other than the Secured
Party (including, but not limited to, any Account Debtor).
i. Each Debtor shall indemnify the Secured Party on demand against each
liability, cost and expense (including, but not limited to, if the Secured Party
retains counsel for advice, for litigation or for any other purpose, each
attorney's fee and disbursement) incurred by the Secured Party as a direct or
indirect result of any claim, regardless of the basis or outcome thereof,
whether asserted affirmatively, as a counterclaim, setoff or defense or
otherwise and whether now existing or hereafter arising, arising out of the
ownership, possession, use, operation, sale or lease of any of the Collateral.
j. Each Debtor shall (i) keep all Goods included in the Collateral insured
against each risk to which any of such Goods may at any time be subject
(including, but not limited to, fire, theft and risks covered by extended
coverage) and (ii) maintain insurance against liability on account of damage to
any Person or property arising out of the ownership, possession, use, operation,
sale or lease of any of such Goods. Such insurance shall be provided in such
amounts, for such periods, on such terms, with such special endorsements and by
such companies as shall be satisfactory to the Secured Party. Each Debtor shall
deliver to the Secured Party a copy of each policy pursuant to which any of such
insurance is provided. Without limiting the generality of the first two
sentences of this Section 4j, (i) each policy pursuant to which any of the
insurance described in clause (i) of the first sentence of this Section 4j is
provided shall contain a mortgagee clause, in form and substance satisfactory to
the Secured Party, (A) naming the Secured Party as a mortgagee as the interest
of the Secured Party may appear and (B) providing that (I) all money payable
pursuant to any insurance provided pursuant to such policy shall be payable to
the Secured Party, (II) no insurance provided pursuant to such policy shall be
affected by any act or omission of any Debtor or of any owner of any real
property referred to in such policy and (III) neither such policy nor such
mortgagee clause may be canceled, terminated or adversely amended except upon
thirty days' prior written notice to the Secured Party and (ii) each policy
pursuant to which any of the insurance described in clause (ii) of the first
sentence of this Section 4j is provided shall contain a clause, in form and
substance satisfactory to the Secured Party, (A) naming the Secured Party as an
additional insured as the interest of the Secured Party may appear and (B)
providing that neither such policy nor such clause may be canceled, terminated
or adversely amended except upon thirty days' prior written notice to the
Secured Party.
k. Each Debtor shall immediately (i) cause all Goods included in the
Collateral to be properly titled and registered to the extent required by any
applicable statute, regulation or other law, (ii) cause the interest of the
Secured Party to be properly noted on each certificate of title relating to any
of such Goods and (iii) deliver each such certificate received by such Debtor to
the Secured Party.
l. Each Debtor shall (i) keep each Fixture and piece of Equipment included
in the Collateral in as good condition as when first delivered to any Debtor,
ordinary wear and tear excepted, (ii) perform maintenance on each such Fixture
and piece of Equipment strictly in accordance with each applicable specification
of any manufacturer or seller thereof and (iii) use and operate each such
Fixture and piece of Equipment, and permit each such Fixture and piece of
Equipment to be used and operated, only in the manner in which it was designed
to be used and operated so as to subject it only to ordinary wear and tear.
m. Each Debtor shall use his, her it its best efforts to cause any issuer
of any General Intangible or Instrument included in the Collateral to make
public, whether by filing reports with the Securities and Exchange Commission or
otherwise, all information with respect to such issuer necessary or desirable to
permit the sale or other disposition of such General Intangible or Instrument
without registration pursuant to the Securities Act of 1933.
n. If any Account or General Intangible included in the Collateral
represents money owing pursuant to any contract for the improvement of real
property or for a public improvement for purposes of the Lien Law of the State
of New York, each Debtor shall (i) immediately send or deliver notice of such
fact to the Secured Party, (ii) receive and hold any money advanced by the
Secured Party with respect to such Account or General Intangible as a trust fund
to be first applied to the payment of trust claims as such term is defined in
Section 71 of such Lien Law, (iii) until each such trust claim is paid, not use
or permit the use of any of such money for any purpose other than the payment of
such trust claims and (iv) promptly upon the request of the Secured Party,
execute and deliver each writing, and take each other action, that the Secured
Party shall deem necessary or desirable at the sole option of the Secured Party
to give or file notice of the Secured Party's interest in such Account or
General Intangible pursuant to whichever of Sections 15, 16 and 73 of such Lien
Law is applicable.
o. If any Account or General Intangible included in the Collateral arises
out of a contract with any government or political subdivision (including, but
not limited to, the United States) or with any department, agency or
instrumentality thereof, such Debtor shall (i) immediately send or deliver
notice of such fact to the Secured Party and (ii) promptly upon the request of
the Secured Party, execute and deliver each writing, and take each other action
that the Secured Party shall deem necessary or desirable at the sole option of
the Secured Party properly to perfect under any statute, regulation or other law
(including, but not limited to, the Federal Assignments of Claims Act) the
interest of the Secured Party in such Account or General Intangible.
p. Each Debtor shall promptly deliver or send to the Secured Party notice
of any failure of any Account Debtor or other Person to perform any obligation
relating to any Account, Chattel Paper, General Intangible, Instrument, Document
or Deposit Account included in the Collateral.
q. Immediately upon receiving any proxy statement, notice or other
communication relating to any General Intangible or Instrument included in the
2
<PAGE>
Collateral, each Debtor shall (i) if such proxy statement, notice or other
communication is in writing, deliver a copy thereof to the Secured Party or (ii)
if such proxy statement, notice or other communication is not in writing,
deliver or send notice thereof to the Secured Party.
r. immediately upon acquiring knowledge or reason to know that any Goods
included in the Collateral have been affixed to, or have been installed in or
on, any real property or any Goods not included in the Collateral, each Debtor
shall deliver or send notice of such fact to the Secured Party.
s. Immediately upon acquiring knowledge or reason to know of any maturity,
call, exchange, conversion, redemption, offer, tender or similar matter relating
to any General Intangible, Instrument or Deposit Account included in the
Collateral, each Debtor shall deliver or send notice thereof to the Secured
Party.
t. Immediately upon acquiring knowledge or reason to know of any loss,
destruction or theft of, or of any damage to, any of the Collateral from any
cause of any kind, each Debtor shall send or deliver notice thereof to the
Secured Party.
u. Immediately upon acquiring knowledge or reason to know of (i) the
threat or commencement by any Person other than the Secured Party of any action
or other legal proceeding relating to any of the Collateral or questioning the
validity of this Agreement or of any action taken or to be taken pursuant to
this Agreement, (ii) any judgment, order or award of any court, agency or other
governmental authority or of any arbitrator relating to any of the Collateral or
rendering invalid this Agreement or any action taken or to be taken pursuant to
this Agreement or (iii) the assertion by any Person other than the Secured Party
of any demand, claim, counterclaim, setoff or defense relating to any of the
Collateral, each Debtor shall deliver or send notice thereof to the Secured
Party.
v. Immediately upon acquiring knowledge or reason to know of the
occurrence or existence of (i) any Event of Default, (ii) any event or condition
that, after notice, after lapse of time or after both notice and lapse of time,
would constitute an Event of Default or (iii ) any event or condition that has
or (so far as can be foreseen) will or might have any material adverse effect on
any of the Collateral, on any Debtor, Primary Obligor or Other Obligor or on the
business, operations, assets, affairs or condition (financial or other) of any
Debtor, Primary Obligor or Other Obligor, each Debtor shall deliver or send
notice thereof to the Secured Party.
w. Immediately upon acquiring knowledge or reason to know of any change in
(i) the location of the residence, only place of business or chief executive
office of any Debtor, (ii) the location of any of the Collateral if not (A) in
the possession or under the control of, or enroute to or from, the Secured Party
or (B) mobile Equipment being removed for not more than thirty days at a time
from any location indicated in any questionnaire submitted to the Secured Party
by any of the undersigned in connection with this Agreement as a location where
such mobile Equipment will be kept or (iii) the name, identity or structure of
any Debtor, each Debtor shall deliver or send notice thereof to the Secured
Party.
x. No Debtor shall (i) execute or permit to be filed or remain on file in
any public office any financing statement relating to any of the Collateral,
naming any Debtor as a debtor and naming any Person other than the Secured Party
as a secured party or (ii) execute any application for any certificate of title
or notice of lien, or permit to exist any certificate of title, relating to any
Goods included in the Collateral and naming any Person other than the Secured
Party as a secured party, except for financing statements, applications, notices
of lien and certificates of title fully and accurately described in Exhibit A
attached to and made a part of this Agreement.
y. No Debtor shall (i) permit to exist any registration of any transfer or
pledge of any Uncertificated Security included in the Collateral, (ii) execute
or permit to exist any order to register any transfer or pledge of, or any
notification of any security interest in, or of any other lien or encumbrance
upon, any such Uncertificated Security or (iii) permit any such Uncertificated
Security to be shown on the records of any clearing corporation other than in
the name of any Debtor, of the Secured Party or of any nominee of the Secured
Party, except for registrations, orders, notifications and Uncertificated
Securities fully and accurately described in Exhibit A attached to and made a
part of this Agreement.
z. No Debtor shall create or permit to exist, or attempt or agree or
otherwise incur any obligation to create or permit to exist, any security
interest in, or any other lien or encumbrance upon, any of the Collateral,
except for Permitted Liens.
aa. No Debtor shall abandon, assign, sell, lease, exchange, convert or
otherwise transfer or dispose of any of the Collateral or any interest in any of
the Collateral, except that, until (i) the occurrence or existence of any Event
of Default or (ii) any notice to the contrary shall be delivered, given or sent
by the Secured Party to any Debtor, each Debtor may (A) in the ordinary course
of such Debtor's business, (I) abandon, assign, sell, lease, exchange or
otherwise transfer of dispose of any Equipment of such Debtor that is obsolete
or worn-out, (II) sell or exchange any Equipment of such Debtor in connection
with the acquisition by such Debtor of other Equipment that is at least as
valuable as such Equipment, that such Debtor intends to use for substantially
the same purposes as such Equipment and that is not subject to any security
interest or other lien or encumbrance, except for Permitted Liens, (III) assign
any Account of such Debtor for purposes of collection, (IV) assign, sell, lease,
exchange or otherwise transfer or dispose of any Inventory of such Debtor other
than in partial or complete satisfaction of any indebtedness, liability or
obligation and (V) dispose of any money of such Debtor or funds in any Deposit
Account of such Debtor in partial or complete satisfaction of any indebtedness,
liability or obligation of such Debtor incurred in the ordinary course of such
Debtor's business and (B) dispose of any money of such Debtor, funds in any
Deposit Account of such Debtor or funds in any other account of such Debtor
evidenced by a certificate of deposit if such money is held, or if such Deposit
account or other account is maintained, for personal, family or household
purposes.
bb. No Debtor shall use, operate, permit the use or operation of, or
assign, sell, lease, exchange or otherwise transfer or dispose of, any of the
Collateral in any manner that (i) would or might violate, or would or might
result in any violation of, any environmental or other statute, regulation or
other law (including, but not limited to, the Environmental Protection Act, the
Occupational Safety and Health Act, the Comprehensive Environmental Response
Compensation and Liability Act and the Resource Conservation and Recovery Act),
any policy providing any insurance on any Goods included in the Collateral or
any warranty with respect to any such Goods or (ii) would or might result in any
such insurance not being paid or in any such warranty not being honored.
cc. No Debtor shall remove, or permit the removal of, any of the
Collateral from any location indicated in any questionnaire submitted to the
Secured Party by any of the undersigned in connection with this Agreement as a
location where any of the Collateral will be kept, except that any mobile
Equipment included in the Collateral may be removed for not more than thirty
days at a time from any location indicated in any such questionnaire as a
location where such mobile Equipment will be kept.
dd. No Debtor shall materially alter or permit the material alteration of
any Fixture or piece of Equipment included in the Collateral.
ee. No Debtor shall cause or permit any Goods included in the Collateral
to (i) become a Fixture or (ii) be or become an accession to any Goods not
included in the Collateral.
ff. No Debtor shall cause or permit any Goods included in the Collateral
to be placed in any warehouse that may issue a negotiable Document with respect
to such Goods.
gg. No Debtor shall assign, sell, exchange, convert or otherwise transfer
or dispose of, take any other action with respect to, or permit the assignment,
sale, exchange, conversion or other transfer or disposition of or the taking of
any other action with respect to, any General Intangible or Instrument not
included in the Collateral if such assignment, sale, exchange, conversion or
other transfer or disposition or such taking of such other action would be
required to be considered in determining whether the sale or other disposition
of any General Intangible or Instrument included in the Collateral was
permissible without registration pursuant to the Securities Act of 1933.
hh. No Debtor who or which controls any issuer of any stock or share
included in the Collateral shall permit, and no Debtor who or which by acting
with any other Person or with other Persons would cause such control to exist
shall take any action to permit, such issuer to issue (i) any such stock or
share in addition to that or those heretofore issued or (ii) any option, warrant
or other right to purchase any such stock or share.
3
<PAGE>
ii. Upon and after (i) the occurrence or existence of any Event of Default
or (ii) the delivery, giving or sending by the Secured Party to any Debtor of
any notice not to do so, no Debtor shall, without the prior written consent of
the Secured Party, (A) request, demand, accept, collect, enforce, extend, renew,
refinance, modify, compound, subordinate, accelerate, settle, adjust or
compromise, enter into any composition of, replace, cancel, release, surrender,
abandon, discharge, realize upon, commence, prosecute, settle or compromise any
action or other legal proceeding relating to, waive any right or remedy relating
to or otherwise terminate, impair or otherwise affect any indebtedness,
liability or obligation of any Account Debtor or other Person relating to, or
give any receipt, release or discharge relating to, any Account, Chattel Paper,
General Intangible, Instrument, Document or Deposit Account included in the
Collateral or (B) attempt or agree or otherwise incur any obligation to do
anything described in clause (A) of this sentence.
jj. Promptly upon the request of the Secured Party made upon or at any
time and from time to time after the occurrence or existence of any Event of
Default, each Debtor shall assemble (i) all Goods included in the Collateral,
except for Fixtures, growing crops and standing timber, and (ii) all Chattel
Paper, Instruments, Documents and records included in the Collateral, and make
them available to the Secured Party at each place reasonably convenient to the
Secured Party and to such Debtor as the Secured Party shall designate
(including, but not limited to, any promises of such Debtor).
kk. Promptly upon the request of the Secured Party:
i. Each Debtor shall enter into each warehousing, lockbox or other
custodial arrangement with respect to any of the Collateral that the Secured
Party shall deem necessary or desirable at the sole option of the Secured Party.
ii. Each Debtor shall provide to the Secured Party all information, in
form and substance satisfactory to the Secured Party, that the Secured Party
shall deem necessary or desirable at the sole option of the Secured Party to (A)
identify the nature, extent, value, age and location of any of the Collateral,
(B) identify or contact any Account Debtor or other Person obligated with
respect to any Account, Chattel Paper, General Intangible, Instrument, Document
or Deposit Account included in the Collateral or (C) verify any insurance on
any Goods included in the Collateral.
iii. Each Debtor shall permit each officer, employee, accountant, attorney
and other agent of the Secured Party to inspect the Collateral and to examine,
audit, copy and extract each record included in the Collateral.
iv. Each Debtor shall provide to the Secured Party a writing, in form and
substance satisfactory to the Secured Party, (A) signed by each Person having
any interest, whether as an owner, mortgagee or lessee or otherwise, in any real
property to which are affixed, or in or on which are installed or located, any
Goods included in the Collateral or in or on which is located any Chattel Paper,
Instrument, Document or record included in the Collateral, (B) disclaiming any
interest of such Person in such Goods, Chattel Paper, Instrument, Document or
record and (C) containing the agreement of such Person to the Secured Party,
upon and at any time and from time to time after the occurrence or existence of
any Event of Default, (I) entering upon such real property or upon any other
real property of such Person to which are affixed, or in or on which are
installed or located, any such Goods or in or on which is located any such
Chattel Paper, Instrument, Document or record, (II) taking possession of and
removing from such real property or from such other real property any Goods
included in the Collateral and affixed thereto or installed or located therein
or thereon or any Chattel Paper, Instrument, Document or record included in the
Collateral and located therein or thereon and (III) remaining on, and using,
such real property or such other real property in the examination, storage,
preparation for any sale, lease or other disposition or sale, lease or other
disposition of such Goods or in the examination, audit, copying or extraction of
such record, without by doing so incurring any liability to such Person, except
for unreasonable damage to such real property or to such other real property
directly resulting from doing so.
v. Each Debtor shall provide to the Secured Party a writing, in form and
substance satisfactory to the Secured Party, (A) signed by each Person having
any interest, whether as an owner, secured party or lessee or otherwise, in any
Goods not included in the Collateral to which are affixed, or in or on which are
installed, any Goods included in the Collateral, (B) disclaiming any interest of
such Person in such Goods included in the Collateral and (C) containing the
agreement of such Person to the Secured Party, upon and at any time and from
time to time after the occurrence or existence of any Event of Default, taking
possession of and removing such Goods included in the Collateral from such Goods
not included in the Collateral, without by doing so incurring any liability to
such Person, except for unreasonable damage to such Goods not included in the
Collateral directly resulting from doing so.
vi. Each Debtor shall provide all information and assistance, execute and
deliver each writing, and take each other action, that the Secured Party shall
deem necessary or desirable at the sole option of the Secured Party in
connection with the verification of any Account, Chattel Paper, General
Intangible, Instrument, Document or Deposit Account included in the Collateral.
vii. Each Debtor shall deliver each Chattel Paper, Document and record
included in the Collateral to the Secured Party with each endorsement,
instrument of assignment and other writing that the Secured Party shall deem
necessary or desirable at the sole option of the Secured Party to accomplish the
assignment or other transfer of such Chattel Paper, Document or record to the
Secured Party.
viii. Each Debtor shall execute and deliver or file each form and other
writing (including, but not limited to, any notice of proposed sale of
securities pursuant to Rule 144 of the Securities and Exchange Commission), and
take each other action (including, but not limited to, making public any
nonpublic material adverse information with respect to any issuer of any General
Intangible or Instrument included in the Collateral), that the Secured Party
shall deem necessary or desirable at the sole option of the Secured Party to
permit the sale or other disposition of any such General Intangible or
Instrument without registration pursuant to the Securities Act of 1933.
ix. Each Debtor who or which controls any issuer of any General Intangible
or Instrument included in the Collateral or otherwise has the right to effect
registration of such General Intangible or Instrument pursuant to the Securities
Act of 1933 shall (A) cause such General Intangible or Instrument to be so
registered, (B) take each other action (including, but not limited to, complying
with any "blue sky" or securities statute, regulation or other law and
delivering to the Secured Party appropriate quantities of prospectuses) that the
Secured Party shall deem necessary or desirable at the sole option of the
Secured Party to permit the public sale or other disposition of such General
Intangible or Instrument by the Secured Party in each jurisdiction that the
Secured Party shall select at the sole option of the Secured Party and (C)
execute and deliver to the Secured Party a writing, in form and substance
satisfactory to the Secured Party, indemnifying in connection with such sale or
other disposition each Person who or which is an underwriter (statutory or
other) of such General Intangible or Instrument against each liability, cost and
expense (including, but not limited to, if such Person retains counsel for
advice, for litigation or for any other purpose, each attorney's fee and
disbursement) incurred by such Person as a direct or indirect result of such
sale or other disposition.
x. Each Debtor shall execute and deliver each financing statement,
amendment of any financing statement, application for any certificate of title,
notice of lien, instrument of assignment and other writing, and take each other
action, that the Secured Party shall deem necessary or desirable at the sole
option of the Secured Party (i) to perfect or accomplish any Security interest,
(ii) otherwise to accomplish any purpose of this Agreement, (iii) in connection
with any transaction contemplated by this Agreement or (iv) in connection with
any of the Collateral.
5. Authorization and Power of Attorney. The Secured Party is irrevocably
and unconditionally authorized to take, and each Debtor irrevocably and
unconditionally appoints the Secured Party as the attorney-in-fact of such
Debtor, with full power of substitution and of revocation, to take, in the name
of such Debtor or otherwise and otherwise as shall be determined by the Secured
Party at the sole option of the Secured Party, each action relating to any of
the Collateral that, subject to this Agreement, such Debtor could take in the
same manner, to the same extent and with the same effect as if such Debtor were
to take such action; provided, however, that, until any notice of intention to
do so shall be delivered, given or sent by the Secured Party to any Debtor upon
or at any time after the occurrence or existence of any Event of Default, (a)
the Secured Party may not, pursuant to such authorization or as such
attorney-in-fact, (i) exercise or direct the exercise of any right to vote or
give any consent, ratification or waiver with respect to any General Intangible
or Instrument included in the Collateral or (ii) except as expressly permitted
by this Agreement, sell, lease or otherwise dispose of any of the Collateral and
(b) each Debtor shall have the right to exercise any right to vote or give any
consent, ratification or waiver with respect to
4
<PAGE>
any General Intangible or Instrument included in the Collateral that such Debtor
would have but for this Agreement unless doing so would or might have any
adverse effect on the value of such General Intangible or Instrument as security
for the payment of the Obligations or otherwise be inconsistent or incompatible
with any provision or purpose of this Agreement. Such power of attorney is
coupled with an interest in favor of the Secured Party and shall not be
terminated or otherwise affected by the death, disability or incompetence of any
Debtor. Without limiting the generality of the first sentence of this Section 5,
pursuant to such authorization and as such attorney-in-fact, the Secured Party
may, in the name of any Debtor or otherwise at the sole option of the Secured
Party, (a) execute and deliver any financing statement or instrument of
assignment relating to any of the Collateral, (b) endorse, or execute and
deliver any instrument of assignment relating to, and deliver any of the
Collateral including, but not limited to, any instrument drawn by any company
issuing any insurance on any Goods included in the Collateral), whether such
endorsement or assignment is to the Secured Party or otherwise, (c) execute and
deliver any writing, or give any communication in any other form, requesting any
transfer, pledge or release from pledge of any Uncertificated Security included
in the Collateral, (d) execute and deliver or file any form or other writing
(including, but not limited to, any notice of proposed sale of
securities pursuant to Rule 144 of the Securities and Exchange Commission), or
take any other action (including, but not limited to, making public any
nonpublic material adverse information with respect to any issuer of any General
Intangible or Instrument included in the Collateral), that the Secured Party
shall deem necessary or desirable at the sole option of the Secured Party to
permit the sale or other disposition of any such General Intangible or
Instrument without registration pursuant to the Securities Act of 1933, (e)
receive and collect any mail addressed to any Debtor, direct the place of
delivery of any such mail to any location designated by the Secured Party, open
any such mail and remove from any such mail and retain any enclosure evidencing,
or otherwise relating to any of the Collateral, (f) obtain, adjust, settle or
cancel any insurance on any Goods included in the Collateral, (g) use any
payment in connection with any such insurance, including, but not limited to,
any refund of any unearned premium therefor to pay any of the Obligations,
whether due or not due, as the Secured Party shall determine at the sole option
of the Secured Party, (h) take any action described in clause (A) of Section 4e
of this Agreement or (i) execute and deliver any other writing, or take any
other action, that the Secured Party shall deem necessary or desirable at the
sole option of the Secured Party (i) to perfect or accomplish any Security
Interest, (ii) otherwise to accomplish any purpose of this Agreement, (iii) in
connection with any transaction contemplated by this Agreement or (iv) in
connection with any of the Collateral. Each debtor revokes each power of
attorney (including, but not limited to, any proxy) heretofore granted by such
Debtor with respect to any General Intangible or Instrument included in the
Collateral.
6. Certain Rights, Remedies and Duties.
a. With respect to the Collateral, the Secured Party shall have each
applicable right and remedy of a secured party pursuant to the Uniform
Commercial Code of the State of New York and each applicable right and remedy
pursuant to any other statute, regulation or other law or pursuant to this
Agreement.
b. The Secured Party shall have the right to file in any public office,
without the signature of any Debtor, each financing statement relating to any of
the Collateral that the Secured Party shall deem necessary or desirable at the
sole option of the Secured Party. Each carbon, photographic or other
reproduction of this Agreement or of any financing statement relating to any of
the Collateral shall be sufficient as a financing statement.
c. The Secured Party shall have the right to direct any company issuing
any insurance on any Goods included in the Collateral to make directly and
solely to the Secured Party any payment in connection therewith (including, but
not limited to, any refund of any unearned premium therefor).
d. The Secured Party shall have the right to verify each Account, Chattel
Paper, General Intangible, Instrument, Document and Deposit Account included in
the Collateral in any manner or through any medium that the Secured Party
considers appropriate, whether directly with any Account Debtor or other Person
obligated with respect thereto or otherwise and whether in the name of any
Debtor or otherwise, at the sole option of the Secured Party.
e. The Secured Party shall have the right to (i) notify each Account
Debtor and other Person obligated with respect to any Account, Chattel Paper,
General Intangible, Instrument or Deposit Account included in the Collateral of
the interest of the Secured Party therein, (ii) direct such Account Debtor or
other Person to deliver to the Secured Party directly any record evidencing, or
otherwise relating to such Account, Chattel Paper, General Intangible,
Instrument or Deposit Account, (iii) direct such Account Debtor or other Person
to make payment with respect to such Account, Chattel Paper, General Intangible,
Instrument or Deposit Account directly and solely to the Secured Party and
(iv) take control of all Proceeds of such Account, Chattel Paper, General
Intangible, Instrument or Deposit Account.
f. The Secured Party shall have the right to transfer to or register in
the name of the Secured Party or of any nominee of the Secured Party any General
Intangible, Instrument or Deposit Account included in the Collateral so that the
Secured Party or such nominee shall appear as the sole owner of record thereof.
Each such transfer or registration may be made with or without reference to this
Agreement or to any Security Interest.
g. Upon and at any time and from time to time after the occurrence or
existence of any Event of Default:
i. The Secured Party shall have the right to use each Fixture and piece of
Equipment included in the Collateral for the purposes of preserving any Goods
included in the Collateral, of completing any work in process included in the
Collateral and of preparing any such Goods for any sale, lease or other
disposition.
ii. The Secured Party shall have the right, without any judicial process
but without any breach of the peace, to (A) enter upon any promises of any
Debtor, (B) take possession of, and remove from any such premises, any Goods,
Chattel Paper, Instrument, Document or record included in the Collateral and (C)
remain on and use any such premises in completing any work in process included
in the Collateral or in preparing for any sale, lease, or other disposition, in
selling, leasing or otherwise disposing of, or in collecting, any of the
Collateral and (C) without the payment of any compensation of any kind, use each
trademark, service mark, trade style, trade name, patent, copyright, license,
franchise and similar General Intangible included in the Collateral to the
extent of any Debtor's rights therein for the purpose of exercising any right or
remedy pursuant to this Agreement or any other right or remedy relating to any
of the Collateral; and, to such extent for such purpose, each Debtor irrevocably
grants to the Secured Party a license in each such trademark, service mark,
trade style, trade name, patent, copyright, license, franchise and similar
General Intangible.
iii. If the Secured Party opts for the private sale or other disposition
of any General Intangible or Instrument included in the Collateral, the Secured
Party shall have the right to (A) restrict the number of prospective bidders in
connection with such sale or other disposition so as to comply with the
Securities Act of 1933 and (B) restrict such prospective bidders to Persons who
will agree to purchase such General Intangible or Instrument for their own
accounts for investment and not with a view to distribution or resale. No such
restriction or other restriction on such sale or other disposition that the
Secured Party shall deem necessary or desirable at the sole option of the
Secured Party in light of any "blue sky" or securities statute, regulation or
other law shall be deemed to be a factor in determining such sale or other
disposition to have been made in other than a commercially reasonable manner.
iv. The Secured Party shall have the right to perform any obligation of
any Debtor pursuant to this Agreement.
h. Until (i) the occurrence or existence of any Event of Default or (ii)
any notice to the contrary shall be delivered, given or sent by the Secured
Party to any Debtor, the Secured Party shall not have any right to retain any
interest, dividend, distribution or similar income consisting of money or of a
check or other draft and payable on account of any General Intangible or
Instrument included in the Collateral, and shall pay to any Debtor any such
interest, dividend, distribution or similar income received by it prior thereto.
i. The Secured Party shall apply all proceeds received by it from any
sale, lease or other disposition of, or from any collection of, any of the
Collateral or otherwise on account of any of the Collateral (including, but not
limited to, as money payable pursuant to any insurance on any Goods included in
the Collateral) first to costs and expenses described in Section 10 of this
Agreement and then to such other of the Obligations, whether due or not due, as
the Secured Party shall determine at the sole option of the Secured Party.
7. Standards of Care. If any portion of the Collateral shall be
transferred to or registered in the name of the Secured Party or of any nominee
of
5
<PAGE>
The Secured Party or shall be in the possession or under the control of the
Secured Party, the Secured Party shall be deemed to have exercised reasonable
care in the custody or preservation of such portion of the Collateral. If,
subject to the following sentence, it (a) accords such portion of the Collateral
treatment substantially equal to the treatment that it accords its own assets of
a similar nature or (b) takes such action in the custody or preservation of such
portion of the Collateral as is reasonably specified in any notice delivered or
sent by any Debtor and received by it in a reasonable time to evaluate and take
such action; provided, however, that (i) any failure by the Secured Party to
take such action shall not of itself be deemed to be a failure to exercise such
reasonable care and (ii) in no event shall the Secured Party be obligated to
take such action if it determines at its sole option that doing so would or
might have any adverse affect on the value of any of the Collateral as security
for the payment of the Obligations or otherwise be inconsistent or incompatible
with any provision or purpose of this Agreement. In no event shall the Secured
Party be obligated to (a) preserve any right or remedy against any prior party
obligated pursuant to any Chattel Paper or Instrument included in the
Collateral, whether or not such Chattel Paper or Instrument is in the possession
or under the control of the Secured Party, (b) ascertain any maturity, call,
exchange, conversion, redemption, offer, tender or similar matter relating to
any General Intangible, Instrument or Deposit Account included in the Collateral
or provide to any Debtor any notice thereof, whether or not the Secured Party
has knowledge thereof, or (c) provide to any Debtor any proxy statement, notice
or other communication received by the Secured Party or by any nominee of the
Secured Party and relating to any of the Collateral.
8. Obligations Immediately Due; Termination of Obligation to Lend.
a. Upon and at any time and from time to time after the occurrence or
existence of any Event of Default other than an Event of Default described in
clause (iv) of Section 16e of this Agreement, all of the Obligations remaining
unpaid shall, at the sole option of the Secured Party and without any notice,
demand, presentment or protest of any kind, become immediately due,
notwithstanding any agreement to the contrary. Upon the Occurrence or existence
of any Event of Default described in such clause (iv), all of the Obligations
remaining unpaid shall without any notice, demand, presentment or protest of any
kind, automatically become immediately due, notwithstanding any agreement to the
contrary. Nothing in this Section 8a shall render any portion of the Obligations
that is payable on demand payable otherwise than on demand or in any other way
affect any right or remedy of the Secured Party with respect to any such portion
of the Obligations.
b. Upon the occurrence or existence of any Event of Default, any
obligation of the Secured Party to grant any or any additional loan, credit or
other financial accommodation to any Debtor shall terminate, notwithstanding any
agreement to the contrary.
9. Representations and Warranties.
a. Each of the undersigned represents and warrants to the Secured Party as
follows:
i. Each answer contained in any questionnaire submitted to the Secured
Party by him, her or it in connection with this Agreement is true and correct.
ii. His, her or its execution, delivery to the Secured Party and
performance of this Agreement do not and will not (A) violate, or result in any
violation of, any statute, regulation or other law or any judgment, order or
award of any court, agency or other governmental authority or of any arbitrator
or (B) violate, result in any violation of, constitute (whether immediately or
after notice, after notice of time or after both notice and lapse of time) any
default under, or result in or require the imposition or creation of any
security interest in, or of any other lien or encumbrance upon, any of his, her
or its assets pursuant to, any agreement to which he, she or it is a party or by
which he, she or it or any of his, her or its assets is bound, except for this
Agreement.
iii. Each authorization, approval, permit and consent from, each
registration and filing with, each declaration and notice to, and each other act
by or relating to, any Person required as a condition of his, her or its
execution, delivery to the Secured Party or performance of this Agreement has
been duty obtained, made, given or done, and is in full force and effect.
iv. If it is not an individual, its execution, delivery to the Secured
Party and performance of this Agreement (A) are and will be in furtherance of
its purposes and within its power and authority, (B) do not and will not
violate, result in any violation of, or result in or require the imposition or
creation of any security interest in, or of any other lien or encumbrance upon,
any of its assets pursuant to, (i) any certificate or articles of incorporation,
by-laws, partnership agreement, articles of association or other charter,
organizational or governing document of it or (ii) any resolution or other
action of record of any shareholders or members of it, of any board of directors
or trustees of it or of any other Person responsible for governing it, and (C)
have been duly authorized by each necessary action of any shareholders or
members of it, of any board of directors or trustees of it or of any other
Person responsible for governing it.
v. He, she or it has not heretofore abandoned, assigned, sold, leased,
exchanged, converted or otherwise transferred or disposed of any of the
Collateral or any interest in any of the Collateral, except as fully and
accurately described in Exhibit A attached to and made a part of this Agreement.
vi. He, she or it has not heretofore extended, renewed, refinanced,
modified, compounded, subordinated, accelerated, settled, adjusted or
compromised, entered into any composition of, replaced, canceled, released or
surrendered, exercised any option or right of subscription relating to, settled
or compromised any action or other legal proceeding relating to, or waived any
right or remedy relating to or otherwise terminated, impaired or otherwise
affected any indebtedness, liability or obligation of any Account Debtor or of
any other Person relating to, any Account, Chattel Paper, General Intangible,
Instrument, Document or Deposit Account included in the Collateral, except as
fully and accurately described in Exhibit A attached to and made a part of this
Agreement.
vii. There exists no demand, claim, counterclaim, setoff or defense, no
action or other legal proceeding, and no outstanding judgment, order or award of
any court, agency or other governmental authority or of any arbitrator, relating
to any of the Collateral or questioning the validity of, or rendering invalid,
this Agreement or any action taken or to be taken pursuant to this Agreement,
except for demands, claims, counterclaims, setoffs, defenses, actions and other
legal proceedings and judgments, orders and awards fully and accurately
described in Exhibit A attached to and made a part of this Agreement.
viii. There is not on file in any public office any presently effective
financing statement relating to any of the Collateral, naming him, her or it as
a debtor and naming any Person other than the Secured Party as a secured party,
except for financing statements fully and accurately described in Exhibit A
attached to and made a part of this Agreement.
ix. There exists no presently effective certificate of title, and no
application for any certificate of title or notice of lien, relating to any of
his, her or its Goods and naming any Person other than the Secured Party as a
secured party, except for certificates of title, applications and notices of
lien fully and accurately described in Exhibit A attached to and made a part of
this Agreement.
x. There exists no (A) presently effective registration of any transfer or
pledge of any Uncertificated Security included in the Collateral, (B)
outstanding order to register any transfer or pledge of any such Uncertificated
Security, (C) notification of an security interest in, or of any other lien or
encumbrance upon, any such Uncertificated Security or (D) such Uncertificated
Security that is shown on the records of any clearing corporation other than in
the name of any Debtor, except for registrations, orders, notifications and
Uncertificated Securities fully and accurately described in Exhibit A attached
to and made a part of this Agreement.
xi. There exists no Security Interest in, and no other lien or encumbrance
upon, any of the Collateral, except for Permitted Liens.
xii. There is no restriction on any assignment or other transfer by him,
her or it of any of the Collateral, except for compliance with any "blue sky" or
securities statute, regulation or other law.
xiii. The real property on which any crop included in the Collateral is
growing or is to be grown, or on which any timber included in the Collateral is
or is to be standing, is fully and accurately described in Exhibit A attached to
and made a part of this Agreement.
b. At each time this Agreement is in effect as to any Debtor, such Debtor
shall be deemed to represent and warrant to the Secured Party as follows:
6
<PAGE>
i. Each Instrument, Document and Deposit Account included in the
Collateral at such time is genuine, is in all respects what it purports to be,
and is enforceable in accordance with its terms against each Person obligated
with respect thereto.
ii. Each Account, Chattel Paper and General Intangible included in the
Collateral at such time is genuine, is in all respect what it purports to be,
and is enforceable in accordance with its terms against each Account Debtor and
other Person obligated with respect thereto, and each sum represented by any
Debtor to the Secured Party as owing by such Account Debtor or other Person with
respect thereto is actually and unconditionally owing by such Account Debtor or
other Person, except for any applicable normal cash discount, without any
counterclaim, setoff or defense. The aggregate sum represented at such time by
any Debtor to the Secured Party as owing by Account Debtors and other Persons
with respect to Accounts, Chattel Paper and General Intangibles included in the
Collateral is the aggregate sum actually and unconditionally owing by Account
Debtors and other Persons with respect thereto at such time, except for
applicable normal cash discounts.
10. Expenses. Each Debtor shall pay to the Secured Party on demand each
cost and expense (including, but not limited to, if the Secured Party retains
counsel for advice, for litigation or for any other purpose, each attorney's fee
and disbursement) incurred by the Secured Party (a) in searching any public
record for, in filing or in recording in any public office, or in obtaining from
any public office any certificate relating to, any financing statement,
certificate of title, application for any certificate of title, notice of lien,
instrument of assignment or other writing relating to any of the Collateral, (b)
in performing any obligation of any Debtor pursuant to this Agreement, (c) in
taking any action pursuant to Section 5 of this Agreement, (d) in connection
with the custody or preservation of any of the Collateral or (e) in endeavoring
to (i) enforce any indebtedness, liability or obligation of any Debtor pursuant
to this Agreement, (ii) preserve or exercise any right or remedy pursuant to
this Agreement, whether against any Debtor or otherwise, (iii) preserve or
exercise any right or remedy relating to, take possession of, collect or
enforce, have registered pursuant to the Securities Act of 1933, prepare for any
sale, lease or other disposition, assign, sell, lease, exchange, convert or
otherwise transfer or dispose of, or realize upon, any of the Collateral, (iv)
obtain any information relating to any Uncertificated Security included in the
Collateral from the issuer of such Uncertificated Security or register any
transfer or pledge of such Uncertificated Security with such issuer or (v)
defend against any claim, regardless of the basis or outcome thereof and whether
asserted affirmatively, as a counterclaim, setoff or defense or otherwise,
asserted against the Secured Party as a direct or indirect result of the
execution and delivery to the Secured Party of this Agreement by any of the
undersigned, except for any claim for any tax imposed by any government or
political subdivision upon any income of the Secured Party or for any interest
or penalty relating to any such tax. After such demand for payment of any cost
or expense incurred by the Secured Party in performing any obligation of any
Debtor pursuant to Section 4f, 4h, 4j, 4k or 4z of this Agreement, each Debtor
shall pay interest at the highest rate permitted by applicable law on the
portion of such cost or expense remaining unpaid.
11. Cumulative Nature, Nonexclusive Exercise and Waivers of Rights and
Remedies.
a. All rights and remedies of the Secured Party pursuant to this Agreement
or otherwise shall be cumulative, and no such right or remedy shall be exclusive
of any other such right or remedy.
b. No single or partial exercise by the Secured Party of any right or
remedy pursuant to this Agreement or otherwise shall preclude any other or
further exercise thereof, or any exercise of any other such right or remedy, by
the Secured Party.
c. No course of dealing or other conduct heretofore pursued, accepted or
acquiesced in, no course of performance or other conduct hereafter pursued,
accepted or acquiesced in, no oral or written agreement or representation
heretofore made, and no oral agreement or representation hereafter made, by the
Secured Party, whether or not relied or acted upon, and no usage of trade,
whether or not relied or acted upon, shall operate as a waiver of any right or
remedy of the Secured Party pursuant to this Agreement or otherwise. No delay by
the Secured Party in exercising any such right or remedy, whether or not relied
or acted upon, shall operate as a waiver of any right of the Secured Party to
exercise the same or any other such right or remedy on such or any future
occasion without any notice or demand of any kind. No waiver by the Secured
Party of any such right or remedy shall be effective unless made in a writing
duty executed by the Secured Party and specifically referring to such waiver. No
waiver by the Secured Party on any one occasion of any such right or remedy
shall operate as a waiver thereof or of any other such right or remedy on any
future occasion.
12. Entire Agreement; Modification; Termination; Nonimpairment; Certain
Consents and Waivers.
a. This Agreement contains the entire agreement between the Secured Party
and each Debtor with respect to the subject matter of this Agreement, and
supersedes each course of dealing or other conduct heretofore pursued, accepted
or acquiesced in, and each oral or written agreement and representation
heretofore made, by the Secured Party with respect thereto, whether or not
relied or acted upon.
b. No course of performance or other conduct hereafter pursued, accepted
or acquiesced in, and no oral agreement or representation hereafter made, by the
Secured Party, whether or not relied or acted upon, and no usage of trade,
whether or not relied or acted upon, shall modify or terminate this Agreement as
to any Debtor on impair or otherwise affect any Security Interest, any
indebtedness, liability or obligation of any Debtor pursuant to this Agreement
or any right or remedy of the Secured Party pursuant to this Agreement or
otherwise.
c. No Modification of this Agreement shall be effective unless made in a
writing duty executed by the Secured Party and specifically referring to each
provision of this Agreement being modified.
d. Except as expressly provided in this Agreement, this Agreement shall
not be modified or terminated as to any Debtor, and no Security Interest, no
indebtedness, liability or obligation of any Debtor pursuant to this Agreement,
and no right or remedy of the Secured Party pursuant to this Agreement or
otherwise shall be impaired or otherwise affected, by any act, omission or other
thing, whether occurring before or after the termination of this Agreement as to
such Debtor with respect to any of the Obligations. Each Debtor consents,
without any notice of any kind, to each act, omission and other thing that would
or might, but for such consent, modify or terminate this Agreement as to any
Debtor or impair or otherwise affect any Security Interest or any such
indebtedness, liability, obligation, right or remedy. Without limiting the
generality of the preceding two sentences, this Agreement shall not be modified
or terminated as to any Debtor by, neither any Security Interest nor any such
indebtedness, liability, obligation, right or remedy shall be impaired or
otherwise affected by, and such consent shall apply to (i) any extension of any
of the Obligations, regardless of the length of such extension and regardless of
whether such extension was preceded by another or by others, (ii) any renewal,
refinancing, modification, compounding, subordination, acceleration,
composition, settlement, adjustment, compromise, reaffirmation, invalidity,
irregularity, unenforceability or impairment of, any replacement, cancellation,
discharge, assignment, sale, exchange, conversion or other transfer of
disposition of, or any grant of any participation in, any of the Obligations,
(iii) any modification or termination of any writing relating to any of the
Obligations, to any of the Collateral or to any Other Collateral, (iv) any
acceptance of any Other Obligor, (v) any replacement, release or discharge of,
or any modification of any indebtedness, liability or obligation of, any other
Debtor or any Primary Obligor, Other Obligor or other Person, (vi) any taking,
holding, continuation, collection, modification, increase or decrease in value
or impairment of, any replacement, cancellation, release, surrender,
abandonment, discharge, assignment, sale, lease, exchange, conversion or other
transfer or disposition of, any termination of any insurance on, any relying or
realizing upon, any grant, perfection, subordination or enforcement of any
security interest in, or of any other lien or encumbrance upon, any failure to
call for, take, hold, continue, collect, insure, preserve or protect, to
replace, assign, sell, lease, exchange, convert or otherwise transfer or dispose
of, to rely or realize upon or to perfect, keep perfected or enforce any
security interest in, or any other lien or encumbrance upon, or any delay in
calling for, taking, continuing, collecting, insuring, preserving or protecting,
in replacing, assigning, selling, leasing, exchanging, converting or otherwise
transferring or disposing of, in relying or realizing upon or in perfecting,
keeping perfected or enforcing any security interest in, or any other lien or
encumbrance upon, any of the Collateral or any Other Collateral, regardless of
its value, (vii) any security interest or other lien or encumbrance not being
created in favor of the Secured Party, (viii) any of the Collateral or any Other
Collateral being or becoming subject to any security interest or other lien or
encumbrance (whether or not prior to any security interest or other lien or
encumbrance
7
<PAGE>
in favor of the Secured Party), subject to any defense or restriction or
unenforceable or impaired, (ix) any exercise, delay in the exercise or waiver of
any failure to exercise, or any forbearance or other indulgence relating to, any
right or remedy of the Secured Party or of any other Person against any Debtor,
Primary Obligor, Other Obligor or other Person or relating to any of the
Obligations, to any of the Collateral or to any Other Collateral, (x) any
failure of the Secured Party or of any other Person to make, prove or vote any
claim relating to any of the Obligations, to any of the Collateral or to any
Other Collateral in any case or other proceeding pursuant to any Bankruptcy Law,
(xi) the occurrence or existence of any Event of Default, (xii) the Obligations
being at any time or from time to time reduced and then increased or being at
any time or from time to time paid in full, (xiii) any refusal or other failure
of the Secured Party or of any other Person to grant any or any additional loan,
credit or other financial accommodation to any Debtor or Primary Obligor, (xiv)
any refusal or other failure of the Secured Party or of any other Person
heretofore or hereafter to provide to any Debtor any information relating to any
other Debtor, to any Primary Obligor, Other Obligor or other Person or to the
business, operations, assets, affairs or condition (financial or other) of any
other Debtor or of any Primary Obligor, Other Obligor or other Person or so to
provide any such information completely and accurately, (xv) any notice to the
Secured Party or to any other Person from any Debtor, Primary Obligor, Other
Obligor or other Person not to grant any or any additional loan, credit or other
financial accommodation to any Debtor or Primary Obligor, not to extend, renew,
refinance, modify or replace any of the Obligations or to take or not to take
any other action, (xvi) the acceptance by the Secured Party or by any other
Person of any instrument or other writing intended by any other Person to create
an accord and satisfaction with respect to any of the Obligations, (xvii) the
manner or order of any sale, lease, exchange, conversion or other transfer or
disposition of any of the Collateral or of any Other Collateral, (xviii) the
manner or order of application of any money received or applied in payment of
any of the Obligation, (xix) any change in the ownership or membership of any
Debtor, Primary Obligor, Other Obligor or other Person, (xx) any change in the
location, business, fame, identity or structure of any Debtor, Primary Obligor,
Other Obligor or other Person, (xxi) the expiration of the period of any statute
of limitations with respect to any action or other legal proceeding against any
other Debtor, or against any Primary Obligor, Other Obligor or other Person,
relating to this Agreement, to any of the Obligations, to any of the Collateral
or to any Other Collateral or (xxii) the termination of this Agreement as to any
other Debtor, whether by agreement, by operation of law or otherwise.
e. Each Debtor waives, without any notice of any kind, each act and other
thing upon which, but for such waiver, any Security Interest, any indebtedness,
liability or obligation of any Debtor pursuant to this Agreement, or any right
or remedy of the Secured Party pursuant to this Agreement or otherwise, would or
might be conditioned. Without limiting the generality of the preceding sentence,
neither any Security Interest nor any such indebtedness, liability, obligation,
right or remedy shall be conditioned upon, and such waiver shall apply to, (i)
the acceptance of this Agreement by the Secured Party, (ii) any demand upon, or
any presentment or protest to, any Debtor, Primary Obligor, Other Obligor or
other Person, (iii) any notice to any Debtor, Primary, Obligor, Other Obligor or
other Person of any nonpayment, dishonor, default or protest, of the acceptance
of this Agreement by the Secured Party, of the incurring of any of the
Obligations or of any other matter or (iv) any exercise of any right or remedy
of the Secured Party of or any other Person against any Debtor, Primary Obligor,
Other Obligor or other Person or relating to any of the Obligations or to any
Other Collateral.
f. Each Debtor waives without any notice of any kind, each right of
redemption or appraisal arising in connection with any sale or other disposition
of any of the Collateral.
g. This Agreement shall not terminate as to any Debtor with respect to any
of the Obligations until written notice of (i) its termination by such Debtor or
(ii) if such Debtor is an individual, the death of such Debtor or the judicial
declaration of such Debtor's incompetence shall have been received by the
Secured Party and the Secured Party shall have had a reasonable period of time
to act thereupon. After any written notice of any termination, death or judicial
declaration of incompetence by or relating to any Debtor shall have been so
received and a reasonable time to act thereupon shall have expired, this
Agreement shall (i) continue in full force and effect as to such Debtor, and as
to each Successor of such Debtor, with respect to (A) each portion of the
Obligations arising before such receipt of such notice and the expiration of
such period of time, (B) each portion of the Obligations arising after such
receipt of such notice and the expiration of such period of time as a direct or
indirect result of any loan, credit or other financial accommodation agreed to
by the Secured Party before such receipt of such notice and the expiration of
such period of time, (C) each portion of the Obligations arising after such
receipt of such notice and the expiration of such period of time as a direct or
indirect result of any portion of the Obligations described in clause (i)(A) or
(i)(B) of this sentence (including, but not limited to, (i) each extension,
renewal, refinancing, modification and replacement of any portion of the
Obligations described in such clause (i)(A) or (i)(B) that is made after such
receipt of such notice and the expiration of such period of time and (ii) all
interest and other charges accruing after such receipt of such notice and the
expiration of such period of time with respect to any portion of the Obligations
described in such clause (i)(A) or (i)(B) or with respect to any such extension,
renewal, refinancing, modification or replacement), (D) each described in
Section 4i of this Agreement or a cost or expense described in Section 10 of
this Agreement and (E) the Collateral, whether existing or arising before or
after such receipt of such notice and the expiration of such period of time,
and (ii) terminate as to such Debtor, and as to each Successor of such Debtor,
with respect to each portion of the Obligations that arises after such receipt
of such notice and the expiration of such period of time and is not described in
clause (i)(B), (i)(C) or (i)(D) of this sentence. With respect to this
Agreement, the sole effect of such receipt of such notice and the expiration of
such period of time shall be to terminate this Agreement to the extent provided
in clause (ii) of the preceding sentence. Upon such receipt of such notice, any
obligation of the Secured Party to grant any or any additional loan, credit or
other financial accommodation to any Debtor shall terminate, notwithstanding any
agreement to the contrary.
h. Understanding that (i) because registration of any General Intangible
or Instrument included in the Collateral pursuant to the Securities Act of 1933
may not have been effected, because any General Intangible or Instrument
included in the Collateral may have been acquired by a Debtor or by another
Person for his, her or its own account for investment and not with a view to
distribution or to resale or because of other circumstances relating to any
General Intangible or Instrument included in the Collateral, there may be
restrictions and limitations affecting the Secured Party in any attempt
expeditiously to sell or otherwise dispose of such General Intangible or
Instrument, (ii) in the absence of any agreement to the contrary, the Secured
Party may have a general duty to attempt to obtain a fair price for such General
Intangible or Instrument if the Secured Party sells or otherwise disposes of
such General Intangible or Instrument even though the Obligations may be paid
in full through realization of a lesser price for such General Intangible or
Instrument and (iii) the Secured Party is not to have any such general duty,
each Debtor waives each right to hold the Secured Party responsible for selling
or for otherwise disposing of such General Intangible or Instrument at an
inadequate price even if the Secured Party in good faith accepts the first offer
received for, or does not approach more than one possible purchaser of, such
General Intangible or Instrument.
13. Governing Law; Jurisdiction; Certain Consents and Waivers.
a. This Agreement shall be governed by and construed, interpreted and
enforced in accordance with the internal law of the State of New York, without
regard to principles of conflict of laws.
b. Each action and other legal proceeding relating to this Agreement
commenced by the Secured Party may be litigated in any court that is either a
court of record of the State of New York or a court of the United States located
in the State of New York. Each such action and other legal proceeding not
commenced by the Secured Party shall be litigated in such a court.
c. Each Debtor (i) consents in each action and other legal proceeding
relating to this Agreement commenced by the Secured Party to the personal
jurisdiction of any court that is either a court of record of the State of New
York or a court of the United States located in the State of New York, (ii)
waives each objection to the laying of venue of any such action or other legal
proceeding, (iii) waives personal service of process in each such action and
other legal proceeding, (iv) consents to the making of service of process in
each such action and other legal proceeding by registered mail directed to such
Debtor at the last address of such Debtor shown in the records relating to this
Agreement maintained by the Secured Party, with such service of process to be
deemed completed five days after the mailing thereof, (v) waives in each such
action and other legal proceeding each right to trial by jury and each right to
assert any counterclaim or setoff or any defense based upon any statute of
limitations or upon any claim of laches, (vi) waives each right to attack
any final judgment that is obtained as a direct or indirect result of any such
action or other legal proceeding, and (vii) consents
8
<PAGE>
to each such final judgment being sued upon in any court having jurisdiction
with respect thereto and enforced in the jurisdiction in which such court is
located as if issued by such court.
14. Notices.
a. Each notice to, and each demand upon, any Debtor by the Secured Party
relating to this Agreement may be (i) delivered in person in writing, (ii)
delivered in person orally with a subsequent confirmation sent by mail, by
telex, by telegram or by mailgram, (iii) given by telephone with a subsequent
confirmation sent by mail, by telex, by telegram or by mailgram or (iv) sent by
mail, by telex, by telegram or by mailgram. Each such notice and demand
delivered in person orally or given by telephone shall be deemed to have been
delivered or given when so communicated. Each such notice, demand and
confirmation sent to any Debtor by mail, by telex, by telegram or by mailgram
may be directed to such Debtor at the last address of such Debtor shown in the
records relating to this Agreement maintained by the Secured Party. Each such
notice, demand and confirmation shall be deemed to have been sent (i) if sent by
mail, when deposited in the mail, first-class or certified postage prepaid, or
when delivered to any post office for sending by registered mail, directed as
provided in the preceding sentence or (ii) if sent by telex, by telegram or by
mailgram, when delivered to any telex operator or telegraph or mailgram office
directed as provided in the preceding sentence. Each requirement under
applicable law of reasonable notice to any Debtor by the Secured Party of any
event shall be deemed to have been met if notice of such event is delivered,
given or sent to such Debtor by the Secured Party as provided in this Section
14a at least ten days before the date on or after which such event is to occur.
b. Each notice to, and each demand upon, the Secured Party by any Debtor
relating to this Agreement (including, but not limited to, Section 12g of this
Agreement), and each notice to the Secured Party of the death of any Debtor or
of the judicial declaration of any Debtor's incompetence, shall specifically
refer to this Agreement, and shall be delivered in person in writing or sent by
registered mail. Each such notice and demand shall be deemed to have been
delivered or sent only when actually received by an officer of the Secured Party
at the chief executive office of the Secured Party.
15. General.
a. If there is more than one Debtor, each of them shall be jointly and
severally liable pursuant to this Agreement.
b. This Agreement shall be binding upon each Debtor and upon each heir and
legal representative of each Debtor, and shall inure to the benefit of, and be
enforceable by the Secured Party, each Successor of the Secured Party and each
direct or indirect assignee or other transferee of any of the Obligations.
c. Each agreement, consent, waiver, appointment as attorney-in-fact and
other thing made, given or done in this Agreement by any of the undersigned
shall be on his, her or its own behalf and on behalf of each of his, her or its
Successors.
d. Except as expressly provided in this Agreement, each right and remedy
of the Secured Party pursuant to this Agreement, and each action of the Secured
Party pursuant to the authorization and appointment as attorney-in-fact
contained in Section 5 of this Agreement, may be exercised or taken (i) at any
time and from time to time, (ii) at the sole option of the Secured Party, (iii)
without any notice or demand of any kind and (iv) whether or not any Event of
Default has occurred or existed, but the Secured Party shall not be obligated to
exercise any such right or remedy or to take any such action. Each request of
the Secured Party pursuant to this Agreement may be made (i) at any time and
from time to time, (ii) at the sole option of the Secured Party and (iii)
whether or not any Event of Default has occurred or existed.
e. Upon and at any time and from time to time after the occurrence or
existence of any Event of Default, (i) the Secured Party shall have the right to
set off against all of the Obligations remaining unpaid each indebtedness,
liability and obligation of the Secured Party in any capacity to any Debtor in
any capacity, whether alone or otherwise and whether or not then due,
(including, but not limited to, any such indebtedness, liability or obligation
arising as a direct or indirect result of any Instrument or Deposit Account),
and (ii) each holder of any participation in any portion of the Obligations
shall have the right (which may be exercised by such holder in accordance with
clauses (i), (ii) and (iii) of the first sentence of Section 15d of this
Agreement as though it were a right of the Secured Party pursuant to this
Agreement) to set off against all of such portion of the Obligations remaining
unpaid each indebtedness, liability and obligation of such holder in any
capacity to any Debtor in any capacity, whether alone or otherwise and whether
or not then due, (including, but not limited to, any such indebtedness,
liability or obligation arising as a direct or indirect result of any Instrument
or Deposit Account). Each exercise of such right by the Secured Party or by such
holder shall be deemed to be immediately effective at the time the Secured Party
or such holder opts therefor even though evidence thereof is not entered on the
records of the Secured Party or of such holder until later.
f. In conjunction with the Secured Party's assignment or other transfer
of, or in conjunction with the Secured Party's grant of any participation in,
any of the Obligations, the Secured Party shall have the right to assign or
otherwise transfer, or to grant any participation in, this Agreement, any of the
Secured Party's rights and remedies pursuant to this Agreement, any of the
Collateral or any interest in any of the Collateral. Upon any assignment or
other transfer of any portion of any of the Collateral by the Secured Party,
each responsibility of the Secured Party with respect to such portion of the
Collateral shall terminate.
g. If the Secured Party (i) in good faith deems itself insecure with
respect to any of the Obligations, is of the opinion that the Collateral is not
sufficient or has declined or may decline in value or is of the opinion that
there is insufficient public information with respect to any General Intangible
or Instrument included in the Collateral to permit the sale or other disposition
of such General Intangible or Instrument without registration pursuant to the
Securities Act of 1933 and (ii) delivers, gives or sends notice of such
insecurity or opinion to any Debtor, such Debtor shall provide to the Secured
Party such Other Collateral as shall be satisfactory to the Secured Party.
h. Solely to the extent required by any statute, regulation or other law
to make the Collateral available for the payment of the Obligations, each Debtor
guarantees the payment, without any setoff or other deduction, of the
Obligations, without any limitation as to amount.
i. Each Account Debtor and other Person obligated with respect to any
Account, Chattel Paper, General Intangible, Instrument, Document or Deposit
Account included in the Collateral may accept without question any exercise by
the Secured Party of any right or remedy pursuant to this Agreement or otherwise
with respect thereto, and shall have no liability to any Debtor as a direct or
indirect result of doing so.
j. Whenever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law.
If, however, any such provision shall be prohibited by or invalid under such
law, it shall be deemed modified to conform to the minimum requirements of such
law, or, if for any reason it is not deemed so modified, it shall be prohibited
or invalid only to the extent of such prohibition or invalidity without the
remainder thereof or any other such provision being prohibited or invalid.
k. Any provision of this Agreement that prohibits any Debtor from taking
any action shall be construed to prohibit such Debtor from taking such action
directly or indirectly.
l. Except as expressly provided in this Agreement, any reference in this
Agreement to any statute, regulation or other law shall be deemed to be as of
any time a reference to such statute, regulation or other law as in effect at
such time or, if such statute, regulation or other law is not in effect at such
time, a reference to any similar statute, regulation or other law in effect at
such time.
m. In this Agreement, headings of sections are for convenience of
reference only, and are not of substantive effect.
16. Definitions. For purposes of this Agreement:
a. "Bankruptcy Law" means (i) any bankruptcy or insolvency statute,
regulation or other law or (ii) any other statute, regulation or other law
relating to the relief of debtors, to the readjustment, composition or extension
of indebtedness, to liquidation or to reorganization.
b. "Collateral" means collectively, wherever located, whether now owned or
hereafter acquired or arising, whether owned alone or otherwise, whether or not
subject to Article 9 of the Uniform Commercial Code of the State of New York,
whether or not described in any schedule heretofore or hereafter
9
<PAGE>
delivered to the Secured Party and whether or not in the possession or under the
control of, or enroute to or from, the Secured Party in any capacity or any
other Person acting on behalf of the Secured Party, (i) all Goods, Accounts,
Chattel Paper, General Intangibles, Instruments, Documents, Deposit Accounts and
money of each Debtor other than any Consumer Goods of any Debtor, (ii) all
demands, claims and rights (including, but not limited to, (A) all claims
arising out of tort, all rights represented by any judgment, all rights to money
payable pursuant to any insurance, all rights of setoff, all rights to payment
pursuant to any letter of credit and all other claims and rights to the payment
of money and (B) all rights as a seller of Goods, whether to reclaim Goods or
stop Goods in transit or otherwise) of each Debtor other than any claim for
wages, salary and other compensation of any Debtor as an employee, (iii) all
direct or indirect additions to, all direct or indirect extensions, renewals and
replacements of, all direct or indirect increases in, all direct or indirect
profits, interest, dividends, distributions and other income and payments on
account of, and all direct or indirect proceeds of any replacement, release,
surrender, discharge, assignment, sale lease, exchange, conversion or other
transfer or disposition of, of any collection of, or of any exercise of any
option or right of subscription relating to, any of the things described in
clauses (i) and (ii) of this sentence, whether arising from any action taken by
any Debtor or by the Secured Party or otherwise and whether arising from any
exchange, conversion, stock split, spin-off, reclassification, merger,
consolidation or other absorption, sale of assets or combination or shares or
otherwise, (iv) all Proceeds and Products of any of the things described in
clauses (i) through (iv) of this sentence and (v) all records (including, but
not limited to, all records maintained on computer software and all schedules,
invoices, shipping documents, delivery receipts, purchase orders and written
agreements) of each Debtor evidencing, or otherwise relating to, any of the
things described in clauses (i) through (iv) of this sentence.
c. "Debtor" means (i) any of the undersigned or (ii) any Successor of any
of the undersigned.
d. "Equipment" has the meaning given it for purposes of Article 9 of the
Uniform Commercial Code of the State of New York as in effect on the date of
this Agreement, and, with respect to any Person, includes, but is not limited
to, (i) any machinery, vehicle or furniture constituting equipment of such
Person and (ii) any part, accessory, attachment, accession or tool installed
in, affixed to, or used or intended to be used in connection with, any equipment
of such Person.
e. An "Event of Default" occurs or exists if (i) any Debtor, Primary
Obligor or Other Obligor defaults in the payment when due, whether by
acceleration or otherwise, of any sum, whether payable for principal, for
interest or otherwise, whether the obligation to make payment thereof now exists
or hereafter arises and whether or not constituting part of the Obligations,
that is now or hereafter owing by him, her or it to the Secured Party or to any
other Person, the maturity of any such sum is accelerated or there occurs or
exists any event or condition that permits, or, after notice, after lapse of
time or after both notice and lapse of time, would permit, the acceleration of
the maturity of any such sum, (ii) any Debtor, Primary Obligor or Other Obligor
defaults in the performance when due of any obligation, whether now existing or
hereafter arising, that is now or hereafter owing by him, her or it to the
Secured Party or to any other Person other than an obligation to pay money or
there occurs or exists any event or condition that constitutes, or, after
notice, after lapse of time or after both notice and lapse of time, would
constitute, any default with respect to any such obligation, (iii) any Debtor,
Primary Obligor or Other Obligor is dissolved, ceases to exist, participates or
agrees to participate in any merger, consolidation or other absorption, assigns,
sells or otherwise transfers or disposes of all or substantially all of his, her
or its assets, makes or permits what might be a fraudulent transfer or
fraudulent conveyance of any of his, her or its assets, makes any bulk sale,
sends any notice of any intended bulk sale, dies, becomes incompetent or
insolvent (however such insolvency is evidenced), generally fails to pay his,
her or its debts as they become due, fails to pay, withhold or collect any tax
as required by any statute, regulation or other law, suspends or ceases his, her
or its present business has served or filed against him, her or it or against
any of his, her or its assets any attachment, levy, tax lien, warrant or similar
lien other than a Permitted Lien or has entered against him, her or it or
against any of his, her or its assets any judgment, order or award of any court,
agency or other governmental authority or of any arbitrator, (iv) any Debtor has
any receiver, trustee, liquidator, sequestrator or custodian of him, her or it
or of any of his, her or its assets appointed (whether with or without his, her
or its consent), makes any assignment for the benefit of creditors or commences
or has commenced against him, her or it any case or other proceeding pursuant to
any Bankruptcy Law or any formal or informal proceeding for the dissolution,
liquidation or winding up of the affairs of, or for the settlement of claims
against, him, her or it, (v) any Primary Obligor or Other Obligor has any
receiver, trustee, liquidator, sequestrator or custodian of him, her or it or of
any of his, her or its assets appointed (whether with or without his, her or its
consent), makes any assignment for the benefit of creditors or commences or has
commenced against him, her or it any case or other proceeding pursuant to any
Bankruptcy Law or any formal or informal proceeding for the dissolution,
liquidation or winding up of the affairs of, or for the settlement of claims
against, him, her or it, (vi) any representation or warranty made in this
Agreement, or any representation or warranty heretofore or hereafter made, or
any financial statement heretofore or hereafter provided to the Secured Party by
or on behalf of any Debtor, Primary Obligor or Other Obligor, proves, as of the
date of such representation, warranty or financial statement, to have been
incorrect or misleading in any material respect or, if a financial statement, to
have omitted any substantial contingent of unliquidated liability of, or any
substantial claim against, such Debtor, Primary Obligor or Other Obligor or
there occurred, and was not disclosed to the Secured Party, before the execution
and delivery to the Secured Party of this Agreement by the undersigned any
material adverse change in any information disclosed in any such representation
or warranty heretofore so made or in any such financial statement heretofore so
provided, (vii) there occurs any loss, theft, destruction or substantial decline
in the value of, or any substantial damage to, any of the Collateral or (viii)
the Secured Party in good faith deems itself insecure with respect to any of the
Obligations or is of the opinion that the Collateral is not sufficient or has
declined or may decline in value, whether or not the Secured Party has asked any
Debtor, Primary Obligor or Other Obligor for any Other Collateral.
f. "General Intangible" has the meaning given it for purposes of Article 9
of the Uniform Commercial Code of the State of New York as in effect on the date
of this Agreement, and, with respect to any Person, includes, but is not limited
to, (i) any computer software of such Person, (ii) any Uncertificated Security
of such Person or any other security of such Person not evidenced by an
instrument, (iii) any trademark, service mark, trade style, trade name, patent,
copyright, license or franchise or such Person and (iv) goodwill of such Person.
g. "Goods" has the meaning given it for purposes of Article 9 of the
Uniform Commercial Code of the State of New York as in effect on the date of
this Agreement, and, with respect to any Person, includes, but is not limited
to, any Fixture, Equipment, Inventory or Farm Product of such Person.
h. "Inventory" has the meaning given it for purposes of Article 9 of the
Uniform Commercial Code of the State of New York as in effect on the date of
this Agreement, and, with respect to any Person, includes, but is not limited
to, any inventory of such Person that is returned, repossessed, reclaimed or
stopped in transit or is raw material or work in process.
i. "Obligations" means collectively all indebtedness, liabilities and
obligations for the payment of money, regardless of kind, of class or of form
and whether for the payment of principal or of interest or otherwise, incurred
for any business, commercial, agricultural or consumer purpose or otherwise, now
existing or hereafter arising, created directly (including, but not limited to,
all indebtedness, liabilities and obligations arising as a direct or indirect
result of any overdraft) or by any assignment or other transfer, direct or
indirect, absolute or contingent (including, but not limited to, all
indebtedness, liabilities and obligations arising as a direct or indirect result
of any guaranty, endorsement or other assurance or as a direct or indirect
result of any letter of credit), similar or dissimilar, related or unrelated,
due or not due, contractual or tortious, liquidated or unliquidated or arising
by operation of law or otherwise, that are now or hereafter owing by any Debtor
or Primary Obligor in any capacity, whether alone or otherwise, to the Secured
Party in any capacity, whether or not allowed as a claim against such Debtor or
Primary Obligor in any case or other proceeding pursuant to any Bankruptcy Law.
j. "Other Collateral" means, whether now existing or hereafter arising,
(i) any guaranty, endorsement or other assurance, any collateral or other
security, or any subordination, now or hereafter directly or indirectly securing
the payment of, or otherwise now or hereafter directly or indirectly applicable
to, any of the Obligations, except for the Collateral, (ii) any indebtedness,
liability or obligation of the Secured Party to any Debtor, Primary Obligor or
Other Obligor that is now or hereafter available for setoff by the Secured Party
against any of the Obligations (including, but not limited to, any such
indebtedness, liability or obligation arising as a direct or indirect result of
any Instrument or Deposit Account) or (iii) any asset of any Debtor, Primary
Obligor or Other Obligor that is now or hereafter subject to any banker's lien
of the Secured Party.
10
<PAGE>
k. "Other Obligor" means, other than any Debtor or Primary Obligor, any
Person (i) who or which is now or hereafter directly or indirectly liable for
the payment of any of the Obligations, whether as a maker, drawer, acceptor,
endorser, guarantor, surety or accommodation party or otherwise, (including, but
not limited to, if any Debtor or Primary Obligor is a partnership, any general
partner of such Debtor or Primary Obligor) or (ii) any asset of whom or of which
now or hereafter directly or indirectly secures the payment of any of the
Obligations.
l. "Permitted Lien" means (i) any security interest in, or any other lien
or encumbrance upon, any of the Collateral fully and accurately described in
Exhibit A attached to and made a part of this Agreement, (ii) any security
interest in, or any other lien or encumbrance upon, any of the Collateral in
favor of the Secured Party, (iii) any lease of any inventory included in the
Collateral by any Debtor as a lessor in the ordinary course of his, her or its
business and without interference with the conduct of his, her or its business
or operations, (iv) any pledge or deposit of any General Intangible, Instrument,
Deposit Account or money included in the Collateral that is made by any Debtor
in the ordinary course of his, her or its business (A) in connection with any
workers' compensation, unemployment insurance, social security or similar
statute, regulation or other law or (B) to secure the payment of any
indebtedness, liability or obligation arising in connection with any letter of
credit, bid, tender, trace or government contract, lease, statute, regulation or
other law or surety, appeal or performance bond, or of any similar indebtedness,
liability or obligation, not incurred in connection with the borrowing of any
money or in connection with the payment of the deferred purchase price of any
asset, (v) any attachment, levy or similar lien against any of the Collateral
arising in connection with any action or other legal proceeding so long as (A)
the validity of the claim or judgment secured thereby is being contested in good
faith by appropriate proceedings promptly instituted and diligently conducted,
(B) adequate reserves have been appropriately established for such claim or
judgment, (C) the execution or other enforcement of such attachment, levy or
similar lien is effectively stayed and (D) neither such claim or judgment nor
such attachment, levy or similar lien has any material adverse effect on any
Debtor or on the business, operations, assets, affairs or condition (financial
or other) of any Debtor, (vi) any statutory lien upon any of the Collateral in
favor of the United States for any amount paid to any Debtor as a progress
payment pursuant to any government contract, (vii) any statutory lien upon any
of the Collateral securing the payment of any tax, assessment, fee, charge, fine
or penalty imposed by any government or political subdivision upon any Debtor or
upon any of the assets, income and franchises of any Debtor or the payment of
any demand or claim of any materialman, mechanic, carrier, warehouseman,
garageman or landlord against any Debtor so long as such tax, assessment, fee,
charge, fine, penalty, demand or claim is not yet due or (A) the validity of
such tax, assessment, fee, charge, fine penalty, demand or claim is being
contested in good faith by appropriate proceedings promptly instituted and
diligently conducted, (B) adequate reserves have been appropriately established
for such tax, assessment, fee, charge, fine, penalty, demand or claim, (C) the
execution or other enforcement of such statutory lien is effectively stayed and
(D) neither the failure to pay such tax, assessment, fee, charge, fine, penalty,
demand or claim nor such statutory lien has any material adverse effect on any
Debtor or on the business, operations, assets, affairs or condition (financial
or other) of any Debtor or (viii) any reservation, exception, encroachment,
easement, right-of-way, covenant, condition, restriction, lease or similar title
exception or encumbrance affecting the title to any Fixture included in the
Collateral but not interfering with the conduct of the business or operations of
any Debtor.
m. "Person" means (i) any individual, corporation, partnership, joint
venture, trust, unincorporated association, government or political subdivision,
(ii) any court, agency or other governmental authority or (iii) any other
entity, body, organization or group.
n. "Primary Obligor" means (i) the Borrower or (ii) any Successor of the
Borrower.
o. "Security Interest" means any security interest granted, or any
assignment, pledge or hypothecation made, pursuant to Section 2a of this
Agreement.
p. "Successor" means, with respect to any Person, (i) if such Person is an
individual, the estate of such Person, (ii) if such Person is not an individual,
any direct or indirect successor of such Person (including, but not limited to,
(A) if such Person is a corporation, any other corporation into which such
Person is hereafter directly or indirectly merged, consolidated or otherwise
absorbed and (B) if such Person is a partnership, any other partnership
hereafter created as a direct or indirect result of the admission of any new
partner or as a direct or indirect result of the death or withdrawal of any
partner) or (iii) any other Person to whom or to which all or substantially all
of the assets or such Person are hereafter directly or indirectly assigned or
otherwise transferred.
Dated February 2, 1996 CVC Products, Inc.
------------------------------------------
By: /s/ Emilio O. DiCataldo
------------------------------------------
Emilio O. DiCataldo, Senior V.P. Finance
------------------------------------------
ACKNOWLEDGMENT
STATE OF NEW YORK )
:SS.
COUNTY OF MONROE )
On the 2 day of February in the year 1996, before me personally came EMILIO O.
-----------
DICATALDO
- --------------------------------------------------------------------------------
|_| Individual to me known and known to me to be the person(s) described in
and who executed the above instrument, and __he (they jointly
and severally) acknowledged to me that __he (they) executed
the same.
|_| Partnership to me known and known to me to be a member of the partnership
described in and which executed the above instrument, and __he
duly acknowledged to me that __he executed the above
instrument for and on behalf of said partnership.
XX Corporation to me known, who, being by me duly sworn, did depose and say
that __he resides at Rochester, New York ; that
--------------------------------
__he is the Senior V.P. Finance of CVC PRODUCTS, INC.,
------------------------- --------------------
the corporation described in and which executed the above
instrument; and that __he signed his(her) name thereto by
order of the board of directors of said corporation.
JOHN D. INZANA /s/ John D. Inzana
NOTARY PUBLIC in the State of New York ----------------------------------
MONROE COUNTY Notary Public
My Commission Expires March 9, 1997
FOR BANK USE ONLY: Authorization confirmed. /s/ [ILLEGIBLE]
------------------------------------
Exhibit A
Permitted Financing Statements and Other Evidences of Lien (Section 4x):
7 UCC-1 financing statements, shown in a UCC search against Borrower,
dated January 22, 1996 (with a January 5, 1996 "Thru Date"), provided to
Secured Party by CSC Networks.
11
<PAGE>
Permitted Transfers, Pledges and Other Actions with Respect to Uncertificated
Securities (Section 4y):
NONE
Exceptions to Representations and Warranties (Clauses (v), (vi), (vii), (viii),
(ix) and (x) of Section 9a):
NONE
Description of Real Property on Which Crop or Timber Located (Clause (xiii) of
Section 9a):
NONE
Permitted Liens (Clause (i) of Section 16l):
Collateral described in the UCC-1 financing statements referred to in
"Permitted Financing Statements" above.
QUESTIONNAIRE
1. What is the complete name of the undersigned (giving, if the undersigned is a
corporation, the name exactly as it appears in the certificate or articles of
incorporation or other charter document of the undersigned or, if the
undersigned is a partnership, the name exactly as it appears in the partnership
agreement or other organizational document of the undersigned or, if there is
none, in any assumed name certificate of the undersigned)?
CVC Products, Inc.
2. Does the undersigned do business under any name other than the name indicated
in the answer to question 1? If so, what is each such other name?
CVC Holdings, Inc.
CVC Products
3. What is the address (including county) of the residence, only place of
business of chief executive office of the undersigned?
525 Lee Road
Rochester, NY 14606
4. What is the address (including county) of each place of business of the
undersigned other than the address indicated in the answer to question 3?
47061 Warm Springs Blvd., Fremont, CA 94539
329 Oak Trail, Garland, TX 75043
3100 Laurelview Court, Fremont, CA 94539
5. What is the address of each location at which any of the Goods, Chattel
Paper, Instruments, Documents and records of the undersigned included in the
Collateral is or will be kept other than the locations the addresses of which
are indicated in the answers to questions 3 and 4?
None
6. If any of the Goods, Chattel Paper, Instruments, Documents and records of the
undersigned included in the Collateral is in the possession of any Person other
than the undersigned, what are the name and address of each such other Person?
None
7. What are the name and address of each Person other than the undersigned who
or which has any interest, whether as an owner, mortgagee or lessee or
otherwise, in any real property to which is affixed, or in or on which is
installed or located, any of the Goods of the undersigned included in the
Collateral or in or on which is located any of the Chattel Paper, Instruments,
Documents and records of the undersigned included in the Collateral?
Security Capital Mutual 47775 Fremont Blvd.
Fremont, CA 94538
Mission Falls Corp. C/O 5776 Stoneridge Mall Road (Suite 100)
Spectrum Interest, Inc. Pleasanton, CA 94588
Dated February 2, 1996 CVC Products, Inc.
------------------------------------------
By: /s/ Emilio O. DiCataldo
------------------------------------------
Emilio O. DiCataldo, Senior V.P. Finance
Fixtures are not perfected in California & Texas
- - Attorney did the UCC filings (G. Amendola of Woods Oulatt)
12
<PAGE>
[LETTERHEAD]
March 13, 1996
EILEEN SOLIMANO
WOODS OVIATT GILMAN STURMAN
& CLARKE
44 EXCHANGE ST.
ROCHESTER, NY 14614
SUBJECT: CVC PROOUCTS INC.
JURISDICTION: TX SECRETARY OF STATE
SEARCH DATE: O2/28/96
DEAR EILEEN SOLIMANO:
WE HAVE CAUSED A SEARCH TO BE MADE OF THE ABOVE JURISDICTION FOR FILINGS UNDER
THE UNIFORM COMMERCIAL CODE FILED AGAINST THE ABOVE NAMED SUBJECT. AS OF THE
CLOSE OF BUSINESS OF THIS SEARCH DATE WE FIND:
PLEASE SEE LISTING.............................
OUR INFORMATION IS AS ACCURATE AS REASONABLE CARE CAN MAKE IT. HOWEVER, THE
ULTIMATE RESPONSIBILITY FOR MAINTAINING FILES RESTS WITH THE FILING OFFICER AND
WE WILL ACCEPT NO LIABILITY BEYOND THE EXERCISE OF REASONABLE CARE.
<PAGE>
Business Name: CVC PRODUCTS INC.
Search Date: 05 MAR 1996
Certification Date : 28 FEB 1996
The Uniform Commercial Code index maintained by the Texas Secretary of State
reflects the following effective filings:
Page 1
FINANCING STATEMENT NUMBER 96-028241 File Date 02-15-96
1. DEBTOR: CVC PRODUCTS, INC., 525 LEE RD, ROCHESTER NY 14606
SECURED PARTY: MANUFACTURERS AND TRADERS TRUST COMPANY, ONE M&T PLAZA,
BUFFALO NY 14240
Total number of filings 1
<PAGE>
[LETTERHEAD]
March 5, 1996
EILEEN SOLIMANO
WOODS OVIATT GILMAN STURMAN
& CLARKE
44 EXCHANGE ST.
ROCHESTER, NY 14614
SUBJECT: CVC PROOUCTS INC.
JURISDICTION: CA SECRETARY OF STATE
SEARCH DATE: O2/16/96
DEAR EILEEN SOLIMANO:
WE HAVE CAUSED A SEARCH TO BE MADE OF THE ABOVE JURISDICTION FOR FILINGS UNDER
THE UNIFORM COMMERCIAL CODE FILED AGAINST THE ABOVE NAMED SUBJECT. AS OF THE
CLOSE OF BUSINESS OF THIS SEARCH DATE WE FIND:
PLEASE SEE LISTING.............................
OUR INFORMATION IS AS ACCURATE AS REASONABLE CARE CAN MAKE IT. HOWEVER, THE
ULTIMATE RESPONSIBILITY FOR MAINTAINING FILES RESTS WITH THE FILING OFFICER AND
WE WILL ACCEPT NO LIABILITY BEYOND THE EXERCISE OF REASONABLE CARE.
<PAGE>
Mar. 04, 1996 Page 1
The following represents a listing of the documentation you requested through a
careful search of effective UCC filings recorded in the Office of the Secretary
of State of California, purchased and maintained in computerized form and
available thru our offices. Variations of the Name and Address of the search key
may appear on this report as a result of the search findings and your individual
request for that information. These documents may include but are not limited to
Financing Statements, Tax Liens, and Judgements effective Feb. 16, 1996.
THIS DATA IS FOR INFORMATION PURPOSES ONLY. CERTIFICATION CAN ONLY BE OBTAINED
THROUGH THE OFFICE OF THE CALIFORNIA SECRETARY OF STATE.
State of California UCC Debtor Name Search results performed on the following
Search Key: CVC
1. 9604560823 filed on Feb. 13, 1996 at 1558
expires on Feb. 13, 2001
Debtor CVC PRODUCTS, INC.
525 LEE RD
ROCHESTER NY 14606
Sec. Pty. MANUFACTURERS AND TRADERS TRUST COMPANY
1 M&T PLZ
BUFFALO NY 14240
Because we cannot independently verify the accuracy of the public information
maintained by the responsible government agency, we make no guaranties,
representations, or warranties as to the accuracy or completeness of this
report. Therefore, we accept no liability for errors or omissions.
<PAGE>
REQUEST FOR COPIES OR INFORMATION. Present in DUPLICATE to Filing Officer.
- --------------------------------------------------------------------------------
1. Debtor (Last Name First) and Address:
CVC PRODUCTS, INC.
Any Street
Any City, New York
- --------------------------------------------------------------------------------
Party requesting information or copies:
(Name and Address)
WOODS, OVIATT, GILMAN,
STURMAN & CLARKE LLP
Attn: Eileen Solimano
44 Exchange Street
Rochester, Mew York 14614
- --------------------------------------------------------------------------------
For Filing Officer: Date, Time, No. Filing Office
MAR 18 96 703703
9:00 AM D.O.S.
- --------------------------------------------------------------------------------
|X| INFORMATION REQUEST |_| COPY REQUEST
Filing officer please furnish certificate showing whether there is on file as of
CURRENT, 19__ at ___________ __ M any presently effective financing statement
naming the above named debtor(s) and any statement of assignment thereof, and if
there is, giving the date and hour of filing of each such statement and the
name(s) and address(es) of each secured party(ies) therein. The statutory fee is
enclosed. Filing officer please furnish exact copies of each page of financing
statements and statements of assignment listed below, which are on file with
your office. Enclosed $_________________ fee for copies requested. In case any
of said statements contain more than one page the undersigned agrees to pay the
statutory fee for each additional page payable in advance.
Date March 7, 1996 (Signature of Requesting Party) /s/ [Illegible]
---------------------
<TABLE>
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
File No Date and Hour of Filing Name(s) and Address(es) of Secured Party(ies) and Assigness, if any
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
</TABLE>
CERTIFICATE: The undersigned filing officer hereby certifies that:
|_| the above listing is a record of all presently effective financing
statements and statements of assignment which name the above debtor(s) and
which are on file in my office as of [Illegible], 19 ____
at __________________ ___ M.
|_| the attached ___________ pages are true and exact copies of all available
financing statements or statements of assignment listed in above request.
COPY 1 MAR 12 1996 /s/ [Illegible]
------------------ ---------------------------------
Date Signature of Filing Officer
5/82 STANDARD FORM - FORM UCC-1 -- Approved by Secretary of State of New York
APPROVED FOR USE IN MOST STATES
<PAGE>
- --------------------------------------------------------------------------------
This FINANCING STATEMENT is presented to a Filing
Officer for filing pursuant to the Uniform Commercial Code.
- --------------------------------------------------------------------------------
No. of Additional
Sheets Presented:
- --------------------------------------------------------------------------------
3. |_| The Debtor is a transmitting utility.
- --------------------------------------------------------------------------------
1. Debtor(s) (Last Name First) and Address(es):
CVC PRODUCTS, INC.
525 Lee Road
Rochester, NY 14606
- --------------------------------------------------------------------------------
2. Secured Party(ies) Name(s) and Address(es)
LCA LEASING CORP.
9400 Williamsburg Plaza
Louisville, KY 40222
- --------------------------------------------------------------------------------
4. For Filing Officer: Date, Time, No. Filing Office
OCT 16 [Illegible]
- --------------------------------------------------------------------------------
5. This Financing Statement covers the following types (or items) of property:
This equipment is leased from the lessor and this filing is for
informational purpose.
One (1) New Daewoo Model Puma 12 Machining Center Equipped With
Fanuc 10TF Controls, Chip Conveyor, Tooling And All Standard
Equipment, Attachments, Accessories, Appurtenances,
Accessions And Substitutions.
|_| Products of the Collateral are also covered.
- --------------------------------------------------------------------------------
6. Assignee(s) of Secured Party and Address(es)
LCA HOLDING CORP.
10 Rockefeller Plaza
New York, NY 10020
- --------------------------------------------------------------------------------
7. |_| The described crops are growing or to be grown on:*
|_| The described goods are or are to be affixed to:*
|_| The lumber to be cut or minerals or the like
(including oil and gas) is on:*
*(Describe Real Estate Below).
- --------------------------------------------------------------------------------
8. Describe Real Estate Here: |_| This statement is to be indexed in
the Real Estate Records:
No. & Street Town or City County Section Block Lot
- --------------------------------------------------------------------------------
9. Name of a Record Owner
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
This FINANCING STATEMENT is presented to a Filing
Officer for filing pursuant to the Uniform Commercial Code.
- --------------------------------------------------------------------------------
No. of Additional
Sheets Presented:
- --------------------------------------------------------------------------------
3. |_| The Debtor is a transmitting utility.
- --------------------------------------------------------------------------------
1. Debtor(s) (Last Name First) and Address(es):
C.V.C. Products Inc
525 Lee Road
Rochester, NY 14606
88814
- --------------------------------------------------------------------------------
2. Secured Party(ies) Name(s) and Address(es)
ADVANTA Leasing Corp
PO Box 1228
Voorhees NJ 08043
- --------------------------------------------------------------------------------
4. For Filing Officer: Date, Time, No. Filing Office
[Illegible]
- --------------------------------------------------------------------------------
5. This Financing Statement covers the following types (or items) of property:
3450 Sonitrol security system
w/smoke dtectors
|_| Products of the Collateral are also covered.
- --------------------------------------------------------------------------------
6. Assignee(s) of Secured Party and Address(es)
- --------------------------------------------------------------------------------
7. |_| The described crops are growing or to be grown on:*
|_| The described goods are or are to be affixed to:*
|_| The lumber to be cut or minerals or the like
(including oil and gas) is on:*
*(Describe Real Estate Below).
- --------------------------------------------------------------------------------
8. Describe Real Estate Here: |_| This statement is to be indexed in
the Real Estate Records:
No. & Street Town or City County Section Block Lot
- --------------------------------------------------------------------------------
9. Name of Record Owner
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
This FINANCING STATEMENT is presented to a Filing
Officer for filing pursuant to the Uniform Commercial Code.
- --------------------------------------------------------------------------------
No. of Additional
Sheets Presented: 8
- --------------------------------------------------------------------------------
3. |_| The Debtor is a transmitting utility.
- --------------------------------------------------------------------------------
1. Debtor(s) (Last Name First) and Address(es):
CVC Products, Inc.
525 Lee Road
Rochester, NY 14606
- --------------------------------------------------------------------------------
2. Secured Party(ies) Name(s) and Address(es)
Storage Technology Corp.
2270 South 88th Street
Louisville, CO 80028-0001
- --------------------------------------------------------------------------------
4. For Filing Officer: Date, Time, No. Filing Office
JUN 694115717
9:00 AM D.O.S.
- --------------------------------------------------------------------------------
5. This Financing Statement covers the following types (or items) of property:
This financing statement is not intended to evidence a security interest, but
rather is being filed to give notice that CVC Products, Inc. is holding the
described property as a consignee, bailee or agent for Storage Technology
Corporation.
See Annex A
|_| Products of the Collateral are also covered.
- --------------------------------------------------------------------------------
6. Assignee(s) of Secured Party and Address(es)
- --------------------------------------------------------------------------------
7. |_| The described crops are growing or to be grown on:*
|_| The described goods are or are to be affixed to:*
|_| The lumber to be cut or minerals or the like
(including oil and gas) is on:*
*(Describe Real Estate Below).
- --------------------------------------------------------------------------------
8. Describe Real Estate Here: |_| This statement is to be indexed in
the Real Estate Records:
No. & Street Town or City County Section Block Lot
- --------------------------------------------------------------------------------
9. Name of Record Owner
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
This FINANCING STATEMENT is presented to a Filing
Officer for filing pursuant to the Uniform Commercial Code.
- --------------------------------------------------------------------------------
No. of Additional
Sheets Presented:
- --------------------------------------------------------------------------------
3. |_| The Debtor is a transmitting utility.
- --------------------------------------------------------------------------------
1. Debtor(s) (Last Name First) and Address(es):
CVC PRODUCTS, INC.
525 Lee Road
Rochester, NY 14606
- --------------------------------------------------------------------------------
2. Secured Party(ies) Name(s) and Address(es)
MANUFACTURERS HANOVER TRUST
COMPANY
183 East Maine Street
Rochester, New York 14604
- --------------------------------------------------------------------------------
4. For Filing Officer: Date, Time, No. Filing Office
NOV 7 [Illegible stamp]
- --------------------------------------------------------------------------------
5. This Financing Statement covers the following types (or items) of property:
North American 7-1/2 ton crane with Detroit 7-1/2 ton hoist including cross
rails, together with all attachments, accessories, accessions, and equipment
now or hereafter affixed to such collateral as used in connection therewith
and substitutions and replacements thereof.
|_| Products of the Collateral are also covered.
- --------------------------------------------------------------------------------
6. Assignee(s) of Secured Party and Address(es)
- --------------------------------------------------------------------------------
7. |_| The described crops are growing or to be grown on:*
|_| The described goods are or are to be affixed to:*
|_| The lumber to be cut or minerals or the like
(including oil and gas) is on:*
*(Describe Real Estate Below).
- --------------------------------------------------------------------------------
8. Describe Real Estate Here: |_| This statement is to be indexed in
the Real Estate Records:
No. & Street Town or City County Section Block Lot
- --------------------------------------------------------------------------------
9. Name of Record Owner
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
This FINANCING STATEMENT is presented to a Filing
Officer for filing pursuant to the Uniform Commercial Code.
- --------------------------------------------------------------------------------
No. of Additional
Sheets Presented:
- --------------------------------------------------------------------------------
3. |_| The Debtor is a transmitting utility.
- --------------------------------------------------------------------------------
1. Debtor(s) (Last Name First) and Address(es):
CVC PRODUCTS, INC.
525 Lee Road
Rochester, NY 14606
16-1017191
- --------------------------------------------------------------------------------
2. Secured Party(ies) Name(s) and Address(es)
GE Capital
64A Perimeter Center East
Atlanta, GA 30346
[Illegible number]
- --------------------------------------------------------------------------------
4. For Filing Officer: Date, Time, No. Filing Office
JUL 1 891152987
- --------------------------------------------------------------------------------
5. This Financing Statement covers the following types (or items) of property:
IDS 108 with VX 2 Voice Mail
System [Illegible]
|_| Products of the Collateral are also covered.
- --------------------------------------------------------------------------------
6. Assignee(s) of Secured Party and Address(es)
[Illegible]
- --------------------------------------------------------------------------------
7. |_| The described crops are growing or to be grown on:*
|_| The described goods are or are to be affixed to:*
|_| The lumber to be cut or minerals or the like
(including oil and gas) is on:*
*(Describe Real Estate Below).
- --------------------------------------------------------------------------------
8. Describe Real Estate Here: |_| This statement is to be indexed in
the Real Estate Records:
No. & Street Town or City County Section Block Lot
- --------------------------------------------------------------------------------
9. Name of Record Owner
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
This FINANCING STATEMENT is presented to a Filing
Officer for filing pursuant to the Uniform Commercial Code.
- --------------------------------------------------------------------------------
No. of Additional
Sheets Presented: 1
- --------------------------------------------------------------------------------
3. |_| The Debtor is a transmitting utility.
- --------------------------------------------------------------------------------
1. Debtor(s) (Last Name First) and Address(es):
CVC PRODUCTS, INC.
525 LEE ROAD
PO BOX 1886
ROCHESTER, NY 14606
42-4101-06988
- --------------------------------------------------------------------------------
2. Secured Party(ies) Name(s) and Address(es)
MACHINE TOOL FINANCE CORPORATION
1200 ROUTE 22, P.O. BOX 6857
BRIDGEWATER, NJ 08807
STATE
- --------------------------------------------------------------------------------
4. For Filing Officer: Date, Time, No. Filing Office
[Illegible]
- --------------------------------------------------------------------------------
5. This Financing Statement covers the following types (or items) of property:
SEE SCHEDULE A ATTACHED HERETO AND MADE A PART HEREOF.
THE RELATIONSHIP BETWEEN THE PARTIES HERETO IS ONE OF
LESSEE AND LESSOR.
|_| Products of the Collateral are also covered.
- --------------------------------------------------------------------------------
6. Assignee(s) of Secured Party and Address(es)
- --------------------------------------------------------------------------------
7. |_| The described crops are growing or to be grown on:*
|_| The described goods are or are to be affixed to:*
|_| The lumber to be cut or minerals or the like
(including oil and gas) is on:*
*(Describe Real Estate Below).
- --------------------------------------------------------------------------------
8. Describe Real Estate Here: |_| This statement is to be indexed in
the Real Estate Records:
No. & Street Town or City County Section Block Lot
- --------------------------------------------------------------------------------
9. Name of Record Owner
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
This FINANCING STATEMENT is presented to a Filing
Officer for filing pursuant to the Uniform Commercial Code.
- --------------------------------------------------------------------------------
No. of Additional
Sheets Presented: 3
- --------------------------------------------------------------------------------
3. Maturity Date (optional):
- --------------------------------------------------------------------------------
1. Debtor(s) (Last Name First) and Address(es):
CVC Products, Inc.
(See Exhibit C attached)
1775 MT READ BLVD
ROCHESTER, NY
- --------------------------------------------------------------------------------
2. Secured Party(ies) Name(s) and Address(es)
Manufacturers Hanover Trust Company/Genesee Region
(See Exhibit C attached)
183 MAIN ST. E. ROCHETER, NY
- --------------------------------------------------------------------------------
4. For Filing Officer: Date, Time, No. Filing Office
9-16-74 236575
[Illegible Stamp]
- --------------------------------------------------------------------------------
5. This Financing Statement covers the following types (or items) of property:
A. Personal Property (See Exhibit B attached)
B. Payments (See Exhibit C attached)
|_| Proceeds -- |_| Products of the Collateral are also covered.
- --------------------------------------------------------------------------------
6. Assignee(s) of Secured Party and Address(es)
9-16-74 236575
- --------------------------------------------------------------------------------
7. |_| The described crops are growing or to be grown on:*
|_| The described goods are or are to be affixed to:*
*(Describe Real Estate Below).
- --------------------------------------------------------------------------------
8. Describe Real Estate Here:
See Exhibit A attached
No. & Street Town or City County Section Block Lot
- --------------------------------------------------------------------------------
9. Name(s) of Record Owner(s):
County of Monroe Industrial Development Agency
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
This STATEMENT is presented to a filing officer for
filing pursuant to the Uniform Commercial Code.
- --------------------------------------------------------------------------------
No. of additional
Sheets Presented:
- --------------------------------------------------------------------------------
3. |_| The Debtor is a transmitting utility.
- --------------------------------------------------------------------------------
1. Debtor(s) (Last Name First) and Address(es):
CVC Products, Inc.
525 Lee Road
Rochester, New York
- --------------------------------------------------------------------------------
2. Secured Party(ies) Name(s) and Address(es):
Manufacturers Hanover Trust
Company now know as:
Chemical Bank
183 East Main Street
Rochester, NY 14604 1013
- --------------------------------------------------------------------------------
4. For Filing Officer: Date, Time, No. Filing Office
[Illegible stamp]
================================================================================
5. This statement refers to original Financing Statement No. 421827 filed
(date) 11/7/88 with NYS.
- --------------------------------------------------------------------------------
6. |_| A. Continuation The original Financing Statement bearing the above file
number is still effective.
|_| B. Termination The Secured Party of record no longer claims a security
interest under the Financing Statement bearing the
above file number.
|_| C. Release From the Collateral described in the Financing
Statement bearing the above file number, the Secured
Party of record releases the following:
|X| D. Assignment The Secured Party of record has assigned the Secured
Party's rights in the property described below under
the Financing Statement bearing the above file number
to the Assignee whose name and address are shown below:
|_| E. Amendment The Financing Statement bearing the above file number
is amended as set forth below: (Signature of Debtor and
Secured Party is Required)
Assign to: Chemical Bank
200 Jericho Quadrangle
Jericho, NY 11753
|_| This statement is to be indexed
in the Real Estate Records Section Block Lot
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
This STATEMENT is presented to a filing officer for
filing pursuant to the Uniform Commercial Code.
- --------------------------------------------------------------------------------
No. of additional
Sheets Presented:
- --------------------------------------------------------------------------------
3. |_| The Debtor is a transmitting utility.
- --------------------------------------------------------------------------------
1. Debtor(s) (Last Name First) and Address(es):
CVC Products, Inc.
525 Lee Road
Rochester, New York
- --------------------------------------------------------------------------------
2. Secured Party(ies) Name(s) and Address(es):
Manufacturers Hanover Trust
Company now know as:
Chemical Bank
183 East Main Street
Rochester, NY 14604
- --------------------------------------------------------------------------------
4. For Filing Officer: Date, Time, No. Filing Office
JUN 393119210
================================================================================
5. This statement refers to original Financing Statement No. 421827 filed
(date) Nov. 7, 1988 with New York State.
- --------------------------------------------------------------------------------
6. |X| A. Continuation The original Financing Statement bearing the above file
number is still effective.
|_| B. Termination The Secured Party of record no longer claims a security
interest under the Financing Statement bearing the
above file number.
|_| C. Release From the Collateral described in the Financing
Statement bearing the above file number, the Secured
Party of record releases the following:
|_| D. Assignment The Secured Party of record has assigned the Secured
Party's rights in the property described below under
the Financing Statement bearing the above file number
to the Assignee whose name and address are shown below:
|_| E. Amendment The Financing Statement bearing the above file number
is amended as set forth below: (Signature of Debtor and
Secured Party is Required)
|_| This statement is to be indexed
in the Real Estate Records Section Block Lot
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
This STATEMENT is presented to a filing officer for
filing pursuant to the Uniform Commercial Code.
- --------------------------------------------------------------------------------
No. of additional
Sheets Presented:
- --------------------------------------------------------------------------------
3. |_| The Debtor is a transmitting utility.
- --------------------------------------------------------------------------------
1. Debtor(s) (Last Name First) and Address(es):
CVC Products, Inc.
1775 Mt. Read Blvd.
Rochester, New York
- --------------------------------------------------------------------------------
2. Secured Party(ies) Name(s) and Address(es)
Manufacturers Hanover Trust
Company/Genesee Region
183 East Main Street
Rochester, NY 14604
- --------------------------------------------------------------------------------
4. For Filing Officer: Date, Time, No. Filing Office
MAY 31
================================================================================
5. This statement refers to original Financing Statement No. 236,575 filed
(date) Sept. 16, 1974 with NEW YORK STATE
- --------------------------------------------------------------------------------
6. |X| A. Continuation The original Financing Statement bearing the above file
number is still effective.
|_| B. Termination The Secured Party of record no longer claims a security
interest under the Financing Statement bearing the
above file number.
|_| C. Release From the Collateral described in the Financing
Statement bearing the above file number, the Secured
Party of record releases the following:
|_| D. Assignment The Secured Party of record has assigned the Secured
Party's rights on the property described below under
the Financing Statement bearing the above file number
to the Assignee whose name and address are shown below:
|_| E. Amendment The Financing Statement bearing the above file number
is amended as set forth below: (Signature of Debtor and
Secured Party is Required)
|_| This statement is to be indexed
in the Real Estate Records Section Block Lot
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
This STATEMENT is presented to a filing officer for
filing pursuant to the Uniform Commercial Code.
- --------------------------------------------------------------------------------
No. of additional
Sheets Presented:
- --------------------------------------------------------------------------------
3. |_| The Debtor is a transmitting utility.
- --------------------------------------------------------------------------------
1. Debtor(s) (Last Name First) and Address(es):
CVC Products, Inc.
1775 Mt. Read Blvd.
Rochester, New York
- --------------------------------------------------------------------------------
2. Secured Party(ies) Name(s) and Address(es)
Manufacturers Hanover Trust
Company/Genesee Region
183 East Main Street
Rochester, NY 14604
- --------------------------------------------------------------------------------
4. For Filing Officer: Date, Time, No. Filing Office
7-7-84 3.00 9:00 AM
JUN 7 84 NYS 128,420
================================================================================
5. This statement refers to original Financing Statement No. 236.575 filed
(date) Sept. 16, 1974 with New York State
- --------------------------------------------------------------------------------
6. |X| A. Continuation The original Financing Statement bearing the above file
number is still effective.
|_| B. Termination The Secured Party of record no longer claims a security
interest under the Financing Statement bearing the
above file number.
|_| C. Release From the Collateral described in the Financing
Statement bearing the above file number, the Secured
Party of record releases the following:
|_| D. Assignment The Secured Party of record has assigned the Secured
Party's rights in the property described below under
the Financing Statement bearing the above file number
to the Assignee whose name and address are shown below:
|_| E. Amendment The Financing Statement bearing the above file number
is amended as set forth below. (Signature of Debtor and
Secured Party is Required)
|_| This statement is to be indexed
in the Real Estate Records Section Block Lot
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
This STATEMENT is presented to a filing officer for
filing pursuant to the Uniform Commercial Code.
- --------------------------------------------------------------------------------
No. of additional
Sheets Presented: 2
- --------------------------------------------------------------------------------
3. |_| The Debtor is a transmitting utility.
- --------------------------------------------------------------------------------
1. Debtor(s) (Last Name First) and Address(es):
CVC Products, Inc.
1775 Mt. Read Blvd.
Rochester, New York
- --------------------------------------------------------------------------------
2. Secured Party(ies) Name(s) and Address(es)
Manufacturers Hanover Trust
Company/Genesee Region
183 East Main Street
Rochester, NY 14604
- --------------------------------------------------------------------------------
4. For Filing Officer: Date, Time, No. Filing Office
3.00 9:00 AM
AUG 13 79NYS 114.279
- --------------------------------------------------------------------------------
5. This statement refers to original Financing Statement No. 236.575 filed
(date) 9/16/74 with Secretary of State
- --------------------------------------------------------------------------------
6. |X| A. Continuation The original Financing Statement bearing the above file
number is still effective.
|_| B. Termination The Secured Party of record no longer claims a security
interest under the Financing Statement bearing the
above file number.
|_| C. Release From the Collateral described in the Financing
Statement bearing the above file number, the Secured
Party of record releases the following:
|_| D. Assignment The Secured Party of record has assigned the Secured
Party's rights in the property described below under
the Financing Statement bearing the above file number
to the Assignee whose name and address are shown below:
|_| E. Amendment The Financing Statement bearing the above file number
is amended as set forth below: (Signature of Debtor and
Secured Party is Required)
|_| This statement is to be indexed
in the Real Estate Records Section Block Lot
- --------------------------------------------------------------------------------
<PAGE>
FINANCING STATEMENT UCC-1 PAGES: 2
- --------------------------------------------------------------------------------
DEBTOR CVC PRODUCTS, INC. FILING DATA
525 LEE ROAD FEB 09 1996
ROCHESTER NY 14606-0000 028550
SEC MANUFACTURERS AND TRADERS TRUST COMPANY
PARTY ONE M&T PLAZA
BUFFALO NY 14240-0000
ASSIGN
- --------------------------------------------------------------------------------
This STATEMENT is presented to a filing officer for
filing pursuant to the Uniform Commercial Code.
- --------------------------------------------------------------------------------
No. of additional
Sheets Presented:
- --------------------------------------------------------------------------------
3. |_| The Debtor is a transmitting utility.
- --------------------------------------------------------------------------------
1. Debtor(s) (Last Name First) and Address(es):
CVC Products, Inc.
1775 Mt. Read Blvd.
Rochester, New York
- --------------------------------------------------------------------------------
2. Secured Party(ies) Name(s) and Address(es)
Manufacturers Hanover Trust
Company Now Known As:
Chemical Bank
183 East Main Street
Rochester, NY 14604
- --------------------------------------------------------------------------------
4. For Filing Officer: Date, Time, No. Filing Office
[Illegible stamp]
================================================================================
5. This statement refers to original Financing Statement No. 236,575 filed
(date) 9/16/74 with New York State.
- --------------------------------------------------------------------------------
6. |_| A. Continuation The original Financing Statement bearing the above file
number is still effective.
|_| B. Termination The Secured Party of record no longer claims a security
interest under the Financing Statement bearing the
above file number.
|_| C. Release From the Collateral described in the Financing
Statement bearing the above file number, the Secured
Party of record releases the following:
|X| D. Assignment The Secured Party of record has assigned the Secured
Party's rights in the property described below under
the Financing Statement bearing the above file number
to the Assignee whose name and address are shown below:
|_| E. Amendment The Financing Statement bearing the above file number
is amended as set forth below: (Signature of Debtor and
Secured Party is Required)
ASSIGN TO: CHEMICAL BANK
200 JERICHO QUADRANGLE
JERICHO, NY 11753 cc1013
|_| This statement is to be indexed
in the Real Estate Records Section Block Lot
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
This STATEMENT is presented to a filing officer for
filing pursuant to the Uniform Commercial Code.
- --------------------------------------------------------------------------------
No. of addititional
Sheets Presented:
- --------------------------------------------------------------------------------
3. |_| The Debtor is a transmitting utility.
- --------------------------------------------------------------------------------
1. Debtor(s) (Last Name First) and Address(es):
CVC Products, Inc.
1775 Mt. Read Blvd.
Rochester, New York
- --------------------------------------------------------------------------------
2. Secured Party(ies) Name(s) and Address(es)
Manufacturers Hanover Trust
Company/Genesee Region
now known as: Chemical Bank
183 East Main Street
Rochester, NY 14604
- --------------------------------------------------------------------------------
4. For Filing Officer: Date, Time, No. Filing Office
JUN 30 94 134411
9:00 AM D.O.S.
================================================================================
5. This statement refers to original Financing Statement No. 236,575 filed
(date) Sept. 16, 1974 with NEW YORK STATE.
- --------------------------------------------------------------------------------
6. |X| A. Continuation The original Financing Statement bearing the above file
number is still effective.
|_| B. Termination The Secured Party of record no longer claims a security
interest under the Financing Statement bearing the
above file number.
|_| C. Release From the Collateral described in the Financing
Statement bearing the above file number, the Secured
Party of record releases the following:
|_| D. Assignment The Secured Party of record has assigned the Secured
Party's rights in the property described below under
the Financing Statement bearing the above file number
to the Assignee whose name and address are shown below:
|_| E. Amendment The Financing Statement bearing the above file number
is amended as set forth below: (Signature of Debtor and
Secured Party is Required)
|_| This statement is to be indexed
in the Real Estate Records Section Block Lot
- --------------------------------------------------------------------------------
<PAGE>
CERTIFICATE
MONROE TITLE INSURANCE CORPORATION (the "Corporation"), a New York
Corporation, for a valuable consideration to it paid, guarantees, that the
Corporation has caused a search of the following indicies and records in the
Monroe County Clerk's Office:
FINANCING STATEMENTS from 1/26/96.
against the following name(s):
CVC PRODUCTS
and found the matters set forth at Set Outs 1 to 12 herein, and nothing more.
IN WITNESS WHEREOF, the Corporation has caused this Certificate to be signed by
its Authorized Officer this 7th day of February, 1996 at 2:42 o'clock P.M.
MONROE TITLE INSURANCE CORPORATION
By /s/ [Illegible]
---------------------------
Authorized Officer
Order number: 334745 Special Serv. Certificate number: 9499
<PAGE>
CERTIFICATE
MONROE TITLE INSURANCE CORPORATION (the "Corporation"), a New York
Corporation, for a valuable consideration to it paid, guarantees, that the
Corporation has caused a search of the following indicies and records in the
Monroe County Clerk's Office:
FINANCING STATEMENTS for the past 5 years
against the following name(s):
CVC PRODUCTS
and found the matters set forth at Set Outs 1 to 10 herein, and nothing more.
IN WITNESS WHEREOF, the Corporation has caused this Certificate to be signed by
its Authorized Officer this 26th day of January, 1996 at 7:59 o'clock A.M.
MONROE TITLE INSURANCE CORPORATION
By /s/ [Illegible]
---------------------------
Authorized Officer
Order number: 334745 Special Serv. Certificate number: 9499
<PAGE>
- --------------------------------------------------------------------------------
1. FINANCING STATEMENT
CVC PRODUCTS INC
525 LEE ROAD;ROCHESTER NY
to
MANUFACTURERS HANOVER TRUST CO
183 EAST MAIN STREET;ROCHESTER NY 14604
Record Date: 9-17-74 Time: 13:55:00
Instrument location: Case# U74/019113
Comments:
Collateral: Personal Property, Payments, Etc.
8/10/79 - Continued.
6/5/84 - Continued.
7/17/84 - Release.
5/24/89 - Continued.
7/13/94 - Continued.
9/22/94 - Assigned.
- --------------------------------------------------------------------------------
2. FINANCING STATEMENT
CVC PRODUCTS INC
525 LEE ROAD;ROCHESTER NY
to
MANUFACTURERS HANOVER TRUST CO
183 EAST MAIN STREET;ROCHESTER NY 14604
Record Date: 10-3-88 Time: 11:40:00
Instrument location: Case# U88/008783
Comments:
Collateral: 7 1/2 Ton Crane.
5/28/93 - Continued.
3/10/94 - Assigned.
- --------------------------------------------------------------------------------
3. FINANCING STATEMENT
CVC PRODUCTS INC
525 LEE ROAD;ROCHESTER NY 14606
to
GE CAPITAL
64A PERIMETER CENTER EAST;ATLANTA GA 30346
Record Date: 7-25-91 Time: 10:59:01
Instrument location: Case# U91/005175
Comments:
Collateral: IDS 108 with VX 2 Voice Mail System.
2/5/93 - Assigned.
- --------------------------------------------------------------------------------
4. FINANCING STATEMENT
CVC PRODUCTS INC
525 LEE ROAD;PO BOX 1886;ROCHESTER NY 14606
(continued)
<PAGE>
# 4 (continued)
to
MACHINE TOOL FINANCE CORPORATION
1200 ROUTE 22;PO BOX 6865;BRIDGEWATER NJ 0880
Record Date: 8-26-91 Time: 16:35:00
Instrument location: Case# U91/006164
Comments:
Collateral: Equipment.
- --------------------------------------------------------------------------------
5. FINANCING STATEMENT
CVC PRODUCTS INC
525 LEE ROAD;ROCHESTER NY 14606
to
LCA HOLDING CORP
10 ROCKEFELLER PLAZA; NY NY 10020
Record Date: 10-2-91 Time: 13:04:05
Instrument location: Case# U91/007173
Comments:
Collateral: Equipment New Daewoo Model Puma.
- --------------------------------------------------------------------------------
6. FINANCING STATEMENT
CVC PRODUCTS INC
525 LEE ROAD;ROCHESTER NY 14603
to
TEMESCAL
AIRCO COATING TECHNOLOGY;PO BOX 2529;FAIRFIEL
Record Date: 11-23-92 Time: 15:49:00
Instrument location: Case# U92/006970
Comments:
Collateral: Guns.
- --------------------------------------------------------------------------------
7. FINANCING STATEMENT
CVC PRODUCTS INC
525 LEE ROAD;ROCHESTER NY 14603
to
ADVANTA LEASING CORP
PO BOX 1228;VOORHEES NY 08043
Record Date: 6-10-93 Time: 10:06:00
Instrument location: Case# U93/003747
Comments:
Collateral: Security System & Smoke Detectors.
- --------------------------------------------------------------------------------
8. FINANCING STATEMENT
CVC PRODUCTS INCORPORATED
525 LEE ROAD;ROCHESTER NY 14603
(continued)
<PAGE>
# 8 (continued)
to
STORAGE TECHNOLOGY CORPORATION
2270 SOUTH 88TH STREET;LOUISVILLE CO 80028-00
Record Date: 6-3-94 Time: 16:01:00
Instrument location: Case# U94/004250
Comments:
Collateral: Security Interest etc.
- --------------------------------------------------------------------------------
9. FINANCING STATEMENT
CVC PRODUCTS INCORPORATED
525 LEE ROAD;ROCHESTER NY 14603
to
STORAGE TECHNOLOGY CORPORATION
2270 SOUTH 88TH STREET;LOUISVILLE CO 80028-00
Record Date: 9-12-94 Time: 16:01:00
Instrument location: Case# U94/006798
Comments:
Collateral: Equipment.
- --------------------------------------------------------------------------------
10. FINANCING STATEMENT
CVC PRODUCTS INCORPORATED
525 LEE ROAD;ROCHESTER NY 14603
to
BREED TECHNOLOGIES INCORPORATE
53 OLD TAMPA HIGHWAY;PO BOX 33050;LAKELAND
Record Date: 11-2-95 Time: 14:53:00
Instrument location: Case# U95/007847
Comments:
Collateral: Equipment.
- --------------------------------------------------------------------------------
11. FINANCING STATEMENT
CVC PRODUCTS, INC.
525 LEE ROAD, ROCHESTER, NY 14606
to
MANUFACTURERS AND TRADERS TRUST COMPANY
ONE M&T PLAZA, BUFFALO, NY 14240
Record Date: 2-7-96 Time: 2:42
Instrument location: Case# U96/1031
Comments:
Collateral: Equipment, inventory, etc.
- --------------------------------------------------------------------------------
12. FINANCING STATEMENT
CVC PRODUCTS, INC.
525 LEE RD., ROCHESTER, NY 14606
(continued)
<PAGE>
# 12 (continued)
to
MANUFACTURERS AND TRADERS TRUST COMPANY
ONE M&T PLAZA, BUFFALO, NY 14240
Record Date: 2-7-96 Time: 2:42
Instrument location: Case# U96/1028
Property address: 525 LEE ROAD, ROCHESTER
Comments:
Collateral: Fixtures.
****************************** END OF PAGE *********************************
<PAGE>
This FINANCING STATEMENT is presented to a Filing
Officer for filing pursuant to the Uniform Commercial Code.
- --------------------------------------------------------------------------------
No. of additional Sheets Presented:
- --------------------------------------------------------------------------------
Maturity Date
3. (optional)
- --------------------------------------------------------------------------------
1. Debtor(s) (Last Name First) and Address(es):
CVC Products, Inc.
(See Exhibit C attached)
- --------------------------------------------------------------------------------
2. Secured Party(ies) Name(s) and Address(es)
Manufacturers Hanover
Trust Company/Genesee
Region
(See Exhibit C attached)
- --------------------------------------------------------------------------------
4. For Filing Officer: Date, Time, No. Filing Office
74-19113
- --------------------------------------------------------------------------------
5. This Financing Statement covers the following types (or items) of property:
A. Personal Property (See Exhibit B attached)
B. Payments (See Exhibit C attached)
|_| Proceeds -- |_| Products of the Collateral are also covered.
- --------------------------------------------------------------------------------
6. Assignee(s) of Secured Party and Address(es)
- --------------------------------------------------------------------------------
7. |_| The described crops are growing or to be grown on:*
|X| The described goods are or are to be affixed to:*
* (Describe Real Estate Below).
- --------------------------------------------------------------------------------
8. Describe Real Estate Here:
See Exhibit A attached
No. & Street Town or City County Section Block Lot
- --------------------------------------------------------------------------------
9. Name(s) of Record Owner(s)
County of Monroe Industrial
Development Agency
- --------------------------------------------------------------------------------
10. This statement is filed without the debtor's signature to perfect a security
interest in collateral (check appropriate box)
|_| under a security agreement signed by debtor authorizing secured party to
file this statement, or
|_| already subject to a security interest in another jurisdiction when it
was brought into this state, or
|_| which is proceeds of the original collateral described above in which a
security interest was perfected.
Manufacturers Hanover Trust
CVC Products, Inc. Company/Genesee Region
- ------------------------------------- ---------------------------------------
By /s/ [Illegible] By /s/ [Illegible]
---------------------------------- ------------------------------------
Signature(s) of Debtor(s) Signature(s) of Secured Party(ies)
(1) Filing Officer Copy-Numerical
9/65 STANDARD FORM NEW YORK STATE FORM UCC-1 - Approved by John P. [Illegible],
Secretary of State of New York
<PAGE>
This STATEMENT is presented to a filing officer for
filing pursuant to the Uniform Commercial Code.
- --------------------------------------------------------------------------------
No. of additional
Sheets Presented:
- --------------------------------------------------------------------------------
3. |_| The Debtor is a transmitting utility.
- --------------------------------------------------------------------------------
1. Debtor(s) (Last Name First) and Address(es):
CVC Products, Inc.
1775 Mt. Read Blvd.
Rochester, New York
- --------------------------------------------------------------------------------
2. Secured Party(ies) Name(s) and Address(es)
Manufacturers Hanover Trust
Company/Genesee Region
183 East Main Street
Rochester, New York
- --------------------------------------------------------------------------------
4. For Filing Officer: Date, Time, No. Filing Office
MONROE COUNTY
CLERK'S OFFICE [stamp]
7419113
'84 JUN 5 PM 2 21
================================================================================
5. This statement refers to original Financing Statement No. 74-19113 filed
(date) Sept. 17, 1974 with Monroe County.
- --------------------------------------------------------------------------------
6. |X| A. Continuation The original Financing Statement bearing the above file
number is still effective.
|_| B. Termination The Secured Party of record no longer claims a security
interest under the Financing Statement bearing the
above file number.
|_| C. Release From the Collateral described in the Financing
Statement bearing the above file number, the Secured
Party of record releases the following:
|_| D. Assignment The Secured Party of record has assigned the Secured
Party's rights in the property described below under
the Financing Statement bearing the above file number
to the Assignee whose name and address are shown below:
|_| E. Amendment The Financing Statement bearing the above file number
is amended as set forth below: (Signature of Debtor and
Secured Party is Required)
|_| This statement is to be indexed
in the Real Estate Records Section Block Lot
- --------------------------------------------------------------------------------
Manufacturers Hanover, N.A.
(as successor to)
Manufacturers Hanover Trust Company/
CVC Products, Inc. Genesee Region
- ------------------------------------- ---------------------------------------
By By /s/ [Illegible]
---------------------------------- ------------------------------------
Signature(s) of Debtor(s) Signature(s) of Secured Party(ies)
(only on amendment)
(1) Filing Officer Copy-Numerical
(5/82) STANDARD FORM - FORM UCC-3 -- Approved by the Secretary of State of
New York, Pennsylvania & Texas
<PAGE>
This STATEMENT is presented to a filing officer for
filing pursuant to the Uniform Commercial Code.
- --------------------------------------------------------------------------------
No. of additional
Sheets Presented:
- --------------------------------------------------------------------------------
3. |_| The Debtor is a transmitting utility.
- --------------------------------------------------------------------------------
1. Debtor(s) (Last Name First) and Address(es):
CVC PRODUCTS, INC.
525 Lee Road
Rochester, New York
- --------------------------------------------------------------------------------
2. Secured Party(ies) Name(s) and Address(es)
MANUFACTURERS HANOVER TRUST
COMPANY/GENESEE REGION
183 East Main Street
Rochester, New York 14604
- --------------------------------------------------------------------------------
4. For Filing Officer: Date, Time, No. Filing Office
MONROE COUNTY
CLERK'S OFFICE [stamp]
74-19113
[Illegible]
================================================================================
5. This statement refers to original Financing Statement No. 74-19113 filed
(date) 9/17/74 with County of Monroe.
- --------------------------------------------------------------------------------
6. |_| A. Continuation The original Financing Statement bearing the above file
number is still effective.
|_| B. Termination The Secured Party of record no longer claims a security
interest under the Financing Statement bearing the
above file number.
|x| C. Release From the Collateral described in the Financing
Statement bearing the above file number, the Secured
Party of record releases the following: All that tract
or parcel of land set forth on Exhibit A attached
hereto.
|_| D. Assignment The Secured Party of record has assigned the Secured
Party's rights in the property described below under
the Financing Statement bearing the above file number
to the Assignee whose name and address are shown below:
|_| E. Amendment The Financing Statement bearing the above file number
is amended as set forth below: (Signature of Debtor and
Secured Party is Required)
|x| This statement is to be indexed in the Real Estate Records
Liber 4723 of Deeds, page 90, County of Monroe
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Manufacturers Hanover, N.A.
as successor in interest to
Manufacturers Hanover Trust
Company/Genesee Region
- ------------------------------------- ---------------------------------------
By By /s/ [Illegible]
---------------------------------- ------------------------------------
Signature(s) of Debtor(s) Signature(s) of Secured Party(ies)
(only on amendment)
(1) Filing Officer Copy-Numerical
(5/82) STANDARD FORM - FORM UCC-3 -- Approved by the Secretary of State of
New York, Pennsylvania & Texas
<PAGE>
This STATEMENT is presented to a filing officer for
filing pursuant to the Uniform Commercial Code.
- --------------------------------------------------------------------------------
No. of additional
Sheets Presented:
- --------------------------------------------------------------------------------
3. |_| The Debtor is a transmitting utility.
- --------------------------------------------------------------------------------
1. Debtor(s) (Last Name First) and Address(es):
CVC Products, Inc.
1775 Mt. Read Blvd.
Rochester, New York
- --------------------------------------------------------------------------------
2. Secured Party(ies) Name(s) and Address(es)
Manufacturers Hanover Trust
Company/Genesee Region
183 East Main Street
Rochester, New York 14604
- --------------------------------------------------------------------------------
4. For Filing Officer: Date, Time, No. Filing Office
MONROE COUNTY
CLERK'S OFFICE
NO.
[Illegible]
================================================================================
5. This statement refers to original Financing Statement No. 74-19113 filed
(date) Sept. 17, 1974 with MONROE COUNTY.
- --------------------------------------------------------------------------------
6. |X| A. Continuation The original Financing Statement bearing the above file
number is still effective.
|_| B. Termination The Secured Party of record no longer claims a security
interest under the Financing Statement bearing the
above file number.
|_| C. Release From the Collateral described in the Financing
Statement bearing the above file number, the Secured
Party of record releases the following:
|_| D. Assignment The Secured Party of record has assigned the Secured
Party's rights in the property described below under
the Financing Statement bearing the above file number
to the Assignee whose name and address are shown below:
|_| E. Amendment The Financing Statement bearing the above file number
is amended as set forth below: (Signature of Debtor and
Secured Party is Required)
|_| This statement is to be indexed
in the Real Estate Records Section Block Lot
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Manufacturers Hanover, N.A.
(as successor to)
Manufacturers Hanover Trust Company/
CVC Products, Inc. Genesee Region
- ------------------------------------- ---------------------------------------
By By /s/ [Illegible]
---------------------------------- ------------------------------------
Signature(s) of Debtor(s) Signature(s) of Secured Party(ies)
(only on amendment)
(1) Filing Officer Copy-Numerical
(5/82) STANDARD FORM - FORM UCC-3 -- Approved by the Secretary of State of
New York, Pennsylvania & Texas
<PAGE>
This STATEMENT is presented to a filing officer for
filing pursuant to the Uniform Commercial Code.
- --------------------------------------------------------------------------------
No. of additional
Sheets Presented: 2
- --------------------------------------------------------------------------------
3. |_| The debtor is a transmitting utility.
- --------------------------------------------------------------------------------
1. Debtor(s) (Last Name First) and Address(es):
CVC Products, Inc.
1775 Mt. Read Blvd.
Rochester, New York
- --------------------------------------------------------------------------------
2. Secured Party(ies) Name(s) and Address(es)
Manufacturers Hanover
Trust Company/Genesee
Region
183 E. Main Street
Rochester, New York 14604
- --------------------------------------------------------------------------------
4. For Filing Officer: Date, Time, No. Filing Office
MONROE COUNTY
CLERK'S OFFICE
NO. 74-19113
[Illegible]
================================================================================
5. This statement refers to original Financing Statement No. 74-19113 filed
(date) 9/17/74 with Monroe County Clerk.
- --------------------------------------------------------------------------------
6. |x| A. Continuation The original Financing Statement bearing the above file
number is still effective.
|_| B. Termination The Secured Party of record no longer claims a security
interest under the Financing Statement bearing the
above file number.
|_| C. Release From the Collateral described in the Financing
Statement bearing the above file number, the Secured
Party of record releases the following:
|_| D. Assignment The Secured Party of record has assigned the Secured
Party's rights in the property described below under
the Financing Statement bearing the above file number
to the Assignee whose name and address are shown below:
|_| E. Amendment The Financing Statement bearing the above file number
is amended as set forth below: (Signature of Debtor and
Secured Party is Required)
|_| This statement is to be indexed
in the Real Estate Records Section Block Lot
- --------------------------------------------------------------------------------
A. Payments (see exhibit A Attached)
B. Real property (see exhibit B Attached
- --------------------------------------------------------------------------------
Manufacturers Hanover Trust Company
/Genesee Region
- ------------------------------------- ---------------------------------------
By By /s/ [Illegible]
---------------------------------- ------------------------------------
Signature(s) of Debtor(s) Signature(s) of Secured Party(ies)
(only on amendment)
(1) Filing Officer Copy-Numerical
(7/78) STANDARD FORM - FORM UCC-3 -- Approved by the Secretary of State of
New York, Pennsylvania & Texas
<PAGE>
Uniform Commercial Code -- FINANCING STATEMENT CHANGE -- Form UCC-3
[Illegible]
IMPORTANT -- Read instructions on back before filling out form.
This STATEMENT is presented to a filing officer for
filing pursuant to the Uniform Commercial Code.
- --------------------------------------------------------------------------------
No. of additional
Sheets Presented:
- --------------------------------------------------------------------------------
3. |_| The Debtor is a transmitting utility.
- --------------------------------------------------------------------------------
1. Debtor(s) (Last Name First) and Address(es):
CVC Products, Inc.
1775 Mt. Read Blvd.
Rochester, New York
- --------------------------------------------------------------------------------
2. Secured Party(ies) Name(s) and Address(es)
Manufacturers Hanover Trust
Company/Genesee Region
now known as: Chemical Bank
183 East Main Street
Rochester, New York 14604
- --------------------------------------------------------------------------------
4. For Filing Officer: Date, Time, No. Filing Office
[Stamp] [Illegible] 94 JUL 13 AM 9:31
================================================================================
5. This statement refers to original Financing Statement No. 74-19113 filed
(date) Sept. 17, 1974 with MONROE COUNTY.
- --------------------------------------------------------------------------------
6. |X| A. Continuation The original Financing Statement bearing the above file
number is still effective.
|_| B. Termination The Secured Party of record no longer claims a security
interest under the Financing Statement bearing the
above file number.
|_| C. Release From the Collateral described in the Financing
Statement bearing the above file number, the Secured
Party of record releases the following:
|_| D. Assignment The Secured Party of record has assigned the Secured
Party's rights in the property described below under
the Financing Statement bearing the above file number
to the Assignee whose name and address are shown below:
|_| E. Amendment The Financing Statement bearing the above file number
is amended as set forth below: (Signature of Debtor and
Secured Party is Required)
|_| This statement is to be indexed
in the Real Estate Records Section Block Lot
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Chemical Bank, as successor by merger
CVC Products, Inc. with Manufacturers Hanover Trust
Company
- ------------------------------------- ---------------------------------------
By By /s/ [Illegible]
---------------------------------- ------------------------------------
Signature(s) of Debtor(s) Signature(s) of Secured Party(ies)
(only on amendment)
(1) Filing Officer Copy-Numerical
(5/82) STANDARD FORM - FORM UCC-3 -- Approved by the Secretary of State
of New York
<PAGE>
Uniform Commercial Code -- FINANCING STATEMENT CHANGE -- Form UCC-3
[Illegible]
IMPORTANT -- Read instructions on back before filling out form.
This STATEMENT is presented to a filing officer for
filing pursuant to the Uniform Commercial Code.
- --------------------------------------------------------------------------------
No. of additional
Sheets Presented:
- --------------------------------------------------------------------------------
3. |_| The Debtor is a transmitting utility.
- --------------------------------------------------------------------------------
1. Debtor(s) (Last Name First) and Address(es):
CVC Products, Inc.
1775 Mt. Read Blvd.
Rochester, New York
- --------------------------------------------------------------------------------
2. Secured Party(ies) Name(s) and Address(es)
Manufacturers Hanover Trust
Company/Genesee Region
183 East Main Street
Rochester, New York
- --------------------------------------------------------------------------------
4. For Filing Officer: Date, Time, No. Filing Office
[Stamp] [Illegible]
================================================================================
5. This statement refers to original Financing Statement No. 74-19113 filed
(date) 9/17/74 with Monroe County.
- --------------------------------------------------------------------------------
6. | | A. Continuation The original Financing Statement bearing the above file
number is still effective.
|_| B. Termination The Secured Party of record no longer claims a security
interest under the Financing Statement bearing the
above file number.
|_| C. Release From the Collateral described in the Financing
Statement bearing the above file number, the Secured
Party of record releases the following:
|x| D. Assignment The Secured Party of record has assigned the Secured
Party's rights in the property described below under
the Financing Statement bearing the above file number
to the Assignee whose name and address are shown below:
|_| E. Amendment The Financing Statement bearing the above file number
is amended as set forth below: (Signature of Debtor and
Secured Party is Required)
|_| This statement is to be indexed
in the Real Estate Records Section Block Lot
- --------------------------------------------------------------------------------
ASSIGN TO: CHEMICAL BANK
200 JERICHO QUADRANGLE
JERICHO, NY 11753
- --------------------------------------------------------------------------------
Chemical Bank
- ------------------------------------- ---------------------------------------
By By /s/ [Illegible]
---------------------------------- ------------------------------------
Signature(s) of Debtor(s) Signature(s) of Secured Party(ies)
(only on amendment)
(1) Filing Officer Copy-Numerical
(5/82) STANDARD FORM - FORM UCC-3 -- Approved by the Secretary of State
of New York
<PAGE>
EXHIBIT A
All payments to be made pursuant to a Lease Agreement dated August 1, 1974 by
and between the County of Monroe Industrial Development Agency and CVC Products,
Inc. being a lease of the real property described in Item 8 below. Such payments
have been assigned to the Manufacturers Hanover Trust Company/Genesee Region
pursuant to an Assignment of the Agency dated as of August 1, 1974.
<PAGE>
EXHIBIT A
Conveys: All that piece or parcel of property situated in the City of
Rochester, County of Monroe, State of New York and described as follows:
Commencing at a point on the westerly highway boundary line of Lee Road
(80.0' r.o.w.) being the southeast property corner of C.V.C. Products, Inc. as
shown on a map by Denluck, Thomas, McGrail & Associates dated February 10, 1975;
thence (1) south 89(degrees)-36'-51" west and along the south property line of
said C.V.C. Products, Inc. a distance of 487.58' to a point; thence (2) north
00(degrees)-06'-56" west and along the easterly highway boundary line of the
Rochester Outer Loop (N.Y.S. Route 390) forming an interior angle of
89(degrees)-43'-27" with course (1) a distance of 2.00' to a point; thence (3)
north 89(degrees)-36'-5l" east and across the lands of Monroe Industrial
Development Agency and now occupied by C.V.C. Products, Inc. forming an interior
angle of 90(degrees)-16'-13" with course (2) a distance of 487.59' to a point;
thence (4) south 00(degrees)-00'-30" west and along the westerly highway
boundary line of Lee Road forming an interior anqle of 89(degrees)-36'-2l" with
course (3) a distance of 2.00' to the point of beginning. Course (4) forms an
interior angle of 90(degrees)-23'-39" with course (1).
<PAGE>
EXHIBIT B
ALL THAT PIECE OR PARCEL OF PROPERTY situated in the City of Rochester, County
of Monroe, State of New York and described as follows:
Beginning at an iron pin set at the intersection of the division line between
the property of Marvin J. Goldblatt (Reputed Owner) on the north and the
property of the New York State Urban Development Corporation on the south with
the proposed westerly boundary of the existing Lee road; thence along said
boundary the following two courses and distances: (1) South 0(degrees) 23" 31"
East, a distance of 268.32 feet to a set iron pin and (2) South 0(degrees) 0'
30" West, a distance of 430.76 feet to a set iron pin; thence South 89(degrees)
36' 51" West through the property of the New York State Urban Development
Corporation, a distance of 487.58 feet to an iron pin set on the easterly
boundary of the existing Rochester Outer Loop-New York State Route 47; thence
along said boundary the following two courses and distances: (1) North
0(degrees) 06' 56" West, a distance of 491.31 feet to an existing concrete
monument and (2) North 0(degrees) 01' 31" East, a distance of 207.76 feet to an
existing concrete monument at its intersection with the southerly boundary of
said Rochester Outer Loop-New York State Route 47; thence North 89(degrees) 36'
51" East along the last mentioned boundary and also along the before-mentioned
division line between the property of Marvin J. Goldblatt (Reputed Owner) on the
north and the property of the New York State Urban Development Corporation on
the south, a distance of 486.71 feet to the point of beginning, containing 7.830
acres of land.
<PAGE>
This FINANCING STATEMENT is presented to a Filing
Officer for filing pursuant to the Uniform Commercial Code.
- --------------------------------------------------------------------------------
No. of Additional
Sheets Presented:
- --------------------------------------------------------------------------------
3. |_| The Debtor is a transmitting utility.
- --------------------------------------------------------------------------------
1. Debtor(s) (Last Name First) and Address(es):
CVC PRODUCTS, INC.
525 Lee Road
Rochester, New York
- --------------------------------------------------------------------------------
2. Secured Party(ies) Name(s) and Address(es)
MANUFACTURERS HANOVER
TRUST COMPANY
183 East Main Street
Rochester, New York
- --------------------------------------------------------------------------------
4. For Filing Officer: Date, Time, No. Filing Office
[Illegible]
- --------------------------------------------------------------------------------
5. This Financing Statement covers the following types (or items) of property:
North American 7-1/2 ton crane with Detroit 7-1/2 ton hoist including cross
rails, together with all attachments, accessories, accessions, and equipment
now or hereafter affixed to such collateral as used in connection therewith and
substitutions and replacements thereof.
|_| Products of the Collateral are also covered.
- --------------------------------------------------------------------------------
6. Assignee(s) of Secured Party and Address(es)
- --------------------------------------------------------------------------------
7. |_| The described crops are growing or to be grown on:*
|_| The described goods are or are to be affixed to:*
|_| The lumber to be cut or minerals or the like
(including oil and gas) is on:*
*(Describe Real Estate Below).
- --------------------------------------------------------------------------------
8. Describe Real Estate Here: |_| This statement is to be indexed in
the Real Estate Records:
No. & Street Town or City County Section Block Lot
- --------------------------------------------------------------------------------
9. Name of a Record Owner
- --------------------------------------------------------------------------------
10. This statement is filed without the debtor's signature to perfect a security
interest in collateral (check appropriate box)
|_| under a security agreement signed by debtor authorizing secured party to
file this statement, or
|_| which is proceeds of the original collateral described above in which a
security interest was perfected, or
|_| acquired after a change of name, identity or corporate structure of the
debtor, or |_| as to which the filing has lapsed, or already subject to
security interest in another jurisdiction:
|_| when the collateral was brought into the state, or |_| when the debtor's
location was changed to this state.
CVC PRODUCTS, INC. MANUFACTURERS HANOVER TRUST COMPANY
- ------------------------------------- ---------------------------------------
By /s/ [Illegible] By /s/ [Illegible]
---------------------------------- ------------------------------------
Signature(s) of Debtor(s) Signature(s) of Secured Party(ies)
(1) Filing Officer Copy-Numerical
(5/82) STANDARD FORM - FORM UCC-1 -- Approved by Secretary of State of New York
<PAGE>
This STATEMENT is presented to a filing officer for
filing pursuant to the Uniform Commercial Code.
- --------------------------------------------------------------------------------
No. of additional
Sheets Presented:
- --------------------------------------------------------------------------------
3. |_| The Debtor is a transmitting utility.
- --------------------------------------------------------------------------------
1. Debtor(s) (Last Name First) and Address(es):
CVC Products, Inc.
525 Lee Road
Rochester, New York
- --------------------------------------------------------------------------------
2. Secured Party(ies) Name(s) and Address(es)
Manufacturers Hanover Trust
Company now known as:
Chemical Bank
183 East Main Street
Rochester, New York 14604
- --------------------------------------------------------------------------------
4. For Filing Officer: Date, Time, No. Filing Office
[Stamp] [Illegible]
================================================================================
5. This statement refers to original Financing Statement No. 88-08783 filed
(date) Oct. 3, 1988 with Monroe County.
- --------------------------------------------------------------------------------
6. |X| A. Continuation The original Financing Statement bearing the above file
number is still effective. 10-3-88 11:40
|_| B. Termination The Secured Party of record no longer claims a security
interest under the Financing Statement bearing the
above file number.
|_| C. Release From the Collateral described in the Financing
Statement bearing the above file number, the Secured
Party of record releases the following:
| | D. Assignment The Secured Party of record has assigned the Secured
Party's rights in the property described below under
the Financing Statement bearing the above file number
to the Assignee whose name and address are shown below:
|_| E. Amendment The Financing Statement bearing the above file number
is amended as set forth below: (Signature of Debtor and
Secured Party is Required)
|_| This statement is to be indexed
in the Real Estate Records Section Block Lot
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Chemical Bank, as successor by merger
with Manufacturers Hanover Trust
CVC Products, Inc. Company
- ------------------------------------- ---------------------------------------
By By /s/ [Illegible]
---------------------------------- ------------------------------------
Signature(s) of Debtor(s) Signature(s) of Secured Party(ies)
(only on amendment)
(1) Filing Officer Copy-Numerical
(5/82) STANDARD FORM - FORM UCC-3 -- Approved by the Secretary of State
of New York
<PAGE>
Uniform Commercial Code -- FINANCING STATEMENT CHANGE -- Form UCC-3
[Illegible]
IMPORTANT -- Read instructions on back before filling out form.
This STATEMENT is presented to a filing officer for
filing pursuant to the Uniform Commercial Code.
- --------------------------------------------------------------------------------
No. of additional
Sheets Presented:
- --------------------------------------------------------------------------------
3. |_| The Debtor is a transmitting utility.
- --------------------------------------------------------------------------------
1. Debtor(s) (Last Name First) and Address(es):
CVC Products, Inc.
525 Lee Road
Rochester, NY
- --------------------------------------------------------------------------------
2. Secured Party(ies) Name(s) and Address(es)
Manufacturers Hanover Trust
Company now known as:
Chemical Bank
183 East Main Street
Rochester, New York 14604 1013
- --------------------------------------------------------------------------------
4. For Filing Officer: Date, Time, No. Filing Office
[Illegible]
94 MAR 10 PM 3:54
================================================================================
5. This statement refers to original Financing Statement No. 88-08783 filed
(date) 10/3/88 with Monroe County.
- --------------------------------------------------------------------------------
6. | | A. Continuation The original Financing Statement bearing the above file
number is still effective.
|_| B. Termination The Secured Party of record no longer claims a security
interest under the Financing Statement bearing the
above file number.
|_| C. Release From the Collateral described in the Financing
Statement bearing the above file number, the Secured
Party of record releases the following:
|X| D. Assignment The Secured Party of record has assigned the Secured
Party's rights in the property described below under
the Financing Statement bearing the above file number
to the Assignee whose name and address are shown below:
|_| E. Amendment The Financing Statement bearing the above file number
is amended as set forth below: (Signature of Debtor and
Secured Party is Required)
Assign to: Chemical Bank
200 Jericho Quadrangle
Jericho, NY 11753
|_| This statement is to be indexed
in the Real Estate Records Section Block Lot
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Chemical Bank, Successor by merger
with Manufacturers Hanover Trust
Company
- ------------------------------------- ---------------------------------------
By By /s/ [Illegible]
---------------------------------- ------------------------------------
Signature(s) of Debtor(s) Signature(s) of Secured Party(ies)
(only on amendment)
(1) Filing Officer Copy-Numerical
[Illegible] STANDARD FORM - FORM UCC-3 -- Approved by the Secretary of State
of New York
<PAGE>
This FINANCING STATEMENT is presented to a Filing
Officer for filing pursuant to the Uniform Commercial Code.
- --------------------------------------------------------------------------------
No. of addititional
Sheets Presented:
- --------------------------------------------------------------------------------
3. |_| The Debtor is a transmitting utility.
- --------------------------------------------------------------------------------
1. Debtor(s) (Last Name First) and Address(es):
CVC Products Inc.
525 Lee Road
Rochester, NY 14606
16-1017191
- --------------------------------------------------------------------------------
2. Secured Party(ies) Name(s) and Address(es)
GE Capital
64A Perimeter [Illegible]
Atlanta, GA 30346
5109676-03
- --------------------------------------------------------------------------------
4. For Filing Officer: Date, Time, No. Filing Office
1991 JUL 25 [Illegible]
MONROE COUNTY CLERK [Stamp]
91-5175
- --------------------------------------------------------------------------------
5. This Financing Statement covers the following types (or items) of property:
IDS 108 with VX 2 Voice
Mail System
|_| Products of the Collateral are also covered.
- --------------------------------------------------------------------------------
6. Assignee(s) of Secured Party and Address(es)
- --------------------------------------------------------------------------------
7. |_| The described crops are growing or to be grown on:*
|_| The described goods are or are to be affixed to:*
|_| The lumber to be cut or minerals or the like
(including oil and gas) is on:*
*(Describe Real Estate Below).
- --------------------------------------------------------------------------------
8. Describe Real Estate Here: |_| This statement is to be indexed in
the Real Estate Records:
No. & Street Town or City County Section Block Lot
- --------------------------------------------------------------------------------
9. Name of a Record Owner
- --------------------------------------------------------------------------------
10. This statement is filed without the debtor's signature to perfect a security
interest in collateral (check appropriate box)
|_| under a security agreement signed by debtor authorizing secured party to
file this statement, or
|_| which is proceeds of the original collateral described above in which a
security interest was perfected, or
|_| acquired after a change of name, identity or corporate structure of the
debtor, or |_| as to which the filing has lapsed, or already subject to
a security interest in another jurisdiction:
|_| when the collateral was brought into the state, or |_| when the
debtor's location was changed to this state.
CVC Products, Inc. GE Capital
- ------------------------------------- ---------------------------------------
By /s/ [Illegible] By /s/ [Illegible]
---------------------------------- ------------------------------------
Signature(s) of Debtor(s) Signature(s) of Secured Party(ies)
(1) Filing Officer Copy-Numerical
(5/82) STANDARD FORM - FORM UCC-1 -- Approved by Secretary of State of New York
<PAGE>
This FINANCING STATEMENT is presented to a Filing
Officer for filing pursuant to the Uniform Commercial Code.
- --------------------------------------------------------------------------------
No. of additional
Sheets Presented:
- --------------------------------------------------------------------------------
3. |_| The Debtor is a transmitting utility.
- --------------------------------------------------------------------------------
1. Debtor(s) (Last Name First) and Address(es):
CVC PRODUCTS, INC.
525 LEE ROAD
PO BOX 1886
ROCHESTER, NY 14606
42-4101-6988
- --------------------------------------------------------------------------------
2. Secured Party(ies) Name(s) and Address(es)
MACHINE TOOL FINANCE CORPORATION
1200 ROUTE 22, P.O. BOX 6857
BRIDGEWATER, NJ 08807
MONROE COUNTY
- --------------------------------------------------------------------------------
4. For Filing Officer: Date, Time, No. Filing Office
1991 AUG 26 PM 4:35
MONROE COUNTY CLERK [Stamp]
91-6164
- --------------------------------------------------------------------------------
5. This Financing Statement covers the following types (or items) of property:
SEE SCHEDULE A ATTACHED HERETO AND MADE A PART HEREOF
THE RELATIONSHIP BETWEEN THE PARTIES HERETO IS ONE OF LESSEE AND LESSOR
|_| Products of the Collateral are also covered.
- --------------------------------------------------------------------------------
6. Assignee(s) of Secured Party and Address(es)
- --------------------------------------------------------------------------------
7. |_| The described crops are growing or to be grown on:*
|_| The described goods are or are to be affixed to:*
|_| The lumber to be cut or minerals or the like
(including oil and gas) is on:*
*(Describe Real Estate Below).
- --------------------------------------------------------------------------------
8. Describe Real Estate Here: |_| This statement is to be indexed in
the Real Estate Records:
No. & Street Town or City County Section Block Lot
- --------------------------------------------------------------------------------
9. Name of a Record Owner
- --------------------------------------------------------------------------------
10. This statement is filed without the debtor's signature to perfect a security
interest in collateral (check appropriate box)
|_| under a security agreement signed by debtor authorizing secured party to
file this statement, or
|_| which is proceeds of the original collateral described above in which a
security interest was perfected, or
|_| acquired after a change of name, identity or corporate structure of the
debtor, or |_| as to which the filing has lapsed, or already subject to
a security interest in another jurisdiction:
|_| when the collateral was brought into the state, or |_| when the
debtor's location was changed to this state.
CVC PRODUCTS, INC. MACHINE TOOL FINANCE CORPORATION
BY: CHRISTINE B. WHITMAN, PRESIDENT
-------------------------------- ---------------------------------------
By /s/ [Illegible] By /s/ [Illegible]
---------------------------------- ------------------------------------
Signature(s) of Debtor(s) Signature(s) of Secured Party(ies)
(1) Filing Officer Copy-Numerical
(5/82) STANDARD FORM - FORM UCC-1 -- Approved by Secretary of State of New York
<PAGE>
MACHINE TOOL
FINANCE CORPORATION
A Subsidiary of U. S. Bancorp Leasing & Financial
SCHEDULE A
Master Lease Number 42-4101-6988
Equipment Schedule Number 42-4101-6988
SCHEDULE OF EQUIPMENT PURSUANT TO AN EQUIPMENT SCHEDULE AGREEMENT DATED AS
OF AUGUST 21, 1991 BETWEEN MACHINE TOOL FINANCE CORPORATION AS LESSOR AND CVC
PRODUCTS, INC. AS LESSEE (THE "LEASE").
ALL THE LESSEE'S RIGHT, TITLE AND INTEREST IN AND TO THE FOLLOWING:
ONE (1) NEW FADAL VMC-6030 HT CNC MACHINING CENTER, SN 9108520, WITH HEIDENHAIN
SCALES, 4TH AXIS PREWIRE, REMOTE, RS-232 CABLE, AND ALL STANDARD ACCESSORIES AND
ATTACHMENTS.
TOGETHER WITH ALL REPLACEMENTS, PARTS, REPAIRS, ADDITIONS, ACCESSIONS AND
ACCESSORIES INCORPORATED THEREIN OR AFFIXED THERETO AND ANY AND ALL PROCEEDS OF
THE FOREGOING INCLUDING, WITHOUT LIMITATION, INSURANCE RECOVERIES.
THE LESSEE HAS NO RIGHT TO SELL, SUBLEASE, OR OTHERWISE DISPOSE OF THE EQUIPMENT
LISTED ABOVE OR ASSIGN ANY RIGHT, TITLE OR INTEREST THEREIN.
Attest/Witness C V C PRODUCTS, INC.
[Lessee]
/s/ R. Scott Armstrong By: /s/ Christine B. Whitman
- ---------------------------------- --------------------------------
R. SCOTT ARMSTRONG CHRISTINE B. WHITMAN
ASSISTANT SECRETARY PRESIDENT
Attest/Witness: MACHINE TOOL FINANCE CORPORATION
By:
- ---------------------------------- --------------------------------
An authorized officer thereof
FILED
1991 AUG 26 PM 4:35
MONROE COUNTY CLERK
<PAGE>
This FINANCING STATEMENT is presented to a Filing
Officer for filing pursuant to the Uniform Commercial Code.
- --------------------------------------------------------------------------------
No. of additional
Sheets Presented:
- --------------------------------------------------------------------------------
3. |_| The Debtor is a transmitting utility.
- --------------------------------------------------------------------------------
1. Debtor(s) (Last Name First) and Address(es):
CVC PRODUCTS, INC.
525 Lee Road
Rochester, NY 14606
- --------------------------------------------------------------------------------
2. Secured Party(ies) Name(s) and Address(es)
LCA LEASING CORP.
9400 Williamsburg Plaza
Louisville, KY 40222
- --------------------------------------------------------------------------------
4. For Filing Officer: Date, Time, No. Filing Office
[Illegible] OCT - 2 PM 1:34 05
[Illegible]
91-7173
- --------------------------------------------------------------------------------
5. This Financing Statement covers the following types (or items) of property:
This equipment is leased from the lessor and this filing is
for informational purpose.
One (1) New Daewoo Model Puma 12 Machining Center Equipped
With Fanuc 10TF Controls,Chip Conveyor,Tooling And All
Standard Equipment, Attachments, Accessories, Appurtenences,
Accessions And Substitutions.
|_| Products of the Collateral are also covered.
- --------------------------------------------------------------------------------
6. Assignee(s) of Secured Party and Address(es)
LCA Holding Corp.
10 Rockefeller Plaza
New York, NY 10020
- --------------------------------------------------------------------------------
7. |_| The described crops are growing or to be grown on:*
|_| The described goods are or are to be affixed to:*
|_| The lumber to be cut or minerals or the like
(including oil and gas) is on:*
*(Describe Real Estate Below).
- --------------------------------------------------------------------------------
8. Describe Real Estate Here: |_| This statement is to be indexed in
the Real Estate Records:
No. & Street Town or City County Section Block Lot
- --------------------------------------------------------------------------------
9. Name of a Record Owner
- --------------------------------------------------------------------------------
10. This statement is filed without the debtor's signature to perfect a security
interest in collateral (check appropriate box)
|_| under a security agreement signed by debtor authorizing secured party to
file this statement, or
|_| which is proceeds of the original collateral described above in which a
security interest was perfected, or
|_| acquired after a change of name, identity or corporate structure of the
debtor, or |_| as to which the filing has lapsed, or already subject to
a security interest in another jurisdiction:
|_| when the collateral was brought into the state, or |_| when the
debtor's location was changed to this state.
CVC Products, Inc. LCA Leasing Corp.
- ------------------------------------- ---------------------------------------
By /s/ [Illegible] VP of Finance By /s/ [Illegible]
---------------------------------- ------------------------------------
Signature(s) of Debtor(s) Signature(s) of Secured Party(ies)
(1) Filing Officer Copy-Numerical
(5/82) STANDARD FORM - FORM UCC-1 -- Approved by Secretary of State of New York
<PAGE>
This FINANCING STATEMENT is presented to a Filing
Officer for filing pursuant to the Uniform Commercial Code.
- --------------------------------------------------------------------------------
No. of additional
Sheets Presented:
- --------------------------------------------------------------------------------
3. |_| The Debtor is a transmitting utility.
- --------------------------------------------------------------------------------
1. Debtor(s) (Last Name First) and Address(es):
CVC Products, Inc.
525 Lee Road
Rochester, NY 14603
- --------------------------------------------------------------------------------
2. Secured Party(ies) Name(s) and Address(es)
Temescal
Airco Coating Technology
P.O. Box 2529
Fairfield, CA 94533
- --------------------------------------------------------------------------------
4. For Filing Officer: Date, Time, No. Filing Office
[Illegible]
92-6970
- --------------------------------------------------------------------------------
5. This Financing Statement covers the following types (or items) of property:
2 EB Gun Control Units 1 EB Gun Transformer
3 EB Gun Indexers
3 EB Guns
3 EB Gun Sweep Controls
1 EB Gun Power Supply
|_| Products of the Collateral are also covered.
- --------------------------------------------------------------------------------
6. Assignee(s) of Secured Party and Address(es)
- --------------------------------------------------------------------------------
7. |_| The described crops are growing or to be grown on:*
|_| The described goods are or are to be affixed to:*
|_| The lumber to be cut or minerals or the like
(including oil and gas) is on:*
*(Describe Real Estate Below).
- --------------------------------------------------------------------------------
8. Describe Real Estate Here: |_| This statement is to be indexed in
the Real Estate Records:
No. & Street Town or City County Section Block Lot
- --------------------------------------------------------------------------------
9. Name of a Record Owner
- --------------------------------------------------------------------------------
10. This statement is filed without the debtor's signature to perfect a security
interest in collateral (check appropriate box)
|_| under a security agreement signed by debtor authorizing secured party to
file this statement, or
|_| which is proceeds of the original collateral described above in which a
security interest was perfected, or
|_| acquired after a change of name, identity or corporate structure of the
debtor, or |_| as to which the filing has lapsed, or already subject to
a security interest in another jurisdiction:
|_| when the collateral was brought into the state, or |_| when the
debtor's location was changed to this state.
CVC Products, Inc. Temescal, Airco Coating Tech.
- ------------------------------------- --------------------------------------
By /s/ [Illegible] By /s/ [Illegible] VP, Finance
---------------------------------- ------------------------------------
Signature(s) of Debtor(s) Signature(s) of Secured Party(ies)
(1) Filing Officer Copy-Numerical
(5/82) STANDARD FORM - FORM UCC-1 -- Approved by Secretary of State of New York
<PAGE>
Uniform Commercial Code -- FINANCING STATEMENT -- Form UCC-1
[Illegible]
IMPORTANT -- Read instructions on back before filling out form.
This FINANCING STATEMENT is presented to a Filing
Officer for filing pursuant to the Uniform Commercial Code.
- --------------------------------------------------------------------------------
No. of additional
Sheets Presented: 8
- --------------------------------------------------------------------------------
FILED
3. |_| The Debtor is a transmitting utility.
- --------------------------------------------------------------------------------
1. Debtor(s) (Last Name First) and Address(es):
CVC Products, Inc.
525 Lee Road
Rochester, NY 14603
- --------------------------------------------------------------------------------
2. Secured Party(ies) Name(s) and Address(es)
Storage Technology Corp.
2270 South 88th Street
Louisville, CO 80028-0001
- --------------------------------------------------------------------------------
4. For Filing Officer: Date, Time, No. Filing Office
1994 JUN - 3 P 4:01
MONROE COUNTY CLERK [Stamp]
91-6164
- --------------------------------------------------------------------------------
5. This Financing Statement covers the following types (or items) of property:
This Financing Statement is not intended to
evidence a security interest, but rather is
being filed to give notice that CVC Products,
Inc. is holding the described property as a
consignee, bailee or agent for Storage
Technology Corporation.
|_| Products of the Collateral are also covered. See Annex A
- --------------------------------------------------------------------------------
6. Assignee(s) of Secured Party and Address(es)
4250/ay
- --------------------------------------------------------------------------------
7. |_| The described crops are growing or to be grown on:*
|_| The described goods are or are to be affixed to:*
|_| The lumber to be cut or minerals or the like
(including oil and gas) is on:*
*(Describe Real Estate Below).
- --------------------------------------------------------------------------------
8. Describe Real Estate Here: |_| This statement is to be indexed in
the Real Estate Records:
No. & Street Town or City County Section Block Lot
- --------------------------------------------------------------------------------
9. Name of a Record Owner
- --------------------------------------------------------------------------------
10. This statement is filed without the debtor's signature to perfect a security
interest in collateral (check appropriate box)
|_| under a security agreement signed by debtor authorizing secured party to
file this statement, or
|_| which is proceeds of the original collateral described above in which a
security interest was perfected, or
|_| acquired after a change of name, identity or corporate structure of the
debtor, or |_| as to which the filing has lapsed, or already subject to
a security interest in another jurisdiction:
|_| when the collateral was brought into the state, or |_| when the
debtor's location was changed to this state.
CVC PRODUCTS, INC.
- ------------------------------------- ---------------------------------------
By /s/ [Illegible] By
---------------------------------- ------------------------------------
Signature(s) of Debtor(s) Signature(s) of Secured Party(ies)
(1) Filing Officer Copy-Numerical
(6/82) STANDARD FORM - FORM UCC-1 -- Approved by Secretary of State of New York
<PAGE>
UCC-1
ANNEX A
Seller: Brooks Automation, Inc.
Filed By: CVC Products, Inc.
In favor of: Storage Technology Corporation
2270 South 88th Street
Louisville, CO 80028-0001
Description of items held for Storage Technology Corporation.
Material to be shipped to CVC Products, Inc.:
Description Quantity P.O.# Part #
- ----------- -------- ----- ------
Vacutran 5 Robot 1 942315 306370-1
Cassette Elevator VCE-2-0 1 942315 302392-1
FILED
1994 JUN - 3 P 4:02
MONROE COUNTY CLERK
<PAGE>
UCC-1
ANNEX A
Seller: Techware Systems Corporation
Filed By: CVC Products, Inc.
In favor of: Storage Technology Corporation
2270 South 88th Street
Louisville, CO 80028-0001
Description of items held for Storage Technology Corporation.
Material to be shipped to CVC Products, Inc.:
Description Quantity P.O.# Part #
- ----------- -------- ----- ------
Computer, Techware III-PM 1 942368 300388-10
Computer, Techware III-WT 1 942368 300388-5
<PAGE>
UCC-1
ANNEX A
Seller: Leybold Vacuum Products, Inc.
Filed By: CVC Products, Inc.
In favor of: Storage Technology Corporation
2270 South 88th Street
Louisville, CO 80028-0001
Description of items held for Storage Technology Corporation.
Material to be shipped to CVC Products, Inc.:
Description Quantity P.O.# Part #
- ----------- -------- ----- ------
Rotary Pump 1 942281 302660
<PAGE>
UCC-1
ANNEX A
Seller: Nashua Industrial Machine Company
Filed By: CVC Products, Inc.
In favor of: Storage Technology Corporation
2270 South 88th Street
Louisville, CO 80028-0001
Description of items held for Storage Technology Corporation.
Material to be shipped to CVC Products, Inc.:
Description Quantity P.O.# Part #
- ----------- -------- ----- ------
Chamber Body - Batch 1 942550 304976
Lid, Chamber - Batch 1 942550 304977
Baseplate, Chamber - Batch 1 942550 304978
<PAGE>
UCC-1
ANNEX A
Seller: MDC Vacuum Product, Corporation
Filed By: CVC Products, Inc.
In favor of: Storage Technology Corporation
2270 South 88th Street
Louisville, CO 80028-0001
Description of items held for Storage Technology Corporation.
Material to be shipped to CVC Products, Inc.:
Description Quantity P.O.# Part #
- ----------- -------- ----- ------
Gate Valve, 4" ISO Bolted 1 942277 302572
Gate Valve, 8" NW200.25RP 1 942277 302396-1
Valve, Mesa 1 942277 300937-1
<PAGE>
UCC-1
ANNEX A
Seller: Advanced Energy
Filed By: CVC Products, Inc.
In favor of: Storage Technology Corporation
2270 South 88th Street
Louisville, CO 80028-0001
Description of items held for Storage Technology Corporation.
Material to be shipped to CVC Products, Inc.:
Description Quantity P.O.# Part #
- ----------- -------- ----- ------
Power Supply, 10Kw DC 1 942617 293402-2
<PAGE>
UCC-1
ANNEX A
Seller: ENI
Filed By: CVC Products, Inc.
In favor of: Storage Technology Corporation
2270 South 88th Street
Louisville, CO 80028-0001
Description of items held for Storage Technology Corporation.
Material to be shipped to CVC Products, Inc.:
Description Quantity P.O.# Part #
- ----------- -------- ----- ------
RF Generator, OEM-2000-02MI 1 942045 302415
<PAGE>
UCC-1
ANNEX A
Seller: Realtime Performance, Inc.
Filed By: CVC Products, Inc.
In favor of: Storage Technology Corporation
2270 South 88th Street
Louisville, CO 80028-0001
Description of items held for Storage Technology Corporation.
Material to be shipped to CVC Products, Inc.:
Description Quantity P.O.# Part #
- ----------- -------- ----- ------
RP Cluster Runtime Key 1 942392 304059-1
<PAGE>
Uniform Commercial Code -- FINANCING STATEMENT -- Form UUC-1
[Illegible]
IMPORTANT -- Read instructions on back before filling out form.
This FINANCING STATEMENT is presented to a Filing
Officer for filing pursuant to the Uniform Commercial Code.
- --------------------------------------------------------------------------------
No. of additional
Sheets Presented: 2
- --------------------------------------------------------------------------------
3. |_| The Debtor is a transmitting utility.
- --------------------------------------------------------------------------------
1. Debtor(s) (Last Name First) and Address(es):
CVC PRODUCTS, INC.
525 LEE ROAD
ROCHESTER, NY 14603
- --------------------------------------------------------------------------------
2. Secured Party(ies) Name(s) and Address(es)
STORAGE TECHNOLOGY CORP.
2270 SOUTH 88TH STREET
LOUISVILLE, CO 80028-0001
- --------------------------------------------------------------------------------
4. For Filing Officer: Date, Time, No. Filing Office
FILED
94 SEP 12 PM 4:01
MONROE COUNTY CLERK
6798194
- --------------------------------------------------------------------------------
5. This Financing Statement covers the following types (or items) of property:
THIS FINANCING STATEMENT IS NOT INTENDED TO EVIDENCE
A SECURITY INTEREST, BUT RATHER IS BEING FILED TO
GIVE NOTICE THAT CVC PRODUCTS, INC. IS HOLDING THE
DESCRIBED PROPERTY AS A CONSIGNEE, BAILEE OR AGENT
FOR STORAGE TECHNOLOGY CORPORATION.
|_| Products of the Collateral are also covered. SEE ANNEX A
- --------------------------------------------------------------------------------
6. Assignee(s) of Secured Party and Address(es)
- --------------------------------------------------------------------------------
7. |_| The described crops are growing or to be grown on:*
|_| The described goods are or are to be affixed to:*
|_| The lumber to be cut or minerals or the like
(including oil and gas) is on:*
*(Describe Real Estate Below).
- --------------------------------------------------------------------------------
8. Describe Real Estate Here: |_| This statement is to be indexed in
the Real Estate Records:
No. & Street Town or City County Section Block Lot
- --------------------------------------------------------------------------------
9. Name of a Record Owner
- --------------------------------------------------------------------------------
10. This statement is filed without the debtor's signature to perfect a security
interest in collateral (check appropriate box)
|_| under a security agreement signed by debtor authorizing secured party to
file this statement, or
|_| which is proceeds of the original collateral described above in which a
security interest was perfected, or
|_| acquired after a change of name, identity or corporate structure of the
debtor, or |_| as to which the filing has lapsed, or already subject to
a security interest in another jurisdiction:
|_| when the collateral was brought into the state, or |_| when the
debtor's location was changed to this state.
CVC PRODUCTS, INC.
- ------------------------------------- ---------------------------------------
By /s/ [Illegible] By
---------------------------------- ------------------------------------
Signature(s) of Debtor(s) Signature(s) of Secured Party(ies)
(1) Filing Officer Copy-Numerical
(5/82) STANDARD FORM - FORM UCC-1 -- Approved by Secretary of State of New York
<PAGE>
UCC-1
ANNEX A
Filed By: CVC Products, Inc.
In favor of: Storage Technology Corporation
2270 South 88th Street
Louisville, CO 80028-0001
Description of items held for Storage Technology Corporation.
Material to be shipped to CVC Products, Inc.:
SUPPLIER DESCRIPTION QTY. P.O.# PART #
Acadia Polymers Electrical Connector Ring 1 943376 305283
" Chuck Body Insert 4 " 305395
" Chuck Body Insert w/cut out 4 " 305396
" Sleeve, Isolator 1 943658 305589
" Tube, Insulator 1 " 305590
" Collar, Insulator 1 " 305591
" Sleene. Insulator 1 " 305594
Ametek/Thermox Dycor Quadrupole Mass Spec 1 942439 300786-2
Antech Zno. SCR Power Control 1 943025 303233
CTI Cryogenics CIT Cryo Compressor 2 942621 302661-3
" Line kit, CTI Cryo CX tools 1 943831 305426-3
E.B. Trottnow Lid, Chuck Body 1 943246 305268
" Chuck Body 1 " 305242
" Plate, Bottom, Water Cooled TBL 1 " 305115
" Plate, Top, Water Cld TBL 1 " 305035
Ferrofluidics Corp. Feed Through - Rotary 1 942768 287121
" Feedth Ferro Hollow 1 942773 297011-2
Hi Tech Valve Solenoid w/Stackable bas 2 942305 302429-4
" Valve Solenoid Ass'y 2 " 302668-2
HPS Division of MKS Ion Guage Controller Hot Fil. 1 942123 301197-2
Huntington Mech Labs Viewport - Zero Length 2 942709 299117-2
MDC Vacuum Products Valve, Mesa w/O-ring 1 942277 300937-1
" Viewport, NW-40 16 942300 302729-1
Meivac Inc. Valve, Vac, Throt, Servo.16" ASA 1 942506 293690-2
1/2
<PAGE>
Metalade NY Inc. Panel Front - Right CX6 1 942748 302490
" Panel Front - Left CX6 1 " 302491
Motion Industries Mod Gear. Internal Indexer Dr. 2 942965 305090
Optec Racing Systems 3 Phase Heater Filter 1 942881 305346
" Power.T/C.RF Filter 1 " 303219-1
Philips Electronic Heating Element. Single Core 5 942867 301305-1
" Heater Block Brazement 5 943640 305252
Rochester Magnet Co. Magnet, Cobalt 160 942394 301052-1
Ross Equipment Co. Direct Drive Brushless Servo 1 942591 305142
" Splined Hub 1 942625 305211-2
" Brake Electric Released 1 " 305210-1
" Gearhead Double Shaft .SZ 42 1 942696 305158-2
" Motor Stepping .SZ 42 Modified 1 942918 305209
" Indexer Drive Only 1 943242 302887-1
Simcona Ion Gage Cable 1 942245 305038-1
" Straight Plug 1 942546 266391-6
" Cable Ass'y 1 942738 305044-1
" Cable 1 " 305046-1
" Cable Ass'y 1 " 305047-1
" Cable Ass'y 1 " 305131-1
" Cable Aas'y 1 942817 305265-1
" Cable Ass'y 1 " 305265-2
" Amphenol Plug 1 942907 266391-36
" Amphenol Receptacle 4 " 266516-32
" Cable Ass'y 1 943035 305385-1
" Cable Ass'y 2 943161 305471-2
" Cable Ass'y 1 " 305471-4
" Amphenol Jack 2 943183 305107-2
" Amphenol BNC 1 943211 305107-3
" Cable Ass'y 1 943212 305471-5
" Cable Ass'y 1 943229 305388-1
" Amphenol Jack 3 943258 305107-2
" Cable Ass'y 1 " 305471-5
" Amphenol Connector 1 943432 302725-1
" Kings Adapter 1 943660 305592
" Amphenol Connector 1 " 305034-2
Techware Systems Techware Rs232 Dr. (A.E.P/S) 1 941612 302343-5
Wall Colmonoy Corp. Brazement 1 943878 305116
2/2
<PAGE>
Uniform Commercial Code -- FINANCING STATEMENT -- Form UCC-1
[Illegible]
IMPORTANT -- Read instructions on back before filling out form.
This FINANCING STATEMENT is presented to a Filing
Officer for filing pursuant to the Uniform Commercial Code.
- --------------------------------------------------------------------------------
No. of additional
Sheets Presented:
- --------------------------------------------------------------------------------
3. |_| The Debtor is a transmitting utility.
- --------------------------------------------------------------------------------
1. Debtor(s) (Last Name First) and Address(es):
CVC PRODUCTS, INC.
525 LEE ROAD
ROCHESTER, NY 14603
- --------------------------------------------------------------------------------
2. Secured Party(ies) Name(s) and Address(es)
BREED TECHOLOGIES, INC.
5300 OLD TAMPA HIGHWAY
P.O. BOX 33050
LAKELAND, FL 35807-3050
- --------------------------------------------------------------------------------
4. For Filing Officer: Date, Time, No. Filing Office
FILED
95 NOV - 2 PM 2:53
MONROE COUNTY CLERK
- --------------------------------------------------------------------------------
5. This Financing Statement covers the following types (or items) of property:
COMPRESSION & RAK SYSTEM
|_| Proceeds -- |_| Products of the Collateral are also covered.
- --------------------------------------------------------------------------------
6. Assignee(s) of Secured Party and Address(es)
95-7847
- --------------------------------------------------------------------------------
7. |_| The described crops are growing or to be grown on:*
|_| The described goods are or are to be affixed to:*
|_| The lumber to be cut or minerals or the like
(including oil and gas) is on:*
*(Describe Real Estate Below).
- --------------------------------------------------------------------------------
8. Describe Real Estate Here: |_| This statement is to be indexed in
the Real Estate Records:
No. & Street Town or City County Section Block Lot
- --------------------------------------------------------------------------------
9. Name of Record Owners:
- --------------------------------------------------------------------------------
10. This statement is filed without the debtor's signature to perfect a security
interest in collateral (check appropriate box)
|_| under a security agreement signed by debtor authorizing secured party to
file this statement, or
|_| already subject to security interest in another jurisdiction when it was
brought into this state, or
|_| which is proceeds of the original collateral described above in which a
security interest was perfected.
CVC PRODUCTS, INC. Breed Technologies, Inc.
- ------------------------------------- ---------------------------------------
By /s/ [Illegible] By /s/ [Illegible]
---------------------------------- ------------------------------------
Signature(s) of Debtor(s) Signature(s) of Secured Party(ies)
(1) Filing Officer Copy-Numerical
[Illegible] STANDARD FORM - FORM UCC-1 -- Approved by Secretary of State of
New York
<PAGE>
Exhibit "A"
Box 5 All fixtures now owned by Debtor or in which Debtor now has any
interest located at or attached to the real property described in Box 8
("Premises") and all fixtures hereafter acquired by Debtor or in which
Debtor hereafter acquires any interest which are subsequently located
at or attached to the Premises, together with all cash and non-cash
proceeds of such property, including but not limited to insurance
proceeds.
Box 8 525 Lee Road in the City of Rochester, County of Monroe, State of
New York, being more particularly described as tax account number
104.340-0l-001.0010
Box 9 CVC Products, Inc.
<PAGE>
This FINANCING STATEMENT is presented to a Filing
Officer for filing pursuant to the Uniform Commercial Code.
- --------------------------------------------------------------------------------
No. of additional
Sheets Presented: 1
- --------------------------------------------------------------------------------
3. |_| The Debtor is a transmitting utility.
- --------------------------------------------------------------------------------
1. Debtor(s) (Last Name First) and Address(es):
CVC PRODUCTS, INC.
525 Lee Road
Rochester, New York 14606
- --------------------------------------------------------------------------------
2. Secured Party(ies) Name(s) and Address(es)
MANUFACTURERS AND TRADERS
TRUST COMPANY
One M&T Plaza
Buffalo, New York 14240
- --------------------------------------------------------------------------------
4. For Filing Officer: Date, Time, No. Filing Office
96 FEB - 7 PM 2:42
[MONROE COUNTY CLERK stamp]
- --------------------------------------------------------------------------------
5. This Financing Statement covers the following types (or items) of property:
See Exhibit "A" attached hereto
|_| Products of the Collateral are also covered.
- --------------------------------------------------------------------------------
6. Assignee(s) of Secured Party and Address(es)
- --------------------------------------------------------------------------------
7. |_| The described crops are growing or to be grown on:*
|X| The described goods are or are to be affixed to:*
|_| The lumber to be cut or minerals or the like
(including oil and gas) is on:*
*(Describe Real Estate Below).
- --------------------------------------------------------------------------------
8. Describe Real Estate Here: |X| This statement is to be indexed in
the Real Estate Records:
See Exhibit "A" attached hereto
No. & Street Town or City County Section Block Lot
- --------------------------------------------------------------------------------
9. Name of a Record Owner
See Exhibit "A" attached hereto
- --------------------------------------------------------------------------------
10. This statement is filed without the debtor's signature to perfect a security
interest in collateral (check appropriate box)
|_| under a security agreement signed by debtor authorizing secured party to
file this statement, or
|_| which is proceeds of the original collateral described above in which a
security interest was perfected, or
|_| acquired after a change of name, identity or corporate structure of the
debtor, or |_| as to which the filing has lapsed, or already subject to
a security interest in another jurisdiction:
|_| when the collateral was brought into the state, or |_| when the
debtor's location was changed to this state.
CVC PRODUCTS, INC. MANUFACTURERS AND TRADERS TRUST COMPANY
- ------------------------------------- ---------------------------------------
By /s/ [Illegible] By /s/ [Illegible]
---------------------------------- ------------------------------------
Signature(s) of Debtor(s) Signature(s) of Secured Party(ies)
(4) File Copy Debtor
(5/82) STANDARD FORM - FORM UCC-1 -- Approved by Secretary of State of New York
<PAGE>
- --------------------------------------------------------------------------------
This FINANCING STATEMENT is presented to a Filing
Officer for filing pursuant to the Uniform Commercial Code.
- --------------------------------------------------------------------------------
No. of Addititional
Sheets Presented: 1
- --------------------------------------------------------------------------------
3. |_| The Debtor is a transmitting utility.
- --------------------------------------------------------------------------------
1. Debtor(s) (Last Name First) and Address(es):
CVC PRODUCTS, INC.
525 Lee Road
Rochester, New York 14606
- --------------------------------------------------------------------------------
2. Secured Party(ies) Name(s) and Address(es)
MANUFACTURERS AND TRADERS
TRUST COMPANY
One M&T Plaza
Buffalo, New York 14240
- --------------------------------------------------------------------------------
4. For Filing Officer: Date, Time, No. Filing Office
96 FEB - 7 PM 2:42
[MONROE COUNTY CLERK stamp]
- --------------------------------------------------------------------------------
5. This Financing Statement covers the following types (or items) of property:
See Exhibit "A" attached hereto
|_| Products of the Collateral are also covered.
- --------------------------------------------------------------------------------
6. Assignee(s) of Secured Party and Address(es)
- --------------------------------------------------------------------------------
7. |_| The described crops are growing or to be grown on:*
|_| The described goods are or are to be affixed to:*
|_| The lumber to be cut or minerals or the like
(including oil and gas) is on:*
*(Describe Real Estate Below).
- --------------------------------------------------------------------------------
8. Describe Real Estate Here: |X| This statement is to be indexed in
the Real Estate Records:
No. & Street Town or City County Section Block Lot
- --------------------------------------------------------------------------------
9. Name of a Record Owner
- --------------------------------------------------------------------------------
10. This statement is filed without the debtor's signature to perfect a security
interest in collateral (check appropriate box)
|_| under a security agreement signed by debtor authorizing secured party to
file this statement, or
|_| which is proceeds of the original collateral described above in which a
security interest was perfected, or
|_| acquired after a change of name, identity or corporate structure of the
debtor, or |_| as to which the filing has lapsed, or already subject to
a security interest in another jurisdiction:
|_| when the collateral was brought into the state, or |_| when the
debtor's location was changed to this state.
CVC PRODUCTS, INC. MANUFACTURERS AND TRADERS TRUST COMPANY
- ------------------------------------- ---------------------------------------
By /s/ [Illegible] By /s/ [Illegible]
---------------------------------- ------------------------------------
Signature(s) of Debtor(s) Signature(s) of Secured Party(ies)
(2) Filing Officer Copy -- Acknowledgement
(5/82) STANDARD FORM - FORM UCC-1 -- Approved by Secretary of State of New York
<PAGE>
EXHIBIT "A"
A. All equipment now owned by Debtor or in which Debtor now has any interest,
and all equipment hereafter acquired by Debtor or in which Debtor
hereafter acquires any interest, together with substitutions, accessions,
increases, parts, fittings and replacements thereof.
B. All inventory now owned by Debtor or in which Debtor now has any interest,
and all inventory hereafter acquired by Debtor or in which Debtor
hereafter acquires any interest, wherever located and whether in Debtor's
actual or constructive possession or in the possession of others. The term
"inventory" includes, but is not limited to finished products, packaging
materials, raw materials, work in process, materials used or consumed in
Debtor's business, all additions thereto, all goods returned or
repossessed from Debtor's customers, as well as supplies, incidentals,
packaging materials and all other items which contribute to the products
sold, manufactured or processed by Debtor, or to the sale, promotion or
shipment thereof.
C. All Debtor's accounts and accounts receivable, now in existence, and all
of Debtor's accounts and accounts receivable hereafter arising.
D. All general intangibles now owned by Debtor, or in which Debtor now has
any interest, and all general intangibles hereafter acquired by Debtor, or
in which Debtor hereafter acquires any interest.
E. All instruments now owned by Debtor or in which Debtor now has any
interest and all instruments hereafter acquired by Debtor or in which
Debtor hereafter acquires any interest.
F. All chattel paper now owned by Debtor or in which Debtor now has any
interest and all chattel paper hereafter acquired by Debtor or in which
Debtor hereafter acquires any interest.
G. All documents now owned by Debtor or in which Debtor now has any interest
and all documents hereafter acquired by Debtor or in which Debtor
hereafter acquires any interest.
H. All deposit accounts now owned by Debtor or in which Debtor now has any
interest and all deposit accounts hereafter acquired by Debtor or in which
Debtor hereafter acquires any interest.
I. All money now owned by Debtor or in which Debtor now has any interest and
all money hereafter acquired by Debtor or in which Debtor hereafter
acquires any interest.
J. All cash and non-cash proceeds of the items listed in "A", "B", "C", "D",
"E", "F", "G", "H" and "I" above, including but not limited to insurance
proceeds.
<PAGE>
Uniform Commercial Code -- FINANCING STATEMENT -- Form UCC-1
[Illegible]
IMPORTANT -- Read instructions on back before filling out form.
This FINANCING STATEMENT is presented to a Filing
Officer for filing pursuant to the Uniform Commercial Code.
- --------------------------------------------------------------------------------
No. of Additional
Sheets Presented:
- --------------------------------------------------------------------------------
3. |_| The Debtor is a transmitting utility.
- --------------------------------------------------------------------------------
1. Debtor(s) (Last Name First) and Address(es):
C.V.C PRODUCTS, INC.
525 Lee Rd
Rochester, NY 14603
88814
- --------------------------------------------------------------------------------
2. Secured Party(ies) Name(s) and Address(es)
ADVANTA Leasing Corp
PO Box 1228
Voorhees NJ 08043
- --------------------------------------------------------------------------------
4. For Filing Officer: Date, Time, No. Filing Office
1993 JUN 10 A 10:06
[MONROE COUNTY CLERK stamp]
- --------------------------------------------------------------------------------
5. This Financing Statement covers the following types (or items) of property:
3450 Sonitrol security system
w/smoke dtectors
|_| Products of the Collateral are also covered.
- --------------------------------------------------------------------------------
6. Assignee(s) of Secured Party and Address(es)
93-3747
- --------------------------------------------------------------------------------
7. |_| The described crops are growing or to be grown on:*
|_| The described goods are or are to be affixed to:*
|_| The lumber to be cut or minerals or the like
(including oil and gas) is on:*
*(Describe Real Estate Below).
- --------------------------------------------------------------------------------
8. Describe Real Estate Here: |_| This statement is to be indexed in
the Real Estate Records:
No. & Street Town or City County Section Block Lot
- --------------------------------------------------------------------------------
9. Name of a Record Owner
- --------------------------------------------------------------------------------
10. This statement is filed without the debtor's signature to perfect a security
interest in collateral (check appropriate box)
|_| under a security agreement signed by debtor authorizing secured party to
file this statement, or
|_| which is proceeds of the original collateral described above in which a
security interest was perfected, or
|_| acquired after a change of name, identity or corporate structure of the
debtor, or |_| as to which the filing has lapsed, or already subject to
a security interest in another jurisdiction:
|_| when the collateral was brought into the state, or |_| when the
debtor's location was changed to this state.
C.V.C. Products, Inc. ADVANTA Leasing Corp
- ------------------------------------- ---------------------------------------
By /s/ [Illegible] By /s/ [Illegible]
---------------------------------- ------------------------------------
Signature(s) of Debtor(s) Signature(s) of Secured Party(ies)
(1) Filing Officer Copy-Numerical
(5/82) STANDARD FORM - FORM UCC-1 -- Approved by Secretary of State of New York
<PAGE>
EXHIBIT 10.17
AMENDED AND RESTATED
LEASE AGREEMENT
THIS LEASE AGREEMENT dated as of the 29th day of September, 1997, by and
between COUNTY OF MONROE INDUSTRIAL DEVELOPMENT AGENCY, a public benefit
corporation duly existing under the laws of the State of New York with offices
at Two State Street, Suite 500, Rochester, New York 14614 (the "Agency") and CVC
PRODUCTS, INC., a New York Corporation with its offices at 525 Lee Road,
Rochester, New York 14606 (the "Company").
W I T N E S S E T H:
WHEREAS, Title 1 of Article 18-A of the General Municipal Law of the State
of New York (the "Act") was duly enacted into law as Chapter 1030 of the Laws of
1969 of the State of New York (the "State"); and
WHEREAS, the Act authorizes the creation of industrial development
agencies for the benefit of the several counties, cities, villages and towns in
the State and empowers such agencies, among other things, to acquire, construct,
reconstruct, lease, improve, maintain, equip and sell land and any building or
other improvement, and all real and personal properties, including, but not
limited to, machinery and equipment deemed necessary in connection therewith,
whether or not now in existence or under construction, which shall be suitable
for manufacturing, warehousing, research, commercial or industrial facilities,
including industrial pollution control facilities, in order to advance job
opportunities, health, general prosperity and the economic welfare of the people
of the State and to improve their standard of living; and
WHEREAS, the Act further authorizes each such agency to lease any or all
of its facilities at such rentals and on such other terms and conditions as it
deems advisable, to issue its bonds for the purpose of carrying out any of its
corporate purposes and, as security for the payment of the principal and
redemption price of, and interest on, any such bonds so issued and any
agreements made in connection therewith, to mortgage any or all of its
facilities and to pledge the revenues and receipts from the leasing of its
facilities; and
WHEREAS, pursuant to and in connection with the provisions of the Act,
Chapter 55 of the Laws of 1972 of the State (collectively, the "Act") created
the Agency which is empowered under the Act to undertake the providing,
financing and leasing of the facility described below; and
WHEREAS, the parties hereto entered into a certain Lease Agreement dated
on or about September 16, 1974 in connection with an eight-acre parcel of land
at 525 Lee Road, City of Rochester, Monroe County, New York, for purposes of the
constructing
<PAGE>
an approximately 104,500 square foot office and manufacturing building; (the
"Facility"); and
WHEREAS, the parties are desirous of, and do hereby modify, amend and
restate the September 16, 1974 Lease Agreement all as set forth hereinbelow; and
WHEREAS, the Agency has determined that the refinancing of the Facility
will accomplish, in part, its public purposes; and
WHEREAS, the Agency proposes to amend, restate and lease the Facility to
the Company, and the Company desires to rent the Facility from the Agency, upon
the terms and conditions hereinafter set forth in this Amended and Restated
Lease Agreement.
NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants hereinafter contained, the parties hereto hereby formally covenant,
agree and bind themselves as follows:
ARTICLE I
REPRESENTATIONS AND COVENANTS
Section 1.1. Representations and Covenants of the Agency.
The Agency makes the following representations and covenants as the basis
for the undertakings on its part herein contained:
(a) The Agency is duly established under the provisions of the Act and has
the power to enter into the transaction contemplated by this Lease Agreement and
to carry out its obligations hereunder. Based upon the representations of the
Company as to the utilization of the Facility, the Facility is of a character
included in the definition of "Project" in the Act.
(b) The Agency has been duly authorized to execute and deliver this Lease
Agreement.
(c) The Agency will acquire a fee interest in the Facility and lease the
Facility to the Company pursuant to this Lease Agreement, cause the Project to
be constructed and equipped by the Company and the Equipment to be acquired and
installed in the Project or elsewhere on the Land, all for the purpose of
promoting the industry, health, welfare, convenience and prosperity of the
inhabitants of the State and the County of Monroe and improving their standard
of living.
2
<PAGE>
(d) Neither the execution and delivery of this Lease Agreement, the
consummation of the transactions contemplated hereby nor the fulfillment of or
compliance with the provisions of this Lease Agreement will conflict with or
result in a breach of any of the terms, conditions or provisions of the Act or
of any corporate restriction or any agreement or instrument to which the Agency
is a party or by which it is bound, or will constitute default under any of the
foregoing, or result in the creation or imposition of any Lien of any nature
upon any of the Property of the Agency under the terms of any such instrument or
agreement.
(e) The Agency has been induced to enter into this Lease Agreement by the
undertaking of the Company to locate and maintain the Facility in the City of
Rochester, Monroe County, New York.
(f) The Agency has determined that the Facility will not have a
"significant effect" on the environment within the meaning of the State
Environmental Quality Review Act and the regulations of the Department of
Environmental Conservation promulgated thereunder.
Section 1.2. Representations and Covenants of the Company.
The Company makes the following representations and covenants as the basis
for the undertakings on its part herein contained:
(a) The Company has power to enter into and to execute and deliver this
Lease Agreement.
(b) Neither the execution and delivery of this Lease Agreement, the
consummation of the transactions contemplated hereby nor the fulfillment of or
compliance with the provisions of this Lease Agreement will conflict with or
result in a breach of any of the terms, conditions or provisions of any
corporate restriction or any agreement or instrument to which the Company is a
party or by which it is bound, or will constitute a default under any of the
foregoing, or result in the creation or imposition of any Lien of any nature
upon any of the Property of the Company under the terms of any such instrument
or agreement.
(c) The providing of the Facility by the Agency and the leasing thereof by
the Agency to the Company will not result in the removal of a plant, facility or
other commercial activity of the Company from one area of the State to another
area of the State nor result in the abandonment of one or more plants or
facilities of the Company located within the State.
(d) The Facility and the operation thereof will conform with all
applicable zoning, planning, building and environmental laws and regulations of
governmental authorities having jurisdiction over the Facility, and the Company
shall defend,
3
<PAGE>
indemnify and hold the Agency harmless from any liability or expenses resulting
from any failure by the Company to comply with the provisions of this subsection
(d).
(e) The Company has transferred to the Agency insurable title to the fee
and assets contemplated by this Lease Agreement and all documents related
hereto.
(f) There is no litigation pending or, to the knowledge of the Company,
threatened, in any court, either state or federal, to which the Company is a
party, and in which an adverse result would in any way diminish or adversely
impact on the Company's ability to fulfill it obligations under this Lease
Agreement.
(g) The Company represents and covenants (i) the Facility complies and
will comply in all respects with all environmental laws and regulations, (ii)
that no pollutants, contaminants, solid wastes, or toxic or hazardous substances
have been in the past or will be discharged, released, stored, treated,
generated, disposed of, or allowed to escape or exist on the Facility except in
compliance with all applicable environmental laws, (iii) that no asbestos has
been or will be incorporated into or disposed of on the Facility except in
compliance with all applicable environmental laws, (iv) that no underground
storage tanks are or will be located on the Facility, and (v) that no
investigation, order, agreement, notice, demand, or settlement with respect to
any of the above is threatened, anticipated, in existence, or will be in
existence. The Company upon receiving any information or notice contrary to the
representations contained in this Section shall immediately notify the Agency in
writing with full details regarding the same. The Company hereby releases the
Agency from liability with respect to, and agrees to defend, indemnity, and hold
harmless the Agency, its directors, officers, employees, agents,
representatives, successors, and assigns from and against any and all claims,
demands, damages, costs, orders, liabilities, penalties, and expenses (including
reasonable attorneys' fees) related in any way to any violation of the covenants
or failure to be accurate in the making of the representations contained in this
Section. In the event the Agency in its reasonable discretion deems it necessary
to perform due diligence with respect to any of the above, or to have an
environmental audit performed with respect to the Facility, the Company agrees
to pay the expenses of same to the Agency upon demand, and agrees that upon
failure to do so, its obligation for such expenses shall be deemed to be
additional rent.
4
<PAGE>
ARTICLE II
FACILITY SITE, DEMISING CLAUSES AND RENTAL PROVISIONS
Section 2.1. Agreement to Convey to Agency.
The Company has conveyed, or has caused to be conveyed, or will convey, or
will cause to be conveyed, to the Agency all of the interest in real property,
including any buildings, structures or improvements thereon, described in
Exhibit "A" attached hereto and the equipment and personal property described in
Exhibit "B" attached hereto (the "Equipment" and collectively the "Facility").
The Company agrees that the Agency's interest in such Facility will be
sufficient for the purposes intended by this Lease Agreement and agrees that it
will defend, indemnify and hold the Agency harmless from any expense or
liability arising out of a defect in title or a lien adversely affecting the
Facility and will pay all reasonable expenses incurred by the Agency in
defending any action respecting title to or a lien affecting the Facility.
Provided, however, that the Agency accepts title subject to the encumbrances
referred to in Section 1.2(e).
Section 2.2. Construction and Equipping of the Facility
The Company and the Agency agree and acknowledge that the Company will
lease the Facility from the Agency pursuant to this Lease Agreement. The
Company, as agent for the Agency, will construct and equip the Facility.
Section 2.3. Demise of Facility.
The Agency hereby demises and leases the Facility to the Company and the
Company hereby rents and leases the Facility from the Agency upon the terms and
conditions of this Lease Agreement.
Section 2.4. Remedies to be Pursued Against Contractors and Subcontractors and
their Sureties.
In the event of a default by any contractor or any other person or
subcontractor under any contract made by it in connection with the Facility or
in the event of a breach of warranty or other liability with respect to any
materials, workmanship, or performance guaranty, the Company at its expense,
either separately or in conjunction with others, may pursue any and all remedies
available to it and the Agency, as appropriate, against the contractor,
subcontractor or manufacturer or supplier or other Person so in default and
against such surety for the performance of such contract. The Company, in its
own name or in the name of the Agency, may prosecute or defend any action or
proceeding or take any other action involving any such contractor,
subcontractor, manufacturer, supplier or surety or other person which the
Company deems reasonably necessary, and in such event, the Agency, at the
Company's expense,
5
<PAGE>
hereby agrees to cooperate fully with the Company and to take all action
necessary to effect the substitution of the Company for the Agency in any such
action or proceeding.
Section 2.5. Duration of Lease Term; Quiet Enjoyment.
(a) The Agency shall deliver to the Company sole and exclusive possession
of the Facility (subject to the provisions of Section 5.3 hereof) and the
leasehold estate created hereby shall be a continuation of the leasehold estate
created by the parties to the Lease Agreement of September 16, 1974 referred to
hereinabove.
(b) The leasehold estate of the Premises as described in Exhibit "A"
created hereby shall terminate at 11:59 P.M. on December 31, 2007, or on such
earlier date as may be permitted by Section 8.1 hereof.
Section 2.6. Rents.
(a) The Company shall pay rent for the Facility as follows: One Dollar
($1.00) annually.
(b) In addition to the payments of rent pursuant to Section 2.6(a)
hereof, throughout the term of this Lease Agreement, the Company shall pay to
the Agency as additional rent, within thirty (30) days of the receipt of demand
therefor, an amount equal to the sum of the expenses of the Agency and the
members thereof incurred (i) for the reason of the Agency's leasing of the
Facility and (ii) in connection with the carrying out of the Agency's duties and
obligations under this Lease Agreement.
(c) The Company agrees to make the above-mentioned payments, without any
further notice, in lawful money of the United States of America as, at the time
of payment, shall be legal tender for the payment of public or private debts. In
the event the Company shall fail to timely make any payment required in this
Section 2.6 the Company shall pay the same together with interest from the date
said payment is due at the rate of six percent (6%) per annum.
Section 2.7. Obligations of Company Hereunder Unconditional.
The obligations of the Company to make the payments required in Section
2.6 hereof and to perform and observe any and all of the other covenants and
agreements on its part contained herein shall be a general obligation of the
Company and shall be absolute and unconditional irrespective of any defense or
any rights of setoff, recoupment or counterclaim it may otherwise have against
the Agency. The Company agrees it will not (i) suspend, discontinue or abate any
payment required by Section 2.6 hereof or (ii) fail to observe any of its other
covenants or agreements in this Lease Agreement or (iii) except as provided in
Section 8.1 hereof, terminate this Lease Agreement for any cause whatsoever
including, without limiting the generality of the
6
<PAGE>
foregoing, failure to complete the Facility, any defect in the title, design,
operation, merchantability, fitness or condition of the Facility or in the
suitability of the Facility for the Company's purposes and needs, failure of
consideration, destruction of or damage to the Facility, commercial frustration
of purpose, or the taking by Condemnation of title to or the use of all or any
part the Facility, any change in the tax or other laws of the United States of
America or administrative rulings of or administrative actions by the State or
any political subdivision of either, or any failure of the Agency to perform and
observe any agreement, whether expressed or implied, or any duty, liability or
obligation arising out of or in connection with this Lease Agreement, or
otherwise. Subject to the foregoing provisions, nothing contained in this
Section 2.7 shall be construed to release the Agency from the performance of any
of the agreements on its part contained in this Lease Agreement or to affect the
right of the Company to seek reimbursement, and in the event the Agency should
fail to perform any such agreement, the Company may institute such separate
action against the Agency as the Company may deem necessary to compel
performance or recover damages for nonperformance, and the Agency covenants that
it will not, subject to the provisions of Section 5.2, take, suffer or permit
any action which will adversely affect, or create any defect in its title to the
Facility or which will otherwise adversely affect the rights or estates of the
Company hereunder, except upon written consent of the Company. None of the
foregoing shall relieve the Company of its obligations under Section 5.2 hereof.
ARTICLE III
MAINTENANCE, MODIFICATIONS, TAXES AND INSURANCE
Section 3.1. Maintenance and Modifications of Facility By Company.
(a) The Company agrees that during the term of this Lease Agreement it
will (i) keep the Facility in as reasonably safe condition as its operations
shall permit; (ii) make all necessary repairs and replacements to the Facility
(whether ordinary or extraordinary, structural or nonstructural, foreseen or
unforeseen); (iii) operate the Facility in a sound and prudent manner; and (iv)
indemnify and hold the Agency harmless from any liability or expenses from the
failure by the Company to comply with (i), (ii) or (iii) above.
(b) The Company at its own expense, from time to time may make any
structural addition, modifications or improvements to the Facility or any
addition, modifications or improvements to the Facility or any part thereof
which it may deem desirable for its business purposes and uses that do not
adversely affect the structural integrity or impair the operating efficiency of
the Facility or substantially change the nature of the Facility. All such
structural additions, modifications or improvements so made by the Company shall
become a part of the Facility. The Company agrees to deliver to the Agency all
documents which may be necessary or appropriate to convey to the Agency title to
or other satisfactory interest in, such property.
7
<PAGE>
Section 3.2. Installation of Additional Equipment.
The Company from time to time may install additional machinery, equipment
or other personal property in the Facility (which may be attached or affixed to
the Facility), and such machinery, equipment or other personal property shall
not become, or be deemed to become, a part of the Facility. The Company from
time to time may remove or permit the removal of such machinery, equipment or
other personal property; provided that any such removal of such machinery,
equipment or other personal property shall not adversely affect the structural
integrity of the Facility or impair the overall operating efficiency of the
Facility for the purposes for which it is intended and provided further that if
any damage is occasioned to Facility by such removal, the Company agrees to
promptly repair such damage at its own expense.
Section 3.3. Taxes, Assessments and Utility Charges.
(a) The Company agrees to pay, as the same respectively become due, (i)
all taxes and governmental charges of any kind whatsoever which may at any time
be lawfully assessed or levied against or with respect to the Facility and any
machinery, equipment or other property installed or brought by the Company
therein or thereon, including without limiting the generality of the foregoing
any taxes levied upon or with respect to the income or revenues of the Agency
from the Facility, (ii) all payments under the Payment in Lieu of Tax Agreement,
(iii) all utility and other charges, including "service charges", incurred or
imposed for the operation, maintenance, use, occupancy, upkeep and improvement
of the Facility, and (iv) all assessments and charges of any kind whatsoever
lawfully made by any governmental body for public improvements; provided that,
with respect to special assessments or other governmental charges that may
lawfully be paid in installments over a period of years, the Company shall be
obligated under this Lease Agreement to pay only such installments as are
required to be paid during the term of this Lease Agreement.
(b) The Company, at its own expense and in its own name and on behalf or
in the name and on behalf of the Agency, may in good faith contest any such
taxes, assessments and other charges. In the event of any such contest, the
Company may permit the taxes, assessments or other charges so contested to
remain unpaid during the period of such contest and any appeal therefrom.
Section 3.4. Insurance Required.
At all times throughout the term of this Lease Agreement, including
without limitation during any period of construction of the Facility, the
Company shall maintain insurance against such risks and for such amounts as are
customarily insured against by businesses of like size and type paying, as the
same become due and payable, all premiums in respect thereto, including, but not
necessarily limited to:
8
<PAGE>
(a) Insurance against loss or damage by fire, lightning and other
casualties, with a uniform standard extended coverage endorsement, such
insurance to be in an amount not less than the replacement cost of the Facility,
exclusive of excavations and foundations, as determined by a recognized
appraiser or insurer selected by the Company. As an alternative to the
requirements in this subsection (a), including the requirement of periodic
appraisal, the Company may insure such property under a blanket insurance policy
or policies covering not only the Facility, but other properties as well.
(b) Workers' compensation insurance, disability benefits insurance, and
each other form of insurance which the Agency or the Company is required by law
to provide, covering loss resulting from injury, sickness, disability or death
of employees of the Company who are located at or assigned to the Facility.
(c) Insurance against loss or losses from liabilities imposed by law or
assumed in any written contract (including the contractual liability assumed by
the Company under Section 5.2 hereof) and arising from personal injury and death
or damage to the property of others caused by any accident or occurrence, with
limits of not less than $1,000,000 per accident or occurrence on account of
personal injury, including death resulting therefrom, and $1,000,000 per
accident or occurrence on account of damage to the Property of others, excluding
liability imposed upon the Company by any applicable workmen's compensation law;
and a blanket excess liability policy in the amount not less than $1,000,000,
protecting the Company against any loss or liability or damage for personal
injury or property damage.
Section 3.5. Additional Provisions Respecting Insurance.
(a) All insurance required by Section 3.4 hereof shall be procured and
maintained in financially sound and generally recognized responsible insurance
companies selected by the Company and authorized to write such insurance in the
State. Such insurance may be written with deductible amounts comparable to those
on similar policies carried by other companies engaged in businesses similar in
size, character and other respects to those in which the Company is engaged. All
policies evidencing such insurance shall provide for (i) payment of the losses
of the Company and the Agency as their respective interest may appear, and (ii)
at least thirty (30) days written notice of the cancellation thereof to the
Company and the Agency.
(b) All such policies of insurance, or a certificate or certificates of
the insurers that such insurance is in force and effect, shall be deposited with
the Agency on or before the Closing Date. The Company shall deliver to the
Agency on or before the first business day of each calendar year thereafter a
certificate dated not earlier than the immediately preceding December 1st
reciting that there is in full force and effect, with a term covering at least
the next succeeding calendar year, insurance in the amounts and of the types
required by Sections 3.4 and 3.5 hereof. Prior to expiration of any such policy,
the
9
<PAGE>
Company shall furnish the Agency evidence that the policy has been renewed or
replaced or is no longer required by this Lease Agreement.
Section 3.6. Application of Net Proceeds of Insurance.
The net proceeds of the insurance carried pursuant to the provisions of
Section 3.4 hereof shall be applied as follows:
(i) the net proceeds of the insurance required by Section 3.4(a) hereof
shall be applied as provided in Section 4.1 hereof, and
(ii) the net proceeds of the insurance required by Section 3.4(b) and (c)
hereof shall be applied toward extinguishment or satisfaction of the
liability with respect to which such insurance proceeds may be paid.
Section 3.7. Right of Agency to Pay Taxes, Insurance Premiums and Other Charges.
If the Company fails (i) to pay any tax, assessment or other governmental
charge required to be paid by Section 3.3 hereof or (ii) to maintain any
insurance required to be maintained by Section 3.4 hereof, the Agency may pay
such tax, assessment or other governmental charge or the premium for such
insurance. The Company shall reimburse the Agency for any amount so paid
together with interest thereon from the date of payment at six percent (6%) per
annum.
ARTICLE IV
DAMAGE, DESTRUCTION AND CONDEMNATION
Section 4.1. Damage or Destruction.
(a) If the Facility shall be damaged or destroyed (in whole or in part) at
any time during the term of this Lease Agreement:
(i) the Agency shall have no obligation to replace, repair, rebuild or
restore the Facility;
(ii) there shall be no abatement or reduction in the amounts payable by
the Company under this Lease Agreement; and
(iii) except as otherwise provided in subsection (b) of this Section 4.1,
the Company shall promptly replace, repair, rebuild or restore the
Facility to substantially the same condition and value as an
operating entity as existed prior to such damage or destruction,
with such changes, alterations and modifications as may be desired
by the Company.
10
<PAGE>
All such replacements, repairs, rebuilding or restoration made pursuant to
this Section 4.1, whether or not requiring the expenditure of the Company's own
money, shall automatically become a part of the Facility as if the same were
specifically described herein.
(b) The Company shall not be obligated to replace, repair, rebuild or
restore the Facility, and the net proceeds of the insurance shall not be applied
as provided in subsection (a) of this Section 4.1, if the Company shall exercise
its option to terminate this Agreement pursuant to Section 8.1 hereof.
(c) The Company may adjust all claims under any policies of insurance
required by Section 3.4(a) hereof.
Section 4.2. Condemnation.
(a) If at any time during the term of this Lease Agreement the whole or
any part of title to, or the use of, the Facility shall be taken by
condemnation, the Agency shall have no obligation to restore or replace the
Facility and there shall be no abatement or reduction in the amounts payable by
the Company under this Lease Agreement. The Agency shall not have any interest
whatsoever in any condemnation award, and the Company shall have the exclusive
right to same.
Except as otherwise provided in subsection (b) of this Section 4.2, the
Company shall promptly:
(i) restore the Facility (excluding any land taken by condemnation) to
substantially the same condition and value as an operating entity as
existed prior to such condemnation, or
(ii) acquire, by construction or otherwise, facilities of substantially
the same nature and value as an operating entity as the Facility.
The Facility, as so restored, or the substitute facilities, whether or not
requiring the expenditure of the Company's own moneys, shall automatically
become part of the Facility as if the same were specifically described herein.
(b) The Company shall not be obligated to restore the Facility or acquire
substitute facilities, and the net proceeds of any condemnation award shall not
be applied as provided in Section 4.2(a), if the Company shall exercise its
option to terminate this Lease Agreement pursuant to Section 8.1 hereof.
(c) The Agency shall cooperate fully with the Company in the handling
and conduct of any condemnation proceeding with respect to the Facility. In
no event shall
11
<PAGE>
the Agency voluntarily settle, or consent to the settlement of, any condemnation
proceeding with respect to the Facility without the written consent of the
Company.
Section 4.3. Condemnation of Company-Owned Property.
The Company shall be entitled to the proceeds of any condemnation award or
portion thereof made for damage to or taking of any property which, at the time
of such damage or taking, is not part of the Facility.
ARTICLE V
SPECIAL COVENANTS
Section 5.1. No Warranty of Condition or Suitability by the Agency.
THE AGENCY MAKES NO WARRANTY, EITHER EXPRESS OR IMPLIED, AS TO THE
CONDITION, TITLE, DESIGN, OPERATION, MERCHANTABILITY OR FITNESS OF THE FACILITY
OR THAT IT IS OR WILL BE SUITABLE FOR THE COMPANY'S PURPOSES OR NEEDS.
Section 5.2. Hold Harmless Provisions.
The Company hereby releases the Agency from, agrees that the Agency shall
not be liable for and agrees to indemnify and hold the Agency harmless from and
against any and all (i) liability for loss or damage to property or injury to or
death of any and all persons that may be occasioned by any cause whatsoever
pertaining to the Facility or arising by reason or of in connection with the
occupation or the use thereof or the presence on, in or about the Facility or
(ii) liability arising from or expense incurred by the Agency's financing,
construction, renovation, equipping, owning and leasing of the Facility,
including without limiting the generality of the foregoing, all causes of action
and reasonable attorneys' fees and any other expenses incurred in defending any
suits or actions which may arise as a result of any of the foregoing. The
foregoing indemnities shall apply notwithstanding the fault or negligence on the
part of the Agency, or any of its respective members, directors, officers,
agents or employees and irrespective of the breach of a statutory obligation or
the application of any rule of comparative or apportioned liability.
Section 5.3. Right to Inspect the Facility.
The Agency and its duly authorized agents shall have the right at all
reasonable times, and upon reasonable notice, to inspect the Facility; any
inspections shall be conducted so as not to interfere with the Company's
business operations.
12
<PAGE>
Section 5.4. Company to Maintain its Existence; Conditions Under Which
Exceptions Permitted.
The Company agrees that during the term of this Lease Agreement it will
maintain its existence, will not dissolve or otherwise dispose of all or
substantially all of its assets.
Section 5.5. Qualification in the State.
Throughout the term of this Lease Agreement, the Company shall continue to
be duly authorized to do business in the State.
Section 5.6. Agreement to Provide Information.
The Company agrees, whenever requested by the Agency, to provide and
certify or cause to be provided and certified such information concerning the
Company, the Facility and other topics necessary to enable the Agency to make
any report required by law or governmental regulation.
Section 5.7. Books of Record and Account; Financial Statements.
The Company at all times agrees to maintain proper accounts, records and
books in which full and correct entries shall be made, in accordance with
generally accepted accounting principles, of all business and affairs of the
Company.
Section 5.8. Compliance With Orders, Ordinances, Etc.
(a) The Company agrees that it will, throughout the term of this Lease
Agreement, promptly comply with all statutes, codes, laws, acts, ordinances,
orders, judgments, decrees, injunctions, rules, regulations, permits, licenses,
authorizations, directions and requirements of all federal, state, county,
municipal and other governments, departments, commissions, boards, companies or
associations insuring the premises, courts, authorities, officials and officers,
foreseen or unforeseen, ordinary or extraordinary, which now or at any time
hereafter may be applicable to the Facility or any part thereof, or to any use,
manner of use or condition of the Facility or any part thereof.
(b) Notwithstanding the provisions of subsection (a) of this Section 5.8,
the Company may in good faith contest the validity of the applicability of any
requirement of the nature referred to in such subsection (a). In such event, the
Company, with the prior written consent of the Agency (which shall not be
unreasonably withheld) may fail to comply with the requirement or requirements
so contested during the period of such contest and any appeal therefrom, unless
the Agency shall notify the Company that it must comply with such requirement or
requirements.
13
<PAGE>
Section 5.9. Discharge of Liens and Encumbrances.
(a) The Company shall not permit or create or suffer to be permitted or
created any lien, upon the Facility or any part thereof by reason of any labor,
services or materials rendered or supplied or claimed to be rendered or supplied
with respect to the Facility or any part thereof.
(b) Notwithstanding the provisions of subsection (a) of this Section 5.9,
the Company may in good faith contest any such lien. In such event, the Company
may permit the items so contested to remain undischarged and unsatisfied during
the period of such contest and any appeal therefrom.
Section 5.10. Sales Tax.
The Company shall, file an Annual Statement with New York State Department
of Taxation and Finance regarding the value of sales tax exemptions the Company,
its agents, consultants or subcontractors have claimed pursuant to the Agency
conferred upon it in connection with the Facility. The Company acknowledges that
the penalty for failure to file such statement is a default under the terms of
this Lease Agreement.
Section 5.11. Depreciation Deductions and Investment Tax Credit.
The parties agree that the Company shall be entitled to all depreciation
deductions with respect to any depreciable property in the Facility pursuant to
section 167 of the United States Internal Revenue Code (the "Code") and to any
investment credit pursuant to Section 38 of the Code with respect to any portion
of the Facility which constitutes "Section 38 Property".
ARTICLE VI
RELEASE OF CERTAIN LAND; ASSIGNMENTS AND SUBLEASING;
MORTGAGE AND PLEDGE OF INTERESTS
Section 6.1. Restriction on Sale of Facility Release of Certain Land.
Except as otherwise specifically provided in this Article VI, the Agency
shall not sell, convey, transfer, mortgage, encumber or otherwise dispose of the
Facility or any part thereof or any of its rights under this Lease Agreement,
without the prior written consent of the Company.
14
<PAGE>
Section 6.2. Removal of Equipment.
(a) The Agency shall not be under any obligation to remove, repair or
replace any inadequate, obsolete, worn out, unsuitable, undesirable or
unnecessary item of Equipment. In any instance where the Company determines that
any item of Equipment has become inadequate, obsolete, worn out, unsuitable,
undesirable or unnecessary, the Company may remove such item of Equipment from
the Facility and may sell, trade-in, exchange or otherwise dispose of the same,
as a whole or in part.
(b) The Agency shall execute and deliver to the Company all instruments
necessary or appropriate to enable the Company to sell or otherwise dispose of
any such item of Equipment. The Company shall pay any costs (including
reasonable counsel fees) incurred in transferring title to and releasing any
item of Equipment removed pursuant to this Section 6.2.
(c) The removal of any item of Equipment pursuant to this Section 6.2
shall not entitle the Company to any abatement or diminution of the rents
payable under Section 2.4 hereof.
Section 6.3. Assignment and Subleasing.
This Amended and Restated Lease Agreement may be assigned in whole or in
part and the Facility may be subleased as a whole or in part by the Lessee,
without the consent of the Agency, provided that:
(a) No assignment or subleasing shall relieve the Lessee from
primary liability for any of its obligations hereunder;
(b) The assignee or sublessee shall assume the obligations of the
Lessee hereunder to the extent of the interest assigned or subleased; and
(c) The Lessee shall, within 10 days after the delivery thereof,
furnish or cause to be furnished to the Agency a true and complete copy of such
each such assignment or sublease, as the case may be, and the instrument of
assumption.
ARTICLE VII
DEFAULT
Section 7.1. Events of Default Defined.
(a) Each of the following shall be an "Event of Default" under this Lease
Agreement:
15
<PAGE>
(1) If the Company fails to pay the amounts required to be paid
pursuant to Section 2.6 of this Lease Agreement and such failure shall have
continued for a period of thirty (30) days after the Agency gives written notice
of such failure to the Company.
(2) If there is any failure by the Company to observe or perform any
other covenant, condition or agreement required by this Lease Agreement to be
observed or performed and such failure shall have continued for a period of
thirty (30) days after the Agency gives written notice to the Company,
specifying the failure and stating that it be remedied, or in the case of any
such default which can be cured with due diligence but not within such 30-day
period, the Company's failure to proceed promptly to cure such default and
thereafter prosecute the curing of such default with due diligence.
(3) If any representation or warranty of the Company contained in
this Lease Agreement is incorrect in any material respect.
(4) If there is any default by the Company to observe or perform any
covenant, condition or agreement required by the Lease, or any other Agreement
between the Company and the Agency to be observed or performed by the Company
and such failure shall have continued for a period of thirty (30) days after the
Agency gives written notice to the Company, specifying that failure and stating
that it be remedied, or in the case of any such default which can be cured with
due diligence but not within such 30-day period, the Company's failure to
proceed promptly to cure such default and thereafter prosecute the curing of
such default with due diligence.
(b) Notwithstanding the provisions of 7.1(a), if by reason of force
majeure either party hereto shall be unable in whole or in part to carry out its
obligations under this Lease Agreement and if such party shall give notice and
full particulars of such force majeure in writing to the other party within a
reasonable time after the occurrence of the event or cause relied upon, the
obligations under this Lease Agreement of the party giving such notice, so far
as they are affected by such force majeure shall be suspended during continuance
of the inability, which shall include a reasonable time for the removal of the
effect thereof. The suspension of such obligations for such period pursuant to
this subsection (b) shall not be deemed an Event of Default under this Section
7.1. Notwithstanding anything to the contrary in this subsection (b), an event
of force majeure shall not excuse, delay or in any way diminish the obligations
of the Company to make the payments required by Section 2.6 and Section 3.3
hereof, to obtain and continue in full force and effect the insurance required
by Section 3.4 hereof, and to provide the indemnity required by Section 5.2
hereof and to comply with the terms of Sections 5.2, 5.3, 5.4, 5.6, 5.7, 5.8,
5.9, 5.10 and 7.1(a)(1) hereof. The term "force majeure" as used herein shall
include, without limitation, acts of God, strikes, lockouts or other industrial
disturbances, acts of public enemies, acts, priorities or orders of any kind of
the government of the United States of America or of the State or any of their
departments, agencies, governmental subdivisions, or officials, any civil or
military
16
<PAGE>
authority, insurrections, riots, epidemics, landslides, lightning, earthquakes,
fire, hurricanes, storms, floods, washouts, droughts, arrests, restraint of
government and people, civil disturbances, explosions, breakage or accident to
machinery, transmission pipes or canals, shortages of labor or materials or
delays of carriers, partial or entire failure of utilities, shortage of energy
or any other cause or event not reasonably within the control of the party
claiming such inability and not due to its fault. The party claiming such
inability shall remove the cause for the same with all reasonable promptness. It
is agreed that the settlement of strikes, lockouts and other industrial
disturbances shall be entirely within the discretion of the party having
difficulty, and the party having difficulty shall not be required to settle any
strike, lockout and other industrial disturbances by acceding to the demands of
the opposing party or parties.
Section 7.2 Remedies on Default.
Whenever any Event of Default shall have occurred and be continuing, the
Agency may take, to the extent permitted by law, any one or more of the
following remedial steps;
(1) Declare, by written notice to the Company, to be immediately due and
payable, whereupon the same shall become immediately due and payable: (i) all
unpaid installments of rent payable pursuant to Section 2.6 (a) hereof and (ii)
all other payments due under this Lease Agreement.
(2) Take any other action as it shall deem necessary to cure any such
Event of Default, provided that the taking of any such action shall not be
deemed to constitute a waiver of such Event of Default.
(3) Take any other action at law or in equity which may appear necessary
or desirable to collect the payments then due or thereafter to become due
hereunder, and to enforce the obligations, agreements or covenants of the
Company under this Lease Agreement.
(4) Terminate this Lease Agreement and convey the Facility to the Company
or its designee.
Section 7.3 Remedies Cumulative.
No remedy herein conferred upon or reserved to the Agency is intended to
be exclusive of any other available remedy, but each and every such remedy shall
be cumulative and in addition to every other remedy given under this Lease
Agreement or now or hereafter existing at law or in equity. No delay or omission
to exercise any right or power accruing upon any default shall impair any such
right or power or shall be construed to be a waiver thereof, but any such right
and power may be exercised from time to time and as often as may be deemed
expedient.
17
<PAGE>
Section 7.4 Agreement to Pay Attorneys' Fees and Expenses.
In the event the Company should default under any of the provisions of
this Lease Agreement and the Agency should employ attorneys or incur other
expenses for the collection of amounts payable hereunder or the enforcement of
performance or observance of any obligations or agreements on the part of the
Company herein contained, the Company shall, on demand therefor, pay to the
Agency, the reasonable fees of such attorneys and such other expenses so
incurred.
Section 7.5 No Additional Waiver Implied by One Waiver.
In the event any agreement contained herein should be breached by any
party and thereafter waived by any other party, such waiver shall be limited to
the particular breach so waived and shall not be deemed to waive any other
breach hereunder.
ARTICLE VIII
EARLY TERMINATION OF AGREEMENT;
OBLIGATIONS OF COMPANY
Section 8.1. Early Termination of Agreement.
(a) The Company shall have the option at any time to terminate this Lease
Agreement upon filing with the Agency a certificate signed by an authorized
representative of the Company stating the Company's intention to do so pursuant
to this Section 8.1 and upon compliance with the requirements set forth in
Section 8.2 hereof.
(b) The Agency shall have the option at any time to terminate this Lease
Agreement upon any default of the Company under Paragraph 1(a) of the Payment in
Lieu Tax Agreement, after ten (10) days written notice to the Company and
opportunity to cure.
(c) The Agency shall have the option at any time to terminate this Lease
Agreement upon default of the Company in the performance of any other obligation
under this agreement upon thirty (30) days written notice to the Company and
opportunity to cure.
Section 8.2. Obligation to Purchase Facility.
Upon termination of the term of this Lease Agreement in accordance with
Section 2.5 or Section 8.1 hereof, the Company shall purchase the Facility from
the Agency for the purchase price of One ($1.00) Dollar. The Company shall
exercise its obligation to purchase by giving written notice to the Agency.
18
<PAGE>
Section 8.3. Conveyance on Purchase.
At the closing of any purchase of the Facility pursuant to Section 8.2
hereof, the Agency shall, upon receipt of the purchase price, deliver to the
Company all necessary documents,
(a) to convey to the Company good and marketable title to the property
being purchased, as such property exists, subject only to the following:
(i) any liens to which title to such property was subject when conveyed
to the Agency,
(ii) any liens created at the request of the Company or to the creation
of which the Company consented or in the creation of which the
Company acquiesced, and
(iii) any liens resulting from the failure of the Company to perform or
observe any of the agreements on its part contained in this Lease
Agreement; and
(b) to release and convey to the Company all of the Agency's rights and
interest in and to any rights of action or any net proceeds of insurance or
condemnation awards with respect to the Facility.
ARTICLE IX
MISCELLANEOUS
Section 9.1. Surrender of Facility.
Except as otherwise expressly provided in this Lease Agreement, at the
termination of this Lease Agreement, the Company shall surrender possession of
the Facility peaceably and promptly to the Agency in as good condition as at the
commencement of the term of this Lease Agreement, loss by fire or other casualty
covered by insurance, condemnation and ordinary wear, tear and obsolescence only
excepted.
Section 9.2. Notices.
All notices, certificates and other communications hereunder shall be in
writing and shall be sufficiently given and shall be deemed given when delivered
and, if delivered by mail, shall be sent by certified mail, postage prepaid,
addressed as follows:
To the Agency: County of Monroe Industrial
Development Agency
Two State Street, Suite 500
19
<PAGE>
Rochester, New York 14614
Attention: Executive Director
To the Company: CVC Products, Inc.
525 Lee Road
Rochester, New York 14606
Attention: Emilio 0. DiCataldo
Section 9.3. Binding Effect.
This Lease Agreement shall insure to the benefit of and shall be binding
upon the Agency, the Company and their respective successors and assigns.
Section 9.4. Severability.
In the event any provision of this Lease Agreement shall be held invalid
or unenforceable by any court of competent jurisdiction, such holding shall not
invalidate or render unenforceable any other provision hereof.
Section 9.5. Amendments, Changes and Modifications.
This Lease Agreement may not be amended, changed, modified, altered or
terminated without the concurring written consent of the parties hereto.
Section 9.6. Execution of Counterparts.
This Lease Agreement may be executed in several counterparts, each of
which shall be an original and all of which shall constitute but one and the
same instrument.
Section 9.7. Applicable Law.
This Lease Agreement shall be governed exclusively by the applicable laws
of the State.
Section 9.8. Recording and Filing.
This Lease Agreement or a memorandum thereof, shall be recorded or filed,
as the case may be, in the Office of the Clerk of Monroe County, New York, or in
such other office as may at the time be provided by law as the proper place for
the recordation or filing thereof.
Section 9.9. Subordination to Mortgage
20
<PAGE>
The Lease Agreement and the Obligation contained in Section 8.2 is subject
and subordinate to a certain Mortgage made by the Company as Borrower to M&T
Real Estate, Inc. in the principal amount of Two Million ($2,000,000.00)
Dollars, and all modifications, extensions or renewals thereof and to all
advances secured thereunder together with interest thereon.
Section 9.10. Survival of Obligations
This Lease Agreement shall survive the performance of the obligations of
the Company to make payments required by Section 2.6 and all indemnities shall
survive any termination or expiration of this Lease Agreement.
Section 9.11. Table of Contents and Section Headings Not Controlling.
The table of contents and the headings of the several sections in this
Lease Agreement have been prepared for convenience of reference only and shall
not control, affect the meaning or be taken as an interpretation of any
provision of this Lease Agreement.
IN WITNESS WHEREOF, the Agency and the Company have caused this Lease
Agreement to be executed in their respective corporate names, all as of the date
first above written.
COUNTY OF MONROE INDUSTRIAL
DEVELOPMENT AGENCY, Sublessor
By: /s/ Robert E. Morgan
--------------------------------------
Robert E. Morgan, Chairman
CVC PRODUCTS, INC.
By: Emilio 0. DiCataldo
--------------------------------------
Emilio 0. DiCataldo, Senior
Vice-President & Chief Financial
Officer
21
<PAGE>
STATE OF NEW YORK)
COUNTY OF MONROE ) ss.:
On the 29th day of September, 1997, before me personally came ROBERT E.
MORGAN, to me personally known, who being by me duly sworn, did depose and say
that he resides in the Town of Mendon, New York; that he is the Chairman of the
COUNTY OF MONROE INDUSTRIAL DEVELOPMENT AGENCY, the public benefit corporation
described in and which executed the foregoing Instrument; and that he signed his
name thereto at the direction of the Board of Directors of such public benefit
corporation.
/s/ Michael J. Townsend
-----------------------
Notary Public
MICHAEL J. TOWNSEND
Notary Public, State of New York
Qualified in Monroe County
Commission Expires May 31, 1999
STATE OF NEW YORK)
COUNTY OF MONROE ) ss.:
On the 29 day of September, 1997, before me personally came EMILIO 0.
DiCATALDO, to me personally known, who being by me duly sworn, did depose and
say that he resides at 11A Long Rd, Rochester, New York; that he is a Senior
Vice-President and Chief Financial Officer of CVC PRODUCTS, INC., the
corporation described in and which executed the foregoing instrument; and that
he signed his name thereto at the direction of the Board of Directors of such
corporation.
/s/ Kevin V. Recchia
-----------------------
Notary Public
KEVIN V. RECCHIA
[LSE] Notary Public, State of New York
No. 02RE5004856
Qualified in Monroe County
Certificate Filed in Monrow County
Commission Expires Nov. 23, 1998
22
<PAGE>
Exhibit "B" to Lease and Memorandum of Lease
All equipment, fixtures, machinery, building materials and items of personal
property now or hereafter to be acquired, constructed and installed in or
necessary for the operation of the building constructed or to be constructed on
the real estate located in the City of Rochester, Monroe County, New York,
described in Schedule "A" to this Financing Statement, including all
substitutions and replacements therefore and all accessions and additions hereto
and proceeds thereof and all plans, specifications, drawings, designs,
blueprints, special tools, parts and fittings and manufacturers', vendors',
contractors' and subcontractors' warranties relating thereto.
<PAGE>
SCHEDULE "A"
ALL THAT TRACT OR PARCEL OF LAND situate in the city of Rochester, County of
Monroe, State of New York and described as follows:
BEGINNING at an iron pin set at the intersection of the division line between
the property of Marvin J. Goldblatt (reputed owner) on the north and the
property of the County of Monroe Industrial Development Agency on the south with
the westerly boundary of Lee Road; thence along said boundary the following two
(2) courses and distances: (1) South 00' 23' 31" east, a distance of 268.32 feet
to a set iron pin and (2) south 00' 00' 30" west, a distance of 428.76 feet to a
set iron pin; thence south 89' 36' 51" west, a distance of 487.59 feet to an
iron pin set on the easterly boundary of the existing Rochester Outer Loop-New
York State Route I-390; thence along said boundary the following two (2) courses
and distances: (1) North 00' 06' 56" west, a distance of 489.31 feet to an
existing monument and (2) north 00' 0l' 31" east, a distance of 207.76 feet to
an existing concrete monument at its intersection with the southerly boundary of
said Rochester Outer Loop-New York State Route I-390; thence north 89' 36' 51"
east along the last mentioned boundary and also along the beforementioned
division line between the property of Marvin J. Goldblatt (reputed owner) on the
north and the property of the County of Monroe Industrial Development Agency on
the south, a distance of 486.71 feet to the point of beginning, containing 7.807
acres of land.
The above described parcel being more particularly shown on a survey made by
Denluck-Hyde, dated August 2, 1988 entitled "Map of a Survey Part of Town Lot
100, 20,000 Acre Tract, City of Rochester, Monroe County."
<PAGE>
EXHIBIT 10.18
BILL OF SALE
CVC PRODUCTS, INC., a New York Corporation, having its offices at 525 Lee
Road, Rochester, New York 14606 (the "Company") for and in consideration of the
sum of One ($1.00) Dollar, the receipt of which is hereby acknowledged, for
itself, convey, transfer, set over and assign to the COUNTY OF MONROE INDUSTRIAL
DEVELOPMENT AGENCY, a public benefit corporation duly organized and existing
under the laws of the State of New York, having its principal office at Suite
500, Two State Street, Rochester, New York 14614 (the "Agency"), and its
successors and assigns, all of its right, title and interest, of whatever kind,
in and to the Building and the Equipment and Fixtures acquired and installed
and/or to be acquired and installed in or as part of the Facility (as defined in
the Amended and Restated Lease Agreement dated as of September 29, 1997 between
the Company and the Agency), and all building materials delivered to the
Facility to be used for the completion of the acquisition, construction and
equipping of the Facility. This Bill of Sale shall become effective as to each
item of the building and the equipment, fixtures and building materials as and
when the same are delivered to the site of the Facility or installed in the
Facility.
All capitalized terms used herein, unless otherwise defined, shall have
the meaning ascribed to such terms in the Lease Agreement.
IN WITNESS WHEREOF, the party hereto has caused this Bill of Sale to be
signed this 29th day of September, 1997.
CVC PRODUCTS, INC.
By: /s/ Emilio O. DiCataldo
-----------------------------------
Emilio O. DiCataldo, Senior Vice
President & Chief Financial Officer
STATE OF NEW YORK )
COUNTY OF MONROE ) ss.:
On the 29th day of September, 1997, before me personally came EMILIO O.
DiCATALDO, to me personally known, who being by me duly sworn, did depose and
say that he resides at 11A Ling Rd., Rochester, New York; that he is the Senior
Vice President and Chief Financial Officer of CVC PRODUCTS, INC., the
corporation described in and which executed the foregoing instrument; that he is
duly authorized by said corporation to sign his name and did sign his name
thereto by virtue of said authority.
/s/ Kevin V. Recchia
---------------------------------
Notary Public
KEVIN V. RECCHIA
Notary Public, State of New York
No. 02RE5004856
Qualified in Monroe County
Certificate Filed in Monroe County
Commission Expires Nov. 23, 1998
<PAGE>
EXHIBIT 10.20
The inserts herein are contained in a Rider attached hereto which is made a part
hereof and incorporated herein. +
[Logo of M&T Bank} TERM LOAN AGREEMENT
(Corporation or Partnership)
Buffalo, New York September 30, 1996 $ 3,000,000.00
BORROWER: CVC PRODUCTS. INC.
a |X| Delaware corporation |_| general partnership |_| limited partnership
|_|_________________ having its chief executive office at 525 Lee Road,
Rochester, NY 14606 Attention: Emilio 0. DiCataldo, Senior Vice President
BANK: MANUFACTURERS AND TRADERS TRUST COMPANY, a New York banking corporation
having its chief executive office at One M&T Plaza, Buffalo, New York 14240
Attention: Office of the General Counsel.
The Bank and the Borrower agree as follows:
1. THE LOAN.
a. Loan. Subject to the terms of this Agreement, the Bank shall lend to
the Borrower, and the Borrower shall borrow from the Bank, the principal sum of
$ 3,000,000.00 (the "Loan"), with interest as specified in Borrower's promissory
note to Bank of even date and any replacements, substitutions or amendments from
time to time (the "Note"). See Insert No. 1.
b. Repayment. Payment of principal, interest and all other amounts
pursuant to this Agreement shall be made in lawful money of the United States in
immediately available funds at the Bank's banking office at One M&T Plaza,
Buffalo, New York, or at such other office as may be specified by the Bank.
2. REPRESENTATIONS, WARRANTIES AND COVENANTS. The Borrower for itself and,
unless expressly waived by the Bank, for each subsidiary, parent and other
entity under common control with or at least 50% owned by the Borrower (a
"Subsidiary"; collectively, the Borrower and each Subsidiary are the "Borrower")
represents, warrants and covenants with the Bank that now and continuing
throughout the term of this Agreement:
a. Use of Proceeds. See Insert No. 2.
b. Good Standing; Authority. The Borrower (i) is an entity duly organized,
validly existing and in good standing under the laws of the jurisdiction in
which it was formed, (ii) is duly authorized to do business in each jurisdiction
in which failure to be so qualified might have a material adverse effect on its
business or assets and (iii) has the power and authority to own each of its
assets and to use them as contemplated now and in the future.
c. Compliance. The Borrower conducts its business and operations and the
ownership of its assets in compliance with each applicable statute, regulation
and other law, including without limitation environmental laws. All approvals,
including without limitation authorizations, permits, consents, franchises,
licenses, registrations, filings, declarations, reports and notices (the
"Approvals") necessary for the conduct of Borrower's business and for the Loan
have been duly obtained and are in full force and effect. The Borrower is in
compliance with the Approvals, with its articles of incorporation and bylaws or
other organizational documents and with each agreement to which it is a party or
by which it or any of its assets is bound. See Insert No. 3.
d. Legality. The execution, delivery and performance by the Borrower of
this Agreement and all related documents (i) are in furtherance of the
Borrower's purposes and within its power and authority; (ii) do not (A) violate
any statute, regulation or other law or any judgment, order or award of any
court, agency or other governmental authority or of any arbitrator or (B)
violate Borrower's certificate of incorporation or other governing instrument,
constitute a default under any agreement binding on Borrower or result in a lien
or encumbrance on any assets of the Borrower; and (iii) have been duly
authorized by all necessary corporate or partnership actions.
e. Fiscal Year. The fiscal year of the Borrower is the calendar year
unless the following blank states otherwise: year ending September 30th.
f. Accounting; Tax Returns and Payment of Claims. The Borrower will
maintain a system of accounting and reserves in accordance with generally
accepted accounting principles, has filed and will file each tax return required
of it and, except as disclosed in an attached Schedule, has paid and will pay
when due each tax, assessment, fee, charge, fine and penalty imposed by any
taxing authority upon it or any of its assets, income or franchises, as well as
all amounts owed to mechanics, materialmen, landlords, suppliers and the like in
the normal course of business.
g. Title to Assets; Insurance. Borrower has good and marketable title to
each of its assets free of security interests, mortgages or other liens or
encumbrances, except as set forth on an attached Schedule titled "Permitted
Liens" or pursuant to the Bank's prior written consent. Borrower will maintain
its property in good repair and will on request provide the Bank with evidence
of insurance coverage satisfactory to Bank, including without limitation fire
and hazard, liability, workers' compensation and business interruption insurance
and flood hazard insurance as required.
h. Judgments and Litigation. There is no pending or threatened claim,
audit, investigation, action or other legal proceeding or judgment, order or
award of any court, agency or other governmental authority or arbitrator which
involves the Borrower or its assets and might have a material adverse effect
upon the Borrower or threaten the validity of this Agreement or any related
document or action. Borrower will immediately notify Bank upon acquiring
knowledge of any such action.
i. Full Disclosure. Neither this Agreement nor any certificate, financial
statement or other writing provided to the Bank by or on behalf of the Borrower
contains any statement of fact that is incorrect or misleading in any material
respect or omits to state any fact necessary to make any such statement not
incorrect or misleading. The Borrower has not failed to disclose to the Bank any
fact that might have a material adverse effect on the Borrower or on the Bank's
decision to lend. See Insert No. 4.
j. Financial and Other Information; Certificates of No Default. During the
term of the Agreement, Borrower shall promptly deliver to Bank copies of all
annual reports, proxy statements and similar information distributed to
shareholders or partners and of all fillings with the Securities and Exchange
Commission and the Pension Benefit Guaranty Corporation and shall provide, in
form satisfactory to the Bank (i) within 45 days after the end of each of its
first three fiscal quarters, consolidated statements of income cash flows for
the quarter, for the corresponding quarter in the previous fiscal year and for
the period from the end of the previous fiscal year, with a consolidated balance
sheet as of the quarter end; (ii) within 20 days after the end of each fiscal
year, consolidated statements of Borrower's income and cash flows and its
consolidated balance sheet as of the end of such fiscal year, setting forth
comparative figures for the preceding fiscal year and to be:
|X| audited |_| reviewed |_| compiled
by Price Waterhouse or another independent certified public accountant
acceptable to the Bank; all such statements shall be certified by Borrower's
chief financial officer or partner to be correct and in accordance with
Borrower's records and to present fairly the results of Borrower's operations
and cash flows and its financial position at year end in conformity with
generally accepted accounting principles and (iii) with each statement of
income, a certificate executed by the Borrower's chief executive and chief
financial officers or managing partners (A) setting forth the computations
required to establish the Borrower's compliance with each financial covenant
during the statement period, (B) stating that the signers of the certificate
have reviewed this Agreement and the operations and condition (financial or
other) of Borrower and each of its Subsidiaries during the relevant period and
(C) stating that no Event of Default occurred during the period, or if an Event
of Default did occur, describing its nature, the date(s) of its occurrence or
period of existence and what action the Borrower has taken with respect thereto.
k. Inspections. Promptly upon the Bank's request, Borrower will permit the
Bank's officers, attorneys or other agents to inspect its premises, examine and
copy its records and discuss its business, operations and financial or other
condition with its responsible officers and independent accountants
1
<PAGE>
The inserts herein are contained in a Rider attached hereto which is made a part
hereof and incorporated herein.
8. NOTICES. Written notices to the Borrower by the Bank may be delivered
in person or in writing and shall be delivered three days after being deposited
in the United States mail or transmitted to the Borrower at the last address of
Borrower shown on the Bank's records. Notices to the Bank by the Borrower must
be in writing, refer specifically to this Agreement and be delivered in person
or by mail directed to the Bank at the address slated on page one. Notices shall
be deemed delivered only when actually received by the officer of the Bank
designated on page one.
9. TERM; SURVIVAL. The repayment schedule for the Loan is set forth in the
Note. The term of this Agreement shall continue until all amounts hereunder have
been fully paid to the Bank's satisfaction. Borrower's obligation to pay the
Bank's expenses shall survive the term of this Agreement. Each of Borrower's
representations, warranties, covenants and agreements shall survive during the
term of this Agreement and shall be presumed to have been relied upon by the
Bank.
10. MISCELLANEOUS. This Agreement with the Note and all collateral
documents including without limitation security agreements and guarantees
contains the entire agreement between the Bank and the Borrower with respect to
the Loan, and supereedes every course of dealing, other conduct, oral agreement
and representation previously made by the Bank. No change in this Agreement
shall be effective unless made in a writing duly executed by the Bank. This
Agreement shall be governed by the laws of the State of New York, without regard
to its principles of conflict of laws. This Agreement is a binding obligation
enforceable against the Borrower and its successors and assigns and shall inure
to the benefit of the Bank and its successors and assigns. Each provision of
this Agreement shall be interpreted as consistent with existing law and shall be
deemed amended to the extent necessary to comply with any conflicting law. If a
court deems any provision invalid, the remainder of the Agreement shall remain
in effect. Section headings are for convenience only.
11. CONSENT TO JURISDICTION. In any action or other legal proceeding
relating to this Note, the Borrower (i) consents to the personal jurisdiction of
any State or federal court located in the State of New York, (ii) waives
objection to the laying of venue, (iii) waives personal service of process and
subpoenas, (iv) consents to service of process and subpoenas by registered mail
directed to the Borrower at the last address shown in the holder's records
relating to this Agreement, with such service to be deemed completed five days
after mailing, (v) waives any right to assert any counterclaim or setoff or any
defense based upon a statute of limitations or upon a claim of laches, (vi)
waives its right to attack a final judgment that is obtained as a direct or
indirect result of any such action and (vii) consents to each such final
judgment being sued upon in any court having jurisdiction.
12. WAIVER OF JURY TRIAL. The Bank and the Borrower each waive any right
to trial by jury in connection with this Agreement.
ACCEPTED:
MANUFACTURERS AND TRADERS TRUST COMPANY
CVC PRODUCTS, INC.
By: /s/ William E. Holston By: /s/ Emilio O. DiCataldo
---------------------- -------------------------------
Name: William Holston Name: Emilio O. DiCataldo
Title: Vice President
Date: 9/30/96 Title: Senior Vice President and Chief
Financial Officer
Date:
-------------------------------
TIN #
-------------------------------
Witness:
-------------------------------
(Signature)
-------------------------------
(Typed Name)
ACKNOWLEDGMENT
STATE OF NEW YORK )
:SS.
COUNTY OF MONROE )
On the 30th day of September in the year 1996, before me personally came Emilio
O. DiCataldo
|_| Partnership to me known and known to me to be a general partner of
the partnership described in and who executed the above
instrument and __he duly acknowledge to me that __he
executed the above instrument for and on the behalf of
said partnership.
|x| Corporation to me known, who being duly sworn, did dispose and say
that __he resides at_________________________
________________________________________________ that
__he is the Senior VP and CFO of CVC Products, Inc. the
corporation described in and which executed the above
instrument; and that __he signed his (her) name thereto
by order of the board of directors of said corporation.
/s/ Gordon E. Forth
----------------------------
Notary Public
GORDON E. FORTH
Notary Public, State of New York
Qualified in Monroe County
Commission Expires June 6, 1996
Authorization Confirmed: /s/ [illegible]
----------------------------
3
<PAGE>
Schedule of Permitted Liens (for use with Section 2g of this Agreement)
See Attached.
Schedule of Additional Covenants (for use with Section 3 of this Agreement)
None.
Schedule Of Permitted Investments (for use with Section 3i of this Agreement)
See Attached.
Schedule of Permitted Indebtedness (for use with Section 3d of this Agreement)
See Attached.
Schedule of Permitted Loans (for use with Section 3j of this Agreement)
See Attached.
4
<PAGE>
Schedule of Permitted Liens
1. The liens or capital lease agreements pursuant to which the following
financing statements were filed:
Monroe County
NYS Financing Financing
Secured Party Statement No. Statement No.
------------- ------------- -------------
(a) LCA Holding Corp. 217806 91-7173
(b) Advanta Leasing Corp. 149980 93-5747
(c) Chemical Bank 421827 88-8780
(d) GE Capital 152967 91-5175
(e) Chemical Bank 236575 74-19113
2. Landlord liens that are not superior to the Bank's security interests.
Schedule of Permitted Investments
1. Corporate bonds in an aggregate amount of no more than $1,000,000.00
per issuance 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 Investor Service, Inc. or "A-1" (or the then
equivalent grade) by Standard & Poor's Ratings Group.
Schedule of Permitted Indebtedness
1. Debt to Bank
2. Debt secured by Permitted Liens
3. Debt to Nikko Tecno no greater than the principal amount outstanding
on the date hereof
4. Debt to Former Shareholders no greater than the principal amount
outstanding on the date hereof
Schedule of Permitted Loans
1. Loans and advances to employees of Borrower in the ordinary course
of Borrower's business as presently conducted in an aggregate
principal amount not to exceed $250,000.00 at any time outstanding.
2. Loans and advances to suppliers in the ordinary course of Borrower's
business as presently conducted in an aggregate principal amount not
to exceed $250,000.00 at any time outstanding.
<PAGE>
3. Pledges or deposits to secure obligations of Borrower under leases
it enters into in the ordinary course of Borrower's business as
presently conducted.
Schedule of Subsidiaries and Affiliates
1. Seagate Technology (Affiliate)
2. Nikko Tecno Co., Inc. (Affiliate)
3. CVC Holdings, Inc. (Affiliate)
Schedule of Benefit Plans
1. Profit Sharing. Borrower offers a qualified 401(k) pension plan to all
permanent employees (Contract No. 4-01135 instituted October 1, 1991). The plan
trustee and investment manager is the Principal Investment/Financial Group -
Pen. Adm. DC4, 711 High Street, Des Moines, Iowa 50392.
2. Pension. Defined Benefit Plan for the period from October 1, 1973
through September 30, 1991. The plan was frozen on September 30, 1991.
Group Annuity Contracts provided by Mass Mutual Life Insurance
Company, 1295 State Street, Springfield, Massachusetts 01111. Empire
Professional Services, 77 Sully's Trail, Pittsford, New York 14534 serves as
actuary thereunder.
-2-
<PAGE>
RIDER TO TERM LOAN AGREEMENT
DATED SEPTEMBER 30, 1996 BETWEEN
CVC PRODUCTS, INC.
AND
MANUFACTURERS AND TRADERS TRUST COMPANY
This Rider is made to a certain Term Loan Agreement, dated September 30,
1996, between CVC PRODUCTS, INC. ("Borrower") and MANUFACTURERS AND TRADERS
TRUST COMPANY ("Bank"). This Rider is an integral part of the September 30, 1996
Term Loan Agreement. The September 30, 1996 Term Loan Agreement, together with
this Rider, is collectively referred to as the "Agreement".
Page 1 Inserts
Insert No. 1
a. Simultaneously with the execution and delivery hereof (the "Closing"),
Borrower shall execute and unconditionally deliver to Bank a Term Note ("Note")
in the form of Exhibit A attached hereto, with blanks completed to conform
herewith and which will:
(i) Be dated the date hereof (the "Closing Date").
(ii) Be payable to the order of Bank in the principal amount of
$3,000,000.00.
(iii) Except as otherwise provided therein, accrue interest payable
at all times prior to an Event of Default, computed on the
basis of a 360 day year for the actual number of days elapsed,
at the variable rate of the Bank's prime rate plus 1/2% per
annum.
(iv) Be payable, unless sooner accelerated, in 60 consecutive equal
monthly principal payments of $50,000.00 each, with the first
principal payment due November 1, 1996 and subsequent
principal payments of $50,000.00 due the first day of the next
58 months thereafter, followed by a final principal payment of
$50,000.00 together with all other amounts due thereunder on
October 1, 2001 ("Maturity Date"). Payments of accrued
interest on the Note shall be due and payable on the same
dates that principal payments are due thereunder and when the
Note is paid in full, provided, however, that an interest only
payment shall be made on October 1, 1996.
R-1
<PAGE>
(V) Provide that the Borrower shall have the option of paying the
principal sum outstanding thereunder to Bank in advance of the
Maturity Date, in whole or in part, at any time and from time
to time without penalty or premium.
Insert No. 2
The Loan proceeds shall be used to repay all principal outstanding under
Borrower's $3,000,000.00 Grid Note, dated August 20, 1996 (the "Existing Grid
Note"), in favor of Bank. The balance of the Loan proceeds shall be retained by
the Borrower for working capital purposes. Upon payment of such amounts under
the Grid Note, Borrower shall execute and deliver to Bank a new Grid Note ("New
Grid Note") which shall be in replacement of and substitution for and not in
payment of the Existing Grid Note. The New Grid Note shall be in the form of
Exhibit B attached hereto with blanks completed to conform herewith and which
will:
(i) Be dated the date hereof (the "Closing Date");
(ii) Be payable to the order of Bank in the principal amount of
$2,500,000.00;
(iii) Except as otherwise provided therein, accrue interest payable
at all times prior to demand, computed on the basis of a 360
day year for the actual number of days elapsed, at the
variable rate of the Bank's prime rate plus 1/2% per annum;
and
(iv) Be payable on demand.
Immediately prior to the making of the Loan, Borrower shall have provided
Bank with a copy of the purchase orders and paid invoices for the capital assets
and equipment that have been purchased or financed with the proceeds from the
Existing Grid Note. Borrower represents and warrants to Bank that equipment and
capital assets so purchased or built have an aggregate original cost of no less
than $3,200,000.00.
Insert No. 3
All hazardous substances at the Borrower's facilities are handled in
compliance with environmental laws. All hazardous substances are disposed of in
compliance with environmental laws.
As used herein, the following definitions shall apply:
R-2
<PAGE>
"environment" means any water, including, but not limited to, surface
water and ground water or water vapor; any land, including land surface or
subsurface; stream sediments; air; fish; wildlife; plants; and all other natural
resources or environmental media.
"environmental laws" means all federal, state and local environmental,
land use, zoning, health, chemical use, safety and sanitation laws, statutes,
ordinances, regulations, codes and rules relating to the protection of the
environment and/or governing the use, storage, treatment, generation,
transportation, processing, handling, production or disposal of hazardous
substances and the regulations, rules, ordinances, bylaws, policies, guidelines,
procedures, interpretations, decisions, orders and directives of federal, state
and local governmental agencies and authorities with respect thereto.
"hazardous substances" means, without limitation, any explosives, radon,
radioactive materials, asbestos, urea formaldehyde foam insulation,
polychlorinated biphenyls, petroleum and petroleum products, methane, hazardous
materials, hazardous wastes, hazardous or toxic substances and any other
material defined as a hazardous substance in the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C. Sections
9601, et. seq.; the Hazardous Materials Transportation Act, as amended, 49
U.S.C. Sections 1801, et. seq.; the Resource Conservation and Recovery Act, as
amended, 42 U.S.C. Sections 6901, et. seq.; Articles 15 and 27 of the New York
State Environmental Conservation Law or any other federal, state, or local law,
regulation, rule, ordinance, bylaw, policy, guideline, procedure,
interpretation, decision, order, or directive, whether existing as of the date
hereof, previously enforced or subsequently enacted.
Insert No. 4
Financial Statements. All financial statements furnished by the Borrower
to the Bank (including, without limitation, the consolidated balance sheets as
of September 30, 1994 and September 30, 1995 and the related consolidated
statements of operations, shareholders' equity and cash flows for the 12 months
then ended and the consolidated balance sheets as of December 31, 1995, March
31, 1996 and June 30, 1996 and the related consolidated statements of
operations, shareholders' equity and cash flows for the three months then ended)
are complete and correct, have been prepared in accordance with Generally
Accepted Accounting Principles ("GAAP") consistently applied throughout the
periods indicated, and fairly present the financial condition of the Borrower,
as of the respective dates thereof and the results of the Borrower's operation
and cash flows for the respective periods covered thereby (except with respect
to interim financial statements in which case, said financial statements are
subject to footnotes and year-end closing adjustments which will not result in a
material change to any items set forth therein). Since June 30, 1996, there has
been no material adverse change in the condition, financial or otherwise, of the
Borrower.
R-3
<PAGE>
Subsidiaries and Affiliates. The Borrower is a wholly owned subsidiary of
CVC Holdings, Inc. ("CVC Holdings") and neither Borrower nor CVC Holdings has
any subsidiaries or affiliates except those listed in the attached "Schedule of
Permitted Subsidiaries and Affiliates." CVC Holdings' sole asset is the capital
stock of Borrower. Borrower is not a party to any material transaction with any
affiliate other than transactions that are in the ordinary course of business
and upon fair and reasonable terms not materially less favorable than such
entity could obtain or could become entitled to in an arm's length transaction
with an entity that is not an affiliate
As used herein, the following definitions apply:
"affiliates" means any entity which directly or indirectly, or through one
or more intermediaries, controls or is controlled by or is under common control
with Borrower or any subsidiary of Borrower.
"control", "controlled by" or "under common control" means, but is not
limited to, the beneficial ownership (as defined in Rule 1 3(d) promulgated by
the Securities Exchange Commission pursuant to Section 13(d) of the Securities
Exchange Act of 1934, as amended) of 10% or more of the outstanding shares of
the capital stock of any corporation having any voting power for the election of
directors (whether or not at the same time stock of any other class or classes
has or might have voting power by reason of the happening of any contingency) or
10% or more of any equity interest in any non-corporate entity, or any other
interest through which the power to direct the management or policies of a
person may be exercised.
Capitalization. All of the outstanding shares and other equity interests
of Borrower are duly authorized, validly issued, and fully paid. Except for the
Borrower's right to repurchase stock held by its employees under certain
circumstances and the Borrower's Series B preferred stock repurchase obligations
under its Certificate of Incorporation, there is no existing contract,
debenture, security, right, option, warrant, call or similar commitment of any
character calling for or relating to the purchase, repurchase, redemption or
retirement of Borrower's shares or other equity securities by the Borrower.
Leases. The Borrower has undisturbed peaceable possession under all leases
under which it is operating, none of which contain unusual or burdensome
provisions that may materially affect the operations of the Borrower, and all
such leases are in full force and effect.
Existing Indebtedness. Except as disclosed in the attached "Schedule of
Permitted Indebtedness", the Borrower has no outstanding indebtedness or
contingent liabilities (including, without limitation, "off balance sheet"
liabilities) other than those liabilities disclosed in the Borrower's balance
sheet, dated as of June 30, 1996, and wages, salary, trade payables and
operating leases incurred in the ordinary course of business, and is not the
account party with respect to any letters of credit other than those issued by
Bank.
R-4
<PAGE>
Borrower and Nikko Tecno Co., Inc. ("Nikko") have agreed to extend the payment
dates on the Borrower's long-term debt to Niko (the "Nikko Debt") as follows:
(i) the $200,000.00 payment due November 13, 1996 has been extended to November
13, 1997, (ii) the $1,000,000.00 payment due November 26, 1996 has been
extended to November 26, 1997 and (iii) the $1,300,000.00 payment due November
26, 1996 has been extended to November 26, 1997. Borrower shall not, without
Bank's prior written consent, modify the terms of any of its existing long-term
debt or make any principal payments at any time for any reason (whether before
or after maturity thereof) or unscheduled payments of interest on the Nikko
Debt.
ERISA Plans. The Borrower does not sponsor, maintain, contribute to or
have any liability with respect to any retirement, pension, profit sharing or
other plan that is subject to ERISA, except for the plans described in the
attached "Schedule of Benefit Plans" (all such plans being referred to as "ERISA
Plans"), true and complete copies of which have been provided to Bank. Neither
the Borrower nor any ERISA affiliate has withdrawn from or terminated any
retirement, pension, profit sharing or other plan subject to ERISA and neither
of them are a member of or contribute to any multiemployer plan. No action,
event, or transaction has occurred that could give rise to a lien, security
interest or encumbrance on the assets of the Borrower as a result of the
application of relevant provisions of ERISA, and the ERISA Plans are in material
compliance with all requirements of ERISA and none of the ERISA Plans are
underfunded.
Margin Securities. No proceeds of the Loan have been or will be used for
the purpose of purchasing or carrying Margin Securities as defined in
Regulation U of the Federal Reserve Board.
Patents, Trademarks and Authorizations. The Borrower owns or possesses all
patents, trademarks, service marks, tradenames, copyrights, licenses,
authorizations and all rights with respect to the foregoing, necessary to the
conduct of its business as now conducted without any material conflict with the
rights of others.
Existing Bank Documents. The following agreements, instruments, notes and
documents executed by the Borrower and/or CVC Holdings with or in favor of the
Bank are all in full force and effect, valid and binding obligations of Borrower
without offset or defense of any kind and Borrower is not in breach of default
thereunder and no events or circumstances exist which with the giving of notice,
lapse of time or both will result in a breach of or default thereunder:
(i) The Existing Grid Note;
(ii) General Security Agreement, dated February 2, 1996, executed
by Borrower in favor of Bank;
R-5
<PAGE>
(iii) Continuing Guaranty, dated February 2, 1996, executed by CVC
Holdings in favor of Bank;
(iv) Letter of Credit Reimbursement Agreement, dated November 21,
1995, executed by CVC Holdings in favor of Bank;
(v) General Security Agreement, dated February 2, 1996, executed
by CVC Holdings in favor of Bank; and
(vi) Landlord/Mortgagee Wavier, dated February 2, 1996, executed by
CVC Holdings in favor of Bank.
The agreements, notes, instruments and documents listed in (i) through
(vi) are referred to as the "Existing Bank Documents".
Insert No. 5
or a person or two or more persons acting in concert acquire record or
beneficial ownership (within the meaning of Rule 13d-3 of the Securities and
Exchange Commission under the Securities Exchange Act of 1934) or increase their
record or beneficial ownership of the Company's voting stock of any class,
directly or indirectly, in the amount of twenty-five percent (25%).
Insert No. 5A
Current Ratio. Borrower shall not at any time have a Current Ratio of less
than 1.35 to 1.0.
Tangible Net Worth. Borrower shall not at any time have a Tangible Net
Worth of less than $8,000,000.00 or as of the end of any fiscal year a Tangible
Net Worth which is less than ninety-five percent (95%) of Borrower's Tangible
Net Worth as of the end of the immediately preceding fiscal year.
Total Liabilities to Tangible Net Worth. Borrower shall not at any time
from the date hereof through and including September 30, 1997 have a ratio of
Total Liabilities to Tangible Net Worth of more than 2.5 to 1.0 and as of
October 1, 1997 and thereafter, Borrower shall not at any time have a ratio of
Total Liabilities to Tangible Net Worth of more than 2.0 to 1.0.
Cash Flow Ratio. Borrower shall not have a Cash Flow Ratio of less than
1.1 to 1.0 as of the end of any fiscal quarter.
Backlog. Borrower shall not have at any time confirmed orders from
customers with an aggregate net sales price of less than $14,000,000.00.
R-6
<PAGE>
Maximum Negative Net Income. Borrower shall not for any fiscal quarter
have Net Income of less than a negative $100,000.00.
As used herein the following definitions shall apply:
"Capital Assets" means such items as are properly carried as fixed assets,
plants and equipment on the balance sheet of the entity to which they relate in
accordance with Generally Accepted Accounting Principles consistently applied
and on a consolidated basis.
"Current Assets" means, as of the date of determination, the assets
treated as current assets in accordance with Generally Accepted Accounting
Principles consistently applied and on a consolidated basis.
"Capital Expenditures" means any expenditure to purchase Capital Assets
(including capital leases), any expenditure which materially adds to the value
of the entity's Capital Assets and/or appreciably prolongs the life of Capital
Assets, in each case to the extent charged to a capital account in accordance
with Generally Accepted Accounting Principles consistently applied and on a
consolidated basis.
"Current Liabilities" means, as of the date of determination, the
liabilities treated as current liabilities in accordance with Generally Accepted
Accounting Principles consistently applied and on a consolidated basis,
including, without limitation, all liabilities and obligations payable on demand
and with final maturities and sinking fund payments required to be made within
one year after the date on which the determination is made, excluding the Nikko
Debt as it exists on the date hereof.
"Current Ratio" means, as of the date of determination, the ratio of
Current Assets to Current Liabilities.
"Cash Flow Ratio" means, as of the end of any fiscal quarter (a) the sum
(without duplication) for the four fiscal quarters then ended ("Measurement
Period") of (i) Net Income and (ii) depreciation and amortization (to the extent
deducted in determining Net Income) for such period, divided by (b) the sum of
(i) current maturities of Borrower's long-term debt due during the 12 months
immediately following the Measurement Period (excluding the Nikko Debt in the
unpaid amount thereof on the date hereof), (ii) distributions, dividends and
amounts paid or accrued for the repurchase of stock by the Borrower during the
Measurement Period and (iii) Capital Expenditures made by Borrower during the
Measurement Period which are not funded with loans made by Bank (other than
under the New Grid Note or any replacement thereof) or with loans from a third
party approved by Bank in writing.
"GAAP" and "Generally Accepted Accounting Principles" shall mean those
principles, methods and practices set forth in the Opinion and Pronouncements of
the Accounting Principles Board and the Financial Accounting Standards Board of
the American Institute of
R-7
<PAGE>
Certified Public Accounts or which have other substantial support, all as in
effect on the date hereof.
"Net Income" means, for the relevant period, net income (determined in
accordance with GAAP consistently applied and on a consolidated basis) after
taxes, excluding in all cases: (a) income or net earnings attributable to
extraordinary and unusual items or attributable to any entity or assets acquired
through any method during the relevant period; and (b) income or net earnings
attributable to an affiliate's operations. Notwithstanding the foregoing,
business received by Borrower from Seagate Technology and Nikko shall not and is
not intended to be excluded from the calculation of Net Income.
"Tangible Net Worth" means, on the date of determination, the sum
(determined in accordance with GAAP consistently applied and on a consolidated
basis) of the capital stock, additional paid-in capital and retained earnings
(or, in the case of an additional paid-in capital or retained earnings deficit,
minus the amount of the deficit) minus (a) treasury stock and (b) all
unamortized debt discount and expenses, unamortized research and development
expense, unamortized deferred charges, goodwill, customer base, patents,
trademarks, service marks, trade names, copyrights together with all items not
previously mentioned and which are required to be classified as intangibles in
accordance with GAAP.
"Total Liabilities" means, at any date, without duplication, all
obligations which, in accordance with GAAP consistently applied and on a
consolidated basis, should be classified upon such Borrower's balance sheet as
liabilities, including current liabilities (including, without limitation, the
Nikko Debt) and long-term liabilities.
Unless otherwise specified herein, all accounting terms used herein shall
be interpreted, all accounting determinations hereunder shall be made, and all
financial statements required to be delivered hereunder shall be prepared, in
accordance with generally accepted accounting principles ("GAAP") as in effect
from time to time, applied on a basis consistent with Borrower's consolidated
financial statements as of and for the 12 month period ended September 30, 1996.
Insert No. 6A
i. Purchase, redeem, retire or otherwise acquire for value any of
Borrower'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, or for any of its subsidiaries do any of the foregoing or
permit any of its subsidiaries or affiliates to purchase, redeem, retire or
otherwise acquire for value any capital stock of the Borrower or the
subsidiaries or any warrants, rights or option to acquire such capital stock,
provided, however, that the Borrower may pay up to a maximum of $100,000.00
during any fiscal year to employees for stock of the Borrower under the terms
of existing stock option plans or stockholders' agreements if no event of
default has occurred hereunder and no event of default will occur hereunder as a
result of such purchase.
R-8
<PAGE>
Insert No. 7
which, either individually or together with all other debt of the Borrower
or Guarantor for which payment has been demanded or accelerated, has unpaid
principal of $100,000.00 or more
Insert No. 7A
or any note or other instrument executed in favor of or with Bank
(including, without limitation, the Existing Bank Documents) or debt owed to
Bank by Borrower or any Guarantor is not paid when due
Insert No. 7B
Notwithstanding paragraphs 4(f) and (g) above, it shall not be an event of
default if the Borrower has any lien involuntarily entered against its assets
dismissed or removed within thirty (30) days after being entered or if any
judgement, order or award entered against Borrower is dismissed, vacated or
bonded within forty-five (45) days after such entry, provided that in all such
cases the creditor is stayed from taking any enforcement collection, execution,
levy or foreclosure proceeding on such lien, judgement, order or award. In
addition, it shall not be an event of default under subparagraph 4(e) above if
Borrower has commenced against it any proceeding pursuant to the Bankruptcy Code
dismissed within forty-five (45) days after petition therefor has been filed
with the bankruptcy court.
Automatically upon the commencement of Borrower's or Guarantor's
bankruptcy if voluntary and upon lapse of forty-five (45) days without dismissal
if involuntary, all amounts outstanding hereunder shall become immediately due
and payable. Upon the occurrence of an event of default hereunder, at the
Bank's option, all amounts hereunder shall become immediately due and payable.
As used herein, references to amounts due under this Agreement or due
hereunder shall include all amounts specifically referred to herein and all
principal, interest and other amounts due under the Note and any ancillary
agreements, instruments or other documents.
R-9
<PAGE>
IN WITNESS WHEREOF, Borrower and Bank have executed this Rider on
September 30, 1996.
CVC PRODUCTS, INC.
By: /s/ Emilio O. DiCataldo
---------------------------------
Emilio O. DiCataldo, Senior Vice
President and Chief Financial
Officer
Accepted:
MANUFACTURERS AND TRADERS TRUST COMPANY
By: /s/ William Holston
-----------------------------------
William Holston, Vice President
STATE OF NEW YORK)
COUNTY OF MONROE ) ss:
On this 30th day of September, 1996, before me personally came, EMILIO O.
DiCATALDO, to me known, who, being by me duly sworn, did depose and say that he
is the Senior Vice President and Chief Financial Officer of CVC PRODUCTS, INC.,
the corporation described in and which executed the above instrument; and that
he signed his name thereto by order of the Board of Directors of said
corporation.
GORDON E. FORTH
Notary Public, State of New York /s/ Gordon E. Forth
Qualified in Monroe County -------------------
Commission Expires June 6, 1996 Notary Public
STATE OF NEW YORK)
COUNTY OF MONROE ) ss:
On this 30th day of September, 1996, before me personally came WILLIAM HOLSTON
to me known, who, being by me duly sworn, did depose and say that he is a Vice
President of MANUFACTURERS AND TRADERS TRUST COMPANY, the corporation described
in and which executed the above instrument; and that he signed his name thereto
by authority granted to him by the Board of Directors of said corporation.
GORDON E. FORTH
Notary Public, State of New York /s/ Gordon E. Forth
Qualified in Monroe County -------------------
Commission Expires June 6, 1996 Notary Public
R-10
<PAGE>
EXHIBIT 10.21
LETTER OF CREDIT REIMBURSEMENT AGREEMENT
[LOGO] M & T BANK
LETTERS OF CREDIT Date 11-21-95
APPLICANT: CVC Holdings, Inc.
a(n) |_| individual(s) |_| partnership |X| corporation |_| _____________________
organized under the laws of N.Y. State
Address of residence/chief executive officer: 525 Lee Road Rochester, New York
14606 Phone:_______________ Fax:__________________________
ACCOUNT PARTY (If any):_________________________________________________________
a(n) |_| individuals |_| partnership |_| corporation |_| ______________organized
under the laws of ___________________________
Address of residence/chief executive office: ___________________________________
To induce the Bank to issue letters of credit (each a "Credit") from time
to time, Applicant hereby agrees that the following terms and conditions shall
apply to each Credit issued by the Bank at the request of Applicant.
1. Definitions. Capitalized terms not expressly defined below have the
meanings assigned in the UCP, or if not there defined, in the UCC.
(a) The "Bank" means Manufacturers and Traders Trust Company, a New York
banking organization with its chief executive office at One M&T
Plaza, Buffalo, New York 14240.
(b) "Banking Day" means the hours between 8:30 am and 4:30 pm on a day
on which the Bank is open for business. Monday through Friday
excluding federal holidays; except that with respect to payment by
electronic funds transfer the Banking Day ends at 3:00 pm.
(c) A "Draft" means any draft, instrument, receipt, acceptance or
drawing certificate or cable, telexed, teletransmitted or other
written demand for payment purportedly drawn under the Credit.
(d) "Property" means goods and merchandise and any and all related
documents, securities, funds, choses in action, and any and all
other forms of property, whether real, personal or mixed, and any
right or interest therein which Applicant purchases or obtains in
connection with the issuance of a Credit.
(e) "UCC" means the Uniform Commercial Code in effect in the State of
New York from time to time.
(f) "UCP" means the Uniform Customs and Practice for Documentary Credits
(1993 revision), ICC Publication No. 500, and any subsequent
revisions thereof approved by a congress of the International
Chamber of Commerce and adhered to by the Bank.
2. Reimbursement for Drafts.
(a) Drafts in United States Currency. For each Draft which is payable in
United States currency, Applicant will reimburse the Bank at its
office on demand in immediately available funds:
(1) For each sight draft, demand or receipt, Applicant will
reimburse the Bank immediately on demand on the same day for
the entire amount paid by the Bank; or if so requested by the
Bank, Applicant will pay such amount in advance of payment by
the Bank.
(2) For each acceptance, Applicant will pay on demand the entire
amount to be paid by the Bank, not later than one Banking Day
prior to maturity. If the acceptance is not payable at One
Bank, then Applicant will pay such amount in time to reach the
place of payment by ordinary mail not later than one Banking
Day prior to maturity of the acceptance.
(b) Drafts in Foreign Currency. For each Draft payable in foreign
currency, Applicant will reimburse the Bank at its office on demand
in immediately available United States funds:
(1) For each sight draft, demand or receipt, Applicant will
reimburse the Bank in an amount equal to (A) the full amount
paid, computed at the Bank's selling rate of exchange in New
York two Banking Days prior to the date of payment of the
Draft for cable transfers to the place of payment in the
currency in which the Draft is payable, plus (B) interest at
the rate set forth below for each day from the date of payment
of the Draft until the day the Bank actually receives
reimbursement or is so requested by the Bank, Applicant will
pay the full amount in advance of payment of the Draft.
(2) In the case of each acceptance, Applicant will pay the Bank
the entire amount to be paid by the Bank pursuant to such
acceptance, computed at the Bank's selling ) rate of exchange
in New York two Banking Days prior to the date of payment,
sufficiently in advance of maturity to enable the Bank to
arrange for cover to reach the place of payment not later than
one Banking Day prior to maturity.
(3) If at the time for computing payment there exists no rate of
exchange generally current in New York for effecting such
cable transfers, Applicant agrees to pay the Bank on demand an
amount in United States currency equal to the actual cost to
the Bank of settlement of the Bank's obligation to the holder
of the Draft, however and whenever such settlement is made by
the Bank, plus interest at the rate set forth below payable
for each day from the date of settlement to but not including
the date the Bank receives reimbursement in full.
(c) Direct Debit. Applicant authorizes the Bank to obtain such
reimbursement and all Fees, Expenses and Costs (defined below) by
direct debit to Applicant's deposit or investment account at the
Bank on or before the day on which the Draft is honored.
3. Fees and Expenses. Applicant agrees to pay to the Bank on demand the
Bank's fees and commissions ("Fees") for each Credit at the rate
established by the Bank from time to time, plus all otherwise unreimbursed
charges, correspondent and transfer fees and similar expenses paid or
incurred by the Bank in connection with delivering, negotiating, advising,
confirming, transferring or otherwise processing a Credit or Draft under
a Credit ("Expenses"), Applicant shall pay interest at the rate set forth
below on any Fees, Expenses or Costs (defined below) not paid immediately
on demand. In addition, if the Bank's expenses for carrying a Credit
should be increased after the Issuance by an increase in a related
(illegible) weighted capital or similar receive requirement. Applicant
shall reimburse the Bank for the cost of maintaining such additional
reserves, computed daily at the federal funds rate.
4. Interest. Applicant agrees that if for any reason the Bank makes payment
under a Credit prior to the Bank's receipt of funds from Applicant or does
not receive payment for Fees or Costs immediately or demand, Applicant
will pay interest to the Bank on demand on the entire unpaid amount from
the date of Bank's payment to the date on which Bank receives actual
reimbursement, at that rate per year which is on each day 5% above the
effective rate announced by the Bank from time to time as its prime rate.
Interest shall be calculated on the basis of a 360-day year for the actual
number of days in each year (365 or 366) the indebtedness is outstanding.
It is the intent of the Bank and Applicant that interest not exceed the
maximum legal rate. Solely to the extent necessary to prevent interest
under this Agreement from exceeding the maximum legal rate, any amount
that would be treated as excessive under a final judicial determination of
applicable law shall be deemed to have been a mistake and be returned to
Applicant.
5. Security Interest in Transport Documents and Deposit Account. As further
security for the performance of all of Applicant's obligations now or
hereafter owing to the Bank, Applicant assigns to the Bank and grants the
Bank's continuing first security interest in all Documents and Property
Page 03
<PAGE>
delivered to the Bank in connection with a Credit, whether or not released in
trust to Applicant in advance of reimbursement, and in any other property of
Applicant and Account Party in the Bank's (illegible) Applicant and Account
Party who acknowledge the Bank's right set off against their obligations under
this Agreement any other property of Applicant of Account Party in any capacity
held by the Bank in any (illegible). Applicant grants to the Bank a subordinate
security interest in all collateral paid by each respective Beneficiary of each
Credit and agrees that the Bank shall be subrogated to Applicant's rights with
respect to each Beneficiary and such collateral immediately upon payment of the
respective Credit.
6. Other Matters Pertaining to Credits.
(a) No Liability. No section or omission by the Bank or its
correspondents in connections with a Credit, taken in good faith and
in conformity with foreign or domestic laws, regulations or customs,
shall create any liability on the part of the Bank to Applicant. The
Bank shall not be responsible for any act, error, neglect or
default, omission, insolvency or failure in business of any of its
correspondents or of any immediate or beneficiary bank, nor for any
delay or omission in processing any Credit resulting from
interruption or failure of any payment system or communications,
medium, court order or any other causes beyond the Bank's control.
In no event shall the Bank be liable for consequential or special
damages
(b) Indemnity. All actions and omissions of the Bank and its
correspondents in connection with the Credit or refused Drafts,
bills of lading, warehouse receipts or other Documents of Property
taken in good faith and in conformity with such foreign or domestic
laws, regulations or customs as the Bank or its respective
correspondent may deem applicable shall be binding upon Applicant.
No such action or omission shall place the Bank or any of its
correspondents under any liability to Applicant. Applicant agrees to
indemnify and hold harmless the Bank and its correspondents against
all claims, demands, losses, liabilities, costs, expenses and
damages, including without limitations the Bank's actual attorneys'
fees and disbursements ("Costs") arising in connection with this
Agreement and each Credit, with any injunction against payment of a
Credit, or in preserving the Bank's rights or collecting
reimbursements or negotiating and documenting a workout of
Applicant's obligations under this Agreement.
(c) Payment of Drafts. Applicant understands that the Bank must accept
or pay any Draft preserved to it and dated on or before the
expiration date of the Credit, regardless of when drawn and whether
or not negotiated, if the Draft is accompanied by all other required
documents and appears on its face to be in substantial compliance
with the terms and conditions of the Credit, and in within the
maximum stated amount of the Credit; (1) even though individual or
aggregate shipments exceed the quantity called for in the Credit,
the Bank may honor related Drafts up to the maximum [ILLEGIBLE]
amount of the Credit, (2) insurance for Property under a commercial
Credit need not exceed the maximum stated amounts of the Credit; and
(3) the Bank may honor any Draft or other documents otherwise in
order signed or issued by an administrator, executor (illegible) in
bankruptcy, debtor in possession, assignee, liquidator, receiver or
other legal representative or other purported successor of the
Beneficiary of the Credit.
(d) Notice of Errors. Applicant will promptly examine the copy of the
Credit and of all amendments delivered to it from time to time by
the Bank and will notify the Bank of any apparent errors in writing
within one day of receipt of such documents. Absent such
(illegible), Applicant shall be conclusively deemed to have waived
all claims against the Bank and its correspondents with respect to
the form of the Credit.
(e) Waiver of Discrepancies. If the Bank determines that a draft or
accompanying documents appear on their face not be in compliance
with the terms and conditions of the Credit, the Bank may in its
sole judgment approach the Applicant for a waiver of the
discrepancies. Applicant will make its decision known to the Bank
within one business day of receipt of the Bank's Inquiry, or sooner
if necessary to enable the Bank to timely pay rather than reject the
Draft. If Applicant such waives discrepancies, Applicant will remain
bound by the terms of the Agreement.
(f) Amendments. If a Credit is amended, modified or changed in any
respect with Applicant's consent, or if a (illegible) is issued at
Applicant's direction, Applicant shall be bound by the terms of this
Agreement with respect to the respective Credit if the amendment
increases the liability of the Bank. Applicant shall be bound as of
the date of issuance of the amendment; if the amendment decreased
the liability of the Bank, Applicant's liability shall be decreased
only as of the date the Beneficiary consents to the amendment.
(g) Independence of Credit. Neither the Bank nor any of its
correspondents shall be responsible for: (1) any use which may be
made of the Credit or for any acts or omissions of any users of the
Credit; (2) the existence, character, quantity, quality, condition,
packing or value of any Property; (3) the time, place, manner,
order, delay, default or omission of notice in connection with the
shipment of any Property or Documents; (4) the validity, sufficiency
or genuineness of documents or endorsements; (5) the character,
adequacy or validity of any insurance concerning the Property; (6)
the solvency, responsibility or relationship to the Property of any
party issuing any Documents; (7) failure of any instrument to bear
adequate reference to the Credit, failure of Documents to accompany
any instrument of negotiation, or failure of any person to note the
amount of any instrument on the reverse of the Credit or to
surrender or take up the Credit or to forward Documents apart from
the instruments as required by the terms of the Credit, each of
which requirements may be waived by the Bank; or (8) errors,
omissions, interruptions or delays in delivery of any messages,
whether by mail, teletransmission, or otherwise, and whether or not
encrypted.
(h) Insurance. Applicant shall provide evidence that it maintains
insurance covering the Property in [ILLEGIBLE] against risks and
provided by companies satisfactory to the Bank and shall assign the
policies of insurance to the Bank or name the Bank as additional
insured and loss payee, as appropriate, at the Bank's option.
Absent such insurance, the Bank may obtain insurance at Applicant's
expense.
7. Additional Covenants. Applicant represents, warrants and agrees that so
long as this Agreement is in effect:
(a) Authorization. Applicant is and will remain duly organized and
existing in the jurisdiction of its organization and authorized to
do business in all jurisdictions material to the conduct of its
business. Applicant has the power and capacity and has taken all
corporate or partnership action necessary to authorize Applicant to
execute and deliver and perform the obligations under this
Agreement. Applicant will not change its ownership or form of
authorization without (i) obtaining the prior written consent of the
Bank and (ii) posting cash collateral equal to the aggregate amount
of all outstanding Credits plus increase of the Bank's announced
prime rate from the date of change to the expiration date of each
retroactive Credit.
(b) Financial Records. Applicant will furnish financial statements and
information satisfactory to the Bank upon request. Applicant will
keep accurate and complete books and records, expressly including
all records required pursuant to currency and trade regulations as
in effect from time to time.
(d) Legality. The transactions covered by such Credit are not prohibited
under the Foreign Assets Control Regulations of the United States
Treasury Department, the Internal Revenue Code of 1986, as amended
from time to time, the Export Administration Act of 1977, as
amended, or related laws and regulations thereunder. Any transfer of
monies or importation covered by Credit shall conform in every
respect with all applicable federal and state laws and foreign and
domestic government regulations. Applicant has procured all licenses
necessary for trading and shipment of the Property and shall furnish
all certificates as the Bank may at any time require. Applicant is
solely responsible for the structure, contents, form and legal
compliance and consequences of each Credit issued pursuant to
Applicant's instructions.
(e) Security Procedures. Applicant assumes all risks resulting from
facsimile and other teletransmission of applications and Credits,
whether or not encrypted, and undertakes to comply with all security
procedures implemented by Bank including without limitation those to
safeguard or authenticate facsimile and other teletransmission and
other electronic communication of applications and Credits and
electronic funds transfer payment orders with respect to proceeds of
Drafts. Applicant acknowledges receipt of notice, with respect to
payment of Drafts to the Beneficiary of a Credit via electronic
funds transfer that under UCC Article 4A the originating bank, all
intermediary banks and the Beneficiary's bank are entitled to rely
on the Beneficiary's bank number and account number alone in making
final payment and have no duty to discover any discrepency between
the number given and the name of the intended payee. APPLICANT
AGREES TO VERIFY ALL FUNDS TRANSFER INSTRUCTIONS WITH EXTRAORDINARY
CARE and expressly indemnify the Bank against any losses or
duplicate payments necessitated by or resulting from Bank's reliance
on erroneous funds transfer instructions in a Credit issued pursuant
to Applicant's instructions.
-2-
PAGE 04
<PAGE>
8. Events of Default and Remedies.
(a) An event of default ("Event of Default") will have occurred if: (1)
Applicant fails to pay when due, whether by demand, acceleration or
otherwise, any indebtedness to Bank, or if there occurs any event
which after notice or lapse of time will permit such acceleration;
(2) Applicant breaches or is in default under any agreement between
Applicant and Bank; (3) Applicant or any guarantor or endorser of
its obligations to Bank (an "Account Party") dies or is determined
incompetent, is dissolved, suspends its present business, agrees to
a merger or other absorption or to transfer or otherwise dispose of
substantially all of its assets or makes or sends notice of a bulk
sale; becomes insolvent (however such insolvency is evidenced),
generally fails to pay its debts as they become due, fails to pay,
withhold, collect any tax as required by law, has served or filed
against it or its assets any lien, judgment, order or award; (4) a
receiver or similar trustee is appointed for Applicant or its assets
or any Account Party or general partner of either (with or without
the agreement), or Applicant or its Account Party or general partner
makes an assignment for the benefit of creditors or commences or has
commenced against it a proceeding pursuant to any bankruptcy law;
(5) any representation, warranty, statement or information made or
furnished by Applicant to Bank proves to have been false or
misleading in any material respect (including without limitation by
omission of any contingent or unliquidated liability or claim
against Applicant); (6) there occurs any change in the management or
ownership of Applicant or any Account Party which is, in the opinion
of the Bank, materially adverse to the Bank's interest and which
remains uncorrected for thirty days after the Bank notifies
Applicant of its opinion; (8) the Bank in good faith deems itself
insecure with respect to reimbursement under this Agreement for any
outstanding Credits whether or not Drafts thereunder have yet been
presented. As obligations hereunder whether or not mature and
whether direct or contingent shall become immediately due and
payable (A) automatically if Applicant or any Account Party
commences or has commenced against it any bankruptcy or insolvency
proceeding and (B) at the Bank's option upon the occurrence of any
other Event of Default. This paragraph shall not cause any
indebtedness not to be payable on demand.
(b) Cumulative Remedies. Bank's rights and remedies shall be cumulative
and include those of a secured party under the Uniform Commercial
Code and other applicable law. In addition to those granted in this
and any other agreement between Bank and Applicant or Account Party.
Upon an Event of Default
9. Miscellaneous.
(a) Non-Waiver by Bank. No single, partial or delayed exercise by the
Bank or any right of remedy shall preclude full and timely exercise
by the Bank at any time of any other right or remedy of the Bank
without notice or of the same right or remedy at any other time. No
course of dealing or other conduct, no oral agreement or
representation made by the Bank or usage of trade shall operate as a
waiver of any right or remedy of the Bank. No waiver shall be
effective unless made specifically in writing by the Bank.
(b) Binding Obligation. This Agreement is binding on Applicant and its
legal representatives, successors and assigns and shall inure to the
benefit of the Bank and its successors and assigns. If Applicant
includes more than one person, their obligations hereunder shall be
joint and several. If a third party executes an Authorization and
Agreement of Account Party substantially in form attached or other
guaranty accepted by the Bank, with respect to this Agreement or a
Credit, the obligations of Applicant and such Account Party shall be
joint and several. If Applicant is a partnership, its obligations
shall continue in force, notwithstanding any change in its
membership, whether arising from the death or retirement of one or
more partners or the accession of one or more new partners.
(c) Issuance Discretionary. The Bank may decline to issue any future
Credit under this agreement or to accept any Draft prior to
maturity, at the Bank's sole discretion.
(d) Termination. This Agreement will continue in full force and effect
until terminated. It may be terminated (1) by the Bank at any time
if the Bank in good faith deems itself insecure with respect to
reimbursement, or (2) by Applicant upon actual receipt of written
notice sent as provided below; provided, however, that Applicant's
obligations under this Agreement shall remain in full force and
effect until all amounts due and to become due with respect to
Credits issued or committed for prior to termination, and any
extensions or renewals, have been paid in full, together with
interest and all Costs and Expenses.
(e) Notices. Notices to Applicant by the Bank may be delivered by
telephone with subsequent written confirmation by mail or
teletransmission. Written notice shall be deemed delivered when
deposited in the United States mail or transmitted to Applicant at
the last address of Applicant shown on the Bank's records. Applicant
will notify Bank promptly of any change in address. Notice to the
Bank by Applicant must be in writing, or by telephone with
subsequent written confirmation, refer specifically to this
Agreement and the Credit, and shall be deemed delivered upon actual
receipt via courier or registered mail by the Manager, Letter of
Credit Department, at the address on page one of this Agreement.
(f) Construction. This Agreement shall be interpreted as consistent with
existing law and shall be deemed amended to the extent necessary
to comply with any conflicting law. If a court deems any provision
invalid, the remainder of this Agreement shall remain in effect.
This Agreement with the application for each Credit, the Credit and
all related security agreements, mortgages, guarantees and
collateral documents, is the entire agreement among the parties
concerning the Credit. The Bank can amend this Agreement at any time
as required for consistency with applicable law, by notice by mail
to Applicant. Credits can be amended only as provided by the UCR.
Otherwise, no modification or amendment can be made except in a
writing signed by the party against which enforcement is sought.
Headings in this Agreement are solely for convenience. Singular
number includes plural and neuter gender includes masculine and
feminine as appropriate.
(g) Governing Law. Each Credit shall be subject to the UCR. The
provisions herein are supplemental to and not in substitution of the
UCR. As to matters not governed by the UCR, this Agreement shall be
governed by the laws of the State of New York as in effect from time
to time.
(h) Jurisdiction. In any action or other legal proceeding relating to
this Note, Applicant (1) consent to the permanent jurisdiction of
any State or federal court located in the State of New York and (2)
agrees that a copy of this Agreement, any application, any Credit,
and Documents or any other relevant document kept in the Bank's
course of business may be admitted into evidence as an original.
(i) WAIVER OF JURY TRIAL. BANK AND APPLICANT EACH WAIVE ANY RIGHT TO
TRIAL BY JURY IN ANY ACTION IN CONNECTION WITH THIS AGREEMENT AND
ANY CREDIT OR APPLICATION HEREUNDER.
Date: 11/21/95 CVC HOLDINGS, INC.
--------------------------------------------
Name of Applicant (Signed)
Tax ID/SS#: 16-1383279 By: /s/ Emilio O. DiCataldo
----------------------------------------
Type Name: Emilio O. DiCataldo Title
Senior V.P. Finance & CFO
By:
- -------------------------------- -----------------------------------------
Signature of Witness Type Name:
------------------------ Title
- --------------------------------
Typed Name of Witness
BANK USE ONLY:
Authorization Confirmed
- --------------------------------
Bank Officer
PAGE 05
<PAGE>
AUTHORIZATION AND AGREEMENT BY ACCOUNT PARTY
We join in the request to Bank to issue Credit on the terms and conditions
set forth above. In consideration thereof, irrevocably agree that: (1) the above
Applicant has the sole right to give instructions and execute agreements and
amendments with respect to the Credits and the disposition of documents; (2) we
shall be jointly and severally liable as a primary obligor for all obligations
owing to Bank in connection with the foregoing Agreement and the Credits and we
shall have no right, claim, setoff or defense against Bank or Bank's
correspondents respecting any matter arising in connection therewith; and (3) we
hereby waive any claim, right or remedy which we may now have or hereafter
acquire against Applicant that arises hereunder or from our performance
hereunder including without limitation, any claim, remedy or right of
subrogation, reimbursement, exoneration, indemnification, contribution or
participation in any claim, right or remedy of Bank against Applicant or any
security which Bank now has or hereafter acquires, whether or not such claim,
right or remedy arises in equity, under contract, by statute, under common law
or otherwise.
-4-
PAGE 06
<PAGE>
[ILLEGIBLE]
Office/Position Name Signature
President & CEO Christine B. Whitman /s/ Christine B. Whitman
-----------------------------
VP of Finance & CFO Emilio O. DiCataldo /s/ Emilio O. DiCataldo
-----------------------------
Secretary Christopher J. Mann /s/ Christopher J. Mann
-----------------------------
[ILLEGIBLE], I have signed [ILLEGIBLE] this __________ day of _________, 19__.
|_| [ILLEGIBLE]
/s/ [ILLEGIBLE]
--------------------------------------------
Signature Title Secretary
--------------------------------------------
Signature Title
<PAGE>
EXHIBIT 10.22
[LOGO]M&T BANK CONTINUING GUARANTY
(CORPORATION OR PARTNERSHIP)
GUARANTOR: CVC Holdings, Inc. 2073060000
----------------------------------------------------------------
Name
525 Lee Road, Rochester, NY 14606
----------------------------------------------------------------
Address of Chief Executive Office
a /X/ corporation / /general partnership / /limited partnership
/ / __________ organized under the laws of the State of Delaware
BORROWER: CVC Products, Inc. 2073150009
----------------------------------------------------------------
Name
525 Lee Road, Rochester, NY 14606
----------------------------------------------------------------
Address
BANK: Manufacturers and Traders Trust Company, One M& T Plaza, Buffalo, New York
14240 Attention: Office of General Counsel
1. Guaranty. (a) Guarantor guarantees to the Bank the full and immediate payment
and performance of all of Borrower's obligations to the Bank from time to time
of every kind and nature, now existing and hereafter incurred, direct and
contingent, liquidated and unliquidated, secured and unsecured, matured and
unmatured, including all accrued and unpaid interest and all Expenses (defined
below) even if such obligations were originally contracted with another lender
or jointly with other borrowers, even if not evidenced by a writing, and even if
periodically extinguished and reincurred (the "Obligations"). Guarantor will
pay or perform its obligations under this Guaranty upon demand. This is a
guaranty of payment, not collection.
(b) Guarantor acknowledges the receipt of valuable consideration for this
Guaranty and acknowledges that the Bank is relying on this Guaranty in making a
financial accommodation to Borrower, whether a commitment to lend, extension,
modification or replacement of, or forbearance with respect to, any Obligation,
cancel ______ of another guaranty, purchase of Borrower's assets, or other
valuable consideration.
2. Continuing, Unconditional and Unlimited Guaranty. This Guaranty is
irrevocable, continuing, unconditional and general without any limitation.
3. Guarantor's Waivers. (a) Guarantor's obligations shall not be released,
impaired or affected in any way by (i) Borrower's bankruptcy, reorganization or
insolvency under any law or that of any other party, or by any action of a
trustee in any such proceeding; (ii) failure of any other party to perform its
obligations under this Guaranty, including without limitation: (A) any new
agreements or obligations of Borrower with or to the Bank, amendments, changes
in rate of interest, extensions of time for payments, modifications, renewals or
the existence of or waivers of default as to any existing or future agreements
of Borrower or any other party with the Bank; (B) any adjustment, compromise or
release of any Obligations of Borrower, by the Bank or any other party; the
existence or nonexistence or order of any filings, exchanges releases,
impairment or sale of, any security for the Obligations, or the order in which
payments and proceeds of collateral are applied; or acceptance by the Bank of
any writing intended by any other party to create an accord and satisfaction
with respect to any of the Obligations; (C) any delay in or failure to call for,
take, hold, continue, collect, preserve or protect, replace, assign, sell,
lease, exchange, convert or otherwise transfer or dispose of, perfect a security
interest in, realize upon or enforce any security interest in any security for
the Obligations, regardless of its value; (D) any exercise, delay in the
exercise or waiver of, any failure to exercise, or any forbearance or other
indulgence relating to any right or remedy of the Bank against any Guarantor,
Borrower or other person or relating to the Obligations, to any portion thereof
or to any security for the Obligations; (E) any fictitiousness, incorrectness,
invalidity or unenforceability, for any reason, of any instrument or other
agreement, or act of commission or comission by the Bank or Borrower; (F) any
composition, extension, moratoria or other statutory relief granted to Borrower;
or (G) any interruption in the business relations between the Bank and Borrower,
or any dissolution or change in form of organization, name or ownership of
Borrower or Guarantor.
(b) Waivers of Notice, etc. The Guarantor waives acceptance, assent and all
rights of notice or demand including without limitation (i) notice of
acceptance of this Guaranty, of Borrower's default or nonpayment of any
Obligations, and of changes in Borrower's financial condition; (ii) presentment,
protest, notice of protect and demand for payment; and (iii) any other notice,
demand or condition in which Guarantor might otherwise be entitled prior to the
Bank's ____ on or enforcement of this Guaranty.
(c) Waiver of Subrogation. Guarantor hereby waives any claim, right or remedy
which Guarantor may now have or hereafter acquire against Borrower that arises
hereunder or from the performance by Guarantor hereunder including, without
limitation, any claim, remedy or right of subrogation, reimbursement,
exoneration, indemnification, contribution or participation in any claim, right
or remedy of Bank against Borrower or any security which Bank now has or
hereafter acquires, whether or not such claim, right or remedy arises in
equity, under contract, by statute, under common law or otherwise.
4. Termination; Reinstatement. This Guaranty can be terminated (a) only with
respect to Obligations not yet incurred, and (b) only by actual receipt by the
Bank officer named above of written notice of Guarantor's intent to terminate
(or Guarantor's dissolution) plus (c) the lapse of a reasonable time for Bank to
act on such notice., This Guaranty cannot be terminated with respect to any
Obligations committed or contracted for or outstanding at the time the Bank acts
on such notice, or any prior or subsequent modifications, renewals, extensions
or replacements of or interest on such Obligations, or related expenses. IF any
payment the Bank has received prior to termination subsequently is declared
fraudulent or preferential or for any other reason required to be surrendered,
Guarantor's obligations under this Guaranty and ant related security agreements
shall be reinstated and remain in effect until the Bank has actually received
payment in full of the Obligations.
5. Expenses. Guarantor agrees to reimburse the Bank on demand for all the
Bank's expenses, costs, damages and losses of any kind or nature, including
without limitation actual attorneys' fees and disbursements whether for internal
or external counsel incurred by the Bank in attempting to enforce this Guaranty,
collect or restructure any of the Obligations, realize on any collateral, or for
any other purpose related to the Obligations including but not limited to costs
of workout, negotiations, redocumentation or bankruptcy or other legal
proceedings or appeal (collectively, "Expenses"). Expenses will accrue interest
at the highest legal rate until payment is actually received by the Bank.
6. Financial and Other Information. Guarantor shall promptly deliver to the
Bank copies of all annual reports, proxy statements and similar information
distributed to shareholders or partners and of all filings with the Securities
and Exchange Commission and the Pension Benefit Guaranty Corporation and shall
provide in form satisfactory to the Bank: (i) within sixty days after the end of
each of its first three fiscal quarters, consolidating and consolidated
statements of income and cash flows for the quarter, for the corresponding
quarter in the previous fiscal year and for the period from the end of the
previous fiscal year with a consolidating and consolidated balance sheet as of
the quarter end; and (ii) within ninety days after the end of each fiscal year,
consolidating and consolidated statements of Guarantor's income and cash flows
and its consolidating and consolidated balance sheet as of the end of such
fiscal year, setting forth comparative figures for the preceding fiscal year and
to be: /X/ audited / / reviewed / / compiled by an independent certified public
accountant acceptable to the Bank; all such statements shall be certified by
Guarantor's chief financial officer or partner to be correct, not misleading an
din accordance with Guarantor's records an to present fairly the results of
Guarantor's operations and cash flows and if annual its financial position at
year end in conformity with generally accepted accounting principles. IF no box
is checked, Guarantor shall deliver financial statements and information in the
form and at the times satisfactory to the bank. Guarantor represents that its
assets are not subject to any liens, encumbrances or contingent liabilities
except as fully disclosed to the Bank in such statements. Guarantor authorizes
the Bank from time to time to obtain, verify and review all financial data
deemed appropriate by the Bank in connection with this Guaranty and the
Obligations, including without limitation credit reports from agencies.
7. Security; Right of Setoff. As further security for payment of the
Obligations, Expenses and any other obligations of Guarantor to the Bank,
Guarantor hereby grants to the Bank's security interest in all money, securities
and other property of Guarantor in the actual or constructive possession or
control of the Bank including
<PAGE>
without limitation all deposits and other accounts owing at any time by the Bank
in any capacity to Guarantor in any capacity (collectively, "Property"). The
Bank shall have the right to set off Guarantor
s Property against any of Guarantor's obligations of the Bank and shall have all
of the rights and remedies of a secured party under the Uniform Commercial Code
in addition to the those under this Guaranty and other agreements and applicable
law.
8. No Transfer of Assets. Guarantor shall not transfer, reinvest or otherwise
dispose of its assets in a manner or to an extent that would or might impair
Guarantor's ability to perform its obligations under this Guaranty.
9. Nonwaiver by the Bank; Miscellaneous. This is the entire agreement between
Guarantor and the Bank with respect to the Guaranty. This Guaranty may be
assigned by the Bank, shall inure to the benefit of the Bank and its successors
and assigns, and shall be binding upon Guarantor and its successors and assigns.
All rights and remedies of the Bank are cumulative and no such right or remedy
shall be exclusive of any other right or remedy. This Guaranty does not
supersede any other guaranty or security granted to the bank by Guarantor or
others (except as to Guarantor's Waiver of Subrogation rights above). No
single, partial or delayed exercise by the Bank of any right or remedy shall
preclude exercise by the Bank at any time at its sole option of the same or any
other right or remedy of the Bank without notice. No course of dealing or other
conduct, no oral agreement or representation made by the Bank or usage of trade
shall operate as a waiver of any right or remedy of the Bank. No waiver or
amendment of any right or remedy of the Bank or release by the Bank shall be
effective unless made specifically in writing by the Bank. This Guaranty shall
be governed by the laws of the State of New York, without regard to its
principles of conflict of laws. Each provision of this Guaranty shall be
interpreted as consistent with existing law and shall be deemed amended to the
extent necessary to comply with any conflicting law. IF any provision is
nevertheless held invalid the other provisions shall remain in effect. Captions
are solely for convenience and are not part of the substance of the Guaranty.
10. Joint and Several; Primary Obligation. If there is more than one Guarantor,
each Guarantor jointly and severally guarantees the payment and performance in
full of all obligations under this Guaranty and agrees that the Bank need not
seek payment from any source other than the undersigned Guarantor. This
Guaranty is a primary obligations. Guarantor's obligations hereunder are
separate and independent of Borrower's, and a separate action may be brought
against Guarantor whether or not action is brought or joined against or with
Borrower or any other party.
11. Authorization. Guarantor certifies that it is an entity in the form
described above duly organized and in good standing under the laws of the State
of its organization and duly authorized to do business in each State material to
the conduct of its business. Guarantor has determined that the execution of the
Guaranty will be in its best interests, to its direct benefit, incidental to its
powers, and in furtherance of its duly acknowledged purposes and objectives.
Execution of this Guaranty by the persons signing below has been authorized by
all necessary corporate action, including directors' and shareholder consent, as
evidenced by the attached certificates, or (as appropriate) is authorized by its
partnership agreement or governing instrument, a certified copy of which is
attached. Guarantor's chief executive office is located at the above address.
12. Guarantor's Consents. In any action or other legal proceeding relating to
this Guaranty, Guarantor (a) consents to the personal jurisdiction of any State
or federal court located in the State of New York and (b) agrees that in any
legal proceeding concerning this Guaranty, (i) a copy of this Guaranty kept in
the Bank's course of business may be admitted into evidence as an original, and
(ii) Guarantor will not interpose any counterclaim, setoff or defense of any
nature.
13. WAIVER OF JURY TRIAL. GUARANTOR AND THE BANK EACH WAIVE ANY RIGHT TO TRIAL
BY JURY IN ANY ACTION WITH RESPECT TO THIS GUARANTY.
GUARANTOR:
DATE February 2, 1996 CVC Holdings, Inc.
TIN # 16-1383279 By: /s/ Emilio O. DiCataldo
--------------------------------
Emilio O. DiCataldo, Senior V.P. Finance
ACKNOWLEDGMENT
STATE OF NEW YORK)
:SS
COUNTY OF MONROE)
On the 2 day of February in the year 1996 before me personally came EMILIO O.
DICATALDO
/ /Partnership to me known and known to me to be a general partner of the
partnership described in and which executed the above
instrument, and __ he duly acknowledged to me that ___ he
executed the above instrument for and on the behalf of said
partnership.
/X/ Corporation to me known, who, being by me duly sworn, did depose and say
that __ he resides in
____________________________________________________________
that __ he is the Senior VP Finance of CVC Holdings, Inc.
the corporation described in an which executed the above
instrument, and that __ he signed his (her) name thereto by
order of the board of directors of said corporation.
/s/ John D. Inzana
-----------------------------
Notary Public
FOR BANK USE ONLY JOHN D. INZANA
Authorization Confirmed: NOTARY PUBLIC in the State of New York
MONROE COUNTRY
/s/ William E. Holston My Commission Expires March 9, 1997
- --------------------------
Signature
<PAGE>
EXHIBIT 10.23
[LOGO FOR M&T BANK] CONTINUING GUARANTY
(Corporation or Partnership)
GUARANTOR: CVC PRODUCTS, INC.
-----------------------------------------------------------------------
Name
525 Lee Road, Rochester, New York 14606
-----------------------------------------------------------------------
Address of Chief Executive Office
a |x| corporation |_| general partnership |_| limited partnership
|_|_______ organized under the laws of the State of Delaware
BORROWER: CVC Holdings, Inc.
-----------------------------------------------------------------------
Name
525 Lee Road, Rochester, New York 14606
-----------------------------------------------------------------------
Address
BANK: Manufacturers and Traders Trust Company, One M&T Plaza, Buffalo, New
York 14240 Attention: Office of General Counsel
1. Guaranty. (a) Guarantor guarantees to the Bank the full and immediate
payment and performance of all of Borrower's obligations to the Bank from time
to time of every kind and nature, now existing and hereafter incurred, direct
and contingent, liquidated, secured and unsecured, matured and unmatured,
including all accrued and unpaid interest and all Expenses (defined below) even
if such obligations were originally contracted with another lender or jointly
with other borrowers, even if not evidenced by a writing, and even if
periodically extinguished and reincurred (the "Obligations"). Guarantor will pay
or perform its obligations under this Guaranty upon demand. This is a guaranty
of payment, not collection.
(b) Guarantor acknowledges the receipt of valuable consideration for this
Guaranty and acknowledges that the Bank is relying on this Guaranty in making a
financial accommodation to Borrower, whether a commitment to lend, extension,
modification or replacement of, or forbearance with respect to, any Obligation,
cancellation of another guaranty, purchase of Borrower's assets, or other
valuable consideration.
2. Continuing, Unconditional and Unlimited Guaranty. This Guaranty is
irrevocable, continuing, unconditional and general without any limitation.
3. Guarantor's Waivers. (a) Guarantor's obligations shall not be released,
impaired or affected in any way by (i) Borrower's bankruptcy, reorganization or
insolvency under any law or that of any other party, or by any action of a
trustee in any such proceeding; (ii) failure of any other party to perform its
obligations to the Bank; or (iii) any other circumstance that might constitute a
legal or equitable defense to Guarantor's obligations under this Guaranty,
including without limitation: (A) any new agreements or obligations of Borrower
with or to the Bank, amendments, changes in rate of interest, extensions of time
of payments, modifications, renewals or the existence of or waivers of default
as to any existing or future agreements of Borrower or any other party with the
Bank; (B) any adjustment, compromise or release of any Obligations of Borrower,
by the Bank or any other party; the existence or nonexistence or order of any
filings, exchanges, releases, impairment or sale of, any security for the
Obligations, or the order in which payments and proceeds of collateral are
applied; or acceptance by the Bank of any writing intended by any other party to
create an accord and satisfaction with respect to any of the Obligations; (C)
any delay in or failure to call for, take, hold, continue, collect, preserve or
protect, replace, assign, sell, lease, exchange, convert or otherwise transfer
or dispose of, perfect a security interest in, realize upon or enforce any
security interest in any security for the Obligations, regardless of its value;
(D) any exercise, delay in the exercise or waiver of, any failure to exercise,
or any forbearance or other indulgence relating to, any right or remedy of the
Bank against any Guarantor, Borrower or other person or relating to the
Obligations, to any portion thereof or to any security for the Obligations; (E)
any fictitiousness, incorrectness, invalidity or unenforceability, for any
reason, of any instrument or other agreement, or act of commission or omission
by the Bank or Borrower; (F) any composition, extension, moratoria or other
statutory relief granted to Borrower; or (G) any interruption in the business
relations between the Bank and Borrower, or any dissolution or change in form of
organization, name or ownership of Borrower or Guarantor.
(b) Waivers of Notice, etc. The Guarantor waives acceptance, assent and
all rights of notice or demand including without limitation (i) notice of
acceptance of this Guaranty, of Borrower's default or nonpayment of any
Obligation, and of changes in Borrower's financial condition; (ii) presentment,
protest, notice of protest and demand for payment; and (iii) any other notice,
demand or condition to which Guarantor might otherwise be entitled prior to the
Bank's reliance on or enforcement of this Guaranty.
(c) Waiver of Subrogation. The Guarantor hereby waives any claim, right or
remedy which Guarantor may now have or hereafter acquire against Borrower that
arises hereunder or from the performance by Guarantor hereunder including,
without limitation, any claim, remedy or right of subrogation, reimbursement,
exoneration, indemnification, contribution or participation in any claim , right
or remedy of Bank against Borrower or any security which Bank now has or
hereafter acquires, whether or not such claim, right or remedy arises in equity,
under contract, by statute, under common law or otherwise.
4. Termination; Reinstatement. This Guaranty can be terminated (a) only
with respect to Obligations not yet incurred, and (b) only by actual receipt by
the Bank officer named above of written notice of Guarantor's intent to
terminate (or Guarantor's dissolution) plus (c) the lapse of a reasonable time
for Bank to act on such notice. This Guaranty cannot be terminated with respect
to any Obligations committed or contracted for or outstanding at the time the
Bank acts on such notice, or any prior or subsequent modifications, renewals,
extensions or replacements of or interest on such Obligations, or related
expenses. If any payment the Bank has received prior to termination subsequently
is declared fraudulent or preferential or for any other reason required to be
surrendered, Guarantor's obligations under this Guaranty and any related
security agreements shall be reinstated and remain in effect until the Bank has
actually received payment in full of the Obligations.
5. Expenses. Guarantor agrees to reimburse the Bank on demand for all the
Bank's expenses, costs, damages and losses of any kind or nature, including
without limitation actual attorneys' fees and disbursements whether for internal
or external counsel incurred by the Bank in attempting to enforce this Guaranty,
collect or restructure any of the Obligations, realize on any collateral, or for
any other purpose related to the Obligations including but not limited to costs
of workout, negotiations, redocumentation or bankruptcy or other legal
proceedings or appeal (collectively, "Expenses"). Expenses will accrue interest
at the highest legal rate until payment is actually received by the Bank.
6. Financial and Other Information. Guarantor shall promptly deliver to
the Bank copies of all annual reports, proxy statements and similar information
distributed to shareholders or partners and of all filings with the Securities
and Exchange Commission and the Pension Benefit Guaranty Corporation and shall
provide in form satisfactory to the Bank: (i) within sixty days after the end of
each of its first three fiscal quarters, consolidated statements of income and
cash flows for the quarter, for the corresponding quarter in the previous
fiscal year and for the period from the end of the previous fiscal year, with a
consolidated balance sheet as of the quarter end; and (ii) within ninety days
after the end of each fiscal year, consolidated statements of Guarantor's income
and cash flows and its consolidated balance sheet as of the end of each fiscal
year, setting forth comparative figures for the preceding fiscal year and to be:
|x| audited |_| reviewed |_| compiled by an independent certified public
accountant acceptable to the Bank; all such statements shall be certified by
Guarantor's chief financial officer or partner to be correct, not misleading and
in accordance with Guarantor's records and to present fairly the results of
Guarantor's operations and cash flows and if annual its financial position at
year end in conformity with generally accepted accounting principles. If no box
is checked, Guarantor shall deliver financial statements and information in the
form and at the times satisfactory to the Bank. Guarantor represents that its
assets are not subject to any liens, encumbrances or contingent liabilities
except as fully disclosed to the Bank in such statements. Guarantor authorizes
the Bank from time to time to obtain, verify and review all financial data
deemed appropriate by the Bank in connection with this Guaranty and the
Obligations, including without limitation credit reports from agencies.
7. Security; Right of Setoff. As further security for payment of the
Obligations, Expenses and any other obligations of Guarantor to the Bank,
Guarantor hereby grants to the Bank a security interest in all money, securities
and other property of Guarantor in the actual or constructive possession or
control of the Bank including
<PAGE>
without limitation all deposits and other accounts owing at any time by the Bank
in any capacity to Guarantor in any capacity (collectively, "Property"). The
Bank shall have the right to set off Guarantor's Property against any of
Guarantor's obligations to the Bank and shall have all of the rights and
remedies of a secured party under the Uniform Commercial Code in addition to
those under this Guaranty and other agreements and applicable law.
8. No Transfer of Assets. Guarantor shall not transfer, reinvest or
otherwise dispose of its assets in a manner or to an extent that would or might
impair Guarantor's ability to perform its obligations under this Guaranty.
9. Nonwaiver by the Bank; Miscellaneous. This is the entire agreement
between Guarantor and the Bank with respect to the Guaranty. This Guaranty may
be assigned by the Bank, shall inure to the benefit of the Bank and its
successors and assigns, and shall be binding upon Guarantor and its successors
and assigns. All rights and remedies of the Bank are cumulative and no such
right or remedy shall be exclusive of any other right or remedy. This Guaranty
does not supersede any other guaranty or security granted to the Bank by
Guarantor or others (except as to Guarantor's Waiver of Subrogation rights
above). No single, partial or delayed exercise by the Bank of any right or
remedy shall preclude exercise by the Bank at any time at its sole option of the
same or any other right or remedy of the Bank without notice. No course of
dealing or other conduct, no oral agreement or representation made by the Bank
or usage of trade shall operate as a waiver of any right or remedy of the Bank.
No waiver or amendment of any right or remedy of the Bank or release by the Bank
shall be effective unless made specifically in writing by the Bank. This
Guaranty shall by governed by the laws of the State of New York, without regard
to its principles of conflict of laws. Each provision of this Guaranty shall be
interpreted as consistent with existing law and shall be deemed amended to the
extent necessary to comply with any conflicting law. If any provision is
nevertheless held invalid the other provisions shall remain in effect. Captions
are solely for convenience and are not part of the substance of this Guaranty.
10. Joint and Several; Primary Obligation. If there is more than one
Guarantor, each Guarantor jointly and severally guarantees the payment and
performance in full of all obligations under this Guaranty and agrees that the
Bank need not seek payment from any source other than the undersigned Guarantor.
This Guaranty is a primary obligation. Guarantor's obligations hereunder are
separate and independent of Borrower's, and a separate action may be brought
against Guarantor whether or not action is brought or joined against or with
Borrower or any other party.
11. Authorization. Guarantor certifies that it is an entity in the form
described above duly organized and in good standing under the laws of the State
of its organization and duly authorized to do business in each State material to
the conduct of its business. Guarantor has determined that the execution of this
Guaranty will be in its best interest, to its direct benefit, incidental to its
powers, and in furtherance of its duly acknowledged purposes and objectives.
Execution of this Guaranty by the persons signing below has been authorized by
all necessary corporate action, including directors' and shareholders consent,
as evidenced by the attached certificates, or (as appropriate) is authorized by
its partnership agreement or governing instrument, a certified copy of which is
attached. Guarantor's chief executive office is located at the above address.
12. Guarantor's Consents. In any action or other legal proceeding relating
to this Guaranty, Guarantor (a) consents to the personal jurisdiction of any
State or federal court located in the State of New York and (b) agrees that in
any proceeding concerning this Guaranty, (i) a copy of this Guaranty kept in the
Bank's course of business may be admitted into evidence as an original, and (ii)
Guarantor will not interpose any counterclaims, setoff or defense of any nature.
13. WAIVER OF JURY TRIAL. GUARANTOR AND THE BANK EACH WAIVE ANY RIGHT TO
TRIAL BY JURY IN ANY ACTION WITH RESPECT TO THIS GUARANTY.
GUARANTOR:
DATE September 30, 1996 CVC PRODUCTS, INC.
------------------ ------------------------------------
TIN # 16-1017191 By: /s/ Emilio O. DiCataldo
------------------ ------------------------------------
Name: Emilio O. DiCataldo
Title: Senior Vice President and Chief
Financial Officer
ACKNOWLEDGMENT
STATE OF NEW YORK )
:SS.
COUNTY OF MONROE )
On the 30th day of September in the year 1996, before me personally came Emilio
O. DiCataldo
|_| Partnership to me known and known to me to be a general partner of
the partnership described in and which executed the
above instrument, and __he duly acknowledged to me that
__he executed the above instrument for and on the behalf
of said partnership.
|x| Corporation to me known, who, being by me duly sworn, did dispose
and say that __he resides in _________________________
________________________________________________; that
__he is the Senior Vice President and Chief Fin. Officer
of CVC Products, Inc. the corporation described in and
which executed the above instrument; and that __he
signed his (her) name thereto by order of the board of
directors of said corporation.
/s/Gordon E. Forth
------------------------------------------------
Notary Public
GORDON E. FORTH
Notary Public, State of New York
Qualified in Monroe County
Commission Expires June 6, 1996
FOR BANK USE ONLY
Authorization Confirmed:
/s/ [ILLEGIBLE]
- ------------------------
Signature
<PAGE>
DOC QTY DATE 2-2-96
COM C.V.C HOLDING
6.S. U.
2073060000
[LOGO OF M&T BANK] CONTINUING GUARANTY
(Corporation or Partnership)
GUARANTOR: CVC Holdings, Inc.
-----------------------------------------------------------------------
Name
525 Lee Road, Rochester, New York 14606
-----------------------------------------------------------------------
Address of Chief Executive Office
a |x| corporation |_| general partnership |_| limited partnership
|_|_______ organized under the laws of the State of Delaware
BORROWER: CVC Products, Inc. 2073150009
-----------------------------------------------------------------------
Name
525 Lee Road, Rochester, New York 14606
-----------------------------------------------------------------------
Address
BANK: Manufacturers and Traders Trust Company, One M&T Plaza, Buffalo, New York
14240 Attention: Office of General Counsel
1. Guaranty (a) Guarantor guarantees to the Bank the full and immediate
payment and performance of all of Borrower's obligations to the Bank from time
to time of every kind and nature, now existing and hereafter incurred, direct
and contingent, liquidated and unliquidated, secured and unsecured, matured and
unmatured, including all accrued and unpaid interest and all Expenses (defined
below) even if such obligations were originally contracted with another lender
or jointly with other borrowers, even if not evidenced by a writing, and even if
periodically extinguished and reincurred (the "Obligations"). Guarantor will pay
or perform its obligations under this Guaranty upon demand. This is a guaranty
of payment, not collection.
(b) Guarantor acknowledges the receipt of valuable consideration for this
Guaranty and acknowledges that the Bank is relying on this Guaranty in making a
financial accommodation to Borrower, whether a commitment to lend, extension,
modification or replacement of, or forbearance with respect to, any Obligation,
cancellation of another guaranty, purchase of Borrower's assets, or other
valuable consideration.
2. Continuing, Unconditional and Unlimited Guaranty. This Guaranty is
irrevocable, continuing, unconditional and general without any limitation.
3. Guarantor's Waivers. (a) Guarantor's obligations shall not be released,
impaired or affected in any way by (i) Borrower's bankruptcy, reorganization or
insolvency under any law or that of any other party, or by any action of a
trustee in any such proceeding; (ii) failure of any other party to perform its
obligations to the Bank; or (iii) any other circumstance that might constitute a
legal or equitable defense to Guarantor's obligations under this Guaranty,
including without limitation: (A) any new agreements or obligations of Borrower
with or to the Bank, amendments, changes in rate of interest, extensions of time
for payments, modifications, renewals or the existence of or waivers of default
as to any existing or future agreements of Borrower or any other party with the
Bank; (B) any adjustment, compromise or release of any Obligations of Borrower,
by the Bank or any other party; the existence or nonexistence or order of any
filings, exchanges, releases, impairment or sale of, any security for the
Obligations, or the order in which payments and proceeds of collateral are
applied; or acceptance by the Bank of any writing intended by any other party to
create an accord and satisfaction with respect to any of the Obligations; (C)
any delay in or failure to call for, take, hold, continue, collect, preserve or
protect, replace, assign, sell, lease, exchange, convert or otherwise transfer
or dispose of, perfect a security interest in, realize upon or enforce any
security interest in any security for the Obligations, regardless of its value;
(D) any exercise, delay in the exercise or waiver of, any failure to exercise,
or any forbearance or other indulgence relating to, any right or remedy of the
Bank against any Guarantor, Borrower or other person or relating to the
Obligations, to any portion thereof or to any security for the Obligations; (E)
any fictitiousness, incorrectness, invalidity or unenforceability, for any
reason, of any instrument or other agreement, or act of commission or omission
by the Bank or Borrower; (F) any composition, extension, moratoria or other
statutory relief granted to Borrower; or (G) any interruption in the business
relations between the Bank and Borrower, or any dissolution or change in form of
organization, name or ownership of Borrower or Guarantor.
(b) Waivers of Notice, etc. The Guarantor waives acceptance, assent and
all rights of notice or demand including without limitation (i) notice of
acceptance of this Guaranty, of Borrower's default or nonpayment of any
Obligation, and of changes in Borrower's financial condition; (ii) presentment,
protest, notice of protest and demand for payment; and (iii) any other notice,
demand or condition to which Guarantor might otherwise be entitled prior to the
Bank's reliance on or enforcement of this Guaranty.
(c) Waiver of Subrogation. The Guarantor hereby waives any claim, right or
remedy which Guarantor may now have or hereafter acquire against Borrower that
arises hereunder or from the performance by Guarantor hereunder including,
without limitation, any claim, remedy or right of subrogation, reimbursement,
exoneration, indemnification, contribution or participation in any claim , right
or remedy of Bank against Borrower or any security which Bank now has or
hereafter acquires, whether or not such claim, right or remedy arises in equity,
under contract, by statute, under common law or otherwise.
4. Termination; Reinstatement. This Guaranty can be terminated (a) only
with respect to Obligations not yet incurred, and (b) only by actual receipt by
the Bank officer named above of written notice of Guarantor's intent to
terminate (or Guarantor's dissolution) plus (c) the lapse of a reasonable time
for Bank to act on such notice. This Guaranty cannot be terminated with respect
to any Obligations committed or contracted for or outstanding at the time the
Bank acts on such notice, or any prior or subsequent modifications, renewals,
extensions or replacements of or interest on such Obligations, or related
expenses. If any payment the Bank has received prior to termination subsequently
is declared fraudulent or preferential or for any other reason required to be
surrendered, Guarantor's obligations under this Guaranty and any related
security agreements shall be reinstated and remain in effect until the Bank has
actually received payment in full of the Obligations.
5. Expenses. Guarantor agrees to reimburse the Bank on demand for all the
Bank's expenses, costs, damages and losses of any kind or nature, including
without limitation actual attorneys' fees and disbursements whether for internal
or external counsel incurred by the Bank in attempting to enforce this Guaranty,
collect or restructure any of the Obligations, realize on any collateral, or for
any other purpose related to the Obligations including but not limited to costs
of workout, negotiations, redocumentation or bankruptcy or other legal
proceedings or appeal (collectively, "Expenses"). Expenses will accrue interest
at the highest legal rate until payment is actually received by the Bank.
6. Financial and Other Information. Guarantor shall promptly deliver to
the Bank copies of all annual reports, proxy statements and similar information
distributed to shareholders or partners and of all filings with the Securities
and Exchange Commission and the Pension Benefit Guaranty Corporation and shall
provide in form satisfactory to the Bank: (i) within sixty days after the end of
each of its first three fiscal quarters, consolidating and consolidated
statements of income and cash flows for the quarter, for the corresponding
quarter in the previous fiscal year and for the period from the end of the
previous fiscal year, with a consolidating and consolidated balance sheet as of
the quarter end; and (ii) within ninety days after the end of each fiscal year,
consolidating and consolidated statements of Guarantor's income and cash flows
and its consolidating and consolidated balance sheet as of the end of each
fiscal year, setting forth comparative figures for the preceding fiscal year and
to be: |x| audited |_| reviewed |_| compiled by an independent certified public
accountant acceptable to the Bank; all such statements shall be certified by
Guarantor's chief financial officer or partner to be correct, not misleading and
in accordance with Guarantor's records and to present fairly the results of
Guarantor's operations and cash flows and if annual its financial position at
year end in conformity with generally accepted accounting principles. If no box
is checked, Guarantor shall deliver financial statements and information in the
form and at the times satisfactory to the Bank. Guarantor represents that its
assets are not subject to any liens, encumbrances or contingent liabilities
except as fully disclosed to the Bank in such statements. Guarantor authorizes
the Bank from time to time to obtain, verify and review all financial data
deemed appropriate by the Bank in connection with this Guaranty and the
Obligations, including without limitation credit reports from agencies.
7. Security; Right of Setoff. As further security for payment of the
Obligations, Expenses and any other obligations of Guarantor to the Bank,
Guarantor hereby grants to the Bank a security interest in all money, securities
and other property of Guarantor in the actual or constructive possession or
control of the Bank including
<PAGE>
without limitation all deposits and other accounts owing at any time by the Bank
in any capacity to Guarantor in any capacity (collectively, "Property"). The
Bank shall have the right to set off Guarantor's Property against any of
Guarantor's obligations to the Bank and shall have all of the rights and
remedies of a secured party under the Uniform Commercial Code in addition to
those under this Guaranty and other agreements and applicable law.
8. No Transfer of Assets. Guarantor shall not transfer, reinvest or
otherwise dispose of its assets in a manner or to an extent that would or might
impair Guarantor's ability to perform its obligations under this Guaranty.
9. Nonwaiver by the Bank; Miscellaneous. This is the entire agreement
between Guarantor and the Bank with respect to the Guaranty. This Guaranty may
be assigned by the Bank, shall inure to the benefit of the Bank and its
successors and assigns, and shall be binding upon Guarantor and its successors
and assigns. All rights and remedies of the Bank are cumulative and no such
right or remedy shall be exclusive of any other right or remedy. This Guaranty
does not supersede any other guaranty or security granted to the Bank by
Guarantor or others (except as to Guarantor's Waiver of Subrogation rights
above). No single, partial or delayed exercise by the Bank of any right or
remedy shall preclude exercise by the Bank at any time at its sole option of the
same or any other right or remedy of the Bank without notice. No course of
dealing or other conduct, no oral agreement or representation made by the Bank
or usage of trade shall operate as a waiver of any right or remedy of the Bank.
No waiver or amendment of any right or remedy of the Bank or release by the Bank
shall be effective unless made specifically in writing by the Bank. This
Guaranty shall by governed by the laws of the State of New York, without regard
to its principles of conflict of laws. Each provision of this Guaranty shall be
interpreted as consistent with existing law and shall be deemed amended to the
extent necessary to comply with any conflicting law. If any provision is
nevertheless held invalid the other provisions shall remain in effect. Captions
are solely for convenience and are not part of the substance of this Guaranty.
10. Joint and Several; Primary Obligation. If there is more than one
Guarantor, each Guarantor jointly and severally guarantees the payment and
performance in full of all obligations under this Guaranty and agrees that the
Bank need not seek payment from any source other than the undersigned Guarantor.
This Guaranty is a primary obligation. Guarantor's obligations hereunder are
separate and independent of Borrower's, and a separate action may be brought
against Guarantor whether or not action is brought or joined against or with
Borrower or any other party.
11. Authorization. Guarantor certifies that it is an entity in the form
described above duly organized and in good standing under the laws of the State
of its organization and duly authorized to do business in each State material to
the conduct of its business. Guarantor has determined that the execution of this
Guaranty will be in its best interests, to its direct benefit, incidental to its
powers, and in furtherance of its duly acknowledged purposes and objectives.
Execution of this Guaranty by the persons signing below has been authorized by
all necessary corporate action, including directors' and shareholder consent, as
evidenced by the attached certificates, or (as appropriate) is authorized by its
partnership agreement or governing instrument, a certified copy of which is
attached. Guarantor's chief executive office is located at the above address.
12. Guarantor's Consents. In any action or other legal proceeding relating
to this Guaranty, Guarantor (a) consents to the personal jurisdiction of any
State or federal court located in the State of New York and (b) agrees that in
any legal proceeding concerning this Guaranty, (i) a copy of this Guaranty kept
in the Bank's course of business may be admitted into evidence as an original,
and (ii) Guarantor will not interpose any counterclaims, setoff or defense of
any nature.
13. WAIVER OF JURY TRIAL. GUARANTOR AND THE BANK EACH WAIVE ANY RIGHT TO
TRIAL BY JURY IN ANY ACTION WITH RESPECT TO THIS GUARANTY.
GUARANTOR:
DATE February 2, 1996 CVC Holdings, Inc.
TIN # 16-1383279 By: /s/ Emilio O. DiCataldo
----------------------------------------
Emilio O. DiCataldo, Senior V.P. Finance
----------------------------------------
----------------------------------------
ACKNOWLEDGMENT
STATE OF NEW YORK )
:SS.
COUNTY OF MONROE )
On the 2 day of February in the year 1996, before me personally came Emilio O.
DiCataldo
|_| Partnership to me known and known to me to be a general partner of
the partnership described in and which executed the
above instrument, and __he duly acknowledged to me that
he executed the above instrument for and on the behalf
of said partnership.
|x| Corporation to me known, who, being by me duly sworn, did dispose
and say that __he resides in _________________________
________________________________________________; that
__he is the Senior VP Finance of CVC Holdings, Inc., the
corporation described in and which executed the above
instrument; and that __he signed his (her) name thereto
by order of the board of directors of said corporation.
/s/ John D. Inzana
-------------------------------------
Notary Public
JOHN D. INZANA
Notary Public, in the State of New York
MONROE COUNTY
Commission Expires March 9, 1997
FOR BANK USE ONLY
Authorization Confirmed:
/s/ [ILLEGIBLE]
- ------------------------
Signature
<PAGE>
EXHIBIT 10.24
DOC GSA DATE 2-2-96
----- ---------
COM
------------------
[LOGO] GENERAL SECURITY AGREEMENT
MANUFACTURERS AND TRADERS TRUST COMPANY
Name(s) of Undersigned CVC Products, Inc. ("Borrower" or "undersigned")
---------------------------------------------------------
Address(es) of Undersigned 525 Lee Road, Rochester, NY 14606
-----------------------------------------------------
In consideration of Manufacturers and Traders Trust Company, a New York
banking corporation having its chief executive office at One M&T Plaza, Buffalo,
New York 14240, (the "Secured Party") heretofore or hereafter (1) granting any
loan, credit or other financial accommodation to, or in reliance upon any
guaranty, endorsement or other assurance of any of the undersigned or (2)
permitting any extension, renewal, refinancing, modification or replacement of
any indebtedness, liability or obligation arising as a direct or indirect result
of any such loan, credit or other financial accommodation, (3) surrendering or
releasing any guaranty, endorsement or other assurance, any collateral or other
security, or any subordination, directly or indirectly securing the payment of,
or otherwise directly or indirectly applicable to, any such indebtedness,
liability or obligation or (4) granting any waiver of, or any forbearance or
other indulgence relating to, any right or remedy relating to any such
indebtedness, liability or obligation, to any such guaranty, endorsement or
other assurance, to any such collateral or other security or to any such
subordination, and for other valuable consideration, the receipt of which is
acknowledged, each of the undersigned agrees with the Secured Party as follows:
1. Reference to Definitions.
a. For purposes of this Agreement, each of the following terms has the
meaning given it in Section 16 of this Agreement: (i) Bankruptcy Law, (ii)
Collateral, (iii) Debtor, (iv) Equipment, (v) Event of Default, (vi) General
Intangible, (vii) Goods, (viii) Inventory, (ix) Obligations, (x) Other
Collateral, (xi) Other Obligor, (xii) Permitted Lien, (xiii) Person, (xiv)
Primary Obligor, (xv) Security Interest and (xvi) Successor.
b. For purposes of this Agreement, each of the following terms has the
meaning given it for purposes of Article 9 of the Uniform Commercial Code of the
State of New York as in effect on the date of this Agreement: (i) Account, (ii)
Account Debtor, (iii) Chattel Paper, (iv) Consumer Goods, (v) Deposit Account,
(vi) Document, (vii) Farm Product, (viii) Fixture, (ix) Instrument, (x) Proceeds
and (xi) Products.
c. For purposes of this Agreement, "Uncertificated Security" has the
meaning given it for purposes of Article 8 of the Uniform Commercial Code of the
State of New York as in effect on the date of this Agreement.
2. Security Interest; Nature of Security Interest.
a. To secure the payment of the Obligations, each of the undersigned
grants to the Secured Party a security interest in, and assigns, pledges and
hypothecates to the Secured Party, the Collateral.
b. Each Security Interest (i) is unconditional, (ii) is independent of and
in addition to all Other Collateral, (iii) is a continuing security interest,
assignment, pledge or hypothecation, and (iv) shall continue in full force and
effect except insofar as this Agreement is terminated as provided in Section 12g
of this Agreement.
3. Reinstatement of Obligations. Each portion of the Obligations that is
(a) paid by any money received or applied by the Secured Party (including, but
not limited to, any such money constituting, or received or applied because of
the existence of, any of the Collateral or any Other Collateral) and later
returned by or otherwise recovered from the Secured Party as a direct or
indirect result of any claim, regardless of the basis or outcome thereof,
whether asserted affirmatively, as a counterclaim, setoff or defense or
otherwise and whether now existing or hereafter arising, for the return or for
any other recovery of such money (including, but not limited to, any such claim
based, in whole or in part, upon any allegation that (i) such money constituted
trust funds for purposes of the Lien Law of the State of New York or for
purposes of any similar statute, regulation or other law, (ii) the receipt or
application of such money constituted an impermissible setoff or (iii) the
receipt or application of such money, or the grant or perfection of any security
interest in, or of any other lien or encumbrance upon, any of the Collateral or
any Other Collateral, constituted a preference, fraudulent transfer or
fraudulent conveyance) or (b) satisfied by the Secured Party's retention of any
portion of the Collateral, or by the Secured Party's retention of any Other
Collateral, that is later returned by or otherwise recovered from the Secured
Party as a direct or indirect result of any claim, regardless of the basis or
outcome thereof, whether asserted affirmatively, as a counterclaim, setoff or
defense or otherwise and whether now existing or hereafter arising, for the
return or for any other recovery of such portion of the Collateral or Other
Collateral (including, but not limited to, any such claim based, in whole or in
part, upon any allegation that the grant or perfection of any security interest
in, or of any other lien or encumbrance upon, such portion of the Collateral or
Other Collateral constituted a preference, fraudulent transfer or fraudulent
conveyance) shall be reinstated as part of the Obligations for purposes of this
Agreement (including, but not limited to, Section 12g of this Agreement) as of
the date it originally arose and for purposes of each statute of limitations
with respect to any action or other legal proceeding by the Secured Party
against any Debtor relating to this Agreement as of the date of such return or
other recovery of such money, portion of the Collateral or Other Collateral.
4. Covenants.
a. Simultaneously with the execution and delivery to the Secured Party of
this Agreement, each of the undersigned shall execute and deliver to the Secured
Party each financing statement, notice of lien, instrument of assignment and
other writing, and take each other action, that the Secured Party shall deem
necessary or desirable at the sole option of the Secured Party to perfect or
accomplish any Security Interest.
b. Simultaneously with the execution and delivery to the Secured Party of
this Agreement, each of the undersigned shall deliver each presently existing
instrument included in the Collateral (except for any check or other draft) and
held by him, her or it to the Secured Party with each endorsement, instrument of
assignment and other writing that the Secured Party shall deem necessary or
desirable at the sole option of the Secured Party to accomplish the assignment
or other transfer of such instrument to the Secured Party. Until such delivery,
he, she or it shall hold such instrument in trust for the Secured Party.
c. Immediately upon receiving any instrument included in the Collateral
(except for, until (i) the occurrence or existence of any Event of Default or
(ii) any notice to the contrary shall be delivered, given or sent by the Secured
Party to any Debtor, any check or other draft), each Debtor shall deliver such
instrument to the Secured Party with each endorsement, instrument of assignment
and other writing that the Secured Party shall deem necessary or desirable at
the sole option of the Secured Party to accomplish the assignment or other
transfer of such instrument to the Secured Party. Until such delivery, such
Debtor shall hold such instrument in trust for the Secured Party.
1
<PAGE>
d. Each Debtor shall provide to the Secured Party, in form satisfactory to
the Secured Party, (i) if such Debtor is an individual, at least once during
each period of twelve consecutive months, a personal financial statement of such
Debtor for a year ending not more than sixty days earlier, in reasonable detail
and certified by such Debtor to be complete and accurate, (ii) if such Debtor is
not an individual, within sixty days after the end of each fiscal quarter of
each fiscal year of such Debtor, statements of income and of changes in
financial position of such Debtor for such fiscal quarter and for the period
from the beginning of such fiscal year to the end of such fiscal quarter and a
balance sheet of such Debtor as of the end of such fiscal quarter each in
reasonable detail and certified by an officer or member of such Debtor to be
complete and accurate, to be in accordance with the records of such Debtor and
to present fairly, subject to normal and nonmaterial year-end adjustments, the
results of the operations, and the changes in financial position, of such Debtor
for such fiscal quarter and for the period from the beginning of such fiscal
year to the end of such fiscal quarter, and the financial position of such
Debtor as of the end of such fiscal quarter, in conformity with generally
accepted accounting principles applied consistently with the application of such
principles with respect to the preceding fiscal quarter of such Debtor, (iii) if
such Debtor is not an individual, within ninety days after the end of each
fiscal year of such Debtor, statements of income and of changes in financial
position of such Debtor for such fiscal year and a balance sheet of such Debtor
as of the end of such fiscal year, each in reasonable detail and certified by an
independent certified public accountant acceptable to the Secured Party to
present fairly the results of the operations, and the changes in financial
position, of such Debtor for such fiscal year and the financial position of such
Debtor as of the end of such fiscal year, in conformity with generally accepted
accounting principles applied consistently with the application of such
principles with respect to the preceding fiscal year of such Debtor and to have
been based upon an audit by such accountant that was made in accordance with
generally accepted auditing standards and accordingly included such tests of
accounting records and such other auditing procedures as such accountant deemed
necessary in the circumstances, and (iv) promptly upon the request of the
Secured Party, all additional information relating to such Debtor or to such
Debtor's business, operations, assets, affairs or condition (financial or other)
that is so requested.
e. Each Debtor shall maintain accurate and complete records relating to
the Collateral (including, but not limited to, upon the request of the Secured
Party, a perpetual inventory record relating to inventory included in the
Collateral) in conformity with generally accepted accounting principles
consistently applied.
f. Before the end of any applicable grace period, each Debtor shall pay
each tax, assessment, fee and charge imposed by any government or political
subdivision upon any of the Collateral, upon the ownership, possession, use,
operation, sale or lease of any of the Collateral, upon this Agreement or upon
any instrument evidencing any of the Obligations.
g. Each Debtor shall obtain and maintain in full force and effect each
authorization, approval, permit, consent, franchise and license from any Person
necessary for the ownership, possession, use, operation, sale or lease of any of
the Collateral.
h. Each Debtor shall defend the Collateral against each demand, claim,
counterclaim, setoff and defense asserted by any Person other than the Secured
Party (including, but not limited to, any Account Debtor).
i. Each Debtor shall indemnify the Secured Party on demand against each
liability, cost and expense (including, but not limited to, if the Secured Party
retains counsel for advice, for litigation or for any other purpose, each
attorney's fee and disbursement) incurred by the Secured Party as a direct or
indirect result of any claim, regardless of the basis or outcome thereof,
whether asserted affirmatively, as a counterclaim, setoff or defense or
otherwise and whether now existing or hereafter arising, arising out of the
ownership, possession, use, operation, sale or lease of any of the Collateral.
j. Each Debtor shall (i) keep all Goods included in the Collateral insured
against each risk to which any of such Goods may at any time be subject
(including, but not limited to, fire, theft and risks covered by extended
coverage) and (ii) maintain insurance against liability on account of damage to
any Person or property arising out of the ownership, possession, use, operation,
sale or lease of any of such Goods. Such insurance shall be provided in such
amounts, for such periods, on such terms, with such special endorsements and by
such companies as shall be satisfactory to the Secured Party. Each Debtor shall
deliver to the Secured Party a copy of each policy pursuant to which any of such
insurance is provided. Without limiting the generality of the first two
sentences of this Section 4j, (i) each policy pursuant to which any of the
insurance described in clause (i) of the first sentence of this Section 4j is
provided shall contain a mortgagee clause, in form and substance satisfactory to
the Secured Party, (A) naming the Secured Party as a mortgagee as the interest
of the Secured Party may appear and (B) providing that (I) all money payable
pursuant to any insurance provided pursuant to such policy shall be payable to
the Secured Party, (II) no insurance provided pursuant to such policy shall be
affected by any act or omission of any Debtor or of any owner of any real
property referred to in such policy and (III) neither such policy nor such
mortgagee clause may be canceled, terminated or adversely amended except upon
thirty days' prior written notice to the Secured Party and (ii) each policy
pursuant to which any of the insurance described in clause (ii) of the first
sentence of this Section 4j is provided shall contain a clause, in form and
substance satisfactory to the Secured Party, (A) naming the Secured Party as an
additional insured as the interest of the Secured Party may appear and (B)
providing that neither such policy nor such clause may be canceled, terminated
or adversely amended except upon thirty days' prior written notice to the
Secured Party.
k. Each Debtor shall immediately (i) cause all Goods included in the
Collateral to be properly titled and registered to the extent required by any
applicable statute, regulation or other law, (ii) cause the interest of the
Secured Party to be properly noted on each certificate of title relating to any
of such Goods and (iii) deliver each such certificate received by such Debtor to
the Secured Party.
l. Each Debtor shall (i) keep each Fixture and piece of Equipment included
in the Collateral in as good condition as when first delivered to any Debtor,
ordinary wear and tear excepted, (ii) perform maintenance on each such Fixture
and piece of Equipment strictly in accordance with each applicable specification
of any manufacturer or seller thereof and (iii) use and operate each such
Fixture and piece of Equipment, and permit each such Fixture and piece of
Equipment to be used and operated, only in the manner in which it was designed
to be used and operated so as to subject it only to ordinary wear and tear.
m. Each Debtor shall use his, her it its best efforts to cause any issuer
of any General Intangible or Instrument included in the Collateral to make
public, whether by filing reports with the Securities and Exchange Commission or
otherwise, all information with respect to such issuer necessary or desirable to
permit the sale or other disposition of such General Intangible or Instrument
without registration pursuant to the Securities Act of 1933.
n. If any Account or General Intangible included in the Collateral
represents money owing pursuant to any contract for the improvement of real
property or for a public improvement for purposes of the Lien Law of the State
of New York, each Debtor shall (i) immediately send or deliver notice of such
fact to the Secured Party, (ii) receive and hold any money advanced by the
Secured Party with respect to such Account or General Intangible as a trust fund
to be first applied to the payment of trust claims as such term is defined in
Section 71 of such Lien Law, (iii) until each such trust claim is paid, not use
or permit the use of any of such money for any purpose other than the payment of
such trust claims and (iv) promptly upon the request of the Secured Party,
execute and deliver each writing, and take each other action, that the Secured
Party shall deem necessary or desirable at the sole option of the Secured Party
to give or file notice of the Secured Party's interest in such Account or
General Intangible pursuant to whichever of Sections 15, 16 and 73 of such Lien
Law is applicable.
o. If any Account or General Intangible included in the Collateral arises
out of a contract with any government or political subdivision (including, but
not limited to, the United States) or with any department, agency or
instrumentality thereof, such Debtor shall (i) immediately send or deliver
notice of such fact to the Secured Party and (ii) promptly upon the request of
the Secured Party, execute and deliver each writing, and take each other action
that the Secured Party shall deem necessary or desirable at the sole option of
the Secured Party properly to perfect under any statute, regulation or other law
(including, but not limited to, the Federal Assignments of Claims Act) the
interest of the Secured Party in such Account or General Intangible.
p. Each Debtor shall promptly deliver or send to the Secured Party notice
of any failure of any Account Debtor or other Person to perform any obligation
relating to any Account, Chattel Paper, General Intangible, Instrument, Document
or Deposit Account included in the Collateral.
q. Immediately upon receiving any proxy statement, notice or other
communication relating to any General Intangible or Instrument included in the
2
<PAGE>
Collateral, each Debtor shall (i) if such proxy statement, notice or other
communication is in writing, deliver a copy thereof to the Secured Party or (ii)
if such proxy statement, notice or other communication is not in writing,
deliver or send notice thereof to the Secured Party.
r. immediately upon acquiring knowledge or reason to know that any Goods
included in the Collateral have been affixed to, or have been installed in or
on, any real property or any Goods not included in the Collateral, each Debtor
shall deliver or send notice of such fact to the Secured Party.
s. Immediately upon acquiring knowledge or reason to know of any maturity,
call, exchange, conversion, redemption, offer, tender or similar matter relating
to any General Intangible, Instrument or Deposit Account included in the
Collateral, each Debtor shall deliver or send notice thereof to the Secured
Party.
t. Immediately upon acquiring knowledge or reason to know of any loss,
destruction or theft of, or of any damage to, any of the Collateral from any
cause of any kind, each Debtor shall send or deliver notice thereof to the
Secured Party.
u. Immediately upon acquiring knowledge or reason to know of (i) the
threat or commencement by any Person other than the Secured Party of any action
or other legal proceeding relating to any of the Collateral or questioning the
validity of this Agreement or of any action taken or to be taken pursuant to
this Agreement, (ii) any judgment, order or award of any court, agency or other
governmental authority or of any arbitrator relating to any of the Collateral or
rendering invalid this Agreement or any action taken or to be taken pursuant to
this Agreement or (iii) the assertion by any Person other than the Secured Party
of any demand, claim, counterclaim, setoff or defense relating to any of the
Collateral, each Debtor shall deliver or send notice thereof to the Secured
Party.
v. Immediately upon acquiring knowledge or reason to know of the
occurrence or existence of (i) any Event of Default, (ii) any event or condition
that, after notice, after lapse of time or after both notice and lapse of time,
would constitute an Event of Default or (iii ) any event or condition that has
or (so far as can be foreseen) will or might have any material adverse effect on
any of the Collateral, on any Debtor, Primary Obligor or Other Obligor or on the
business, operations, assets, affairs or condition (financial or other) of any
Debtor, Primary Obligor or Other Obligor, each Debtor shall deliver or send
notice thereof to the Secured Party.
w. Immediately upon acquiring knowledge or reason to know of any change in
(i) the location of the residence, only place of business or chief executive
office of any Debtor, (ii) the location of any of the Collateral if not (A) in
the possession or under the control of, or enroute to or from, the Secured Party
or (B) mobile Equipment being removed for not more than thirty days at a time
from any location indicated in any questionnaire submitted to the Secured Party
by any of the undersigned in connection with this Agreement as a location where
such mobile Equipment will be kept or (iii) the name, identity or structure of
any Debtor, each Debtor shall deliver or send notice thereof to the Secured
Party.
x. No Debtor shall (i) execute or permit to be filed or remain on file in
any public office any financing statement relating to any of the Collateral,
naming any Debtor as a debtor and naming any Person other than the Secured Party
as a secured party or (ii) execute any application for any certificate of title
or notice of lien, or permit to exist any certificate of title, relating to any
Goods included in the Collateral and naming any Person other than the Secured
Party as a secured party, except for financing statements, applications, notices
of lien and certificates of title fully and accurately described in Exhibit A
attached to and made a part of this Agreement.
y. No Debtor shall (i) permit to exist any registration of any transfer or
pledge of any Uncertificated Security included in the Collateral, (ii) execute
or permit to exist any order to register any transfer or pledge of, or any
notification of any security interest in, or of any other lien or encumbrance
upon, any such Uncertificated Security or (iii) permit any such Uncertificated
Security to be shown on the records of any clearing corporation other than in
the name of any Debtor, of the Secured Party or of any nominee of the Secured
Party, except for registrations, orders, notifications and Uncertificated
Securities fully and accurately described in Exhibit A attached to and made a
part of this Agreement.
z. No Debtor shall create or permit to exist, or attempt or agree or
otherwise incur any obligation to create or permit to exist, any security
interest in, or any other lien or encumbrance upon, any of the Collateral,
except for Permitted Liens.
aa. No Debtor shall abandon, assign, sell, lease, exchange, convert or
otherwise transfer or dispose of any of the Collateral or any interest in any of
the Collateral, except that, until (i) the occurrence or existence of any Event
of Default or (ii) any notice to the contrary shall be delivered, given or sent
by the Secured Party to any Debtor, each Debtor may (A) in the ordinary course
of such Debtor's business, (I) abandon, assign, sell, lease, exchange or
otherwise transfer of dispose of any Equipment of such Debtor that is obsolete
or worn-out, (II) sell or exchange any Equipment of such Debtor in connection
with the acquisition by such Debtor of other Equipment that is at least as
valuable as such Equipment, that such Debtor intends to use for substantially
the same purposes as such Equipment and that is not subject to any security
interest or other lien or encumbrance, except for Permitted Liens, (III) assign
any Account of such Debtor for purposes of collection, (IV) assign, sell, lease,
exchange or otherwise transfer or dispose of any Inventory of such Debtor other
than in partial or complete satisfaction of any indebtedness, liability or
obligation and (V) dispose of any money of such Debtor or funds in any Deposit
Account of such Debtor in partial or complete satisfaction of any indebtedness,
liability or obligation of such Debtor incurred in the ordinary course of such
Debtor's business and (B) dispose of any money of such Debtor, funds in any
Deposit Account of such Debtor or funds in any other account of such Debtor
evidenced by a certificate of deposit if such money is held, or if such Deposit
account or other account is maintained, for personal, family or household
purposes.
bb. No Debtor shall use, operate, permit the use or operation of, or
assign, sell, lease, exchange or otherwise transfer or dispose of, any of the
Collateral in any manner that (i) would or might violate, or would or might
result in any violation of, any environmental or other statute, regulation or
other law (including, but not limited to, the Environmental Protection Act, the
Occupational Safety and Health Act, the Comprehensive Environmental Response
Compensation and Liability Act and the Resource Conservation and Recovery Act),
any policy providing any insurance on any Goods included in the Collateral or
any warranty with respect to any such Goods or (ii) would or might result in any
such insurance not being paid or in any such warranty not being honored.
cc. No Debtor shall remove, or permit the removal of, any of the
Collateral from any location indicated in any questionnaire submitted to the
Secured Party by any of the undersigned in connection with this Agreement as a
location where any of the Collateral will be kept, except that any mobile
Equipment included in the Collateral may be removed for not more than thirty
days at a time from any location indicated in any such questionnaire as a
location where such mobile Equipment will be kept.
dd. No Debtor shall materially alter or permit the material alteration of
any Fixture or piece of Equipment included in the Collateral.
ee. No Debtor shall cause or permit any Goods included in the Collateral
to (i) become a Fixture or (ii) be or become an accession to any Goods not
included in the Collateral.
ff. No Debtor shall cause or permit any Goods included in the Collateral
to be placed in any warehouse that may issue a negotiable Document with respect
to such Goods.
gg. No Debtor shall assign, sell, exchange, convert or otherwise transfer
or dispose of, take any other action with respect to, or permit the assignment,
sale, exchange, conversion or other transfer or disposition of or the taking of
any other action with respect to, any General Intangible or Instrument not
included in the Collateral if such assignment, sale, exchange, conversion or
other transfer or disposition or such taking of such other action would be
required to be considered in determining whether the sale or other disposition
of any General Intangible or Instrument included in the Collateral was
permissible without registration pursuant to the Securities Act of 1933.
hh. No Debtor who or which controls any issuer of any stock or share
included in the Collateral shall permit, and no Debtor who or which by acting
with any other Person or with other Persons would cause such control to exist
shall take any action to permit, such issuer to issue (i) any such stock or
share in addition to that or those heretofore issued or (ii) any option, warrant
or other right to purchase any such stock or share.
3
<PAGE>
ii. Upon and after (i) the occurrence or existence of any Event of Default
or (ii) the delivery, giving or sending by the Secured Party to any Debtor of
any notice not to do so, no Debtor shall, without the prior written consent of
the Secured Party, (A) request, demand, accept, collect, enforce, extend, renew,
refinance, modify, compound, subordinate, accelerate, settle, adjust or
compromise, enter into any composition of, replace, cancel, release, surrender,
abandon, discharge, realize upon, commence, prosecute, settle or compromise any
action or other legal proceeding relating to, waive any right or remedy relating
to or otherwise terminate, impair or otherwise affect any indebtedness,
liability or obligation of any Account Debtor or other Person relating to, or
give any receipt, release or discharge relating to, any Account, Chattel Paper,
General Intangible, Instrument, Document or Deposit Account included in the
Collateral or (B) attempt or agree or otherwise incur any obligation to do
anything described in clause (A) of this sentence.
jj. Promptly upon the request of the Secured Party made upon or at any
time and from time to time after the occurrence or existence of any Event of
Default, each Debtor shall assemble (i) all Goods included in the Collateral,
except for Fixtures, growing crops and standing timber, and (ii) all Chattel
Paper, Instruments, Documents and records included in the Collateral, and make
them available to the Secured Party at each place reasonably convenient to the
Secured Party and to such Debtor as the Secured Party shall designate
(including, but not limited to, any promises of such Debtor).
kk. Promptly upon the request of the Secured Party:
i. Each Debtor shall enter into each warehousing, lockbox or other
custodial arrangement with respect to any of the Collateral that the Secured
Party shall deem necessary or desirable at the sole option of the Secured Party.
ii. Each Debtor shall provide to the Secured Party all information, in
form and substance satisfactory to the Secured Party, that the Secured Party
shall deem necessary or desirable at the sole option of the Secured Party to (A)
identify the nature, extent, value, age and location of any of the Collateral,
(B) identify or contact any Account Debtor or other Person obligated with
respect to any Account, Chattel Paper, General Intangible, Instrument, Document
or Deposit Account included in the Collateral or (C) verify any insurance on
any Goods included in the Collateral.
iii. Each Debtor shall permit each officer, employee, accountant, attorney
and other agent of the Secured Party to inspect the Collateral and to examine,
audit, copy and extract each record included in the Collateral.
iv. Each Debtor shall provide to the Secured Party a writing, in form and
substance satisfactory to the Secured Party, (A) signed by each Person having
any interest, whether as an owner, mortgagee or lessee or otherwise, in any real
property to which are affixed, or in or on which are installed or located, any
Goods included in the Collateral or in or on which is located any Chattel Paper,
Instrument, Document or record included in the Collateral, (B) disclaiming any
interest of such Person in such Goods, Chattel Paper, Instrument, Document or
record and (C) containing the agreement of such Person to the Secured Party,
upon and at any time and from time to time after the occurrence or existence of
any Event of Default, (I) entering upon such real property or upon any other
real property of such Person to which are affixed, or in or on which are
installed or located, any such Goods or in or on which is located any such
Chattel Paper, Instrument, Document or record, (II) taking possession of and
removing from such real property or from such other real property any Goods
included in the Collateral and affixed thereto or installed or located therein
or thereon or any Chattel Paper, Instrument, Document or record included in the
Collateral and located therein or thereon and (III) remaining on, and using,
such real property or such other real property in the examination, storage,
preparation for any sale, lease or other disposition or sale, lease or other
disposition of such Goods or in the examination, audit, copying or extraction of
such record, without by doing so incurring any liability to such Person, except
for unreasonable damage to such real property or to such other real property
directly resulting from doing so.
v. Each Debtor shall provide to the Secured Party a writing, in form and
substance satisfactory to the Secured Party, (A) signed by each Person having
any interest, whether as an owner, secured party or lessee or otherwise, in any
Goods not included in the Collateral to which are affixed, or in or on which are
installed, any Goods included in the Collateral, (B) disclaiming any interest of
such Person in such Goods included in the Collateral and (C) containing the
agreement of such Person to the Secured Party, upon and at any time and from
time to time after the occurrence or existence of any Event of Default, taking
possession of and removing such Goods included in the Collateral from such Goods
not included in the Collateral, without by doing so incurring any liability to
such Person, except for unreasonable damage to such Goods not included in the
Collateral directly resulting from doing so.
vi. Each Debtor shall provide all information and assistance, execute and
deliver each writing, and take each other action, that the Secured Party shall
deem necessary or desirable at the sole option of the Secured Party in
connection with the verification of any Account, Chattel Paper, General
Intangible, Instrument, Document or Deposit Account included in the Collateral.
vii. Each Debtor shall deliver each Chattel Paper, Document and record
included in the Collateral to the Secured Party with each endorsement,
instrument of assignment and other writing that the Secured Party shall deem
necessary or desirable at the sole option of the Secured Party to accomplish the
assignment or other transfer of such Chattel Paper, Document or record to the
Secured Party.
viii. Each Debtor shall execute and deliver or file each form and other
writing (including, but not limited to, any notice of proposed sale of
securities pursuant to Rule 144 of the Securities and Exchange Commission), and
take each other action (including, but not limited to, making public any
nonpublic material adverse information with respect to any issuer of any General
Intangible or Instrument included in the Collateral), that the Secured Party
shall deem necessary or desirable at the sole option of the Secured Party to
permit the sale or other disposition of any such General Intangible or
Instrument without registration pursuant to the Securities Act of 1933.
ix. Each Debtor who or which controls any issuer of any General Intangible
or Instrument included in the Collateral or otherwise has the right to effect
registration of such General Intangible or Instrument pursuant to the Securities
Act of 1933 shall (A) cause such General Intangible or Instrument to be so
registered, (B) take each other action (including, but not limited to, complying
with any "blue sky" or securities statute, regulation or other law and
delivering to the Secured Party appropriate quantities of prospectuses) that the
Secured Party shall deem necessary or desirable at the sole option of the
Secured Party to permit the public sale or other disposition of such General
Intangible or Instrument by the Secured Party in each jurisdiction that the
Secured Party shall select at the sole option of the Secured Party and (C)
execute and deliver to the Secured Party a writing, in form and substance
satisfactory to the Secured Party, indemnifying in connection with such sale or
other disposition each Person who or which is an underwriter (statutory or
other) of such General Intangible or Instrument against each liability, cost and
expense (including, but not limited to, if such Person retains counsel for
advice, for litigation or for any other purpose, each attorney's fee and
disbursement) incurred by such Person as a direct or indirect result of such
sale or other disposition.
x. Each Debtor shall execute and deliver each financing statement,
amendment of any financing statement, application for any certificate of title,
notice of lien, instrument of assignment and other writing, and take each other
action, that the Secured Party shall deem necessary or desirable at the sole
option of the Secured Party (i) to perfect or accomplish any Security interest,
(ii) otherwise to accomplish any purpose of this Agreement, (iii) in connection
with any transaction contemplated by this Agreement or (iv) in connection with
any of the Collateral.
5. Authorization and Power of Attorney. The Secured Party is irrevocably
and unconditionally authorized to take, and each Debtor irrevocably and
unconditionally appoints the Secured Party as the attorney-in-fact of such
Debtor, with full power of substitution and of revocation, to take, in the name
of such Debtor or otherwise and otherwise as shall be determined by the Secured
Party at the sole option of the Secured Party, each action relating to any of
the Collateral that, subject to this Agreement, such Debtor could take in the
same manner, to the same extent and with the same effect as if such Debtor were
to take such action; provided, however, that, until any notice of intention to
do so shall be delivered, given or sent by the Secured Party to any Debtor upon
or at any time after the occurrence or existence of any Event of Default, (a)
the Secured Party may not, pursuant to such authorization or as such
attorney-in-fact, (i) exercise or direct the exercise of any right to vote or
give any consent, ratification or waiver with respect to any General Intangible
or Instrument included in the Collateral or (ii) except as expressly permitted
by this Agreement, sell, lease or otherwise dispose of any of the Collateral and
(b) each Debtor shall have the right to exercise any right to vote or give any
consent, ratification or waiver with respect to
4
<PAGE>
any General Intangible or Instrument included in the Collateral that such Debtor
would have but for this Agreement unless doing so would or might have any
adverse effect on the value of such General Intangible or Instrument as security
for the payment of the Obligations or otherwise be inconsistent or incompatible
with any provision or purpose of this Agreement. Such power of attorney is
coupled with an interest in favor of the Secured Party and shall not be
terminated or otherwise affected by the death, disability or incompetence of any
Debtor. Without limiting the generality of the first sentence of this Section 5,
pursuant to such authorization and as such attorney-in-fact, the Secured Party
may, in the name of any Debtor or otherwise at the sole option of the Secured
Party, (a) execute and deliver any financing statement or instrument of
assignment relating to any of the Collateral, (b) endorse, or execute and
deliver any instrument of assignment relating to, and deliver any of the
Collateral including, but not limited to, any instrument drawn by any company
issuing any insurance on any Goods included in the Collateral), whether such
endorsement or assignment is to the Secured Party or otherwise, (c) execute and
deliver any writing, or give any communication in any other form, requesting any
transfer, pledge or release from pledge of any Uncertificated Security included
in the Collateral, (d) execute and deliver or file any form or other writing
(including, but not limited to, any notice of proposed sale of
securities pursuant to Rule 144 of the Securities and Exchange Commission), or
take any other action (including, but not limited to, making public any
nonpublic material adverse information with respect to any issuer of any General
Intangible or Instrument included in the Collateral), that the Secured Party
shall deem necessary or desirable at the sole option of the Secured Party to
permit the sale or other disposition of any such General Intangible or
Instrument without registration pursuant to the Securities Act of 1933, (e)
receive and collect any mail addressed to any Debtor, direct the place of
delivery of any such mail to any location designated by the Secured Party, open
any such mail and remove from any such mail and retain any enclosure evidencing,
or otherwise relating to any of the Collateral, (f) obtain, adjust, settle or
cancel any insurance on any Goods included in the Collateral, (g) use any
payment in connection with any such insurance, including, but not limited to,
any refund of any unearned premium therefor to pay any of the Obligations,
whether due or not due, as the Secured Party shall determine at the sole option
of the Secured Party, (h) take any action described in clause (A) of Section 4e
of this Agreement or (i) execute and deliver any other writing, or take any
other action, that the Secured Party shall deem necessary or desirable at the
sole option of the Secured Party (i) to perfect or accomplish any Security
Interest, (ii) otherwise to accomplish any purpose of this Agreement, (iii) in
connection with any transaction contemplated by this Agreement or (iv) in
connection with any of the Collateral. Each debtor revokes each power of
attorney (including, but not limited to, any proxy) heretofore granted by such
Debtor with respect to any General Intangible or Instrument included in the
Collateral.
6. Certain Rights, Remedies and Duties.
a. With respect to the Collateral, the Secured Party shall have each
applicable right and remedy of a secured party pursuant to the Uniform
Commercial Code of the State of New York and each applicable right and remedy
pursuant to any other statute, regulation or other law or pursuant to this
Agreement.
b. The Secured Party shall have the right to file in any public office,
without the signature of any Debtor, each financing statement relating to any of
the Collateral that the Secured Party shall deem necessary or desirable at the
sole option of the Secured Party. Each carbon, photographic or other
reproduction of this Agreement or of any financing statement relating to any of
the Collateral shall be sufficient as a financing statement.
c. The Secured Party shall have the right to direct any company issuing
any insurance on any Goods included in the Collateral to make directly and
solely to the Secured Party any payment in connection therewith (including, but
not limited to, any refund of any unearned premium therefor).
d. The Secured Party shall have the right to verify each Account, Chattel
Paper, General Intangible, Instrument, Document and Deposit Account included in
the Collateral in any manner or through any medium that the Secured Party
considers appropriate, whether directly with any Account Debtor or other Person
obligated with respect thereto or otherwise and whether in the name of any
Debtor or otherwise, at the sole option of the Secured Party.
e. The Secured Party shall have the right to (i) notify each Account
Debtor and other Person obligated with respect to any Account, Chattel Paper,
General Intangible, Instrument or Deposit Account included in the Collateral of
the interest of the Secured Party therein, (ii) direct such Account Debtor or
other Person to deliver to the Secured Party directly any record evidencing, or
otherwise relating to such Account, Chattel Paper, General Intangible,
Instrument or Deposit Account, (iii) direct such Account Debtor or other Person
to make payment with respect to such Account, Chattel Paper, General Intangible,
Instrument or Deposit Account directly and solely to the Secured Party and
(iv) take control of all Proceeds of such Account, Chattel Paper, General
Intangible, Instrument or Deposit Account.
f. The Secured Party shall have the right to transfer to or register in
the name of the Secured Party or of any nominee of the Secured Party any General
Intangible, Instrument or Deposit Account included in the Collateral so that the
Secured Party or such nominee shall appear as the sole owner of record thereof.
Each such transfer or registration may be made with or without reference to this
Agreement or to any Security Interest.
g. Upon and at any time and from time to time after the occurrence or
existence of any Event of Default:
i. The Secured Party shall have the right to use each Fixture and piece of
Equipment included in the Collateral for the purposes of preserving any Goods
included in the Collateral, of completing any work in process included in the
Collateral and of preparing any such Goods for any sale, lease or other
disposition.
ii. The Secured Party shall have the right, without any judicial process
but without any breach of the peace, to (A) enter upon any promises of any
Debtor, (B) take possession of, and remove from any such premises, any Goods,
Chattel Paper, Instrument, Document or record included in the Collateral and (C)
remain on and use any such premises in completing any work in process included
in the Collateral or in preparing for any sale, lease, or other disposition, in
selling, leasing or otherwise disposing of, or in collecting, any of the
Collateral and (C) without the payment of any compensation of any kind, use each
trademark, service mark, trade style, trade name, patent, copyright, license,
franchise and similar General Intangible included in the Collateral to the
extent of any Debtor's rights therein for the purpose of exercising any right or
remedy pursuant to this Agreement or any other right or remedy relating to any
of the Collateral; and, to such extent for such purpose, each Debtor irrevocably
grants to the Secured Party a license in each such trademark, service mark,
trade style, trade name, patent, copyright, license, franchise and similar
General Intangible.
iii. If the Secured Party opts for the private sale or other disposition
of any General Intangible or Instrument included in the Collateral, the Secured
Party shall have the right to (A) restrict the number of prospective bidders in
connection with such sale or other disposition so as to comply with the
Securities Act of 1933 and (B) restrict such prospective bidders to Persons who
will agree to purchase such General Intangible or Instrument for their own
accounts for investment and not with a view to distribution or resale. No such
restriction or other restriction on such sale or other disposition that the
Secured Party shall deem necessary or desirable at the sole option of the
Secured Party in light of any "blue sky" or securities statute, regulation or
other law shall be deemed to be a factor in determining such sale or other
disposition to have been made in other than a commercially reasonable manner.
iv. The Secured Party shall have the right to perform any obligation of
any Debtor pursuant to this Agreement.
h. Until (i) the occurrence or existence of any Event of Default or (ii)
any notice to the contrary shall be delivered, given or sent by the Secured
Party to any Debtor, the Secured Party shall not have any right to retain any
interest, dividend, distribution or similar income consisting of money or of a
check or other draft and payable on account of any General Intangible or
Instrument included in the Collateral, and shall pay to any Debtor any such
interest, dividend, distribution or similar income received by it prior thereto.
i. The Secured Party shall apply all proceeds received by it from any
sale, lease or other disposition of, or from any collection of, any of the
Collateral or otherwise on account of any of the Collateral (including, but not
limited to, as money payable pursuant to any insurance on any Goods included in
the Collateral) first to costs and expenses described in Section 10 of this
Agreement and then to such other of the Obligations, whether due or not due, as
the Secured Party shall determine at the sole option of the Secured Party.
7. Standards of Care. If any portion of the Collateral shall be
transferred to or registered in the name of the Secured Party or of any nominee
of
5
<PAGE>
The Secured Party or shall be in the possession or under the control of the
Secured Party, the Secured Party shall be deemed to have exercised reasonable
care in the custody or preservation of such portion of the Collateral. If,
subject to the following sentence, it (a) accords such portion of the Collateral
treatment substantially equal to the treatment that it accords its own assets of
a similar nature or (b) takes such action in the custody or preservation of such
portion of the Collateral as is reasonably specified in any notice delivered or
sent by any Debtor and received by it in a reasonable time to evaluate and take
such action; provided, however, that (i) any failure by the Secured Party to
take such action shall not of itself be deemed to be a failure to exercise such
reasonable care and (ii) in no event shall the Secured Party be obligated to
take such action if it determines at its sole option that doing so would or
might have any adverse affect on the value of any of the Collateral as security
for the payment of the Obligations or otherwise be inconsistent or incompatible
with any provision or purpose of this Agreement. In no event shall the Secured
Party be obligated to (a) preserve any right or remedy against any prior party
obligated pursuant to any Chattel Paper or Instrument included in the
Collateral, whether or not such Chattel Paper or Instrument is in the possession
or under the control of the Secured Party, (b) ascertain any maturity, call,
exchange, conversion, redemption, offer, tender or similar matter relating to
any General Intangible, Instrument or Deposit Account included in the Collateral
or provide to any Debtor any notice thereof, whether or not the Secured Party
has knowledge thereof, or (c) provide to any Debtor any proxy statement, notice
or other communication received by the Secured Party or by any nominee of the
Secured Party and relating to any of the Collateral.
8. Obligations Immediately Due; Termination of Obligation to Lend.
a. Upon and at any time and from time to time after the occurrence or
existence of any Event of Default other than an Event of Default described in
clause (iv) of Section 16e of this Agreement, all of the Obligations remaining
unpaid shall, at the sole option of the Secured Party and without any notice,
demand, presentment or protest of any kind, become immediately due,
notwithstanding any agreement to the contrary. Upon the Occurrence or existence
of any Event of Default described in such clause (iv), all of the Obligations
remaining unpaid shall without any notice, demand, presentment or protest of any
kind, automatically become immediately due, notwithstanding any agreement to the
contrary. Nothing in this Section 8a shall render any portion of the Obligations
that is payable on demand payable otherwise than on demand or in any other way
affect any right or remedy of the Secured Party with respect to any such portion
of the Obligations.
b. Upon the occurrence or existence of any Event of Default, any
obligation of the Secured Party to grant any or any additional loan, credit or
other financial accommodation to any Debtor shall terminate, notwithstanding any
agreement to the contrary.
9. Representations and Warranties.
a. Each of the undersigned represents and warrants to the Secured Party as
follows:
i. Each answer contained in any questionnaire submitted to the Secured
Party by him, her or it in connection with this Agreement is true and correct.
ii. His, her or its execution, delivery to the Secured Party and
performance of this Agreement do not and will not (A) violate, or result in any
violation of, any statute, regulation or other law or any judgment, order or
award of any court, agency or other governmental authority or of any arbitrator
or (B) violate, result in any violation of, constitute (whether immediately or
after notice, after notice of time or after both notice and lapse of time) any
default under, or result in or require the imposition or creation of any
security interest in, or of any other lien or encumbrance upon, any of his, her
or its assets pursuant to, any agreement to which he, she or it is a party or by
which he, she or it or any of his, her or its assets is bound, except for this
Agreement.
iii. Each authorization, approval, permit and consent from, each
registration and filing with, each declaration and notice to, and each other act
by or relating to, any Person required as a condition of his, her or its
execution, delivery to the Secured Party or performance of this Agreement has
been duty obtained, made, given or done, and is in full force and effect.
iv. If it is not an individual, its execution, delivery to the Secured
Party and performance of this Agreement (A) are and will be in furtherance of
its purposes and within its power and authority, (B) do not and will not
violate, result in any violation of, or result in or require the imposition or
creation of any security interest in, or of any other lien or encumbrance upon,
any of its assets pursuant to, (i) any certificate or articles of incorporation,
by-laws, partnership agreement, articles of association or other charter,
organizational or governing document of it or (ii) any resolution or other
action of record of any shareholders or members of it, of any board of directors
or trustees of it or of any other Person responsible for governing it, and (C)
have been duly authorized by each necessary action of any shareholders or
members of it, of any board of directors or trustees of it or of any other
Person responsible for governing it.
v. He, she or it has not heretofore abandoned, assigned, sold, leased,
exchanged, converted or otherwise transferred or disposed of any of the
Collateral or any interest in any of the Collateral, except as fully and
accurately described in Exhibit A attached to and made a part of this Agreement.
vi. He, she or it has not heretofore extended, renewed, refinanced,
modified, compounded, subordinated, accelerated, settled, adjusted or
compromised, entered into any composition of, replaced, canceled, released or
surrendered, exercised any option or right of subscription relating to, settled
or compromised any action or other legal proceeding relating to, or waived any
right or remedy relating to or otherwise terminated, impaired or otherwise
affected any indebtedness, liability or obligation of any Account Debtor or of
any other Person relating to, any Account, Chattel Paper, General Intangible,
Instrument, Document or Deposit Account included in the Collateral, except as
fully and accurately described in Exhibit A attached to and made a part of this
Agreement.
vii. There exists no demand, claim, counterclaim, setoff or defense, no
action or other legal proceeding, and no outstanding judgment, order or award of
any court, agency or other governmental authority or of any arbitrator, relating
to any of the Collateral or questioning the validity of, or rendering invalid,
this Agreement or any action taken or to be taken pursuant to this Agreement,
except for demands, claims, counterclaims, setoffs, defenses, actions and other
legal proceedings and judgments, orders and awards fully and accurately
described in Exhibit A attached to and made a part of this Agreement.
viii. There is not on file in any public office any presently effective
financing statement relating to any of the Collateral, naming him, her or it as
a debtor and naming any Person other than the Secured Party as a secured party,
except for financing statements fully and accurately described in Exhibit A
attached to and made a part of this Agreement.
ix. There exists no presently effective certificate of title, and no
application for any certificate of title or notice of lien, relating to any of
his, her or its Goods and naming any Person other than the Secured Party as a
secured party, except for certificates of title, applications and notices of
lien fully and accurately described in Exhibit A attached to and made a part of
this Agreement.
x. There exists no (A) presently effective registration of any transfer or
pledge of any Uncertificated Security included in the Collateral, (B)
outstanding order to register any transfer or pledge of any such Uncertificated
Security, (C) notification of an security interest in, or of any other lien or
encumbrance upon, any such Uncertificated Security or (D) such Uncertificated
Security that is shown on the records of any clearing corporation other than in
the name of any Debtor, except for registrations, orders, notifications and
Uncertificated Securities fully and accurately described in Exhibit A attached
to and made a part of this Agreement.
xi. There exists no Security Interest in, and no other lien or encumbrance
upon, any of the Collateral, except for Permitted Liens.
xii. There is no restriction on any assignment or other transfer by him,
her or it of any of the Collateral, except for compliance with any "blue sky" or
securities statute, regulation or other law.
xiii. The real property on which any crop included in the Collateral is
growing or is to be grown, or on which any timber included in the Collateral is
or is to be standing, is fully and accurately described in Exhibit A attached to
and made a part of this Agreement.
b. At each time this Agreement is in effect as to any Debtor, such Debtor
shall be deemed to represent and warrant to the Secured Party as follows:
6
<PAGE>
i. Each Instrument, Document and Deposit Account included in the
Collateral at such time is genuine, is in all respects what it purports to be,
and is enforceable in accordance with its terms against each Person obligated
with respect thereto.
ii. Each Account, Chattel Paper and General Intangible included in the
Collateral at such time is genuine, is in all respect what it purports to be,
and is enforceable in accordance with its terms against each Account Debtor and
other Person obligated with respect thereto, and each sum represented by any
Debtor to the Secured Party as owing by such Account Debtor or other Person with
respect thereto is actually and unconditionally owing by such Account Debtor or
other Person, except for any applicable normal cash discount, without any
counterclaim, setoff or defense. The aggregate sum represented at such time by
any Debtor to the Secured Party as owing by Account Debtors and other Persons
with respect to Accounts, Chattel Paper and General Intangibles included in the
Collateral is the aggregate sum actually and unconditionally owing by Account
Debtors and other Persons with respect thereto at such time, except for
applicable normal cash discounts.
10. Expenses. Each Debtor shall pay to the Secured Party on demand each
cost and expense (including, but not limited to, if the Secured Party retains
counsel for advice, for litigation or for any other purpose, each attorney's fee
and disbursement) incurred by the Secured Party (a) in searching any public
record for, in filing or in recording in any public office, or in obtaining from
any public office any certificate relating to, any financing statement,
certificate of title, application for any certificate of title, notice of lien,
instrument of assignment or other writing relating to any of the Collateral, (b)
in performing any obligation of any Debtor pursuant to this Agreement, (c) in
taking any action pursuant to Section 5 of this Agreement, (d) in connection
with the custody or preservation of any of the Collateral or (e) in endeavoring
to (i) enforce any indebtedness, liability or obligation of any Debtor pursuant
to this Agreement, (ii) preserve or exercise any right or remedy pursuant to
this Agreement, whether against any Debtor or otherwise, (iii) preserve or
exercise any right or remedy relating to, take possession of, collect or
enforce, have registered pursuant to the Securities Act of 1933, prepare for any
sale, lease or other disposition, assign, sell, lease, exchange, convert or
otherwise transfer or dispose of, or realize upon, any of the Collateral, (iv)
obtain any information relating to any Uncertificated Security included in the
Collateral from the issuer of such Uncertificated Security or register any
transfer or pledge of such Uncertificated Security with such issuer or (v)
defend against any claim, regardless of the basis or outcome thereof and whether
asserted affirmatively, as a counterclaim, setoff or defense or otherwise,
asserted against the Secured Party as a direct or indirect result of the
execution and delivery to the Secured Party of this Agreement by any of the
undersigned, except for any claim for any tax imposed by any government or
political subdivision upon any income of the Secured Party or for any interest
or penalty relating to any such tax. After such demand for payment of any cost
or expense incurred by the Secured Party in performing any obligation of any
Debtor pursuant to Section 4f, 4h, 4j, 4k or 4z of this Agreement, each Debtor
shall pay interest at the highest rate permitted by applicable law on the
portion of such cost or expense remaining unpaid.
11. Cumulative Nature, Nonexclusive Exercise and Waivers of Rights and
Remedies.
a. All rights and remedies of the Secured Party pursuant to this Agreement
or otherwise shall be cumulative, and no such right or remedy shall be exclusive
of any other such right or remedy.
b. No single or partial exercise by the Secured Party of any right or
remedy pursuant to this Agreement or otherwise shall preclude any other or
further exercise thereof, or any exercise of any other such right or remedy, by
the Secured Party.
c. No course of dealing or other conduct heretofore pursued, accepted or
acquiesced in, no course of performance or other conduct hereafter pursued,
accepted or acquiesced in, no oral or written agreement or representation
heretofore made, and no oral agreement or representation hereafter made, by the
Secured Party, whether or not relied or acted upon, and no usage of trade,
whether or not relied or acted upon, shall operate as a waiver of any right or
remedy of the Secured Party pursuant to this Agreement or otherwise. No delay by
the Secured Party in exercising any such right or remedy, whether or not relied
or acted upon, shall operate as a waiver of any right of the Secured Party to
exercise the same or any other such right or remedy on such or any future
occasion without any notice or demand of any kind. No waiver by the Secured
Party of any such right or remedy shall be effective unless made in a writing
duty executed by the Secured Party and specifically referring to such waiver. No
waiver by the Secured Party on any one occasion of any such right or remedy
shall operate as a waiver thereof or of any other such right or remedy on any
future occasion.
12. Entire Agreement; Modification; Termination; Nonimpairment; Certain
Consents and Waivers.
a. This Agreement contains the entire agreement between the Secured Party
and each Debtor with respect to the subject matter of this Agreement, and
supersedes each course of dealing or other conduct heretofore pursued, accepted
or acquiesced in, and each oral or written agreement and representation
heretofore made, by the Secured Party with respect thereto, whether or not
relied or acted upon.
b. No course of performance or other conduct hereafter pursued, accepted
or acquiesced in, and no oral agreement or representation hereafter made, by the
Secured Party, whether or not relied or acted upon, and no usage of trade,
whether or not relied or acted upon, shall modify or terminate this Agreement as
to any Debtor on impair or otherwise affect any Security Interest, any
indebtedness, liability or obligation of any Debtor pursuant to this Agreement
or any right or remedy of the Secured Party pursuant to this Agreement or
otherwise.
c. No Modification of this Agreement shall be effective unless made in a
writing duty executed by the Secured Party and specifically referring to each
provision of this Agreement being modified.
d. Except as expressly provided in this Agreement, this Agreement shall
not be modified or terminated as to any Debtor, and no Security Interest, no
indebtedness, liability or obligation of any Debtor pursuant to this Agreement,
and no right or remedy of the Secured Party pursuant to this Agreement or
otherwise shall be impaired or otherwise affected, by any act, omission or other
thing, whether occurring before or after the termination of this Agreement as to
such Debtor with respect to any of the Obligations. Each Debtor consents,
without any notice of any kind, to each act, omission and other thing that would
or might, but for such consent, modify or terminate this Agreement as to any
Debtor or impair or otherwise affect any Security Interest or any such
indebtedness, liability, obligation, right or remedy. Without limiting the
generality of the preceding two sentences, this Agreement shall not be modified
or terminated as to any Debtor by, neither any Security Interest nor any such
indebtedness, liability, obligation, right or remedy shall be impaired or
otherwise affected by, and such consent shall apply to (i) any extension of any
of the Obligations, regardless of the length of such extension and regardless of
whether such extension was preceded by another or by others, (ii) any renewal,
refinancing, modification, compounding, subordination, acceleration,
composition, settlement, adjustment, compromise, reaffirmation, invalidity,
irregularity, unenforceability or impairment of, any replacement, cancellation,
discharge, assignment, sale, exchange, conversion or other transfer of
disposition of, or any grant of any participation in, any of the Obligations,
(iii) any modification or termination of any writing relating to any of the
Obligations, to any of the Collateral or to any Other Collateral, (iv) any
acceptance of any Other Obligor, (v) any replacement, release or discharge of,
or any modification of any indebtedness, liability or obligation of, any other
Debtor or any Primary Obligor, Other Obligor or other Person, (vi) any taking,
holding, continuation, collection, modification, increase or decrease in value
or impairment of, any replacement, cancellation, release, surrender,
abandonment, discharge, assignment, sale, lease, exchange, conversion or other
transfer or disposition of, any termination of any insurance on, any relying or
realizing upon, any grant, perfection, subordination or enforcement of any
security interest in, or of any other lien or encumbrance upon, any failure to
call for, take, hold, continue, collect, insure, preserve or protect, to
replace, assign, sell, lease, exchange, convert or otherwise transfer or dispose
of, to rely or realize upon or to perfect, keep perfected or enforce any
security interest in, or any other lien or encumbrance upon, or any delay in
calling for, taking, continuing, collecting, insuring, preserving or protecting,
in replacing, assigning, selling, leasing, exchanging, converting or otherwise
transferring or disposing of, in relying or realizing upon or in perfecting,
keeping perfected or enforcing any security interest in, or any other lien or
encumbrance upon, any of the Collateral or any Other Collateral, regardless of
its value, (vii) any security interest or other lien or encumbrance not being
created in favor of the Secured Party, (viii) any of the Collateral or any Other
Collateral being or becoming subject to any security interest or other lien or
encumbrance (whether or not prior to any security interest or other lien or
encumbrance
7
<PAGE>
in favor of the Secured Party), subject to any defense or restriction or
unenforceable or impaired, (ix) any exercise, delay in the exercise or waiver of
any failure to exercise, or any forbearance or other indulgence relating to, any
right or remedy of the Secured Party or of any other Person against any Debtor,
Primary Obligor, Other Obligor or other Person or relating to any of the
Obligations, to any of the Collateral or to any Other Collateral, (x) any
failure of the Secured Party or of any other Person to make, prove or vote any
claim relating to any of the Obligations, to any of the Collateral or to any
Other Collateral in any case or other proceeding pursuant to any Bankruptcy Law,
(xi) the occurrence or existence of any Event of Default, (xii) the Obligations
being at any time or from time to time reduced and then increased or being at
any time or from time to time paid in full, (xiii) any refusal or other failure
of the Secured Party or of any other Person to grant any or any additional loan,
credit or other financial accommodation to any Debtor or Primary Obligor, (xiv)
any refusal or other failure of the Secured Party or of any other Person
heretofore or hereafter to provide to any Debtor any information relating to any
other Debtor, to any Primary Obligor, Other Obligor or other Person or to the
business, operations, assets, affairs or condition (financial or other) of any
other Debtor or of any Primary Obligor, Other Obligor or other Person or so to
provide any such information completely and accurately, (xv) any notice to the
Secured Party or to any other Person from any Debtor, Primary Obligor, Other
Obligor or other Person not to grant any or any additional loan, credit or other
financial accommodation to any Debtor or Primary Obligor, not to extend, renew,
refinance, modify or replace any of the Obligations or to take or not to take
any other action, (xvi) the acceptance by the Secured Party or by any other
Person of any instrument or other writing intended by any other Person to create
an accord and satisfaction with respect to any of the Obligations, (xvii) the
manner or order of any sale, lease, exchange, conversion or other transfer or
disposition of any of the Collateral or of any Other Collateral, (xviii) the
manner or order of application of any money received or applied in payment of
any of the Obligation, (xix) any change in the ownership or membership of any
Debtor, Primary Obligor, Other Obligor or other Person, (xx) any change in the
location, business, fame, identity or structure of any Debtor, Primary Obligor,
Other Obligor or other Person, (xxi) the expiration of the period of any statute
of limitations with respect to any action or other legal proceeding against any
other Debtor, or against any Primary Obligor, Other Obligor or other Person,
relating to this Agreement, to any of the Obligations, to any of the Collateral
or to any Other Collateral or (xxii) the termination of this Agreement as to any
other Debtor, whether by agreement, by operation of law or otherwise.
e. Each Debtor waives, without any notice of any kind, each act and other
thing upon which, but for such waiver, any Security Interest, any indebtedness,
liability or obligation of any Debtor pursuant to this Agreement, or any right
or remedy of the Secured Party pursuant to this Agreement or otherwise, would or
might be conditioned. Without limiting the generality of the preceding sentence,
neither any Security Interest nor any such indebtedness, liability, obligation,
right or remedy shall be conditioned upon, and such waiver shall apply to, (i)
the acceptance of this Agreement by the Secured Party, (ii) any demand upon, or
any presentment or protest to, any Debtor, Primary Obligor, Other Obligor or
other Person, (iii) any notice to any Debtor, Primary, Obligor, Other Obligor or
other Person of any nonpayment, dishonor, default or protest, of the acceptance
of this Agreement by the Secured Party, of the incurring of any of the
Obligations or of any other matter or (iv) any exercise of any right or remedy
of the Secured Party of or any other Person against any Debtor, Primary Obligor,
Other Obligor or other Person or relating to any of the Obligations or to any
Other Collateral.
f. Each Debtor waives without any notice of any kind, each right of
redemption or appraisal arising in connection with any sale or other disposition
of any of the Collateral.
g. This Agreement shall not terminate as to any Debtor with respect to any
of the Obligations until written notice of (i) its termination by such Debtor or
(ii) if such Debtor is an individual, the death of such Debtor or the judicial
declaration of such Debtor's incompetence shall have been received by the
Secured Party and the Secured Party shall have had a reasonable period of time
to act thereupon. After any written notice of any termination, death or judicial
declaration of incompetence by or relating to any Debtor shall have been so
received and a reasonable time to act thereupon shall have expired, this
Agreement shall (i) continue in full force and effect as to such Debtor, and as
to each Successor of such Debtor, with respect to (A) each portion of the
Obligations arising before such receipt of such notice and the expiration of
such period of time, (B) each portion of the Obligations arising after such
receipt of such notice and the expiration of such period of time as a direct or
indirect result of any loan, credit or other financial accommodation agreed to
by the Secured Party before such receipt of such notice and the expiration of
such period of time, (C) each portion of the Obligations arising after such
receipt of such notice and the expiration of such period of time as a direct or
indirect result of any portion of the Obligations described in clause (i)(A) or
(i)(B) of this sentence (including, but not limited to, (i) each extension,
renewal, refinancing, modification and replacement of any portion of the
Obligations described in such clause (i)(A) or (i)(B) that is made after such
receipt of such notice and the expiration of such period of time and (ii) all
interest and other charges accruing after such receipt of such notice and the
expiration of such period of time with respect to any portion of the Obligations
described in such clause (i)(A) or (i)(B) or with respect to any such extension,
renewal, refinancing, modification or replacement), (D) each described in
Section 4i of this Agreement or a cost or expense described in Section 10 of
this Agreement and (E) the Collateral, whether existing or arising before or
after such receipt of such notice and the expiration of such period of time,
and (ii) terminate as to such Debtor, and as to each Successor of such Debtor,
with respect to each portion of the Obligations that arises after such receipt
of such notice and the expiration of such period of time and is not described in
clause (i)(B), (i)(C) or (i)(D) of this sentence. With respect to this
Agreement, the sole effect of such receipt of such notice and the expiration of
such period of time shall be to terminate this Agreement to the extent provided
in clause (ii) of the preceding sentence. Upon such receipt of such notice, any
obligation of the Secured Party to grant any or any additional loan, credit or
other financial accommodation to any Debtor shall terminate, notwithstanding any
agreement to the contrary.
h. Understanding that (i) because registration of any General Intangible
or Instrument included in the Collateral pursuant to the Securities Act of 1933
may not have been effected, because any General Intangible or Instrument
included in the Collateral may have been acquired by a Debtor or by another
Person for his, her or its own account for investment and not with a view to
distribution or to resale or because of other circumstances relating to any
General Intangible or Instrument included in the Collateral, there may be
restrictions and limitations affecting the Secured Party in any attempt
expeditiously to sell or otherwise dispose of such General Intangible or
Instrument, (ii) in the absence of any agreement to the contrary, the Secured
Party may have a general duty to attempt to obtain a fair price for such General
Intangible or Instrument if the Secured Party sells or otherwise disposes of
such General Intangible or Instrument even though the Obligations may be paid
in full through realization of a lesser price for such General Intangible or
Instrument and (iii) the Secured Party is not to have any such general duty,
each Debtor waives each right to hold the Secured Party responsible for selling
or for otherwise disposing of such General Intangible or Instrument at an
inadequate price even if the Secured Party in good faith accepts the first offer
received for, or does not approach more than one possible purchaser of, such
General Intangible or Instrument.
13. Governing Law; Jurisdiction; Certain Consents and Waivers.
a. This Agreement shall be governed by and construed, interpreted and
enforced in accordance with the internal law of the State of New York, without
regard to principles of conflict of laws.
b. Each action and other legal proceeding relating to this Agreement
commenced by the Secured Party may be litigated in any court that is either a
court of record of the State of New York or a court of the United States located
in the State of New York. Each such action and other legal proceeding not
commenced by the Secured Party shall be litigated in such a court.
c. Each Debtor (i) consents in each action and other legal proceeding
relating to this Agreement commenced by the Secured Party to the personal
jurisdiction of any court that is either a court of record of the State of New
York or a court of the United States located in the State of New York, (ii)
waives each objection to the laying of venue of any such action or other legal
proceeding, (iii) waives personal service of process in each such action and
other legal proceeding, (iv) consents to the making of service of process in
each such action and other legal proceeding by registered mail directed to such
Debtor at the last address of such Debtor shown in the records relating to this
Agreement maintained by the Secured Party, with such service of process to be
deemed completed five days after the mailing thereof, (v) waives in each such
action and other legal proceeding each right to trial by jury and each right to
assert any counterclaim or setoff or any defense based upon any statute of
limitations or upon any claim of laches, (vi) waives each right to attack
any final judgment that is obtained as a direct or indirect result of any such
action or other legal proceeding, and (vii) consents
8
<PAGE>
to each such final judgment being sued upon in any court having jurisdiction
with respect thereto and enforced in the jurisdiction in which such court is
located as if issued by such court.
14. Notices.
a. Each notice to, and each demand upon, any Debtor by the Secured Party
relating to this Agreement may be (i) delivered in person in writing, (ii)
delivered in person orally with a subsequent confirmation sent by mail, by
telex, by telegram or by mailgram, (iii) given by telephone with a subsequent
confirmation sent by mail, by telex, by telegram or by mailgram or (iv) sent by
mail, by telex, by telegram or by mailgram. Each such notice and demand
delivered in person orally or given by telephone shall be deemed to have been
delivered or given when so communicated. Each such notice, demand and
confirmation sent to any Debtor by mail, by telex, by telegram or by mailgram
may be directed to such Debtor at the last address of such Debtor shown in the
records relating to this Agreement maintained by the Secured Party. Each such
notice, demand and confirmation shall be deemed to have been sent (i) if sent by
mail, when deposited in the mail, first-class or certified postage prepaid, or
when delivered to any post office for sending by registered mail, directed as
provided in the preceding sentence or (ii) if sent by telex, by telegram or by
mailgram, when delivered to any telex operator or telegraph or mailgram office
directed as provided in the preceding sentence. Each requirement under
applicable law of reasonable notice to any Debtor by the Secured Party of any
event shall be deemed to have been met if notice of such event is delivered,
given or sent to such Debtor by the Secured Party as provided in this Section
14a at least ten days before the date on or after which such event is to occur.
b. Each notice to, and each demand upon, the Secured Party by any Debtor
relating to this Agreement (including, but not limited to, Section 12g of this
Agreement), and each notice to the Secured Party of the death of any Debtor or
of the judicial declaration of any Debtor's incompetence, shall specifically
refer to this Agreement, and shall be delivered in person in writing or sent by
registered mail. Each such notice and demand shall be deemed to have been
delivered or sent only when actually received by an officer of the Secured Party
at the chief executive office of the Secured Party.
15. General.
a. If there is more than one Debtor, each of them shall be jointly and
severally liable pursuant to this Agreement.
b. This Agreement shall be binding upon each Debtor and upon each heir and
legal representative of each Debtor, and shall inure to the benefit of, and be
enforceable by the Secured Party, each Successor of the Secured Party and each
direct or indirect assignee or other transferee of any of the Obligations.
c. Each agreement, consent, waiver, appointment as attorney-in-fact and
other thing made, given or done in this Agreement by any of the undersigned
shall be on his, her or its own behalf and on behalf of each of his, her or its
Successors.
d. Except as expressly provided in this Agreement, each right and remedy
of the Secured Party pursuant to this Agreement, and each action of the Secured
Party pursuant to the authorization and appointment as attorney-in-fact
contained in Section 5 of this Agreement, may be exercised or taken (i) at any
time and from time to time, (ii) at the sole option of the Secured Party, (iii)
without any notice or demand of any kind and (iv) whether or not any Event of
Default has occurred or existed, but the Secured Party shall not be obligated to
exercise any such right or remedy or to take any such action. Each request of
the Secured Party pursuant to this Agreement may be made (i) at any time and
from time to time, (ii) at the sole option of the Secured Party and (iii)
whether or not any Event of Default has occurred or existed.
e. Upon and at any time and from time to time after the occurrence or
existence of any Event of Default, (i) the Secured Party shall have the right to
set off against all of the Obligations remaining unpaid each indebtedness,
liability and obligation of the Secured Party in any capacity to any Debtor in
any capacity, whether alone or otherwise and whether or not then due,
(including, but not limited to, any such indebtedness, liability or obligation
arising as a direct or indirect result of any Instrument or Deposit Account),
and (ii) each holder of any participation in any portion of the Obligations
shall have the right (which may be exercised by such holder in accordance with
clauses (i), (ii) and (iii) of the first sentence of Section 15d of this
Agreement as though it were a right of the Secured Party pursuant to this
Agreement) to set off against all of such portion of the Obligations remaining
unpaid each indebtedness, liability and obligation of such holder in any
capacity to any Debtor in any capacity, whether alone or otherwise and whether
or not then due, (including, but not limited to, any such indebtedness,
liability or obligation arising as a direct or indirect result of any Instrument
or Deposit Account). Each exercise of such right by the Secured Party or by such
holder shall be deemed to be immediately effective at the time the Secured Party
or such holder opts therefor even though evidence thereof is not entered on the
records of the Secured Party or of such holder until later.
f. In conjunction with the Secured Party's assignment or other transfer
of, or in conjunction with the Secured Party's grant of any participation in,
any of the Obligations, the Secured Party shall have the right to assign or
otherwise transfer, or to grant any participation in, this Agreement, any of the
Secured Party's rights and remedies pursuant to this Agreement, any of the
Collateral or any interest in any of the Collateral. Upon any assignment or
other transfer of any portion of any of the Collateral by the Secured Party,
each responsibility of the Secured Party with respect to such portion of the
Collateral shall terminate.
g. If the Secured Party (i) in good faith deems itself insecure with
respect to any of the Obligations, is of the opinion that the Collateral is not
sufficient or has declined or may decline in value or is of the opinion that
there is insufficient public information with respect to any General Intangible
or Instrument included in the Collateral to permit the sale or other disposition
of such General Intangible or Instrument without registration pursuant to the
Securities Act of 1933 and (ii) delivers, gives or sends notice of such
insecurity or opinion to any Debtor, such Debtor shall provide to the Secured
Party such Other Collateral as shall be satisfactory to the Secured Party.
h. Solely to the extent required by any statute, regulation or other law
to make the Collateral available for the payment of the Obligations, each Debtor
guarantees the payment, without any setoff or other deduction, of the
Obligations, without any limitation as to amount.
i. Each Account Debtor and other Person obligated with respect to any
Account, Chattel Paper, General Intangible, Instrument, Document or Deposit
Account included in the Collateral may accept without question any exercise by
the Secured Party of any right or remedy pursuant to this Agreement or otherwise
with respect thereto, and shall have no liability to any Debtor as a direct or
indirect result of doing so.
j. Whenever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law.
If, however, any such provision shall be prohibited by or invalid under such
law, it shall be deemed modified to conform to the minimum requirements of such
law, or, if for any reason it is not deemed so modified, it shall be prohibited
or invalid only to the extent of such prohibition or invalidity without the
remainder thereof or any other such provision being prohibited or invalid.
k. Any provision of this Agreement that prohibits any Debtor from taking
any action shall be construed to prohibit such Debtor from taking such action
directly or indirectly.
l. Except as expressly provided in this Agreement, any reference in this
Agreement to any statute, regulation or other law shall be deemed to be as of
any time a reference to such statute, regulation or other law as in effect at
such time or, if such statute, regulation or other law is not in effect at such
time, a reference to any similar statute, regulation or other law in effect at
such time.
m. In this Agreement, headings of sections are for convenience of
reference only, and are not of substantive effect.
16. Definitions. For purposes of this Agreement:
a. "Bankruptcy Law" means (i) any bankruptcy or insolvency statute,
regulation or other law or (ii) any other statute, regulation or other law
relating to the relief of debtors, to the readjustment, composition or extension
of indebtedness, to liquidation or to reorganization.
b. "Collateral" means collectively, wherever located, whether now owned or
hereafter acquired or arising, whether owned alone or otherwise, whether or not
subject to Article 9 of the Uniform Commercial Code of the State of New York,
whether or not described in any schedule heretofore or hereafter
9
<PAGE>
delivered to the Secured Party and whether or not in the possession or under the
control of, or enroute to or from, the Secured Party in any capacity or any
other Person acting on behalf of the Secured Party, (i) all Goods, Accounts,
Chattel Paper, General Intangibles, Instruments, Documents, Deposit Accounts and
money of each Debtor other than any Consumer Goods of any Debtor, (ii) all
demands, claims and rights (including, but not limited to, (A) all claims
arising out of tort, all rights represented by any judgment, all rights to money
payable pursuant to any insurance, all rights of setoff, all rights to payment
pursuant to any letter of credit and all other claims and rights to the payment
of money and (B) all rights as a seller of Goods, whether to reclaim Goods or
stop Goods in transit or otherwise) of each Debtor other than any claim for
wages, salary and other compensation of any Debtor as an employee, (iii) all
direct or indirect additions to, all direct or indirect extensions, renewals and
replacements of, all direct or indirect increases in, all direct or indirect
profits, interest, dividends, distributions and other income and payments on
account of, and all direct or indirect proceeds of any replacement, release,
surrender, discharge, assignment, sale lease, exchange, conversion or other
transfer or disposition of, of any collection of, or of any exercise of any
option or right of subscription relating to, any of the things described in
clauses (i) and (ii) of this sentence, whether arising from any action taken by
any Debtor or by the Secured Party or otherwise and whether arising from any
exchange, conversion, stock split, spin-off, reclassification, merger,
consolidation or other absorption, sale of assets or combination or shares or
otherwise, (iv) all Proceeds and Products of any of the things described in
clauses (i) through (iv) of this sentence and (v) all records (including, but
not limited to, all records maintained on computer software and all schedules,
invoices, shipping documents, delivery receipts, purchase orders and written
agreements) of each Debtor evidencing, or otherwise relating to, any of the
things described in clauses (i) through (iv) of this sentence.
c. "Debtor" means (i) any of the undersigned or (ii) any Successor of any
of the undersigned.
d. "Equipment" has the meaning given it for purposes of Article 9 of the
Uniform Commercial Code of the State of New York as in effect on the date of
this Agreement, and, with respect to any Person, includes, but is not limited
to, (i) any machinery, vehicle or furniture constituting equipment of such
Person and (ii) any part, accessory, attachment, accession or tool installed
in, affixed to, or used or intended to be used in connection with, any equipment
of such Person.
e. An "Event of Default" occurs or exists if (i) any Debtor, Primary
Obligor or Other Obligor defaults in the payment when due, whether by
acceleration or otherwise, of any sum, whether payable for principal, for
interest or otherwise, whether the obligation to make payment thereof now exists
or hereafter arises and whether or not constituting part of the Obligations,
that is now or hereafter owing by him, her or it to the Secured Party or to any
other Person, the maturity of any such sum is accelerated or there occurs or
exists any event or condition that permits, or, after notice, after lapse of
time or after both notice and lapse of time, would permit, the acceleration of
the maturity of any such sum, (ii) any Debtor, Primary Obligor or Other Obligor
defaults in the performance when due of any obligation, whether now existing or
hereafter arising, that is now or hereafter owing by him, her or it to the
Secured Party or to any other Person other than an obligation to pay money or
there occurs or exists any event or condition that constitutes, or, after
notice, after lapse of time or after both notice and lapse of time, would
constitute, any default with respect to any such obligation, (iii) any Debtor,
Primary Obligor or Other Obligor is dissolved, ceases to exist, participates or
agrees to participate in any merger, consolidation or other absorption, assigns,
sells or otherwise transfers or disposes of all or substantially all of his, her
or its assets, makes or permits what might be a fraudulent transfer or
fraudulent conveyance of any of his, her or its assets, makes any bulk sale,
sends any notice of any intended bulk sale, dies, becomes incompetent or
insolvent (however such insolvency is evidenced), generally fails to pay his,
her or its debts as they become due, fails to pay, withhold or collect any tax
as required by any statute, regulation or other law, suspends or ceases his, her
or its present business has served or filed against him, her or it or against
any of his, her or its assets any attachment, levy, tax lien, warrant or similar
lien other than a Permitted Lien or has entered against him, her or it or
against any of his, her or its assets any judgment, order or award of any court,
agency or other governmental authority or of any arbitrator, (iv) any Debtor has
any receiver, trustee, liquidator, sequestrator or custodian of him, her or it
or of any of his, her or its assets appointed (whether with or without his, her
or its consent), makes any assignment for the benefit of creditors or commences
or has commenced against him, her or it any case or other proceeding pursuant to
any Bankruptcy Law or any formal or informal proceeding for the dissolution,
liquidation or winding up of the affairs of, or for the settlement of claims
against, him, her or it, (v) any Primary Obligor or Other Obligor has any
receiver, trustee, liquidator, sequestrator or custodian of him, her or it or of
any of his, her or its assets appointed (whether with or without his, her or its
consent), makes any assignment for the benefit of creditors or commences or has
commenced against him, her or it any case or other proceeding pursuant to any
Bankruptcy Law or any formal or informal proceeding for the dissolution,
liquidation or winding up of the affairs of, or for the settlement of claims
against, him, her or it, (vi) any representation or warranty made in this
Agreement, or any representation or warranty heretofore or hereafter made, or
any financial statement heretofore or hereafter provided to the Secured Party by
or on behalf of any Debtor, Primary Obligor or Other Obligor, proves, as of the
date of such representation, warranty or financial statement, to have been
incorrect or misleading in any material respect or, if a financial statement, to
have omitted any substantial contingent of unliquidated liability of, or any
substantial claim against, such Debtor, Primary Obligor or Other Obligor or
there occurred, and was not disclosed to the Secured Party, before the execution
and delivery to the Secured Party of this Agreement by the undersigned any
material adverse change in any information disclosed in any such representation
or warranty heretofore so made or in any such financial statement heretofore so
provided, (vii) there occurs any loss, theft, destruction or substantial decline
in the value of, or any substantial damage to, any of the Collateral or (viii)
the Secured Party in good faith deems itself insecure with respect to any of the
Obligations or is of the opinion that the Collateral is not sufficient or has
declined or may decline in value, whether or not the Secured Party has asked any
Debtor, Primary Obligor or Other Obligor for any Other Collateral.
f. "General Intangible" has the meaning given it for purposes of Article 9
of the Uniform Commercial Code of the State of New York as in effect on the date
of this Agreement, and, with respect to any Person, includes, but is not limited
to, (i) any computer software of such Person, (ii) any Uncertificated Security
of such Person or any other security of such Person not evidenced by an
instrument, (iii) any trademark, service mark, trade style, trade name, patent,
copyright, license or franchise or such Person and (iv) goodwill of such Person.
g. "Goods" has the meaning given it for purposes of Article 9 of the
Uniform Commercial Code of the State of New York as in effect on the date of
this Agreement, and, with respect to any Person, includes, but is not limited
to, any Fixture, Equipment, Inventory or Farm Product of such Person.
h. "Inventory" has the meaning given it for purposes of Article 9 of the
Uniform Commercial Code of the State of New York as in effect on the date of
this Agreement, and, with respect to any Person, includes, but is not limited
to, any inventory of such Person that is returned, repossessed, reclaimed or
stopped in transit or is raw material or work in process.
i. "Obligations" means collectively all indebtedness, liabilities and
obligations for the payment of money, regardless of kind, of class or of form
and whether for the payment of principal or of interest or otherwise, incurred
for any business, commercial, agricultural or consumer purpose or otherwise, now
existing or hereafter arising, created directly (including, but not limited to,
all indebtedness, liabilities and obligations arising as a direct or indirect
result of any overdraft) or by any assignment or other transfer, direct or
indirect, absolute or contingent (including, but not limited to, all
indebtedness, liabilities and obligations arising as a direct or indirect result
of any guaranty, endorsement or other assurance or as a direct or indirect
result of any letter of credit), similar or dissimilar, related or unrelated,
due or not due, contractual or tortious, liquidated or unliquidated or arising
by operation of law or otherwise, that are now or hereafter owing by any Debtor
or Primary Obligor in any capacity, whether alone or otherwise, to the Secured
Party in any capacity, whether or not allowed as a claim against such Debtor or
Primary Obligor in any case or other proceeding pursuant to any Bankruptcy Law.
j. "Other Collateral" means, whether now existing or hereafter arising,
(i) any guaranty, endorsement or other assurance, any collateral or other
security, or any subordination, now or hereafter directly or indirectly securing
the payment of, or otherwise now or hereafter directly or indirectly applicable
to, any of the Obligations, except for the Collateral, (ii) any indebtedness,
liability or obligation of the Secured Party to any Debtor, Primary Obligor or
Other Obligor that is now or hereafter available for setoff by the Secured Party
against any of the Obligations (including, but not limited to, any such
indebtedness, liability or obligation arising as a direct or indirect result of
any Instrument or Deposit Account) or (iii) any asset of any Debtor, Primary
Obligor or Other Obligor that is now or hereafter subject to any banker's lien
of the Secured Party.
10
<PAGE>
k. "Other Obligor" means, other than any Debtor or Primary Obligor, any
Person (i) who or which is now or hereafter directly or indirectly liable for
the payment of any of the Obligations, whether as a maker, drawer, acceptor,
endorser, guarantor, surety or accommodation party or otherwise, (including, but
not limited to, if any Debtor or Primary Obligor is a partnership, any general
partner of such Debtor or Primary Obligor) or (ii) any asset of whom or of which
now or hereafter directly or indirectly secures the payment of any of the
Obligations.
l. "Permitted Lien" means (i) any security interest in, or any other lien
or encumbrance upon, any of the Collateral fully and accurately described in
Exhibit A attached to and made a part of this Agreement, (ii) any security
interest in, or any other lien or encumbrance upon, any of the Collateral in
favor of the Secured Party, (iii) any lease of any inventory included in the
Collateral by any Debtor as a lessor in the ordinary course of his, her or its
business and without interference with the conduct of his, her or its business
or operations, (iv) any pledge or deposit of any General Intangible, Instrument,
Deposit Account or money included in the Collateral that is made by any Debtor
in the ordinary course of his, her or its business (A) in connection with any
workers' compensation, unemployment insurance, social security or similar
statute, regulation or other law or (B) to secure the payment of any
indebtedness, liability or obligation arising in connection with any letter of
credit, bid, tender, trace or government contract, lease, statute, regulation or
other law or surety, appeal or performance bond, or of any similar indebtedness,
liability or obligation, not incurred in connection with the borrowing of any
money or in connection with the payment of the deferred purchase price of any
asset, (v) any attachment, levy or similar lien against any of the Collateral
arising in connection with any action or other legal proceeding so long as (A)
the validity of the claim or judgment secured thereby is being contested in good
faith by appropriate proceedings promptly instituted and diligently conducted,
(B) adequate reserves have been appropriately established for such claim or
judgment, (C) the execution or other enforcement of such attachment, levy or
similar lien is effectively stayed and (D) neither such claim or judgment nor
such attachment, levy or similar lien has any material adverse effect on any
Debtor or on the business, operations, assets, affairs or condition (financial
or other) of any Debtor, (vi) any statutory lien upon any of the Collateral in
favor of the United States for any amount paid to any Debtor as a progress
payment pursuant to any government contract, (vii) any statutory lien upon any
of the Collateral securing the payment of any tax, assessment, fee, charge, fine
or penalty imposed by any government or political subdivision upon any Debtor or
upon any of the assets, income and franchises of any Debtor or the payment of
any demand or claim of any materialman, mechanic, carrier, warehouseman,
garageman or landlord against any Debtor so long as such tax, assessment, fee,
charge, fine, penalty, demand or claim is not yet due or (A) the validity of
such tax, assessment, fee, charge, fine penalty, demand or claim is being
contested in good faith by appropriate proceedings promptly instituted and
diligently conducted, (B) adequate reserves have been appropriately established
for such tax, assessment, fee, charge, fine, penalty, demand or claim, (C) the
execution or other enforcement of such statutory lien is effectively stayed and
(D) neither the failure to pay such tax, assessment, fee, charge, fine, penalty,
demand or claim nor such statutory lien has any material adverse effect on any
Debtor or on the business, operations, assets, affairs or condition (financial
or other) of any Debtor or (viii) any reservation, exception, encroachment,
easement, right-of-way, covenant, condition, restriction, lease or similar title
exception or encumbrance affecting the title to any Fixture included in the
Collateral but not interfering with the conduct of the business or operations of
any Debtor.
m. "Person" means (i) any individual, corporation, partnership, joint
venture, trust, unincorporated association, government or political subdivision,
(ii) any court, agency or other governmental authority or (iii) any other
entity, body, organization or group.
n. "Primary Obligor" means (i) the Borrower or (ii) any Successor of the
Borrower.
o. "Security Interest" means any security interest granted, or any
assignment, pledge or hypothecation made, pursuant to Section 2a of this
Agreement.
p. "Successor" means, with respect to any Person, (i) if such Person is an
individual, the estate of such Person, (ii) if such Person is not an individual,
any direct or indirect successor of such Person (including, but not limited to,
(A) if such Person is a corporation, any other corporation into which such
Person is hereafter directly or indirectly merged, consolidated or otherwise
absorbed and (B) if such Person is a partnership, any other partnership
hereafter created as a direct or indirect result of the admission of any new
partner or as a direct or indirect result of the death or withdrawal of any
partner) or (iii) any other Person to whom or to which all or substantially all
of the assets or such Person are hereafter directly or indirectly assigned or
otherwise transferred.
Dated February 2, 1996 CVC Products, Inc.
------------------------------------------
By: /s/ Emilio O. DiCataldo
------------------------------------------
Emilio O. DiCataldo, Senior V.P. Finance
------------------------------------------
ACKNOWLEDGMENT
STATE OF NEW YORK )
:SS.
COUNTY OF MONROE )
On the 2 day of February in the year 1996, before me personally came EMILIO O.
-----------
DICATALDO
- --------------------------------------------------------------------------------
|_| Individual to me known and known to me to be the person(s) described in
and who executed the above instrument, and __he (they jointly
and severally) acknowledged to me that __he (they) executed
the same.
|_| Partnership to me known and known to me to be a member of the partnership
described in and which executed the above instrument, and __he
duly acknowledged to me that __he executed the above
instrument for and on behalf of said partnership.
XX Corporation to me known, who, being by me duly sworn, did depose and say
that __he resides at Rochester, New York ; that
--------------------------------
__he is the Senior V.P. Finance of CVC PRODUCTS, INC.,
------------------------- --------------------
the corporation described in and which executed the above
instrument; and that __he signed his(her) name thereto by
order of the board of directors of said corporation.
JOHN D. INZANA /s/ John D. Inzana
NOTARY PUBLIC in the State of New York ----------------------------------
MONROE COUNTY Notary Public
My Commission Expires March 9, 1997
FOR BANK USE ONLY: Authorization confirmed. /s/ [ILLEGIBLE]
------------------------------------
Exhibit A
Permitted Financing Statements and Other Evidences of Lien (Section 4x):
7 UCC-1 financing statements, shown in a UCC search against Borrower,
dated January 22, 1996 (with a January 5, 1996 "Thru Date"), provided to
Secured Party by CSC Networks.
11
<PAGE>
Permitted Transfers, Pledges and Other Actions with Respect to Uncertificated
Securities (Section 4y):
NONE
Exceptions to Representations and Warranties (Clauses (v), (vi), (vii), (viii),
(ix) and (x) of Section 9a):
NONE
Description of Real Property on Which Crop or Timber Located (Clause (xiii) of
Section 9a):
NONE
Permitted Liens (Clause (i) of Section 16l):
Collateral described in the UCC-1 financing statements referred to in
"Permitted Financing Statements" above.
QUESTIONNAIRE
1. What is the complete name of the undersigned (giving, if the undersigned is a
corporation, the name exactly as it appears in the certificate or articles of
incorporation or other charter document of the undersigned or, if the
undersigned is a partnership, the name exactly as it appears in the partnership
agreement or other organizational document of the undersigned or, if there is
none, in any assumed name certificate of the undersigned)?
CVC Products, Inc.
2. Does the undersigned do business under any name other than the name indicated
in the answer to question 1? If so, what is each such other name?
CVC Holdings, Inc.
CVC Products
3. What is the address (including county) of the residence, only place of
business of chief executive office of the undersigned?
525 Lee Road
Rochester, NY 14606
4. What is the address (including county) of each place of business of the
undersigned other than the address indicated in the answer to question 3?
47061 Warm Springs Blvd., Fremont, CA 94539
329 Oak Trail, Garland, TX 75043
3100 Laurelview Court, Fremont, CA 94539
5. What is the address of each location at which any of the Goods, Chattel
Paper, Instruments, Documents and records of the undersigned included in the
Collateral is or will be kept other than the locations the addresses of which
are indicated in the answers to questions 3 and 4?
None
6. If any of the Goods, Chattel Paper, Instruments, Documents and records of the
undersigned included in the Collateral is in the possession of any Person other
than the undersigned, what are the name and address of each such other Person?
None
7. What are the name and address of each Person other than the undersigned who
or which has any interest, whether as an owner, mortgagee or lessee or
otherwise, in any real property to which is affixed, or in or on which is
installed or located, any of the Goods of the undersigned included in the
Collateral or in or on which is located any of the Chattel Paper, Instruments,
Documents and records of the undersigned included in the Collateral?
Security Capital Mutual 47775 Fremont Blvd.
Fremont, CA 94538
Mission Falls Corp. C/O 5776 Stoneridge Mall Road (Suite 100)
Spectrum Interest, Inc. Pleasanton, CA 94588
Dated February 2, 1996 CVC Products, Inc.
------------------------------------------
By: /s/ Emilio O. DiCataldo
------------------------------------------
Emilio O. DiCataldo, Senior V.P. Finance
Fixtures are not perfected in California & Texas
- - Attorney did the UCC filings (G. Amendola of Woods Oulatt)
12
<PAGE>
EXHIBIT 10.25
DOC GSA DATE 2-2-96
----- ---------
COM CVC HOLDINGS INC.
------------------
[LOGO] GENERAL SECURITY AGREEMENT
MANUFACTURERS AND TRADERS TRUST COMPANY
Name(s) of Undersigned CVC Holdings, Inc.
---------------------------------------------------------
Address(es) of Undersigned 525 Lee Road, Rochester, NY 14606
-----------------------------------------------------
In consideration of Manufacturers and Traders Trust Company, a New York
banking corporation having its chief executive office at One M&T Plaza, Buffalo,
New York 14240, (the "Secured Party") heretofore or hereafter (1) granting any
loan, credit or other financial accommodation to, or in reliance upon any
guaranty, endorsement or other assurance of (a) any of the undersigned or (b)
CVC Products, Inc., a Delaware Corporation
- ------------------ ----------------------------------------------------------
(Name) (Type of entity and, if not an individual, jurisdiction in
having his or her residence or its only place of business or
- ----------------
which organized)
chief executive office at 525 Lee Road, Rochester, NY 14606
------------------------------------------------------
(Address)
- --------------------------------------------------------------------------------
(the "Borrower"), (2) permitting any extension, renewal, refinancing,
modification or replacement of any indebtedness, liability or obligation arising
as a direct or indirect result of any such loan, credit or other financial
accommodation, (3) surrendering or releasing any guaranty, endorsement or other
assurance, any collateral or other security, or any subordination, directly or
indirectly securing the payment of, or otherwise directly or indirectly
applicable to, any such indebtedness, liability or obligation or (4) granting
any waiver of, or any forbearance or other indulgence relating to, any right or
remedy relating to any such indebtedness, liability or obligation, to any such
guaranty, endorsement or other assurance, to any such collateral or other
security or to any such subordination, and for other valuable consideration, the
receipt of which is acknowledged, each of the undersigned agrees with the
Secured Party as follows:
1. Reference to Definitions.
a. For purposes of this Agreement, each of the following terms has the
meaning given it in Section 16 of this Agreement: (i) Bankruptcy Law, (ii)
Collateral, (iii) Debtor, (iv) Equipment, (v) Event of Default, (vi) General
Intangible, (vii) Goods, (viii) Inventory, (ix) Obligations, (x) Other
Collateral, (xi) Other Obligor, (xii) Permitted Lien, (xiii) Person, (xiv)
Primary Obligor, (xv) Security Interest and (xvi) Successor.
b. For purposes of this Agreement, each of the following terms has the
meaning given it for purposes of Article 9 of the Uniform Commercial Code of the
State of New York as in effect on the date of this Agreement: (i) Account, (ii)
Account Debtor, (iii) Chattel Paper, (iv) Consumer Goods, (v) Deposit Account,
(vi) Document, (vii) Farm Product, (viii) Fixture, (ix) Instrument, (x) Proceeds
and (xi) Products.
c. For purposes of this Agreement, "Uncertificated Security" has the
meaning given it for purposes of Article 8 of the Uniform Commercial Code of the
State of New York as in effect on the date of this Agreement.
2. Security Interest; Nature of Security Interest.
a. To secure the payment of the Obligations, each of the undersigned
grants to the Secured Party a security interest in, and assigns, pledges and
hypothecates to the Secured Party, the Collateral.
b. Each Security Interest (i) is unconditional, (ii) is independent of and
in addition to all Other Collateral, (iii) is a continuing security interest,
assignment, pledge or hypothecation, and (iv) shall continue in full force and
effect except insofar as this Agreement is terminated as provided in Section 12g
of this Agreement.
3. Reinstatement of Obligations. Each portion of the Obligations that is
(a) paid by any money received or applied by the Secured Party (including, but
not limited to, any such money constituting, or received or applied because of
the existence of, any of the Collateral or any Other Collateral) and later
returned by or otherwise recovered from the Secured Party as a direct or
indirect result of any claim, regardless of the basis or outcome thereof,
whether asserted affirmatively, as a counterclaim, setoff or defense or
otherwise and whether now existing or hereafter arising, for the return or for
any other recovery of such money (including, but not limited to, any such claim
based, in whole or in part, upon any allegation that (i) such money constituted
trust funds for purposes of the Lien Law of the State of New York or for
purposes of any similar statute, regulation or other law, (ii) the receipt or
application of such money constituted an impermissible setoff or (iii) the
receipt or application of such money, or the grant or perfection of any security
interest in, or of any other lien or encumbrance upon, any of the Collateral or
any Other Collateral, constituted a preference, fraudulent transfer or
fraudulent conveyance) or (b) satisfied by the Secured Party's retention of any
portion of the Collateral, or by the Secured Party's retention of any Other
Collateral, that is later returned by or otherwise recovered from the Secured
Party as a direct or indirect result of any claim, regardless of the basis or
outcome thereof, whether asserted affirmatively, as a counterclaim, setoff or
defense or otherwise and whether now existing or hereafter arising, for the
return or for any other recovery of such portion of the Collateral or Other
Collateral (including, but not limited to, any such claim based, in whole or in
part, upon any allegation that the grant or perfection of any security interest
in, or of any other lien or encumbrance upon, such portion of the Collateral or
Other Collateral constituted a preference, fraudulent transfer or fraudulent
conveyance) shall be reinstated as part of the Obligations for purposes of this
Agreement (including, but not limited to, Section 12g of this Agreement) as of
the date it originally arose and for purposes of each statute of limitations
with respect to any action or other legal proceeding by the Secured Party
against any Debtor relating to this Agreement as of the date of such return or
other recovery of such money, portion of the Collateral or Other Collateral.
4. Covenants.
a. Simultaneously with the execution and delivery to the Secured Party of
this Agreement, each of the undersigned shall execute and deliver to the Secured
Party each financing statement, notice of lien, instrument of assignment and
other writing, and take each other action, that the Secured Party shall deem
necessary or desirable at the sole option of the Secured Party to perfect or
accomplish any Security Interest.
b. Simultaneously with the execution and delivery to the Secured Party of
this Agreement, each of the undersigned shall deliver each presently existing
instrument included in the Collateral (except for any check or other draft) and
held by him, her or it to the Secured Party with each endorsement, instrument of
assignment and other writing that the Secured Party shall deem necessary or
desirable at the sole option of the Secured Party to accomplish the assignment
or other transfer of such instrument to the Secured Party. Until such delivery,
he, she or it shall hold such instrument in trust for the Secured Party.
c. Immediately upon receiving any instrument included in the Collateral
(except for, until (i) the occurrence or existence of any Event of Default or
(ii) any notice to the contrary shall be delivered, given or sent by the Secured
Party to any Debtor, any check or other draft), each Debtor shall deliver such
instrument to the Secured Party with each endorsement, instrument of assignment
and other writing that the Secured Party shall deem necessary or desirable at
the sole option of the Secured Party to accomplish the assignment or other
transfer of such instrument to the Secured Party. Until such delivery, such
Debtor shall hold such instrument in trust for the Secured Party.
1
<PAGE>
d. Each Debtor shall provide to the Secured Party, in form satisfactory to
the Secured Party, (i) if such Debtor is an individual, at least once during
each period of twelve consecutive months, a personal financial statement of such
Debtor for a year ending not more than sixty days earlier, in reasonable detail
and certified by such Debtor to be complete and accurate, (ii) if such Debtor is
not an individual, within sixty days after the end of each fiscal quarter of
each fiscal year of such Debtor, statements of income and of changes in
financial position of such Debtor for such fiscal quarter and for the period
from the beginning of such fiscal year to the end of such fiscal quarter and a
balance sheet of such Debtor as of the end of such fiscal quarter each in
reasonable detail and certified by an officer or member of such Debtor to be
complete and accurate, to be in accordance with the records of such Debtor and
to present fairly, subject to normal and nonmaterial year-end adjustments, the
results of the operations, and the changes in financial position, of such Debtor
for such fiscal quarter and for the period from the beginning of such fiscal
year to the end of such fiscal quarter, and the financial position of such
Debtor as of the end of such fiscal quarter, in conformity with generally
accepted accounting principles applied consistently with the application of such
principles with respect to the preceding fiscal quarter of such Debtor, (iii) if
such Debtor is not an individual, within ninety days after the end of each
fiscal year of such Debtor, statements of income and of changes in financial
position of such Debtor for such fiscal year and a balance sheet of such Debtor
as of the end of such fiscal year, each in reasonable detail and certified by an
independent certified public accountant acceptable to the Secured Party to
present fairly the results of the operations, and the changes in financial
position, of such Debtor for such fiscal year and the financial position of such
Debtor as of the end of such fiscal year, in conformity with generally accepted
accounting principles applied consistently with the application of such
principles with respect to the preceding fiscal year of such Debtor and to have
been based upon an audit by such accountant that was made in accordance with
generally accepted auditing standards and accordingly included such tests of
accounting records and such other auditing procedures as such accountant deemed
necessary in the circumstances, and (iv) promptly upon the request of the
Secured Party, all additional information relating to such Debtor or to such
Debtor's business, operations, assets, affairs or condition (financial or other)
that is so requested.
e. Each Debtor shall maintain accurate and complete records relating to
the Collateral (including, but not limited to, upon the request of the Secured
Party, a perpetual inventory record relating to inventory included in the
Collateral) in conformity with generally accepted accounting principles
consistently applied.
f. Before the end of any applicable grace period, each Debtor shall pay
each tax, assessment, fee and charge imposed by any government or political
subdivision upon any of the Collateral, upon the ownership, possession, use,
operation, sale or lease of any of the Collateral, upon this Agreement or upon
any instrument evidencing any of the Obligations.
g. Each Debtor shall obtain and maintain in full force and effect each
authorization, approval, permit, consent, franchise and license from any Person
necessary for the ownership, possession, use, operation, sale or lease of any of
the Collateral.
h. Each Debtor shall defend the Collateral against each demand, claim,
counterclaim, setoff and defense asserted by any Person other than the Secured
Party (including, but not limited to, any Account Debtor).
i. Each Debtor shall indemnify the Secured Party on demand against each
liability, cost and expense (including, but not limited to, if the Secured Party
retains counsel for advice, for litigation or for any other purpose, each
attorney's fee and disbursement) incurred by the Secured Party as a direct or
indirect result of any claim, regardless of the basis or outcome thereof,
whether asserted affirmatively, as a counterclaim, setoff or defense or
otherwise and whether now existing or hereafter arising, arising out of the
ownership, possession, use, operation, sale or lease of any of the Collateral.
j. Each Debtor shall (i) keep all Goods included in the Collateral insured
against each risk to which any of such Goods may at any time be subject
(including, but not limited to, fire, theft and risks covered by extended
coverage) and (ii) maintain insurance against liability on account of damage to
any Person or property arising out of the ownership, possession, use, operation,
sale or lease of any of such Goods. Such insurance shall be provided in such
amounts, for such periods, on such terms, with such special endorsements and by
such companies as shall be satisfactory to the Secured Party. Each Debtor shall
deliver to the Secured Party a copy of each policy pursuant to which any of such
insurance is provided. Without limiting the generality of the first two
sentences of this Section 4j, (i) each policy pursuant to which any of the
insurance described in clause (i) of the first sentence of this Section 4j is
provided shall contain a mortgagee clause, in form and substance satisfactory to
the Secured Party, (A) naming the Secured Party as a mortgagee as the interest
of the Secured Party may appear and (B) providing that (I) all money payable
pursuant to any insurance provided pursuant to such policy shall be payable to
the Secured Party, (II) no insurance provided pursuant to such policy shall be
affected by any act or omission of any Debtor or of any owner of any real
property referred to in such policy and (III) neither such policy nor such
mortgagee clause may be canceled, terminated or adversely amended except upon
thirty days' prior written notice to the Secured Party and (ii) each policy
pursuant to which any of the insurance described in clause (ii) of the first
sentence of this Section 4j is provided shall contain a clause, in form and
substance satisfactory to the Secured Party, (A) naming the Secured Party as an
additional insured as the interest of the Secured Party may appear and (B)
providing that neither such policy nor such clause may be canceled, terminated
or adversely amended except upon thirty days' prior written notice to the
Secured Party.
k. Each Debtor shall immediately (i) cause all Goods included in the
Collateral to be properly titled and registered to the extent required by any
applicable statute, regulation or other law, (ii) cause the interest of the
Secured Party to be properly noted on each certificate of title relating to any
of such Goods and (iii) deliver each such certificate received by such Debtor to
the Secured Party.
l. Each Debtor shall (i) keep each Fixture and piece of Equipment included
in the Collateral in as good condition as when first delivered to any Debtor,
ordinary wear and tear excepted, (ii) perform maintenance on each such Fixture
and piece of Equipment strictly in accordance with each applicable specification
of any manufacturer or seller thereof and (iii) use and operate each such
Fixture and piece of Equipment, and permit each such Fixture and piece of
Equipment to be used and operated, only in the manner in which it was designed
to be used and operated so as to subject it only to ordinary wear and tear.
m. Each Debtor shall use his, her it its best efforts to cause any issuer
of any General Intangible or Instrument included in the Collateral to make
public, whether by filing reports with the Securities and Exchange Commission or
otherwise, all information with respect to such issuer necessary or desirable to
permit the sale or other disposition of such General Intangible or Instrument
without registration pursuant to the Securities Act of 1933.
n. If any Account or General Intangible included in the Collateral
represents money owing pursuant to any contract for the improvement of real
property or for a public improvement for purposes of the Lien Law of the State
of New York, each Debtor shall (i) immediately send or deliver notice of such
fact to the Secured Party, (ii) receive and hold any money advanced by the
Secured Party with respect to such Account or General Intangible as a trust fund
to be first applied to the payment of trust claims as such term is defined in
Section 71 of such Lien Law, (iii) until each such trust claim is paid, not use
or permit the use of any of such money for any purpose other than the payment of
such trust claims and (iv) promptly upon the request of the Secured Party,
execute and deliver each writing, and take each other action, that the Secured
Party shall deem necessary or desirable at the sole option of the Secured Party
to give or file notice of the Secured Party's interest in such Account or
General Intangible pursuant to whichever of Sections 15, 16 and 73 of such Lien
Law is applicable.
o. If any Account or General Intangible included in the Collateral arises
out of a contract with any government or political subdivision (including, but
not limited to, the United States) or with any department, agency or
instrumentality thereof, such Debtor shall (i) immediately send or deliver
notice of such fact to the Secured Party and (ii) promptly upon the request of
the Secured Party, execute and deliver each writing, and take each other action
that the Secured Party shall deem necessary or desirable at the sole option of
the Secured Party properly to perfect under any statute, regulation or other law
(including, but not limited to, the Federal Assignments of Claims Act) the
interest of the Secured Party in such Account or General Intangible.
p. Each Debtor shall promptly deliver or send to the Secured Party notice
of any failure of any Account Debtor or other Person to perform any obligation
relating to any Account, Chattel Paper, General Intangible, Instrument, Document
or Deposit Account included in the Collateral.
q. Immediately upon receiving any proxy statement, notice or other
communication relating to any General Intangible or Instrument included in the
2
<PAGE>
Collateral, each Debtor shall (i) if such proxy statement, notice or other
communication is in writing, deliver a copy thereof to the Secured Party or (ii)
if such proxy statement, notice or other communication is not in writing,
deliver or send notice thereof to the Secured Party.
r. immediately upon acquiring knowledge or reason to know that any Goods
included in the Collateral have been affixed to, or have been installed in or
on, any real property or any Goods not included in the Collateral, each Debtor
shall deliver or send notice of such fact to the Secured Party.
s. Immediately upon acquiring knowledge or reason to know of any maturity,
call, exchange, conversion, redemption, offer, tender or similar matter relating
to any General Intangible, Instrument or Deposit Account included in the
Collateral, each Debtor shall deliver or send notice thereof to the Secured
Party.
t. Immediately upon acquiring knowledge or reason to know of any loss,
destruction or theft of, or of any damage to, any of the Collateral from any
cause of any kind, each Debtor shall send or deliver notice thereof to the
Secured Party.
u. Immediately upon acquiring knowledge or reason to know of (i) the
threat or commencement by any Person other than the Secured Party of any action
or other legal proceeding relating to any of the Collateral or questioning the
validity of this Agreement or of any action taken or to be taken pursuant to
this Agreement, (ii) any judgment, order or award of any court, agency or other
governmental authority or of any arbitrator relating to any of the Collateral or
rendering invalid this Agreement or any action taken or to be taken pursuant to
this Agreement or (iii) the assertion by any Person other than the Secured Party
of any demand, claim, counterclaim, setoff or defense relating to any of the
Collateral, each Debtor shall deliver or send notice thereof to the Secured
Party.
v. Immediately upon acquiring knowledge or reason to know of the
occurrence or existence of (i) any Event of Default, (ii) any event or condition
that, after notice, after lapse of time or after both notice and lapse of time,
would constitute an Event of Default or (iii ) any event or condition that has
or (so far as can be foreseen) will or might have any material adverse effect on
any of the Collateral, on any Debtor, Primary Obligor or Other Obligor or on the
business, operations, assets, affairs or condition (financial or other) of any
Debtor, Primary Obligor or Other Obligor, each Debtor shall deliver or send
notice thereof to the Secured Party.
w. Immediately upon acquiring knowledge or reason to know of any change in
(i) the location of the residence, only place of business or chief executive
office of any Debtor, (ii) the location of any of the Collateral if not (A) in
the possession or under the control of, or enroute to or from, the Secured Party
or (B) mobile Equipment being removed for not more than thirty days at a time
from any location indicated in any questionnaire submitted to the Secured Party
by any of the undersigned in connection with this Agreement as a location where
such mobile Equipment will be kept or (iii) the name, identity or structure of
any Debtor, each Debtor shall deliver or send notice thereof to the Secured
Party.
x. No Debtor shall (i) execute or permit to be filed or remain on file in
any public office any financing statement relating to any of the Collateral,
naming any Debtor as a debtor and naming any Person other than the Secured Party
as a secured party or (ii) execute any application for any certificate of title
or notice of lien, or permit to exist any certificate of title, relating to any
Goods included in the Collateral and naming any Person other than the Secured
Party as a secured party, except for financing statements, applications, notices
of lien and certificates of title fully and accurately described in Exhibit A
attached to and made a part of this Agreement.
y. No Debtor shall (i) permit to exist any registration of any transfer or
pledge of any Uncertificated Security included in the Collateral, (ii) execute
or permit to exist any order to register any transfer or pledge of, or any
notification of any security interest in, or of any other lien or encumbrance
upon, any such Uncertificated Security or (iii) permit any such Uncertificated
Security to be shown on the records of any clearing corporation other than in
the name of any Debtor, of the Secured Party or of any nominee of the Secured
Party, except for registrations, orders, notifications and Uncertificated
Securities fully and accurately described in Exhibit A attached to and made a
part of this Agreement.
z. No Debtor shall create or permit to exist, or attempt or agree or
otherwise incur any obligation to create or permit to exist, any security
interest in, or any other lien or encumbrance upon, any of the Collateral,
except for Permitted Liens.
aa. No Debtor shall abandon, assign, sell, lease, exchange, convert or
otherwise transfer or dispose of any of the Collateral or any interest in any of
the Collateral, except that, until (i) the occurrence or existence of any Event
of Default or (ii) any notice to the contrary shall be delivered, given or sent
by the Secured Party to any Debtor, each Debtor may (A) in the ordinary course
of such Debtor's business, (I) abandon, assign, sell, lease, exchange or
otherwise transfer of dispose of any Equipment of such Debtor that is obsolete
or worn-out, (II) sell or exchange any Equipment of such Debtor in connection
with the acquisition by such Debtor of other Equipment that is at least as
valuable as such Equipment, that such Debtor intends to use for substantially
the same purposes as such Equipment and that is not subject to any security
interest or other lien or encumbrance, except for Permitted Liens, (III) assign
any Account of such Debtor for purposes of collection, (IV) assign, sell, lease,
exchange or otherwise transfer or dispose of any Inventory of such Debtor other
than in partial or complete satisfaction of any indebtedness, liability or
obligation and (V) dispose of any money of such Debtor or funds in any Deposit
Account of such Debtor in partial or complete satisfaction of any indebtedness,
liability or obligation of such Debtor incurred in the ordinary course of such
Debtor's business and (B) dispose of any money of such Debtor, funds in any
Deposit Account of such Debtor or funds in any other account of such Debtor
evidenced by a certificate of deposit if such money is held, or if such Deposit
account or other account is maintained, for personal, family or household
purposes.
bb. No Debtor shall use, operate, permit the use or operation of, or
assign, sell, lease, exchange or otherwise transfer or dispose of, any of the
Collateral in any manner that (i) would or might violate, or would or might
result in any violation of, any environmental or other statute, regulation or
other law (including, but not limited to, the Environmental Protection Act, the
Occupational Safety and Health Act, the Comprehensive Environmental Response
Compensation and Liability Act and the Resource Conservation and Recovery Act),
any policy providing any insurance on any Goods included in the Collateral or
any warranty with respect to any such Goods or (ii) would or might result in any
such insurance not being paid or in any such warranty not being honored.
cc. No Debtor shall remove, or permit the removal of, any of the
Collateral from any location indicated in any questionnaire submitted to the
Secured Party by any of the undersigned in connection with this Agreement as a
location where any of the Collateral will be kept, except that any mobile
Equipment included in the Collateral may be removed for not more than thirty
days at a time from any location indicated in any such questionnaire as a
location where such mobile Equipment will be kept.
dd. No Debtor shall materially alter or permit the material alteration of
any Fixture or piece of Equipment included in the Collateral.
ee. No Debtor shall cause or permit any Goods included in the Collateral
to (i) become a Fixture or (ii) be or become an accession to any Goods not
included in the Collateral.
ff. No Debtor shall cause or permit any Goods included in the Collateral
to be placed in any warehouse that may issue a negotiable Document with respect
to such Goods.
gg. No Debtor shall assign, sell, exchange, convert or otherwise transfer
or dispose of, take any other action with respect to, or permit the assignment,
sale, exchange, conversion or other transfer or disposition of or the taking of
any other action with respect to, any General Intangible or Instrument not
included in the Collateral if such assignment, sale, exchange, conversion or
other transfer or disposition or such taking of such other action would be
required to be considered in determining whether the sale or other disposition
of any General Intangible or Instrument included in the Collateral was
permissible without registration pursuant to the Securities Act of 1933.
hh. No Debtor who or which controls any issuer of any stock or share
included in the Collateral shall permit, and no Debtor who or which by acting
with any other Person or with other Persons would cause such control to exist
shall take any action to permit, such issuer to issue (i) any such stock or
share in addition to that or those heretofore issued or (ii) any option, warrant
or other right to purchase any such stock or share.
3
<PAGE>
ii. Upon and after (i) the occurrence or existence of any Event of Default
or (ii) the delivery, giving or sending by the Secured Party to any Debtor of
any notice not to do so, no Debtor shall, without the prior written consent of
the Secured Party, (A) request, demand, accept, collect, enforce, extend, renew,
refinance, modify, compound, subordinate, accelerate, settle, adjust or
compromise, enter into any composition of, replace, cancel, release, surrender,
abandon, discharge, realize upon, commence, prosecute, settle or compromise any
action or other legal proceeding relating to, waive any right or remedy relating
to or otherwise terminate, impair or otherwise affect any indebtedness,
liability or obligation of any Account Debtor or other Person relating to, or
give any receipt, release or discharge relating to, any Account, Chattel Paper,
General Intangible, Instrument, Document or Deposit Account included in the
Collateral or (B) attempt or agree or otherwise incur any obligation to do
anything described in clause (A) of this sentence.
jj. Promptly upon the request of the Secured Party made upon or at any
time and from time to time after the occurrence or existence of any Event of
Default, each Debtor shall assemble (i) all Goods included in the Collateral,
except for Fixtures, growing crops and standing timber, and (ii) all Chattel
Paper, Instruments, Documents and records included in the Collateral, and make
them available to the Secured Party at each place reasonably convenient to the
Secured Party and to such Debtor as the Secured Party shall designate
(including, but not limited to, any promises of such Debtor).
kk. Promptly upon the request of the Secured Party:
i. Each Debtor shall enter into each warehousing, lockbox or other
custodial arrangement with respect to any of the Collateral that the Secured
Party shall deem necessary or desirable at the sole option of the Secured Party.
ii. Each Debtor shall provide to the Secured Party all information, in
form and substance satisfactory to the Secured Party, that the Secured Party
shall deem necessary or desirable at the sole option of the Secured Party to (A)
identify the nature, extent, value, age and location of any of the Collateral,
(B) identify or contact any Account Debtor or other Person obligated with
respect to any Account, Chattel Paper, General Intangible, Instrument, Document
or Deposit Account included in the Collateral or (C) verify any insurance on
any Goods included in the Collateral.
iii. Each Debtor shall permit each officer, employee, accountant, attorney
and other agent of the Secured Party to inspect the Collateral and to examine,
audit, copy and extract each record included in the Collateral.
iv. Each Debtor shall provide to the Secured Party a writing, in form and
substance satisfactory to the Secured Party, (A) signed by each Person having
any interest, whether as an owner, mortgagee or lessee or otherwise, in any real
property to which are affixed, or in or on which are installed or located, any
Goods included in the Collateral or in or on which is located any Chattel Paper,
Instrument, Document or record included in the Collateral, (B) disclaiming any
interest of such Person in such Goods, Chattel Paper, Instrument, Document or
record and (C) containing the agreement of such Person to the Secured Party,
upon and at any time and from time to time after the occurrence or existence of
any Event of Default, (I) entering upon such real property or upon any other
real property of such Person to which are affixed, or in or on which are
installed or located, any such Goods or in or on which is located any such
Chattel Paper, Instrument, Document or record, (II) taking possession of and
removing from such real property or from such other real property any Goods
included in the Collateral and affixed thereto or installed or located therein
or thereon or any Chattel Paper, Instrument, Document or record included in the
Collateral and located therein or thereon and (III) remaining on, and using,
such real property or such other real property in the examination, storage,
preparation for any sale, lease or other disposition or sale, lease or other
disposition of such Goods or in the examination, audit, copying or extraction of
such record, without by doing so incurring any liability to such Person, except
for unreasonable damage to such real property or to such other real property
directly resulting from doing so.
v. Each Debtor shall provide to the Secured Party a writing, in form and
substance satisfactory to the Secured Party, (A) signed by each Person having
any interest, whether as an owner, secured party or lessee or otherwise, in any
Goods not included in the Collateral to which are affixed, or in or on which are
installed, any Goods included in the Collateral, (B) disclaiming any interest of
such Person in such Goods included in the Collateral and (C) containing the
agreement of such Person to the Secured Party, upon and at any time and from
time to time after the occurrence or existence of any Event of Default, taking
possession of and removing such Goods included in the Collateral from such Goods
not included in the Collateral, without by doing so incurring any liability to
such Person, except for unreasonable damage to such Goods not included in the
Collateral directly resulting from doing so.
vi. Each Debtor shall provide all information and assistance, execute and
deliver each writing, and take each other action, that the Secured Party shall
deem necessary or desirable at the sole option of the Secured Party in
connection with the verification of any Account, Chattel Paper, General
Intangible, Instrument, Document or Deposit Account included in the Collateral.
vii. Each Debtor shall deliver each Chattel Paper, Document and record
included in the Collateral to the Secured Party with each endorsement,
instrument of assignment and other writing that the Secured Party shall deem
necessary or desirable at the sole option of the Secured Party to accomplish the
assignment or other transfer of such Chattel Paper, Document or record to the
Secured Party.
viii. Each Debtor shall execute and deliver or file each form and other
writing (including, but not limited to, any notice of proposed sale of
securities pursuant to Rule 144 of the Securities and Exchange Commission), and
take each other action (including, but not limited to, making public any
nonpublic material adverse information with respect to any issuer of any General
Intangible or Instrument included in the Collateral), that the Secured Party
shall deem necessary or desirable at the sole option of the Secured Party to
permit the sale or other disposition of any such General Intangible or
Instrument without registration pursuant to the Securities Act of 1933.
ix. Each Debtor who or which controls any issuer of any General Intangible
or Instrument included in the Collateral or otherwise has the right to effect
registration of such General Intangible or Instrument pursuant to the Securities
Act of 1933 shall (A) cause such General Intangible or Instrument to be so
registered, (B) take each other action (including, but not limited to, complying
with any "blue sky" or securities statute, regulation or other law and
delivering to the Secured Party appropriate quantities of prospectuses) that the
Secured Party shall deem necessary or desirable at the sole option of the
Secured Party to permit the public sale or other disposition of such General
Intangible or Instrument by the Secured Party in each jurisdiction that the
Secured Party shall select at the sole option of the Secured Party and (C)
execute and deliver to the Secured Party a writing, in form and substance
satisfactory to the Secured Party, indemnifying in connection with such sale or
other disposition each Person who or which is an underwriter (statutory or
other) of such General Intangible or Instrument against each liability, cost and
expense (including, but not limited to, if such Person retains counsel for
advice, for litigation or for any other purpose, each attorney's fee and
disbursement) incurred by such Person as a direct or indirect result of such
sale or other disposition.
x. Each Debtor shall execute and deliver each financing statement,
amendment of any financing statement, application for any certificate of title,
notice of lien, instrument of assignment and other writing, and take each other
action, that the Secured Party shall deem necessary or desirable at the sole
option of the Secured Party (i) to perfect or accomplish any Security interest,
(ii) otherwise to accomplish any purpose of this Agreement, (iii) in connection
with any transaction contemplated by this Agreement or (iv) in connection with
any of the Collateral.
5. Authorization and Power of Attorney. The Secured Party is irrevocably
and unconditionally authorized to take, and each Debtor irrevocably and
unconditionally appoints the Secured Party as the attorney-in-fact of such
Debtor, with full power of substitution and of revocation, to take, in the name
of such Debtor or otherwise and otherwise as shall be determined by the Secured
Party at the sole option of the Secured Party, each action relating to any of
the Collateral that, subject to this Agreement, such Debtor could take in the
same manner, to the same extent and with the same effect as if such Debtor were
to take such action; provided, however, that, until any notice of intention to
do so shall be delivered, given or sent by the Secured Party to any Debtor upon
or at any time after the occurrence or existence of any Event of Default, (a)
the Secured Party may not, pursuant to such authorization or as such
attorney-in-fact, (i) exercise or direct the exercise of any right to vote or
give any consent, ratification or waiver with respect to any General Intangible
or Instrument included in the Collateral or (ii) except as expressly permitted
by this Agreement, sell, lease or otherwise dispose of any of the Collateral and
(b) each Debtor shall have the right to exercise any right to vote or give any
consent, ratification or waiver with respect to
4
<PAGE>
any General Intangible or Instrument included in the Collateral that such Debtor
would have but for this Agreement unless doing so would or might have any
adverse effect on the value of such General Intangible or Instrument as security
for the payment of the Obligations or otherwise be inconsistent or incompatible
with any provision or purpose of this Agreement. Such power of attorney is
coupled with an interest in favor of the Secured Party and shall not be
terminated or otherwise affected by the death, disability or incompetence of any
Debtor. Without limiting the generality of the first sentence of this Section 5,
pursuant to such authorization and as such attorney-in-fact, the Secured Party
may, in the name of any Debtor or otherwise at the sole option of the Secured
Party, (a) execute and deliver any financing statement or instrument of
assignment relating to any of the Collateral, (b) endorse, or execute and
deliver any instrument of assignment relating to, and deliver any of the
Collateral including, but not limited to, any instrument drawn by any company
issuing any insurance on any Goods included in the Collateral), whether such
endorsement or assignment is to the Secured Party or otherwise, (c) execute and
deliver any writing, or give any communication in any other form, requesting any
transfer, pledge or release from pledge of any Uncertificated Security included
in the Collateral, (d) execute and deliver or file any form or other writing
(including, but not limited to, any notice of proposed sale of
securities pursuant to Rule 144 of the Securities and Exchange Commission), or
take any other action (including, but not limited to, making public any
nonpublic material adverse information with respect to any issuer of any General
Intangible or Instrument included in the Collateral), that the Secured Party
shall deem necessary or desirable at the sole option of the Secured Party to
permit the sale or other disposition of any such General Intangible or
Instrument without registration pursuant to the Securities Act of 1933, (e)
receive and collect any mail addressed to any Debtor, direct the place of
delivery of any such mail to any location designated by the Secured Party, open
any such mail and remove from any such mail and retain any enclosure evidencing,
or otherwise relating to any of the Collateral, (f) obtain, adjust, settle or
cancel any insurance on any Goods included in the Collateral, (g) use any
payment in connection with any such insurance, including, but not limited to,
any refund of any unearned premium therefor to pay any of the Obligations,
whether due or not due, as the Secured Party shall determine at the sole option
of the Secured Party, (h) take any action described in clause (A) of Section 4e
of this Agreement or (i) execute and deliver any other writing, or take any
other action, that the Secured Party shall deem necessary or desirable at the
sole option of the Secured Party (i) to perfect or accomplish any Security
Interest, (ii) otherwise to accomplish any purpose of this Agreement, (iii) in
connection with any transaction contemplated by this Agreement or (iv) in
connection with any of the Collateral. Each debtor revokes each power of
attorney (including, but not limited to, any proxy) heretofore granted by such
Debtor with respect to any General Intangible or Instrument included in the
Collateral.
6. Certain Rights, Remedies and Duties.
a. With respect to the Collateral, the Secured Party shall have each
applicable right and remedy of a secured party pursuant to the Uniform
Commercial Code of the State of New York and each applicable right and remedy
pursuant to any other statute, regulation or other law or pursuant to this
Agreement.
b. The Secured Party shall have the right to file in any public office,
without the signature of any Debtor, each financing statement relating to any of
the Collateral that the Secured Party shall deem necessary or desirable at the
sole option of the Secured Party. Each carbon, photographic or other
reproduction of this Agreement or of any financing statement relating to any of
the Collateral shall be sufficient as a financing statement.
c. The Secured Party shall have the right to direct any company issuing
any insurance on any Goods included in the Collateral to make directly and
solely to the Secured Party any payment in connection therewith (including, but
not limited to, any refund of any unearned premium therefor).
d. The Secured Party shall have the right to verify each Account, Chattel
Paper, General Intangible, Instrument, Document and Deposit Account included in
the Collateral in any manner or through any medium that the Secured Party
considers appropriate, whether directly with any Account Debtor or other Person
obligated with respect thereto or otherwise and whether in the name of any
Debtor or otherwise, at the sole option of the Secured Party.
e. The Secured Party shall have the right to (i) notify each Account
Debtor and other Person obligated with respect to any Account, Chattel Paper,
General Intangible, Instrument or Deposit Account included in the Collateral of
the interest of the Secured Party therein, (ii) direct such Account Debtor or
other Person to deliver to the Secured Party directly any record evidencing, or
otherwise relating to such Account, Chattel Paper, General Intangible,
Instrument or Deposit Account, (iii) direct such Account Debtor or other Person
to make payment with respect to such Account, Chattel Paper, General Intangible,
Instrument or Deposit Account directly and solely to the Secured Party and
(iv) take control of all Proceeds of such Account, Chattel Paper, General
Intangible, Instrument or Deposit Account.
f. The Secured Party shall have the right to transfer to or register in
the name of the Secured Party or of any nominee of the Secured Party any General
Intangible, Instrument or Deposit Account included in the Collateral so that the
Secured Party or such nominee shall appear as the sole owner of record thereof.
Each such transfer or registration may be made with or without reference to this
Agreement or to any Security Interest.
g. Upon and at any time and from time to time after the occurrence or
existence of any Event of Default:
i. The Secured Party shall have the right to use each Fixture and piece of
Equipment included in the Collateral for the purposes of preserving any Goods
included in the Collateral, of completing any work in process included in the
Collateral and of preparing any such Goods for any sale, lease or other
disposition.
ii. The Secured Party shall have the right, without any judicial process
but without any breach of the peace, to (A) enter upon any promises of any
Debtor, (B) take possession of, and remove from any such premises, any Goods,
Chattel Paper, Instrument, Document or record included in the Collateral and (C)
remain on and use any such premises in completing any work in process included
in the Collateral or in preparing for any sale, lease, or other disposition, in
selling, leasing or otherwise disposing of, or in collecting, any of the
Collateral and (C) without the payment of any compensation of any kind, use each
trademark, service mark, trade style, trade name, patent, copyright, license,
franchise and similar General Intangible included in the Collateral to the
extent of any Debtor's rights therein for the purpose of exercising any right or
remedy pursuant to this Agreement or any other right or remedy relating to any
of the Collateral; and, to such extent for such purpose, each Debtor irrevocably
grants to the Secured Party a license in each such trademark, service mark,
trade style, trade name, patent, copyright, license, franchise and similar
General Intangible.
iii. If the Secured Party opts for the private sale or other disposition
of any General Intangible or Instrument included in the Collateral, the Secured
Party shall have the right to (A) restrict the number of prospective bidders in
connection with such sale or other disposition so as to comply with the
Securities Act of 1933 and (B) restrict such prospective bidders to Persons who
will agree to purchase such General Intangible or Instrument for their own
accounts for investment and not with a view to distribution or resale. No such
restriction or other restriction on such sale or other disposition that the
Secured Party shall deem necessary or desirable at the sole option of the
Secured Party in light of any "blue sky" or securities statute, regulation or
other law shall be deemed to be a factor in determining such sale or other
disposition to have been made in other than a commercially reasonable manner.
iv. The Secured Party shall have the right to perform any obligation of
any Debtor pursuant to this Agreement.
h. Until (i) the occurrence or existence of any Event of Default or (ii)
any notice to the contrary shall be delivered, given or sent by the Secured
Party to any Debtor, the Secured Party shall not have any right to retain any
interest, dividend, distribution or similar income consisting of money or of a
check or other draft and payable on account of any General Intangible or
Instrument included in the Collateral, and shall pay to any Debtor any such
interest, dividend, distribution or similar income received by it prior thereto.
i. The Secured Party shall apply all proceeds received by it from any
sale, lease or other disposition of, or from any collection of, any of the
Collateral or otherwise on account of any of the Collateral (including, but not
limited to, as money payable pursuant to any insurance on any Goods included in
the Collateral) first to costs and expenses described in Section 10 of this
Agreement and then to such other of the Obligations, whether due or not due, as
the Secured Party shall determine at the sole option of the Secured Party.
7. Standards of Care. If any portion of the Collateral shall be
transferred to or registered in the name of the Secured Party or of any nominee
of
5
<PAGE>
The Secured Party or shall be in the possession or under the control of the
Secured Party, the Secured Party shall be deemed to have exercised reasonable
care in the custody or preservation of such portion of the Collateral. If,
subject to the following sentence, it (a) accords such portion of the Collateral
treatment substantially equal to the treatment that it accords its own assets of
a similar nature or (b) takes such action in the custody or preservation of such
portion of the Collateral as is reasonably specified in any notice delivered or
sent by any Debtor and received by it in a reasonable time to evaluate and take
such action; provided, however, that (i) any failure by the Secured Party to
take such action shall not of itself be deemed to be a failure to exercise such
reasonable care and (ii) in no event shall the Secured Party be obligated to
take such action if it determines at its sole option that doing so would or
might have any adverse affect on the value of any of the Collateral as security
for the payment of the Obligations or otherwise be inconsistent or incompatible
with any provision or purpose of this Agreement. In no event shall the Secured
Party be obligated to (a) preserve any right or remedy against any prior party
obligated pursuant to any Chattel Paper or Instrument included in the
Collateral, whether or not such Chattel Paper or Instrument is in the possession
or under the control of the Secured Party, (b) ascertain any maturity, call,
exchange, conversion, redemption, offer, tender or similar matter relating to
any General Intangible, Instrument or Deposit Account included in the Collateral
or provide to any Debtor any notice thereof, whether or not the Secured Party
has knowledge thereof, or (c) provide to any Debtor any proxy statement, notice
or other communication received by the Secured Party or by any nominee of the
Secured Party and relating to any of the Collateral.
8. Obligations Immediately Due; Termination of Obligation to Lend.
a. Upon and at any time and from time to time after the occurrence or
existence of any Event of Default other than an Event of Default described in
clause (iv) of Section 16e of this Agreement, all of the Obligations remaining
unpaid shall, at the sole option of the Secured Party and without any notice,
demand, presentment or protest of any kind, become immediately due,
notwithstanding any agreement to the contrary. Upon the Occurrence or existence
of any Event of Default described in such clause (iv), all of the Obligations
remaining unpaid shall without any notice, demand, presentment or protest of any
kind, automatically become immediately due, notwithstanding any agreement to the
contrary. Nothing in this Section 8a shall render any portion of the Obligations
that is payable on demand payable otherwise than on demand or in any other way
affect any right or remedy of the Secured Party with respect to any such portion
of the Obligations.
b. Upon the occurrence or existence of any Event of Default, any
obligation of the Secured Party to grant any or any additional loan, credit or
other financial accommodation to any Debtor shall terminate, notwithstanding any
agreement to the contrary.
9. Representations and Warranties.
a. Each of the undersigned represents and warrants to the Secured Party as
follows:
i. Each answer contained in any questionnaire submitted to the Secured
Party by him, her or it in connection with this Agreement is true and correct.
ii. His, her or its execution, delivery to the Secured Party and
performance of this Agreement do not and will not (A) violate, or result in any
violation of, any statute, regulation or other law or any judgment, order or
award of any court, agency or other governmental authority or of any arbitrator
or (B) violate, result in any violation of, constitute (whether immediately or
after notice, after notice of time or after both notice and lapse of time) any
default under, or result in or require the imposition or creation of any
security interest in, or of any other lien or encumbrance upon, any of his, her
or its assets pursuant to, any agreement to which he, she or it is a party or by
which he, she or it or any of his, her or its assets is bound, except for this
Agreement.
iii. Each authorization, approval, permit and consent from, each
registration and filing with, each declaration and notice to, and each other act
by or relating to, any Person required as a condition of his, her or its
execution, delivery to the Secured Party or performance of this Agreement has
been duty obtained, made, given or done, and is in full force and effect.
iv. If it is not an individual, its execution, delivery to the Secured
Party and performance of this Agreement (A) are and will be in furtherance of
its purposes and within its power and authority, (B) do not and will not
violate, result in any violation of, or result in or require the imposition or
creation of any security interest in, or of any other lien or encumbrance upon,
any of its assets pursuant to, (i) any certificate or articles of incorporation,
by-laws, partnership agreement, articles of association or other charter,
organizational or governing document of it or (ii) any resolution or other
action of record of any shareholders or members of it, of any board of directors
or trustees of it or of any other Person responsible for governing it, and (C)
have been duly authorized by each necessary action of any shareholders or
members of it, of any board of directors or trustees of it or of any other
Person responsible for governing it.
v. He, she or it has not heretofore abandoned, assigned, sold, leased,
exchanged, converted or otherwise transferred or disposed of any of the
Collateral or any interest in any of the Collateral, except as fully and
accurately described in Exhibit A attached to and made a part of this Agreement.
vi. He, she or it has not heretofore extended, renewed, refinanced,
modified, compounded, subordinated, accelerated, settled, adjusted or
compromised, entered into any composition of, replaced, canceled, released or
surrendered, exercised any option or right of subscription relating to, settled
or compromised any action or other legal proceeding relating to, or waived any
right or remedy relating to or otherwise terminated, impaired or otherwise
affected any indebtedness, liability or obligation of any Account Debtor or of
any other Person relating to, any Account, Chattel Paper, General Intangible,
Instrument, Document or Deposit Account included in the Collateral, except as
fully and accurately described in Exhibit A attached to and made a part of this
Agreement.
vii. There exists no demand, claim, counterclaim, setoff or defense, no
action or other legal proceeding, and no outstanding judgment, order or award of
any court, agency or other governmental authority or of any arbitrator, relating
to any of the Collateral or questioning the validity of, or rendering invalid,
this Agreement or any action taken or to be taken pursuant to this Agreement,
except for demands, claims, counterclaims, setoffs, defenses, actions and other
legal proceedings and judgments, orders and awards fully and accurately
described in Exhibit A attached to and made a part of this Agreement.
viii. There is not on file in any public office any presently effective
financing statement relating to any of the Collateral, naming him, her or it as
a debtor and naming any Person other than the Secured Party as a secured party,
except for financing statements fully and accurately described in Exhibit A
attached to and made a part of this Agreement.
ix. There exists no presently effective certificate of title, and no
application for any certificate of title or notice of lien, relating to any of
his, her or its Goods and naming any Person other than the Secured Party as a
secured party, except for certificates of title, applications and notices of
lien fully and accurately described in Exhibit A attached to and made a part of
this Agreement.
x. There exists no (A) presently effective registration of any transfer or
pledge of any Uncertificated Security included in the Collateral, (B)
outstanding order to register any transfer or pledge of any such Uncertificated
Security, (C) notification of an security interest in, or of any other lien or
encumbrance upon, any such Uncertificated Security or (D) such Uncertificated
Security that is shown on the records of any clearing corporation other than in
the name of any Debtor, except for registrations, orders, notifications and
Uncertificated Securities fully and accurately described in Exhibit A attached
to and made a part of this Agreement.
xi. There exists no Security Interest in, and no other lien or encumbrance
upon, any of the Collateral, except for Permitted Liens.
xii. There is no restriction on any assignment or other transfer by him,
her or it of any of the Collateral, except for compliance with any "blue sky" or
securities statute, regulation or other law.
xiii. The real property on which any crop included in the Collateral is
growing or is to be grown, or on which any timber included in the Collateral is
or is to be standing, is fully and accurately described in Exhibit A attached to
and made a part of this Agreement.
b. At each time this Agreement is in effect as to any Debtor, such Debtor
shall be deemed to represent and warrant to the Secured Party as follows:
6
<PAGE>
i. Each Instrument, Document and Deposit Account included in the
Collateral at such time is genuine, is in all respects what it purports to be,
and is enforceable in accordance with its terms against each Person obligated
with respect thereto.
ii. Each Account, Chattel Paper and General Intangible included in the
Collateral at such time is genuine, is in all respect what it purports to be,
and is enforceable in accordance with its terms against each Account Debtor and
other Person obligated with respect thereto, and each sum represented by any
Debtor to the Secured Party as owing by such Account Debtor or other Person with
respect thereto is actually and unconditionally owing by such Account Debtor or
other Person, except for any applicable normal cash discount, without any
counterclaim, setoff or defense. The aggregate sum represented at such time by
any Debtor to the Secured Party as owing by Account Debtors and other Persons
with respect to Accounts, Chattel Paper and General Intangibles included in the
Collateral is the aggregate sum actually and unconditionally owing by Account
Debtors and other Persons with respect thereto at such time, except for
applicable normal cash discounts.
10. Expenses. Each Debtor shall pay to the Secured Party on demand each
cost and expense (including, but not limited to, if the Secured Party retains
counsel for advice, for litigation or for any other purpose, each attorney's fee
and disbursement) incurred by the Secured Party (a) in searching any public
record for, in filing or in recording in any public office, or in obtaining from
any public office any certificate relating to, any financing statement,
certificate of title, application for any certificate of title, notice of lien,
instrument of assignment or other writing relating to any of the Collateral, (b)
in performing any obligation of any Debtor pursuant to this Agreement, (c) in
taking any action pursuant to Section 5 of this Agreement, (d) in connection
with the custody or preservation of any of the Collateral or (e) in endeavoring
to (i) enforce any indebtedness, liability or obligation of any Debtor pursuant
to this Agreement, (ii) preserve or exercise any right or remedy pursuant to
this Agreement, whether against any Debtor or otherwise, (iii) preserve or
exercise any right or remedy relating to, take possession of, collect or
enforce, have registered pursuant to the Securities Act of 1933, prepare for any
sale, lease or other disposition, assign, sell, lease, exchange, convert or
otherwise transfer or dispose of, or realize upon, any of the Collateral, (iv)
obtain any information relating to any Uncertificated Security included in the
Collateral from the issuer of such Uncertificated Security or register any
transfer or pledge of such Uncertificated Security with such issuer or (v)
defend against any claim, regardless of the basis or outcome thereof and whether
asserted affirmatively, as a counterclaim, setoff or defense or otherwise,
asserted against the Secured Party as a direct or indirect result of the
execution and delivery to the Secured Party of this Agreement by any of the
undersigned, except for any claim for any tax imposed by any government or
political subdivision upon any income of the Secured Party or for any interest
or penalty relating to any such tax. After such demand for payment of any cost
or expense incurred by the Secured Party in performing any obligation of any
Debtor pursuant to Section 4f, 4h, 4j, 4k or 4z of this Agreement, each Debtor
shall pay interest at the highest rate permitted by applicable law on the
portion of such cost or expense remaining unpaid.
11. Cumulative Nature, Nonexclusive Exercise and Waivers of Rights and
Remedies.
a. All rights and remedies of the Secured Party pursuant to this Agreement
or otherwise shall be cumulative, and no such right or remedy shall be exclusive
of any other such right or remedy.
b. No single or partial exercise by the Secured Party of any right or
remedy pursuant to this Agreement or otherwise shall preclude any other or
further exercise thereof, or any exercise of any other such right or remedy, by
the Secured Party.
c. No course of dealing or other conduct heretofore pursued, accepted or
acquiesced in, no course of performance or other conduct hereafter pursued,
accepted or acquiesced in, no oral or written agreement or representation
heretofore made, and no oral agreement or representation hereafter made, by the
Secured Party, whether or not relied or acted upon, and no usage of trade,
whether or not relied or acted upon, shall operate as a waiver of any right or
remedy of the Secured Party pursuant to this Agreement or otherwise. No delay by
the Secured Party in exercising any such right or remedy, whether or not relied
or acted upon, shall operate as a waiver of any right of the Secured Party to
exercise the same or any other such right or remedy on such or any future
occasion without any notice or demand of any kind. No waiver by the Secured
Party of any such right or remedy shall be effective unless made in a writing
duty executed by the Secured Party and specifically referring to such waiver. No
waiver by the Secured Party on any one occasion of any such right or remedy
shall operate as a waiver thereof or of any other such right or remedy on any
future occasion.
12. Entire Agreement; Modification; Termination; Nonimpairment; Certain
Consents and Waivers.
a. This Agreement contains the entire agreement between the Secured Party
and each Debtor with respect to the subject matter of this Agreement, and
supersedes each course of dealing or other conduct heretofore pursued, accepted
or acquiesced in, and each oral or written agreement and representation
heretofore made, by the Secured Party with respect thereto, whether or not
relied or acted upon.
b. No course of performance or other conduct hereafter pursued, accepted
or acquiesced in, and no oral agreement or representation hereafter made, by the
Secured Party, whether or not relied or acted upon, and no usage of trade,
whether or not relied or acted upon, shall modify or terminate this Agreement as
to any Debtor on impair or otherwise affect any Security Interest, any
indebtedness, liability or obligation of any Debtor pursuant to this Agreement
or any right or remedy of the Secured Party pursuant to this Agreement or
otherwise.
c. No Modification of this Agreement shall be effective unless made in a
writing duty executed by the Secured Party and specifically referring to each
provision of this Agreement being modified.
d. Except as expressly provided in this Agreement, this Agreement shall
not be modified or terminated as to any Debtor, and no Security Interest, no
indebtedness, liability or obligation of any Debtor pursuant to this Agreement,
and no right or remedy of the Secured Party pursuant to this Agreement or
otherwise shall be impaired or otherwise affected, by any act, omission or other
thing, whether occurring before or after the termination of this Agreement as to
such Debtor with respect to any of the Obligations. Each Debtor consents,
without any notice of any kind, to each act, omission and other thing that would
or might, but for such consent, modify or terminate this Agreement as to any
Debtor or impair or otherwise affect any Security Interest or any such
indebtedness, liability, obligation, right or remedy. Without limiting the
generality of the preceding two sentences, this Agreement shall not be modified
or terminated as to any Debtor by, neither any Security Interest nor any such
indebtedness, liability, obligation, right or remedy shall be impaired or
otherwise affected by, and such consent shall apply to (i) any extension of any
of the Obligations, regardless of the length of such extension and regardless of
whether such extension was preceded by another or by others, (ii) any renewal,
refinancing, modification, compounding, subordination, acceleration,
composition, settlement, adjustment, compromise, reaffirmation, invalidity,
irregularity, unenforceability or impairment of, any replacement, cancellation,
discharge, assignment, sale, exchange, conversion or other transfer of
disposition of, or any grant of any participation in, any of the Obligations,
(iii) any modification or termination of any writing relating to any of the
Obligations, to any of the Collateral or to any Other Collateral, (iv) any
acceptance of any Other Obligor, (v) any replacement, release or discharge of,
or any modification of any indebtedness, liability or obligation of, any other
Debtor or any Primary Obligor, Other Obligor or other Person, (vi) any taking,
holding, continuation, collection, modification, increase or decrease in value
or impairment of, any replacement, cancellation, release, surrender,
abandonment, discharge, assignment, sale, lease, exchange, conversion or other
transfer or disposition of, any termination of any insurance on, any relying or
realizing upon, any grant, perfection, subordination or enforcement of any
security interest in, or of any other lien or encumbrance upon, any failure to
call for, take, hold, continue, collect, insure, preserve or protect, to
replace, assign, sell, lease, exchange, convert or otherwise transfer or dispose
of, to rely or realize upon or to perfect, keep perfected or enforce any
security interest in, or any other lien or encumbrance upon, or any delay in
calling for, taking, continuing, collecting, insuring, preserving or protecting,
in replacing, assigning, selling, leasing, exchanging, converting or otherwise
transferring or disposing of, in relying or realizing upon or in perfecting,
keeping perfected or enforcing any security interest in, or any other lien or
encumbrance upon, any of the Collateral or any Other Collateral, regardless of
its value, (vii) any security interest or other lien or encumbrance not being
created in favor of the Secured Party, (viii) any of the Collateral or any Other
Collateral being or becoming subject to any security interest or other lien or
encumbrance (whether or not prior to any security interest or other lien or
encumbrance
7
<PAGE>
in favor of the Secured Party), subject to any defense or restriction or
unenforceable or impaired, (ix) any exercise, delay in the exercise or waiver of
any failure to exercise, or any forbearance or other indulgence relating to, any
right or remedy of the Secured Party or of any other Person against any Debtor,
Primary Obligor, Other Obligor or other Person or relating to any of the
Obligations, to any of the Collateral or to any Other Collateral, (x) any
failure of the Secured Party or of any other Person to make, prove or vote any
claim relating to any of the Obligations, to any of the Collateral or to any
Other Collateral in any case or other proceeding pursuant to any Bankruptcy Law,
(xi) the occurrence or existence of any Event of Default, (xii) the Obligations
being at any time or from time to time reduced and then increased or being at
any time or from time to time paid in full, (xiii) any refusal or other failure
of the Secured Party or of any other Person to grant any or any additional loan,
credit or other financial accommodation to any Debtor or Primary Obligor, (xiv)
any refusal or other failure of the Secured Party or of any other Person
heretofore or hereafter to provide to any Debtor any information relating to any
other Debtor, to any Primary Obligor, Other Obligor or other Person or to the
business, operations, assets, affairs or condition (financial or other) of any
other Debtor or of any Primary Obligor, Other Obligor or other Person or so to
provide any such information completely and accurately, (xv) any notice to the
Secured Party or to any other Person from any Debtor, Primary Obligor, Other
Obligor or other Person not to grant any or any additional loan, credit or other
financial accommodation to any Debtor or Primary Obligor, not to extend, renew,
refinance, modify or replace any of the Obligations or to take or not to take
any other action, (xvi) the acceptance by the Secured Party or by any other
Person of any instrument or other writing intended by any other Person to create
an accord and satisfaction with respect to any of the Obligations, (xvii) the
manner or order of any sale, lease, exchange, conversion or other transfer or
disposition of any of the Collateral or of any Other Collateral, (xviii) the
manner or order of application of any money received or applied in payment of
any of the Obligation, (xix) any change in the ownership or membership of any
Debtor, Primary Obligor, Other Obligor or other Person, (xx) any change in the
location, business, fame, identity or structure of any Debtor, Primary Obligor,
Other Obligor or other Person, (xxi) the expiration of the period of any statute
of limitations with respect to any action or other legal proceeding against any
other Debtor, or against any Primary Obligor, Other Obligor or other Person,
relating to this Agreement, to any of the Obligations, to any of the Collateral
or to any Other Collateral or (xxii) the termination of this Agreement as to any
other Debtor, whether by agreement, by operation of law or otherwise.
e. Each Debtor waives, without any notice of any kind, each act and other
thing upon which, but for such waiver, any Security Interest, any indebtedness,
liability or obligation of any Debtor pursuant to this Agreement, or any right
or remedy of the Secured Party pursuant to this Agreement or otherwise, would or
might be conditioned. Without limiting the generality of the preceding sentence,
neither any Security Interest nor any such indebtedness, liability, obligation,
right or remedy shall be conditioned upon, and such waiver shall apply to, (i)
the acceptance of this Agreement by the Secured Party, (ii) any demand upon, or
any presentment or protest to, any Debtor, Primary Obligor, Other Obligor or
other Person, (iii) any notice to any Debtor, Primary, Obligor, Other Obligor or
other Person of any nonpayment, dishonor, default or protest, of the acceptance
of this Agreement by the Secured Party, of the incurring of any of the
Obligations or of any other matter or (iv) any exercise of any right or remedy
of the Secured Party of or any other Person against any Debtor, Primary Obligor,
Other Obligor or other Person or relating to any of the Obligations or to any
Other Collateral.
f. Each Debtor waives without any notice of any kind, each right of
redemption or appraisal arising in connection with any sale or other disposition
of any of the Collateral.
g. This Agreement shall not terminate as to any Debtor with respect to any
of the Obligations until written notice of (i) its termination by such Debtor or
(ii) if such Debtor is an individual, the death of such Debtor or the judicial
declaration of such Debtor's incompetence shall have been received by the
Secured Party and the Secured Party shall have had a reasonable period of time
to act thereupon. After any written notice of any termination, death or judicial
declaration of incompetence by or relating to any Debtor shall have been so
received and a reasonable time to act thereupon shall have expired, this
Agreement shall (i) continue in full force and effect as to such Debtor, and as
to each Successor of such Debtor, with respect to (A) each portion of the
Obligations arising before such receipt of such notice and the expiration of
such period of time, (B) each portion of the Obligations arising after such
receipt of such notice and the expiration of such period of time as a direct or
indirect result of any loan, credit or other financial accommodation agreed to
by the Secured Party before such receipt of such notice and the expiration of
such period of time, (C) each portion of the Obligations arising after such
receipt of such notice and the expiration of such period of time as a direct or
indirect result of any portion of the Obligations described in clause (i)(A) or
(i)(B) of this sentence (including, but not limited to, (i) each extension,
renewal, refinancing, modification and replacement of any portion of the
Obligations described in such clause (i)(A) or (i)(B) that is made after such
receipt of such notice and the expiration of such period of time and (ii) all
interest and other charges accruing after such receipt of such notice and the
expiration of such period of time with respect to any portion of the Obligations
described in such clause (i)(A) or (i)(B) or with respect to any such extension,
renewal, refinancing, modification or replacement), (D) each described in
Section 4i of this Agreement or a cost or expense described in Section 10 of
this Agreement and (E) the Collateral, whether existing or arising before or
after such receipt of such notice and the expiration of such period of time,
and (ii) terminate as to such Debtor, and as to each Successor of such Debtor,
with respect to each portion of the Obligations that arises after such receipt
of such notice and the expiration of such period of time and is not described in
clause (i)(B), (i)(C) or (i)(D) of this sentence. With respect to this
Agreement, the sole effect of such receipt of such notice and the expiration of
such period of time shall be to terminate this Agreement to the extent provided
in clause (ii) of the preceding sentence. Upon such receipt of such notice, any
obligation of the Secured Party to grant any or any additional loan, credit or
other financial accommodation to any Debtor shall terminate, notwithstanding any
agreement to the contrary.
h. Understanding that (i) because registration of any General Intangible
or Instrument included in the Collateral pursuant to the Securities Act of 1933
may not have been effected, because any General Intangible or Instrument
included in the Collateral may have been acquired by a Debtor or by another
Person for his, her or its own account for investment and not with a view to
distribution or to resale or because of other circumstances relating to any
General Intangible or Instrument included in the Collateral, there may be
restrictions and limitations affecting the Secured Party in any attempt
expeditiously to sell or otherwise dispose of such General Intangible or
Instrument, (ii) in the absence of any agreement to the contrary, the Secured
Party may have a general duty to attempt to obtain a fair price for such General
Intangible or Instrument if the Secured Party sells or otherwise disposes of
such General Intangible or Instrument even though the Obligations may be paid
in full through realization of a lesser price for such General Intangible or
Instrument and (iii) the Secured Party is not to have any such general duty,
each Debtor waives each right to hold the Secured Party responsible for selling
or for otherwise disposing of such General Intangible or Instrument at an
inadequate price even if the Secured Party in good faith accepts the first offer
received for, or does not approach more than one possible purchaser of, such
General Intangible or Instrument.
13. Governing Law; Jurisdiction; Certain Consents and Waivers.
a. This Agreement shall be governed by and construed, interpreted and
enforced in accordance with the internal law of the State of New York, without
regard to principles of conflict of laws.
b. Each action and other legal proceeding relating to this Agreement
commenced by the Secured Party may be litigated in any court that is either a
court of record of the State of New York or a court of the United States located
in the State of New York. Each such action and other legal proceeding not
commenced by the Secured Party shall be litigated in such a court.
c. Each Debtor (i) consents in each action and other legal proceeding
relating to this Agreement commenced by the Secured Party to the personal
jurisdiction of any court that is either a court of record of the State of New
York or a court of the United States located in the State of New York, (ii)
waives each objection to the laying of venue of any such action or other legal
proceeding, (iii) waives personal service of process in each such action and
other legal proceeding, (iv) consents to the making of service of process in
each such action and other legal proceeding by registered mail directed to such
Debtor at the last address of such Debtor shown in the records relating to this
Agreement maintained by the Secured Party, with such service of process to be
deemed completed five days after the mailing thereof, (v) waives in each such
action and other legal proceeding each right to trial by jury and each right to
assert any counterclaim or setoff or any defense based upon any statute of
limitations or upon any claim of laches, (vi) waives each right to attack
any final judgment that is obtained as a direct or indirect result of any such
action or other legal proceeding, and (vii) consents
8
<PAGE>
to each such final judgment being sued upon in any court having jurisdiction
with respect thereto and enforced in the jurisdiction in which such court is
located as if issued by such court.
14. Notices.
a. Each notice to, and each demand upon, any Debtor by the Secured Party
relating to this Agreement may be (i) delivered in person in writing, (ii)
delivered in person orally with a subsequent confirmation sent by mail, by
telex, by telegram or by mailgram, (iii) given by telephone with a subsequent
confirmation sent by mail, by telex, by telegram or by mailgram or (iv) sent by
mail, by telex, by telegram or by mailgram. Each such notice and demand
delivered in person orally or given by telephone shall be deemed to have been
delivered or given when so communicated. Each such notice, demand and
confirmation sent to any Debtor by mail, by telex, by telegram or by mailgram
may be directed to such Debtor at the last address of such Debtor shown in the
records relating to this Agreement maintained by the Secured Party. Each such
notice, demand and confirmation shall be deemed to have been sent (i) if sent by
mail, when deposited in the mail, first-class or certified postage prepaid, or
when delivered to any post office for sending by registered mail, directed as
provided in the preceding sentence or (ii) if sent by telex, by telegram or by
mailgram, when delivered to any telex operator or telegraph or mailgram office
directed as provided in the preceding sentence. Each requirement under
applicable law of reasonable notice to any Debtor by the Secured Party of any
event shall be deemed to have been met if notice of such event is delivered,
given or sent to such Debtor by the Secured Party as provided in this Section
14a at least ten days before the date on or after which such event is to occur.
b. Each notice to, and each demand upon, the Secured Party by any Debtor
relating to this Agreement (including, but not limited to, Section 12g of this
Agreement), and each notice to the Secured Party of the death of any Debtor or
of the judicial declaration of any Debtor's incompetence, shall specifically
refer to this Agreement, and shall be delivered in person in writing or sent by
registered mail. Each such notice and demand shall be deemed to have been
delivered or sent only when actually received by an officer of the Secured Party
at the chief executive office of the Secured Party.
15. General.
a. If there is more than one Debtor, each of them shall be jointly and
severally liable pursuant to this Agreement.
b. This Agreement shall be binding upon each Debtor and upon each heir and
legal representative of each Debtor, and shall inure to the benefit of, and be
enforceable by the Secured Party, each Successor of the Secured Party and each
direct or indirect assignee or other transferee of any of the Obligations.
c. Each agreement, consent, waiver, appointment as attorney-in-fact and
other thing made, given or done in this Agreement by any of the undersigned
shall be on his, her or its own behalf and on behalf of each of his, her or its
Successors.
d. Except as expressly provided in this Agreement, each right and remedy
of the Secured Party pursuant to this Agreement, and each action of the Secured
Party pursuant to the authorization and appointment as attorney-in-fact
contained in Section 5 of this Agreement, may be exercised or taken (i) at any
time and from time to time, (ii) at the sole option of the Secured Party, (iii)
without any notice or demand of any kind and (iv) whether or not any Event of
Default has occurred or existed, but the Secured Party shall not be obligated to
exercise any such right or remedy or to take any such action. Each request of
the Secured Party pursuant to this Agreement may be made (i) at any time and
from time to time, (ii) at the sole option of the Secured Party and (iii)
whether or not any Event of Default has occurred or existed.
e. Upon and at any time and from time to time after the occurrence or
existence of any Event of Default, (i) the Secured Party shall have the right to
set off against all of the Obligations remaining unpaid each indebtedness,
liability and obligation of the Secured Party in any capacity to any Debtor in
any capacity, whether alone or otherwise and whether or not then due,
(including, but not limited to, any such indebtedness, liability or obligation
arising as a direct or indirect result of any Instrument or Deposit Account),
and (ii) each holder of any participation in any portion of the Obligations
shall have the right (which may be exercised by such holder in accordance with
clauses (i), (ii) and (iii) of the first sentence of Section 15d of this
Agreement as though it were a right of the Secured Party pursuant to this
Agreement) to set off against all of such portion of the Obligations remaining
unpaid each indebtedness, liability and obligation of such holder in any
capacity to any Debtor in any capacity, whether alone or otherwise and whether
or not then due, (including, but not limited to, any such indebtedness,
liability or obligation arising as a direct or indirect result of any Instrument
or Deposit Account). Each exercise of such right by the Secured Party or by such
holder shall be deemed to be immediately effective at the time the Secured Party
or such holder opts therefor even though evidence thereof is not entered on the
records of the Secured Party or of such holder until later.
f. In conjunction with the Secured Party's assignment or other transfer
of, or in conjunction with the Secured Party's grant of any participation in,
any of the Obligations, the Secured Party shall have the right to assign or
otherwise transfer, or to grant any participation in, this Agreement, any of the
Secured Party's rights and remedies pursuant to this Agreement, any of the
Collateral or any interest in any of the Collateral. Upon any assignment or
other transfer of any portion of any of the Collateral by the Secured Party,
each responsibility of the Secured Party with respect to such portion of the
Collateral shall terminate.
g. If the Secured Party (i) in good faith deems itself insecure with
respect to any of the Obligations, is of the opinion that the Collateral is not
sufficient or has declined or may decline in value or is of the opinion that
there is insufficient public information with respect to any General Intangible
or Instrument included in the Collateral to permit the sale or other disposition
of such General Intangible or Instrument without registration pursuant to the
Securities Act of 1933 and (ii) delivers, gives or sends notice of such
insecurity or opinion to any Debtor, such Debtor shall provide to the Secured
Party such Other Collateral as shall be satisfactory to the Secured Party.
h. Solely to the extent required by any statute, regulation or other law
to make the Collateral available for the payment of the Obligations, each Debtor
guarantees the payment, without any setoff or other deduction, of the
Obligations, without any limitation as to amount.
i. Each Account Debtor and other Person obligated with respect to any
Account, Chattel Paper, General Intangible, Instrument, Document or Deposit
Account included in the Collateral may accept without question any exercise by
the Secured Party of any right or remedy pursuant to this Agreement or otherwise
with respect thereto, and shall have no liability to any Debtor as a direct or
indirect result of doing so.
j. Whenever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law.
If, however, any such provision shall be prohibited by or invalid under such
law, it shall be deemed modified to conform to the minimum requirements of such
law, or, if for any reason it is not deemed so modified, it shall be prohibited
or invalid only to the extent of such prohibition or invalidity without the
remainder thereof or any other such provision being prohibited or invalid.
k. Any provision of this Agreement that prohibits any Debtor from taking
any action shall be construed to prohibit such Debtor from taking such action
directly or indirectly.
l. Except as expressly provided in this Agreement, any reference in this
Agreement to any statute, regulation or other law shall be deemed to be as of
any time a reference to such statute, regulation or other law as in effect at
such time or, if such statute, regulation or other law is not in effect at such
time, a reference to any similar statute, regulation or other law in effect at
such time.
m. In this Agreement, headings of sections are for convenience of
reference only, and are not of substantive effect.
16. Definitions. For purposes of this Agreement:
a. "Bankruptcy Law" means (i) any bankruptcy or insolvency statute,
regulation or other law or (ii) any other statute, regulation or other law
relating to the relief of debtors, to the readjustment, composition or extension
of indebtedness, to liquidation or to reorganization.
b. "Collateral" means collectively, wherever located, whether now owned or
hereafter acquired or arising, whether owned alone or otherwise, whether or not
subject to Article 9 of the Uniform Commercial Code of the State of New York,
whether or not described in any schedule heretofore or hereafter
9
<PAGE>
delivered to the Secured Party and whether or not in the possession or under the
control of, or enroute to or from, the Secured Party in any capacity or any
other Person acting on behalf of the Secured Party, (i) all Goods, Accounts,
Chattel Paper, General Intangibles, Instruments, Documents, Deposit Accounts and
money of each Debtor other than any Consumer Goods of any Debtor, (ii) all
demands, claims and rights (including, but not limited to, (A) all claims
arising out of tort, all rights represented by any judgment, all rights to money
payable pursuant to any insurance, all rights of setoff, all rights to payment
pursuant to any letter of credit and all other claims and rights to the payment
of money and (B) all rights as a seller of Goods, whether to reclaim Goods or
stop Goods in transit or otherwise) of each Debtor other than any claim for
wages, salary and other compensation of any Debtor as an employee, (iii) all
direct or indirect additions to, all direct or indirect extensions, renewals and
replacements of, all direct or indirect increases in, all direct or indirect
profits, interest, dividends, distributions and other income and payments on
account of, and all direct or indirect proceeds of any replacement, release,
surrender, discharge, assignment, sale lease, exchange, conversion or other
transfer or disposition of, of any collection of, or of any exercise of any
option or right of subscription relating to, any of the things described in
clauses (i) and (ii) of this sentence, whether arising from any action taken by
any Debtor or by the Secured Party or otherwise and whether arising from any
exchange, conversion, stock split, spin-off, reclassification, merger,
consolidation or other absorption, sale of assets or combination or shares or
otherwise, (iv) all Proceeds and Products of any of the things described in
clauses (i) through (iv) of this sentence and (v) all records (including, but
not limited to, all records maintained on computer software and all schedules,
invoices, shipping documents, delivery receipts, purchase orders and written
agreements) of each Debtor evidencing, or otherwise relating to, any of the
things described in clauses (i) through (iv) of this sentence.
c. "Debtor" means (i) any of the undersigned or (ii) any Successor of any
of the undersigned.
d. "Equipment" has the meaning given it for purposes of Article 9 of the
Uniform Commercial Code of the State of New York as in effect on the date of
this Agreement, and, with respect to any Person, includes, but is not limited
to, (i) any machinery, vehicle or furniture constituting equipment of such
Person and (ii) any part, accessory, attachment, accession or tool installed
in, affixed to, or used or intended to be used in connection with, any equipment
of such Person.
e. An "Event of Default" occurs or exists if (i) any Debtor, Primary
Obligor or Other Obligor defaults in the payment when due, whether by
acceleration or otherwise, of any sum, whether payable for principal, for
interest or otherwise, whether the obligation to make payment thereof now exists
or hereafter arises and whether or not constituting part of the Obligations,
that is now or hereafter owing by him, her or it to the Secured Party or to any
other Person, the maturity of any such sum is accelerated or there occurs or
exists any event or condition that permits, or, after notice, after lapse of
time or after both notice and lapse of time, would permit, the acceleration of
the maturity of any such sum, (ii) any Debtor, Primary Obligor or Other Obligor
defaults in the performance when due of any obligation, whether now existing or
hereafter arising, that is now or hereafter owing by him, her or it to the
Secured Party or to any other Person other than an obligation to pay money or
there occurs or exists any event or condition that constitutes, or, after
notice, after lapse of time or after both notice and lapse of time, would
constitute, any default with respect to any such obligation, (iii) any Debtor,
Primary Obligor or Other Obligor is dissolved, ceases to exist, participates or
agrees to participate in any merger, consolidation or other absorption, assigns,
sells or otherwise transfers or disposes of all or substantially all of his, her
or its assets, makes or permits what might be a fraudulent transfer or
fraudulent conveyance of any of his, her or its assets, makes any bulk sale,
sends any notice of any intended bulk sale, dies, becomes incompetent or
insolvent (however such insolvency is evidenced), generally fails to pay his,
her or its debts as they become due, fails to pay, withhold or collect any tax
as required by any statute, regulation or other law, suspends or ceases his, her
or its present business has served or filed against him, her or it or against
any of his, her or its assets any attachment, levy, tax lien, warrant or similar
lien other than a Permitted Lien or has entered against him, her or it or
against any of his, her or its assets any judgment, order or award of any court,
agency or other governmental authority or of any arbitrator, (iv) any Debtor has
any receiver, trustee, liquidator, sequestrator or custodian of him, her or it
or of any of his, her or its assets appointed (whether with or without his, her
or its consent), makes any assignment for the benefit of creditors or commences
or has commenced against him, her or it any case or other proceeding pursuant to
any Bankruptcy Law or any formal or informal proceeding for the dissolution,
liquidation or winding up of the affairs of, or for the settlement of claims
against, him, her or it, (v) any Primary Obligor or Other Obligor has any
receiver, trustee, liquidator, sequestrator or custodian of him, her or it or of
any of his, her or its assets appointed (whether with or without his, her or its
consent), makes any assignment for the benefit of creditors or commences or has
commenced against him, her or it any case or other proceeding pursuant to any
Bankruptcy Law or any formal or informal proceeding for the dissolution,
liquidation or winding up of the affairs of, or for the settlement of claims
against, him, her or it, (vi) any representation or warranty made in this
Agreement, or any representation or warranty heretofore or hereafter made, or
any financial statement heretofore or hereafter provided to the Secured Party by
or on behalf of any Debtor, Primary Obligor or Other Obligor, proves, as of the
date of such representation, warranty or financial statement, to have been
incorrect or misleading in any material respect or, if a financial statement, to
have omitted any substantial contingent of unliquidated liability of, or any
substantial claim against, such Debtor, Primary Obligor or Other Obligor or
there occurred, and was not disclosed to the Secured Party, before the execution
and delivery to the Secured Party of this Agreement by the undersigned any
material adverse change in any information disclosed in any such representation
or warranty heretofore so made or in any such financial statement heretofore so
provided, (vii) there occurs any loss, theft, destruction or substantial decline
in the value of, or any substantial damage to, any of the Collateral or (viii)
the Secured Party in good faith deems itself insecure with respect to any of the
Obligations or is of the opinion that the Collateral is not sufficient or has
declined or may decline in value, whether or not the Secured Party has asked any
Debtor, Primary Obligor or Other Obligor for any Other Collateral.
f. "General Intangible" has the meaning given it for purposes of Article 9
of the Uniform Commercial Code of the State of New York as in effect on the date
of this Agreement, and, with respect to any Person, includes, but is not limited
to, (i) any computer software of such Person, (ii) any Uncertificated Security
of such Person or any other security of such Person not evidenced by an
instrument, (iii) any trademark, service mark, trade style, trade name, patent,
copyright, license or franchise or such Person and (iv) goodwill of such Person.
g. "Goods" has the meaning given it for purposes of Article 9 of the
Uniform Commercial Code of the State of New York as in effect on the date of
this Agreement, and, with respect to any Person, includes, but is not limited
to, any Fixture, Equipment, Inventory or Farm Product of such Person.
h. "Inventory" has the meaning given it for purposes of Article 9 of the
Uniform Commercial Code of the State of New York as in effect on the date of
this Agreement, and, with respect to any Person, includes, but is not limited
to, any inventory of such Person that is returned, repossessed, reclaimed or
stopped in transit or is raw material or work in process.
i. "Obligations" means collectively all indebtedness, liabilities and
obligations for the payment of money, regardless of kind, of class or of form
and whether for the payment of principal or of interest or otherwise, incurred
for any business, commercial, agricultural or consumer purpose or otherwise, now
existing or hereafter arising, created directly (including, but not limited to,
all indebtedness, liabilities and obligations arising as a direct or indirect
result of any overdraft) or by any assignment or other transfer, direct or
indirect, absolute or contingent (including, but not limited to, all
indebtedness, liabilities and obligations arising as a direct or indirect result
of any guaranty, endorsement or other assurance or as a direct or indirect
result of any letter of credit), similar or dissimilar, related or unrelated,
due or not due, contractual or tortious, liquidated or unliquidated or arising
by operation of law or otherwise, that are now or hereafter owing by any Debtor
or Primary Obligor in any capacity, whether alone or otherwise, to the Secured
Party in any capacity, whether or not allowed as a claim against such Debtor or
Primary Obligor in any case or other proceeding pursuant to any Bankruptcy Law.
j. "Other Collateral" means, whether now existing or hereafter arising,
(i) any guaranty, endorsement or other assurance, any collateral or other
security, or any subordination, now or hereafter directly or indirectly securing
the payment of, or otherwise now or hereafter directly or indirectly applicable
to, any of the Obligations, except for the Collateral, (ii) any indebtedness,
liability or obligation of the Secured Party to any Debtor, Primary Obligor or
Other Obligor that is now or hereafter available for setoff by the Secured Party
against any of the Obligations (including, but not limited to, any such
indebtedness, liability or obligation arising as a direct or indirect result of
any Instrument or Deposit Account) or (iii) any asset of any Debtor, Primary
Obligor or Other Obligor that is now or hereafter subject to any banker's lien
of the Secured Party.
10
<PAGE>
k. "Other Obligor" means, other than any Debtor or Primary Obligor, any
Person (i) who or which is now or hereafter directly or indirectly liable for
the payment of any of the Obligations, whether as a maker, drawer, acceptor,
endorser, guarantor, surety or accommodation party or otherwise, (including, but
not limited to, if any Debtor or Primary Obligor is a partnership, any general
partner of such Debtor or Primary Obligor) or (ii) any asset of whom or of which
now or hereafter directly or indirectly secures the payment of any of the
Obligations.
l. "Permitted Lien" means (i) any security interest in, or any other lien
or encumbrance upon, any of the Collateral fully and accurately described in
Exhibit A attached to and made a part of this Agreement, (ii) any security
interest in, or any other lien or encumbrance upon, any of the Collateral in
favor of the Secured Party, (iii) any lease of any inventory included in the
Collateral by any Debtor as a lessor in the ordinary course of his, her or its
business and without interference with the conduct of his, her or its business
or operations, (iv) any pledge or deposit of any General Intangible, Instrument,
Deposit Account or money included in the Collateral that is made by any Debtor
in the ordinary course of his, her or its business (A) in connection with any
workers' compensation, unemployment insurance, social security or similar
statute, regulation or other law or (B) to secure the payment of any
indebtedness, liability or obligation arising in connection with any letter of
credit, bid, tender, trace or government contract, lease, statute, regulation or
other law or surety, appeal or performance bond, or of any similar indebtedness,
liability or obligation, not incurred in connection with the borrowing of any
money or in connection with the payment of the deferred purchase price of any
asset, (v) any attachment, levy or similar lien against any of the Collateral
arising in connection with any action or other legal proceeding so long as (A)
the validity of the claim or judgment secured thereby is being contested in good
faith by appropriate proceedings promptly instituted and diligently conducted,
(B) adequate reserves have been appropriately established for such claim or
judgment, (C) the execution or other enforcement of such attachment, levy or
similar lien is effectively stayed and (D) neither such claim or judgment nor
such attachment, levy or similar lien has any material adverse effect on any
Debtor or on the business, operations, assets, affairs or condition (financial
or other) of any Debtor, (vi) any statutory lien upon any of the Collateral in
favor of the United States for any amount paid to any Debtor as a progress
payment pursuant to any government contract, (vii) any statutory lien upon any
of the Collateral securing the payment of any tax, assessment, fee, charge, fine
or penalty imposed by any government or political subdivision upon any Debtor or
upon any of the assets, income and franchises of any Debtor or the payment of
any demand or claim of any materialman, mechanic, carrier, warehouseman,
garageman or landlord against any Debtor so long as such tax, assessment, fee,
charge, fine, penalty, demand or claim is not yet due or (A) the validity of
such tax, assessment, fee, charge, fine penalty, demand or claim is being
contested in good faith by appropriate proceedings promptly instituted and
diligently conducted, (B) adequate reserves have been appropriately established
for such tax, assessment, fee, charge, fine, penalty, demand or claim, (C) the
execution or other enforcement of such statutory lien is effectively stayed and
(D) neither the failure to pay such tax, assessment, fee, charge, fine, penalty,
demand or claim nor such statutory lien has any material adverse effect on any
Debtor or on the business, operations, assets, affairs or condition (financial
or other) of any Debtor or (viii) any reservation, exception, encroachment,
easement, right-of-way, covenant, condition, restriction, lease or similar title
exception or encumbrance affecting the title to any Fixture included in the
Collateral but not interfering with the conduct of the business or operations of
any Debtor.
m. "Person" means (i) any individual, corporation, partnership, joint
venture, trust, unincorporated association, government or political subdivision,
(ii) any court, agency or other governmental authority or (iii) any other
entity, body, organization or group.
n. "Primary Obligor" means (i) the Borrower or (ii) any Successor of the
Borrower.
o. "Security Interest" means any security interest granted, or any
assignment, pledge or hypothecation made, pursuant to Section 2a of this
Agreement.
p. "Successor" means, with respect to any Person, (i) if such Person is an
individual, the estate of such Person, (ii) if such Person is not an individual,
any direct or indirect successor of such Person (including, but not limited to,
(A) if such Person is a corporation, any other corporation into which such
Person is hereafter directly or indirectly merged, consolidated or otherwise
absorbed and (B) if such Person is a partnership, any other partnership
hereafter created as a direct or indirect result of the admission of any new
partner or as a direct or indirect result of the death or withdrawal of any
partner) or (iii) any other Person to whom or to which all or substantially all
of the assets or such Person are hereafter directly or indirectly assigned or
otherwise transferred.
Dated February 2, 1996 CVC Holdings, Inc.
---------------------------------------
By: /s/ Emilio O. DiCataldo
---------------------------------------
Emilio O. DiCataldo, Senior VP Finance
---------------------------------------
ACKNOWLEDGMENT
STATE OF NEW YORK )
:SS.
COUNTY OF MONROE )
On the ______ day of February in the year 1996, before me personally came Emilio
-------
O. DiCataldo
- --------------------------------------------------------------------------------
|_| Individual to me known and known to me to be the person(s) described in
and who executed the above instrument, and __he (they jointly
and severally) acknowledged to me that __he (they) executed
the same.
|_| Partnership to me known and known to me to be a member of the partnership
described in and which executed the above instrument, and __he
duly acknowledged to me that __he executed the above
instrument for and on behalf of said partnership.
|X| Corporation to me known, who, being by me duly sworn, did depose and say
that __he resides at Rochester, New York; that __he is the
Senior VP Finance of CVC HOLDINGS, INC., the corporation
described in and which executed the above instrument; and that
__he signed his(her) name thereto by order of the board of
directors of said corporation.
JOHN D. INZANA /s/ John D. Inzana
NOTARY PUBLIC in the State of New York ----------------------------------
MONROE COUNTY Notary Public
My Commission Expires March 9, 1997
FOR BANK USE ONLY: Authorization confirmed. /s/ [ILLEGIBLE]
------------------------------------
Exhibit A
Permitted Financing Statements and Other Evidences of Lien (Section 4x):
A UCC-1 financing statement shown in a New York Department of State UCC
search against Borrower dated 1/23/96 ("Thru Date" - 1/5/96), delivered to
Secured Party by CSC Networks.
11
<PAGE>
Permitted Transfers, Pledges and Other Actions with Respect to Uncertificated
Securities (Section 4y):
NONE
Exceptions to Representations and Warranties (Clauses (v), (vi), (vii), (viii),
(ix) and (x) of Section 9a):
NONE
Description of Real Property on Which Crop or Timber Located (Clause (xiii) of
Section 9a):
NONE
Permitted Liens (Clause (i) of Section 16l):
Collateral described in the UCC-1 financing statements referred to in
"Permitted Financing Statements" above.
QUESTIONNAIRE
1. What is the complete name of the undersigned (giving, if the undersigned is a
corporation, the name exactly as it appears in the certificate or articles of
incorporation or other charter document of the undersigned or, if the
undersigned is a partnership, the name exactly as it appears in the partnership
agreement or other organizational document of the undersigned or, if there is
none, in any assumed name certificate of the undersigned)?
CVC Holdings, Inc.
2. Does the undersigned do business under any name other than the name indicated
in the answer to question 1? If so, what is each such other name?
CVC Products, CVC Products, Inc.
3. What is the address (including county) of the residence, only place of
business of chief executive office of the undersigned?
525 Lee Road
Rochester, NY 14606
4. What is the address (including county) of each place of business of the
undersigned other than the address indicated in the answer to question 3?
47061 Warm Springs Blvd., Fremont, CA 94539
329 Oak Trail, Garland, TX 75043
3100 Laurelview Court, Fremont, CA 94539
5. What is the address of each location at which any of the Goods, Chattel
Paper, Instruments, Documents and records of the undersigned included in the
Collateral is or will be kept other than the locations the addresses of which
are indicated in the answers to questions 3 and 4?
None
6. If any of the Goods, Chattel Paper, Instruments, Documents and records of the
undersigned included in the Collateral is in the possession of any Person other
than the undersigned, what are the name and address of each such other Person?
None
7. What are the name and address of each Person other than the undersigned who
or which has any interest, whether as an owner, mortgagee or lessee or
otherwise, in any real property to which is affixed, or in or on which is
installed or located, any of the Goods of the undersigned included in the
Collateral or in or on which is located any of the Chattel Paper, Instruments,
Documents and records of the undersigned included in the Collateral?
Security Capital Mutual 47775 Fremont Blvd., Fremont, CA 94538
Mission Falls Corp. C/O
Spectrum Interest, Inc. 5776 Stoneridge Mall Road (Suite 100)
Pleasanton, CA 94588
Dated February 2, 1996 CVC Holdings, Inc.
------------------------------------------
By: /s/ Emilio O. DiCataldo
------------------------------------------
Emilio O. DiCataldo, Senior V.P. Finance
------------------------------------------
12
<PAGE>
Exhibit 11
COMPUTATION OF
EARNINGS PER SHARE
<TABLE>
Nine months ended
Year ended September 30, June 30,
--------------------------------------- ------------------------------
1994(1) 1995 1996 1996 1997
---------- ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net income -- $ 130,269 $ 3,179,507 $ 1,957,129 $ 990,054
Add: Interest expense, net of tax -- 29,488 72,810 31,159 47,620
---------- ---------- ----------- ----------- -----------
Net income, as adjusted -- 159,757 3,252,317 1,988,288 1,037,674
Weighted average common and
common equivalent shares(2) -- 8,501,522 11,216,861 11,165,438 11,361,890
---------- ---------- ----------- ----------- -----------
---------- ---------- ----------- ----------- -----------
Pro forma net income per share (unaudited)(2) $ -- $ 0.02 $ 0.29 $ 0.18 $ 0.09
---------- ---------- ----------- ----------- -----------
---------- ---------- ----------- ----------- -----------
</TABLE>
- -------------------------
(1) Pro forma historical earnings per share has been omitted for the fiscal
year ended September 30, 1994 since a net loss existed in that year and,
therefore, pro forma earnings per share data is not considered meaningful
in light of the non-cumulative preferred stock (see Notes to Consolidated
Financial Statements) being a common share equivalent which would have a
material anti-dilutive effect on pro forma earnings per share in 1994.
(2) See Notes to Consolidated Financial Statements for information concerning
weighted average common and common share equivalents and pro forma net
income per share (unaudited).
<PAGE>
Exhibit 21.1
Sole subsidiary of CVC, Inc.:
1. CVC Products, Inc., a wholly-owned subsidiary of CVC, Inc., is a
Delaware corporation which does business under the name of
CVC Products.
<PAGE>
Exhibit 23.1
Consent of Independent Accountants
We hereby consent to the use in the Prospectus constituting part of this
Registration Statement on Form S-1 of our report dated November 15, 1996
relating to the consolidated financial statements of CVC, Inc., which appears
in such Prospectus. We also consent to the reference to us under the heading
"Experts" in such Prospectus.
PRICE WATERHOUSE LLP
Rochester, New York
October 16, 1997
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Prospectus constituting part of this
Registration Statement on Form S-1 of our report dated November 15, 1996
relating to the consolidated financial statements of CVC, Inc. and subsidiary
which appears in such Prospectus. We also consent to the reference to us
under the heading "Experts" in such Prospectus.
Chapman, Collins, Agostinelli & Shaw, P.C.
Rochester, New York
October 16, 1997
<PAGE>
Exhibit 23.4
FORM OF CONSENT
We hereby consent to the reference to our firm as it appears in this
Registration Statement, including the Prospectus constituting a part hereof.
/s/ Baker & Botts, L.L.P.
------------------------
BAKER & BOTTS, L.L.P.
October 15, 1997
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 730
<SECURITIES> 0
<RECEIVABLES> 4,882
<ALLOWANCES> 92
<INVENTORY> 16,304
<CURRENT-ASSETS> 23,947
<PP&E> 9,688
<DEPRECIATION> 1,803
<TOTAL-ASSETS> 31,837
<CURRENT-LIABILITIES> 15,131
<BONDS> 6,529
0
10,040
<COMMON> 4
<OTHER-SE> (725)
<TOTAL-LIABILITY-AND-EQUITY> 31,837
<SALES> 48,378
<TOTAL-REVENUES> 48,378
<CGS> 33,755
<TOTAL-COSTS> 33,755
<OTHER-EXPENSES> 11,246
<LOSS-PROVISION> 42
<INTEREST-EXPENSE> 299
<INCOME-PRETAX> 3,180
<INCOME-TAX> 0
<INCOME-CONTINUING> 3,180
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,180
<EPS-PRIMARY> 0
<EPS-DILUTED> .29
</TABLE>
